CareTrust REIT, Inc 10-Q for FY2025 Q3
CareTrust REIT, Inc. (CTRE)
10-Q
2025-11-05
For: 2025-09-30
View Original
Added on
April 08, 2026
About this 10-Q
CareTrust REIT, Inc filed this 10-Q on November 5, 2025, covering the quarter ended September 30, 2025 (FY2025 Q3).
Headline figures
Quarter ended September 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $132.44M
- up 71.2% from $77.38M a year earlier
- Net income
- $74.9M
- up 124.0% from net income of $33.44M a year earlier
- Diluted EPS
- $0.35
- up 66.7% from $0.21 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2025
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission File Number: 001-36181
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
(949 ) 542-3130
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| ☒ | Accelerated filer | ☐ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of November 4, 2025, there were 223,300,322 shares of common stock outstanding.
INDEX
| PART I—FINANCIAL INFORMATION | ||||||||
| Item 1. | Financial Statements (Unaudited) | |||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| PART II—OTHER INFORMATION | ||||||||
| Item 1. | ||||||||
| Item 1A. | ||||||||
| Item 5. | ||||||||
| Item 6. | ||||||||
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
CARETRUST REIT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(Unaudited)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Assets: | |||||||||||
| Real estate investments, net | $ | $ | |||||||||
Financing receivable, at fair value (including accrued interest of $ | |||||||||||
Other real estate related investments (including accrued interest of $ | |||||||||||
| Assets held for sale, net | |||||||||||
| Cash and cash equivalents | |||||||||||
| Accounts and other receivables | |||||||||||
| Prepaid expenses and other assets, net | |||||||||||
| Deferred financing costs, net | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Equity: | |||||||||||
| Senior unsecured notes payable, net | $ | $ | |||||||||
| Senior unsecured term loan, net | |||||||||||
| Accounts payable, accrued liabilities and deferred rent liabilities | |||||||||||
| Dividends payable | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note 14) | |||||||||||
| Redeemable noncontrolling interests | |||||||||||
| Equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Cumulative distributions in excess of earnings | ( | ( | |||||||||
| Accumulated other comprehensive income | |||||||||||
| Total stockholders’ equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
1
CARETRUST REIT, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
(Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Rental income | $ | $ | $ | $ | |||||||||||||||||||
| Interest income from financing receivable | |||||||||||||||||||||||
| Interest income from other real estate related investments and other income | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Property taxes and insurance | |||||||||||||||||||||||
| Impairment of real estate investments | |||||||||||||||||||||||
| Transaction costs | |||||||||||||||||||||||
| Property operating expenses | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total expenses | |||||||||||||||||||||||
| Other income (loss): | |||||||||||||||||||||||
| Loss on extinguishment of debt | ( | ( | ( | ( | |||||||||||||||||||
| (Loss) gain on sale of real estate, net | ( | ( | |||||||||||||||||||||
| Unrealized gain (loss) on other real estate related investments, net | ( | ||||||||||||||||||||||
| (Loss) gain on foreign currency transactions | ( | ||||||||||||||||||||||
| Total other income (loss) | ( | ( | |||||||||||||||||||||
| Income before income tax expense | |||||||||||||||||||||||
| Income tax expense | ( | ( | |||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | ( | ( | ( | ||||||||||||||||||||
| Net income attributable to CareTrust REIT, Inc. | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per common share attributable to CareTrust REIT, Inc: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted-average number of common shares: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
2
CARETRUST REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation | ( | ||||||||||||||||||||||
| Cash flow hedges | ( | ( | |||||||||||||||||||||
| Total other comprehensive (loss) income | ( | ||||||||||||||||||||||
| Total comprehensive income | |||||||||||||||||||||||
| Total comprehensive income (loss) attributable to noncontrolling interests | ( | ( | ( | ||||||||||||||||||||
| Comprehensive income attributable to CareTrust REIT, Inc. | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
3
CARETRUST REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
(in thousands, except share and per share amounts)
(Unaudited)
| Common Stock | Additional Paid-in Capital | Cumulative Distributions in Excess of Earnings | Accumulated Other Comprehensive Income | Total Stockholders’ Equity | Noncontrolling Interests | Total Equity | Redeemable Noncontrolling Interests | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of stock-based compensation awards, net of shares withheld for employee taxes | ( | — | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Common dividends ($ | — | — | — | ( | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interests | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of stock-based compensation awards | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Amortization of stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Common dividends ($ | — | — | — | ( | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interests | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Common dividends ($ | — | — | — | ( | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interests | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
4
CARETRUST REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
(in thousands, except share and per share amounts)
(Unaudited)
| Common Stock | Additional Paid-in Capital | Cumulative Distributions in Excess of Earnings | Accumulated Other Comprehensive Income | Total Stockholders’ Equity | Noncontrolling Interests | Total Equity | Redeemable Noncontrolling Interests | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of stock-based compensation awards, net of shares withheld for employee taxes | ( | — | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Common dividends ($ | — | — | — | ( | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interests | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of stock-based compensation awards | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Amortization of stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Common dividends ($ | — | — | — | ( | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interests | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Common dividends ($ | — | — | — | ( | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interests | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
5
CARETRUST REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
See accompanying notes to condensed consolidated financial statements.
| For the Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization (including below-market ground leases) | |||||||||||
| Amortization of deferred financing costs | |||||||||||
| Loss on extinguishment of debt | |||||||||||
| Unrealized (gain) loss on other real estate related investments, net | ( | ||||||||||
| Amortization of stock-based compensation | |||||||||||
| Straight-line rental income | ( | ||||||||||
| Amortization of lease incentives | |||||||||||
| Amortization of above and below market leases | ( | ( | |||||||||
| Noncash interest income | ( | ( | |||||||||
| (Gain) loss on sale of real estate, net | ( | ||||||||||
| Impairment of real estate investments | |||||||||||
| Change in operating assets and liabilities: | |||||||||||
| Accounts and other receivables | ( | ( | |||||||||
| Prepaid expenses and other assets, net | ( | ( | |||||||||
| Accounts payable, accrued liabilities and deferred rent liabilities | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Acquisitions of real estate, net of deposits applied | ( | ( | |||||||||
| Purchases of equipment, furniture and fixtures and improvements to real estate | ( | ( | |||||||||
| Preferred equity investments | ( | ( | |||||||||
| Investment in real estate related investments and other loans receivable | ( | ( | |||||||||
| Principal payments received on real estate related investments and other loans receivable | |||||||||||
| Escrow deposits for potential acquisitions of real estate | ( | ( | |||||||||
| Net proceeds from sales of real estate | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from the issuance of common stock, net | |||||||||||
| Proceeds from the issuance of senior unsecured term loan | |||||||||||
| Proceeds from the secured borrowing | |||||||||||
| Borrowings under unsecured revolving credit facility | |||||||||||
| Payments on unsecured revolving credit facility | ( | ||||||||||
| Payments on senior unsecured term loan | ( | ||||||||||
| Payments on secured notes payable | ( | ||||||||||
| Payments on secured revolving credit facilities | ( | ||||||||||
| Payment on secured borrowing | ( | ||||||||||
| Payments on extinguishment of debt and deferred financing costs | ( | ( | |||||||||
| Net-settle adjustment on restricted stock | ( | ( | |||||||||
| Dividends paid on common stock | ( | ( | |||||||||
| Contributions from noncontrolling interests | |||||||||||
| Distributions to noncontrolling interests | ( | ( | |||||||||
| Net cash provided by financing activities | |||||||||||
| Effect of foreign currency translation on cash and cash equivalents | |||||||||||
| Net increase in cash and cash equivalents | |||||||||||
| Cash and cash equivalents as of the beginning of period | |||||||||||
| Cash and cash equivalents as of the end of period | $ | $ | |||||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Interest paid | $ | $ | |||||||||
| Supplemental schedule of noncash investing and financing activities: | |||||||||||
| Increase in dividends payable | $ | $ | |||||||||
| Right-of-use asset obtained in exchange for new operating lease obligation | $ | $ | |||||||||
| Assets held for sale exchanged for real estate investments | $ | $ | |||||||||
| Transfer of pre-acquisition costs to acquired assets | $ | $ | |||||||||
| Sale of real estate settled with note receivable | $ | $ | |||||||||
| Liabilities assumed by buyer in connection with sale of real estate | $ | $ | |||||||||
6
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
1. ORGANIZATION
Description of Business—CareTrust REIT, Inc.’s (“CareTrust REIT” or the “Company”) primary business consists of acquiring, financing, developing and owning real property to be leased to third-party tenants in the healthcare sector located in the United States (“U.S.”) and the United Kingdom (“U.K.”). As of September 30, 2025, the Company owned, directly or through joint ventures, and leased to independent operators 399 skilled nursing facilities (“SNFs”), multi-service campuses, U.K. Care Homes (as defined below), assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 36,192 operational beds and units located in 32 states and the U.K. with the highest concentration of properties by rental income located in California, Texas, the U.K and Tennessee. As of September 30, 2025, the Company also had other real estate related investments consisting of four preferred equity investments, 15 real estate secured loans receivable, and five mezzanine loans receivable with a carrying value of $871.3 million and one financing receivable with a carrying value of $98.1 million.
In the U.K., a care home (“U.K. Care Home”) is a residential setting that provides accommodation and personal care services for individuals who need assistance with daily living activities and are unable to manage independently in their own homes. U.K. Care Homes generally fall into two main categories: residential care homes and care homes with nursing (also called nursing homes). Residential care homes provide personal care and support for daily living activities like washing, dressing, and medication management, while care homes with nursing also offer 24/7 on-site nursing care for individuals with more complex medical needs.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The U.S. Dollar (“USD”) is the reporting currency of the Company. Unless otherwise indicated, all dollar amounts are expressed in USD. The functional currency for our consolidated subsidiaries operating in the U.K. is the British Pound (“GBP”). For the consolidated subsidiaries whose functional currency is not USD, the Company translates the financial statements into USD at the time of consolidation. Balance sheet accounts are translated at the exchange rate in effect at the balance sheet date. Gains and losses resulting from translation are included in accumulated other comprehensive income (loss), as a separate component of equity. Income statement accounts are translated using the average exchange rate for the period.
The Company and certain of its consolidated subsidiaries have intercompany and third-party debt that is not denominated in the Company’s functional currency. When the debt is remeasured to the functional currency of the entity, a gain or loss can result. The resulting adjustment is reflected in results of operations within other income (loss), unless it is intercompany debt that is deemed to be long-term in nature in which case the adjustments are included in accumulated other comprehensive income. In the statement of cash flows, cash flows denominated in foreign currencies are translated using the exchange rates in effect at the time of the respective cash flows or at average exchange rates for the period, depending on the nature of the cash flow items.
Income Taxes—In connection with the Acquisition (as defined in Note 3, Acquisitions), the Company is subject to certain foreign taxes. The Company’s foreign subsidiaries in the U.K. operate as a REIT and generally are subject only to a withholding tax on earnings upon distribution out of the U.K. All earnings of the Company’s foreign subsidiaries in excess of the amounts required to be distributed are considered to be indefinitely reinvested and accordingly, no provision for applicable income taxes has been provided thereon. Upon distribution of those earnings, the Company would be subject to withholding
7
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
taxes payable to the U.K. See Note 3, Acquisitions, for additional information. The expense associated with these taxes is included in income tax expense on the Company’s condensed consolidated income statements.
Derivative and Hedging Activities—The Company is exposed to, among other risks, the impact of changes in foreign currency exchange rates as a result of the Company’s investments in the U.K. and interest rate risk related to its capital structure. As a matter of policy, the Company does not use derivatives for trading or speculative purposes. The Company’s risk management program is designed to manage the exposure and volatility arising from these risks, and may utilize foreign currency forward contracts, interest rate swaps, interest rate caps and debt issued in foreign currencies to offset a portion of these risks.
Derivatives are financial arrangements among two or more parties with returns linked to or “derived” from an underlying equity, debt, commodity, other asset, liability, interest rate, foreign exchange rate or another index, or the occurrence or nonoccurrence of a specified event. The settlement of a derivative is determined by its underlying notional amount specified in the contract. Derivative contracts may be entered into outright or embedded within a non-derivative host contract, and may be listed, traded on exchanges or privately negotiated directly between two parties.
To qualify for hedge accounting, derivative instruments used for risk management purposes must effectively reduce the risk exposure that they are designed to hedge. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. This process includes designating all derivatives that are part of a hedging relationship to specific forecasted transactions as well as recognized liabilities or assets on the condensed consolidated balance sheets. In addition, at the inception of a qualifying cash flow hedging relationship, the underlying transaction or transactions, must be, and are expected to remain, probable of occurring in accordance with the Company’s related assertions. The Company recognizes all derivative instruments, including embedded derivatives required to be bifurcated, as assets or liabilities on the condensed consolidated balance sheets at fair value which is determined using a market approach and Level 2 inputs. For derivatives designated in qualifying cash flow hedging relationships, the gain or loss on the derivative is recognized in accumulated other comprehensive income as a separate component of equity.
If it is determined that a derivative instrument ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, the Company discontinues its cash flow hedge accounting prospectively and records the appropriate adjustment to earnings based on the current fair value of the derivative instrument.
Derivative Instruments Not Designated As Hedging Instruments—Certain derivative financial instruments, consisting of interest rate cap agreements, are used to manage the Company’s exposure to interest rate movements, but do not meet the accounting requirements to be classified as hedging instruments. These derivatives are carried at their fair value in prepaid expenses and other assets, net on the Company’s condensed consolidated balance sheets. The changes in fair value of interest rate derivatives are recognized within interest expense on the Company’s condensed consolidated income statements.
8
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
3. ACQUISITIONS
Care REIT plc Asset Acquisition
On May 8, 2025, the Company closed its acquisition (the “Care REIT Acquisition”) of Care REIT plc (“Care REIT” or “Target”). In connection with this acquisition, on June 30, 2025, the Company 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”). The Company treats 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 by acquiring the assets of Care REIT and its associated operations.
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, the Company also assumed Care REIT’s liabilities of approximately $290.9 million. In addition, the Company paid the partners of Impact Health Partners LLP approximately $6.8 million for substantially all of Impact Health Partners LLP’s assets.
Consideration and Purchase Price Allocation
The Acquisition was accounted for as an asset acquisition in accordance with ASC 805, Business Combinations, which requires that the cost of an acquisition is allocated on a relative fair value basis to the assets acquired and the liabilities assumed. The following table summarizes the fair value of total consideration transferred in the Acquisition (dollars in thousands):
| Cash paid to Target shareholders | $ | ||||
| Cash paid to Investment Manager | |||||
| Transaction costs capitalized | |||||
| Total Consideration | $ | ||||
The following table summarizes the estimated fair values assigned to the assets acquired and liabilities assumed (dollars in thousands):
| Real estate investments | $ | ||||
| Cash and cash equivalents | |||||
| Prepaid expenses and other assets | |||||
| Accounts and other receivables | |||||
| Accounts payable, accrued liabilities and deferred rent liabilities | ( | ||||
| Secured notes payable | ( | ||||
| Secured revolving credit facilities | ( | ||||
| Fair value of net assets acquired | $ | ||||
9
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
Fair Value Measurement
The estimated fair values of assets acquired and liabilities assumed were primarily based on information that was available as of the closing date of the Acquisition. The methodology used to estimate the fair values to apply purchase accounting are summarized below.
•U.K. Care Homes: The Company engaged third party valuation specialists to calculate the fair value of the real estate assets acquired by the Company using standard valuation methodologies, including the cost and market approaches. The average remaining useful lives for real estate assets, excluding land, were reset to the following:
| Average Useful Life (years) | |||||
| Buildings | |||||
| Site improvements | |||||
| Above-market leases | |||||
| Below-market leases | |||||
| In-place leases | |||||
•All of the properties acquired are owned freehold, except for 14 which are held long leasehold for nominal rent. On the closing date of the Care REIT Acquisition, the Company recorded operating right-of-use assets of $30.0 million within prepaid expenses and other assets, net. The weighted average remaining useful lives of the acquired operating right-of-use assets are 1371 years.
•Other assets and liabilities: the carrying values of cash, interest rate derivatives, trade and other receivables, trade and other payables, other liabilities, and debt assumed approximate their fair values.
4. REAL ESTATE INVESTMENTS, NET
The following table summarizes the Company’s investment in owned properties, and properties held in consolidated joint ventures, held for use as of September 30, 2025 and December 31, 2024 (dollars in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||
| Land | $ | $ | |||||||||
| Buildings and improvements | |||||||||||
| Integral equipment, furniture and fixtures | |||||||||||
| Identified intangible assets | |||||||||||
| Real estate investments | |||||||||||
Accumulated depreciation and amortization(1) | ( | ( | |||||||||
| Real estate investments, net | $ | $ | |||||||||
(1) As of September 30, 2025 and December 31, 2024, accumulated depreciation and amortization included $0.9 million and $1.2 million, respectively, of accumulated amortization related to lease intangibles. The lease intangibles are amortized over the term of each related lease.
As of September 30, 2025, all of the Company’s owned facilities held for investment were leased to various operators under triple-net leases. All of the triple-net leases contain annual escalators based on the percentage change in the Consumer Price Index (“CPI”) or Retail Price Index (“RPI”) (but not less than zero), some of which are subject to a floor and/or cap, or fixed rent escalators. As of September 30, 2025, eight facilities were held for sale. See Note 5, Impairment of Real Estate Investments, Assets Held for Sale and Asset Sales, for additional information.
10
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
As of September 30, 2025, the Company’s total future contractual minimum rental income for all of its tenants, excluding operating expense reimbursements and assets held for sale, was as follows (dollars in thousands):
| Year | Amount | ||||
| 2025 (three months) | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
Tenant Purchase Options
Certain of the Company’s operators hold purchase options allowing them to acquire properties they currently lease from the Company. A summary of these purchase options is presented below (dollars in thousands):
| Asset Type | Properties | Lease Expiration | Option Period Open Date | Option Type(1) | Current Cash Rent(2) | |||||||||||||||||||||
| SNF | January 2030 | 02/01/2026 | (3) | A | ||||||||||||||||||||||
| SNF / Campus | October 2032 | 03/05/2027 | (4) | B | (8) | |||||||||||||||||||||
| SNF / Campus | May 2034 | 06/01/2026 | (5) | B | (9) | |||||||||||||||||||||
| SNF | November 2034 | 12/01/2027 | (3) | A | ||||||||||||||||||||||
| SNF | November 2039 | 12/01/2027 | (6) | B | ||||||||||||||||||||||
| SNF | August 2040 | 09/01/2028 | (7) | B | ||||||||||||||||||||||
(1) Option type includes:
A - Fixed base price.
B - Fixed capitalization rate on lease revenue.
(2) Based on annualized cash revenue for contracts in place as of September 30, 2025.
(3) Option window is open until the expiration of the lease term.
(4) Option window is open for six months from the option period open date.
(5) Option window is open for nine months from the option period open date.
(6) Lease agreement provides for the purchase of one to two facilities in each window over four option windows, for a total of six facilities. Each option window opens at the beginning of each of lease years four, five, six, and seven beginning December 1, 2027 and is open for one year .
(7) Option window is open for 24 months from the option period open date.
(8) Option provides for purchase of any two of the three facilities. The current cash rent shown is an average of the range of $3.2 million to $3.5 million.
11
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
Rental Income
The following table summarizes components of the Company’s rental income (dollars in thousands):
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| Rental Income | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
Contractual rent due(1) | $ | $ | $ | $ | |||||||||||||||||||
| Straight-line rent | ( | ( | |||||||||||||||||||||
| Amortization of lease incentives | ( | ( | ( | ( | |||||||||||||||||||
Amortization of above and below-market lease intangibles(2) | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
(1) Includes initial 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. Tenant operating expense reimbursements for the three months ended September 30, 2025 and 2024 were $2.2 million and $1.7 million, respectively. Tenant operating expense reimbursements for the nine months ended September 30, 2025 and 2024 were $6.4 million and $5.1 million, respectively.
(2) In connection with lease terminations in August 2025, the Company accelerated the amortization of the remaining below-market lease intangibles of $4.4
Recent Real Estate Acquisitions
The following table summarizes the Company’s real estate acquisitions for the nine months ended September 30, 2025 (dollars in thousands):
| Type of Property | Purchase Price(1) | Initial Annual Cash Rent(2) | Number of Properties | Number of Beds/Units(3) | |||||||||||||||||||
Skilled nursing(4) | $ | $ | |||||||||||||||||||||
U.K. Care Homes(5) | |||||||||||||||||||||||
Multi-service campuses(6) | |||||||||||||||||||||||
| Assisted living | |||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||
(1) Purchase price includes capitalized acquisition costs.
(2) Initial annual cash rent represents initial cash rent for the first twelve months, excluding inflation linked increases.
(3) The number of beds/units includes operating beds at the acquisition date.
(4) Includes 11 SNFs held through joint ventures. See Note 13, Variable Interest Entities, 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, the Company 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.
(6) Includes two multi-service campuses held through joint ventures. See Note 13, Variable Interest Entities, for additional information.
Lease Amendments and Terminations
New SNF lease and Lease Termination. Effective August 31, 2025, the Company terminated its master lease with a skilled nursing operator and entered into a new triple-net master lease with a new skilled nursing operator with respect to three SNFs and one multi-service campus. The new master lease has an initial term of approximately 15 years with two five-year renewal options and fixed rent escalators. Initial annual cash rent under the new master lease was approximately $3.9 million. Annual cash rent under the terminated master lease was $4.0 million.
Covenant Care Lease Transitions. On August 1, 2025, the Company funded approximately $12.3 million (inclusive of transaction costs) in connection with the assignment and termination of multiple lease agreements between the Company and affiliates of Covenant Care California, LLC (“Covenant Care”) and pertaining to eight skilled nursing facilities, two multi-service campuses and one assisted living facility located in California. In connection with the transaction, the Company entered into new long-term leases (or in some instances, amended existing leases with current tenants of the Company) with replacement tenants to continue operating the facilities, as described below. As a result of the subject transaction, annual rent increased approximately $3.9 million. Annual cash rent under the terminated master leases was $13.0 million and, during the three and nine months ended September 30, 2025, the Company accelerated the amortization of the remaining below market lease intangibles of $4.4 million and in-place lease intangibles of $2.4 million.
12
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
In connection with the transaction, the Company amended one existing triple-net master lease with subsidiaries of The Ensign Group, Inc. (“Ensign”) to add seven skilled nursing, multi-service campus and assisted living properties and extend the lease term. The lease, as amended, has a remaining term of 15 years. Three of the seven facilities will transition upon regulatory approval which is expected to occur in the next twelve months. The applicable Ensign master lease, as amended, includes two five-year renewal options and CPI-based rent escalators. Annual cash rent under the applicable master lease, as amended, increased by approximately $10.0 million.
Also in connection with the transaction, the Company, via two consolidated joint ventures, entered into a new triple-net master lease with a skilled nursing operator to include three SNFs. The new master lease commenced August 1, 2025 with an initial term of approximately 10 years, including four five-year renewal options and fixed annual escalators. Initial annual cash rent under the new master lease was $6.4 million. In addition, the Company amended one existing triple-net master lease to add one multi-service campus. Annual cash rent under the applicable master lease, as amended, increased by approximately $0.6 million.
Amended Kalesta Lease. On February 28, 2025, the Company acquired one ALF. In connection with the acquisition, the Company amended its existing triple-net master lease with affiliates of Kalesta Healthcare, LLC (“Kalesta”) to include the one ALF and extended the initial lease term. The Kalesta master lease, as amended, had a remaining term at the date of amendment of approximately 15 years. Annual cash rent under the amended Kalesta master lease increased by approximately $1.9 million.
Ridgeline Lease Termination and NC Jaybird Lease. Effective December 31, 2024, the Company terminated its master lease with affiliates of Ridgeline Properties, LLC (“Ridgeline”). The Company entered into a new master lease (the “NC Jaybird Lease”) with affiliates of Jaybird Senior Living, Inc. (“Jaybird”) with respect to two ALFs in North Carolina previously leased to Ridgeline. The NC Jaybird Lease commenced on January 1, 2025 with an initial term of approximately 12 years, featuring two five-year renewal options and CPI-based rent escalators. Under the NC Jaybird Lease, Jaybird will receive three months of abated rent, followed by 15 months of rent calculated as a percentage of the tenants’ gross revenue. Subsequently, the next twelve months will have a fixed annual cash rent amount of $0.8 million increasing annually based on CPI. Annual cash rent under the terminated master lease for the two ALFs in North Carolina was $0.8 million.
Effective May 1, 2025, two additional ALFs in Michigan and Ohio previously operating under the Ridgeline master lease transferred operations to Jaybird under a separate master lease (“New Jaybird Lease”). The New Jaybird Lease has an initial term of 12 years, featuring two five-year renewal options and CPI-based rent escalators. Under the New Jaybird Lease, Jaybird will receive six months of abated rent, followed by twelve months of rent calculated as a percentage of tenants’ gross revenue, and the following twelve months will have a fixed annual cash rent amount of $1.9 million increasing annually based on CPI. Annual rent under the terminated master lease for the two ALFs was $1.8 million.
Amended Eduro Lease and Amended Ensign Lease. On March 1, 2024, operations of two SNFs in Colorado operated by affiliates of Eduro Healthcare, LLC (“Eduro”) were transferred to subsidiaries of Ensign. In connection with the transfer, the Company partially terminated the Eduro master lease and amended one existing triple-net master lease with Ensign to include the two SNFs and extended the initial lease term by 15 years. The applicable Ensign master lease, as amended, had a remaining term at the date of amendment of approximately 20 years with two five-year renewal options and CPI-based rent escalators. Annual cash rent under the applicable Ensign master lease, as amended, increased by approximately $2.1 million and annual cash rent under the Eduro master lease, as amended, decreased by the same amount.
New SNF Lease and Lease Termination. On December 31, 2023, the Company terminated its master lease with a skilled nursing operator related to two facilities. Effective January 1, 2024, in connection with the December 31, 2023 lease termination, one SNF was removed from the master lease, was classified as held for sale as of March 31, 2024 and was sold during the three months ended June 30, 2024. See Note 5, Impairment of Real Estate Investments, Assets Held for Sale and Asset Sales, for additional information. In connection with the lease termination, the Company entered into a new triple-net master lease with a new skilled nursing operator with respect to one multi-service campus. The new master lease has an initial term of approximately 10 years with two five-year renewal options and CPI-based rent escalators. Initial annual cash rent under the new master lease was approximately $0.6 million and the master lease provides for partial rent abatement until required authorizations with respect to the ALF portion of the facility are obtained and occupancy levels reach a certain percentage.
13
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
5. IMPAIRMENT OF REAL ESTATE INVESTMENTS, ASSETS HELD FOR SALE AND ASSET SALES
Impairment of Real Estate Investments Held for Sale
During both the three and nine months ended September 30, 2025, the Company recognized aggregate impairment charges of $0.5 8.4 million and $36.9 million, respectively, related to properties held for sale, which is reported in impairment of real estate investments in the condensed consolidated income statements.
As of September 30, 2025, there were eight facilities classified as held for sale, all of which have been recorded at the lesser of their carrying value or fair value less estimated costs to sell.
The fair values of the assets held for sale were based on estimated sales prices, which are considered to be Level 3 (as defined below) measurements within the fair value hierarchy. Estimated sales prices were determined using a market approach (comparable sales model), which relies on certain assumptions by management, including: (i) comparable market transactions, (ii) estimated prices per unit, and (iii) binding agreements for sales and non-binding offers to purchase from unrelated third-parties. There are inherent uncertainties in making these assumptions. For the Company’s impairment calculations during the nine months ended September 30, 2025, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $7,000 to $181,000 , with a weighted average price per unit of $67,000 . For the Company’s impairment calculations during the nine months ended September 30, 2024, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $5,000 to $94,000 , with a weighted average price per unit of $36,000 .
Asset Sales and Held for Sale Reclassifications
Asset Exchange
On July 31, 2025, the Company completed an asset swap pursuant to which it transferred ownership of 10 U.K. Care Homes to an existing tenant in exchange for six U.K. Care Homes and £2.2 million in cash before selling costs. The 10 U.K. Care Homes had been classified as held for sale as of June 30, 2025. The annual rent did not significantly change as a result of the asset swap.
The following table summarizes the Company’s dispositions for the three and nine months ended September 30, 2025 and 2024 (dollars in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
Number of facilities(1) | |||||||||||||||||||||||
Net sales proceeds(2) | $ | $ | $ | $ | |||||||||||||||||||
| Net carrying value | |||||||||||||||||||||||
| Net (loss) gain on sale, net | $ | $ | ( | $ | $ | ( | |||||||||||||||||
(1) One non-operational previously impaired facility sold during the nine months ended September 30, 2025 was not classified as held for sale as of December 31, 2024.
(2) Net sales proceeds for the three and nine months ended September 30, 2025 includes non-cash consideration related to an asset exchange. Net sales proceeds for the nine months ended September 30, 2024 includes $1.0 million of seller financing in connection with the sale of one ALF in January 2024. Net sales proceeds for the three and nine months ended September 30, 2024 includes $2.8 11 SNFs.
14
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
The following table summarizes the Company’s assets held for sale activity for the nine months ended September 30, 2025 and 2024 (dollars in thousands):
| Net Carrying Value | Number of Facilities | ||||||||||||||||
| December 31, 2024 | $ | ||||||||||||||||
| Additions to assets held for sale | |||||||||||||||||
| Assets sold | ( | ( | |||||||||||||||
| Impairment of real estate held for sale | ( | ||||||||||||||||
September 30, 2025 | $ | ||||||||||||||||
| December 31, 2023 | $ | ||||||||||||||||
| Additions to assets held for sale | |||||||||||||||||
| Assets sold | ( | ( | |||||||||||||||
| Impairment of real estate held for sale | ( | ||||||||||||||||
| Assets reclassified to held for investment | ( | ( | |||||||||||||||
September 30, 2024 | $ | ||||||||||||||||
15
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
6. OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS
As of September 30, 2025 and December 31, 2024, the Company’s other real estate related investments, inclusive of accrued interest, consisted of the following (dollars in thousands):
Facility Count and Type | As of September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans Receivable, at Fair Value: | SNF | Campus | ALF | ILF | Principal Balance as of September 30, 2025 | Fair Value as of September 30, 2025(1) | Principal Balance as of December 31, 2024 | Fair Value as of December 31, 2024(1) | Weighted Average Contractual Interest Rate(2), (3) | Maturity Date | |||||||||||||||||||||||||||||||||||||||||||
Mortgage secured loans receivable(4) | $ | $ | $ | $ | % | 12/12/2025 - 9/30/2039 | |||||||||||||||||||||||||||||||||||||||||||||||
Mezzanine loans receivable(4) | % | 7/25/2027 - 12/31/2034 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Facility Count and Type | As of September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan Receivable, at Amortized Cost: | U.K. Care Home | Principal Balance as of September 30, 2025 | Book Value as of September 30, 2025(5) | Principal Balance as of December 31, 2024 | Book Value as of December 31, 2024 | Weighted Average Effective Interest Rate | Maturity Date | ||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage secured loan receivable | $ | $ | $ | $ | % | 9/21/2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
As of September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal Balance as of September 30, 2025 | Book Value as of September 30, 2025 | Principal Balance as of December 31, 2024 | Book Value as of December 31, 2024 | Weighted Average Contractual Interest Rate | Maturity Date | ||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred equity | $ | $ | $ | $ | % | N/A | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Facility Count and Type | As of September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financing Receivable, at Fair Value: | SNF | Campus | ALF | ILF | Principal Balance as of September 30, 2025 | Fair Value as of September 30, 2025(6) | Principal Balance as of December 31, 2024 | Fair Value as of December 31, 2024(6) | Weighted Average Effective Interest Rate(7) | Maturity Date | |||||||||||||||||||||||||||||||||||||||||||
| Financing Receivable | $ | $ | $ | $ | % | 11/30/2039 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
(1)Fair value of mortgage secured loans receivable includes $3.4 0.9
(2)Rates are net of subservicing fee, if applicable.
(3)Two mortgage secured loans receivable and two mezzanine loans receivable use term secured overnight financing rate (“SOFR”), which are subject to a floor for certain of the loans. Term SOFR used as of September 30, 2025 was 4.13 %.
(4)If the Company also has extended mezzanine financing to an affiliate of the borrower under a mortgage loan receivable, the applicable facility counts are included in both respective totals.
(5)Book value of loan receivable, at amortized cost, includes $0.5 million of loan costs as of September 30, 2025.
(6)Fair value of financing receivable includes $2.3 million and $0.3 million of accrued interest as of September 30, 2025 and December 31, 2024, respectively.
16
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
The following table summarizes the Company’s other real estate related investments activity for the nine months ended September 30, 2025 and 2024 (dollars in thousands):
Nine Months Ended September 30, | ||||||||||||||
2025 | 2024 | |||||||||||||
| Origination of other real estate related investments | $ | $ | ||||||||||||
| Accrued interest, net | ||||||||||||||
| Unrealized gain (loss) on other real estate related investments, net | ( | |||||||||||||
| Payments of other real estate related investments | ( | |||||||||||||
| Net change in other real estate related investments | $ | $ | ||||||||||||
2025 Other Real Estate Related Investment Transactions
On January 10, 2025, the Company advanced the second installment of a mezzanine loan for one SNF secured by a pledge of membership interests in an up-tier holding company of the borrower group for $6.4 million. The loan bears interest at a rate of 13 %, with annual CPI-based escalators. The mezzanine loan is set to mature on December 31, 2034. The mezzanine loan may not be prepaid in whole or in part prior to maturity. The Company elected the fair value option for the mezzanine loan.
In February 2025, the Company received a partial prepayment on one mortgage loan in the amount of $4.4 million in connection with the borrower’s election to release one skilled nursing facility from the loan. In April 2025, the remaining outstanding balance of $2.9 million was paid off.
In April 2025, one mortgage loan with a principal balance of $2.0 million was paid off.
In April 2025, the Company funded a $9.0 million earnout on an existing $165.0 million mortgage loan.
On June 1, 2025 and July 1, 2025, the Company extended a mortgage loan through installments of $6.1 million and $5.0 million, respectively, to a skilled nursing real estate owner. The mortgage loan is secured by one SNF and bears interest at a rate of 8.5 %, payable monthly. The mortgage loan is set to mature on May 31, 2035 and includes a one year extension option. The mortgage loan may be prepaid in whole, after the 12th month following the loan closing, for an exit fee ranging from 0 % to 2 % of the loan plus unpaid interest payments. The Company elected the fair value option for the mortgage loan.
On September 22, 2025, the Company extended a mortgage loan of £15.5 million, to an existing operator. The mortgage loan is secured by one U.K. Care Home and bears interest at a rate of 8.5 %. The mortgage loan is set to mature on September 21, 2026, and includes a put and call option, subject to certain conditions, to purchase the real estate. Upon receipt by the existing operator of certain regulatory approvals, the Company intends to exercise its option to accelerate the mortgage loan, acquire the underlying real estate securing the mortgage loan, and enter into a new long-term lease with the existing operator. This mortgage loan is reflected at amortized cost on the condensed consolidated balance sheets. The amortized cost of a loan receivable is the outstanding unpaid principal balance, net of unamortized costs and fees directly associated with the origination of the loan. Direct loan origination costs are amortized over the term of the loan as an adjustment to interest income.
2024 Other Real Estate Related Investment Transactions
On January 1, 2024, the Company closed on the sale of one ALF. In connection with the sale, the Company provided affiliates of the purchaser of the property with a $1.0 million mortgage loan which bears interest at a rate of 9.0 %. The mortgage loan is secured by the ALF and is set to mature on January 1, 2027. The mortgage loan may be prepaid in whole before the maturity date. The Company elected the fair value option for the mortgage loan.
17
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
On January 25, 2024, the Company extended a $9.8 million mezzanine loan for a portfolio of ten SNFs located in Missouri secured by a pledge of membership interests in an up-tier holding company of the borrower group. The Company participated in the loan alongside a co-lender pursuant to a participation agreement entered into between the Company and the co-lender. Pursuant to such agreement, the Company provided $9.8 million in mezzanine loan proceeds and the co-lender provided the remaining $10.2 million of loan proceeds. As a participant in the loan, and subject to limited exceptions, the Company is entitled to receive its proportionate share of loan payments made by the borrower with each co-lender’s proportionate share being given equal weight. The loan bears interest at term SOFR plus 8.75 %, with a term SOFR floor of 6 %, payable monthly and net of a 0.75 % subservicing fee. Commencing on February 1, 2026, monthly principal payments shall be due. The mezzanine loan is set to mature on July 25, 2027, with two six-month extension options and may (subject to certain restrictions) be prepaid in whole before the maturity date for an exit fee ranging from 1 % to 2 % of the loan plus unpaid interest payments equal to 24 months (less the amount of monthly interest payments made by the borrower through the date of prepayment). The Company elected the fair value option for the mezzanine loan.
On February 1, 2024, the Company extended a $7.4 million mezzanine loan for one SNF located in California secured by a pledge of membership interests in an up-tier holding company of the borrower group. The loan bears interest at 11.5 %, payable monthly. The mezzanine loan is set to mature on January 31, 2029, and may not (subject to certain limited exceptions) be prepaid prior to the date that is 18 months following the loan closing. The Company elected the fair value option for the mezzanine loan.
On February 2, 2024, the Company extended a $35.0 million mezzanine loan for a portfolio of 15 SNFs located in Virginia secured by a pledge of membership interests in an up-tier holding company of the borrower group. The Company participated in the loan alongside a co-lender pursuant to a participation agreement entered into between the Company and the co-lender. Pursuant to such agreement, the Company provided $35.0 million in mezzanine loan proceeds and the co-lender provided the remaining $50.0 million of loan proceeds. As a participant in the loan, and subject to limited exceptions, the Company is entitled to receive its proportionate share of loan payments made by the borrower with each co-lender’s proportionate share being given equal weight. The loan bears interest at term SOFR plus 8.75 %, with a term SOFR floor of 6 %, payable monthly and net of a 0.75 % subservicing fee. Commencing on February 2, 2026, monthly principal payments shall be due. The mezzanine loan is set to mature on August 1, 2027, with two six-month extension options and may (subject to certain restrictions) be prepaid in whole before the maturity date for an exit fee ranging from 1 % to 2 % of the loan plus unpaid interest payments equal to 18 months (less the amount of monthly interest payments made by the borrower through the date of prepayment). The Company elected the fair value option for the mezzanine loan.
On May 1, 2024, the Company extended a $26.7 million mortgage loan to a skilled nursing real estate owner. The mortgage loan is secured by two SNFs and bears interest at a rate of 9.1 %, payable monthly. The mortgage loan is set to mature on May 1, 2031 and includes a one year extension option. The mortgage loan may not be prepaid prior to July 31, 2029, subject to certain limited exceptions. The mortgage loan includes a purchase option with an exercise window that opens during the initial 90-day period of each of the 4th, 5th and 6th loan years, with the purchase option price for the facilities being calculated by dividing the amount of the then annual base rent by an agreed upon lease yield. The Company elected the fair value option for the mortgage loan.
On June 3, 2024, the Company extended a $165.0 million mortgage loan to a regional health care real estate owner. The mortgage loan is secured by eight SNFs located in North Carolina and bears interest at a rate of SOFR plus 4.25 %, with a term SOFR floor of 5.15 %, payable monthly and net of a 0.25 % subservicing fee. Commencing on June 1, 2027, monthly principal payments will be due. The mortgage loan is set to mature on June 1, 2029, and includes two six-month extension options. The mortgage loan may not be prepaid prior to June 1, 2026, subject to certain limited exceptions. The Company elected the fair value option for the mortgage loan. Concurrently with closing, KeyBank National Association purchased a $75.0 million participation in the mortgage loan from the Company. On July 30, 2024, the Company exercised the call option on the $75.0 million secured borrowing at a call purchase price equal to the principal amount plus accrued and unpaid interest and an exit fee of $0.4 million.
On August 1, 2024, the Company extended a $260.0 million mortgage loan to a skilled nursing real estate owner. The loan is secured by a first priority mortgage lien on a real estate portfolio of 37 SNFs, ALFs and multi-service campuses located in various states and bears interest at a fixed rate of 8.4 %, payable monthly. The mortgage loan is set to mature on August 1, 2029 and has a 24-month lockout period on prepayment subject to certain exceptions. The mortgage loan may otherwise be prepaid in part or in whole after the 24-month lockout period with agreed upon exit fees, as applicable.
18
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
Preferred Equity Investments
On June 5, 2025, the Company funded a $30.0 million preferred equity investment in a skilled nursing real estate owner. The Company’s initial contractual yield on its preferred equity investment is 12 %. Prepayment of the preferred equity investment is restricted, subject to certain conditions.
On August 1, 2024, the Company funded a $43.0 million preferred equity investment in an uptier holding company of the borrower under an existing $260.0 million mortgage loan. The Company's initial contractual yield on its preferred equity investment is 11 %.
On June 3, 2024, the Company funded a $9.0 million preferred equity investment in an uptier parent entity of the borrower under an existing $165.0 million mortgage loan. The Company's initial contractual yield on its preferred equity investment is 11 %. Prepayment of the preferred equity investment is restricted, subject to certain carveouts, prior to the senior mortgage loan being paid off in full.
Financing Receivable
On December 5, 2024, the Company invested $95.7 million, exclusive of transaction costs, to acquire a portfolio of 46 properties in Illinois in a sale and leaseback transaction with a skilled nursing operator. In connection with the transaction, the Company entered into a new triple-net master lease with the skilled nursing operator and provided the operator with options to repurchase the properties, structured over multiple tranches, with various option window start dates, beginning December 1, 2024, and open through the remainder of the 15 -year term. As such, the Company determined that the sale and leaseback transaction met the accounting criteria to be presented as a financing receivable on its condensed consolidated balance sheets and recorded interest income from financing receivable on its condensed consolidated income statements. Interest income is based on an imputed interest rate over the term of the applicable financing arrangement and as a result the interest recognized in any particular period will not equal the cash payments from the agreement in that period. Cash received from the financing receivable was $2.2 million and $6.6 million during the three and nine months ended September 30, 2025, respectively. The Company elected the fair value option for the financing receivable.
Other Loans Receivables
As of September 30, 2025 and December 31, 2024, the Company’s other loans receivable, included in prepaid expenses and other assets, net on the Company’s condensed consolidated balance sheets, consisted of the following (dollars in thousands):
As of September 30, 2025 | |||||||||||||||||||||||||||||||||||
| Investment | Principal Balance as of September 30, 2025 | Book Value as of September 30, 2025 | Book Value as of December 31, 2024 | Weighted Average Contractual Interest Rate | Maturity Date | ||||||||||||||||||||||||||||||
| Other loans receivable | $ | $ | $ | % | 6/1/2026 - 12/31/2030 | ||||||||||||||||||||||||||||||
| Expected credit loss | — | ( | ( | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | ||||||||||||||||||||||||||||||||
19
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
The following table summarizes the Company’s other loans receivable activity for the nine months ended September 30, 2025 and 2024 (dollars in thousands):
Nine Months Ended September 30, | ||||||||||||||
2025 | 2024 | |||||||||||||
| Origination of other loans receivable | $ | $ | ||||||||||||
Assumption of other loans receivable in connection with the Acquisition(1) | ||||||||||||||
| Principal payments | ( | ( | ||||||||||||
| Accrued interest, net | ||||||||||||||
| Net change in other loans receivable | $ | $ | ||||||||||||
(1) In connection with the Acquisition, the Company assumed other loans receivable, including one for $6.7 million related to the development of a U.K. Care Home. Upon certain conditions being met, a put option by the operator or a call option by the Company may each be exercised providing for the Company’s acquisition of the development for an additional $5.0 million. If these options are not exercised the loan becomes repayable in June 2026.
Expected credit losses and recoveries are recorded in provision for loan losses, net in the condensed consolidated income statements. During both the nine months ended September 30, 2025 and 2024, the Company had no
The following table summarizes the interest and other income recognized from the Company’s loans receivable and other investments during the three and nine months ended September 30, 2025 and 2024 (dollars in thousands):
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| Investment | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Mortgage secured loans receivable | $ | $ | $ | $ | |||||||||||||||||||
| Mezzanine loans receivable | |||||||||||||||||||||||
| Preferred equity investment | |||||||||||||||||||||||
| Other loans receivable | |||||||||||||||||||||||
| Financing receivable | |||||||||||||||||||||||
Other(1) | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
7. FAIR VALUE MEASUREMENTS
The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. GAAP guidance defines three levels of inputs that may be used to measure fair value:
Level 1 – Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
Level 3 – Unobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and, depending on various factors, it is possible that an asset or
20
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
liability may be classified differently from quarter to quarter. Changes in the type of inputs may result in a reclassification for certain assets. The Company does not expect that changes in classifications between levels will be frequent.
Items Measured at Fair Value on a Recurring Basis
The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2025 and December 31, 2024, aggregated by the level in the fair value hierarchy within which those instruments fall (dollars in thousands):
| Level 1 | Level 2 | Level 3 | Balance as of September 30, 2025 | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Mortgage secured loans receivable | $ | $ | $ | $ | |||||||||||||||||||
| Mezzanine loans receivable | |||||||||||||||||||||||
| Financing receivable | |||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Cash flow hedges | $ | $ | $ | $ | |||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | |||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Balance as of December 31, 2024 | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Mortgage secured loans receivable | $ | $ | $ | $ | |||||||||||||||||||
| Mezzanine loans receivable | |||||||||||||||||||||||
| Financing receivable | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
The following table details the Company’s assets measured at fair value on a recurring basis using Level 3 inputs (dollars in thousands):
| Investments in Real Estate Secured Loans | Investments in Mezzanine Loans | Investment in Financing Receivable | |||||||||||||||
Balance as of December 31, 2024 | $ | $ | $ | ||||||||||||||
| Originations | |||||||||||||||||
| Accrued interest, net | ( | ||||||||||||||||
| Unrealized gain, net | |||||||||||||||||
| Payments | ( | ||||||||||||||||
Balance as of September 30, 2025 | $ | $ | $ | ||||||||||||||
Real estate secured and mezzanine loans receivable, at fair value: The fair value of the secured and mezzanine loans receivables were estimated using an internal valuation model that considered the expected future cash flows of the investment, the underlying collateral value, market interest rates and other credit enhancements. As such, the Company classifies each instrument as Level 3 due to the significant unobservable inputs used in determining market interest rates for investments with similar terms. During the three and nine months ended September 30, 2025, the Company recorded a net unrealized gain of $4.0 million and $7.3 million, respectively, on its secured and mezzanine loans receivable, to bring the interest rates in line with market rates. During the three months ended September 30, 2024, the Company recorded unrealized gains of $5.9 million, which were partially offset by unrealized losses of $4.1 million, on its secured and mezzanine loans receivable to bring the interest rates in line with market rates. During the nine months ended September 30, 2024, the Company recorded unrealized losses on its secured and mezzanine loans receivable of $7.3 million, which were partially offset by unrealized gains of $6.6 million, to bring the interest rates in line with market rates. Future changes in market interest rates or collateral value could materially impact the estimated discounted cash flows that are used to determine the fair value of the secured and mezzanine loans receivable. As of September 30, 2025 and December 31, 2024, the Company did no
21
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
The following table shows the quantitative information about unobservable inputs related to the Level 3 fair value measurements comprising the investments in secured and mezzanine loans receivables as of September 30, 2025:
| Type | Book Value as of September 30, 2025 | Valuation Technique | Unobservable Inputs | Range | |||||||||||||||||||
| Mortgage secured loans receivable | $ | Discounted cash flow | Discount Rate | ||||||||||||||||||||
| Mezzanine loans receivable | Discounted cash flow | Discount Rate | |||||||||||||||||||||
Derivative instruments: The Company estimates the fair value of derivative instruments, including its interest rate caps, swaps and foreign currency forwards, using the assistance of a third party using inputs that are observable in the market, which include forward yield curves and other relevant information.
In connection with the Acquisition, the Company assumed Care REIT’s two outstanding interest rate caps with an aggregate £100.0 million in notional value to mitigate the interest rate risk of the variable rate secured revolving credit facilities. The interest rate derivatives were not designated as a hedge in qualifying hedging relationships. In July 2025, the Company paid off its variable rate secured revolving credit facilities and terminated the interest rate cap instruments associated with them. See Note 8, Debt, for additional information. The Company recorded a $0.3 million loss and a $0.2 million net gain in interest expense related to the interest rate caps during the three and nine months ended September 30, 2025, respectively.
In June 2025, the Company entered into four foreign currency forward contracts with £31.0 million in notional value issued at a weighted average GBP-USD exchange rate of 1.34 that are designated as cash flow hedges. The Company entered into cash flow hedges to hedge the foreign currency risk of intercompany loans denominated in GBP.
On July 10, 2025, the Company entered into two interest rate swaps, with a notional amount of $250.0 3.5 %. The Company’s 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 the Company making fixed-rate payments over the term of the agreements without exchange of the underlying notional amount.
The following table summarizes the terms and fair values of the Company’s derivative financial instruments as of September 30, 2025:
| Derivative | Notional Amount (in thousands) | Maturity or Settlement Date | Index | Strike Rate | Fair Value as of September 30, 2025 (in thousands) | |||||||||||||||||||||||||||||||||
| Cash flow hedge | £ | December 2025 | GBP-USD exchange rate | $ | $ | ( | ||||||||||||||||||||||||||||||||
| Cash flow hedge | £ | March 2026 | GBP-USD exchange rate | $ | ( | |||||||||||||||||||||||||||||||||
| Cash flow hedge | £ | June 2026 | GBP-USD exchange rate | $ | ( | |||||||||||||||||||||||||||||||||
| Interest rate swap | $ | June 2028 | USD-SOFR | % | ||||||||||||||||||||||||||||||||||
| Interest rate swap | $ | June 2028 | USD-SOFR | % | ||||||||||||||||||||||||||||||||||
22
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
The table below presents the effect of cash flow hedge accounting on accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2025 (dollars in thousands):
| Gain (loss) recognized in Other Comprehensive Income (Loss) | Gain (loss) reclassified from Accumulated Other Comprehensive Income (Loss) into Income | Income Statement Location | ||||||||||||||||||||||||||||||||||||
| For the three months ended September 30, 2025 | For the nine months ended September 30, 2025 | For the three months ended September 30, 2025 | For the nine months ended September 30, 2025 | |||||||||||||||||||||||||||||||||||
| Cash flow hedge | $ | ( | $ | $ | ( | $ | ( | Gain/loss on foreign currency transaction | ||||||||||||||||||||||||||||||
| Interest rate swap | Interest expense | |||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
The Company estimates that an additional $0.2 million will be reclassified from accumulated other comprehensive income as a net decrease to interest expense and $0.2 million will be reclassified from accumulated other comprehensive income to loss on foreign currency transactions over the next 12 months.
Financing receivable: The fair value was determined using a widely accepted valuation technique, discounted cash flow analysis, on the expected cash flows. The discount rate used to value the future cash inflows of the financing receivable at September 30, 2025 was 12 %.
For the nine months ended September 30, 2025, there were no classification changes in assets and liabilities with Level 3 inputs in the fair value hierarchy.
Items Disclosed at Fair Value
Considerable judgment is necessary to estimate the fair value disclosure of financial instruments. The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. A summary of the face value, carrying amount and fair value of the Company’s preferred equity investments and the Notes (as defined in Note 8, Debt, below) as of September 30, 2025 and December 31, 2024 is as follows (dollars in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||
| Level | Face Value | Carrying Amount | Fair Value | Face Value | Carrying Amount | Fair Value | |||||||||||||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||||||||||||||
| Preferred equity investments | 3 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||||||||||||||
| Senior unsecured notes payable | 2 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Cash and cash equivalents, accounts and other receivables, accounts payable, and accrued liabilities: The carrying values for these instruments approximate their fair values due to the short-term nature of these instruments.
Preferred equity investments: The fair value of the preferred equity investments was estimated using an internal valuation model that considered the expected future cash flows of the investment, the underlying collateral value, market interest rates and other credit enhancements. The Company utilized discount rates of 11 % to 15 % in its fair value calculation. As such, the Company classifies these instruments as Level 3.
Loan receivable, at amortized cost: The carrying value of the loan receivable at amortized cost approximates fair value due to the short-term nature of this instrument.
Senior unsecured notes payable: The fair value of the Notes was determined using third-party quotes derived from orderly trades.
Unsecured revolving credit facility and senior unsecured term loan: The fair values approximate their carrying values as the interest rates are variable and approximate prevailing market interest rates and spreads for similar debt arrangements.
23
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
8. DEBT
The following table summarizes the balance of the Company’s indebtedness as of September 30, 2025 and December 31, 2024 (dollars in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Principal Amount | Deferred Loan Fees | Carrying Amount | Principal Amount | Deferred Loan Fees | Carrying Amount | ||||||||||||||||||
| Senior unsecured notes payable | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||
| Senior unsecured term loan | ( | ||||||||||||||||||||||
| $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||
Senior Unsecured Notes Payable
2028 Senior Notes. On June 17, 2021, the Company’s wholly owned subsidiary, CTR Partnership, L.P. (the “Operating Partnership”), and its wholly owned subsidiary, CareTrust Capital Corp. (together with the Operating Partnership, the “Issuers”), completed a private offering of $400.0 million aggregate principal amount of 3.875 % Senior Notes due 2028 (the “Notes”) to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act of 1933, as amended. The Notes were issued at par, resulting in gross proceeds of $400.0 million and net proceeds of approximately $393.8 million after deducting underwriting fees and other offering expenses. The Notes mature on June 30, 2028. The Notes accrue interest at a rate of 3.875 % per annum payable semiannually in arrears on June 30 and December 30 of each year, commencing on December 30, 2021.
The Issuers may redeem some or all of the Notes at any time prior to March 30, 2028 at a price equal to 100 % of the principal amount of the Notes redeemed plus accrued and unpaid interest on the Notes, if any, to, but not including, the redemption date, plus a “make-whole” premium. At any time on or after March 30, 2028, the Issuers may redeem some or all of the Notes at a redemption price equal to 100 % of the principal amount of the Notes redeemed plus accrued interest on the Notes, if any, to, but not including, the redemption date. If certain changes of control of the Company occur, the Issuers will be required to make an offer to holders of the Notes to repurchase their Notes at a price of 101 % of their principal amount plus accrued and unpaid interest, if any, to, but not including, the repurchase date.
The obligations under the Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by the Company and all of CareTrust’s existing and future subsidiaries (other than the Issuers) that guarantee obligations under the Third Amended Revolving Facility (as defined below); provided, however, that such guarantees are subject to automatic release under certain customary circumstances.
The indenture governing the Notes contains customary covenants such as limiting the ability of the Company and its restricted subsidiaries to: incur or guarantee additional indebtedness; incur or guarantee secured indebtedness; pay dividends or distributions on, or redeem or repurchase, capital stock; make certain investments or other restricted payments; sell assets; enter into transactions with affiliates; merge or consolidate or sell all or substantially all of their assets; and create restrictions on the ability of the Issuers and their restricted subsidiaries to pay dividends or other amounts to the Issuers. The indenture governing the Notes also requires the Company and its restricted subsidiaries to maintain a specified ratio of unencumbered assets to unsecured indebtedness. These covenants are subject to a number of important and significant limitations, qualifications and exceptions. The indenture governing the Notes also contains customary events of default.
As of September 30, 2025, the Company was in compliance with all applicable financial covenants under the indenture governing the Notes.
24
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
Unsecured Revolving Credit Facility and Unsecured Term Loan Facility
On December 18, 2024, the Operating Partnership, as the borrower, the Company, as guarantor, CareTrust GP, LLC, and certain of the Operating Partnership’s wholly owned subsidiaries, entered into a third amended and restated credit and guaranty agreement with KeyBank National Association, as administrative agent, an issuing bank and swingline lender (as amended from time to time, the “Third Amended Credit Agreement”). The Third Amended Credit Agreement, which amends and restates the Second Amended Credit Agreement (as defined below) provides for an upsized unsecured revolving credit facility (the “Third Amended Revolving Facility”) with revolving commitments in an aggregate principal amount of $1.2 billion, including a letter of credit subfacility for 10 % of the then available revolving commitments and a swingline loan subfacility for 10 % of the then available revolving commitments. Future borrowings under the Third Amended Revolving Facility will be used for working capital purposes, for capital expenditures, to fund acquisitions and for general corporate purposes.
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 16, 2022, the Operating Partnership, as the borrower, the Company, as guarantor, CareTrust GP, LLC, and certain of the Operating Partnership’s wholly owned subsidiaries, entered into a second amended and restated credit and guaranty agreement with KeyBank National Association, as administrative agent, an issuing bank and swingline lender (as amended from time to time, the “Second Amended Credit Agreement”). The Second Amended Credit Agreement, which amended and restated the Company’s amended and restated credit and guaranty agreement, dated as of February 8, 2019 (as amended, the “Prior Credit Agreement”) provided for: (i) an unsecured revolving credit facility (the “Revolving Facility”) with revolving commitments in an aggregate principal amount of $600.0 million, including a letter of credit subfacility for 10 % of the then available revolving commitments and a swingline loan subfacility for 10 % of the then available revolving commitments and (ii) the continuation of the unsecured term loan credit facility which was previously extended under the Prior Credit Agreement (the “Term Loan” and together with the Revolving Facility, the “Second Amended Credit Facility”) in an aggregate principal amount of $200.0 million.
On October 10, 2023, the Operating Partnership, the Company, CareTrust GP, LLC, certain of the Operating Partnership’s wholly owned subsidiaries and KeyBank National Association entered into the First Amendment to the Second Amended Credit Agreement (the “First Amendment to the Second Amended Credit Agreement”). The First Amendment to the Second Amended Credit Agreement restated the definition of Consolidated Total Asset Value to include net proceeds from at-the-market forward commitments executed but not yet closed as of the relevant date as if such proceeds had actually been received.
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 or Term SOFR or Daily 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 its consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if the Company obtains certain specified investment grade ratings on its senior long-term unsecured debt). In addition, the Operating Partnership will pay a facility fee on the revolving commitments under the Third Amended Revolving Facility ranging from 0.15 % to 0.35 % per annum, based on the debt to asset value ratio of the Company and its consolidated subsidiaries (unless the Company obtains certain specified investment grade ratings on its 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 on 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 its consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if the Company obtains certain specified investment grade ratings on its senior long-term unsecured debt). The First Amendment to the Third Amended Credit Agreement removed the SOFR credit spread adjustment applicable to loans under the Third Amended Revolving Facility bearing interest at Term SOFR or Daily Simple SOFR.
As of September 30, 2025, the Operating Partnership had $500.0 million of borrowings outstanding under the Term Loan Facility and no borrowings outstanding under the Third Amended Revolving Facility.
25
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
The Third Amended Revolving Facility has a maturity date of February 9, 2029, and includes, at the sole discretion of the Operating Partnership, two six-month extension options. The Term Loan Facility has a maturity date of May 30, 2030.
The Third Amended Revolving Facility is guaranteed, jointly and severally, by the Company and its wholly owned subsidiaries that are party to the Third Amended Credit Agreement (other than the Operating Partnership). The Third Amended Credit Agreement contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company and its subsidiaries to grant liens on their assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations, amend organizational documents and pay certain dividends and other restricted payments. The Third Amended Credit Agreement requires the Company to comply with financial maintenance covenants to be tested quarterly, consisting of a maximum debt to asset value ratio, a minimum fixed charge coverage ratio, a minimum tangible net worth, a maximum secured debt to asset value ratio, a maximum unsecured debt to unencumbered properties asset value ratio and a minimum unsecured interest coverage ratio. The Third Amended Credit Agreement also contains certain customary events of default, including the failure to make timely payments under the Third Amended Revolving Facility or other material indebtedness, the failure to satisfy certain covenants (including the financial maintenance covenants), the occurrence of change of control and specified events of bankruptcy and insolvency.
As of September 30, 2025, the Company was in compliance with all applicable financial covenants under the Third Amended Credit Agreement.
Debt Assumed in Connection with the Acquisition and Subsequently Paid Off
On May 8, 2025, upon consummation of the Acquisition, the Company assumed secured revolving credit facilities and secured notes payable with an outstanding balance of $154.0 million and $99.8 million, respectively. The terms of the debt were as follows:
| Clydesdale Bank PLC (“Virgin”) | HSBC UK Bank Plc (“HSBC”) | National Westminster Bank Plc (“NatWest”) | Secured notes payable (tranche A) | Secured notes payable (tranche B) | ||||||||||||||||||||||||||||||||||
| Facility Type | Revolving credit facility | Revolving credit facility | Revolving credit facility | Private placement | Private placement | |||||||||||||||||||||||||||||||||
| Maturity date | December 2029 | April 2026 | June 2029 | December 2035 | June 2035 | |||||||||||||||||||||||||||||||||
| Base rate | SONIA | SONIA | SONIA | N/A | N/A | |||||||||||||||||||||||||||||||||
Margin(1) | % | % | % | N/A | N/A | |||||||||||||||||||||||||||||||||
| Fixed interest rate | N/A | N/A | N/A | % | % | |||||||||||||||||||||||||||||||||
(1)SONIA used at time of prepayment was 4.22 %.
On July 8, 2025, the Company repaid in full the secured notes payable. The aggregate payoff amount of £75.5 million consisted of outstanding principal of £75.0 million and accrued and unpaid interest of approximately £0.5 million.
On July 31, 2025, the Company repaid in full and terminated the secured revolving credit facilities. The aggregate payoff amount of £116.5 million consisted of outstanding principal of £115.8 million, accrued and unpaid interest of approximately £0.4 million and a prepayment penalty of £0.3 million. In connection with the payoff of the secured revolving credit facilities, the Company terminated the interest rate caps associated with this variable rate debt. See Note 7, Fair Value Measurements, for additional information.
26
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
Schedule of Debt Maturities
The following is a schedule of maturities for the Company’s outstanding debt as of September 30, 2025 (dollars in thousands):
| Term Loan | Senior Unsecured Notes | Total | ||||||||||||||||||||||||||||||
| 2025 (Three months) | $ | $ | $ | |||||||||||||||||||||||||||||
| 2026 | ||||||||||||||||||||||||||||||||
| 2027 | ||||||||||||||||||||||||||||||||
| 2028 | ||||||||||||||||||||||||||||||||
| 2029 | ||||||||||||||||||||||||||||||||
| 2030 | ||||||||||||||||||||||||||||||||
| Thereafter | ||||||||||||||||||||||||||||||||
| Total Debt | $ | $ | $ | |||||||||||||||||||||||||||||
As of September 30, 2025, the weighted average interest rate on the Company’s outstanding debt was 4.29 %, inclusive of the effects of interest rate swap agreements.
9. EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
Common Stock
Public Offering of Common Stock—On August 14, 2025, the Company completed an underwritten public offering of 23.0 million newly issued shares of its common stock at a price per share of $32.00 , resulting in gross proceeds of $736.0 million. The Company used a portion of the proceeds to pay down the outstanding revolving credit facility and intends to use the remaining proceeds to fund acquisitions.
At-The-Market Offering—On January 21, 2025, the Company 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 its common stock through an “at-the-market” equity offering program (the “New ATM Program”) and terminated its 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 its 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 the Company’s shares of common stock under the ATM Program.
In the event the Company enters into an ATM forward contract to sell shares of common stock pursuant to the ATM Program, the Company would 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 the Company’s discretion, prior to the final settlement date, at which time the Company 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 the Company 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.
The following table summarizes the ATM Program activity (or activity under any predecessor at-the-market equity offering programs) for the three and nine months ended September 30, 2025 and 2024 (in thousands, except per share amounts):
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | ||||||||||||||||||||
| Number of shares | |||||||||||||||||||||||
| Average sales price per share | $ | $ | $ | $ | |||||||||||||||||||
Gross proceeds(1) | $ | $ | $ | $ | |||||||||||||||||||
(1) Total gross proceeds is before $6.2 million of commissions paid to the sales agents during the three months ended September 30, 2024, under the ATM Program. Total gross proceeds is before $4.6 million and $13.4 million of commissions paid to the sales agents during the nine months ended September 30, 2025 and 2024, respectively, under the ATM Program.
27
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
As of September 30, 2025, the Company had $380.1 million available for future issuances under the New ATM Program.
Dividends on Common Stock—The following table summarizes the cash dividends per share of common stock declared by the Company’s board of directors for the first nine months of 2025 (dollars in thousands, except per share amounts):
| For the Three Months Ended | ||||||||||||||
| March 31, 2025 | June 30, 2025 | September 30, 2025 | ||||||||||||
| Dividends declared per share | $ | $ | $ | |||||||||||
| Dividends payment date | April 15, 2025 | July 15, 2025 | October 15, 2025 | |||||||||||
| Dividends payable as of record date | $ | $ | $ | |||||||||||
| Dividends record date | March 31, 2025 | June 30, 2025 | September 30, 2025 | |||||||||||
Redeemable Noncontrolling Interests
Arrangements with noncontrolling interest holders are assessed for appropriate balance sheet classification based on the redemption and other rights held by the noncontrolling interest holder. Two of the Company’s noncontrolling interest holders have the ability to put their equity interests to the Company during specified option exercise periods, subject to certain conditions. The put options are payable in cash and subject to changes in redemption value. Accordingly, the Company records the redeemable noncontrolling interests outside of permanent equity. The redeemable noncontrolling interests are adjusted for additional contributions and distributions and the proportionate share of the net earnings or losses. When the redemption of the noncontrolling interests becomes probable, the Company will record the redeemable noncontrolling interests at the greater of their carrying amounts or redemption values at the end of each reporting period by making an election either to accrete changes in the redemption values of the redeemable noncontrolling interests over the period from the date it is probable of exercise to the earliest redemption date or to recognize the entire adjustment on the date redemption becomes probable. In addition to the rights of the redeemable noncontrolling interest holders, the Company has the ability to call the interests of the noncontrolling interest holders during specified option exercise periods.
As of September 30, 2025, the redeemable noncontrolling interests did not meet the conditions for redemption.
10. STOCK-BASED COMPENSATION
All stock-based awards are subject to the terms of the CareTrust REIT, Inc. and CTR Partnership, L.P. Incentive Award Plan (the “Plan”). The Plan provides for the granting of stock-based compensation, including stock options, restricted stock, performance awards, restricted stock units, relative total stockholder return based stock awards and other incentive awards to officers, employees and directors in connection with their employment with or services provided to the Company. Under the Plan, 5,000,000 shares have been authorized for awards.
Under the Plan, restricted stock awards (“RSAs”) typically vest in equal annual installments over a three year period. The board of directors granted certain RSAs in 2025 (“2025 RSAs”) which vest in one installment over one year . RSAs granted to non-employee members of the board of directors (“Board Awards”) vest in full on the earlier to occur of the Company’s next Annual Meeting of Stockholders or one year . Relative total shareholder return units (“TSR Units”) granted since 2021 are subject to both time and market based conditions and cliff vest after a three-year period. The amount of such market awards that will ultimately vest is dependent on the Company’s total shareholder return (“TSR”) performance relative to a custom TSR peer group consisting of other publicly traded healthcare REITs and will range from 0 % to 200 % of the TSR Units initially granted. The RSAs and Board Awards are valued on the date of grant based on the closing price of the Company’s common stock, while the TSR Units are valued on the date of grant using a Monte Carlo valuation model. The vesting of certain awards may accelerate, as defined in the grant agreement, upon retirement, a change in control or other events.
28
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
The following table summarizes the status of the restricted stock award activity for the nine months ended September 30, 2025:
| Shares | Weighted Average Share Price | ||||||||||
| Unvested balance at December 31, 2024 | $ | ||||||||||
| Granted: | |||||||||||
| RSAs | |||||||||||
| Board Awards | |||||||||||
| Vested | ( | ||||||||||
| Unvested balance at September 30, 2025 | $ | ||||||||||
As of September 30, 2025, the weighted-average remaining vesting period of such awards was 1.7 years.
The following table summarizes the stock-based compensation expense recognized for the periods presented (dollars in thousands):
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Stock-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
29
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
11. EARNINGS PER COMMON SHARE
The following table presents the calculation of basic and diluted earnings per common share attributable to CareTrust REIT, Inc. (“EPS”) for the Company’s common stock for the three and nine months ended September 30, 2025 and 2024, and reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS (dollars and shares in thousands, except per share amounts):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income attributable to CareTrust REIT, Inc. | $ | $ | $ | $ | |||||||||||||||||||
| Less: Net income allocated to participating securities | ( | ( | ( | ( | |||||||||||||||||||
| Numerator for basic and diluted earnings available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average basic common shares outstanding | |||||||||||||||||||||||
| Dilutive potential common shares - TSR Units | |||||||||||||||||||||||
| Weighted-average diluted common shares outstanding | |||||||||||||||||||||||
| Earnings per common share attributable to CareTrust REIT, Inc., basic | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per common share attributable to CareTrust REIT, Inc., diluted | $ | $ | $ | $ | |||||||||||||||||||
| Antidilutive unvested RSAs excluded from the computation | |||||||||||||||||||||||
12. SEGMENT REPORTING
The chief operating decision maker (“CODM”) is the President and Chief Executive Officer. The Company represents a single reportable segment consisting of investments in healthcare-related real estate properties located in the United States and the United Kingdom, based on how its CODM evaluates the businesses and allocates resources. The CODM assesses performance for the Company and decides how to allocate resources based on consolidated net income that is also reported on the condensed consolidated income statements. The CODM does not review segment assets at a different asset level or category than the amounts disclosed in the condensed consolidated balance sheets. The CODM uses net income to evaluate the performance of the Company in deciding whether to reinvest profits into the Company.
30
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
The CODM evaluates performance based on net income, as follows (in thousands):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Rental income | $ | $ | $ | $ | |||||||||||||||||||
| Interest income from financing receivable | |||||||||||||||||||||||
| Interest income from other real estate related investments and other income | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Property taxes and insurance | |||||||||||||||||||||||
| Impairment of real estate investments | |||||||||||||||||||||||
| Transaction costs | |||||||||||||||||||||||
| Property operating expenses | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Cash compensation | |||||||||||||||||||||||
| Incentive compensation | |||||||||||||||||||||||
| Share-based compensation | |||||||||||||||||||||||
| Professional services | |||||||||||||||||||||||
| Taxes and insurance | |||||||||||||||||||||||
Other expenses(1) | |||||||||||||||||||||||
| Total general and administrative | |||||||||||||||||||||||
| Total expenses | |||||||||||||||||||||||
| Other income (loss): | |||||||||||||||||||||||
| Loss on extinguishment of debt | ( | ( | ( | ( | |||||||||||||||||||
| (Loss) gain on sale of real estate, net | ( | ( | |||||||||||||||||||||
| Unrealized gain (loss) on other real estate related investments, net | ( | ||||||||||||||||||||||
| (Loss) gain on foreign currency transaction, net | ( | ||||||||||||||||||||||
| Total other income (loss) | ( | ( | |||||||||||||||||||||
| Income before income tax expense | |||||||||||||||||||||||
| Income tax expense | ( | ( | |||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | ( | ( | ( | ||||||||||||||||||||
| Net income attributable to CareTrust REIT, Inc. | $ | $ | $ | $ | |||||||||||||||||||
(1)Other expenses include certain overhead expenses.
31
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
13. VARIABLE INTEREST ENTITIES
VIEs for Which the Company is the Primary Beneficiary
Noncontrolling Interests—The Company has entered into ventures with unrelated third parties to own real estate and has concluded that such ventures are VIEs. As the Company exercises power over and receives economic benefits from the VIEs, the Company is considered the primary beneficiary and consolidates the VIEs.
The following table summarizes the contributions to joint ventures that are consolidated variable interest entities through September 30, 2025 (dollars in thousands):
| Gross Investment | |||||||||||||||||||||||
| Investment Year | State | Facility Type | Number of Facilities | CTRE | Noncontrolling Interests | Total | |||||||||||||||||
| 2023 | CA | SNF | $ | $ | $ | ||||||||||||||||||
| 2023 | CA | SNF | |||||||||||||||||||||
| 2024 | CA | ALF | |||||||||||||||||||||
| 2024 | CA | Multi-service campuses | |||||||||||||||||||||
| 2024 | CA | SNF | |||||||||||||||||||||
| 2024 / 2025 | (1) | TN, AL | SNF | ||||||||||||||||||||
| 2024 / 2025 | CA | SNF Campus | |||||||||||||||||||||
| 2025 | (1) | WA, OR, ID | SNF | ||||||||||||||||||||
| 2025 | CA | SNF Campus | |||||||||||||||||||||
| Total | $ | $ | $ | ||||||||||||||||||||
(1) The noncontrolling interest is classified as a redeemable noncontrolling interest on the condensed consolidated balance sheets.
Pursuant to the Company’s joint ventures (“JVs”), the Company typically contributes at least 90 % of the JV’s total investment amount and receives 100 % of the preferred equity interest in the JV and a 50 % common equity interest in the JV. The Company’s JV partner contributes the remaining total investment amount in exchange for a 50 % common equity interest in the JV.
Total assets and total liabilities include VIE assets and liabilities as follows (dollars in thousands):
September 30, 2025 | December 31, 2024 | ||||||||||
| Assets: | |||||||||||
| Real estate investments, net | $ | $ | |||||||||
| Cash and cash equivalents | |||||||||||
| Accounts and other receivables | |||||||||||
| Prepaid and other assets | |||||||||||
| Total assets | |||||||||||
| Liabilities: | |||||||||||
| Accounts payable, accrued liabilities and deferred rent liabilities | |||||||||||
| Total liabilities | $ | $ | |||||||||
32
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
VIE for Which the Company is not the Primary Beneficiary
The Company is not required to consolidate VIEs in which it has concluded it does not have a controlling financial interest, and thus is not the primary beneficiary. In such cases, the Company does not exercise power over and/or does not have potentially significant economic exposure from the VIE. The Company’s investment in the unconsolidated VIE is carried in other real estate related investments on the condensed consolidated balance sheets and includes one mortgage secured loan issued by the VIE.
14. COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are and may become from time to time a party to various claims and lawsuits arising in the ordinary course of business, which are not individually or in the aggregate anticipated to have a material adverse effect on the Company’s results of operations, financial condition or cash flows. Claims and lawsuits may include matters involving general or professional liability asserted against the Company’s tenants, which are the responsibility of the Company’s tenants and for which the Company is entitled to be indemnified by its tenants under the insurance and indemnification provisions in the applicable leases.
In the normal course of business, the Company enters into various commitments, typically consisting of funding of capital expenditures and short-term working capital loans to existing tenants while they await licensure and certification or are conducting turnaround work in one or more of the Company’s properties.
Capital expenditures for each property leased under the Company’s triple-net leases are generally the responsibility of the tenant, except for the facilities leased under certain master lease agreements, with certain subsidiaries of Ensign and The Pennant Group, under which the tenant will have an option to require the Company to finance certain capital expenditures up to an aggregate of 20 % of the Company’s initial investment in such property, subject to a corresponding rent increase at the time of funding. For the Company’s other triple-net master leases, the tenants also have the option to request capital expenditure funding that would generally be subject to a corresponding rent increase at the time of funding, which are subject to tenant compliance with the conditions to the Company’s approval and funding of their requests. The Company has also provided select tenants with strategic capital for facility upkeep and modernization. The Company’s Tenant Code of Conduct and Corporate Responsibility policy (the “Tenant ESG Program”) provides eligible triple-net tenants of the Company with monetary inducements to make sustainable improvements to the Company’s properties. Incentive options include a wide variety of opportunities for tenants to upgrade everything from energy and environmental systems to water-saving landscaping and more. The Company’s board of directors has authorized annual allocations of up to $500,000 to fund the Tenant ESG Program.
The table below summarizes the Company’s existing, known commitments and contingencies as of September 30, 2025 (in thousands):
| Remaining Commitment | |||||||||||||||||||||||
Capital expenditures(1) | $ | ||||||||||||||||||||||
| Mortgage loans | |||||||||||||||||||||||
Other loans receivable(2) | |||||||||||||||||||||||
Earn-out obligations(3) | |||||||||||||||||||||||
| $ | |||||||||||||||||||||||
(1)As of September 30, 2025, the Company had committed to fund expansions, construction, capital improvements and ESG incentives at certain triple-net leased facilities totaling $9.6 million, of which $8.7 million is subject to rent increase at the time of funding.
(2)Represents non-real estate secured loan commitments.
(3)Includes an earn-out obligation of up to $10.0 million under a purchase and sale agreement for one SNF in Virginia, which was acquired during 2024. The earn-out is available, contingent on the operator achieving certain thresholds per the agreement, beginning in October 2025 through October 2026.
33
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
15. CONCENTRATION OF RISK
Concentrations of credit risk arise when one or more tenants, operators, or obligors related to the Company’s investments are engaged in similar business activities or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions.
Major operator concentration – The Company has operators from which it derived 10% or more of its revenue for the nine months ended September 30, 2025 and 2024. The following table sets forth information regarding the Company’s major operators as of September 30, 2025 and 2024:
| Percentage of Total Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Operator/Borrower | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2025(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Ensign(2) | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2024(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Ensign(2) | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Priority Management Group | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||
(1) Based on the Company’s rental income and interest income on other real estate related investments, exclusive of operating expense reimbursements.
(2) Ensign is subject to the registration and reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. Ensign’s financial statements, as filed with the SEC, can be found at http://www.sec.gov. The Company has not verified this information through an independent investigation or otherwise.
Major geographic concentration – The following table provides information regarding the Company’s concentrations with respect to certain geographies from which the Company derived 10% or more of its revenue for the nine months ended September 30, 2025 and 2024:
| Percentage of Total Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Geography | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2025(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CA | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| U.K. | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| TX | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| TN | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2024(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| CA | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| TX | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||
(1) Based on the Company’s rental income and interest income on other real estate related investments, exclusive of operating expense reimbursements.
16. SUBSEQUENT EVENTS
The Company evaluates subsequent events in accordance with ASC 855, Subsequent Events. The Company evaluates subsequent events up until the date the condensed consolidated financial statements are issued.
34
CARETRUST REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —
(Unaudited)
Recent Acquisitions
On October 20, 2025, the Company contributed $28.5 million to a JV that purchased one SNF in California for $29.2 million, which includes estimated capitalized acquisition costs. In exchange, the Company holds 100 % of the preferred equity interests in the JV and 50 % of the common equity interest in the JV. The JV partner contributed the remaining $0.7 million of the total investment in exchange for 50 % of the common equity interest in the JV. In connection with the acquisition of the facility, the Company entered into a new master lease with a skilled nursing operator. The new master lease has a term of approximately 15 years, with two five-year renewal options and fixed rent increases. Initial annual cash rent under the new master lease is $2.5 million, inclusive of $0.3 million in deferred rent to be repaid during the second year of the lease.
On October 30, 2025, the Company acquired four SNFs and one multi-service campus in the mid-Atlantic and southeast for $210.6 million, which includes estimated capitalized acquisition costs. In connection with the acquisition of the facilities, the Company amended an existing master lease with a skilled nursing operator. The amended master lease has a remaining term of approximately 15 years, with two five-year renewal options and CPI-based rent escalators. Annual cash rent under the amended lease increased by approximately $18.0 million.
On October 31, 2025, the Company acquired two senior housing properties in Missouri and Ohio for $26.6 million, which includes estimated capitalized acquisition costs. In connection with the acquisition of the facilities, the Company entered into a new master lease with a senior housing operator. The new master lease has a term of approximately 15 years, with two five-year renewal options and CPI-based rent escalators. Initial annual cash rent under the new master lease is $2.1 million. In addition to the cash rent, the master lease provides for percentage rent beginning in 2026 as 20 % of the positive difference between gross revenues and a certain threshold.
On October 31, 2025, the Company acquired eight SNFs in Mississippi for $166.1 million, which includes estimated capitalized acquisition costs. In connection with the acquisition of the facilities, the Company entered into a new master lease with a skilled nursing operator. The new master lease has a term of approximately ten years , with three five-year renewal options and fixed rent increases. Initial annual cash rent under the new master lease is $15.5 million. The master lease provides for deferred rent of $2.5 million in the first year and $1.4 million in the second lease year to be repaid in years three through five.
Mortgage Loan Prepayment
On October 31, 2025, one mezzanine loan with a principal balance of $35.0 million was fully prepaid, including all unpaid accrued interest.
Asset Sales
On October 10, 2025, the Company sold two senior housing properties with an aggregate carrying value of $11.2 million. The Company does not expect to record a material gain or loss on sale of the real estate.
On November 4, 2025, the Company sold one senior housing property with an aggregate carrying value of $0.2 million. The Company does not expect to record a material gain or loss on sale of the real estate.
35
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
Certain statements in this report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements regarding: future financing plans, business strategies, growth prospects and operating and financial performance; expectations regarding the making of distributions and the payment of dividends; and compliance with and changes in governmental regulations.
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 and willingness of our tenants and borrowers 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 risk that we may have to incur additional impairment charges related to our assets held for sale if we are unable to sell such assets at the prices we expect; (iii) the impact of healthcare reform legislation, including potential minimum staffing level requirements, on the operating results and financial conditions of our tenants and borrowers; (iv) the ability of our tenants and borrowers to comply with applicable laws, rules and regulations in the operation of the properties we lease to them or finance; (v) the intended benefits of our acquisition of Care REIT plc (“Care REIT”) may not be realized, and we will be subject to additional risks from our investment in Care REIT and any other international investments; (vi) the ability and willingness of our tenants to renew their leases with us upon their expiration, and the 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, as well as any obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant; (vii) the availability of and the ability to identify (a) tenants 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 on favorable terms; (viii) the ability to generate sufficient cash flows to service our outstanding indebtedness; (ix) access to debt and equity capital markets; (x) fluctuating interest and currency rates; (xi) the impact of public health crises, including significant COVID-19 outbreaks as well as other pandemics or epidemics; (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 U.S. and U.K. tax law and other state, federal or local laws, whether or not specific to REITs; (xv) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xvi) any additional factors included under Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, 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”).
Forward-looking statements speak only as of the date of this report. Except in the normal course of our public disclosure obligations, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any statement is based.
Overview
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 located in the United States (“U.S.”) and the United Kingdom (“U.K.”). As of September 30, 2025, we owned, directly or indirectly in consolidated joint ventures, and leased to independent operators 399 skilled nursing facilities (“SNFs”), multi-service campuses, U.K. care homes, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 36,192 operational beds and units located in 32 states and the U.K. with the highest concentration of properties by rental income located in California, Texas, the U.K. and Tennessee. As of September 30, 2025, we also had other real estate related investments consisting of four preferred equity investments, 15 real estate secured loans receivable and five mezzanine loans receivable with a carrying value of $871.3 million and one financing receivable with a carrying value of $98.1 million.
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Recent Developments
The Acquisition
On May 8, 2025, we closed our acquisition (the “Care REIT Acquisition”) of Care REIT plc (“Care REIT” or “Target”). 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.
Market Trends and Uncertainties
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, 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 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. See “Impairment of Real Estate Assets, Assets Held for Sale and Asset Sales” below. During the three months ended September 30, 2025, we collected 100% of contractual rents and interest due from our operators and borrowers exclusive of properties held-for-sale. 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.
Regulatory Updates
During the third quarter of 2025, both Idaho and North Carolina implemented Medicaid reimbursement rate reductions that could adversely impact the operations of the tenants of 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. In North Carolina, the Department of Health and Human Services reduced provider reimbursement rates by 3% to 10%, effective October 1, 2025, following a $319 million funding gap in the state’s Medicaid rebase. These reductions disproportionately affect skilled nursing, hospice, behavioral health, and intermediate care services for individuals with intellectual and developmental disabilities. The rate cuts could adversely impact our tenants’ ability to meet some of their financial obligations to us.
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”), a comprehensive budget reconciliation package reshaping 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.
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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, particularly those operating in states with high Medicaid census. In addition, the OBBBA placed a moratorium through September 30, 2034 on implementation or enforcement of the federal minimum staffing standards for long-term care facilities finalized by CMS on May 10, 2024, which reduces near-term compliance risk and cost pressure associated with those staffing rations. While the long-term impact of the legislation will depend on subsequent rule making and state-level implementation, we believe the bill’s passage reduces near-term reimbursement risk and supports the financial health of our operator base. We continue to monitor regulatory developments closely and remain engaged with our tenants to assess the operational and financial implications of this and other legislative actions.
In July 2025, the Centers for Medicare and Medicaid Services (“CMS”) approved its payment rate update to SNF reimbursements for fiscal year 2026, which includes a net increase of 3.2% in Medicare Part A payments to SNFs, a slight increase from the proposed rate, which was 2.8%. This increase is expected to partially offset some of our tenants’ higher operating costs.
In April 2025, the U.S. District Court for the Northern District of Texas vacated a CMS final rule regarding minimum staffing requirements, which was previously issued on May 10, 2024 and consisted 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 included a staggered implementation approach for which CMS was required to publish additional details on compliance as the implementation dates approached. The rule also included possible waivers and temporary hardship exemptions for select facilities; however, no funding for the additional staff would be provided. An appeal of this decision is pending.
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.
Recent Investments
The following table summarizes our acquisitions from January 1, 2025 through September 30, 2025 (dollars in thousands):
| Type of Property | Purchase Price(1) | Initial Annual Cash Rent(2) | Number of Properties | Number of Beds/Units(3) | |||||||||||||||||||
Skilled nursing(4) | $ | 166,537 | $ | 16,100 | 11 | 973 | |||||||||||||||||
U.K. Care Homes(5) | 861,226 | 65,490 | 132 | 7,485 | |||||||||||||||||||
Multi-service campuses(6) | 43,783 | 4,381 | 2 | 320 | |||||||||||||||||||
| Assisted living | 20,637 | 1,896 | 1 | 160 | |||||||||||||||||||
| Total | $ | 1,092,183 | $ | 87,867 | 146 | 8,938 | |||||||||||||||||
(1)Purchase price includes capitalized acquisition costs.
(2)Initial annual cash rent represents initial cash rent for the first twelve months, excluding inflation linked increases.
(3)The number of beds/units includes operating beds at acquisition date.
(4)Includes 11 SNFs held through joint ventures. See Note 4, Real Estate Investments, Net, and Note 13, Variable Interest Entities, 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.
(6)Includes two multi-service campuses held through joint ventures. See Note 4, Real Estate Investments, Net, and Note 13, Variable Interest Entities, for additional information.
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The following table summarizes our other real estate related investments from January 1, 2025 through September 30, 2025 (dollars in thousands):
| Investment Type | Investment | Annual Initial Interest Income(1) | Number of Properties | Number of Beds/Units(2) | |||||||||||||||||||
| Mortgage secured loans receivable | $ | 41,479 | $ | 3,567 | 10 | 1,400 | |||||||||||||||||
| Mezzanine loans receivable | 6,389 | 842 | 1 | 148 | |||||||||||||||||||
| Preferred equity | 30,000 | 3,600 | N/A | N/A | |||||||||||||||||||
| Total | $ | 77,868 | $ | 8,009 | 11 | 1,548 | |||||||||||||||||
(1)Represents annualized acquisition-date contractual interest income, less subservicing fees, if applicable. For floating rate loans, interest income has been calculated using the benchmark rate at loan origination.
(2)The number of beds/units includes operating beds at the investment date.
Financing Activity
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.
Public Offering of Common Stock
On August 14, 2025, we completed an underwritten public offering of 23.0 million newly issued shares of our common stock at a price per share of $32.00, resulting in gross proceeds of $736.0 million. We used a portion of the proceeds to pay down the outstanding revolving credit facility and intend to use the remaining proceeds to fund acquisitions.
At-The-Market Offering of Common Stock
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 Program”). 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 September 30, 2025.
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In the event we enter into an ATM forward contract to sell shares of common stock pursuant to the ATM Program, we would 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 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.
The following tables summarize the ATM Program activity for the three and nine months ended September 30, 2025 and 2024 (in thousands, except per share amounts).
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Number of shares | — | 17,241 | 12,608 | 40,986 | |||||||||||||||||||
| Average sales price per share | $ | — | $ | 29.01 | $ | 29.34 | $ | 26.35 | |||||||||||||||
Gross proceeds(1) | $ | — | $ | 500,085 | $ | 369,871 | $ | 1,079,852 | |||||||||||||||
(1) Total gross proceeds is before $6.2 million of commissions paid to the sales agents during the three months ended September 30, 2024 under the ATM Program. Total gross proceeds is before $4.6 million and $13.4 million of commissions paid to the sales agents during the nine months ended September 30, 2025 and 2024, respectively, under the ATM Program.
As of September 30, 2025, we had $380.1 million available for future issuances under the New ATM Program.
Impairment of Real Estate Assets, Assets Held for Sale, and Asset Sales
During both the three and nine months ended September 30, 2025, we recognized an impairment charge of $0.5 million related to properties held for sale. During the three and nine months ended September 30, 2024, we recognized impairment charges of $8.4 million and $36.9 million, respectively, related to properties held for sale. These charges are reported in impairment of real estate investments in the condensed consolidated income statements.
Asset Sales and Held for Sale Reclassifications
We periodically reassess our investments and tenant relationships, and from time to time we have selectively disposed of certain facilities or investments, or terminated tenant 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.
The following table summarizes our dispositions for the three and nine months ended September 30, 2025 and 2024 (dollars in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
Number of facilities(1) | 10 | 11 | 15 | 14 | |||||||||||||||||||
Net sales proceeds(2) | $ | 38,207 | $ | 7,712 | $ | 82,608 | $ | 8,852 | |||||||||||||||
| Net carrying value | 38,207 | 9,998 | 78,732 | 11,106 | |||||||||||||||||||
| Net (loss) gain on sale, net | $ | — | $ | (2,286) | $ | 3,876 | $ | (2,254) | |||||||||||||||
(1) One non-operational previously impaired facility sold during the nine months ended September 30, 2025 was not classified as held for sale as of December 31, 2024.
(2) Net sales proceeds for the three and nine months ended September 30, 2025 includes non-cash consideration related to an asset exchange. Net sales proceeds for the nine months ended September 30, 2024 includes $1.0 million of seller financing in connection with the sale of one ALF in January 2024. Net sales proceeds for the three and nine months ended September 30, 2024 includes $2.8 million of liabilities assumed by the buyer in connection with the sale of 11 SNFs.
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The following table summarizes our assets held for sale activity for the period presented (dollars in thousands):
| Net Carrying Value | Number of Facilities | ||||||||||||||||
| December 31, 2024 | $ | 57,261 | 10 | ||||||||||||||
| Additions to assets held for sale | 50,066 | 12 | |||||||||||||||
| Assets sold | (78,732) | (14) | |||||||||||||||
| Impairment of real estate held for sale | (452) | — | |||||||||||||||
| September 30, 2025 | $ | 28,143 | 8 | ||||||||||||||
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Results of Operations
Three Months Ended September 30, 2025 Compared to Three Months Ended June 30, 2025:
| Three Months Ended | Increase (Decrease) | Percentage Difference | |||||||||||||||||||||
| September 30, 2025 | June 30, 2025 | ||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Rental income | $ | 104,265 | $ | 86,033 | $ | 18,232 | 21 | % | |||||||||||||||
| Interest income from financing receivable | 2,908 | 2,886 | 22 | 1 | % | ||||||||||||||||||
| Interest income from other real estate related investments and other income | 25,271 | 23,550 | 1,721 | 7 | % | ||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Depreciation and amortization | 26,693 | 21,215 | 5,478 | 26 | % | ||||||||||||||||||
| Interest expense | 12,622 | 13,038 | (416) | (3) | % | ||||||||||||||||||
| Property taxes and insurance | 2,326 | 2,117 | 209 | 10 | % | ||||||||||||||||||
| Impairment of real estate investments | 452 | — | 452 | * | |||||||||||||||||||
| Transaction costs | 560 | 61 | 499 | 818 | % | ||||||||||||||||||
| Property operating expenses | 279 | 938 | (659) | (70) | % | ||||||||||||||||||
| General and administrative | 15,420 | 12,549 | 2,871 | 23 | % | ||||||||||||||||||
| Other income (loss): | |||||||||||||||||||||||
| Loss on extinguishment of debt | (390) | — | (390) | * | |||||||||||||||||||
| Unrealized gain on other real estate related investments, net | 3,603 | 1,968 | 1,635 | 83 | % | ||||||||||||||||||
| (Loss) gain on foreign currency transactions | (298) | 4,413 | (4,711) | (107) | % | ||||||||||||||||||
| Income taxes | |||||||||||||||||||||||
| Income tax expense | (2,077) | (1,030) | (1,047) | 102 | % | ||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | 29 | (643) | 672 | (105) | % | ||||||||||||||||||
•Not meaningful
Rental income. Rental income increased by approximately $18.2 million as detailed below:
| Three Months Ended | Increase (Decrease) | |||||||||||||||||||
| (in thousands) | September 30, 2025 | June 30, 2025 | ||||||||||||||||||
| Contractual cash rent | $ | 93,873 | $ | 81,383 | $ | 12,490 | ||||||||||||||
| Tenant reimbursements | 2,202 | 1,965 | 237 | |||||||||||||||||
| Total contractual rent | 96,075 | 83,348 | 12,727 | |||||||||||||||||
| Straight-line rent | 3,419 | 1,760 | 1,659 | |||||||||||||||||
| Amortization of lease incentives | (48) | (48) | — | |||||||||||||||||
| Amortization of above and below market leases | 4,819 | 973 | 3,846 | |||||||||||||||||
| Total amount in rental income | $ | 104,265 | $ | 86,033 | $ | 18,232 | ||||||||||||||
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 $12.7 million due to a $10.9 million increase in rental income from real estate investments made after March 31, 2025, including properties acquired in connection with the Acquisition, a $1.0 million increase in rental rates for our existing tenants, an increase of $0.6 million related to the transfer of 12 facilities to new operators, and an increase of $0.2 million in tenant reimbursements. Straight-line rent increased by $1.7 million related to the Acquisition. Amortization of above and below market leases increased $3.8 million due to lease terminations in August 2025, which accelerated the amortization of the applicable below market lease intangibles.
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Interest income from financing receivable. Interest income from financing receivable did not change significantly during the quarter ended September 30, 2025 compared to the quarter ended June 30, 2025.
Interest income from other real estate related investments and other income. The $1.7 million, or 7%, increase in interest income from other real estate related investments and other income was primarily due to an increase of $3.4 million of interest earned on money market funds, an increase of $1.4 million of interest income on new investments made after March 31, 2025, and an increase of $0.2 million related to the number of days in the quarter compared to the prior quarter, partially offset by a decrease of $3.1 million of interest earned on escrow deposits during the three months ended June 30, 2025, primarily related to the Acquisition, and a decrease of $0.2 million due to origination and extension fees during the three months ended June 30, 2025.
Depreciation and amortization. The $5.5 million, or 26%, increase in depreciation and amortization was primarily due to an increase of $3.3 million due to acquisitions and capital improvements made after March 31, 2025, including related to properties acquired in connection with the Acquisition, and $2.2 million of accelerated amortization of lease intangibles related to lease terminations in August 2025.
Interest expense. Interest expense decreased by approximately $0.4 million as detailed below:
Change in interest expense for the three months ended September 30, 2025 compared to the three months ended June 30, 2025 | ||||||||
| (in thousands) | ||||||||
| Increases to interest expense due to: | ||||||||
| Increase due to new Term Loan Facility | $ | 3,492 | ||||||
Other changes in interest expense(1) | 136 | |||||||
| Total increases to interest expense | 3,628 | |||||||
| Decreases to interest expense due to: | ||||||||
| Decrease in outstanding borrowing amount for the Revolving Facility, net | (3,384) | |||||||
| Decrease due to payoff of debt assumed in the Acquisition | (660) | |||||||
| Total decreases to interest expense | (4,044) | |||||||
| Total change to interest expense | $ | (416) | ||||||
(1)Other changes in interest expense generally relate to changes to loan fee amortization.
Property taxes and insurance. The $0.2 million, or 10%, increase in property taxes and insurance was primarily due to an increase of $0.2 million due to acquisitions made after March 31, 2025 and an increase of $0.1 million due to reassessments, partially offset by a decrease of $0.1 million due to the transfer of certain properties to new operators that make direct tax payments.
Impairment of real estate investments. During the three months ended September 30, 2025, we recognized impairment charges of $0.5 million related to properties classified as held for sale. We did not recognize any impairment charges during the three months ended June 30, 2025.
Transaction costs. During the three months ended September 30, 2025, we recognized $0.6 million of costs related to integrating the operations of Care REIT plc. During the three months ended June 30, 2025, we recognized $0.1 million of non-capitalizable acquisition costs.
Property operating expenses. During the three months ended September 30, 2025, we recognized $0.3 million of property operating expenses related to assets we plan to sell or repurpose, re-tenant, or have sold. During the three months ended June 30, 2025, we recognized $0.9 million of property operating expenses related to assets we plan to sell or repurpose, re-tenant, or have sold.
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General and administrative expense. General and administrative expense increased by $2.9 million as detailed below:
| Three Months Ended | Increase (Decrease) | |||||||||||||||||||
| (in thousands) | September 30, 2025 | June 30, 2025 | ||||||||||||||||||
| Incentive compensation | $ | 7,042 | $ | 3,424 | $ | 3,618 | ||||||||||||||
| Cash compensation | 2,636 | 2,003 | 633 | |||||||||||||||||
| Share-based compensation | 2,493 | 3,026 | (533) | |||||||||||||||||
| Professional services | 1,439 | 2,453 | (1,014) | |||||||||||||||||
| Taxes and insurance | 523 | 470 | 53 | |||||||||||||||||
| Other expenses | 1,287 | 1,173 | 114 | |||||||||||||||||
| General and administrative expense | $ | 15,420 | $ | 12,549 | $ | 2,871 | ||||||||||||||
Loss on extinguishment of debt. During the three months ended September 30, 2025, we recorded a loss on extinguishment of debt of $0.4 million associated with the prepayment of the secured revolving credit facilities that were assumed in connection with the Acquisition. No loss on extinguishment of debt was recognized during the three months ended June 30, 2025.
Unrealized gain on other real estate related investments, net. During the three months ended September 30, 2025, we recorded $4.1 million of unrealized gains on our secured and mezzanine loans receivable, partially offset by unrealized losses of $0.1 million to bring the interest rates in line with market rates and unrealized foreign currency loss of $0.4 million related to one mortgage loan receivable. During the three months ended June 30, 2025, we recorded $2.3 million of unrealized gains on our secured and mezzanine loans receivable, partially offset by unrealized losses of $0.3 million, to bring the interest rates in line with market rates.
(Loss) gain on foreign currency transactions. During the three months ended September 30, 2025, we recorded a $0.3 million foreign currency loss on cash paid in connection with the acquisition of Impact Health Partners LLP. During the three months ended June 30, 2025, we recorded a $4.4 million foreign currency gain on cash paid to Care REIT shareholders in connection with the Care REIT Acquisition.
Income tax expense. During the three months ended September 30, 2025 and June 30, 2025, we recorded $2.1 million and $1.0 million of income tax expense, respectively, related to foreign withholding taxes related to taxable income in the U.K.
Net income (loss) attributable to noncontrolling interests. Net income attributable to noncontrolling interests increased primarily due to accelerated amortization of lease intangibles related to the Covenant Care lease transitions.
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Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024:
| Nine Months Ended | Increase (Decrease) | Percentage Difference | |||||||||||||||||||||
| September 30, 2025 | September 30, 2024 | ||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Rental income | $ | 261,944 | $ | 166,062 | $ | 95,882 | 58 | % | |||||||||||||||
| Interest income from financing receivable | 8,601 | — | 8,601 | * | |||||||||||||||||||
| Interest income from other real estate related investments and other income | 70,989 | 43,280 | 27,709 | 64 | % | ||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Depreciation and amortization | 65,749 | 41,317 | 24,432 | 59 | % | ||||||||||||||||||
| Interest expense | 32,329 | 25,188 | 7,141 | 28 | % | ||||||||||||||||||
| Property taxes and insurance | 6,508 | 5,892 | 616 | 10 | % | ||||||||||||||||||
| Impairment of real estate investments | 452 | 36,872 | (36,420) | (99) | % | ||||||||||||||||||
| Transaction costs | 1,509 | — | 1,509 | * | |||||||||||||||||||
| Property operating expenses | 1,322 | 4,392 | (3,070) | (70) | % | ||||||||||||||||||
| General and administrative | 36,992 | 19,637 | 17,355 | 88 | % | ||||||||||||||||||
| Other income (loss): | |||||||||||||||||||||||
| Loss on extinguishment of debt | (390) | (657) | 267 | * | |||||||||||||||||||
| Gain (loss) on sale of real estate, net | 3,876 | (2,254) | 6,130 | * | |||||||||||||||||||
| Unrealized gain (loss) on other real estate related investments, net | 6,858 | (689) | 7,547 | * | |||||||||||||||||||
| Gain on foreign currency transactions, net | 4,115 | — | 4,115 | * | |||||||||||||||||||
| Income taxes | |||||||||||||||||||||||
| Income tax expense | (3,107) | — | (3,107) | * | |||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | (1,223) | (501) | (722) | 144 | % | ||||||||||||||||||
•Not meaningful
Rental income. Rental income increased by $95.9 million as detailed below:
Nine Months Ended | Increase (Decrease) | |||||||||||||||||||
| (in thousands) | September 30, 2025 | September 30, 2024 | ||||||||||||||||||
| Contractual cash rent | $ | 243,756 | $ | 159,060 | $ | 84,696 | ||||||||||||||
| Tenant reimbursements | 6,443 | 5,073 | 1,370 | |||||||||||||||||
| Total contractual rent | 250,199 | 164,133 | 86,066 | |||||||||||||||||
| Straight-line rent | 5,172 | (21) | 5,193 | |||||||||||||||||
| Amortization of lease incentives | (145) | (9) | (136) | |||||||||||||||||
| Amortization of above and below market leases | 6,718 | 1,959 | 4,759 | |||||||||||||||||
| Total amount in rental income | $ | 261,944 | $ | 166,062 | $ | 95,882 | ||||||||||||||
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 $86.1 million due to a $84.7 million increase in rental income from real estate investments made after December 31, 2023, including properties acquired in connection with the Acquisition, a $5.0 million increase in rental rates for our existing tenants, a $1.4 million increase in tenant reimbursements, and an increase of $1.4 million related to the transfer of 15 facilities to new operators, partially offset by a $3.7 million decrease in rental income recognized related to certain tenants on a cash basis method of accounting and a $2.7 million decrease in rental income related to dispositions made after December 31, 2023. Straight-line rent increased by $5.2 million due to the Acquisition. Amortization of
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above and below market leases increased $4.8 million primarily due to lease terminations in August 2025, which accelerated the amortization of the applicable below market lease intangibles.
Interest income from financing receivable. During the nine months ended September 30, 2025, we recorded $8.6 million of interest income related to an investment classified as a financing receivable in December 2024.
Interest income from other real estate related investments and other income. The $27.7 million increase in interest and other income was primarily due to an increase of $29.7 million due to the origination of loans receivable after December 31, 2023, an increase of $4.7 million of interest income earned on escrow deposits and an increase of $0.7 million due to originations of other loans, partially offset by a decrease of $6.2 million of interest income on money market funds, a decrease of $0.9 million related to loan payments and a $0.3 million decrease of interest income due to placing one other loan on non-accrual status.
Depreciation and amortization. The $24.4 million, or 59%, increase in depreciation and amortization was primarily due to an increase of $26.0 million related to acquisitions and capital improvements made after December 31, 2023 and an increase of $2.3 million due to lease terminations in August 2025, which accelerated the amortization of the applicable in-place lease intangibles, partially offset by a decrease of $1.9 million due to the disposal of assets, a decrease of $1.2 million due to assets becoming fully depreciated after December 31, 2023 and a decrease of $ 0.8 million due to classifying assets as held for sale after December 31, 2023.
Interest expense. Interest expense increased by $7.1 million as detailed below:
Change in interest expense for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 | ||||||||
| (in thousands) | ||||||||
| Increases to interest expense due to: | ||||||||
| Increase in outstanding borrowing amount for the Revolving Facility | $ | 5,786 | ||||||
| Increase due to new Term Loan Facility | 8,316 | |||||||
| Increase due to assumption of debt in connection with the Acquisition | 2,880 | |||||||
Other changes in interest expense(1) | 1,177 | |||||||
| Total increases to interest expense | 18,159 | |||||||
| Decreases to interest expense due to: | ||||||||
| Decrease due to prepayment of a prior term loan | (10,086) | |||||||
| Decrease due to prepayment of secured borrowing | (932) | |||||||
| Total decreases to interest expense | (11,018) | |||||||
| Total change in interest expense | $ | 7,141 | ||||||
(1)Other changes in interest expense generally relate to changes to loan fee amortization.
Property taxes and insurance. The $0.6 million, or 10%, increase in property taxes was due to a $1.8 million increase related to acquisitions made after December 31, 2023, partially offset by a decrease of $0.8 million due to reassessments, a decrease of $0.2 million due to properties that were sold after December 31, 2023 and a decrease of $0.2 million due to the transfer of certain properties to new operators that make direct tax payments.
Impairment of real estate investments. During the nine months ended September 30, 2025, we recognized impairment charges of $0.5 million related to properties classified as held for sale. During the nine months ended September 30, 2024, we recognized impairment charges of $30.4 million related to properties classified as held for sale, $4.4 million related to properties held for investment, and $2.1 million related to properties that were sold.
Transaction costs. During the nine months ended September 30, 2025, we recognized $1.5 million of costs related to unsuccessful acquisition pursuit costs that we classify as transaction costs and costs related to integrating the operations of Care REIT plc. We did not recognize any transaction costs during the nine months ended September 30, 2024.
Property operating expenses. During the nine months ended September 30, 2025, we recognized $1.7 million of property operating expenses related to assets we plan to sell or repurpose, re-tenant, or have sold, partially offset by $0.4 million in recoveries. During the nine months ended September 30, 2024, we recognized $4.4 million of property operating expenses related to assets we plan to sell or repurpose, re-tenant or have sold.
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General and administrative expense. General and administrative expense increased by $17.4 million as detailed below:
Nine Months Ended | Increase/(Decrease) | |||||||||||||||||||
| (in thousands) | September 30, 2025 | September 30, 2024 | ||||||||||||||||||
| Incentive compensation | $ | 11,691 | $ | 5,500 | $ | 6,191 | ||||||||||||||
| Share-based compensation | 9,428 | 4,669 | 4,759 | |||||||||||||||||
| Cash compensation | 6,730 | 4,878 | 1,852 | |||||||||||||||||
| Professional services | 4,768 | 1,936 | 2,832 | |||||||||||||||||
| Taxes and insurance | 1,212 | 761 | 451 | |||||||||||||||||
| Other expenses | 3,163 | 1,893 | 1,270 | |||||||||||||||||
| General and administrative expense | $ | 36,992 | $ | 19,637 | $ | 17,355 | ||||||||||||||
Loss on extinguishment of debt. During the nine months ended September 30, 2025, we recorded a loss on extinguishment of debt of $0.4 million associated with the prepayment of the secured revolving credit facilities that were assumed in connection with the Acquisition. During the nine months ended September 30, 2024, we recorded a $0.7 million loss on extinguishment of debt related to the exit fee associated with the call of the secured borrowing and the write-off of deferred financing costs associated with the prepayment of the Term Loan (as defined below).
Gain on sale of real estate, net. During the nine months ended September 30, 2025, we recorded a $3.9 million gain on sale of real estate related to the sale of three SNFs and one multi-service campus. During the nine months ended September 30, 2024, we recorded a $2.3 million loss on sale of real estate, net related to the sale of 13 SNFs and one ALF.
Unrealized gain (loss) on other real estate related investments, net. During the nine months ended September 30, 2025, we recorded $8.3 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 unrealized foreign currency loss of $0.4 million related to one mortgage loan receivable. During the nine months ended September 30, 2024, we recorded a $7.3 million unrealized loss on our secured and mezzanine loans receivable due to an increase in interest rates during the first half of 2024, partially offset by unrealized gains of $6.6 million primarily due to a decrease in interest rates during the third quarter of 2024.
Gain on foreign currency transactions, net. During the nine months ended September 30, 2025, we recorded a $4.4 million foreign currency gain on cash paid to Care REIT shareholders in connection with the Care REIT Acquisition, partially offset by a $0.3 million foreign currency loss on cash paid in connection with the acquisition of Impact Health Partners LLP.
Income tax expense. During the nine months ended September 30, 2025, we recorded $3.1 million of income tax expense related to foreign withholding taxes related to taxable income in the U.K.
Net loss attributable to noncontrolling interests. The $0.7 million increase in net loss attributable to noncontrolling interests was primarily due to investments entered into subsequent to December 31, 2023.
Liquidity and Capital Resources
To qualify as a REIT for federal income tax purposes, we are required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, to our stockholders on an annual basis. Accordingly, we intend to make, but are not contractually bound to make, regular quarterly dividends to common stockholders from cash flow from operating activities. All such dividends are at the discretion of our board of directors.
Our short-term liquidity requirements consist primarily of operating and interest expenses directly associated with our properties, including:
•interest expense and scheduled debt maturities on outstanding indebtedness;
•general and administrative expenses;
•dividend plans;
•operating lease obligations; and
•capital expenditures for improvements to our properties.
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Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions and other investments (including mortgage and mezzanine loan originations), capital expenditures, and scheduled debt maturities. We intend to invest in and/or develop additional healthcare and seniors housing properties as suitable opportunities arise and so long as adequate sources of financing are available. We expect that future investments in and/or development of properties, including any improvements or renovations of current or newly-acquired properties, will depend on and will be financed by, in whole or in part, our existing cash, borrowings available to us under the Third Amended Revolving Facility (as defined below), future borrowings or the proceeds from sales of shares of our common stock pursuant to our ATM Program or additional issuances of common stock or other securities. In addition, we may seek financing from U.S. government agencies, including through Fannie Mae and the U.S. Department of Housing and Urban Development, in appropriate circumstances in connection with acquisitions and refinancing of existing mortgage loans.
We believe that our expected operating cash flow from rent collections and interest payments on our other real estate related investments, together with our cash balance, available borrowing capacity under the Third Amended Revolving Facility (as defined below) and availability under the ATM Program will be sufficient to meet ongoing debt service requirements, dividend plans, operating lease obligations, capital expenditures, working capital requirements, and other needs for at least the next 12 months. We expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements. While we may from time to time sell properties as part of our hold / investment strategy on an investment-by-investment basis, we currently do not expect to sell any of our properties to meet liquidity needs. Our quarterly cash dividend and any failure of our operators to pay rent or of our borrowers to make interest or principal payments may impact our available capital resources.
We have filed an automatic shelf registration statement with the U.S. Securities and Exchange Commission that expires in February 2026 and at or prior to such time we expect to file a new shelf registration statement. The shelf registration statement allows us or certain of our subsidiaries, as applicable, to offer and sell shares of common stock, preferred stock, warrants, rights, units and debt securities through underwriters, dealers or agents or directly to purchasers, in one or more offerings on a continuous or delayed basis, in amounts, at prices and on terms we determine at the time of the offering. On January 21, 2025, we entered into the New ATM Program. In addition to the issuance and sale of shares of our common stock, we may also enter into one or more ATM forward contracts with sales agents for the sale of shares of our common stock under the ATM Program. See “At-The-Market Offering of Common Stock” for information regarding activity under the ATM Program.
Although we are subject to restrictions on our ability to incur indebtedness, we expect that we will be able to refinance existing indebtedness or incur additional indebtedness for acquisitions or other purposes, if needed. However, there can be no assurance that we will be able to refinance our indebtedness, incur additional indebtedness or access additional sources of capital, such as by issuing common stock or other debt or equity securities, on terms that are acceptable to us or at all.
As of September 30, 2025, we are in compliance with all debt covenants on our outstanding indebtedness.
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Cash Flows
The following table presents selected data from our condensed consolidated statements of cash flows for the periods presented (dollars in thousands):
| For the Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash provided by operating activities | $ | 273,069 | $ | 169,043 | |||||||
| Net cash used in investing activities | (901,048) | (828,087) | |||||||||
| Net cash provided by financing activities | 1,126,302 | 741,698 | |||||||||
| Effect of foreign currency translation | 335 | — | |||||||||
| Net increase in cash and cash equivalents | 498,658 | 82,654 | |||||||||
| Cash and cash equivalents as of the beginning of period | 213,822 | 294,448 | |||||||||
| Cash and cash equivalents as of the end of period | $ | 712,480 | $ | 377,102 | |||||||
Net cash provided by operating activities increased for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Operating cash inflows are derived primarily from the rental payments received under our lease agreements and interest income received on our other real estate related investments, including as a result of new investments. Operating cash outflows consist primarily of interest expense on our borrowings and general and administrative expenses. The net increase of $104.0 million in cash provided by operating activities for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 is primarily due to an increase in rental income received and an increase in interest income received on our other real estate related investments, partially offset by an increase in cash paid for general and administrative expense and an increase in cash paid for interest expense.
Cash used in investing activities for the nine months ended September 30, 2025 was primarily comprised of $915.6 million in acquisitions of real estate, investment in real estate related investments and other loans receivable and escrow deposits for potential acquisitions of real estate, $30.0 million in preferred equity investments and $10.0 million of purchases of equipment, furniture and fixtures and improvements to real estate, partially offset by $44.4 million in net proceeds from the sale of real estate and $10.1 million in principal payments received from our other real estate related investments and other loans receivable. Cash used in investing activities for the nine months ended September 30, 2024 was primarily comprised of $777.1 million in acquisitions of real estate, investment in real estate related investments and other loans receivable and escrow deposits for potential acquisitions of real estate, $52.0 million in preferred equity investments and $4.2 million of purchases of equipment, furniture and fixtures and improvements to real estate, partially offset by $5.1 million in net proceeds from the sale of real estate and $0.1 million in principal payments received on other loans receivable.
Our cash flows provided by financing activities for the nine months ended September 30, 2025 were primarily comprised of $1.1 billion in net proceeds from the issuance of common stock, $500.0 million in net borrowings under our Third Amended Revolving Facility (as defined below), and $7.1 million in contributions from noncontrolling interests, partially offset by a $256.2 million payment on the secured notes payable and secured revolving credit facilities, $184.5 million in dividends paid, a $4.6 million payment on extinguishment of debt and deferred financing costs, $3.8 million in distributions to noncontrolling interests and a $3.3 million net settlement adjustment on restricted stock. Our cash flows provided by financing activities for the nine months ended September 30, 2024 were primarily comprised of $1.1 billion in net proceeds from the issuance of common stock, $75.0 million in proceeds from a secured borrowing and $1.2 million in contributions from noncontrolling interests, partially offset by a $200.0 million prepayment of the Term Loan, $122.4 million in dividends paid, a $75.0 million payment on the secured borrowing, a $2.5 million net settlement adjustment on restricted stock, and $0.4 million payment on extinguishment of debt and deferred financing costs.
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Material Cash Requirements
Our material cash requirements from known contractual and other obligations include:
3.875% Senior Unsecured Notes due 2028
On June 17, 2021, our wholly owned subsidiary, CTR Partnership, L.P. (the “Operating Partnership”), and its wholly owned subsidiary, CareTrust Capital Corp. (together with the Operating Partnership, the “Issuers”), completed a private offering of $400.0 million aggregate principal amount of 3.875% Senior Notes due 2028 (the “Notes”). The Notes mature on June 30, 2028. The Notes accrue interest at a rate of 3.875% per annum payable semiannually in arrears on June 30 and December 30 of each year, commencing on December 30, 2021. The obligations under the Notes are guaranteed, jointly and severally, on an unsecured basis, by us and all of our subsidiaries (other than the Issuers) that guarantee obligations under the Third Amended Revolving Facility (as defined below). As of September 30, 2025, we were in compliance with all applicable financial covenants under the indenture governing the Notes. See Note 8, Debt, to our condensed consolidated financial statements included in this report for further information about the Notes.
Unsecured Revolving Credit Facility and Term Loan
On December 16, 2022, we, together with certain of our subsidiaries, entered into a second amended and restated credit and guaranty agreement with KeyBank National Association, as administrative agent, an issuing bank and swingline lender (as amended from time to time, the “Second Amended Credit Agreement”). The Operating Partnership was the borrower under the Second Amended Credit Agreement, and the obligations thereunder were guaranteed, jointly and severally, on an unsecured basis, by us and substantially all of our subsidiaries. The Second Amended Credit Agreement, which amended and restated our amended and restated credit and guaranty agreement, dated as of February 8, 2019 (as amended, the “Prior Credit Agreement”) provided for: (i) an unsecured revolving credit facility (the “Revolving Facility”) with revolving commitments in an aggregate principal amount of $600.0 million, including a letter of credit subfacility for 10% of the then available revolving commitments and a swingline loan subfacility for 10% of the then available revolving commitments and (ii) the continuation of the unsecured term loan credit facility which was previously extended under the Prior Credit Agreement (the “Term Loan” and together with the Revolving Facility, the “Second Amended Credit Facility”) in an aggregate principal amount of $200.0 million.
On October 10, 2023, we entered into the First Amendment to the Second Amended Credit Agreement with KeyBank National Association (the “First Amendment to the Second Amended Credit Agreement”). The First Amendment to the Second Amended Credit Agreement restated the definition of Consolidated Total Asset Value to include net proceeds from at-the-market forward commitments executed but not yet closed as of the relevant date as if such proceeds had actually been received.
On December 18, 2024, we, together with certain of our subsidiaries, entered into a third amended and restated credit and guaranty agreement with KeyBank National Association, as administrative agent, an issuing bank and swingline lender, and the lenders party thereto (as amended from time to time, the “Third Amended Credit Agreement”). The Third Amended Credit Agreement, which amends and restates our Second Amended Credit Agreement provides for an unsecured revolving credit facility (the “Third Amended Revolving Facility”) with revolving commitments in an aggregate principal amount of $1.2 billion, including a letter of credit subfacility for 10% of the then available revolving commitments and a swingline loan subfacility for 10% of the then available revolving commitments. Future borrowings under the Third Amended Revolving Facility will be used for working capital purposes, for capital expenditures, to fund acquisitions and for general corporate purposes.
The Third Amended Credit Agreement also provides that, subject to customary conditions, including obtaining lender commitments and pro forma compliance with financial maintenance covenants under the Third Amended Credit Agreement, the Operating Partnership may seek to increase the aggregate principal amount of the revolving commitments and/or establish one or more new tranches of term loans under the Third Amended Revolving Facility in an aggregate amount not to exceed $800.0 million.
On May 30, 2025, we entered into 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.
As of September 30, 2025, we had $500.0 million of borrowings outstanding under the Term Loan Facility and no borrowings outstanding under the Third Amended Revolving Facility. The Third Amended Revolving Facility has a maturity date of February 9, 2029, and includes, at our sole discretion, two six-month extension options. The Term Loan Facility has a maturity date of May 30, 2030.
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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 or Term SOFR or Daily 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 Amended Revolving 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 Revolving Facility bearing interest at Term SOFR or Daily Simple SOFR.
As of September 30, 2025, we were in compliance with all applicable financial covenants under the Third Amended Credit Agreement. See Note 8, Debt, to our condensed consolidated financial statements included in this report for further information about the Third Amended Credit Agreement.
Commitments and Contingencies
As of September 30, 2025, we had committed to fund expansions, construction, capital improvements and ESG incentives, which provides eligible triple-net tenants with monetary inducements to make sustainable improvements to our properties, at certain triple-net leased facilities totaling $9.6 million, of which $8.7 million is subject to rent increase at the time of funding. We expect to fund the capital expenditures in the next one to two years. As of September 30, 2025, we have mortgage loan commitments of $3.8 million and non-real estate secured loan commitments of $11.9 million. As of September 30, 2025, we have earn-out commitments of $13.4 million, $10.0 million of which are related to a purchase and sale agreement which provides for an earn-out obligation for one SNF in Virginia that was acquired during 2024. The $10.0 million earn-out is available, contingent on the operator achieving certain thresholds per the agreement, beginning in October 2025 through October 2026. See Note 14, Commitments and Contingencies, to our condensed consolidated financial statements included in this report for further information.
Dividend Plans
We are required to pay dividends in order to maintain our REIT status and we expect to make quarterly dividend payments in cash with the annual dividend amount no less than 90% of our annual REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains. See Note 9, Equity and Redeemable Noncontrolling Interests, to our condensed consolidated financial statements included in this report for a summary of the cash dividends per share of our common stock declared by our board of directors for the three months ended September 30, 2025.
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Critical Accounting Policies and Estimates
Our condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information set forth in the Accounting Standards Codification, as published by the Financial Accounting Standards Board. GAAP requires us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base these estimates on our experience and assumptions we believe to be reasonable under the circumstances. However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements. We periodically reevaluate our estimates and assumptions, and in the event they 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. Please refer to “Critical Accounting Policies and Estimates” in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 12, 2025, for further information regarding the critical accounting policies that affect our more significant estimates and judgments used in the preparation of our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. There have been no material changes in such critical accounting policies during the nine months ended September 30, 2025.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to various market risks, primarily interest rate risk with respect to our variable rate indebtedness and exchange rate risk for the British Pound Sterling.
Interest rate risk—We borrow debt at a combination of variable and fixed rates. As of September 30, 2025, our indebtedness included $500.0 million in term loans and $400.0 million in notes payable. As of September 30, 2025, we had $500.0 million of outstanding variable rate indebtedness. The unused portion ($1.2 billion at September 30, 2025) of our Third Amended Revolving Facility, should it be drawn upon, is subject to variable rates.
An increase in interest rates could make the financing of any acquisition by us more costly as well as increase the costs of our variable rate debt obligations. Rising interest rates could also limit our ability to refinance our debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness. Increased inflation may also have a pronounced negative impact on the interest expense we pay in connection with our outstanding indebtedness, as these costs could increase at a rate higher than our rents.
We manage, or hedge, interest rate risks related to our borrowings by means of interest rate swap agreements. However, the REIT provisions of the Internal Revenue Code of 1986, as amended, substantially limit our ability to hedge our assets and liabilities. See “Risk Factors — Risks Related to Our Status as a REIT — Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities,” which is included in our Annual Report on Form 10-K for the year ended December 31, 2024. We also expect to manage our exposure to interest rate risk by maintaining a mix of fixed and variable rates for our indebtedness.
As of September 30, 2025, we had 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. 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.
Exchange rate risk—We are exposed to changes in foreign exchange rates as a result of our real estate investments in the United Kingdom. Our foreign currency exposure is partially mitigated through the use of British Pound denominated intercompany debt totaling £462.4 million as of September 30, 2025 and foreign currency forward contracts. Based solely on our results of operations for the nine months ended September 30, 2025, if the applicable exchange rate were to increase or decrease by 10%, our net income from our consolidated U.K.-based investments would increase or decrease, as applicable, by $1.6 million.
To hedge a portion of the interest expense due on our intercompany debt in the U.K., at September 30, 2025, we have three foreign currency forward contracts with notional amounts totaling £23.2 million that mature between 2025 and 2026.
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Item 4. Controls and Procedures.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and regulations and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As of September 30, 2025, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of our disclosure controls and procedures. As previously disclosed, on May 8, 2025, we completed the Care REIT Acquisition. As such, the scope of our assessment of the effectiveness of our disclosure controls and procedures did not include the internal control over financial reporting of Care REIT. These exclusions are consistent with the SEC Staff’s guidance that an assessment of a recently acquired business may be omitted from the scope of our assessment of the effectiveness of disclosure controls and procedures that are also part of internal control over financial reporting in the 12 months following the acquisition. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, at the reasonable assurance level, as of September 30, 2025.
Changes in Internal Control over Financial Reporting
As a result of the Acquisition, our management is in the process of reviewing the operations of Care REIT, and implementing our internal control structure over the operations of the recently acquired entity; however, we will elect to exclude Care REIT when conducting our annual evaluation of the effectiveness of internal control over financial reporting for the current year, as permitted by applicable regulation.
There has been no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
The Company and its subsidiaries are and may become from time to time a party to various claims and lawsuits arising in the ordinary course of business, but none of the Company or any of its subsidiaries is, and none of their respective properties are, the subject of any material legal proceedings. Claims and lawsuits may include matters involving general or professional liability asserted against its tenants, which are the responsibility of its tenants and for which the Company is entitled to be indemnified by its tenants under the insurance and indemnification provisions in the applicable leases.
Item 1A. Risk Factors.
We have disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 and our Quarterly Report on Form 10-Q for the quarter ended March 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.
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Item 5. Other Information.
On September 24, 2025 , David Sedgwick , our President and Chief Executive Officer , adopted a trading arrangement for the sale of shares of our common stock (a "Rule 10b-5 Trading Plan") that is intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c). Mr. Sedgwick’s Rule 10b-5 Trading Plan provides for the sale of up to 144,492 shares of common stock pursuant to the terms of the plan, and is effective through August 3, 2026 unless earlier terminated in accordance with the terms of the plan.
Item 6. Exhibits.
Exhibit Number | Description of the Document | |||||||
| *101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
| *101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||
| *101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| *101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| *101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| *101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| *104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||||||
| * Filed herewith | ||||||||
| ** Furnished herewith | ||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CareTrust REIT, Inc. | |||||||||||
| November 5, 2025 | By: | /s/ William M. Wagner | |||||||||
| William M. Wagner | |||||||||||
Chief Financial Officer and Treasurer (duly authorized officer and principal financial officer) | |||||||||||
56
Exhibit 31.1
CERTIFICATION
I, David M. Sedgwick, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of CareTrust REIT, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| By: | /s/ David M. Sedgwick | |||||||
David M. Sedgwick | ||||||||
| President and Chief Executive Officer | ||||||||
Date: November 5, 2025
Exhibit 31.2
CERTIFICATION
I, William M. Wagner, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of CareTrust REIT, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| By: | /s/ William M. Wagner | |||||||
| William M. Wagner | ||||||||
| Chief Financial Officer and Treasurer | ||||||||
Date: November 5, 2025
Exhibit 32.1
Certification of Chief Executive Officer and
Chief Financial Officer Pursuant to
18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of CareTrust REIT, Inc. (the “Company”) for the quarterly period ended September 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), David M. Sedgwick, as President and Chief Executive Officer of the Company, and William M. Wagner, as Chief Financial Officer and Treasurer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to their knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ David M. Sedgwick | ||||||||
| Name: | David M. Sedgwick | |||||||
| Title: | President and Chief Executive Officer | |||||||
| Date: | November 5, 2025 | |||||||
| /s/ William M. Wagner | ||||||||
| Name: | William M. Wagner | |||||||
| Title: | Chief Financial Officer and Treasurer | |||||||
| Date: | November 5, 2025 | |||||||