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Investment in Unconsolidated Joint Ventures | 3 Months Ended
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Mar. 31, 2024
Investment in Unconsolidated Joint Ventures |
Investment in Unconsolidated Joint Ventures |
3. | Investment in Unconsolidated Joint Ventures
We have preferred equity investments in two joint ventures. We determined that each of these JVs meets the accounting criteria to be considered a variable interest entity (“VIE”). We are not the primary beneficiary of the JVs as we do not have both: 1) the power to direct the activities that most significantly affect the JVs’ economic performance, and 2) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE. However, we do have significant influence over the JVs. Therefore, we have accounted for the JVs using the equity method of accounting. The following table provides information regarding these preferred equity investments (dollar amounts in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Type | ​ | Type | ​ | Total | ​ | ​ | Contractual | ​ | ​ | Number | ​ | ​ | ​ | ​
​ | ​ | of | ​ | of | ​ | Preferred | ​ | ​ | Cash | ​ | ​ | of | ​ | ​ | Carrying | ​
State | ​ | Properties | ​ | Investment | ​ | Return | ​ | ​ | Portion | ​ | ​ | Beds/ Units | ​ | ​ | Value | ​
Washington | ​ | ALF/MC | ​ | Preferred Equity | (1) | 12 | % | ​ | 7 | % | ​ | 95 | ​ | $ | 6,340 | (1)
Washington | ​ | ILF/ALF | ​ | Preferred Equity | (2) | 14 | % | ​ | 8 | % | ​ | 267 | ​ | ​ | 13,000 | (2)
Total (3) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 362 | ​ | $ | 19,340 | ​
(1) | Our investment represents 15.5% of the total investment. The preferred equity investment earns an initial cash rate of 7% increasing to 9% in year four until the internal rate of return (“IRR”) is 8%. After achieving an 8% IRR, the cash rate drops to 8% with an IRR ranging between 12% to 14%, depending upon timing of redemption. We have the option to require the JV partner to purchase our preferred equity interest at any time between August 17, 2031 and December 31, 2036.
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(2) | Our investment represents 11.6% of the estimated total investment. The preferred equity investment earns an initial cash rate of 8% with an IRR of 14%. The JV partner has the option to buy out our investment at any time after August 31, 2023 at the IRR rate. Also, we have the option to require the JV partner to purchase our preferred equity interest at any time between August 31, 2027 and, upon project completion and leasing the property, prior to the end of the first renewal term of the lease.
​
(3) | Subsequent to March 31, 2024, we originated a $12,700 mortgage loan to a current operator in order to acquire a skilled nursing and assisted living campus in Texas. The mortgage loan is secured by this property. In accordance with GAAP, this mortgage loan was determined to be an acquisition, development and construction (“ADC”) loan and will be accounted for as an unconsolidated JV. The campus was built in 2017 and includes 78 units (48 skilled nursing and 30 assisted living) and 104 licensed beds (70 skilled nursing and 34 assisted living). The five-year mortgage loan is interest only at a current rate of 9.15%.
The following table summarizes our capital contributions, income recognized, and cash interest received related to our investments in unconsolidated joint ventures during the three months ended March 31, 2024 and 2023 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Type | ​ | ​ | ​
​ | ​ | of | ​ | ​ | Capital | ​ | ​ | Income | ​ | ​ | Cash Income | ​ | ​ | Non-cash | ​
Year | ​ | Properties | ​ | ​ | Contribution | ​ | ​ | Recognized | ​ | ​ | Earned | ​ | ​ | Income Accrued | ​
2024 | ​ | ALF/MC | ​ | $ | — | ​ | $ | 112 | ​ | $ | 112 | ​ | $ | — | ​
​ | ​ | ILF/ALF (1) | ​ | ​ | — | ​ | ​ | 264 | ​ | ​ | — | ​ | ​ | 264 | ​
Total | ​ | ​ | ​ | $ | — | ​ | $ | 376 | ​ | $ | 112 | ​ | $ | 264 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2023 | ​ | ALF/MC | ​ | $ | — | ​ | $ | 112 | ​ | $ | — | ​ | $ | 112 | ​
​ | ​ | UDP (1) | ​ | ​ | — | ​ | ​ | 264 | ​ | ​ | — | ​ | ​ | 264 | ​
Total | ​ | ​ | ​ | $ | — | ​ | $ | 376 | ​ | $ | — | ​ | $ | 376 | ​
(1) | The JV developed and owns a 267-unit ILF and ALF in Washington. The development project was completed during the fourth quarter of 2023.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (a)(3) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481687/323-10-50-3 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481687/323-10-50-3 Reference 3: http://www.xbrl.org/2003/role/recommendedDisclosureRef -Topic 323 -SubTopic 740 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481543/323-740-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 323 -Publisher FASB -URI https://asc.fasb.org//323/tableOfContent + Details
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