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Real Estate Investments (Tables) | 6 Months Ended
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Jun. 30, 2020
Real Estate Investments |
Summary of investments in owned properties | The following table summarizes our investments in owned properties at June 30, 2020 (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 | ​ | $ | 880,343 | ​ | 60.9 | % | 107 | ​ | — | ​ | 6,164 | ​ | $ | 142.82 | ​
Skilled Nursing | ​ | ​ | 543,825 | ​ | 37.6 | % | 50 | ​ | 6,283 | ​ | 212 | ​ | $ | 83.73 | ​
Under Development (2) | ​ | ​ | 10,163 | ​ | 0.7 | % | — | ​ | — | ​ | — | ​ | ​ | — | ​
Other (3) | ​ | ​ | 11,360 | ​ | 0.8 | % | 1 | ​ | 118 | ​ | — | ​ | ​ | — | ​
Total | ​ | $ | 1,445,691 | ​ | 100.0 | % | 158 | ​ | 6,401 | ​ | 6,376 | ​ | ​ | ​ | ​
(1) | We own properties in 27 states that are leased to 29 different operators.
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(2) | Represents a 90-bed SNF development project located in Missouri.
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(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) |
2020 | ​ | $ | 68,001 | ​
2021 | ​ |  | 141,369 | ​
2022 | ​ |  | 128,751 | ​
2023 | ​ |  | 129,931 | ​
2024 | ​ |  | 126,406 | ​
Thereafter | ​ |  | 623,574 | ​
(1) | Represents contractual cash rent, except for Anthem Memory Care (“Anthem”) lease which is based on projected cash to be received as agreed upon with the operator.
Summary of components of our rental income | The following table summarizes components of our rental income for the three and six months ended June 30, 2020 and 2019 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended | ​ | Six Months Ended | ​
​ | ​ | June 30, | ​ | June 30,
Rental Income | ​ | ​ | 2020 | ​ | ​ | 2019 | ​ | ​ | 2020 | ​ | ​ | 2019 | ​
Base cash rental income | ​ | $ | 33,336 | ​ | $ | 33,019 | ​ | $ | 66,351 | ​ | $ | 66,933 | ​
Variable cash rental income | ​ | ​ | 4,155 | (1) | ​ | 4,077 | (1) | ​ | 8,437 | (1) | ​ | 8,562 | (1)
Straight-line rent | ​ | ​ | 634 | ​ | ​ | 1,275 | ​ | ​ | 1,473 | ​ | ​ | 2,513 | ​
Change in straight-line rent receivable and lease incentives due to collectibility | ​ | ​ | (17,742) | (2) | ​ | — | ​ | ​ | (17,742) | (2) | ​ | (1,926) | ​
Amortization of lease incentives | ​ | ​ | (108) | ​ | ​ | (94) | ​ | ​ | (209) | ​ | ​ | (181) | ​
Total | ​ | $ | 20,275 | ​ | $ | 38,277 | ​ | $ | 58,310 | ​ | $ | 75,901 | ​
(1) | The variable rental income for the three and six months ended June 30, 2020, includes contingent rental income of $44 and $104, respectively, and reimbursement of real estate taxes by our lessees of $4,111 and $8,333, respectively. The variable rental income for the three and six months ended June 30, 2019 includes contingent rental income of $167 and $317, respectively, and reimbursement of real estate taxes by our lessees of $3,910 and $8,245, respectively.
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(2) | During the second quarter of 2020, Senior Lifestyle Corporation (“Senior Lifestyle”) failed to pay full rent for May and June 2020. In accordance with ASC 842, we evaluated the collectibility of receiving substantially all of our lease payments from the Senior Lifestyle master lease through maturity and determined that we did not have the level of certainty required by the standard. Accordingly, we wrote-off $17,557 of Senior Lifestyle’s straight-line rent receivable and $185 of Senior Lifestyle’s lease incentives related to this master lease.
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 | ​ | $ | 36,072 | ​ | 2024-2029 | ​
California | ​ | ALF | ​ | 2 | ​ | ​ | 30,372 | ​ | ​ | 17,082 | ​ | 2021-TBD | (1)
Florida | ​ | MC | ​ | 1 | ​ | ​ | 14,340 | ​ | ​ | 12,720 | ​ | 2028-2029 | ​
Kentucky and Ohio | ​ | MC | ​ | 2 | ​ | ​ | 30,152 | ​ | ​ | 27,509 | ​ | 2028-2029 | ​
Texas | ​ | MC | ​ | 2 | ​ | ​ | 25,265 | ​ | ​ | 24,025 | ​ | 2025-2027 | ​
South Carolina | ​ | ALF/MC | ​ | 1 | ​ | ​ | 11,680 | ​ | ​ | 10,503 | ​ | 2028-2029 | ​
Total | ​ | ​ | ​ | ​ | ​ | $ | 150,704 | ​ | $ | 127,911 | ​ | ​ | ​
(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 six months ended June 30, 2020 and 2019 (dollar amounts in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Total | ​ | Number | ​ | Number
​ | ​ | ​ | ​ | Purchase | ​ | Transaction | ​ | Acquisition | ​ | of | ​ | of
Year | ​ | Type of Property | ​ | Price | ​ | Costs (1) | ​ | Costs | ​ | Properties | ​ | Beds/Units
2020 | ​ | Skilled Nursing (2) | ​ | $ | 13,500 | ​ | $ | 81 | ​ | $ | 13,581 |  | 1 | ​ | 140
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2019 | ​ | Assisted Living (3) | ​ | $ | 16,719 | ​ | $ | 176 | ​ | $ | 16,895 | ​ | 1 | ​ | 74
​ | ​ | Land (4) | ​ | ​ | 110 | ​ | ​ | 26 | ​ | ​ | 136 | ​ | — | ​ | —
Total | ​ | ​ | ​ | $ | 16,829 | ​ | $ | 202 | ​ | $ | 17,031 | ​ | 1 | ​ | 74
(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.
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(2) | We acquired a SNF located in Texas.
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(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%.
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(4) | We acquired a parcel of land adjacent to an existing SNF in California.
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Schedule of investment in development and improvement projects | During the six months ended June 30, 2020 and 2019, we invested the following in development and improvement projects (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 2020 | ​ | 2019
Type of Property | ​ | Developments | ​ | Improvements | ​ | Developments | ​ | Improvements | ​
Assisted Living Communities | ​ | $ | 4,487 | ​ | $ | 3,039 | ​ | $ | 8,520 | ​ | $ | 893 | ​
Skilled Nursing Centers | ​ | ​ | 5,861 | ​ | ​ | 14 | ​ | ​ | 4,492 | ​ | ​ | — | ​
Other | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 175 | ​
Total | ​ | $ | 10,348 | ​ | $ | 3,053 | ​ | $ | 13,012 | ​ | $ | 1,068 | ​
Schedule of completed projects | Completed Developments. The following table summarizes our completed developments during the six months ended June 30, 2020 and 2019 (dollar amounts in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Number | ​ | Type | ​ | Number | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | of | ​ | of | ​ | of | ​ | ​ | ​ | ​ | Total
Year | ​ | Type of Project | ​ | Properties | ​ | Property | ​ | Beds/Units | ​ | State | ​ | Investment
2020 | ​ | Development | ​ | 1 | ​ | ALF/MC | ​ | 78 | ​ | Oregon | (1) | $ | 18,443
Total | ​ | ​ | ​ | 1 | ​ | ​ | ​ | 78 | ​ | ​ | ​ | $ | 18,443
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2019 | ​ | Development | ​ | 1 | ​ | SNF | ​ | 143 | ​ | Kentucky | ​ | $ | 24,493
​ | ​ | Development | ​ | 1 | ​ | ILF/ALF/MC | ​ | 110 | ​ | Wisconsin | ​ | ​ | 21,872
Total | ​ | ​ | ​ | 2 | ​ | ​ | ​ | 253 | ​ | ​ | ​ | $ | 46,365
(1) | Certificate of occupancy was received in March 2020, however, due to the COVID-19 pandemic, we have consented to delay the opening of this community to a later date to be determined.
Schedule of real estate investment property sold | Properties Sold. The following table summarizes property sales during the six months ended June 30, 2020 and 2019 (dollar amounts in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Type | ​ | Number | ​ | Number | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | of | ​ | of | ​ | of | ​ | ​ | Sales | ​ | ​ | Carrying | ​ | ​ | Net | ​
Year | ​ | State | ​ | Properties | ​ | Properties | ​ | Beds/Units | ​ | ​ | Price | ​ | ​ | Value | ​ | ​ | Gain | ​
2020 | ​ | N/A | ​ | N/A | ​ | — | ​ | — | ​ | $ | — | ​ | $ | — | ​ | $ | 102 | (1)
​ | ​ | Arizona | ​ | SNF | ​ | 1 | ​ | 194 | ​ | ​ | 12,550 | ​ | ​ | 2,229 | ​ | ​ | 10,292 | ​
​ | ​ | Colorado | ​ | SNF | ​ | 3 | ​ | 275 | ​ | ​ | 15,000 | ​ | ​ | 4,271 | ​ | ​ | 10,364 | ​
​ | ​ | Iowa | ​ | SNF | (2) | 7 | ​ | 544 | ​ | ​ | 14,500 | ​ | ​ | 4,886 | ​ | ​ | 9,005 | ​
​ | ​ | Kansas | ​ | SNF | ​ | 3 | ​ | 250 | ​ | ​ | 9,750 | ​ | ​ | 7,438 | ​ | ​ | 1,993 | ​
​ | ​ | Texas | ​ | SNF | ​ | 7 | ​ | 1,148 | ​ | ​ | 23,000 | ​ | ​ | 10,260 | ​ | ​ | 12,287 | ​
Total 2020 (3) | ​ | ​ | ​ | ​ | ​ | 21 | ​ | 2,411 | ​ | $ | 74,800 | ​ | $ | 29,084 | ​ | $ | 44,043 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2019 | ​ | N/A | ​ | N/A | ​ | — | ​ | — | ​ | $ | — | ​ | $ | — | ​ | $ | 500 | (4)
(
(1) | Gain recognized from the $90 repayment of a holdback related to a property sold during the fourth quarter of 2019 and the reassessment adjustment of $12 from the holdback under the expected value model per ASC Topic 606, Contracts with Customers (“ASC 606”).
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(2) | This transaction includes a holdback of $838 which is held in an interest-bearing account with an escrow holder on behalf of the buyer for potential specific losses. Using the expected value model per ASC 606, we estimated and recorded the holdback value of $471. During the six months ended June 30, 2020, we received $150 of the holdback. We reassessed the holdback under the expected value model and recorded an additional gain of $91.
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(3) | Properties sold within the Preferred Care portfolio.
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(4) | Gain recognized from the repayment of a holdback related to a portfolio of six ALFs sold during the second quarter of 2018.
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 June 30, 2020 (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
9.9% | ​ | 2043 | ​ | $ | 185,657 | ​ | SNF | ​ | 71.8 | % | 1 | ​ | 15 | ​ | 1,941 | ​ | $ | 95.65
9.2% | ​ | 2045 | ​ | ​ | 38,443 | ​ | SNF | ​ | 14.8 | % | 1 | ​ | 4 | ​ | 501 | ​ | $ | 76.73
9.4% | ​ | 2045 | ​ |  | 19,624 | ​ | SNF | ​ | 7.6 | % | 1 | ​ | 2 | ​ | 205 | ​ | $ | 95.73
9.6% | ​ | 2045 | ​ | ​ | 14,925 | ​ | SNF | ​ | 5.8 | % | 1 | ​ | 1 | ​ | 157 | ​ | $ | 95.06
Total | ​ | ​ | ​ | $ | 258,649 | ​ | ​ | ​ | 100.0 | % | 4 | ​ | 22 | ​ | 2,804 | ​ | $ | 92.24
(1) | The majority of the mortgage loans provide for annual increases in the interest rate after a certain time period increasing by 2.25%.
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(2) | Some loans contain certain guarantees, provide for certain facility fees and the majority of the mortgage loans have a 30-year term.
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(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 six months ended June 30, 2020 and 2019 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 2020 | ​ | 2019 | ​
Originations and funding under mortgage loans receivable | ​ | $ | 2,557 | ​ | $ | 9,736 | ​
Scheduled principal payments received | ​ | ​ | (565) | ​ | ​ | (565) | ​
Mortgage loan premium amortization | ​ | ​ | (2) | ​ | ​ | (2) | ​
Provision for loan loss reserve | ​ | ​ | (20) | ​ | ​ | (92) | ​
Net increase in mortgage loans receivable | ​ | $ | 1,970 | ​ | $ | 9,077 | ​

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