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02/24/2026 | Press release | Distributed by Public on 02/24/2026 15:47

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

Business and Investment Strategy

We are a real estate investment trust ("REIT") that invests in seniors housing and health care properties through sale-leasebacks, financing leases, mortgage financing, joint ventures and structured finance solutions including preferred equity and mezzanine lending. Additionally, during the second quarter of 2025, we began utilizing the structure authorized by the REIT Investment Diversification and Empowerment Act of 2007 (commonly referred to as "RIDEA") as permitted by the Housing and Economic Recovery Act of 2008 and established a seniors housing operating portfolio ("SHOP").

Under a typical RIDEA structure, we have certain oversight approval rights and the right to review operational and financial reporting information, but our independent third-party operators ultimately control the day-to-day operations of the property, pursuant to the terms of our management agreements. Offering RIDEA structures represent a further aspect of our traditional strategy of investing through vehicles such as non-cancelable triple-net operating leases, mortgage loans, and structured finance. We believe that RIDEA structures provide us with additional investment opportunities. We also have identified opportunities to cooperatively convert existing triple-net leases into our new SHOP segment, and in certain instances have completed these conversions. To develop and implement RIDEA structures, we may need to continue to commit financial and operational resources. While we anticipate that adding RIDEA transactions will be positive for our business model, our ability to succeed in this new segment will be determined by numerous factors, including our ability to identify suitable investments and our relationship with operators of our SHOP communities. We rely on the SHOP operator's personnel, expertise, resources, good faith, and judgement to manage our SHOP communities efficiently and effectively. We also rely on the SHOP operators to set appropriate resident fees, provide accurate property-level financial results for our properties in a timely manner, and otherwise operate our SHOP communities in compliance with the terms of our management agreements and all applicable laws and regulations.

We seek to create, sustain and enhance stockholder equity value and provide current income for distribution to stockholders through real estate investments in seniors housing and health care properties managed by experienced operators. Our primary seniors housing and health care property classifications include skilled nursing facilities ("SNF"), assisted living facilities ("ALF"), independent living facilities ("ILF"), memory care communities ("MC") and combinations thereof. We also invest in other ("OTH") types of properties, such as land parcels, projects under development ("UDP") and behavioral health care hospitals. To meet these objectives, we attempt to invest in properties that provide opportunity for additional value and current returns to our stockholders and diversify our investment portfolio by geographic location, operator, property classification and form of investment.

We conduct and manage our business as two operating segments for internal reporting and internal decision-making purposes: real estate investments ("Real Estate Investments") segment which consists of our portfolio of owned real properties subject to non-cancelable triple-net leases ("NNN" or "Triple-Net Portfolio"), financing receivables, mortgage loan receivables, notes receivable and unconsolidated joint ventures, and our SHOP segment consists of seniors housing communities that are managed on our behalf by independent operators pursuant to the terms of separate management agreements. For purposes of this Annual Report on Form 10-K and other presentations, we generally include ALF, ILF, and MC in the seniors housing communities ("SH") property classification. We have been operating since August 1992.

The following graph summarizes our gross investments as of December 31, 2025:

Substantially all of our revenues and sources of cash flows from operations are derived from operating lease rentals, resident fees and services, interest earned on financing receivables, interest earned on outstanding mortgage loans receivable, interest earned on outstanding notes receivable and income from investments in unconsolidated joint ventures. Our investments in owned real properties, financing leases, mortgage loans, mezzanine loans and preferred equity investments represent our primary source of liquidity to fund distributions and are dependent upon the performance of the operators on their lease and loan obligations and the rates earned thereon. To the extent that the operators experience operating difficulties and are unable to generate sufficient cash to make payments to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. To mitigate this risk, we monitor our investments through a variety of methods determined by property type and operator. Our monitoring process includes periodic review of financial income statements for each facility, periodic review of operator credit, scheduled property inspections and review of covenant compliance.

In addition to our monitoring and research efforts, we also structure our investments to help mitigate payment risk. Some operating leases, financing leases and loans are credit-enhanced by guaranties, security deposits and/or letters of credit. Furthermore, operating leases are typically structured as master leases and loans are generally cross-defaulted and cross-collateralized with other loans, operating leases or agreements between us and the operator and its affiliates.

Depending upon the availability and cost of external capital, we anticipate making additional investments in health care related properties. New investments are generally funded from cash on hand, temporary borrowings under our unsecured revolving line of credit, asset sales and internally generated cash flows. Our investments generate internal cash from rent and interest receipts and principal payments on mortgage loans receivable. Permanent financing for future investments, which replaces funds drawn under our unsecured revolving line of credit, is expected to be provided through a combination of public and private offerings of debt and equity securities and secured and unsecured debt financing. The timing, source and amount of cash flows provided by financing activities and used in investing activities are sensitive to the capital markets' environment, especially to changes in interest rates. Changes in the capital markets' environment may impact the availability of cost-effective capital.

We believe our business model has enabled and will continue to enable us to maintain the integrity of our property investments, including in response to financial difficulties that may be experienced by operators. We have traditionally taken and will continue to take a conservative approach to managing our business, choosing to maintain liquidity and exercise patience until favorable investment opportunities arise.

Investment Portfolio Overview

The following tables summarize our real estate investment portfolio as of December 31, 2025 (dollar amounts in thousands):


								Twelve Months Ended
								December 31, 2025
		Number of				Percentage		Rental Income			Percentage
	Number of	SNF	SH	Gross		of		and Resident			of Total
Owned Properties	Properties ⁽¹⁾	Beds ⁽²⁾	Units ⁽²⁾	Investments		Investments		Fees and Services			Revenues
Triple-Net Portfolio:
Seniors Housing	54	-	3,218	$	505,473	21.1	%	$	38,040		16.2	%
Skilled Nursing	43	5,217	236		527,922	22.0	%		54,718		23.3	%
Other ⁽³⁾	1	118	-		12,005	0.5	%		1,189		0.5	%
Subtotal: Triple-Net Portfolio	98	5,335	3,454		1,045,400	43.6	%		93,947	⁽⁵⁾	40.0	%
SHOP:
Seniors Housing	25	-	2,073		565,265	23.6	%		72,116	⁽⁶⁾	30.7	%
Total Owned Properties	123	5,335	5,527		1,610,665	67.2	%		166,063		70.7	%

		Number of				Percentage		Interest Income			Percentage
	Number of	SNF	SH		Gross	of		from Financing			of Total
Financing Receivables	Properties ⁽¹⁾	Beds ⁽²⁾	Units ⁽²⁾		Investments	Investments		Receivable			Revenues
Seniors Housing	28	-	1,263		286,543	12.0	%		22,430		9.6	%
Skilled Nursing	3	299	-		76,545	3.2	%		5,885		2.5	%
Total Financing Receivables	31	299	1,263		363,088	15.2	%		28,315		12.1	%

		Number of				Percentage		Interest Income			Percentage
	Number of	SNF	SH		Gross	of		from Mortgage			of Total
Mortgage Loans	Properties ⁽¹⁾	Beds ⁽²⁾	Units ⁽²⁾		Investments	Investments		Loans			Revenues
Seniors Housing	5	-	551		123,732	5.2	%		6,193		2.6	%
Skilled Nursing	21	2,576	-		253,985	10.6	%		30,144		12.9	%
Under Development ⁽⁴⁾	-	-	-		7,794	0.3	%		131		0.1	%
Total Mortgage Loans	26	2,576	551		385,511	16.1	%		36,468	⁽⁷⁾	15.6	%

		Number of				Percentage		Interest			Percentage
	Number of	SNF	SH		Gross	of		and other			of Total
Notes Receivable	Properties ⁽¹⁾	Beds ⁽²⁾	Units ⁽²⁾		Investments	Investments		Income			Revenues
Seniors Housing	5	-	621		25,025	1.0	%		2,555		1.1	%
Skilled Nursing	-	-	-		849	0.0	%		-		0.0	%
Total Notes Receivable	5	-	621		25,874	1.0	%		2,555	⁽⁸⁾	1.1	%

		Number of				Percentage		Income from			Percentage
	Number of	SNF	SH		Gross	of		Unconsolidated			of Total
Unconsolidated Joint Ventures	Properties ⁽¹⁾	Beds ⁽²⁾	Units ⁽²⁾		Investments	Investments		Joint Ventures			Revenues
Skilled Nursing	1	104	-		12,524	0.5	%		1,178		0.5	%
Total Unconsolidated Joint Ventures	1	104	-		12,524	0.5	%		1,178	⁽⁹⁾	0.5	%

Total Portfolio	186	8,314	7,962	$	2,397,662	100.0	%	$	234,579		100.0	%


	Number	Number of				Percentage
	of	SNF	SH	Gross		of
Summary of Properties by Type	Properties ⁽¹⁾	Beds ⁽²⁾	Units ⁽²⁾	Investments		Investments
Seniors Housing	117	-	7,726	$	1,506,038	62.9	%
Skilled Nursing	68	8,196	236		871,825	36.3	%
Other ⁽³⁾	1	118	-		12,005	0.5	%
Under Development ⁽⁴⁾	-	-	-		7,794	0.3	%
Total Portfolio	186	8,314	7,962	$	2,397,662	100.0	%

(1)	We have investments in owned properties, including NNN and SHOP, properties we own accounted for as financing receivables, mortgage loans, notes receivable and unconsolidated joint ventures in 23 states to 30 different operators.

(2)	See Item 2. Propertiesfor discussion of bed/unit count.

(3)	Includes three parcels of land held-for-use and one behavioral health care hospital.

(4)	We funded $7,794 under a $26,120 mortgage loan commitment for the construction of a 116-unit SH located in Illinois. The loan bears interest at a current rate of 9.0% and an IRR of 9.5%.

(5)	Excludes $10,781 variable rental income from lessee reimbursement of our real estate taxes, $12,957 rental income from properties converted to SHOP and the straight-line rent receivable write-off of $1,514.

(6)	Resident fees and services include all amounts earned from residents, based on individual resident agreements, at our SHOP communities.

(7)	Excludes $2,555 of interest income related to mortgage loans receivable that have been paid off.

(8)	Included in the Interest and other incomeline item of our Consolidated Statements of Income. Excludes $2,739 interest income from loans that have been paid off.

(9)	Excludes $5,578 income from the redemption of our preferred equity investments in two joint ventures. Subsequent to December 31, 2025, the operator provided notice of its intent to pay off this mortgage loan.

As of December 31, 2025, we had $2.0 billion in net carrying value of investments as follows (dollar amounts in thousands):


			Percentage
	Carrying		of
	Value		Investments
Triple-Net Portfolio	$	693,409	35.0	%
SHOP		508,350	25.7	%
Financing receivables		359,457	18.1	%
Mortgage loans		381,662	19.3	%
Notes receivable		25,615	1.3	%
Unconsolidated joint ventures		12,524	0.6	%
	$	1,981,017	100.0	%

The following table provides details on the components of revenues and related net operating income ("NOI") across our portfolio for the year ended December 31, 2025 (in thousands):


	Amount
Real Estate Investment segment:
Triple-Net Portfolio
Contractual cash rental income	$	109,471
Variable cash rental income		10,781
Straight-line rent adjustment ⁽¹⁾		(1,631)
Adjustment of lease incentives and rental income		(1,514)
Amortization of lease incentives		(936)
Rental income		116,171
Financing Receivables:
Cash interest income from financing receivables		26,912
Effective interest income ⁽²⁾		1,403
Interest income from financing receivables		28,315
Mortgage loans receivable:
Cash interest received		36,352
Effective interest income ⁽³⁾		2,671
Interest income from mortgage loans		39,023
Other notes receivable:
Interest income-other notes		6,464
Effective interest adjustment ⁽⁴⁾		(1,170)
Interest income from notes receivable		5,294
Unconsolidated joint ventures
Income from unconsolidated joint ventures		6,757

Total revenue-Real Estate Investments segment		195,560

Property level expenses-real estate investments		(10,795)
NOI-Real Estate Investment Segment ⁽⁵⁾	$	184,765

SHOP segment:
Resident fees and services:	$	72,116
Property level expenses-SHOP		(54,088)
NOI-SHOP Segment ⁽⁵⁾	$	18,028

(1)	At December 31, 2025, the Straight-line rent receivablebalance on our Consolidated Balance Sheetswas $17,949.

(2)	At December 31, 2025, the financing receivables effective interest receivable balance which is included in the Interest receivableline item on our Consolidated Balance Sheetswas $6,899.

(3)	At December 31, 2025, the mortgage loans receivable effective interest receivable balance which is included in the Interest receivableline item on our Consolidated Balance Sheetswas $14,052.

(4)	At December 31, 2025, the other notes receivable effective interest receivable balance which is included in the Interest receivableline item on our Consolidated Balance Sheetswas $74.

(5)	See Non-GAAP Financial Measuresbelow for additional information and reconciliation.

Update on Certain Operators

ALG Senior Living

We hold controlling interest in three joint ventures with ALG Senior Living ("ALG"). The joint ventures own 28 assisted living and memory care communities in North Carolina (27) and South Carolina (1) with a total of 1,263 units. The joint ventures lease these communities to affiliates of ALG under three 10-year master leases and have provided the lessee with the option to purchase these communities. In accordance with generally accepted accounting principles ("GAAP"), the communities are recorded as Financing Receivables on our Consolidated Balance Sheets. Additionally, ALG operates a 45-unit assisted living and memory care community in North Carolina under a mortgage loan maturing in May 2026. ALG has paid their contractual rent and interest obligations through February 2026.

Anthem Memory Care

Anthem operated 12 memory care communities located in California, Colorado, Kansas, Illinois and Ohio under triple-net master leases. During the second quarter of 2025, we terminated the Anthem triple-net master leases and converted the 12 memory care communities covered under the master leases into our new SHOP segment. In conjunction with the conversion, we wrote-off Anthem's working capital note of $2.7 million and the related interest receivable of $0.4 million during the second quarter of 2025.

Genesis Healthcare, Inc.

During the second quarter of 2025, we received written notice from Genesis Healthcare Inc. ("Genesis") of its exercise of a 5-year extension option, which would extend the term of the lease to April 30, 2031. During the third quarter of 2025, Genesis filed for Chapter 11 bankruptcy. Accordingly, we wrote-off straight-line rent receivable balance of $1.3 million related to Genesis' master lease. Subsequent to December 31, 2025, a federal bankruptcy judge approved the sale of Genesis' assets to a newly formed investment group. Affiliates of Genesis lease six skilled nursing centers in New Mexico (five) and Alabama (one) with a total of 782 beds under a master lease with LTC. Genesis has paid its contractual rent through February 2026. We will continue to monitor the status of Genesis' bankruptcy-related developments.

Prestige Healthcare

Prestige Healthcare ("Prestige") operates 21 skilled nursing centers located in Michigan secured under four mortgage loans and two skilled nursing centers located in South Carolina under a master lease. Prestige is our largest operator based upon revenues and assets representing 11.9% of our total revenues and 12.6% of our total assets as of December 31, 2025.

Prior to an amendment in July 2025, under Prestige's $179.9 million mortgage loan secured by 14 properties, the minimum mortgage interest payment due to us was based on an annual current pay rate of 8.5% on the outstanding loan balance. The difference between the contractual interest rate and the current pay interest rate on the outstanding loan balance remained an obligation of Prestige and was payable through the application of security deposits we hold on behalf of Prestige or was payable at maturity. At December 31, 2025, Prestige's security totaled $6.1 million.

During the third quarter of 2025, Prestige's $179.9 million mortgage loan was modified to increase the current interest paid by Prestige from 8.5% to the full contractual interest rate of 11.14%, escalating annually. The modification was effective July 1, 2025. Additionally, the modification provides Prestige an option to prepay this mortgage loan at par and without penalty within a 12-month window beginning in July 2026. Prestige is required to provide us with at least a 90-day notice of its intention to exercise the option and the ability for Prestige to exercise the pre-payment option is contingent on several factors including Prestige being current and in good standing on all its mortgage loans with LTC and obtaining replacement financing. In conjunction with the loan amendment that provided the borrower with a penalty-free early payoff option, we wrote-off $41.5 million of interest receivable previously accrued related to this loan during the third quarter of 2025. Subsequent to December 31, 2025, Prestige provided notice of its intent to repay its $179.9 million mortgage loan and we expect them to repay the loan in 2026. Prestige is current on their contractual loan obligations through February 2026.

Other Operators

We had a JV that owned two assisted living communities with a total of 186 units in Oregon. The communities were leased under two separate leases with the same operator, who was the non-controlling member of the JV. During 2025, we acquired the operator's $4.0 million non-controlling interest in the JV for $1.2 million and terminated the two existing leases. In connection with the termination of these leases, we wrote-off $0.2 million straight-line rent receivable and $0.3 million lease incentive. Concurrently, we entered into a new combined master lease with the same operator. The new combined master lease had a five-year term with one 1-year extension option and four 5-year extension options. During the fourth quarter of 2025, we terminated the new master lease and converted the senior housing communities covered by the master lease into our SHOP segment. Upon conversion into SHOP, the communities are operating and accounted for as one community. In connection with the conversion, we wrote-off the related working capital note of

$1.0 million during the fourth quarter of 2025.

Subsequent to December 31, 2025, we terminated a triple-net master lease and converted two seniors housing communities covered under the master lease to our SHOP segment. Upon conversion, we entered into a management agreement with an operator new to us. The communities have a total of 88 units and a gross book value of $25.9 million and are located in Texas.

2025 Transactions Overview

The following tables summarize our transactions during the year ended December 31, 2025 (dollar amounts in thousand):

SHOP Segment

During the second quarter of 2025, we began utilizing the RIDEA structure and established a SHOP segment. Following the establishment of SHOP, we terminated triple-net master leases with three operators and converted 15 communities covered under these master leases into our SHOP segment. Upon conversion into the SHOP segment, two of these communities are operating and accounted for as one community. Additionally, we acquired 11 communities within our SHOP segment. As of December 31, 2025, our SHOP segment included 25 seniors housing communities that are managed on our behalf by seven independent operators pursuant to separate management agreements. At December 31, 2025, our SHOP segment represented 23.6% of our gross portfolio investments.

The following table presents information related to our SHOP segment as of December 31, 2025 (dollar amounts in thousands):


						Average
				Number	Number	Investment
		Gross		of	of	per
State	Investment			Properties	Beds/Units	Unit
Wisconsin	$	248,183		7	742	$	334.48
Illinois		58,022		4	264	$	219.78
California		48,743		2	133	$	366.49
Colorado		41,801		4	228	$	183.34
Kentucky		39,763		2	158	$	251.66
Oregon		33,139		1	186	$	178.17
Tennessee		31,334		1	100	$	313.34
Kansas		26,241		2	114	$	230.18
Georgia		23,015		1	88	$	261.53
Ohio		15,024		1	60	$	250.40
Total	$	565,265	⁽¹⁾	25	2,073	$	272.68

(1)

Subsequent to December 31, 2025, we acquired three seniors housing communities within our SHOP segment for $108,000. The communities are located in Georgia with a total of 394 units. In conjunction with the acquisition, we entered into a management agreement with an existing operator. Additionally, we terminated a triple-net master lease and converted two SHs covered under the master lease to our SHOP segment. Upon conversion, we entered into a management agreement with an operator new to us. The communities have a total of 88 units and a gross book value of $25,981.

SHOP Acquisitions and Improvement Projects.The following table summarizes our acquisitions within our SHOP segment during the year ended December 31, 2025 (dollar amounts in thousands):


							Total			Number	Number
		Purchase			Transaction		Acquisition			of	of
State	Type of Property	Price			Costs		Costs			Properties	Beds/Units
California	SH	$	35,200		$	283	$	35,483		1	67
Georgia	SH		22,900			98		22,998		1	88
Kentucky	SH		39,500			259		39,759		2	158
Tennessee	SH		31,250			81		31,331		1	100
Wisconsin	SH		194,050			470		194,520		5	520
Wisconsin	SH		30,000			612		30,612		1	122
		$	352,900	⁽¹⁾	$	1,803	$	354,703	⁽²⁾	11	1,055

(1)	Subsequent to December 31, 2025, we acquired three seniors housing communities in Georgia within our SHOP segment for $108,000. In conjunction with the acquisition, we entered into a management agreement with an existing operator.

(2)	At acquisition, we received property tax prorations credits of $1,116.

During the year ended December 31, 2025, we funded capital improvement projects of $2.7 million within our SHOP segment.

Triple-Net Portfolio

Lease Extensions.Many of our triple-net operating leases contain renewal options that, if exercised, could result in the amount of rent payable upon renewal being greater than that currently being paid. The following table outlines information related to our Triple-Net lease extensions during the year ended December 31, 2025 (dollar amounts in thousands):

Number

Gross

Original

Extended

Type of Property

Investment

Properties

Beds/Units

State

Maturity

68,767

461

IL, MI, OH

May 31, 2025

May 31, 2026

SNF

53,339

782

AL, NM

April 30, 2026

⁽¹⁾

April 30, 2031

32,361

159

GA, SC

December 31, 2025

December 31, 2026

25,891

February 28, 2025

February 28, 2026

SNF

13,053

211

February 28, 2026

February 28, 2031

SNF

5,275

141

December 31, 2025

⁽²⁾

December 31, 2026

198,686

1,842

(1)

During the third quarter of 2025, Genesis filed for Chapter 11 bankruptcy. Subsequent to December 31, 2025, a federal bankruptcy judge approved the sale of Genesis' assets to a newly formed investment group. Genesis has paid its contractual rent through February 2026. We will continue to monitor the status of the bankruptcy-related developments.

(2)	The purchase option window provided in the master lease which expired on December 31, 2024, was extended for another year to December 31, 2025. During the third quarter of 2025, the operator provided an election notice to exercise its purchase option.

Lease Terminations.During 2025, we terminated two existing leases with the same operator and combined them into a single master lease with the same operator. The new master lease had a five-year term. In connection with the termination of these leases, we wrote-off $0.2 million of straight-line rent receivable and $0.3 million of lease incentive balances during the year ended December 31, 2025. During the fourth quarter of 2025, we terminated the new master lease and converted the senior housing communities covered by the master lease into our SHOP segment. The communities are located in Oregon with a total of 186 units. Upon conversion into SHOP, the communities are operating and accounted for as one community. In connection with the conversion, we wrote-off the related working capital note of $1.0 million during the fourth quarter of 2025.

Additionally, during 2025, we terminated the Anthem Memory Care, LLC ("Anthem") triple-net master leases and converted the communities covered under the master leases into our SHOP segment. In conjunction with the conversion, during 2025, we wrote-off Anthem's working capital note of $2.7 million and the related interest receivable of $0.4 million. Also, we terminated the New Perspective Senior Living, LLC ("New Perspective") triple-net lease and converted the community covered under the lease into our SHOP segment. In connection with the conversion, we paid New Perspective $6.0 million lease termination fee.

Triple-Net Portfolio Sales.During the year ended December 31, 2025, we recorded a net gain on sale of real estate of $77.8 million. The following table summarizes property sales during the year ended December 31, 2025 (dollar amounts in thousands):


	Type	Number	Number
	of	of	of		Sales		Carrying		Net
State	Properties	Properties	Beds/Units		Price		Value		Gain (Loss) ⁽¹⁾
California	SNF	1	156	$	29,000	$	12,010	$	16,578
Florida	SNF	2	240		43,000		16,148		25,907
Ohio	SH	1	39		1,000		670		236
Ohio ⁽²⁾	N/A	-	-		1,800		1,342		340
Oklahoma	SH	1	29		670		670		(96)
Texas	N/A	1	-		2,880		3,266		(690)
Virginia	SNF	4	500		51,000		14,772		35,547
		10	964	$	129,350	$	48,878	$	77,822

(1)	Calculation of net gain (loss) includes cost of sales and write-off of straight-line rent receivable and lease incentives, when applicable.

(2)	We sold a parcel of land adjacent to a memory care community within our portfolio.

Triple-Net Portfolio Improvement Projects.During the year ended December 31, 2025, we invested in improvement projects within our Triple-Net Portfolio as follows (in thousands):


Type of Property	NNN
Seniors Housing Communities	$	2,967
Skilled Nursing Centers		1,600
Total	$	4,567

Mortgage Loans Receivable

The following table summarizes our mortgage loans receivable activity for the year ended December 31, 2025 (in thousands):


	Amount
Originations and funding under mortgage loans receivable	$	105,845	⁽¹⁾
Payoffs received		(37,237)	⁽²⁾
Application of interest reserve		2,177
Scheduled principal payments received		(1,000)
Mortgage loan premium amortization		(9)
Provision for loan loss reserve		(697)
Net increase in mortgage loans receivable	$	69,079

(1)	Funded the following mortgage loans during 2025:

(a)

$55,350 under a $57,550 mortgage loan commitment secured by two SH with a total of 171 units in California. The loan term is five years at a rate of 8.3%;

(b)

$38,351 under a $42,300 mortgage loan commitment secured by a 250-unit SH in Florida. The loan term is five years at a fixed rate of 8.5%;

(c)

$4,350 under a $19,500 mortgage loan commitment for the construction of an 85-unit SH in Michigan. The borrower contributed $12,100 of equity upon origination in July 2023, which was used to initially fund the construction. Our remaining commitment is $2,396. The interest-only loan term is approximately three years at a rate of 8.75%, and includes two one-year extensions, each of which is contingent on certain coverage thresholds; and

(d)

$7,794 under a $26,120 mortgage loan commitment for the construction of a 116-unit SH located in Illinois. The borrower contributed $12,300 of equity which was used to initially fund the construction. During the third quarter of 2025, we began funding this commitment. Our remaining commitment is $18,326. The loan bears interest at a current rate of 9.0% and an IRR of 9.5%.

(2)	Received the following payoffs and paydown during 2025:

(a)

$16,706 from a mortgage loan payoff secured by a 112-unit SH in Florida;

(b)

$16,500 from a mortgage loan payoff secured by a 150-bed SNF in Illinois;

(c)

$4,000 from a mortgage loan payoff secured by two SH with a total of 92 units in Florida; and

(d)

$31 of partial principal paydown.

Unconsolidated Joint Ventures

We had preferred equity investments in joint ventures that met the accounting criteria to be considered a variable interest entity ("VIE"). During the year ended December 31, 2025, we received $16.0 million, which includes a 13% exit IRR of $3.0 million, from the redemption of a preferred equity investment in a joint venture that owns a 267-unit seniors housing in Washington. Additionally, during the year ended December 31, 2025, we received $8.1 million, which includes a 12% exit IRR of $1.8 million, from the redemption of a preferred equity investment in a joint venture that owns a 109-unit seniors housing community in Washington.

Notes Receivable

The following table summarizes our notes receivable activity for the year ended December 31, 2025 (dollar amounts in thousands):


	Amount
Advances under notes receivable	$	25
Principal payments received under notes receivable		(18,218)	⁽¹⁾
Write-off of notes receivable		(3,650)	⁽²⁾
Recovery of credit losses		218
Net decrease in notes receivable	$	(21,625)

(1)	Received the following payoffs and paydown during 2025:

(a)

$17,000 from the early payoff of a mezzanine loan. In conjunction with the mezzanine loan payoff, we received 12% exit IRR income of $2,599 recognized as Interest and other incomein our Consolidated Statements of Income. The exit IRR income was partially offset by $1,624 of effective interest previously recognized over the term of the mezzanine loan through payoff;

(b)

$639 from the payoff of three working capital loans; and

(c)

$579 from the paydown of a working capital loan.

(2)	Represents the write-off of the Anthem working capital note in connection with terminating Anthem's master lease and converting the communities covered under the master lease to SHOP.

Key Performance Indicators, Trends and Uncertainties

We utilize several key performance indicators to evaluate the various aspects of our business. These indicators are discussed below and relate to concentration risk and credit strength. Management uses these key performance indicators to facilitate internal and external comparisons to our historical operating results in making operating decisions and for budget planning purposes.

Concentration Risk.We evaluate by gross real estate investment our concentration risk in terms of asset mix, real estate investment mix, operator mix and geographic mix. Concentration risk is valuable to understand what portion of our real estate investments could be at risk if certain sectors were to experience downturns. Asset mix measures the portion of our real estate investments that are real property or mortgage loans. Investment mix measures the portion of our investments that relate to our various property types. Operator mix measures the portion of our real estate investments that relate to our top five operators. Geographic mix measures the portion of our real estate investment that relate to our top five states.

The following table reflects our recent historical trends of concentration risk (gross investment, in thousands):



	12/31/25		9/30/25		6/30/25		3/31/25		12/31/24
Asset mix:
Triple-Net Portfolio	$	1,045,400	$	1,149,924	$	1,154,836	$	1,329,856	$	1,333,078
SHOP		565,265		446,527		174,847		-		-
Financing receivables		363,088		362,201		361,438		361,460		361,482
Mortgage loan receivables		385,511		393,587		356,815		317,527		315,734
Notes receivable		25,874		27,010		44,135		44,786		47,717
Unconsolidated joint ventures		12,524		18,342		17,793		17,602		30,602
Real estate investment mix:
Senior housing communities	$	1,506,038	$	1,440,634	$	1,138,799	$	1,100,232	$	1,117,588
Skilled nursing centers		871,825		943,775		959,060		958,994		959,020
Other ⁽¹⁾		12,005		12,005		12,005		12,005		12,005
Under development		7,794		1,177		-		-		-
Operator/credit mix:
ALG Senior Living	$	297,292	$	296,405	$	295,628	$	295,629	$	295,629
Prestige Healthcare ⁽¹⁾		267,982		268,534		268,567		268,896		269,022
Encore Senior Living		206,429		199,187		196,735		195,355		195,276
HMG Healthcare, LLC		167,737		167,917		167,202		166,976		166,716
Anthem Memory Care, LLC ⁽²⁾		-		-		-		153,714		156,407
Carespring Health Care Management, LLC		102,940		102,940		102,940		102,940		102,940
Remaining operators		790,017		916,081		903,945		887,721		902,623
SHOP operators ^{(2) (3)}		565,265		446,527		174,847		-		-
Geographic mix:
Wisconsin	$	319,951	$	288,933	$	94,051	$	93,849	$	93,844
Texas		314,987		314,232		319,423		318,584		318,133
North Carolina		303,391		302,504		301,727		301,650		301,468
Michigan		293,954		293,889		293,189		292,396		290,450
California ⁽⁴⁾		143,906		160,780		69,717		69,717		69,717
Remaining states ⁽⁴⁾		1,021,473		1,037,253		1,031,757		995,035		1,015,001

(1)

As of December 31, 2025, we have three parcels of land. These parcels are located adjacent to properties securing the Prestige Healthcare mortgage loan and are managed by Prestige. Subsequent to December 31, 2025, Prestige provided notice of its intent to repay its $179,885 mortgage loan and we expect them to repay the loan in 2026.

(2)

During the second quarter of 2025, we terminated our Anthem triple-net master leases and converted the communities covered under the master leases into our SHOP segment. Accordingly, our "Anthem Memory Care, LLC" were included with "SHOP operators" classification for the third and fourth quarters of 2025.

(3)	Our communities within our SHOP segment operated by independent operators on our behalf are classified as "SHOP operators". Our SHOP segment is not subject to operator/credit concentration risk.

(4)

During the three months ended December 31, 2025, we sold two SNFs in Florida with a gross book value of $23,902 for a sales price of $43,000. As a result of this transaction, Florida is no longer a top five state under our geographic mix and is replaced by California. Accordingly, our "California" properties were reclassified from "Remaining states" and our "Florida" properties were reclassified to "Remaining states" for all periods presented.

Credit Strength. We measure our credit strength both in terms of leverage ratios and coverage ratios. Our leverage ratios include debt to gross asset value and debt to market capitalization. The leverage ratios indicate how much of our Consolidated Balance Sheets capitalization is related to long-term obligations. Our coverage ratios include interest coverage ratio and fixed charge coverage ratio. The coverage ratios indicate our ability to service interest and fixed charges (interest). The coverage ratios are based on earnings before interest, taxes, depreciation and amortization for real estate ("EBITDAre") as defined by National Association of Real Estate Investment Trusts ("Nareit"). EBITDAre is calculated as net income available to common stockholders (computed in accordance with GAAP) excluding (i) interest expense, (ii) income tax expense, (iii) real estate depreciation and amortization, (iv) impairment write-downs of depreciable real estate, (v) gains or losses on the sale of depreciable real estate, and (vi) adjustments for unconsolidated partnerships and joint ventures. Adjusted EBITDAre is calculated as EBITDAre adjusted for non-recurring items. Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. The following table reflects the recent historical

trends for our credit strength measures:

Balance Sheet Metrics


	Year Ended		Quarter Ended
	12/31/25		12/31/25			9/30/25			6/30/25			3/31/25			12/31/24
Debt to gross asset value	34.0	%	34	%	⁽¹⁾	38.1	%	⁽⁴⁾	31.3	%		31.1	%		31.1	%
Debt to market capitalization ratio	33.6	%	33.6	%	⁽²⁾	35.1	%	⁽⁵⁾	30.4	%	⁽⁷⁾	29.5	%	⁽⁸⁾	30.3	%
Interest coverage ratio ⁽¹⁰⁾	4.8	x	4.4	x	⁽³⁾	4.8	x	^{(6 )}	5.1	x		5.0	x	⁽⁹⁾	4.7	x
Fixed charge coverage ratio ⁽¹⁰⁾	4.8	x	4.4	x	⁽³⁾	4.8	x	^{(6 )}	5.1	x		5.0	x	⁽⁹⁾	4.7	x

(1)	Decreased due to decrease in outstanding debt.

(2)	Decreased due to decrease in outstanding debt partially offset by decrease in market capitalization resulting from lower stock price.

(3)	Decreased due to increase in interest expense partially offset by increase in net operating income from our SHOP segment.

(4)	Increased due to increase in outstanding debt partially offset by increase in gross asset value.

(5)	Increased due to increase in outstanding debt partially offset by increase in market capitalization resulting from the sale of common stock under our Equity Distribution Agreement as well as increase in stock price.

(6)	Decreased due to increase in interest expense and decrease in rental income partially offset by increase in revenue from resident fees and services and interest and other income.

(7)	Increased due to increase in outstanding debt and decrease in market capitalization from lower stock price.

(8)	Decreased due to increase in market capitalization due to increase in stock price.

(9)	Increased due to decrease in interest expense.

(10)

In calculating our interest coverage and fixed charge coverage ratios above, we use EBITDAre, which is a financial measure not derived in accordance with GAAP (non-GAAP financial measure). EBITDAreand Adjusted EBITDAreare not alternatives to net income, operating income or cash flows from operating activities as calculated and presented in accordance with GAAP. You should not rely on EBITDAre and Adjusted EBITDAreas a substitute for any such GAAP financial measures or consider it in isolation, for the purpose of analyzing our financial performance, financial position or cash flows. Net income is the most directly comparable GAAP measure to EBITDAre and Adjusted EBITDAre.

We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved and actual results may differ materially from our expectations. This may be a result of various factors, including, but not limited to:

●

the status of the economy;

●

the status of capital markets, including prevailing interest rates;

●

compliance with and changes to regulations and payment policies within the health care industry;

●

changes in financing terms;

●

competition within the health care and seniors housing industries;

●

changes in federal, state and local legislation; and

●

the duration, spread and severity of a public health crises such as a pandemic.

Management regularly monitors the economic and other factors listed above. We develop strategic and tactical plans designed to improve performance and maximize our competitive position. Our ability to achieve our financial objectives is dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic, health care and company-specific trends.

Operating Results

Year ended December 31, 2025 compared to year ended December 31, 2024 (in thousands):


	Year Ended December 31,
	2025			2024			Difference
Revenues:
Rental income	$	116,171		$	132,278		$	(16,107)	⁽¹⁾
Resident fees and services		72,116			-			72,116	⁽²⁾
Interest income from financing receivables		28,315			21,663			6,652	⁽³⁾
Interest income from mortgage loans		39,023			45,216			(6,193)	⁽⁴⁾
Interest and other income		7,229			10,690			(3,461)	⁽⁵⁾
Total revenues		262,854			209,847			53,007

Expenses:
Interest expense		35,306			40,336			5,030	⁽⁶⁾
Depreciation and amortization		37,874			36,367			(1,507)	⁽⁷⁾
Seniors housing operating expenses		54,088			-			(54,088)	⁽⁸⁾
Impairment loss		-			6,953	⁽⁹⁾		6,953
Write-off of effective interest receivable		41,455			-			(41,455)	⁽¹⁰⁾
Provision for credit losses		4,515			741			(3,774)	⁽¹¹⁾
Transaction costs		8,221			819			(7,402)	⁽¹²⁾
Triple-net lease property tax expense		10,795			12,930			2,135
General and administrative expenses		31,120			27,243			(3,877)	⁽¹³⁾
Total expenses		223,374			125,389			(97,985)

Income before unconsolidated joint ventures, real estate dispositions and other items		39,480			84,458			(44,978)

Gain on sale of real estate, net		77,822	⁽¹⁴⁾		7,979	⁽¹⁵⁾		69,843
Income from unconsolidated joint ventures		6,757			2,442			4,315	⁽¹⁶⁾
Income tax provision		(179)			-			(179)
Net income		123,880			94,879			29,001
Income allocated to non-controlling interests		(5,908)			(3,839)			(2,069)	⁽³⁾
Net income attributable to LTC Properties, Inc.		117,972			91,040			26,932
Income allocated to participating securities		(696)			(682)			(14)
Net income available to common stockholders	$	117,276		$	90,358		$	26,918

(1)

Decreased primarily due to conversion of 15 communities from triple-net to our SHOP segment, lower rent from property sales and the turnaround impact of a one-time revenue received in 2024 related to the repayment of a $2,377 rent credit, write-off of a straight-line rent receivable balance due to an operator filing for bankruptcy and the write-off of a straight-line rent receivable and lease incentive balance in connection with the termination of two existing leases with the same operator, and combining them into a single master lease. The decreases were partially offset by rent increases from fair-market rent resets, annual escalations and amendments.

(2)	Resident fees and services include all amounts earned from residents, based on individual resident agreements, at our SHOP communities.

(3)	Increased primarily due to the exchange of two mortgage loan receivables near the end of the second quarter of 2024 for controlling interests in two newly formed JVs that are accounted for as financing receivables.

(4)	Decreased primarily due to explanation (3) above, decrease in Prestige effective interest previously accrued, and payoffs partially offset by additional mortgage loan funding.

(5)	Decreased due to aggregate one-time income of $4,052 received from two former operators and receipt of insurance proceeds in 2024 compared to one-time income of $600 received from a former operator in 2025.

(6)	Decreased due to lower average outstanding balance on our revolving line of credit, scheduled principal paydowns on our senior unsecured notes and lower interest rates.

(7)	Increased due to acquisitions within our SHOP segment partially offset by properties sold.

(8)	Represents operating expenses related to our new SHOP segment.

(9)	Represents the impairment loss in connection with the anticipated closure of two SH communities totaling 95 units in Ohio and Texas and the subsequent sale of a 29-unit SH community located in Oklahoma.

(10)	In conjunction with the Prestige mortgage loan modification that provided Prestige a penalty-free early payoff option, we wrote-off interest receivable previously accrued related to this mortgage loan.

(11)	Increased due to the write-off of working capital notes and interest receivable in connection with the transition of triple-net leases covering 15 properties to RIDEA.

(12)	Increased primarily due to $5,971 lease termination fee paid to New Perspective upon conversion of the community covered under a triple-net lease into our SHOP segment and additional costs associated with the startup of our new RIDEA platform.

(13)	Increased primarily due to one-time expenses related to an employee's retirement and increase in incentive compensation expenses and other corporate expenses.

(14)

Represents the gain on sale related to the sale of seven SNFs with a total of 896 units located in California (one), Florida (two) and Virginia (four), one SH and a parcel of land adjacent to an SH within our portfolio located in Ohio partially offset by a net loss on sale related to a closed facility in Texas.

(15)	Represents the gain on sale of an 80-unit SH in Texas, a 110-unit community in Wisconsin and three closed properties located in Texas (two) and Colorado (one), partially offset by the aggregate loss on sale of six SHs located in Texas (five) and Florida (one).

(16)	Increased due to the aggregate exit IRR of $4,762 received in connection with the redemption of our preferred equity investments in two JVs.

Year ended December 31, 2024 compared to year ended December 31, 2023 (in thousands):


	Year Ended December 31,
	2024			2023			Difference
Revenues:
Rental income	$	132,278		$	127,350		$	4,928	⁽¹⁾
Interest Income from financing receivables		21,663			15,243			6,420	⁽²⁾
Interest income from mortgage loans		45,216			47,725			(2,509)	⁽³⁾
Interest and other income		10,690			6,926			3,764	⁽⁴⁾
Total revenues		209,847			197,244			12,603

Expenses:
Interest expense		40,336			47,014			6,678	⁽⁵⁾
Depreciation and amortization		36,367			37,416			1,049	⁽⁶⁾
Impairment loss		6,953	⁽⁷⁾		15,775	⁽⁸⁾		8,822
Provision for credit losses		741			5,678			4,937	⁽⁹⁾
Transaction costs		819			1,144			325
Property tax expense		12,930			13,269			339
General and administrative expenses		27,243			24,286			(2,957)	⁽¹⁰⁾
Total expenses		125,389			144,582			19,193

Income before unconsolidated joint ventures, real estate dispositions and other items

Gain on sale of real estate, net		7,979	⁽¹¹⁾		37,296	⁽¹²⁾		(29,317)
Income from unconsolidated joint ventures		2,442			1,504			938	⁽¹³⁾
Net income		94,879			91,462			3,417
Income allocated to non-controlling interests		(3,839)			(1,727)			(2,112)	⁽²⁾
Net income attributable to LTC Properties, Inc.		91,040			89,735			1,305
Income allocated to participating securities		(682)			(587)			(95)
Net income available to common stockholders	$	90,358		$	89,148		$	1,210

(1)

Increased due to $3,158 one-time additional straight-line rental income related to restoring accrual basis accounting for two master leases, $2,377 repayment of rent credit in connection with the sale of our interest in a consolidated JV, rental income from acquisitions, annual rent escalations, partially offset by portfolio transitions and property sales.

(2)	Increased primarily due to exchange of two mortgage loan receivables during the second quarter of 2024 for controlling interests in two newly formed JVs that are accounted for as financing receivables.

(3)	Decreased primarily due to explanation (2) above and payoffs, partially offset by mortgage loan originations.

(4)	Increased primarily due to aggregate one-time income of $4,052 received from two former operators, partially offset by working capital note payoffs.

(5)	Decreased due to lower outstanding balance on our revolving line of credit and scheduled principal paydowns on our senior unsecured notes.

(6)	Decreased due to properties sold.

(7)	Represents the impairment loss in connection with the anticipated closure of SH totaling 95 units in Ohio and Texas and the subsequent sale of a 29-unit SH located in Oklahoma.

(8)

Represents the impairment loss in connection with the negotiations to sell seven SH totaling 248 units in Texas and the impairment loss related to three SH totaling 197 units in Florida and Mississippi due to entering into purchase and sale agreements with sales prices lower than the communities' carrying values. These properties were sold during 2023 and 2024.

(9)	Decreased primarily due to the $3,561 write-off of an uncollectible working capital loan in 2023 and loan and note payoffs, offset by explanation (2) above.

(10)	Increased due to higher costs related to properties transitioned to new operators, incentive compensation charges, public company costs and the timing of certain expenditures.

(11)	Represents the gain on sale of an 80-unit SH in Texas, a 110-unit community in Wisconsin and three closed properties located in Texas (two) and Colorado (one), partially offset by the aggregate loss on sale of six SHs located in Texas (five) and Florida (one).

(12)	Represents the aggregate net gain on sale related to 19 SHs located in Florida (five), Kentucky (one), Mississippi (one), Nebraska (three), New Jersey (one), Oklahoma (one), Pennsylvania (two) and South Carolina (three) and two SNFs in New Mexico during 2023.

(13)	Increased due to additional income from origination of a $12,700 mortgage loan receivable secured by a SNF in Texas. In accordance with GAAP, this mortgage loan receivable was determined to be an acquisition, development and construction ("ADC") loan and is accounted for as an unconsolidated JV.

Other

Non-GAAP Financial Measures

A non-GAAP financial measure is defined as a numerical measure of a registrant's historical or future financial performance, financial position or cash flows that excludes or includes amounts that are not excluded from or included in the most directly comparable measure calculated and presented in accordance with GAAP. We consider Funds from Operations ("FFO"), NOI and EBITDAre to be useful supplemental measures of our financial or operating performance.

Funds From Operations

FFO attributable to common stockholders, basic FFO attributable to common stockholders per share and diluted FFO attributable to common stockholders per share are supplemental measures of a REIT's financial performance that are not defined by GAAP. Real estate values historically rise and fall with market conditions, but cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. We believe that by excluding the effect of historical cost depreciation, which may be of limited relevance in evaluating current performance, FFO facilitates comparisons of operating performance between periods.

We use FFO as a supplemental performance measurement of our cash flow generated by operations. FFO does not represent cash generated from operating activities in accordance with GAAP, and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income available to common stockholders.

We calculate and report FFO in accordance with the definition and interpretive guidelines issued by Nareit. FFO, as defined by Nareit, means net income available to common stockholders (computed in accordance with GAAP) excluding gains or losses on the sale of real estate and impairment write-downs of depreciable real estate plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Our calculation of FFO may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current Nareit definition or that have a different interpretation of the current Nareit definition from us; therefore, caution should be exercised when comparing our FFO to that of other REITs.

The following table reconciles net income available to common stockholders to FFO attributable to common stockholders (unaudited, amounts in thousands, except per share amounts):



	For the Year Ended December 31,
	2025		2024		2023
GAAP net income available to common stockholders	$	117,276	$	90,358	$	89,148
Add: Depreciation and amortization		37,874		36,367		37,416
Add: Impairment loss		-		6,953		15,775
Less: Gain on sale of real estate, net		(77,822)		(7,979)		(37,296)
Nareit FFO attributable to common stockholders	$	77,328	$	125,699	$	105,043
Nareit FFO attributable to common stockholders per share:
Effect of dilutive securities:
Add: Participating securities		-		682		587
Diluted Nareit FFO attributable to common stockholders	$	77,328	$	126,381	$	105,630

Weighted average shares used to calculate Nareit FFO per share:
Shares for basic net income per share		46,230		43,743		41,272
Effect of dilutive securities:
Performance-based stock units		330		498		86
Participating securities		-		296		256
Total effect of dilutive securities		330		794		342
Shares for diluted FFO per share		46,560		44,537		41,614

Net Operating Income

Net operating income or NOI is a non-GAAP financial measure that is calculated as net income (loss) (computed in accordance with GAAP) before (i) general and administrative expenses, (ii) transaction costs, (iii) write-off of effective interest, (iv) provision for credit losses, (v) impairment loss, (vi) depreciation and amortization, (vii) interest expense,(viii) gain or loss on sale of real estate and (ix) income tax benefit or expense. We use NOI to reflect the operating performance of our portfolio because NOI excludes certain items that are not associated with the operations of our properties.

NOI is not equivalent to our net income (loss) as determined under GAAP. Additionally, our use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount. Therefore, caution should be exercised when comparing our NOI to that of other REITs.

The following is a reconciliation of net income or loss, which is the most directly comparable GAAP financial measure to NOI for the years ended December 31, 2025, 2024 and 2023 (in thousands):


	Year Ended December 31,
	2025		2024		2023
Net income	$	123,880	$	94,879	$	91,462
Add: Income tax provision		179		-		-
Less : Gain on sale of real estate, net		(77,822)		(7,979)		(37,296)
Add: General and administrative expense		31,120		27,243		24,286
Add: Transaction costs		8,221		819		1,144
Add: Write-off of effective interest		41,455		-		-
Add: Provision for credit losses		4,515		741		5,678
Add: Impairment loss		-		6,953		15,775
Add: Depreciation and amortization		37,874		36,367		37,416
Add: Interest expense		35,306		40,336		47,014
NOI	$	204,728	$	199,359	$	185,479

Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate

Earnings before interest, taxes, depreciation and amortization for real estate or EBITDAre is calculated as net income available to common stockholders (computed in accordance with GAAP) excluding (i) interest expense, (ii) income tax expense, (iii) real estate depreciation and amortization, (iv) impairment write-downs of depreciable real estate, (v) gains or losses on the sale of depreciable real estate, and (vi) adjustments for unconsolidated partnerships and joint ventures.

EBITDAre is not an alternative to net income, operating income or cash flows from operating activities as calculated and presented in accordance with GAAP. You should not rely on EBITDAre as a substitute for any such GAAP financial measures or consider it in isolation, for the purpose of analyzing our financial performance, financial position or cash flows. Net income is the most directly comparable GAAP measure to EBITDAre.

The following is a reconciliation of net income or loss, which is the most directly comparable GAAP financial measure to EBITDAre for the periods presented below (in thousands):


	Year to Date			Three Months Ended
	12/31/25			12/31/25				9/30/25		6/30/25			3/31/25			12/31/24
Net income (loss)	$	123,880		$	103,651		$	(18,540)		$	16,548		$	22,221		$	19,590
Less/Add: (Gain)/loss on sale		(77,822)			(78,057)			738			(332)			(171)			(1,097)
Add/Less: Income tax provision (benefit)		179			218			42			(81)			-			-
Add: Impairment loss		-			-			-			-			-			6,953
Add: Interest expense		35,306			10,588			8,791			8,014			7,913			8,365
Add: Depreciation and amortization		37,874			10,949			8,987			8,776			9,162			9,194
EBITDAre		119,417			47,349			18			32,925			39,125			43,005
Add/(Less): Non-recurring one-time items		49,783	⁽¹⁾		(1,051)	⁽²⁾		42,418	⁽³⁾		8,011	⁽⁴⁾		405	⁽⁵⁾		(3,379)	⁽⁶⁾
Adjusted EBITDAre	$	169,200		$	46,298		$	42,436		$	40,936		$	39,530		$	39,626

Interest expense	$	35,306		$	10,588		$	8,791		$	8,014		$	7,913		$	8,365

Interest coverage ratio		4.8	x		4.4	x		4.8	x		5.1	x		5.0	x		4.7	x

Interest expense	$	35,306		$	10,588		$	8,791		$	8,014		$	7,913		$	8,365
Total fixed charges	$	35,306		$	10,588		$	8,791		$	8,014		$	7,913		$	8,365

Fixed charge coverage ratio		4.8	x		4.4	x		4.8	x		5.1	x		5.0	x		4.7	x

(1)	See (2) through (5) below.

(2)

Includes $1,800 received in connection with the redemption of our preferred equity investment in a joint venture and $600 of one-time income received from a former operator partially offset by $957 write-off of a working capital note and $392 of one-time transaction costs in connection with the transition to RIDEA.

(3)

Includes $41,455 effective interest write-off related to a mortgage loan amendment that permits penalty-free early payoff window within an allowable window, $1,271 straight-line rent receivable write-off due to an operator's bankruptcy filing, $554 provision for credit losses related to mortgage loan originations and $488 of one-time transaction costs in connection with the transition to RIDEA partially offset by the exit IRR of $975 received in connection with an early payoff of a mezzanine loan and recovery of credit losses of $375 related to loan payoffs.

(4)	Includes $5,971termination fee paid to New Perspective, $1,136 one-time costs associated with an employee's retirement, $520 of one-time RIDEA transaction costs and $384 provision for credit losses related to a mortgage loan origination.

(5)

Includes $2,693 write-off of a working capital note, $371 of related interest receivable, and $303 of one-time transaction costs, all in connection with the transition to RIDEA, partially offset by the 13% exit IRR of $2,962 received in connection with the redemption of our preferred equity investment in a JV.

(6)

Includes a one-time additional straight-line income of $3,158 related to restoring accrual basis accounting for two master leases, recovery of credit losses of $511 related to a mortgage loan receivable write-off, partially offset by a $290 provision for credit losses related to the write-off of an uncollectible loan receivable.

Critical Accounting Policies and Estimates

Our accounting policies are more fully described under Item 8. FINANCIAL STATEMENTS-Footnote 2. Summary of Significant Accounting Policies. As discussed in Footnote 2, the preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Listed below are those policies and estimates that we believe are critical and require the use of significant judgement in their application.

Impairment of Long-Lived Assets

Assets that are classified as held-for-use are periodically evaluated for impairment when events or changes in circumstances indicate that the asset may be impaired or the carrying amount of the asset may not be recoverable through future undiscounted cash flows. Where indicators of impairment exist, the estimation required in the undiscounted future cash flow assumption includes management's probability-weighting of various scenarios such as modifying the lease with the existing operator, identifying a replacement operator or sale of the real property investment. In addition, the undiscounted future cash flows include management's assumptions of rental revenues, net operating income, capitalization rates and expected hold periods. In determining fair value, we use current appraisals or other third-party opinions of value and other estimates of fair value such as estimated discounted future cash flows.

Collectability of operator obligations

We assess the collectability of substantially all our lease, financing receivables and mortgage loan payments through maturity. If collectability is not probable, all or a portion of our straight-line rent receivable, effective interest receivable and other lease receivables may be written-off. In order to assess our payments for collectability, we make assumptions that include evaluating operator's payment history, the financial strength of the operator, projected future market conditions and contractual amounts and timing of expected payments. Our ability to accurately predict collectability of substantially all of the payments due to us impacts the timing of straight-line rent, effective interest and other lease receivable write-offs, if any. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our consolidated financial statements.

Purchase Price Allocation

We evaluate each purchase transaction to determine whether the acquired assets meet the definition of an asset acquisition or a business combination. Transaction costs related to acquisitions that are not deemed to be business combinations are included in the cost basis of the acquired assets, while transaction costs related to acquisitions that are deemed to be business combinations are expensed as incurred.

We make estimates as part of our allocation of the purchase price for asset acquisitions to the various components of the acquisition based upon the relative fair value of each component. The most significant components of our purchase allocations are typically the allocation of fair value to land and building. Our estimates of the fair value of land and building acquired were determined using the sales comparison approach and the income approach, respectively, and include assumptions of comparable land sales, direct capitalization rates and property net operating income.

In the case of the fair value of buildings and the allocation of value to land and other intangibles, the estimates of the values of these components will affect the amount of depreciation and amortization we record over the estimated useful life of the property acquired or the remaining lease term.

Liquidity and Capital Resources

Sources and Uses of Cash

As of December 31, 2025, we had $650.0 million in liquidity as follows (amounts in thousands):


	At December 31, 2025
Cash and cash equivalents	$	14,387
Available under unsecured revolving line of credit		347,137	⁽¹⁾
Available under Equity Distribution Agreement		288,509	⁽²⁾
Total Liquidity	$	650,033	⁽³⁾

(1)	Subsequent to December 31, 2025, we borrowed $107,000 under our unsecured revolving line of credit. Accordingly, we have $359,863 outstanding with $240,137 available for borrowing.

(2)	Subsequent to December 31, 2025, we sold 71,059 shares of common stock under our Equity Distribution Agreement. Accordingly, we had $285,970 available under the Equity Distribution Agreement.

(3)	Subsequent to December 31, 2025, we had $540,494 in Liquidity. See (1) and (2) above.

We believe that our current cash balance, cash flow from operations available for distribution or reinvestment, our borrowing capacity and our potential ability to access the capital markets are sufficient to provide for payment of our current operating costs, meet debt obligations and pay common dividends at least sufficient to maintain our REIT status and repay borrowings at, or prior to, their maturity. The timing, source and amount of cash flows used by financing and investing activities are sensitive to the capital markets' environment, especially to changes in interest rates. In addition, inflation has adversely affected our operators' business, results of operations, cash flows and financial condition which could, in turn, adversely affect our financial position.

The operating results of the properties will be impacted by various factors over which the operators may have no control. Those factors include, without limitation, the health of the economy, inflation pressures, employee availability and cost, changes in supply of or demand for competing seniors housing and health care facilities, ability to hire and maintain qualified staff, ability to control other rising operating costs, the potential for significant reforms in the health care industry, and related occupancy challenges that could be faced by our industry or in the markets where our properties are located. In addition, our future growth in net income and cash flow may be adversely impacted by various proposals for changes in the governmental regulations and financing of the health care industry or the impact of any other infectious disease and epidemic outbreaks. We cannot presently predict what impact these potential events may have, if any. We believe that adequate provisions have been made for the possibility of loans and financing receivables proving uncollectible but we will continually evaluate the financial status of the operations of our seniors housing and health care properties. In addition, we will monitor our borrowers and the underlying collateral for mortgage loans and financing receivables and will make future revisions to the provision, if considered necessary.

Depending on our borrowing capacity, compliance with financial covenants, ability to access the capital markets, and the payment of dividends may be negatively impacted. We continuously evaluate the availability of cost-effective capital and believe we have sufficient liquidity for our current dividend, corporate expenses and additional capital investments in 2026.

Our investments, principally our investments in owned real properties, financing leases and mortgage loans, are subject to the possibility of loss of their carrying values as a result of changes in market prices, interest rates and inflationary expectations. The effects on interest rates may affect our costs of financing our operations and the fair market value of our financial assets. Generally, our leases have agreed upon annual increases and our loans have predetermined increases in interest rates. Inasmuch as we may initially fund some of our investments with variable interest rate debt, we would be at risk of net interest margin deterioration if medium and long-term rates were to increase.

Our primary sources of cash include rent and interest receipts, borrowings under our unsecured credit facility, public and private issuance of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable. Our primary uses of cash include property operating expenses and recurring capital expenditures within our SHOP segment, dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, renovations and other capital improvements and construction advances), loan advances and general and administrative expenses. These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows as summarized below (in thousands):


	Year Ended December 31,					Change
Net cash provided by (used in):	2025		2024			$
Operating activities	$	135,977	$	125,875	$	10,102
Investing activities		(269,944)		90,680		(360,624)
Financing activities		138,940		(227,427)		366,367
Increase (decrease) in cash and cash equivalents		4,973		(10,872)		15,845
Cash and cash equivalents, beginning of period		9,414		20,286		(10,872)
Cash and cash equivalents, end of period	$	14,387	$	9,414	$	4,973

Debt Obligations

Unsecured Credit Facility. We had an unsecured credit agreement that provided for an aggregate commitment of the lenders of up to $525.0 million comprising of a $425.0 million revolving credit facility and two $50.0 million term loans (the "Original Term Loans"). The Original Term Loans had maturities of November 19, 2025 and November 19, 2026. The revolving credit facility had a maturity date of November 19, 2026. The unsecured credit agreement permitted us to request increases to the revolving credit facility and term loans commitments up to a total of $1.0 billion. During the third quarter of 2025, we entered into a new four-year unsecured credit agreement (the "New Credit Agreement") maturing in July 2029, to replace our previous credit agreement. The New Credit Agreement increased the aggregate commitment on our revolving credit facility from $425.0 million to $600.0 million (the "Revolving Line of Credit") and provides for the opportunity to increase the total commitment to an aggregate $1.2 billion (the "Accordion"). The New Credit Agreement provides for a one-year extension option, subject to customary conditions. Material terms of the New Credit Agreement remain unchanged. In connection with the New Credit Agreement, the Original Term loans were rolled into the Revolving Line of Credit. During the fourth quarter of 2025, we amended our New Credit Agreement to increase the aggregate commitment of the lenders by $200.0 million to a total of $800.0 million through the exercise of the Accordion and established term loans totaling $200.0 million (the "Term Loans"). The Term Loans consist of $50.0 million, $55.0 million, $55.0 million and $40.0 million borrowings, with contractual maturities of three, four, five and seven years, respectively.

Based on our leverage at December 31, 2025, the Revolving Line of Credit provides for interest annually at Adjusted SOFR plus 110 basis points and a facility fee of 15 basis points and the Term Loans provide for interest annually at SOFR plus 115 basis points for the three, four and five year borrowings and 150 basis points for seven year borrowings.

Interest Rate Swap Agreement.In connection with entering into the Original Term Loans as discussed above, we entered into two receive variable/pay fixed interest rate swap agreements with maturities of November 19, 2025 and November 19, 2026, respectively, that effectively locked-in the forecasted interest payments on the Original Term Loan borrowings over the four and five year terms of the loans. Additionally, during the fourth quarter of 2025, we entered into interest rate swaps with maturities of three, four, five and seven years, respectively (the "Interest Rate Swaps") to effectively lock-in the forecasted interest payments on the Term Loans. Our interest rate swaps are considered cash flow hedges and are recorded on our Consolidated Balance Sheets at fair value, with changes in the fair value of these instruments recognized in Accumulated other comprehensive income (loss) on our Consolidated Balance Sheets. During the year ended December 31, 2025, we recorded $3.3 million decrease in fair value of interest rate swaps.

The following table sets forth information regarding our interest rate swaps at December 31, 2025 (dollar amounts in thousands):


						Notional			Fair Value at
Date Entered	Maturity Date	Swap Rate			Rate Index	Amount			December 31, 2025
November 2021	November 19, 2025	N/A	%	⁽¹⁾	1-month SOFR	$	N/A	⁽¹⁾	$	-	⁽¹⁾
November 2021	November 19, 2026	2.46	%		1-month SOFR		50,000	⁽²⁾		938
December 2025	December 12, 2028	4.61	%		SOFR with 5-day lookback		25,000			(52)
December 2025	December 12, 2028	4.61	%		SOFR with 5-day lookback		25,000			(55)
December 2025	December 12, 2029	4.65	%		SOFR with 5-day lookback		55,000			(136)
December 2025	December 12, 2030	4.68	%		SOFR with 5-day lookback		30,000			(45)
December 2025	December 12, 2030	4.72	%		SOFR with 5-day lookback		25,000			(74)
December 2025	December 12, 2032	5.21	%		SOFR with 5-day lookback		27,500			(45)
December 2025	December 12, 2032	5.25	%		SOFR with 5-day lookback		12,500			(49)
						$	250,000		$	482

(1)	The interest rate swap, which had a notional amount of $50,000, matured on November 19, 2025. Accordingly, the fair value of the interest rate swap was $0 at December 31, 2025.

(2)	During the third quarter of 2025, the interest rate swap was rolled into the Revolving Line of Credit.

Senior Unsecured Notes. We have senior unsecured notes held by institutional investors with interest rates ranging from 3.66% to 4.5%. The senior unsecured notes mature between 2026 and 2033.

The debt obligations by component as of December 31, 2025 are as follows (dollar amounts in thousands):


	Applicable			Available
	Interest	Outstanding		for
Debt Obligations	Rate ⁽¹⁾	Balance		Borrowing
Revolving line of credit ⁽²⁾	4.40%	$	252,863	$	347,137
Term loans, net of debt issue costs	4.77%		198,213		-
Senior unsecured notes, net of debt issue costs ⁽³⁾	4.12%		391,105		-
Total	4.36%	$	842,181	$	347,137

(1)	Represents weighted average of interest rate as of December 31, 2025.

(2)	Subsequent to December 31, 2025, we borrowed $107,000 under our unsecured revolving line of credit. Accordingly, we have $359,863 outstanding and $240,137 available for borrowing under our unsecured revolving line of credit.

(3)	Subsequent to December 31, 2025, we repaid $5,000 in scheduled principal paydowns on our senior unsecured notes. Accordingly, we have $386,105 outstanding under our senior unsecured notes, net of debt issue costs.

Our debt borrowings and repayments during the year ended December 31, 2025, are as follows (in thousands):


Debt Obligations		Borrowings			Repayments
Revolving line of credit	$	486,500	⁽¹⁾	$	(377,987)
Term loans		200,000			(100,000)
Senior unsecured notes		-			(49,500)	⁽²⁾
Total	$	686,500		$	(527,487)

(1)	Subsequent to December 31, 2025, we borrowed $107,000 under our unsecured revolving line of credit. Accordingly, we have $359,863 outstanding and $240,137 available for borrowing under our unsecured revolving line of credit.

(2)	Subsequent to December 31, 2025, we repaid $5,000 in scheduled principal paydowns on our senior unsecured notes. Accordingly, we have $386,105 outstanding under our senior unsecured notes, net of debt issue costs.

Equity

At December 31, 2025, we had 48,481,892 shares of common stock outstanding, equity on our balance sheet totaled $1.2 billion and our equity securities had a market value of $1.7 billion. During the year ended December 31, 2025, we declared and paid $107.4 million cash dividends.

Non-controlling Interests. We have entered into partnerships to develop and/or own real estate. Given that our limited members do not have substantive kick-out rights, liquidation rights, or participation rights, we have concluded that the partnerships are VIEs. Since we exercise power over and receive benefits from the VIEs, we are considered the primary beneficiary. Accordingly, we consolidate the VIEs and record the non-controlling interests at cost. As of December 31, 2025, we have the following consolidated VIEs (in thousands):


					Gross
Investment		Property			Consolidated			Non-Controlling
Year	Purpose	Type	State		Assets ⁽¹⁾			Interests
2024	Own real estate	SH	NC/SC	$	122,460		$	58,010
2024	Own real estate	SH	NC		41,000			3,015
2023	Own real estate	SH	OH		54,942			9,134
2023	Own real estate	SH	NC		123,082			2,916
2022	Own real estate	SNF	FL		76,545	⁽²⁾		14,325
Total				$	418,029		$	87,400

(1)	Includes the total real estate investments and excludes intangible assets.

(2)	During the fourth quarter of 2025, the lessee provided notice of intent to exercise the purchase option available with an exit IRR of 8.5%.

During the year ended December 31, 2025, we acquired our joint venture partner's non-controlling interests in

the joint ventures that own two seniors housing communities in Oregon with a total of 186 units for $1.2 million. Accordingly, we obtained full ownership and control of these communities. As a result these joint ventures are not listed in the table above.

Common Stock. We have an equity distribution agreement (the "Equity Distribution Agreement") to offer and sell, from time to time, up to $400.0 million in aggregate offering price of shares of our common stock. The Equity Distribution Agreement provides for sales of common shares to be made by means of ordinary brokers' transactions, which may include block trades, or transactions that are deemed to be "at the market" offerings.

During the year ended December 31, 2025, we sold 2,804,200 shares of our common stock for $100.6 million in net proceeds under the Equity Distribution Agreement. Accordingly, at December 31, 2025, we had $288.6 million available under the Equity Distribution Agreement. In conjunction with the sale of common stock, we incurred $0.4 million of costs associated with the Equity Distribution Agreement which have been recorded in additional paid in capital as a reduction of proceeds received. Subsequent to December 31, 2025, we sold 71,059 shares of common stock for $2.5 million in net proceeds under our Equity Distribution Agreement.

During 2025, we acquired 151,018 shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations. Subsequent to December 31, 2025, we declared a monthly cash dividend of $0.19 per share on our common stock for the months of January, February and March 2026, payable on January 30, February 27 and March 31, 2026, respectively, to stockholders of record on January 22, February 20, and March 23, 2026, respectively.

Stock Based Compensation Plans. During 2021, we adopted, and our stockholders approved the 2021 Equity Participation Plan (the "2021 Plan") which replaced the 2015 Equity Participation Plan (the "2015 Plan"). Under the 2021 Plan, 1,900,000 shares of common stock have been authorized and reserved for awards, less one share for every one share that was subject to an award granted under the 2015 Plan after December 31, 2020 and prior to adoption. In addition, any shares that were not issued under outstanding awards under the 2015 Plan because the shares were forfeited or cancelled after December 31, 2020 were added to and available for awards under the 2021 Plan. Under the 2021 Plan, the shares were authorized and reserved for awards to officers, employees, non-employee directors and consultants. The terms of the awards granted under the 2021 Plan are set by our compensation committee at its discretion. As of December 31, 2025, we had 1,327,393 shares of common stock reserved for awards under the 2021 Plan.

Restricted Stock and Performance-based Stock Units.During 2025, we granted 236,242 shares of restricted common stock and performance-based stock units under the 2021 Plan as follows:


No. of	Price per
Shares	Share		Award Type	Vesting Period
113,790	$	34.88	Restricted stock	ratably over 3 years
5,626	$	35.55	Restricted stock	April 30, 2028
15,625	$	35.20	Restricted stock	⁽¹⁾
52,666	$	34.88	Performance-based stock units	TSR targets ⁽²⁾
48,535	$	34.88	Performance-based stock units	TSR targets ⁽³⁾
236,242

(1)	The vesting date is the earlier of the one-year anniversary of the award date and the date of the next annual meeting of the stockholders of LTC following the award date.

(2)	Vesting is based on achieving certain total shareholder return ("TSR") targets in 3 years.

(3)	Vesting is based on achieving certain TSR targets relative to the TSR of predefined peer group in 3 years.

At December 31, 2025, the remaining compensation expense to be recognized related to the future service period of unvested outstanding restricted common stock and performance-based stock units are as follows (dollar amounts in thousands):


	Remaining
	Compensation
Vesting Date	Expense
2026	$	5,887
2027		2,899
2028		322
Total	$	9,108

Stock Options.We did not issue any stock options during the year ended December 31, 2025. At December 31, 2025, we had no stock options outstanding and exercisable.

Material Cash Requirements

We monitor our contractual obligations and commitments described above to ensure funds are available to meet obligations when due. The following table represents our long-term contractual obligations (scheduled principal payments and amounts due at maturity) as of December 31, 2025, excluding the effects of interest and debt issue costs (in thousands):


	Total			2026			2027		2028		2029		2030		Thereafter
Revolving line of credit	$	252,863	⁽¹⁾	$	-		$	-	$	252,863	$	-	$	-	$	-
Term loans		200,000			-			-		50,000		55,000		55,000		40,000
Senior unsecured notes		392,000	⁽²⁾		51,500	⁽²⁾		54,500		55,000		63,000		67,000		101,000
	$	844,863		$	51,500		$	54,500	$	357,863	$	118,000	$	122,000	$	141,000

(1)	Subsequent to December 31, 2025, we borrowed $107,000 under our unsecured revolving line of credit. Accordingly, we have $359,863 outstanding and $240,137 available for borrowing under our unsecured revolving line of credit.

(2)	Subsequent to December 31, 2025, we repaid $5,000 in scheduled principal paydowns on our senior unsecured notes. Accordingly, we have $386,105 outstanding under our senior unsecured notes.

The following table represents our projected interest expense based on current interest rates as of year-end, excluding capitalized interest, amortization of debt issue costs and bank fees, as of December 31, 2025 (in thousands):


	Total		2026		2027		2028		2029		2030		Thereafter
Revolving line of credit	$	41,110	$	12,351	$	11,251	$	11,282	$	6,226	$	-	$	-
Term loans		44,824		9,671		9,671		9,569		7,191		4,595		4,127
Senior unsecured notes		56,228		15,218		13,154		10,306		7,995		5,751		3,804
	$	142,162	$	37,240	$	34,076	$	31,157	$	21,412	$	10,346	$	7,931

Also, see Item 8. FINANCIAL STATEMENTS- Note 16. Commitments and Contingencies within our consolidated financial statements for additional information regarding our contractual commitments.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources.

LTC Properties Inc. published this content on February 24, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 24, 2026 at 21:47 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]