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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


			OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission file number: 001-39153

National Healthcare Properties, Inc.

(Exact name of registrant as specified in its charter)

Maryland

38-3888962

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)


540 Madison Ave., 27th Floor, New York, NY						10022
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: (212) 415-6500

Securities registered pursuant to section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

7.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share

NHPAP

The Nasdaq Global Market

7.125% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share

NHPAB

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of August 1, 2025, the registrant had 28,296,439 shares of common stock outstanding.

NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


			Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 (Unaudited)			3
Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2025 and 2024 (Unaudited)			4
Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2025 (Unaudited)			5
Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 202 4 (Unaudited)			6
Consolidated Statements of Cash Flows for the Six Months Ended June 3 0 , 2025 and 2024 (Unaudited)			7
Notes to Consolidated Financial Statements (Unaudited)			9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.			39

Item 3. Quantitative and Qualitative Disclosures About Market Risk.			54

Item 4. Controls and Procedures.			54

PART II - OTHER INFORMATION			55

Item 1. Legal Proceedings.			55

Item 1A. Risk Factors.			55

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities.			55

Item 3. Defaults Upon Senior Securities.			55

Item 4. Mine Safety Disclosures.			55

Item 5. Other Information.			55

Item 6. Exhibits.			56

Signatures.			57

Table of Contents

Part I — FINANCIAL INFORMATION

Item 1. Financial Statements.

NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)


	June 30, 2025		December 31, 2024
ASSETS
Real estate investments, at cost:
Land	$	177,999	$	190,082
Buildings, fixtures and improvements	1,804,274		2,012,401
Acquired intangible assets	249,941		284,447
Construction in progress	4,126		7,867
Total real estate investments, at cost	2,236,340		2,494,797
Less: accumulated depreciation and amortization	(671,070)		(725,831)
Total real estate investments, net	1,565,270		1,768,966
Assets held for sale	1,725		—
Cash and cash equivalents	47,123		21,652
Restricted cash	56,047		52,443
Derivative assets, at fair value	11,208		19,206
Straight-line rent receivable, net	20,315		22,841
Operating lease right-of-use assets	6,841		7,480
Prepaid expenses and other assets	22,591		26,316
Accounts receivable, net	9,311		5,850
Deferred costs, net	18,465		21,269
Total assets	$	1,758,896	$	1,946,023

LIABILITIES AND EQUITY
Mortgage notes payable, net	$	696,508	$	779,160
Credit facilities	337,624		362,216
Market lease intangible liabilities, net	5,380		6,125

Accounts payable and accrued expenses (including $30,267 due to related parties as of December 31, 2024)	46,322		89,575
Operating lease liabilities	7,801		8,109
Deferred rent	9,347		7,217
Distributions payable	3,432		3,496
Total liabilities	1,106,414		1,255,898
Stockholders’ Equity
7.375% Series A cumulative redeemable perpetual preferred stock, $0.01 par value, 4,740,000 authorized; 3,920,228 and 3,977,144 issued and outstanding as of June 30, 2025 and December 31, 2024, respectively	40		40
7.125% Series B cumulative redeemable perpetual preferred stock, $0.01 par value, 3,680,000 authorized; 3,563,787 and 3,630,000 issued and outstanding as of June 30, 2025 and December 31, 2024, respectively	35		36
Common stock, $0.01 par value, 300,000,000 shares authorized, 28,448,845 and 28,296,439 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively	1,132		1,132
Additional paid-in capital	2,532,585		2,533,706
Accumulated other comprehensive income	9,441		16,640
Distributions in excess of accumulated earnings	(1,896,200)		(1,866,994)
Total stockholders’ equity	647,033		684,560
Non-controlling interests	5,449		5,565
Total equity	652,482		690,125
Total liabilities and equity	$	1,758,896	$	1,946,023

Share and per share data have been adjusted for all periods presented to reflect a one-for-four reverse stock split effective September 30, 2024.

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenue from tenants	$	85,332	$	88,817	$	171,775	$	177,116

Operating expenses:
Property operating and maintenance	53,848		55,005		111,388		110,150
Impairment charges	15,212		2,409		27,111		2,669
Operating fees to related parties	—		6,424		—		12,790
Termination fees to related parties	—		98,241		—		98,241
Acquisition and transaction related	497		357		548		499
General and administrative	5,406		4,668		10,618		11,436
Depreciation and amortization	18,539		21,928		42,245		42,666
Total expenses	93,502		189,032		191,910		278,451
Operating gain/(loss) before gain on sale of real estate investments	(8,170)		(100,215)		(20,135)		(101,335)
Gain (loss) on sale of real estate investments	2,652		(225)		27,641		(225)
Operating (loss) income	(5,518)		(100,440)		7,506		(101,560)
Other expense:
Interest expense	(15,836)		(17,752)		(30,365)		(34,135)
Interest and other income	231		457		216		529
Gain on extinguishment of debt	257		—		257		—
Gain on non-designated derivatives	32		882		31		2,833
Total other expenses, net	(15,316)		(16,413)		(29,861)		(30,773)
Loss before income taxes	(20,834)		(116,853)		(22,355)		(132,333)
Income tax expense (benefit)	—		(65)		6		(135)
Net loss	(20,834)		(116,918)		(22,349)		(132,468)
Net loss (income) attributable to non-controlling interests	31		452		(23)		452
Allocation for preferred stock	(3,386)		(3,450)		(6,836)		(6,900)
Net loss attributable to common stockholders	(24,189)		(119,916)		(29,208)		(138,916)

Other comprehensive loss:
Unrealized (loss) gain on designated derivatives	(2,205)		(1,276)		(7,199)		1,004
Comprehensive loss attributable to common stockholders	$	(26,394)	$	(121,192)	$	(36,407)	$	(137,912)

Weighted-average shares outstanding — Basic and Diluted(1)	28,296,439		28,296,438		28,296,439		28,291,789
Net loss per share attributable to common stockholders — Basic and Diluted(1)	$	(0.85)	$	(4.24)	$	(1.03)	$	(4.91)

____________

(1)Retroactively adjusted for the effects of previous stock dividends (see Note 1 — Organization).

Share and per share data have been adjusted for all periods presented to reflect a one-for-four reverse stock split effective September 30, 2024.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

(Unaudited)


	Six Months Ended June 30, 2025
	Series A Preferred Stock			Series B Preferred Stock			Common Stock
	Number of Shares	Par Value		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Distributions in excess of accumulated earnings		Total Stockholders Equity		Non-controlling Interests		Total Equity
Balance, December 31, 2024	3,977,144	40		3,630,000	$	36	28,296,439	$	1,132	$	2,533,706	$	16,640	$	(1,866,994)	$	684,560	$	5,565	$	690,125
Share-based compensation	—	—		—	—		—	—		570		—		—		570		—		570


Distributions declared on Series A Preferred Stock, $0.92 per share	—	—		—	—		—	—		—		—		(3,634)		(3,634)		—		(3,634)
Distributions declared on Series B Preferred Stock, $0.89 per share	—	—		—	—		—	—		—		—		(3,200)		(3,200)		—		(3,200)
Distributions to non-controlling interest holders	—	—		—	—		—	—		—		—		—		—		(93)		(93)
Repurchase of Series A Preferred Stock	(56,916)	—		—	—		—	—		(822)		—		—		(822)		—		(822)
Repurchase of Series B Preferred Stock	—	—		(66,213)	(1)		—	—		(915)		—		—		(916)		—		(916)
Net loss	—	—		—	—		—	—		—		—		(22,372)		(22,372)		23		(22,349)
Unrealized loss on designated derivatives	—	—		—	—		—	—		—		(7,199)		—		(7,199)		—		(7,199)

Rebalancing of ownership percentage	—	—		—	—		—	—		46		—		—		46		(46)		—
Balance, June 30, 2025	3,920,228	$	40	3,563,787	$	35	28,296,439	$	1,132	$	2,532,585	$	9,441	$	(1,896,200)	$	647,033	$	5,449	$	652,482


	Three Months Ended June 30, 2025
	Series A Preferred Stock			Series B Preferred Stock			Common Stock
	Number of Shares	Par Value		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Distributions in excess of accumulated earnings		Total Stockholders Equity		Non-controlling Interests		Total Equity
Balance, March 31, 2025	3,977,144	$	40	3,630,000	$	36	28,296,439	$	1,132	$	2,533,737	$	11,646	$	(1,872,012)	$	674,579	$	5,541	$	680,120

Share-based compensation	—	—		—	—		—	—		570		—		—		570		—		570


Distributions declared on Series A Preferred Stock, $0.46 per share	—	—		—	—		—	—		—		—		(1,800)		(1,800)		—		(1,800)
Distributions declared on Series B Preferred Stock, $0.45 per share	—	—		—	—		—	—		—		—		(1,585)		(1,585)		—		(1,585)
Distributions to non-controlling interest holders	—	—		—	—		—	—		—		—		—		—		(46)		(46)
Repurchase of Series A Preferred Stock	(56,916)	—		—	—		—	—		(822)		—		—		(822)		—		(822)
Repurchase of Series B Preferred Stock	—	—		(66,213)	(1)		—	—		(915)		—		—		(915)		—		(915)
Net loss	—	—		—	—		—	—		—		—		(20,803)		(20,803)		(31)		(20,834)
Unrealized loss on designated derivatives	—	—		—	—		—	—		—		(2,205)		—		(2,205)		—		(2,205)
Rebalancing of ownership percentage	—	—		—	—		—	—		15		—		—		15		(15)		—
Balance, June 30, 2025	3,920,228	$	40	3,563,787	$	35	28,296,439	$	1,132	$	2,532,585	$	9,441	$	(1,896,200)	$	647,033	$	5,449	$	652,482

Share and per share data have been adjusted for all periods presented to reflect a one-for-four reverse stock split effective September 30, 2024.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

(Unaudited)


	Six Months Ended June 30, 2024
	Series A Preferred Stock			Series B Preferred Stock			Common Stock
	Number of Shares	Par Value		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive (Loss) Income		Distributions in Excess of Accumulated Earnings		Total Stockholders Equity		Non-controlling Interests		Total Equity
Balance, December 31, 2023	3,977,144	$	40	3,630,000	$	36	27,886,255	$	1,115	$	2,509,303	$	23,464	$	(1,639,804)	$	894,154	$	6,429	$	900,583

Share-based compensation	—	—		—	—		—	—		460		—		—		460		—		460
Distributions declared in common stock, $0.21 per share	—	—		—	—		423,290	17		23,678		—		(23,695)		—		—		—
Distributions declared on Series A Preferred Stock, $0.92 per share	—	—		—	—		—	—		—		—		(3,668)		(3,668)		—		(3,668)
Distributions declared on Series B Preferred Stock, $0.90 per share	—	—		—	—		—	—		—		—		(3,232)		(3,232)		—		(3,232)
Distributions to non-controlling interest holders	—	—		—	—		—	—		—		—		—		—		(92)		(92)
Net loss	—	—		—	—		—	—		—		—		(132,016)		(132,016)		(452)		(132,468)
Unrealized loss on designated derivatives	—	—		—	—		—	—		—		1,004		—		1,004		—		1,004

Rebalancing of ownership percentage	—	—		—	—		—	—		43		—		—		43		(43)		—
Balance, June 30, 2024	3,977,144	$	40	3,630,000	$	36	28,309,545	$	1,132	$	2,533,484	$	24,468	$	(1,802,415)	$	756,745	$	5,842	$	762,587


	Three Months Ended June 30, 2024
	Series A Preferred Stock			Series B Preferred Stock			Common Stock
	Number of Shares	Par Value		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Distributions in Excess of Accumulated Earnings		Total Stockholders Equity		Non-controlling Interests		Total Equity
Balance, March 31, 2024	3,977,144	$	40	3,630,000	$	36	28,309,545	$	1,132	$	2,533,232	$	25,744	$	(1,682,499)	$	877,685	$	6,362	$	884,047

Stock-based compensation	—	—		—	—		—	—		230		—		—		230		—		230

Distributions declared on Series A Preferred Stock, $0.46 per share	—	—		—	—		—	—		—		—		(1,834)		(1,834)		—		(1,834)
Distributions declared on Series B Preferred Stock, $0.45 per share	—	—		—	—		—	—		—		—		(1,616)		(1,616)		—		(1,616)
Distributions to non-controlling interest holders	—	—		—	—		—	—		—		—		—		—		(46)		(46)
Net loss	—	—		—	—		—	—		—		—		(116,466)		(116,466)		(452)		(116,918)
Unrealized gain on designated derivatives	—	—		—	—		—	—		—		(1,276)		—		(1,276)		—		(1,276)

Rebalancing of ownership percentage	—	—		—	—		—	—		22		—		—		22		(22)		—
Balance, June 30, 2024	3,977,144	$	40	3,630,000	$	36	28,309,545	$	1,132	$	2,533,484	$	24,468	$	(1,802,415)	$	756,745	$	5,842	$	762,587

Share and per share data have been adjusted for all periods presented to reflect a one-for-four reverse stock split effective September 30, 2024.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2025		2024
Cash flows from operating activities:
Net loss	$	(22,349)	$	(132,468)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	42,245		42,666
Amortization of deferred financing costs	2,295		1,661
Accretion of terminated swap	—		(1,218)
Amortization of mortgage premiums and discounts, net	44		45
Amortization (accretion) of market lease and other intangibles, net	2,196		(687)
Bad debt expense	615		796
Equity-based compensation	570		460
(Gain) loss on sale of real estate investments	(27,641)		225
Cash received from non-designated derivative instruments	1,775		3,565
Gain on non-designated derivative instruments	(31)		(2,833)
Impairment charges	27,111		2,669
Gain on extinguishment of debt	(257)		—
Deferred tax valuation allowance	946		—
Changes in assets and liabilities:
Straight-line rent receivable	(1,658)		98
Prepaid expenses and other assets	(1,990)		(1,824)
Termination fees payable to related parties	—		98,241
Accounts receivable, net	3,461		—
Accounts payable, accrued expenses and other liabilities	(36,416)		(2,854)
Deferred leasing costs	(6,223)		—
Deferred rent	2,130		393
Net cash (used in) provided by operating activities	(13,177)		8,935
Cash flows from investing activities:
Property acquisitions	(250)		(5,606)
Capital expenditures	(12,365)		(11,159)
Investments in non-designated interest rate caps	—		(1,709)
Proceeds from sales of real estate investments	88,759		2,896
Net cash provided by (used in) investing activities	76,144		(15,578)
Cash flows from financing activities:
Payments on credit facilities	(24,593)		(2,885)
Proceeds from credit facilities	—		6,960

Payments on mortgage notes payable	(429)		(584)

Payments of deferred financing costs	(205)		(199)

Repurchase of preferred stock	(1,738)		—

Distributions paid on Series A Preferred Stock	(3,634)		(3,668)
Distributions paid on Series B Preferred Stock	(3,200)		(3,232)
Distributions to non-controlling interest holders	(93)		(92)


Net cash used in financing activities	(33,892)		(3,700)

Table of Contents

NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2025		2024
Net change in cash, cash equivalents and restricted cash	$	29,075	$	(10,343)
Cash, cash equivalents and restricted cash, beginning of period	74,095		91,316
Cash, cash equivalents and restricted cash, end of period	$	103,170	$	80,973


	Six Months Ended June 30,
	2025		2024
Cash and cash equivalents, end of period	$	47,123	$	29,461
Restricted cash, end of period	56,047		51,512
Cash, cash equivalents and restricted cash, end of period	$	103,170	$	80,973

Supplemental disclosures of cash flow information:
Cash paid for interest	$	26,252	$	33,700
Cash paid for income and franchise taxes	243		410

Non-cash investing and financing activities:
Common stock issued through stock dividends	$	—	$	23,695
Preferred stock dividend declared	$	3,478	$	3,450
Mortgages issued with acquisition of real estate investments	$	—	$	7,500
Proceeds from real estate sales used to repay mortgage notes payable	$	82,540	$	—
Mortgage notes payable repaid with proceeds from real estate sales	$	(82,540)	$	—


Net change in accrued capital expenditures for the period	$	3,375	$	—

Share and per share data have been adjusted for all periods presented to reflect a one-for-four reverse stock split effective September 30, 2024.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Note 1 — Organization

National Healthcare Properties, Inc. (including, as required by context, National Healthcare Properties Operating Partnership, L.P. (the “OP”) and its subsidiaries, the “Company”) is a real estate investment trust (“REIT”) for U.S. federal income tax purposes. The Company acquires, owns and manages a diversified portfolio of healthcare-related real estate, focused on outpatient medical facilities (“OMFs”) and senior housing operating properties (“SHOPs”).

As of June 30, 2025, the Company owned 175 properties (including one land parcel and one property classified as held for sale) located in 30 states and comprised of 7.3 million rentable square feet.

Substantially all of the Company’s business is conducted through the OP and its wholly-owned subsidiaries, including taxable REIT subsidiaries (“TRSs”). Prior to the consummation of the Internalization (as defined below) on September 27, 2024, the Company’s former advisor, Healthcare Trust Advisors, LLC (the “Advisor”), managed its day-to-day business with the assistance of its property manager, Healthcare Trust Properties, LLC (the “Property Manager”); the Advisor and Property Manager were under common control with AR Global Investments, LLC (the “Advisor Parent”), and these related parties received compensation and fees for providing services to the Company. See the “Internalization” section in this Note for additional information.

As of June 30, 2025, the Company owned 41 (including one property classified as held for sale) SHOPs using the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”) structure in its SHOP segment. Under RIDEA, a REIT may lease “qualified healthcare properties” on an arm’s length basis to a TRS if the property is operated on behalf of such subsidiary by a person who qualifies as an “eligible independent contractor”. As of June 30, 2025, the Company had four eligible independent contractors operating 41 SHOPs.

The Company has two operating and reportable business segments: OMFs and SHOPs. All of the Company’s properties across both business segments are located throughout the United States. In its OMF operating segment, the Company owns, manages and leases single and multi-tenant OMFs where tenants are generally required to pay their pro rata share of property operating expenses, which may be subject to expense exclusions and floors, in addition to base rent. The Property Manager or third-party managers manage the Company’s OMFs.

From October 2020 through January 2024, the Company issued an aggregate of approximately 5.2 million shares of common stock as stock dividends (as adjusted to reflect the Reverse Stock Split (as defined below)). Dividends payable entirely in shares of common stock are treated in a fashion similar to a stock split for accounting purposes specifically related to per-share calculations for the current and prior periods. No other additional shares of common stock have been issued since October 2020. References made to weighted-average shares and per-share amounts in the accompanying consolidated statements of operations and comprehensive income have been retroactively adjusted to reflect the cumulative increase in shares outstanding resulting from the stock dividends since October 2020 and through January 2024, and are noted as such throughout the accompanying financial statements and notes. See Note 8 — Stockholders’ Equity for additional information on the stock dividends.

On March 26, 2025, the Company published a new estimate of per-share net asset value (“Estimated Per-Share NAV”) as of December 31, 2024. The Estimated Per-Share NAV published on March 26, 2025 has not been adjusted since publication and will not be adjusted until the Company’s board of directors (the “Board”) determines a new Estimated Per-Share NAV. The Company intends to publish Estimated Per-Share NAV periodically at the discretion of the Board, provided that such estimates will be made at least once annually unless the Company lists its common stock on a national securities exchange.

Internalization

On September 27, 2024 (the “Closing Date”), the Company consummated (the “Closing”) the transactions (the “Internalization”) contemplated by that certain merger agreement dated August 6, 2024 (the “Internalization Agreement”) by and among the Company, HTI Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Merger Sub”), the Advisor and the Advisor Parent.

Consummation of the Internalization resulted in the internalization of the Company’s management through the merger of the Advisor with and into Merger Sub, with the Advisor being the surviving entity and the termination of the Company’s prior arrangement for advisory management services provided by the Advisor. All assets, contracts and employees necessary for the Company to conduct its business were contributed by the Advisor Parent to the Advisor prior to the Closing Date, including all of the equity interests in the Property Manager, which became a wholly-owned subsidiary of the Company following the Internalization.

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Pursuant to the Internalization Agreement, on the Closing Date, (i) the outstanding membership interests of the Advisor were converted into the right to receive from the Company an internalization fee of $98.2 million and (ii) the Advisor Parent received (x) an asset management fee of $5.5 million, representing the aggregate base management fee that the Company would have been required to pay to the Advisor during the remaining three month notice period required to terminate the advisory agreement, and (y) a property management fee of $2.9 million, representing the aggregate management fees that the Company would have been required to pay to the Property Manager through the property management agreement, in each case subject to certain other adjustments (collectively, the “Closing Payments” in an aggregate amount of $106.6 million).

Pursuant to the Internalization Agreement, because the Closing Payments exceeded the Company’s Available Cash (as defined in the Internalization Agreement), the Company paid the Advisor Parent an aggregate cash consideration of $75.0 million (such cash amount, the “Closing Date Cash Consideration”), and the Company issued to the Advisor Parent an unsecured promissory note (the “Promissory Note”) in a principal amount of $30.3 million, equal to the difference between the Closing Date Cash Consideration and the Closing Payments, which Promissory Note was repaid in full in January 2025.

Reverse Stock Split, Name Change and Common Stock Par Value Adjustment

On September 26, 2024, the Company filed Articles of Amendment to the Company’s articles of amendment and restatement (as amended to date, the “Charter”) with the State Department of Assessments and Taxation of Maryland (“SDAT”) to effect a reverse stock split of the Company’s common stock at a ratio of one-for-four, which became effective on September 30, 2024 (the “Reverse Stock Split”). As a result of the Reverse Stock Split, the par value of the common stock adjusted to $0.04 per share. The number of authorized shares of common stock under the Charter remains unchanged.

On September 26, 2024, the Company filed another Articles of Amendment to the Company’s Charter with the SDAT to (i) change the Company’s name to “National Healthcare Properties, Inc.” from “Healthcare Trust, Inc.” and (ii) adjust the par value of the Company’s common stock back to $0.01 per share following the Reverse Stock Split, both of which became effective on September 30, 2024. In connection with its name change, the Company, as the general partner of the OP, caused the name of the OP to be changed to “National Healthcare Properties Operating Partnership, L.P.” from “Healthcare Trust Operating Partnership, L.P.”

All share and per share data in this Quarterly Report on Form 10-Q have been adjusted for all periods presented to reflect the Reverse Stock Split.

Note 2 — Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to this Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair statement of results for the interim periods. The results of operations for the three and six months ended June 30, 2025 and 2024 are not necessarily indicative of the results for the entire year or any subsequent interim periods.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2024, which are included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on February 27, 2025. Except for those required by new accounting pronouncements discussed below, there have been no significant changes to the Company’s significant accounting policies during the three and six months ended June 30, 2025.

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity (“VIE”) for which the Company is the primary beneficiary. The Company has determined the OP is a VIE of which the Company is the primary beneficiary. Substantially all of the Company’s assets and liabilities are held by the OP.

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, impairments, fair value measurements and income taxes, as applicable.

Revenue Recognition

The Company’s revenues, which are derived primarily from lease contracts, include rent received from tenants in its OMF segment. As of June 30, 2025, these leases had a weighted average remaining lease term of 5.7 years. Rent from tenants in the Company’s OMF segment is recorded in accordance with the terms of each lease on a straight-line basis over the initial term of the lease. Because many of the leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable for, and include in revenue from tenants on a straight-line basis, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation. For new leases after acquisition, the commencement date is considered to be the date the tenant takes control of the space. For lease modifications, the commencement date is considered to be the date the lease modification is executed. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. Tenant revenue also includes operating expense reimbursements which generally increase with any increase in property operating and maintenance expenses in the Company’s OMF segment. In addition to base rent, dependent on the specific lease, tenants are generally required to pay either (i) their pro rata share of property operating and maintenance expenses, which may be subject to expense exclusions and floors, or (ii) their share of increases in property operating and maintenance expenses to the extent they exceed the properties’ expenses for the base year of the respective leases. Under ASC 842, the Company has elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For expenses paid directly by the tenant, under both ASC 842 and 840, the Company has reflected them on a net basis.

The Company’s revenues also include resident services and fee income primarily related to rent derived from lease contracts with residents in the Company’s SHOP segment, held using a structure permitted under RIDEA. Rental income from residents in the Company’s SHOP segment is recognized as earned when services are provided. Residents pay monthly rent that covers occupancy of their unit and basic services, including utilities, meals and some housekeeping services. The terms of the leases are short term in nature, primarily month-to-month.

The Company defers the revenue related to lease payments received from tenants and residents in advance of their due dates. Pursuant to certain of the Company’s lease agreements, tenants are required to reimburse the Company for certain property operating and maintenance expenses related to non-SHOP assets (recorded in revenue from tenants), in addition to paying base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating and maintenance costs of the respective properties.

The following table presents future base rent payments on a cash basis due to the Company over the next five years and thereafter as of June 30, 2025. These amounts exclude tenant reimbursements and contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes, among other items. These amounts also exclude SHOP leases which are short term in nature.


(In thousands)	Future Base Rent Payments
2025 (remainder)	$	44,733
2026	87,531
2027	79,245
2028	68,224
2029	59,716
Thereafter	274,135
Total	$	613,584

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

The Company continually reviews receivables related to rent and unbilled rent and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Under the leasing standards, the Company is required to assess, based on credit risk only, if it is probable that the Company will collect virtually all of the lease payments at lease commencement date and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant. If the Company determines that it is probable it will collect virtually all of the lease payments (rent and common area maintenance), the lease will continue to be accounted for on an accrual basis (i.e., straight-line). However, if the Company determines it is not probable that it will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and a full reserve would be recorded on previously accrued amounts in cases where it was subsequently concluded that collection was not probable. Cost recoveries from tenants are included in operating revenue from tenants, in accordance with current accounting rules, in the Company’s consolidated statements of operations and comprehensive loss in the period the related costs are incurred, as applicable.

The Company recorded reductions in revenue of $0.4 million and $0.6 million for uncollectable amounts during the three and six months ended June 30, 2025, respectively, and $0.6 million and $0.8 million for uncollectable amounts during the three and six months ended June 30, 2024, respectively.

Investments in Real Estate

Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life or improve the productive capacity of the asset. Costs of repairs and maintenance are expensed as incurred.

At the time an asset is acquired, the Company evaluates the inputs, processes and outputs of the asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations and comprehensive loss. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets. See the “Purchase Price Allocation” section in this Note for a discussion of the initial accounting for investments in real estate.

Disposal of real estate investments that represent a strategic shift in operations that will have a major effect on the Company’s operations and financial results are required to be presented as discontinued operations in the consolidated statements of operations. No properties were presented as discontinued operations during the three and six months ended June 30, 2025 and 2024. Properties that are intended to be sold are to be designated as “held for sale” on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale, most significantly that the sale is probable within one year. The Company evaluates probability of sale based on specific facts including whether a sales agreement is in place and the buyer has made significant non-refundable deposits. Properties are no longer depreciated when they are classified as held for sale. There was one SHOP property classified as held for sale as of June 30, 2025. Amounts related to this property are recorded in “assets held for sale” on the Company’s consolidated balance sheets. There were no properties classified as held for sale as of December 31, 2024.

Purchase Price Allocation

In both a business combination and an asset acquisition, the Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities based on their respective fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements on an as if vacant basis. Intangible assets may include the value of in-place leases and above- and below-market leases and other identifiable assets or liabilities based on lease or property specific characteristics. In addition, any assumed mortgages receivable or payable and any assumed or issued non-controlling interests (in a business combination) are recorded at their estimated fair values. In allocating the fair value to assumed mortgages, amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above or below-market interest rates. In allocating the fair value to any assumed or issued non-controlling interests, amounts are recorded at their fair value at the close of business on the acquisition date. In a business combination, the difference between the purchase price and the fair value of identifiable net assets acquired is either recorded as goodwill or as a bargain purchase gain. In an asset acquisition, the difference between the acquisition price (including capitalized transaction costs) and the fair value of identifiable net assets acquired is allocated to the non-current assets. During the six months ended June 30, 2024, the Company acquired four properties. During the six months ended June 30, 2025, the Company did not acquire any properties. All acquisitions during the six months ended June 30, 2024 were asset acquisitions.

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

For acquired properties with leases classified as operating leases, the Company allocates the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed, based on their respective fair values. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. The Company also considers information obtained about each property as a result of the Company’s pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

The Company utilizes various estimates, processes and information to determine the as-if vacant property value. The Company estimates the fair value using data from appraisals, comparable sales, discounted cash flow analysis and other methods. Fair value estimates are also made using significant assumptions such as capitalization rates, market rental rates, discount rates and land values per square foot.

Identifiable intangible assets include amounts allocated to acquired leases for above- and below-market lease rates and the value of in-place leases. Factors considered in the analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at contract rates during the expected lease-up period, which typically ranges from six to 24 months. The Company also estimates costs to execute similar leases including leasing commissions, legal and other related expenses.

Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of market rental rates for each corresponding in-place lease, measured over a period equal to the remaining initial term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases.

The aggregate value of intangible assets related to customer relationships, as applicable, is measured based on the Company’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the tenant. Characteristics considered by the Company in determining these values include the nature and extent of its existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. The Company did not record any intangible asset amounts related to customer relationships during the six months ended June 30, 2025 or 2024.

Accounting for Leases

Lessor Accounting

The Company evaluates new leases (by the Company or by a predecessor lessor/owner) pursuant to ASC 842: Leases to determine lease classification. A lease is classified by a lessor as a sales-type lease if the significant risks and rewards of ownership reside with the tenant. This situation is met if, among other things, there is an automatic transfer of title during the lease, a bargain purchase option, the non-cancelable lease term is for more than a major part of the remaining economic useful life of the asset (e.g., equal to or greater than 75%), the present value of the minimum lease payments represents substantially all (e.g., equal to or greater than 90%) of the leased property’s fair value at lease inception, or the asset is so specialized in nature that it provides no alternative use to the lessor (and therefore would not provide any future value to the lessor) after the lease term. Further, such new leases would be evaluated to consider whether they would be failed sale-leaseback transactions and accounted for as financing transactions by the lessor.

As a lessor of real estate, the Company has elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating and maintenance expenses) as a single lease component as an operating lease because (i) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (ii) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance. Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed.

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Lessee Accounting

For lessees, the accounting standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method over the term of the lease. Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Further, certain transactions where at inception of the lease the buyer-lessor accounted for the transaction as a purchase of real estate and a new lease may be required to have symmetrical accounting to the seller-lessee if the transaction was not a qualified sale-leaseback and accounted for as a financing transaction. For additional information and disclosures related to the Company’s operating leases, see Note 16 — Commitments and Contingencies.

Impairment of Long-Lived Assets

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the property for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If an impairment exists, due to the inability to recover the carrying value of a property, the Company would recognize an impairment loss in the consolidated statements of operations and comprehensive loss to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held for use. For properties held for sale, the impairment loss recorded would equal the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net loss because recording an impairment loss results in an immediate negative adjustment to earnings. For additional information, see Note 3 — Real Estate Investments, Net.

Reportable Segments

The Company’s reportable segments, based on how it evaluates its business and allocates resources, are as follows: (i) OMFs and (ii) SHOPs. For additional information, see Note 15 — Segment Reporting.

Depreciation and Amortization

Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings and building improvements, 15 years for land improvements and fixtures and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

Construction in progress is not depreciated until the project has reached substantial completion. The value of certain other intangibles such as certificates of need in certain jurisdictions are amortized over the expected period of benefit (generally the life of the related building).

The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to expense over the remaining periods of the respective leases.

The value of customer relationship intangibles, if any, is amortized to expense over the initial term and any renewal periods in the respective leases, but in no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense.

Assumed mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining terms of the respective mortgages.

Income Taxes

The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with the taxable year ended December 31, 2013. If the Company continues to qualify for taxation as a REIT, it generally will not be subject to U.S. federal corporate income tax to the extent it distributes all of its REIT taxable income (which does not equal net income as calculated in accordance with GAAP) to its stockholders. REITs are subject to a number of organizational and operational requirements, including a requirement that the Company distribute annually at least 90% of the Company’s REIT taxable income to the Company’s stockholders.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal, state and local income taxes at regular corporate rates beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. The Company had no REIT taxable income requiring distribution to its stockholders for each of the years ended December 31, 2024, 2023 and 2022. Accordingly, no provision for U.S. federal or state income taxes related to such REIT taxable income was recorded in the Company’s financial statements. Even if the Company continues to qualify as a REIT, it may be subject to certain state and local taxes on its income and property, and U.S. federal income and excise taxes on its undistributed income.

Certain limitations are imposed on REITs with respect to the ownership and operation of seniors housing properties. Generally, to qualify as a REIT, the Company cannot directly or indirectly operate seniors housing properties. Instead, such facilities may be either leased to a third-party operator or leased to a TRS and operated by a third party on behalf of the TRS. Accordingly, the Company has formed a TRS that is wholly-owned by the OP to lease its SHOPs and the TRS has entered into management contracts with unaffiliated third-party operators to operate the facilities on its behalf.

As of June 30, 2025, the Company owned 41 seniors housing properties which are leased and operated through its TRS. The TRS is a wholly-owned subsidiary of the OP. A TRS is subject to U.S. federal, state and local income taxes. The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies (including modifying intercompany leases with the TRS) and recent financial operations. In the event the Company determines that it would not be able to realize the deferred income tax assets in the future in excess of the net recorded amount, the Company establishes a valuation allowance which offsets the previously recognized income tax asset. Deferred income taxes result from temporary differences between the carrying amounts of the TRS’s assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes as well as net operating loss carryforwards. Significant components of the deferred tax assets and liabilities as of June 30, 2025 and December 31, 2024 consisted of deferred rent and net operating loss carryforwards.

Because of the TRS’s historical operating losses and the adverse economic impacts from increases in the rate of inflation in recent years on the results of operations of the Company’s SHOP assets, the Company is not able to conclude that it is more likely than not it will realize the future benefit of its deferred tax assets; thus the Company has provided a 100% valuation allowance of $11.4 million as of June 30, 2025. If and when the Company believes it is more likely than not that it will recover its deferred tax assets, the Company will reverse the valuation allowance as an income tax benefit in its consolidated statements of comprehensive loss. As of December 31, 2024, the Company had a deferred tax asset of $10.5 million with a full valuation allowance.

Stock-Based Compensation

The Company recognizes share-based payments to employees and directors, including grants of restricted shares of common stock and restricted stock units (including performance-based awards), in general and administrative expense in the Company’s consolidated statements of operations and comprehensive loss on a straight-line basis over the requisite service period based on the grant date fair value of the award. Forfeitures of share-based awards are recognized as they occur.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Recently Issued Accounting Pronouncements

Adopted:

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting — Improvements to Reportable Segment Disclosures, which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the Company’s CODM, and an explanation of how the Company’s CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. The ASU should be adopted retrospectively unless it is impracticable to do so. The Company has adopted both the annual and interim requirements under ASU 2023-07. The Company has included financial statement disclosures in accordance with ASU 2023-07 within Note 15 — Segment Reporting in this report.

Not yet adopted:

In December 2023, the FASB issued Accounting Standards Update 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public entities on an annual basis to (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). ASU 2023-09 is effective for fiscal years beginning after December 15, 2025. The Company is evaluating the impact of the adoption of ASU 2023-09 on its consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires public business entities (PBEs) to provide disaggregated disclosure in tabular format in the notes to financial statements of specific expenses, including but not limited to: (i) employee compensation, (ii) depreciation, and (iii) intangible asset amortization. In January 2025, the FASB issued ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of the adoption of these ASUs on its consolidated financial statements.

Reclassifications

To conform to the current year presentation, amounts related to “construction in progress” and “accounts receivable, net” for the comparative periods have been reclassified from “prepaid expenses and other assets” and presented separately on the Company’s consolidated balance sheets.

Note 3 — Real Estate Investments, Net

Property Acquisitions

The Company invests in healthcare-related facilities, primarily OMFs and SHOPs, which expand and diversify its portfolio and revenue base. The Company owned 175 properties (including one land parcel) as of June 30, 2025. No properties were acquired during the six months ended June 30, 2025.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Significant Concentrations

As of June 30, 2025 and 2024, the Company did not have any tenants (including for this purpose, all affiliates of such tenants) whose annualized rental income on a straight-line basis represented 10% or greater of total annualized rental income for the portfolio on a straight-line basis.

The following table lists the states where the Company had concentrations of properties where annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income on a straight-line basis for all properties as of June 30, 2025 and 2024:


	June 30,
State	2025	2024









Florida	22.4%	20.5%
Georgia	11.1%	*
Pennsylvania	10.7%	10.5%




Iowa	10.3%	*

* Not greater than 10%.

Intangible Assets and Liabilities

The following table discloses amounts recognized within the consolidated statements of operations and comprehensive loss related to amortization of in-place leases and other intangible assets, amortization and accretion of above- and below-market lease assets and liabilities, net and the amortization and accretion of above- and below-market ground leases, net, for the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2025		2024		2025		2024
Amortization of in-place leases and other intangible assets (1)	$	2,168	$	3,585	$	4,683	$	6,669
Accretion of above- and below-market leases, net (2)	$	(158)	$	(284)	$	(197)	$	(784)
Amortization of above- and below-market ground leases, net (3)	$	32	$	57	$	2,410	$	96

________

(1)Reflected within depreciation and amortization expense.

(2)Reflected within revenue from tenants.

(3)Reflected within property operating and maintenance expense.

The following table provides the projected amortization expense and adjustments to revenues for the next five years:


(In thousands)	2025 (remainder)		2026		2027		2028		2029
In-place lease assets	$	4,042	$	7,298	$	5,013	$	3,704	$	3,259
Other intangible assets	2		4		4		4		3
Total to be added to amortization expense	$	4,044	$	7,302	$	5,017	$	3,708	$	3,262

Above-market lease assets	$	(134)	$	(239)	$	(176)	$	(138)	$	(73)
Below-market lease liabilities	496		925		650		586		545
Total to be added to revenue from tenants	$	362	$	686	$	474	$	448	$	472

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Dispositions

Three and Six Months Ended June 30, 2025

The Company disposed of three held-for-use OMFs and three held-for-use SHOPs during the three months ended June 30, 2025 for an aggregate contract sales price of $21.4 million. These dispositions resulted in an aggregate gain on sale of $2.7 million, which is presented in the Company’s consolidated statements of operations and comprehensive loss for the three months ended June 30, 2025.

The Company disposed of 15 held-for-use OMFs and three held-for-use SHOPs during the six months ended June 30, 2025 for an aggregate contract sales price of $189.8 million. These dispositions resulted in an aggregate gain on sale of $27.6 million, which is presented in the Company’s consolidated statements of operations and comprehensive loss for the six months ended June 30, 2025.

Three and Six Months Ended June 30, 2024

The Company disposed of one held-for-use SHOP during the three and six months ended June 30, 2024 for a contract sales price of $3.3 million. The Company recorded a $0.2 million loss on the sale of this SHOP, which is presented in the Company’s consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2024.

Assets Held for Sale

When assets are identified by management as held for sale, the Company reflects them separately on its balance sheet and stops recognizing depreciation and amortization expense on the identified assets and estimates the sales price, net of costs to sell, of those assets. If the carrying amount of the assets classified as held for sale exceeds the estimated net sales price, the Company records an impairment charge equal to the amount by which the carrying amount of the assets exceeds the Company’s estimate of the net sales price of the assets. For held-for-sale properties, the Company predominately uses the contract sales price as fair market value.

There was one SHOP classified as held for sale as of June 30, 2025. There were no properties classified as held for sale as of December 31, 2024.

Assets Held for Use

When circumstances indicate the carrying value of a property classified as held for use may not be recoverable, the Company reviews the property for impairment. For the Company, the most common triggering events are (i) concerns regarding the tenant (i.e., credit or expirations) in the Company’s single-tenant properties or significant vacancy in the Company’s multi-tenant properties and (ii) changes to the Company’s expected holding period as a result of business decisions or non-recourse debt maturities. If a triggering event is identified, the Company considers the projected cash flows due to various performance indicators, and where appropriate, the Company evaluates the impact on its ability to recover the carrying value of the properties based on the expected cash flows on an undiscounted basis over its intended holding period. The Company makes certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessments of terminal values. Where more than one possible scenario exists, the Company uses a probability weighted approach in estimating cash flows. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analysis may not be achieved, and actual losses or impairment may be realized in the future. If the undiscounted cash flows over the expected hold period are less than the carrying value, the Company reflects an impairment charge to write the asset down to its fair value.

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Impairment Charges

The following table presents impairment charges by segment recorded during the three and six months ended June 30, 2025 and 2024:


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2025		2024		2025		2024


OMF	$	1,142	$	2,409	$	1,889	$	2,409






SHOP	14,070		—		25,222		260

Total impairment charges(1)	$	15,212	$	2,409	$	27,111	$	2,669

(1)Amounts presented for the six months ended June 30, 2025 primarily relate to two held-for-use SHOPs and two held-for-use OMF. These properties were impaired to their contractual sales price as determined by their purchase and sale agreements and were subsequently sold or expected to be sold.

Note 4 — Mortgage Notes Payable, Net

The following table reflects the Company’s mortgage notes payable as of June 30, 2025 and December 31, 2024:


		Outstanding Loan Amount as of				Effective Interest Rate (1) as of
Portfolio	Encumbered Properties	June 30, 2025		December 31, 2024		June 30, 2025		December 31, 2024		Interest Rate	Maturity
		(In thousands)		(In thousands)
Capital One OMF Loan (2)(4)	38	330,248		363,957		3.71	%	3.58	%	Fixed	Dec. 2026
Barclays OMF Loan	56	219,500		234,173		6.45	%	6.45	%	Fixed	June 2033
Multi-Property CMBS Loan(4)	15	85,771		116,037		4.60	%	4.60	%	Fixed	May 2028
BMO CMBS Loan	7	33,066		37,472		2.89	%	2.89	%	Fixed	Dec. 2031
Fox Ridge Chenal - Little Rock, AR	1	14,624		14,833		2.95	%	2.95	%	Fixed	May 2049
Fox Ridge North Little Rock - North Little Rock, AR	1	9,074		9,204		2.95	%	2.95	%	Fixed	May 2049
BMO CPC Mortgage	4	7,500		7,500		6.84	%	6.84	%	Fixed	March 2034

Fox Ridge Bryant - Bryant, AR	1	$	6,381	$	6,471	3.98	%	3.98	%	Fixed	May 2047
Gross mortgage notes payable	123	706,164		789,647		4.64	%	4.56	%
Deferred financing costs, net of accumulated amortization (3)		(8,516)		(9,304)
Mortgage premiums and discounts, net		(1,140)		(1,183)
Mortgage notes payable, net		$	696,508	$	779,160

_____________

(1)Calculated on a weighted average basis for all mortgages outstanding as of June 30, 2025 and December 31, 2024.

(2)Variable rate loan, based on daily SOFR (as defined below) as of June 30, 2025 and December 31, 2024, which is fixed as a result of entering into “pay-fixed” interest rate swap agreements. The Company allocated $330.2 million and $378.5 million of its “pay-fixed” interest rate swaps to this mortgage consistently as of June 30, 2025 and December 31, 2024, respectively. In December 2024, the Company proactively executed an amendment to the hedged notional amount to match the expected prospective loan balance of $364.0 million. This amendment became effective in January 2025.

(3)Deferred financing costs represent commitment fees, legal fees and other costs associated with obtaining financing. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close or result in a definitive agreement.

(4)2025 amounts include debt paydowns related to dispositions of $33.7 million on the Capital One OMF Loan, $30.6 million on the Multi-Property CMBS Loan and $14.7 million on the Barclays OMF Loan.

As of June 30, 2025, the Company had pledged $1.2 billion in total real estate investments, at cost, as collateral for its $706.2 million of gross mortgage notes payable. This real estate is not available to satisfy other debts and obligations unless first satisfying the mortgage notes payable secured by these properties. The Company makes payments of principal and interest, or interest only, depending upon the specific requirements of each mortgage note, on a monthly basis.

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Some of the Company’s mortgage note agreements require compliance with certain property-level financial covenants, including debt service coverage ratios. Notably, the Barclays OMF Loan Agreement requires the OP to comply with certain covenants, including, maintaining combined cash and cash equivalents totaling at least $12.5 million at all times. As of June 30, 2025, the Company was in compliance with these financial covenants.

See Note 5 — Credit Facilities -Future Principal Payments for a schedule of principal payment requirements of the Company’s mortgage notes and credit facilities.

Note 5 — Credit Facilities

The Company had the following credit facilities outstanding as of June 30, 2025 and December 31, 2024:


			Outstanding Facility Amount as of				Effective Interest Rate (2) (3)
Credit Facilities	Encumbered Properties (1)		June 30, 2025		December 31, 2024		June 30, 2025		December 31, 2024		Interest Rate	Maturity
			(In thousands)		(In thousands)
Fannie Mae Master Credit Facilities:
Capital One Facility	11		$	201,635	$	203,405	6.84	%	7.19	%	Variable	Nov. 2026
KeyBank Facility	10		135,989		137,103		6.89	%	7.24	%	Variable	Nov. 2026
Total Fannie Mae Master Credit Facilities	21		$	337,624	$	340,508

OMF Warehouse Facility	—	(4)	—		21,708		—	%	7.55	%	Variable	Dec. 2026

Total Credit Facilities	21		$	337,624	$	362,216	6.86	%	7.23	%

________

(1)Encumbered properties are as of June 30, 2025.

(2)Calculated on a weighted average basis for all credit facilities outstanding as of June 30, 2025 and December 31, 2024, respectively.

(3)The Company has nine active non-designated interest rate cap agreements with an aggregate notional amount of $481.3 million which limited one-month SOFR to 3.50%.The Company did not designate these derivatives as hedges and, accordingly, the changes in value and any cash received from these derivatives are presented within gain (loss) on derivative instruments in the consolidated statements of operations and comprehensive loss (see Note 7 — Derivatives and Hedging Activities for additional details). Inclusive of the impact of these non-designated derivatives, the economic interest rates on the Capital One Fannie Mae Facility and KeyBank Fannie Mae Facility were 5.89% and 5.93%, respectively, as of both June 30, 2025 and December 31, 2024.

(4)The Company repaid in full and terminated the OMF Warehouse Facility in April 2025.

As of June 30, 2025, the Company had pledged $623.5 million in total real estate investments, at cost as collateral under its credit facilities. All of the real estate assets pledged to secure borrowings under the Company’s credit facilities are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, unless, as applicable, the existing indebtedness associated with the property is satisfied or the property is removed from the pledged collateral.

Unencumbered real estate investments, at cost as of June 30, 2025 were $431.6 million, although there can be no assurance as to the amount of liquidity the Company would be able to generate from using these unencumbered assets as collateral for future mortgage loans, future advances under the credit facilities or other future financings.

Fannie Mae Master Credit Facilities

On October 31, 2016, the Company, through wholly-owned subsidiaries of the OP, entered into a master credit facility agreement relating to a secured credit facility with KeyBank (the “KeyBank Facility”) and a master credit facility agreement with Capital One for a secured credit facility with Capital One Multifamily Finance LLC, an affiliate of Capital One (the “Capital One Facility” and, together with the KeyBank Facility, the “Fannie Mae Master Credit Facilities”). Advances made under these agreements were assigned by Capital One and KeyBank to Fannie Mae at closing for inclusion in Fannie Mae’s Multifamily MBS program.

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

The Company may request future advances under the Fannie Mae Master Credit Facilities by adding eligible properties to the collateral pool subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests. Borrowings under the Fannie Mae Master Credit Facilities bore monthly interest equal to the sum of the current SOFR for one-month denominated deposits and a spread of 2.41% and 2.46% for the Capital One Facility and the KeyBank Facility, respectively. The Fannie Mae Master Credit Facilities mature on November 1, 2026.

Through June 30, 2025, the Company had provided cash deposits totaling $12.1 million to Fannie Mae because the debt service coverage ratios of the underlying properties of each facility were below the minimum required amounts per the debt agreements. These deposits are recorded as restricted cash on the Company’s consolidated balance sheets and are pledged as additional collateral for the Fannie Mae Master Credit Facilities. These deposits will be refunded upon the earlier of the Company’s achievement of a debt service coverage ratio above the minimum required amount of 1.40 or the maturity of the Fannie Mae Master Credit Facilities.

OMF Warehouse Facility

On December 22, 2023, the Company, through wholly-owned subsidiaries of the OP, entered into a loan agreement with Capital One to provide up to $50.0 million of variable-rate financing. In April 2025, the Company repaid in full and terminated the facility.

Non-Designated Interest Rate Caps

As of June 30, 2025 the Company had nine non-designated interest rate cap agreements with an aggregate notional amount of $481.3 million which caps SOFR at 3.50% with terms through November 2026. The Company does not apply hedge accounting to these non-designated interest cap agreements, and changes in value as well as any cash received are presented within (loss) gain on non-designated derivatives in the Company’s consolidated statements of comprehensive loss. See Note 7 — Derivatives and Hedging Activities for additional information regarding the Company’s derivatives.

In connection with the Fannie Mae Master Credit Facilities, the Company was required to enter into interest rate cap agreements which the Company periodically renews upon their expiration.

In April 2025, the Company terminated two interest rate caps with a notional of $21.7 million related to the OMF Warehouse Facility upon the facility’s full repayment.

In June 2025, the Company purchased three interest rate caps with a notional of $133.8 million for $1.1 million that limit one-month SOFR to 3.50% and mature in November 2026 related to the Fannie Mae Master Credit Facilities. These interest rate caps were purchased in advance of interest rate caps set to expire.

Future Principal Payments

The following table summarizes the scheduled aggregate principal payments for the five years subsequent to June 30, 2025 and thereafter, on all of the Company’s outstanding mortgage notes payable and credit facilities:


	Future Principal Payments
(In thousands)	Mortgage Notes Payable		Credit Facilities		Total
2025 (remainder)	$	436	$	2,885	$	3,321
2026	331,141		334,739		665,880
2027	922		—		922
2028	86,722		—		86,722
2029	982		—		982
Thereafter	285,961		—		285,961
Total	$	706,164	$	337,624	$	1,043,788

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

The Company’s existing principal demands for cash are to fund acquisitions, capital expenditures, the payment of its operating and administrative expenses, debt service obligations (including principal repayment) and distributions to holders of its Series A Preferred Stock and Series B Preferred Stock. The Company closely monitors its current and anticipated liquidity position relative to its current and anticipated demands for cash and believes that it has sufficient current liquidity to meet its financial obligations for at least the next twelve months. The Company expects to fund its future short-term operating liquidity requirements, including distributions to holders of Series A Preferred Stock and Series B Preferred Stock, through a combination of current cash on hand, net cash provided by its operating activities, potential future advances under its Fannie Mae Master Credit Facilities, net cash provided by its property dispositions and potential new financings utilizing certain of its currently unencumbered properties.

Note 6 — Fair Value of Financial Instruments

GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring assets and liabilities at fair value. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below:

Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3 — Unobservable inputs that reflect the entity’s own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare.

Financial Instruments Measured at Fair Value on a Recurring Basis

Derivative Instruments

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of June 30, 2025, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties.

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

The following table presents information about the Company’s assets and liabilities measured at fair value as of June 30, 2025 and December 31, 2024, aggregated by the level in the fair value hierarchy within which those instruments fall.


(In thousands)	Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Total
June 30, 2025
Derivative assets, at fair value (non-designated)	$	—	$	1,755	$	—	$	1,755
Derivative assets, at fair value (designated)	—		9,453		—		9,453
Total	$	—	$	11,208	$	—	$	11,208

December 31, 2024
Derivative assets, at fair value (non-designated)	$	—	$	2,554	$	—	$	2,554
Derivative assets, at fair value (designated)	—		16,652		—		16,652
Total	$	—	$	19,206	$	—	$	19,206

A review of the fair value hierarchy classification is conducted on a quarterly basis. Changes in the type of inputs may result in a reclassification for certain assets. There has been no transfer into or out of Level 3 financial instruments during the periods presented.

Real Estate Investments Measured at Fair Value on a Non-Recurring Basis

Real Estate Investments - Held for Use

The Company has impaired real estate investments held for use, which were carried at fair value on a non-recurring basis on the consolidated balance sheets as of June 30, 2025 and December 31, 2024.

See Note 3 — Real Estate Investments, Net - Assets Held for Use and Impairment Charges for additional details.

Real Estate Investments - Held for Sale

Real estate investments held for sale are carried at net realizable value on a non-recurring basis and are generally classified in Level 3 of the fair value hierarchy. The Company classified one property as held for sale as of June 30, 2025 and none as of December 31, 2024.

Financial Instruments Not Measured at Fair Value

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The fair values of short-term financial instruments such as cash and cash equivalents, restricted cash, straight-line rent receivable, net, prepaid expenses and other assets, deferred costs, net, accounts payable and accrued expenses, deferred rent and distributions payable approximate their carrying value on the consolidated balance sheets due to their short-term nature.

The fair values of the Company’s remaining financial instruments that are not reported at fair value on the consolidated balance sheets are reported below:


		June 30, 2025				December 31, 2024
(In thousands)	Level	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Gross mortgage notes payable and mortgage premium and discounts, net	3	$	705,024	$	684,141	$	788,464	$	747,542
Credit facilities	3	337,624		338,792		362,216		362,974
Total debt		$	1,042,648	$	1,022,933	$	1,150,680	$	1,110,516

The fair value of the mortgage notes payable is estimated using a discounted cash flow analysis, based on the Company’s experience with similar types of borrowing arrangements, excluding the value of derivatives.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Note 7 — Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

The Company may use derivative financial instruments, including interest rate swaps, caps, collars, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings.

The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. Additionally, in using interest rate derivatives, the Company aims to add stability to interest expense and to manage its exposure to interest rate movements. The Company does not intend to utilize derivatives for speculative purposes or purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company, and its affiliates, may also have other financial relationships. The Company does not anticipate that any of its counterparties will fail to meet their obligations.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2025 and December 31, 2024:


(In thousands)	Balance Sheet Location	June 30, 2025		December 31, 2024
Derivatives designated as hedging instruments:
Interest rate “pay-fixed” swaps	Derivative assets, at fair value	$	9,453	$	16,652

Derivatives not designated as hedging instruments:
Interest rate caps	Derivative assets, at fair value	$	1,755	$	2,554

Cash Flow Hedges of Interest Rate Risk

As of June 30, 2025 and December 31, 2024, the Company had one derivative with a notional value of $330.2 million and $378.5 million, respectively, designated as a cash flow hedges of interest rate risk. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. This derivative was used to hedge the variable cash flows associated with variable-rate debt.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, from July 1, 2025 through June 30, 2026, the Company estimates that $7.2 million will be reclassified from other comprehensive income as a decrease to interest expense.

During the six months ended June 30, 2025, the Company received $1.5 million in connection with the partial unwind of a derivative. In conjunction with the partial unwind, the Company accelerated the reclassification of gains of $1.5 million from other comprehensive income to earnings as a result of the hedged forecasted transactions becoming probable not to occur. This gain was recorded as a reduction in interest expense in its consolidated statements of operations and comprehensive loss for the six months ended June 30, 2025.

The table below details the location in the financial statements of the gain (loss) recognized on interest rate derivatives designated as cash flow hedges for the periods presented:

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2025		2024		2025		2024
Amount of (loss) gain recognized in accumulated other comprehensive income on interest rate derivatives	$	58	$	2,272	$	(1,141)	$	9,319
Amount of gain reclassified from accumulated other comprehensive income into income as interest expense	$	2,263	$	3,548	$	6,058	$	8,315
Total amount of interest expense presented in the consolidated statements of operations and comprehensive loss	$	(15,836)	$	(17,752)	$	(30,365)	$	(34,135)

Non-Designated Derivatives

These derivatives are used to manage the Company’s exposure to interest rate movements, but do not meet the strict hedge accounting requirements to be classified as hedging instruments. Changes in the fair value of derivatives not designated as hedges under a qualifying hedging relationship are recorded directly to net income and recorded in gain on non-designated derivatives in the Company’s consolidated statements of operations and comprehensive loss.

The Company had the following outstanding interest rate derivatives with current effective notional amounts that were not designated as hedges in qualified hedging relationships as of June 30, 2025 and December 31, 2024:

June 30, 2025

December 31, 2024

Interest Rate Derivatives

Number of Instruments

Notional Amount (1)

Number of Instruments

Notional Amount (1)

(In thousands)

Interest rate caps (2)

481,293

369,218

__________

(1)Notional amount represents the currently active interest rate cap contracts.

(2)All of the Company’s interest rate cap agreements limited one-month SOFR to 3.50% with terms through November 2026. The actual one-month SOFR rates during the three months ended June 30, 2025 exceeded the strike price rate of 3.50% and the Company received payments under these agreements. Changes in the fair market value of these non-designated derivatives, as well as any cash received, are presented within gain on non-designated derivatives in the Company’s consolidated statements of operations and comprehensive loss.

These derivatives are used to limit the Company’s exposure to interest rate movements for economic purposes, however, the Company has not elected to apply hedge accounting.

Three interest rate caps with an aggregate notional amount of $138.5 million matured in July 2025 and were replaced with three new interest rate caps with a notional of $133.8 million that limit one-month SOFR to 3.50% and will mature in November 2026.

Beginning in the year ended December 31, 2022, SOFR exceeded 3.50% and the Company began receiving payments under these interest rate caps. While the Company does not apply hedge accounting for these interest rate caps, they are economically hedging the Capital One Facility, KeyBank Facility and OMF Warehouse Facility. Changes in the fair value of, and any cash received from, derivatives not designated as hedges under a qualifying hedging relationship are recorded directly to net loss and are presented within gain on non-designated derivatives in the Company’s consolidated statements of operations and comprehensive loss.

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Offsetting Derivatives

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives (both designated and non-designated) as of June 30, 2025 and December 31, 2024. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets.


									Gross Amounts Not Offset in the Consolidated Balance Sheet
(In thousands)	Gross Amounts of Recognized Assets		Gross Amounts of Recognized (Liabilities)		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Received		Net Amount
June 30, 2025	$	11,208	$	—	$	—	$	11,208	$	—	$	—	$	11,208
December 31, 2024	$	19,206	$	—	$	—	$	19,206	$	—	$	—	$	19,206

Credit-risk-related Contingent Features

The Company has agreements in place with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

As of June 30, 2025, there were no derivatives in a net liability position. The Company is not required to post any collateral related to these agreements and was not in breach of any agreement provisions.

Note 8 — Stockholders’ Equity

Common Stock

As of both June 30, 2025 and December 31, 2024, the Company had 28,448,845 and 28,296,439 shares of common stock outstanding, respectively, including unvested restricted shares, shares issued pursuant to the Company’s distribution reinvestment plan (“DRIP”), net of share repurchases and shares issued as stock dividends from October 2020 and through January 2024. From October 2020 and through January 2024, the Company issued an aggregate of 5.2 million shares (as adjusted to reflect the Reverse Stock Split) in respect to the stock dividends. Except for restricted shares awarded under the Plan (as defined below), no shares of common stock were issued during the three and six months ended June 30, 2025, and, except for shares issued as stock dividends in January 2024, no other additional shares of common stock were issued during the year ended December 31, 2024.

References made to weighted-average shares and per-share amounts in the consolidated statements of operations and comprehensive income or loss have been retroactively adjusted to reflect the cumulative increase in shares outstanding due to the stock dividends and are noted as such throughout the accompanying financial statements and notes. In addition, on March 26, 2025, the Company published a new Estimated Per-Share NAV as of December 31, 2024, which was approved by the Board on March 26, 2025. See Note 1 — Organization for additional information.

Distribution Reinvestment Plan

Pursuant to the DRIP, stockholders may elect to reinvest distributions paid in cash by the Company into shares of common stock. The Company has the right to amend the DRIP or terminate the DRIP with ten days’ notice to participants. Shares issued under the DRIP are recorded as equity in the accompanying consolidated balance sheets in the period distributions are declared. During the six months ended June 30, 2025 and the year ended December 31, 2024, the Company did not issue any shares of common stock pursuant to the DRIP.

Stockholder Rights Plan

In May 2020, the Company announced that the Board had approved a stockholder rights plan. In December 2020, the Company issued a dividend of one common share purchase right for each share of its common stock outstanding as authorized by its Board in its discretion. During the year ended December 31, 2023, The Company extended the expiration date of the stockholders rights plan from May 18, 2023 to May 18, 2026.

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Preferred Stock and Preferred Units

The Company is authorized to issue up to 50,000,000 shares of preferred stock. In connection with an underwritten offering in December 2019, the Company classified and designated 1,610,000 shares of its authorized preferred stock as authorized shares of its Series A Preferred Stock. In September 2020, the Board authorized the classification of 600,000 additional shares of the Company’s preferred stock as Series A Preferred Stock in connection with the preferred stock purchase agreement and registration rights agreement with B. Riley Principal Capital, LLC and in May 2021, the Board authorized the classification of 2,530,000 additional shares of the Company’s preferred stock as Series A Preferred Stock in connection with an offering in May 2021. Also, in connection with an underwritten offering in October 2021, the Company classified and designated 3,680,000 shares of its authorized preferred stock in October 2021 as authorized shares of its Series B Preferred Stock.

The Company also had 100,000 Series A Preferred Units outstanding as of June 30, 2025 and December 31, 2024, which were accounted for as a component of non-controlling interests. See Note 13 — Non-controlling Interests for additional information.

Preferred Stock Repurchase Program

On May 2, 2025, the Board authorized a stock repurchase program for up to an aggregate amount of $50.0 million of the Series A Preferred Stock and Series B Preferred Stock. During the three months ended June 30, 2025, the Company repurchased and retired 56,916 shares of Series A Preferred Stock at an average price of $14.46 and 66,213 shares of Series B Preferred Stock at an average price of $13.83, inclusive of commissions. Any repurchased shares are treated as authorized and unissued shares of preferred stock without designation as to class or series in accordance with Maryland law and the terms of the Series A Preferred Stock and Series B Preferred Stock and shown as a reduction of stockholder’s equity at cost.

Distributions and Dividends

Common Stock

On August 13, 2020, the Board changed the Company’s common stock distribution policy to preserve the Company’s liquidity and maintain additional financial flexibility. Under the policy, distributions authorized by the Board on the Company’s shares of common stock were issued on a quarterly basis in arrears in shares of the Company’s common stock valued at the Company’s Estimated Per Share NAV of common stock in effect on the applicable date. The Company has not declared a quarterly stock dividend since January 2024, and does not intend to declare any further stock dividends in the future.

Note 9 — Related Party Transactions and Arrangements

Fees Incurred in Connection with the Operations of the Company Prior to the Internalization

Prior to September 2024, the former Advisor managed the Company’s day-to-day business and received compensation and fees for providing services to the Company pursuant to an advisory agreement. Immediately following the Internalization, the Company and the Advisor (now a wholly owned subsidiary of the Company following the Internalization) terminated the advisory agreement by mutual agreement. The following describes certain expenses and fees that the Company was obligated to pay under the advisory agreement prior to its termination.

Asset Management Fees

Under the limited partnership agreement of the OP (as amended from time to time, the “LPA”) and the previous advisory agreement and until March 31, 2015, for its asset management services, the Company issued the Advisor an asset management subordinated participation by causing the OP to issue to the Advisor partnership units of the OP designated as “Class B Units” (“Class B Units”). The Class B Units were intended to be profit interests and vest, and no longer are subject to forfeiture, at such time as: (x) the value of the OP’s assets plus all distributions made equals or exceeds the total amount of capital contributed by investors plus a 6.0% cumulative, pre-tax, non-compounded annual return thereon (the “Economic Hurdle”); (y) any one of the following occurs: (1) a listing; (2) another liquidity event or (3) the termination of the advisory agreement by an affirmative vote of a majority of the Company’s independent directors without cause; and (z) the Advisor is still providing advisory services to the Company (the “Performance Condition”). Unvested Class B Units would be forfeited immediately if: (a) the advisory agreement is terminated for any reason other than a termination without cause; or (b) the advisory agreement is terminated by an affirmative vote of a majority of the Company’s independent directors without cause before the Economic Hurdle has been met.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

The Board previously approved the issuance of 359,250 Class B Units to the Advisor in connection with this arrangement. The value of issued Class B Units will be determined and expensed when the Company deems the achievement of the Performance Condition to be probable. As of June 30, 2025, the Company determined that achieving the Performance Condition was not yet considered probable for accounting purposes. The Board determined in February 2018 that the Economic Hurdle had been satisfied, however, none of the events have occurred, including a listing of the Company’s common stock on a national securities exchange, which would have satisfied the other vesting requirement of the Class B Units. Therefore, no expense has ever been recognized in connection with the Class B Units. In connection with the Internalization, immediately prior to Closing, the Advisor transferred 359,250 Class B Units to the Advisor Parent.

The advisory agreement also required the Company to pay the Advisor a base management fee. The fixed portion of the base management fee was equal to $1.625 million per month, while the variable portion of the base management fee was equal to one-twelfth of 1.25% of the cumulative net proceeds of any equity issued by the Company and its subsidiaries subsequent to February 17, 2017 per month. In addition, the advisory agreement required the Company to pay the Advisor certain variable management/incentive fee quarterly in arrears. No incentive fee was incurred for the six months ended June 30, 2024. Upon termination of the advisory agreement, the Company is no longer obligated to pay the base management fee or the variable management/incentive fee.

In connection with the Internalization, on the Closing Date, the Advisor Parent received an asset management fee of $10.9 million, representing the aggregate base management fee that the Company would have been required to pay to the Advisor during the six month notice period required to terminate the advisory agreement, inclusive of $5.5 million of base management fees that the Company would have been required to pay to the Advisor during the remaining three month notice period following the Closing Date.

Professional Fees and Other Reimbursements

Prior to the termination of the advisory agreement, the Company reimbursed the Advisor’s costs of providing administrative services including personnel costs. During the three and six months ended June 30, 2024, the Company incurred $3.0 million and $7.0 million, respectively, of reimbursement expenses from the Advisor for providing administrative services. These reimbursement expenses were included in general and administrative expense in the consolidated statements of operations and comprehensive loss. The Advisor was also reimbursed for services provided for which it incurred investment-related expenses or insourced expenses.

Property Management Fees

Until the Property Manager became the Company’s wholly-owned subsidiary as part of the Internalization, the Company paid the Property Manager a property management fee on a monthly basis, equal to 1.5% of gross revenues from the Company’s stand-alone single-tenant net leased properties managed and 2.5% of gross revenues from all other types of properties managed, plus market-based leasing commissions applicable to the geographic location of the property. The Company also reimbursed the Property Manager for property level expenses incurred by the Property Manager.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Summary of Related Party Expenses and Payables

The following table details amounts incurred and payable in connection with the Company’s operations-related services described above as of and for the periods presented:


	Three Months Ended June 30,			Six Months Ended June 30,				Payable (Prepayments) as of
	2025		2024	2025		2024
(In thousands)	Incurred			Incurred		Incurred		Incurred		June 30, 2025		December 31, 2024
Non-recurring fees and reimbursements:
Acquisition cost reimbursements	$	—		$	—	$	—	$	20	$	—	$	—
Termination fees (1)	—			98,241		—		98,241		—		30,267
Ongoing fees and reimbursements:
Asset management fees	—			5,458		—		10,916		—		—
Professional fees and other reimbursements (2)	—			3,021		—		6,980		—		—
Property management fees (3)	—			1,022		—		2,492		—		—

Total related party operation fees and reimbursements	$	—		$	107,742	$	—	$	118,649	$	—	$	30,267

___________

(1)Reflects the Promissory Note issued to the Advisor Parent in connection with the Internalization, which was repaid in full in January 2025.

(2)Included in general and administrative expenses in the consolidated statements of operations.

(3)The three months and six ended June 30, 2024 include $0.1 million and $0.6 million, respectively, of leasing commissions which are capitalized and included in deferred costs, net on the Company’s consolidated balance sheets.

Internalization

For details regarding the terms of the Internalization, see Note 1 — Organization — Internalization.

Fees and Participations Incurred in Connection with a Listing or the Liquidation of the Company’s Real Estate Assets

Fees Incurred in Connection with a Listing

Under the LPA, if the common stock of the Company is listed on a national securities exchange, an affiliate of the Advisor Parent will be entitled to receive a promissory note as evidence of its right to receive a subordinated incentive listing distribution from the OP equal to 15.0% of the amount by which (i) the market value of all issued and outstanding shares of common stock at the time of listing plus distributions since the Company’s initial public offering of common stock in 2013 exceeds (ii) the aggregate capital contributed by the original investors plus an amount equal to a 6.0% cumulative, pre-tax non-compounded annual return to the original investors in the Company’s initial public offering of common stock in 2013. None of these distributions has been earned through the date of this Quarterly Report on Form 10-Q and no such distribution was incurred during the three and six months ended June 30, 2025 or 2024. The Company currently expects it is highly unlikely that the OP will be obligated to make such a subordinated incentive listing distribution.

Subordinated Participation in Net Sales Proceeds

Under the LPA, upon a liquidation or sale of all or substantially all of the Company’s assets, including through a merger or sale of stock, an affiliate of the Advisor Parent will be entitled to receive a subordinated participation in the net sales proceeds of the sale of real estate assets from the OP equal to 15.0% of remaining net sale proceeds after return of capital contributions to the original investors in the Company’s initial public offering of common stock in 2013 plus payment to investors of a 6.0% cumulative, pre-tax non-compounded annual return on the capital contributed by investors. None of these distributions has been earned through the date of this Quarterly Report on Form 10-Q and no such participation in net sales proceeds became due and payable during the three and six months ended June 30, 2025 or 2024.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Termination Fees

Under the LPA, upon termination or non-renewal of the advisory agreement with the Advisor, with or without cause, an affiliate of the Advisor Parent was entitled to receive a promissory note as evidence of its right to receive subordinated termination distributions from the OP equal to 15.0% of the amount by which the sum of the Company’s market value plus distributions exceeds the sum of the aggregate capital contributed plus an amount equal to a 6.0% cumulative, pre-tax, non-compounded annual return to investors in the Company’s initial public offering of common stock in 2013. However, in accordance with the terms of the LPA, in connection with the Internalization and the Company’s termination of the Advisory Agreement, the affiliate of the Advisor Parent deferred its right to receive a subordinated distribution upon termination until either a listing on a national securities exchange or other liquidity event occurs. None of these fees has been earned through the date of this Quarterly Report on Form 10-Q and no such fees became due and payable during the six months ended June 30, 2025 or 2024. The Company currently expects it is highly unlikely that the OP will be obligated to make such subordinated termination distributions.

Note 10 — Economic Dependency

Under various agreements, prior to the Internalization, the Company engaged the Advisor, its affiliates and entities under common control with the Advisor to provide certain services that were essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company and asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services and investor relations. As a result of these relationships, the Company was dependent upon the Advisor and its affiliates prior to the Internalization.

Note 11 — Equity-Based Compensation

Stock-Based Compensation

On May 22, 2025, the Company’s stockholders approved the 2025 Omnibus Incentive Compensation Plan of National Healthcare Properties, Inc. (the “Plan”). The Plan provides for the granting of stock-based compensation to employees and directors, including restricted shares of common stock, restricted stock units (“RSUs”) and long-term incentive partnership units in the OP. The maximum number of shares of common stock reserved for awards under the Plan is 1.9 million shares plus 6.5% of any shares issued and sold by the Company in any private or public offering that occurs following the approval of the Plan through, and including, an initial public offering of the Company’s common stock pursuant to an effective registration statement filed with the SEC. As of June 30, 2025, 1.7 million of the reserve shares are available for future equity rewards.

Under the Plan, the fair market value of restricted shares of common stock is expensed over the vesting period. Time-based restricted shares granted to the Board, executive officers and employees, which vest based solely upon passage of time, generally vest on a graded schedule over a period of one to three years. The fair value of time-based restricted shares is based on the Company’s most recently published NAV.

Performance-based RSUs granted to the executive officers and certain other employees may be earned and vest, if at all, at the end of a three-year performance period subject to continued employment through the performance period and the achievement of performance goals set forth in the related award agreements. The number of shares that ultimately vest based on performance can be either 0% or vary from 50% to 200% of target depending on the level of achievement of the performance criteria. The fair value of performance-based RSUs is determined based on the Company’s most recently published NAV and management’s expectation of the amount of RSUs to be earned and vested at the end of the performance period.

The total grant date fair value of time-based restricted shares and performance-based RSUs granted during the three and six months ended June 30, 2025 was $6.5 million.

Upon vesting of restricted shares and RSUs, the participant is required to pay the related tax withholding obligation, as applicable. The Company generally reduces the number of shares of common stock delivered to pay the employee tax withholding obligation. The value of the shares withheld is dependent on the Company’s most recently published NAV.

The following table summarizes stock-based compensation activity for the six months ended June 30, 2025 (units in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)


	Number of Restricted Shares or RSUs	Weighted-Average Issue Price
Unvested, January 1, 2025	—	$	—
Vested	—	—
Granted	202	32.15
Forfeitures	—	—
Unvested, June 30, 2025	202	$	32.15

Total stock-based compensation cost was $0.6 million for the three and six months June 30, 2025, which was recognized in general and administrative expense in the Company’s consolidated statements of operations and comprehensive loss. As of June 30, 2025 there was $7.5 million of future expenses related to unvested stock-based compensation arrangements granted under the Plan, which is expected to be recognized over a weighted average period of 2.3 years.

Previous Restricted Share Plan

The Company previously adopted an employee and director incentive restricted share plan (the “RSP”), which provided the Company with the ability to grant awards of restricted shares of common stock (“restricted shares”). The RSP expired in February 2023. As of June 30, 2025, there were no unvested shares under the RSP and the Company did not have any remaining unrecognized compensation cost related to unvested restricted share awards granted under the RSP. Compensation expense related to restricted shares was $0.2 million and $0.5 million for the three and six months ended June 30, 2024, respectively.

Note 12 — Accumulated Other Comprehensive Income

The following table illustrates the changes in accumulated other comprehensive income as of and for the period presented:


(In thousands)	Unrealized Gain on Designated Derivative
Balance, December 31, 2024	$	16,640
Amount of gain recognized in accumulated other comprehensive income on interest rate derivatives	(1,141)
Amount of gain reclassified from accumulated other comprehensive income	(6,058)

Balance, June 30, 2025	$	9,441

Accumulated other comprehensive income predominately relates to the unrealized gains (losses) on designated derivatives, however, as previously discussed in Note 7 — Derivatives and Hedging Activities, previously designated hedges were terminated and the termination costs are being amortized over the term of the hedged item.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Note 13 — Non-controlling Interests

Non-controlling interests on the Company’s consolidated balance sheets is comprised of the following:


	Balance as of
(In thousands)	June 30, 2025		December 31, 2024
Series A Preferred Units held by third parties	$	2,578	$	2,578
Common OP Units held by third parties	2,065		2,212
Total Non-controlling Interests in the OP	4,643		4,790
Non-controlling Interests in property owning subsidiaries	806		775
Total Non-controlling interests	$	5,449	$	5,565

Net loss attributable to non-controlling interests in the Company’s consolidated statements of operations and comprehensive loss are comprised of the following:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024
Income attributable to Series A Preferred Units held by third parties	$	(46)	$	(46)	$	(92)	$	(92)
Loss attributable to Common OP Units held by third parties	91		513		98		579
Net loss attributable to non-controlling interests in the OP	45		467		6		487
Income attributable to non-controlling interests in property-owning subsidiaries	(14)		(15)		(29)		(35)
Net loss attributable to non-controlling interests	$	31	$	452	$	(23)	$	452

Non-Controlling Interests in the OP

For preferred and common shares issued by the Company, the Company typically issues mirror securities with substantially equivalent economic rights between the Company and the OP. The securities held by the Company are eliminated in consolidation.

Series A Preferred Units

The Company is the sole general partner and holds substantially all of the Series A Preferred Units (except as discussed below). All common and preferred units in the OP held by the Company are eliminated in consolidation.

In September 2021, the Company partially funded the purchase of an OMF from an unaffiliated third party by causing the OP to issue 100,000 Series A Preferred Units to the unaffiliated third party, with a face value of $25.00 per unit, which were recorded at issuance at a then fair value of $2.6 million, or $25.78 per unit, to the unaffiliated third party.

A holder of Series A Preferred Units has the right to receive cash distributions equivalent to the cash distributions, if any, on the Company’s Series A Preferred Stock, which earn dividends at a rate equal to 7.375% of its face value. After holding the Series A Preferred Units for a period of one year, a holder of Series A Preferred Units has the right to redeem Series A Preferred Units for, at the option of the OP, the corresponding number of shares of the Company’s Series A Preferred Stock, or the cash equivalent. The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP’s assets. During the three and six months ended June 30, 2025 and 2024, Series A Preferred Unit holders were paid $46,000 and $0.1 million, respectively.

Common OP Units

The Company is the sole general partner and holds substantially all of the Common OP Units. In November 2014, the Company partially funded the purchase of an OMF from an unaffiliated third party by causing the OP to issue 405,908 Common OP Units, with a value of $10.1 million, or $25.00 per unit, to the unaffiliated third party.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

A holder of Common OP Units has the right to receive cash distributions equivalent to the cash distributions, if any, on the Company’s common stock in an amount retroactively adjusted to reflect the stock dividends, other stock dividends and other similar events. After holding the Common OP Units for a period of one year, a holder of Common OP Units has the right to redeem Common OP Units for, at the option of the OP, the corresponding number of shares of the Company’s common stock, as retroactively adjusted for the stock dividends, other stock dividends and other similar events, or the cash equivalent. The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP’s assets. During the six months ended June 30, 2025 and 2024, Common OP Unit non-controlling interest holders were not paid any cash distributions.

Stock dividends do not cause the OP to issue additional Common OP Units, rather, the redemption ratio to common stock is adjusted. The 405,998 Common OP Units outstanding as of June 30, 2025 would be redeemable for 124,161 shares of common stock, giving effect to adjustments for the impact of the stock dividends through January 2024 and the Reverse Stock Split.

Non-Controlling Interests in Property Owning Subsidiaries

The Company also has investment arrangements with other unaffiliated third parties whereby such investors receive an ownership interest in certain of the Company’s property-owning subsidiaries and are entitled to receive a proportionate share of the net operating cash flow derived from the subsidiaries’ property. Upon disposition of a property subject to non-controlling interest, the investor will receive a proportionate share of the net proceeds from the sale of the property. The investor has no recourse to any other assets of the Company. Due to the nature of the Company’s involvement with these arrangements and the significance of its investment in relation to the investment of the third party, the Company has determined that it controls each entity in these arrangements and therefore the entities related to these arrangements are consolidated within the Company’s financial statements. A non-controlling interest is recorded for the investor’s ownership interest in the properties.

The following table summarizes the activity related to investment arrangements with the unaffiliated third parties:


										Distributions
		Third Party Net Investment Amount		Non-Controlling Ownership Percentage		Net Real Estate Assets Subject to Investment Arrangement				Three Months Ended June 30,
Property Name (Dollar amounts in thousands)	Investment Date	June 30, 2025		June 30, 2025		June 30, 2025		December 31, 2024		2025	2024
Plaza Del Rio Outpatient Medical Campus Portfolio (1)	May 2015	$	806	6.6	%	$	13,177	$	12,763	—	—

_______

(1)Of the six total properties in the Plaza Del Rio Outpatient Medical Campus Portfolio, three properties were encumbered under the Capital One OMF Loan and one property was encumbered under the Multi-Property CMBS Loan. See Note 4 — Mortgage Notes Payable, Net and Note 5 — Credit Facilities for additional information.

Note 14 — Net Loss Per Share

The following is a summary of the basic and diluted net loss per share computation for the periods presented and has been retroactively adjusted to reflect the stock dividends and the Reverse Stock Split (see Note 1 — Organization and Note 8 — Stockholders’ Equity for additional details):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net loss attributable to common stockholders (in thousands)	$	(24,189)	$	(119,916)	$	(29,208)	$	(138,916)
Basic and diluted weighted-average shares outstanding	28,296,439		28,296,438		28,296,439		28,291,789
Basic and diluted net loss per share	$	(0.85)	$	(4.24)	$	(1.03)	$	(4.91)

Diluted net loss per share assumes the conversion of all common stock equivalents into an equivalent number of shares of common stock, unless the effect is antidilutive. The Company considers unvested restricted shares, Common OP Units and Class B Units to be common share equivalents. Series A Preferred Units are non-participating.

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

The Company had the following common stock equivalents on a weighted-average basis that were excluded from the calculation of diluted net loss per share attributable to stockholders as their effect would have been antidilutive. The amounts in the table below have been retroactively adjusted to reflect the stock dividends and the Reverse Stock Split (see Note 1 — Organization for additional details):


	Three Months Ended June 30,		Six Months Ended June 30,
	2025	2024	2025	2024
Unvested restricted shares (1)	2,930	13,107	1,473	13,105
Common OP Units (2)	124,161	124,161	124,161	124,161
Class B Units (3)	109,865	109,865	109,865	109,865
Total weighted average antidilutive common stock equivalents	236,956	247,133	235,499	247,131

________

(1)Weighted average number of antidilutive unvested restricted shares outstanding for the periods presented. There were 219,339 and 52,428 unvested restricted shares outstanding as of June 30, 2025 and 2024, respectively.

(2)Weighted average number of antidilutive Common OP Units presented as shares outstanding for the periods presented, at the current redemption rate reflecting adjustments for the effect of the stock dividends and the Reverse Stock Split (see Note 1 — Organization for additional details). There were 405,998 Common OP Units outstanding as of June 30, 2025 and 2024. The securities held by the Company are eliminated in consolidation.

(3)Weighted average number of antidilutive Class B Units presented as shares outstanding for the periods presented, at the current redemption rate reflecting adjustments for the effect of the stock dividends and the Reverse Stock Split (see Note 1 — Organization for additional details). There were 359,250 Class B Units outstanding as of June 30, 2025 and 2024. These Class B Units were unvested as of June 30, 2025 and 2024 (see Note 9 — Related Party Transactions and Arrangements for additional information).

Note 15 — Segment Reporting

The Company has two operating and reportable business segments: OMFs and SHOPs. The disclosures below for the three months ended June 30, 2025 and 2024 are presented for the Company’s two reportable business segments for management and internal financial reporting purposes.

The Company’s CODM is provided financial data on a periodic basis which includes net operating income (“NOI”) for each of the reportable business segments. This serves as the profit or loss measure used by the CODM for performance assessment and resource allocation.

The Company’s CODM is its Chief Executive Officer. The Company, through its CODM, evaluates performance and makes resource allocations based on its two business segments. The OMF segment primarily consists of facilities leased to healthcare-related tenants under long-term leases, which may require such tenants to pay a pro rata share of property-related expenses as well as seniors housing properties, hospitals and inpatient rehabilitation facilities under long-term leases, under which tenants are generally responsible to directly pay property-related expenses. The SHOP segment consists of direct investments in seniors housing properties, primarily providing assisted living, independent living and memory care services, which are operated through engaging independent third-party operators.

Net Operating Income

The Company evaluates the performance of the combined properties in each segment using NOI, which is defined as total revenues from tenants, less property operating costs. As such, this excludes all other items of expense and income included in the consolidated financial statements in calculating consolidated income (loss) before income taxes. The Company uses NOI to assess and compare property level performance and to make decisions concerning the operation of the properties. The Company believes that NOI is useful as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from consolidated income (loss) before income taxes.

NOI excludes certain components from consolidated income (loss) before income taxes in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by the Company may not be comparable to NOI reported by other REITs that define NOI differently.

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

The following table presents the operating financial information for the Company’s two business segments for the three months ended June 30, 2025 and 2024:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024
OMFs(1):
Revenue from tenants	$	29,252	$	34,671	$	59,887	$	69,270
Less: Property operating and maintenance	8,013		9,727		19,181		19,427
NOI	$	21,239	$	24,944	$	40,706	$	49,843

SHOPs:
Revenue from tenants	$	56,080	$	54,146	$	111,888	$	107,846
Less: Property operating and maintenance
Compensation related expenses(2)	27,003		27,983		53,849		55,731
Other property operating and maintenance(3)	18,832		17,295		38,358		34,992
NOI	$	10,245	$	8,868	$	19,681	$	17,123

(1) The CODM uses NOI to evaluate performance of the OMF segment as a large portion of the property-level operating expenses is recovered from tenants.

(2) Includes costs incurred for salaries, benefits and other labor related costs.

(3) Includes costs incurred for supplies, management fees, taxes, insurance and overhead.

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

Reconciliation to Consolidated Financial Information

A reconciliation of the total reportable segments’ NOI to consolidated net loss attributable to common stockholders is presented below:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024





Net loss attributable to common stockholders:
Net Operating Income:
OMFs	$	21,239	24,944		$	40,706	49,843
SHOPs	10,245		8,868		19,681		17,123
Total NOI	31,484		33,812		60,387		66,966
Impairment charges	(15,212)		(2,409)		(27,111)		(2,669)
Operating fees to related parties	—		(6,424)		—		(12,790)
Termination fees to related parties	—		(98,241)		—		(98,241)
Acquisition and transaction related	(497)		(357)		(548)		(499)
General and administrative	(5,406)		(4,668)		(10,618)		(11,436)
Depreciation and amortization	(18,539)		(21,928)		(42,245)		(42,666)
Gain (loss) on sale of real estate investment	2,652		(225)		27,641		(225)
Interest expense	(15,836)		(17,752)		(30,365)		(34,135)
Interest and other income	231		457		216		529
Gain on extinguishment of debt	257		—		257		—
Gain on non-designated derivatives	32		882		31		2,833
Loss before income taxes	(20,834)		(116,853)		(22,355)		(132,333)
Income tax expense (benefit)	—		(65)		6		(135)
Net loss	(20,834)		(116,918)		(22,349)		(132,468)
Net loss (gain) attributable to non-controlling interests	31		452		(23)		452
Preferred stock distributions	(3,386)		(3,450)		(6,836)		(6,900)
Net loss attributable to common stockholders	$	(24,189)	$	(119,916)	$	(29,208)	$	(138,916)

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NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

The following table reconciles investments in real estate, net by segment to consolidated total assets as of the periods presented:


(In thousands)	June 30, 2025		December 31, 2024
ASSETS
Investments in real estate, net:
OMF Segment	$	847,346	$	1,010,323
SHOP Segment	717,924		758,643
Total investments in real estate, net	1,565,270		1,768,966
Assets held for sale	1,725		—
Cash and cash equivalents	47,123		21,652
Restricted cash	56,047		52,443
Derivative assets, at fair value	11,208		19,206
Straight-line rent receivable, net	20,315		22,841
Operating lease right-of-use assets	6,841		7,480
Prepaid expenses and other assets	22,591		26,316
Deferred costs, net	18,465		21,269
Accounts receivable, net	9,311		5,850
Total assets	$	1,758,896	$	1,946,023

Note 16 — Commitments and Contingencies

As of June 30, 2025, the Company had six operating and five direct financing lease agreements. The six operating leases have durations, including assumed renewals, ranging from 17.4 years to 36.3 years, excluding an adjacent parking lot lease with a term of 1.3 years. The Company did not enter into any additional ground leases during the six months ended June 30, 2025.

As of June 30, 2025, the Company had ROU assets and liabilities of $6.8 million and $7.8 million, respectively, which are included in operating lease right-of-use assets and operating lease liabilities, respectively, on the Company’s consolidated balance sheets. In determining operating ROU assets and lease liabilities for the Company’s existing operating leases upon the adoption of the lease guidance issued in 2019, as well as for new operating leases in the current period, the Company was required to estimate an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases. Because the terms of the Company’s ground leases are significantly longer than the terms of borrowings available to the Company on a fully-collateralized basis, the Company’s estimate of this rate required significant judgment.

The Company’s ground operating leases have a weighted-average remaining lease term, including assumed renewals, of 29.4 years and a weighted-average discount rate of 7.36% as of June 30, 2025. For each of the three months ended June 30, 2025 and 2024, the Company paid cash of $0.2 million for amounts included in the measurement of lease liabilities and recorded expense of$0.2 million on a straight-line basis in accordance with the current accounting guidance. For each of the six months ended June 30, 2025 and 2024, the Company paid cash of $0.4 million and recorded expense of $0.4 million. The ground operating lease expense is recorded in property operating and maintenance expense in the Company’s consolidated statements of operations and comprehensive loss.

Table of Contents

NATIONAL HEALTHCARE PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(Unaudited)

The following table reflects the base cash rental payments due from the Company for the next five years as of June 30, 2025:


	Future Base Rent Payments
(In thousands)	Operating Leases		Direct Financing Leases (1)
2025 (remainder)	$	317	$	39
2026	627		79
2027	596		81
2028	597		83
2029	599		85
Thereafter	19,043		5,845
Total minimum lease payments	21,779		6,212
Less: amounts representing interest	(13,978)		(2,194)
Total present value of minimum lease payments	$	7,801	$	4,018

_______

(1)The direct finance lease liability is included in accounts payable and accrued expenses on the balance sheet as of June 30, 2025. The direct financing lease asset is included as part of building and improvements as the land component was not required to be bifurcated under ASU 840.

Litigation and Regulatory Matters

In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. As of June 30, 2025, there are no material legal or regulatory proceedings pending or known to be contemplated against the Company or its properties.

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. As of June 30, 2025, the Company had not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.

Note 17 — Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements except for those listed below:

Subsequent to June 30, 2025, the Company disposed of one SHOP for the contract sales price of $1.8 million.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of National Healthcare Properties, Inc. and the notes thereto. As used herein, the terms the “Company,” “we,” “our” and “us” refer to National Healthcare Properties, Inc., a Maryland corporation, including, as required by context, National Healthcare Properties Operating Partnership, LP (our “OP”), a Delaware limited partnership, and its subsidiaries. Prior to consummation of the Internalization (as defined below), the Company was externally managed by Healthcare Trust Advisors, LLC (the “Advisor”), a Delaware limited liability company. Capitalized terms used herein, but not otherwise defined, have the meaning ascribed to those terms in “Part I — Financial Information” included in the notes to the consolidated financial statements and contained herein.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements regarding the intent, belief or current expectations of the Company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,”, “projects,” “potential,” “predicts,” “intends,” “would,” “could,” “should” or similar expressions, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those contemplated by such forward-looking statements. We believe these forward-looking statements are reasonable; however, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. We intend that all forward-looking statements be subject to the safe-harbor provisions of the PSLRA.

These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include the risks associated with the internalization of our property management and advisory functions; the geopolitical instability due to the ongoing military conflicts between Russia and Ukraine, including related impact on us, our tenants, operators and the global economy and financial markets; the increased economic and political uncertainties due to the tariffs imposed by, or imposed on, the United States and its trading relationships; and that our ongoing or potential future transactions are subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all. Some of the additional risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements are set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2024, in Part II — Other Information, Item IA — Risk Factors of this Quarterly Report on Form 10-Q and as described from time to time in our other filings with the Securities and Exchange Commission.

Overview

We are a real estate investment trust (“REIT”) for U.S. federal income tax purposes. We acquire, own and manage a diversified portfolio of healthcare-related real estate focused on outpatient medical facilities (“OMFs”) and senior housing operating properties (“SHOPs”). As of June 30, 2025, we owned 175 properties (including one land parcel) located in 30 states and comprised of 7.3 million rentable square feet.

Substantially all of our business is conducted through the OP and its wholly-owned subsidiaries. Prior to consummation of the Internalization on September 27, 2024, our former Advisor managed our day-to-day business with the assistance of our property manager, Healthcare Trust Properties, LLC (the “Property Manager”); the Advisor and Property Manager were under common control with AR Global Investments, LLC (the “Advisor Parent”) and these related parties received compensation and fees for providing services to us. In connection with the Internalization, we internalized our advisory and property management functions with our own dedicated workforce; the Property Manager became our wholly-owned subsidiary as a result of the Internalization (See Note 1 - Organization and Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q).

We operate in two reportable business segments for management and financial reporting purposes: OMFs and SHOPs. All of our properties across both business segments are located throughout the United States. In our OMF operating segment, we own, manage and lease single- and multi-tenant OMFs where tenants are generally required to pay their pro rata share of property operating expenses, which may be subject to expense exclusions and floors, in addition to base rent. Our Property Manager or third-party managers manage our OMFs. In our SHOP segment, we invest in seniors housing properties through the REIT Investment Diversification and Empowerment Act of 2007 structure. As of June 30, 2025, we had four eligible independent contractors operating 41 SHOPs.

We declared and issued quarterly dividends entirely in shares of our common stock from October 2020 through January 2024. We do not intend to declare any further stock dividends in the future.

On March 26, 2025, we published a new Estimated Per-Share NAV equal to $32.15 as of December 31, 2024. The Estimated Per-Share NAV has not been adjusted since publication and will not be adjusted until our board of directors (“Board”) determines a new Estimated Per-Share NAV. We intend to publish Estimated Per-Share NAV periodically at the discretion of the Board, provided that such estimates will be made at least once annually unless and until we list our common stock.

Reverse Stock Split

Effective September 30, 2024, we effected a reverse stock split of our common stock (the “Reverse Stock Split”). Upon the effectiveness of the Reverse Stock Split, every four shares of our issued and outstanding common stock automatically combined and reclassified into one issued and outstanding share of common stock. All share and per share data in this Quarterly Report on Form 10-Q have been adjusted for all periods presented to reflect the Reverse Stock Split.

Significant Accounting Estimates and Critical Accounting Policies

For a discussion about our significant accounting estimates and critical accounting policies, see the “Significant Accounting Estimates and Critical Accounting Policies” section of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 27, 2025. Except for those required by new accounting pronouncements discussed below, there have been no material changes from these significant accounting estimates and critical accounting policies.

Recently Issued Accounting Pronouncements

See Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

Properties

The following table presents certain additional information about the properties we owned as of June 30, 2025:


Portfolio	Number of Properties		Rentable Square Feet	Percentage Leased (1)		Weighted Average Remaining Lease Term in Years (2)	Gross Asset Value (3)
							(In thousands)
OMF Segment	133		3,771,395	91.0%	(5)	5.7	$	1,171,156
SHOP Segment	42	(4)	3,571,182	83.0%	(5)	N/A	1,046,985
Total Portfolio	175		7,342,577				$	2,218,141

________

(1)Inclusive of leases signed but not yet commenced as of June 30, 2025.

(2)Weighted-average remaining lease term in years is calculated based on square feet as of June 30, 2025.

(3)Gross asset value represents total real estate investments, at cost ($2.2 billion total as of June 30, 2025) net of gross market lease intangible liabilities ($19.9 million total as of June 30, 2025). Cumulative impairment charges are reflected within gross asset value.

(4)Includes one parcel of land. As of June 30, 2025, we had 3,784 rentable units in our SHOP segment. The SHOP segment excludes one closed SHOP with 39 rentable units.

(5)Percentage leased for the OMF segment is presented as of the end of the period shown; percentage leased for the SHOP segment represents occupancy as of the end of the period shown.

Results of Operations

Comparison of the Three Months Ended June 30, 2025 and 2024

Net loss attributable to common stockholders was $24.2 million and $119.9 million, respectively, for the three months ended June 30, 2025, and 2024. The following table shows our results of operations for the three months ended June 30, 2025 and 2024 and the period to period change by line item of the consolidated statements of operations:


	Three Months Ended June 30,				Increase (Decrease)
(Dollars in thousands)	2025		2024		$
Revenue from tenants	$	85,332	$	88,817	$	(3,485)

Operating expenses:
Property operating and maintenance	53,848		55,005		(1,157)
Impairment charges	15,212		2,409		12,803
Operating fees to related parties	—		6,424		(6,424)
Termination fees to related parties	—		98,241		(98,241)
Acquisition and transaction related	497		357		140
General and administrative	5,406		4,668		738
Depreciation and amortization	18,539		21,928		(3,389)
Total expenses	93,502		189,032		(95,530)
Operating loss before loss on sale of real estate investments	(8,170)		(100,215)		92,045
Gain (loss) on sale of real estate investments	2,652		(225)		2,877
Operating loss	(5,518)		(100,440)		94,922
Other expense:
Interest expense	(15,836)		(17,752)		1,916
Interest and other income	231		457		(226)
Gain on extinguishment of debt	257		—		257
Gain on non-designated derivatives	32		882		(850)
Total other expenses	(15,316)		(16,413)		1,097
Loss before income taxes	(20,834)		(116,853)		96,019
Income tax expense (benefit)	—		(65)		65
Net loss	(20,834)		(116,918)		96,084
Net loss attributable to non-controlling interests	31		452		(421)
Allocation for preferred stock	(3,386)		(3,450)		64
Net loss attributable to common stockholders	$	(24,189)	$	(119,916)	$	95,727

Segment Results — Outpatient Medical Facilities

The following table presents the revenue and property operating and maintenance expense and the period to period change within our OMF segment for the three months ended June 30, 2025 and 2024:


	Three Months Ended June 30,		Increase (Decrease) to NOI
(in thousands)		2025		2024			$			%
Revenue from tenants					$	29,252		$	34,671		$	(5,419)	(15.6)	%
Less: Property operating and maintenance					8,013			9,727			(1,714)		(17.6)	%
NOI					$	21,239		$	24,944		$	(3,705)	(14.9)	%


	Number of Properties at June 30,		Occupancy at June 30,
	2025	2024	2025		2024
Total Portfolio	133	160	91.0	%	90.3	%

Revenue from tenants primarily reflects contractual rent received from tenants in our OMFs and operating expense reimbursements. These reimbursements generally increase in proportion with the increase in property operating and maintenance expenses in our OMF segment. Pursuant to many of our lease agreements in our OMFs, tenants are generally required to pay their pro rata share of property operating and maintenance expenses, which may be subject to expense exclusions and floors, certain capital expenditures, and salaries in addition to base rent. Property operating and maintenance expenses reflect the costs associated with our OMFs, including real estate taxes, utilities, repairs, maintenance and property management fees.

The OMF net operating income (“NOI”) decrease for the three months ended June 30, 2025 over the same period in 2024 was primarily driven by the disposition of 27 OMFs subsequent to June 30, 2024, which was partially offset by positive trends in revenue driven by occupancy gains. (See Note 15 - Segment Reporting to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information on our presentation of NOI for the segments).

Segment Results — Seniors Housing Operating Properties

The following table presents the revenue and property operating and maintenance expenses and the period to period change within our SHOP segment for the three months ended June 30, 2025 and 2024:


	Three Months Ended June 30,		Increase (Decrease) to NOI
(in thousands)		2025		2024			$			%
Revenue from tenants					$	56,080		$	54,146		$	1,934	3.6	%
Less: Property operating and maintenance					45,835			45,278			557		1.2	%
NOI					$	10,245		$	8,868		$	1,377	15.5	%


	Number of Properties at June 30,		Occupancy for the Three Months Ended June 30,
	2025	2024	2025		2024
Total Portfolio (1)	42	47	81.4	%	75.8	%

(1)Includes one and two land parcels for the three months ended June 30, 2025 and 2024, respectively.

Revenues from tenants within our SHOP segment are generated in connection with rent and services offered to residents depending on the level of care required, as well as fees associated with other ancillary services. Property operating and maintenance expenses relate to the costs associated with staffing to provide care for the residents in our SHOPs, as well as food, marketing, real estate taxes, management fees paid to our third-party operators and costs associated with maintaining the physical site.

The SHOP NOI increase for the three months ended June 30, 2025 over the same period in 2024 was primarily due to positive trends in revenue driven by occupancy gains, partially offset by higher operating expenses in 2025, and the disposition of three SHOPs subsequent to June 30, 2024.

Other Results of Operations

Impairment Charges

We recorded $15.2 million of impairment charges during the three months ended June 30, 2025, related primarily to a held-for-use SHOP ($14.1 million). This property was impaired to its contractual sales price as determined by its purchase and sale agreement and is expected to be sold. See Note 3 — Real Estate Investments, Net to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information on the impairment charges.

Operating Fees to Related Parties

Prior to the consummation of the Internalization, our former Advisor and the Property Manager were paid for asset management and property management services for managing our properties on a day-to-day basis. Following the consummation of the Internalization, we are no longer paying the above-referenced fees to the related parties.

Operating fees to these related parties were $6.4 million for the three months ended June 30, 2024. No operating fees to related parties were incurred during the three months ended June 30, 2025 as a result of the Internalization.

See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q which provides detail on our fees and expense reimbursements to our former Advisor.

Acquisition and Transaction Related Expenses

Acquisition and transaction related expenses were relatively consistent for the three months ended June 30, 2025 and 2024.

General and Administrative Expenses

General and administrative expenses increased by $0.7 million to $5.4 million for the three months ended June 30, 2025 from $4.7 million for the three months ended June 30, 2024, primarily due to the stock-based compensation incurred in the three months ended June 30, 2025.

See Note 11 — Equity-Based Compensation to our consolidated financial statements in this Quarterly Report on Form 10-Q which provides detail on stock-based compensation.

Depreciation and Amortization Expenses

Depreciation and amortization expense decreased by $3.4 million to $18.5 million for the three months ended June 30, 2025 from $21.9 million for the three months ended June 30, 2024. The decrease was primarily attributable to property dispositions subsequent to the second quarter of 2024.

Gain on Sale of Real Estate Investments

During the three months ended June 30, 2025, we disposed of three held-for-use OMFs and three held-for-use SHOPs for an aggregate contract sales price of $21.4 million. These dispositions resulted in an aggregate gain on sale of $2.7 million. During the three months ended June 30, 2024 we disposed of one SHOP for a contract sales price of $3.3 million and recorded a loss on sale of $0.2 million.

Interest Expense

Interest expense decreased by $1.9 million to $15.8 million for the three months ended June 30, 2025 from $17.8 million for the three months ended June 30, 2024. The decrease in interest expense was mainly due to lower average balances of our indebtedness and lower weighted average interest rates during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

Our interest expense in future periods will vary based on our level of future borrowings and the cost of borrowings, among other factors (including the impact of variable rates to the extent such borrowings are not hedged). Continued high interest rates may adversely impact the terms on which we may borrow in the future and thus our results of operations.

Interest and Other Income

Interest and other income includes income from our investment securities and interest income earned on cash and cash equivalents held during the period. Interest and other income was decreased by $0.2 million to $0.2 million for the three months ended June 30, 2025 from $0.5 million for the three months ended June 30, 2024. This decrease is due to excess insurance reimbursement in June 30, 2024, partially offset by higher interest rates on, and balances of, our cash accounts during the three months ended June 30, 2025.

Gain on extinguishment of debt

We recorded a $0.3 million gain on extinguishment of debt the three months ended June 30, 2025 in connection with the repayment of a loan prior to maturity relating to the sale of a property.

Gain (loss) on Non-Designated Derivatives

The gain (loss) in the three months ended June 30, 2025 and 2024 on non-designated derivative instruments related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with our credit facilities, which have floating interest rates. The relevant amounts in each period represent the change in value and any cash received on the non-designated derivatives.

Income Tax Expense (Benefit)

Income taxes generally relate to our SHOPs, which are leased to our TRS. We recorded an income tax expense of approximately $0.1 million for the three months ended June 30, 2024. Income tax expense for the three months ended June 30, 2025 was not material.

Because of our TRS’s recent operating history of losses and the adverse economic impacts from increases in the rate of inflation in recent years on the results of operations of our SHOP assets, we are not able to conclude that it is more likely than not we will realize the future benefit of our deferred tax assets; thus we have recorded a 100% valuation allowance on our net deferred tax assets through June 30, 2025. If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our consolidated statements of comprehensive loss.

Allocation for Preferred Stock Distributions

Allocation for preferred stock was $3.4 million for each of the three months ended June 30, 2025 and 2024. These amounts represent the allocation of our net loss that is attributable to holders of Series A Preferred Stock and Series B Preferred Stock.

Comparison of the Six Months Ended June 30, 2025 and 2024

Net loss attributable to common stockholders was $29.2 million and $138.9 million, respectively, for the six months ended June 30, 2025 and 2024. The following table shows our results of operations for the six months ended June 30, 2025 and 2024 and the period to period change by line item of the consolidated statements of operations:


	Six Months Ended June 30,				Increase (Decrease)
(in thousands)	2025		2024
Revenue from tenants	$	171,775	$	177,116	$	(5,341)

Operating expenses:
Property operating and maintenance	111,388		110,150		1,238
Impairment charges	27,111		2,669		24,442
Operating fees to related parties	—		12,790		(12,790)
Termination fees to related parties	—		98,241		(98,241)
Acquisition and transaction related	548		499		49
General and administrative	10,618		11,436		(818)
Depreciation and amortization	42,245		42,666		(421)
Total expenses	191,910		278,451		(86,541)
Operating loss before gain/ (loss) on sale of real estate investments	(20,135)		(101,335)		81,200
Gain (loss) on sale of real estate investments	27,641		(225)		27,866
Operating income (loss)	7,506		(101,560)		109,066
Other income (expense):
Interest expense	(30,365)		(34,135)		3,770
Interest and other income	216		529		(313)
Gain on extinguishment of debt	257		—		257
Gain on non-designated derivatives	31		2,833		(2,802)
Total other expenses	(29,861)		(30,773)		912
Loss before income taxes	(22,355)		(132,333)		109,978
Income tax expense	6		(135)		141
Net loss	(22,349)		(132,468)		110,119
Net (income) loss attributable to non-controlling interests	(23)		452		(475)

National Healthcare Properties, Inc. 10-Q