Equity

3 Months Ended

Mar. 31, 2024

Equity

Equity

7. Equity

Non-controlling Interests. We have entered into partnerships to develop and/or own real estate. Given that our limited members do not have the substantive kick-out rights, liquidation rights, or participation rights, we have concluded that the partnerships are VIEs. As we exercise power over and receive benefits from the VIEs, we are considered the primary beneficiary. Accordingly, we consolidate the VIEs and record the non-controlling interests on the consolidated financial statements.

As of March 31, 2024, we have the following consolidated VIEs (in thousands):

					Gross
Investment		Property			Consolidated		Non-Controlling
Year	Purpose	Type	State		Assets (1)		Interests
2023	Owned real estate	ILF/ALF/MC	OH	$	54,758	$	9,134
2023	Owned real estate	ALF/MC	NC		121,321		3,831
2022	Owned real estate	SNF	FL		76,669		14,325
2018	Owned real estate	ILF	OR		14,650		2,907
2018	Owned real estate and development	ALF/MC	OR		18,452		1,156
2017	Owned real estate	ALF/MC	SC		11,680		1,240
Total				$	297,530	$	32,593

(1) Includes the total real estate investments and excludes intangible assets.

Common Stock. We have separate equity distribution agreements (collectively, “Equity Distribution Agreements”) to offer and sell, from time to time, up to $200,000,000 in aggregate offering price of shares of our common stock. The Equity Distribution Agreements provide for sales of common shares to be made by means of ordinary brokers’ transactions, which may include block trades, or transactions that are deemed to be “at the market” offerings.

During the three months ended March 31, 2023, we sold 48,500 shares of common stock for $1,777,000 in net proceeds under our Equity Distribution Agreements. In conjunction with the sale of common stock, we incurred $80,000 of costs associated with this agreement which have been recorded in additional paid in capital as a reduction of proceeds received.

During the three months ended March 31, 2024, we sold 139,100 shares of common stock for $4,453,000 in net proceeds under our Equity Distribution Agreements. In conjunction with the sale of common stock, we incurred $116,000 of costs associated with this agreement which have been recorded in additional paid in capital as a reduction of proceeds received. At March 31, 2024, we had $71,509,000 available under the Equity Distribution Agreements. Subsequent to March 31, 2024, we sold 204,700 shares of common stock for $6,522,000 in net proceeds under our Equity Distribution Agreements. Accordingly, we have $64,905,000 available under our Equity Distribution Agreements after the sale of these additional shares.

During the three months ended March 31, 2024 and 2023, we acquired 49,540 shares and 41,350 shares, respectively, of common stock held by employees who tendered owned shares to satisfy tax withholding obligations.

Available Shelf Registration. We have an automatic shelf registration statement on file with the SEC, and currently have the ability to file additional automatic shelf registration statements, to provide us with capacity to publicly offer an indeterminate amount of common stock, preferred stock, warrants, debt, depositary shares, or units. We may from time to time raise capital under our automatic shelf registration statement in amounts, at prices, and on terms to be announced when and if the securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of the offering. Our shelf registration statement expires on February 17, 2025.

Distributions. We declared and paid the following cash dividends (in thousands):

	Three Months Ended March 31,
	2024				2023
	Declared		Paid		Declared		Paid
Common Stock (1)	$	24,616	$	24,616	$	23,563	$	23,563

(1) Represents $0.19 per share per month for the three months ended March 31, 2024 and 2023.

In April 2024, we declared a monthly cash dividend of $0.19 per share on our common stock for the months of April, May and June 2024, payable on April 30, May 31, and June 28, 2024, respectively, to stockholders of record on April 22, May 23, and June 20, 2024, respectively.

Stock-Based Compensation. During 2021, we adopted and our shareholders approved the 2021 Equity Participation Plan (“the 2021 Plan”) which replaces the 2015 Equity Participation Plan (“the 2015 Plan”). Under the 2021 Plan, 1,900,000 shares of common stock have been authorized and reserved for awards, less one share for every one share that was subject to an award granted under the 2015 Plan after December 31, 2020 and prior to adoption. In addition, any shares that are not issued under outstanding awards under the 2015 Plan because the shares were forfeited or cancelled after December 31, 2020 will be added to and again be available for awards under the 2021 Plan. Under the 2021 Plan, the shares were authorized and reserved for awards to officers, employees, non-employee directors and consultants. The terms of the awards granted under the 2021 Plan and the 2015 Plan are set by our compensation

committee at its discretion. Beginning in the first quarter of 2024, we entered into Performance Stock Unit Award Agreements, based upon absolute and relative total shareholder return, under the 2021 Plan. Forms of such Performance Stock Unit Award Agreements are filed as exhibits to this quarter report.

During the three months ended March 31, 2024 and 2023, no stock options were granted or exercised. During each of the three months ended March 31, 2024 and 2023, 5,000 stock options expired and were cancelled. At March 31, 2024, we had no stock options outstanding and exercisable.

The following table summarizes our restricted stock activity for the three months ended March 31, 2024 and 2023:

	Three Months Ended March 31,
	2024		2023
Outstanding, January 1		258,620		229,236
Granted		159,536		127,960
Vested		(114,782)		(98,206)
Cancelled		—		(1,085)
Outstanding, March 31		303,374		257,905

No performance-based stock units vested during the three months ended March 31, 2024, and 2023.

During the three months ended March 31, 2024 and 2023, we granted restricted stock and performance-based stock units under the 2021 Plan as follows:

	No. of	Price per
Year	Shares/Units	Share		Reward Type	Vesting Period
2024	159,536	$	30.72	Restricted stock	ratably over 3 years
	69,610	$	31.84	Performance-based stock units	TSR targets (1)
	62,914	$	31.84	Performance-based stock units	TSR targets (2)
	292,060
2023	127,960	$	37.16	Restricted stock	ratably over 3 years
	86,867	$	37.16	Performance-based stock units	TSR targets (3)
	214,827

(1) Vesting is based on achieving certain total shareholder return (“TSR”) targets in 3 years.

(2) Vesting is based on achieving certain TSR targets relative to the TSR of a predefined peer group in 3 years.

(3) Vesting is based on achieving certain total shareholder return (“TSR”) targets in 4 years with acceleration opportunity in 3 years.

Compensation expense recognized related to the vesting of restricted common stock and performance-based stock units for the three months ended March 31, 2024 and 2023 were $2,202,000 and $2,088,000, respectively. At March 31, 2024, the remaining compensation expense to be recognized related to the future service period of unvested outstanding restricted common stock and performance-based stock units are as follows (in thousands):

	Remaining
	Compensation
Vesting Date	Expense
April - December 2024	$	6,484
2025		6,266
2026		3,385
2027		369
Total	$	16,504