Real Estate Properties

At March 31, 2018, we owned 444 properties (470 buildings) located in 42 states and Washington, D.C., including two senior living communities classified as held for sale with a net carrying value of $18,479 as of March 31, 2018.

Acquisitions:

We have accounted for our 2018 acquisitions as acquisitions of assets unless otherwise noted. We funded our 2018 acquisitions using cash on hand and borrowings under our revolving credit facility, unless otherwise noted.

Senior Living Community Acquisitions:

In November 2017, we entered a transaction agreement with Five Star Senior Living Inc., or Five Star, pursuant to which we agreed to acquire six senior living communities from Five Star. In December 2017, we acquired two of these senior living communities located in Alabama and Indiana with a combined 229 living units for $39,457, including closing costs of $307. In January 2018, we acquired one of these senior living communities located in Tennessee with 88 living units for $19,868, including closing costs of $201. In February 2018, we acquired one of these senior living communities located in Arizona with 127 living units for $22,622, including our assumption of an approximately $16,748 mortgage note and closing costs of $372. In connection with our acquisition of these senior living communities, we entered management and pooling agreements with Five Star for Five Star to manage these senior living communities for us. The closings of the acquisitions of the remaining two senior living communities for an aggregate purchase price of $23,300, including the assumption of approximately $16,800 of mortgage notes, are expected to occur by the end of the second quarter of 2018 as third party approvals are received and we expect to enter management and pooling agreements with Five Star concurrent with those acquisitions. These acquisitions are subject to conditions; these conditions may not be met and the remaining acquisitions may not be completed, may be delayed or the terms of these acquisitions or the management and pooling agreements for these communities may change. See Note 9 for further information regarding these transactions and transaction agreement.

The table below represents the purchase price allocations (including net closing adjustments) of the senior living community acquisitions that closed during the three months ended March 31, 2018, as described above:



Date	Location	Leased/Managed	Number of Properties	Units	Cash Paid Plus Assumed Debt ⁽¹⁾		Land		Building and Improvements		FF&E		Acquired Real Estate Intangible Assets		Assumed Debt		Premium on Assumed Debt
January 2018	Tennessee	Managed	1	88	$	19,868	$	580	$	14,884	$	1,209	$	3,195	$	—	$	—
February 2018	Arizona	Managed	1	127	22,622		2,017		17,123		390		4,451		16,748		(1,359		)
			2	215	$	42,490	$	2,597	$	32,007	$	1,599	$	7,646	$	16,748	$	(1,359	)


(1)	Cash paid plus assumed debt, if any, includes closing costs.

MOBs:

In January 2018, we acquired three MOBs (three buildings) located in Kansas, Missouri and California with a total of approximately 400,000 square feet for an aggregate purchase price of approximately $91,698, including closing costs of $544.

In March 2018, we acquired one MOB (one building) located in Virginia with approximately 135,000 square feet for a purchase price of approximately $23,275, including the assumption of a $11,050 mortgage note and closing costs of $525.

The table below represents the purchase price allocations (including net closing adjustments) of the MOB acquisitions that closed during the three months ended March 31, 2018, as described above:



Date	Location	Number of Properties	Number of Buildings	Square Feet (000’s)	Cash Paid Plus Assumed Debt ⁽¹⁾		Land		Building and Improvements		Acquired Real Estate Leases ⁽²⁾		Assumed Debt
January 2018	3 States	3	3	400	$	91,698	$	16,873	$	54,605	$	20,220	$	—
March 2018	Virginia	1	1	135	23,275		2,863		11,105		9,307		11,050
		4	4	535	$	114,973	$	19,736	$	65,710	$	29,527	$	11,050


(1)	Cash paid plus assumed debt, if any, includes closing costs.


(2)	The weighted average amortization period for acquired real estate leases as of the acquisition dates was 5.8 years.

Impairment:

We periodically evaluate our assets for impairments. Impairment indicators may include declining tenant or resident occupancy, weak or declining profitability from the property, decreasing tenant cash flows 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. We did not record any impairment charges for our real estate properties during the three months ended March 31, 2018.

Pacifica Senior Living, LLC:

We lease eight senior living communities to affiliates of Pacifica Senior Living, LLC, or Pacifica, a privately owned company, with lease terms continuing until 2023. The rent payable to us under these leases is scheduled to increase at agreed upon times during the lease terms. A large majority of the tenants’ revenues at these senior living communities is derived from private resources. An affiliate of Pacifica has provided limited guarantees of these leases and the obligations under these leases are secured by deposits totaling approximately $3,277. On January 31, 2018, the tenant of one of these senior living communities notified us that it will not pay the rent due for the applicable community. The annual rent we received in 2017 for this community was approximately $2,049, including $105 of straight line rent adjustments. We held a security deposit of $583 for the rent due for this community and the limited guarantee for this community is equal to one year’s rent at this community. We used $528 of the security deposit to cover the rent and other amounts due for the three months ended March 31, 2018. We are currently in negotiations to transfer the operations of this community to another operator and are enforcing our rights under the applicable lease and guaranty.

Dispositions:

In March 2018, we sold two senior living communities that were leased to Sunrise Senior Living LLC, or Sunrise, for an aggregate sales price of $217,000, excluding closing costs, resulting in a gain of $181,154. We have agreed to sell an additional senior living community leased to Sunrise for a sales price of $96,000 and we expect the closing of this sale to occur before the end of the second quarter of 2018. We recognized rental income of $2,776 during the three months ended March 31, 2018 related to these three senior living communities.

In March, 2018, we agreed to sell one skilled nursing facility, or SNF, a type of senior living community, that is leased to Five Star for a sales price of approximately $6,500, excluding closing costs. We expect the closing of the sale of this SNF to occur before the end of 2018. Rental income will be reduced in accordance with our lease with Five Star upon the sale of this SNF.

The two senior living communities that we have agreed to sell were classified as held for sale as of March 31, 2018 and had a net carrying value of $18,479 as of March 31, 2018. These pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or their terms will not change.