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Investments in and Advances to Unconsolidated Joint Ventures | 9 Months Ended
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Sep. 30, 2015
Investments in and Advances to Unconsolidated Joint Ventures |
Investments in and Advances to Unconsolidated Joint Ventures | NOTE 8. Investments in and Advances to Unconsolidated Joint Ventures The Company owns interests in the following entities that are accounted for under the equity method at September 30, 2015 (dollars in thousands):
Entity(1) |  | Segment |  | Carrying Amount |  | Ownership% |
CCRC JV(2) |  | senior housing |  | $ | 447,658 |  |  | 49 |  |
HCRMC |  | senior housing and post-acute/skilled nursing |  |  | 21,238 |  |  | 9 |  |
MBK JV(3) |  | senior housing |  |  | 26,400 |  |  | 50 |  |
HCP Ventures III, LLC |  | medical office |  |  | 6,329 |  |  | 30 |  |
HCP Ventures IV, LLC |  | medical office and hospital |  |  | 24,705 |  |  | 20 |  |
HCP Life Science(4) |  | life science |  |  | 68,834 |  | 50 | – | 63 |
Vintage Park |  | senior housing |  |  | 5,745 |  |  | 85 |  |
MBK Development JV(3) |  | senior housing |  |  | 1,824 |  |  | 50 |  |
Suburban Properties, LLC |  | medical office |  |  | 4,861 |  |  | 67 |  |
Advances to unconsolidated joint ventures, net |  |  |  |  | 196 |  |  |  |  |
|  |  |  | $ | 607,790 |  |  |  |  |
| (1) |  | These entities are not consolidated because the Company does not control, through voting rights or other means, the joint ventures.
| (2) |  | Includes two unconsolidated joint ventures in a RIDEA structure (CCRC PropCo CCRC OpCo).
| (3) |  | Includes two unconsolidated joint ventures in a RIDEA structure (PropCo and OpCo).
| (4) |  | Includes three unconsolidated joint ventures between the Company and an institutional capital partner. HCP Life Science includes the following partnerships (and the Company’s ownership percentage): (i) Torrey Pines Science Center, LP (50%); (ii) Britannia Biotech Gateway, LP (55%); and (iii) LASDK, LP (63%).
Summarized combined financial information for the Company’s equity method investments follows (in thousands):
|  | September 30, |  | December 31, |
|  | 2015 |  | 2014 |
Real estate, net |  | $ | 4,987,309 |  | $ | 5,134,587 |
Goodwill and other assets, net |  |  | 5,238,342 |  |  | 4,986,310 |
Total assets |  | $ | 10,225,651 |  | $ | 10,120,897 |
Capital lease obligations and debt |  | $ | 7,205,096 |  | $ | 7,197,940 |
Accounts payable |  |  | 1,139,955 |  |  | 1,015,912 |
Other partners’ capital |  |  | 1,241,809 |  |  | 1,281,413 |
HCP’s capital(1) |  |  | 638,791 |  |  | 625,632 |
Total liabilities and partners’ capital |  | $ | 10,225,651 |  | $ | 10,120,897 |
| (1) |  | The combined basis difference of the Company’s investments in these joint ventures of $31 million, as of September 30, 2015, is attributable to goodwill, real estate, capital lease obligations, deferred tax assets and lease-related net intangibles.
|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |
|  | 2015 |  | 2014 |  | 2015 |  | 2014 |
Total revenues |  | $ | 1,126,797 |  | $ | 1,082,110 |  | $ | 3,435,943 |  | $ | 3,209,039 |
Income (loss) from discontinued operations |  |  | 2,100 |  |  | 2,000 |  |  | (3,900) |  |  | (6,800) |
Net loss |  |  | (65,819) |  |  | (702) |  |  | (77,529) |  |  | (4,826) |
HCP’s share of earnings(1) |  |  | 8,314 |  |  | 10,168 |  |  | 33,916 |  |  | 39,388 |
Fees earned by HCP |  |  | 454 |  |  | 447 |  |  | 1,372 |  |  | 1,340 |
Distributions received by HCP |  |  | 16,186 |  |  | 2,113 |  |  | 20,673 |  |  | 5,881 |
| (1) |  | The Company’s joint venture interest in HCRMC is accounted for using the equity method and results in an ongoing elimination of DFL income proportional to HCP’s ownership in HCRMC. The elimination of the respective proportional lease expense at the HCRMC level in substance results in $14 million and $16 million of DFL income that is recharacterized to the Company’s share of earnings from HCRMC (equity income from unconsolidated joint ventures) for the three months ended September 30, 2015 and 2014, respectively. For the nine months ended September 30, 2015 and 2014, $44 million and $47 million, respectively, of DFL income was recharacterized to the Company’s share of earnings from HCR MC.
CCRC JV. On August 29, 2014, as part of the Brookdale Transaction discussed in Note 3, HCP and Brookdale forme d unconsolidated joint ventures that own 14 CCRC campuses in a RIDEA structure. At closing, Brookdale contributed eight of its owned campuses; the Company contributed two campuses previously leased to Brookdale valued at $162 million (carrying value of $92 million) and $370 million of cash. At closing, the CCRC JV campuses were encumbered by $569 million of mortgage debt and entrance fee obligations. HCRMC. On April 20, 2015, the U.S. Department of Justice (“DOJ”) unsealed a previously filed complaint in the United States District Court for the Eastern District of Virginia against HCRMC and certain of its affiliates in three consolidated cases following a civil investigation arising out of three lawsuits filed by former employees of HCRMC under the qui tam provisions of the federal False Claims Act. The DOJ’s complaint in intervention is captioned United States of America, ex rel. Ribik, Carson, and Slough v. HCR ManorCare, Inc., ManorCare Inc., HCR ManorCare Services, LLC and Heartland Employment Services, LLC (Civil Action Numbers: 1:09cv13; 1:11cv1054; 1:14cv1228 (CMH/TCB)). The complaint alleges that HCRMC submitted claims to Medicare for therapy services that were not covered by the skilled nursing facility benefit, were not medically reasonable and necessary, and were not skilled in nature, and therefore not entitled to Medicare reimbursement. While this litigation is at an early stage and HCRMC has indicated that it believes the claims are unjust and it will vigorously defend against them, a significant adverse judgment against HCRMC or significant settlement obligation could impact the carrying value of the Company’s investments in HCRMC’s operations and/or DFLs investment further (see Note 6). On October 28, 2015, the Company concluded that its 9% equity investment in HCRMC was other-than-temporarily impaired as of September 30, 2015 and recorded an impairment charge of $27 million during the three months ended September 30, 2015 (see Note 15). MBK JV s. On March 30, 2015, the Company and MBK Senior Living (“MBK”), a subsidiary of Mitsui & Co. Ltd, formed a new RIDEA joint venture (“MBK JV”) that owns three senior housing facilities with the Company and MBK each owning a 50% equity interest. MBK manages these communities on behalf of the joint venture. The Company contributed $27 million of cash and MBK contributed the three senior housing facilities with a fair value of $126 million, which were encumbered by $78 million of mortgage debt at closing. On September 25, 2015, the Company and MBK formed a new RIDEA joint venture (“MBK Development JV”) which acquired a $3 million parcel of land for the purpose of developing a 74-unit class A senior housing facility in Santa Rosa, California. The parcel of land is located adjacent to the Oakmont Gardens independent living facility currently owned and operated by the MBK JV.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=49116238&loc=d3e32847-111569 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=49116238&loc=d3e32787-111569 + Details
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