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What changed in Community Healthcare Trust Inc's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Community Healthcare Trust Inc's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+272 added−286 removedSource: 10-K (2026-02-17) vs 10-K (2025-02-18)

Top changes in Community Healthcare Trust Inc's 2025 10-K

272 paragraphs added · 286 removed · 218 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

32 edited+11 added−15 removed72 unchanged
Biggest changeExamples of significant legislation currently under consideration, recently enacted or in the process of implementation, include: • the Affordable Care Act and proposed amendments and any further repeal measures and related actions at the federal and state level; • the 2019 repeal of a portion of the Affordable Care Act for the mandate that all individuals purchase health insurance or pay a tax penalty; • mandatory expansion of healthcare services and increased access to individual healthcare insurance through legislative initiatives, including the Inflation Reduction Act of 2022; • quality control, cost containment, and payment system reforms for Medicaid, Medicare and other public funding, such as expansion of pay-for-performance criteria and value-based purchasing programs, bundled 12 provider payments, accountable care organizations, increased patient cost-sharing, geographic payment variations, comparative effectiveness research, and lower payments for hospital readmissions; • implementation of health insurance exchanges and regulations governing their operation, whether run by the state or by the federal government, whereby individuals and small businesses purchase health insurance, including government-funded plans, many assisted by federal subsidies that are under ongoing legal challenges; • equalization of Medicare payment rates across different facility-type settings (i.e., the Bipartisan Budget Act of 2015, Section 603, lowered Medicare payment rates, effective January 1, 2017, for services provided in off-campus, provider-based outpatient departments to the same level of rates for physician-office settings for those facilities not grandfathered-in under the current Medicare rates as of the law’s date of enactment, November 2, 2015 and beginning January 1, 2019, CMS implemented site neutral changes in Medicare reimbursement for clinic visits provided in off-campus locations that were previously exempted from payment reductions); • the continued adoption by providers of federal standards for, and the associated audits of, the meaningful-use of electronic health records and the transition to ICD-10 coding; • federal and sate legislative changes requiring advance notice and approval of health care provider material change transactions, including sale or transfers of assets involving equity investors, and otherwise limiting or prohibiting arrangements between health care providers and private equity investors, including REITs; • the continued effort to expand the utilization of telehealth services; • implementation of federal rules requiring healthcare providers and third party payors to comply with electronic health system interoperability rules intended to allow for more efficient sharing of healthcare data; • changes made by the Trump Administration to reverse actions taken by the Biden Administration that impacted enrollment in health insurance exchanges and Medicaid; • a continuing trend of provider consolidation and associated antitrust scrutiny; • tax law changes affecting non-profit providers; • legislation modifying the rules for determining Medicare coverage, including efforts to promote home health care services; • regulatory changes designed to address health equity and disparities as a critical aspect of health and health care; and • regulatory and legislative changes related to the use of artificial intelligence in healthcare.
Biggest changeExamples of significant legislation currently under consideration, recently enacted or in the process of implementation, include: • continued changes to the Affordable Care Act and proposed amendments and any further repeal measures and related actions at the federal and state level; • changes affecting access to individual healthcare insurance through legislative initiatives, including proposed changes to the Inflation Reduction Act of 2022; • quality control, cost containment, and payment system reforms for Medicaid, Medicare and other public funding, such as expansion of pay-for-performance criteria and value-based purchasing programs, bundled provider payments, accountable care organizations, increased patient cost-sharing, geographic payment variations, comparative effectiveness research, and lower payments for hospital readmissions; 12 • implementation of health insurance exchanges and regulations governing their operation, whether run by the state or by the federal government, whereby individuals and small businesses purchase health insurance, including government-funded plans, many assisted by federal subsidies that are under ongoing legal challenges; • equalization of Medicare payment rates across different facility-type settings (i.e., the Bipartisan Budget Act of 2015, Section 603, lowered Medicare payment rates, effective January 1, 2017, for services provided in off-campus, provider-based outpatient departments to the same level of rates for physician-office settings for those facilities not grandfathered-in under the current Medicare rates as of the law’s date of enactment, November 2, 2015 and beginning January 1, 2019, CMS implemented site neutral changes in Medicare reimbursement for clinic visits provided in off-campus locations that were previously exempted from payment reductions); • the continued adoption by providers of federal standards for, and the associated audits of, the meaningful-use of electronic health records and the transition to ICD-10 coding; • federal and state legislative changes requiring advance notice and approval of health care provider material change transactions, including sale or transfers of assets involving equity investors, and otherwise limiting or prohibiting arrangements between health care providers and private equity investors, including REITs; • the continued effort to expand the utilization of telehealth services; • implementation of federal rules requiring healthcare providers and third party payors to comply with electronic health system interoperability rules intended to allow for more efficient sharing of healthcare data; • changes made by the Trump Administration to reverse actions taken by the Biden Administration that impacted enrollment in health insurance exchanges and Medicaid; • a continuing trend of provider consolidation and associated antitrust scrutiny; • tax law changes affecting non-profit providers; • legislation modifying the rules for determining Medicare coverage, including efforts to promote home health care services; • regulatory changes designed to address health equity and disparities as a critical aspect of health and health care; • regulatory and legislative changes related to the use of artificial intelligence in healthcare; and • regulatory changes to health care fraud and abuse laws that could affect health care providers' delivery of services and business operations.
Each kind of healthcare provider tenant has a different and complex set of laws related to reimbursement and reimbursement models, which may affect the tenant’s ability to collect revenues and meet the terms of their leases. Such varying reimbursement models and laws impact each kind of provider as well as the healthcare system as a whole.
Each kind of healthcare tenant has a different and complex set of laws related to reimbursement and reimbursement models, which may affect the tenant’s ability to collect revenues and meet the terms of their leases. Such varying reimbursement models and laws impact each kind of provider as well as the healthcare system as a whole.
The Company’s internet website address is www.chct.reit. Corporate Governance Guidelines The Company has adopted Corporate Governance Guidelines relating to the conduct and operations of the Board of 14 Directors. The Corporate Governance Guidelines are posted on the Company’s website (www.chct.reit) and are available in print to any stockholder who requests a copy.
The Company’s internet website address is www.chct.reit. 14 Corporate Governance Guidelines The Company has adopted Corporate Governance Guidelines relating to the conduct and operations of the Board of Directors. The Corporate Governance Guidelines are posted on the Company’s website (www.chct.reit) and are available in print to any stockholder who requests a copy.
Section 603 reflects movement by the Congress and CMS toward “site-neutral reimbursement” where Medicare rates across different facility-type settings are equalized. CMS implemented these changes beginning January 1, 2017. Beginning January 1, 2019, CMS also implemented site neutral changes in Medicare reimbursement for clinic visits provided in off-campus locations that 11 were previously exempted from payment reductions.
Section 603 reflects movement by the Congress and CMS toward “site-neutral reimbursement” where Medicare rates across different facility-type settings are equalized. CMS implemented these changes beginning January 1, 2017. Beginning January 1, 2019, CMS also implemented site neutral changes in Medicare reimbursement for clinic visits provided in off-campus locations that were previously exempted from payment reductions.
In addition, we believe that healthcare-related real estate rents and valuations are less susceptible to changes in the general economy than many other types of commercial real estate due to favorable demographic trends and the need-based rise in healthcare expenditures, even during 7 economic downturns. • Extensive Relationships with Healthcare Providers, Intermediaries and Property Owners.
In addition, we believe that healthcare-related real estate rents and valuations are less susceptible to changes in the general economy than many other types of commercial real estate due to favorable demographic trends and the need-based rise in healthcare expenditures, even during economic downturns. • Extensive Relationships with Healthcare Providers, Intermediaries and Property Owners.
We believe that our board and management team receiving restricted stock and restricted stock units subject to long-term cliff-vesting periods as a material component of their total compensation effectively aligns the interests of our board and management with those of our stockholders, creating significant incentives to maximize returns for our stockholders.
We believe that our board and management team receiving restricted stock and restricted stock units subject to long-term cliff-vesting periods as a material component of their total compensation effectively aligns the interests of our 8 board and management with those of our stockholders, creating significant incentives to maximize returns for our stockholders.
Different tenants may be more or less subject to certain types of regulation, some of 10 which are specific to the type of facility or provider. We cannot predict the degree to which these changes, or changes to the federal healthcare programs in general, may affect the economic performance of some or all of our tenants, positively or negatively.
Different tenants may be more or less subject to certain types of regulation, some of which are specific to the type of facility or provider. We cannot predict the degree to which these changes, or changes to the federal healthcare programs in general, may affect the economic performance of some or all of our tenants, positively or negatively.
In addition, expansion (including the addition of new beds or services or the acquisition of medical equipment) and occasionally the discontinuation of services of healthcare facilities may be subject to state regulatory approval through certificate of need programs. This may impact the ability of our tenants to expand their businesses.
In addition, expansion (including the addition of new beds or services or 10 the acquisition of medical equipment) and occasionally the discontinuation of services of healthcare facilities may be subject to state regulatory approval through certificate of need programs. This may impact the ability of our tenants to expand their businesses.
Our tenant base includes many nationally recognized healthcare providers (or their affiliates) and our property portfolio has significant diversification with respect to healthcare provider, industry segment, and facility type. • Attractive and Disciplined Investment Focus.
Our tenant base includes many nationally recognized healthcare providers (or their affiliates) and 7 our property portfolio has significant diversification with respect to healthcare provider, industry segment, and facility type. • Attractive and Disciplined Investment Focus.
We believe our relationships provide us with additional off-market or lightly marketed acquisition opportunities, thus providing us the opportunity to continue to purchase assets outside a competitive bidding process. • Experienced Management Team. Our executive management team averages over 25 years of healthcare, real estate and/or public REIT management experience on average. Led by David H.
We believe our relationships provide us with additional off-market or lightly marketed acquisition opportunities, thus providing us the opportunity to continue to purchase assets outside a competitive bidding process. • Experienced Management Team. Our executive management team averages over 25 years of healthcare, real estate and/or public REIT management experience. Led by David H.
We believe that we are organized in conformity with the requirements for qualification as a REIT under the Code and that our manner of operations will enable us to continue to meet the requirements for qualification and taxation as a REIT for U.S. federal income tax purposes for the year ending December 31, 2025.
We believe that we are organized in conformity with the requirements for qualification as a REIT under the Code and that our manner of operations will enable us to continue to meet the requirements for qualification and taxation as a REIT for U.S. federal income tax purposes for the year ending December 31, 2026.
If an employee desires to raise a concern in a confidential or anonymous manner, the concern may be directed to the whistleblower officer at the Company’s whistleblower hotline. During the year ended December 31, 2024, the whistleblower officer received no whistleblower complaints.
If an employee desires to raise a concern in a confidential or anonymous manner, the concern may be directed to the whistleblower officer at the Company’s whistleblower hotline. During the year ended December 31, 2025, the whistleblower officer received no whistleblower complaints.
Tax Status We have qualified as a REIT for U.S. federal income tax purposes since 2015, the year we began operations, and we expect that we will remain qualified as a REIT for U.S. federal income tax purposes for the year ending December 31, 2025.
Tax Status We have qualified as a REIT for U.S. federal income tax purposes since 2015, the year we began operations, and we expect that we will remain qualified as a REIT for U.S. federal income tax purposes for the year ending December 31, 2026.
We offer competitive benefits and training programs to develop employees’ expertise and skillsets, use training, communication, appropriate investments and clear corporate policies to strive to provide a safe, harassment-free work environment guided by principles of fair and equal treatment, and prioritize employee engagement.
We offer competitive benefits and training programs to develop employees’ expertise and skill sets, use training, communication, appropriate investments and clear corporate policies to strive to provide a safe, harassment-free work environment guided by principles of fair and equal treatment, and prioritize employee engagement.
While the Biden Administration supported the Affordable Care Act through legislation and Executive Orders, the Trump Administration may continue its previous legislative and regulatory efforts to limit various aspects of the ACA as indicated by its January 20, 2025 Executive Order immediately rescinding several Biden Administration health care-related Executive Orders, including Executive Order 14009 (Strengthening Medicaid and the Affordable Care Act, January 28, 2021); the Affordable Care Act (January 28, 2021); Executive Order 14070 (Continuing to Strengthen Americans’ Access to Affordable, Quality Health Coverage, April 5, 2022); Executive Order 14087 (Lowering Prescription Drug Costs for Americans, October 14, 2022).
While the Biden Administration supported the Affordable Care Act through legislation and Executive Orders, early in 2025 the Trump Administration continued its previous legislative and regulatory efforts to limit various aspects of the ACA as indicated by its January 20, 2025 Executive Orders rescinding several Biden Administration health care-related Executive Orders, including Executive Order 14009 (Strengthening Medicaid and the Affordable Care Act, January 28, 2021); the Affordable Care Act (January 28, 2021); Executive Order 14070 (Continuing to Strengthen Americans’ Access to Affordable, Quality Health Coverage, April 5, 2022); Executive Order 14087 (Lowering Prescription Drug Costs for Americans, October 14, 2022).
At December 31, 2024, we had $212.0 million outstanding on our revolving credit facility and had $275.0 million outstanding on our term loans under our second amendment to the third amended and restated credit agreement, dated as of October 16, 2024, by and among Community Healthcare Trust Incorporated, as borrower, the several banks and financial institutions party thereto as lenders, and Truist Bank, as administrative agent (collectively, our "Credit Facility") with a 40.3% debt-to-total capitalization ratio (debt plus stockholders' equity plus accumulated depreciation).
At December 31, 2025, we had $258.0 million outstanding on our revolving credit facility and had $275.0 million outstanding on our term loans under our second amendment to the third amended and restated credit agreement, dated as of October 16, 2024, by and among Community Healthcare Trust Incorporated, as borrower, the several banks and financial institutions party thereto as lenders, and Truist Bank, as administrative agent (collectively, our "Credit Facility") with a 42.9% debt-to-total capitalization ratio (debt plus stockholders' equity plus accumulated depreciation).
Number of Properties Annualized Rent (%) Medical Office Building (MOB) 93 36.9 % Inpatient Rehabilitation Facilities (IRF) 9 19.2 % Acute Inpatient Behavioral (AIB) 5 13.0 % Specialty Centers (SC) 37 10.3 % Physician Clinics (PC) 35 8.3 % Behavioral Specialty Facilities (BSF) 12 6.2 % Surgical Centers and Hospitals (SCH) 7 4.0 % Long-term Acute Care Hospitals (LTACH) 2 2.1 % Total real estate investments 200 100.0 % Customer Concentrations The Company's real estate portfolio is leased to a diverse tenant base.
Number of Properties Annualized Rent (%) Medical Office Building (MOB) 93 36.0 % Inpatient Rehabilitation Facilities (IRF) 10 21.2 % Acute Inpatient Behavioral (AIB) 5 12.6 % Specialty Centers (SC) 36 8.9 % Physician Clinics (PC) 33 8.2 % Behavioral Specialty Facilities (BSF) 13 7.1 % Surgical Centers and Hospitals (SCH) 6 4.0 % Long-term Acute Care Hospitals (LTACH) 2 2.0 % Total real estate investments 198 100.0 % Customer Concentrations The Company's real estate portfolio is leased to a diverse tenant base.
Other changes brought about by the Affordable Care Act could negatively impact reimbursement for any one of the kind of provider tenants as outlined below. The Affordable Care Act also altered reimbursement from private insurers and managed care organizations.
Other changes brought about by legislation or regulatory changes could negatively impact reimbursement for any one of the kind of provider tenants as outlined below. The Affordable Care Act altered reimbursement from private insurers and managed care organizations.
As a REIT, we are not subject to corporate federal income tax with respect to taxable income distributed to our stockholders. We have also elected two subsidiaries to be treated as taxable REIT subsidiaries ("TRSs"), which are subject to federal and state income taxes.
We operate so as to maintain our status as a REIT for federal income tax purposes. As a REIT, we are not subject to corporate federal income tax with respect to taxable income distributed to our stockholders. We have also elected two subsidiaries to be treated as taxable REIT subsidiaries ("TRSs"), which are subject to federal and state income taxes.
The properties are located in 36 states, totaling approximately 4.4 million square feet in the aggregate and were approximately 90.9% leased, excluding real estate assets held for sale, at December 31, 2024 with a weighted average remaining lease term of approximately 6.7 years.
The properties are located in 36 states, totaling approximately 4.5 million square feet in the aggregate, with a weighted average remaining lease term of approximately 7.0 years. Excluding the real estate asset held for sale at December 31, 2025, the properties were approximately 90.6% leased.
In connection with our review and consideration of healthcare real estate acquisition opportunities, we generally take into account a variety of considerations, including but not limited to: • whether the property will be leased to a financially-sound healthcare tenant; • the historical performance of the market and its future prospects; • property location, with an emphasis on proximity to a population base; • demand for healthcare related services and facilities; • current and future supply of competing properties; • occupancy and rental rates in the market; • population density and growth potential; • anticipated capital expenditures; • anticipated future acquisition opportunities; and • existing and potential competition from other healthcare real estate owners and tenants.
In connection with our review and consideration of healthcare real estate acquisition opportunities, we generally take into account a variety of considerations, including but not limited to: • whether the property will be leased to a financially-sound healthcare tenant; • the historical performance of the market and its future prospects; • property location, with an emphasis on proximity to a population base; • demand for healthcare related services and facilities; • current and future supply of competing properties; • occupancy and rental rates in the market; • population density and growth potential; • anticipated capital expenditures; • anticipated future acquisition opportunities; and • existing and potential competition from other healthcare real estate owners and tenants. 9 We currently have no intention to invest in companies that provide healthcare services structured to comply with the REIT Investment Diversification and Empowerment Act of 2007, or RIDEA.
See each of the discussions under Item 1A, "Risk Factors," under the captions "Adverse economic or other conditions in the geographic markets in which we conduct business could negatively affect our occupancy levels and rental rates and have a material adverse effect on our operating 6 results," and " A large percentage of our properties are located in Texas, Illinois, and Ohio , and changes in these markets may materially adversely affect us." 2024 Real Estate Investments During the year ended December 31, 2024, the Company acquired nine real estate properties, in seven separate transactions, as detailed in Note 4 – Real Estate Acquisitions, Disposition, and Assets Held for Sale to the Consolidated Financial Statements.
See each of the discussions under Item 1A, "Risk Factors," under the captions " Adverse economic or other 6 conditions in the geographic markets in which we conduct business could negatively affect our occupancy levels and rental rates and have a material adverse effect on our operating results ," and " A large percentage of our annualized rent is provided by properties that are located in Texas and Florida and changes in these markets may materially adversely impact our business and financial condition." 2025 Real Estate Investments During the year ended December 31, 2025, the Company acquired three real estate properties, as detailed in Note 4 – Real Estate Acquisitions, Dispositions, and Assets Held for Sale to the Consolidated Financial Statements.
Dupuy was a Managing Director at SunTrust Robinson Humphrey (Truist Securities) where he led investment banking coverage of healthcare facilities and REITs and held positions in healthcare banking at Bank of America. Mr. Monroe has experience in healthcare investment banking. Ms. Stach has experience in public healthcare RE IT accounting and financial reporting. Mr.
Prior to joining the Company, Mr. Dupuy was a Managing Director at SunTrust Robinson Humphrey (Truist Securities) where he led investment banking coverage of healthcare facilities and REITs and held positions in healthcare banking at Bank of America. Mr. Monroe has experience in healthcare investment banking. Ms.
Our tenants include many nationally recognized healthcare providers, such as Adventist HealthCare, Inc., Hospital Corporation of America, Fresenius Medical Care AG & Co, Davita, Inc., Tenet Healthcare Corporation, Catholic Healthcare Initiatives, and Lifepoint Health. Lifepoint Health accounted for 8.7% of annualized revenues and US Healthvest accounted for 7.5% of annualized revenues as of December 31, 2024.
Our tenants include many nationally recognized healthcare providers, such as Adventist HealthCare, Inc., Hospital Corporation of America, Fresenius Medical Care AG & Co, Davita, Inc., Tenet Healthcare Corporation, Catholic Healthcare Initiatives, and Lifepoint Health.
Real Estate Investments As of December 31, 2024, we had gross investments of approximately $1.2 billion in 200 real estate properties (including a portion of one property accounted for as a sales-type lease with a gross amount totaling approximately $3.0 million and two properties classified as held for sale with an aggregate amount totaling approximately $6.8 million).
Real Estate Investments As of December 31, 2025, we had gross investments of approximately $1.2 billion in 198 real estate properties (including one property, with sales-type leases, with a gross amount totaling approximately $8.1 million and one property classified as held for sale with a net investment totaling approximately $5.3 million).
Geographic Concentrations The Company's portfolio is currently located in 36 states with 38.4% of our annualized rent as of December 31, 2024 derived from properties located in Texas (16.7%), Illinois (11.6%), and Ohio (10.1%).
Geographic Concentrations The Company's portfolio is currently located in 36 states with 26.7% of our annualized rent as of December 31, 2025 derived from properties located in Texas (14.3%) and Florida (12.4%). No other states provided annualized rent over 10% as of December 31, 2025.
Meyer, our Executive Vice President, Asset Management, our management team has significant experience in acquiring, owning, operating and managing healthcare facilities and providing full service real estate solutions for the healthcare industry. Prior to joining the Company, Mr.
Dupuy, Chief Executive Officer and President, William G. Monroe IV, our Executive Vice President and Chief Financial Officer, and Leigh Ann Stach, our Executive Vice President and Chief Accounting Officer, our management team has significant experience in acquiring, owning, operating and managing healthcare facilities and providing full service real estate solutions for the healthcare industry.
Finally, each executive officer and director has met stock ownership guidelines that require our executive officers and dire ctors to continuously own an amount of our common stock based on a multiple of such officer's annual base salary or such director's annual retainer, as applicable. 8 Business Objective Our principal business objective is to provide attractive risk-adjusted returns to our stockholders through a combination of (i) sustainable and increasing rental income and cash flow that generates reliable, increasing dividends and (ii) potential long-term appreciation in the value of our properties and common stock.
Business Objective Our principal business objective is to provide attractive risk-adjusted returns to our stockholders through a combination of (i) sustainable and increasing rental income and cash flow that generates reliable, increasing dividends and (ii) potential long-term appreciation in the value of our properties and common stock.
The success of our employees drives the success of the business and supports our goal of long-term value creation for our shareholders.
At December 31, 2025, 46% of our employees, 32% of our management team, and 33% of our board of directors were female. The success of our employees drives the success of the business and supports our goal of long-term value creation for our shareholders.
These proposals, individually or in the aggregate, could significantly change the delivery of healthcare services, either nationally or at the state level, if implemented.
Legislative Developments Each year, legislative proposals for health policy are introduced in Congress and state legislatures, and regulatory changes are enacted by government agencies. These proposals, individually or in the aggregate, could significantly change the delivery of healthcare services, either nationally or at the state level, if implemented.
Ultimately, we cannot predict the amount of benefit from these measures or if future legislation will ultimately require similar site neutral changes in Medicare reimbursement rates for services provided in other facility-type settings. Legislative Developments Each year, legislative proposals for health policy are introduced in Congress and state legislatures, and regulatory changes are enacted by government agencies.
However, other laws may limit the extent to which higher rents may be charged based on proximity to a hospital. Ultimately, we cannot predict the amount of benefit from these measures or if future legislation will ultimately require similar site neutral changes in Medicare reimbursement rates for services provided in other facility-type settings.
While such site neutral changes are expected to lower overall Medicare spending, our medical office buildings located on hospital campuses could become more valuable as hospital tenants keep their higher Medicare rates for on-campus outpatient services. However, other laws may limit the extent to which higher rents may be charged based on proximity to a hospital.
More recently, in July 2025, CMS proposed regulatory changes to expand site-neutral policies to drug administration costs in response to prior direction from the Trump 11 Administration’s April 15, 2025 Executive Order 14723 “Covering Drug Prices by Once Again Putting Americans First.” While such site neutral changes are expected to lower overall Medicare spending, our medical office buildings located on hospital campuses could become more valuable as hospital tenants keep their higher Medicare rates for on-campus outpatient services.
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Upon acquisition, the properties were 99.3% leased in the aggregate with lease expirations through 2039. Human Capital Resource Management As of December 31, 2024, we had 36 employees. All of our employees work at our corporate office in Franklin, Tennessee. Our employees are not members of any labor union, and we consider our relations with our employees to be excellent.
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While no tenants provided more than 10% of our annualized rent as of December 31, 2025, our largest tenants were US Healthvest which provided 7.3% and Lifepoint Health which provided 6.4% of our annualized rent.
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We have a stable, but growing workforce with an average tenure of 3.9 years and voluntary employee turnover of approximately 3% during the year ended December 31, 2024. At December 31, 2024, 39% of our employees, 33% of our management team, and 33% of our board of directors were female.
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Upon acquisition, the properties were 100.0% leased in the aggregate with lease expirations through 2040. Human Capital Resource Management We believe our employees are a critical component to the achievement of our business objectives. Our employees are comprised of accountants, asset managers, leasing personnel, administrative staff, investment and construction management personnel, and the corporate management team.
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Dupuy, Chief Executive Officer and President, William G. Monroe IV, our Executive Vice President and Chief Financial Officer, Leigh Ann Stach, our Executive Vice President and Chief Accounting Officer, and Timothy L.
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We believe that by supporting and investing in our employees, we are able to attract and retain the highest quality talent. We provide health benefits, 401(k) matching up to 3.5%, HSA contributions annually, tuition and other employee education reimbursements, as well as other in-house training, annual restricted stock grants, and restricted stock award matching for deferred compensation elections.
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Meyer has experience in real estate and asset management in public healthcare REITs. • Growth Oriented Capital Structure.
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We are committed to fostering and cultivating a culture of diversity and inclusion and embrace employee differences in race, color, religion, sex, sexual orientation, national origin, age, disability, and other characteristics that make our employees unique. As of December 31, 2025, we had 35 employees. All of our employees work at our corporate office in Franklin, Tennessee.
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We currently have no intention to invest in companies that provide healthcare services structured to comply with the REIT Investment Diversification and Empowerment Act of 2007, or RIDEA. 9 We operate so as to maintain our status as a REIT for federal income tax purposes.
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Our employees are not members of any labor union, and we consider our relations with our employees to be excellent. We have a stable workforce with an average tenure of 4.0 years. During 2025, we had total voluntary employee turnover of approxim ately 11%, including 3% of retirements.
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The Affordable Care Act has continued to change how healthcare services are covered, delivered and reimbursed. The Affordable Care Act includes payment reform provisions intended to drive Medicare towards more value-based purchasing which, in turn, increases accountability for healthcare providers for the quality and costs of the healthcare services they provide.
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Stach has experience in healthcare and public healthcare RE IT accounting and financial reporting. • Conservative Capital Structure.
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While more individuals now carry healthcare coverage as a result of the Affordable Care Act, the full effects of the changes to reimbursement models for both public and commercial coverage continue to evolve.
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Finally, each executive officer and director has met stock ownership guidelines that require our executive officers and dire ctors to continuously own an amount of our common stock based on a multiple of such officer's annual base salary or such director's annual retainer, as applicable.
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Through Executive Orders issued January 28, 2021, the Biden Administration signaled its strong support for the Affordable Care Act by taking steps to reverse various actions by the first Trump Administration and to strengthen Medicaid and the Affordable Care Act.
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Following these Executive Orders, the One Big Beautiful Bill Act (“OBBBA”) of 2025, which was enacted on July 4, 2025, made significant changes to the Affordable Care Act that could affect patient access to care, including: (i) reducing funding for ACA marketplace subsidiaries possibly as much as $100 billion over ten (10) years; (ii) not extending premium tax credits which results in higher insurance premiums for many which may impact their ability to afford coverage; (iii) eliminating automatic re-enrollment and implementing additional enrollment verification requirements which could make maintaining and obtaining coverage more difficult; and (iv) shortening the annual open enrollment period.
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These efforts have resulted in more than 16 million Americans enrolling in ACA health plans and an additional 14 million low-income Americans being enrolled in the ACA’s Medicaid expansion coverage from a pre-ACA baseline. Other Biden Administration legislative initiatives and policies were implemented in an attempt to expand access to health care coverage.
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The Congressional Budget Office (“CBO”) projects that these changes will cause 10 to 16.9 million people to lose coverage by 2034. In addition, the OBBBA made significant changes to Medicaid, including over $900 billion in Federal funding reductions. Given this significant decrease in Federal Medicaid funding, states may decrease reimbursement to health care providers or eliminate certain benefits.
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For example, on August 22, 2022, the Inflation Reduction Act of 2022 was signed into law and extended increased premium subsidies available in the ACA marketplaces through 2025, which prevents an estimated 2 million individuals from losing coverage.
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The CBO estimates that OBBBA’s changes to the Medicaid program may result in 7.5 to 7.8 million more uninsured people by 2034.
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In addition, on October 11, 2022, the IRS issued a final rule changing how affordability of coverage and minimum value is determined for an employee’s relatives under the ACA.
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While it is unclear what additional legislative and regulatory changes may be forthcoming, and we cannot accurately predict future legislative or regulatory actions of any administration, any changes that adversely impact the ability of patients to obtain and pay for health care services could have an adverse effect on our business and operations.
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Specifically, the new rule provides for a separate affordability test where an eligible employer-sponsored plan is affordable for an employee’s relative if the employee’s required contribution for family coverage under the plan does not exceed 9.5% of the employee’s household income.
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Previously, health coverage affordability and adequacy had been measured solely for the employee, but not for coverage of the employee’s family. The U.S.
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Department of Health and Human Services' data shows continued growth in access to care under the ACA, with over 20 million people selecting an ACA Marketplace plan in the 2024 Open Enrollment Period, including over 3.7 million people who were new to ACA Marketplace plans.
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It is unclear what legislative and regulatory changes will result from these initial executive actions, and we cannot predict the nature of any future legislative or regulatory actions of the current Trump Administration.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

89 edited+21 added−21 removed352 unchanged
Biggest changeWhile the Biden Administration supported the Affordable Care Act and various institutions designed to support increased access to care, the Trump Administration's immediate actions to rescind various Biden Administration initiatives through its January 20, 2025 "Initial Rescission of Harmful Executive Orders and Actions" may signal its intent to reignite efforts to repeal the ACA or otherwise limit it in material ways. 27 We cannot predict the ultimate content, timing or effect of any further healthcare reform legislation related to increasing access to healthcare or the impact of potential legislation on us.
Biggest changeFurther, we are unable to foresee how individuals and businesses will respond to the uncertain landscape or that landscape's effect on the reimbursement rates received by our tenants, the financial success of our tenants and strategic partners, and consequently the effect on us. 27 While the Biden Administration supported the Affordable Care Act and various institutions designed to support increased access to care, the Trump Administration's immediate actions to rescind various Biden Administration initiatives through its January 20, 2025 "Initial Rescission of Harmful Executive Orders and Actions" and through changes included in the July 2025 One Big Beautiful Bill Act of 2025 signal its intent to continue efforts to repeal the ACA or otherwise continue to limit it in material ways.
The availability of equity capital to us will depend, in part, upon the market price of our common stock, which, in turn, will depend upon various market conditions and other factors that may change from time to time, including: • the extent of investor interest in our Company and our assets; • our ability to satisfy the distribution requirements applicable to REITs; • the general reputation of REITs and the attractiveness of their equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; • our financial performance and that of our tenants; • analyst reports about us and the REIT industry; 24 • macroeconomic conditions generally and conditions affecting the healthcare and real estate industry in particular; • general stock and bond market conditions, including changes in interest rates on fixed income securities, which may lead prospective purchasers of our common stock to demand a higher annual yield from future distributions; • a failure to maintain or increase our dividend which is dependent, in large part, upon funds from operations, or FFO, which, in turn, depends upon increased revenue from additional acquisitions and rental increases; and • other factors such as governmental regulatory action and changes in REIT tax laws.
The availability of equity capital to us will depend, in part, upon the market price of our common stock, which, in turn, will depend upon various market conditions and other factors that may change from time to time, including: • the extent of investor interest in our Company and our assets; 24 • our ability to satisfy the distribution requirements applicable to REITs; • the general reputation of REITs and the attractiveness of their equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; • our financial performance and that of our tenants; • analyst reports about us and the REIT industry; • macroeconomic conditions generally and conditions affecting the healthcare and real estate industry in particular; • general stock and bond market conditions, including changes in interest rates on fixed income securities, which may lead prospective purchasers of our common stock to demand a higher annual yield from future distributions; • a failure to maintain or increase our dividend which is dependent, in large part, upon funds from operations, or FFO, which, in turn, depends upon increased revenue from additional acquisitions and rental increases; and • other factors such as governmental regulatory action and changes in REIT tax laws.
To the extent that we consummate development opportunities, our investment in these projects could be subject to the following risks: • we may be unable to obtain financing for development projects on favorable terms or at all; • we may not complete development projects on schedule or within budgeted amounts; • we may encounter delays in obtaining or fail to obtain all necessary zoning, land use, building, occupancy, environmental and other governmental permits and authorizations, or underestimate the costs necessary to develop the property to market standards; • development or construction delays may provide tenants the right to terminate preconstruction leases or cause us to incur additional costs; • volatility in the price of construction materials or labor may increase our development costs; • hospitals or health systems may maintain significant decision-making authority with respect to the development schedule; • we may incorrectly forecast risks associated with development in new geographic regions; • tenants may not lease space at the quantity or rental rate levels projected; 25 • demand for our development project may decrease prior to completion, including due to competition from other developments; and • lease rates and rents at newly developed properties may fluctuate based on factors beyond our control, including market and economic conditions.
To the extent that we consummate development opportunities, our investment in these projects could be subject to the following risks: • we may be unable to obtain financing for development projects on favorable terms or at all; • we may not complete development projects on schedule or within budgeted amounts; • we may encounter delays in obtaining or fail to obtain all necessary zoning, land use, building, occupancy, environmental and other governmental permits and authorizations, or underestimate the costs necessary to develop the property to market standards; • development or construction delays may provide tenants the right to terminate preconstruction leases or cause us to incur additional costs; 25 • volatility in the price of construction materials or labor may increase our development costs; • hospitals or health systems may maintain significant decision-making authority with respect to the development schedule; • we may incorrectly forecast risks associated with development in new geographic regions; • tenants may not lease space at the quantity or rental rate levels projected; • demand for our development project may decrease prior to completion, including due to competition from other developments; and • lease rates and rents at newly developed properties may fluctuate based on factors beyond our control, including market and economic conditions.
Our level of debt and any limitations imposed upon us by our debt agreements could have adverse consequences, including the following: • our cash flow may be insufficient to meet required principal and interest payments; • we may be unable to borrow additional funds as needed or on favorable terms, including to make acquisitions; • we may be unable to refinance indebtedness at maturity or the refinancing terms may be less favorable than the terms of the original indebtedness; • because a portion of our debt bears interest at variable rates, an increase in interest rates could materially increase our interest expense; • we may fail to effectively hedge against interest rate volatility; • we may be forced to dispose of properties, possibly on disadvantageous terms if we are able to do so at all, in order to repay indebtedness; • after debt service, the amount available for distributions to our stockholders may be reduced; • we may default on our debt obligations, which could restrict our ability to make any distributions to our stockholders; • our ability to make distributions to our stockholders could be restricted by our debt agreements; • our leverage could place us at a competitive disadvantage compared to our competitors who have less debt; • we may experience increased vulnerability to economic and industry downturns, reducing our ability to respond to changing business and economic conditions; • we may default on our obligations and the lenders may foreclose on properties that secure their loans and receive an assignment of rents and leases; • we may violate financial covenants, which would cause a default on our obligations and result in the acceleration of our payment obligations; • we may inadvertently violate non-financial restrictive covenants in our loan documents, such as covenants that require us to maintain the existence of entities, maintain insurance policies and provide financial statements, which would entitle the lenders to accelerate our debt obligations; and • our default under any loan with cross-default or cross-collateralization provisions could result in default on other indebtedness or result in the foreclosures of other properties.
Our level of debt and any limitations imposed upon us by our debt agreements could have adverse consequences, including the following: • our cash flow may be insufficient to meet required principal and interest payments; • we may be unable to borrow additional funds as needed or on favorable terms, including to make acquisitions; • we may be unable to refinance indebtedness at maturity or the refinancing terms may be less favorable than the terms of the original indebtedness; • because a portion of our debt bears interest at variable rates, an increase in interest rates could materially increase our interest expense; • we may fail to effectively hedge against interest rate volatility; • we may be forced to dispose of properties, possibly on disadvantageous terms if we are able to do so at all, in order to repay indebtedness; • after debt service, the amount available for distributions to our stockholders may be reduced; • we may default on our debt obligations, which could restrict our ability to make any distributions to our stockholders; • our ability to make distributions to our stockholders could be restricted by our debt agreements; • our leverage could place us at a competitive disadvantage compared to our competitors who have less debt; 37 • we may experience increased vulnerability to economic and industry downturns, reducing our ability to respond to changing business and economic conditions; • we may default on our obligations and the lenders may foreclose on properties that secure their loans and receive an assignment of rents and leases; • we may violate financial covenants, which would cause a default on our obligations and result in the acceleration of our payment obligations; • we may inadvertently violate non-financial restrictive covenants in our loan documents, such as covenants that require us to maintain the existence of entities, maintain insurance policies and provide financial statements, which would entitle the lenders to accelerate our debt obligations; and • our default under any loan with cross-default or cross-collateralization provisions could result in default on other indebtedness or result in the foreclosures of other properties.
However, so long as any TRS tenant of ours qualifies as a TRS, it will not be treated as a “related party tenant” with respect to our healthcare properties that are managed by “eligible independent contractors.” We would seek to structure any future arrangements with a TRS tenant such that the TRS tenant would qualify to be treated as a TRS for U.S. federal income tax purposes, but there can be no assurance that the IRS would not challenge the status of a TRS or that a court would not sustain such a challenge.
However, so long as any TRS tenant of ours qualifies as a TRS, it will not be treated as a “related party tenant” with respect to our healthcare properties that are managed by “eligible independent contractors.” We would seek to structure any future arrangements with a TRS tenant such that the TRS tenant would qualify to be treated as a TRS for U.S. federal 44 income tax purposes, but there can be no assurance that the IRS would not challenge the status of a TRS or that a court would not sustain such a challenge.
Security breaches, including physical or electronic break-ins, computer viruses, malware, phishing attacks, worms, attacks by hackers or foreign governments, disruptions from unauthorized access and tampering 26 (including through social engineering such as phishing attacks), coordinated denial-of-service attacks, impersonation of authorized users and similar incidents, can create system disruptions, shutdowns or result in a loss of company assets or unauthorized disclosure of confidential information.
Security breaches, including physical or electronic break-ins, computer viruses, malware, phishing attacks, worms, attacks by hackers or foreign governments, disruptions from unauthorized access and tampering (including through social engineering such as phishing attacks), coordinated denial-of-service attacks, impersonation of authorized users and similar incidents, can create system disruptions, shutdowns or result in a loss of company assets or unauthorized disclosure of confidential information.
Imposition of any of these penalties upon one of our tenants or strategic partners could jeopardize that tenant’s ability to operate or to make rent payments or affect the level of occupancy in our healthcare properties, which may have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the market price of our 29 common stock.
Imposition of any of these penalties upon one of our tenants or strategic partners could jeopardize that tenant’s ability to operate or to make rent payments or affect the level of occupancy in our healthcare properties, which may have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the market price of our common stock.
We cannot assure you that a sufficient amount of capital will be available to us on favorable terms, or at all, when needed for the foregoing purposes, which would materially and adversely affect our financial condition, results of operations, cash flows and ability to pay distributions, and the market price of our common stock.
We cannot assure you that a sufficient amount of capital will be available to us on favorable terms, or at all, when needed for the foregoing purposes, 43 which would materially and adversely affect our financial condition, results of operations, cash flows and ability to pay distributions, and the market price of our common stock.
The loss of services of our senior management or other key employees for any reason or for any amount of time could significantly delay or prevent the achievement of our strategic objectives and negatively impact our business, financial condition, results of operations, and stock price. Although we have entered into employment agreements with Messrs. Dupuy, Monroe and Meyer and Ms.
The loss of services of our senior management or other key employees for any reason or for any amount of time could significantly delay or prevent the achievement of our strategic objectives and negatively impact our business, financial condition, results of operations, and stock price. Although we have entered into employment agreements with Messrs. Dupuy and Monroe and Ms.
Any such delays, limitations and 20 expenses could adversely impact our ability to collect rent, obtain possession of leased properties or otherwise exercise remedies for tenant default and could have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the market price of our common stock.
Any such delays, limitations and expenses could adversely impact our ability to collect rent, obtain possession of leased properties or otherwise exercise remedies for tenant default and could have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the market price of our common stock.
Additionally, failure to close acquisitions under contract or in our investment pipeline could restrict our growth opportunities. 18 In addition, there is no assurance that we will fully realize the potential benefits of any past or future acquisition or strategic transaction. We are exposed to the risk that our future acquisitions may not prove to be successful.
Additionally, failure to close acquisitions under contract or in our investment pipeline could restrict our growth opportunities. In addition, there is no assurance that we will fully realize the potential benefits of any past or future acquisition or strategic transaction. We are exposed to the risk that our future acquisitions may not prove to be successful.
A reduction in reimbursements to our tenants from third-party payers for any reason could adversely affect our tenants’ ability to make rent payments to us which 28 may have a material adverse effect on our businesses, financial condition and results of operations, our ability to make distributions to our stockholders and the market price of our common stock.
A reduction in reimbursements to our tenants from third-party payers for any reason could adversely affect our tenants’ ability to make rent payments to us which may have a material adverse effect on our businesses, financial condition and results of operations, our ability to make distributions to our stockholders and the market price of our common stock.
In general, neither ordinary nor capital gain distributions with respect to our common stock, nor gain from the sale of our common stock, should constitute unrelated business tax income, or UBTI, to a tax-exempt stockholder. However, under certain limited circumstances, income and gain recognized by certain tax-exempt stockholders could be treated, in whole or in part, as UBTI.
In general, neither ordinary nor capital gain distributions with respect to our common stock, nor gain from the sale of our common stock, should constitute unrelated business taxable income, or UBTI, to a tax-exempt stockholder. However, under certain limited circumstances, income and gain recognized by certain tax-exempt stockholders could be treated, in whole or in part, as UBTI.
The more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock.
The more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less attractive than 45 investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock.
We cannot assure you that we will qualify as a “domestically controlled” REIT, although we expect our stock will be regularly traded on an established securities market. 45 Our capital gain distributions to non-U.S. stockholders attributable to our sales of U.S. real property interests may be subject to tax under FIRPTA.
We cannot assure you that we will qualify as a “domestically controlled” REIT, although we expect our stock will be regularly traded on an established securities market. Our capital gain distributions to non-U.S. stockholders attributable to our sales of U.S. real property interests may be subject to tax under FIRPTA.
As we expect to compete with 17 many national, regional and local acquirers of healthcare properties, properties that are acquired in off-market or lightly marketed transactions are typically more attractive to us as a purchaser because of the absence of a formal sales process, which could lead to higher prices.
As we expect to compete with many national, regional and local acquirers of healthcare properties, properties that are acquired in off-market or lightly marketed transactions are typically more attractive to us as a purchaser because of the absence of a formal sales process, which could lead to higher prices.
In addition, if such events lead to a significant or prolonged impact on capital or credit markets or economic growth, then our business, financial condition and results of operations could be adversely affected. 19 The bankruptcy, insolvency or weakened financial position of our tenants, and particularly our largest tenants, could materially and adversely affect our operating results and financial condition.
In addition, if such events lead to a significant or prolonged impact on capital or credit markets or economic growth, then our business, financial condition and results of operations could be adversely affected. The bankruptcy, insolvency or weakened financial position of our tenants, and particularly our largest tenants, could materially and adversely affect our operating results and financial condition.
We cannot give any assurances that material weaknesses will not be identified in the future in connection with our compliance with the provisions of the Sarbanes-Oxley Act. The existence of any material weakness would preclude a conclusion by management and our independent auditors that we maintained effective internal control over financial reporting.
We cannot give any assurances that material weaknesses will not be identified in the future in connection with our compliance with the provisions of the Sarbanes-Oxley Act. The existence of any material 36 weakness would preclude a conclusion by management and our independent auditors that we maintained effective internal control over financial reporting.
In order for such rent to qualify as “rents from real property” for purposes of the gross income tests applicable to REITs, the leases must be respected as true leases for U.S. federal income tax purposes and not be treated as service contracts, joint ventures or some 44 other type of arrangement.
In order for such rent to qualify as “rents from real property” for purposes of the gross income tests applicable to REITs, the leases must be respected as true leases for U.S. federal income tax purposes and not be treated as service contracts, joint ventures or some other type of arrangement.
The federal government has taken the position, and some courts have held that violations of other laws, such as the Stark Law, can also be a violation of the False Claims Act. Additionally, certain laws, such as the False Claims Act, allow for individuals to bring whistleblower actions on behalf of the government for violations thereof.
The federal government has taken the position, and some 29 courts have held that violations of other laws, such as the Stark Law, can also be a violation of the False Claims Act. Additionally, certain laws, such as the False Claims Act, allow for individuals to bring whistleblower actions on behalf of the government for violations thereof.
In order to maintain our status as a REIT under the Code, we are required, among other things, to distribute each year to our stockholders at least 90% of our REIT taxable income, without regard to the deduction for dividends paid 23 and excluding net capital gains.
In order to maintain our status as a REIT under the Code, we are required, among other things, to distribute each year to our stockholders at least 90% of our REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains.
It is possible that in the future our safety and security measures will not prevent the systems’ improper functioning or damage, or the improper access or disclosure of personally identifiable or proprietary information and any such event could materially and adversely impact our business, financial condition or results of operations.
It is possible that in the future our safety and security measures will not prevent the systems’ improper functioning or 26 damage, or the improper access or disclosure of personally identifiable or proprietary information and any such event could materially and adversely impact our business, financial condition or results of operations.
Instead, each of its partners will be allocated, and may be required to pay tax with respect to, its share of our operating partnership’s income. We cannot assure you that the IRS will not challenge the status of our operating 42 partnership, or that a court would not sustain such a challenge.
Instead, each of its partners will be allocated, and may be required to pay tax with respect to, its share of our operating partnership’s income. We cannot assure you that the IRS will not challenge the status of our operating partnership, or that a court would not sustain such a challenge.
The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. In order to qualify as a REIT, we must satisfy a number of requirements, including requirements regarding the ownership of our stock, the composition of our assets and the composition of our income.
The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. In order to qualify as a REIT, we must satisfy a number of requirements, including requirements regarding the ownership of our stock, the composition of our assets and the composition and sources of our income.
If we determine that an impairment has occurred, we would be required to make an adjustment to the net carrying value of the asset which could have an adverse effect on our results of operations in the period in which the impairment charge is recorded.
If we determine that an impairment has occurred, we would be 35 required to make an adjustment to the net carrying value of the asset which could have an adverse effect on our results of operations in the period in which the impairment charge is recorded.
In the event we decide to sell any of our properties, we cannot predict whether we will be able to sell such properties for the price or on the terms set by us or whether any price or other terms offered by a prospective purchaser would be acceptable to us.
In the event we decide to sell any of our properties, we cannot predict whether we will be able to sell such properties for the price or on the terms set by us or whether any 31 price or other terms offered by a prospective purchaser would be acceptable to us.
As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist absent the current provisions in our charter, bylaws and indemnification agreements or that might exist with other companies.
As a result, we and our stockholders may have more limited rights against our directors and 41 officers than might otherwise exist absent the current provisions in our charter, bylaws and indemnification agreements or that might exist with other companies.
We also may be unable to complete renovation of a 21 property or tenant space on schedule due to supply chain disruptions or labor shortages, which could result in increased debt service expense or construction costs.
We also may be unable to complete renovation of a property or tenant space on schedule due to supply chain disruptions or labor shortages, which could result in increased debt service expense or construction costs.
Our business and property operations may be adversely affected if 22 these vendors fail to adequately provide key services at our properties as a result of unanticipated events, including those resulting from climate change.
Our business and property operations may be adversely affected if these vendors fail to adequately provide key services at our properties as a result of unanticipated events, including those resulting from climate change.
In the event of negative economic or other changes in these markets, our business, financial condition and results of operations, our ability to make distributions to our stockholders and the market price of our common stock may be materially and adversely affected.
In the event of negative economic or other changes in these markets, our business, financial condition and 23 results of operations, our ability to make distributions to our stockholders and the market price of our common stock may be materially and adversely affected.
However, there are certain losses, including losses from floods, earthquakes, wildfires, acts of war, acts of terrorism 32 or riots, that are not generally insured against or that are not generally fully insured against because it is not deemed economically feasible or prudent to do so.
However, there are certain losses, including losses from floods, earthquakes, wildfires, acts of war, acts of terrorism or riots, that are not generally insured against or that are not generally fully insured against because it is not deemed economically feasible or prudent to do so.
As a result, the presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly remediation 33 program to contain or remove the mold or other airborne contaminants from the affected property or increase indoor ventilation.
As a result, the presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants from the affected property or increase indoor ventilation.
We may also be unable to successfully integrate the operations of acquired properties, maintain consistent standards, controls, policies and procedures, or realize the anticipated benefits of the acquisitions within the anticipated timeframe or at all.
We may also be unable to successfully integrate the operations of acquired properties, maintain consistent standards, controls, policies and procedures, or realize the anticipated benefits of the acquisitions 19 within the anticipated timeframe or at all.
If any of our leases are not renewed, or are terminated prior to the contractual expiration date, we would attempt to lease those properties to another tenant at then-current market rates.
If any of our leases are not renewed, or are terminated prior to the contractual expiration date, we would attempt to lease those 20 properties to another tenant at then-current market rates.
Even where subsurface investigation is performed, it can be very difficult to ascertain the full extent of 34 environmental contamination or the costs that are likely to flow from such contamination.
Even where subsurface investigation is performed, it can be very difficult to ascertain the full extent of environmental contamination or the costs that are likely to flow from such contamination.
We may change our business, investment and financing strategies without a vote of, or notice to, our stockholders, which could result in our making investments and engaging in business activities that are different from, and possibly riskier than, the investments and businesses described in this report.
We may change our business, investment and financing strategies without stockholder approval. We may change our business, investment and financing strategies without a vote of, or notice to, our stockholders, which could result in our making investments and engaging in business activities that are different from, and possibly riskier than, the investments and businesses described in this report.
Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include: • actual or anticipated variations in our quarterly operating results or dividends; • changes in our FFO or earnings estimates; • publication of research reports about us or the real estate industry; • increases in market interest rates that lead purchasers of our shares to demand a higher yield; • changes in market valuations of similar companies; • adverse market reaction to any additional debt we incur in the future; • additions or departures of key management personnel; • actions by institutional stockholders; • speculation in the press or investment community; • the realization of any of the other risk factors presented in this report; 46 • the extent of investor interest in our securities; • the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; • our underlying asset value; • investor confidence in the stock and bond markets generally; • changes in tax laws; • future equity issuances by us; • failure to meet earnings estimates; • failure to meet and maintain REIT qualification; • changes in our credit ratings; • the impact of a pandemic, epidemic or outbreak of a contagious disease on our business, financial condition, results of operations, cash flows, and global financial markets; and • general market and economic conditions.
We cannot assure you that the market price of our common stock will not fluctuate or decline significantly in the future. 46 Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include: • actual or anticipated variations in our quarterly operating results or dividends; • changes in our FFO or earnings estimates; • publication of research reports about us or the real estate industry; • increases in market interest rates that lead purchasers of our shares to demand a higher yield; • changes in market valuations of similar companies; • adverse market reaction to any additional debt we incur in the future; • additions or departures of key management personnel; • actions by institutional stockholders; • speculation in the press or investment community; • the realization of any of the other risk factors presented in this report; • the extent of investor interest in our securities; • the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; • our underlying asset value; • investor confidence in the stock and bond markets generally; • changes in tax laws; • future equity issuances by us; • failure to meet earnings estimates; • failure to meet and maintain REIT qualification; • changes in our credit ratings; • the impact of a pandemic, epidemic or outbreak of a contagious disease on our business, financial condition, results of operations, cash flows, and global financial markets; and • general market and economic conditions.
Our real estate investments are concentrated in healthcare properties, making us more vulnerable economically than if our investments were diversified in other segments of the economy. We acquire, own, manage, operate and selectively develop properties for lease primarily to physicians and healthcare delivery systems.
Risks Related to Our Business Our real estate investments are concentrated in healthcare properties, making us more vulnerable economically than if our investments were diversified in other segments of the economy. We acquire, own, manage, operate and selectively develop properties for lease primarily to physicians and healthcare delivery systems.
Certain provisions of the Maryland General Corporation Law, or MGCL, applicable to Maryland corporations may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide our common stockholders with the opportunity to realize a premium over the then-prevailing market price of our shares, including: • “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our shares at any time within the two-year period immediately prior to the date in question) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes certain minimum price and/or supermajority stockholder voting requirements on these combinations; and • “control share” provisions that provide that holders of “control shares” of our company (defined as shares that, when aggregated with all other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares,” subject to certain exceptions) have no voting rights with respect to their control shares, except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares. 39 Our bylaws, however, contain provisions exempting us from the business combination and control share acquisition provisions of the MGCL and we will not be permitted to opt into either of these provisions in the future without the affirmative vote of a majority of the votes cast on the matter by stockholders entitled to vote.
Certain provisions of the Maryland General Corporation Law, or MGCL, applicable to Maryland corporations may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide our common stockholders with the opportunity to realize a premium over the then-prevailing market price of our shares, including: • “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our shares at any time within the two-year period immediately prior to the date in question) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes certain minimum price and/or supermajority stockholder voting requirements on these combinations; and • “control share” provisions that provide that holders of “control shares” of our company (defined as shares that, when aggregated with all other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares,” subject to certain exceptions) have no voting rights with respect to their control shares, except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
Increases in interest rates may increase our interest expense and adversely affect our cash flows and our ability to service our indebtedness and to make distributions to our shareholders. As of December 31, 2024, we had $137.0 million of variable-rate indebtedness outstanding that had not been swapped for a fixed interest rate.
Increases in interest rates may increase our interest expense and adversely affect our cash flows and our ability to service our indebtedness and to make distributions to our shareholders. As of December 31, 2025, we had $183.0 million of variable-rate indebtedness outstanding that had not been swapped for a fixed interest rate.
If there are defaults under mortgage note investments, we may not be able to foreclose on or obtain a suitable remedy with respect to such investments. Specifically, we may not be able to repossess and sell the underlying properties quickly, which could reduce the value of our investment.
Delays in liquidating defaulted mortgage note investments could reduce our investment returns. If there are defaults under mortgage note investments, we may not be able to foreclose on or obtain a suitable remedy with respect to such investments. Specifically, we may not be able to repossess and sell the underlying properties quickly, which could reduce the value of our investment.
The Affordable Care Act and associated regulations continue to encourage increasing enrollment in plans offered by private insurers who choose to participate in state-run exchanges, but potential changes by the Trump Administration affecting Medicaid and the availability of lower cost, lower coverage plans creates uncertainty around private insurer costs and, thereby, payment rates to providers .
While the Affordable Care Act and associated regulations continued to encourage increasing enrollment in plans offered by private insurers who choose to participate in state-run exchanges, changes by the 28 Trump Administration affecting Medicaid enrollment and payments, and the availability of lower cost, lower coverage plans creates uncertainty around private insurer costs and, thereby, payment rates to providers .
After the expiration of any applicable transfer restrictions imposed by our 2024 Incentive Plan, stock purchase agreements or lockup agreements with us, our executive officers and directors will have the ability to sell all of any portion of the applicable common stock which could cause the market price of our common stock to decline. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
After the expiration of any applicable transfer restrictions imposed by our 2024 Incentive Plan, restricted stock award agreements or securities laws, our executive officers and directors will have the ability to sell all of any portion of the applicable common stock which could cause the market price of our common stock to decline. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Although the Federal Reserve lowered the benchmark federal funds rate in September 2024 and November 2024, it may raise the federal funds rate in the future, which would likely lead to higher interest rates in the credit markets and the possibility of slowing economic growth.
Although the Federal Reserve lowered the benchmark federal funds rate in 2024 and 2025, it ma y raise the federal funds rate in the future, which would likely lead to higher interest rates in the credit markets and the possibility of slowing economic growth.
Although our board of directors has no such intention at the present time, it could establish a class or series of preferred shares that could, depending on the terms of such class or series, delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests.
Although our board of directors has no such intention at the present time, it could establish a class or series of preferred shares that could, depending on the terms of such class or series, delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests. 40 Certain provisions in the partnership agreement of our operating partnership may delay or prevent unsolicited acquisitions of us.
Because of the uncertainty of market conditions that may affect the future disposition of our properties, and the potential payment of prepayment penalties upon such disposition, we cannot assure you that we will be able to sell our properties at a profit in the future, which could materially adversely affect our business, financial condition and results of operations and our ability to make distributions to our stockholders.
Because of the uncertainty of market conditions that may affect the future disposition of our properties, and the potential payment of prepayment penalties upon such disposition, we cannot assure you that we will be able to sell our properties at a profit in the future, which could materially adversely affect our business, financial condition and results of operations and our ability to make distributions to our stockholders. 32 If we sell properties by providing financing to purchasers, defaults by the purchasers would adversely affect our cash flows.
Our charter and bylaws, the partnership agreement of our operating partnership and Maryland law also contain other provisions that may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interest. 40 We may change our business, investment and financing strategies without stockholder approval.
Our charter and bylaws, the partnership agreement of our operating partnership and Maryland law also contain other provisions that may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interest.
Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs. The Code also imposes a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis.
Overall, for tax years beginning after December 31, 2025, no more than 25% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs. The Code also imposes a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis.
As such, if we do not have access to off-market or lightly marketed deal flow in the future, our ability to locate and acquire additional properties in our target submarkets at attractive prices could be materially and adversely affected, which could materially impede our growth, and, as a result, adversely affect our operating results.
As such, if we do not have access to off-market or lightly marketed deal flow in the future, our ability to locate and acquire additional properties in our target submarkets at attractive prices could be materially and adversely affected, which could materially impede our growth, and, as a result, adversely affect our operating results. 17 Inflation and the U.S. government’s response thereto could adversely impact our tenants and our operations.
If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that will substantially reduce the funds available for distribution to our stockholders because: • we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates; • we could be subject to the federal corporate alternative minimum tax and increased state and local taxes; and • unless we are entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.
Legislation, new Treasury Regulations, administrative interpretations or court decisions may materially and adversely affect our ability to qualify as a REIT for U.S. federal income tax purposes. 42 If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that will substantially reduce the funds available for distribution to our stockholders because: • we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates; • we could be subject to the federal corporate alternative minimum tax and increased state and local taxes; and • unless we are entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.
Additionally, the California Privacy Rights Act passed in November 2020, with the majority of its provisions becoming operative January 1, 2023. These laws require our tenants to safeguard personal information, and potentially other information, against reasonably anticipated threats or hazards to the information.
Additionally, the California Privacy Rights Act passed in November 2020, with the majority of its provisions becoming operative January 1, 2023. These laws require our tenants to safeguard personal information, and potentially other information, against reasonably anticipated threats or hazards to the information. The use of Artificial Intelligence (“AI”) in health care continues to increase and evolve.
Also, the existence of common stock issuable under our 2024 Incentive Plan may adversely affect the terms upon which we may be able to obtain additional capital through the sale of equity securities.
Also, the existence of common stock issuable under our 2024 Incentive Plan may adversely affect the terms upon which we may be able to obtain additional capital through the sale of equity securities. In addition, future issuances of our common stock may be dilutive to existing stockholders.
As of December 31, 2024, we had $487.0 million outstanding under our Credit Facility, including our term loans.
As of December 31, 2025, we had $533.0 million outstanding under our Credit Facility, including our term loans.
Furthermore, if one or more of the analysts who do cover us downgrades our shares or our industry, or the stock of any of our competitors, the market price of our common stock could decline.
We have no control over these analysts. Furthermore, if one or more of the analysts who do cover us downgrades our shares or our industry, or the stock of any of our competitors, the market price of our common stock could decline.
Bankruptcy Court for the Southern District of Texas during 2023. We may have difficulty finding suitable replacement tenants in the event of non-renewal of our leases or a tenant default. We cannot predict whether our tenants will renew existing leases beyond their current terms.
We may have difficulty finding suitable replacement tenants in the event of non-renewal of our leases or a tenant default. We cannot predict whether our tenants will renew existing leases beyond their current terms.
In addition, we do not know whether existing requirements will change or whether future requirements will require us to make significant unanticipated expenditures that will adversely impact our financial condition, results of operations, cash flows and our ability to pay distributions, and the market price of our common stock.
In addition, we do not know whether existing requirements will change or whether future requirements will require us to make significant unanticipated expenditures that will adversely impact our financial condition, results of operations, cash flows and our ability to pay distributions, and the market price of our common stock. 34 Environmental compliance costs and liabilities associated with owning and leasing our properties may affect our results of operations.
Our partnership agreement provides that, in the event of a conflict between the interests of our operating partnership or any limited partner, on the one hand, and the company or our stockholders, on the other hand, we, as the general partner of our operating partnership, may give priority to the separate interests of the company or our stockholders (including with respect to tax consequences). 35 Further, any action or failure to act on our part or on the part of our directors that gives priority to the interests of the company or our stockholders and does not result in a violation of our partnership agreement does not violate the duty of loyalty or any other duty that we, in our capacity as the general partner of our operating partnership, owe to our operating partnership and its limited partners or violate the obligation of good faith and fair dealing.
Further, any action or failure to act on our part or on the part of our directors that gives priority to the interests of the company or our stockholders and does not result in a violation of our partnership agreement does not violate the duty of loyalty or any other duty that we, in our capacity as the general partner of our operating partnership, owe to our operating partnership and its limited partners or violate the obligation of good faith and fair dealing.
Therefore, we may not be able to vary our portfolio 31 promptly in response to economic or other conditions or on favorable terms, which may adversely affect our cash flows, our ability to make distributions to our stockholders and the market price of our common stock.
Therefore, we may not be able to vary our portfolio promptly in response to economic or other conditions or on favorable terms, which may adversely affect our cash flows, our ability to make distributions to our stockholders and the market price of our common stock. We may suffer reduced or delayed revenues for, or have difficulty selling, properties with vacancies.
At December 31, 2024, we had 68 leases scheduled to expire in 2025 and 72 leases scheduled to expire in 2026 , which represent 9.6% and 11.3% of our total annualized lease revenue, respectively, for the year ended December 31, 2024.
At December 31, 2025, we had 77 leases scheduled to expire in 2026 and 68 leases scheduled to expire in 2027 , which represent 9.0% and 7.2% of our total annualized lease revenue, respectively, for the year ended December 31, 2025.
We cannot predict the effect of additional costs on tenants to comply with these laws nor the costs associated with a potential breach of protected health information or personally identifiable information by a tenant and what effect they might have on the expenses of our tenants and their ability to meet their obligations to us, which in turn could have a material adverse effect on our business, financial condition and results of operations, our ability to pay distributions to our stockholders and the market price of our common stock. 30 Our healthcare-related tenants may be subject to significant legal actions that could subject them to increased operating costs and substantial uninsured liabilities, which may affect their ability to pay their rent payments to us, and we could be subject to healthcare industry violations.
We cannot predict the effect of additional costs on tenants to comply with these laws nor the costs associated with a potential breach of protected health information or personally identifiable information by a tenant and what effect they might have on the expenses of our tenants and their ability to meet their obligations to us, which in turn could have a material adverse effect on our business, financial condition and results of operations, our ability to pay distributions to our stockholders and the market price of our common stock.
If we become more highly leveraged, the resulting increase in outstanding debt could adversely affect our ability to make debt service payments, to pay our anticipated distributions and to make the distributions required to qualify as a REIT.
We could alter the balance between our total outstanding indebtedness and the value of our properties at any time. If we become more highly leveraged, the resulting increase in outstanding debt could adversely affect our ability to make debt service payments, to pay our anticipated distributions and to make the distributions required to qualify as a REIT.
These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some stockholders or limited partners might consider such proposals, if made, desirable.
Provisions of the partnership agreement of our operating partnership may delay or make more difficult unsolicited acquisitions of us or changes of our control. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some stockholders or limited partners might consider such proposals, if made, desirable.
However, for tax years beginning after December 31, 2017, but before January 1, 2026, certain stockholders may be able to deduct up to 20% of "qualified REIT dividends" pursuant to Section 199A of the Code subject to certain limitations set forth in the Code. Distributions to tax-exempt stockholders may be classified as unrelated business tax income.
However, certain stockholders may be able to deduct up to 20% of "qualified REIT dividends" pursuant to Section 199A of the Code subject to certain limitations set forth in the Code. Distributions to tax-exempt stockholders may be classified as unrelated business taxable income.
If the market price of our common stock declines significantly, you may be unable to resell your shares at or above the price at which you purchased such shares. We cannot assure you that the market price of our common stock will not fluctuate or decline significantly in the future.
If the market price of our common stock declines significantly, you may be unable to resell your shares at or above the price at which you purchased such shares.
We may be unable to complete any pending acquisitions, which would adversely affect our ability to make distributions to our stockholders and could have a material adverse impact on our results of operations, earnings and cash flow, and even if acquisitions are completed, we may fail to successfully operate acquired properties.
Our business could be adversely affected by an inability to retain personnel or upward pressure on wages as a result of the competitive labor market. 18 We may be unable to complete any pending acquisitions, which would adversely affect our ability to make distributions to our stockholders and could have a material adverse impact on our results of operations, earnings and cash flow, and even if acquisitions are completed, we may fail to successfully operate acquired properties.
These swap agreements involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements. In addition, these arrangements may not be effective in reducing the Company's exposure to changes in interest rates and no hedging activity can completely insulate us from the risks associated with changes in interest rates.
In addition, these arrangements may not be effective in reducing the Company's exposure to changes in interest rates and no hedging activity can completely insulate us from the risks associated with changes in interest rates.
A large percentage of our properties are located in Texas, Illinois, and Ohio, and changes in these markets may materially adversely impact our business and financial condition. Of our investments in 200 properties, the properties located in Texas, Illinois, and Ohio provide, in the aggregate, approximately 38.4% of our annualized rent as of December 31, 2024.
A large percentage of our annualized rent is provided by properties that are located in Texas and Florida and changes in these markets may materially adversely impact our business and financial condition. Of our investments in 198 properties, the properties located in Texas and Florida provide, in the aggregate, approximately 26.7% of our annualized rent as of December 31, 2025.
Each executive officer has significant experience in the healthcare and/or real estate industry and has developed significant relationships with various healthcare providers and real estate brokers throughout the United States.
Monroe IV, our Executive Vice President and Chief Financial Officer, and Ms. Leigh Ann Stach, our Executive Vice President and Chief Accounting Officer. Each executive officer has significant experience in the healthcare and/or real estate industry and has developed significant relationships with various healthcare providers and real estate brokers throughout the United States.
Depending upon the amount or nature of such liabilities, our business, financial condition and results of operations, our ability to make distributions to our shareholders and the market price of our shares may be adversely affected. 36 Required payments of principal and interest on our Credit Facility may leave us with insufficient cash to operate our properties or to pay the distributions currently contemplated or necessary to qualify as a REIT and may expose us to the risk of default under our debt obligations.
Required payments of principal and interest on our Credit Facility may leave us with insufficient cash to operate our properties or to pay the distributions currently contemplated or necessary to qualify as a REIT and may expose us to the risk of default under our debt obligations.
There is also some indication that ESG and sustainability goals are becoming more controversial, as some governmental entities and certain investor constituencies question the appropriateness or object to ESG and sustainability initiatives.
Some legislatures, government agencies and listing exchanges have mandated or proposed, and others may in the future further mandate, certain ESG disclosure or performance. There is also some indication that ESG and sustainability goals are becoming more controversial, as some governmental entities and certain investor constituencies question the appropriateness or object to ESG and sustainability initiatives.
In recent years, the assessment of the potential impact of climate change has begun to impact the activities of government authorities and other areas that impact the business environment in the U.S., including, but not limited to, energy-efficiency measures, water use measures and land-use practices.
In recent years, the assessment of the potential impact of climate change has begun to impact the activities of government authorities and other areas that impact the business environment in the U.S., including, but not limited to, energy-efficiency measures, water use measures and land-use practices. 22 Various federal, state and local laws and regulations have been implemented or are under consideration to mitigate the effects of climate change caused by greenhouse gas emissions.
The realization of any or all of these risks may have an adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the market price of our common stock. 37 We could become highly leveraged in the future because our organizational documents contain no limitations on the amount of debt that we may incur.
The realization of any or all of these risks may have an adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the market price of our common stock.
This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have a material adverse effect on us, including our financial condition, results of operations, cash flow and the market price of our common stock.
This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have a material adverse effect on us, including our financial condition, results of operations, cash flow and the market price of our common stock. 47 Increases in market interest rates may have an adverse effect on the market price of our common stock as prospective purchasers of our common stock may expect a higher dividend yield and as an increased cost of borrowing may decrease our funds available for distribution.
Certain provisions of Maryland law could inhibit changes of control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests.
These restrictions may also have the effect of delaying, deferring, or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer, or sale of all or substantially all of our assets) that might provide a premium price for holders of our common stock. 39 Certain provisions of Maryland law could inhibit changes of control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests.
Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of our subsidiaries will be available to satisfy the claims of our stockholders only after all of our and our subsidiaries’ liabilities and obligations have been paid in full. 41 Our operating partnership may issue additional OP units to third parties without the consent of our stockholders, which would reduce our ownership percentage in our operating partnership and would have a dilutive effect on the amount of distributions made to us by our operating partnership and, therefore, the amount of distributions we can make to our stockholders.
Our operating partnership may issue additional OP units to third parties without the consent of our stockholders, which would reduce our ownership percentage in our operating partnership and would have a dilutive effect on the amount of distributions made to us by our operating partnership and, therefore, the amount of distributions we can make to our stockholders.
Consequently, we may choose not to engage in an otherwise attractive sale of property or may conduct such a sale through a TRS, which would subject such sale to federal and state income taxation. 43 Any ownership of a TRS will be subject to limitations, and our transactions with a TRS cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.
Any ownership of a TRS will be subject to limitations, and our transactions with a TRS cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.
While inflation has shown signs of moderating, it remains uncertain whether substantial inflation in the United States will be sustained over an extended period of time.
Inflation, both real or anticipated, could adversely affect the economy and the costs of labor, goods and services to our tenants. While inflation has shown signs of moderating, it remains uncertain whether substantial inflation in the United States will be sustained over an extended period of time.
Our properties will be subject to increases in tax rates, utility costs, operating expenses, insurance costs, repairs, and maintenance and administrative expenses. If we are unable to offset such cost increases through rent increases, we could be required to fund those increases in operating costs which could adversely affect funds available for future acquisitions or cash available for distribution.
If we are unable to offset such cost increases through rent increases, we could be required to fund those increases in operating costs which could adversely affect funds available for future acquisitions or cash available for distribution. 33 Our property taxes could increase due to property tax rate changes or reassessments, which could materially adversely impact our cash flows.
If we sell properties by providing financing to purchasers, defaults by the purchasers would adversely affect our cash flows. If we decide to sell any of our properties, we intend to use our best efforts to sell them for cash. However, in some instances we may sell our properties by providing financing to purchasers.
If we decide to sell any of our properties, we intend to use our best efforts to sell them for cash. However, in some instances we may sell our properties by providing financing to purchasers. When we provide financing to purchasers, we will bear the risk that the purchaser may default, which could negatively impact our cash distributions to stockholders.
In addition, future issuances of our common stock may be dilutive to existing stockholders. 47 If securities analysts do not publish research or reports about our industry or if they downgrade our common stock or the healthcare-related real estate sector, the price of our common stock could decline.
If securities analysts do not publish research or reports about our industry or if they downgrade our common stock or the healthcare-related real estate sector, the price of our common stock could decline. The trading market for our common stock relies in part upon the research and reports that industry or financial analysts publish about us or our industry.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeSince its inception, the Company has not had a security breach, and has not incurred any resulting expenses, penalties or settlements. 49 Reporting to the Board of Directors The Vice President of Information Technology, in his capacity, regularly informs the Chief Executive Officer and Chief Financial Officer of all aspects related to cybersecurity risks and incidents.
Biggest changeReporting to the Board of Directors The Vice President of Information Technology, in his capacity, regularly informs the Chief Executive Officer and Chief Financial Officer of all aspects related to cybersecurity risks and incidents. This ensures that the highest levels of management are kept abreast of the cybersecurity posture and potential risks facing the Company.
This 48 approach is designed to mitigate risks related to data breaches or other security incidents originating from third-parties. Risks from Cybersecurity Threats We have not encountered cybersecurity challenges that have materially impaired our operations or financial standing. Governance The Board of Directors is acutely aware of the critical nature of managing risks associated with cybersecurity threats.
This approach is designed to mitigate risks related to data breaches or other security incidents originating from third-parties. Risks from Cybersecurity Threats We have not encountered cybersecurity challenges that have materially impaired our operations or financial standing. Governance The Board of Directors is acutely aware of the critical nature of managing risks associated with cybersecurity threats.
The Board has established robust oversight mechanisms to ensure effective governance in managing risks associated with cybersecurity threats because we recognize the significance of these threats to our operational integrity and stakeholder confidence.
The Board has established robust oversight mechanisms to ensure effective governance in managing risks associated with cybersecurity threats because we recognize the significance of these threats to our operational integrity and stakeholder confidence. Board of Directors Oversight The Audit Committee of the Company's Board of Directors oversees the Company's cybersecurity risk management.
Board of Directors Oversight Management has formed an IT Committee consisting of the Chief Executive Officer, Chief Financial Officer, and the Vice President of Information Technology to review and discuss information security matters and cyber security risks. The committee meets at least twice a year and reports to the Board of Directors as needed.
Management has formed an IT Committee consisting of the Chief Executive Officer, Chief Financial Officer, and the Vice President of Information Technology to review and discuss information security matters and cyber security risks. The committee meets at least twice a year and reports to the Audit Committee on a regular basis.
In addition, all Company employees are required to complete mandatory cybersecurity training each year. Monitor Cybersecurity Incidents The Vice President of Information Technology is continually informed about the latest developments in cybersecurity, including potential threats and innovative risk management techniques. This ongoing knowledge acquisition is crucial for the effective prevention, detection, mitigation, and remediation of cybersecurity incidents.
Monitor Cybersecurity Incidents The Vice President of Information Technology is continually informed about the latest developments in cybersecurity, including potential threats and innovative risk management techniques. This ongoing knowledge acquisition is crucial for the effective prevention, detection, mitigation, and remediation of cybersecurity incidents.
In addition, the IT Committee and the Board maintain an ongoing dialogue regarding emerging or potential cybersecurity risks, ensuring the Board’s oversight is proactive and responsive. The IT Committee actively participates in strategic decisions related to cybersecurity, offering guidance and approval for major initiatives. This involvement ensures that cybersecurity considerations are integrated into the broader strategic objectives of the Company.
In addition, the IT Committee and the Board maintain an ongoing dialogue regarding emerging or potential cybersecurity risks, ensuring the Board’s oversight is proactive and responsive. The IT Committee actively 49 participates in strategic decisions related to cybersecurity, offering guidance and approval for major initiatives.
This plan includes immediate actions to mitigate the impact and long-term strategies for remediation and prevention of future incidents. As part of the managed monitoring and remediation platform, the Company benefits from a $100,000 breach prevention warranty.
This plan includes immediate actions to mitigate the impact and long-term strategies for remediation and prevention of future incidents. As part of the managed monitoring and remediation platform, the Company benefits from a $100,000 breach prevention warranty. Since its inception, the Company has not had a security breach, and has not incurred any resulting expenses, penalties or settlements.
CIS controls map to many established standards and regulatory frameworks, including the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF) and NIST SP 800-53, the ISO 27000 series of standards, PCI DSS, HIPAA, and others.
CIS controls map to many established standards and regulatory frameworks, including the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF) and NIST SP 800-53, the ISO 27000 series of standards, PCI DSS, HIPAA, and others. 48 Managing Material Risks & Integrated Overall Risk Management The Company has strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management.
Our risk management team works closely with our IT department to continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs.
This integration ensures that cybersecurity considerations are an integral part of our decision-making processes at every level. Our risk management team works closely with our IT department to continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs.
This ensures that the highest levels of management are kept abreast of the cybersecurity posture and potential risks facing the Company. Furthermore, significant cybersecurity matters, and strategic risk management decisions are escalated to the Board of Directors, ensuring that they have comprehensive oversight and can provide guidance on critical cybersecurity issues.
The Audit Committee receives periodic updates from management regarding cybersecurity risks and reports on such matters to the Board of Directors on a quarterly basis. Furthermore, significant cybersecurity matters, and strategic risk management decisions are escalated to the Board of Directors as circumstances require, ensuring that they have comprehensive oversight and can provide guidance on critical cybersecurity issues. 50
Risk Management Personnel Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with the Vice President of Information Technology. Our Vice President of Information Technology has over 25 years of experience in the information technology field and has been a member of and led numerous teams responsible for cybersecurity operations.
Our Vice President of Information Technology has over 25 years of experience in the information technology field and has been a member of and led numerous teams responsible for cybersecurity operations. In addition, all Company employees are required to complete mandatory cybersecurity training each year.
Removed
Managing Material Risks & Integrated Overall Risk Management The Company has strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management. This integration ensures that cybersecurity considerations are an integral part of our decision-making processes at every level.
Added
This involvement ensures that cybersecurity considerations are integrated into the broader strategic objectives of the Company. Risk Management Personnel Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with the Vice President of Information Technology.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeTotal Leased Square Footage Annualized Lease Revenue Year Number of Leases Expiring Amount (in thousands) Percent (%) Amount (in thousands) Percent (%) 2025 68 402 10.0 % $ 10,312 9.6 % 2026 72 554 13.7 % 12,162 11.3 % 2027 63 371 9.2 % 7,870 7.3 % 2028 58 386 9.6 % 8,187 7.6 % 2029 42 352 8.7 % 8,775 8.1 % 2030 20 159 3.9 % 4,148 3.8 % 2031 27 367 9.1 % 10,024 9.3 % 2032 14 148 3.7 % 2,227 2.1 % 2033 13 79 2.0 % 1,656 1.5 % 2034 23 327 8.1 % 12,151 11.3 % Thereafter 29 870 21.6 % 29,912 27.8 % Month-to-Month 7 18 0.4 % 314 0.3 % Totals 436 4,033 100.0 % $ 107,738 100.0 %
Biggest changeTotal Leased Square Footage Annualized Lease Revenue Year Number of Leases Expiring Amount (in thousands) Percent (%) Amount (in thousands) Percent (%) 2026 77 460 11.3 % $ 10,144 9.0 % 2027 68 373 9.2 % 8,099 7.2 % 2028 70 480 11.8 % 10,070 8.9 % 2029 45 370 9.1 % 9,454 8.4 % 2030 37 303 7.4 % 6,918 6.1 % 2031 28 390 9.6 % 10,884 9.6 % 2032 25 206 5.1 % 4,070 3.6 % 2033 13 75 1.8 % 1,655 1.5 % 2034 19 255 6.3 % 9,356 8.3 % 2035 16 233 5.7 % 8,831 7.8 % Thereafter 32 890 21.7 % 32,080 28.5 % Month-to-Month 9 41 1.0 % 1,230 1.1 % Totals 439 4,076 100.0 % $ 112,791 100.0 %
ITEM 2. PROPERTIES In addition to the information provided below, see Item 1, "Business," Note 2 – Real Estate Investments to the Consolidated Financial Statements in Item 8 "Financial Statements and Supplementary Data," and Schedule III of Item 15 of this Annual Report on Form 10-K for more detailed information about the Company's properties as of December 31, 2024.
ITEM 2. PROPERTIES In addition to the information provided below, see Item 1, "Business," Note 2 – Real Estate Investments to the Consolidated Financial Statements in Item 8 "Financial Statements and Supplementary Data," and Schedule III of Item 15 of this Annual Report on Form 10-K for more detailed information about the Company's properties as of December 31, 2025.
Scheduled Lease Expirations As of December 31, 2024, the weighted average remaining years to maturity pursuant to the leases with our tenants was approximately 6.7 years, with expirations through 2044. The table below details scheduled lease expirations, as of December 31, 2024, for our properties for the periods indicated.
Scheduled Lease Expirations As of December 31, 2025, the weighted average remaining years to maturity pursuant to the leases with our tenants was approximately 7.0 years, with expirations through 2046. The table below details scheduled lease expirations, as of December 31, 2025, for our properties for the periods indicated.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. ITEM 4. MINE SAFETY DISCLOSURES None. 50 PART II.
Biggest changeThe Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. ITEM 4. MINE SAFETY DISCLOSURES None. 51 PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Ending Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Community Healthcare Trust Incorporated $ 100.00 $ 114.20 $ 118.86 $ 94.24 $ 73.98 $ 58.09 Russell 3000 Index $ 100.00 $ 120.89 $ 151.91 $ 122.73 $ 154.59 $ 191.39 NAREIT All Equity REIT Index $ 100.00 $ 94.88 $ 134.06 $ 100.62 $ 112.04 $ 117.56 The information provided under the heading “Stock Performance Graph” shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to its proxy regulations or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, other than as provided in Item 201 of Regulation S-K.
Biggest changePeriod Ending Index 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 Community Healthcare Trust Incorporated $ 100.00 $ 104.08 $ 82.52 $ 64.78 $ 50.87 $ 48.94 Russell 3000 Index $ 100.00 $ 125.66 $ 101.53 $ 127.88 $ 158.32 $ 185.47 NAREIT All Equity REIT Index $ 100.00 $ 141.30 $ 106.05 $ 118.09 $ 123.90 $ 126.71 The information provided under the heading “Stock Performance Graph” shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to its proxy regulations or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, other than as provided in Item 201 of Regulation S-K.
The information provided in this section shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. 51 ITEM 6. [RESERVED] Intentionally omitted.
The information provided in this section shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. ITEM 6. [RESERVED] Intentionally omitted. 52
The performance graph assumes that the value of the investment in our common stock, the Russell 3000 Index and the NAREIT All Equity REIT Index was $100 at December 31, 2019 and that all dividends were reinvested.
The performance graph assumes that the value of the investment in our common stock, the Russell 3000 Index and the NAREIT All Equity REIT Index was $100 at December 31, 2020 and that all dividends were reinvested.
Stock Performance Graph The following graph compares, over a measurement period beginning December 31, 2019 and ending on December 31, 2024, the cumulative total return on our common stock with the cumulative total return on the stocks included in (i) the Russell 3000 Index and (ii) the NAREIT All Equity REIT Index.
Stock Performance Graph The following graph compares, over a measurement period beginning December 31, 2020 and ending on December 31, 2025, the cumulative total return on our common stock with the cumulative total return on the stocks included in (i) the Russell 3000 Index and (ii) the NAREIT All Equity REIT Index.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Shares of the Company's common stock are traded on the New York Stock Exchange under the symbol "CHCT." At February 11, 2025, there were 47 stockholders of record. Future dividends will be declared and paid at the discretion of the Board of Directors.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Shares of the Company's common stock are traded on the New York Stock Exchange under the symbol "CHCT." At February 10, 2026, there were 46 stockholders of record. Future dividends will be declared and paid at the discretion of the Board of Directors.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

68 edited+20 added−31 removed46 unchanged
Biggest changeYear Ended December 31, (In thousands) 2024 2023 2022 Net (loss) income $ (3,181) $ 7,714 $ 22,019 General and administrative (1) 19,058 15,539 14,837 Accelerated amortization of deferred compensation — 11,799 — Depreciation and amortization 42,778 39,693 32,339 Credit loss reserve 11,000 — — Impairments, net of net gains on the sales of depreciable real estate assets 121 102 — Interest expense 23,706 17,792 11,873 Deferred income taxes — 306 41 Interest and other income, net (530) (813) (66) NOI $ 92,952 $ 92,132 $ 81,043 ____________________________ (1) 2023 excludes accelerated amortization of stock-based compensation shown separately below.
Biggest changeYear Ended December 31, (In thousands) 2025 2024 2023 Net income (loss) $ 5,102 $ (3,181) $ 7,714 General and administrative (1) 19,193 19,058 15,539 Severance and transition related expenses 1,311 — — Accelerated amortization of stock-based compensation 4,591 — 11,799 Depreciation and amortization 43,538 42,778 39,693 Credit loss reserve 8,672 11,000 — (Gains) on the sales of depreciable real estate assets, net of losses and impairments (11,803) 121 102 Interest expense 26,978 23,706 17,792 Deferred income taxes 23 — 306 Interest and other income, net (34) (530) (813) NOI $ 97,571 $ 92,952 $ 92,132 ____________________________ (1) General and administrative expenses for 2025 and 2023 exclude accelerated amortization of stock-based compensation and severance and transition related expenses, which are shown separately in the table. 63 EBITDA r e and Adjusted EBITDA re The Company uses the NAREIT definition of EBITDA re which is net income plus interest expense, income tax expense, and depreciation and amortization, plus losses or minus gains on the disposition of depreciable property, including losses/gains on change of control, plus impairment write-downs of depreciable property and of investments in unconsolidated affiliates caused by a decrease in value of depreciable property in the affiliate, plus or minus adjustments to reflect the entity's share of EBITDA re of unconsolidated affiliates and consolidated affiliates with non-controlling interest.
If a sale of the borrower's collateral, such as the underlying business or real estate, is expected to repay amounts due to the Company, the Company will also evaluate the value of the underlying collateral in measuring any expected credit loss which may include, but is not limited to, the borrower's current or projected operating cash flows and financial performance, the borrower's ability to refinance the loan, market liquidity and/or other circumstances that could impact the borrower's ability to satisfy its obligations under its notes with the Company.
If a sale of the borrower's collateral, such as the underlying business or real estate, is expected to repay amounts due to the Company, the Company will also evaluate the value of the underlying collateral in measuring any expected credit 66 loss which may include, but is not limited to, the borrower's current or projected operating cash flows and financial performance, the borrower's ability to refinance the loan, market liquidity and/or other circumstances that could impact the borrower's ability to satisfy its obligations under its notes with the Company.
The Company believes that by excluding the effect of depreciation, amortization, impairments and gains or losses from sales of real estate, losses and impairment of incidental assets, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO, AFFO, FFO per share and AFFO per share can facilitate comparisons of operating performance between periods.
The Company believes that by excluding the effect of depreciation, amortization, impairments and gains or losses from sales of real estate, losses and impairment of 61 incidental assets, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO, AFFO, FFO per share and AFFO per share can facilitate comparisons of operating performance between periods.
In the case of a below-market lease, we also evaluate any renewal options associated with that lease to determine if the intangible should include those periods. The capitalized above-market or below-market lease intangibles are amortized as a reduction from or an addition to rental income over the estimated remaining term of the respective leases.
In the case of a below-market lease, we also evaluate any renewal options associated with that lease to determine if the intangible should include those periods. The capitalized above-market or below-market lease 65 intangibles are amortized as a reduction from or an addition to rental income over the estimated remaining term of the respective leases.
The Company’s ability to borrow under the Credit Facility is subject to its ongoing compliance with a number of customary affirmative and negative covenants, including limitations with respect to liens, indebtedness, distributions, mergers, consolidations, investments, restricted payments and asset sales, as well as financial maintenance covenants.
The Company’s ability to borrow under the Credit Facility is subject to its ongoing compliance with a number of customary affirmative and negative covenants, including limitations with respect to liens, indebtedness, distributions, mergers, consolidations, investments, restricted payments and asset sales, as well as financial 59 maintenance covenants.
Under the amended ATM Program, the Company may issue and sell shares of its common stock, having an aggregate gross sales price of up to $300.0 million, exclusive of shares of Common Stock sold under its prior agreements with our Agents.
ATM Program Under the ATM Program, the Company may issue and sell shares of its common stock, having an aggregate gross sales price of up to $300.0 million, exclusive of shares of common stock sold under its prior agreements with our Agents.
Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO") FFO is an operating performance measure adopted by the National Association of Real Estate Investment Trusts, 59 Inc. (“NAREIT”).
Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO") FFO is an operating performance measure adopted by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”).
Inflation Inflation has significantly increased during the past couple of years and a prolonged period of high and persistent inflation could cause an increase in our expenses, capital expenditures, and cost of our variable-rate borrowings which could have a material impact on our financial position or results of operations.
Inflation Inflation has significantly increased during the past several years and a prolonged period of high and persistent inflation could cause an increase in our expenses, capital expenditures, and cost of our variable-rate borrowings which could have a material impact on our financial position or results of operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations” in our 2023 Annual Report on Form 10-K for a comparison of the year ended December 31, 2023 compared to December 31, 2022, which is incorporated by reference.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations” in our 2024 Annual Report on Form 10-K for a comparison of the year ended December 31, 2024 compared to December 31, 2023, which is incorporated by reference.
Ground Leases At December 31, 2024, the Company was obligated, as the lessee, under four non-prepaid ground leases accounted for as operating leases with expiration dates through 2076, including renewal options, and two non-prepaid ground leases accounted for as a financing lease with an expiration date through 2109, including renewal options.
Ground Leases At December 31, 2025, the Company was obligated, as the lessee, under four non-prepaid ground leases accounted for as operating leases with expiration dates through 2076, including renewal options, and two non-prepaid ground leases accounted for as a financing lease with an expiration date through 2109, including renewal options.
Use of Estimates in the Consolidated Financial Statements Preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may materially differ from those estimates. 64
Use of Estimates in the Consolidated Financial Statements Preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may materially differ from those estimates. 67
Cash flows provided by operating activities for the years ended December 31, 2024, 2023 and 2022 were generally provided by contractual rents and interest on notes receivables, net of property operating expenses not reimbursed by the tenants and general and administrative expenses.
Cash flows provided by operating activities for the years ended December 31, 2025, 2024 and 2023 were generally provided by contractual rents and interest on notes receivables, net of property operating expenses not reimbursed by the tenants, general and administrative expenses, and interest expense.
The Company cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs. Operating Activities Cash flows provided by operating activities for the years ended December 31, 2024, 2023 and 2022 were approximately $58.9 million, $61.4 million, and $60.3 million, respectively.
The Company cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs. Operating Activities Cash flows provided by operating activities for the years ended December 31, 2025, 2024 and 2023 were approximately $56.4 million, $58.9 million, and $61.4 million, respectively.
Any rental increases related to the Company's ground leases are generally either stated or based on the Consumer Price Index. At December 31, 2024, the Company's aggregate obligation under these ground leases was approximately $8.7 million. See Note 3 – Real Estate Leases to the Consolidated Financial Statements.
Any rental increases related to the Company's ground leases are generally either stated or based on the Consumer Price Index. At December 31, 2025, the Company's aggregate obligation under these ground leases was approximately $8.5 million. See Note 3 – Real Estate Leases to the Consolidated Financial Statements.
The table below reconciles net income to FFO and AFFO for the years ended December 31, 2024, 2023, and 2022.
The table below reconciles net income to FFO and AFFO for the years ended December 31, 2025, 2024, and 2023.
The Company was in compliance with its financial covenants under its Credit Facility as of December 31, 2024.
The Company was in compliance with its financial covenants under its Credit Facility as of December 31, 2025.
The table below reconciles net income to NOI for the years ended December 31, 2024, 2023, and 2022.
The table below reconciles net income to NOI for the years ended December 31, 2025, 2024, and 2023.
The Company anticipates closing on one of these properties in the first quarter of 2025 with the remainder throughout 2025, 2026 and 2027; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually clos e.
The Company anticipates closing on one of these properties in the first quarter of 2026 with the remainder throughout 2026 and 2027; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually close.
The shares of common stock may be sold from time to time through or to one or more of the Agents, as may be determined by the Company in its sole discretion, subject to the terms and conditions of the agreement and applicable law.
The shares of common stock may be sold from time to time through or to one or more of the Agents, as may be determined by the Company in its sole discretion, subject to the terms and conditions of the third amended and restated sales agency agreement and applicable law.
As of December 31, 2024, the Company had approximately $2.0 million in commitments for capital improvement projects; four of these projects totaling $0.3 million, represent redevelopment projects of the buildings into different healthcare uses backed by long-term leases.
As of December 31, 2025, the Company had approximately $2.0 million in commitments for capital improvement projects; three of these projects totaling approximately $0.9 million, represent redevelopment projects of the buildings into different healthcare uses backed by long-term leases.
During the year ended December 31, 2024, we had expiring or terminated leases related to approximately 551,000 square feet, and we leased or renewed leases related to approximately 517,000 square feet. Purchase Option Provisions Certain of the Company's leases provide the lessee with a purchase option or a right of first refusal to purchase the leased property.
During the year ended December 31, 2025, we had expiring or terminated leases related to approximately 712,000 square feet, and we leased or renewed leases related to approximately 683,000 square feet. 53 Purchase Option Provisions Certain of the Company's leases provide the lessee with a purchase option or a right of first refusal to purchase the leased property.
Interest and other income Interest and other income decreased approximately $0.3 million for the year ended December 31, 2024 compared to the same period in 2023.
Interest and other income Interest and other income decreased approximately $0.5 million for the year ended December 31, 2025 compared to the same period in 2024.
Actual results could differ from those estimates. Set forth below is a summary of our accounting policies and estimates that we believe are critical to the preparation of our Consolidated Financial Statements. Our accounting policies are more fully discussed in Note 1 – Summary of Significant Accounting Policies to the Consolidated Financial Statements.
Set forth below is a summary of our accounting policies and estimates that we believe are critical to the preparation of our Consolidated Financial Statements. Our accounting policies are more fully discussed in Note 1 – Summary of Significant Accounting Policies to the Consolidated Financial Statements.
Four of these projects, with remaining obligations totaling $11.1 million as of December 31, 2024, represent redevelopment projects of the buildings into different healthcare uses backed by long term leases. 58 The Company has entered into contracts with various vendors for various capital improvement projects related to its portfolio.
Three of these projects, with remaining obligations totaling approximately $8.0 million as of December 31, 2025, represent redevelopment projects of the buildings into different healthcare uses backed by long term leases. The Company has entered into contracts with various vendors for various capital improvement projects related to its portfolio.
The Company also has seven properties under definitive purchase agreements, to be acquired after completion and occupancy, for an aggregate expected purchase price of ap proximately $169.5 million. The Company's expected returns on these investments are approximately 9.1% to 9.75%.
Acquisition Pipeline The Company has five properties under definitive purchase agreements, to be acquired after completion and occupancy, for an aggregate expected purchase price of approximately $122.5 million. The Company's expected returns on these investments are approximately 9.1% to 9.75%.
The Company had an aggregate gross investment of approximately $31.5 million in nine real estate properties as of December 31, 2024 that were subject to exercisable purchase options. Lease Expirations Approximately 7.3% to 11.3% of our leases (based on annualized rent) will expire in each of the next 5 years.
The Company had an aggregate gross investment of approximately $42.0 million in 13 real estate properties as of December 31, 2025 that were subject to exercisable purchase options. Lease Expirations Approximately 6.1% to 9.0% of our leases (based on annualized rent) will expire in each of the next 5 years.
Interest and other income for 2024 included an undistributed allowance for tenant improvements totaling $0.3 million for a lease that expired and $0.2 million of earnest money on a terminated contract on a property held for sale.
Interest and other income for 2024 included an undistributed allowance for tenant improvements totaling $0.3 million for a lease that expired and $0.2 million of earnest money on a terminated contract for a property held for sale. Year Ended December 31, 2024 Compared to December 31, 2023 See “Item 7.
The fair value of tangible property assets acquired considers the value of the property as if vacant determined by a combination of comparable sales, replacement cost, income valuation approach and other relevant data. The determination of fair value involves the use of significant judgment and estimation.
We expense transaction costs associated with business combinations in the period incurred. The fair value of tangible property assets acquired considers the value of the property as if vacant and determined by a combination of comparable sales, replacement cost, income valuation approach and other relevant data. The determination of fair value involves the use of significant judgment and estimation.
Year Ended December 31, (Amounts in thousands, except per share amounts) 2024 2023 2022 Net (loss) income $ (3,181) $ 7,714 $ 22,019 Real estate depreciation and amortization 43,277 40,103 32,602 Credit loss reserve (1) 11,000 — — Impairments, net of net gains on the sales of depreciable real estate assets 121 102 — Total adjustments 54,398 40,205 32,602 FFO $ 51,217 $ 47,919 $ 54,621 Straight-line rent (1,942) (3,052) (3,444) Stock-based compensation 9,987 8,166 9,415 Accelerated amortization of stock-based compensation (2) — 11,799 — Net gain from insurance recovery on casualty loss — (706) — AFFO $ 59,262 $ 64,126 $ 60,592 FFO per diluted common share $ 1.91 $ 1.86 $ 2.24 AFFO per diluted common share $ 2.21 $ 2.49 $ 2.49 Weighted Average Common Shares Outstanding-Diluted (3) 26,843 25,752 24,379 ____________________________ (1) During the second quarter of 2024, the Company recorded an $11.0 million credit loss reserve on notes receivable with a geriatric inpatient behavioral hospital tenant where collectibility was not reasonably assured.
Year Ended December 31, (Amounts in thousands, except per share amounts) 2025 2024 2023 Net income (loss) $ 5,102 $ (3,181) $ 7,714 Depreciation and amortization 43,909 43,277 40,103 Credit loss reserve (1) 8,672 11,000 — (Gains) on the sales of depreciable real estate assets, net of losses and impairments (11,803) 121 102 Total adjustments 40,778 54,398 40,205 FFO $ 45,880 $ 51,217 $ 47,919 Straight-line rent (3,721) (1,942) (3,052) Stock-based compensation 10,305 9,987 8,166 Accelerated amortization of stock-based compensation (2) 4,591 — 11,799 Severance and transition-related expenses (2) 1,311 — — Net gain from insurance recovery on casualty loss — — (706) AFFO $ 58,366 $ 59,262 $ 64,126 FFO per diluted common share $ 1.69 $ 1.91 $ 1.86 AFFO per diluted common share $ 2.15 $ 2.21 $ 2.49 Weighted Average Common Shares Outstanding-Diluted (3) 27,117 26,843 25,752 ____________________________ (1) During 2025 and 2024, the Company recorded credit loss reserves on its notes receivable with a geriatric inpatient behavioral hospital borrower/tenant totaling approximately $8.7 million and $11.0 million, respectively, where collectibility was not reasonably assured.
The Company anticipates closing on one of these properties in the first quarter of 2025 with the remainder throughout 2025, 2026 and 2027; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually clos e.
The Company's expected returns on these investments are approximately 9.1% to 9.75%. The Company anticipates closing on one of these properties in the first quarter of 2026 with the remainder throughout 2026 and 2027; however, the Company cannot provide assurance as to the timing of when, or whether, these transactions will actually close.
Real estate acquisitions During the year ended December 31, 2024, the Company acquired nine real estate properties for an aggregate purchase price of approximately $72.1 million. Upon acquisition, the properties, totaling approximately 261,000 square feet, were 99.3% leased in the aggregate with lease expirations through 2039.
Real estate acquisitions During the year ended December 31, 2025, the Company acquired three real estate properties for an aggregate purchase price of approximately $64.5 million. Upon acquisition, the properties, totaling approximately 113,000 square feet, were 100.0% leased in the aggregate with lease expirations through 2040.
Many of our lease agreements contain provisions designed to mitigate the adverse impact of inflation, including annual rent increases based on stated increases or CPI increases. In response to inflationary pressures, the Federal Reserve began raising interest rates in 2022.
Many of our lease agreements contain provisions designed to mitigate the adverse impact of inflation, including annual rent increases based on stated increases or CPI increases. In response to inflationary pressures, the Federal Reserve raised interest rates in 2022 and 2023, however, the Federal Reserve lowered interest rates in 2024 and 2025, and may provide additional rate changes during 2026.
Depreciation and amortization expense increased approximately $3.1 million, or 7.8%, for the year ended December 31, 2024 compared to the same period in 2023 due mainly to the following: • Depreciation and amortization related to properties acquired during 2024 and 2023 accounted for an increase of approximately $5.0 million; • Depreciation related to tenant and other improvements accounted for an increase of approximately $4.7 million; offset partially by • Real estate intangible assets acquired prior to 2023 that became fully depreciated resulted in a decrease of approximately $3.5 million; and • Depreciation and amortization on the properties classified as held for sale during 2023 and 2024 resulted in a decrease of approximately $1.6 million; and • Accelerated amortization of lease intangibles on the two GenesisCare properties where the leases were rejected in their 2023 bankruptcy resulted in a decrease of approximately $1.5 million.
Depreciation and amortization expense increased approximately $0.8 million, or 1.8%, for the year ended December 31, 2025 compared to the same period in 2024 due mainly to the following: • Depreciation and amortization related to properties acquired during 2025 and 2024 accounted for an increase of approximately $1.8 million; • Tenant improvements and other capital expenditures resulted in an increase of approximately $2.0 million; partially offset by • Properties that were sold or classified as held for sale during 2024 and 2025 resulted in a decrease of approximately $0.4 million; • Fully amortized land and building improvements resulted in a decrease of approximately $0.7 million; and • Real estate intangible assets acquired prior to 2024 that became fully depreciated resulted in a decrease of approximately $1.9 million; Gains on the sales of depreciable real estate assets, net of losses and impairments Gains on the sales of depreciable real estate assets, net of losses and impairments increased by approximately $11.9 million for the year ended December 31, 2025 compared to the same period in 2024.
Interest expense Interest expense increased approximately $5.9 million, or 33.2%, for the year ended December 31, 2024 compared to the same period in 2023.
Interest expense Interest expense increased approximately $3.3 million, or 13.8%, for the year ended December 31, 2025 compared to the same period in 2024.
The Company expects that substantially all of its acquisitions will be accounted for as asset acquisitions. The acquisition date fair values of the tangible and intangible assets and acquired liabilities are estimated based on information obtained from multiple sources as a result of pre-acquisition due diligence, tax records, and other sources, including third-party valuations.
The acquisition date fair values of the tangible and intangible assets and acquired liabilities are estimated based on information obtained from multiple sources as a result of pre-acquisition due diligence, tax records, and other sources, including third-party valuations. Based on these estimates, we recognize the acquired assets and liabilities based on their estimated fair values.
We consider EBITDA re and Adjusted EBITDA re important measures because they provide additional information to allow management, investors, and our current and potential creditors to evaluate and compare our core operating results and our ability to service debt. 61 The table below reconciles net income to EBITDA re and Adjusted EBITDA re for the years ended December 31, 2024, 2023, and 2022.
We consider EBITDA re and Adjusted EBITDA re important measures because they provide additional information to allow management, investors, and our current and potential creditors to evaluate and compare our core operating results and our ability to service debt.
An acquisition accounted for as a business combination is recorded at fair value and related closing costs are expensed as incurred. An acquisition accounted for as an asset acquisition is recorded at its purchase price, inclusive of acquisition costs, which is allocated among the acquired assets and assumed liabilities based upon their relative fair values at the date of acquisition.
An acquisition accounted for as an asset acquisition is recorded at its purchase price, inclusive of acquisition costs, which is allocated among the acquired assets and assumed liabilities based upon their relative fair values at the date of acquisition. The Company expects that substantially all of its acquisitions will be accounted for as asset acquisitions.
Expenses Property operating expenses increased approximately $2.1 million, or 10.2%, for the year ended December 31, 2024 compared to the same period in 2023 due mainly to the following: • Property operating expenses on properties acquired during 2024 and 2023 resulted in an increase of approximately $1.7 million; • Property insurance expense increased approximately $0.2 million; and • Landscaping and snow plow expense increased approximately $0.2 million.
Expenses Property operating expenses increased approximately $0.8 million, or 3.5%, for the year ended December 31, 2025 compared to the same period in 2024 due mainly to the following: • Property operating expenses on properties acquired during 2025 and 2024 resulted in an increase of approximately $0.4 million; • Utilities expenses (on a same store basis) increased approximately $0.3 million; 55 • Landscaping expenses, including snow plow expenses, (on a same store basis) increased approximately $0.2 million; and • Property insurance expenses (on a same store basis) increased approximately $0.1 million; offset partially by • A reduction of expenses totaling approximately $0.2 million due to properties sold during 2025 and 2024.
The Company has entered into interest rate swaps to fix the interest rates on the Term Loans and the portion of the Revolver balance that was used to repay a Term Loan.
The Company has entered into interest rate swaps to fix the interest rates on the Term Loans and the portion of the Revolver balance that was used to repay a Term Loan. Note 5 – Debt, net and Note 6 – Derivative Financial Instruments to the Consolidated Financial Statements provide more detail on the Company's debt and interest rate swaps.
Contractual interest due under the Credit Facility increased $5.5 million due to a pricing grid increase on hedged debt in the fourth quarter of 2024 due to increased leverage ratio, a higher weighted average balance on the Revolving Credit Facility, along with a rise in interest rates during 2024 as compared to 2023.
Contractual interest due under the Credit Facility increased $3.4 million due to: (i) a pricing grid increase on hedged debt in the fourth quarter of 2024 due to increased leverage ratio, and (ii) a higher weighted average balance on the Revolving Credit Facility in 2025 compared to 2024. See Note 5 – Debt, net to the Consolidated Financial Statements.
Investing Activities Cash flows used in investing activities for the years ended December 31, 2024, 2023 and 2022 were approximately $92.7 million, $113.7 million, and $113.8 million, respectively. During 2024, the Company invested in nine real estate properties for cash consideration of approximately $72.4 million, and sold two properties and a land parcel, for net proceeds of approximately $2.3 million.
During 2024, the Company invested in nine real estate properties for an aggregate cash consideration of approximately $72.4 million, and sold two properties and a land parcel, for net proceeds of approximately $2.3 million.
Critical Accounting Policies and Estimates Our Consolidated Financial Statements are prepared in conformity with GAAP and the rules and regulations of the SEC. In preparing the Consolidated Financial Statements, management is required to exercise judgment and make assumptions and estimates that may impact the carrying value of assets and liabilities and the reported amounts of revenues and expenses.
In preparing the Consolidated Financial Statements, management is required to exercise judgment and make assumptions and estimates that may impact the carrying value of assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from those estimates.
The Company may also assume tenant improvement obligations included in leases acquired in its real estate acquisitions. As of December 31, 2024, the Company had approximately $26.5 million in commitments for tenant improvements.
Tenant Improvements and Capital Improvements The Company may provide tenant improvement allowances in new or renewal leases for the purpose of refurbishing or renovating tenant space. The Company may also assume tenant improvement obligations included in leases acquired in its real estate acquisitions. As of December 31, 2025, the Company had approximately $28.8 million in commitments for tenant improvements.
(3) Diluted weighted average common shares outstanding for FFO are calculated based on the treasury method, rather than the 2-class method used to calculate earnings per share. 60 Net Operating Income ("NOI") NOI is a key performance indicator.
Also, non-cash accelerated amortization of stock-based compensation totaling $11.8 million was recorded in 2023 upon the passing of the Company's former CEO. (3) Diluted weighted average common shares outstanding for FFO are calculated based on the treasury method, rather than the 2-class method used to calculate earnings per share. 62 Net Operating Income ("NOI") NOI is a key performance indicator.
As of December 31, 2024, the Company had a $500.0 million ATM program, of which approximately $426.3 million remained available to be issued. 57 Security Deposits As of December 31, 2024, the Company held approximately $2.9 million in security deposits, included in other liabilities, on the Consolidated Statement of Operations, for the benefit of the Company in the event the obligated tenant fails to perform under the terms of its respective lease.
Security Deposits As of December 31, 2025, the Company held approximately $2.6 million in security deposits, included in other liabilities, on the Consolidated Balance Sheet, for the benefit of the Company in the event the obligated tenant fails to perform under the terms of its respective lease.
Year Ended December 31, (In thousands) 2024 2023 2022 Net income $ (3,181) $ 7,714 $ 22,019 Interest expense 23,706 17,792 11,873 Depreciation and amortization 42,778 39,693 32,339 Deferred income tax expense — 306 41 Impairments, net of net gains on the sales of depreciable real estate assets 121 102 — EBITDA re $ 63,424 $ 65,607 $ 66,272 Non-cash stock-based compensation expense (1) 9,987 8,166 9,415 Credit loss reserve 11,000 — — Accelerated amortization of deferred compensation — 11,799 — Net gain from insurance recovery on casualty loss — (706) — Adjusted EBITDA re $ 84,411 $ 84,866 $ 75,687 ____________________________ (1) 2023 excludes accelerated amortization of stock-based compensation shown separately below.
Year Ended December 31, (In thousands) 2025 2024 2023 Net income (loss) $ 5,102 $ (3,181) $ 7,714 Interest expense 26,978 23,706 17,792 Depreciation and amortization 43,538 42,778 39,693 Deferred income tax expense 23 — 306 (Gains) on the sales of depreciable real estate assets, net of losses and impairments (11,803) 121 102 EBITDA re $ 63,838 $ 63,424 $ 65,607 Non-cash stock-based compensation expense (1) 10,305 9,987 8,166 Credit loss reserve 8,672 11,000 — Accelerated amortization of stock-based compensation 4,591 — 11,799 Net gain from insurance recovery on casualty loss — — (706) Adjusted EBITDA re $ 87,406 $ 84,411 $ 84,866 ____________________________ (1) General and administrative expenses for 2025 and 2023 exclude accelerated amortization of stock-based compensation which are shown separately in the table. 64 Critical Accounting Policies and Estimates Our Consolidated Financial Statements are prepared in conformity with GAAP and the rules and regulations of the SEC.
Post-Effective Amendment No. 1 included disclosure required for registrants other than a well-known seasoned issuer and made certain other amendments. Under this registration statement, the Company has the capacity to offer and sell from time to time various types of securities, including common stock, preferred stock, depository shares, rights, debt securities, warrants and units.
Under this registration statement, the Company has the capacity to offer and sell from time to time various types of securities, including common stock, preferred stock, depository shares, rights, debt securities, warrants and units.
Other operating interest decreased approximately $2.9 million, or 70.7%, for the year ended December 31, 2024 compared to the same period in 2023 due mainly to the following: • A reduction in interest totaling $2.7 million due to reversing interest and placing notes on nonaccrual status during 2024 related to a geriatric inpatient behavioral hospital tenant; • A reduction in interest totaling $0.3 million due to amortizing payments on notes receivable; offset partially by • An increase in interest totaling $0.1 million due to a new note entered into during 2024.
Other operating interest decreased approximately $1.4 million, or 112.8%, for the year ended December 31, 2025 compared to the same period in 2024 due mainly to the following: • A reduction in interest totaling $1.5 million due to reserving interest on notes in 2025 with a geriatric behavioral hospital borrower/tenant in six properties, net of cash collections differences in 2025 compared to 2024 for that borrower/tenant; • A reduction in interest totaling $0.3 million due to amortizing payments on notes receivable; offset partially by • An increase in interest of approximately $0.4 million from interest on a new note entered into during 2024, as well as interest on a financing and sales-type lease s.
See Note 9 – Stock Incentive Plans for more details. 53 Results of Operations The Company's consolidated results of operations for 2024 compared to 2023 were significantly impacted by acquisitions and other capital improvements in our real estate, including depreciation and amortization on our real estate portfolio, collectibility of lease payments, interest and notes receivable, general and administrative expenses, including the impact of changes to executive compensation programs and the accelerated amortization of stock-based compensation upon the passing of our former CEO in 2023, and interest expense.
See Note 5 – Debt, net and Note 6 – Derivative Financial Instruments for more details on the Company's debt and interest rate swaps. 54 Results of Operations The Company's consolidated results of operations for 2025 compared to 2024 were significantly impacted by acquisitions, including depreciation and amortization on our real estate portfolio, asset dispositions, leasing activities, collectibility of lease payments, notes receivable and related interest, interest expense, and general and administrative expenses, including severance and the accelerated amortization of stock-based compensation upon the termination our former Executive Vice President, Asset Management in 2025.
If management determines that the carrying value of the Company’s assets may not be fully recoverable based on the existence of any of the factors above, or others, management would measure and record an impairment charge based on the estimated fair value of the property or the estimated fair value less costs to sell the property. 63 Revenue Recognition The primary source of revenue for the Company is generated through its leasing arrangements with its tenants which is accounted for under Accounting Standards Codification Topic 842 ("ASC Topic 842"), or through notes with its borrowers which is covered under ASC 310.
If management determines that the carrying value of the Company’s assets may not be fully recoverable based on the existence of any of the factors above, or others, management would measure and record an impairment charge based on the estimated fair value of the property or the estimated fair value less costs to sell the property.
The ability of the Company to pay dividends is dependent upon its ability to generate cash flows and to make accretive new investments. Non-GAAP Financial Measures and Key Performance Indicators Management considers certain non-GAAP financial measures and key performance indicators to be useful supplemental measures of the Company's operating performance.
The ability of the Company to pay dividends is dependent upon its ability to generate cash flows and to make accretive new investments.
Also, during 2023, the Company received insurance proceeds from a casualty loss of approximately $2.3 million, and the Company funded capital expenditures, including tenant improvements, during 2024, 2023 and 2022 totaling approximately $24.6 million, $19.0 million, and $10.4 million, respectively.
During 2023, the Company invested in 19 real estate properties and a land parcel for an aggregate cash consideration of approximately $98.9 million. • During 2024 and 2023, the Company funded notes receivable of approximately $3.1 million, and $2.0 million, respectively, and received payments on notes receivable in 2025, 2024 and 2023 of approximately $5.2 million, $5.1 million, and $3.9 million, respectively. • The Company funded capital expenditures, including tenant improvements, during 2025, 2024 and 2023 totaling approximately $20.5 million, $24.6 million, and $19.0 million, respectively. • During 2023, the Company received insurance proceeds from a casualty loss of approximately $2.3 million.
The Company anticipates funding these investments with cash from operations, through proceeds from its Credit Facility or from net proceeds from additional debt or equity offerings. Notes Receivable The Company has two notes with a tenant with unfunded commitments remaining totaling approximately $6.0 million at December 31, 2024. See Note 10 – Other Assets, net to the Consolidated Financial Statements.
The Company anticipates funding these investments with cash from operations, or with net proceeds from equity or debt issuances, from our Credit Facility, or from asset sales. Notes Receivable The Company has one revolving credit facility with a tenant with an unfunded commitment remaining totaling approximately $5.8 million at December 31, 2025.
The Company would depend on the VIE to provide timely financial information and would rely on the interest control of the VIE to provide accurate financial information.
The Company would depend on the VIE to provide timely financial information and would rely on the interest control of the VIE to provide accurate financial information. Untimely or inaccurate financial information provided to the Company or deficiencies in the VIE's internal controls over financial reporting could impact the Company's Consolidated Financial Statements and its internal control over financial reporting.
Dividends The Company is required to pay dividends to its stockholders at least equal to 90% of its taxable income in order to maintain its qualification as a REIT. During 2024, 2023 and 2022, the Company paid cash dividends in the amounts of $1.845 per share, $1.805 per share and $1.765 per share, respectively.
See Note 10 – Other Assets, net to the Consolidated Financial Statements. Dividends The Company is required to pay dividends to its stockholders at least equal to 90% of its taxable income in order to maintain its qualification as a REIT.
Though these higher interest rates have just begun to decline, these higher rates may adversely impact real estate asset values and increase our interest expense on our variable-rate borrowings under our revolving credit facility. Interest Expense During the first quarter of 2024, two interest rates swaps related to Term Loans matured and were replaced with two previously forward-starting swaps.
Higher interest rates may adversely impact real estate asset values and increase our interest expense on our variable-rate borrowings under our revolving credit facility.
Yea r Ended December 31, 2024 Compared to December 31, 2023 Revenues Rental income increased approximately $5.9 million, or 5.4%, for the year ended December 31, 2024 compared to the same period in 2023 due mainly to the following: • Income on properties acquired during 2024 and 2023 increased rental income by approximately $11.0 million; partially offset by • A reduction in rental income related to tenants on cash basis during 2024 and 2023 totaling approximately $4.0 million (including $0.7 million of straight-line rent); and • A reduction in rental income of $1.1 million due mainly to lease terminations, including two Genesis Care leases with the Company that were rejected in 2023 as part of the Genesis Care bankruptcy.
Year Ended December 31, 2025 Compared to December 31, 2024 Revenues Rental income increased approximately $6.8 million, or 5.9%, for the year ended December 31, 2025 compared to the same period in 2024 due mainly to the following: • Income on properties acquired during 2025 and 2024 increased rental income by approximately $5.4 million; • Rental income related to tenants on cash basis increased by approximately $0.9 million for the twelve months ended December 31, 2025 as compared to the same period in 2024, mainly due to the non-cash write-off of straight-line rent in 2024 for the geriatric inpatient behavioral hospital tenant accrued prior to 2024; partially offset by • Properties sold during 2025 and 2024 resulted in a decrease in rental income of approximately $1.1 million, including $0.4 million related to a lease that was converted from an operating lease to a sales-type lease in 2025; • A net decrease in the allowance for doubtful accounts for 2025 compared to 2024 totaling approximately $0.2 million; and • The remaining $1.8 million net increase resulted from annual rent increases, net leasing activities, including the rent commencement of leases previously under construction and various other items.
At December 31, 2024, our debt to total capitalization ratio (debt plus stockholders' equity plus accumulated depreciation) was approximately 40.3%. Sources and Uses of Cash The Company derives most of its revenues from its real estate properties, collecting rental income and operating expense reimbursements based on contractual arrangements with its tenants.
The Company uses these indicators and others to compare its operations to its peers and to help identify areas in which the Company may need to focus its attention. 57 Sources and Uses of Cash The Company derives most of its revenues from its real estate properties, collecting rental income and operating expense reimbursements based on contractual arrangements with its tenants.
The Company's notes receivable are considered incidental to the Company's main business. (2) Non-cash accelerated amortization of stock-based compensation totaling $11.8 million was recorded in 2023 upon the passing of the Company's former CEO.
The Company's notes receivable are considered incidental to the Company's main business, as such, the reserves are added back to FFO. (2) During 2025, the Company recorded severance and transition-related charges totaling approximately $5.9 million, including non-cash accelerated amortization of stock-based compensation of approximately $4.6 million.
See Note 4 – Real Estate Acquisitions, Disposition, and Assets Held for Sale in the Consolidated Financial Statements for more details. 52 Leased square footage As of December 31, 2024, our real estate portfolio was approximately 90.9% lease d, excluding real estate assets held for sale.
Leased square footage As of December 31, 2025, our real estate portfolio was approx imately 90.6% leased, excluding the real estate asset held for sale.
The Company also has seven properties under definitive purchase agreements, to be acquired after completion and occupancy, for an aggregate expected purchase price of ap proximately $169.5 million. The Company's expected returns on these investments are approximately 9.1% to 9.75%.
See Note 4 – Real Estate Acquisitions, Dispositions, and Assets Held for Sale in the Consolidated Financial Statements for more details. Acquisition pipeline The Company has five properties under definitive purchase agreements, to be acquired after completion and occupancy, for an aggregate expected purchase price of approximately $122.5 million.
Real estate dispositions During the year ended December 31, 2024, the Company disposed of two properties in Texas and a land parcel adjacent to a property in Georgia. The Company received net proceeds of approximately $2.3 million and recognized an immaterial gain in the aggregate on the dispositions.
Real estate dispositions and Assets Held for Sale During the year ended December 31, 2025 , the Company disposed of five properties. The Company received net proceeds of approximately $32.9 million, including $0.7 million where cash was received subsequent to December 31, 2025, and recognized a net gain on sales, net of losses and impairments, totaling approximately $11.6 million.
On February 13, 2025, the Company’s Board of Directors declared a quarterly common stock dividend in the amount of $0.4675 per share. The dividend is payable on March 5, 2025 to stockholders of record on February 24, 2025.
During 2025, 2024 and 2023, the Company paid cash dividends in the amounts of $1.885 per share, $1.845 per share and $1.805 per share, respectively. 60 On February 12, 2026, the Company’s Board of Directors declared a quarterly common stock dividend in the amount of $0.4775 per share.
The Company anticipates funding these investments with cash from operations, or with net proceeds from equity or debt issuances, from our Credit Facility, or from asset sales. Tenant Improvements and Capital Improvements The Company may provide tenant improvement allowances in new or renewal leases for the purpose of refurbishing or renovating tenant space.
The Company anticipates funding these investments with cash from operations, from net proceeds from equity or debt issuances, from our Credit Facility, or from asset sales. Asset Disposition On February 12, 2026, the Company sold the property classified as an asset held for sale at December 31, 2025 and received net proceeds of approximately $5.2 million.
Note 5 – Debt, net to the Consolidated Financial Statements provides more details on the Credit Facility and Note 6 – Derivative Financial Instruments provides more detail on interest rate swaps entered into on the Term Loans. At December 31, 2024, the Company had borrowing capacity remaining under the Revolving Credit Facility of approximately $188.0 million.
At December 31, 2025, the Company had borrowing capacity remaining under the Revolving Credit Facility of approximately $142.0 million.
Deferred income tax expense Deferred income tax expense decreased approximately $0.3 million for the year ended December 31, 2024 compared to the same period in 2023. During 2023, the Company fully reserved its deferred tax asset.
General and administrative expenses increased approximately $6.0 million, or 31.7%, for the year ended December 31, 2025 compared to the same period in 2024 due mainly to the following: • On May 31, 2025, the Company terminated its former Executive Vice President of Asset Management.
Untimely or inaccurate financial information provided to the Company or deficiencies in the VIE's internal controls over financial reporting could impact the Company's Consolidated Financial Statements and its internal control over financial reporting. 62 Accounting for Acquisitions of Real Estate Properties Real estate property acquisitions are accounted for as a business combination or an asset acquisition.
Accounting for Acquisitions of Real Estate Properties Real estate property acquisitions are accounted for as a business combination or an asset acquisition. An acquisition accounted for as a business combination is recorded at fair value and related closing costs are expensed as incurred.
Credit loss reserve A credit loss reserve totaling $11.0 million was recorded in 2024 related to notes receivable with a geriatric inpatient behavioral hospital tenant as the Company had determined that collectability of contractual amounts due was not reasonably assured.
Credit loss reserve Credit loss reserves totaling $8.7 million and $11.0 million, respectively, were recorded during 2025 and 2024, related to notes receivable with a geriatric inpatient behavioral hospital borrower/tenant, fully reserving these notes in 2025. See Note 10 – Other Assets, net in the Consolidated Financial Statements for more details on these notes and the credit loss reserves.
Removed
Acquisition pipeline The Company has entered into a definitive purchase agreement for a residential treatment campus consisting of five buildings with an expected purchase price of approximately $9.5 million and an expected return of 9.5%.
Added
Additionally, during the second quarter of 2025, the Company amended an operating lease on a property that resulted in a sales-type lease.
Removed
The Company expects to close on this investment during the first quarter of 2025; however, the Company cannot provide assurance as to the timing of when, or whether, the transaction will actually close.
Added
As such, the Company reclassified the net book value of the real estate totaling $3.7 million to a net lease investment in other assets on the Condensed Consolidated Balance Sheet and recognized a gain on sale totaling approximately $1.3 million (see Sales-type leases in Note 3 – Real Estate Leases in the Consolidated Financial Statements for more details).
Removed
Assets Held for Sale The Company has two properties with an aggregate carrying balance of $6.8 million classified as held for sale.
Added
The Company has one property with a carrying balance of $5.3 million classified as held for sale at December 31, 2025 . During the year ended December 31, 2025 , the Company recorded impairment charges of $1.1 million on this property.
Removed
Also, during the fourth quarter of 2024, the Company amended its Credit Facility to (i) increase the Revolving Credit Facility commitments, (ii) decrease pricing on the Revolving Credit Facility, (iii) extend maturity of the Revolving Credit Facility, and (iv) repay the $75.0 million A-3 Term loan with proceeds from the Revolving Credit Facility.
Added
Credit Loss on Loans and Interest Receivables During the second quarter of 2025, the Company recorded reserves, fully reserving its notes and interest with a geriatric inpatient behavioral hospital tenant, totaling approximately $8.7 million on its notes and approximately $1.7 million of interest receivables.
Removed
Also, with the repayment of the A-3 Term loan, the interest rate swaps that previously hedged the A-3 Term Loan were reassigned to hedge $75.0 million of the Revolving Credit Facility through the swaps maturity date in 2026.
Added
See Note 1 – Summary of Significant Accounting Policies and Note 10 – Other Assets, net to the Condensed Consolidated Financial Statements for more details on these reserves. Accelerated Amortization of Restricted Stock and Restricted Stock Units The Company's former Executive Vice President, Asset Management was terminated effective May 31, 2025.
Removed
During the fourth quarter of 2024, the Company's leverage ratio increased resulting in higher pricing on the Term Loans based on the pricing grid in our Credit Facility.
Added
In accordance with his employment agreement, his unvested restricted shares totaling 198,015 shares vested and his unvested restricted stock units totaling 18,275 units vested at target upon termination. As such, upon termination and vesting of these shares, the Company accelerated the unamortized remaining balance of his deferred compensation at May 31, 2025 and recognized $4.6 million of amortization expense.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+1 added−0 removed1 unchanged
Biggest changeThe following table provides information regarding the sensitivity of certain of the Company’s financial instruments, reflecting the effect of hedging instruments, as described above, to market conditions and changes resulting from changes in interest rates. For purposes of this analysis, sensitivity is demonstrated based on hypothetical 10% changes in the underlying market interest rates.
Biggest changeSee Trends and Matters Impacting Operating Results in Item 7 for more information related to these interest rate swaps. The following table provides information regarding the sensitivity of certain of the Company’s financial instruments, reflecting the effect of hedging instruments, as described above, to market conditions and changes resulting from changes in interest rates.
Inflation Inflation has significantly increased during the past couple of years and a prolonged period of high and persistent inflation could cause an increase in our expenses, capital expenditures, and cost of our variable-rate borrowings which could have a material impact on our financial position or results of operations.
Inflation Inflation has significantly increased during the past several years and a prolonged period of high and persistent inflation could cause an increase in our expenses, capital expenditures, and cost of our variable-rate borrowings which could have a material impact on our financial position or results of operations.
Management uses regular monitoring of market conditions and analysis techniques to manage this risk. As of December 31, 2024, the Company's Revolving Credit Facility and Term Loans were based on variable interest rates while its notes receivable bore interest at fixed rates.
Management uses regular monitoring of market conditions and analysis techniques to manage this risk. As of December 31, 2025, the Company's Revolving Credit Facility and Term Loans were based on variable interest rates while its notes receivable bore interest at fixed rates.
Many of our lease agreements contain provisions designed to mitigate the adverse impact of inflation, including annual rent increases based on stated increases or CPI increases. In response to inflationary pressures, the Federal Reserve raised interest rates in 2022 and 2023, however, the Federal Reserve lowered interest rates in 2024 and may provide additional rate cuts during 2025.
Many of our lease agreements contain provisions designed to mitigate the adverse impact of inflation, including annual rent increases based on stated increases or CPI increases. In response to inflationary pressures, the Federal Reserve raised interest rates in 2022 and 2023, however, the Federal Reserve lowered interest rates in 2024 and 2025, and may provide additional rate changes during 2026.
Higher interest rates may adversely impact real estate asset values and increase our interest expense on our variable-rate borrowings under our revolving credit facility. 65
Higher interest rates may adversely impact real estate asset values and increase our interest expense on our variable-rate borrowings under our revolving credit facility. 68
Impact on Earnings and Cash Flows (Dollars in thousands) Outstanding Principal Balance at December 31, 2024 Calculated Annual Interest Expense Assuming 10% Increase in Market Interest Rates Assuming 10% Decrease in Market Interest Rates Variable Rate Debt: Revolving Credit Facility, unhedged $ 137,000 $ 8,790 $ (879) $ 879 Revolving Credit Facility, hedged (1) $ 75,000 $ 3,406 $ — $ — A-4 Term Loan (1) $ 125,000 $ 4,494 $ — $ — A-5 Term Loan (1) $ 150,000 $ 8,423 $ — $ — ___________ (1) The Company has interest rate swaps that fix the interest rates for $75 million of the Revolving Credit Facility and all of the A-4 Term Loan and the A-5 Term Loan; therefore, changes in the interest rates will not impact our earnings or cash flows.
Impact on Earnings and Cash Flows (Dollars in thousands) Outstanding Principal Balance at December 31, 2025 Calculated Annual Interest Expense Assuming 10% Increase in Market Interest Rates Assuming 10% Decrease in Market Interest Rates Variable Rate Debt: Revolving Credit Facility, unhedged $ 183,000 $ 10,588 $ (1,059) $ 1,059 Revolving Credit Facility, hedged (1) $ 75,000 $ 2,881 $ — $ — A-4 Term Loan (1) $ 125,000 $ 4,494 $ — $ — A-5 Term Loan (1) $ 150,000 $ 8,423 $ — $ — ___________ (1) The Company has interest rate swaps that fix the interest rates for $75 million of the Revolving Credit Facility and all of the A-4 Term Loan and the A-5 Term Loan; therefore, changes in the interest rates will not impact our earnings or cash flows.
(2) Calculated using Level 3 inputs at December 31, 2024 and Level 2 inputs at December 31, 2023. At December 31, 2024, the carrying amount, net of credit loss reserve, was $10,547.
(2) Calculated using Level 3 inputs at December 31, 2024 and 2025. At December 31, 2025, the carrying amount, net of credit loss reserve, was $0.
Fair Value (Dollars in thousands) Outstanding Principal Balance at December 31, 2024 December 31, 2024 Assuming 10% Increase in Market Interest Rates Assuming 10% Decrease in Market Interest Rates December 31, 2023 Fixed Rate Receivables/Payable: Notes Receivable, Level 2 (1) $ 7,180 $ 7,248 $ 7,208 $ 7,281 $ 13,161 Notes Receivable (2) $ 21,547 $ 10,547 $ 10,547 $ 10,547 $ 22,435 Mortgage Note Payable (1) $ — $ — $ — $ — $ 4,821 ___________ (1) Level 2 - Fair value based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets.
Fair Value (Dollars in thousands) Outstanding Principal Balance at December 31, 2025 December 31, 2025 Assuming 10% Increase in Market Interest Rates Assuming 10% Decrease in Market Interest Rates December 31, 2024 Fixed Rate Receivables/Payable: Notes and Mortgage Receivable, Level 2 (1) $ 3,830 $ 3,964 $ 3,948 $ 3,980 $ 7,248 Notes Receivable, Level 3 (2) $ 19,672 $ — $ — $ — $ 10,547 ___________ (1) Level 2 - Fair value based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets.
The Company has entered into interest rate swaps to fix the interest rates on its Term Loans and $75.0 million of the $212.0 million Revolver Credit Facility borrowings outstanding as of December 31, 2024.
The Company has entered into interest rate swaps to fix the interest rates on its Term Loans and $75.0 million of the $258.0 million Revolving Credit Facility borrowings outstanding as of December 31, 2025. The swaps to fix the interest rate on the Revolving Credit Facility borrowings mature in March 2026.
Added
For purposes of this analysis, sensitivity is demonstrated based on hypothetical 10% changes in the underlying market interest rates.

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