Real Estate Properties

Our real estate properties, excluding those classified as held for sale, consisted of land of $844,567 and buildings and improvements of $7,031,733 as of December 31, 2018; and land of $824,879 and buildings and improvements of $6,999,884 as of December 31, 2017. Accumulated depreciation was $1,408,793 and $125,599 for buildings and improvements, respectively, as of December 31, 2018; and $1,250,057 and $204,420 for buildings and improvements, respectively, as of December 31, 2017.

The future minimum lease payments due to us during the current terms of our leases as of December 31, 2018, are $579,757 in 2019, $552,947 in 2020, $528,448 in 2021, $507,667 in 2022, $483,525 in 2023 and $1,844,178 thereafter.

We have accounted for our 2018 and 2017 acquisitions as acquisitions of assets following our adoption of ASU No. 2017-01 on January 1, 2017. We have accounted for our 2016 acquisitions as business combinations unless otherwise noted. We funded these acquisitions using cash on hand and borrowings under our revolving credit facility, unless otherwise noted.

MOB Acquisitions:

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. As of the date acquired, the weighted average amortization period for capitalized lease origination costs was 5.3 years.

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 our assumption of a $11,050 mortgage note and closing costs of $525. As of the date acquired, the weighted average amortization period for capitalized lease origination costs was 5.8 years.

In January 2017, we acquired one MOB (one building) located in Kansas with approximately 117,000 square feet for a purchase price of approximately $15,106, including closing costs of $35. As of the date acquired, the weighted average amortization period for capitalized lease origination costs was 10.3 years.

In July 2017, we acquired one MOB (one building) located in Maryland with approximately 59,000 square feet for a purchase price of approximately $16,601, including closing costs of $383. As of the date acquired, the weighted average amortization period for capitalized lease origination costs was 3.8 years.

In October 2017, we acquired two MOBs (two buildings) located in Minnesota and North Carolina with a total of approximately 255,000 square feet for an aggregate purchase price of approximately $38,794, including closing costs of $283. As of the date acquired, the weighted average amortization period for capitalized lease origination costs was 2.6 years.

In November 2017, we acquired one MOB (one building) located in California with approximately 63,000 square feet for a purchase price of approximately $26,823, including closing costs of $323. As of the date acquired, the weighted average amortization period for capitalized lease origination costs was 8.7 years.

In December 2017, we acquired one MOB (one building) located in Virginia with approximately 136,000 square feet for a purchase price of approximately $15,844, including closing costs of $275. As of the date acquired, the weighted average amortization periods for capitalized lease origination costs, above market lease values and below market lease values were 7.2 years, 6.1 years and 6.8 years, respectively.

In February 2016, we acquired one MOB (three buildings) located in Minnesota with approximately 128,000 square feet for a purchase price of approximately $22,700, excluding closing costs. As of the date acquired, the weighted average amortization periods for capitalized lease origination costs and below market lease values were 6.4 years and 7.3 years, respectively.

In May 2016, we acquired one MOB (one building) located in Florida with approximately 166,000 square feet for a purchase price of approximately $45,232, including closing costs of $232. We accounted for this acquisition as an asset acquisition.

In October 2016, we acquired one MOB (one building) located in Ohio with approximately 96,000 square feet for approximately $18,500, excluding closing costs. As of the date acquired, the weighted average amortization periods for capitalized lease origination costs and above market lease values, respectively, were 14.1 years.

The table below represents the purchase price allocations (including net closing adjustments) of the MOB acquisitions described above:



Date	Location	Number of Properties	Number of Buildings	Square Feet (000's)	Cash Paid plus Assumed Debt			Land		Buildings and Improvements		Acquired Real Estate Leases		Acquired Real Estate Lease Obligations			Assumed Debt
MOB acquisitions during the year ended December 31, 2018:
January 2018	3 States	3	3	400	$	91,698	⁽¹⁾	$	16,873	$	54,605	$	20,220	$	—		$	—
March 2018	Virginia	1	1	135	23,275		⁽¹⁾	2,863		11,105		9,307		—			(11,050		)
		4	4	535	$	114,973		$	19,736	$	65,710	$	29,527	$	—		$	(11,050	)

MOB acquisitions during the year ended December 31, 2017:
January 2017	Kansas	1	1	117	$	15,106	⁽¹⁾	$	1,522	$	7,246	$	6,338	$	—		$	—
July 2017	Maryland	1	1	59	16,601		⁽¹⁾	6,138		6,526		3,937		—			—
October 2017	2 States	2	2	255	38,794		⁽¹⁾	6,738		25,040		7,016		—			—
November 2017	California	1	1	63	26,823		⁽¹⁾	7,957		13,430		5,436		—			—
December 2017	Virginia	1	1	136	15,844		⁽¹⁾	3,263		7,615		4,986		(20		)	—
		6	6	630	$	113,168		$	25,618	$	59,857	$	27,713	$	(20	)	$	—

MOB acquisitions during the year ended December 31, 2016:
February 2016	Minnesota	1	3	128	$	22,700	⁽²⁾	$	4,028	$	14,710	$	5,053	$	(1,091	)	$	—
May 2016	Florida	1	1	166	45,232		⁽¹⁾	2,792		42,440		—		—			—
October 2016	Ohio	1	1	96	18,500		⁽²⁾	1,025		12,883		4,592		—			—
		3	5	390	$	86,432		$	7,845	$	70,033	$	9,645	$	(1,091	)	$	—


(1)	Cash paid plus assumed debt, if any, includes closing costs as these acquisitions are accounted for as acquisitions of assets.


(2)	Cash paid plus assumed debt, if any, excludes closing costs as these acquisitions are accounted for as business combinations.

Senior Living Community Acquisitions:

In August 2017, we acquired a land parcel from Five Star adjacent to a senior living community located in Delaware that we lease to Five Star for $750, excluding closing costs. This land parcel was added to the applicable lease and Five Star’s annual minimum rent payable to us increased by $33 in accordance with the terms of that lease.

In November 2017, we entered a transaction agreement with Five Star pursuant to which we acquired six senior living communities from Five Star: in December 2017, we acquired two 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 senior living community located in Tennessee with 88 living units for $19,868, including closing costs of $201; in February 2018, we acquired one senior living community located in Arizona with 127 living units for $22,622, including our assumption of approximately $16,748 of mortgage debt principal and closing costs of $372; and in June 2018, we acquired the remaining two of these senior living communities located in Tennessee with a combined 151 living units for $23,860, including our assumption of approximately $16,588 of mortgage debt principal and closing costs of $560. In connection with our acquisitions 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. See Note 5 for further information regarding these transactions and transaction agreement.

In May 2016, we acquired one senior living community located in Georgia with 38 private pay units for $8,400, excluding closing costs. We acquired this community using a TRS structure and entered a management agreement with Five Star to manage this community.

In June 2016, we entered a transaction agreement with Five Star pursuant to which, among other things: we acquired seven senior living communities located in four states with 545 living units from Five Star for $112,350, excluding closing costs, and simultaneously leased these communities back to Five Star under a new long term lease agreement pursuant to which Five Star is required to pay to us initial annual rent of $8,426; we and Five Star terminated three of our four then existing pooling agreements with Five Star; and we and Five Star entered 10 new pooling agreements that combine our management agreements with Five Star for senior living communities that include assisted living units, or our AL Management Agreements. See Notes 5 and 7 for further information regarding these transactions and transaction agreement.

In September 2016, we acquired an additional living unit at a senior living community located in Florida that we lease to Five Star for $130, excluding closing costs. This living unit was added to the applicable lease with Five Star and Five Star’s annual rent payable to us increased by $10 in accordance with the terms of that lease.

In December 2016, we acquired two senior living communities located in Illinois with a combined 126 living units for $18,600, excluding closing costs. These two senior living communities were added to one of our leases with Five Star and Five Star’s annual rent payable to us increased by $1,395 in accordance with the terms of that lease.

Also in December 2016, we acquired a land parcel adjacent to a senior living community located in Georgia that Five Star manages for our account for $1,600, excluding closing costs. This land parcel was added to the applicable management agreement with Five Star.

The table below represents the purchase price allocations (including net closing adjustments) of the senior living community acquisitions described above:



Date	Location	Leased / Managed	Number of Properties	Units	Cash Paid plus Assumed Debt			Land		Buildings and Improvements		FF&E		Acquired Real Estate Leases		Assumed Debt			Premium on Assumed Debt
Senior Living Community Acquisitions during the year ended December 31, 2018:
January 2018	Tennessee	Managed	1	88	$	19,868	⁽¹⁾	$	580	$	14,884	$	1,209	$	3,195	$	—		$	—
February 2018	Arizona	Managed	1	127	22,622		⁽¹⁾	2,017		17,123		390		4,451		(16,748		)	(1,359		)
June 2018	Tennessee	Managed	2	151	23,860		⁽¹⁾	965		17,910		1,628		3,843		(16,588		)	(486		)
			4	366	$	66,350		$	3,562	$	49,917	$	3,227	$	11,489	$	(33,336	)	$	(1,845	)

Senior Living Community Acquisitions during the year ended December 31, 2017:
December 2017	2 States	Managed	2	229	$	39,457	⁽¹⁾	$	4,055	$	26,424	$	1,204	$	7,774	$	—		$	—

Senior Living Community Acquisitions during the year ended December 31, 2016:
May 2016	Georgia	Managed	1	38	$	8,400	⁽²⁾	$	327	$	6,195	$	478	$	1,400	$	—		$	—
June 2016	4 States	Leased	7	545	112,493		⁽¹⁾	11,085		94,940		6,468		—		—			—
December 2016	Illinois	Leased	2	126	18,601		⁽²⁾	1,814		13,377		1,087		2,323		—			—
			10	709	$	139,494		$	13,226	$	114,512	$	8,033	$	3,723	$	—		$	—


(1)	Cash paid plus assumed debt, if any, includes closing costs as these acquisitions are accounted for as acquisitions of assets.


(2)	Cash paid plus assumed debt, if any, excludes closing costs as these acquisitions are accounted for as business combinations.

See Notes 5 and 7 for further information regarding the arrangements we have with Five Star.

Intangible Lease Assets and Obligations:

At December 31, 2018, we had recorded intangible lease assets of $691,219, including $35,056 of capitalized above market lease values and $656,163 of the value of in place leases. At December 31, 2017, we had recorded intangible lease assets of $791,067, including $40,540 of capitalized above market lease values and $750,527 of the value of in place leases. We had recorded intangible lease obligations of $134,395 and $136,713 at December 31, 2018 and 2017, respectively. Accumulated amortization of capitalized above market lease values was $27,375 and $29,900 at December 31, 2018 and 2017, respectively. At December 31, 2018, the remaining weighted average amortization period of capitalized above market lease values is approximately 4.4 years. Accumulated amortization of capitalized below market lease values was $48,091 and $40,695 at December 31, 2018 and 2017, respectively. At December 31, 2018, the remaining weighted average amortization period of intangible lease obligations is approximately 9.8 years. Accumulated amortization of the value of in place leases exclusive of the value of above and below market in place leases was $244,600 and $288,902 at December 31, 2018 and 2017, respectively. At December 31, 2018, the remaining weighted average amortization period of the value of in place leases exclusive of the value of above and below market in place leases is approximately 8.8 years. We expect to recognize net future amortization of these intangible lease assets and liabilities in the amounts of approximately $57,515 in 2019, $43,896 in 2020, $39,410 in 2021, $36,583 in 2022, $35,089 in 2023 and $120,447 thereafter.

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 assets by comparing it to the expected future undiscounted net cash flows to be generated from those assets. 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. See Note 9 for further information on impairment.

During 2018, we recorded impairment charges of $46,797 to adjust the carrying values of 13 MOBs (13 buildings) to their aggregate estimated fair value. Two of these MOBs are classified as held for sale as of December 31, 2018. During 2018, we also recorded impairment of assets charges of $19,549 to write off unamortized lease assets related to lease defaults at three of our triple net leased senior living communities located in California, Colorado and Oregon that were leased to third party private operators. As a result of these leases being terminated, or in the process of being terminated, we have concluded there is no value to the unamortized lease assets and have written them off completely during 2018. In June 2018, we reached an agreement with the tenant leasing the senior living community in California and its guarantor to settle past due amounts, terminate the lease and transfer operations, and in connection with this agreement, we received $2,150 of settlement proceeds. In November 2018, we reached an agreement with the tenant leasing the senior living community in Colorado to terminate the lease and transfer operations. We entered management agreements with Five Star to operate these communities for our account under TRS structures. The above impairment charges are aggregated and included in impairment of assets in our consolidated statements of comprehensive income.

During 2017, we recorded no impairments on real estate properties. During 2016, we recorded net impairment charges of $11,488 to adjust the carrying values of two MOBs (five buildings), one land parcel and two senior living communities that were sold during 2016 to their aggregate estimated net sale price.

During 2016, we also recorded impairment charges of $4,391 to write off acquired lease intangible assets associated with lease defaults at two of our senior living communities located in North Carolina and Alabama that were leased to third party private operators. In April 2016, we reached an agreement with the tenant leasing the senior living community located in North Carolina and its guarantor to settle past due amounts, terminate the lease and transfer operations. As part of this agreement, we received $2,365. In July 2016, we reached an agreement with the tenant leasing the senior living community located in Alabama to terminate the lease and transfer operations. We entered management agreements with Five Star to operate these communities for our account under TRS structures. In December 2016, we entered a settlement agreement and terminated the in place management agreements with the third party senior living manager affiliated with one of the tenants that defaulted on its lease for five communities located in Georgia. We paid fees of $115 to terminate the existing management agreements and we entered new management agreements with Five Star to manage these five communities.

Dispositions:

In February 2019, we sold one MOB located in Florida for a sales price of approximately $2,900, excluding closing costs.

Also in February 2019, we agreed to sell one MOB located in Colorado for a sales price of approximately $2,625, excluding closing costs. We expect the closing of the sale of this MOB to occur during the second quarter of 2019.

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. In May 2018, we sold one senior living community leased to Sunrise for a sales price of $96,000, excluding closing costs, resulting in a gain of $78,856. In June 2018, we sold one SNF that was leased to Five Star and one senior living community that was leased to a private operator, where the tenant exercised its purchase option, for a combined sales price of approximately $21,865, excluding closing costs, resulting in a net gain of $1,906. Pursuant to the terms of our lease with Five Star, our annual rental income decreased by $650 from the sale of the SNF that was previously leased to Five Star.

In December 2018, we agreed to sell two MOBs located in Massachusetts for an aggregate sales price of approximately $2,050, excluding closing costs. We expect the closings of these sales to occur during the second quarter of 2019. These properties are classified as held for sale as of December 31, 2018.

In December 2017, we sold one senior living community located in Virginia for $55,000, excluding closing costs; we recognized a gain of $45,901 from this sale. Also in December 2017, we recognized a gain on sale of $154 from an eminent domain taking of land at one of our wellness centers in Romeoville, IL.

In March 2016, we sold a land parcel located in Pennsylvania for $700, excluding closing costs. In June 2016, we sold a triple net leased SNF located in Pennsylvania for $9,100, excluding closing costs; we recognized a gain on sale of $4,061 from this sale. In July 2016, we sold four MOBs (four buildings) located in Oklahoma for $20,150, excluding closing costs. In September 2016, we and Five Star sold a former SNF located in Wisconsin that we leased to Five Star for $248, excluding closing costs; as a result of this sale, Five Star's annual rent payable to us decreased by $25 in accordance with the terms of the applicable lease. In December 2016, we sold one MOB located in Pennsylvania for $2,800, excluding closing costs. In December 2016, we sold a formerly managed memory care building located in Florida for $2,100, excluding closing costs.

We classify all properties as held for sale in our consolidated balance sheets that meet the applicable criteria for that treatment as set forth in the Property, Plant and Equipment Topic of the Codification. As of December 31, 2018, we had two MOBs with 32,604 square feet classified as held for sale. As of December 31, 2017, we had four triple net leased senior living communities with 1,295 units classified as held for sale. As of December 31, 2016, we had no properties classified as held for sale. The real estate assets of these held for sale properties are included in other assets in our consolidated balance sheets as of December 31, 2018 and 2017, and had a net book value (after impairment) of approximately $1,928 and $53,338, respectively.

Investments and Capital Expenditures:

During 2018 and 2017, pursuant to the terms of our existing leases, we invested $23,376 and $51,952, respectively, in revenue producing capital improvements at certain of our triple net leased communities, including $17,956 and $39,800, respectively, at communities leased to Five Star. As a result of these investments, annualized rental income payable to us increased by approximately $1,816 and $4,870, respectively, pursuant to the terms of the applicable leases, including $1,433 and $3,193, respectively, at communities leased to Five Star.

During 2018, we committed $17,212 for capital expenditures related to 881,502 square feet of leases executed at our MOBs. During 2017, we committed $22,540 for capital expenditures related to 1.3 million square feet of leases executed at our MOBs.

Committed and unspent tenant related obligations based on executed leases as of December 31, 2018 and 2017 were $22,009 and $20,681, respectively.