Summary of components of our rental income

The following table summarizes components of our rental income for the nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Rental Income		2023			2022			2023			2022
Contractual cash rental income	$	29,121	⁽¹⁾	$	28,180		$	87,260	⁽¹⁾	$	83,203
Variable cash rental income		3,386	⁽²⁾		4,160	⁽²⁾		9,846	⁽²⁾		12,218	⁽²⁾
Straight-line rent		(747)	⁽³⁾		(436)			(1,635)	⁽³⁾		(963)
Adjustment for collectability of lease incentives and rental income		—			(83)	⁽⁴⁾		(26)			(256)	⁽⁵⁾
Amortization of lease incentives		(171)			(236)			(584)			(665)
Total	$	31,589		$	31,585		$	94,861		$	93,537

(1)	Increased primarily due to rental income from acquisitions and transitioned portfolios, repayment of deferred rent and annual rent escalations, partially offset by sold properties.

(2)

The variable rental income for the three and nine months ended September 30, 2023 and the three and nine months ended September 30, 2022, primarily includes reimbursement of real estate taxes of our lessees. Decreased primarily due to property tax reassessment and sold properties partially offset by acquisitions.

(3)	Decreased primarily due to deferred rent repayment and normal amortization.

(4)	Represents lease incentive balances write-off related to two properties that were transitioned to another operator in our portfolio.

(5)	Represents a lease incentive balance write-off related to a closed property and subsequent lease termination and (4) above.

Schedule of properties held-for-sale

Properties Held -for-Sale. The following summarizes our held-for-sale properties as of September 30, 2023 (dollar amounts in thousands):


	Type	Number	Number
	of	of	of		Gross		Accumulated
State	Property	Properties	Beds/units		Investment		Depreciation
FL	ALF	4	176	$	12,215	$	7,213
SC	ALF	3	128		8,823		4,377
		7	304	$	21,038	$	11,590

Schedule of improvement projects

Improvements and Developments. During the nine months ended September 30, 2023 and 2022, we invested in the following (in thousands):


		Nine Months Ended September 30,
Type of Property		2023				2022
	Developments		Improvements		Developments		Improvements
Assisted Living Communities	$	—	$	2,418	$	105	$	3,015
Skilled Nursing Centers		—		2,548		—		981
Other		—		87		—		559
Total	$	—	$	5,053	$	105	$	4,555

Summary of investments in mortgage loans secured by first mortgages

Mortgage Loans. The following table sets forth information regarding our investments in mortgage loans secured by first mortgages at September 30, 2023 (dollar amounts in thousands):


						Type	Percentage		Number of					Investment
			Gross			of	of					SNF	ALF	per
Interest Rate	Maturity	State	Investment			Property	Investment		Loans ⁽¹⁾	Properties ⁽²⁾		Beds	Units	Bed/Unit
7.5%	2024	MO	$	1,961		OTH	0.4	%	1	—	⁽³⁾	—	—	$	n/a
7.5%	2024	LA		29,346		SNF	6.1	%	1	1		189	—	$	155.27
7.5%	2024	GA		51,111	⁽⁴⁾	ALF	10.7	%	1	1		—	203	$	251.78
7.8%	2025	FL		16,706		ALF	3.5	%	1	1		—	68	$	245.68
7.3%	2025	NC		10,750	⁽⁴⁾	ALF	2.2	%	1	1		—	45	$	238.89
7.3% ⁽⁵⁾	2025	NC/SC		58,331		ALF	12.2	%	1	13		—	523	$	111.53
7.3% ⁽⁵⁾	2026	NC		34,043		ALF	7.1	%	1	4		—	217	$	156.88
7.3% ⁽⁵⁾	2026	NC		826		OTH	0.2	%	1	—	⁽⁶⁾	—	—	$	—
8.8%	2028	IL		16,500	⁽⁷⁾	SNF	3.5	%	1	1		150	—	$	110.00
10.6% ⁽⁸⁾	2043	MI		184,220		SNF	38.5	%	1	15		1,875	—	$	98.25
9.7% ⁽⁸⁾	2045	MI		40,000		SNF	8.4	%	1	4		480	—	$	83.33
10.1%	2045	MI		19,700		SNF	4.1	%	1	2		201	—	$	98.01
10.3% ⁽⁸⁾	2045	MI		14,850		SNF	3.1	%	1	1		146	—	$	101.71
Total			$	478,344	⁽⁹⁾		100.0	%	13	44		3,041	1,056	$	116.75

(1)	Some loans contain certain guarantees and provide for certain facility fees.

(2)	Our mortgage loans are secured by properties located in eight states with seven borrowers.

(3)	Represents a mortgage loan secured by a parcel of land for the future development of a 91-bed post-acute SNF.

(4)

During the first quarter of 2023, we originated a $10,750 mortgage loan secured by a 45-unit MC located in North Carolina. The loan carries a two-year term with an interest-only rate of 7.25% and an IRR of 9.0%. Additionally, we invested $51,111 in an existing mortgage loan secured by a 203-unit ILF, ALF and MC located in Georgia by acquiring a participating interest owned by existing lenders for $42,251 in addition to converting our $7,461 mezzanine loan in the property into a participating interest in the mortgage loan. The mortgage loan matures in October 2024 and our investment is at an initial rate of 7.5% with an IRR of 7.75%. We recorded $1,380 of additional interest income in connection with the effective prepayment of the mezzanine loan in the first quarter of 2023.

(5)	Represents the initial rate with an IRR of 8%.

(6)	Represents a mortgage loan secured by a parcel of land in North Carolina held for future development of a seniors housing community.

(7)	During the second quarter of 2023, we originated a $16,500 senior loan for the purchase of a 150-bed SNF in Illinois. The mortgage loan matures in June 2028 and our investment is at an interest rate of 8.75%.

(8)	Mortgage loans provide for 2.25% annual increases in the interest rate.

(9)

During the third quarter of 2023, we committed to fund a $19,500 mortgage loan for the construction of an 85-unit ALF and MC in Michigan. The borrower contributed $12,100 of equity which will initially fund the construction. Once all of the borrower’s equity has been drawn, we will begin funding the commitment. The loan term is approximately three years at a rate of 8.75%, and includes two, one-year extensions, each of which is contingent on certain coverage thresholds.

Schedule of mortgage loan activity

The following table summarizes our mortgage loan activity for the nine months ended September 30, 2023 and 2022 (in thousands):


	Nine Months Ended September 30,
	2023			2022
Originations and funding under mortgage loans receivable	$	83,383	⁽¹⁾	$	35,234	⁽²⁾
Application of interest reserve		1,609			4,348
Scheduled principal payments received		(301)			(625)
Mortgage loan premium amortization		(5)			(4)
Provision for loan loss reserve		(847)			(389)
Net increase in mortgage loans receivable	$	83,839		$	38,564

(1)	We originated the following:

(a)

$10,750 mortgage loan secured by a 45-unit MC located in North Carolina. The loan carries a two-year term with an interest-only rate of 7.25% and an IRR of 9.0%;

(b)

$51,111 mortgage loan investment secured by a 203-unit ILF, ALF and MC located in Georgia. We acquired a participating interest owned by existing lenders for $42,251 in addition to converting our $7,461 mezzanine loan in the property into a participating interest in the mortgage loan. The mortgage loan matures in October 2024 and our investment is at an initial rate of 7.5% with an IRR of 7.75%. We recorded $1,380 of additional interest income in connection with the effective prepayment of the mezzanine loan in the first quarter of 2023;

(c)

$16,500 senior loan for the purchase of a 150-bed SNF in Illinois. The mortgage loan matures in June 2028 and our investment is at an interest rate of 8.75%;

(d)

5,022 of additional funding under other mortgage loans receivable; and

(e)

$19,500 mortgage loan commitment for the construction of an 85-unit ALF and MC in Michigan. The borrower contributed $12,100 of equity which will initially fund the construction. Once all of the borrower’s equity has been drawn, we will begin funding the commitment. The loan term is approximately three years at a rate of 8.75%, and includes two, one-year extensions, each of which is contingent on certain coverage thresholds.

(2)

We originated two senior mortgage loans, secured by four ALFs operated by an existing operator, as well as a land parcel in North Carolina. The communities have a combined total of 217 units, with an average age of less than four years. The land parcel is approximately 7.6 acres adjacent to one of the ALFs and is being held for the future development of a seniors housing community. The mortgage loans have a four-year term, an interest rate of 7.25% and an IRR of 8%.