During the first quarter of 2026, we closed on the acquisition of one property in Germany for approximately €23 million (along with real estate transfer tax) leased to Median Kliniken S.à r.l ("MEDIAN") pursuant to a long-term lease with annual inflation-based escalators.

In the first quarter of 2025, we funded approximately $39 million to Steward Health Care System's ("Steward") secured lender in order to obtain control over certain real estate assets for use by our new tenants.

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


Property	Commitment		Costs Paid as of March 31, 2026		Cost Remaining
IMED Hospitales ("IMED") (Spain)	$	65,952	$	49,820	$	16,132
IMED (Spain)		42,780		42,594		186
HSA (Florida)		43,500		4,421		39,079
NOR (California)		24,333		289		24,044
Other (Various)		554		210		344
	$	177,119	$	97,334	$	79,785

We have two other development projects ongoing in Texas (Texarkana development) and Massachusetts (Norwood redevelopment). These are not highlighted above; however, we have completed 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 March 31, 2026, we estimate that the cost 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 $5 million and $10 million.

During the first quarter of 2026, we completed construction and began recording rental income on a $10.7 million capital addition project at an Avondale, Arizona facility leased to Lifepoint Behavioral.

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

During the first three months of 2026, we completed the sale of two facilities for total proceeds of approximately $31 million, of which $12 million was received in advance of the sale in the first quarter of 2025, resulting in a loss on real estate of $0.8 million.

During the first three months of 2025, we completed the sale of two facilities and an ancillary facility for approximately $20 million, resulting in a gain on real estate of $8.1 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 March 31, 2026, we account for all of these leases as operating leases, except where GAAP requires alternative classification, including leases on certain Ernest Health, Inc. ("Ernest") 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 March 31, 2026, 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.

In August 2019, we invested in a portfolio of 14 acute care hospitals in three states (California, Pennsylvania, and Connecticut) operated by and master leased to or mortgaged by Prospect Medical Holdings, Inc. ("Prospect") for a combined investment of approximately $1.6 billion.

On May 23, 2023, Prospect completed a recapitalization plan, which included receiving $375 million in new financing from several lenders. Along with this new capital from third-party lenders, we agreed to the following restructuring of our then $1.7 billion investment including: a) maintaining the master lease covering six California hospitals without any changes in rental rates or escalator provisions, b) transitioning the Pennsylvania properties back to Prospect in return for a $150 million first lien mortgage, c) providing up to $75 million in a loan secured by a first lien on Prospect's accounts receivable and certain other assets, and d) obtaining a non-controlling ownership interest in PHP Holdings in exchange for unpaid rent and interest, among other things.

Prospect filed for Chapter 11 bankruptcy on January 11, 2025 with the United States Bankruptcy Court for the Northern District of Texas. On March 20, 2025, the bankruptcy court approved a global settlement (including a recovery waterfall) between us, Prospect, and other stakeholders. Due to the bankruptcy, 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 2025 and in accordance with the global settlement and the estimated recovery waterfall, we recorded approximately $140 million of additional impairment charges (including $55 million of impairment charges in the 2025 first quarter that further reduced our investment in the Connecticut properties). In determining the 2025 first quarter impairment charges, we compared the carrying value of our investments to our 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 as applicable) and applying the priority of claims associated with the bankruptcy. In estimating the fair value of the California, Pennsylvania, and 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 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%).

In 2025 and through the first quarter of 2026, all the Connecticut and Pennsylvania properties (along with our investment in PHP Holdings discussed below) have been sold, and Prospect's bankruptcy plan has been deemed effective.

During the 2026 first quarter, we received approximately $45 million from these asset sales and collection of Connecticut accounts receivable that serve as collateral for our remaining investment, while funding $45 million of the $70 million bankruptcy court approved funding commitment, as disclosed in our 2025 Annual Report. At March 31, 2026, our remaining investment in Prospect is approximately $61 million. In addition, we expect to fund the remaining $25 million of the $70 million commitment in the 2026 second quarter. We believe this total investment is fully recoverable from the collection of Connecticut accounts receivable (of which we received $9 million in April 2026) and proceeds from litigation and other causes of action, the ultimate outcome and timing of which are uncertain.

In December 2025, we re-leased the six California properties to NOR as a result of their successful bid to acquire the hospital operations. Terms of the lease include an initial annualized rent almost identical to the previous rent amount due from Prospect in 2025, annual inflation-based escalators starting in the 2027 first quarter, and an initial fixed term of 15 years. All rent is to be deferred for six months (until mid-June 2026), 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 are accounting for rent revenue associated with the NOR lease on the cash basis. We have committed to fund approximately $24 million for a new emergency department at one facility and up to $60 million in seismic improvements that may be required by California regulators over the next four years, both of which will increase the lease base and result in additional rent.

In regard to our investment in PHP Holdings, we accounted for this investment using the fair value option method. In 2025, we recorded an approximate $147 million negative fair value adjustment, including $18 million in the 2025 first quarter. 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 entered into agreements in September 2024 with six operators (HSA, Honor Health, Insight Health ("Insight"), Quorum, College Health, and Tenor Health ("Tenor")) to lease 18 of the 23 former Steward-operated facilities. Since then, we have sold three of the facilities (including one in the 2026 first quarter) at a net gain. These leases included a rent ramp up period. In the 2025 first quarter, cash rents received from these operators were approximately $3.4 million, ramping up to $11 million in the 2025 second quarter, approximately $12 million in the 2025 third quarter, $26.1 million in the 2025 fourth quarter (including approximately $4 million of September 2025 rent from a cash-basis tenant that was received on October 1, 2025), and $24.5 million in the first quarter of 2026. Based on these lease contracts (adjusted for the sales noted above), rent payments are to increase to approximately 79% of contractual rent by the second quarter 2026, and 100% of contractual rent starting with October 2026. As of March 31, 2026, all of these new operators have paid the rent due under their respective leases, except for cash-basis tenants Insight/Tenor who represent less than 1% of our annual revenues.

As of March 31, 2026, we have approximately $130 million in working capital and other loans related to these operators to assist in the takeover of these operations and the transition of certain services (such as revenue cycle management). These loans are generally secured by accounts receivables and/or other assets (like personal property). Approximately $3 million of working capital loans have been repaid to-date, and we impaired a portion of the loans associated with Insight/Tenor in the 2026 first quarter.

The remaining five former Steward-operated properties (with a net book value of approximately 4% of our total assets), including two developments (see "Development and Capital Addition Activities" above), are in various stages of being re-tenanted or sold.

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 quarters ended March 31, 2026 and 2025, our share of the Utah partnership's income included a favorable fair value adjustment of approximately $7.2 million (primarily related to an unrealized gain on investments in real estate) and $6.0 million (primarily related to its interest rate swap), respectively.

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 Aevis, the international joint venture, and PHP Holdings through the first half of 2025), we recorded approximately $2 million in unfavorable non-cash fair value adjustments during the first three months of 2026; whereas, this was a $30 million unfavorable non-cash fair value adjustment for the same period of 2025.

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.

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 March 31, 2026					As of December 31, 2025
Operators	Total Assets (1)		Percentage of Total Assets			Total Assets (1)		Percentage of Total Assets
Circle Health Ltd ("Circle")	$	2,069,009		14.0	%	$	2,121,848		14.1	%
Priory		1,273,725		8.6	%		1,301,888		8.7	%
HSA		1,209,459		8.2	%		1,200,996		8.0	%
Swiss Medical Network		868,978		5.9	%		873,703		5.8	%
Lifepoint Behavioral		806,344		5.5	%		809,492		5.4	%
Other operators		6,624,284		44.9	%		6,688,287		44.6	%
Other assets		1,910,878		12.9	%		2,005,561		13.4	%
Total	$	14,762,677		100.0	%	$	15,001,775		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 March 31, 2026					As of December 31, 2025
U.S. States and Other Countries	Total Assets		Percentage of Total Assets			Total Assets		Percentage of Total Assets
Texas	$	1,403,311		9.5	%	$	1,427,391		9.5	%
California		1,024,998		7.0	%		977,890		6.5	%
Florida		832,712		5.6	%		834,940		5.6	%
Arizona		329,471		2.2	%		328,873		2.2	%
Ohio		317,842		2.2	%		330,189		2.2	%
All other states		2,422,158		16.4	%		2,480,182		16.5	%
Other domestic assets		1,046,367		7.1	%		1,072,900		7.2	%
Total U.S.	$	7,376,859		50.0	%	$	7,452,365		49.7	%
United Kingdom	$	4,084,982		27.7	%	$	4,184,188		27.9	%
Switzerland		868,978		5.9	%		873,703		5.8	%
Germany		761,421		5.1	%		751,806		5.0	%
Spain		306,718		2.1	%		302,323		2.0	%
All other countries		499,208		3.4	%		504,729		3.4	%
Other international assets		864,511		5.8	%		932,661		6.2	%
Total international	$	7,385,818		50.0	%	$	7,549,410		50.3	%
Grand total	$	14,762,677		100.0	%	$	15,001,775		100.0	%

Total Assets by Facility Type (1)


	As of March 31, 2026					As of December 31, 2025
Facility Types	Total Assets		Percentage of Total Assets			Total Assets		Percentage of Total Assets
General acute care hospitals	$	8,673,783		58.8	%	$	8,769,909		58.5	%
Behavioral health facilities		2,407,964		16.3	%		2,445,418		16.3	%
Post acute care facilities		1,668,629		11.3	%		1,671,616		11.1	%
Freestanding ER/urgent care facilities		101,423		0.7	%		109,271		0.7	%
Other assets		1,910,878		12.9	%		2,005,561		13.4	%
Total	$	14,762,677		100.0	%	$	15,001,775		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 March 31, 2026.

On a revenue basis, concentration in 2026 compared to the same periods of 2025 is as follows:

Total Revenues by Geographic Location


	For the Three Months Ended March 31,
	2026					2025
Geographic Location	Total Revenues		Percentage of Total Revenues			Total Revenues		Percentage of Total Revenues
Total U.S.	$	134,861		53.5	%	$	116,840		52.2	%
United Kingdom		96,396		38.2	%		88,653		39.6	%
All other countries		20,808		8.3	%		18,306		8.2	%
Grand total	$	252,065		100.0	%	$	223,799		100.0	%

Total Revenues by Facility Type


	For the Three Months Ended March 31,
	2026					2025
Facility Types	Total Revenues		Percentage of Total Revenues			Total Revenues		Percentage of Total Revenues
General acute care hospitals	$	156,194		62.0	%	$	135,019		60.3	%
Behavioral health facilities		55,575		22.0	%		51,520		23.0	%
Post acute care facilities		38,370		15.2	%		35,256		15.8	%
Freestanding ER/urgent care facilities		1,926		0.8	%		2,004		0.9	%
Total	$	252,065		100.0	%	$	223,799		100.0	%

The following shows those tenants that represented 10% or more of our total revenues for the three months ended March 31, 2026 and 2025:


	For the Three Months Ended March 31,
	2026					2025
Operators	Total Revenues		Percentage of Total Revenues			Total Revenues		Percentage of Total Revenues
Circle	$	54,961		21.8	%	$	50,711		22.7	%
Priory		27,496		10.9	%		24,941		11.1	%
Other operators		169,608		67.3	%		148,147		66.2	%
Total	$	252,065		100.0	%	$	223,799		100.0	%