XML 16 R10.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Real Estate Investments | 6 Months Ended
--- | ---
Jun. 30, 2013
Real Estate Investments |
Real Estate Investments | 2. Real Estate Investments Assisted living properties, independent living properties, memory care properties, and combinations thereof are included in the assisted living property type. Range of care properties (or ROC) property type consists of properties providing skilled nursing and any combination of assisted living, independent living and/or memory care services. Any reference to the number of properties, number of schools, number of units, number of beds, and yield on investments in real estate are unaudited and outside the scope of our independent registered public accounting firm’s review of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board. Owned Properties. The following table summarizes our investments in owned properties at June 30, 2013 (dollar amounts in thousands):
|  |  |  |  |  | Number |  | Number of |  | Investment |
Type of Property |  | Gross Investments |  | Percentage of Investments |  | of Properties (1) |  | SNF Beds |  | ALF Units |  | per Bed/Unit |
Skilled Nursing |  | $454,021 |  | 49.7% |  | 73 |  | 8,418 |  | — |  | $53.93 |
Assisted Living |  | 379,913 |  | 41.6% |  | 96 |  | — |  | 4,502 |  | $84.39 |
Range of Care |  | 43,907 |  | 4.8% |  | 8 |  | 634 |  | 274 |  | $48.36 |
Under Development (2) |  | 22,757 |  | 2.5% |  | — |  | — |  | — |  | — |
Schools |  | 12,444 |  | 1.4% |  | 2 |  | — |  | — |  | — |
Totals |  | $913,042 |  | 100.0% |  | 179 |  | 9,052 |  | 4,776 |  |  |
(1) We have investments in 26 states leased to 35 different operators. (2) Includes a MC development with 60 units, two combination ALF and MC developments with a total of 158 units, and a SNF development with 143 beds. All of our owned properties are leased to our operators pursuant to non-cancelable operating leases generally with an initial term of 10 to 15 years. Each lease is a triple net lease covering one or more properties which requires the operator/lessee to pay all costs necessary in the operations of the facilities. Many of the leases contain renewal options and one master lease contains an option to purchase six skilled nursing properties with a total of 230 beds for an all cash purchase price of $11,000,000. As of June 30, 2013, the net book value for these six properties was $8,156,000. If the lessee fails to exercise its option to purchase these six properties on or before September 30, 2013, the lessee is obligated to purchase a 30-bed skilled nursing property out of the six property portfolio for $1,000,000 on or before October 31, 2013. The 30-bed skilled nursing property has a net book value of $210,000 as of June 30, 2013. The leases provide for fixed minimum base rent during the initial and renewal periods. The majority of our leases contain provisions for specified annual increases over the rents of the prior year that are generally computed in one of four ways depending on specific provisions of each lease: (i) a specified percentage increase over the prior year’s rent, generally between 2.0% and 3.0%; (ii) a calculation based on the Consumer Price Index; (iii) as a percentage of facility net patient revenues in excess of base amounts; or (iv) specific dollar increases. During the six months ended June 30, 2013, we completed the construction of a 120-bed skilled nursing property in Texas. This new property replaces a skilled nursing property in our existing portfolio. In July 2013, all the residents were relocated from the old property to the new property. The operator is responsible for closing and selling the old property. During the six months ended June 30, 2013, we funded $3,405,000 under the $9,094,000 development commitment for the new property. In July 2013, we funded $1,008,000 under this development commitment and we anticipate funding the remaining balance in August 2013. Also, during the six months ended June 30, 2013, we sold a 47-bed skilled nursing property in Colorado for $1,000 and recognized a $1,014,000 loss on sale. In July 2013, we completed the construction of a 60-unit memory care property in Colorado. The new memory care property opened in July 2013. Total cost for the new property was approximately $9,817,000. As of June 30, 2013, we have a commitment to provide, under certain conditions, up to $5,000,000 per year through December 2014 to an existing operator for expansion of the 37 properties they lease from us. The estimated yield of this commitment is 9.5% plus the positive difference, if any, between the average yields on the U.S. Treasury 10-year note for the five days prior to funding, minus 420 basis points as of June 30, 2013, no funds have been requested under this commitment. In addition, the following table summarizes our investment commitments as of June 30, 2013, excluding the $5,000,000 per year commitment, and year to date funding on our ongoing development, redevelopment, renovation and expansion projects (excludes capitalized interest, dollar amounts in thousands):
Type of Property |  | Investment Commitment |  | 2013 Funding (2) |  | Commitment Funded |  | Remaining Commitment |  | Number of Properties |  | Number of Beds/Units |
Skilled Nursing |  | $29,550 |  | $2,115 |  | $7,651 |  | $21,899 |  | 6 |  | 640 |
Assisted Living (1) |  | 40,802 |  | 8,042 |  | 16,218 |  | 24,584 |  | 6 |  | 354 |
Totals |  | $70,352 |  | $10,157 (3) |  | $23,869 |  | $46,483 |  | 12 |  | 994 |
(1) Includes the development of a 60-unit memory care property for $9,817 and two assisted living and memory care combination properties for a total of $16,385, and the expansion of three assisted living properties for a total $14,600. (2) Excludes $260 of capital improvement on three completed projects with no remaining commitments and includes $6 funded under the commitment as marketing expense. (3) In July of 2013, we funded $1,932 under investment commitments. During the six months ended June 30, 2012, we purchased a 144-bed skilled nursing property located in Texas for an aggregate purchase price of $18,600,000. We also purchased a vacant parcel of land in Colorado for $1,882,000 and simultaneously entered into a lease and development commitment agreement to fund the construction of a 60 unit memory care unit. (See above for development commitment status.) Additionally, we sold a 140-bed skilled nursing property located in Texas for $1,248,000 and recognized a gain, net of selling expenses, of $16,000. This property was leased under a master lease and the economic terms of the master lease did not change as a result of this sale. Mortgage Loans. The following table summarizes our investments in mortgage loans secured by first mortgages at June 30, 2013 (dollar amounts in thousands):
|  |  |  | Percentage |  |  |  | Number |  | Number of |  | Investment |
Type of Property |  | Gross Investments |  | of Investments |  | Number of Loans |  | of Properties(1) |  | SNF Beds |  | ALF Units |  | per Bed/Unit |
Skilled Nursing (2) |  | $24,730 |  | 62.3% |  | 15 |  | 17 |  | 1,861 |  | — |  | $13.29 |
Assisted Living |  | 12,202 |  | 30.8% |  | 3 |  | 8 |  | — |  | 211 |  | $57.83 |
Range of Care |  | 2,736 |  | 6.9% |  | 1 |  | 1 |  | 99 |  | 74 |  | $15.82 |
Totals |  | $39,668 |  | 100.0% |  | 19 |  | 26 |  | 1,960 |  | 285 |  |  |
(1) We have investments in 8 states that include mortgages to 11 different operators. (2) Includes a mortgage and construction loan secured by a currently operating skilled nursing property and parcel of land upon which a 106-bed replacement property is being constructed. The agreement gives us the right to purchase the replacement facility for $13,500 during an 18 month period beginning on the first anniversary of the issuance of the certificate of occupancy. At June 30, 2013, the mortgage loans had interest rates ranging from 7.0% to 13.5% and maturities ranging from 2014 to 2022. In addition, some loans contain certain guarantees, provide for certain facility fees and generally have 20-year to 25-year amortization schedules. The majority of the mortgage loans provide for annual increases in the interest rate based upon a specified increase of 10 to 25 basis points. During the six months ended June 30, 2013, we funded $913,000 under a $10,600,000 mortgage and construction loan and we have a remaining commitment of $7,067,000. In July 2013, we funded $1,897,000 under the mortgage and construction loan and we have a remaining commitment of $5,170,000. During the six months ended June 30, 2013 and 2012, we received $938,000 and $1,389,000, respectively, in regularly scheduled principal payments. During the six months ended June 30, 2012, we received $2,363,000 plus accrued interest related to the early payoff of two mortgage loans secured by two skilled nursing properties. In August 2013, we entered into a $141,000,000 mortgage loan agreement with affiliates of Prestige Healthcare and secured by 15 properties with a total of 2,092 skilled nursing beds and 24 independent living units in Michigan. The loan is for a term of 30 years and will bear interest at 9.41% for five years, escalating annually thereafter by 2.25%. Payments will be interest-only for a period of three years, after which the borrower will make interest payments along with annual principal payments of $1,000,000. Of the aggregate loan amount, we anticipate funding approximately $126,000,000 during the fourth quarter of 2013 with additional forward commitments of $12,000,000 for capital improvements and up to $3,000,000 for short-term working capital. The loan agreement also provides, under certain conditions and based on certain operating metrics and valuation thresholds achieved and sustained within the first twelve years of the term, for additional loan proceeds of up to $40,000,000 with such proceeds limited to $10,000,000 per twelve months. The borrower will have a one-time option between the third and twelfth years to prepay up to 50% of the then outstanding loan balance without penalty. Exclusively for the purposes of this option, the properties collateralizing the loan have been separated by us into two pools of assets. If and when the option is exercised, we will identify which of the two pools we will release for prepayment and removal from portfolio of properties securing the loan. If the prepayment option is exercised and timely concluded, the borrower forfeits its opportunity to access any additional loan proceeds. Additionally, under certain circumstances, including a change in regulatory environment, we have the option to purchase the properties.

X
- Details
Name: | us-gaap_RealEstateAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for real estate owned (as defined). Generally, the largest component of real estate owned by lenders is assets taken in settlement of troubled loans through surrender or foreclosure. Real estate investments, real estate loans that qualify as investments in real estate, and premises that are no longer used in operations may also be included in real estate owned. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph c -Subparagraph Schedule III -Article 5 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 35 -Paragraph 17 -URI http://asc.fasb.org/extlink&oid=16397438&loc=d3e1424-110224 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 28 -Article 12 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 10 -Subparagraph 4 -Article 9 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher OTS -Name Federal Regulation (FR) -Number Title 12 -Section 563c.102 -Paragraph 10 -Subparagraph a, b -Chapter V -Subsection I -LegacyDoc This is a non-GAAP reference that was included in the 2009 taxonomy. It will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Audit and Accounting Guide (AAG) -Number AAG-DEP -Paragraph 2, 6, 9-11, 18, 20 -IssueDate 2006-05-01 -Chapter 11 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 11 -Article 9 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 144 -Paragraph 7, 34 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher OTS -Name Federal Regulation (FR) -Number Title 12 -Section 563c.102 -Paragraph 11 -Chapter V -Subsection I -LegacyDoc This is a non-GAAP reference that was included in the 2009 taxonomy. It will be removed from future versions of this taxonomy. Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 01-6 -Paragraph 13 -Subparagraph f -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 45 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6375948&loc=d3e4437-111522 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 15 -Paragraph 28 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 35 -Paragraph 43 -URI http://asc.fasb.org/extlink&oid=16397438&loc=d3e1739-110224 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.9-03.10(4)) -URI http://asc.fasb.org/extlink&oid=6876686&loc=d3e534808-122878 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 34 -Paragraph 9, 11, 12, 13, 14, 15, 21 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 40 -Section 40 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6905009&loc=d3e18511-111553 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 40 -Section 40 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6905009&loc=d3e18551-111553 + Details
Name: | us-gaap_RealEstateOwnedTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration