COMMITMENTS AND CONTINGENCIES
Tenant Improvements
The Company may provide tenant improvement allowances in new or renewal leases for the purpose of refurbishing or renovating tenant space. The Company may also assume tenant improvement obligations included in leases acquired in its real estate acquisitions. As of December 31, 2025 and 2024, the Company had approximately $28.8 million and $26.5 million, respectively, in commitments for tenant improvements. At December 31, 2025 three of these projects, totaling $8.0 million, represented redevelopment projects of the buildings into different healthcare uses backed by long-term leases. At December 31, 2024 four of these projects, totaling $11.1 million, represented redevelopment projects of the buildings into different healthcare uses backed by long-term leases.
Capital Improvements
The Company has entered into contracts with various vendors for various capital improvement projects related to its portfolio. As of December 31, 2025 the Company had commitments of approximately $2.0 million in commitments for capital improvement projects; three of these projects totaling $0.9 million, represent redevelopment projects of the buildings into different healthcare uses backed by long-term leases. As of December 31, 2024, the Company had approximately $2.0 million in commitments for capital improvement projects; four of these projects totaling $0.3 million, represent redevelopment projects of the buildings into different healthcare uses backed by long-term leases.
Legal Proceedings
The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company's Consolidated Financial Statements.
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.