As of June 30, 2025, mortgage notes receivable totaled $169.4 million, each of which are secured by real estate properties and other assets of the borrowers and related to 16 facilities. Other notes receivable totaled $101.0 million, substantially all of which are guaranteed by significant parties to the notes or by cross-collateralization of properties with the same owner. As of December 31, 2024, our investments in mortgage notes receivable totaled $175.8 million and other notes receivable totaled $113.4 million. These amounts, as stated above, exclude credit loss reserves of $17.5 million and $20.2 million as of June 30, 2025 and December 31, 2024, respectively.

As of June 30, 2025, we had two loans designated as non-performing notes consisting of a mezzanine loan with a principal balance of $12.0 million due from affiliates of SLM and an unsecured loan due from Bickford with a principal balance of $1.3 million. As of December 31, 2024, we had three loans designated as non-performing notes consisting of $14.5 million of principal due under the SLM mezzanine loan, $1.4 million of principal due under the Bickford loan and a mortgage due from SLM with a principal balance of $10.0 million.

Interest income recognized on a cash basis from these non-performing notes was $0.1 million for the six months ended June 30, 2025 and $0.5 million and $0.9 million for the three and six months ended June 30, 2024, respectively. The credit loss reserves related to non-performing notes totaled $13.3 million and $16.1 million as of June 30, 2025 and December 31, 2024, respectively.

In February 2025, we acquired an assisted living facility in Oviedo, Florida upon the execution of a deed in lieu of foreclosure agreement in settlement of the $10.0 million non-performing mortgage due from SLM. We recorded the acquired real estate property at its estimated fair value of $8.6 million, which represented the net carrying value of the mortgage at the time of closing of the deed in lieu of foreclosure transaction. Reference Note 3 for additional information on the concurrent transactions.

In May 2025, we received $2.5 million in partial repayment of the non-performing mezzanine loan due from SLM as described above. This partial repayment resulted in a reduction of the credit loss reserve on this loan and the related credit loss expense of $1.3 million in each of the three and six months ended June 30, 2025.

In March 2025, we amended a mezzanine loan agreement with affiliates of Vizion Health providing for additional funding of $5.4 million. The outstanding principal balance of the loan was $17.7 million as of June 30, 2025. The amendment to the loan agreement provides for an annual interest rate of 9.2% as of June 30, 2025 and a maturity date in May 2028.

In May 2025, we entered into a construction loan agreement to fund up to $28.0 million for the development of an 84-unit assisted living and memory care facility in Wyoming, Michigan to be operated by Encore Senior Living. The loan agreement provides for an annual interest rate of 9.0% and a maturity date in April 2030. As of June 30, 2025, no amounts have been drawn on this loan.

We have a $50.0 million mezzanine loan and security agreement with Montecito Medical Real Estate for a fund that invests in medical real estate, including medical office buildings, throughout the United States. In the first quarter of 2025, $6.2 million of principal was repaid upon the sale of one of the underlying properties. As of June 30, 2025, $9.4 million of remaining principal was outstanding on the loan, which is associated with five medical office buildings with a combined purchase price of approximately $56.7 million. For the three and six months ended June 30, 2025, we recognized interest income of $0.2 million and $0.7 million, respectively, related to this loan. For the three and six months ended June 30, 2024, we recognized interest income of $0.5 million and $1.0 million, respectively.

As of June 30, 2025, we had one fully funded construction loan with Bickford that had a principal balance of $14.7 million. This construction loan is secured by a first mortgage lien on substantially all of the related real and personal property as well as a pledge of any and all leases or agreements which may grant a right of use to the property. The loan provides for an annual interest rate of 9.0% and a maturity date in July 2026. The loan agreement contains usual and customary covenants and requires the borrower to pay property insurance and taxes. We hold a fair value purchase option under the loan agreement to purchase the property upon stabilization of the underlying operations.

As of June 30, 2025, we held a $12.0 million second mortgage as a component of the purchase price consideration in connection with the sale of six properties to Bickford in 2021. This second mortgage bears a 10.0% annual interest rate and matures in April 2026. We did not include this note receivable in the determination of the gain recognized upon the sale of this portfolio. Therefore, this note receivable is not reflected in mortgage and other notes receivable on the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024. For each of the three and six months ended June 30, 2025 and 2024, we recognized interest income of $0.3 million and $0.6 million, respectively. During each of the three and six months ended June 30, 2025 and 2024, Bickford repaid $0.1 million and $0.2 million, respectively, of principal on this note receivable. These payments have been recognized in gains on sales of real estate properties, net, on our condensed consolidated statements of income.

We have provided a $15.0 million revolving line of credit to Senior Living whose borrowings under the revolver are to be used for working capital needs and to finance construction projects within its portfolio, including building additional units at existing facilities. The revolver matures in December 2031, which is also when the Senior Living leases mature. As of June 30, 2025, the outstanding balance on the revolver was $14.0 million and bore an annual interest rate of 8.0%.

Our principal measures of credit quality, except for construction loans, are debt service coverage for amortizing loans and interest or fixed charge coverage for non-amortizing loans (collectively, “Coverage”). A Coverage ratio provides a measure of the borrower’s ability to make scheduled principal and interest payments. The Coverage ratios presented in the table below have been calculated utilizing the most recent date for which data is available, March 31, 2025, using EBITDARM (earnings before interest, taxes, depreciation, amortization, rent and management fees) and the requisite debt service, interest service or fixed charges, as defined in the applicable loan agreement. We categorize Coverage into three levels: (i) more than 1.5x, (ii) between 1.0x and 1.5x, and (iii) less than 1.0x. We update our calculations of Coverage on a quarterly basis. Coverage is not a meaningful credit quality indicator for construction mortgages as these developments are typically not generating any operating income, or they have insufficient operating income because occupancy levels necessary to stabilize the properties have not yet been achieved. We measure credit quality for these mortgages by considering the construction and stabilization timelines and the financial condition of the borrower, as well as economic and market conditions.

We consider the guidance in ASC 310-20, Receivables - Nonrefundable Fees and Other Costs, when determining whether a modification, extension or renewal constitutes a current period origination. The following table summarizes the credit quality indicators related to the principal amounts due to us from mortgage and other notes receivable as of June 30, 2025 and is disaggregated based on the year of loan origination ($ in thousands):


											Prior
	2025		2024		2023		2022		2021		Years		Total
Mortgages:
More than 1.5x	$	—	$	54,804	$	725	$	31,643	$	—	$	32,700	$	119,872
Between 1.0x and 1.5x	—		—		—		28,422		—		—		28,422
Less than 1.0x	—		—		—		—		—		21,123		21,123

	—		54,804		725		60,065		—		53,823		169,417
Mezzanine loans:
More than 1.5x	—		—		536		—		20,854		—		21,390
Between 1.0x and 1.5x	1,739		—		—		—		9,391		—		11,130
Less than 1.0x	—		11,590		234		—		—		25,000		36,824

	1,739		11,590		770		—		30,245		25,000		69,344
Non-performing notes:

Between 1.0x and 1.5x	—		1,317		—		—		—		—		1,317
Less than 1.0x	—		—		—		—		—		12,000		12,000
	—		1,317		—		—		—		12,000		13,317
Revolver:
More than 1.5x													18,326



Credit loss reserves													(17,465)
Total mortgage and other notes
receivable, net													$	252,939

Due to the continuing challenges in financial markets and the potential impact on the collectability of our mortgage and other notes receivable, we forecasted a 20% increase in the probability of a default and a 20% increase in the amount of estimated loss from a default on all loans, other than those designated as non-performing notes, resulting in an effective adjustment of 7.8% as of June 30, 2025. The methodology for estimating credit loss reserves for our non-performing notes incorporates considerations of the sufficiency of the underlying collateral, current conditions and forecasts of future economic conditions that may impact the collectability of these loans, including qualitative factors, which may differ from conditions existing in the historical periods.