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Commitments and Contingencies
 9 Months Ended
Sep. 30, 2013
Commitments and Contingencies  
Commitments and Contingencies

7.                                    Commitments and Contingencies

 

As part of an acquisition in 2011, we committed to provide a contingent payment if certain operational thresholds are met.  The contingent payment was recorded at fair value, which was estimated using a discounted cash flow analysis, and we were accreting the contingent liability to the settlement amount as of the payment date.  The fair value of such contingent liability was re-evaluated on a quarterly basis based on changes in estimates of future operating results and changes in market discount rates. During the three months ended September 30, 2013, we paid $7,000,000 related to the contingent liability. Accordingly, we have no remaining contingent liability as of September 30, 2013. During the three and nine months ended September 30, 2013, we recorded non-cash interest expense of $36,000 and $256,000, respectively, related to the contingent liability. During the three and nine months ended September 30, 2012, we recorded non-cash interest expense of $110,000 and $330,000, respectively, related to the contingent liability. At December 31, 2012, the contingent liability had a carrying value of $6,744,000.

 

At September 30, 2013, we had outstanding commitments totaling $80,188,000 to develop, re-develop, renovate or expand six skilled nursing properties with a total of 640 beds, two memory care properties with a total of 108 units, two assisted living and memory care combination properties with a total of 158 units, and two assisted living properties with a total of 136 units.  As of September 30, 2013, we have funded $22,293,000 under these commitments and we have a remaining commitment of $57,895,000. We also 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.   See Note 2. Real Estate Investments for further discussion of these commitments.

 

Additionally at September 30, 2013, we had a $10,600,000 mortgage and construction commitment. As of September 30, 2013, we funded $5,435,000 under this commitment and we have a remaining commitment of $5,165,000. In October 2013, we funded a $124,387,000 mortgage loan and committed to provide an additional $12,000,000 for capital improvements and, under certain conditions and based on certain operating metrics and valuation thresholds achieved and sustained within the first twelve years of the term, additional loan proceeds of up to $40,000,000. See Note 2. Real Estate Investments for further discussion of these mortgage loans.

 

At September 30, 2013, we committed to provide $2,325,000 in loans and line of credit agreements. As of September 30, 2013, we had funded $615,000 under these commitments and we have a remaining commitment of $1,710,000. In October 2013, we entered into a new agreement to fund two pre-development loans of $325,000 each to facilitate the site selection and pre-construction services for the future development of two memory care properties. As a result of this commitment, we have a total commitment of $2,975,000 under our loans and line of credit agreements and we have a remaining commitment balance of $2,360,000. See Note 3. Notes Receivables for further discussion of these commitments.