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Real Estate Transactions | 6 Months Ended
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Jun. 30, 2020
Real Estate [Abstract] |
Real Estate Transactions | Real Estate Transactions 2020 Real Estate Investments The Post Acquisition In January 2020, the Company entered into definitive agreements to acquire a life science campus in Waltham, Massachusetts for $320 million. The Company closed the acquisition in April 2020. 2019 Real Estate Investments Cambridge Acquisition During the first quarter of 2019, the Company acquired a life science facility for $71 million and development rights at an adjacent undeveloped land parcel for consideration of up to $27 million. The existing facility and land parcel are located in Cambridge, Massachusetts. Discovery Portfolio Acquisition In April 2019, the Company acquired a portfolio of nine senior housing properties for $445 million. The properties are located across Florida, Georgia, and Texas and are operated by Discovery Senior Living, LLC. Oakmont Portfolio Acquisitions In May 2019, the Company acquired three senior housing communities in California for $113 million and in July 2019, the Company acquired an additional five senior housing communities for $284 million. Both portfolios were acquired from and continue to be operated by Oakmont Senior Living LLC (“Oakmont”). Each portfolio was contributed to a DownREIT joint venture in which the sellers received non-controlling interests in lieu of cash for a portion of the sales price. The Company consolidates each DownREIT joint venture. As part of the May and July 2019 Oakmont transactions, the Company assumed $50 million and $112 million, respectively, of secured mortgage debt, both of which were recorded at their relative fair values through asset acquisition accounting. Sierra Point Towers Acquisition In June 2019, the Company acquired two life science buildings in South San Francisco, California, adjacent to the Company’s The Shore at Sierra Point development, for $245 million. Vintage Park JV Interest Purchase In June 2019, the Company acquired the outstanding equity interests of a senior housing joint venture structure (which owned one senior housing facility), in which the Company previously held an unconsolidated equity investment, for $24 million. Subsequent to acquisition, the Company owned 100% of the equity. Upon consolidating the facility at acquisition, the Company derecognized the existing investment in the joint venture structure, marked the real estate to fair value (using a relative fair value allocation), and recognized a gain upon change of control of $12 million, net of a tax impact of $1 million. The gain upon change of control is recognized within other income (expense), net and the tax impact is recognized within income tax benefit (expense). Hartwell Innovation Campus Acquisition In July 2019, the Company acquired a life science campus in the suburban Boston submarket of Lexington, Massachusetts, for $228 million. The campus is comprised of four buildings. West Cambridge Acquisition In December 2019, the Company acquired one life science building, adjacent to the Company’s existing properties in Cambridge, Massachusetts, for $333 million. Sovereign Wealth Fund Senior Housing Joint Venture In December 2019, the Company formed a new joint venture (the “SWF SH JV”) with a sovereign wealth fund that owns 19 SHOP assets operated by Brookdale. The Company owns 53.5% of the SWF SH JV and contributed all 19 assets with a fair value of $790 million. The SWF SH JV partner owns the other 46.5% and purchased its interest for $367 million. Upon formation of the SWF SH JV, the Company recognized its retained equity method investment at fair value, deconsolidated the 19 SHOP assets, and recognized a gain upon change of control of $161 million, which is recorded in other income (expense), net. Other Real Estate Acquisitions During the year ended December 31, 2019, the Company acquired one medical office building (“MOB”) in Kansas for $15 million, one MOB in Texas for $9 million, and one life science building in the Sorrento Mesa submarket of San Diego, California for $16 million. Development Activities The Company’s commitments related to development and redevelopment projects decreased by $17 million, to $344 million at June 30, 2020, when compared to December 31, 2019, primarily as a result of completed development and redevelopment projects, partially offset by increased commitments on existing projects and new projects started during the second quarter of 2020. As part of the development program with HCA Healthcare, Inc., during the three months ended June 30, 2020, the Company commenced development of one MOB, which will be on-campus. Held for Sale At June 30, 2020, 12 senior housing triple-net facilities, 6 MOBs, 1 undeveloped MOB land parcel, 33 SHOP facilities, and 2 facilities included in the Company’s other non-reportable segment were classified as held for sale, with an aggregate carrying value of $379 million, primarily comprised of real estate assets of $367 million (net of accumulated depreciation of $239 million). Liabilities of assets held for sale was primarily comprised of mortgage debt of $28 million and other liabilities of $5 million at June 30, 2020. At December 31, 2019, 27 senior housing triple-net facilities (inclusive of 18 facilities sold to Brookdale under the 2019 MTCA - see Note 3), 28 SHOP facilities, and 2 MOBs were classified as held for sale, with an aggregate carrying value of $504 million, primarily comprised of real estate assets of $476 million (net of accumulated depreciation of $243 million). Liabilities of assets held for sale were primarily comprised of mortgage debt of $32 million and other liabilities of $4 million at December 31, 2019. 2020 Dispositions of Real Estate During the three months ended June 30, 2020, the Company sold two SHOP assets for $28 million, resulting in total gain on sales of $2 million. Additionally, during the three months ended June 30, 2020, one of the Company’s tenants exercised its option to acquire three MOBs in San Diego, California for $106 million. The Company completed the sale in June 2020 and recognized total gain on sales of $81 million. During the three months ended March 31, 2020, the Company sold 7 SHOP assets for $36 million and 18 senior housing triple-net assets for $385 million (representative of the 18 facilities sold to Brookdale under the 2019 MTCA - see Note 3), resulting in total gain on sales of $165 million. 2019 Dispositions of Real Estate During the three months ended June 30, 2019, the Company sold one SHOP asset for $14 million, five MOBs for $15 million, and one life science asset for $7 million, resulting in total gain on sales of $11 million. During the six months ended June 30, 2019, the Company sold 10 SHOP assets for $82 million, 2 senior housing triple-net assets for $26 million, 5 MOBs for $15 million, 1 life science asset for $7 million, and 1 undeveloped life science land parcel for $35 million, resulting in total gain on sales of $19 million. Impairments of Real Estate 2020 During the three months ended June 30, 2020, the Company recognized an aggregate impairment charge of $19 million related to 12 SHOP assets, 2 senior housing triple-net assets, 1 MOB, and 1 undeveloped MOB land parcel that are classified as held for sale and wrote down their aggregate carrying value of $108 million to their aggregate fair value, less estimated costs to sell, of $89 million. During the six months ended June 30, 2020, the Company recognized an aggregate impairment charge of $50 million related to 20 SHOP assets, 4 senior housing triple-net assets, 2 MOBs, and 1 undeveloped MOB land parcel as a result of being classified as held for sale and wrote down their aggregate carrying value of $231 million to their aggregate fair value, less estimated costs to sell, of $181 million. The fair value of the impaired assets was based on forecasted sales prices, which are considered to be Level 3 measurements within the fair value hierarchy. Forecasted sales prices were determined using a direct capitalization model and/or a market approach (comparable sales model), which rely on certain assumptions by management, including: (i) market capitalization rates, (ii) comparable market transactions, (iii) estimated prices per unit, (iv) negotiations with prospective buyers, and (v) forecasted cash flow streams (lease revenue rates, expense rates, growth rates, etc.). There are inherent uncertainties in making these assumptions. For the Company’s impairment calculations during and as of the six months ended June 30, 2020, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $35,000 to $238,000, with a weighted average price of $90,000. 2 019 During the three months ended June 30, 2019, the Company recognized an aggregate impairment charge of $59 million related to 2 senior housing triple-net assets, 14 SHOP assets, and 1 MOB that were classified as held for sale and wrote down their aggregate carrying value of $164 million to their aggregate fair value, less estimated costs to sell, of $105 million. The fair value of the impaired assets was based on forecasted sales prices, which are considered to be Level 3 measurements within the fair value hierarchy. For the Company’s impairment calculations during the three months ended June 30, 2019, the Company estimated the fair value of each asset using either (i) market capitalization rates ranging from 4.97% to 6.64%, with a weighted average rate of 5.41% or (ii) prices per unit ranging from $52,000 to $90,000, with a weighted average price of $62,000. Additionally, during the three months ended June 30, 2019, the Company recognized a $6 million casualty-related gain, net of a $0.3 million deferred tax expense, as a result of insurance proceeds received for property damage and other associated costs related to hurricanes in 2017. The gain is recorded in other income (expense), net. In addition to the impairments described above, during the six months ended June 30, 2019, the Company determined the carrying value of two MOBs that were candidates for potential future sale were no longer recoverable due to the Company’s shortened intended hold period under the held-for-use impairment model. Accordingly, the Company wrote-down the carrying amount of these two assets to their respective fair value, which resulted in an aggregate impairment charge of $9 million. The fair value of the assets are considered to be Level 2 measurements within the fair value hierarchy.

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- Definition The entire disclosure for certain real estate investment financial statements, real estate investment trust operating support agreements, real estate owned, retail land sales, time share transactions, as well as other real estate related disclosures. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 970 -URI http://asc.fasb.org/topic&trid=2156125 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 978 -URI http://asc.fasb.org/topic&trid=2134977 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 976 -URI http://asc.fasb.org/topic&trid=2134846 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 974 -URI http://asc.fasb.org/topic&trid=2156429 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 972 -URI http://asc.fasb.org/topic&trid=2134617 + Details
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