NOTE 7 – REAL ESTATE LOANS RECEIVABLE

Real estate loans consist of mortgage loans and other real estate loans which are primarily collateralized by a first, second or third mortgage lien or a leasehold mortgage on, or an assignment of the partnership interest in the related properties. As of December 31, 2025, our real estate loans receivable consists of 20 fixed rate mortgages on 91 operating long-term care facilities and 20 other real estate loans. The facilities subject to the mortgage notes are operated by 15 independent healthcare operating companies and are located in 9 states and within the U.K. The other real estate loans are with 16 of our operators as of December 31, 2025. We monitor compliance with the loans and when necessary have initiated collection, foreclosure and other proceedings with respect to certain outstanding real estate loans.

A summary of our real estate loans receivable by loan type and by borrower and/or guarantor is as follows:

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Interest income on real estate loans is included within interest income on the Consolidated Statements of Operations and is summarized as follows:

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The following is a summary of advances and principal repayments under our real estate loans:

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Included below is additional discussion on any significant new loans issued and/or significant updates to any existing loans.

Ciena Healthcare Management, Inc (“Ciena”) Mortgage Loans

As of December 31, 2025 and 2024, Omega had $480.0 million and $525.5 million, respectively, of mortgage notes with Ciena secured by 34 and 38 facilities, respectively. The mortgage loans bear interest at a weighted average interest rate of 11.8% and mature on June 30, 2030. During the year ended December 31, 2025, Ciena made $40.6 million of early repayments on mortgage notes with a weighted average interest rate of 11.6% as of the repayment date, subject to the master mortgage agreement with Ciena.

U.K. Mortgage Loans

In May 2024, we funded an aggregate $71.7 million under two new mortgage loans to an existing U.K. operator secured by first mortgage liens on two parcels of land that the U.K. operator intends to develop into two facilities. Both mortgage loans bear interest at 10.0% per annum and had original maturity dates of October 28, 2024. During the fourth quarter of 2024, the $18.5 million mortgage loan was extended to February 28, 2025 prior to being refinanced into a mezzanine loan in the first quarter of 2025. Through multiple amendments in 2024 and 2025, the maturity date of the $53.2 million mortgage loan was extended to January 31, 2026.

During the fourth quarter of 2024, we funded an additional $61.7 million and $39.1 million, respectively, under two new mortgage loans to the same existing U.K. operator discussed above that originally bore interest at 11.0% per annum. The $61.7 million mortgage loan had an original maturity date of October 29, 2025, and the $39.1 million mortgage loan had an original maturity date of November 27, 2025. Both mortgage loans contain a purchase option, whereby Omega can purchase the facilities that secure the applicable mortgage loan. The purchase options can be exercised upon the occurrence of certain conditions. During the fourth quarter of 2025, both of these mortgage loans were amended to extend the maturity dates to April 30, 2026 and reduce the interest rate to 10% per annum.

As of December 31, 2025 and 2024, the outstanding principal balance on the four loans discussed above was $172.5 million.

$60.0 million Mortgage Loan

In December 2023, we funded a $50.0 million mortgage loan to a new operator secured by a first mortgage lien on the operator’s four facilities. The mortgage loan bears interest at 10% per annum and matures on December 28, 2028. During the fourth quarter of 2024, the mortgage loan was amended to increase the maximum principal to $60.0 million. As of December 31, 2025 and 2024, the outstanding principal balance of this mortgage note was $53.8 million.  

Guardian Mortgage Loan

As of January 1, 2023, we had an $82.0 million four-facility first mortgage loan outstanding with Guardian that was on non-accrual status and being accounted for under the cost recovery method as a result of ongoing liquidity issues. During the year ended December 31, 2023, we received $3.9 million of interest payments that we applied against the outstanding principal balance of the loan and recognized a recovery for credit loss equal to the amount of payments applied against principal.

In the second quarter of 2023, Guardian sold the four facilities subject to the mortgage note with Omega. Guardian used $35.2 million of proceeds from the sale of the facilities to make a principal repayment to Omega, in the same amount, against the mortgage note. Following the repayment, Omega agreed to release the mortgage liens on these facilities and forgive the remaining $46.8 million of outstanding principal due under the mortgage note. We had previously established an allowance for credit loss to reserve this loan down to $35.2 million in anticipation of this settlement. Following the sale in the second quarter of 2023, we wrote off the outstanding principal and related allowance associated with the mortgage loan. As a result, Guardian no longer has any outstanding loan obligations to us.

Maplewood Revolving Credit Facility

In July 2020, we entered into the Maplewood Revolver as a part of an overall restructuring with this operator. Loan proceeds under the Maplewood Revolver may be used to fund Maplewood’s working capital needs. The loan is secured by a leasehold mortgage and Maplewood’s share of any future potential sales proceeds of facilities subject to the Maplewood Master Lease. Advances made under the Maplewood Revolver bear interest at a fixed rate of 7% per annum. The loan is on non-accrual status for interest income recognition. Maplewood was determined to be a VIE when this loan was originated in 2020. Our balances and risk of loss associated with Maplewood are included within our disclosures in Note 10 – Variable Interest Entities.

In the first quarter of 2023, Omega entered into a restructuring agreement and a loan amendment that modified the Maplewood Revolver. As part of the restructuring agreement and loan amendment, Omega agreed to extend the maturity date to June 2035, increase the capacity of the Maplewood Revolver to $320.0 million, including PIK interest applied to the principal, and to convert the 7% cash interest due on the Maplewood Revolver to all PIK interest in 2023, 1% cash interest and 6% PIK interest in 2024, and 4% cash interest and 3% PIK interest in 2025 and through the maturity date. The maximum PIK interest allowable under the Maplewood Revolver, as amended, was $52.2 million. This amendment was treated as a loan modification provided to a borrower experiencing financial difficulty.

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 management team members was completed. Concurrently with the transition of the equity to the new management team, on December 11, 2025, Omega entered into a restructuring agreement and amended the Maplewood Master Lease and the Maplewood Revolver. The loan amendment extended the maturity date of the Maplewood Revolver from June 2035 to June 2037. In addition, the amendment also allows for the payment of interest due on the Maplewood Revolver to be paid-in-kind through maturity, effective retroactively beginning January 1, 2023. For the years ended December 31, 2025 and 2024, prior to the amendment, Maplewood missed cash interest payments of $11.9 million and $2.7 million, respectively. As the loan is on non-accrual status, the previously missed cash interest payments due under the loan were never recognized as interest income. Therefore, subsequent to the amendment, the missed cash interest payments will increase the principal balance of the loan but will not be included in the amortized cost basis of the loan. The interest rate remains at 7% per annum. Omega has no obligation to make any additional cash advances under the loan, but additional PIK interest added to the principal is allowable with no limit. This amendment was treated as a loan modification provided to a borrower experiencing financial difficulty.

We adjusted the internal risk rating on the Maplewood Revolver, utilized as a component of our allowance for credit loss calculation, from a 3 to a 4 in the second quarter of 2023 when Maplewood began to short-pay contractual rent under its lease agreement. In the first quarter of 2024, we again adjusted the internal risk rating from a 4 to 5 to reflect the increased risk of the Maplewood Revolver as a result of the missed interest payments in the first quarter of 2024, discussed below, and due to Maplewood continuing to pay interest in kind on the loan. We believe the internal risk rating of a 5 appropriately reflects the risks as of December 31, 2025. See the allowance for credit losses attributable to real estate loans with a 5 internal risk rating within Note 9 – Allowance for Credit Losses.

During the year ended December 31, 2023, we recorded interest income of $1.5 million on the Maplewood Revolver for the contractual interest payment received related to December 2022, as the loan was placed on non-accrual status for interest recognition during the fourth quarter of 2022. We did not record any interest income related to the PIK interest during the years ended December 31, 2025, 2024 and 2023. As of December 31, 2025 and 2024, the outstanding principal balance of the Maplewood Revolver was $323.8 million and $301.7 million, respectively, and the amortized cost basis of the Maplewood Revolver was $263.6 million, which represents 18.1% and 17.6%, respectively, of the total amortized cost basis of all real estate loan receivables.

$68.0 million Mezzanine Loan

In April 2023, we entered into a mezzanine loan with a principal balance of $68.0 million with an existing operator and its affiliates in connection with the operator’s acquisition of 13 SNFs in West Virginia. The loan matures on April 13, 2029 and bears interest at a variable rate that results in a blended interest rate of 12% per annum across this loan and three other existing loans with the operator. The loan requires quarterly principal payments of $1.0 million commencing on July 1, 2023 and additional payments contingent on certain metrics. The loan is secured by a leasehold mortgage and a pledge of the operator’s equity interest in subsidiaries of the operator. As of December 31, 2025 and 2024, the amortized cost basis of the mezzanine loan is $53.8 million and $57.2 million, respectively.