In April 2025, we invested approximately CHF 50 million (CHF 25 million of which is a short-term loan) in the Swiss
Medical Network real estate joint venture, proceeds of which, along with fundings from our joint venture partner, were used to facilitate the acquisition of a general acute care facility.

In the first quarter of 2025, we funded approximately $39 million to Steward Health Care System's ("Steward") secured lender to obtain control over certain real estate assets. As part of this transaction, Steward and its secured lenders agreed for Quorum Health ("Quorum"), one of the new tenants of the former Steward operated facilities as discussed below, to take over as manager of the transition services for the former Steward operated properties, including some that we do not own.

On April 12, 2024, we sold our interests in five Utah hospitals for an aggregate agreed valuation of approximately $1.2 billion to a newly formed joint venture (the "Utah partnership") with an institutional asset manager (the "Fund"), which we call the Utah Transaction, and we recognized a gain on real estate of approximately $380 million, partially offset by a $20 million write-off of unbilled straight-line rent receivables. We retained an approximately 25% interest in the Utah partnership valued initially at approximately $108 million, which is being accounted for on the equity method on a quarterly lag basis and included in the "Investments in unconsolidated real estate joint ventures" line of the condensed consolidated balance sheets. The Fund purchased an approximate 75% interest in the Utah partnership for $886 million. In conjunction with this transaction closing, the Utah partnership placed new non-recourse secured financing, providing $190 million of additional cash to us. In total, the Utah Transaction generated $1.1 billion of cash to us. The Utah lessee (an affiliate of CommonSpirit Health ("CommonSpirit")) may acquire the leased real estate at a price equal to the greater of fair market value and the approximate $1.2 billion lease base at the fifth or tenth anniversary of the 2023 master lease commencement. We granted the Fund certain limited and conditional preferences based on the possible execution of the purchase option, which we accounted for as a derivative liability with an initial value of approximately $2.3 million.

See table below for a status summary of our current development and capital addition projects (in thousands):


Property	Commitment		Costs Paid as of June 30, 2025		Cost Remaining
IMED Hospitales ("IMED") (Spain)	$	56,498	$	29,877	$	26,621
IMED (Spain)		41,211		35,654		5,557
Lifepoint Behavioral (Kansas)		20,183		16,761		3,422
Surgery Partners (Idaho)		15,993		13,345		2,648
Lifepoint Behavioral (Arizona)		10,659		5,320		5,339
Other (Various)		554		210		344
	$	145,098	$	101,167	$	43,931

We have two other development projects ongoing in Texas (Texarkana development) and Massachusetts (Norwood redevelopment). These are not highlighted above; however, we are presently completing construction to the stage where the building is "weathered in" and environmentally secure so as to physically protect our investment while we actively market the hospitals for sale or lease. As of June 30, 2025, we estimate that the cost to complete construction to this stage, plus costs of additional construction that

we believe will be more efficient if completed in the near-term (such as electing to accelerate completion of a parking structure at one hospital), approximates between $50 million and $55 million.

During the first quarter of 2025, we completed construction and began recording rental income on a $10.5 million capital addition project at an Arizona facility leased to Lifepoint Behavioral Health ("Lifepoint Behavioral").

During the first quarter of 2024, we completed construction and began recording rental income on a $35.4 million behavioral health facility located in McKinney, Texas, that is leased to Lifepoint Behavioral. We also completed construction and began recording rental income on a €46 million (approximately $49.0 million) general acute care facility located in Spain that is leased to IMED.

During the first six months of 2025, we completed the sale of three facilities and an ancillary facility for approximately $48 million, resulting in a gain on real estate of $13.3 million. These three facilities were held for sale at December 31, 2024.

See Utah Transaction above for a discussion of the five Utah hospitals sold on April 12, 2024. On April 9, 2024, we sold five properties to Prime Healthcare Services, Inc. ("Prime") for total proceeds of approximately $250 million along with a $100 million interest-bearing mortgage loan (which was fully repaid on August 29, 2024). This transaction resulted in a gain on real estate of approximately $53 million, partially offset by a non-cash straight-line rent write-off of approximately $30 million.

As part of this sale transaction, we extended the lease maturity of four other facilities with Prime to 2044. This amended lease has inflation-based escalators, collared between 2% and 4% and a purchase option on or prior to August 26, 2028 for a value of $238 million, which is greater than our net book value for these properties at June 30, 2025. After August 26, 2028, this option price reverts to $260 million (subject to annual escalations).

During the first six months of 2024, we also completed the sale of three other facilities and two ancillary facilities for approximately $7 million, resulting in a loss on real estate of approximately $1.4 million.

In the first quarter of 2024, we also sold our minority equity investment in Lifepoint Behavioral for approximately $12 million.

We acquire and develop healthcare facilities and lease the facilities to healthcare operating companies. The initial fixed lease terms of these infrastructure-type assets are typically at least 15 years, and most include renewal options at the election of our tenants, generally in five year increments. Over 99% of our leases provide annual rent escalations based on increases in the Consumer Price Index ("CPI") (or similar indices outside the U.S.) and/or fixed minimum annual rent escalations. Many of our domestic leases contain purchase options with pricing set at various terms but in no case less than our total initial investment. Our leases typically require the tenant to handle and bear most of the costs associated with our properties including repair/maintenance, property taxes, and insurance.

For all of our properties subject to lease, we are the legal owner of the property and the tenant's right to use and possess such property is guided by the terms of a lease. At June 30, 2025, we account for all of these leases as operating leases, except where GAAP requires alternative classification, including leases on certain Ernest Health, Inc. ("Ernest") and Prospect Medical Holdings, Inc. ("Prospect") facilities that are accounted for as either direct financing or other financing type leases. The components of our total investment in financing leases consisted of the following (in thousands):

At June 30, 2025, our vacant properties represented less than 1% of total assets. We are in various stages of either re-leasing or selling these vacant properties.

Our tenants’ financial performance and resulting ability to satisfy their lease and loan obligations to us are material to our financial results and our ability to service our debt and make distributions to our stockholders. Our tenants operate in the healthcare industry, which is highly regulated, and changes in regulation (or delays in enacting regulation) may temporarily impact our tenants’ operations until they are able to make the appropriate adjustments to their business. In addition, our tenants may experience operational challenges from time-to-time as a result of many factors, including those external to them, such as cybersecurity attacks, public health crises, economic issues resulting in high inflation and spikes in labor costs, extreme or severe weather and climate-related events, and adverse market and political conditions. We monitor our tenants' operating results and the potential impact from these challenges. We may elect to provide support to our tenants from time-to-time in the form of short-term rent abatements or rent deferrals to be paid back in full, or in the form of temporary loans. See below for an update on some of our current and former tenants.

As discussed in previous filings, Steward filed for Chapter 11 bankruptcy on May 6, 2024 with the United States Bankruptcy Court for the Southern District of Texas. On September 11, 2024, the bankruptcy court entered an interim order, subsequently made final on September 18, 2024, approving a global settlement between Steward, its lenders, the unsecured creditors committee, and the Company. The order provided for the following: a) termination of our master lease with Steward; b) the release of claims against 23 of our properties (including the release of claims by the secured lender over its liens on equipment, inventory, and licenses), allowing us to begin the process of re-tenanting or selling these properties; and c) a full release of claims against us from all parties. In return, we consented to the sale of the operations and our real estate in three facilities in the Space Coast region of Florida, along with a full release of our claims in Steward including claims to past due rent and interest, outstanding loans, and our equity investment.

In regard to our real estate partnership with Macquarie that owned and leased eight properties in Massachusetts to Steward, the bankruptcy court approved the termination of the master lease with Steward during the 2024 third quarter. We and Macquarie entered into an agreement with the mortgage lender of the joint venture to transition the eight properties to them along with cash proceeds of approximately $40 million (representing our share), in return for full payment of the underlying mortgage debt and a release of claims against each party.

Due to the events discussed above and in previous filings, we recorded various impairment and negative fair value charges during 2024, including approximately $490 million and $960 million of charges for the three and six months ended June 30, 2024, respectively, to fully reserve our equity and certain loan investments in Steward and our equity investment in the Massachusetts joint venture. In addition, during the 2024 second quarter, we changed the estimated useful life of the in-place lease intangibles associated with the Steward master leases, as we expected such leases would end before their contractual term. This change in estimate resulted in approximately $34 million of additional amortization expense in the 2024 second quarter and is reflected in the "Real estate depreciation and amortization" line of our condensed consolidated statements of net income.

With this global settlement and termination of the joint venture master lease, our relationship with Steward effectively ended.

Despite the bankruptcy, we received and recorded rent and interest revenue from Steward of $19 million and $30 million for the three and six month periods, respectively, ending June 30, 2024. In addition, we were benefited from rent paid by Steward to the Massachusetts joint venture of $28 million ($14 million representing our share) and $66 million ($33 million representing our share) for the three and six month periods ended June 30, 2024, respectively.

Subsequent to the release of claims on the 23 properties as part of the global settlement on September 18, 2024, we reached definitive agreements with six operators (Healthcare Systems of America, Honor Health, Insight Health ("Insight"), Quorum, College Health, and Tenor Health) to lease 18 of these facilities in 2024 and early 2025. These leases include a rent ramp up period. In the 2025 first quarter, cash rents from these operators were approximately $3.4 million, ramping up to $11 million in the 2025 second quarter (or approximately 28% of what total contractual rents are to be in 2026 once all rent ramp up is completed). Based on these lease contracts, rent payments are to increase to approximately 57% of contractual rent by the fourth quarter of 2025, 78% of contractual rent by second quarter 2026, and 100% of contractual rent starting October 2026. As of June 30, 2025, all of these new operators have paid the rent due under their respective leases, except for Insight who owes us approximately $0.5 million.

As of June 30, 2025, we have provided approximately $125 million in short-term working capital loans to these operators to assist in the takeover of these operations and the transition of certain services (such as revenue cycle management) away from Steward.

The remaining five former Steward properties (with a net book value of approximately 3% of our total assets), including two developments (see "Development and Capital Addition Activities" above), are in various stages of being re-tenanted or sold.

As discussed in previous filings, Prospect’s operating losses in multiple East Coast markets, including Pennsylvania and Rhode Island (a state in which we have no investment), adversely impacted Prospect’s overall liquidity. Prospect filed for Chapter 11 bankruptcy on January 11, 2025 with the United States Bankruptcy Court for the Northern District of Texas. Prospect’s bankruptcy filing constituted a default under the terms of our master leases and loan agreements with Prospect, and imposed a stay on our ability to exercise contractual rights with respect to these defaults. The bankruptcy filing barred us from collecting pre-bankruptcy debts from Prospect unless we received an order permitting us to do so from the bankruptcy court. The bankruptcy court has the power to approve and direct the sale of Prospect’s property free and clear of any associated mortgages and loans, whether or not there are sufficient net proceeds to repay them, in whole or in part. For that reason, we may recover none or substantially less than the full value of our claims.

On March 20, 2025, the bankruptcy court approved a global settlement (including a recovery waterfall) between us, Prospect, and other stakeholders.

Our investments in Prospect include leased real estate assets in California and Connecticut (for which we account as financing leases), a mortgage loan secured by hospital real estate operated by Prospect in Pennsylvania, and a $75 million asset-backed loan outstanding. In addition, we acquired a non-controlling ownership interest in May 2023 in PHP Holdings. In the second quarter of 2025, we funded a $13.5 million loan to Prospect and have since funded an additional loan of approximately $11.5 million as contemplated by the global settlement.

Due to the events discussed above, we recorded more than $400 million of impairment charges and negative fair value adjustments associated with our investments in Prospect in the 2024 fourth quarter, resulting in a full reserve of the asset-backed loan and our Pennsylvania mortgage loan, along with a decrease in the value in our Connecticut properties. No charge was recorded on our California properties. In accordance with the global settlement (and related recovery waterfall) discussed above, we recorded approximately $55 million of additional impairment charges on our Connecticut properties in the 2025 first quarter; while in the second quarter of 2025, we recorded an approximate $18 million of impairment recovery. In determining the 2025 first and second quarter impairment charges and recoveries, we compared the carrying value of our investments to our current estimate of expected proceeds (net of any possible future cash outlays) to be received under the bankruptcy court approved recovery waterfall, factoring in an estimated recovery of Prospect assets (including our real estate assets) and applying the priority of claims associated with the bankruptcy. In estimating the fair value of the California, Pennsylvania, and certain Connecticut real estate, we, along with assistance from a third-party, independent valuation firm, used a combination of cost, market, and income approaches using Level 3 inputs. The cost approach used comparable sales to value the land and cost manuals to value the improvements. The value derived from the market approach was based on sale prices of similar properties. For the income approach, we divided the expected operating income from the property by an estimated market capitalization rate (range from 8.25% to 8.5%). For the remaining Connecticut real estate, fair value was based on a recent bid received for these properties.

In regard to our investment in PHP Holdings, we account for this investment using the fair value option method. Each quarter, we mark such investment to fair value as more fully described in Note 7 to the condensed consolidated financial statements. In the first six months of 2025, we recorded an approximate $147 million negative fair value adjustment ($129 million of which was in the second quarter), whereas this adjustment was approximately $360 million in the first six months of 2024 ($160 million of which was recorded in the second quarter of 2024). The adjustment in 2025 was made based on changes to the purchase agreement between PHP Holdings and Astrana Health and updates to PHP Holdings' working capital position. At June 30, 2025, our investment in PHP Holdings was $2.3 million, which is the amount received on July 1, 2025 from the sale of PHP Holdings to Astrana Health.

Prospect's bankruptcy proceedings are continuing, and the ultimate outcome of such proceedings is uncertain. At this time, we are unable to predict the timing of any of the foregoing matters or the timing for a resolution of the Prospect bankruptcy proceeding. We cannot assure you that we will be able to recover or preserve the remaining approximately $660 million of our investment in Prospect as of June 30, 2025, in whole or in part.

To this point, on August 4, 2025, the bankruptcy court approved, among other things, an interim order for additional loan advances to be made by us to the debtor including: a) up to $55 million, for which we are funding $15 million on August 8, 2025, to cover forecasted cash shortfalls by the debtor as it pursues sales of hospital operations and sales/leases of related real estate; b) approximately $25 million for the full repayment of the current senior debtor-in-possession lender; and c) up to $30 million in the form of a backstop facility to cover administrative and priority claims. Except for the $15 million funding on August 8, 2025, all of the other loan advances are conditioned on other events occurring including further bankruptcy court approvals and meeting other milestones or requirements. Any additional loan advances (other than the backstop facility) will rank senior in priority as it relates to the recovery waterfall; while any funds advanced under the backstop facility will be secured by recoveries, if any, from causes of actions owned by the debtor.

Starting January 1, 2023, we began accounting for our leases and loans to Prospect on a cash basis. We received and recorded approximately $18 million and $25 million of revenue for the three and six month periods ended June 30, 2024, respectively, on our California properties. Prospect has not made any scheduled rent or interest payments since the second quarter of 2024.

As discussed in previous filings, we placed our loan to the international joint venture on the cash basis of accounting in 2023, as we determined that it was no longer probable that the borrower would pay its future interest in full. This loan, accounted for under the fair value option method, was collateralized by the equity of Steward held by an investor in both Steward and the international joint venture. Consistent with the discussion above on Steward, we recorded a $225 million unfavorable fair value adjustment in the 2024 first quarter to fully reserve for the loan and related equity investment. These investments were adjusted for after comparing our carrying value to an updated fair value analysis of the underlying collateral, with assistance from a third-party, independent valuation firm.

In the 2023 third quarter, we moved to cash basis of accounting for a tenant that comprised approximately 1% of our total assets due to declines in operating results. During 2024, we terminated the lease with this tenant and entered into a forbearance and restructuring agreement. This forbearance and restructuring agreement has since been amended to, among other things, give the former tenant more time to complete their planned third-party financing. The substantive terms of the amended forbearance and restructuring agreement included: a) repayment of $10 million of unpaid rent in cash, which we received on December 31, 2024; b) acquisition by this former tenant of certain of our facilities (with a net book value of approximately $38 million) for approximately $45 million, one of which closed in early January 2025 for approximately $3 million and we received a $20 million deposit in March 2025 in advance of two other closings; c) repayment of a mortgage loan; and d) entering into a new 20 year triple-net lease agreement of three properties with a net book value of approximately $154 million.

We received and recorded approximately $5 million and $10 million of rent as required by the amended forbearance and restructuring agreement for the three and six month periods ended June 30, 2025, respectively. At this time, the former tenant has not completed its financing plan but continues to make its required payments under the amended forbearance and restructuring agreement.

Our primary business strategy is to acquire real estate and lease to providers of healthcare services. Typically, we directly own 100% of such investments. However, from time-to-time, we will co-invest with other investors that share a similar view that hospital real estate is a necessary infrastructure-type asset in communities. In these types of investments, we will own undivided interests of less than 100% of the real estate through unconsolidated real estate joint ventures. The underlying real estate and leases in these unconsolidated real estate joint ventures are generally structured similarly and carry a similar risk profile to the rest of our real estate portfolio.

The Utah partnership applies specialized accounting and reporting for investment companies under Topic 946, which measures the underlying investments at fair value. For the three and six months ended June 30, 2025, our share of the Utah partnership's

favorable fair value adjustment was approximately $15 million and $21 million, respectively, which for the 2025 second quarter primarily related to an unrealized gain on investments in real estate.

For our unconsolidated real estate joint venture that leases more than 70 healthcare facilities to MEDIAN, we, along with our
joint venture partner, finalized a refinancing of the €655 million secured debt on June 17, 2025, that was due on June 30, 2025. The new €702.5 million non-recourse, 10-year non-amortizing secured debt has an approximately 5.1% fixed rate, and the majority of the proceeds were used to fund the repayment of the prior €655 million secured loan that carried a lower rate.

Our investments in unconsolidated operating entities are noncontrolling investments that are typically made in conjunction with larger real estate transactions in which the operators are vetted as part of our overall underwriting process. In many cases, we would not be able to acquire the larger real estate portfolio without such investments in operators. These investments also offer the opportunity to enhance our overall return and provide for certain minority rights and protections.

For our investments marked to fair value (including our investments in PHP Holdings, Aevis and the international joint venture), we recorded approximately $156 million in unfavorable non-cash fair value adjustments during the first half of 2025 ($125 million of which was recorded in the 2025 second quarter); whereas, this was a $595 million unfavorable non-cash fair value adjustment for the same period of 2024 ($160 million of which was recorded in the 2024 second quarter).

In the first quarter of 2024, we sold our interest in the Priory syndicated term loan for £90 million (approximately $115 million), resulting in an approximate £6 million ($7.8 million) economic loss.

We apply a forward-looking "expected loss" model to our financing receivables, including financing leases and loans, based on historical credit losses of similar instruments.

The following table summarizes the activity in our credit loss reserves (in thousands):


	For the Three Months Ended June 30,
	2025			2024
Balance at beginning of the period	$	577,455		$	456,592
(Recovery) provision for credit loss, net (1)		(12,659	)		81,942
Expected credit loss reserve written off or related to financial instruments sold, repaid, or satisfied		—			—
Balance at end of the period	$	564,796		$	538,534


	For the Six Months Ended June 30,
	2025		2024
Balance at beginning of the year	$	511,473	$	96,001
Provision for credit loss, net (1)		53,323		442,533
Expected credit loss reserve written off or related to financial instruments sold, repaid, or satisfied		—		—
Balance at end of the period	$	564,796	$	538,534

We monitor concentration risk in several ways due to the nature of our real estate assets that are vital to the communities in which they are located and given our history of being able to replace inefficient operators of our facilities, if needed, with more effective operators. See below for our concentration details (dollars in thousands):

Total Assets by Operator


	As of June 30, 2025					As of December 31, 2024
Operators	Total Assets (1)		Percentage of Total Assets			Total Assets (1)		Percentage of Total Assets
Circle Health Ltd ("Circle")	$	2,195,038		14.5	%	$	2,026,778		14.2	%
Priory		1,340,466		8.8	%		1,233,462		8.6	%
Healthcare Systems of America		1,204,109		7.9	%		1,187,006		8.3	%
Swiss Medical Network		863,343		5.7	%		719,632		5.1	%
Lifepoint Behavioral		816,943		5.4	%		813,584		5.7	%
Other operators		6,850,257		45.3	%		6,624,256		46.3	%
Other assets (2)		1,880,272		12.4	%		1,689,876		11.8	%
Total	$	15,150,428		100.0	%	$	14,294,594		100.0	%

(1)

Total assets by operator are generally comprised of real estate assets, mortgage loans, investments in unconsolidated real estate joint ventures, investments in unconsolidated operating entities, and other loans.

(2)

Includes our investment in PHP Holdings of approximately $2 million and $150 million as of June 30, 2025, and December 31, 2024, respectively - see tenant update described previously in this same Note 3.

Total Assets by U.S. State and Country (1)


	As of June 30, 2025					As of December 31, 2024
U.S. States and Other Countries	Total Assets		Percentage of Total Assets			Total Assets		Percentage of Total Assets
Texas	$	1,415,603		9.3	%	$	1,394,296		9.8	%
California		943,646		6.3	%		935,470		6.4	%
Florida		845,268		5.6	%		840,876		5.9	%
Arizona		384,310		2.5	%		379,801		2.7	%
Ohio		332,337		2.2	%		327,577		2.3	%
All other states		2,621,863		17.3	%		2,636,587		18.5	%
Other domestic assets		1,031,221		6.8	%		951,486		6.6	%
Total U.S.	$	7,574,248		50.0	%	$	7,466,093		52.2	%
United Kingdom	$	4,319,502		28.5	%	$	3,985,672		27.9	%
Switzerland		863,343		5.7	%		719,632		5.0	%
Germany		756,490		5.0	%		672,343		4.7	%
Spain		285,895		1.9	%		247,996		1.7	%
All other countries		501,899		3.3	%		464,468		3.3	%
Other international assets		849,051		5.6	%		738,390		5.2	%
Total international	$	7,576,180		50.0	%	$	6,828,501		47.8	%
Grand total	$	15,150,428		100.0	%	$	14,294,594		100.0	%

Total Assets by Facility Type (1)


	As of June 30, 2025					As of December 31, 2024
Facility Types	Total Assets		Percentage of Total Assets			Total Assets		Percentage of Total Assets
General acute care hospitals	$	8,992,213		59.4	%	$	8,493,331		59.4	%
Behavioral health facilities		2,506,704		16.5	%		2,376,460		16.7	%
Post acute care facilities		1,655,572		10.9	%		1,617,596		11.3	%
Freestanding ER/urgent care facilities		115,667		0.8	%		117,331		0.8	%
Other assets		1,880,272		12.4	%		1,689,876		11.8	%
Total	$	15,150,428		100.0	%	$	14,294,594		100.0	%

(1)

For geographic and facility type concentration metrics in the tables above, we allocate our investments in unconsolidated operating entities pro rata based on the gross book value of the real estate. Such pro rata allocations are subject to change from period to period.

On an individual property basis, our largest investment in any single property was less than 2% of our total assets as of June 30, 2025.

On a revenue basis, concentration in 2025 compared to the same periods of 2024 is as follows:

Total Revenues by Geographic Location


	For the Three Months Ended June 30,
	2025					2024
Geographic Location	Total Revenues		Percentage of Total Revenues			Total Revenues		Percentage of Total Revenues
Total U.S.	$	126,067		52.4	%	$	160,461		60.2	%
United Kingdom		93,924		39.1	%		88,164		33.1	%
All other countries		20,368		8.5	%		17,935		6.7	%
Grand total	$	240,359		100.0	%	$	266,560		100.0	%

Total Revenues by Facility Type


	For the Three Months Ended June 30,
	2025					2024
Facility Types	Total Revenues		Percentage of Total Revenues			Total Revenues		Percentage of Total Revenues
General acute care hospitals	$	147,648		61.4	%	$	173,133		65.0	%
Behavioral health facilities		53,545		22.3	%		52,957		19.9	%
Post acute care facilities		37,176		15.5	%		34,493		12.9	%
Freestanding ER/urgent care facilities		1,990		0.8	%		5,977		2.2	%
Total	$	240,359		100.0	%	$	266,560		100.0	%

The following shows those tenants that represented 10% or more of our total revenues for the three and six months ended June 30, 2025 and 2024:


	For the Three Months Ended June 30,
	2025					2024
Operators	Total Revenues		Percentage of Total Revenues			Total Revenues		Percentage of Total Revenues
Circle	$	53,725		22.4	%	$	50,555		19.0	%
Priory		26,456		11.0	%		24,633		9.2	%
Other operators		160,178		66.6	%		191,372		71.8	%
Total	$	240,359		100.0	%	$	266,560		100.0	%