10q10k10q10k.net

What changed in CareTrust REIT, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of CareTrust REIT, Inc.'s 2023 and 2024 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 2024 report.

+386 added−316 removedSource: 10-K (2025-02-12) vs 10-K (2024-02-08)

Top changes in CareTrust REIT, Inc.'s 2024 10-K

386 paragraphs added · 316 removed · 286 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

101 edited+48 added−9 removed129 unchanged
Biggest changeTotal SNFs Multi-Service Campuses ALFs and ILFs State Properties Beds/Units Facilities Beds Campuses Beds/Units Facilities Beds/Units CA (1) 46 5,676 32 3,712 9 1,527 5 437 TX 45 5,871 40 5,123 3 536 2 212 ID 17 1,474 16 1,405 1 69 — — UT 13 1,374 9 913 1 272 3 189 AZ 11 1,340 8 971 — — 3 369 IL 11 1,053 7 642 2 275 2 136 WA 10 936 9 839 — — 1 97 LA 8 1,164 7 949 1 215 — — CO 7 785 5 517 — — 2 268 OH 6 609 2 226 3 317 1 66 IA 5 354 3 185 2 169 — — MI 5 255 — — — — 5 255 NE 5 366 3 220 2 146 — — MT 3 260 3 260 — — — — NV 3 304 1 92 — — 2 212 MN 2 62 — — — — 2 62 NC 2 105 — — — — 2 105 NJ 2 98 — — — — 2 98 WI 2 89 — — — — 2 89 FL 1 80 — — — — 1 80 GA 1 148 1 148 — — — — KS 1 102 1 102 — — — — MD 1 120 — — — — 1 120 ND 1 83 1 83 — — — — NM 1 124 1 124 — — — — OR 1 53 1 53 — — — — SD 1 81 1 81 — — — — WV 1 67 — — 1 67 — — Total 212 23,033 151 16,645 25 3,593 36 2,795 (1) Includes three SNFs with 385 beds held in consolidated joint ventures. 9 Table of Contents Occupancy by Property Type: The following table displays occupancy by property type for each of the years ended December 31, 2023 and 2022.
Biggest changeTotal SNFs Multi-Service Campuses ALFs and ILFs State Properties Beds/Units Facilities Beds Campuses Beds/Units Facilities Beds/Units CA (1) 51 6,390 33 3,828 12 2,004 6 558 TX 43 5,414 38 4,726 3 476 2 212 TN (1) 26 2,740 26 2,740 — — — — ID 17 1,396 16 1,327 1 69 — — UT 13 1,374 9 913 1 272 3 189 AZ 11 1,353 8 984 — — 3 369 IL 11 1,053 7 642 2 275 2 136 WA 10 900 9 803 — — 1 97 LA 8 1,164 7 949 1 215 — — CO 7 788 5 520 — — 2 268 NC 6 493 4 390 — — 2 103 IA 5 354 3 185 2 169 — — MD 5 431 2 187 1 108 2 136 NE 5 366 3 220 2 146 — — OH 4 379 1 116 2 197 1 66 PA 4 597 4 597 — — — — MT 3 260 3 260 — — — — NV 3 304 1 92 — — 2 212 MN 2 62 — — — — 2 62 WI 2 89 — — — — 2 89 AL (1) 1 91 1 91 — — — — GA 1 148 1 148 — — — — KS 1 102 1 102 — — — — MI 1 66 — — — — 1 66 MO 1 70 1 70 — — — — ND 1 83 1 83 — — — — NM 1 124 1 124 — — — — OR 1 53 1 53 — — — — SC 1 108 1 108 — — — — SD 1 81 1 81 — — — — VA 1 125 1 125 — — — — WV 1 67 — — 1 67 — — Total 248 27,025 189 20,464 28 3,998 31 2,563 (1) Includes facilities held in consolidated joint ventures.
We intend to maintain a mix of credit facility debt, unsecured debt and possibly secured mortgage debt, which, together with our anticipated ability to complete future equity financings, including issuances of our common stock via registered public offerings or under an at-the-market equity program, we expect will fund the growth of our property portfolio. Develop New Tenant Relationships.
We intend to maintain a mix of credit facility debt, unsecured debt and possibly secured mortgage debt, which, together with our anticipated ability to complete future equity financings, including issuances of our common stock via registered public offerings or under our at-the-market equity program, we expect will fund the growth of our property portfolio. Develop New Tenant Relationships.
While most factors described above indicate projected growth for our industry, labor shortages and proposed minimum staffing requirements from the Centers for Medicare and Medicaid Services (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments — Regulatory Updates”) have led, and may continue to lead, to increased costs.
While most factors described above indicate projected growth for our industry, labor shortages and minimum staffing requirements from the Centers for Medicare and Medicaid Services (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments — Regulatory Updates”) have led, and may continue to lead, to increased costs.
We also actively monitor the overall occupancy, skilled mix, and other operating metrics of our tenants on at least a monthly basis. We have replaced tenants in the past, and may elect to replace tenants in the future, if they fail to meet the terms and conditions of their leases with us.
We also actively monitor the overall occupancy, skilled mix, and other operating metrics of our tenants and borrowers on at least a monthly basis. We have replaced tenants in the past, and may elect to replace tenants in the future, if they fail to meet the terms and conditions of their leases with us.
We communicate such observations to our tenants; however, we have no contractual obligation to do so. Moreover, our tenants have sole discretion with respect to the day-to-day operation of the facilities they lease from us, and how and whether to implement any observation we may share with them.
We communicate such observations to our tenants and borrowers; however, we have no contractual obligation to do so. Moreover, our tenants and borrowers have sole discretion with respect to the day-to-day operation of the facilities they lease from us, and how and whether to implement any observation we may share with them.
In addition, we have, and may from time to time in the future, repurpose facilities for other uses, such as behavioral health. The replacement tenants may include tenants with whom we have had no prior landlord-tenant relationship as well as current tenants with whom we are comfortable expanding our relationships.
The replacement tenants may include tenants with whom we have had no prior landlord-tenant relationship as well as current tenants with whom we are comfortable expanding our relationships. In addition, we may from time to time in the future repurpose facilities for other uses, such as behavioral health.
Although seniors housing and skilled nursing occupancy rates have declined during the COVID-19 pandemic, we believe that these trends in population will support an increasing demand for services in the long-term, which in turn will likely support an increasing demand for the services provided within our properties.
Although seniors housing and skilled nursing occupancy rates declined during the COVID-19 pandemic, we believe that these trends in population will support an increasing demand for services in the long-term, which in turn will likely support an increasing demand for the services provided within our properties.
Given the divided nature of Congress, it is unclear whether Congress will successfully expand health insurance coverage and assess alternative health care delivery and payment systems. The Republican Party currently controls the United States House of Representatives (by a slim majority) and the Democratic Party currently controls the Senate (by a slim majority).
Given the divided nature of Congress, it is unclear whether Congress will successfully expand health insurance coverage and assess alternative health care delivery and payment systems. The Republican Party currently controls the United States Senate and the House of Representatives (by a slim majority).
Governance Our corporate governance structure was carefully crafted to align with the interests of our investors and other stakeholders with a core leadership team that has over 65 years of collective experience as operators and investors. The members of our board of directors each bring deep expertise in healthcare, real estate, investing, accounting, and/or business development.
Governance Our corporate governance structure was carefully crafted to align with the interests of our investors and other stakeholders with a core leadership team that has over 68 years of collective experience as operators and investors. The members of our board of directors each bring deep expertise in healthcare, real estate, investing, accounting, and/or business development.
The survey found that 70% or more employees agree that our comprehensive benefits package is very competitive and a strong point of working for CareTrust, employees are highly committed to their future at CareTrust, and that CareTrust has a culture that values inclusivity. CareTrust invests significant time and resources in supporting and developing our employees and creating a desirable workplace.
The survey found that 78% or more employees agree that our comprehensive benefits package is very competitive and a strong point of working for CareTrust, employees are highly committed to their future at CareTrust, and that CareTrust has a culture that values inclusivity. CareTrust invests significant time and resources in supporting and developing our employees and creating a desirable workplace.
We also anticipate diversifying our portfolio over time, including by acquiring properties in different geographic markets, and in different asset classes. In addition, we actively monitor the clinical, regulatory and financial operating results of our tenants, and work to identify opportunities within their operations and markets that could improve their operating results at our facilities.
We also anticipate diversifying our portfolio over time, including by acquiring properties in different geographic markets, including internationally, and in different asset classes. In addition, we actively monitor the clinical, regulatory and financial operating results of our tenants and borrowers, and work to identify opportunities within their operations and markets that could improve their operating results at our facilities.
We have leased a significant number of our properties to subsidiaries of Ensign on a triple-net basis under eight long-term leases, each with its own pool of properties, that have varying maturities and diversity in both property type and geography (each an “Ensign Master Lease” and collectively, the “Ensign Master Leases”).
We have leased a significant number of our properties to subsidiaries of Ensign on a triple-net basis under eight long-term leases, each with its own pool of properties, that have varying maturities and diversity in both facility type and geography (each an “Ensign Master Lease” and collectively, the “Ensign Master Leases”).
Our ESG Report outlines our high priority ESG initiatives and goals for our company and our property portfolio. In our 2022 ESG Report, we included a Global Reporting Initiative (“GRI”) Index in reference to the GRI Standards as well as a Task Force on Climate-Related Financial Disclosures (“TCFD”) index to further align with applicable global standards for sustainability reporting.
Our ESG Report outlines our high priority ESG initiatives and goals for our company and our property portfolio. In our 2023 ESG Report, we included a Global Reporting Initiative (“GRI”) Index in reference to the GRI Standards as well as a Task Force on Climate-Related Financial Disclosures (“TCFD”) index to further align with applicable global standards for sustainability reporting.
Government Regulation, Licensing and Enforcement Overview As operators of healthcare facilities, tenants of our healthcare properties are typically subject to extensive and complex federal, state and local healthcare laws and regulations relating to fraud and abuse practices, government reimbursement, licensure and certificate of need and similar laws governing the operation of healthcare facilities, and we expect that the healthcare industry, in general, will continue to face significant regulation and pressure in the areas of fraud, waste and abuse, 15 Table of Contents cost control, healthcare management and provision of services, among others.
Government Regulation, Licensing and Enforcement Overview As operators of healthcare facilities, tenants of our healthcare properties are typically subject to extensive and complex federal, state and local healthcare laws and regulations relating to fraud and abuse practices, government reimbursement, licensure and certificate of need and similar laws governing the operation of healthcare facilities, and we expect that the healthcare industry, in general, will continue to face significant regulation and pressure in the areas of fraud, waste and abuse, cost control, healthcare management and provision of services, among others.
Under the False Claims Act’s so-called “reverse false claims,” liability also could arise for “using” a false record or statement to “conceal,” “avoid” or “decrease” an “obligation” (which can include the retention of an overpayment) “to pay or transmit money or property to the government.” The False Claims Act also empowers and 16 Table of Contents provides incentives to private citizens (commonly referred to as qui tam relator or whistleblower) to file suit on the government’s behalf.
Under the False Claims Act’s so-called “reverse false claims,” liability also could arise for “using” a false record or statement to “conceal,” “avoid” or “decrease” an “obligation” (which can include the retention of an overpayment) “to pay or transmit money or property to the government.” The False Claims Act also empowers and provides incentives to private citizens (commonly referred to as qui tam relator or whistleblower) to file suit on the government’s behalf.
The information found on, or otherwise accessible through, our website is not incorporated by reference into, nor does it form a part of, this report or any other document that we file with the SEC. 20 Table of Contents
The information found on, or otherwise accessible through, our website is not incorporated by reference into, nor does it form a part of, this report or any other document that we file with the SEC. 24 Table of Contents
We believe we offer competitive compensation (including salary, incentive bonus and equity) and benefits packages (including a 401(k) plan with a fixed employer contribution, Flexible Spending Accounts (FSAs), employer-funded employee assistance program (EAP), a generous vacation, holiday and personal time off policy, and an array of voluntary benefits options and other benefits for employees and their families).
We believe we offer competitive compensation (including salary, incentive bonus and equity) and benefits packages (including a 401(k) plan with a fixed employer contribution, Flexible Spending Accounts (FSAs), employer-funded employee assistance program (EAP), a generous vacation, holiday and personal time off policy, and an array of voluntary 18 Table of Contents benefits options and other benefits for employees and their families).
Under various federal, state and local environmental laws, ordinances and regulations, an owner of real property, such as us, may be liable for the costs of removal or remediation of hazardous or toxic substances at, under or disposed of in connection with such property, as well as other potential costs relating to hazardous or toxic substances (including government fines and damages for injuries to persons and adjacent property).
Under various federal, state and local environmental laws, ordinances and regulations, an owner of real property, such as us, may be liable for the costs of removal or remediation of hazardous or toxic substances at, under or disposed of in connection with such property, as well as other potential costs relating to hazardous or toxic substances (including government 22 Table of Contents fines and damages for injuries to persons and adjacent property).
Our qualification as a REIT will depend upon our ability to meet, on a continuing basis, various complex 19 Table of Contents requirements under the Internal Revenue Code of 1986, as amended (the “Code”), relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels to our stockholders and the concentration of ownership of our capital stock.
Our qualification as a REIT will depend upon our ability to meet, on a continuing basis, various complex requirements under the Internal Revenue Code of 1986, as amended (the “Code”), relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels to our stockholders and the concentration of ownership of our capital stock.
We pursue acquisitions and strategic opportunities that meet our investing and financing strategy and that are attractively priced, including funding development of properties through preferred equity or construction loans and thereafter entering into sale and leaseback arrangements with such developers as well as other secured term financing and mezzanine lending.
We pursue acquisitions and strategic opportunities that meet our investing and financing strategy 16 Table of Contents and that are attractively priced, including funding development of properties through preferred equity or construction loans and thereafter entering into sale and leaseback arrangements with such developers as well as other secured term financing and mezzanine lending.
If any of our tenants or their employees are found to have violated any applicable reporting requirements, they may become subject to penalties or other sanctions up to and including loss of licensure.
If any of our tenants or their employees are found to have violated any applicable reporting or health and safety requirements, they may become subject to penalties or other sanctions up to and including loss of licensure.
This final rule defines the term “real estate investment trust,” which sets the stage for Medicare SNFs to disclose whether each direct or indirect owning or managing entity is a real estate investment trust.
The rule defines the term “real estate investment trust,” which sets the stage for Medicare SNFs to disclose whether each direct or indirect owning or managing entity is a real estate investment trust.
Portfolio Summary We have a geographically diverse portfolio of properties, consisting of the following types as of December 31, 2023: • Skilled Nursing Facilities. SNFs are licensed healthcare facilities that provide restorative, rehabilitative and nursing care for people not requiring the more extensive and sophisticated treatment available at acute care hospitals.
Portfolio Summary We have a geographically diverse portfolio, consisting of the following types of facilities as of December 31, 2024: • Skilled Nursing Facilities. SNFs are licensed healthcare facilities that provide restorative, rehabilitative and nursing care for people not requiring the more extensive and sophisticated treatment available at acute care hospitals.
If the government proceeds civilly, it may impose a civil monetary penalty of $50,000 per violation and an assessment of not more than three times the total amount of remuneration involved, and it may exclude the parties from participation in all federal health care programs.
If the government proceeds civilly, it may impose a civil monetary penalty of $50,000 per 19 Table of Contents violation and an assessment of not more than three times the total amount of remuneration involved, and it may exclude the parties from participation in all federal health care programs.
During the year ended December 31, 2020, the Company acquired four additional facilities, which have a total of 620 operational beds, leased to subsidiaries of Ensign on a triple-net basis under two separate master lease agreements, each of which contains a purchase option.
During the year ended December 31, 2020, the Company acquired four additional facilities, which have a total of 620 operational beds, leased to subsidiaries of Ensign on a triple-net basis under two separate master lease agreements (the “Ensign TX Master Leases”), each of which contains a purchase option.
As a result, SNFs are generally serving a larger population of higher-acuity patients than in the past. The same trend is impacting ALFs, which are now generally serving some patients who previously would have received services at SNFs. • Significant Acquisition and Consolidation Opportunities.
As a result, SNFs are generally serving a larger population of higher-acuity patients than in the past. The same trend is impacting ALFs, which are now generally serving some patients who previously would have received services at SNFs. 7 Table of Contents • Significant Acquisition and Consolidation Opportunities.
Most notably, he worked for both Nationwide Health Properties, Inc., a healthcare REIT, and Sunstone Hotel Investors, Inc., a lodging REIT, serving as Senior Vice President and Chief Accounting Officer of each company prior to joining us as our Chief Financial Officer. 12 Table of Contents James B.
Most notably, he worked for both Nationwide Health Properties, Inc., a healthcare REIT, and Sunstone Hotel Investors, Inc., a lodging REIT, serving as Senior Vice President and Chief Accounting Officer of each company prior to joining us as our Chief Financial Officer. James B.
As of December 31, 2023, 15 of our properties were leased to subsidiaries of Priority Management Group (“PMG”) on a triple-net basis under one long-term lease (the “PMG Master Lease”), and have a total of 2,144 operational beds.
PMG As of December 31, 2024, 15 of our properties were leased to subsidiaries of Priority Management Group (“PMG”) on a triple-net basis under one long-term lease (the “PMG Master Lease”), and have a total of 2,144 operational beds.
As of December 31, 2023, we emplo yed 17 full-time employees (including our executive officers), none of whom is subject to a collective bargaining agreement. Our comprehensive benefits package includes flexible work hours, the option to work remotely, and company workspaces/amenities. Retention and Turnover. Recruiting, hiring, training and retaining excellent employees is a high priority for us.
As of December 31, 2024, we emplo yed 21 full-time employees (including our executive officers), none of whom is subject to a collective bargaining agreement. Our comprehensive benefits package includes flexible work hours, the option to work remotely, and company workspaces/amenities. Retention and Turnover. Recruiting, hiring, training and retaining excellent employees is a high priority for us.
Reimbursement Sources of revenue for our tenants include (and for our future tenants is expected to include), among other sources, governmental healthcare programs, such as the federal Medicare program and state Medicaid programs, and non-governmental payors, such as insurance carriers and health maintenance organizations.
Reimbursement Sources of revenue for our tenants include (and for our future tenants is expected to include), among other sources, governmental healthcare programs, such as the federal Medicare program and state Medicaid programs, and non-governmental 20 Table of Contents payors, such as insurance carriers and health maintenance organizations.
We are committed to sustainable practices in our corporate offices and to providing tenant education, support and incentives to make sustainable improvements at our net-leased properties. In 2023, we published our third annual Corporate Sustainability Report (our “ESG Report”) as part of our ongoing commitment to provide regular reporting on our environmental, social and governance (“ESG”) priorities.
We are committed to sustainable practices in our corporate offices and to providing tenant education, support and incentives to make sustainable improvements at our net-leased properties. In 2024, we published our fourth annual Corporate Sustainability Report (our “ESG Report”) as part of our ongoing commitment to provide regular reporting on our environmental, social and governance (“ESG”) priorities.
Entities subject to HIPAA include health plans, healthcare 18 Table of Contents clearinghouses, and most health care providers (including many of our tenants). Business associates of these entities who create, receive, maintain or transmit Protected Health Information are also subject to HIPAA.
Entities subject to HIPAA include health plans, healthcare clearinghouses, and most health care providers (including many of our tenants). Business associates of these entities who create, receive, maintain or transmit Protected Health Information are also subject to HIPAA.
We have also assisted our 13 Table of Contents tenants with transitioning to lower emissions technologies through our tenant incentive program, where we support efficiency projects through our dedicated tenant capital expenditure budget, providing sustainability incentives rent-free. Pursue Strategic Development Opportunities. We work with operators and developers to identify strategic development opportunities.
We have also assisted our tenants with transitioning to lower emissions technologies through our tenant incentive program, where we support efficiency projects through our dedicated tenant capital expenditure budget, providing sustainability incentives rent-free. Pursue Strategic Development Opportunities. We work with operators and developers to identify strategic development opportunities.
Census estimates that there were over 58 million people in the United States in 2022 over the age of 65. The U.S. Census estimates this group to be one of the fastest growing segments of the United States population, projecting that it will almost double between 2020 and 2060.
Census estimates that there were over 59 million people in the United States in 2023 over the age of 65. The U.S. Census estimates this group to be one of the fastest growing segments of the United States population, projecting that it will almost double between 2020 and 2060.
From time to time, we partner with third-party institutional investors to invest in healthcare real estate through joint ventures.
From time to time, we partner with third-party institutional investors to invest in healthcare real estate in consolidated joint ventures.
Our joint venture partner contributes the remaining 2.5% of the joint venture’s total investment amount in exchange for a 50% common equity interest in the joint venture. We conduct and manage our business as one operating segment for internal reporting and internal decision making purposes.
Our joint venture partner contributes the remaining total investment amount in exchange for a 50% common equity interest in the joint venture. We conduct and manage our business as one operating segment for internal reporting and internal decision making purposes.
As of December 31, 2023, CareTrust REIT is the only limited partner of the Operating Partnership, owning 99% of its outstanding partnership interests, and we have not issued OP Units to any other party. The benefits of our UPREIT structure include the following: • Access to capital .
As of December 31, 2024, CareTrust REIT is the only limited partner of the Operating Partnership, owning 99% of its outstanding partnership interests, and we have not issued OP Units to any other party. 23 Table of Contents The benefits of our UPREIT structure include the following: • Access to capital .
Financially Secure Primary Tenant. Ensign is an established provider of healthcare services with strong financial performance and accounted for 33% of total annualized contractual rental income as of December 31, 2023.
Financially Secure Primary Tenant. Ensign is an established provider of healthcare services with strong financial performance and accounted for 28% of total annualized contractual rental income as of December 31, 2024.
We believe our success depends on our ability to attract, develop and retain key personnel. During 2023, we conducted an employee satisfaction survey with a 100% response rate and an overall satisfaction rate of 86%.
We believe our success depends on our ability to attract, develop and retain key personnel. During 2024, we conducted an employee satisfaction survey with a 100% response rate and an overall satisfaction rate of 84%.
Rent is escalated annually in June under the Ensign Master Leases, and in December for the four additional facilities leased to Ensign, by an amount equal to the product of (1) the lesser of the percentage change in the Consumer Price Index (“CPI”) (but not less than zero) or 2.5%, and (2) the prior year’s rent.
Rent is escalated annually in June under the Ensign Master Leases, and in December under the Ensign TX Master Leases, by an amount equal to the product of (1) the lesser of the percentage change in the Consumer Price Index (“CPI”) (but not less than zero) or 2.5%, and (2) the prior year’s rent.
See “Risk Factors — Risks Related to Our Business and Operati ons — We are dependent on the healthcare operators that lease our properties to successfully operate their business and make contractual lease payments, and an event that materially and adversely affects their business, financial position or results of operations could materially and adversely affect our business, financial position or results of operations.” We monitor the creditworthiness of our tenants by evaluating the ability of the tenants to meet their lease obligations to us based on the tenants’ financial performance, including the evaluation of any guarantees of tenant lease obligations.
See “Risk Factors — Risks Related to Our Business and Operations — We are dependent on the healthcare operators that lease our properties as well as the borrowers under our mortgage secured loans to successfully operate their business and make contractual payments, and an event that materially and adversely affects their business, financial position or results of operations could materially and adversely affect our business, financial position or results of operations.” We monitor the creditworthiness of our tenants by evaluating the ability of the tenants to meet their lease obligations to us based on the tenants’ financial performance, including the evaluation of any guarantees of tenant lease obligations.
Our portfolio of SNFs, ALFs, ILFs and multi-service campuses is broadly diversified by geographic location throughout the United States, with concentrations in California and Texas based on rental income. Significant Master Leases As of December 31, 2023, we leased 94 facilities to subsidiaries of Ensign, which have a total of 9,776 operational beds.
Our portfolio of SNFs, ALFs, ILFs and multi-service campuses is broadly diversified by geographic location throughout the United States, with concentrations in California and Texas based on rental income. Significant Master Leases Ensign As of December 31, 2024, we leased 97 facilities to subsidiaries of Ensign, which have a total of 10,160 operational beds.
All of our owned properties (including properties we own through joint ventures, excluding one SNF which is non-operational), are leased to our tenants under long-term, triple-net leases, pursuant to which the operators are responsible for all facility maintenance and repair, insurance required in connection with the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leased properties and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.
All of our owned properties (including properties we own in consolidated joint ventures), are leased to our tenants under long-term, triple-net leases, pursuant to which the operators are responsible for all facility maintenance and repair, insurance required in connection with the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leased properties and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.
The PMG Master Lease commenced on December 1, 2016, and provides for an initial term of fifteen years, with two five-year renewal options. As of December 31, 2023, annualized contractual rental income from the PMG Master Lease was $31.2 million, representing 15% of total annualized contractual rental income.
The PMG Master Lease commenced on December 1, 2016, and provides for an initial term of fifteen years, with two five-year renewal options. As of December 31, 2024, annualized contractual rental income from the PMG Master Lease was $31.9 million, representing 12% of total annualized contractual rental income.
We expect that the supply/demand imbalance in the skilled nursing industry will inc reasingly favor skilled nursing and assisted living providers due to the shift of patient care to lower cost settings and an aging population. 6 Table of Contents • Increased Demand Driven by Aging Populations .
We expect that the supply/demand imbalance in the skilled nursing industry will increasingly favor skilled nursing and assisted living providers due to the shift of patient care to lower cost settings and an aging population. • Increased Demand Driven by Aging Populations .
As of December 31, 2023, CareTrust REIT owned, directly or through joint ventures, and leased to independent operators, 226 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) (including facilities classified as held for sale) consisting of 23,928 operational beds and units located in 28 states with the highest concentration of properties by rental income located in California and Texas.
As of December 31, 2024, CareTrust REIT owned, directly or in consolidated joint ventures, and leased to independent operators, 258 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) (including facilities classified as held for sale) consisting of 28,088 operational beds and units located in 32 states with the highest concentration of properties by rental income located in California and Texas.
As of December 31, 2023, our portfolio included two ILFs. • Multi-Service Campuses. Multi-service campuses generally include some combination of co-located SNFs, ALFs, ILFs, and/or memory care units all housed at a single location and operated as a continuum of care. We also refer to continuing care retirement communities as multi-service campuses.
Multi-service campuses generally include some combination of co-located SNFs, ALFs, ILFs, and/or memory care units all housed at a single location and operated as a continuum of care. We also refer to continuing care retirement communities as multi-service campuses.
According to the American Health Care Association, the nursing home industry was comprised of approximately 15,000 facilities as of July 2023, as compared with over 15,600 facilities as of July 2016.
According to the American Health Care Association, the nursing home industry was comprised of approximately 14,800 facilities as of July 2024, as compared with over 15,600 facilities as of July 2016.
Our joint venture partner contributes the remaining 2.5% of the joint venture’s total investment amount in exchange for a 50% common ownership interest in the joint venture.
Our joint venture partner contributes the remaining total investment amount in exchange for a 50% common ownership interest in the joint venture.
These metrics help us identify potential areas of concern relative to our tenants’ credit quality and ultimately the tenants’ ability to generate sufficient liquidity to meet their ongoing obligations, including their obligations to continue paying contractual rents due to us and satisfying other financial obligations to third parties, as prescribed by our triple-net leases. 8 Table of Contents Properties by Type: The following table displays the geographic distribution of our facilities, excluding those held for sale, and the related number of beds and units available for occupancy by property type, as of December 31, 2023.
These metrics help us identify potential areas of concern relative to our tenants’ or borrowers’ credit quality and ultimately the tenants’ or borrowers’ ability to generate sufficient liquidity to meet their ongoing obligations, including their obligations to continue paying contractual rents and interest due to us and satisfying other financial obligations to third parties, as prescribed by our triple-net leases and loan agreements. 10 Table of Contents Owned Properties Properties by Type: The following table displays the geographic distribution of our properties leased to third-party tenants, excluding those held for sale, and the related number of beds and units available for occupancy by facility type, as of December 31, 2024.
From time to time, we also extend secured mortgage loans to healthcare operators, secured by healthcare-related properties, and secured mezzanine loans to healthcare operators, secured by membership interests in healthcare-related properties. From time to time, we also partner with third-party institutional investors to invest in healthcare 5 Table of Contents real estate through joint ventures.
From time to time, we also extend secured mortgage loans to healthcare operators, secured by healthcare-related properties, extend secured mezzanine loans to healthcare operators, secured by membership interests in healthcare-related properties, and invest in preferred equity investments. From time to time, we also partner with third-party institutional investors to invest in healthcare real estate in consolidated joint ventures.
At Ensign’s option, each Ensign Master Lease may be extended for up to three five-year renewal terms beyond the initial term and, if elected, the renewal will be effective for all of the leased property then subject to the applicable Ensign Master Lease.
At Ensign’s option, each Ensign Master Lease may be extended for up to three five-year renewal terms beyond the initial term and, if elected, the renewal will be effective for all of the leased facilities then subject to the applicable Ensign Master Lease. The Ensign Master Leases are guaranteed by Ensign and contain cross-default provisions.
According to the Centers for Medicare & Medicaid Services, nursing home care facilities and continuing care retirement expenditures are projected to grow from approximately $193.6 billion in 2022, which includes federal expenditures in response to the COVID-19 pandemic, to approximately $283.3 billion in 2031.
According to the Centers for Medicare & Medicaid Services, nursing home care facilities and continuing care retirement expenditures are projected to grow from approximately $209.3 billion in 2023, which includes federal expenditures in response to the COVID-19 pandemic, to approximately $337.4 billion in 2032.
Treatment programs include physical, occupational, speech, respiratory and other therapies, including sub-acute clinical protocols such as wound care and intravenous drug treatment. Charges for these services are generally paid from a combination of government reimbursement and private sources. As of December 31, 2023, our portfolio included 151 SNFs (excluding 12 SNFs held for sale).
Treatment programs include physical, occupational, speech, respiratory and other therapies, including sub-acute clinical protocols such as wound care and intravenous drug treatment. Charges for these services are generally paid from a combination of government reimbursement and private sources.
These activities carry real and substantial costs, which we regard as a meaningful investment in our workforce and our company. We believe that employee turnover is costly in direct and indirect ways, and we are committed to employee retention and satisfac tion. During the year ended December 31, 2023, we experienced turnover of three full-time employees, excluding our executive officers.
These activities carry real and substantial costs, which we regard as a meaningful investment in our workforce and our company. We believe that employee turnover is costly in direct and indirect ways, and we are committed to employee retention and satisfac tion. During the year ended December 31, 2024, we did not experience any turnover, including executive officers.
The Tenant ESG Program provides our eligible triple-net tenants with monetary inducements to make sustainable improvements to our properties. Incentive options include a wide variety of opportunities for tenants to upgrade everything from energy and 14 Table of Contents environmental systems to water-saving landscaping and more.
The Tenant ESG Program provides our eligible triple-net tenants with monetary inducements to make sustainable improvements to our properties. Incentive options include a wide variety of opportunities for tenants to upgrade everything from energy and environmental systems to water-saving landscaping and more. Our board of directors has authorized annual allocations of up to $500,000 to fund the Tenant ESG Program.
We intend to support these operators by providing strategic capital for facility acquisition, upkeep and modernization. Our management team’s experience gives us a key competitive advantage in objectively evaluating an operator’s financial position, care and service programs, operating efficiencies and likely business prospects. Experienced Management Team. David M. Sedgwick was appointed as our Chief Executive Officer effective January 1, 2022.
We intend to support these operators by providing strategic capital for facility acquisition, upkeep and modernization. Our management team’s experience gives us a key competitive advantage in objectively evaluating an operator’s financial position, care and service programs, operating efficiencies and likely business prospects. Ability to Identify Strategic Borrowers .
Pursuant to our joint ventures, we typically contribute 97.5% of the joint venture’s total investment amount and we receive 100% of the preferred equity interest in the joint venture in exchange for 95% of that total investment and a 50% common equity interest in the joint venture in exchange for the remaining 2.5% of that investment.
Pursuant to our joint ventures, we typically contribute at least 90% of the joint venture’s total investment amount and we receive 100% of the preferred equity interest in the joint venture and a 50% common equity interest in the joint venture.
Sedgwick served as the Chief Human Capital Officer and President of Facility Services at Ensign. Mr. Sedgwick has been a licensed nursing home administrator since 2001. Our Chief Financial Officer, William M. Wagner, has more than 30 years of accounting and finance experience, primarily in real estate, including more than 19 years of experience working extensively for REITs.
Sedgwick has been a licensed nursing home administrator since 2001. Our Chief Financial Officer, William M. Wagner, has more than 31 years of accounting and finance experience, primarily in real estate, including more than 20 years of experience working extensively for REITs.
Pursuant to our joint ventures, we typically contribute 97.5% of the joint venture’s total investment amount and we receive 100% of the preferred equity interest in the joint venture in exchange for 95% of that total investment and a 50% common equity interest in the joint venture in exchange for the remaining 2.5% of that investment.
Pursuant to our joint ventures, 5 Table of Contents we typically contribute at least 90% of the joint venture’s total investment amount and we receive 100% of the preferred equity interest in the joint venture and a 50% common equity interest in the joint venture.
These facilities are often marketed as an opportunity for residents to “age in place,” and tend to attract couples where the individuals may require or benefit 7 Table of Contents from differing levels of car e. As of December 31, 2023, our portfolio included 25 facilities that we classify as multi-service campuses.
These facilities are often marketed as an opportunity for residents to “age in place,” and tend to attract couples where the individuals may require or benefit from differing levels of car e.
For the Year Ended December 31, 2023 As of December 31, 2023 Property Type Rental Income (in thousands) Percent of Total Total Beds/ Units SNFs (1) $ 145,589 73 % 17,366 Multi-Service Campuses 35,779 18 % 3,593 ALFs and ILFs 17,231 9 % 2,969 Total $ 198,599 100 % 23,928 (1) Includes three SNFs held in consolidated joint ventures.
For the Year Ended December 31, 2023 As of December 31, 2023 Facility Type Rental Income (in thousands) Percent of Total Occupancy (1) Total Beds/ Units SNFs (2) $ 145,589 73 % 75 % 17,366 Multi-Service Campuses 35,779 18 % 75 % 3,593 ALFs and ILFs 17,231 9 % 75 % 2,969 Total $ 198,599 100 % 23,928 (1) Occupancy data excludes two facilities which are in the process of being repurposed, one non-operational SNF and two non-operational ALFs.
Included in the 151 SNFs are three SNFs held through joint ventures and one SNF which is non-operational. In addition, our portfolio includes 25 SNFs located on campuses that also have ALFs or ILFs, which we refer to as multi-service campuses (see below under “Multi-Service Campuses”). • Assisted Living Facilities .
In addition, our portfolio includes 35 SNFs located on campuses that also have ALFs or ILFs, which we refer to as multi-service campuses (see below under “Multi-Service Campuses”). • Assisted Living Facilities .
As of December 31, 2023, we also had other real estate related investments consisting of one preferred equity investment, eight real estate secured loans receivable and one mezzanine loan receivable with a carrying value of $180.4 million.
As of December 31, 2024, we also had other real estate related investments consisting of three preferred equity investments, 15 real estate secured loans receivable and five mezzanine loans receivable with a carrying value of $795.2 million and one financing receivable with a carrying value of $96.0 million.
Sedgwick has more than 23 years of experience in the skilled nursing and seniors housing industry. Mr. Sedgwick’s President, Chief Operating Officer and Vice President duties regularly involved him in matters related to new investments, asset management, tenant relations, portfolio management, portfolio optimization, investor relations and capital markets activities for the Company. Prior to joining CareTrust, Mr.
Sedgwick’s President, Chief 15 Table of Contents Operating Officer and Vice President duties regularly involved him in matters related to new investments, asset management, tenant relations, portfolio management, portfolio optimization, investor relations and capital markets activities for the Company. Prior to joining CareTrust, Mr. Sedgwick served as the Chief Human Capital Officer and President of Facility Services at Ensign. Mr.
Due 17 Table of Contents to this, healthcare reform legislation would likely require at least some support from both Republican and Democratic lawmakers to become law and it is uncertain whether any healthcare reform legislation will ultimately become law.
Due to this, healthcare reform legislation would likely require at least some support from both Republican and Democratic lawmakers to become law and it is uncertain whether any healthcare reform legislation will ultimately become law. We cannot predict the ultimate content, timing or effect of any healthcare reform legislation or the impact of potential legislation on our business.
If Medicare reimbursement provided to our healthcare tenants is reduced under the SNF VBP Program, that reduction may have an adverse impact on the ability of our tenants to meet their obligations to us.
However, there is no assurance that payments made by CMS as a result of the SNF VBP Program will be sufficient to cover a facility’s costs. If Medicare reimbursement provided to our healthcare tenants is reduced under the SNF VBP Program, that reduction may have an adverse impact on the ability of our tenants to meet their obligations to us.
In November 2023, CMS adopted a final rule implementing certain portions of the Affordable Care Act, requiring the disclosure of certain ownership, managerial, and other information regarding Medicare SNFs and Medicaid nursing facilities.
A final rule adopted by CMS that implemented certain portions of the Affordable Care Act and requires the disclosure of certain ownership, managerial, and other information regarding Medicare SNFs and Medicaid nursing facilities, became effective on January 16, 2024.
As of December 31, 2023, our portfolio included 34 ALFs (excluding two ALFs classified as held for sale), some of which also contain independent living and memory care units. Included in the 34 ALFs are two facilities which are in the process of being repurposed and two facilities which are non-operational. • Independent Living Facilities .
As of December 31, 2024, our portfolio included 51 ALFs (excluding 5 ALFs classified as held for sale and one facility which is non-operational), some of which also contain independent living and memory care units.
Our properties are located in 28 states and we intend to continue to acquire properties in other states throughout the United States. Although our portfolio currently consists primarily of owned real property, we have also invested in joint ventures through which we own properties, as well as mortgage loans receivable and mezzanine loans.
Although our portfolio currently consists primarily of owned real property, we have also invested in joint 14 Table of Contents ventures through which we own properties, as well as mortgage loans receivable, mezzanine loans and preferred equity investments.
The climate risk assessment found that the highest risk for our portfolio was heat caused by higher temperatures. During 2023, we distributed a Tenant Climate Risk-Opportunity Survey and received a 50% response rate. This survey helped contribute to ESG dialogue with tenants and overall improved our risk management strategy.
In the overall portfolio physical climate risk assessment, four risk categories were defined with a portfolio risk percentage provided for each category, addressing each physical risk. The climate risk assessment found that the highest risk for our portfolio was heat caused by higher temperatures. During 2023, we distributed a Tenant Climate Risk-Opportunity Survey and received a 50% response rate.
We believe this geographic diversification will limit the effect of changes in any one market on our overall performance. Long-Term, Triple-Net Lease Structure.
The properties in any one state do not account for more than 22% of our annualized run rate revenue as of December 31, 2024. We believe this geographic diversification will limit the effect of changes in any one market on our overall performance. Long-Term, Triple-Net Lease Structure.
The survey found transitional risks for our tenants due to transitioning to a low carbon economy including increased material costs, volatility in utilities’ pricing, market preference for greener buildings, and higher insurance premiums. Also in 2020, we published our Tenant Code of Conduct & Corporate Responsibility (our “Tenant ESG Program”).
This survey helped contribute to ESG dialogue with tenants and overall improved our risk management strategy. The survey found transitional risks for our tenants due to transitioning to a low carbon economy including increased material costs, volatility in utilities’ pricing, market preference for greener buildings, and higher insurance premiums.
During the year ended December 31, 2023, we sold approximately 30.9 million shares at an average gross price of $20.86 for gross proceeds of approximately $643.8 million under our ATM Program to fund future acquisitions. Ability to Identify Talented Operators .
During the year ended December 31, 2024, we sold approximately 41.0 million shares at an average gross price of $26.35 for gross proceeds of approximately $1.1 billion under our ATM Program to fund current and future acquisitions.
During 2023, we partnered with a third party to conduct a portfolio level physical climate risk assessment on all standing assets. Physical risks assessed were heat, flood, precipitation, fire, and drought. In the overall portfolio physical climate risk assessment, four risk categories were defined with a portfolio risk percentage provided for each category, addressing each physi cal risk.
During 2024, we increased leases with ESG requirements by 10% from September 2023. During 2023, we partnered with a third party to conduct a portfolio level physical climate risk assessment on all standing assets. Physical risks assessed were heat, flood, precipitation, fire, and drought.
We expect that our future investments may also include first mortgages, mezzanine debt and other securities issued by, or joint ventures with, REITs or other entities that own real estate consistent with our investment objectives. 11 Table of Contents Our Competitive Strengths We believe that our ability to acquire, integrate and improve facilities is a direct result of the following key competitive strengths: Geographically Diverse Property Portfolio.
We expect that our future investments may also include first mortgages, mezzanine debt and other securities issued by, or joint ventures with, REITs or other entities that own real estate consistent with our investment objectives.
Property Type — Rental Income: The following tables display the annual rental income for each property type leased to third-party tenants for the years ended December 31, 2023 and 2022 and total beds/units for each property type as of December 31, 2023 and 2022.
See Note 3, Real Estate Investments, Net , and Note 12, Variable Interest Entities , for additional information. 11 Table of Contents Facility Type — Rental Income and Occupancy: The following tables display the annual rental income and occupancy for each facility type leased to third-party tenants for the years ended December 31, 2024 and 2023 and total beds/units for each facility type as of December 31, 2024 and 2023.
We diversify through the acquisition of new and existing facilities from third parties and the expansion and upgrade of current facilities and strategically investing in new developments with options to acquire the developments at stabilization. We employ what we believe to be a disciplined, opportunistic acquisition strategy with a focus on the acquisition of SNFs, ALFs and ILFs.
We diversify through the acquisition of new and existing facilities from third parties and the expansion and upgrade of current facilities, by strategically investing in new developments with options to acquire the developments at stabilization. In addition, we diversify through investing in high-quality borrowers, facility types and geography.
The foregoing principles and additional ESG initiatives are reflected in our Environmental, Social and Governance policy adopted on October 29, 2021, and previously published Policy on Human Capital, Policy on Human Rights and Responsibilities, Policy on Environmental Sustainability and our proprietary Tenant ESG Program. All of these policies are located on the Investor Relations section of our website at www.caretrustreit.com.
We have published our Environmental, Social and Governance policy, Policy on Human Capital, Policy on Human Rights and Responsibilities, Policy on Environmental Sustainability and information about our Tenant ESG Program on the Investor Relations section of our website at www.caretrustreit.com.
We expect the data to help us identify the most promising opportunities for improvement in our portfolio, set informed ESG goals and measure progress over time.
During 2021, we began collecting data and have increased our tracking since, adding waste tracking in 2023 and reaching a total of 105 tracked properties by the end of 2024. We expect the data to help us identify the most promising opportunities for improvement in our portfolio, set informed ESG goals and measure progress over time.

… 78 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

95 edited+22 added−5 removed162 unchanged
Biggest changeViolations of such laws by an operator of a health care property could result in loss of accreditation, denial of reimbursement, imposition of fines, suspension or decertification from government healthcare programs, civil liability, and in certain limited instances, criminal penalties, loss of license or closure of the property and/or the incurrence of considerable costs arising from an investigation or regulatory action. 28 Table of Contents If we or our tenants fail to adhere to applicable privacy and data security laws, this could have a material adverse effect on us or on our tenants’ ability to meet their obligations to us .
Biggest changeViolations of such laws by an operator of a health care property could result in loss of accreditation, denial of reimbursement, imposition of fines, suspension or decertification from government healthcare programs, civil liability, and in certain limited instances, criminal penalties, loss of license or closure of the property and/or the incurrence of considerable costs arising from an investigation or regulatory action.
As a result of the concentration of our properties in California and Texas as described in “Portfolio Summary” under Item 1 of this Annual Report on Form 10-K, the conditions of local economies and real estate markets, including increases in real estate taxes, changes in governmental rules, regulations and reimbursement rates or criteria, changes in demographics, state funding, acts of nature, the impacts of climate change and other factors that may result in a decrease in demand and/or reimbursement for skilled nursing services in these states could have a disproportionately adverse effect on our tenants’ revenue, costs and results of operations, which may affect their ability to meet their obligations to us.
As a result of the concentration of our properties in California and Texas as described in “Portfolio Summary” under Item 1 of this Annual Report on Form 10-K, the conditions of local economies and real estate markets, including increases in real estate taxes, changes in governmental rules, regulations and reimbursement rates or criteria, changes in demographics, state funding, acts of nature, the impacts of climate change and other factors that may result in a decrease in demand and/or reimbursement for skilled nursing services in these states could have a disproportionately adverse effect on our tenants’ and borrowers’ revenue, costs and results of operations, which may affect their ability to meet their obligations to us.
Our tenants are subject to the following risks, among others, relating to governmental healthcare reimbursement programs: statutory and regulatory changes; retroactive rate adjustments; recovery of program overpayments or set-offs; administrative rulings; policy interpretations; payment or other delays by fiscal intermediaries or carriers; government funding restrictions (at a program level or with respect to specific facilities); and interruption or delays in payments due to any ongoing governmental investigations and audits.
Our tenants and borrowers are subject to the following risks, among others, relating to governmental healthcare reimbursement programs: statutory and regulatory changes; retroactive rate adjustments; recovery of program overpayments or set-offs; administrative rulings; policy interpretations; payment or other delays by fiscal intermediaries or carriers; government funding restrictions (at a program level or with respect to specific facilities); and interruption or delays in payments due to any ongoing governmental investigations and audits.
Any resulting financial impact to our tenants, including liability claims or regulatory penalties, costs to respond and implement remediation measures as well as operational consequences or business impacts resulting from any damage to their reputation or harm to their business relationships, could negatively impact the ability of our tenants to meet their financial and other contractual obligations to us, which could have a material adverse effect on our business, financial condition and results of operations.
Any resulting financial impact to our tenants or borrowers, including liability claims or regulatory penalties, costs to respond and implement remediation measures as well as operational consequences or business impacts resulting from any damage to their reputation or harm to their business relationships, could negatively impact the ability of our tenants or borrowers to meet their financial and other contractual obligations to us, which could have a material adverse effect on our business, financial condition and results of operations.
If our tenants or operators fail to comply with the laws, regulations and other requirements applicable to their businesses and the operation of our properties, they could become ineligible to receive reimbursement from governmental and private third-party payor programs, face bans on admissions of new patients or residents, suffer civil or criminal penalties or be required to make significant operational changes.
If our borrowers, tenants or operators fail to comply with the laws, regulations and other requirements applicable to their businesses and the operation of our properties, they could become ineligible to receive reimbursement from governmental and private third-party payor programs, face bans on admissions of new patients or residents, suffer civil or criminal penalties or be required to make significant operational changes.
The cost to comply with these laws, regulations and other requirements results in increased costs of doing business for our tenants and operators. For example, on October 13, 2023, California Senate Bill No. 525 (“SB 525”) was signed into law, requiring a substantial increase in the minimum wage for workers operating in certain health care facilities.
The cost to comply with these laws, regulations and other requirements results in increased costs of doing business for our tenants, operators and borrowers. For example, on October 13, 2023, California Senate Bill No. 525 (“SB 525”) was signed into law, requiring a substantial increase in the minimum wage for workers operating in certain health care facilities.
We and our tenants are subject to HIPAA and various other state and federal laws that relate to privacy and data security, including the reporting of data breaches involving personal information as discussed in “Government Regulation, Licensing and Enforcement - Privacy, Security and Data Breach Notification Laws” in Item 1 of this Annual Report on Form 10-K.
We and our tenants and borrowers are subject to HIPAA and various other state and federal laws that relate to privacy and data security, including the reporting of data breaches involving personal information as discussed in “Government Regulation, Licensing and Enforcement - Privacy, Security and Data Breach Notification Laws” in Item 1 of this Annual Report on Form 10-K.
Our tenants’ failure to comply with any of these laws, regulations or standards could result in adverse publicity and reputational harm as well as penalties which may include loss or restriction of license, loss of accreditation, denial of reimbursement, imposition of fines, suspension or decertification from federal and state healthcare programs, or closure of the facility.
Our tenants’ or borrowers’ failure to comply with any of these laws, regulations or standards could result in adverse publicity and reputational harm as well as penalties which may include loss or restriction of license, loss of accreditation, denial of reimbursement, imposition of fines, suspension or decertification from federal and state healthcare programs, or closure of the facility.
In addition, if economic conditions resul t in significant increases in the Consumer Price Index, but the escalations under our leases are capped, our growth and profitability also may be limited. Cybersecurity incidents or other damage to the information systems and technology of us or our tenants could harm our business.
In addition, if economic conditions resul t in significant increases in the Consumer Price Index, but the escalations under our leases are capped, our growth and profitability also may be limited. Cybersecurity incidents or other damage to the information systems and technology of us, our tenants or borrowers could harm our business.
We expect healthcare reimbursement will continue to be a significant focus for federal and state authorities in their cost control efforts. We cannot predict the timing or effects of any future legislative reforms on our tenants’ business costs or government and other third-party payor reimbursement.
We expect healthcare reimbursement will continue to be a significant focus for federal and state authorities in their cost control efforts. We cannot predict the timing or effects of any future legislative reforms on our tenants’ and borrowers’ business costs or government and other third-party payor reimbursement.
We cannot be certain that our tenants will be able to achieve occupancy and rate levels, or manage their expenses, in a way that will enable them to meet all of their obligations to us. Further, many competing companies may have resources and attributes that are superior to those of our tenants.
We cannot be certain that our tenants and borrowers will be able to achieve occupancy and rate levels, or manage their expenses, in a way that will enable them to meet all of their obligations to us. Further, many competing companies may have resources and attributes that are superior to those of our tenants and borrowers.
Furthermore, the impact, or impending threat, of a natural disaster may require that our tenants evacuate one or more facilities, which would be costly and would involve risks, including potentially fatal risks, for the patients at such facilities. The impact of disasters and similar events is inherently uncertain.
Furthermore, the impact, or impending threat, of a natural disaster may require that our tenants or borrowers evacuate one or more facilities, which would be costly and would involve risks, including potentially fatal risks, for the patients at such facilities. The impact of disasters and similar events is inherently uncertain.
Based on our overall portfolio physical climate risk assessment, we found that the highest climate risk for our portfolio was heat caused by higher temperatures, which may result in higher operating and energy costs for our tenants and higher capital costs for resiliency measures for us and our tenants to maintain the property and its value.
Based on our overall portfolio physical climate risk assessment, we found that the highest climate risk for our portfolio was heat caused by higher temperatures, which may result in higher operating and energy costs for our tenants and borrowers and higher capital costs for resiliency measures for us and our tenants and borrowers to maintain the property and its value.
The need to control Medicaid expenditures may be exacerbated by the potential for increased enrollment in Medicaid due to unemployment and declines in family incomes. These potential reductions could be compounded by the potential for federal cost-cutting efforts that could lead to reductions in reimbursement to our tenants under both the Medicaid and Medicare programs.
The need to control Medicaid expenditures may be exacerbated by the potential for increased enrollment in Medicaid due to unemployment and declines in family incomes. These potential reductions could be compounded by the potential for federal cost-cutting efforts that could lead to reductions in reimbursement to our tenants and borrowers under both the Medicaid and Medicare programs.
If the power supply, delivery of goods or the ability of employees to reach our facilities is interrupted in any material respect due to a natural disaster or other reasons, it would have a significant impact on our facilities and our tenants’ businesses at those facilities.
If the power supply, delivery of goods or the ability of employees to reach the facilities is interrupted in any material respect due to a natural disaster or other reasons, it would have a significant impact on the facilities and our tenants’ and borrowers’ businesses at those facilities.
As currently in effect, our charter and bylaws, among other things, (1) contain transfer and ownership restrictions on the percentage by number and value of outstanding shares of our stock that may be owned or acquired by any stockholder; (2) prohibit stockholders action by non-unanimous written consent; (3) permit the board of directors, without further action of the stockholders, to amend the charter to increase or decrease the aggregate number of authorized shares or the number of shares of any class or series that may be issued; (4) permit the board of directors to classify or reclassify any unissued shares of common or preferred stock and set the preferences, rights and other terms of the classified or reclassified shares; (5) establish certain 33 Table of Contents advance notice procedures for stockholder proposals, and provide procedures for the nomination of candidates for our board of directors; (6) provide that special meetings of stockholders may only be called by the Company or upon written request of 25% of all the votes entitled to be cast at such meeting; (7) provide that a director may only be removed by stockholders for cause and upon the vote of two-thirds of the outstanding shares of common stock; and (8) require supermajority approval to amend or repeal certain charter provisions.
As currently in effect, our charter and bylaws, among other things, (1) contain transfer and ownership restrictions on the percentage by number and value of outstanding shares of our stock that may be owned or acquired by any stockholder; (2) prohibit stockholders action by non-unanimous written consent; (3) permit the board of directors, without further action of the stockholders, to amend the charter to increase or decrease the aggregate number of authorized shares or the number of shares of any class or series that may be issued; (4) permit the board of directors to classify or reclassify any unissued shares of common or preferred stock and set the preferences, rights and other terms of the classified or reclassified shares; (5) establish certain advance notice procedures for stockholder proposals, and provide procedures for the nomination of candidates for our board of directors; (6) provide that special meetings of stockholders may only be called by the Company or upon written request of 25% of all the votes entitled to be cast at such meeting; (7) provide that a director may only be removed by stockholders for cause and upon the vote of two-thirds of the outstanding shares of common stock; and (8) require supermajority approval to amend or repeal certain charter provisions.
For example, the federal government and a number of states are currently managing budget deficits and, as a result, many states are focusing on the reduction of expenditures under their Medicaid programs, which may result in a freeze on Medicaid rates or a decrease in reimbursement rates for our tenants.
For example, the federal government and a number of states are currently managing budget deficits and, as a result, many states are focusing on the reduction of expenditures under their Medicaid programs, which may result in a freeze on Medicaid rates or a decrease in reimbursement rates for our tenants and borrowers.
While we have taken steps to protect the security of our information systems, we have, from time to time, experienced cybersecurity incidents of varying degrees, although none of these cyber incidents have had a material adverse impact on our business, financial condition or results of operations.
While we have taken steps to protect the security of our information systems, we have, from time to time, experienced cybersecurity incidents of varying degrees, although none of these cyber incidents has had a material adverse impact on our business, financial condition or results of operations.
Any of these results could have a material adverse effect on our business, financial condition and results of operations and our ability to make distributions to stockholders. We have and may in the future incur impairment charges, which could negatively impact our results of operations.
Any of these results could have a material adverse effect on our business, financial condition and results of operations and our ability to make distributions to stockholders. We have incurred and may in the future incur impairment charges, which could negatively impact our results of operations.
Increased competition has resulted and may further result in lower net revenues for some of our tenants and may affect their ability to meet their financial and other contractual obligations to us. The healthcare industry is highly competitive.
Increased competition has resulted and may further result in lower net revenues for some of our tenants and borrowers and may affect their ability to meet their financial and other contractual obligations to us. The healthcare industry is highly competitive.
Risks Related to Laws and Regulations Healthcare reform legislation impacts cannot accurately be predicted and could adversely affect our results of operations. We and the healthcare operators leasing our properties depend on the healthcare industry and are susceptible to risks associated with healthcare reform.
Risks Related to Laws and Regulations Healthcare reform legislation impacts cannot accurately be predicted and could adversely affect our results of operations. We, our borrowers and the healthcare operators leasing our properties depend on the healthcare industry and are susceptible to risks associated with healthcare reform.
Our tenants also compete with numerous other companies providing similar healthcare services or alternatives such as home health agencies, life care at home, community-based service programs, retirement communities and convalescent centers.
Our tenants and borrowers also compete with numerous other companies providing similar healthcare services or alternatives such as home health agencies, life care at home, community-based service programs, retirement communities and convalescent centers.
Failure of any tenant to obtain, or the loss or imposition of restrictions on any required license, registration, certificate of need, provider agreement or certification would prevent a facility from operating in the manner intended by such tenant.
Failure of any tenant or borrower to obtain, or the loss or imposition of restrictions on any required license, registration, certificate of need, provider agreement or certification would prevent a facility from operating in the manner intended by such tenant.
Any increase in labor costs and other property operating expenses or any failure by our tenants to attract and retain qualified personnel could reduce the revenues of our tenants and their ability to meet their obligations to us.
Any increase in labor costs and other property operating expenses or any failure by our tenants or borrowers to attract and retain qualified personnel could reduce the revenues of our borrowers and tenants and their ability to meet their obligations to us.
Our tenants that operate SNFs and other healthcare facilities must be licensed under applicable state law and, depending upon the type of facility, certified or approved as providers under the Medicare and/or Medicaid programs.
Our tenants and borrowers that operate SNFs and other healthcare facilities must be licensed under applicable state law and, depending upon the type of facility, certified or approved as providers under the Medicare and/or Medicaid programs.
Tenants that fail to comply with applicable requirements of governmental reimbursement programs, such as Medicare or Medicaid, may cease to operate or be unable to meet their financial and other contractual obligations to us.
Tenants and borrowers that fail to comply with applicable requirements of governmental reimbursement programs, such as Medicare or Medicaid, may cease to operate or be unable to meet their financial and other contractual obligations to us.
Risks to our business that have been associated with the COVID-19 pandemic, and may be associated with future COVID-19 outbreaks or other public health crises, include: • one or more of our tenants or borrowers could experience deteriorating financial conditions and be unable or unwilling to pay rent on time and in full (which has, and could continue to result from, among other reasons (i) increased operating costs and staffing requirements related to compliance with Centers for Disease Control and Prevention (“CDC”) protocols, (ii) decreased occupancy rates, (iii) increased scrutiny by regulators, (iv) potential repayments of relief funds received by tenants, (v) nursing or other staffing shortages; or (vi) decisions by elderly individuals to avoid or delay entrance into assisted living and other long-term care facilities); • the possibility we may have to restructure tenants’ obligations and may not be able to do so on terms that are favorable to us; • the potential need to recognize asset impairment charges or credit losses on our loans receivable if we determine that the full amount of our investments are not recoverable; • increased costs or delays that we have incurred, and may continue to incur, if we need to reposition or transition any of our currently-leased properties to another tenant or operator, which have adversely impacted, and may in the future adversely impact, our revenues and results of operations ; • risks related to lawsuits and regulatory enforcement actions related to pandemic outbreaks involving us, our tenants, operators or borrowers, including increases in the costs of business, negative publicity and/or further decreases in occupancy and/or profitability at our facilities; • the expiration, or lack of enforcement, of certain liability immunity for health care providers in relation to a qualified pandemic under the Public Readiness and Emergency Preparedness Act (the “PREP Act”); • complete or partial closures of, or other operational issues at, one or more of our properties resulting from government actions or directives; • limitations on our access to capital and other sources of funding, which could adversely impact our ability to make new property investments; • our ability to continue to make cash distributions to our stockholders commensurate with historical levels; and • our ability to repay outstanding debt or maintain compliance with covenants under our Second Amended Credit Facility (as defined below) and the indenture governing our Notes.
Risks to our business that have been associated with the COVID-19 pandemic, and may be associated with future COVID-19 outbreaks or other public health crises, include: • one or more of our tenants or borrowers could experience deteriorating financial conditions and be unable or unwilling to pay rent on time and in full (which has, and could continue to result from, among other reasons (i) increased operating costs and staffing requirements related to compliance with Centers for Disease Control and Prevention (“CDC”) protocols, (ii) decreased occupancy rates, (iii) increased scrutiny by regulators, (iv) potential repayments of relief funds received by tenants, (v) nursing or other staffing shortages; or (vi) decisions by elderly individuals to avoid or delay entrance into assisted living and other long-term care facilities); • the possibility we may have to restructure tenants’ or borrowers’ obligations and may not be able to do so on terms that are favorable to us; • the potential need to recognize asset impairment charges or credit losses on our loans receivable if we determine that the full amount of our investments are not recoverable; • increased costs or delays that we have incurred, and may continue to incur, if we need to reposition or transition any of our currently-leased properties to another tenant or operator, which have adversely impacted, and may in the future adversely impact, our revenues and results of operations ; • risks related to lawsuits and regulatory enforcement actions related to pandemic outbreaks involving us, our tenants, operators or borrowers, including increases in the costs of business, negative publicity and/or further decreases in occupancy and/or profitability at our facilities; • the expiration, or lack of enforcement, of certain liability immunity for healthcare providers in relation to a qualified pandemic under the Public Readiness and Emergency Preparedness Act (the “PREP Act”); • complete or partial closures of, or other operational issues at, one or more of our properties resulting from government actions or directives; • limitations on our access to capital and other sources of funding, which could adversely impact our ability to make new property investments; 28 Table of Contents • our ability to continue to make cash distributions to our stockholders commensurate with historical levels; and • our ability to repay outstanding debt or maintain compliance with covenants under our Third Amended Credit Facility (as defined below) and the indenture governing our Notes.
Our tenants may also from time to time experience cybersecurity incidents or other damage or interruption to their information systems that disrupt their operations or result in the loss or misuse of confidential information or other sensitive or personal information.
Our tenants or borrowers may also from time to time experience cybersecurity incidents or other damage or interruption to their information systems that disrupt their operations or result in the loss or misuse of confidential information or other sensitive or personal information.
While we cannot make any assessment as to the ultimate timing or the effect that any future legislative reforms may have on our tenants’ costs of doing business and on the amount of reimbursement by government and other third-party payors, potential reductions in Medicaid and Medicare reimbursement, or in non-governmental third-party payor reimbursement, to our tenants could reduce the revenues of our tenants and their ability to meet their obligations to us.
While we cannot make any assessment as to the ultimate timing or the effect that any future legislative reforms may have on our tenants’ or borrowers’ costs of doing business and on the amount of reimbursement by government and other third-party payors, potential reductions in Medicaid and Medicare reimbursement, or in non-governmental third-party payor reimbursement, to our tenants and borrowers could reduce the revenues of our tenants and borrowers and their ability to meet their obligations to us.
The failure of any of our tenants to comply with these laws, requirements and regulations could materially and adversely affect their ability to meet their financial and contractual obligations to us.
The failure of any of our tenants and borrowers to comply with these laws, requirements and regulations could materially and adversely affect their ability to meet their financial and contractual obligations to us.
In addition, failure to satisfy our obligations under the Notes or our other debt or to comply with the financial and other restrictive covenants contained in the indenture governing the Notes or the Second Amended Credit Agreement (as defined below), could result in an event of default, which could result in all of our debt becoming immediately due and payable and permit certain of our lenders to foreclose on our assets securing such debt.
In addition, failure to satisfy our obligations under the Notes or our other debt or to comply with the financial and other restrictive covenants contained in the indenture governing the Notes or the Third Amended Credit Agreement (as defined below), could result in an event of default, which could result in all of our debt becoming immediately due and payable and permit certain of our lenders to foreclose on our assets securing such debt.
Significant turnover, or a shortage of nurses or other trained personnel or general inflationary pressures on wages, may force tenants to enhance pay and benefits packages to compete effectively for skilled personnel, or to use more expensive contract personnel, but they may be unable to offset these added costs by increasing the rates charged to residents.
Significant turnover, or a shortage of nurses or other trained personnel or general inflationary pressures on wages, may force tenants, borrowers or operators to enhance pay and benefits packages to compete effectively for skilled personnel, or to use more expensive contract personnel, but they may be unable to offset these added costs by increasing the rates charged to residents.
Bank failures or other events affecting financial institutions could have a material adverse effect on our and our tenants’ liquidity, results of operations, and financial condition.
Bank failures or other events affecting financial institutions could have a material adverse effect on our, our tenants’ or our borrowers’ liquidity, results of operations, and financial condition.
The Second Amended Credit Agreement and the indenture governing the Notes restrict, and market or business conditions may limit our ability to take, these actions. Any debt restructuring or refinancing could be at higher interest rates and may require us to comply with more onerous covenants that could further restrict our business operations.
The Third Amended Credit Agreement and the indenture governing the Notes restrict, and market or business conditions may limit our ability to take, these actions. Any debt restructuring or refinancing could be at higher interest rates and may require us to comply with more onerous covenants that could further restrict our business operations.
We generally must distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, in order for us to qualify to be taxed as a REIT (assuming that certain other requirements are also satisfied) so that U.S. federal corporate income tax does not apply to earnings that we 30 Table of Contents distribute.
We generally must distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, in order for us to qualify to be taxed as a REIT (assuming that certain other requirements are also satisfied) so that U.S. federal corporate income tax does not apply to earnings that we distribute.
We may be unable to maintain our current credit ratings, and in the event that our current credit ratings deteriorate, a ratings agency downgrades our credit rating or places our rating under watch or review for possible downgrade, we would likely incur higher borrowing costs, which would make it more difficult or expensive to obtain additional financing or refinance existing obligations and commitments and the trading price of our common stock may decline.
We may be unable to maintain our current credit ratings, and in the event that our current credit ratings deteriorate, a ratings agency downgrades our credit rating or places our rating under watch or review for 37 Table of Contents possible downgrade, we would likely incur higher borrowing costs, which would make it more difficult or expensive to obtain additional financing or refinance existing obligations and commitments and the trading price of our common stock may decline.
Prior to the transfer of the operations of such healthcare properties to successor operators, the new operator generally must become licensed under state law and, in certain states, receive change of ownership approvals under certificate of need laws (which provide for a 25 Table of Contents certification that the state has made a determination that a need exists for the beds located on the property) and, if applicable, file for a Medicare and Medicaid change of ownership.
Prior to the transfer of the operations of such healthcare properties to successor operators, the new operator generally must become licensed under state law and, in certain states, receive change of ownership approvals under certificate of need laws (which provide for a certification that the state has made a determination that a need exists for the beds located on the property) and, if applicable, file for a Medicare and Medicaid change of ownership.
High levels of indebtedness could have one or more of the following adverse consequences, among others: require us to dedicate a substantial portion of our cash flow from operations to make principal and interest payments on our indebtedness, thereby reducing our cash flow available to fund working capital, dividends, capital expenditures and acquisitions and other general corporate purposes; require us to maintain certain debt coverage and other financial ratios at specified levels, thereby reducing our financial flexibility; make it more difficult for us to satisfy our financial obligations, including the Notes and borrowings under the Second Amended Credit Facility (as defined below); increase our vulnerability to general adverse economic and 31 Table of Contents industry conditions or a downturn in our business; limit, along with the financial and other restrictive covenants in our indebtedness, our ability to borrow additional funds on favorable terms or at all to expand our business or ease liquidity constraints; limit our ability to refinance all or a portion of our indebtedness on or before maturity on the same or more favorable terms or at all; and require us to dispose of one or more of our properties at disadvantageous prices in order to service our indebtedness or to raise funds to pay such indebtedness at maturity.
High levels of indebtedness could have one or more of the following adverse consequences, among others: require us to dedicate a substantial portion of our cash flow from operations to make principal and interest payments on our indebtedness, thereby reducing our cash flow available to fund working capital, dividends, capital expenditures and acquisitions and other general corporate purposes; require us to maintain certain debt coverage and other financial ratios at specified levels, thereby reducing our financial flexibility; make it more difficult for us to satisfy our financial obligations, including the Notes and borrowings under the Third Amended Revolving Facility (as defined below); increase our vulnerability to general adverse economic and industry conditions or a downturn in our business; limit, along with the financial and other restrictive covenants in our indebtedness, our ability to borrow additional funds on favorable terms or at all to expand our business or ease liquidity constraints; limit our ability to refinance all or a portion of our indebtedness on or before maturity on the same or more favorable terms or at all; and require us to dispose of one or more of our properties at disadvantageous prices in order to service our indebtedness or to raise funds to pay such indebtedness at maturity.
Further, our Second Amended Credit Agreement and the indenture governing the Notes permit us to incur substantial additional debt, including secured debt, subject to our compliance with certain financial covenants set forth in the Second Amended Credit Agreement and our ability to satisfy certain covenants in the indenture governing the Notes.
Further, our Third Amended Credit Agreement and the indenture governing the Notes permit us to incur substantial additional debt, including secured debt, subject to our compliance with certain financial covenants set forth in the Third Amended Credit Agreement and our ability to satisfy certain covenants in the indenture governing the Notes.
We believe that additional resources may be dedicated to regulatory enforcement, which could further increase our tenants’ costs of doing business and negatively impact their ability to pay their rent obligations to us.
We believe that additional resources may be dedicated to regulatory enforcement, which could further increase our tenants’ and borrowers’ costs of doing business and negatively impact their ability to pay their obligations to us.
For example, we may hold some of our assets or conduct certain of our activities through one or more taxable REIT subsidiaries (each, a “TRS”) or other subsidiary corporations that will be subject to U.S. federal, state, and local corporate-level income taxes as regular C corporations.
For 35 Table of Contents example, we may hold some of our assets or conduct certain of our activities through one or more taxable REIT subsidiaries (each, a “TRS”) or other subsidiary corporations that will be subject to U.S. federal, state, and local corporate-level income taxes as regular C corporations.
Additionally, failure of our tenants to generally comply with applicable laws and regulations could adversely affect facilities owned by us, result in adverse publicity and reputational harm, and therefore could materially and adversely affect us.
Additionally, failure of our tenants or borrowers to generally comply with applicable laws and regulations could adversely affect facilities owned by us, result in adverse publicity and reputational harm, and therefore could materially and adversely affect us.
The Second Amended Credit Agreement requires us to comply with financial maintenance covenants to be tested quarterly and also contains customary events of default, including the failure to make timely payments under the Second Amended Credit Facility or other material indebtedness, failure to satisfy certain covenants (including financial maintenance covenants), the occurrence of a change of control and specified events of bankruptcy and insolvency.
The Third Amended Credit Agreement requires us to comply with financial maintenance covenants to be tested quarterly and also contains customary events of default, including the failure to make timely payments under the Third Amended Revolving Facility or other material indebtedness, failure to satisfy certain covenants (including financial maintenance covenants), the occurrence of a change of control and specified events of bankruptcy and insolvency.
The failure of a bank, or events involving limited liquidity, defaults, non-performance, or other adverse conditions in the financial or credit markets impacting financial institutions, or concerns or rumors about such events, may adversely impact us, either directly or through an adverse impact on our tenants, operators, and borrowers.
The failure of a bank, or events involving limited liquidity, defaults, non-performance, or other adverse conditions in the financial or credit markets impacting financial institutions, or concerns or rumors about such events, may adversely impact us, 31 Table of Contents either directly or through an adverse impact on our tenants, operators, and borrowers.
Our ability to make scheduled payments on and to refinance our indebtedness depends on and is subject to our future financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors beyond our control, including the availability of financing in the international banking and capital markets.
Our ability to make scheduled payments on and to refinance our indebtedness depends on and is subject to our future financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors beyond our control, including the availability of financing in the international banking and capital 36 Table of Contents markets.
Though the regulatory environment in which SNFs operate is more restrictive than for ALFs, ALFs face similar penalties for noncompliance with applicable legal requirements. For example, operations at our properties may require a license, registration, certificate of need, provider agreement or certification.
Though the regulatory environment in which SNFs operate is more restrictive than for ALFs, ALFs face similar penalties for noncompliance with applicable legal requirements. For example, operations at our properties may require a 33 Table of Contents license, registration, certificate of need, provider agreement or certification.
Changes to the U.S. federal tax laws and interpretations thereof, whether under the Act or otherwise, could adversely affect an investment in our stock No prediction can be made regarding whether new legislation or regulation (including new tax measures) will be enacted by legislative bodies or governmental agencies, nor can we predict what consequences would result from this legislation or regulation.
Changes to the U.S. federal tax laws and interpretations thereof, whether under the Act or otherwise, could adversely affect an investment in our stock 34 Table of Contents No prediction can be made regarding whether new legislation or regulation (including new tax measures) will be enacted by legislative bodies or governmental agencies, nor can we predict what consequences would result from this legislation or regulation.
In addition, approvals of local authorities for any required modifications 22 Table of Contents and/or renovations may be necessary, resulting in delays in transitioning a facility to a new tenant. These expenditures or renovations and delays could materially and adversely affect our business, financial condition or results of operations.
In addition, approvals of local authorities for any required modifications and/or renovations may be necessary, resulting in delays in transitioning a facility to a new tenant. These expenditures or renovations and delays could materially and adversely affect our business, financial condition or results of operations.
Global credit and financial markets have experienced extreme volatility and disruptions over the past several years, including declines in consumer confidence, concerns about declines in economic growth, increases in the rate of inflation, increases in borrowing rates and changes in liquidity and credit availability, and uncertainty about economic stability, including most recently in connection with actions undertaken by the U.S.
Global credit and financial markets have experienced extreme volatility and disruptions over the past several years, including declines in consumer confidence, concerns about declines in economic growth, increases in the rate of inflation, increases in borrowing rates and changes in liquidity and credit availability, and uncertainty about economic stability, including most recently in connection with proposed policies of the Trump administration, actions undertaken by the U.S.
Our ability to meet these requirements may be affected by events beyond our control and, if we fail to do so, we may be unable to obtain waivers from the lenders or amend the covenants. 32 Table of Contents Increases in interest rates could increase our existing and future debt borrowing costs and adversely affect our stock price.
Our ability to meet these requirements may be affected by events beyond our control and, if we fail to do so, we may be unable to obtain waivers from the lenders or amend the covenants. Increases in interest rates could increase our existing and future debt borrowing costs and adversely affect our stock price.
If one of our tenants experiences such a loss, it may be unable to satisfy its lease payment obligations to us. We are, and may continue to be, exposed to contingent rent escalators, which could hinder our profitability and growth.
If one of our tenants or borrowers experiences such a loss, it may be unable to satisfy its payment obligations to us. We are, and may continue to be, exposed to contingent rent escalators, which could hinder our profitability and growth.
In addition, specific anti-takeover provisions of the Maryland General Corporation Law (“MGCL”) could make it more difficult for a third party to attempt a hostile takeover, 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 thereof) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose special appraisal rights and special stockholder voting requirements on these combinations; and • “control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with 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 “control shares”) have no voting rights 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.
In addition, specific anti-takeover provisions of the Maryland General Corporation Law (“MGCL”) could make it more difficult for a third party to attempt a hostile takeover, 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 thereof) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose special appraisal rights and special stockholder voting requirements on these combinations; and • “control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with 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 “control shares”) have no voting rights 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. 38 Table of Contents Our bylaws contain a provision that exempts from the MGCL’s control share acquisition statute any and all acquisitions by any person of shares of our stock.
If we fail to qualify to be taxed as a REIT in any year, we would be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates, and dividends paid to our stockholders 29 Table of Contents would not be deductible by us in computing our taxable income.
If we fail to qualify to be taxed as a REIT in any year, we would be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates, and dividends paid to our stockholders would not be deductible by us in computing our taxable income.
Upon termination or expiration of existing leases, delays or the failure of the new tenant in receiving regulatory approvals from the applicable federal, state or local government agencies, may prolong the period during which we are unable to collect rent and the property may experience performance declines.
Upon termination or expiration of existing leases, delays or the failure of the new tenant in receiving regulatory approvals from the applicable federal, state or local government agencies, has in the past prolonged, and may in the future prolong, the period during which we are unable to collect rent and the property may experience performance declines.
Under such circumstances, the insurance proceeds received might not be adequate to restore the economic position with respect to such tenant or property. If one of our tenants experiences a material general or professional liability loss that is uninsured or exceeds policy coverage limits, it may be unable to satisfy its lease payment obligations to us.
Under such circumstances, the insurance proceeds received might not be adequate to restore the economic position with respect to such tenant or property. 30 Table of Contents If one of our tenants or borrowers experiences a material general or professional liability loss that is uninsured or exceeds policy coverage limits, it may be unable to satisfy its payment obligations to us.
The COVID-19 pandemic adversely 23 Table of Contents impacted nearly all aspects of our business. Public health crises, including significant COVID-19 outbreaks and any future epidemics or pandemic, could result in similar adverse impacts on our business, results of operations, cash flows and financial condition.
The COVID-19 pandemic adversely impacted nearly all aspects of our business. Public health crises, including significant COVID-19 outbreaks and any future epidemics or pandemics, could result in similar adverse impacts on our business, results of operations, cash flows and financial condition.
The obligations under the Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by us and all of our existing and future subsidiaries (other than CTR Partnership, L.P. and CareTrust Capital Corp.) that guarantee obligations under the Second Amended Credit Facility.
The obligations under the Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by us and all of our existing and future subsidiaries (other than CTR Partnership, L.P. and CareTrust Capital Corp.) that guarantee obligations under the Third Amended Revolving Facility.
Such events could harm our tenants’ patients and employees, severely damage or destroy one or more of our facilities, harm our tenants’ business, reputation, financial condition and financial performance, or otherwise cause our tenants’ businesses to suffer in ways that we currently cannot predict.
Such events could harm our tenants’ or borrowers’ patients and employees, severely damage or destroy one or more of the facilities they operate, harm our tenants’ or borrowers’ business, reputation, financial condition and financial performance, or otherwise cause our tenants’ or borrowers’ businesses to suffer in ways that we currently cannot predict.
Interest rates in recent years have increased, and may continue to increase, our interest costs for any new debt and our obligations under our Revolving Facility and Term Loan, which could make acquisition financings more costly or lower our current period earnings.
Interest rates in recent years have increased, and may continue to increase, our interest costs for any new debt and our obligations under our Third Amended Revolving Facility, which could make acquisition financings more costly or lower our current period earnings.
Our business may fail to generate sufficient cash flow from operations or future borrowings may be unavailable to us under the Second Amended Credit Facility or from other sources in an amount sufficient to enable us to service our debt, to refinance our debt or to fund our other liquidity needs.
Our business may fail to generate sufficient cash flow from operations or future borrowings may be unavailable to us under the Third Amended Revolving Facility or from other sources in an amount sufficient to enable us to service our debt, to refinance our debt or to fund our other liquidity needs.
These types of natural disasters will likely increase in number, scope and intensity as a result of climate change. Further, these acts of nature may cause disruption to our tenants, their employees and our facilities, which could have an adverse impact on our tenants’ patients and businesses.
These types of natural disasters will likely increase in number, scope and intensity as a result of climate change. Further, these acts of nature may cause disruption to our tenants or borrowers, their employees and the underlying facilities, which could have an adverse impact on our tenants’ or borrowers’ patients and businesses.
The occupancy levels at, and results of operations from, our facilities are dependent on our ability and the ability of our tenants to compete with other tenants and operators on a number of different levels, including the quality of care provided, reputation, the physical appearance of a facility, price, the range of services offered, family preference, amenities, alternatives for healthcare delivery, the supply of competing properties, physicians, staff, referral sources, location, and the size and demographics of the population in the surrounding area.
The occupancy levels at, and results of operations from, our owned facilities and the facilities securing loans receivable are dependent on our ability and the ability of our borrowers and tenants to compete with other tenants and operators on a number of different levels, including the quality of care provided, reputation, the physical appearance of a facility, price, the range of services offered, family preference, amenities, alternatives for healthcare 29 Table of Contents delivery, the supply of competing properties, physicians, staff, referral sources, location, and the size and demographics of the population in the surrounding area.
As a result, if debt or equity financing is not available on acceptable terms, further acquisitions might be limited. Investments through joint ventures involve risks not present in investments in which we are the sole investor. 24 Table of Contents We have invested, and may continue to invest, as a joint venture partner in joint ventures.
As a result, if debt or equity financing is not available on acceptable terms, further acquisitions might be limited. Investments in consolidated joint ventures involve risks not present in investments in which we are the sole investor. We have invested, and may continue to invest, as a joint venture partner in joint ventures.
Our tenants and operators could be forced to expend considerable resources responding to an investigation, lawsuit or other enforcement action under applicable laws or regulations. Additionally, if our tenants’ residents do not have insurance, it could adversely impact the tenants’ ability to satisfy their obligation to us.
Our tenants, operators and borrowers could be forced to expend considerable resources responding to an investigation, lawsuit or other enforcement action under 32 Table of Contents applicable laws or regulations. Additionally, if our tenants’ or borrowers’ residents do not have insurance, it could adversely impact the tenants’ or borrowers’ ability to satisfy their obligation to us.
The risk 26 Table of Contents of cybersecurity incidents has generally increased as the number, intensity and sophistication of attacks and intrusions from around the world have increased.
The risk of cybersecurity incidents has generally increased as the number, intensity and sophistication of attacks and intrusions from around the world have increased.
In addition, even if damage to our properties is covered by insurance, business disruptions caused by a casualty event may result in lost revenue for our tenants or us for which insurance may not fully compensate them or us for such loss of revenue.
In addition, even if damage to our owned properties or the properties securing our loans receivable is covered by insurance, business disruptions caused by a casualty event may result in lost revenue for our tenants, borrowers or us for which insurance may not fully compensate them or us for such loss of revenue.
Our facilities located in Texas and certain other states in the southeast are especially susceptible to natural disasters such as hurricanes, tornadoes and flooding and our facilities located in California are particularly susceptible to natural disasters such as fires, earthquakes and mudslides.
Our owned facilities and the facilities securing our loans receivable that are located in Texas and certain other states in the southeast are especially susceptible to natural disasters such as hurricanes, tornadoes and flooding and our owned facilities and the facilities securing our loans receivable that are located in California are particularly susceptible to natural disasters such as fires, earthquakes and mudslides.
Our general business strategy may be adversely affected by any such economic downturn, volatile business environment or unpredictable and unstable market conditions.
Our general business strategy may be adversely affected by any such economic downturn, volatile business environment or 25 Table of Contents unpredictable and unstable market conditions.
If we determine that an impairment has occurred, we are required to adjust the net carrying value of the asset, which could have a material adverse effect on our results of operations in the period in which the write-off occurs. For example, in the twelve months ended December 31, 2023, we recorded impairment charges of approxim ately $36.3 million.
If we determine that an impairment has occurred, we are required to adjust the net carrying value of the asset, which could have a material adverse effect on our results of operations in the period in which the write-off occurs. For example, in the twelve months ended December 31, 2024, we recorded impairment charges of approximately $42.2 million.
Risk Factors Risks Related to Our Business and Operations We are dependent on the healthcare operators that lease our properties to successfully operate their businesses and make contractual lease payments, and an event that materially and adversely affects their business, financial position or results of operations could materially and adversely affect our business, financial position or results of operations.
Risk Factors Risks Related to Our Business and Operations We are dependent on the healthcare operators that lease our properties as well as the borrowers under our mortgage secured loans and mezzanine loans to successfully operate their businesses and make contractual payments, and an event that materially and adversely affects their business, financial position or results of operations could materially and adversely affect our business, financial position or results of operations.
In order to provide patient care, our tenants are dependent on consistent and reliable delivery of food, pharmaceuticals, utilities and other goods to our facilities, and the availability of employees to provide services at the facilities.
In order to 27 Table of Contents provide patient care, our tenants and borrowers are dependent on consistent and reliable delivery of food, pharmaceuticals, utilities and other goods to the facilities they operate, and the availability of employees to provide services at the facilities.
The extent to which the COVID-19 pandemic, or other future health crises, may impact our business, results of operations, cash flows and financial condition depends on many factors which are highly uncertain and are difficult to predict.
The extent to which public health crises may impact our business, results of operations, cash flows and financial condition depends on many factors which are highly uncertain and are difficult to predict.
Either of these actions could negatively affect our business and financial condition as well as the market price of our common stock. ITEM 1B. Unresolved Staff Comments None.
Either of these actions could negatively affect our business and financial condition as well as the market price of our common stock.
Because all of the properties we own, except for one SNF which is non-operational, are operated by our tenants pursuant to triple-net master leases (including properties we own through joint ventures), we are unable to directly implement strategic business decisions regarding the daily operation and marketing of these properties.
Because all of the properties we own are operated by our tenants pursuant to triple-net master leases (including properties we own in consolidated joint ventures), we are unable to directly implement strategic business decisions regarding the daily operation and marketing of these properties.
While consumer sentiment is on the rise, concerns about declines in economic growth have faded and inflation has cooled there can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur.
Federal Reserve Board to address inflation, the military conflicts in Ukraine and Gaza and supply chain disruptions. While consumer sentiment is on the rise, concerns about declines in economic growth have faded and inflation has cooled there can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur.
We cannot predict whether any future legislative proposals will be adopted or, if adopted, the impact these proposals would have on our tenants or our business. 27 Table of Contents Our tenants are subject to extensive federal, state and local laws and regulations affecting the healthcare industry that include those relating to, among other things, licensure, conduct of operations, ownership of facilities, addition of facilities and equipment, allowable costs, services, prices for services, qualified beneficiaries, quality of care, patient rights and insurance, fraudulent or abusive behavior, labor and employment issues and financial and other arrangements that may be entered into by healthcare providers.
Our tenants and borrowers are subject to extensive federal, state and local laws and regulations affecting the healthcare industry that include those relating to, among other things, licensure, conduct of operations, ownership of facilities, addition of facilities and equipment, allowable costs, services, prices for services, qualified beneficiaries, quality of care, patient rights and insurance, fraudulent or abusive behavior, labor and employment issues and financial and other arrangements that may be entered into by healthcare providers.
As of December 31, 2023, we had approximately $600.0 million of indebtedness, consisting of $400.0 million representing our 3.875% Senior Notes due 2028 (the “Notes”), $200.0 million under our unsecured term loan credit facility (the “Term Loan”) and no borrowings outstanding under our unsecured revolving credit facility (the “Revolving Facility”).
As of December 31, 2024, we had approximately $400.0 million of indebtedness representing our 3.875% Senior Notes due 2028 (the “Notes”) and no borrowings outstanding under our unsecured revolving credit facility.
As of December 31, 2023, properties leased to Ensign represented $67.8 million, or 33%, of total annualized contractual rental income, and properties leased to Pennant under the Pennant Master Lease for which Ensign provides a guaranty (the “Pennant Guaranty”) represented $7.3 million, or 4%, of total annualized contractual rental income.
As of December 31, 2024, properties leased to Ensign and held for investment represented $68.2 million, or 26%, of total annualized contractual rental income, and properties leased to Pennant under the Pennant Master Lease for which Ensign provides a guaranty (the “Pennant Guaranty”) represented $7.5 million, or 3%, of total annualized contractual rental income.
In addition, increased costs due to inflationary conditions may have material adverse effects on the operating expenses of our tenants and their ability to meet their obligations to us and may also increase the costs for us to make capital improvements to our facilities.
In addition, increased costs due t o inflationary conditions may continue to adversely affect the operating expenses of our tenants and borrowers and their ability to meet their obligations to us and may also increase the costs for us to make capital improvements to our facilities.
The healthcare operators to whom we lease properties are subject to extensive federal, state, local and industry-related licensure, certification and inspection laws, regulations and standards.
The healthcare operators that operate the properties we lease to our tenants or that secure our loans receivable are subject to extensive federal, state, local and industry-related licensure, certification and inspection laws, regulations and standards.

… 42 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed21 unchanged
Biggest changeWe are implementing a business use case review process and vendor risk assessment for all third-party service providers that will 35 Table of Contents access or implicate our materially significant technology or data. If we deem the cybersecurity risk of a particular service provider too great, such service provider will not be approved or access will be terminated.
Biggest changeWe are implementing a business use case review process and vendor risk assessment for all third-party service providers that will access or implicate our materially significant technology or data. If we deem the cybersecurity risk of a particular service provider too great, such service provider will not be approved or access will be terminated.
Based on information known to us, we also do not believe any risks from cybersecurity threats, including as a result of previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Based on information known to us, we do not believe any risks from cybersecurity threats, including as a result of previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Through their participation in meetings of the audit committee, other members of the Board are also kept apprised of material risks from cybersecurity threats and our related risk management activities. 36 Table of Contents
Through their participation in meetings of the audit committee, other members of the Board are also kept apprised of material risks from cybersecurity threats and our related risk management activities.
Cybersecurity Governance As described above, we have engaged a third-party IT and cybersecurity firm to whom we have outsourced primary responsibility to oversee, implement and manage our processes and controls to assess, identify, and manage material risks from cybersecurity threats.
Cybersecurity Governance As described above, we have engaged a third-party IT and cybersecurity firm to whom we have outsourced primary responsibility to oversee, implement and manage our processes and controls to assess, identify, and manage material risks from 40 Table of Contents cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

3 edited+1 added−0 removed0 unchanged
Biggest changeThe following table displays the expiration of the annualized contractual cash rental income under our lease agreements as of December 31, 2023, excluding properties classified as held for sale, one SNF which is non-operational and two ALFs which are being repurposed, by year and total investment (dollars in thousands) and, in each case, without giving effect to any renewal or purchase options: Lease Maturity Percent of Total Percent of Year Investment Investment Rent (1) Total Rent 2024 $ 15,800 0.8 % $ 1,583 0.8 % 2027 46,801 2.4 % 5,476 2.7 % 2029 149,476 7.6 % 11,339 5.6 % 2030 51,487 2.6 % 5,107 2.5 % 2031 490,317 24.9 % 51,160 25.4 % 2032 178,836 9.1 % 18,502 9.2 % 2033 136,782 6.9 % 20,804 10.3 % 2034 352,416 17.9 % 33,984 16.8 % 2036 146,486 7.4 % 14,209 7.0 % 2038 401,514 20.4 % 39,575 19.7 % Total $ 1,969,915 100.0 % $ 201,739 100.0 % (1) Includes three SNFs held in consolidated joint ventures.
Biggest changeThe following table displays the expiration of the annualized contractual cash rental income under our lease agreements as of December 31, 2024, excluding properties classified as held for sale and one ALF which is non-operational, by year and total investment (dollars in thousands) and, in each case, without giving effect to any renewal or purchase options: Lease Maturity Percent of Total Percent of Year Investment (1) Investment Rent (1) Total Rent 2026 $ 25,116 0.9 % $ 868 0.3 % 2027 46,801 1.7 % 5,613 2.1 % 2029 105,696 3.9 % 8,543 3.1 % 2031 490,317 18.2 % 52,466 19.3 % 2032 278,386 10.3 % 27,467 10.1 % 2033 147,818 5.5 % 22,352 8.2 % 2034 453,119 16.8 % 45,336 16.6 % 2036 169,678 6.3 % 14,564 5.3 % 2038 319,580 11.8 % 33,514 12.3 % 2039 564,154 20.9 % 54,694 20.1 % 2044 97,973 3.7 % 6,895 2.6 % Total $ 2,698,638 100.0 % $ 272,312 100.0 % (1) Includes facilities held in consolidated joint ventures.
See the “Tenant Purchase Options” section of Note 3, Real Estate Investments, Net in the Notes to consolidated financial statements for additional information on leases subject to purchase options. The information set forth under “Portfolio Summary” in Item 1 of this Annual Report on Form 10-K is incorporated by reference herein.
See the “Tenant Purchase Options” section of Note 3, Real Estate Investments, Net, in the Notes to consolidated financial statements for additional information on leases subject to purchase options. 41 Table of Contents The information set forth under “Portfolio Summary” in Item 1 of this Annual Report on Form 10-K is incorporated by reference herein.
ITEM 2. Properties As of December 31, 2023, all of the properties we own are leased under long-term, triple-net leases (including properties we own through joint ventures), except for one SNF which is non-operational.
ITEM 2. Properties As of December 31, 2024, all of the properties we own are leased under long-term, triple-net leases (including properties we own in consolidated joint ventures).
Added
See Note 3, Real Estate Investments, Net , and Note 12, Variable Interest Entities , for additional information.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+1 added−0 removed4 unchanged
Biggest changeRATE OF RETURN TREND COMPARISON DECEMBER 31, 2018 - DECEMBER 29, 2023 (DECEMBER 31, 2018 = $100) Stock Price Performance Graph Total Return The stock performance graph shall not be deemed soliciting material or to be filed with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or to the liabilities of Section 18 of the Exchange Act, nor shall it be incorporated by reference into any past or future filing under the Securities Act of 1933 or the Exchange Act, except to the extent we specifically request that it be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act of 1933 or the Exchange Act. 39 Table of Contents December 31, 2018 2019 2020 2021 2022 2023 CareTrust REIT, Inc. $ 100.00 $ 116.26 $ 132.15 $ 142.56 $ 123.03 $ 156.49 RMS $ 100.00 $ 125.84 $ 116.31 $ 166.39 $ 125.61 $ 142.87 Russell 2000 $ 100.00 $ 125.53 $ 150.58 $ 172.90 $ 137.56 $ 160.85 S&P 500 Real Estate Index $ 100.00 $ 129.01 $ 126.21 $ 184.52 $ 136.31 $ 153.15 40 Table of Contents ITEM 6. [Reserved]
Biggest changeRATE OF RETURN TREND COMPARISON DECEMBER 31, 2019 - DECEMBER 31, 2024 (DECEMBER 31, 2019 = $100) Stock Price Performance Graph Total Return The stock performance graph shall not be deemed soliciting material or to be filed with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or to the liabilities of Section 18 of the Exchange Act, nor shall it be incorporated by reference into any past or future filing under the Securities Act of 1933 or the Exchange Act, except to the extent we specifically request that it be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act of 1933 or the Exchange Act.
REIT Total Return Index) and the Russell 2000 Index (“Russell 2000”). Total cumulative return is based on a $100 investment in CareTrust REIT common stock and in each of the indices at the market close on December 31, 2018 and assumes quarterly reinvestment of dividends before consideration of income taxes.
REIT Total Return Index) and the Russell 2000 Index (“Russell 2000”). Total cumulative return is based on a $100 investment in CareTrust REIT common stock and in each of the indices at the market close on December 31, 2019 and assumes quarterly reinvestment of dividends before consideration of income taxes.
For example, while the Notes and our Second Amended Credit Agreement permit us to declare and pay any dividend or make any distribution that is 37 Table of Contents necessary to maintain our REIT status, those distributions are subject to certain financial tests under the indenture governing the Notes, and therefore, the amount of cash distributions we can make to our stockholders may be limited.
For example, while the Notes and our Third Amended Credit Agreement permit us to declare and pay any dividend or make any distribution that is necessary to maintain our REIT status, those distributions are subject to certain financial tests under the indenture governing the Notes, and therefore, the amount of cash distributions we can make to our stockholders may be limited.
(2) Because our aggregate cash distributions exceeded our annual earnings and profits, the cash distribution declared in the fourth quarter of 2023 and paid in January 2024, of $0.280 per share, will be treated as a 2024 distribution for federal income tax purposes. 38 Table of Contents Stock Price Performance Graph The graph below compares the cumulative total return of our common stock, the S&P 500 REIT Index, the RMS (MSCI U.S.
(2) Because our aggregate cash distributions exceeded our annual earnings and profits, the cash distribution declared in the fourth quarter of 2024 and paid in January 2025, of $0.290 per share, will be treated as a 2025 distribution for federal income tax purposes. 42 Table of Contents Stock Price Performance Graph The graph below compares the cumulative total return of our common stock, the S&P 500 REIT Index, the RMS (MSCI U.S.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Common Equity Our common stock is listed on the New York Stock Exchange under the symbol “CTRE.” At February 7, 2024, we had approximately 43 stockholders of record.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Common Equity Our common stock is listed on the New York Stock Exchange under the symbol “CTRE.” At February 11, 2025, we had approximately 52 stockholders of record.
Following is the characterization of our annual cash dividends on common stock: Year Ended December 31, Common Stock 2023 2022 Ordinary dividend $ 0.8218 $ 0.4291 Non-dividend distributions 0.2932 0.6609 Total taxable distribution 1.1150 1.0900 Distributions allocated from prior tax year (1) (0.2750) (0.2650) Distributions allocated to subsequent tax year (2) 0.2800 0.2750 Total distributions declared $ 1.1200 $ 1.1000 (1) Because our aggregate cash distributions exceeded our annual earnings and profits, the cash distribution declared in the fourth quarter of 2022 and paid in January 2023, of $0.275 per share, will be treated as a 2023 distribution for federal income tax purposes.
Following is the characterization of our annual cash dividends on common stock: Year Ended December 31, Common Stock 2024 2023 Ordinary dividend $ 0.8529 $ 0.8218 Non-dividend distributions 0.2971 0.2932 Total taxable distribution 1.1500 1.1150 Distributions allocated from prior tax year (1) (0.2800) (0.2750) Distributions allocated to subsequent tax year (2) 0.2900 0.2800 Total distributions declared $ 1.1600 $ 1.1200 (1) Because our aggregate cash distributions exceeded our annual earnings and profits, the cash distribution declared in the fourth quarter of 2023 and paid in January 2024, of $0.280 per share, will be treated as a 2024 distribution for federal income tax purposes.
Added
December 31, 2019 2020 2021 2022 2023 2024 CareTrust REIT, Inc. $ 100.00 $ 113.67 $ 122.62 $ 105.83 $ 134.60 $ 169.91 S&P 500 $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 RMS $ 100.00 $ 92.43 $ 132.23 $ 99.82 $ 113.54 $ 123.47 Russell 2000 $ 100.00 $ 119.96 $ 137.74 $ 109.59 $ 128.14 $ 142.93 S&P 500 Real Estate Index $ 100.00 $ 97.83 $ 143.02 $ 105.65 $ 118.71 $ 124.92 43 Table of Contents ITEM 6. [Reserved]

Item 7. Management's Discussion & Analysis

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

72 edited+26 added−13 removed43 unchanged
Biggest changeImpairment of Real Estate Assets, Assets Held for Sale, and Asset Sales Impairment of Real Estate Assets During the year ended December 31, 2023, we recognized aggregate impairment charges of $36.3 million, of which $26.8 million related to properties held for sale, $8.0 million related to properties held for investment, and $1.5 million related to properties that were sold. 43 Table of Contents Asset Sales and Held for Sale Reclassifications The following table summarizes our dispositions for the twelve months ended December 31, 2023 (dollars in thousands): Twelve Months Ended December 31, 2023 Number of facilities 5 Net sales proceeds $ 18,313 Net carrying value 16,095 Net gain on sale $ 2,218 The following table summarizes our assets held for sale activity for the periods presented (dollars in thousands): Net Carrying Value Number of Facilities December 31, 2022 $ 12,291 5 Additions to assets held for sale 47,114 14 Assets sold (16,095) (5) Impairment of real estate held for sale (28,299) — December 31, 2023 (1) $ 15,011 14 (1) Includes two facilities sold subsequent to December 31, 2023.
Biggest changeThe following table summarizes our dispositions for the year ended December 31, 2024 (dollars in thousands): Year Ended December 31, 2024 Number of facilities 17 Net sales proceeds $ 17,715 Net carrying value 19,923 Net loss on sale $ (2,208) The following table summarizes our assets held for sale activity for the periods presented (dollars in thousands): Net Carrying Value Number of Facilities December 31, 2023 $ 15,011 14 Additions to assets held for sale 104,447 15 Assets sold (19,923) (17) Impairment of real estate held for sale (37,266) — Assets reclassified to held for investment (5,008) (2) December 31, 2024 $ 57,261 10 Subsequent to December 31, 2024, we sold or disposed of three SNFs, one SNF Campus and one ALF, for which we expect to record an estimated gain on sale of real estate of $3.9 million. 47 Table of Contents Results of Operations Operating Results Our primary business consists of acquiring, developing, financing and owning real property to be leased to third party tenants in the healthcare sector.
The Second Amended Credit Agreement, which amends and restates our amended and restated credit and guaranty agreement, dated as of February 8, 2019 (as amended, the “Prior Credit Agreement”) provides for: (i) an unsecured revolving credit facility (the “Revolving Facility”) with revolving commitments in an aggregate principal amount of $600.0 million, including a letter of credit subfacility for 10% of the then available revolving commitments and a swingline loan subfacility for 10% of the then available revolving commitments and (ii) the continuation of the unsecured term loan credit facility which was previously extended under the Prior Credit Agreement (the “Term Loan” and together with the Revolving Facility, the “Second Amended Credit Facility”) in an aggregate principal amount of $200.0 million.
The Second Amended Credit Agreement, which amends and restates our amended and restated credit and guaranty agreement, dated as of February 8, 2019 (as amended, the “Prior Credit Agreement”) provides for: (i) an unsecured revolving credit facility (the “Prior Revolving Facility”) with revolving commitments in an aggregate principal amount of $600.0 million, including a letter of credit subfacility for 10% of the then available revolving commitments and a swingline loan subfacility for 10% of the then available revolving commitments and (ii) the continuation of the unsecured term loan credit facility which was previously extended under the Prior Credit Agreement (the “Term Loan” and together with the Prior Revolving Facility, the “Second Amended Credit Facility”) in an aggregate principal amount of $200.0 million.
Our cash flows provided by financing activities for the year ended December 31, 2023 were primarily comprised of $634.4 million of net proceeds from the issuance of common stock under the ATM Program and $1.9 million in net contributions from noncontrolling interests, partially offset by $125.0 million in net payments under our Revolving Credit Facility (as defined below), $115.5 million in dividends paid and $1.5 million in net settlement adjustment on restricted stock.
Our cash flows provided by financing activities for the year ended December 31, 2023 were primarily comprised of $634.4 million of net proceeds from the issuance of common stock under the ATM Program and $1.9 million in net contributions from noncontrolling interests, partially offset by $125.0 million in net payments under our Revolving Credit Facility (as defined below), $115.5 million in dividends paid and a $1.5 million net settlement adjustment on restricted stock.
Recent Developments Market Trends and Uncertainties Current macroeconomic conditions, particularly inflation (including higher wages and supply costs), elevated interest rates and related changes to consumer spending, including, but not limited to, causing individuals to delay or defer moves to seniors housing, has adversely impacted and could continue to adversely impact our tenants’ ability to meet some of their financial obligations to us.
Recent Developments Market Trends and Uncertainties Recent macroeconomic conditions, particularly inflation (including higher supply costs), elevated interest rates and related changes to consumer spending, including, but not limited to, causing individuals to delay or defer moves to seniors housing, has adversely impacted and could continue to adversely impact our tenants’ ability to meet some of their financial obligations to us.
If in the future we reduce our estimate of cash flow projections, we may need to impair our real estate assets. We have not materially changed the assumptions used in the analysis during the year ended December 31, 2023. Revenue Recognition. We recognize lease revenue in accordance with ASC 842, Leases .
If in the future we reduce our estimate of cash flow projections, we may need to impair our real estate assets. We have not materially changed the assumptions used in the analysis during the year ended December 31, 2024. Revenue Recognition. We recognize lease revenue in accordance with ASC 842, Leases .
In addition, the Operating Partnership will pay a facility fee on the revolving commitments under the Revolving Facility ranging from 0.15% to 0.35% per annum, based on the debt to asset value ratio of the Company and our consolidated subsidiaries (unless we obtain certain specified investment grade ratings on our senior long-term unsecured debt and the Operating Partnership elects to decrease the applicable margin as described above, in which case the Operating Partnership will pay a facility fee on the revolving commitments ranging from 0.125% to 0.30% per annum based off the credit ratings of our senior long-term unsecured debt).
In addition, the Operating Partnership will pay a facility fee on the revolving commitments under the Third Amended Revolving Facility ranging from 0.15% to 0.35% per annum, based on the debt to asset value ratio of the Company and our consolidated subsidiaries (unless we obtain certain specified investment grade ratings on our senior long-term unsecured debt and the Operating Partnership elects to decrease the applicable margin as described above, in which case the Operating Partnership will pay a facility fee on the revolving commitments ranging from 0.125% to 0.30% per annum based off the credit ratings of the Company’s senior long-term unsecured debt).
The interest rates applicable to loans under the Revolving Facility are, at the Operating Partnership’s option, equal to either a base rate plus a margin ranging from 0.10% to 0.55% per annum or Adjusted Term SOFR or Adjusted Daily Simple SOFR (each as defined in the Second Amended Credit Agreement) plus a margin ranging from 1.10% to 1.55% per annum based on the debt to asset value ratio of the Company and our consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if we obtain certain specified investment grade ratings on our senior long-term unsecured debt).
The interest rates applicable to loans under the Third Amended Revolving Facility are, at the Operating Partnership’s option, equal to either a base rate plus a margin ranging from 0.05% to 0.55% per annum or Adjusted Term SOFR or Adjusted Daily Simple SOFR (each as defined in the Third Amended Credit Agreement) plus a margin ranging from 1.05% to 1.55% per annum based on the debt to asset value ratio of the Company and our consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if we obtain certain specified investment grade ratings on our senior long-term unsecured debt).
Management’s judgement can impact the timing of write-offs and recovery adjustments. We did not materially change the assumptions used in the analysis during the year ended December 31, 2023. Fair Value of Other Real Estate Related Investments.
Management’s judgement can impact the timing of write-offs and recovery adjustments. We did not materially change the assumptions used in the analysis during the year ended December 31, 2024. Fair Value of Other Real Estate Related Investments.
The obligations under the Notes are guaranteed, jointly and severally, on an unsecured basis, by us and all of our subsidiaries (other than the Issuers) that guarantee obligations under the Second Amended Credit Facility (as defined below). As of December 31, 2023, we were in compliance with all applicable financial covenants under the indenture governing the Notes.
The obligations under the Notes are guaranteed, jointly and severally, on an unsecured basis, by us and all of our subsidiaries (other than the Issuers) that guarantee obligations under the Amended Credit Facility (as defined below). As of December 31, 2024, we were in compliance with all applicable financial covenants under the indenture governing the Notes.
Dividend Plans We are required to pay dividends in order to maintain our REIT status, and we expect to make quarterly dividend payments in cash with the annual dividend amount no less than 90% of our annual REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains.
Dividend Plans We are required to pay dividends in order to maintain our REIT status, and we expect to make quarterly dividend payments in cash with the annual dividend amount no less than 90% of our annual REIT taxable income, determined without 53 Table of Contents regard to the dividends paid deduction and excluding any net capital gains.
Unsecured Revolving Credit Facility and Term Loan On December 16, 2022, we, together with certain of our subsidiaries, entered into a second amended and restated credit and guaranty agreement with KeyBank National Association, as administrative agent, an issuing bank and swingline lender (as amended from time to time, the “Second Amended Credit Agreement”).
Unsecured Revolving Credit Facility and Term Loan On December 16, 2022, we, together with certain of our subsidiaries, entered into a second amended and restated credit and guaranty agreement with KeyBank National Association, as administrative agent, an issuing bank and swingline lender the “Second Amended Credit Agreement”).
See Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements for further detail. Our assessment of collectibility of tenant receivables includes a binary assessment of whether or not substantially all of the amounts due under a tenant’s lease agreement are probable of collection.
See Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements for further detail. Our assessment of collectibility of tenant receivables includes a binary assessment of whether or not substantially all of the amounts due under a 54 Table of Contents tenant’s lease agreement are probable of collection.
During the year ended December 31, 2023, we recorded an unrealized loss of $8.1 million on our secured and mezzanine loans receivable due to rising interest rates and a $0.3 million loss due to a loan origination fee paid, partially offset by unrealized gains of $0.7 million due to a decrease in projected forward interest rates and a reversal of a previously recognized unrealized loss of $1.2 million related to the repayment of one mezzanine loan receivable and the partial repayment of one mortgage loan receivable.
During the year ended December 31, 2023, we recorded an unrealized loss of $8.1 million due to rising interest rates and a $0.3 million loss due to a loan origination fee paid, partially offset by unrealized gains of $0.7 million due to a decrease in projected forward interest rates and a reversal of a previously recognized unrealized loss of $1.2 million related to the repayment of one mezzanine loan receivable and the partial repayment of one mortgage loan receivable.
Operating cash inflows are derived primarily from the rental payments received under our lease agreements, including as a result of new investments, and interest payments received on our other real estate related investments. Operating cash outflows consist primarily of interest expense on our borrowings and general and administrative expenses.
Operating cash inflows are derived primarily from the rental payments received under our lease agreements, including as a result of new investments, and interest payments received on our other real estate related investments. Operating cash outflows consist primarily of interest expense on our 51 Table of Contents borrowings and general and administrative expenses.
Our short-term liquidity requirements consist primarily of operating and interest expenses directly associated with our properties, including: • interest expense and scheduled debt maturities on outstanding indebtedness; • general and administrative expenses; • dividend plans; • operating lease obligations; and • capital expenditures for improvements to our properties.
Our short-term liquidity requirements consist primarily of operating and interest expenses directly associated with our properties, including: • interest expense and scheduled debt maturities on outstanding indebtedness; 50 Table of Contents • general and administrative expenses; • dividend plans; • operating lease obligations; and • capital expenditures for improvements to our properties.
At each reporting period, we evaluate our real estate investments held for use for potential impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be 50 Table of Contents recoverable.
At each reporting period, we evaluate our real estate investments held for use for potential impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 For discussion related to the results of operations and changes in financial condition for fiscal 2022 compared to fiscal 2021, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our fiscal 2022 Annual Report on Form 10-K, which was filed with the SEC on February 9, 2023.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 For discussion related to the results of operations and changes in financial condition for fiscal 2023 compared to fiscal 2022, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our fiscal 2023 Annual Report on Form 10-K, which was filed with the SEC on February 8, 2024.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 For discussion related to the cash flows for fiscal 2022 compared to fiscal 2021, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our fiscal 2022 Annual Report on Form 10-K, which was filed with the SEC on February 9, 2023.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 For discussion related to the cash flows for fiscal 2023 compared to fiscal 2022, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our fiscal 2023 Annual Report on Form 10-K, which was filed with the SEC on February 8, 2024.
As a result of SB 525, certain health care facilities (including licensed skilled nursing facilities) operating in California are required to increase the wages of their covered health care employees to at least $21 per hour from June 1, 2024 to May 31, 2026, $22 or $23 per hour (depending on facility type) from June 1, 2026 to May 31, 2028, and $25 per hour after June 1, 2028.
As a result of SB 525, certain health care facilities (including licensed skilled nursing facilities) operating in California are required to increase the wages of their covered health care employees to at least $21 per hour, which was initially required to be effective from June 1, 2024 to May 31, 2026, $22 or $23 per hour (depending on facility type) from June 1, 2026 to May 31, 2028, and $25 per hour after June 1, 2028.
Future borrowings under the Second Amended Credit Facility will be used for working capital purposes, for capital expenditures, to fund acquisitions and for general corporate purposes. On October 10, 2023, we entered into the First Amendment to the Second Amended Credit Agreement with KeyBank National Association (the “First Amendment”).
Future borrowings under the Second Amended Credit Facility will be used for working capital purposes, for capital expenditures, to fund acquisitions and for general corporate purposes. 52 Table of Contents On October 10, 2023, we entered into the First Amendment to the Second Amended Credit Agreement with KeyBank National Association (the “First Amendment”).
As of December 31, 2023, we were in compliance with all applicable financial covenants under the Second Amended Credit Agreement. See Note 7, Debt, to our consolidated financial statements included in this report for further information about the Second Amended Credit Agreement.
As of December 31, 2024, we were in compliance with all applicable financial covenants under the Third Amended Credit Agreement. See Note 7, Debt, to our consolidated financial statements included in this report for further information about the Third Amended Credit Agreement.
During the year ended December 31, 2023, we recorded a $2.3 million gain on sale of real estate related to the sale of 2 ALFs and one SNF, partially offset by a $0.1 million loss on sale of real estate related to the sale of two ALFs.
During the year ended December 31, 2023, we recorded a $2.3 million gain on sale of real estate related to the sale of two ALFs and one SNF, partially offset by a $0.1 million loss on sale of real estate related to the sale of two ALFs. Unrealized gain (loss) on other real estate related investments, net .
See Note 8, Equity, to our consolidated financial statements included in this report for a summary of the cash dividends per share of our common stock declared by our board of directors for 2023, 2022 and 2021.
See Note 8, Equity and Redeemable Noncontrolling Interest, to our consolidated financial statements included in this report for a summary of the cash dividends per share of our common stock declared by our board of directors for 2024, 2023 and 2022.
In the event our tenants are unable to satisfy their obligations to 41 Table of Contents us and we are unable to effect these actions on terms that are as favorable to us as those currently in place, our rental income would be adversely impacted and we may incur additional expenses or obligations and be required to recognize additional impairment charges.
In the event our tenants or borrowers are unable to satisfy their obligations to us and we are unable to effect these actions on terms that are as favorable to us as those currently in place, our rental and interest income 44 Table of Contents would be adversely impacted and we may incur additional expenses or obligations and be required to recognize additional impairment charges or fair value adjustments.
On September 15, 2023, we entered into the New ATM Program. In addition to the issuance and sale of shares of our common stock, we may also enter into one or more ATM forward contracts with sales agents for the sale of shares of our common stock under the ATM Program.
On January 21, 2025, we entered into the New ATM Program. In addition to the issuance and sale of shares of our common stock, we may also enter into one or more ATM forward contracts with sales agents for the sale of shares of our common stock under the ATM Program.
We expect that future investments in and/or development of properties, including any improvements or renovations of current or newly-acquired properties, will depend on and will be financed by, in whole or in part, our existing cash, borrowings available to us under the Second Amended Credit Facility (as defined below), future borrowings or the proceeds from sales of shares of our common stock pursuant to our ATM Program or additional issuances of 47 Table of Contents common stock or other securities.
We expect that future investments in and/or development of properties, including any improvements or renovations of current or newly-acquir ed properties, will depend on and will be financed by, in whole or in part, our existing cash, borrowings available to us under the Third Amended Revolving Facility (as defined below), future borrowings or the proceeds from sales of shares of our common stock pursuant to our ATM Program or additional issuances of common stock or other securities.
Property operating expenses. During the years ended December 31, 2023 and 2022, we recognized $3.4 million and $5.0 million, respectively, of property operating expenses related to assets we plan to sell or repurpose, re-tenant, or have sold. 46 Table of Contents General and administrative expense.
During the years ended December 31, 2024 and 2023, we recognized $5.7 million and $3.4 million, respectively, of property operating expenses related to assets we plan to sell or repurpose, re-tenant, or have sold. General and administrative expense.
As of December 31, 2023, we owned, directly or indirectly through joint ventures, and leased to independent operators 226 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”), consisting of 23,928 operational beds and units located in 28 states with the highest concentration of properties by rental income located in California and Texas.
As of December 31, 2024, we owned, directly or indirectly in consolidated joint ventures, and leased to independent operators 258 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”), consisting of 28,088 operational beds and units located in 32 states with the highest concentration of properties by rental income located in California and Texas.
Impairment of real estate investments. During the twelve months ended December 31, 2023, we recognized aggregate impairment charges of $36.3 million, of which $26.8 million related to properties held for sale, $8.0 million related to properties held for investment, and $1.5 million related to properties that were sold.
During the year ended December 31, 2023, we recognized aggregate impairment charges of $36.3 million, of which $26.8 million related to properties held for sale, $8.0 million related to properties held for investment, and $1.5 million related to properties that were sold. Transaction costs.
We believe that our expected operating cash flow from rent collections and interest payments on our other real estate related investments, together with o ur cash balance of $294.4 million, available borrowing capacity of $600.0 million under the Revolving Facility (as defined below), and availability of $274.1 million under the ATM Program, each at December 31, 2023, will be sufficient to meet ongoing debt service requirements, dividend plans, operating lease obligations, capital expenditures, working capital requirements and other needs for at least the next 12 months.
We believe that our expected operating cash flow from rent collections and interest payments on our other real estate related investments, together with o ur cash balance, available borrowing capacity under the Third Amended Revolving Facility, and availability under the ATM Program will be sufficient to meet ongoing debt service requirements, dividend plans, operating lease obligations, capital expenditures, working capital requirements and other needs for at least the next 12 months.
The $0.9 million increase in depreciation and amortization was primarily due to an increase of $4.0 million related to new real estate investments and capital improvements made after January 1, 2022 and an increase of $1.1 million related to properties reclassified to held for investment during the year ended December 31, 2022, partially offset by a decrease in depreciation of $2.8 million due to assets becoming fully depreciated after January 1, 2022 and a $1.4 million decrease from assets sold and classified as held for sale.
The $5.6 million increase in depreciation and amortization was primarily due to an increase of $9.8 million related to new real estate investments and capital improvements made after January 1, 2023, partially offset by a decrease in depreciation of $2.8 million due to assets becoming fully depreciated after January 1, 2023, and a $1.4 million decrease from assets sold and classified as held for sale.
We have elected the fair value option for our other real estate related investments for which such election is permitted, as provided for under ASC 825, Financial Instruments (“ASC 825”). For financial instruments that are traded in an "active market," the best measure of fair value is the quoted market price.
We have elected the fair value option for our mortgage loans receivable, mezzanine loans receivable and financing receivable for which such election is permitted, as provided for under ASC 825, Financial Instruments (“ASC 825”). For financial instruments that are traded in an "active market," the best measure of fair value is the quoted market price.
The proposed rule consists of three core staffing proposals: (1) minimum nurse staffing standards of 0.55 hours per resident day for registered nurses and 2.45 hours of care from a nurse aid per resident per day; (2) a requirement to have a registered nurse onsite 24 hours a day, seven days a week; and (3) enhanced facility assessment requirements.
The rule consists of three core staffing requirements: (1) overall minimum standard of 3.48 total nurse staff hours per resident day; (2) minimum nurse staffing standards of 0.55 hours per resident day for registered nurses and 2.45 hours of care from a certified nurse’s aid per resident per day; and (3) a requirement to have a registered nurse onsite 24 hours a day, seven days a week.
On September 15, 2023, we terminated the Previous ATM Program and entered into a new equity distribution agreement to issue and sell, from time to time, up to $500.0 million in aggregate offering price of our common stock through an “at-the-market” equity offering program (the “New ATM Program” and together with the Previous ATM Program, the “ATM Program”).
At-The-Market Offering of Common Stock On January 21, 2025, we entered into a new equity distribution agreement to issue and sell, from time to time, up to $750.0 million in aggregate offering price of our common stock through an “at-the-market” equity offering program (the “New ATM Program”) and terminated our previous $750.0 million “at-the-market” equity offering program (together, with all previous at-the-market equity offering programs, the “Previous ATM Programs” and together with the New ATM Program, the “ATM Programs”).
As of December 31, 2023, we had $200.0 million outstanding under the Term Loan and no borrowings outstanding under the Revolving Facility. The Revolving Facility has a maturity date of February 9, 2027, and includes, at our sole discretion, two, six-month extension options. The Term Loan has a maturity date of February 8, 2026.
As of December 31, 2024, we had no borrowings outstanding under the Third Amended Revolving Facility. The Third Amended Revolving Facility has a maturity date of February 9, 2029, and includes, at our sole discretion, two, six-month extension options. Prior to the prepayment, the Term Loan had a maturity date of February 8, 2026.
Total contractual cash rent increased by $9.3 million due to an increase of $9.1 million in contractual cash rent from real estate investments made after January 1, 2022, an increase of $5.7 million from increases in rental rates for our existing tenants and a $2.7 million increase in tenant reimbursements, partially offset by a $7.8 million decrease in rental income related to certain tenants on a cash basis method of accounting and a $0.4 million decrease due to dispositions.
Total contractual cash rent increased by $27.2 million due to an increase of $25.9 million in contractual cash rent from real estate investments made after 48 Table of Contents January 1, 2023, an increase of $5.1 million from increases in rental rates for our existing tenants, a $1.2 million increase in tenant reimbursements, and an increase of $0.4 million related to transfers of facilities between operators, partially offset by a $4.6 million decrease in rental income related to certain tenants on a cash basis method of accounting and a $0.8 million decrease related to the disposal of real estate.
There were no outstanding ATM forward contracts that had not settled as of December 31, 2023. The following tables summarize the ATM Program activity (or activity under any predecessor at-the-market equity offering programs) for the year ended December 31, 2023 (in thousands, except per share amounts).
There were no outstanding ATM forward contracts that had not settled as of December 31, 2024. The following tables summarize the ATM Program activity for the year ended December 31, 2024 (in thousands, except per share amounts).
From time to time in the past, we have taken actions to reposition one or more properties with a replacement tenant or sell the property and, in certain cases, we have also restructured tenants’ long-term obligations.
From time to time in the past, we have taken actions to reposition one or more properties with a replacement tenant or sell the property and, in certain cases, we have also restructured tenants’ long-term obligations. See “Impairment of Real Estate Assets, Assets Held for Sale and Asset Sales” below.
See above under “Recent Developments” for additional information on the origination of loans receivable. Depreciation and amortization. Depreciation and amortization expense increased $0.9 million, or 2%, for the year ended December 31, 2023 to $51.2 million compared to $50.3 million for the year ended December 31, 2022.
See above under “Recent Developments” for additional information on the origination of loans receivable. Depreciation and amortization. Depreciation and amortization expense increased $5.6 million, or 11%, for the year ended December 31, 2024 from $56.8 million compared to $51.2 million for the year ended December 31, 2023.
Cash used in investing activities for the year ended December 31, 2022 was primarily comprised of $171.6 million in acquisitions of real estate and investments in real estate related investments and other loans receivable and $7.3 million of purchases of equipment, furniture and fixtures and improvements to real estate, partially offset by $6.3 million of payments received from our other loans receivable and $45.1 million in net proceeds from real estate sales.
Cash used in investing activities for the year ended December 31, 2023 was primarily comprised of $297.9 million in acquisitions of real estate and investments in real estate related investments and other loans receivable and $11.0 million of purchases of equipment, furniture and fixtures and improvements to real estate, and $1.8 million in preferred equity investments, partially offset by $26.5 million of payments received on real estate related investments and other loans receivable and $16.3 million in net proceeds from real estate sales.
The $10.5 million, or 122%, increase in interest and other income is primarily due to an increase of $10.3 million related to the origination of loans receivable subsequent to January 1, 2022, an increase of $1.3 million in interest income on money market funds and an increase of $0.6 million related to prepayment penalties, partially offset by a decrease of $1.4 million related to repayments of loans receivable and a decrease of $0.3 million related to a loan origination fee during the year ended December 31, 2022.
The $47.8 million, or 250%, increase in interest and other income is primarily due to an increase of $33.2 million related to the origination of loans receivable subsequent to January 1, 2023, an increase of $16.2 million in interest income on money market funds, an increase of $0.4 million due to originations of other loans, and an increase of $0.2 million related to a loan origination fee received during the year ended December 31, 2024, partially offset by a decrease of $1.5 million related to repayments of loans receivable and a decrease of $0.7 million related to prepayment penalties on one mezzanine loan receivable and one mortgage loan receivable during the year ended December 31, 2023.
During the year ended December 31, 2022, we recorded a $3.8 million loss on sale of real estate related to the sale of six SNFs, five ALFs and one multi-service campus and a $0.2 million loss on sale of real estate related to the sale of a land parcel, partially offset by a $0.2 million gain on sale of real estate related to the sale of one SNF.
During the year ended December 31, 2024, we recorded a $2.3 million loss on the sale of real estate related to the sale of 12 SNFs, partially offset by a $0.1 million gain on the sale of real estate related to the sale of four ALFs and one SNF.
Cash Flows The following table presents selected data from our consolidated statements of cash flows for the years presented: Year Ended December 31, 2023 2022 (dollars in thousands) Net cash provided by operating activities $ 154,767 $ 144,415 Net cash used in investing activities (267,815) (127,400) Net cash provided by (used in) financing activities 394,318 (23,732) Net increase (decrease) in cash and cash equivalents 281,270 (6,717) Cash and cash equivalents as of the beginning of period 13,178 19,895 Cash and cash equivalents as of the end of period $ 294,448 $ 13,178 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net cash provided by operating activities for the year ended December 31, 2023 was $154.8 million compared to $144.4 million for the year ended December 31, 2022, an increase of $10.4 million.
Cash Flows The following table presents selected data from our consolidated statements of cash flows for the years presented: Year Ended December 31, 2024 2023 (dollars in thousands) Net cash provided by operating activities $ 244,251 $ 154,767 Net cash used in investing activities (1,513,683) (267,815) Net cash provided by financing activities 1,188,806 394,318 Net (decrease) increase in cash and cash equivalents (80,626) 281,270 Cash and cash equivalents as of the beginning of period 294,448 13,178 Cash and cash equivalents as of the end of period $ 213,822 $ 294,448 Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Net cash provided by operating activities for the year ended December 31, 2024 was $244.3 million compared to $154.8 million for the year ended December 31, 2023, an increase of $89.5 million.
Within our SNFs, occupancy levels have continued to improve since their trough in January 2021 and are reaching pre-COVID occupancy levels for most of our tenants.
Within our SNFs, occupancy levels have continued to improve since their trough in January 2021 and have reached or exceeded occupancy levels prior to the onset of the COVID-19 pandemic, for most of our tenants.
For floating rate loans, interest income has been calculated using the benchmark rate floor. (2) The number of beds/units includes operating beds at the investment date.
(2) Represents annualized acquisition-date interest income, less subservicing fees, if applicable. For floating rate loans, interest income has been calculated using the benchmark rate at loan origination. (3) The number of beds/units includes operating beds at the investment date.
We have concluded to use a present value technique, a discounted cash flow model, to determine fair value. 51 Table of Contents The determination of estimated fair value of our other real estate related investments requires the use of both macroeconomic and microeconomic assumptions and/or inputs, which are generally based on current market and economic conditions, such as changes in the risk-free or benchmark rate and changes attributable to instrument-specific credit risk (e.g., changes in credit spread associated with the instrument).
The determination of estimated fair value of our mortgage loans, mezzanine loans and financing receivable requires the use of both macroeconomic and microeconomic assumptions and/or inputs, which are generally based on current market and economic conditions, such as changes in the risk-free or benchmark rate and changes attributable to instrument-specific credit risk (e.g., changes in credit spread associated with the instrument).
For the Year Ended December 31, 2023 Number of shares 30,869 Average sales price per share $ 20.86 Gross proceeds (1) $ 643,802 (1) Total gross proceeds is before $8.3 million of commissions paid to the sales agents and forward adjustments during the year ended December 31, 2023, under the ATM Program.
For the Year Ended December 31, 2024 Number of shares 40,986 Average sales price per share $ 26.35 Gross proceeds (1) $ 1,079,852 (1) Total gross proceeds is before $13.4 million of commissions paid to the sales agents and forward adjustments during the year ended December 31, 2024, under the ATM Program.
As of December 31, 2023, we also had other real estate related investments consisting of one preferred equity investment, eight real estate secured loans receivable and one mezzanine loan receivable with a carrying value of $180.4 million.
As of December 31, 2024, we also had other real estate related investments consisting of three preferred equity investments, 15 real estate secured loans receivable and five mezzanine loans receivable with a carrying value of $795.2 million and one financing receivable with a carrying value of $96.0 million.
As a result of impacts experienced by our tenants since the onset of the COVID-19 pandemic, the ability of some of our tenants to meet their financial obligations to us in full has been negatively impacted. See “Impairment of Real Estate Assets, Assets Held for Sale and Asset Sales” below.
As a result of impacts experienced by our operators since the onset of the COVID-19 pandemic and due to recent market trends and uncertainties, the ability of some of our tenants and borrowers to meet their financial obligations to us in full has been negatively impacted.
During the three and twelve months ended December 31, 2023, we collected 100.0% and 97.7% of contractual rents due from our operators excluding cash deposits, respectively.
During the three and twelve months ended December 31, 2024, we collected 98.8% and 98.5% of contractual rents and interest due from our tenants and borrowers excluding cash deposits, respectively.
Higher interest rates also increase our costs of capital to finance acquisitions and increase our borrowing costs. In addition, current macroeconomic conditions and the resulting market volatility may adversely impact our ability to sell properties on acceptable terms, if at all, which could result in additional impairment charges.
In addition, current macroeconomic conditions and the resulting market volatility may adversely impact our ability to sell properties on acceptable terms, if at all, which could result in additional impairment charges. As a result of the above factors, our tenants are continuing to experience elevated operating costs at their facilities.
The First Amendment restates the definition of Consolidated Total Asset Value 49 Table of Contents to include net proceeds from at-the-market forward commitments executed but not yet closed as of the relevant date as if such proceeds had actually been received.
The First Amendment restates the definition of Consolidated Total Asset Value to include net proceeds from at-the-market forward commitments executed but not yet closed as of the relevant date as if such proceeds had actually been received. On September 19, 2024 (the “Prepayment Date”), we prepaid all $200.0 million aggregate principal amount of our outstanding Term Loan.
Capital Expenditures As of December 31, 2023, we had committed to fund expansions, construction, capital improvements and ESG incentives at certain triple-net leased facilities tot aling $9.2 million, of which $2.4 million is s ubject to rent increase at the time of funding. We expect to fund the capital expenditures in the next one to two years.
Capital Expenditures As of December 31, 2024, we had committed to fund expansions, construction, capital improvements and ESG incentives, which provides eligible triple-net tenants with monetary inducements to make sustainable improvements to our properties, at certain triple-net leased facilities tot aling $6.6 million, of which $5.7 million is s ubject to rent increase at the time of funding.
During the year ended December 31, 2022, we recorded a $4.6 million expected credit loss related to two other loans receivable that were placed on non-accrual status, partially offset by a $0.8 million recovery related to one other loan receivable that was previously written off. No provision for loan losses was recognized during the year ended December 31, 2023.
During the year ended December 31, 2024, we recorded a $4.9 million expected credit loss related to one other loan receivable with a principal balance of $4.9 million that has been placed on non-accrual status. No provision for loan losses was recognized during the year ended December 31, 2023. Property operating expenses.
Depending on the ultimate level of staffing required, an unfunded mandate to increase staff may have a material and adverse impact on the financial condition of our tenants. On October 13, 2023, California Senate Bill No. 525 (“SB 525”) was signed into law, requiring a substantial increase in the minimum wage for workers operating in certain health care facilities.
Regulatory Updates On October 13, 2023, California Senate Bill No. 525 (“SB 525”) was signed into law, requiring a substantial increase in the minimum wage for workers operating in certain health care facilities.
At a portfolio wide level, occupancy levels at our seniors housing facilities, comprising our ALFs and ILFs, are continuing to show signs of recovery following the onset of the COVID-19 pandemic, although they have not yet fully normalized to pre-pandemic levels.
At a portfolio wide level, occupancy levels at our seniors housing facilities, comprising our ALFs and ILFs, continue to remain below occupancy levels at the onset of the COVID-19 pandemic.
The net increase of $10.4 million in cash provided by operating activities for the year ended December 31, 2022 is primarily due to an increase in rental income received, interest income received on our other real estate related investments, and a decrease in cash paid for operating expenses related to assets we plan to sell, have sold, or repurpose, partially offset by an increase in cash paid for interest expense. 48 Table of Contents Cash used in investing activities for the year ended December 31, 2023 was primarily comprised of $297.9 million in acquisitions of real estate and investments in real estate related investments and other loans receivable, $11.0 million of purchases of equipment, furniture and fixtures and improvements to real estate, and $1.8 million in preferred equity investments, partially offset by $26.5 million of payments received on real estate related investments and other loans receivable and $16.3 million in net proceeds from real estate sales.
The net increase of $89.5 million in cash provided by operating activities for the year ended December 31, 2024 is primarily due to an increase in interest income received on our other real estate related investments, rental income received, and a decrease in cash paid for interest expense, partially offset by an increase in cash paid for operating expenses related to assets we plan to sell, have sold, or repurpose and an increase in cash paid for general and administrative expense.
Rental income increased by $11.1 million as detailed below: Year Ended (in thousands) December 31, 2023 December 31, 2022 Increase/(Decrease) Contractual cash rent $ 192,746 $ 186,131 $ 6,615 Tenant reimbursements 5,498 2,775 2,723 Total contractual rent 198,244 188,906 9,338 Straight-line rent (29) 17 (46) Below market lease 384 — 384 Adjustment for collectibility — (1,417) 1,417 Total amount in rental income $ 198,599 $ 187,506 $ 11,093 Total contractual rent includes initial contractual cash rent and tenant reimbursements, as adjusted for applicable rental escalators and rent increases due to capital expenditures funded by us.
Rental income increased by $29.7 million as detailed below: Year Ended (in thousands) December 31, 2024 December 31, 2023 Increase/(Decrease) Contractual cash rent $ 218,750 $ 192,746 $ 26,004 Tenant reimbursements 6,676 5,498 1,178 Total contractual rent 225,426 198,244 27,182 Straight-line rent (28) (29) 1 Amortization of lease incentives (22) — (22) Amortization of below market leases 2,885 384 2,501 Total rental income $ 228,261 $ 198,599 $ 29,662 Total contractual rent includes initial contractual cash rent and tenant reimbursements, as adjusted for applicable rental escalators and rent increases due to capital expenditures funded by us.
General and administrative expense increased by $1.6 million as detailed below: Year Ended (in thousands) December 31, 2023 December 31, 2022 Increase/(Decrease) Cash compensation $ 5,636 $ 6,107 $ (471) Incentive compensation 5,350 3,550 1,800 Share-based compensation 5,153 5,758 (605) Professional services 2,399 1,897 502 Other administrative expense 1,041 923 118 Taxes and insurance 908 897 11 Other expenses 1,318 1,033 285 Total change in general and administrative expense $ 21,805 $ 20,165 $ 1,640 Gain (loss) on sale of real estate, net .
General and administrative expense increased by $7.1 million as detailed below: Year Ended (in thousands) December 31, 2024 December 31, 2023 Increase/(Decrease) Incentive compensation $ 9,699 $ 5,350 $ 4,349 Cash compensation 6,474 5,636 838 Share-based compensation 6,130 5,153 977 Other administrative expense 1,400 1,041 359 Professional services 2,785 2,399 386 Taxes and insurance 1,019 908 111 Other expenses 1,416 1,318 98 Total change in general and administrative expense $ 28,923 $ 21,805 $ 7,118 Loss on extinguishment of debt.
See Note 12, Commitments and Contingencies, to our consolidated financial statements included in this report for further information regarding our obligation to finance certain capital expenditures under our triple-net leases.
The earn-out is available, contingent on the operator achieving certain thresholds per the agreement, beginning in October 2025 through October 2026. S ee Note 13, Commitments and Contingencies, to our consolidated financial statements included in this report for further information regarding our obligation to finance certain capital expenditures under our triple-net leases.
Our cash flows used in financing activities for the year ended December 31, 2022 were primarily comprised of $106.1 million in dividends paid, $5.4 million in payments of deferred financing costs and a $4.5 million net settlement adjustment on restricted stock, partially offset by $47.2 million of net proceeds from the issuance of common stock under the Prior ATM Program and $45.0 million in net borrowings under our Revolving Facility.
Our cash flows provided by financing activities for the year ended December 31, 2024 were primarily comprised of $1,552.9 million of net proceeds from the issuance of common stock, $75.0 million in proceeds from a secured borrowing and $19.8 million in contributions from noncontrolling interests net of distributions, partially offset by a $200.0 million prepayment of the Term Loan, $172.2 million in dividends paid, a $75.0 million payment on the secured borrowing, a $9.2 million payment on extinguishment of debt and deferred financing costs, and a $2.5 million net settlement adjustment on restricted stock.
Recent Investments The following table summarizes the Company’s acquisitions from January 1, 2023 through February 8, 2024 (dollars in thousands): Type of Property Purchase Price (1) Initial Annual Cash Rent (2) Number of Properties Number of Beds/Units (3) Skilled nursing (4) $ 169,181 $ 13,764 10 1,256 Multi-service campuses 25,276 1,916 1 168 Assisted living (5) 50,354 4,517 5 327 Total $ 244,811 $ 20,197 16 1,751 (1) Purchase price includes capitalized acquisition costs.
Recent Investments The following table summarizes the Company’s acquisitions from January 1, 2024 through February 12, 2025 (dollars in thousands): Type of Property Purchase Price (1) Initial Annual Cash Rent (2) Number of Properties Number of Beds/Units (3) Skilled nursing (4) $ 732,919 $ 67,924 43 4,632 Multi-service campuses (4) 90,639 7,467 5 683 Assisted living (4) 12,749 1,022 2 102 Total $ 836,307 $ 76,413 50 5,417 (1) Purchase price includes capitalized acquisition costs.
Interest expense increased by $10.9 million as detailed below: Change in interest expense for the year ended December 31, 2023 compared to the year ended December 31, 2022 (in thousands) Increase in interest rates for the senior unsecured term loan $ 6,826 Increase in interest rates for the unsecured revolving credit facility 5,275 Decrease in outstanding borrowing amount for the unsecured revolving facility, net (1,607) Other changes in interest expense 381 Total change to interest expense $ 10,875 Property taxes .
Interest expense decreased by $10.6 million as detailed below: Change in interest expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 (in thousands) Decreases to interest expense due to: Decrease in outstanding borrowing amount for the Prior Revolving Facility $ (8,517) Decrease due to prepayment of Term Loan (4,007) Total decrease to interest expense (12,524) Increases to interest expense due to: Issuance of secured borrowing 931 Increase in interest rates for the Term Loan 650 Other changes in interest expense 370 Total increases to interest expense 1,951 Total change in interest expense $ (10,573) Property taxes .
During the year ended December 31, 2022, we recognized aggregate impairment charges of $79.1 million, of which $14.4 million related to properties held for sale, $19.7 million related to properties held for investment, and $45.0 million related to properties that were sold. See above under “Recent Developments” for additional information. Provision for loan losses, net.
Impairment of real estate investments. During the year ended December 31, 2024, we recognized aggregate impairment charges of $42.2 million, of which $18.8 million related to properties held for sale, $9.4 million related to properties held for investment, and $14.0 million related to properties that were sold.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Year Ended December 31, Increase (Decrease) Percentage Difference 2023 2022 (dollars in thousands) Revenues: Rental income $ 198,599 $ 187,506 $ 11,093 6 % Interest and other income 19,171 8,626 10,545 122 % Expenses: Depreciation and amortization 51,199 50,316 883 2 % Interest expense 40,883 30,008 10,875 36 % Property taxes 6,170 4,333 1,837 42 % Impairment of real estate investments 36,301 79,062 (42,761) (54) % Provision for loan losses, net — 3,844 (3,844) (100) % Property operating expenses 3,423 5,039 (1,616) (32) % General and administrative 21,805 20,165 1,640 8 % Other (loss) income: Gain (loss) on sale of real estate, net 2,218 (3,769) 5,987 (159) % Unrealized loss on other real estate related investments, net (6,485) (7,102) 617 (9) % Net loss attributable to noncontrolling interests Net loss attributable to noncontrolling interests (13) — (13) * • Not meaningful Rental income.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Year Ended December 31, Increase (Decrease) Percentage Difference 2024 2023 (dollars in thousands) Revenues: Rental income $ 228,261 $ 198,599 $ 29,662 15 % Interest income from financing receivable 1,009 — 1,009 100 % Interest income from other real estate related investments and other income 67,016 19,171 47,845 250 % Expenses: Depreciation and amortization 56,831 51,199 5,632 11 % Interest expense 30,310 40,883 (10,573) (26) % Property taxes 7,838 6,170 1,668 27 % Impairment of real estate investments 42,225 36,301 5,924 16 % Transaction costs 1,326 — 1,326 100 % Provision for loan losses, net 4,900 — 4,900 100 % Property operating expenses 5,714 3,423 2,291 67 % General and administrative 28,923 21,805 7,118 33 % Other income (loss): Loss on extinguishment of debt (657) — (657) 100 % (Loss) gain on sale of real estate, net (2,208) 2,218 (4,426) (200) % Unrealized gain (loss) on other real estate related investments, net 9,045 (6,485) 15,530 (239) % Net loss attributable to noncontrolling interests Net loss attributable to noncontrolling interests (681) (13) (668) * • Not meaningful Rental income.
(2) Initial annual cash rent represents initial cash rent for the first twelve months excluding the impact of straight-line rent or rent abatement in the first one to three months, if applicable. (3) The number of beds/units includes operating beds at acquisition date. (4) Includes three SNFs held through joint ventures.
(2) Initial annual cash rent represents initial cash rent for the first twelve months. (3) The number of beds/units includes operating beds at acquisition date. (4) Includes facilities held in consolidated joint ventures. See Note 3, Real Estate Investments, Net , and Note 12, Variable Interest Entities for additional information.
We expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements.
We expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements. While we may from time to time sell properties as part of our hold / investment strategy on an investment-by-investment basis, we currently do not expect to sell any of our properties to meet liquidity needs.
This increase is expected to partially offset some of our tenants’ higher operating costs. On September 1, 2023, CMS issued proposed rules regarding minimum staffing requirements and increased inspections at nursing homes in order to establish comprehensive nurse staffing requirements.
On April 22, 2024, CMS issued a final rule regarding minimum staffing requirements and increased inspections at nursing homes in order to establish comprehensive nurse staffing requirements.
The increase was primarily due to a $1.4 million increase in property taxes due to new real estate investments made after January 1, 2022, a $0.9 million increase due to property taxes expected to be paid directly by us as a result of certain assets being designated as held for sale, a $0.4 million increase in property taxes due to existing operators that no longer make direct tax payments and an increase of $0.2 million of property taxes due to reassessments and increased effective tax rates, partially offset by a decrease of $1.0 million related to properties sold after January 1, 2022 and a decrease of $0.1 million due to the transfer of certain properties to new operators that make direct tax payments.
Property taxes increased $1.7 million, or 27%, for the year ended December 31, 2024 compared to December 31, 2023. The increase was primarily due to a $2.8 million increase in property taxes due to new real estate investments made after January 1, 2023, partially offset by a decrease of $1.1 million related to properties sold after January 1, 2023.
The proposed rule also includes a staggered implementation approach and possible hardship exemptions for select facilities. Comments on the proposed rule had to be submitted by November 6, 2023.
The rule includes a staggered implementation approach for which CMS will publish additional details on compliance as the implementation dates approach. The rule also includes possible waivers and temporary hardship exemptions for select facilities; however, no funding for the additional staff will be provided.
See Note 14, Subsequent Events , for additional information. 42 Table of Contents The following table summarizes other real estate related investments, by the Company from January 1, 2023 through February 8, 2024 (dollars in thousands): Investment Type Investment Annual Initial Interest Income (1) Number of Properties Number of Beds/Units (2) Mortgage secured loans receivable $ 51,584 $ 4,806 9 772 Mezzanine loans receivable 52,165 7,119 N/A N/A Preferred equity 1,782 267 N/A N/A Total $ 105,531 $ 12,192 9 772 (1) Represents annualized acquisition-date interest income on any mortgage secured loans receivable and mezzanine loans, less subservicing fees, if applicable.
(3) The number of beds/units includes operating beds at the investment date. 45 Table of Contents The following table summarizes other real estate related investments by the Company from January 1, 2024 through February 12, 2025 (dollars in thousands): Investment Type (1) Investment Initial Annual Interest Income (2) Number of Properties Number of Beds/Units (3) Mortgage secured loans receivable $ 496,615 $ 44,210 50 5,172 Mezzanine loans receivable 63,676 8,636 29 3,763 Preferred equity 52,000 5,734 N/A N/A Total $ 612,291 $ 58,580 79 8,935 (1) Table excludes a $1.0 million mortgage loan originated in connection with the sale of one ALF during the period presented.
During the year ended December 31, 2022, we recorded a $7.1 million unrealized loss on our secured and mezzanine loans receivable. The unrealized loss was due to rising interest rates.
During the year ended December 31, 2024, we recorded an unrealized gain of $17.8 million due to a decrease in interest rates during the second half of 2024, partially offset by an unrealized loss of $8.8 million due to an increase in interest rates during the first half of 2024.
Removed
As a result of the above factors, together with the additional protective measures taken by our tenants in response to and following the COVID-19 pandemic, our tenants are continuing to experience increased operating costs at their facilities. Our tenants are also experiencing labor shortages resulting in reduced admissions and higher operating costs.
Added
Higher interest rates have also increased our costs of capital to finance acquisitions and increased our borrowing costs. We continue to monitor changes in the interest rate environment and the effect of changing rates on our business.
Removed
Regulatory Updates In July 2023, The Centers for Medicare and Medicaid Services (“CMS”) approved its payment rate update to SNF reimbursements for fiscal 2024, which commenced October 1, 2023, and includes a net increase of 4.0%, or approximately $1.4 billion, in Medicare Part A payments to SNFs.
Added
After the initial implementation was delayed by the Governor of California in June 2024, SB 525 went into effect on October 16, 2024. The Centers for Medicare and Medicaid Services (“CMS”) issued a final rule on July 31, 2024, updating Medicare payment policies and rates for SNFs for fiscal year 2025.
Removed
It is uncertain when the proposed rules will be finalized and become effective, what the ultimate scope and timing of the staffing requirements will be thereunder, and whether any such requirements will be accompanied by additional funding to offset any increased costs associated with meeting these requirements for our operators.
Added
This update includes a 4.2% increase in Medicare Part A payments to SNFs, totaling approximately $1.4 billion. These increases are expected to partially offset some of our tenants’ higher operating costs.
Removed
See Note 3, Real Estate Investments, Net , and Note 11, Variable Interest Entities for additional information. (5) Includes on ALF held through a joint venture.
Added
Further, in this final rule, CMS expanded its ability to impose penalties on SNFs for health and safety deficiencies/non-compliance by allowing for more per instance and per day civil monetary penalties to be imposed for such health and safety deficiencies/non-compliance, as appropriate.

… 31 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+2 added−3 removed3 unchanged
Biggest changeOur Second Amended Credit Agreement provide s for: (i) an unsecured revolving credit facility (the “Revolving Facility”) with revolving commitments in an aggregate principal amount of $600.0 million, including a letter of credit subfacility for 10% of the then available revolving commitments and a swingline loan subfacility for 10% of the then available revolving commitments and (ii) an unsecured term loan credit facility (the “Term Loan”) in an aggregate principal amount of $200.0 million from a syndicate of banks and other financial institutions.
Biggest changeOur Third Amended Credit Agreement provides for: (i) an unsecured revolving credit facility (the “Third Amended Revolving Facility”) with revolving commitments in an aggregate principal amount of $1.2 billion, including a letter of credit subfacility for 10% of the then available revolving commitments and a swingline loan subfacility for 10% of the then available revolving commitments.
See “Risk Factors - Risks Related to Our Status as a REIT - Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.” As of December 31, 2023, we had no swap agreements to hedge our interest rate risks.
See “Risk Factors - Risks Related to Our Status as a REIT - Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.” As of December 31, 2024, we had no swap agreements to hedge our interest rate risks.
The interest rates applicable to loans under the Revolving Facility are, at the Operating Partnership’s option, equal to either a base rate plus a margin ranging from 0.10% to 0.55% per annum or Adjusted Term SOFR or Adjusted Daily Simple SOFR (each as defined in the Second Amended Credit Agreement) plus a margin ranging from 1.10% to 1.55% per annum based on the debt to asset value ratio of the Company and our consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if we obtain certain specified investment grade ratings on our senior long-term unsecured debt).
The interest rates applicable to loans under the Third Amended Revolving Facility are, at the Operating Partnership’s option, equal to either a base rate plus a margin ranging from 0.05% to 0.55% per annum or Adjusted Term SOFR or Adjusted Daily Simple SOFR (each as defined in the Third Amended Credit Agreement) plus a margin ranging from 1.05% to 1.55% per annum based on the debt to asset value ratio of the Company and our consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if we obtain certain specified investment grade ratings on our senior long-term unsecured debt).
An increase in interest rates could make the financing of any acquisition by us more costly as well as increase the costs of our variable rate debt obligations. Rising interest rates could also limit our ability to refinance our debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness.
Rising interest rates could also limit our ability to refinance our debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness.
We also expect to manage our exposure to interest rate risk by maintaining a mix of fixed and variable rates for our indebtedness.
We also expect to manage our exposure to interest rate risk by maintaining a mix of fixed and variable rates for our indebtedness. 55 Table of Contents ITEM 8. Financial Statements and Supplementary Data See the Index to Consolidated Financial Statements on page F-1 of this report. ITEM 9.
Removed
The interest rates applicable to loans under the Term Loan are, at the Operating Partnership’s option, equal to either a base rate plus a margin ranging from 0.50% to 1.20% per annum or Adjusted Term SOFR or Adjusted Daily Simple SOFR plus a margin ranging from 1.50% to 2.20% per annum based on the debt to asset value ratio of the Company and our consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if we obtain certain specified investment grade ratings on our senior long-term unsecur ed debt).
Added
As of December 31, 2024, we had no borrowings outstanding under the Third Amended Revolving Facility. An increase in interest rates could make the financing of any acquisition by us more costly as well as increase the costs of our variable rate debt obligations.
Removed
As of December 31, 2023, we had a $200.0 million Term Loan outstanding and no borrowings outstanding under the Revolving Facility.
Added
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures None.
Removed
Based on our outstanding debt balance as of December 31, 2023 described above and the interest rates applicable to our outstanding debt at December 31, 2023, assuming a 100 basis point increase in the interest rates related to our variable rate debt, interest expense would have increased approximately $2.0 million for the year ended December 31, 2023.

Other CTRE 10-K year-over-year comparisons