XML 27 R15.htm IDEA: XBRL DOCUMENT
v3.24.2

Loans Receivable | 6 Months Ended
--- | ---
Jun. 30, 2024
Receivables [Abstract] |
Loans Receivable | Loans Receivable The following table summarizes the Company’s loans receivable (in thousands):
| June 30, 2024 |  | December 31, 2023
Secured loans(1)(2) | $ | 200,583 |  |  | $ | 178,678 |
CCRC resident loans | 53,346 |  |  | 42,733 |
Mezzanine loans(2) | 35,820 |  |  | — |
Unamortized discounts and fees(3) | (5,128) |  |  | (131) |
Reserve for loan losses | (9,143) |  |  | (2,830) |
Loans receivable, net | $ | 275,478 |  |  | $ | 218,450 |
_______________________________________ (1)At June 30, 2024, the Company had $69 million of remaining commitments to fund additional loans for outpatient medical capital expenditure projects. At December 31, 2023, the Company had $29 million of remaining commitments to fund additional loans for senior housing redevelopment and capital expenditure projects. This $29 million commitment was reduced to zero in February 2024 in conjunction with the refinance of the Sunrise Senior Housing Portfolio Seller Financing as discussed below. (2)Includes secured loans and mezzanine loans acquired as part of the Merger (see Note 3). (3)As of June 30, 2024, includes net unamortized discounts of $5 million related to the loans receivable acquired as part of the Merger (see Note 3). The Merger On March 1, 2024, upon the consummation of the Merger, the Company acquired 9 secured loans with an aggregate outstanding principal balance of $89 million and 10 mezzanine loans with an aggregate outstanding principal balance of $36 million, for a total of $124 million. Typically, each secured loan is secured by a mortgage on a related outpatient medical building, each construction loan (included in secured loans above) is secured by a mortgage on the land and improvements as constructed, generally with guarantees from the borrowers, and each mezzanine loan is collateralized by an ownership interest in the respective borrower. As of the Closing Date, the secured loans had maturities ranging from June 2024 to July 2027 and stated fixed interest rates ranging from 7.00% to 10.00%. The mezzanine loans had maturities ranging from June 2024 to June 2027 and stated fixed interest rates ranging from 8.00% to 10.00%. As of June 30, 2024, unamortized net discounts on the secured loans and mezzanine loans acquired were $1 million and $3 million, respectively. These discounts are recognized in interest income and other on the Consolidated Statements of Operations using the effective interest rate method over the remaining term of the loans. As of June 30, 2024, six of the secured loans acquired had $69 million of remaining commitments to fund outpatient medical capital expenditure projects. Sunrise Senior Housing Portfolio Seller Financing In conjunction with the sale of 32 senior housing operating properties (“SHOP”) facilities for $664 million in January 2021, the Company provided the buyer with initial financing of $410 million. The remainder of the sales price was received in cash at the time of sale. Additionally, the Company agreed to provide up to $92 million of additional financing for capital expenditures (up to 65% of the estimated cost of capital expenditures). The initial and additional financing is secured by the buyer’s equity ownership in each property. In June 2023, the interest rate on this secured loan was converted from a variable rate based on LIBOR to a variable rate based on Term SOFR (plus a 10 basis point adjustment related to SOFR transition). In June 2021, February 2022, July 2022, and December 2022, the Company received partial principal repayments of $246 million, $8 million, $27 million, and $10 million, respectively, in conjunction with the disposition of the underlying collateral. In connection with these principal repayments, the additional financing available was reduced to $40 million, of which $11 million had been funded as of December 31, 2023. In February 2024, this loan reached its maturity and was refinanced with the Company. In connection with the refinance, the Company received a partial principal repayment of $69 million and the maturity date was extended to August 2027. The interest rate on the loan remained as Term SOFR (plus a 10 basis point adjustment related to SOFR transition) plus 4.0% for the first two years of the extended term, but increases to 5.0% for the last 18 months of the extended term and is now subject to a fixed floor of 9%. In connection with the refinance, the additional financing was reduced to $1 million, all of which was funded in February 2024. Therefore, at June 30, 2024, the Company no longer has a commitment to provide the borrower with additional financing for capital expenditures. In May 2024, the Company received a partial principal repayment of $5 million in conjunction with the disposition of the underlying collateral. At June 30, 2024 and December 31, 2023, this secured loan had an outstanding principal balance of $58 million and $131 million, respectively. Other SHOP Seller Financing In conjunction with the sale of 16 additional SHOP facilities for $230 million in January 2021, the Company provided the buyer with financing of $150 million. The remainder of the sales price was received in cash at the time of sale. The financing is secured by the buyer’s equity ownership in each property. Upon maturity in January 2023, the borrower did not make the required principal repayment. In February 2023, the borrower made a partial principal repayment of $102 million and the remaining balance owed was refinanced with the Company. In connection with the refinance, the maturity date of the loan was extended to January 2024 and the interest rate on the loan was increased to a variable rate based on Term SOFR (plus an 11 basis point adjustment related to SOFR transition) plus 6.0% for the first six months of the extended term, increasing to 7.0% for the last six months of the extended term. The Company also received a $1 million extension fee in connection with the refinance, which was recognized in interest income through the maturity date of January 2024. In January 2024, the loan was refinanced with the Company. In connection with the refinance, the maturity date of the loan was extended to January 2025. The interest rate on the loan remained as Term SOFR (plus an 11 basis point adjustment related to SOFR transition) plus 7.0%, but is now subject to a fixed floor of 12%. The Company also received a $1 million extension fee in connection with the refinance, which is recognized in interest income over the remaining term of the loan. At each of June 30, 2024 and December 31, 2023, this secured loan had an outstanding principal balance of $48 million. Outpatient Medical Seller Financing In conjunction with the sale of 59 outpatient medical buildings for $674 million in July 2024 (see Note 5), the Company provided the buyer with a mortgage loan secured by the real estate sold for $405 million. The remainder of the sales price was received in cash at the time of sale. The seller financing has an initial term that matures in July 2026 and includes two 12-month extension options. The interest rate on the seller financing is fixed at 6.0% for the initial term and increases to 6.5% during the optional extension periods. 2024 Other Loans Receivable Transactions In May 2024, the Company extended the maturity date of one mezzanine loan with an outstanding balance of $2 million from May 2026 to May 2027. In June 2024, the Company extended the maturity date of one mezzanine loan with an outstanding balance of $1 million from June 2024 to June 2025 and one secured loan with an outstanding balance of $12 million from June 2024 to September 2024. 2023 Other Loans Receivable Transactions In February 2023, the Company received full repayment of the outstanding balance of one $35 million secured loan. In April 2023, the Company received full repayment of the outstanding balance of one $14 million secured loan. In May 2023, the Company received full repayment of two outstanding secured loans with an aggregate balance of $12 million. Also in May 2023, the interest rate on one secured loan with an outstanding balance of $21 million was converted from a variable rate based on LIBOR to a variable rate based on Term SOFR (plus a 10 basis point adjustment related to SOFR transition). In October 2023, the Company received full repayment of the outstanding balance of this $21 million secured loan. CCRC Resident Loans For certain residents that qualify, CCRCs may offer to lend residents the necessary funds to satisfy the entrance fee requirements so that they are able to move into a community while still continuing the process of selling their previous home. The loans are due upon sale of the resident’s previous home. At June 30, 2024 and December 31, 2023, the Company held $53 million and $43 million, respectively, of such notes receivable. Loans Receivable Internal Ratings In connection with the Company’s quarterly review process or upon the occurrence of a significant event, loans receivable are reviewed and assigned an internal rating of Performing, Watch List, or Workout. Loans that are deemed Performing meet all present contractual obligations, and collection and timing of all amounts owed is reasonably assured. Watch List Loans are defined as loans that do not meet the definition of Performing or Workout. Workout Loans are defined as loans in which the Company has determined, based on current information and events, that: (i) it is probable it will be unable to collect all amounts due according to the contractual terms of the agreement, (ii) the borrower is delinquent on making payments under the contractual terms of the agreement, and (iii) the Company has commenced action or anticipates pursuing action in the near term to seek recovery of its investment. The following table summarizes, by year of origination, the Company’s internal ratings for loans receivable, net of unamortized discounts, fees, and reserves for loan losses, as of June 30, 2024 (in thousands):
Investment Type |  | Year of Origination(1) |  | Total
| 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | Prior |
Secured loans |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing loans |  | $ | 37,466 |  |  | $ | 26,854 |  |  | $ | 24,221 |  |  | $ | 101,984 |  |  | $ | — |  |  | $ | — |  |  | $ | 190,525 |
Watch list loans |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Workout loans |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total secured loans |  | $ | 37,466 |  |  | $ | 26,854 |  |  | $ | 24,221 |  |  | $ | 101,984 |  |  | $ | — |  |  | $ | — |  |  | $ | 190,525 |
Current period gross write-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Current period recoveries |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Current period net write-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Mezzanine loans |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing loans |  | $ | — |  |  | $ | 4,924 |  |  | $ | 4,573 |  |  | $ | 8,034 |  |  | $ | 10,863 |  |  | $ | 3,213 |  |  | $ | 31,607 |
Watch list loans |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Workout loans |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total mezzanine loans |  | $ | — |  |  | $ | 4,924 |  |  | $ | 4,573 |  |  | $ | 8,034 |  |  | $ | 10,863 |  |  | $ | 3,213 |  |  | $ | 31,607 |
Current period gross write-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Current period recoveries |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Current period net write-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
CCRC resident loans |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing loans |  | $ | 36,219 |  |  | $ | 16,838 |  |  | $ | 289 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 53,346 |
Watch list loans |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Workout loans |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total CCRC resident loans |  | $ | 36,219 |  |  | $ | 16,838 |  |  | $ | 289 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 53,346 |
Current period gross write-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Current period recoveries |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Current period net write-offs |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
_______________________________________ (1)Additional loans funded for capital expenditure projects (as discussed above) is included in the year of origination of the initial loan. Reserve for Loan Losses The Company evaluates the liquidity and creditworthiness of its borrowers on a quarterly basis to determine whether any updates to the future expected losses recognized upon inception are necessary. The Company’s evaluation considers payment history and current credit status, industry conditions, current economic conditions, forecasted economic conditions, individual and portfolio property performance, credit enhancements, liquidity, and other factors. Future economic conditions are based primarily on near-term economic forecasts from the Federal Reserve and reasonable assumptions for long-term economic trends. The determination of loan losses also considers concentration of credit risk associated with the senior housing and outpatient medical industries to which its loans receivable relate. The Company’s borrowers furnish property, portfolio, and guarantor/operator-level financial statements, among other information, on a monthly or quarterly basis; the Company utilizes this financial information to calculate the debt service coverages in its assessment of internal ratings that it uses as a primary credit quality indicator. Debt service coverage information is evaluated together with other property, portfolio, and operator performance information, including revenue, expense, net operating income, occupancy, rental rates, capital expenditures, and EBITDA (defined as earnings before interest, tax, and depreciation and amortization), along with other liquidity measures. The Company evaluates, on a monthly basis or immediately upon a significant change in circumstance, its borrowers’ ability to service their obligations with the Company. The following table summarizes the Company’s reserve for loan losses (in thousands):
| June 30, 2024 |  | December 31, 2023
| Secured Loans |  | Mezzanine Loans and Other(1) |  |  |  | Total |  | Secured Loans |  | Mezzanine Loans and Other(1) |  |  |  | Total
Reserve for loan losses, beginning of period | $ | 2,830 |  |  | $ | — |  |  |  |  | $ | 2,830 |  |  | $ | 8,280 |  |  | $ | — |  |  |  |  | $ | 8,280 |
Provision for expected loan losses on funded loans receivable | 5,209 |  |  | 1,104 |  |  |  |  | 6,313 |  |  | 2,088 |  |  | — |  |  |  |  | 2,088 |
Expected loan losses (recoveries) related to loans sold or repaid | — |  |  | — |  |  |  |  | — |  |  | (7,538) |  |  | — |  |  |  |  | (7,538) |
Reserve for loan losses, end of period | $ | 8,039 |  |  | $ | 1,104 |  |  |  |  | $ | 9,143 |  |  | $ | 2,830 |  |  | $ | — |  |  |  |  | $ | 2,830 |
_______________________________________ (1)Includes CCRC resident loans. Additionally, at June 30, 2024 and December 31, 2023, a liability of $5.3 million and $0.7 million, respectively, related to expected credit losses for unfunded loan commitments was included in accounts payable, accrued liabilities, and other liabilities. The change in the reserve for expected loan losses during the six months ended June 30, 2024 is primarily due to: (i) reserves recognized on senior loans and mezzanine loans receivable acquired as part of the Merger and (ii) reserves recognized on seller financing loans refinanced during the first quarter of 2024.

X
- Definition The entire disclosure for claims held for amounts due to 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. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/310-10/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 835 -SubTopic 30 -Name Accounting Standards Codification -Section 45 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482925/835-30-45-2 + Details
Name: | us-gaap_LoansNotesTradeAndOtherReceivablesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_ReceivablesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration