| Property Portfolio |
Note 3 – Property Portfolio
Summary of Properties Acquired and Sold During the Nine Months Ended September 30, 2025
During the nine months ended September 30, 2025, the Company completed the acquisition of a five-property portfolio of medical real estate. For this acquisition, substantially all of the fair value was concentrated in a single identifiable asset or group of similar identifiable assets and, therefore, this acquisition represented an asset acquisition. Accordingly, transaction costs for this acquisition were capitalized.
During the nine months ended September 30, 2025, the Company completed five dispositions. In February 2025, the Company sold a medical office building located in Derby, Kansas receiving gross proceeds of $1.0 million, resulting in a gain of $17 thousand. In March 2025, the Company sold a medical office building located in Coos Bay, Oregon receiving gross proceeds of $7.2 million, resulting in a gain of $1.3 million. In April 2025, the Company sold a medical office building in Chipley, Florida receiving gross proceeds of $1.4 million, resulting in a gain of $0.2 million. In August 2025, the Company sold a medical office building in Germantown, Tennessee receiving gross proceeds of $1.9 million, resulting in a gain of $0.3 million. In September 2025, the Company sold an office building in Aurora, Illinois receiving gross proceeds of $1.9 million, resulting in no gain or loss on sale.
A rollforward of the gross investment in land, building, improvements, and acquired lease intangible assets as of September 30, 2025 is as follows:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Site |
|
Tenant |
|
Acquired Lease |
|
Gross Investment in |
|
|
Land |
|
Building |
|
Improvements |
|
Improvements |
|
Intangible Assets |
|
Real Estate |
Balances as of December 31, 2024 |
|
$ |
174,300 |
|
$ |
1,044,019 |
|
$ |
23,973 |
|
$ |
69,679 |
|
$ |
138,945 |
|
$ |
1,450,916 |
Facility Acquired – Date Acquired: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carondelet - 2/7/25 |
|
|
— |
|
|
13,327 |
|
|
— |
|
|
1,274 |
|
|
1,725 |
|
|
16,326 |
Silverbell - 2/7/25 |
|
|
— |
|
|
8,482 |
|
|
— |
|
|
973 |
|
|
1,368 |
|
|
10,823 |
Slippery Rock - 2/7/25 |
|
|
— |
|
|
3,511 |
|
|
455 |
|
|
593 |
|
|
572 |
|
|
5,131 |
Clive - 4/1/25 |
|
|
— |
|
|
11,400 |
|
|
507 |
|
|
1,595 |
|
|
2,218 |
|
|
15,720 |
Des Moines - 4/1/25 |
|
|
— |
|
|
18,917 |
|
|
182 |
|
|
3,289 |
|
|
3,519 |
|
|
25,907 |
Capitalized costs(1) |
|
|
— |
|
|
4,224 |
|
|
464 |
|
|
3,412 |
|
|
— |
|
|
8,100 |
Total Additions: |
|
|
— |
|
|
59,861 |
|
|
1,608 |
|
|
11,136 |
|
|
9,402 |
|
|
82,007 |
Facility Sold – Date Sold: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derby - 2/18/25 |
|
|
(146) |
|
|
(1,250) |
|
|
(118) |
|
|
(73) |
|
|
(372) |
|
|
(1,959) |
Coos Bay - 3/19/25 |
|
|
(861) |
|
|
(5,096) |
|
|
(56) |
|
|
(49) |
|
|
(410) |
|
|
(6,472) |
Chipley - 4/30/25 |
|
|
(170) |
|
|
(875) |
|
|
(34) |
|
|
(111) |
|
|
(189) |
|
|
(1,379) |
2999 Germantown - 8/7/25 |
|
|
(253) |
|
|
(1,593) |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,846) |
Aurora - 9/4/25 |
|
|
(339) |
|
|
(2,345) |
|
|
(308) |
|
|
(603) |
|
|
(2,680) |
|
|
(6,275) |
Total Dispositions: |
|
|
(1,769) |
|
|
(11,159) |
|
|
(516) |
|
|
(836) |
|
|
(3,651) |
|
|
(17,931) |
Impairment of investment property(2) |
|
|
(1,182) |
|
|
(5,099) |
|
|
— |
|
|
— |
|
|
— |
|
|
(6,281) |
Balances as of September 30, 2025 |
|
$ |
171,349 |
|
$ |
1,087,622 |
|
$ |
25,065 |
|
$ |
79,979 |
|
$ |
144,696 |
|
$ |
1,508,711 |
| (1) |
Represents capital projects that were completed and placed in service during the nine months ended September 30, 2025 related to the Company’s existing facilities. |
| (2) |
In August 2025, the Company entered into an agreement to sell its facility located in Aurora, Illinois. The Company recognized an impairment loss of $6.3 million during the nine months ended September 30, 2025 to reduce the carrying value of the asset to its fair value. The fair value was determined to be the contractual sales price less commissions and fees. The sale of the facility was completed in September 2025.
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Depreciation expense was $11,213 and $32,827 for the three and nine months ended September 30, 2025, respectively, and $9,993 and $30,233 for the three and nine months ended September 30, 2024, respectively.
As of September 30, 2025, the Company had aggregate capital improvement commitments and obligations to improve, expand, and maintain the Company’s existing facilities of approximately $24,200. Many of these amounts are subject to contingencies that make it difficult to predict when they will be utilized, if at all. In accordance with the terms of the Company’s leases, capital improvement obligations in the next twelve months are expected to total approximately $9,800.
Summary of Properties Acquired and Sold During the Year Ended December 31, 2024
During the year ended December 31, 2024, the Company completed the acquisition of a 15-property portfolio. For this acquisition, substantially all of the fair value was concentrated in a single identifiable asset or group of similar identifiable assets and, therefore, this acquisition represented an asset acquisition. Accordingly, transaction costs for this acquisition were capitalized.
During the year ended December 31, 2024, the Company completed seven dispositions. In June 2024, the Company sold an in-patient rehabilitation facility located in Mishawaka, Indiana receiving gross proceeds of $8.1 million, resulting in a loss of $3.4 million. In July 2024, the Company sold a medical office building located in Panama City, Florida receiving gross proceeds of $11.0 million, resulting in a gain of $1.7 million. In September 2024, the Company sold a medical office building located in Panama City Beach, Florida receiving gross proceeds of $1.1 million, resulting in a gain of $0.1 million. In December 2024, the Company sold two medical office buildings located in Carson City, Nevada receiving gross proceeds of $1.0 million, resulting in a loss of $2.4 million. In December 2024, the Company sold three medical office buildings located in Ellijay, Georgia receiving gross proceeds of $4.3 million, resulting in a gain of $0.7 million. In December 2024, in connection with the formation of the Joint Venture, the Company sold two assets to the Joint Venture consisting of a medical office building located in High Point, North Carolina receiving gross proceeds of $28.0 million resulting in gain of $6.2 million and a medical office building located in Fort Worth, Texas receiving gross proceeds of $7.2 million, resulting in a gain of $1.3 million.
A rollforward of the gross investment in land, building, improvements, and acquired lease intangible assets as of December 31, 2024 is as follows:
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|
|
|
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|
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|
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|
|
|
|
|
|
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|
|
|
|
Site |
|
Tenant |
|
Acquired Lease |
|
Gross Investment in |
|
|
Land |
|
Building |
|
Improvements |
|
Improvements |
|
Intangible Assets |
|
Real Estate |
Balances as of December 31, 2023 |
|
$ |
164,315 |
|
$ |
1,035,705 |
|
$ |
21,974 |
|
$ |
66,358 |
|
$ |
138,617 |
|
$ |
1,426,969 |
Facility Acquired – Date Acquired: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minot – 7/11/24 |
|
|
935 |
|
|
7,324 |
|
|
144 |
|
|
103 |
|
|
676 |
|
|
9,182 |
Clinton – 7/11/24 |
|
|
938 |
|
|
4,829 |
|
|
188 |
|
|
256 |
|
|
657 |
|
|
6,868 |
Westland – 7/11/24 |
|
|
921 |
|
|
3,630 |
|
|
157 |
|
|
99 |
|
|
540 |
|
|
5,347 |
Cerritos – 7/11/24 |
|
|
3,424 |
|
|
1,244 |
|
|
107 |
|
|
106 |
|
|
392 |
|
|
5,273 |
Spartanburg – 7/11/24 |
|
|
890 |
|
|
2,613 |
|
|
168 |
|
|
390 |
|
|
517 |
|
|
4,578 |
Conway – 10/2/24 |
|
|
2,430 |
|
|
7,415 |
|
|
188 |
|
|
372 |
|
|
897 |
|
|
11,302 |
Little Rock – 10/2/24 |
|
|
1,449 |
|
|
6,579 |
|
|
164 |
|
|
284 |
|
|
741 |
|
|
9,217 |
Russellville – 10/2/24 |
|
|
1,086 |
|
|
4,022 |
|
|
218 |
|
|
205 |
|
|
491 |
|
|
6,022 |
Sarasota – 10/2/24 |
|
|
643 |
|
|
4,133 |
|
|
— |
|
|
548 |
|
|
712 |
|
|
6,036 |
Venice – 10/2/24 |
|
|
1,102 |
|
|
2,830 |
|
|
123 |
|
|
187 |
|
|
426 |
|
|
4,668 |
Ruskin – 10/2/24 |
|
|
242 |
|
|
1,443 |
|
|
28 |
|
|
45 |
|
|
175 |
|
|
1,933 |
6807 Bradenton – 10/2/24 |
|
|
1,225 |
|
|
626 |
|
|
22 |
|
|
68 |
|
|
180 |
|
|
2,121 |
2101 Bradenton – 10/2/24 |
|
|
967 |
|
|
1,372 |
|
|
52 |
|
|
64 |
|
|
235 |
|
|
2,690 |
2203 Bradenton – 10/2/24 |
|
|
408 |
|
|
913 |
|
|
35 |
|
|
37 |
|
|
132 |
|
|
1,525 |
6002 Bradenton – 10/2/24 |
|
|
1,679 |
|
|
2,985 |
|
|
112 |
|
|
190 |
|
|
463 |
|
|
5,429 |
Capitalized costs(1) |
|
|
— |
|
|
5,494 |
|
|
1,481 |
|
|
4,828 |
|
|
— |
|
|
11,803 |
Total Additions: |
|
|
18,339 |
|
|
57,452 |
|
|
3,187 |
|
|
7,782 |
|
|
7,234 |
|
|
93,994 |
Facility Sold – Date Sold: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mishawaka – 6/27/24 |
|
|
(1,924) |
|
|
(10,084) |
|
|
(75) |
|
|
(1,798) |
|
|
(2,223) |
|
|
(16,104) |
Panama City – 7/12/24 |
|
|
(1,117) |
|
|
(7,201) |
|
|
(165) |
|
|
(841) |
|
|
(1,141) |
|
|
(10,465) |
Panama City Beach – 9/19/24 |
|
|
(272) |
|
|
(606) |
|
|
(21) |
|
|
(84) |
|
|
(149) |
|
|
(1,132) |
Carson City – 12/6/2024 |
|
|
(760) |
|
|
(3,268) |
|
|
— |
|
|
— |
|
|
— |
|
|
(4,028) |
Ellijay – 12/17/2024 |
|
|
(777) |
|
|
(2,929) |
|
|
(136) |
|
|
(408) |
|
|
(870) |
|
|
(5,120) |
High Point – 12/20/2024(2) |
|
|
(1,749) |
|
|
(20,417) |
|
|
(504) |
|
|
(869) |
|
|
(1,656) |
|
|
(25,195) |
Fort Worth – 12/20/2024(2) |
|
|
(1,487) |
|
|
(3,333) |
|
|
(251) |
|
|
(445) |
|
|
(787) |
|
|
(6,303) |
Total Dispositions: |
|
|
(8,086) |
|
|
(47,838) |
|
|
(1,152) |
|
|
(4,445) |
|
|
(6,826) |
|
|
(68,347) |
Impairment of investment property(3) |
|
|
(268) |
|
|
(1,300) |
|
|
(36) |
|
|
(16) |
|
|
(80) |
|
|
(1,700) |
Balances as of December 31, 2024 |
|
$ |
174,300 |
|
$ |
1,044,019 |
|
$ |
23,973 |
|
$ |
69,679 |
|
$ |
138,945 |
|
$ |
1,450,916 |
(1) |
Represents capital projects that were completed and placed in service during the year ended December 31, 2024 related to the Company’s existing facilities. |
(2) |
These two facilities were sold to the Joint Venture in connection with its formation. |
(3) |
In December 2024, the Company entered into an agreement to sell its facility located in Derby, Kansas. The Company recognized an impairment loss of $1.7 million during the year ended December 31, 2024 to reduce the carrying value of the asset to its fair value. The fair value was determined to be the contractual sales price less commissions and fees. |
Lease Intangible Assets and Liabilities
The following is a summary of the carrying amount of lease intangible assets and liabilities as of the dates presented:
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|
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|
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|
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|
|
|
As of September 30, 2025 |
|
|
|
|
|
Accumulated |
|
|
|
|
|
Cost |
|
Amortization |
|
Net |
Assets |
|
|
|
|
|
|
|
|
|
In-place leases |
|
$ |
82,590 |
|
$ |
(55,958) |
|
$ |
26,632 |
Above market leases |
|
|
24,024 |
|
|
(14,544) |
|
|
9,480 |
Leasing costs |
|
|
38,082 |
|
|
(24,000) |
|
|
14,082 |
|
|
$ |
144,696 |
|
$ |
(94,502) |
|
$ |
50,194 |
Liability |
|
|
|
|
|
|
|
|
|
Below market leases |
|
$ |
17,335 |
|
$ |
(11,819) |
|
$ |
5,516 |
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2024 |
|
|
|
|
|
Accumulated |
|
|
|
|
|
Cost |
|
Amortization |
|
Net |
Assets |
|
|
|
|
|
|
|
|
|
In-place leases |
|
$ |
77,698 |
|
$ |
(50,714) |
|
$ |
26,984 |
Above market leases |
|
|
24,599 |
|
|
(13,201) |
|
|
11,398 |
Leasing costs |
|
|
36,648 |
|
|
(21,326) |
|
|
15,322 |
|
|
$ |
138,945 |
|
$ |
(85,241) |
|
$ |
53,704 |
Liability |
|
|
|
|
|
|
|
|
|
Below market leases |
|
$ |
14,073 |
|
$ |
(10,137) |
|
$ |
3,936 |
The following is a summary of the acquired lease intangible amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
Amortization expense related to in-place leases |
|
$ |
2,423 |
|
$ |
2,431 |
|
$ |
7,232 |
|
$ |
7,707 |
|
Amortization expense related to leasing costs |
|
$ |
1,113 |
|
$ |
1,114 |
|
$ |
3,350 |
|
$ |
3,467 |
|
Decrease in rental revenue related to above market leases |
|
$ |
714 |
|
$ |
793 |
|
$ |
2,204 |
|
$ |
2,425 |
|
Increase in rental revenue related to below market leases |
|
$ |
(601) |
|
$ |
(511) |
|
$ |
(1,699) |
|
$ |
(1,643) |
|
As of September 30, 2025, scheduled future aggregate net amortization of the acquired lease intangible assets and liabilities for each year ended December 31 is listed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Decrease |
|
Net Increase |
|
|
in Revenue |
|
in Expense |
2025 (three months remaining) |
|
$ |
(224) |
|
$ |
4,129 |
2026 |
|
|
(321) |
|
|
13,633 |
2027 |
|
|
(320) |
|
|
9,361 |
2028 |
|
|
(890) |
|
|
5,805 |
2029 |
|
|
(945) |
|
|
3,677 |
Thereafter |
|
|
(1,264) |
|
|
4,109 |
Total |
|
$ |
(3,964) |
|
$ |
40,714 |
As of September 30, 2025, the weighted average amortization periods for asset lease intangibles and liability lease intangibles were 3.0 years and 2.4 years, respectively.
|