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Real Estate Properties | 6 Months Ended
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Jun. 30, 2016
Real Estate Properties |
Real Estate Properties | Note 3. Real Estate Properties At June 30, 2016, we owned 436 properties (462 buildings) located in 43 states and Washington, D.C. We have accounted for, or expect to account for, the following acquisitions as business combinations unless otherwise noted. Acquisitions: The allocation of the purchase prices of the acquisitions shown below are based upon preliminary estimates of the fair value of assets acquired and liabilities assumed. The final amounts allocated to assets acquired and liabilities assumed may differ from the preliminary allocations presented in these condensed consolidated financial statements. Triple Net Leased Senior Living Communities: In June 2016, we acquired seven senior living communities located in four states with 545 private pay units from Five Star Quality Care, Inc., or, together with its subsidiaries, Five Star, for approximately $112,350, excluding closing costs, and simultaneously entered into a new long term lease with Five Star for those communities. We funded this acquisition using cash on hand and borrowings under our revolving credit facility. See Note 10 for further information regarding this sale and leaseback transaction with Five Star. We accounted for this acquisition as an asset acquisition, and the preliminary allocation of the purchase price was as follows:
|  |  |  |  |  |  |  | Cash Paid |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  | Number |  |  |  | plus |  |  |  |  |  |  |  |  |  |  |  |  | Premium
|  |  |  | of |  | Units / |  | Assumed |  |  |  |  | Buildings and |  |  |  | Assumed |  | on Assumed
Date |  | Location |  | Properties |  | Beds |  | Debt (1) |  | Land |  | Improvements |  | FF&E |  | Debt |  | Debt
Jun-16 |  | 4 states |  | 7 |  | 545 |  | $ | 112,350 |  | $ | 10,630 |  | $ | 99,590 |  | $ | 2,130 |  | $ | — |  | $ | —
|  |  |  | 7 |  | 545 |  | $ | 112,350 |  | $ | 10,630 |  | $ | 99,590 |  | $ | 2,130 |  | $ | — |  | $ | —
| (1) |  | This amount includes the cash we paid as well as various closing settlement adjustments, but excludes closing costs.
Managed Senior Living Communities: In May 2016, we acquired one managed senior living community located in Georgia with 38 private pay units for a purchase price of approximately $8,400, excluding closing costs. We acquired this community using a taxable REIT subsidiary, or TRS, structure and we have entered a management agreement with Five Star to manage this community. We funded this acquisition using cash on hand and borrowings under our revolving credit facility. See Note 10 for further information regarding our management arrangements with Five Star. The preliminary allocation of the purchase price for this acquisition was as follows:
|  |  |  |  |  |  |  | Cash Paid |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  | Number |  |  |  | plus |  |  |  |  |  |  |  |  |  | Acquired |  |  |  |  | Premium
|  |  |  | of |  | Units / |  | Assumed |  |  |  |  | Buildings and |  |  |  | Real Estate |  | Assumed |  | on Assumed
Date |  | Location |  | Properties |  | Beds |  | Debt (1) |  | Land |  | Improvements |  | FF&E |  | Leases |  | Debt |  | Debt
May-16 |  | Georgia |  | 1 |  | 38 |  | $ | 8,400 |  | $ | 327 |  | $ | 6,195 |  | $ | 478 |  | $ | 1,400 |  | $ | — |  | $ | —
|  |  |  | 1 |  | 38 |  | $ | 8,400 |  | $ | 327 |  | $ | 6,195 |  | $ | 478 |  | $ | 1,400 |  | $ | — |  | $ | —
| (1) |  | This amount includes the cash we paid as well as various closing settlement adjustments, but excludes closing costs.
MOBs: In February 2016, we acquired one property (three buildings) leased to medical providers, medical related businesses, clinics and biotech laboratory tenants, or MOBs, located in Minnesota with approximately 128,000 square feet for a purchase price of approximately $22,700, excluding closing costs. In May 2016, we acquired one MOB (one building) located in Florida with approximately 166,000 square feet for a purchase price of approximately $45,000, excluding closing costs. We accounted for the acquisition of this MOB as an asset acquisition. We funded these acquisitions using cash on hand and borrowings under our revolving credit facility. The preliminary allocation of the purchase prices for these acquisitions was as follows:
|  |  |  |  |  |  |  |  |  | Cash Paid |  |  |  |  |  |  |  |  |  |  | Acquired |  |  |  |  |  |  |
|  |  |  | Number |  | Number |  |  |  | plus |  |  |  |  |  |  |  | Acquired |  | Real Estate |  |  |  |  | Premium |
|  |  |  | of |  | of |  | Square |  | Assumed |  |  |  |  | Buildings and |  | Real Estate |  | Lease |  | Assumed |  | on Assumed |
Date |  | Location |  | Properties |  | Buildings |  | Feet (000’s) |  | Debt (1) |  | Land |  | Improvements |  | Leases (2) |  | Obligations (2) |  | Debt |  | Debt |
Feb-16 |  | Minnesota |  | 1 |  | 3 |  | 128 |  | $ | 22,700 |  | $ | 4,074 |  | $ | 15,223 |  | $ | 5,163 |  | $ | (1,760) |  | $ | — |  | $ | — |
May-16 |  | Florida |  | 1 |  | 1 |  | 166 |  |  | 45,000 |  |  | 3,047 |  |  | 41,953 |  |  | — |  |  | — |  |  | — |  |  | — |
|  |  |  | 2 |  | 4 |  | 294 |  | $ | 67,700 |  | $ | 7,121 |  | $ | 57,176 |  | $ | 5,163 |  | $ | (1,760) |  | $ | — |  | $ | — |
| (1) |  | This amount includes the cash we paid as well as various closing settlement adjustments, but excludes closing costs.
| (2) |  | The weighted average amortization periods for acquired lease intangible assets and assumed real estate lease obligations at the time of these acquisitions was 6.4 years and 7.3 years, respectively.
Impairment: We periodically evaluate our assets for impairments. Impairment indicators may include declining tenant or resident occupancy, weak or declining profitability of our properties, decreasing cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life, and legislative, market or industry changes that could permanently reduce the value of an asset. If indicators of impairment are present, we evaluate the carrying value of the affected asset by comparing it to the expected future undiscounted net cash flows to be generated from that asset. If the sum of these expected future net cash flows is less than the carrying value, we reduce the net carrying value of the asset to its estimated fair value. During the six months ended June 30, 2016, we recorded the following impairment charges:
| · |  | $4,391 in the first quarter of 2016 to write off acquired lease intangible assets associated with lease defaults at two of our triple net leased senior living communities leased to two third party private operators. In April 2016, we reached an agreement with one of these tenants and its guarantor to settle past due amounts, terminate the lease and transfer operations. As part of this agreement, we received an amount of $2,365, and entered into a management agreement with Five Star to operate this community on our behalf under a TRS structure. In July 2016, we reached an agreement with the other tenant to terminate the lease and transfer operations, and we entered into a management agreement with Five Star to operate this community on our behalf under a TRS structure. See Note 10 for further information regarding our management arrangements with Five Star.
| · |  | $2,999 in the first quarter of 2016 to reduce the carrying values of one MOB (one building) and one land parcel to their estimated sales prices less costs to sell. In March 2016, we sold this land parcel as described further below under “Dispositions”.
| · |  | $4,961 in the second quarter of 2016 to reduce the carrying values of five MOBs (five buildings) to their estimated sales price less costs to sell. These five MOBs are classified as held for sale as of June 30, 2016. In July 2016, we sold four of these MOBs as described further below under “Dispositions”.
Dispositions: In March 2016, we sold a land parcel, which was previously classified as held for sale, for approximately $700, excluding closing costs. In June 2016, we sold one skilled nursing facility, or SNF, that was previously included in our triple net leased senior living community segment and classified as held for sale for approximately $9,100, excluding closing costs. We recognized a gain on sale of approximately $4,061 related to this sale. In July 2016, we sold four MOBs (four buildings), which were classified as held for sale at June 30, 2016 for approximately $20,150, excluding closing costs. Results of operations for properties sold or held for sale are only included in discontinued operations in our condensed consolidated statements of comprehensive income when the criteria for discontinued operations in the Presentation of Financial Statements Topic of the FASB Accounting Standards Codification are met. The senior living communities and MOBs which we are or were offering for sale during the periods presented did not meet the criteria for discontinued operations and are included in continuing operations.

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- Definition The entire disclosure for certain real estate investment financial statements, real estate investment trust operating support agreements, real estate owned, retail land sales, time share transactions, as well as other real estate related disclosures. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 970 -SubTopic 360 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-28) -URI http://asc.fasb.org/extlink&oid=6590653&loc=d3e638233-123024 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 11 -Article 9 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph c -Subparagraph Schedule III -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 10 -Subparagraph 4 -Article 9 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 6 -Subparagraph a -Article 5 + Details
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