3. Real Estate and Other Activities

New Investments

2026 Activity

On June 1, 2026, we completed a transaction with ScionHealth ("Scion"), Lifepoint Health, Inc. ("Lifepoint"), and Lifepoint Behavioral Health ("Lifepoint Behavioral") (the "Scion/Lifepoint Transaction"), as further described in this same Note 3 under the "Other Leasing Activities" subheading. As part of the transaction, we acquired one property in Kentucky valued at $165.5 million as part of a property exchange described below under the "Disposals" subheading of this Note 3. The property is leased to Lifepoint pursuant to a long-term master lease with annual inflation-based escalators.

During the first quarter of 2026, we closed on the acquisition of one property in Germany for approximately €23 million (along with real estate transfer tax) leased to Median Kliniken S.à r.l ("MEDIAN") pursuant to a long-term lease with annual inflation-based escalators.

2025 Activity

In April 2025, we invested approximately CHF 52 million (or approximately $63 million), inclusive of a CHF 25 million (or approximately $30 million) short-term loan, in the Swiss Medical Network real estate joint venture, proceeds of which, along with fundings from our joint venture partner, were used to facilitate the acquisition of a general acute care facility in Switzerland and repayment of debt.

In the first quarter of 2025, we funded approximately $39 million to Steward Health Care System's ("Steward") secured lender in order to obtain control over certain real estate assets for use by our new tenants.

Development and Capital Addition Activities

We have two other development projects ongoing in Texas (Texarkana development) and Massachusetts (Norwood redevelopment). These are not highlighted above; however, we have completed construction to the stage where the building is "weathered in" and environmentally secure so as to physically protect our investment while we actively market the hospitals for sale or lease. As of June 30, 2026, we estimate that the cost of additional construction that we believe will be more efficient if completed in

the near-term (such as electing to accelerate completion of a parking structure and elevators at Norwood) approximates between $5 million and $10 million.

2026 Activity

During the first quarter of 2026, we completed construction and began recording rental income on a $10.7 million capital addition project at an Avondale, Arizona facility leased to Lifepoint Behavioral.

2025 Activity

During the first quarter of 2025, we completed construction and began recording rental income on a $10.5 million capital addition project at a Gilbert, Arizona facility leased to Lifepoint Behavioral.

Disposals

2026 Activity

On June 1, 2026, we completed the Scion/Lifepoint Transaction as further described in this same Note 3 under the "Other Leasing Activities" subheading. As part of the transaction, we completed a property exchange, which resulted in the transfer of three facilities back to Scion in exchange for the Kentucky property noted previously in this same Note 3 under the "New Investments" subheading. The transaction, which included the satisfaction of the lease incentive from the 2025 transaction with the tenant, resulted in a net gain of approximately $6.8 million.

During the first six months of 2026, we also completed the sale of five facilities for total proceeds of approximately $31 million, of which $12 million was received in advance of the sale in the first quarter of 2025, resulting in a loss on real estate of approximately $1 million.

2025 Activity

During the first six months of 2025, we completed the sale of three facilities and an ancillary facility for approximately $48 million, resulting in a gain on real estate of $13.3 million.

Leasing Operations (Lessor)

We acquire and develop healthcare facilities and lease the facilities to healthcare operating companies. The initial fixed lease terms of these infrastructure-type assets are typically at least 15 years, and most include renewal options at the election of our tenants, generally in five-year increments. Over 99% of our leases provide annual rent escalations based on increases in the Consumer Price Index ("CPI") (or similar indices outside the U.S.) and/or fixed minimum annual rent escalations. Many of our domestic leases contain purchase options with pricing set at various terms but in no case less than our total initial investment. Our leases typically require the tenant to handle and bear most of the costs associated with our properties including repair/maintenance, property taxes, and insurance.

For all of our properties subject to lease, we are the legal owner of the property and the tenant's right to use and possess such property is guided by the terms of a lease. At June 30, 2026, we account for all of these leases as operating leases, except where GAAP requires alternative classification, including leases on certain Ernest Health, Inc. ("Ernest") facilities that are accounted for as either direct financing or other financing type leases. The components of our total investment in financing leases consisted of the following (in thousands):

Other Leasing Activities

At June 30, 2026, our vacant properties represented less than 1% of total assets. We are in various stages of either re-leasing or selling these vacant properties.

Our tenants’ financial performance and resulting ability to satisfy their lease and loan obligations to us are material to our financial results and our ability to service our debt and make distributions to our stockholders. Our tenants operate in the healthcare

industry, which is highly regulated, and changes in regulation (or delays in enacting regulation) may temporarily impact our tenants’ operations until they are able to make the appropriate adjustments to their business. In addition, our tenants may experience operational challenges from time-to-time as a result of many factors, including those external to them, such as cybersecurity attacks, public health crises, economic issues resulting in high inflation and spikes in labor costs, extreme or severe weather and climate-related events, and adverse market and political conditions. We monitor our tenants' operating results and the potential impact from these challenges. We may elect to provide support to our tenants from time-to-time in the form of short-term rent abatements or rent deferrals to be paid back in full, or in the form of temporary loans. See below for an update on some of our tenants.

Scion/Lifepoint Transaction

On June 1, 2026, we completed the Scion/Lifepoint Transaction which included (i) our acquisition of a new property from Lifepoint (as previously described in this same Note 3 under the "New Investments" subheading) in exchange for three Scion properties (as previously described in this same Note 3 under the "Disposals" subheading), (ii) the transition of hospital operations of two of our other facilities from Scion to Lifepoint, and (iii) the execution of a combined single master lease covering properties leased to Lifepoint and Lifepoint Behavioral. The new master lease has a lease term ending in 2045, annual cash rents approximating 99% of such rents prior to this transaction, and includes lease escalator provisions. After the Scion/Lifepoint Transaction, we have one remaining property leased to Scion, representing less than 0.2% of our total assets.

Prospect

In August 2019, we invested in a portfolio of 14 acute care hospitals in three states (California, Pennsylvania, and Connecticut) operated by and master leased to or mortgaged by Prospect Medical Holdings, Inc. ("Prospect") for a combined investment of approximately $1.6 billion.

On May 23, 2023, Prospect completed a recapitalization plan, which included receiving $375 million in new financing from several lenders. Along with this new capital from third-party lenders, we agreed to the following restructuring of our then $1.7 billion investment including: a) maintaining the master lease covering six California hospitals without any changes in rental rates or escalator provisions, b) transitioning the Pennsylvania properties back to Prospect in return for a $150 million first lien mortgage, c) providing up to $75 million in a loan secured by a first lien on Prospect's accounts receivable and certain other assets, and d) obtaining a non-controlling ownership interest in PHP Holdings in exchange for unpaid rent and interest, among other things.

Prospect filed for Chapter 11 bankruptcy on January 11, 2025 with the United States Bankruptcy Court for the Northern District of Texas. On March 20, 2025, the bankruptcy court approved a global settlement (including a recovery waterfall) between us, Prospect, and other stakeholders. Due to the bankruptcy, we recorded more than $400 million of impairment charges and negative fair value adjustments associated with our investments in Prospect in the 2024 fourth quarter, resulting in a full reserve of the asset-backed loan and our Pennsylvania mortgage loan, along with a decrease in the value in our Connecticut properties. No charge was recorded on our California properties.

In 2025 and in accordance with the global settlement and the estimated recovery waterfall, we recorded approximately $140 million of additional impairment charges (including $55 million of impairment charges in the 2025 first quarter that further reduced our investment in the Connecticut properties, partially offset by an approximate $18 million impairment recovery in the 2025 second quarter). In determining the 2025 first and second quarter impairment charges and recoveries, we compared the carrying value of our investments to our estimate of expected proceeds (net of any possible future cash outlays) to be received under the bankruptcy court approved recovery waterfall, factoring in an estimated recovery of Prospect assets (including our real estate assets) and applying the priority of claims associated with the bankruptcy. In estimating the fair value of the California, Pennsylvania, and certain Connecticut real estate, we, along with assistance from a third-party independent valuation firm, used a combination of cost, market, and income approaches using Level 3 inputs. The cost approach used comparable sales to value the land and cost manuals to value the improvements. The value derived from the market approach was based on sales prices of similar properties. For the income approach, we divided the expected operating income from the property by an estimated market capitalization rate (ranging from 8.25% to 8.5%). For the remaining Connecticut real estate, fair value was based on a recent (at the time) bid received for these properties.

In 2025 and through the first quarter of 2026, all the Connecticut and Pennsylvania properties (along with our investment in PHP Holdings discussed below) were sold, and Prospect's bankruptcy plan was deemed effective.

During the first six months of 2026, we received approximately $60 million from these asset sales and collection of Connecticut accounts receivable that serve as collateral for our remaining investment, while funding $62 million of the $65 million bankruptcy court approved funding commitment, as disclosed in our 2025 Annual Report. At June 30, 2026, our remaining investment in Prospect is approximately $67 million inclusive of the remaining $3 million commitment that we expect to fund in the 2026 third quarter. We believe this total investment is fully recoverable from the collection of remaining Connecticut accounts receivable (of which we received $1.5 million subsequent to quarter end) and proceeds from litigation and other causes of action, the ultimate outcome and timing of which are uncertain.

Re-tenanting Activity

In December 2025, we re-leased the six California properties to NOR as a result of their successful bid to acquire the hospital operations. Terms of the lease include an initial annualized rent almost identical to the previous rent amount due from Prospect in 2025, annual inflation-based escalators starting in the 2027 first quarter, and an initial fixed term of 15 years. All rent was deferred for the first six months (or until mid-June 2026), and 50% of rent is to be deferred for an additional six months, after which the aggregate deferred rent will be paid over the remaining lease term. We are accounting for rent revenue associated with the NOR lease on the cash basis and recognized $1 million in the 2026 second quarter. We have committed to fund approximately $24 million for a new emergency department at one facility and up to $60 million in seismic improvements that may be required by California regulators over the next four years, both of which will increase the lease base and result in additional rent.

PHP Investment

In regard to our investment in PHP Holdings, we accounted for this investment using the fair value option method. In the first six months of 2025, we recorded an approximate $147 million negative fair value adjustment ($129 million of which was in the 2025 second quarter). The adjustment in 2025 was made based on changes to the purchase agreement between PHP Holdings and Astrana Health and updates to PHP Holdings' working capital position. On July 1, 2025, we received $2.3 million from the sale of PHP Holdings to Astrana Health.

Other Re-tenanting Activity

As discussed in previous filings, we entered into agreements in September 2024 with six operators (HSA, Honor Health, Insight Health ("Insight"), Quorum, College Health, and Tenor Health ("Tenor")) to lease 18 of the 23 former Steward-operated facilities. Since then, we have sold three of the facilities, including one in the 2026 first quarter. These leases included a rent ramp up period. In the 2025 first quarter, cash rents received from these operators were approximately $3.4 million, ramping up to $11 million in the 2025 second quarter, approximately $12 million in the 2025 third quarter, $26.1 million in the 2025 fourth quarter (including approximately $4 million of September 2025 rent from a cash-basis tenant that was received on October 1, 2025), $24.5 million in the 2026 first quarter, and $29.7 million in the second quarter of 2026. Based on these lease contracts (adjusted for the sales noted above), rent payments are to increase to approximately 100% of contractual rent starting with October 2026. As of June 30, 2026, all of these new operators have paid the rent due under their respective leases, except for cash-basis tenants Insight/Tenor who represent less than 1% of our annual revenues.

As of June 30, 2026, we have approximately $172 million in working capital and other loans related to these operators that were initially advanced to assist in the takeover of these operations and the transition of certain services (such as revenue cycle management). These loans are generally secured by accounts receivables and/or other assets (like personal property). In the 2026 second quarter, we advanced an additional $50 million to HSA due to ongoing revenue cycle management issues, of which we have subsequently received approximately $25 million. In addition, approximately $9 million (including $6 million received in July 2026) of working capital loans have been repaid from the other operators. We have recorded charges of $27.4 million in the first six months of 2026, which impaired the majority of the loans due from Insight/Tenor to equal the fair value of the underlying collateral.

The remaining five former Steward-operated properties (with a net book value of approximately 4% of our total assets), including two developments (see "Development and Capital Addition Activities" above), are in various stages of being re-tenanted or sold.

Investments in Unconsolidated Entities

Investments in Unconsolidated Real Estate Joint Ventures

Our primary business strategy is to acquire real estate and lease to providers of healthcare services. Typically, we directly own 100% of such investments. However, from time-to-time, we will co-invest with other investors that share a similar view that hospital real estate is a necessary infrastructure-type asset in communities. In these types of investments, we will own undivided interests of less than 100% of the real estate through unconsolidated real estate joint ventures. The underlying real estate and leases in these unconsolidated real estate joint ventures are generally structured similarly and carry a similar risk profile to the rest of our real estate portfolio.

For our MEDIAN unconsolidated real estate joint venture, we, along with our joint venture partner, closed on a €702.5 million non-recourse, 10-year nonamortizing secured debt facility on June 17, 2025. The debt carries a 5.1% fixed interest rate, and the majority of the proceeds were used to fund the repayment of the prior €655 million secured loan that carried a lower interest rate.

The Utah partnership applies specialized accounting and reporting for investment companies under Topic 946, which measures the underlying investments at fair value. For the three months ended June 30, 2026 and 2025, our share of the Utah partnership's favorable fair value adjustments was approximately $2.0 million and $15.0 million, respectively, while, for the six months ended June 30, 2026 and 2025, our share was approximately $9.0 million and $21.0 million, respectively.

Investments in Unconsolidated Operating Entities

Our investments in unconsolidated operating entities are noncontrolling investments that are typically made in conjunction with larger real estate transactions in which the operators are vetted as part of our overall underwriting process. In many cases, we would not be able to acquire the larger real estate portfolio without such investments in operators. These investments also offer the opportunity to enhance our overall return and provide for certain minority rights and protections.

Credit Loss Reserves

We apply a forward-looking "expected loss" model to our financing receivables, including financing leases and loans, based on historical credit losses of similar instruments.

Concentrations of Credit Risk

We monitor concentration risk in several ways due to the nature of our real estate assets that are vital to the communities in which they are located and given our history of being able to replace inefficient operators of our facilities, if needed, with more effective operators. See below for our concentration details (dollars in thousands):