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 2025, we funded approximately $47 million to Steward Health Care System's ("Steward") secured lender to obtain control over certain real estate assets. As part of these transactions, 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 (effective March of 2025) 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.

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 September 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 $35 million and $40 million.

During the third quarter of 2025, we completed construction and began recording rental income on two projects totaling approximately $36 million, one of which is leased to Lifepoint Behavioral Health ("Lifepoint Behavioral") and the other to Surgery Partners.

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.

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 nine months of 2025, we completed the sale of five facilities (including two former Steward-operated facilities that were being leased to College Health for nominal rent) and an ancillary facility for aggregate proceeds of approximately $100 million, resulting in a gain on real estate of approximately $4 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 September 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 September 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 $600 million and $1.6 billion of charges for the three and nine months ended September 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 with the lease termination discussed above, we accelerated the amortization on the related in-place lease intangibles resulting in $115 million and $149 million of amortization expense in the three and nine months ended September 30, 2024, as 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 $10 million and $40 million for the three and nine month periods, respectively, ending September 30, 2024. In addition, rent paid by Steward to the Massachusetts joint

venture was approximately $10 million ($5 million representing our share) and $76 million ($38 million representing our share) for the three and nine months ended September 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 ("Tenor")) to lease 18 of these facilities in 2024 and early 2025. These leases included 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, and approximately $12 million in the 2025 third quarter (excluding the September rent for Healthcare Systems of America as discussed below). Based on these lease contracts (adjusted for the sale of the two properties to College Health), rent payments are to increase to approximately 58% of contractual rent by the fourth quarter of 2025, 79% of contractual rent by second quarter 2026, and 100% of contractual rent starting October 2026. As of September 30, 2025, all of these new operators have paid the rent due under their respective leases, except for cash-basis tenants Insight/Tenor who owe us approximately $1.2 million and Healthcare Systems of America, who paid their September rent of approximately $4 million on October 1, 2025 and such revenue will be recognized in the 2025 fourth quarter.

As of September 30, 2025, we have provided approximately $130 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). Except for certain information technology services, the new tenants are operating independently and no longer using the transition services as of September 30, 2025.

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 (which we account for as other financing type leases), a mortgage loan secured by hospital real estate operated by Prospect in Pennsylvania, and a $75 million asset-backed loan outstanding. In addition, in May 2023, we acquired a non-controlling ownership interest in PHP Holdings. In 2025, we funded approximately $100 million in new loans to Prospect, including approximately $90 million in the 2025 third quarter, net of repayments.

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 $110 million of additional impairment charges in 2025, including $65 million in the 2025 third quarter. In determining the 2025 impairment charges, 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 Connecticut real estate in the first and second quarters of 2025, 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 sales prices of similar properties. For the income approach, we divided the expected operating income from the property by an estimated market capitalization rate (ranging from 8.25% to 8.5%). For the third quarter of 2025, we estimated the fair value of California real estate similar to previous quarters, using an 8.5% estimated market capitalization rate from the income approach. For the 2025 third quarter, we estimated the fair value of the Pennsylvania and Connecticut real estate based on received bids for these properties.

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 (including the expected receipt of cash proceeds that we are currently projecting to be in excess of the current outstanding loans) as of September 30, 2025, in whole or in part. On November 4, 2025, we received $45 million of Yale proceeds through the recovery waterfall that will be used to reduce our outstanding loan balance.

On August 4, 2025, the bankruptcy court approved, among other things, an interim order for up to $30 million in the form of a backstop facility to cover administrative and priority claims. This possible loan advance is conditioned on other events occurring including further bankruptcy court approvals. Any funds advanced under the backstop facility will be secured by recoveries, if any, from causes of actions owned by the debtor.

We have agreed in principle to a lease agreement with NOR Healthcare Systems Corporation ("NOR") as a result of their successful bid to acquire the operations of the Prospect-operated California facilities. Terms of the lease include an initial annualized rent almost identical to the previous rent amount due from Prospect in 2025 and annual inflation-based escalators, starting in the 2027 first quarter. All rent is to be deferred for six months, and 50% of rent is to be deferred for an additional six months, after which the aggregate deferred rent will be paid over the remaining lease term. We have committed to fund up to $60 million in seismic improvements that may be required by California regulators over the next four years, which will increase the lease base and result in additional rent.

Starting January 1, 2023, we began accounting for our leases and loans to Prospect on a cash basis. We received and recorded approximately $25 million of revenue for the nine months ended September 30, 2024 on our California properties (none in the 2024 third quarter). Prospect has not made any scheduled rent or interest payments in 2025.

In regard to our investment in PHP Holdings, we accounted for this investment using the fair value option method. Each quarter, we marked such investment to fair value as more fully described in Note 8 to the condensed consolidated financial statements. In the first nine months of 2025, we recorded an approximate $147 million negative fair value adjustment (none in the 2025 third quarter), whereas this adjustment was approximately $498 million in the first nine months of 2024 ($134 million of which was recorded in the third 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. On July 1, 2025, we received $2.3 million from the sale of PHP Holdings to Astrana Health.

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 the 2024 third quarter, we terminated the lease with this tenant, resulting in the acceleration of lease intangible amortization of $22 million, and we 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 capital restructuring. The substantive terms of our latest agreement include: 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, 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 another closing, and c) entering into a new 20 year triple-net lease agreement of the remaining properties, among other things.

We received and recorded approximately $5 million and $15 million of rent as required by the amended forbearance and restructuring agreement for the three and nine month periods ended September 30, 2025, respectively. At this time, the former tenant has not completed its restructuring 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 nine months ended September 30, 2025, our share of the Utah partnership's income included a favorable fair value adjustment of approximately $13 million and $34 million, respectively, 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. In the 2025 third quarter, Germany enacted legislation that will reduce future income tax rates by 5%, which was the primary driver for a $13 million (our share) deferred income tax benefit in the period.

On October 31, 2025, we received approximately $23 million in distributions from the Swiss Medical Network joint venture.

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 nine months of 2025 ($0.7 million of which was recorded in the 2025 third quarter); whereas, this was a $739 million unfavorable non-cash fair value adjustment for the same period of 2024 ($144 million of which was recorded in the 2024 third 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 September 30,
	2025		2024
Balance at beginning of the period	$	564,796	$	538,534
Provision for credit loss, net (1)		85,111		438,154
Expected credit loss reserve written off or related to financial instruments sold, repaid, or satisfied		—		(825,548	)	(2)
Balance at end of the period	$	649,907	$	151,140


	For the Nine Months Ended September 30,
	2025		2024
Balance at beginning of the year	$	511,473	$	96,001
Provision for credit loss, net (1)		138,434		880,687
Expected credit loss reserve written off or related to financial instruments sold, repaid, or satisfied		—		(825,548	)	(2)
Balance at end of the period	$	649,907	$	151,140

(1)

The amount in 2025 is primarily related to Prospect; whereas, the amount in 2024 is primarily related to loans involving Steward. See "Leasing Operations (Lessor)" in this Note 3 for further discussion.

(2)

Includes write-offs in the third quarter of 2024 of previously reserved loans to Steward.

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 September 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")	$	2,135,280		14.3	%	$	2,026,778		14.2	%
Priory		1,306,202		8.8	%		1,233,462		8.6	%
Healthcare Systems of America		1,202,187		8.1	%		1,187,006		8.3	%
Swiss Medical Network		863,329		5.8	%		719,632		5.1	%
Lifepoint Behavioral		814,878		5.5	%		813,584		5.7	%
Other operators		6,809,539		45.5	%		6,624,256		46.3	%
Other assets		1,792,780		12.0	%		1,689,876		11.8	%
Total	$	14,924,195		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.

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


	As of September 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	$	1,429,105		9.6	%	$	1,394,296		9.8	%
California		1,032,272		6.9	%		935,470		6.4	%
Florida		838,271		5.6	%		840,876		5.9	%
Ohio		332,436		2.2	%		327,577		2.3	%
Arizona		330,494		2.2	%		379,801		2.7	%
All other states		2,548,691		17.1	%		2,636,587		18.5	%
Other domestic assets		949,691		6.4	%		951,486		6.6	%
Total U.S.	$	7,460,960		50.0	%	$	7,466,093		52.2	%
United Kingdom	$	4,204,908		28.2	%	$	3,985,672		27.9	%
Switzerland		863,328		5.8	%		719,632		5.0	%
Germany		757,239		5.1	%		672,343		4.7	%
Spain		289,878		1.9	%		247,996		1.7	%
All other countries		504,793		3.4	%		464,468		3.3	%
Other international assets		843,089		5.6	%		738,390		5.2	%
Total international	$	7,463,235		50.0	%	$	6,828,501		47.8	%
Grand total	$	14,924,195		100.0	%	$	14,294,594		100.0	%

Total Assets by Facility Type (1)


	As of September 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	$	8,912,538		59.7	%	$	8,493,331		59.4	%
Behavioral health facilities		2,456,058		16.5	%		2,376,460		16.7	%
Post acute care facilities		1,647,940		11.0	%		1,617,596		11.3	%
Freestanding ER/urgent care facilities		114,879		0.8	%		117,331		0.8	%
Other assets		1,792,780		12.0	%		1,689,876		11.8	%
Total	$	14,924,195		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 September 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 September 30,
	2025					2024
Geographic Location	Total Revenues		Percentage of Total Revenues			Total Revenues		Percentage of Total Revenues
Total U.S.	$	120,650		50.8	%	$	115,640		51.2	%
United Kingdom		95,713		40.3	%		91,776		40.6	%
All other countries		21,159		8.9	%		18,411		8.2	%
Grand total	$	237,522		100.0	%	$	225,827		100.0	%

Total Revenues by Facility Type


	For the Three Months Ended September 30,
	2025					2024
Facility Types	Total Revenues		Percentage of Total Revenues			Total Revenues		Percentage of Total Revenues
General acute care hospitals	$	144,760		60.9	%	$	139,075		61.6	%
Behavioral health facilities		54,726		23.1	%		52,799		23.4	%
Post acute care facilities		36,097		15.2	%		30,278		13.4	%
Freestanding ER/urgent care facilities		1,939		0.8	%		3,675		1.6	%
Total	$	237,522		100.0	%	$	225,827		100.0	%

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


	For the Three Months Ended September 30,
	2025					2024
Operators	Total Revenues		Percentage of Total Revenues			Total Revenues		Percentage of Total Revenues
Circle	$	54,228		22.8	%	$	52,427		23.2	%
Priory		27,481		11.6	%		25,934		11.5	%
Other operators		155,813		65.6	%		147,466		65.3	%
Total	$	237,522		100.0	%	$	225,827		100.0	%


	For the Nine Months Ended September 30,
	2025					2024
Operators	Total Revenues		Percentage of Total Revenues			Total Revenues		Percentage of Total Revenues
Circle	$	158,664		22.6	%	$	153,994		20.2	%
Priory		78,878		11.2	%		76,449		10.0	%
Other operators		464,138		66.2	%		533,260		69.8	%
Total	$	701,680		100.0	%	$	763,703		100.0	%