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Real Estate Investments (Tables) | 9 Months Ended
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Sep. 30, 2015
Summary of investments in owned properties | The following table summarizes our investments in owned properties at September 30, 2015 (dollar amounts in thousands):
|  |  |  |  |  |  |  |  |  |  |  |  | Average |
|  |  |  |  | Percentage |  | Number |  | Number of |  | Investment |
|  | Gross |  | of |  | of |  | SNF |  | ALF |  | per |
Type of Property |  | Investments |  | Investments |  | Properties(1) |  | Beds |  | Units |  | Bed/Unit |
Assisted Living |  | $ | 573,693 |  | 49.7 | % | 96 |  | — |  | 5,187 |  | $ | 110.60 |
Skilled Nursing |  |  | 500,161 |  | 43.3 | % | 69 |  | 8,513 |  | — |  | $ | 58.75 |
Range of Care |  |  | 43,907 |  | 3.8 | % | 7 |  | 634 |  | 274 |  | $ | 48.36 |
Under Development(2) |  |  | 26,675 |  | 2.3 | % | — |  | — |  | — |  |  | — |
Other(3) |  |  | 10,213 |  | 0.9 | % | 1 |  | — |  | — |  |  | — |
Totals |  | $ | 1,154,649 |  | 100.0 | % | 173 |  | 9,147 |  | 5,461 |  |  |  |
| (1) |  | We own properties in 27 states that are leased to 30 different operators.
| (2) |  | Represents six development projects consisting of four MC properties with a total of 254 units, a 108-unit independent living property and an 89-unit combination ALF and MC property.
| (3) |  | Represents one school property and three parcels of land held-for-use.
Summary of investments acquired | The following table summarizes our investments for the nine months ended September 30, 2015 (dollar amounts in thousands):
|  |  |  |  |  |  |  | Total |  | Number |  | Number
|  | Purchase |  | Transaction |  | Acquisition |  | of |  | of
Type of Property |  | Price(1) |  | Costs(2) |  | Costs |  | Properties |  | Beds/Units
Skilled Nursing(3) |  | $ | 13,946 |  | $ | — |  | $ | 13,946 |  | 1 |  | 106
Assisted Living(4) |  |  | 156,097 |  |  | 325 |  |  | 156,422 |  | 11 |  | 951
Land(5) |  |  | 13,533 |  |  | 97 |  |  | 13,630 |  | — |  | —
Totals |  | $ | 183,576 |  | $ | 422 |  | $ | 183,998 |  | 12 |  | 1,057
| (1) |  | Represents cost associated with our acquisitions; however, depending on the accounting treatment of our acquisitions, transaction costs may be capitalized to the properties’ basis and, for our land purchases with forward development commitments, transaction costs are capitalized as part of construction in progress. Additionally, transaction costs in the table above may differ from the acquisition costs line item in our consolidated statement of income as a result of transaction costs from prior year’s acquisitions.
| (2) |  | We purchased the property by exercising our purchase option under a $10,600 mortgage and construction loan and equipped the property for $3,346. The property was added to an existing master lease at a lease rate equivalent to the interest rate in effect on the loan at the time the purchase option was exercised. Additionally, we paid the lessee a $1,054 lease inducement and will amortize as a yield adjustment over the life of the lease term. See Mortgage Loans below for further discussion of the loan agreement.
| (3) |  | We acquired a newly constructed 60-unit MC property for $14,250 including a $2,000 working capital reserve which is recorded similarly to an earn-out and valued at $1,847 using a discounted cash flow analysis. As a result, our basis in the property was recorded at $14,132 which includes capitalized transaction costs. Additionally, we agreed to provide the lessee an earn-out up to $300 upon the property achieving a sustainable stipulated rent coverage ratio. When the working capital reserve and earn-out payments are funded, cash rent will increase by the amounts funded multiplied by the lease rate in effect at the time. We also acquired a portfolio comprised of 10 independent, assisted living and memory care properties for $142,000 and agreed to provide the lessee an earn-out up to $10,000, upon the portfolio achieving a sustainable stipulated rent coverage ratio, which will increase cash rent by the amount funded multiplied by the lease rate in effect at the time.
| (4) |  | We acquired parcels of land and entered into four development commitments up to a total of $55,529, including the land purchases, for the development of two MC properties totaling 132 units, a 108-unit IL property and an 89-unit combination AL and MC property. Additionally, we acquired land and existing improvements on a 56-unit MC property and entered a development commitment up to a total of $12,182, including the land purchase, to complete the development of the MC property. Also, we purchased a parcel of land we previously leased pursuant to a ground lease.
Schedule of commitments | At September 30, 2015, we had commitments as follows (in thousands):
|  | Investment |  | 2015 |  | Commitment |  | Remaining |
|  | Commitment |  | Funding |  | Funded |  | Commitment |
Real estate properties (See Note 2) |  | $ | 90,758 | (2) | $ | 24,425 |  | $ | 26,482 |  | $ | 64,276 |
Earn-out liabilities |  |  | 16,300 |  |  | — |  |  | — |  |  | 16,300 |
Lease incentives (1) |  |  | 4,202 |  |  | 493 |  |  | 527 |  |  | 3,675 |
Mortgage loans (See Note 2) |  |  | 33,990 | (2) |  | 3,927 |  |  | 7,265 |  |  | 26,725 |
Joint venture investments (See Note 3) |  |  | 25,650 |  |  | 20,143 |  |  | 20,143 |  |  | 5,507 |
Notes receivable (See Note 4) |  |  | 2,650 | (3) |  | 502 |  |  | 637 |  |  | 2,013 |
Totals |  | $ | 173,550 |  | $ | 49,490 |  | $ | 55,054 |  | $ | 118,496 |
| (1) |  | As part of our lease originations or amendments, we may provide lease incentive payments to or on behalf of our lessees. These payments may either be one-time payments or commitments to fund at a future date, as presented above. Lease inducement payments are amortized as a yield adjustment over the term of the lease on a straight line basis.
| (2) |  | Represents commitments to purchase land and improvements, if applicable, and to develop, re-develop, renovate or expand senior housing and long term care properties.
| (3) |  | Represents loan and line of credit commitments.
Schedule of development, redevelopment, renovation, and expansion activity | Our construction in progress (or CIP) activity during the nine months ended September 30, 2015 for our development, redevelopment, renovation, and expansion projects is as follows (dollar amounts in thousands):
|  | CIP |  |  |  |  |  |  |  |  |  |  | CIP |
|  | Balance at |  |  |  |  | Capitalized |  | Conversions |  | Balance at |
Type of Property |  | 12/31/2014 |  | Funded(1) |  | Interest |  | out of CIP |  | 9/30/2015 |
Skilled nursing |  | $ | — |  | $ | 414 |  | $ | — |  | $ | (397) |  | $ | 17 |
Assisted living |  |  | 8,671 |  |  | 19,297 |  |  | 481 |  |  | (9,871) |  |  | 18,578 |
Total |  | $ | 8,671 |  | $ | 19,711 |  | $ | 481 |  | $ | (10,268) |  | $ | 18,595 |
| (1) |  | Excludes $7,972 of funding directly capitalized into building and includes the previously discussed acquisition of the existing improvements of a 56-unit MC property for $6,315 and pre-development loan reclass totaling $716.
Schedule of additional loan commitments and amounts funded under the mortgage loans | The following table summarizes our additional loan commitments as of September 30, 2015, and amounts funded under these mortgage loans (dollar amounts in thousands):
|  | Additional |  |  |  |  |  |  |  |  |  |  | Number |  | Number |
|  | Loan |  | 2015 |  | Commitment |  | Remaining |  | of |  | of |
Type of Property |  | Commitment |  | Funding |  | Funded |  | Commitment |  | Properties |  | Beds/Units |
Skilled Nursing |  | $ | 33,500 |  | $ | 3,697 |  | $ | 7,035 |  | $ | 26,465 |  | 16 |  | 2,215 |
Assisted Living |  |  | 490 |  |  | 230 |  |  | 230 |  |  | 260 |  | 1 |  | 100 |
Totals |  | $ | 33,990 |  | $ | 3,927 |  | $ | 7,265 |  | $ | 26,725 |  | 17 |  | 2,315 |
Summary of investments in mortgage loans secured by first mortgages | The following table summarizes our investments in mortgage loans secured by first mortgages at September 30, 2015 (dollar amounts in thousands):
|  |  |  |  | Percentage |  | Number |  | Number |  | Number of |  | Investment |
|  | Gross |  | of |  | of |  | of |  | SNF |  | ALF |  | per |
Type of Property |  | Investments |  | Investments |  | Loans |  | Properties(1) |  | Beds |  | Units |  | Bed/Unit |
Skilled Nursing |  | $ | 192,810 |  | 93.4 | % | 14 |  | 28 |  | 3,621 |  | — |  | $ | 53.25 |
Assisted Living |  |  | 13,731 |  | 6.6 | % | 3 |  | 8 |  | — |  | 270 |  | $ | 50.86 |
Totals |  | $ | 206,541 |  | 100.0 | % | 17 |  | 36 |  | 3,621 |  | 270 |  |  |  |
| (1) |  | We have investments in properties located in 7 states that include mortgages to 10 different operators.
Real estate properties |
Schedule of completed development, improvement and construction projects | The following table summarizes our on-going investment commitments as of September 30, 2015, and amounts funded exclusively under these projects (excludes capitalized interest, dollar amounts in thousands):
|  |  |  |  |  | Total |  |  |  |  | Number |  | Number |
|  | Investment |  | Commitment |  | Remaining |  | of |  | of |
Type of Property |  | Commitment |  | Funded |  | Commitment |  | Properties |  | Beds/Units |
Skilled Nursing(1) |  | $ | 6,000 |  | $ | 17 |  | $ | 5,983 |  | 2 |  | 314 |
Assisted Living(2) |  |  | 84,758 |  |  | 26,465 |  |  | 58,293 |  | 36 |  | 2,097 |
Totals |  | $ | 90,758 |  | $ | 26,482 |  | $ | 64,276 |  | 38 |  | 2,411 |
| (1) |  | Includes two commitments for renovation and expansion projects.
| (2) |  | Includes the development of an IL property for $14,500, four MC properties for a total of $48,923 and one ALF/MC property for $16,535. Also, includes three commitments for renovation projects on 30 ALFs totaling $4,800.

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