XML 52 R21.htm IDEA: XBRL DOCUMENT

Real Estate Investments (Tables)

9 Months Ended

Sep. 30, 2019

Summary of investments in owned properties

The following table summarizes our investments in owned properties at September 30, 2019 (dollar amounts in thousands):


								Average
			Percentage		Number	Number of		Investment
	Gross		of		of	SNF	ALF	per
Type of Property	Investment		Investment		Properties ⁽¹⁾	Beds	Units	Bed/Unit
Assisted Living	$	844,635	57.3	%	105	—	6,070	$	139.15
Skilled Nursing		605,763	41.1	%	72	8,835	261	$	66.60
Under Development ⁽²⁾		12,934	0.9	%	—	—	—		—
Other ⁽³⁾		11,360	0.7	%	1	118	—		—
Total	$	1,474,692	100.0	%	178	8,953	6,331

(1)	We own properties in 28 states that are leased to 30 different operators.

(2)	Represents a 78-unit ALF/MC located in Oregon and a 90-bed SNF located in Missouri.

(3)	Includes three parcels of land held-for-use, and one behavioral health care hospital.

Schedule of future minimum base rents receivable

Future minimum base rents receivable under the remaining non-cancelable terms of operating leases excluding the effects of straight-line rent receivable, amortization of lease incentives and renewal options are as follows (in thousands):


	Cash
	Rent ⁽¹⁾
2019	$	32,265
2020		132,387
2021		124,338
2022		125,420
2023		127,027
Thereafter		731,116

(1)	Represents contractual cash rent, except for four master leases which are based on cash rents. See below for more information.

Summary of components of our rental income

The following table summarizes components of our rental income for the three and nine months ended September 30, 2019 and 2018 (in thousands):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Rental Income		2019			2018			2019			2018
Base cash rental income	$	33,754	⁽¹⁾	$	31,506		$	100,687	⁽¹⁾	$	95,273
Variable cash rental income		3,926	⁽²⁾		76	⁽²⁾		12,488	⁽²⁾		395	⁽²⁾
Straight-line rent		1,085	⁽³⁾		3,189			3,598	⁽³⁾		8,629
Adjustment for collectibility of rental income		—			—			(1,926)	⁽⁴⁾		—
Amortization of lease incentives		(100)			(560)			(281)			(1,651)
Total	$	38,665		$	34,211		$	114,566		$	102,646

(1)	Increased due to acquisitions, developments and capital improvements partially offset due to reduced rent from sold properties and properties transitioned to other operators.

(2)

The three months ended September 30, 2019 variable rental income includes $77 related to contingent rental income and $3,849 related to our real estate taxes which were reimbursed by our operators. The nine months ended September 30, 2019 variable rental income includes $394 related to contingent rental income and $12,094 related to our real estate taxes which were reimbursed by our operators. Per the provisions of ASC 842, any lessor cost, paid by the lessor and reimbursed by the lessee, must be included as a lease payment. As discussed above, we adopted ASC 842 using a modified retrospective approach as of the adoption date of January 1, 2019. Accordingly, we are not required to report this revenue stream for periods prior to January 1, 2019.

(3)

In accordance with ASC 842 lease accounting guidance, we evaluated the collectibility of lease payments through maturity and determined that it was not probable that we would collect substantially all of the contractual obligations from Anthem, Thrive, Preferred Care and Senior Care leases through maturity. Decreased due to these leases being accounted for on cash-basis as of January 1, 2019.

(4)

During the first quarter of 2019, we terminated a lease agreement and transitioned two operating seniors housing communities under the lease agreement to a new operator. As a result of the lease termination, we wrote-off $1,926 straight-line rent receivable to contra-revenue in accordance with ASC 842.

Summary of information about purchase options included in our lease agreements

Some of our lease agreements provide purchase options allowing the lessees to purchase the properties they currently lease from us. The following table summarizes information about purchase options included in our lease agreements (dollar amount in thousands):


	Type	Number
	of	of		Gross		Carrying	Option
State	Property	Properties		Investments		Value	Window
California	ALF/MC	2	$	38,895	$	36,777	2024-2029
California	ALF	2		28,246		15,551	2021-TBD	⁽¹⁾
Florida	MC	1		14,201		12,845	2028-2029
Kentucky and Ohio	MC	2		30,087		28,007	2028-2029
Texas	MC	2		25,265		24,490	2025-2027
South Carolina	ALF/MC	1		11,680		10,939	2028-2029
Total			$	148,374	$	128,609

(1)	The option window ending date will be either 24 months or 48 months after the option window commences, based on certain contingencies.

Summary of investments acquired

Acquisitions and Developments: The following table summarizes our acquisitions for the nine months ended September 30, 2019 and 2018 (dollar amounts in thousands):


						Total		Number	Number
		Purchase		Transaction		Acquisition		of	of
Year	Type of Property	Price		Costs ⁽¹⁾		Costs		Properties	Beds/Units
2019	Skilled Nursing ⁽²⁾	$	19,500	$	77	$	19,577	1	90
	Assisted Living ⁽³⁾		16,719		176		16,895	1	74
	Land ⁽⁴⁾		2,732		49		2,781	—	—
Total		$	38,951	$	302	$	39,253	2	164

2018	Assisted Living ^{(5) (6)}	$	39,600	$	65	$	39,665	3	177
	Land ⁽⁶⁾		695		48		743	—	—
Total		$	40,295	$	113	$	40,408	3	177

(1)

Represents cost associated with our acquisitions; however, upon adoption of ASU 2017-01, our acquisitions meet the definition of an asset acquisition resulting in capitalization of transaction costs to the properties’ basis. For our land purchases with forward development commitments, transaction costs are capitalized as part of construction in progress. Transaction costs per our Consolidated Statements of Income and Comprehensive Income represents current and prior year transaction costs due to timing and terminated transactions.

(2)	We acquired a newly constructed 90-bed SNF located in Missouri.

(3)

We entered into a joint venture (“JV”) (consolidated on our financial statements) to purchase an existing operational 74-unit ALF/MC community. The non-controlling partner contributed $919 of equity and we contributed $15,971 in cash. Our economic interest in the real estate JV is approximately 95%.

(4)	We acquired a parcel of land adjacent to an existing SNF in California. Additionally, we acquired a parcel of land and development of a 90-bed SNF in Missouri. The commitment totals approximately $17,400.

(5)	We acquired two MC properties in Texas.

(6)	We entered into a JV (consolidated on our financial statements) to purchase an existing operational 89-unit ILF and to own the real estate and develop a 78-unit ALF/MC for $18,108 in Oregon.

Schedule of investment in development and improvement projects

During the nine months ended September 30, 2019 and 2018, we invested the following in development and improvement projects (in thousands):


	Nine Months Ended September 30,
	2019				2018
Type of Property	Developments		Improvements		Developments			Improvements
Assisted Living Communities	$	10,266	$	1,826	$	19,251	$	1,131
Skilled Nursing Centers		4,786		—		6,466		500
Other		—		295		—		432
Total	$	15,052	$	2,121	$	25,717	$	2,063

Schedule of completed projects

Completed Developments. The following table summarizes our completed developments during the nine months ended September 30, 2019 and 2018 (dollar amounts in thousands):


		Number	Type	Number
		of	of	of			Total
Year	Type of Project	Properties	Property	Beds/Units	State	Investment
2019	Development	1	SNF	143	Kentucky	$	24,496
	Development	1	ILF/ALF/MC	110	Wisconsin		21,893
Total		2		253		$	46,389

2018	Development	1	MC	66	Illinois	$	13,974
Total		1		66		$	13,974

Summary of properties held-for-sale

Properties held-for-sale. The following table summarizes our property held-for-sale as of September 30, 2019 (dollar amounts in thousands):

Type

Number

Gross

Accumulated

State

Property

Properties

Investment

Depreciation

Beds/units

Texas

ILF

5,746

1,916

140

Schedule of real estate investment property sold

Properties Sold. The following table summarizes property sales during the nine months ended September 30, 2019 and 2018 (dollar amounts in thousands):


		Type		Number	Number						Net
		of		of	of		Sales		Carrying		Gain
Year	State	Properties		Properties	Beds/Units		Price		Value		(Loss)
2019	N/A	N/A		—	—	$	—	$	—	$	500	⁽¹⁾
	Georgia	SNF		1	148		7,920		1,639		6,236
Total 2019				1	148	$	7,920	$	1,639	$	6,736

2018	Alabama	SNF		2	285	$	17,525	$	3,272	$	14,253
	Kansas	ALF	⁽²⁾	—	—		350		346		—
	Ohio and Pennsylvania	ALF	⁽¹⁾	6	320		67,500		16,352		48,445
Total 2018				8	605	$	85,375	$	19,970	$	62,698

(1)	Gain recognized due to the receipt of funds held in escrow related to a portfolio of six ALFs sold during the second quarter of 2018.

(2)	We sold land adjacent to an existing ALF community in Kansas.

Summary of investments in mortgage loans secured by first mortgages

Mortgage Loans. The following table summarizes our investments in mortgage loans secured by first mortgages at September 30, 2019 (dollar amounts in thousands):


				Type	Percentage		Number of			Investment
		Gross		of	of				SNF	per
Interest Rate ⁽¹⁾	Maturity	Investment		Property	Investment		Loans ⁽²⁾	Properties ⁽³⁾	Beds	Bed/Unit
9.7%	2043	$	186,510	SNF	72.9	%	1	15	2,029	$	91.92
9.2%	2045		34,886	SNF	13.6	%	1	4	501	$	69.63
9.4%	2045		19,391	SNF	7.6	%	1	2	205	$	94.59
9.4%	2045		14,950	SNF	5.9	%	1	1	157	$	95.22
Total		$	255,737		100.0	%	4	22	2,892	$	88.43

(1)	The majority of the mortgage loans provide for annual increases in the interest rate after a certain time period based upon a specified increase of 2.25%.

(2)	Some loans contain certain guarantees, provide for certain facility fees and the majority of the mortgage loans have a 30-year term.

(3)	The properties securing these mortgage loans are located in one state and are operated by one operator.

Schedule of mortgage loan activity

The following table summarizes our mortgage loan activity for the nine months ended September 30, 2019 and 2018 (in thousands):


	Nine Months Ended September 30,
	2019			2018
Originations and funding under mortgage loans receivable	$	10,919	⁽¹⁾	$	20,530	⁽²⁾
Pay-offs received		—			(1,086)
Scheduled principal payments received		(565)			(550)
Mortgage loan premium amortization		(3)			(3)
Provision for loan loss reserve		(104)			(189)
Net increase in mortgage loans receivable	$	10,247		$	18,702

(1)	During 2019, we funded an additional $7,500 under an existing mortgage loan. The incremental funding bears interest at 9.41%, fixed for two years, and escalating by 2.25% thereafter.

(2)

During 2018, we funded an additional $7,400 under an existing mortgage loan for the purchase of a 112-bed SNF in Michigan. The incremental funding bears interest at 8.7%, fixed for five years, and escalating by 2.25% thereafter. Also, we funded additional loan proceeds of $7,125 under an existing mortgage loan for the purchase of a 126-bed skilled nursing center in Michigan. This incremental funding bears interest at 9.41%, fixed for five years, and escalating by 2.25% thereafter.