NOTE 5 – CONTRACTUAL RECEIVABLES AND OTHER RECEIVABLES AND LEASE INDUCEMENTS

Contractual receivables relate to the amounts currently owed to us under the terms of our lease and loan agreements. Effective yield interest receivables relate to the difference between the interest income recognized on an effective yield basis over the term of the loan agreement and the interest currently due to us according to the contractual agreement. Straight-line rent receivables relate to the difference between the rental revenue recognized on a straight-line basis and the amounts currently due to us according to the contractual agreement. Lease inducements result from value provided by us to the lessee, at the inception, modification or renewal of the lease, and are amortized as a reduction of rental income over the non-cancellable lease term.

A summary of our net receivables by type is as follows:

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Cash basis operator leases and straight-line rent receivable write-offs

We review our collectibility assumptions related to our operator leases on an ongoing basis. If we determine that it is no longer probable that substantially all rents over the life of a lease are collectible, rental revenue related to the operator lease will be recognized only to the extent of payments received (“cash basis of revenue recognition”), and all related receivables associated with the lease will be written off. Write-offs of contractual and straight-line receivables are recorded as adjustments to rental revenue.

We recognized straight-line rent receivable write-offs of $15.5 million, $2.8 million, and zero for the years ended December 31, 2025, 2024, and 2023, respectively, in connection with placing certain operator leases on a cash basis of revenue recognition. We placed three, four and three operators on a cash basis of revenue recognition for the years ended December 31, 2025, 2024, and 2023, respectively. Several of the operator leases placed on a cash basis of revenue recognition in the comparative years related to new operator leases, so there were no related straight-line rent receivable write-offs associated with these operator leases. As of December 31, 2025, we had 20 operator leases on a cash basis for revenue recognition, which represent 19.0%, 19.9% and 21.4% of our total revenues for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2024, we had 21 operator leases on a cash basis for revenue recognition, which represent 20.5% and 22.1% of our total revenues for the years ended December 31, 2024 and 2023, respectively.

During the year ended December 31, 2023, we transitioned the portfolios of four cash basis operators with an aggregate of 48 facilities to new or amended leases with five operators. We recognized revenue on a straight-line basis for the leases associated with these five operators. The aggregate initial contractual rent related to the 48 facilities transitioned to these five operators is $48.0 million per annum. The transitioned facilities included 14 facilities of which Omega made or agreed to make termination payments of $15.5 million in aggregate that were recorded as initial direct costs related to the lease with the new operator of the 14 transitioned facilities in the first quarter of 2023. These termination payments are deferred and recognized within depreciation and amortization expense on a straight-line basis over the term of the master lease.

During the years ended December 31, 2025, 2024 and 2023, we also wrote-off $2.5 million, $1.4 million and $8.1 million of straight-line rent receivable balances through rental income as a result of transitioning facilities between existing operators.

Operator updates

Agemo

After Agemo Holdings, LLC (“Agemo”), an operator on a cash basis of revenue recognition, failed to pay contractual rent and interest due under its lease and loan agreements throughout 2022, in the first quarter of 2023, Omega and Agemo entered into a restructuring agreement, an amended and restated master lease and a replacement loan agreement for two replacement loans. As part of the restructuring agreement and related agreements, Omega agreed to, among other things:

Agemo resumed making contractual rent and interest payments during the second quarter of 2023 in accordance with the restructuring terms discussed above. We recorded rental income of $24.4 million, $23.8 million and $17.4 million for the years ended December 31, 2025, 2024 and 2023, respectively, for the contractual rent payments that were received. No interest income was recognized during the years ended December 31, 2025, 2024 and 2023 on the two loans with Agemo because these loans are on non-accrual status and we are utilizing the cost recovery method, under which any payments are applied against the principal amount.

LaVie

During 2023, we continued the process of restructuring our portfolio with LaVie by amending the lease agreements with LaVie to allow for a partial rent deferral of $19.0 million for the first four months of 2023, transitioning two facilities previously subject to the master lease with LaVie to another operator during the second quarter of 2023 and selling seven facilities previously subject to the master lease with LaVie to a third party during the third quarter of 2023. In the fourth quarter of 2023, Omega sold an additional 30 facilities and amended the master lease with LaVie to further reduce monthly rent to $3.3 million.

Despite our efforts to restructure the portfolio, LaVie began to short pay contractual rent during the third quarter of 2023, which continued for the remainder of 2023. For the year ended December 31, 2023, LaVie paid total contractual rent of $37.0 million, a total short pay of $21.1 million of the $58.1 million due under the lease agreement after reflecting the deferral discussed above. As LaVie was placed on a cash basis of revenue recognition for lease purposes in the fourth quarter of 2022, only the $37.0 million of contractual rent payments that were received from LaVie were recorded as rental income during the year ended December 31, 2023.

In June 2024, LaVie commenced voluntary cases under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Georgia, Atlanta Division. We provided $10.0 million of a $20.0 million junior secured debtor-in-possession (“DIP”) financing loan to LaVie, as further discussed in Note 8 – Non-Real Estate Loans Receivable. As a condition of the DIP financing, LaVie was required to pay Omega full contractual rent under its lease agreement. We determined LaVie was a VIE after it became a debtor-in-possession and following the issuance of the DIP financing loan. Omega is not the primary beneficiary of LaVie because we do not have the power to control the activities that most significantly impact LaVie’s economic performance. See Note 10 – Variable Interest Entities, for additional disclosures surrounding our VIEs. On December 5, 2024, a plan of reorganization was confirmed by the Bankruptcy Court, pursuant to which the LaVie master lease agreement was to be assumed and assigned by the reorganized debtor upon the effective date of the plan.

Prior to its bankruptcy filing, LaVie short paid contractual rent under its lease agreement by $8.8 million. Following the bankruptcy filing, LaVie resumed making full contractual rent payments due under its lease agreement. As LaVie was on a cash basis of revenue recognition for lease purposes, rental income recorded was equal to cash received of $28.6 million during the year ended December 31, 2024.

The plan of reorganization was effective as of June 1, 2025, which resulted in the LaVie master lease agreement being assumed by and assigned to ENDMT LLC (“Avardis”) and amended and restated. The amended master lease has a lease term ending December 31, 2037 and requires monthly rent payments of $3.1 million, which escalate 2.5% annually.

During the first and second quarters of 2025, LaVie paid full contractual rent of $15.5 million through the date the plan of reorganization became effective. We did not recognize any interest income related to LaVie during the years ended December 31, 2025, 2024 and 2023, as the three loans that were outstanding during the periods have interest paid-in-kind (“PIK”) and were on non-accrual status.

Following the June 1, 2025 effective date of the plan of reorganization, Avardis paid full contractual rent of $21.9 million during the year ended December 31, 2025. Avardis is on a straight-line basis for rental income recognition, and we recognized $25.5 million of rental income related to Avardis during the year ended December 31, 2025.

Maplewood

In the first quarter of 2023, we agreed to a formal restructuring agreement, master lease amendments and loan amendments with Maplewood Senior Living (along with affiliates, “Maplewood”). As part of the restructuring agreement and related agreements, Omega agreed to, among other things:

Shortly after the restructuring was completed, on March 31, 2023, Greg Smith, the principal and chief executive officer of Maplewood, passed away. Mr. Smith had been a guarantor of Maplewood’s contractual obligations pursuant to a $40.0 million limited unconditional guaranty agreement. Maplewood began to short pay contractual rent under its lease agreement during the second quarter of 2023.

In June 2024, Omega executed a non-binding term sheet with the key members of the existing Maplewood management team (the “Key Principals”) and the Greg Smith estate (the “Estate”) which outlined the terms of a proposed transition, in which the Key Principals would become the new majority equity holders in the Maplewood entities. The proposed transition included maintaining the Maplewood lease agreement and the Maplewood Revolver provided by Omega. On July 31, 2024, we entered into a settlement agreement (the “Settlement Agreement”) with the Estate and submitted it to the probate court for approval. The Settlement Agreement, among other things, grants Omega the right to direct the assignment of Mr. Smith’s equity to the Key Principals or their designee(s) or another designee of Omega’s choosing, with the Estate remaining liable under Mr. Smith’s guaranty until August 2025, and required Omega to refrain from exercising contractual rights or remedies in connection with the defaults. On August 26, 2024, the probate court approved the Settlement Agreement. In the fourth quarter of 2025, we received the final regulatory approvals related to the licensure of Maplewood’s operating assets, and the transition of the equity to the Key Principals was completed. Concurrently with the transition of the equity to the Key Principals, on December 11, 2025, Omega entered into a restructuring agreement and amended its master lease agreement for 17 facilities (the “Maplewood Master Lease”) and the Maplewood Revolver. The single facility lease for the Inspir Embassy Row property in Washington D.C. was not modified as part of the restructuring. As part of the restructuring agreement and related agreements, Omega and Maplewood agreed, among other things:

For the year ended December 31, 2023, Maplewood paid total contractual rent of $57.8 million, a total short pay of $11.5 million of the $69.3 million due under the lease agreement for the year after reflecting the impact of deferred escalators. Omega applied all $4.8 million of Maplewood’s security deposit towards the total year to date shortfall and recognized rental income of $62.6 million for the year ended December 31, 2023. The $12.5 million option termination fee payment made in the first quarter of 2023 in connection with the restructuring agreement was accounted for as a lease inducement. As Maplewood is on a cash basis of revenue recognition, the inducement was immediately expensed and was recorded as a reduction to the $62.6 million of rental income recognized for the year ended December 31, 2023. For the year ended December 31, 2024, Maplewood paid total contractual rent of $47.5 million, a total short pay of $21.8 million of the $69.3 million of contractual rent due under the lease agreement for the year after reflecting the impact of deferred escalators. For the year ended December 31, 2025, Maplewood paid total contractual rent of $58.9 million compared to the $69.3 million of contractual rent due under the lease agreement for the year after reflecting the impact of deferred escalators. These amounts exclude contractual rent and payments related to Inspir Embassy Row in Washington D.C. of $11.9 million for the year ended December 31, 2025, which were paid in full and are separately discussed in Note 3– Real Estate Asset Acquisitions and Development. As discussed further in Note 7 – Real Estate Loans Receivable, we recorded interest income of zero, zero and $1.5 million on the Maplewood Revolver during the years ended December 31, 2025, 2024 and 2023, respectively. Following the restructuring and transition of the equity to the Key Principals, the lease remains on a cash basis of revenue recognition and the Maplewood Revolver remains on a non-accrual basis.

In January 2026, Maplewood paid $6.3 million under its lease agreements, $1.1 million of which relates to Inspir Embassy Row in Washington D.C.

Genesis

In March 2025, Genesis Healthcare, Inc. (“Genesis”), an operator on a cash basis of rental revenue recognition, failed to make a rent payment due under its lease agreement and interest payment due under one of its three loan agreements. In July 2025, Genesis commenced voluntary cases under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division. Genesis will continue to operate, as a DIP, the 31 facilities subject to a master lease agreement with Omega, unless and until Genesis’ leasehold interest under the master lease agreement is rejected or assumed and assigned. We provided $8.0 million of a $30.0 million junior secured DIP financing, along with other lenders, to Genesis to support sufficient liquidity to, among other things, operate its facilities during bankruptcy, as further discussed in Note 8 – Non-Real Estate Loans Receivable. As a condition of the DIP financing, Genesis is required to pay Omega full contractual rent under its lease agreement. On January 14, 2026, 101 W State Street Holdings, LLC (“WSSH”) was named the winning bidder in the auction to acquire Genesis’ assets, and on January 26, 2026, the Bankruptcy Court approved the sale to WSSH, subject to satisfaction of the terms and conditions of the purchase and sale agreement between Genesis and WSSH. To the extent that the transaction is consummated, closing is not expected in the next 90-120 days. Genesis has not yet elected to assume and assign the Omega lease to WSSH. If the transaction closes, it is anticipated that the cash proceeds of the sale will be sufficient to repay the DIP and Omega term loans. As discussed in Note 20 – Commitments and Contingencies, the Statutory Unsecured Claimant’s Committee has filed a proposed Complaint and Preliminary Objection regarding the collateral supporting our term loans (discussed in Note 8 – Non-Real Estate Loans Receivable) and regarding payments received by Omega under its lease and loan obligations in the 90 days prior to the Genesis bankruptcy filing date.

Since commencing the bankruptcy process in July 2025, Genesis made all required contractual rent and interest payments through the end of 2025. As Genesis is on a cash basis of revenue recognition, we recognized rental income of $51.2 million, $48.1 million, and $51.4 million for the years ended December 31, 2025, 2024 and 2023, respectively. The $51.2 million recognized in 2025 includes $47.0 million for contractual rent payments received and $4.2 million from the application of proceeds from the letter of credit in March 2025 that was held as collateral from Genesis. In addition, we recognized interest income of $17.1 million (which includes $0.1 million from the application of proceeds from the letter of credit) related to loans with Genesis during the year ended December 31, 2025. After the application of proceeds from the letter of credit, there is $3.5 million remaining under the letter of credit. In January 2026, Genesis paid full contractual rent and interest of $4.5 million.

Guardian

In August 2023, Guardian, an operator on a cash basis of revenue recognition, failed to make the contractual rent payment due under its lease agreement and continued to fail to make the required contractual rent payments due under its lease agreement throughout the remainder of 2023. We applied $6.3 million of Guardian’s security deposit to fund the unpaid rent for payment missed in the third and fourth quarters. As Guardian is on a cash basis of revenue recognition, we recorded rental income of $16.8 million for the year ended December 31, 2023 for the contractual rent payments that were received from Guardian and through the application of Guardian’s security deposit.

Guardian continued to fail to make the contractual rent payment due under its lease agreement during the first quarter of 2024. As such, we only recorded rental income of $0.1 million related to our lease with Guardian for the three months ended March 31, 2024 for the application of Guardian’s remaining security deposit to fund a portion of the unpaid rent. In April 2024, we transitioned the remaining six facilities previously included in Guardian’s master lease to a new operator for minimum initial contractual rent of $5.5 million per annum with the potential to increase contractual rent dependent on revenue received by the operator.

Additionally, no mortgage interest income was recognized on the Guardian mortgage loan (discussed in Note 7 – Real Estate Loans Receivable) during the year ended December 31, 2023 as we were accounting for this loan under the cost recovery method.

Lease Inducements

We funded $10.0 million, $1.0 million and $15.9 million of lease inducements or incentives to operators during the years ended December 31, 2025, 2024 and 2023, respectively. Lease inducements are deferred and amortized as a reduction to rental income over the remaining contractual term of the related lease if the operator’s lease is recognizing revenue on a straight-line basis. To the extent the related operator lease is on a cash basis of revenue recognition, the full lease inducement is recorded as a reduction to rental income in the period it was paid.