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Real Estate Investments (Tables) | 9 Months Ended
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Sep. 30, 2024
Real Estate Investments |
Summary of investments in owned properties | The following table summarizes our investments in owned properties at September 30, 2024 (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 | ​ | $ | 732,120 | ​ | 54.5 | % | 73 | ​ | — | ​ | 4,341 | ​ | $ | 168.65 | ​
Skilled Nursing | ​ | ​ | 598,063 | ​ | 44.6 | % | 50 | ​ | 6,113 | ​ | 236 | ​ | $ | 94.20 | ​
Other (2) | ​ | ​ | 12,005 | ​ | 0.9 | % | 1 | ​ | 118 | ​ | — | ​ | ​ | — | ​
Total | ​ | $ | 1,342,188 | ​ | 100.0 | % | 124 | ​ | 6,231 | ​ | 4,577 | ​ | ​ | ​ | ​
(1) | We own properties in 23 states that are leased to 23 different operators.
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(2) | Includes three parcels of land held-for-use, and one behavioral health care hospital.
Schedule of assisted living portfolio property | During 2023, Brookdale Senior Living Communities, Inc. (“Brookdale”) elected not to exercise its renewal option under a master lease that matured on December 31, 2023. The 35-property assisted living portfolio was apportioned as follows (dollar amounts in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Type | ​ | Number | ​ | ​ | Number | ​ | ​ | First | ​ | ​ | ​ | ​ | ​
Lease | ​ | ​ | ​ | of | ​ | of | ​ | ​ | of | ​ | ​ | Year | ​ | ​ | Lease | ​ | ​
Commencement | ​ | State | ​ | Property | ​ | Properties | ​ | ​ | Units | ​ | ​ | Rent | ​ | ​ | Term | ​ | ​
November 2023 | ​ | OK | ​ | ALF | ​ | 5 | (1) | ​ | 184 | ​ | $ | 960 | ​ | ​ | Three years | ​ | ​
January 2024 | ​ | CO, KS, OH, TX | ​ | ALF | ​ | 17 | (2) | ​ | 738 | ​ | ​ | 9,325 | ​ | ​ | Six years | ​ | ​
January 2024 | ​ | NC | ​ | ALF | ​ | 5 | (3) | ​ | 210 | ​ | ​ | 3,300 | ​ | ​ | Six years | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | 27 | ​ | ​ | 1,132 | ​ | $ | 13,585 | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Type | ​ | Number | ​ | ​ | Number | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | of | ​ | of | ​ | ​ | of | ​ | ​ | Sales | ​ | ​ | Net | ​ | ​
Year sold | ​ | State | ​ | Property | ​ | Properties | ​ | ​ | Units | ​ | ​ | Price | ​ | ​ | Proceeds (4) | ​ | ​
2023 | ​ | FL | ​ | ALF | ​ | 4 | ​ | ​ | 176 | ​ | $ | 18,750 | ​ | $ | 14,310 | (5) | ​
2023 | ​ | OK | ​ | ALF | ​ | 1 | ​ | ​ | 37 | ​ | ​ | 800 | ​ | ​ | 769 | ​ | ​
2023 | ​ | SC | ​ | ALF | ​ | 3 | ​ | ​ | 128 | ​ | ​ | 8,409 | ​ | ​ | 8,153 | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | 8 | ​ | ​ | 341 | ​ | $ | 27,959 | ​ | $ | 23,232 | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total | ​ | ​ | ​ | ​ | ​ | 35 | ​ | ​ | 1,473 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(1) | These communities were transitioned to an existing LTC operator. The new master lease includes a purchase option that can be exercised starting in November 2027 through October 2029 if the lessee exercises its four-year extension option. Rent increases to $984 in the second year, and $1,150 in the third year.
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(2) | These communities were re-leased to Brookdale under a new master lease. Rent escalates by approximately 2.0% annually. The new master lease includes a purchase option that can be exercised in 2029. We also agreed to fund $7,200 for capital expenditures for the first two years of the lease at an initial rate of 8.0% escalating by approximately 2.0% annually thereafter.
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(3) | These communities were transitioned to an operator new to us. Rent escalates by approximately 3.0% annually.
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(4) | Net of transaction costs and seller financing, if any.
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(5) | We provided seller financing collateralized by two of the Florida properties, with a total of 92 units. The $4,000 seller-financed mortgage loan has a two-year term, with a one-year extension, at an interest rate of 8.75%.
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, 2024 and 2023 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended | ​ | Nine Months Ended
​ | ​ | September 30, | ​ | September 30,
Rental Income | ​ | ​ | 2024 | ​ | ​ | 2023 | ​ | ​ | 2024 | ​ | ​ | 2023 | ​
Contractual cash rental income | ​ | $ | 29,215 | ​ | $ | 29,065 | ​ | $ | 89,142 | (1) | $ | 87,204 | (1)
Variable cash rental income | ​ | ​ | 3,194 | ​ | ​ | 3,442 | ​ | ​ | 9,830 | ​ | ​ | 9,902 | ​
Straight-line rent | ​ | ​ | 37 | (2) | ​ | (747) | (2) | ​ | (561) | (2) | ​ | (1,635) | (2)
Adjustment of lease incentives and rental income | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (321) | (3) | ​ | (26) | (4)
Amortization of lease incentives | ​ | ​ | (188) | ​ | ​ | (171) | ​ | ​ | (626) | ​ | ​ | (584) | ​
Total | ​ | $ | 32,258 | ​ | $ | 31,589 | ​ | $ | 97,464 | ​ | $ | 94,861 | ​
(1) | Increased primarily due to $2,377 repayment of rent credit in connection with the sale of our interest in a consolidated joint venture (“JV), rental income from 2023 acquisitions and annual rent escalations and contractual rent increases, partially offset by property sales and transitioned portfolios.
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(2) | Straight-line rent income increased due to lease extensions and more leases accounted for on a straight-line basis.
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(3) | Represents a straight-line rent receivable write-off related to a lease converting to periodic fair market rent resets.
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(4) | Represents lease incentive balance write-offs related to lease terminations.
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 amounts in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Type | ​ | Number | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | of | ​ | of | ​ | ​ | Gross | ​ | ​ | Net Book | ​ | Option | ​
State | ​ | Property | ​ | Properties | ​ | ​ | Investments (1) | ​ | ​ | Value | ​ | Window | ​
California | ​ | ALF/MC | ​ | 2 | ​ | $ | 38,895 | ​ | $ | 32,072 | ​ | 2020-2029 | ​
Colorado/Kansas/Ohio/Texas | ​ | ALF/MC | ​ | 17 | ​ | ​ | 63,576 | ​ | ​ | 29,928 | ​ | 2029 | (2)
Florida | ​ | SNF | ​ | 3 | ​ | ​ | 76,625 | ​ | ​ | 76,625 | ​ | 2025-2027 | ​
Georgia/South Carolina | ​ | ALF/MC | ​ | 2 | ​ | ​ | 31,904 | ​ | ​ | 24,721 | ​ | 2027 | ​
North Carolina | ​ | ALF/MC | ​ | 11 | ​ | ​ | 121,419 | ​ | ​ | 121,419 | ​ | 2025-2028 | (3)
North Carolina | ​ | ALF | ​ | 5 | ​ | ​ | 14,654 | ​ | ​ | 6,876 | ​ | 2029 | (4)
North Carolina | ​ | ALF | ​ | 4 | ​ | ​ | 41,000 | ​ | ​ | 41,000 | ​ | 2024-2028 | (5)
North Carolina/ South Carolina | ​ | ALF/MC | ​ | 13 | ​ | ​ | 122,460 | ​ | ​ | 122,460 | ​ | 2024-2028 | (6)
Ohio | ​ | MC | ​ | 1 | ​ | ​ | 16,161 | ​ | ​ | 13,158 | ​ | 2024-2025 | ​
Ohio | ​ | ILF/ALF/MC | ​ | 1 | ​ | ​ | 54,782 | ​ | ​ | 51,877 | ​ | 2025-2027 | ​
Oklahoma | ​ | ALF/MC | ​ | 5 | ​ | ​ | 11,221 | ​ | ​ | 4,170 | ​ | 2027-2029 | (7)
Tennessee | ​ | SNF | ​ | 2 | ​ | ​ | 5,275 | ​ | ​ | 2,157 | ​ | 2023-2024 | ​
Texas | ​ | SNF | ​ | 4 | ​ | ​ | 52,726 | ​ | ​ | 49,332 | ​ | 2027-2029 | (8)
Texas | ​ | MC | ​ | 1 | ​ | ​ | 12,743 | ​ | ​ | 9,440 | ​ | 2026-2028 | (9)
Total | ​ | ​ | ​ | ​ | ​ | $ | 663,441 | ​ | $ | 585,235 | ​ | ​ | ​
(1) | Gross investments include previously recorded impairment losses, if any.
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(2) | During 2023, we re-leased 17 ALFs with a total of 738 units to Brookdale under a new six-year master lease. The new master lease commenced in January 2024 and includes a purchase option that can be exercised in 2029. See above for more information.
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(3) | During 2023, we entered into a JV that purchased 11 ALFs and MCs with a total of 523 units and leased the communities under a 10-year master lease. The master lease provides the operator with the option to buy up to 50% of the properties at the beginning of the third lease year, and the remaining properties at the beginning of the fourth lease year through the end of the sixth lease year, with an exit Internal Rate of Return (“IRR”) of 9.0% on any portion of the properties being purchased. For more information regarding this transaction see Financing Receivables below.
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(4) | During 2023, we transferred five ALFs with a total of 210 units from Brookdale to an operator new to us. The new master lease commenced in January 2024 and includes a purchase option that can be exercised in 2029. See above for more information.
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(5) | During 2024, we entered into a joint venture agreement with ALG Senior Living (“ALG”) and obtained a 92.7% controlling interest in the $41,000 newly formed JV that owns four ALFs in North Carolina with a total of 217 units. The JV leased the communities back to an affiliate of the seller under a 10-year master lease agreement. The master lease includes a purchase option that can be exercised through 2028, with an exit IRR of 8.0%. For more information regarding this transaction see Financing Receivables below.
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(6) | During 2024, we entered into a joint venture agreement with ALG and obtained a 52.6% controlling interest in the $122,460 newly formed JV that owns 13 ALFs and MCs in North Carolina (12) and South Carolina (1) with a total of 523 units. The JV leased the communities back to an affiliate of the seller under a 10-year master lease agreement. The master lease includes a purchase option that can be exercised through 2028, with an exit IRR of 8.0%. For more information regarding this transaction see Financing Receivables below.
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(7) | During 2023, we transferred five ALFs in Oklahoma with a total of 184 units from Brookdale to an existing operator. The new master lease commenced in November 2023 and includes a purchase option that can be exercised starting in November 2027 through October 2029 if the lessee exercises its four-year extension option. See above for more information.
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(8) | During 2022, we purchased four skilled nursing centers and leased these properties under a 10-year lease with an existing operator. The lease allows the operator to elect either an earn-out payment or purchase option. If neither option is elected within the timeframe defined in the lease, both elections are terminated. For more information regarding the earn-out see Note 9. Commitments and Contingencies.
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(9) | During 2024, we transferred this community to an operator new to us. The new master lease commenced in April 2024 and includes a purchase option that can be exercised in May 2026 through April 2028, if the lessee exercises its one-year extension option.
Schedule of impairment loss | The following table summarizes information regarding impairment losses recorded during the nine months ended September 30, 2024 and 2023 (dollar amounts in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Type | ​ | Number | ​ | Number | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | of | ​ | of | ​ | of | ​ | Impairment | ​
Year | ​ | State | ​ | Properties | ​ | Properties | ​ | Beds/Units | ​ | Loss | ​
2024 | ​ | n/a | ​ | n/a | ​ | — | ​ | — | ​ | $ | — | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2023 | ​ | Florida | ​ | ALF | ​ | 1 | ​ | 70 | ​ | $ | 434 | (1)
​ | ​ | Florida | ​ | ALF | ​ | 1 | ​ | 60 | ​ | ​ | 7,522 | ​
​ | ​ | Mississippi | ​ | ALF | ​ | 1 | ​ | 67 | ​ | ​ | 4,554 | (2)
​ | ​ | ​ | ​ | ​ | ​ | 3 | ​ | 197 | ​ | $ | 12,510 | ​
(1) | In conjunction with the ongoing negotiations to sell this community, we recorded a $434 impairment loss during the three months ended March 31, 2023, and a $1,222 impairment loss during the fourth quarter of 2022. This community was sold during the second quarter of 2023 for $4,850 and we recorded a net gain on sale of real estate of $64 as a result of this transaction.
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(2) | This community was sold during the fourth quarter of 2023 for $1,650 and we recorded a net loss on sale of real estate of $219 as a result of this transaction.
Schedule of properties held-for-sale | The following summarizes our held-for-sale properties as of September 30, 2024 and December 31, 2023 (dollar amounts in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Type | ​ | Number | ​ | Number | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | of | ​ | of | ​ | of | ​ | ​ | Gross | ​ | ​ | Accumulated | ​ | ​ | ​
​ | ​ | State | ​ | Property | ​ | Properties | ​ | Beds/units | ​ | ​ | Investment | ​ | ​ | Depreciation | ​ | ​ | ​
At September 30, 2024 | ​ | CO | ​ | ALF | (1) | 1 | ​ | — | (1) | $ | 5,852 | ​ | $ | (1,794) | ​ | ​ | ​
At December 31, 2023 | ​ | WI | ​ | ALF | (2) | 1 | ​ | 110 | ​ | $ | 22,007 | ​ | $ | (3,616) | ​ | ​ | ​
(1) | Subsequent to September 30, 2024, this closed property was sold for $5,250.
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(2) | This community was sold during the three months ended March 31, 2024.
Summary of acquisitions | The following table summarizes our acquisitions for the nine months ended September 30, 2024 and 2023 (dollar amounts in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Cash | ​ | ​ | ​ | ​ | Non- | ​ | ​ | ​ | ​ | ​ | ​ | Number | ​ | Number
​ | ​ | ​ | ​ | Paid at | ​ | Assumed | ​ | ​ | Controlling | ​ | Transaction | ​ | ​ | Assets | ​ | of | ​ | of
Year | ​ | Type of Property | ​ | Acquisition | ​ | Liabilities | ​ | ​ | Interest | ​ | Costs | ​ | ​ | Acquired | ​ | Properties | ​ | Beds/Units
2024 | ​ | OTH (1) | ​ | $ | 300 | ​ | $ | — | ​ | $ | — | ​ | $ | 19 | ​ | $ | 319 | ​ | — | ​ | —
2023 | ​ | ALF (2) | ​ | ​ | 43,759 | ​ | ​ | 9,767 | ​ | ​ | 9,133 | ​ | ​ | 363 | ​ | ​ | 63,022 | (3) | 1 | ​ | 242
(1) | We acquired a parcel of land in Kansas adjacent to an existing community operated by Brookdale. Rent was increased by 8.0% of our total cost of the investment.
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(2) | We entered into a $54,134 JV and contributed $45,000 into the JV that purchased an ILF/ALF/MC in Ohio. Under the JV agreement, the seller, our JV partner, has the option to purchase the campus between the third and fourth lease years for LTC’s allocation of the JV investment plus an IRR of 9.75%. The campus was leased to Encore Senior Living (“Encore”) under a 10-year term with an initial yield of 8.25% on LTC’s allocation of the JV investment. LTC committed to fund $2,100 of lease incentives under the Encore lease.
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(3) | Includes $8,585 tax abatement intangible included in the Prepaid expenses and other assets line item in our Consolidated Balance Sheets.
Summary of the carrying amount of intangible assets | The following is a summary of the carrying amount of intangible assets as of September 30, 2024 and December 31, 2023 (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, 2024 | ​ | December 31, 2023
​ | ​ | ​ | ​ | ​ | ​ | ​ | Accumulated | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Accumulated | ​ | ​ | ​ | ​
Assets | ​ | ​ | Cost | ​ | ​ | ​ | Amortization | ​ | ​ | ​ | Net | ​ | ​ | Cost | ​ | ​ | ​ | Amortization | ​ | ​ | ​ | Net
In-place leases | ​ | $ | 11,155 | (1) | ​ | $ | (6,650) | (2) | ​ | $ | 4,505 | ​ | $ | 11,348 | (1) | ​ | $ | (6,109) | (2) | ​ | $ | 5,239
Tax abatement intangible | ​ | $ | 8,309 | (3) | ​ | $ | (924) | (3) | ​ | $ | 7,385 | ​ | $ | 8,309 | (3) | ​ | $ | (405) | (3) | ​ | $ | 7,904
(1) | Included in the Buildings and improvements line item in our Consolidated Balance Sheets.
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(2) | Included in the Accumulated depreciation and amortization line item in our Consolidated Balance Sheets.
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(3) | Included in the Prepaid expenses and other assets line item in our Consolidated Balance Sheets.
Schedule of developments and improvement projects | During the nine months ended September 30, 2024 and 2023, we invested in the following capital improvement projects (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Nine Months Ended September 30,
Type of Property | ​ | 2024 | ​ | 2023 | ​
Assisted Living Communities | ​ | $ | 8,663 | ​ | $ | 2,418 | ​
Skilled Nursing Centers | ​ | ​ | 1,245 | ​ | ​ | 2,548 | ​
Other | ​ | ​ | — | ​ | ​ | 87 | ​
Total | ​ | $ | 9,908 | ​ | $ | 5,053 | ​
Schedule of property sold | The following table summarizes property sales during the nine months ended September 30, 2024 and 2023 (dollar amounts in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Type | ​ | Number | ​ | Number | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | of | ​ | of | ​ | of | ​ | ​ | Sales | ​ | ​ | Carrying | ​ | ​ | Net | ​
Year | ​ | State | ​ | Properties | ​ | Properties | ​ | Beds/Units | ​ | ​ | Price | ​ | ​ | Value | ​ | ​ | (Loss) Gain (1) | ​
2024 | ​ | Florida | ​ | ALF | ​ | 1 | ​ | 60 | ​ | $ | 4,500 | ​ | $ | 4,579 | ​ | $ | (289) | ​
​ | ​ | Texas | ​ | ALF | ​ | 5 | ​ | 208 | ​ | ​ | 1,600 | ​ | ​ | 1,282 | ​ | ​ | (390) | ​
​ | ​ | Texas | ​ | ALF | ​ | 2 | ​ | — | ​ | ​ | 500 | ​ | ​ | 389 | ​ | ​ | — | ​
​ | ​ | Texas | ​ | ALF | ​ | 1 | ​ | 80 | ​ | ​ | 7,959 | (2) | ​ | 4,314 | ​ | ​ | 3,635 | ​
​ | ​ | Wisconsin | ​ | ALF | ​ | 1 | ​ | 110 | ​ | ​ | 20,193 | (3) | ​ | 16,195 | ​ | ​ | 3,986 | ​
​ | ​ | n/a | ​ | n/a | ​ | — | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (60) | (4)
Total (5) | ​ | ​ | ​ | ​ | ​ | 10 | ​ | 458 | ​ | $ | 34,752 | ​ | $ | 26,759 | ​ | $ | 6,882 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2023 | ​ | Florida | ​ | ALF | ​ | 1 | ​ | 70 | ​ | $ | 4,850 | ​ | $ | 4,082 | ​ | $ | 65 | ​
​ | ​ | Kentucky | ​ | ALF | ​ | 1 | ​ | 60 | ​ | ​ | 11,000 | ​ | ​ | 10,720 | ​ | ​ | 57 | ​
​ | ​ | New Jersey | ​ | ALF | ​ | 1 | ​ | 39 | ​ | ​ | 2,000 | ​ | ​ | 1,552 | ​ | ​ | 266 | ​
​ | ​ | New Mexico | ​ | SNF | ​ | 2 | ​ | 235 | ​ | ​ | 21,250 | ​ | ​ | 5,523 | ​ | ​ | 15,287 | ​
​ | ​ | Nebraska | ​ | ALF | ​ | 3 | ​ | 117 | ​ | ​ | 2,984 | ​ | ​ | 2,934 | ​ | ​ | — | ​
​ | ​ | Pennsylvania | ​ | ALF | ​ | 2 | ​ | 130 | ​ | ​ | 11,128 | ​ | ​ | 6,054 | ​ | ​ | 4,870 | ​
Total | ​ | ​ | ​ | ​ | ​ | 10 | ​ | 651 | ​ | $ | 53,212 | ​ | $ | 30,865 | ​ | $ | 20,545 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(
(1) | Calculation of net gain includes cost of sales and write-off of straight-line receivable and lease incentives, when applicable.
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(2) | Additionally, as part of the negotiated sale, we received an additional $441 representing rental income through lease maturity in January 2025.
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(3) | Represents the price to sell our portion of interest in a JV, net of the JV partner’s $2,305 contributions in the joint venture.
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(4) | We recognized additional loss due to additional incurred costs related to properties sold during 2023.
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(5) | Subsequent to September 30, 2024, we sold a closed ALF located in Colorado for $5,250. At September 30, 2024, the community was classified as held-for-sale and had a gross book value of $5,852 and a net book value of $4,058.
Schedule of investments in financing receivables | The following tables provide information regarding our investments in financing receivables (dollar amounts in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Type | ​ | Number | ​ | Number | ​ | ​ | Investment
Interest | ​ | Investment | ​ | ​ | ​ | ​ | ​ | ​ | Gross | ​ | ​ | LTC | ​ | of | ​ | of | ​ | of | ​ | ​ | per
Rate | ​ | Year | ​ | Maturity | ​ | State | ​ | ​ | Investments | ​ | ​ | Investment | ​ | Properties | ​ | Properties | ​ | Beds/Units | ​ | ​ | Bed/Unit
7.25% | (1) | 2022 | ​ | 2032 | ​ | FL | ​ | $ | 76,626 | ​ | $ | 62,301 | ​ | SNF | ​ | 3 | ​ | 299 | ​ | $ | 256.27
7.25% | (2) | 2023 | ​ | 2033 | ​ | NC | ​ | ​ | 121,419 | ​ | ​ | 117,588 | ​ | ALF/MC | ​ | 11 | ​ | 523 | ​ | $ | 232.16
7.25% | (3) | 2024 | ​ | 2034 | ​ | NC/SC | ​ | ​ | 122,460 | ​ | ​ | 64,450 | ​ | ALF/MC | ​ | 13 | ​ | 523 | ​ | $ | 234.15
7.25% | (4) | 2024 | ​ | 2034 | ​ | NC | ​ | ​ | 41,000 | ​ | ​ | 37,985 | ​ | ALF | ​ | 4 | ​ | 217 | ​ | $ | 188.94
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 361,505 | ​ | $ | 282,324 | ​ | ​ | ​ | 31 | ​ | 1,562 | ​ | ​ | ​
(1) | During 2022, we entered into a JV with an operator new to us. The JV purchased three SNFs and leased the centers back to an affiliate of the seller under a 10-year master lease, with two five-year renewal options and provided the seller-lessee with a purchase option, exercisable at the beginning of the fourth year through the end of the fifth year.
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(2) | During 2023, we entered into a JV with ALG. The JV purchased 11 ALFs and MCs and leased these communities back to an affiliate of the seller under a 10-year master lease, with two five-year renewal options. The contractual initial cash yield of 7.25% increases to 7.5% in year three then escalates thereafter based on Consumer Price Index(“CPI”) subject to a floor of 2.0% and a ceiling of 4.0%. The JV provided the seller-lessee with a purchase option to buy up to 50% of the properties at the beginning of the third lease year and the remaining properties at the beginning of the fourth lease year through the end of the sixth lease year, with an exit IRR of 9.0%. During 2024, we deferred a total of $2,240 consolidated JV interest income from financing receivables for May through September 2024 and agreed to defer up to approximately $258 per month for October through December 2024 consolidated JV interest income from financing receivables.
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(3) | During the second quarter of 2024, we funded an additional $5,546 under a mortgage loan receivable due from an ALG affiliate secured by 13 ALFs and MCs located in North Carolina (12) and South Carolina (1). We then entered into a newly formed $122,460 JV with ALG, whereby we exchanged our $64,450 mortgage loan receivable for a 53% controlling interest in the JV. Concurrently, ALG contributed these properties to the joint venture for a 47% non-controlling interest. The JV leased the properties to an ALG affiliate under a 10-year master lease, with two five-year renewal options and provided the seller-lessee with a purchase option exercisable through 2028, with an exit IRR of 8.0%.
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(4) | During the second quarter of 2024, we funded an additional $2,766 under a mortgage loan receivable due from an ALG affiliate secured by four ALFs located in North Carolina. We then entered into a newly formed $41,000 JV with ALG, whereby we exchanged $37,985 mortgage loan receivables for a 93% controlling interest in the JV. Concurrently, ALG contributed these properties and a parcel of land to the joint venture for a 7% non-controlling interest. The JV leased the properties to an ALG affiliate under a 10-year master lease, with two five-year renewal options and provided the seller-lessee with a purchase option exercisable through 2028, with an exit IRR of 8.0%.
Summary of financing receivables activities | The following table summarizes our financing receivables activities for the nine months ended September 30, 2024 and 2023 (dollar amounts in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Nine Months Ended September 30, | ​
​ | ​ | 2024 | ​ | 2023 | ​
Investment and funding under financing receivables | ​ | $ | 163,557 | (1) | $ | 121,332 | (2)
Amortization of capital costs | ​ | ​ | (65) | ​ | ​ | (65) | ​
Provision for loan loss reserve | ​ | ​ | (1,635) | (1) | ​ | (1,213) | (2)
​ | ​ | $ | 161,857 | ​ | $ | 120,054 | ​
(1) | During 2024, we entered into two joint venture agreements with affiliates of ALG. We recorded an aggregate Provision for Credit losses of $1,635 equal to 1.0% of the investment balance. See above for more information.
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(2) | During 2023, we entered into a joint venture agreement with an affiliate of ALG. We recorded Provision for credit losses of $1,213 equal to 1.0% of the investment balance. See above for more information.
Summary of investments in mortgage loans secured by first mortgages | During 2024, we committed to fund a $26,120,000 mortgage loan for the construction of a 116-unit independent living, assisted living and memory care community in Illinois. The borrower contributed $12,300,000 of equity which will initially fund the construction. The loan term is approximately six years at a current rate of 9.0% and an IRR of 9.5%. The following table sets forth information regarding our investments in mortgage loans secured by first mortgages at September 30, 2024 (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 | ​ | GA | ​ | $ | 51,111 | (3) | ALF | ​ | 14.0 | % | 1 | ​ | 1 | ​ | — | ​ | 203 | ​ | $ | 251.78
8.8% | ​ | 2025 | ​ | FL | ​ | ​ | 4,000 | ​ | ALF | ​ | 1.1 | % | 1 | ​ | 2 | ​ | — | ​ | 92 | ​ | $ | 43.48
7.8% | ​ | 2025 | ​ | FL | ​ | ​ | 16,706 | ​ | ALF | ​ | 4.7 | % | 1 | ​ | 1 | ​ | — | ​ | 112 | ​ | $ | 149.16
7.3% | ​ | 2025 | ​ | NC | ​ | ​ | 10,750 | ​ | ALF | ​ | 2.9 | % | 1 | ​ | 1 | ​ | — | ​ | 45 | ​ | $ | 238.89
8.8% (4) | ​ | 2026 | ​ | MI | ​ | ​ | 9,999 | ​ | UDP | ​ | 2.7 | % | 1 | ​ | — | (4) | — | ​ | — | ​ | $ | n/a
8.8% | ​ | 2028 | ​ | IL | ​ | ​ | 16,500 | ​ | SNF | ​ | 4.5 | % | 1 | ​ | 1 | ​ | 150 | ​ | — | ​ | $ | 110.00
10.8% (5) | ​ | 2043 | ​ | MI | ​ | ​ | 180,973 | ​ | SNF | ​ | 49.7 | % | 1 | ​ | 14 | ​ | 1,749 | ​ | — | ​ | $ | 103.47
9.9% (5) | ​ | 2045 | ​ | MI | ​ | ​ | 39,850 | ​ | SNF | ​ | 10.9 | % | 1 | ​ | 4 | ​ | 480 |  | — | ​ | $ | 83.02
10.3% (5) | ​ | 2045 | ​ | MI | ​ |  | 19,700 | ​ | SNF | ​ | 5.4 | % | 1 | ​ | 2 | ​ | 201 |  | — | ​ | $ | 98.01
10.5% (5) | ​ | 2045 | ​ | MI | ​ | ​ | 14,825 | ​ | SNF | ​ | 4.1 | % | 1 | ​ | 1 | ​ | 146 | ​ | — | ​ | $ | 101.54
Total | ​ | ​ | ​ | ​ | ​ | $ | 364,414 | ​ | ​ | ​ | 100.0 | % | 10 | ​ | 27 | ​ | 2,726 |  | 452 | ​ | $ | 114.67
(1) | Some loans contain certain guarantees and provide for certain facility fees.
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(2) | Our mortgage loans are secured by properties located in five states with seven borrowers.
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(3) | Subsequent to September 30, 2024, we received the payoff of this mortgage loan receivable.
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(4) | 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 initially funded the construction. In 2024, once all of the borrower’s equity was drawn, we began funding the commitment. Our remaining commitment is $9,500. The 8.75% interest-only loan matures in September 2026 and includes two, one-year extensions, each of which is contingent on certain coverage thresholds.
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(5) | Mortgage loans provide for 2.25% annual increases in the interest rate.
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Schedule of mortgage loan activity | The following table summarizes our mortgage loan activity for the nine months ended September 30, 2024 and 2023 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Nine Months Ended September 30,
​ | ​ | 2024 | ​ | ​ | 2023 | ​
Originations and funding under mortgage loans receivable | ​ | $ | 19,078 | (1) | ​ | $ | 83,383 | (5)
Exchange of mortgage loans for controlling interests in joint ventures accounted for as financing receivables | ​ | ​ | (102,435) | (3) | ​ | ​ | — | ​
Pay-offs received | ​ | ​ | (34,094) | (2) | ​ | ​ | — | ​
Application of interest reserve | ​ | ​ | 169 | ​ | ​ | ​ | 1,609 | ​
Scheduled principal payments received | ​ | ​ | (380) | ​ | ​ | ​ | (301) | ​
Mortgage loan premium amortization | ​ | ​ | (4) | ​ | ​ | ​ | (5) | ​
Recovery (provision) for loan loss reserve | ​ | ​ | 1,176 | ​ | ​ | ​ | (847) | ​
Net (decrease) increase in mortgage loans receivable | ​ | $ | (116,490) | (4) | ​ | $ | 83,839 | ​
(1) | The following funding occurred:
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| (a) | $9,999 under a $19,500 mortgage loan commitment for the construction of an 85-unit ALF and MC in Michigan. The borrower contributed $12,100 of equity upon origination in July 2023, which was used to initially fund the construction. Our remaining commitment is $9,500. The interest-only 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;
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| (b) | $5,546 of additional funding under a mortgage loan receivable agreement with an ALG affiliate secured by 13 ALFs and MCs in North Carolina (12) and South Carolina (1). During the three months ended June 30, 2024, we exchanged this $64,450 mortgage loan receivable for a controlling interest in a JV investment with an ALG affiliate. See Financing Receivables above for more information;
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| (c) | $2,766 of additional funding under a mortgage loan receivable agreement with an ALG affiliate secured by four ALFs in North Carolina. During the three months ended June 30, 2024, we exchanged this $37,985 mortgage loan receivable for a controlling interest in a JV investment with an ALG affiliate. See Financing Receivables above for more information; and
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| (d) | $767 of additional funding under various loans.
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(2) | We received the payoff of a $29,347 mortgage loan secured by a 189-bed SNF in Louisiana and a $2,013 mortgage loan secured by a parcel of land in Missouri. Additionally, we received a partial principal paydown of $2,734 related to the sale of a SNF securing the mortgage loan previously secured by 15-SNFs in Michigan.
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(3) | The following occurred:
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| (a) | $64,450 mortgage loan receivable due from an ALG affiliate was exchanged for a controlling interest in a JV. See (1)(b) above for more information; and
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| (b) | $37,985 mortgage loan receivable due from an ALG affiliate was exchanged for a controlling interest in a JV. See (1)(c) above for more information.
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(4) | Subsequent to September 30 2024, we received the payoff of a $51,111 mortgage loan receivable secured by a 203-unit ALF in Georgia.
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(5) | The following funding and originations occurred:
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| (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%;
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| (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. Subsequent to September 30, 2024, the $51,111 mortgage loan was paid off. See (4) above;
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| (c) | $16,500 senior loan for the purchase of a 150-bed Medicare focused SNF in Illinois. The mortgage loan matures in June 2028 and our investment is at an interest rate of 8.75%; and
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| (d) | $5,022 of additional funding under other mortgage loans receivable.

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