As of June 30, 2026, we had a portfolio of six ILFs that are held in a consolidated partnership with Merrill Gardens, LLC (“Merrill”), which owns a 20.0% common equity interest in the partnership. We own 100% of the preferred equity interest and 80.0% of the common equity interest in the partnership. The operating agreement for the partnership provides for contingent distributions to the members based on the attainment of certain yields on the investment calculated on an annual basis. The Merrill partnership is included in our SHOP segment.

The operating agreement includes a provision entitling Merrill to put rights upon certain contingent events, as specified in the agreement and which are not solely within our control as the majority equity interest owner. We determined that Merrill’s noncontrolling interest is contingently redeemable. As a result, we are required to remeasure the carrying value of the noncontrolling interest to its redemption value in the period it becomes known that a triggering event for redemption is probable to occur. As of June 30, 2026 and December 31, 2025, we concluded the redemption criteria were not met and classified the noncontrolling interest in the mezzanine section between liabilities and equity on our condensed consolidated balance sheets.

The following table provides a summary of the activity related to the redeemable noncontrolling interest for the six months ended June 30, 2026 ($ in thousands):


Balance at the beginning of the period	$	10,195
Net loss	(474)
Capital contributions	700
Distributions declared	(54)
Balance at the end of the period	$	10,367

In our Real Estate Investments segment, we own an 80.0% common equity interest in a partnership which owns and leases a CCRC located in Washington. LCS Timber Ridge LLC (“LCS”) owns the remaining 20.0% of the common equity interest in the partnership. Reference Note 6 for additional information on this investment.

Prior to August 1, 2025, we owned a 98.0% common equity interest in a partnership which owned and leased a portfolio of six SHOs. Discovery Senior Housing Investor, XXIV, LLC owned the remaining 2.0% of the common equity interest in the partnership. This partnership was included in our Real Estate Investments segment prior to its dissolution on August 1, 2025.

In our SHOP segment, we own 100.0% of the preferred equity interest and 98.0% of the common equity interest in a partnership, which owns a portfolio of 10 ILFs. A related party of Discovery Senior Living owns the remaining 2.0% of the common equity interest in the partnership. The operating agreement of the partnership provides for contingent distributions to the members based on the attainment of certain yields on the investment calculated on an annual basis.