Summarized Condensed Consolidating Information | SUMMARIZED CONDENSED CONSOLIDATING INFORMATION The Notes issued by the Operating Partnership and CareTrust Capital Corp. on May 10, 2017 are jointly and severally, fully and unconditionally, guaranteed by CareTrust REIT, Inc., as the parent guarantor (the “Parent Guarantor”), and the wholly owned subsidiaries of the Parent Guarantor other than the Issuers (collectively, the “Subsidiary Guarantors” and, together with the Parent Guarantor, the “Guarantors”), subject to automatic release under certain customary circumstances, including if the Subsidiary Guarantor is sold or sells all or substantially all of its assets, the Subsidiary Guarantor is designated “unrestricted” for covenant purposes under the indenture governing the Notes, the Subsidiary Guarantor’s guarantee of other indebtedness which resulted in the creation of the guarantee of the Notes is terminated or released, or the requirements for legal defeasance or covenant defeasance or to discharge the indenture have been satisfied. The following provides information regarding the entity structure of the Parent Guarantor, the Issuers and the Subsidiary Guarantors: CareTrust REIT, Inc. – The Parent Guarantor was formed on October 29, 2013 in anticipation of the separation of Ensign’s healthcare business and its real estate business into two separate and independently publicly traded companies (the “Spin-Off”) and was a wholly owned subsidiary of Ensign prior to the effective date of the Spin-Off on June 1, 2014. The Parent Guarantor did not conduct any operations or have any business prior to the date of the consummation of the Spin-Off related transactions. CTR Partnership, L.P. and CareTrust Capital Corp. – The Issuers, each of which is a wholly owned subsidiary of the Parent Guarantor, were formed on May 8, 2014 and May 9, 2014 , respectively, in anticipation of the Spin-Off and the related transactions. The Issuers did not conduct any operations or have any business prior to the date of the consummation of the Spin-Off related transactions. Subsidiary Guarantors – The Subsidiary Guarantors consist of all of the subsidiaries of the Parent Guarantor other than the Issuers. Pursuant to Rule 3-10 of Regulation S-X, the following summarized consolidating information is provided for the Parent Guarantor, the Issuers, and the Subsidiary Guarantors. There are no subsidiaries of the Company other than the Issuers and the Subsidiary Guarantors. This summarized financial information has been prepared from the financial statements of the Company and the books and records maintained by the Company. CONDENSED CONSOLIDATING BALANCE SHEETS SEPTEMBER 30, 2019 (in thousands, except share and per share amounts) Parent Guarantor Issuers Combined Subsidiary Guarantors Elimination Consolidated Assets: Real estate investments, net $ — $ 878,848 $ 525,176 $ — $ 1,404,024 Other real estate investments, net — 41,728 3,080 — 44,808 Assets held for sale, net — 34,590 — — 34,590 Cash and cash equivalents — 5,749 — — 5,749 Accounts and other receivables, net — 2,104 21 — 2,125 Prepaid expenses and other assets — 30,198 4 — 30,202 Deferred financing costs, net — 3,268 — — 3,268 Investment in subsidiaries 949,133 524,410 — (1,473,543 ) — Intercompany — 3,108 — (3,108 ) — Total assets $ 949,133 $ 1,524,003 $ 528,281 $ (1,476,651 ) $ 1,524,766 Liabilities and Equity: Senior unsecured notes payable, net $ — $ 295,721 $ — $ — $ 295,721 Senior unsecured term loan, net — 198,661 — — 198,661 Unsecured revolving credit facility — 65,000 — — 65,000 Accounts payable and accrued liabilities — 15,488 763 — 16,251 Dividends payable 21,647 — — — 21,647 Intercompany — — 3,108 (3,108 ) — Total liabilities 21,647 574,870 3,871 (3,108 ) 597,280 Equity: Common stock, $0.01 par value; 500,000,000 shares authorized, 95,103,270 shares issued and outstanding as of September 30, 2019 951 — — — 951 Additional paid-in capital 1,162,047 795,857 321,761 (1,117,618 ) 1,162,047 Cumulative distributions in excess of earnings (235,512 ) 153,276 202,649 (355,925 ) (235,512 ) Total equity 927,486 949,133 524,410 (1,473,543 ) 927,486 Total liabilities and equity $ 949,133 $ 1,524,003 $ 528,281 $ (1,476,651 ) $ 1,524,766 CONDENSED CONSOLIDATING BALANCE SHEETS DECEMBER 31, 2018 (in thousands, except share and per share amounts) Parent Guarantor Issuers Combined Subsidiary Guarantors Elimination Consolidated Assets: Real estate investments, net $ — $ 887,921 $ 328,316 $ — $ 1,216,237 Other real estate investments, net — 12,299 5,746 — 18,045 Cash and cash equivalents — 36,792 — — 36,792 Accounts and other receivables, net — 9,359 2,028 — 11,387 Prepaid expenses and other assets — 8,666 2 — 8,668 Deferred financing costs, net — 633 — — 633 Investment in subsidiaries 786,030 484,955 — (1,270,985 ) — Intercompany — — 151,242 (151,242 ) — Total assets $ 786,030 $ 1,440,625 $ 487,334 $ (1,422,227 ) $ 1,291,762 Liabilities and Equity: Senior unsecured notes payable, net $ — $ 295,153 $ — $ — $ 295,153 Senior unsecured term loan, net — 99,612 — — 99,612 Unsecured revolving credit facility — 95,000 — — 95,000 Accounts payable and accrued liabilities — 13,588 2,379 — 15,967 Dividends payable 17,783 — — — 17,783 Intercompany — 151,242 — (151,242 ) — Total liabilities 17,783 654,595 2,379 (151,242 ) 523,515 Equity: Common stock, $0.01 par value; 500,000,000 shares authorized, 85,867,044 shares issued and outstanding as of December 31, 2018 859 — — — 859 Additional paid-in capital 965,578 661,686 321,761 (983,447 ) 965,578 Cumulative distributions in excess of earnings (198,190 ) 124,344 163,194 (287,538 ) (198,190 ) Total equity 768,247 786,030 484,955 (1,270,985 ) 768,247 Total liabilities and equity $ 786,030 $ 1,440,625 $ 487,334 $ (1,422,227 ) $ 1,291,762 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019 (in thousands) Parent Guarantor Issuers Combined Subsidiary Guarantors Elimination Consolidated Revenues: Rental income $ — $ 11,702 $ 19,875 $ — $ 31,577 Independent living facilities — — 929 — 929 Interest and other income — 808 — — 808 Total revenues — 12,510 20,804 — 33,314 Expenses: Depreciation and amortization — 7,756 5,664 — 13,420 Interest expense — 7,064 — — 7,064 Property taxes — 972 53 — 1,025 Independent living facilities — — 806 — 806 Impairment of real estate investments — 16,692 — — 16,692 Provision for loan losses — 1,076 — — 1,076 General and administrative 1,095 2,407 — — 3,502 Total expenses 1,095 35,967 6,523 — 43,585 Gain on sale of real estate — 217 — — 217 (Loss) income in Subsidiary (8,959 ) 14,281 — (5,322 ) — Net (loss) income $ (10,054 ) $ (8,959 ) $ 14,281 $ (5,322 ) $ (10,054 ) CONDENSED CONSOLIDATING INCOME STATEMENTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018 (in thousands) Parent Guarantor Issuers Combined Subsidiary Guarantors Elimination Consolidated Revenues: Rental income $ — $ 20,554 $ 14,778 $ — $ 35,332 Tenant reimbursements — 1,804 1,186 — 2,990 Independent living facilities — — 871 — 871 Interest and other income — 317 — — 317 Total revenues — 22,675 16,835 — 39,510 Expenses: Depreciation and amortization — 6,833 4,518 — 11,351 Interest expense — 6,805 — — 6,805 Property taxes — 1,804 1,186 — 2,990 Independent living facilities — — 766 — 766 General and administrative 987 2,101 — — 3,088 Total expenses 987 17,543 6,470 — 25,000 Income in Subsidiary 15,497 10,365 — (25,862 ) — Net income $ 14,510 $ 15,497 $ 10,365 $ (25,862 ) $ 14,510 CONDENSED CONSOLIDATING INCOME STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 (in thousands) Parent Guarantor Issuers Combined Subsidiary Guarantors Elimination Consolidated Revenues: Rental income $ — $ 59,709 $ 54,338 $ — $ 114,047 Independent living facilities — — 2,676 — 2,676 Interest and other income — 1,828 622 — 2,450 Total revenues — 61,537 57,636 — 119,173 Expenses: Depreciation and amortization — 22,989 15,770 — 38,759 Interest expense — 21,209 — — 21,209 Property taxes — 2,200 107 — 2,307 Independent living facilities — — 2,232 — 2,232 Impairment of real estate investments — 16,692 — — 16,692 Provision for loan losses — 1,076 — — 1,076 General and administrative 3,236 8,110 72 — 11,418 Total expenses 3,236 72,276 18,181 — 93,693 Gain on sale of real estate — 217 — — 217 Income in Subsidiary 28,933 39,455 — (68,388 ) — Net income $ 25,697 $ 28,933 $ 39,455 $ (68,388 ) $ 25,697 CONDENSED CONSOLIDATING INCOME STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 (in thousands) Parent Guarantor Issuers Combined Subsidiary Guarantors Elimination Consolidated Revenues: Rental income $ — $ 60,122 $ 43,734 $ — $ 103,856 Tenant reimbursements — 5,360 3,614 — 8,974 Independent living facilities — — 2,515 — 2,515 Interest and other income — 1,039 196 — 1,235 Total revenues — 66,521 50,059 — 116,580 Expenses: Depreciation and amortization — 20,488 13,739 — 34,227 Interest expense — 21,182 — — 21,182 Property taxes — 5,360 3,614 — 8,974 Independent living facilities — — 2,226 — 2,226 General and administrative 2,822 6,740 76 — 9,638 Total expenses 2,822 53,770 19,655 — 76,247 Gain on sale of real estate — 2,051 — — 2,051 Income in Subsidiary 45,206 30,404 — (75,610 ) — Net income $ 42,384 $ 45,206 $ 30,404 $ (75,610 ) $ 42,384 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 (in thousands) Parent Guarantor Issuers Combined Subsidiary Guarantors Elimination Consolidated Cash flows from operating activities: Net cash (used in) provided by operating activities $ (114 ) $ 39,195 $ 56,077 $ — $ 95,158 Cash flows from investing activities: Acquisitions of real estate — (86,393 ) (212,164 ) — (298,557 ) Improvements to real estate — (767 ) (463 ) — (1,230 ) Purchases of equipment, furniture and fixtures — (2,922 ) (4 ) — (2,926 ) Investment in real estate mortgage and other loans receivable — (14,699 ) — — (14,699 ) Principal payments received on real estate mortgage and other loans receivable — 11,959 — — 11,959 Repayment of other real estate investment — — 2,204 — 2,204 Escrow deposits for acquisitions of real estate — (22,920 ) — — (22,920 ) Net proceeds from sales of real estate — 218 — — 218 Distribution from subsidiary 59,155 — — (59,155 ) — Intercompany financing (193,325 ) (154,350 ) — 347,675 — Net cash used in investing activities (134,170 ) (269,874 ) (210,427 ) 288,520 (325,951 ) Cash flows from financing activities: Proceeds from the issuance of common stock, net 195,963 — — — 195,963 Proceeds from the issuance of senior unsecured term loan — 200,000 — — 200,000 Borrowings under unsecured revolving credit facility — 235,000 — — 235,000 Payments on unsecured revolving credit facility — (265,000 ) — — (265,000 ) Payments on senior unsecured term loan — (100,000 ) — — (100,000 ) Payments of deferred financing costs — (4,534 ) — — (4,534 ) Net-settle adjustment on restricted stock (2,524 ) — — — (2,524 ) Dividends paid on common stock (59,155 ) — — — (59,155 ) Distribution to Parent — (59,155 ) — 59,155 — Intercompany financing — 193,325 154,350 (347,675 ) — Net cash provided by (used in) financing activities 134,284 199,636 154,350 (288,520 ) 199,750 Net decrease in cash and cash equivalents — (31,043 ) — — (31,043 ) Cash and cash equivalents, beginning of period — 36,792 — — 36,792 Cash and cash equivalents, end of period $ — $ 5,749 $ — $ — $ 5,749 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 (in thousands) Parent Guarantor Issuers Combined Subsidiary Guarantors Elimination Consolidated Cash flows from operating activities: Net cash (used in) provided by operating activities: $ (7 ) $ 28,087 $ 44,310 $ — $ 72,390 Cash flows from investing activities: Acquisitions of real estate — (75,621 ) — — (75,621 ) Improvements to real estate — (5,376 ) (25 ) — (5,401 ) Purchases of equipment, furniture and fixtures — (1,193 ) (69 ) — (1,262 ) Investment in real estate mortgage and other loans receivable — (2,598 ) — — (2,598 ) Principal payments received on real estate mortgage and other loans receivable — 893 — — 893 Escrow deposit for acquisition of real estate — (1,000 ) — — (1,000 ) Net proceeds from the sale of real estate — 13,004 — — 13,004 Distribution from subsidiary 45,827 — — (45,827 ) — Intercompany financing (129,251 ) 44,216 — 85,035 — Net cash used in investing activities (83,424 ) (27,675 ) (94 ) 39,208 (71,985 ) Cash flows from financing activities: Proceeds from the issuance of common stock, net 130,546 — — — 130,546 Borrowings under unsecured revolving credit facility — 60,000 — — 60,000 Payments on unsecured revolving credit facility — (135,000 ) — — (135,000 ) Net-settle adjustment on restricted stock (1,288 ) — — — (1,288 ) Dividends paid on common stock (45,827 ) — — — (45,827 ) Distribution to Parent — (45,827 ) — 45,827 — Intercompany financing — 129,251 (44,216 ) (85,035 ) — Net cash provided by (used in) financing activities 83,431 8,424 (44,216 ) (39,208 ) 8,431 Net increase in cash and cash equivalents — 8,836 — — 8,836 Cash and cash equivalents, beginning of period — 6,909 — — 6,909 Cash and cash equivalents, end of period $ — $ 15,745 $ — $ — $ 15,745 |