Loans Receivable

3 Months Ended

Mar. 31, 2015

NOTE 7. Loans Receivable

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


	March 31, 2015						December 31, 2014
	Real Estate		Other				Real Estate		Other
	Secured		Secured		Total		Secured		Secured		Total
Mezzanine	$	—	$	930,587	$	930,587	$	—	$	799,064	$	799,064
Other(1)		122,514		—		122,514		135,363		—		135,363
Unamortized discounts, fees and costs		—		(14,413)		(14,413)		—		(14,056)		(14,056)
Allowance for loan losses		—		(13,410)		(13,410)		—		(13,410)		(13,410)
	$	122,514	$	902,764	$	1,025,278	$	135,363	$	771,598	$	906,961

(1)Represents construction loans outstanding related to senior housing development projects. At March 31, 2015, the Company had $8 million remaining under its commitments to fund development projects.

Loans Receivable Internal Ratings

The following table summarizes the Company’s internal ratings for loans receivable at March 31, 2015 (dollars in thousands):


	Carrying		Percentage of Loan	Internal Ratings
Investment Type	Amount		Portfolio	Performing Loans		Watch List Loans		Workout Loans
Real estate secured	$	122,514	12	$	122,514	$	—	$	—
Other secured		902,764	88		885,777		—		16,987
	$	1,025,278	100	$	1,008,291	$	—	$	16,987

Other Secured Loans

HC-One Facility. In November 2014, the Company was the lead investor in the financing for Formation Capital and Safanad’s acquisition of NHP, a company that, at closing, owned 273 nursing and residential care homes representing over 12,500 beds in the U.K. principally operated by HC-One. The Company provided a loan facility (the “HC-One Facility”), secured by substantially all of NHP’s assets, totaling £395 million, with £363 million ($574 million) drawn at closing. The HC-One Facility has a five-year term and was initially funded by a £355 million draw on the Company’s revolving line of credit facility that is discussed in Note 11. In February 2015, the Company increased the HC-One Facility by £108 million ($164 million) to £502 million ($795 million), in conjunction with HC-One’s acquisition of Meridian Healthcare.

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, 2015, the loans were subordinate to $435 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 matures in October 2017, 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 of July 31, 2012.

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 and has an internal rating of “workout”. The carrying value of the loan, net of an allowance for loan losses, was $17 million at both March 31, 2015 and December 31, 2014. During the three months ended March 31, 2015, the Company received cash payments of $0.5 million from the Borrower. At both March 31, 2015 and December 31, 2014, the allowance related to the Company’s senior secured loan to Delphis was $13 million with no additional allowances recognized during the three months ended March 31, 2015 or the year ended December 31, 2014. At March 31, 2015, the Company believes the fair value of the collateral supporting this loan is in excess of its carrying value.

Subsequent Event. In April 2015, the Company converted £174 million of the HC-One Facility into a sale-leaseback transaction for 36 nursing and residential care homes located throughout the U.K. (see Note 4).

- 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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