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Investment Activity | 3 Months Ended
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Mar. 31, 2025
Real Estate [Abstract] |
Investment Activity | Investment Activity Asset Acquisitions During the three months ended March 31, 2025, we completed the following real estate acquisitions within our Real Estate Investments segment ($ in thousands):
Operator |  | Date |  | Properties |  | Asset Class |  | Land |  | Building and Improvements |  | Total
Generations, LLC |  | Q1 2025 |  | 1 |  | SLC |  | $ | 3,062 |  |  | $ | 18,138 |  |  | $ | 21,200 |
Mainstay Healthcare 1 |  | Q1 2025 |  | 1 |  | ALF |  | 2,864 |  |  | $ | 5,736 |  |  | 8,600 |
Juniper Communities, LLC |  | Q1 2025 |  | 1 |  | ALF |  | 4,154 |  |  | 42,130 |  |  | 46,284 |
|  |  |  |  |  |  |  | $ | 10,080 |  |  | $ | 66,004 |  |  | $ | 76,084 |
1 This property was acquired in a deed in lieu of foreclosure transaction with Senior Living Management to satisfy the repayment of its $10.0 million mortgage note receivable. See “Cash Basis Tenants” below. In January 2025, we acquired a 108-unit assisted living and memory care community in Montrose, Colorado. The acquisition price was $21.2 million, including $0.2 million in closing costs. The 10-year lease, which includes two five-year extension options, has an initial lease rate of 8% with fixed annual escalators of 2%. In March 2025, we acquired a 120-unit assisted living and memory care community in Bergen County, New Jersey. The acquisition price was $46.3 million, including $0.3 million in closing costs. The 15-year lease, which includes two five-year extension options, has an initial lease rate of 7.95% with fixed annual escalators of 2%. The lease includes a $0.8 million capital improvement fund, which will be added to the respective lease base, if funded. Second Quarter 2025 Acquisitions In April 2025, we acquired a portfolio of six memory care communities located in Nebraska for a total purchase price of $63.5 million, including $0.3 million in closing costs. The 15-year master lease, which includes two five-year extension options, has an initial lease rate of 8.0% with fixed annual escalators of 2%. A deposit of $7.0 million, which was included in “Other assets, net” on the Condensed Consolidated Balance Sheet as of March 31, 2025, was applied to the purchase price. Cash on hand as of March 31, 2025 was used to fund the remaining purchase price. Impairments of Long-Lived Assets We reduce the carrying value of impaired properties to their estimated fair value or, with respect to the properties classified as assets held for sale, to the estimated fair value less costs to sell. To estimate the fair values of the properties, we utilize a market approach which considers binding agreements for sales (Level 1 inputs), non-binding offers to purchase from unrelated third parties, broker quotes of estimated values (Level 3 inputs), and/or independent third-party valuations (Level 1 and 3 inputs). During the three months ended March 31, 2025 and 2024, we did not recognize any impairment charges. We lease a SLC that is subject to an outstanding purchase and sale agreement for the tenant to acquire the property for approximately $38.5 million. The purchase and sale agreement, as amended, expires in June 2025. The property continues to be classified as held and used and is leased pursuant to the existing triple-net lease that generates approximately $2.8 million in annual rent and expires in July 2027. The property will be reclassified to assets held for sale when the sale becomes probable, including when the tenant demonstrates its ability to obtain sufficient financing to close on the sale of the property within the terms of the purchase and sale agreement. The property had a net investment of $18.9 million as of March 31, 2025. Tenant Concentration The following table contains information regarding concentration in our Real Estate Investments portfolio of tenants or affiliates of tenants that exceed 10% of total revenues as of and for the three months ended March 31, 2025 and 2024, excluding $2.6 million for our corporate office, a credit loss reserve of $18.9 million and $359.8 million in real estate assets in the SHOP segment ($ in thousands):
| As of March 31, 2025 |  | Revenues 1 |
| Asset Class |  | Gross Real Estate |  | Notes Receivable |  | Three Months Ended March 31, |
|  |  |  | 2025 |  |  |  | 2024 |
Senior Living Communities, LLC (“Senior Living”) | EFC |  | $ | 577,493 |  |  | $ | 47,686 |  |  | $ | 13,727 |  |  | 15% |  | $ | 12,815 |  | 16%
National HealthCare Corporation (“NHC”) | SNF |  | 133,770 |  |  | — |  |  | 10,785 |  |  | 12% |  | 11,246 |  | 14%
Bickford Senior Living (“Bickford”) | ALF |  | 428,342 |  |  | 16,044 |  |  | 10,651 |  |  | 12% |  | 10,054 |  | 12%
All others, net | Various |  | 1,529,695 |  |  | 214,950 |  |  | 37,307 |  |  | 42% |  | 31,409 |  | 39%
Escrow funds received from tenants |  |  |  |  |  |  |  |  |  |  |  |
for property operating expenses | Various |  | — |  |  | — |  |  | 2,887 |  |  | 3% |  | 2,733 |  | 3%
|  |  | $ | 2,669,300 |  |  | $ | 278,680 |  |  | 75,357 |  |  |  |  | 68,257 |  |
Resident fees and services 2 |  |  |  |  |  |  | 13,939 |  |  | 16% |  | 13,256 |  | 16%
|  |  |  |  |  |  | $ | 89,296 |  |  |  |  | $ | 81,513 |  |
1 Includes interest income on notes receivable and rental income from properties classified as assets held for sale. 2 There is no tenant concentration in “Resident fees and services” because these agreements are with individual residents. At March 31, 2025, the only state in which we had an investment concentration of 10% or more was South Carolina (11.3%). Senior Living As of March 31, 2025, we leased ten retirement communities to Senior Living. We recognized straight-line rents revenue of $(0.2) million and $(0.7) million from Senior Living for the three months ended March 31, 2025 and 2024, respectively. NHC As of March 31, 2025, we leased three ILFs and 32 SNFs to NHC, a publicly held company, under a master lease (four of which were subleased to other parties for whom the lease payments were guaranteed to us by NHC). Straight-line rents revenue of $0.2 million and $0.1 million was recognized from NHC for the three months ended March 31, 2025 and 2024, respectively. NHC Percentage Rent - Under the terms of our master lease agreement with NHC, rent escalates by 4% of the increase, if any, in each of the facility’s revenue over a base year and is referred to as “percentage rent.” The following table summarizes the percentage rent income from NHC ($ in thousands):
|  | Three Months Ended March 31,
|  | 2025 |  | 2024
Current year |  | $ | 1,618 |  |  | $ | 1,379 |
Prior year final certification 1 |  | 956 |  |  | 1,656 |
Total percentage rent income |  | $ | 2,574 |  |  | $ | 3,035 |
1 For purposes of the percentage rent calculation described in the master lease agreement, NHC’s annual revenue by facility for a given year is certified to NHI by March 31 st of the following year. One of the members of our Board of Directors is also a member of NHC’s board of directors. Bickford As of March 31, 2025, we leased 38 facilities to Bickford under master four leases. Bickford has been on the cash basis of revenue recognition since the second quarter of 2022 based upon information obtained from Bickford regarding its financial condition that has raised substantial doubt as to its ability to continue as a going concern. During the three months ended March 31, 2025 and 2024, Bickford repaid $1.3 million and $1.5 million, respectively, of its outstanding rent deferrals primarily related to the COVID-19 pandemic. As of March 31, 2025, Bickford’s outstanding rent deferrals totaled $11.7 million. Cash Basis Tenants We had two tenants, including Bickford, on the cash basis of accounting for revenue recognition for their leasing arrangements based on our assessment of each tenant’s ability to satisfy its contractual obligations as of March 31, 2025. As of March 31, 2024, we had three tenants, including Bickford, on the cash basis of accounting for revenue recognition for their leasing arrangements. Cash rents received from these tenants for the three months ended March 31, 2025 and 2024 were as follows ($ in thousands):
| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Bickford | $ | 9,984 |  |  | $ | 9,364 |  |  |  |  |
All others | 1,480 |  |  | 2,401 |  |  |  |  |
Total rental income from cash basis operators | $ | 11,464 |  |  | $ | 11,765 |  |  |  |  |
Senior Living Management Effective January 1, 2025, the remaining two properties leased to Senior Living Management (“SLM”) were transitioned to a new operator who had been serving as the interim manager of the properties. We executed a new 15-year triple-net master lease, which includes two five-year extension options, with the new operator. The master lease generates approximately $1.1 million in annual rent with fixed annual escalators of 2%. In February 2025, we acquired an assisted living facility in Oviedo, Florida through the completion of a deed in lieu of foreclosure to settle a $10.0 million non-performing mortgage note receivable. Reference Note 4 for further discussion of the non-performing notes receivable from SLM. We recorded the real estate assets acquired at their estimated fair values of $8.6 million. The net carrying value of the mortgage note receivable prior to completing the deed in lieu of foreclosure was $8.6 million. We executed a lease with a new operator who was serving as the interim manager. The lease generates approximately $0.7 million in annual rent. Other Portfolio Activity Discovery Senior Living Effective May 1, 2025, we amended our triple-net master lease with Discovery Senior Living for a portfolio of six senior housing properties held in a consolidated real estate partnership with an aggregate net book value of $126.8 million as of March 31, 2025 that is owned by both parties to reset the contractual rent that took effect May 1, 2025 to $0.5 million per month. As part of the amendment, we obtained the right, but not the obligation, to pursue, negotiate, engage and otherwise enter into a new agreement with a new manager with respect to these leased properties. The straight-line rent receivable associated with the in-place lease is $9.3 million as of March 31, 2025. This receivable will be reduced to its realizable value when management determines the transition is probable of occurring and the existing lease will be terminated. Rental income recognized associated with this lease was $1.5 million for the three months ended March 31, 2025 and 2024. Tenant Purchase Options Certain of our leases contain purchase options allowing tenants to acquire the leased properties at a fixed base price plus a specified share in any appreciation, fixed base price, or a fixed minimum internal rate of return on our investment. At March 31, 2025, tenants had purchase options on four properties with an aggregate net investment of $76.6 million that will become exercisable between 2028 and 2031. Rental income from these properties with tenant purchase options was $2.5 million and $1.8 million for the three months ended March 31, 2025 and 2024, respectively. We cannot reasonably estimate at this time the probability that any purchase options will be exercised in the future. Consideration to be received from the exercise of any tenant purchase option is expected to exceed our net investment in the leased property or properties. Future Minimum Base Rent Future minimum lease payments to be received by us under our operating leases at March 31, 2025, were as follows ($ in thousands):
Remainder of 2025 | $ | 193,573 |
2026 | 264,868 |
2027 | 215,848 |
2028 | 210,492 |
2029 | 200,519 |
2030 | 190,882 |
Thereafter | 719,710 |
| $ | 1,995,892 |
Variable Lease Payments Most of our leases contain annual escalators in rent payments. Some of our leases contain escalators that are determined annually based on a variable index or other factors that are indeterminable at the inception of the lease. The table below indicates the rental income recognized as a result of fixed and variable lease escalators ($ in thousands):
| Three Months Ended |  |
| March 31, |  |
| 2025 |  | 2024 |  |  |  |
Lease payments based on fixed escalators | $ | 61,690 |  |  | $ | 56,592 |  |  |  |  |
Lease payments based on variable escalators | 3,604 |  |  | 3,893 |  |  |  |  |
Straight-line rents, net of write-offs | 1,410 |  |  | (308) |  |  |  |  |
Escrow funds received from tenants for property operating expenses | 2,887 |  |  | 2,733 |  |  |  |  |
Amortization of lease incentives | (725) |  |  | (723) |  |  |  |  |
Rental income | $ | 68,866 |  |  | $ | 62,187 |  |  |  |  |

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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://www.xbrl.org/2003/role/disclosureRef -Topic 974 -SubTopic 720 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477728/974-720-50-1 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 976 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/976/tableOfContent Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 978 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/978/tableOfContent Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 970 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/970/tableOfContent Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 972 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/972/tableOfContent Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 974 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/974/tableOfContent + Details
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