Note 8 - Long-term Leases

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Leases of Lessee Disclosure [Text Block]

Note 8 – Long-Term Leases

Operating Leases

At June 30, 2020, we leased from NHI the real property of 35 skilled nursing facilities, seven assisted living centers and three independent living centers under two separate lease agreements. As part of the first lease agreement, we sublease four Florida skilled nursing facilities to a third-party operator. Base rent expense under both NHI lease agreements totals $34,200,000 annually with rent thereafter escalating by 4% of the increase in facility revenue over a base year. Total facility rent expense to NHI was $9,655,000 and $19,310,000 for the three months and six months ended June 30, 2020. Total facility rent expense to NHI was $9,515,000 and $19,030,000 for the three months and six months ended June 30, 2019.

Finance Leases

At June 30, 2020, we leased and operated three senior healthcare facilities in the state of Missouri under three separate lease agreements. Two of the healthcare facilities are skilled nursing facilities that also include assisted living facilities and the third healthcare facility is a memory care facility. Each of the leases is a ten-year lease with two five–year renewal options. Under the terms of the leases, base rent totals $5,200,000 annually with rent thereafter escalating by 4% of the increase in facility revenue over the 2014 base year.

Minimum Lease Payments

The following table summarizes the maturity of our finance and operating lease liabilities as of June 30, 2020 (in thousands):

	Finance Leases			Operating Leases
2020	$	5,200		$	35,429
2021		5,200			35,141
2022		5,200			34,636
2023		3,467			34,420
2024		-			34,269
Thereafter		-			57,050
Total minimum lease payments		19,067			230,945
Less: amounts representing interest		(1,990	)		(39,916	)
Present value of future minimum lease payments		17,077			191,029
Less: current portion		(4,292	)		(24,850	)
Noncurrent lease liabilities	$	12,785		$	166,179