As part of the Company's acquisitions, the Company may invest in sale and leaseback transactions. In accordance with applicable accounting guidance, the Company must determine whether each sale and leaseback transaction qualifies as a sale. Generally, an option for the seller-lessee to repurchase a real estate asset precludes accounting for the transfer of the asset as a sale and the purchased assets should be presented as financing receivables.

The following table provides information regarding the Company's financing receivables at June 30, 2026 and December 31, 2025 (dollars in thousands):


	Property Count and Type		As of June 30, 2026				As of December 31, 2025				As of June 30, 2026		As of December 31, 2025
	SNF	Senior housing			Principal Balance			Carrying Value			Principal Balance		Carrying Value			Weighted Average Effective Interest Rate				Maturity Date
Financing receivable, at fair value	35	6		(1)	$	91,280		$	92,899	(4)	$	91,280	$	92,193	(4)	12.0	%	12.0	%	11/30/2039
Financing receivable	15	—		(2)	375,000			376,866		(5)	—		—			9.7	%	N/A		4/30/2041
Financing receivable	5	2		(3)	86,000			86,390			—		—			9.0	%	N/A		4/30/2041
Total					$	552,280		$	556,155		$	91,280	$	92,193

(1) The seller-lessee has the option to purchase the properties in separate tranches. The purchase price is a fixed amount. The next option window opens in December 2026, with the final tranche's window closing in 2039.

(2) The seller-lessee has the option to purchase up to five properties in each of three separate tranches. The purchase price is a fixed capitalization rate on contract rent. The first tranche's option window opens in 2034, with the final tranche's window closing in 2039.

(3) The seller-lessee has the option to purchase all seven properties. The purchase price is a fixed capitalization rate on contract rent. The option window opens and closes within 2036.

(4) Fair value of financing receivable includes $1.6 million and $0.9 million of accrued interest as of June 30, 2026 and December 31, 2025, respectively.

The following table summarizes the financing receivables activity for the six months ended June 30, 2026 (in thousands):


	Financing Receivable, at Fair Value		Financing Receivables
Balance at December 31, 2025	$	92,193	$	—
Originations	—		467,129
Credit loss reserve	—		(4,671)

Accrued interest	706		880
Amortization of loan costs	—		(82)
Balance at June 30, 2026	$	92,899	$	463,256

The Company applies Accounting Standards Codification ("ASC") Topic 326, Financial Instruments-Credit Losses (“ASC 326”), which requires a forward-looking “expected loss” model, to estimate loan losses. The Company determined that financial instruments, including financing receivables and loans receivable, for which the Company has not elected the fair value option under ASC 825, Financial Instruments (“ASC 825”), are within the scope of ASC 326.

The Company monitors the credit quality of its financial instruments through a variety of methods determined by the underlying collateral or other protective rights, operator’s payment history and other internal metrics. The Company's monitoring process includes periodic review of financial statements for each property, scheduled property inspections and review of covenant compliance, industry conditions and current and future economic conditions.

In determining the “expected” credit loss reserves on these instruments, the Company utilized the probability of default and discounted cash flow methods. Further, the Company stress-tested the results to reflect the impact of unknown adverse future events.

The expected credit losses related to financial instruments that are within the scope of ASC 326 are as follows (dollars in thousands):


	Amount
Reserve for loan losses, as of December 31, 2025	$	6,994
Provision for expected loan losses on funded financing receivables	4,671
Reserve for loan losses, as of June 30, 2026	$	11,665

The change in the reserve for expected loan losses during the six months ended June 30, 2026 is primarily due to reserves recognized on two new financing receivables executed during the six months ended June 30, 2026 for which the Company has not elected the fair value option under ASC 825. See Note 6, Other Real Estate Related and Other Investments, for further information on the reserve for loan losses for other loans receivable.