Loans Receivable

3 Months Ended

Mar. 31, 2014

(6) Loans Receivable

The following table summarizes the Company’s loans receivable (in thousands):

	March 31, 2014								December 31, 2013
	Real Estate Secured		Other Secured			Total			Real Estate Secured		Other Secured			Total
Mezzanine	$	—	$	234,455		$	234,455		$	—	$	234,455		$	234,455
Other(1)	152,759		—			152,759			147,669		—			147,669
Unamortized discounts, fees and costs	—		(2,632		)	(2,632		)	—		(2,713		)	(2,713		)
Allowance for loan losses	—		(13,410		)	(13,410		)	—		(13,410		)	(13,410		)
	$	152,759	$	218,413		$	371,172		$	147,669	$	218,332		$	366,001

(1) Includes $123 million and $117 million at March 31, 2014 and December 31, 2013, respectively, of construction loans outstanding related to senior housing development projects. At March 31, 2014, the Company had $25 million remaining in its commitments to fund development projects.

The following table summarizes the Company’s internal ratings for loans receivable at March 31, 2014 (in thousands):

	Carrying		Percentage of Loan	Internal Ratings
Investment Type	Amount		Portfolio	Performing Loans		Watch List Loans		Workout Loans
Real estate secured	$	152,759	41	$	152,759	$	—	$	—
Other secured	218,413		59	200,342		—		18,071
	$	371,172	100	$	353,101	$	—	$	18,071

Other Secured Loans

Tandem Health Care Loan. On July 31, 2012, the Company closed a mezzanine loan facility to lend up to $205 million to Tandem Health Care (“Tandem”), as part of the recapitalization of a post-acute/skilled nursing portfolio. The Company funded $100 million (the “First Tranche”) at closing and funded an additional $102 million (the “Second Tranche”) in June 2013. At March 31, 2014, the loans were subordinate to $442 million of senior mortgage debt. The loans bear interest at fixed rates of 12% and 14% per annum for the First and Second Tranches, respectively. This loan facility has a total term of up to 63 months from the First Tranche closing, is prepayable at the borrower’s option and is secured by real estate partnership interests. The loans are subject to prepayment premiums if repaid on or before the third anniversary from the First Tranche closing date.

Delphis Operations, L.P. Loan. The Company holds a secured term loan made to Delphis Operations, L.P. (“Delphis” or the “Borrower”) that is collateralized by assets of the Borrower. The Borrower’s collateral is comprised primarily of a partnership interest in an operating surgical facility that leases a property owned by the Company. This loan is on cost recovery status. The carrying value of the loan, net of an allowance for loan losses of $13 million, was $18.1 million at both March 31, 2014 and December 31, 2013. At March 31, 2014, the Company believes the fair value of the collateral supporting this loan is in excess of its carrying value.

A reconciliation of the Company’s allowance related to the Company’s senior secured loan to Delphis follows (in thousands):

	Amount
Balance at January 1, 2014	$	13,410
Additions	—
Balance at March 31, 2014	$	13,410

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

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