Chiron Real Estate Inc.
11/06/2026 | Press release | Distributed by Public on 11/06/2026 15:42
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our financial statements, including the notes to those financial statements, included elsewhere in this Quarterly Report on Form 10-Q (this "Report"). Some of the statements we make in this section are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section below entitled "Special Note Regarding Forward-Looking Statements." Certain risk factors may cause actual results, performance, or achievements to differ materially from those expressed or implied by the following discussion. For a discussion of such risk factors, see Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report"), that was filed with the U.S. Securities and Exchange Commission (the "SEC" or the "Commission") on March 2, 2026 and Item 1A. Risk Factors in this Quarterly Report on Form 10-Q. Unless otherwise indicated, all dollar amounts in the following discussion are presented in thousands.
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Special Note Regarding Forward-Looking Statements
This Report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act")). In particular, statements pertaining to our trends, liquidity, capital resources, future dividends, pending acquisitions, potential sales, the healthcare industry, the healthcare real estate markets and seniors housing opportunities, among others, contain forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology including, but not limited to, "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "estimates" or "anticipates" or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
•difficulties in identifying healthcare and seniors housing facilities to acquire (due to increased cost of capital, competition or otherwise) and completing such acquisitions;
•defaults on or non-renewal of leases by tenants;
•our ability to collect rents;
•increases in interest rates and increased operating costs;
•our seniors housing operating portfolio ("SHOP") segment may expose us to various operational risks, liabilities and claims;
•our ability to renew our management agreements with our SHOP managers on as favorable terms or at all, and our ability when necessary, to effectively and efficiently transition a SHOP community to a new manager;
•our ability to successfully re-align our portfolio in connection with the expansion of our investment strategy to focus primarily on seniors housing properties;
•macroeconomic and geopolitical factors, including, but not limited to, inflationary pressures, tariffs and international trade policies, elevated interest rates, distress in the banking sector, global supply chain disruptions and ongoing geopolitical conflicts and war;
•changes in current healthcare and healthcare real estate trends and costs, including wage inflation;
•an epidemic or pandemic (such as the COVID-19 epidemic), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it;
•our ability to satisfy the covenants in our existing and any future debt agreements;
•our ability to refinance our existing debt when needed or on favorable terms;
•decreased rental rates or increased vacancy rates, including expected rent levels on acquired properties;
•adverse economic or real estate conditions or developments, either nationally or in the markets in which our facilities are located;
•our failure to generate sufficient cash flows to service our outstanding obligations;
•our ability to satisfy our short and long-term liquidity requirements;
•our ability to deploy the debt and equity capital we raise;
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•our ability to hedge our interest rate risk;
•our ability to raise additional equity and debt capital on attractive terms or at all;
•our ability to make distributions on shares of our common and preferred stock or to redeem our preferred stock;
•expectations regarding the timing and/or completion of any acquisition;
•expectations regarding the timing and/or completion of dispositions, and the expected use of proceeds therefrom;
•our use of joint ventures may limit our returns on and our flexibility with jointly-owned investments;
•risks associated with our development joint ventures, including construction delays, cost overruns, inability to obtain necessary permits or financing, and the risk that completed developments may not achieve projected occupancy or financial returns;
•general volatility of the market price of our common and preferred stock;
•changes in our business or our investment or financing strategy;
•our dependence upon key personnel, whose continued service is not guaranteed;
•our ability to identify, hire and retain highly qualified personnel in the future;
•the degree and nature of our competition;
•changes in healthcare laws, governmental regulations, tax laws and similar matters;
•changes in expected trends in Medicare, Medicaid and commercial insurance reimbursement trends, including changes in Medicaid reimbursement rates pursuant to the One Big Beautiful Bill Act (the "OBBBA");
•competition for investment opportunities;
•our failure to achieve the anticipated benefits from, and effectively integrate, our completed or anticipated acquisitions and investments;
•our expected capital and tenant improvement expenditures;
•changes in accounting policies generally accepted in the United States of America ("GAAP");
•lack of, or insufficient amounts of, insurance;
•other factors affecting the real estate industry generally;
•changes in the tax treatment of our distributions;
•our failure to maintain our qualification as a real estate investment trust ("REIT") for U.S. federal income tax purposes;
•our ability to qualify for the safe harbor from the 100% prohibited transactions tax under the REIT rules with respect to our property dispositions; and
•limitations imposed on our business due to, and our ability to satisfy, complex rules relating to REIT qualification for U.S. federal income tax purposes.
See Item 1A. Risk Factors in our 2025 Annual Report and Item 1A. Risk Factors in this Quarterly Report on Form 10-Q for further discussion of these and other risks, as well as the risks, uncertainties and other factors discussed in this Report and identified in other documents we may file with the SEC from time to time. You should carefully consider these risks before making any investment decisions in our company. New risks and uncertainties may also emerge from time to
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time that could materially and adversely affect us. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this Report, except as required by applicable law. You should not place undue reliance on any forward-looking statements that are based on information currently available to us or the third parties making the forward-looking statements.
Overview
Chiron Real Estate Inc. (the "Company") is a Maryland corporation and internally managed REIT that owns (i) healthcare facilities leased to physician groups and regional and national healthcare systems and (ii) seniors housing communities. The Company's seniors housing portfolio includes independent living communities ("IL"), assisted living communities ("AL"), memory care communities ("MC"), and development financing investments in active adult communities. As of September 30, 2026, the Company's gross investment portfolio consisted of 81% healthcare facilities, primarily outpatient medical facilities, 17% SHOP communities, and 2% unconsolidated joint ventures and other investments.
The Company holds its facilities and conducts its operations through a Delaware limited partnership subsidiary, Chiron Real Estate LP (the "Operating Partnership"). The Company serves as the sole general partner of the Operating Partnership through a wholly owned subsidiary of the Company, Chiron Real Estate GP LLC, a Delaware limited liability company. As of September 30, 2026, the Company owned 91.2% of the outstanding common limited partnership units in the Operating Partnership ("OP Units"), with the remaining 8.8% owned by holders of long-term incentive plan units ("LTIP Units") and third-party limited partners who contributed properties or services in exchange for OP Units.
Our revenues are derived from the rental and operating expense reimbursement payments we receive from our tenants, and most of our leases are medium to long-term triple net leases with contractual rent escalation provisions. We also derive revenue from resident agreements at our SHOP communities. Our primary expenses are depreciation, interest, property operating and general and administrative expenses. We finance our acquisitions with a mixture of debt and equity primarily from our cash from operations, borrowings under our Credit Facility, and stock issuances.
In September 2025, the Company completed a one-for-five reverse stock split of its outstanding shares of common stock, with a corresponding adjustment to the outstanding partnership units of the Operating Partnership (the "Reverse Stock Split"). Unless otherwise noted, all common share and unit amounts shown herein are shown on a split-adjusted basis.
Business Overview and Strategy
Chiron Real Estate Inc. has made a strategic decision to transition its business from a healthcare real estate company to a seniors housing REIT focused on operating communities through RIDEA-compliant structures. Under a RIDEA structure, the Company participates directly in the operating results of its seniors housing communities through taxable REIT subsidiaries, recognizing both the revenues and operating expenses of the communities rather than receiving fixed lease payments from a third-party tenant. We believe this investment model provides greater long-term upside participation, deeper operational alignment with our operators, and exposure to the compelling demographic trends driving demand for high-quality seniors housing.
We are focused on investing in seniors housing communities, including IL, AL, MC, and active adult communities, in affluent, high-barrier markets with favorable supply-demand dynamics and demographic tailwinds from an aging population. Our current SHOP communities are concentrated in the Washington, D.C. metropolitan area and under the management of Greystone Communities, a leading seniors housing operator. We intend to expand our SHOP segment through acquisitions of stabilized and lease-up communities, ground-up development through joint ventures, and strategic partnerships with high-quality operators in target markets.
We have equity interests in four unconsolidated joint ventures as of September 30, 2026, each as described below under "2026 Investment Activity - Joint Ventures": (i) the IRF Joint Venture, in which we hold a 15% interest and provide asset management services following the June 2026 sale of our IRF Portfolio; (ii) the Heitman OM Joint Venture, in which we hold a 12.5% interest in a medical office portfolio controlled by Heitman; (iii) the Maple Grove Active Adult Joint Venture, in which we hold a 49% interest in a development-stage active adult community near Minneapolis, Minnesota; and (iv) the Hudson Active Adult Joint Venture, in which we hold a 49% interest in a development-stage active adult
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community near Hudson, Wisconsin. We intend to utilize the cash flows and management fees from these JVs to support our seniors housing growth strategy.
Our goals are to provide stockholders with (i) sustainable dividends supported by growing SHOP cash flows and (ii) long-term stock price appreciation driven by portfolio growth, operational improvements, and the demographic tailwinds benefiting the seniors housing sector.
Our Properties
As of September 30, 2026, we had gross investments of approximately $1.6 billion in real estate, consisting of 181 healthcare facilities, primarily outpatient medical facilities, with an aggregate of approximately 4.6 million leasable square feet, and 2 SHOP communities, with an aggregate of 292 homes.
2026 Investment Activity
Acquired Properties
On June 1, 2026, the Company completed the acquisition of The Landing Alexandria ("The Landing"), a 163-home, luxury seniors housing community located in Alexandria, Virginia, from affiliates of Silverstone Senior Living ("SSL") for a purchase price of approximately $130 million. The Landing has operated since May 2022 and offers IL, AL and MC homes.
On June 1, 2026, the Company completed the acquisition of The Riviera at Alexandria ("The Riviera"), a 129-home, luxury seniors housing community located in Alexandria, Virginia, from affiliates of SSL for a purchase price of approximately $119 million. The Riviera is a newly developed IL community that opened in March 2026 and remains in lease-up. The Company operates The Landing and The Riviera as SHOP communities and one of its TRSs has engaged an affiliate of Greystone Communities to manage the day-to-day operations of the communities. Under this structure, the Company owns the real estate and participates directly in the operating results of the communities, including revenues and operating expenses, rather than receiving fixed lease payments from a third-party tenant.
On September 1, 2026, the Company acquired a parcel of land zoned for a seniors housing community located in Reston, Virginia for a purchase price of approximately $15.4 million.
On October 1, 2026, the Company completed the acquisition of The Pinnacle North Bethesda ("The Pinnacle"), a newly constructed, 175-home luxury seniors housing community located in North Bethesda, Maryland, from an affiliate of SSL for a purchase price of approximately $173 million. The Pinnacle offers IL, AL, and MC homes, together with ground floor retail. The Company operates The Pinnacle as a SHOP community and has engaged Greystone Communities to manage the day-to-day operations of the community. The acquisition was funded using borrowings under the Company's Credit Facility.
Joint Ventures
On January 6, 2026, the Company entered into a joint venture with a developer to facilitate the development of a 132-home, active adult residential community in a suburb of Minneapolis, Minnesota (the "Maple Grove Active Adult Joint Venture"). We invested $7.1 million for a 49% equity interest in the Maple Grove Active Adult Joint Venture, with the developer retaining a 51% interest. The Maple Grove Active Adult Joint Venture entered into a construction loan with a principal balance of $31.0 million, of which $18.4 million was drawn on as of September 30, 2026. The developer is serving as the managing member of the Maple Grove Active Adult Joint Venture.
On May 13, 2026, the Company entered into a joint venture with a developer to facilitate the development of an active adult residential community near Hudson, Wisconsin (the "Hudson Active Adult Joint Venture"). The Company invested $6.7 million for a 49% equity interest, with the developer retaining a 51% interest and serving as the managing member. The Hudson Active Adult Joint Venture obtained a construction loan with a principal balance of $26.0 million, none of which was drawn on as of September 30, 2026.
On June 10, 2026, the Heitman OM Joint Venture acquired an additional medical office building located near Minneapolis, Minnesota, for a purchase price of $10.3 million, with the Company contributing its 12.5% proportionate share of the purchase price in accordance with the joint venture agreement. As of September 30, 2026, the Heitman OM
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Joint Venture has obtained two mortgage loans with an aggregate principal balance of $22.9 million, all of which was drawn as of September 30, 2026.
On June 29, 2026, the Company completed the sale of seven inpatient rehabilitation facilities ("IRFs") to a newly formed joint venture (the "IRF Joint Venture") between the Company, through its Operating Partnership, and a U.S. public pension fund (the "IRF JV Partner"). The portfolio was valued at an aggregate purchase price of $217 million and comprised approximately 456,000 square feet of space that was 100% leased with a weighted average remaining lease term of eight years. In connection with the transaction, the Company received net proceeds of $211.4 million, before funding its $16.3 million retained equity investment in the IRF Joint Venture, and recognized a gain on the sale of investment properties of $71.9 million. The IRF JV Partner acquired an 85% equity interest and controls the IRF Joint Venture through its voting interest, while the Company acquired a 15% equity interest, serves as manager of the joint venture, and continues to oversee asset management in exchange for a management fee. The IRF Joint Venture obtained a mortgage loan with a principal balance of $108.5 million, all of which was drawn as of September 30, 2026.
Real Estate Loans
On April 1, 2026, the Company originated a $3.0 million mezzanine loan secured by equity interests in an entity that owns an under-development medical facility located in Fort Myers, Florida, of which $3.0 million was drawn as of September 30, 2026. The medical facility is an on-campus outpatient surgical facility that is 100% pre-leased to an investment-grade tenant under a 15-year lease with no termination rights. The loan bears interest at a rate of 12.0% per annum, has an initial term of 24 months, and represents approximately 10% of the total project cost. In connection with the loan, the Company holds a right of first offer and right of first refusal with respect to a sale of the property, which are subject to the pre-leased tenant's corresponding rights.
On July 28, 2026, the Company originated an approximately $2.2 million mezzanine loan secured by interests in an entity that owns an under-development medical facility in Daleville, Virginia, of which $1.3 million was drawn as of September 30, 2026. The medical facility is a two-story, approximately 40,000 square foot freestanding emergency department and medical office building that is 100% pre-leased to an investment-grade regional healthcare system under a 15-year lease. The loan bears interest at 12% per annum, has an initial term of 24 months and included a 2% origination fee, with completion and repayment supported by a corporate guaranty. In connection with the loan, the Company holds a right of first offer and right of first refusal with respect to a sale of the property, which are subject to the pre-leased tenant's corresponding rights.
2026 Disposition Activity
On June 29, 2026, the Company disposed of certain properties in connection with its investment activity, including the sale of seven IRFs to the IRF Joint Venture described above under "Joint Ventures."
On September 16, 2026, the Company sold an administrative asset located in Vernon, Connecticut, receiving gross proceeds of $1.9 million, resulting in a loss on sale of investment properties of $0.3 million.
Recent Developments
White Rock
On January 20, 2026, White Rock Medical Center LLC ("White Rock"), filed for Chapter 11 bankruptcy protection under the United States Bankruptcy Code. At the time of its bankruptcy filing, White Rock operated two hospitals in Texas, including the White Rock Medical Center in Dallas, Texas, an acute-care hospital owned by the Company where White Rock is the sole tenant and has been operating the hospital since October 2023. There are 12 years remaining on this lease. According to the filed bankruptcy documents, the primary reason for the bankruptcy is a dispute with the former operator of the facility related to amounts due to the former operator. Accordingly, White Rock plans to (i) restructure indebtedness related to its purchase of the hospital operations at the White Rock Medical Center and a related transition services agreement and (ii) sell its hospital operations to a third party, with the goal of stabilizing its operations and maximizing value to its stakeholders. As a means of assisting White Rock in its stabilization efforts, the Company has funded annual property tax obligations due under the lease and accepted reduced monthly payments. On September 21, 2026, the bankruptcy court approved White Rock's plan of reorganization, which included affirming our leases. In connection with the lease affirmations, the Company agreed to a cure amount of approximately $2.6 million, payable over time from available cash generated by hospital operations, with any remaining balance due no later than five years
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following the effective date.
Severance and Transition Costs
During August 2026, due to our strategic shift towards SHOP communities, we entered into a separation agreement with one of our executives. For the three and nine months ended September 30, 2026, the Company recognized approximately $2.0 million for costs related to the separation agreement and transition, including $1.2 million related to current and future cash payments and $0.8 million in accelerated stock-based compensation expense. Severance and transition related costs are included in "General and administrative" expense in the Company's Condensed Consolidated Statements of Operations. As of September 30, 2026, the remaining accrued liability for future cash payments of $1.0 million was included in "Accounts payable and accrued expenses" in the Company's Condensed Consolidated Balance Sheets.
Trends Which May Influence Our Results of Operations
We believe the following trends may positively impact our results of operations:
•An aging population. The general aging of the population, driven by the large baby boomer generation (born 1946-1964) and increases in life expectancy due to advances in medical technology and services, continues to be a key driver of demand for seniors housing communities. According to the most recent U.S. Census Bureau estimates, the population age 65 and older grew by over a third during the past decade, including approximately 3.1% from 2023 to 2024, and is projected to continue growing at a rate that exceeds that of the overall U.S. population. We believe this demographic shift will support sustained demand for IL, AL, MC, and active adult communities of the type in which we invest.
•Seniors housing supply and demand dynamics. New seniors housing supply has remained constrained relative to historical levels, as elevated construction costs, tighter financing conditions, and longer entitlement timelines have limited new development activity in many markets. At the same time, demand continues to benefit from demographic tailwinds, improving consumer sentiment, and the ongoing release of pent-up demand following the COVID-19 pandemic. As a result, occupancy rates across many markets have continued to recover, and operators have generally demonstrated improving pricing power, including the ability to increase resident fees and reduce move-in concessions. We believe well-located seniors housing communities operated by experienced operators with favorable payer and resident mix are well-positioned to benefit from these dynamics.
•Housing market conditions supporting senior move-ins. Many prospective residents of seniors housing communities fund a portion of their move-in and monthly costs through the proceeds of a primary home sale. Sustained home values and transaction activity in our target markets, particularly the Washington, D.C. metropolitan area, can support affordability and move-in velocity at our communities.
•A continuing shift towards outpatient care. According to the American Hospital Association, patients are demanding more outpatient operations. We believe this shift in patient preference from inpatient to outpatient facilities will benefit our tenants as most of our properties consist of outpatient facilities.
•Physician practice group and hospital consolidation. We believe the trend towards physician group consolidation will serve to strengthen the credit quality of our tenants if our tenants merge or are consolidated with larger health systems.
We believe the following trends may negatively impact our results of operations:
•Interest rates remain at elevated levels. During September 2026, the U.S. Federal Reserve (the "Fed") increased the Federal Funds Rate, bringing the target range to 3.75% to 4.00%, where it remained through September 30, 2026. As of September 30, 2026 the 10-year U.S. Treasury yield was 5.29% and one-month term SOFR was 3.91%.
Although interest rates declined during 2025, they remain significantly higher than in 2021 and continue to result in elevated interest expense with respect to our unhedged floating-rate indebtedness. The current
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interest rate environment also increases our cost of capital for acquisitions and development investments and may compress investment spreads.
•Labor and wage pressure. Labor costs represent a significant component of the operating expenses of our SHOP communities. AL wage rates continued to rise in 2025 across nursing and direct-care roles. The Assisted Living Salary & Benefits Report cited by Senior Housing News reported 2025 hourly wage increases of approximately 2.96% for registered nurses, 2.77% for certified nursing assistants, 2.98% for resident assistants, and 3.15% for medication aides, with overall AL turnover of 34.53% and resident assistant and personal care aide turnover above 40%. Wage inflation and high turnover rates increase our operators' labor costs and could negatively affect the operating margins of our SHOP communities if not offset by corresponding increases in resident fees and occupancy.
•Medicaid reimbursement policy changes. Medicaid is a significant source of funding for AL, MC, and other seniors housing services in many states. In 2025, the U.S. Congress enacted the OBBBA, which included provisions that could reduce federal Medicaid funding to certain states. If states respond to reduced federal support by lowering Medicaid reimbursement rates, restricting eligibility, or reducing covered benefits, the operating results of our SHOP communities that serve Medicaid-eligible residents could be negatively affected. Additionally, changes in third-party reimbursement policies by Medicare, commercial insurers, and managed care organizations continue to represent a source of uncertainty for healthcare service providers and could indirectly affect demand for and the financial performance of our communities.
•Macroeconomic conditions, inflation, and tariffs. Broader macroeconomic conditions, including elevated inflation, tariffs and international trade policies, global supply chain disruptions, and geopolitical conflicts, could adversely affect our business. Tariffs on imported building materials, appliances, and equipment have contributed to cost inflation for capital expenditure and renovation projects at seniors housing communities and may increase our development costs. Insurance costs, including property, casualty, and general liability coverage, remain elevated across the seniors housing sector, creating additional margin pressure at our SHOP communities. If inflationary pressures persist, our operators may be unable to fully offset cost increases through resident fee increases, which could negatively affect our SHOP segment's net operating income.
Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires our management to use judgment in the application of accounting policies, including making estimates and assumptions. We base estimates on the best information available to us at the time, our experience and on various other assumptions believed to be reasonable under the circumstances. These estimates affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our financial statements. From time to time, we re-evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Please refer to our 2025 Annual Report for further information regarding the critical accounting policies that affect our more significant estimates and judgments used in the preparation of our condensed consolidated financial statements included in Part I, Item 1 of this Report.
During the nine months ended September 30, 2026, the following estimates have become significant or have changed materially from those described in our 2025 Annual Report as a result of our strategic transition to seniors housing:
•SHOP Revenue Recognition and Collectability of Resident Receivables. Beginning in the second quarter of 2026, we recognize resident fees and services revenue at our SHOP communities in accordance with ASC Topic 606. Revenue is recognized only to the extent that collection is probable. This assessment requires judgment regarding payment history, the resident's or responsible party's ability to satisfy contractual obligations, the value of underlying deposits or collateral, and current economic conditions. Resident receivables are recorded net of an allowance for expected credit losses estimated in accordance with ASC Topic 326, using a current expected credit loss methodology. Because our first SHOP communities were acquired in 2026 and have limited operating history under our ownership, our estimates of collectability and credit losses are based on the operators' historical
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experience, payor mix, and community-level conditions rather than our own seasoned portfolio data. As the portfolio matures, these estimates may change.
Segment Results
Beginning June 1, 2026, we operate through two reportable segments: Healthcare Real Estate and SHOP. Healthcare Real Estate continues to represent the majority of our revenues and Segment NOI. The SHOP segment was established with the acquisition of The Landing and The Riviera on June 1, 2026, and the three months ended September 30, 2026 represents the first full quarter of SHOP operations.
For the three months ended September 30, 2026, Healthcare Real Estate segment total revenues were $34,096, property-level operating expenses were $8,592, and Segment NOI was $25,504. For the nine months ended September 30, 2026, Healthcare Real Estate segment total revenues were $110,066, property-level operating expenses were $26,301, and Segment NOI was $83,765. Compared to the same periods in 2025, total revenues and Segment NOI decreased modestly, primarily driven by our dispositions activity.
For the three months ended September 30, 2026, SHOP segment total revenues were $6,239, property-level operating expenses were $5,543, and Segment NOI was $696. For the nine months ended September 30, 2026, SHOP segment total revenues were $8,080, property-level operating expenses were $7,118, and Segment NOI was $962. The 2025 comparative periods reflect no SHOP activity. SHOP revenues consist entirely of resident fees and services. Properties operated by Greystone Communities represented 100% of SHOP revenues for both periods. Our SHOP communities are currently concentrated in the Washington, D.C. metropolitan area; and our results are therefore subject to economic, regulatory, and competitive conditions specific to that market.
We expect SHOP to become a more significant component of our results as our communities continue to stabilize and increase occupancy and as we execute on our seniors housing acquisition and development strategy.
Consolidated Results of Operations
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
| Three Months Ended September 30, | ||||||||||||||||||||
| 2026 | 2025 | $ Change | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Revenue | ||||||||||||||||||||
| Rental revenue | $ | 33,515 | $ | 37,036 | $ | (3,521) | ||||||||||||||
| Resident fees and services | 6,239 | - | 6,239 | |||||||||||||||||
| Other income | 581 | 193 | 388 | |||||||||||||||||
| Total revenue | 40,335 | 37,229 | 3,106 | |||||||||||||||||
| Expenses | ||||||||||||||||||||
| General and administrative | 7,704 | 4,860 | 2,844 | |||||||||||||||||
| Operating expenses | 14,135 | 8,224 | 5,911 | |||||||||||||||||
| Depreciation expense | 11,025 | 11,213 | (188) | |||||||||||||||||
| Amortization expense | 5,144 | 3,795 | 1,349 | |||||||||||||||||
| Interest expense | 8,308 | 8,175 | 133 | |||||||||||||||||
| Total expenses | 46,316 | 36,267 | 10,049 | |||||||||||||||||
| Income before other (expense) income | (5,981) | 962 | (6,943) | |||||||||||||||||
| (Loss) gain on sale of investment properties | (259) | 294 | (553) | |||||||||||||||||
| Impairment of investment property | - | (6,281) | 6,281 | |||||||||||||||||
| Equity income (loss) from unconsolidated joint ventures | 505 | (33) | 538 | |||||||||||||||||
| Net loss | $ | (5,735) | $ | (5,058) | $ | (677) | ||||||||||||||
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Revenue
Total Revenue
Total revenue for the three months ended September 30, 2026 was $40.3 million, compared to $37.2 million for the same period in 2025, representing an increase of $3.1 million. The increase was primarily driven by $6.2 million of resident fees and services of The Landing and The Riviera, as well as $1.5 million of growth within our existing portfolio. These increases were partially offset by a $4.6 million decrease attributable to dispositions completed during 2026 and 2025. Within total revenue, $5.9 million was recognized from net lease expense recoveries during the three months ended September 30, 2026, compared to $5.2 million for the same period in 2025.
Expenses
General and Administrative
General and administrative expenses for the three months ended September 30, 2026 were $7.7 million, compared to $4.9 million for the same period in 2025, an increase of $2.8 million. The increase was primarily driven by $2.0 million of severance and transition related expenses, including $1.2 million related to current and future cash payments and $0.8 million in accelerated stock-based compensation expense, as well as $0.6 million of additional employee compensation costs, all of which were associated with the Company's strategic transition toward SHOP communities.
Operating Expenses
Operating expenses for the three months ended September 30, 2026 were $14.1 million, compared to $8.2 million for the same period in 2025, an increase of $5.9 million. The increase was primarily attributable to $5.5 million of SHOP operating expenses related to The Landing and The Riviera, and a $0.7 million increase in our existing portfolio driven by higher property-level costs year-over-year. These increases were partially offset by $0.3 million attributable to disposition activity completed during 2026 and 2025. Of the total operating expenses, $5.9 million were recoverable property operating expenses incurred during the three months ended September 30, 2026, compared to $5.2 million for the same period in 2025.
Depreciation Expense
Depreciation expense for the three months ended September 30, 2026 was $11.0 million, compared to $11.2 million for the same period in 2025, a decrease of $0.2 million. The decrease was primarily attributable to $1.3 million related to dispositions completed during 2026 and 2025, partially offset by $1.1 million of depreciation expense from our 2026 acquisitions.
Amortization Expense
Amortization expense for the three months ended September 30, 2026 was $5.1 million, compared to $3.8 million for the same period in 2025, an increase of $1.3 million. The increase was primarily attributable to $1.8 million of SHOP amortization expense related to The Landing and The Riviera. These increases were partially offset by $0.3 million of amortization expense decreases in our existing portfolio, and $0.2 million due to the impact of dispositions completed during 2026 and 2025.
Interest Expense
Interest expense for the three months ended September 30, 2026 was $8.3 million, compared to $8.2 million for the same period in 2025, an increase of $0.1 million. The increase was partially driven by higher interest rates resulting from the expiration in April 2026 of the prior interest rate swaps on our Term Loan A and the replacement of those swaps with new interest rate swaps on the Term Loan A tranches that fix the SOFR component of the applicable interest rate at higher rates than the prior swaps.
The weighted average interest rate of our debt for the three months ended September 30, 2026 was 4.54% compared to 4.12% for the same period in 2025. Additionally, the weighted average interest rate and term of our debt was 4.51% and 3.4 years, respectively, at September 30, 2026, compared to 4.06% and 1.3 years, respectively, at September 30, 2025.
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Income Before Other (Expense) Income
Income before other (expense) income for the three months ended September 30, 2026 was a loss of $6.0 million, compared to income of $1.0 million for the same period in 2025.
(Loss) Gain on Sale of Investment Properties
During the three months ended September 30, 2026, we completed one disposition recognizing a loss on sale of investment properties of $0.3 million. During the three months ended September 30, 2025, we completed two dispositions recognizing a gain on sale of investment properties of $0.3 million.
Impairment of Investment Property
We did not recognize any impairment of investment properties during the three months ended September 30, 2026. In August 2025, we entered into an agreement to sell our facility located in Aurora, Illinois. We recognized an impairment loss of $6.3 million during the three months ended September 30, 2025 to reduce the carrying value of the asset to its fair value, which was determined to be the contractual sales price less commissions and fees. The sale of this facility was completed in September 2025.
Equity Income (Loss) from Unconsolidated Joint Ventures
Equity Income (Loss) from Unconsolidated Joint Ventures for the three months ended September 30, 2026 was $505 thousand of income, compared to a loss of $33 thousand for the same period in 2025.
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | $ Change | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Revenue | |||||||||||||||||
| Rental revenue | $ | 108,596 | $ | 109,510 | $ | (914) | |||||||||||
| Resident fees and services | 8,080 | - | 8,080 | ||||||||||||||
| Other income | 1,470 | 306 | 1,164 | ||||||||||||||
| Total revenue | 118,146 | 109,816 | 8,330 | ||||||||||||||
| Expenses | |||||||||||||||||
| General and administrative | 18,014 | 14,505 | 3,509 | ||||||||||||||
| Operating expenses | 33,419 | 24,025 | 9,394 | ||||||||||||||
| Depreciation expense | 33,555 | 32,827 | 728 | ||||||||||||||
| Amortization expense | 12,717 | 11,299 | 1,418 | ||||||||||||||
| Interest expense | 24,347 | 23,351 | 996 | ||||||||||||||
| Total expenses | 122,052 | 106,007 | 16,045 | ||||||||||||||
| Income before other (expense) income | (3,906) | 3,809 | (7,715) | ||||||||||||||
| Gain on sale of investment properties | 71,622 | 1,859 | 69,763 | ||||||||||||||
| Impairment of investment property | - | (6,281) | 6,281 | ||||||||||||||
| Equity income (loss) from unconsolidated joint ventures | 484 | (123) | 607 | ||||||||||||||
| Net income (loss) | $ | 68,200 | $ | (736) | $ | 68,936 | |||||||||||
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Revenue
Total Revenue
Total revenue for the nine months ended September 30, 2026 was $118.1 million, compared to $109.8 million for the same period in 2025, representing an increase of $8.3 million. The increase was primarily driven by $8.1 million of resident fees and services recognized during the four-month period in which we owned The Landing and The Riviera, as well as $2.3 million of incremental revenue from 2025 acquisitions reflecting a full nine months of ownership in 2026. These increases were further supported by $4.1 million of growth within our existing portfolio. These increases were partially offset by a $4.4 million decrease attributable to dispositions completed during 2026 and a $1.7 million decrease related to dispositions completed in 2025. Within total revenue, $17.8 million was recognized from net lease expense recoveries during the nine months ended September 30, 2026, compared to $15.8 million for the same period in 2025.
Expenses
General and Administrative
General and administrative expenses for the nine months ended September 30, 2026 were $18.0 million, compared to $14.5 million for the same period in 2025, an increase of $3.5 million. The increase was primarily driven by $2.0 million of severance and transition related expenses, including $1.2 million related to current and future cash payments and $0.8 million in accelerated stock-based compensation expense, as well as $1.1 million of additional non-cash LTIP compensation expense and $0.6 million of additional employee compensation costs, all of which were associated with the Company's strategic transition toward SHOP communities.
Operating Expenses
Operating expenses for the nine months ended September 30, 2026 were $33.4 million, compared to $24.0 million for the same period in 2025, an increase of $9.4 million. The increase was primarily attributable to $7.1 million of SHOP operating expenses recognized during the four-month period in which we owned The Landing and The Riviera, $1.3 million of operating expenses from 2025 acquisitions, which reflect a full nine months of ownership in 2026, and a $1.7 million increase in our existing portfolio driven by higher property-level costs year-over-year. These increases were partially offset by $0.7 million attributable to disposition activity completed during 2026 and 2025. Of the total operating expenses, $17.8 million were recoverable property operating expenses incurred during the nine months ended September 30, 2026, compared to $15.8 million for the same period in 2025.
Depreciation Expense
Depreciation expense for the nine months ended September 30, 2026 was $33.6 million, compared to $32.8 million for the same period in 2025, an increase of $0.7 million. The increase was primarily attributable to $1.4 million of SHOP depreciation expense recognized during the four-month period in which we owned The Landing and The Riviera, and $1.2 million of depreciation expense from acquisitions completed during the nine months ended September 30, 2025, reflecting a full nine months of ownership in 2026. These increases were partially offset by $1.9 million attributable to dispositions completed during 2026 and 2025.
Amortization Expense
Amortization expense for the nine months ended September 30, 2026 was $12.7 million, compared to $11.3 million for the same period in 2025, an increase of $1.4 million. The increase was primarily attributable to $1.9 million of SHOP amortization expense recognized during the four-month period in which we owned The Landing and The Riviera, and $0.7 million of amortization expense from acquisitions completed during the nine months ended September 30, 2025, reflecting a full nine months of ownership in 2026. These increases were partially offset by $0.7 million of amortization expense decreases in our existing portfolio, and $0.5 million due to the impact of dispositions completed during 2026 and 2025.
Interest Expense
Interest expense for the nine months ended September 30, 2026 was $24.3 million, compared to $23.4 million for the same period in 2025, an increase of $1.0 million. The increase was partially driven by higher interest rates resulting
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from the expiration in April 2026 of the prior interest rate swaps on our Term Loan A and the replacement of those swaps with new interest rate swaps on the Term Loan A tranches that fixed the SOFR component of the applicable interest rate at higher rates than the prior swaps.
The weighted average interest rate of our debt for the nine months ended September 30, 2026 was 4.20% compared to 4.00% for the same period in 2025. Additionally, the weighted average interest rate and term of our debt was 4.51% and 3.4 years, respectively, at September 30, 2026 compared to 4.06% and 1.3 years, respectively, at September 30, 2025.
Income Before Other (Expense) Income
Income before other (expense) income for the nine months ended September 30, 2026 was a loss of $3.9 million, compared to income of $3.8 million for the same period in 2025.
Gain on Sale of Investment Properties
During the nine months ended September 30, 2026, we completed eight dispositions, seven of which were sold in connection with the establishment of the IRF Joint Venture, and recognized a net gain on sale of investment properties of $71.6 million. During the nine months ended September 30, 2025, we completed five dispositions and recognized a net gain on sale of investment properties of $1.9 million.
Impairment of Investment Property
We did not recognize any impairment of investment properties during the nine months ended September 30, 2026. In August 2025, we entered into an agreement to sell our facility located in Aurora, Illinois. We recognized an impairment loss of $6.3 million during the nine months ended September 30, 2025 to reduce the carrying value of the asset to its fair value, which was determined to be the contractual sales price less commissions and fees. The sale of this facility was completed in September 2025.
Equity Income (Loss) from Unconsolidated Joint Ventures
Equity Income (Loss) from Unconsolidated Joint Ventures for the nine months ended September 30, 2026 was $0.5 million of income, compared to a loss of $0.1 million for the same period in 2025.
Cash Flow Information
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | $ Change | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Net cash provided by operating activities | $ | 49,271 | $ | 51,977 | $ | (2,706) | |||||||||||
| Net cash used in investing activities | (109,087) | (67,152) | (41,935) | ||||||||||||||
| Net cash provided by financing activities | 63,825 | 16,073 | 47,752 | ||||||||||||||
| Net increase in cash and cash equivalents and restricted cash | $ | 4,009 | $ | 898 | $ | 3,111 | |||||||||||
Net cash provided by operating activities for the nine months ended September 30, 2026 was $49.3 million, compared to $52.0 million for the same period in 2025. Net cash provided by operating activities decreased primarily due to the impact of our 2026 and 2025 acquisitions and dispositions.
Net cash used in investing activities for the nine months ended September 30, 2026 was $109.1 million, compared to $67.2 million for the same period in 2025. Net cash used in investing activities increased primarily due to higher net acquisition activity in 2026 compared to 2025.
Net cash provided by financing activities for the nine months ended September 30, 2026 was $63.8 million, compared to $16.1 million for the same period in 2025. Net cash provided by financing activities increased primarily due to higher net proceeds received from preferred stock offerings. The increases were partially offset by net repayments on our
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Credit Facility, and lower dividends paid to common and preferred stockholders as well as holders of OP Units and LTIP Units.
Non-GAAP Financial Measures
Management considers certain non-GAAP financial measures to be useful supplemental measures of the Company's operating performance. A non-GAAP financial measure is generally defined as one that purports to measure financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable measure determined in accordance with GAAP. The Company reports non-GAAP financial measures because these measures are observed by management to also be among the most predominant measures used by the REIT industry and by industry analysts to evaluate REITs. For these reasons, management deems it appropriate to disclose and discuss these non-GAAP financial measures. Set forth below are descriptions of the non-GAAP financial measures management considers relevant to the Company's business and useful to investors, as well as reconciliations of those measures to the most directly comparable GAAP financial measure.
The non-GAAP financial measures presented herein are not necessarily identical to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. These measures should not be considered as alternatives to net income, as indicators of the Company's financial performance, or as alternatives to cash flow from operating activities as measures of the Company's liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of the Company's needs. Management believes that in order to facilitate a clear understanding of the Company's historical consolidated operating results, these measures should be examined in conjunction with net income and cash flows from operations as presented in the Condensed Consolidated Financial Statements and other financial data included elsewhere in this Report.
Funds from Operations, Core Funds from Operations, and Funds Available for Distribution
Funds from operations attributable to common stockholders and noncontrolling interest ("FFO"), core FFO attributable to common stockholders and noncontrolling interest ("Core FFO"), and funds available for distribution attributable to common stockholders and noncontrolling interest ("FAD") are non-GAAP financial measures within the meaning of the rules of the SEC. The Company considers FFO, Core FFO, and FAD to be important supplemental measures of its operating performance and believes FFO is frequently used by securities analysts, investors, and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results.
In accordance with the National Association of Real Estate Investment Trusts' ("NAREIT") definition, FFO means net income or loss computed in accordance with GAAP before noncontrolling interests of holders of OP Units and LTIP Units, less preferred stock dividends, plus real estate-related depreciation and amortization (excluding amortization of debt issuance costs and the amortization of above and below market leases), adjustments for unconsolidated partnerships and joint ventures, excluding gains (or losses) from sales of investment properties and extraordinary items, investment property impairment losses, to reflect FFO on the same basis. Because FFO excludes real estate-related depreciation and amortization (other than amortization of debt issuance costs and above and below market lease amortization expense), the Company believes that FFO provides a performance measure that, when compared period-over-period, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from the closest GAAP measurement, net income or loss.
Core FFO is a non-GAAP measure used by many investors and analysts to measure a real estate company's operating performance by removing the effect of items that do not reflect ongoing property operations. Management calculates Core FFO by modifying the NAREIT computation of FFO by adjusting it for certain cash and non-cash items and certain recurring and non-recurring items. For the Company, these items include amortization of above and below market leases, straight line deferred rental revenue, stock-based compensation expense, amortization of debt issuance costs, severance and transition related expenses, reverse stock split expense, and other adjustments related to unconsolidated joint ventures.
We calculate FAD by subtracting from Core FFO capital expenditures, which includes tenant improvements, leasing commissions, and building capital. Management believes FAD is useful in analyzing the portion of cash flow that is available for distribution to stockholders and unitholders. Investors, analysts and the Company utilize FAD as an indicator of common dividend potential.
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Management believes that reporting Core FFO in addition to FFO and FAD is a useful supplemental measure for the investment community to use when evaluating the operating performance of the Company on a comparative basis.
A reconciliation of net income to FFO and Core FFO and FAD for the three and nine months ended September 30, 2026 and 2025 is as follows. All per share, per share and unit, and weighted average share and unit amounts have been adjusted to reflect the impact of the Reverse Stock Split.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (unaudited and in thousands except per share and unit amounts) | |||||||||||||||||||||||
| Net (loss) income | $ | (5,735) | $ | (5,058) | $ | 68,200 | $ | (736) | |||||||||||||||
| Less: Preferred stock dividends | (3,980) | (1,455) | (9,435) | (4,366) | |||||||||||||||||||
| Depreciation and amortization expense | 16,145 | 14,983 | 46,198 | 44,055 | |||||||||||||||||||
| Depreciation and amortization expense from unconsolidated joint ventures | 591 | 73 | 737 | 195 | |||||||||||||||||||
| Loss (gain) on sale of investment properties | 259 | (294) | (71,622) | (1,859) | |||||||||||||||||||
| Impairment of investment property | - | 6,281 | - | 6,281 | |||||||||||||||||||
| FFO attributable to common stockholders and noncontrolling interest | $ | 7,280 | $ | 14,530 | $ | 34,078 | $ | 43,570 | |||||||||||||||
| Amortization of above (below) market leases, net | 100 | 113 | 396 | 505 | |||||||||||||||||||
| Straight line deferred rental revenue | (108) | (332) | (190) | (868) | |||||||||||||||||||
| Stock-based compensation expense | 1,642 | 1,207 | 4,249 | 3,086 | |||||||||||||||||||
| Amortization of debt issuance costs | 657 | 554 | 2,171 | 1,672 | |||||||||||||||||||
|
Severance and transition related expenses(1)
|
1,993 | - | 1,993 | 671 | |||||||||||||||||||
| Reverse stock split expense | - | 170 | - | 170 | |||||||||||||||||||
| Other adjustments from unconsolidated joint ventures | (704) | - | (721) | 51 | |||||||||||||||||||
| Core FFO attributable to common stockholders and noncontrolling interest | $ | 10,860 | $ | 16,242 | $ | 41,976 | $ | 48,857 | |||||||||||||||
| Net (loss) income attributable to common stockholders per share - basic and diluted | $ | (0.67) | $ | (0.45) | $ | 4.06 | $ | (0.35) | |||||||||||||||
| FFO attributable to common stockholders and noncontrolling interest per share and unit | $ | 0.50 | $ | 1.00 | $ | 2.36 | $ | 3.00 | |||||||||||||||
| Core FFO attributable to common stockholders and noncontrolling interest per share and unit | $ | 0.75 | $ | 1.12 | $ | 2.90 | $ | 3.37 | |||||||||||||||
| Weighted Average Shares and Units Outstanding - basic and diluted | 14,506 | 14,554 | 14,467 | 14,512 | |||||||||||||||||||
| Weighted Average Shares and Units Outstanding: | |||||||||||||||||||||||
| Weighted Average Common Shares | 13,240 | 13,393 | 13,237 | 13,381 | |||||||||||||||||||
| Weighted Average OP Units | 441 | 447 | 443 | 448 | |||||||||||||||||||
| Weighted Average LTIP Units | 825 | 714 | 787 | 683 | |||||||||||||||||||
| Weighted Average Shares and Units Outstanding - basic and diluted | 14,506 | 14,554 | 14,467 | 14,512 | |||||||||||||||||||
| Core FFO attributable to common stockholders and noncontrolling interest | $ | 10,860 | $ | 16,242 | $ | 41,976 | $ | 48,857 | |||||||||||||||
| FAD capital expenditures | (3,728) | (4,420) | (9,820) | (9,669) | |||||||||||||||||||
| FAD attributable to common stockholders and noncontrolling interest | $ | 7,132 | $ | 11,822 | $ | 32,156 | $ | 39,188 | |||||||||||||||
(1)For the three and nine months ended September 30, 2026, includes $1.2 million of current and future cash payments and $0.8 million in accelerated stock-based compensation expense related to a separation agreement.
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Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) and Adjusted EBITDAre
The Company calculates EBITDAre in accordance with standards established by NAREIT and defines EBITDAre as net income or loss computed in accordance with GAAP plus interest expense, depreciation and amortization, adjustments for unconsolidated partnerships and joint ventures, gain or loss on the sale of investment properties, and investment property impairment losses to reflect EBITDAre on the same basis, as applicable. The Company defines Adjusted EBITDAre as EBITDAre plus non-cash stock compensation expense, non-cash intangible amortization related to above and below market leases, severance and transition related expenses, reverse stock split expense, and adjustments related to our investments in unconsolidated joint ventures. Management considers EBITDAre and Adjusted EBITDAre important measures because they provide additional information to allow management, investors, and our current and potential creditors to evaluate and compare our core operating results and our ability to service debt.
A reconciliation of net income to EBITDAre and Adjusted EBITDAre for the three and nine months ended September 30, 2026 and 2025 is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (unaudited and in thousands) | |||||||||||||||||||||||
| Net (loss) income | $ | (5,735) | $ | (5,058) | $ | 68,200 | $ | (736) | |||||||||||||||
| Interest expense | 8,308 | 8,175 | 24,347 | 23,351 | |||||||||||||||||||
| Depreciation and amortization expense | 16,169 | 15,008 | 46,272 | 44,126 | |||||||||||||||||||
| Loss (gain) on sale of investment properties | 259 | (294) | (71,622) | (1,859) | |||||||||||||||||||
| Impairment of investment property | - | 6,281 | - | 6,281 | |||||||||||||||||||
| Proportionate share of unconsolidated joint venture adjustments | 880 | 112 | 1,103 | 311 | |||||||||||||||||||
| EBITDAre | $ | 19,881 | $ | 24,224 | $ | 68,300 | $ | 71,474 | |||||||||||||||
| Stock-based compensation expense | 1,642 | 1,207 | 4,249 | 3,086 | |||||||||||||||||||
| Amortization of above (below) market leases, net | 100 | 113 | 396 | 505 | |||||||||||||||||||
|
Severance and transition related expenses(1)
|
1,993 | - | 1,993 | 671 | |||||||||||||||||||
| Reverse stock split expense | - | 170 | - | 170 | |||||||||||||||||||
| Proportionate share of unconsolidated joint venture adjustments | (658) | - | (675) | 55 | |||||||||||||||||||
| Adjusted EBITDAre | $ | 22,958 | $ | 25,714 | $ | 74,263 | $ | 75,961 | |||||||||||||||
(1)For the three and nine months ended September 30, 2026, includes $1.2 million of current and future cash payments and $0.8 million in accelerated stock-based compensation expense related to a separation agreement.
Net Operating Income (NOI), Cash NOI, and Same-Property Cash NOI
The Company considers net operating income ("NOI") to be an appropriate supplemental measure to net income because it helps both investors and management understand the core operations of our properties. We define NOI as total net (loss) income, plus general and administrative expense, depreciation and amortization expense, interest expense, loss (gain) on sale of investment properties, impairment of investment property, and our proportionate share of unconsolidated joint venture adjustments. Cash NOI and Same-Property Cash NOI are key performance indicators. Management considers these to be supplemental measures that allow investors, analysts and Company management to measure unlevered property-level cash operating results. The Company defines Cash NOI as NOI excluding non-cash items such as amortization of above (below) market leases, net and straight line deferred rental revenue. Cash NOI is historical and not necessarily indicative of future results. Same-Property Cash NOI compares Cash NOI for stabilized properties. Stabilized properties are properties that have been included in operations for the duration of the year-over-year comparison period presented. Accordingly, stabilized properties exclude properties that were recently acquired or disposed of, properties classified as held for sale, properties undergoing redevelopment, and newly redeveloped or developed properties. Same-Property Cash NOI also excludes lease terminations fees and joint ventures and other income in order to remove non-recurring items and joint venture-related income from our NOI.
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A reconciliation of net (loss) income to NOI, Cash NOI and Same-Property Cash NOI for the three and nine months ended September 30, 2026 and 2025 is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (unaudited and in thousands) | |||||||||||||||||||||||
| Net (loss) income | $ | (5,735) | $ | (5,058) | $ | 68,200 | $ | (736) | |||||||||||||||
| General and administrative | 7,704 | 4,860 | 18,014 | 14,505 | |||||||||||||||||||
| Depreciation and amortization expense | 16,169 | 15,008 | 46,272 | 44,126 | |||||||||||||||||||
| Interest expense | 8,308 | 8,175 | 24,347 | 23,351 | |||||||||||||||||||
| Loss (gain) on sale of investment properties | 259 | (294) | (71,622) | (1,859) | |||||||||||||||||||
| Impairment of investment property | - | 6,281 | - | 6,281 | |||||||||||||||||||
| Proportionate share of unconsolidated joint venture adjustments | 222 | 113 | 428 | 366 | |||||||||||||||||||
| NOI | $ | 26,927 | $ | 29,085 | $ | 85,639 | $ | 86,034 | |||||||||||||||
| Amortization of above (below) market leases, net | 100 | 113 | 396 | 505 | |||||||||||||||||||
| Straight line deferred rental revenue | (108) | (332) | (190) | (868) | |||||||||||||||||||
| Proportionate share of unconsolidated joint venture adjustments | (30) | (2) | (34) | (10) | |||||||||||||||||||
| Cash NOI | $ | 26,889 | $ | 28,864 | $ | 85,811 | $ | 85,661 | |||||||||||||||
| Assets not held for all periods | (678) | (4,064) | |||||||||||||||||||||
| Lease termination fees | (260) | (117) | |||||||||||||||||||||
| Joint ventures and other income | (1,019) | (154) | |||||||||||||||||||||
| Same-Property Cash NOI | $ | 24,932 | $ | 24,529 | |||||||||||||||||||
Liquidity and Capital Resources
General
Our short-term (up to 12 months) liquidity requirements include:
•Interest expense and scheduled principal payments on outstanding indebtedness;
•General and administrative expenses;
•Property operating expenses;
•Property acquisitions;
•Distributions on our common and preferred stock and OP Units and LTIP Units;
•Increased capital requirements for our joint ventures;
•Repurchases of our common stock; and
•Capital and tenant improvements and leasing costs.
Over the next twelve months, we are contractually obligated to pay, or have capital commitments for, principal and interest payments on our outstanding debt and ground and operating lease expenses. In addition, if we decide to redeem our Series A Preferred Stock in full, we would have to pay the liquidation preference of $77.6 million plus accrued dividends, fees and expenses.
Our long-term (beyond 12 months) liquidity requirements consist primarily of funds necessary to pay for acquisitions, capital and tenant improvements at our properties, scheduled debt maturities, general and administrative
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expenses, operating expenses, common stock repurchases, and distributions. Beyond the next twelve months, we are contractually obligated to pay, or have capital commitments for, principal and interest payments on our outstanding debt and ground and operating lease expenses. We also have Series B Preferred Stock with an aggregate liquidation preference of $51.3 million (redeemable beginning November 2030) and Series C Convertible Preferred Stock with an aggregate liquidation preference of $100.0 million (redeemable at our option beginning June 2030).
We expect to satisfy our short and long-term liquidity needs through various internal and external sources, including cash flow from operations, debt financing, sales of additional equity securities, the issuance of OP Units in connection with acquisitions of additional properties, select additional property dispositions and recapitalization transactions. As of September 30, 2026, management believed it complied with all of the financial and non-financial covenants contained in the Credit Facility.
Sources of Liquidity
Our primary internal sources of liquidity include cash flow from operations and proceeds from select property dispositions and recapitalization transactions. Our primary external sources of liquidity include equity issuances, including shares of common stock under our 2024 ATM Program, shares of Series B Cumulative Redeemable Preferred Stock under our 2026 Series B Preferred ATM Program, and privately placed preferred or convertible preferred equity, as well as OP Units issued in connection with property acquisitions, and debt financing under our unsecured Credit Facility and Senior Note Facility.
ATM Program
In January 2024, the Company and the Operating Partnership implemented a $300 million "at-the-market" equity offering program, pursuant to which we may offer and sell (including through forward sales), from time to time, shares of our common stock (the "2024 ATM Program"). No shares were sold under the 2024 ATM Program during the nine months ended September 30, 2026 or from October 1, 2026 through November 2, 2026. As of September 30, 2026, we had $288.0 million remaining available under the 2024 ATM Program.
In February 2026, the Company and the Operating Partnership implemented a $75 million "at-the-market" equity offering program, pursuant to which we may offer and sell (including through forward sales), from time-to-time, shares of our Series B Cumulative Redeemable Preferred Stock (the "2026 Series B Preferred ATM Program"). No shares were sold under the 2026 Series B Preferred ATM Program during the nine months ended September 30, 2026 or from October 1, 2026 through November 2, 2026.
Debt Financing
Credit Facility. Our Credit Facility consists of (i) the $350 million Term Loan A Tranches, (ii) the $150 million Term Loan B, and (iii) the $400 million Revolver. The Credit Facility also contains a $500 million accordion feature. As of November 2, 2026, we had unutilized borrowing capacity under the Credit Facility of $60.0 million.
The Credit Facility is an unsecured facility with a maturity of (i) October 2029 for the Revolver (subject to two, six-month extension options), (ii) October 2029, October 2030, and April 2031 for the Term Loan A Tranches, and (iii) February 2028 for Term Loan B. Interest rates on amounts outstanding under the Credit Facility equal SOFR plus a borrowing spread based on the current pricing grid in the Credit Facility.
As of September 30, 2026, we had 11 interest rate swaps that are used to manage our interest rate risk. Four of our interest rate swaps relate to our Term Loan B with a combined notional value of $150 million that fix the SOFR component on Term Loan B through January 2028 at 2.54%. Seven of our interest rate swaps relate to our Term Loan A tranches that fix the SOFR component of the Term Loan A Tranches with a combined notional value of $350 million at rates between 3.24% to 3.32% and have maturities in October 2029, October 2030, and April 2031. The seven interest rate swaps related to our Term Loan A tranches became effective in May 2026.
We are subject to a number of financial covenants under the Credit Facility, including, among other things, the following as of the end of each fiscal quarter, (i) a maximum consolidated unsecured leverage ratio of less than 60%, (ii) a maximum consolidated secured leverage ratio of less than 30%, (iii) a maximum consolidated secured recourse leverage ratio of less than 10%, (iv) a minimum fixed charge coverage ratio of 1.50:1.00, (v) a minimum unsecured interest coverage ratio of 1.50:1.00, (vi) a maximum consolidated leverage ratio of less than 60%, (vii) a minimum net worth of
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$595.6 million plus 75% of all net proceeds raised through equity offerings subsequent to September 30, 2025. As of September 30, 2026, we were in compliance with all of the financial and non-financial covenants contained in the Credit Facility.
Other Fixed Debt. We have $1.0 million in gross notes payable as of September 30, 2026. This debt is comprised of one instrument.
Total Fixed Debt. Our gross fixed debt totaled $501 million at September 30, 2026, with a weighted average interest rate of 4.32% based on our interest rate swaps and current leverage. The weighted average maturity of our fixed debt was 3.2 years at September 30, 2026.
Senior Note Facility
On March 2, 2026, we entered into a Master Note and Guaranty Agreement (the "Senior Note Agreement") with NYL Investors LLC and certain of its affiliates (collectively, the "Purchasers"), establishing an uncommitted senior unsecured note facility that provides us with access to up to $150 million in long-duration, fixed-rate unsecured capital to complement our Credit Facility. Under the Senior Note Agreement, we may issue senior unsecured promissory notes ("Notes") from time to time in one or more series in an aggregate principal amount of up to $150 million during a commitment period ending on the third anniversary of the effective date (or earlier upon termination or certain other events). The Senior Note Agreement does not obligate the Purchasers to purchase any Notes, and each issuance is subject to the Purchasers' discretion and satisfaction of customary conditions. Notes may have maturities of up to ten years and will bear interest at rates based on spreads over U.S. Treasury securities determined at the time of issuance. As of September 30, 2026, and through November 2, 2026, no Notes had been issued or were outstanding under the Senior Note Agreement. See Note 4 - "Credit Facility, Notes Payable and Derivative Instruments" for additional details.
Debt Activity
During the nine months ended September 30, 2026, we borrowed $269.1 million under the Credit Facility and repaid $263.3 million, for a net amount borrowed of $5.8 million. The net amount borrowed during the period was primarily driven by the funding of our 2026 acquisitions. During the nine months ended September 30, 2025, we borrowed $115.4 million under the Credit Facility and repaid $40.3 million, for a net amount borrowed of $75.1 million. As of September 30, 2026, the net outstanding Credit Facility balance was $669.0 million. As of November 2, 2026, our total available liquidity was approximately $70.4 million, consisting of $60.0 million of available capacity under the revolver component of the Credit Facility (the "Revolver") and $10.4 million of cash and cash equivalents.
Series C Convertible Preferred Stock Offering
On May 29, 2026 and June 2, 2026, we issued an aggregate of 1,000,000 shares of our Series C Convertible Preferred Stock in a private placement for aggregate gross proceeds of $100.0 million. We used the net proceeds to fund a portion of our SHOP acquisitions and to pay down amounts outstanding under the Revolver. The Series C Convertible Preferred Stock bear cumulative dividends at an initial rate of 6.00% per annum, stepping up to 8.00% beginning June 2, 2030 and increasing by 2.00% on each anniversary thereafter up to a maximum of 12.00%, in each case to the extent not redeemed or converted. The Series C Convertible Preferred Stock is convertible into our common stock at an implied conversion price of $43.00 per share, subject to customary anti-dilution adjustments, and may be redeemed by us at our option on or after June 2, 2030 at the $100 per share liquidation preference plus accrued dividends. No additional shares of Series C Convertible Preferred Stock have been issued since June 2, 2026. See Note 5 - "Equity" for a complete description of the terms of the Series C Convertible Preferred Stock.
Common Stock Repurchase Program
In August 2025, the Board approved a $50 million common stock repurchase program (the "Stock Repurchase Program"), pursuant to which we may repurchase shares of our common stock from time to time in the open market, including through block purchases, through privately negotiated transactions or pursuant to any Rule 10b5-1 trading plan, in accordance with applicable securities laws. The Stock Repurchase Program does not obligate us to repurchase any dollar amount or number of shares and may be suspended or discontinued at any time. No shares were repurchased during the nine months ended September 30, 2026 or from October 1, 2026 through November 2, 2026, as we have prioritized available capital toward SHOP community acquisitions and debt repayment. As of November 2, 2026, approximately $44 million remained available for repurchases under the Stock Repurchase Program.
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Off-Balance Sheet Arrangements
As of September 30, 2026, we have investments in four unconsolidated joint ventures with ownership interests of 49%, 49%, 15% and 12.5%. The aggregate carrying amount of debt incurred by these ventures, including both our and our partners' share, was approximately $149.8 million (of which our proportionate share is approximately $28.2 million). See Note 2 - "Summary of Significant Accounting Policies" to our accompanying condensed consolidated financial statements for additional information regarding our unconsolidated joint ventures. We have no other off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources.
Chiron Real Estate Inc. published this content on November 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 06, 2026 at 21:43 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]