v3.26.1
LEASES
 6 Months Ended
Jun. 30, 2026
Leases [Abstract]  
LEASES LEASES
The Company leases real property associated with 103 independent skilled nursing and senior living facilities under eight triple‑net master lease agreements with CareTrust REIT, Inc. (collectively, the Master Leases). The Master Leases have initial terms ranging from 13 to 20 years and include two or three five‑year renewal options at the Company’s election, subject to customary conditions. If the Company elects to renew the term of a Master Lease, the renewal will be effective to all, but not less than all, of the leased property then subject to such Master Lease.
The Master Leases are non‑cancelable prior to expiration without the consent of CareTrust. Rent consists of a fixed base amount subject to annual escalation equal to the lesser of 2.5% or the percentage change in the Consumer Price Index (not less than zero). As triple‑net leases, the Company is responsible for substantially all property‑level operating costs, including taxes, insurance, utilities, and maintenance. Total rent expense under the Master Leases was approximately $19,755 and $39,386 for the three and six months ended June 30, 2026, respectively, and $16,904 and $34,030 for the three and six months ended June 30, 2025, respectively.
The Master Leases require the Company to comply with certain financial covenants, including portfolio coverage and minimum rent coverage ratios, as well as customary reporting and other requirements. The Company was in compliance with all such requirements as of June 30, 2026.
The Company leases facilities where its independent subsidiaries operate under non-cancelable operating leases, most of which have initial lease terms ranging from 15 to 20 years. Most of these leases contain renewal options, certain of which involve rent increases.
The Company's 104 independent subsidiaries, excluding the subsidiaries that are operated under the Master Leases with CareTrust, are operated under 19 separate master lease arrangements. Under the master leases, a default at a single facility could subject one or more of the other facilities covered by the same master lease to the same default risk. Failure to comply with Medicare and Medicaid provider requirements is an event of default under several of the Company’s leases, master lease agreements and debt financing instruments. In addition, other potential defaults related to an individual facility may cause a default of an entire master lease portfolio and could trigger cross-default provisions in the Company’s outstanding debt arrangements and other leases. With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the lease without the consent of the landlord.
The components of operating lease expense are as follows:
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Rent - cost of services(1)
$66,412 $57,195 $131,918 $114,271 
Cost of services(2)
7,922 6,611 14,901 13,040 
General and administrative expense275 214 495 413 
$74,609 $64,020 $147,314 $127,724 
(1)Rent - cost of services includes deferred rent expense adjustments of $255 and $576 for the three and six months ended June 30, 2026, respectively, and $199 and $407 for the three and six months ended June 30, 2025, respectively. Additionally, rent - cost of services includes other variable lease costs such as consumer price index increases and short-term leases of $5,127 and $10,258 for the three and six months ended June 30, 2026, respectively, and $4,634 and $8,638 for the three and six months ended June 30, 2025, respectively.
(2)Cost of services includes variable lease costs consisting of property taxes and insurance.

Future minimum lease payments for all third-party leases as of June 30, 2026 are as follows:
YearAmount
2026 (remainder)$122,703 
2027245,198 
2028244,213 
2029239,030 
2030233,671 
2031223,098 
Thereafter1,797,565 
TOTAL LEASE PAYMENTS$3,105,478 
Less: present value adjustment (994,876)
PRESENT VALUE OF TOTAL LEASE LIABILITIES$2,110,602 
Less: current lease liabilities(121,117)
LONG-TERM OPERATING LEASE LIABILITIES$1,989,485 
Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the lease commencement date. As of June 30, 2026, the weighted average remaining lease term is 13.7 years and the weighted average discount rate used to determine the operating lease liabilities is 6.1%.
Lessor Activities

The Company leases 39 owned real estate properties to third‑party operators, including 35 senior living operations operated by The Pennant Group, Inc. (Pennant). All of the leases are triple‑net arrangements, under which the tenants are responsible for substantially all property‑level operating costs, including taxes, insurance, utilities, and maintenance. The initial terms range from 14 to 16 years.
During the three and six months ended June 30, 2026, the Company, through Standard Bearer, entered into three lease agreements with a third-party operator for three stand-alone senior living operations, each with initial lease terms of 15 years.
Total rental income from all third-party sources for the three and six months ended June 30, 2026 and 2025 is as follows:
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Pennant(1)
$4,427 $4,082 $8,640 $8,204 
Other third-party(2)(3)
3,557 2,273 6,237 4,152 
TOTAL$7,984 $6,355 $14,877 $12,356 
(1) Pennant rental income includes variable rent such as property taxes of $321 and $633 during the three and six months ended June 30, 2026 and $270 and $580 for the three and six months ended June 30, 2025.
(2) Other third-party includes rental revenue associated with the Company's subleases to third parties of $1,144 and $2,279 for the three and six months ended June 30, 2026, and $1,116 and $2,223 for the three and six months ended June 30, 2025, respectively.
(3) For the three and six months ended June 30, 2026, other third-party revenue included $1,016 of rental income earned from acquired real estate properties during the period prior to their lease to the Company's independent operating subsidiaries.
Future contractual minimum annual rental income for all third-party leases as of June 30, 2026 were as follows:
Year
Amount
2026 (remainder)$14,647 
202728,719 
202828,269 
202928,148 
203027,072 
203127,052 
Thereafter115,327 
TOTAL$269,234 
LEASES LEASES
The Company leases real property associated with 103 independent skilled nursing and senior living facilities under eight triple‑net master lease agreements with CareTrust REIT, Inc. (collectively, the Master Leases). The Master Leases have initial terms ranging from 13 to 20 years and include two or three five‑year renewal options at the Company’s election, subject to customary conditions. If the Company elects to renew the term of a Master Lease, the renewal will be effective to all, but not less than all, of the leased property then subject to such Master Lease.
The Master Leases are non‑cancelable prior to expiration without the consent of CareTrust. Rent consists of a fixed base amount subject to annual escalation equal to the lesser of 2.5% or the percentage change in the Consumer Price Index (not less than zero). As triple‑net leases, the Company is responsible for substantially all property‑level operating costs, including taxes, insurance, utilities, and maintenance. Total rent expense under the Master Leases was approximately $19,755 and $39,386 for the three and six months ended June 30, 2026, respectively, and $16,904 and $34,030 for the three and six months ended June 30, 2025, respectively.
The Master Leases require the Company to comply with certain financial covenants, including portfolio coverage and minimum rent coverage ratios, as well as customary reporting and other requirements. The Company was in compliance with all such requirements as of June 30, 2026.
The Company leases facilities where its independent subsidiaries operate under non-cancelable operating leases, most of which have initial lease terms ranging from 15 to 20 years. Most of these leases contain renewal options, certain of which involve rent increases.
The Company's 104 independent subsidiaries, excluding the subsidiaries that are operated under the Master Leases with CareTrust, are operated under 19 separate master lease arrangements. Under the master leases, a default at a single facility could subject one or more of the other facilities covered by the same master lease to the same default risk. Failure to comply with Medicare and Medicaid provider requirements is an event of default under several of the Company’s leases, master lease agreements and debt financing instruments. In addition, other potential defaults related to an individual facility may cause a default of an entire master lease portfolio and could trigger cross-default provisions in the Company’s outstanding debt arrangements and other leases. With an indivisible lease, it is difficult to restructure the composition of the portfolio or economic terms of the lease without the consent of the landlord.
The components of operating lease expense are as follows:
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Rent - cost of services(1)
$66,412 $57,195 $131,918 $114,271 
Cost of services(2)
7,922 6,611 14,901 13,040 
General and administrative expense275 214 495 413 
$74,609 $64,020 $147,314 $127,724 
(1)Rent - cost of services includes deferred rent expense adjustments of $255 and $576 for the three and six months ended June 30, 2026, respectively, and $199 and $407 for the three and six months ended June 30, 2025, respectively. Additionally, rent - cost of services includes other variable lease costs such as consumer price index increases and short-term leases of $5,127 and $10,258 for the three and six months ended June 30, 2026, respectively, and $4,634 and $8,638 for the three and six months ended June 30, 2025, respectively.
(2)Cost of services includes variable lease costs consisting of property taxes and insurance.

Future minimum lease payments for all third-party leases as of June 30, 2026 are as follows:
YearAmount
2026 (remainder)$122,703 
2027245,198 
2028244,213 
2029239,030 
2030233,671 
2031223,098 
Thereafter1,797,565 
TOTAL LEASE PAYMENTS$3,105,478 
Less: present value adjustment (994,876)
PRESENT VALUE OF TOTAL LEASE LIABILITIES$2,110,602 
Less: current lease liabilities(121,117)
LONG-TERM OPERATING LEASE LIABILITIES$1,989,485 
Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the lease commencement date. As of June 30, 2026, the weighted average remaining lease term is 13.7 years and the weighted average discount rate used to determine the operating lease liabilities is 6.1%.
Lessor Activities

The Company leases 39 owned real estate properties to third‑party operators, including 35 senior living operations operated by The Pennant Group, Inc. (Pennant). All of the leases are triple‑net arrangements, under which the tenants are responsible for substantially all property‑level operating costs, including taxes, insurance, utilities, and maintenance. The initial terms range from 14 to 16 years.
During the three and six months ended June 30, 2026, the Company, through Standard Bearer, entered into three lease agreements with a third-party operator for three stand-alone senior living operations, each with initial lease terms of 15 years.
Total rental income from all third-party sources for the three and six months ended June 30, 2026 and 2025 is as follows:
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Pennant(1)
$4,427 $4,082 $8,640 $8,204 
Other third-party(2)(3)
3,557 2,273 6,237 4,152 
TOTAL$7,984 $6,355 $14,877 $12,356 
(1) Pennant rental income includes variable rent such as property taxes of $321 and $633 during the three and six months ended June 30, 2026 and $270 and $580 for the three and six months ended June 30, 2025.
(2) Other third-party includes rental revenue associated with the Company's subleases to third parties of $1,144 and $2,279 for the three and six months ended June 30, 2026, and $1,116 and $2,223 for the three and six months ended June 30, 2025, respectively.
(3) For the three and six months ended June 30, 2026, other third-party revenue included $1,016 of rental income earned from acquired real estate properties during the period prior to their lease to the Company's independent operating subsidiaries.
Future contractual minimum annual rental income for all third-party leases as of June 30, 2026 were as follows:
Year
Amount
2026 (remainder)$14,647 
202728,719 
202828,269 
202928,148 
203027,072 
203127,052 
Thereafter115,327 
TOTAL$269,234