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Commitments and Contingencies
 9 Months Ended
Sep. 30, 2014
Commitments and Contingencies  
Commitments and Contingencies

 

6.Commitments and Contingencies

 

At September 30, 2014, we had commitments totaling $60,325,000 to develop, re-develop, renovate or expand senior housing and long-term health care properties. As of September 30, 2014, we have funded $41,586,000 under these commitments and we have a remaining commitment of $18,739,000. In October 2014, we funded $4,485,000 under investment commitments. Accordingly, we have a remaining commitment of $14,254,000. 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, 2014, we have a commitment to provide an existing borrower $12,000,000 for capital improvements. As of September 30, 2014, we funded $1,512,000 under the capital improvement commitment and we have a remaining commitment of $10,487,000. We also provided this borrower a commitment to borrow up to an additional $40,000,000 of loan proceeds under certain conditions and based on certain operating metrics and valuation thresholds. Since these conditions have not been met, no funding has been made under this additional loan commitment. See Note 2. Real Estate Investments for further discussion of these commitments.

 

At September 30, 2014, we committed to provide $2,963,000 under loans and line of credit agreements. As of September 30, 2014, we had funded $1,147,000 under these commitments and we have a remaining commitment of $1,816,000. See Note 3. Notes Receivable for further discussion of these commitments.

 

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. During the third quarter of 2013, we paid $7,000,000 related to the contingent liability. Accordingly, we have no remaining contingent liability as of September 30, 2014. 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.

 

We are a party from time to time to various general and professional liability claims and lawsuits asserted against the lessees or borrowers of our properties, which in our opinion are not singularly or in the aggregate material to our results of operations or financial condition. These types of claims and lawsuits may include matters involving general or professional liability, which we believe under applicable legal principles are not our responsibility as a non-possessory landlord or mortgage holder. We believe that these matters are the responsibility of our lessees and borrowers pursuant to general legal principles and pursuant to insurance and indemnification provisions in the applicable leases or mortgages. We intend to continue to vigorously defend such claims.