Real Estate Investments

9 Months Ended

Sep. 30, 2022

2022 Real Estate Property Acquisitions

During the nine months ended September 30, 2022, the Company purchased seven real estate properties in five separate transactions, or the 2022 Acquisitions, which were each determined to be asset acquisitions. The Company allocated the purchase price of the 2022 Acquisitions to tangible assets, consisting of land, building and improvements, tenant improvements, and acquired intangible assets and liabilities, consisting of in-place and above and below market leases, based on the relative fair value method of allocating all accumulated costs.

The following table summarizes the consideration transferred for the 2022 Acquisitions during the nine months ended September 30, 2022:


Property Description	Date Acquired	Ownership Percentage	Purchase Price (amount in thousands)
Yukon Healthcare Facility	03/10/2022	100%	$	19,554
Pleasant Hills Healthcare Facility	05/12/2022	100%	14,303
Prosser Healthcare Facilities (1)	05/20/2022	100%	8,593
Tampa Healthcare Facility II	07/20/2022	100%	51,259
Escondido Healthcare Facility	07/21/2022	100%	63,485
Total			$	157,194

(1) The Prosser Healthcare Facilities consist of three healthcare properties.

The following table summarizes the Company's purchase price allocation of the 2022 Acquisitions during the nine months ended September 30, 2022 (amounts in thousands):


	Total
Land	$	2,646
Building and improvements	136,938
Tenant improvements	4,840
In-place leases	12,779
Above-market leases	454
Total assets acquired	157,657
Below-market leases	(463)
Net assets acquired	$	157,194

Acquisition costs associated with transactions determined to be asset acquisitions are capitalized. The Company capitalized acquisition costs of approximately $617,000 related to the 2022 Acquisitions, which are included in the Company's allocation of the real estate acquisitions presented above.

2022 Real Estate Property Disposition

On February 10, 2022, the Company sold one land parcel that formerly contained a healthcare property, or the 2022 Disposition, for an aggregate sale price of $24,000,000 and generated net proceeds of $22,701,000. For the nine months ended September 30, 2022, the Company recognized an aggregate gain on sale of $460,000, which is presented in gain on real estate disposition in the condensed consolidated statements of comprehensive income.

Concentration of Credit Risk and Significant Leases

As of September 30, 2022, the Company had one exposure to geographic concentration that accounted for greater than 10.0% of rental revenue for the nine months ended September 30, 2022. Real estate investments located in the Houston-The Woodlands-Sugar Land, Texas metropolitan statistical area accounted for 10.9% of rental revenue for the nine months ended September 30, 2022.

As of September 30, 2022, the Company had one exposure to tenant concentration that accounted for greater than 10.0% of rental revenue for the nine months ended September 30, 2022. The leases with tenants at healthcare properties under common control of Post Acute Medical, LLC and its affiliates accounted for 14.2% of rental revenue for the nine months ended September 30, 2022.

Impairments of Real Estate, Goodwill, Acquired Intangible Assets and Acquired Intangible Liabilities

During the nine months ended September 30, 2022, the Company recorded an impairment loss on real estate, including goodwill, in the aggregate amount of $7,387,000 related to a healthcare property. The fair value of this property was determined based on a market approach model using a signed purchase and sale agreement to estimate the fair value and classified within Level 2 of the fair value hierarchy. In addition, during the nine months ended September 30, 2022, the Company recognized an impairment of one in-place lease intangible asset in the amount of approximately $380,000 related to a tenant in this property. During the three months ended September 30, 2022, the Company did not have impairment of real estate, goodwill, acquired intangible assets or acquired intangible liabilities.

During the three months ended September 30, 2021, the Company recorded an impairment loss on real estate in the amount of $10,241,000 related to one healthcare property for which the carrying value exceeded the estimated fair value.

During the three months ended September 30, 2021, the Company did not have impairment of goodwill, acquired intangible assets or acquired intangible liabilities.

During the nine months ended September 30, 2021, the Company recorded impairment losses on real estate, including goodwill, in the aggregate amount of $27,837,000 related to one healthcare property held for use, one healthcare property classified as held for sale and one land parcel that formerly contained a healthcare property classified as held for sale, for which the carrying values exceeded the estimated fair values less costs to sell. The fair value of the properties with impairment charges during the three and nine months September 30, 2021, were determined based on a market approach model using comparable properties adjusted for differences in characteristics to estimate the fair value and classified within Level 2 of the fair value hierarchy. During the nine months ended September 30, 2021, the Company recognized an impairment of one in-place lease intangible asset in the amount of approximately $1,120,000 related to one healthcare tenant. The impaired properties for the three and nine months ended September 30, 2021 have all been subsequently sold.

During the nine months ended September 30, 2021, the Company did not have impairment of acquired intangible liabilities.

Impairment charges on real estate and goodwill are recorded as impairment losses in the accompanying condensed consolidated statements of comprehensive income. Impairment of the in-place leases is included in depreciation and amortization in the accompanying condensed consolidated statements of comprehensive income.