ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
New Senior Investment Group Inc. |
Delaware | 80-0912734 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1345 Avenue of the Americas, New York, NY | 10105 | |
(Address of principal executive offices) | (Zip Code) |
(212) 479-3140 |
(Former name, former address and former fiscal year, if changed since last report) |
Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o | (Do not check if a smaller reporting company) |
Smaller reporting company o | Emerging growth company o |
• | our ability to successfully operate as a standalone public company; |
• | our ability to comply with the terms of our financings, which depends in part on the performance of our operators; |
• | any increase in our borrowing costs as a result of rising interest rates or other factors; |
• | our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due or as needed to comply with the terms of our covenants or to facilitate our ability to sell assets; |
• | our ability to manage our liquidity and sustain distributions to our shareholders at the current level, particularly in light of the cash shortfall described under Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources”; |
• | our dependence on our property managers and tenants to operate our properties successfully and in compliance with the terms of our agreements with them, applicable law and the terms of our financings; |
• | factors affecting the performance of our properties, such as increases in costs (including, but not limited to, the costs of labor, supplies, insurance and property taxes); |
• | concentration risk with respect to Holiday Retirement (“Holiday”), which, for the six months ended June 30, 2017, accounted for 73.6% of net operating income (“NOI”) from our Managed Properties segment and 78.9% of NOI from our Triple Net Lease Properties segment; |
• | risks associated with a change of control in the ownership or senior management of Holiday; |
• | our ability and the ability of our property managers and tenants to obtain and maintain adequate property, liability and other insurance from reputable, financially stable providers; |
• | changes of federal, state and local laws and regulations relating to employment, fraud and abuse practices, Medicaid reimbursement and licensure, etc., including those affecting the healthcare industry that affect our costs of compliance or increase the costs, or otherwise affect the operations or our property managers or tenants; |
• | the ability of our property managers, tenants and their respective guarantors to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to us and third parties; |
• | the ability and willingness of our tenants to make the rent and other payments due to us under our leases, and the possibility that we will not be able to derive the full benefit of the original terms of our leases; |
• | our ability to reposition our leased properties on the same or better terms as we compete for tenants upon the expiration or earlier termination of our leases or with respect to additional properties that we may seek to lease in the future; |
• | the quality and size of our investment pipeline, our ability to execute investments at attractive risk-adjusted prices, our ability to finance our investments on favorable terms, and our ability to deploy investable cash in a timely manner; |
• | our ability to sell properties on favorable terms and to realize the anticipated benefits from any such dispositions; |
• | changes in economic conditions generally and the real estate, senior housing and bond markets specifically; |
• | our stock price performance and any disruption or lack of access to the capital markets or other sources of financing; |
• | the impact of any current or future legal proceedings and regulatory investigations and inquiries on us, FIG LLC (our “Manager”) or our operators; |
• | potential conflicts of interest relating to our external management structure, the fact that Holiday is majority-owned by private equity funds managed by our Manager (or its affiliates), or other factors, and our ability to effectively manage and resolve actual, potential or perceived conflicts of interest; |
• | effects of the pending merger of Fortress Investment Group LLC with affiliates of SoftBank Group Corp.; |
• | our ability to maintain effective internal control over financial reporting and our reliance on our operators for timely delivery of accurate property-level financial results; |
• | our ability to maintain our qualification as a Real Estate Investment Trust (“REIT”) for U.S. federal income tax purposes and the potentially onerous consequences that any failure to maintain such qualification would have on our business; and |
• | our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended (the “1940 Act”) and the fact that maintaining such exemption imposes limits on our business strategy. |
• | should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; |
• | have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; |
• | may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and |
• | were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. |
PAGE | ||
June 30, 2017 | December 31, 2016 | ||||||
Assets | (Unaudited) | ||||||
Real estate investments: | |||||||
Land | $ | 218,356 | $ | 220,317 | |||
Buildings, improvements and other | 2,550,053 | 2,552,862 | |||||
Accumulated depreciation | (263,756 | ) | (218,968 | ) | |||
Net real estate property | 2,504,653 | 2,554,211 | |||||
Acquired lease and other intangible assets | 317,773 | 319,929 | |||||
Accumulated amortization | (280,234 | ) | (255,452 | ) | |||
Net real estate intangibles | 37,539 | 64,477 | |||||
Net real estate investments | 2,542,192 | 2,618,688 | |||||
Cash and cash equivalents | 60,497 | 58,048 | |||||
Straight-line rent receivables | 82,891 | 73,758 | |||||
Receivables and other assets, net | 58,194 | 71,234 | |||||
Total Assets | $ | 2,743,774 | $ | 2,821,728 | |||
Liabilities and Equity | |||||||
Liabilities | |||||||
Mortgage notes payable, net | $ | 2,095,601 | $ | 2,130,387 | |||
Due to affiliates | 12,137 | 11,623 | |||||
Accrued expenses and other liabilities | 106,415 | 100,823 | |||||
Total Liabilities | $ | 2,214,153 | $ | 2,242,833 | |||
Commitments and contingencies (Note 13) | |||||||
Equity | |||||||
Preferred stock $0.01 par value, 100,000,000 shares authorized and none issued or outstanding as of both June 30, 2017 and December 31, 2016 | $ | — | $ | — | |||
Common stock $0.01 par value, 2,000,000,000 shares authorized, 82,148,869 and 82,127,247 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 821 | 821 | |||||
Additional paid-in capital | 898,132 | 897,918 | |||||
Accumulated deficit | (369,332 | ) | (319,844 | ) | |||
Total Equity | $ | 529,621 | $ | 578,895 | |||
Total Liabilities and Equity | $ | 2,743,774 | $ | 2,821,728 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | |||||||||||||||
Resident fees and services | $ | 86,039 | $ | 90,297 | $ | 172,765 | $ | 180,003 | |||||||
Rental revenue | 28,247 | 28,244 | 56,494 | 56,483 | |||||||||||
Total revenues | 114,286 | 118,541 | 229,259 | 236,486 | |||||||||||
Expenses | |||||||||||||||
Property operating expense | 58,668 | 60,606 | 118,252 | 121,231 | |||||||||||
Depreciation and amortization | 35,943 | 53,866 | 73,461 | 101,233 | |||||||||||
Interest expense | 23,505 | 22,805 | 46,571 | 45,593 | |||||||||||
Acquisition, transaction and integration expense | 446 | 652 | 794 | 1,406 | |||||||||||
Management fees and incentive compensation to affiliate | 6,754 | 4,430 | 10,578 | 8,358 | |||||||||||
General and administrative expense | 3,726 | 3,554 | 7,737 | 7,924 | |||||||||||
Loss on extinguishment of debt | 297 | — | 672 | — | |||||||||||
Other expense | 26 | 511 | 161 | 698 | |||||||||||
Total expenses | $ | 129,365 | $ | 146,424 | $ | 258,226 | $ | 286,443 | |||||||
Gain on sale of real estate | 18,347 | — | 22,546 | — | |||||||||||
Income (loss) before income taxes | 3,268 | (27,883 | ) | (6,421 | ) | (49,957 | ) | ||||||||
Income tax expense (benefit) | 147 | (525 | ) | 353 | (751 | ) | |||||||||
Net income (loss) | $ | 3,121 | $ | (27,358 | ) | $ | (6,774 | ) | $ | (49,206 | ) | ||||
Net income (loss) per share of common stock (A) | |||||||||||||||
Basic | $ | 0.04 | $ | (0.33 | ) | $ | (0.08 | ) | $ | (0.60 | ) | ||||
Diluted | 0.04 | (0.33 | ) | (0.08 | ) | (0.60 | ) | ||||||||
Weighted average number of shares of common stock outstanding | |||||||||||||||
Basic | 82,142,562 | 82,114,218 | 82,141,661 | 82,590,408 | |||||||||||
Diluted (B) | 82,778,761 | 82,114,218 | 82,141,661 | 82,590,408 | |||||||||||
Dividends declared per share of common stock | $ | 0.26 | $ | 0.26 | $ | 0.52 | $ | 0.52 |
(A) | Basic earnings per share (“EPS”) is calculated by dividing net income by the weighted average number of shares of common stock outstanding. Diluted EPS is computed by dividing net income by the weighted average number of shares of common stock outstanding plus the additional dilutive effect, if any, of common stock equivalents during each period. |
(B) | For the reporting periods with a net loss, all outstanding options were excluded from the diluted share calculation as their effect would have been anti-dilutive. |
Common Stock | |||||||||||||||||||
Shares | Amount | Accumulated Deficit | Additional Paid-in Capital | Total Equity | |||||||||||||||
Equity at December 31, 2016 | 82,127,247 | $ | 821 | $ | (319,844 | ) | $ | 897,918 | $ | 578,895 | |||||||||
Director’s shares issued | 21,622 | — | — | 214 | 214 | ||||||||||||||
Dividends declared | — | — | (42,714 | ) | — | (42,714 | ) | ||||||||||||
Net loss | — | — | (6,774 | ) | — | (6,774 | ) | ||||||||||||
Equity at June 30, 2017 | 82,148,869 | $ | 821 | $ | (369,332 | ) | $ | 898,132 | $ | 529,621 |
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Cash Flows From Operating Activities | |||||||
Net loss | $ | (6,774 | ) | $ | (49,206 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation of tangible assets and amortization of intangible assets | 73,535 | 101,304 | |||||
Amortization of deferred financing costs | 4,774 | 4,841 | |||||
Amortization of deferred community fees | (597 | ) | (936 | ) | |||
Amortization of premium on mortgage notes payable | (296 | ) | (292 | ) | |||
Non-cash straight line rent | (9,133 | ) | (11,084 | ) | |||
Gain on sale of real estate | (22,546 | ) | — | ||||
Loss on extinguishment of debt | 672 | — | |||||
Equity-based compensation | 75 | 5 | |||||
Provision for uncollectible receivables | 1,242 | 1,058 | |||||
Other non-cash expense | 131 | 557 | |||||
Changes in: | |||||||
Receivables and other assets, net | (3,287 | ) | (5,924 | ) | |||
Due to affiliates | 514 | 2,160 | |||||
Accrued expenses and other liabilities | 6,175 | 16,910 | |||||
Net cash provided by operating activities | $ | 44,485 | $ | 59,393 | |||
Cash Flows From Investing Activities | |||||||
Proceeds from the sale of real estate, net | $ | 47,354 | $ | — | |||
Capital expenditures, net of insurance proceeds | (10,309 | ) | (9,563 | ) | |||
Reimbursements (escrows) for capital expenditures, net | 3,569 | (2,221 | ) | ||||
Deposits refunded for real estate investments | — | 584 | |||||
Net cash provided by (used in) investing activities | $ | 40,614 | $ | (11,200 | ) | ||
Cash Flows From Financing Activities | |||||||
Principal payments of mortgage notes payable | $ | (11,657 | ) | $ | (7,854 | ) | |
Repayments of mortgage notes payable | (27,968 | ) | — | ||||
Payment of exit fee on extinguishment of debt | (311 | ) | — | ||||
Payment of common stock dividend | (42,714 | ) | (42,706 | ) | |||
Repurchase of common stock | — | (30,884 | ) | ||||
Net cash used in financing activities | $ | (82,650 | ) | $ | (81,444 | ) | |
Net increase (decrease) in cash and cash equivalents | 2,449 | (33,251 | ) | ||||
Cash and cash equivalents, beginning of period | 58,048 | 116,881 | |||||
Cash and cash equivalents, end of period | $ | 60,497 | $ | 83,630 | |||
Supplemental Disclosure of Cash Flow Information | |||||||
Cash paid during the period for interest expense | $ | 42,134 | $ | 41,122 | |||
Cash paid during the period for income taxes | 271 | 262 | |||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities | |||||||
Issuance of common stock | $ | 214 | $ | — |
1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3. | DISPOSITIONS |
4. | SEGMENT REPORTING |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | ||||||||||||||||||||||
Triple Net Lease Properties | Managed Properties | Consolidated | Triple Net Lease Properties | Managed Properties | Consolidated | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Resident fees and services | $ | — | $ | 86,039 | $ | 86,039 | $ | — | $ | 90,297 | $ | 90,297 | |||||||||||
Rental revenue | 28,247 | — | 28,247 | 28,244 | — | 28,244 | |||||||||||||||||
Less: Property operating expense | — | 58,668 | 58,668 | — | 60,606 | 60,606 | |||||||||||||||||
Segment NOI | $ | 28,247 | $ | 27,371 | $ | 55,618 | $ | 28,244 | $ | 29,691 | $ | 57,935 | |||||||||||
Depreciation and amortization | 35,943 | 53,866 | |||||||||||||||||||||
Interest expense | 23,505 | 22,805 | |||||||||||||||||||||
Acquisition, transaction and integration expense | 446 | 652 | |||||||||||||||||||||
Management fees and incentive compensation to affiliate | 6,754 | 4,430 | |||||||||||||||||||||
General and administrative expense | 3,726 | 3,554 | |||||||||||||||||||||
Loss on extinguishment of debt | 297 | — | |||||||||||||||||||||
Other expense | 26 | 511 | |||||||||||||||||||||
Total expenses | 70,697 | 85,818 | |||||||||||||||||||||
Gain on sale of real estate | 18,347 | — | |||||||||||||||||||||
Income (loss) before income taxes | 3,268 | (27,883 | ) | ||||||||||||||||||||
Income tax expense (benefit) | 147 | (525 | ) | ||||||||||||||||||||
Net income (loss) | $ | 3,121 | $ | (27,358 | ) |
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | ||||||||||||||||||||||
Triple Net Lease Properties | Managed Properties | Consolidated | Triple Net Lease Properties | Managed Properties | Consolidated | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Resident fees and services | $ | — | $ | 172,765 | $ | 172,765 | $ | — | $ | 180,003 | $ | 180,003 | |||||||||||
Rental revenue | 56,494 | — | 56,494 | 56,483 | — | 56,483 | |||||||||||||||||
Less: Property operating expense | — | 118,252 | 118,252 | — | 121,231 | 121,231 | |||||||||||||||||
Segment NOI | $ | 56,494 | $ | 54,513 | $ | 111,007 | $ | 56,483 | $ | 58,772 | $ | 115,255 | |||||||||||
Depreciation and amortization | 73,461 | 101,233 | |||||||||||||||||||||
Interest expense | 46,571 | 45,593 | |||||||||||||||||||||
Acquisition, transaction and integration expense | 794 | 1,406 | |||||||||||||||||||||
Management fees and incentive compensation to affiliate | 10,578 | 8,358 | |||||||||||||||||||||
General and administrative expense | 7,737 | 7,924 | |||||||||||||||||||||
Loss on extinguishment of debt | 672 | — | |||||||||||||||||||||
Other expense | 161 | 698 | |||||||||||||||||||||
Total expenses | 139,974 | 165,212 | |||||||||||||||||||||
Gain on sale of real estate | 22,546 | — | |||||||||||||||||||||
Loss before income taxes | (6,421 | ) | (49,957 | ) | |||||||||||||||||||
Income tax expense (benefit) | 353 | (751 | ) | ||||||||||||||||||||
Net loss | $ | (6,774 | ) | $ | (49,206 | ) |
June 30, 2017 | December 31, 2016 | ||||||||||||
Assets: | Amount | Percentage | Amount | Percentage | |||||||||
Triple Net Lease Properties | $ | 1,145,464 | 41.8 | % | $ | 1,151,102 | 40.8 | % | |||||
Managed Properties | 1,567,868 | 57.1 | % | 1,639,726 | 58.1 | % | |||||||
All other assets (A) | 30,442 | 1.1 | % | 30,900 | 1.1 | % | |||||||
Total assets | $ | 2,743,774 | 100.0 | % | $ | 2,821,728 | 100.0 | % |
(A) | Primarily consists of corporate cash and deferred tax assets which are not directly attributable to the Company’s reportable business segments. |
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | ||||||||||
Number of Communities | % of Total Revenue | Number of Communities | % of Total Revenue | ||||||||
Florida | 24 | 19.0 | % | 26 | 19.7 | % | |||||
Texas | 19 | 12.2 | % | 19 | 12.0 | % | |||||
California | 11 | 9.8 | % | 12 | 10.1 | % | |||||
North Carolina | 9 | 6.5 | % | 9 | 6.3 | % | |||||
Pennsylvania | 7 | 5.9 | % | 7 | 6.1 | % | |||||
Oregon | 9 | 4.9 | % | 10 | 5.3 | % | |||||
Utah | 6 | 4.1 | % | 6 | 4.5 | % | |||||
Other | 63 | 37.6 | % | 65 | 36.0 | % | |||||
Total | 148 | 100.0 | % | 154 | 100.0 | % |
5. | REAL ESTATE INVESTMENTS |
June 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Depreciation | Net Carrying Value | Gross Carrying Amount | Accumulated Depreciation | Net Carrying Value | ||||||||||||||||||
Land | $ | 218,356 | $ | — | $ | 218,356 | $ | 220,317 | $ | — | $ | 220,317 | |||||||||||
Building and improvements | 2,422,839 | (196,804 | ) | 2,226,035 | 2,430,658 | (163,670 | ) | 2,266,988 | |||||||||||||||
Furniture, fixtures and equipment | 127,214 | (66,952 | ) | 60,262 | 122,204 | (55,298 | ) | 66,906 | |||||||||||||||
Total real estate investments | $ | 2,768,409 | $ | (263,756 | ) | $ | 2,504,653 | $ | 2,773,179 | $ | (218,968 | ) | $ | 2,554,211 |
June 30, 2017 | December 31, 2016 | ||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | Weighted Average Remaining Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | Weighted Average Remaining Amortization Period | ||||||||||||||||||||
Above/below market lease intangibles, net | $ | 5,868 | $ | (653 | ) | $ | 5,215 | 54.1 years | $ | 5,868 | $ | (556 | ) | $ | 5,312 | 53.7 years | |||||||||||
In-place lease intangibles | 306,109 | (277,054 | ) | 29,055 | 2.7 years | 308,265 | (252,684 | ) | 55,581 | 2.7 years | |||||||||||||||||
Other intangibles | 5,796 | (2,527 | ) | 3,269 | 9.6 years | 5,796 | (2,212 | ) | 3,584 | 9.5 years | |||||||||||||||||
Total intangibles | $ | 317,773 | $ | (280,234 | ) | $ | 37,539 | $ | 319,929 | $ | (255,452 | ) | $ | 64,477 |
6. | RECEIVABLES AND OTHER ASSETS, NET |
June 30, 2017 | December 31, 2016 | ||||||
Escrows held by lenders (A) | $ | 36,028 | $ | 36,231 | |||
Prepaid expenses | 2,555 | 3,617 | |||||
Resident receivables, net | 2,780 | 3,085 | |||||
Deferred tax assets, net | 8,461 | 8,660 | |||||
Security deposits | 3,397 | 3,238 | |||||
Income tax receivable | 972 | 1,313 | |||||
Assets held for sale | — | 10,824 | |||||
Other assets and receivables | 4,001 | 4,266 | |||||
Total receivables and other assets | $ | 58,194 | $ | 71,234 |
(A) | Represents amounts held by lenders in tax, insurance, replacement reserve and other escrow accounts that are related to mortgage notes collateralized by New Senior’s properties. |
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Balance, beginning of period | $ | 976 | $ | 509 | |||
Provision for uncollectible receivables | 1,242 | 1,058 | |||||
Write-offs, net of recoveries | (1,056 | ) | (580 | ) | |||
Balance, end of period | $ | 1,162 | $ | 987 |
7. | MORTGAGE NOTES PAYABLE, NET |
June 30, 2017 | December 31, 2016 | ||||||||||||||||||||
Outstanding Face Amount | Carrying Value (A) | Maturity Date | Stated Interest Rate | Weighted Average Maturity (Years) | Outstanding Face Amount | Carrying Value (A) | |||||||||||||||
Managed Properties | |||||||||||||||||||||
Fixed Rate | $ | 603,340 | $ | 600,057 | Dec 2018 - Sep 2025 | 3.65% to 6.76% | 6.7 | $ | 604,749 | $ | 601,232 | ||||||||||
Floating Rate (B) | 687,048 | 681,497 | Oct 2020 - May 2022 | 1M LIBOR + 2.20% to 1M LIBOR + 2.70% | 4.5 | 717,254 | 710,672 | ||||||||||||||
Triple Net Lease Properties | |||||||||||||||||||||
Fixed Rate (C) | 676,428 | 664,133 | Jan 2021 - Jan 2024 | 3.80% to 7.40% | 4.8 | 683,137 | 667,579 | ||||||||||||||
Floating Rate | 150,332 | 149,914 | Apr 2018 - Oct 2018 | 3M LIBOR + 3.00% to 3M LIBOR + 3.25% | 1.1 | 151,634 | 150,904 | ||||||||||||||
Total | $ | 2,117,148 | $ | 2,095,601 | 5.0 | $ | 2,156,774 | $ | 2,130,387 |
(A) | The totals are reported net of deferred financing costs of $22,662 and $27,797 as of June 30, 2017 and December 31, 2016, respectively. |
(B) | All of these loans have LIBOR caps that range between 3.30% and 3.80% as of June 30, 2017. |
(C) | Includes loans with an outstanding face amount of $340,301 and $289,360, as of June 30, 2017, for which the Company bought down the interest rates to 4.00% and 3.80%, respectively, through January 2019. The interest rates will increase to 4.99% and 4.55%, respectively, thereafter. |
8. | DERIVATIVE INSTRUMENTS |
June 30, 2017 | December 31, 2016 | ||||||
Outstanding notional amount | $ | 730,838 | $ | 731,007 | |||
LIBOR cap range | 3.30% to 3.80% | 3.30% to 3.80% | |||||
LIBOR cap effective date range | Mar 2015 to Sep 2020 | Mar 2015 to Sep 2020 | |||||
Fair value | $ | 28 | $ | 115 |
9. | ACCRUED EXPENSES AND OTHER LIABILITIES |
June 30, 2017 | December 31, 2016 | ||||||
Security deposits payable | $ | 60,431 | $ | 57,186 | |||
Escrow liabilities (A) | 11,712 | 10,503 | |||||
Accounts payable | 10,356 | 10,398 | |||||
Mortgage interest payable | 6,624 | 6,671 | |||||
Deferred community fees, net | 5,209 | 5,257 | |||||
Rent collected in advance | 3,571 | 3,180 | |||||
Property tax payable | 4,542 | 3,877 | |||||
Other liabilities | 3,970 | 3,751 | |||||
Total accrued expenses and other liabilities | $ | 106,415 | $ | 100,823 |
(A) | Represents amounts held by lenders in tax, insurance, replacement reserve and other escrow accounts that are related to mortgage notes collateralized by New Senior’s triple net lease properties. |
10. | TRANSACTIONS WITH AFFILIATES |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Included in: | |||||||||||||||
General and administrative expense | $ | 1,887 | $ | 2,402 | $ | 3,907 | $ | 4,272 | |||||||
Acquisition, transaction and integration expense | 288 | 567 | 650 | 926 | |||||||||||
Total reimbursements to the Manager | $ | 2,175 | $ | 2,969 | $ | 4,557 | $ | 5,198 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Property management fees | $ | 4,706 | $ | 5,110 | $ | 9,633 | $ | 9,635 | |||||||
Travel reimbursement costs | 80 | 92 | 165 | 184 | |||||||||||
Property-level payroll expenses | 23,720 | 25,851 | 48,611 | 51,844 |
11. | INCOME TAXES |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Current | |||||||||||||||
Federal | $ | — | $ | — | $ | — | $ | — | |||||||
State and local | 83 | 46 | 154 | 121 | |||||||||||
Total current provision | 83 | 46 | 154 | 121 | |||||||||||
Deferred | |||||||||||||||
Federal | 57 | (519 | ) | 152 | (798 | ) | |||||||||
State and local | 7 | (52 | ) | 47 | (74 | ) | |||||||||
Total deferred provision (benefit) | 64 | (571 | ) | 199 | (872 | ) | |||||||||
Total provision (benefit) for income taxes | $ | 147 | $ | (525 | ) | $ | 353 | $ | (751 | ) |
June 30, 2017 | December 31, 2016 | ||||||
Deferred tax assets: | |||||||
Prepaid fees and rent | $ | 1,797 | $ | 1,816 | |||
Net operating losses | 4,854 | 4,386 | |||||
Deferred rent | 2,193 | 3,129 | |||||
Tax credits | 42 | 42 | |||||
Other | 169 | 113 | |||||
Total deferred tax assets | 9,055 | 9,486 | |||||
Less valuation allowance | — | — | |||||
Net deferred tax assets | 9,055 | 9,486 | |||||
Deferred tax liabilities: | |||||||
Depreciation and amortization | 594 | 826 | |||||
Total deferred tax liabilities | 594 | 826 | |||||
Total net deferred tax assets | $ | 8,461 | $ | 8,660 |
12. | EQUITY |
13. | COMMITMENTS AND CONTINGENCIES |
14. | SUBSEQUENT EVENTS |
Three Months Ended June 30, | Increase (Decrease) | |||||||||||||
(dollars in thousands) | 2017 | 2016 | Amount | Percentage | ||||||||||
Revenues | ||||||||||||||
Resident fees and services | $ | 86,039 | $ | 90,297 | $ | (4,258 | ) | (4.7 | )% | |||||
Rental revenue | 28,247 | 28,244 | 3 | — | % | |||||||||
Total revenues | 114,286 | 118,541 | (4,255 | ) | (3.6 | )% | ||||||||
Expenses | ||||||||||||||
Property operating expense | 58,668 | 60,606 | (1,938 | ) | (3.2 | )% | ||||||||
Depreciation and amortization | 35,943 | 53,866 | (17,923 | ) | (33.3 | )% | ||||||||
Interest expense | 23,505 | 22,805 | 700 | 3.1 | % | |||||||||
Acquisition, transaction and integration expense | 446 | 652 | (206 | ) | (31.6 | )% | ||||||||
Management fees and incentive compensation to affiliate | 6,754 | 4,430 | 2,324 | 52.5 | % | |||||||||
General and administrative expense | 3,726 | 3,554 | 172 | 4.8 | % | |||||||||
Loss on extinguishment of debt | 297 | — | 297 | NM | ||||||||||
Other expense | 26 | 511 | (485 | ) | (94.9 | )% | ||||||||
Total expenses | $ | 129,365 | $ | 146,424 | $ | (17,059 | ) | (11.7 | )% | |||||
Gain on sale of real estate | 18,347 | — | 18,347 | NM | ||||||||||
Income (loss) before income taxes | 3,268 | (27,883 | ) | 31,151 | NM | |||||||||
Income tax expense (benefit) | 147 | (525 | ) | 672 | NM | |||||||||
Net income (loss) | $ | 3,121 | $ | (27,358 | ) | $ | 30,479 | NM |
Three Months Ended June 30, | Increase (Decrease) | |||||||||||||
(dollars in thousands) | 2017 | 2016 | Amount | Percentage | ||||||||||
Managed Properties | ||||||||||||||
Resident fees and services | $ | 86,039 | $ | 90,297 | $ | (4,258 | ) | (4.7 | )% | |||||
Less: Property operating expense | 58,668 | 60,606 | (1,938 | ) | (3.2 | )% | ||||||||
Segment NOI for Managed Properties | 27,371 | 29,691 | (2,320 | ) | (7.8 | )% | ||||||||
Triple Net Lease Properties | ||||||||||||||
Rental revenue | 28,247 | 28,244 | 3 | — | % | |||||||||
Segment NOI for Triple Net Lease Properties | $ | 28,247 | $ | 28,244 | $ | 3 | — | % |
Three Months Ended June 30, | Increase (Decrease) | |||||||||||||
(dollars in thousands) | 2017 | 2016 | Amount | Percentage | ||||||||||
Total revenue | $ | 114,286 | $ | 118,541 | $ | (4,255 | ) | (3.6 | )% | |||||
Segment NOI for Managed Properties | 27,371 | 29,691 | (2,320 | ) | (7.8 | )% | ||||||||
Segment NOI for Triple Net Lease Properties | 28,247 | 28,244 | 3 | — | % | |||||||||
Total segment NOI | 55,618 | 57,935 | (2,317 | ) | (4.0 | )% | ||||||||
Expenses | ||||||||||||||
Depreciation and amortization | 35,943 | 53,866 | (17,923 | ) | (33.3 | )% | ||||||||
Interest expense | 23,505 | 22,805 | 700 | 3.1 | % | |||||||||
Acquisition, transaction and integration expense | 446 | 652 | (206 | ) | (31.6 | )% | ||||||||
Management fees and incentive compensation to affiliate | 6,754 | 4,430 | 2,324 | 52.5 | % | |||||||||
General and administrative expense | 3,726 | 3,554 | 172 | 4.8 | % | |||||||||
Loss on extinguishment of debt | 297 | — | 297 | NM | ||||||||||
Other expense | 26 | 511 | (485 | ) | (94.9 | )% | ||||||||
Total expenses | 70,697 | 85,818 | (15,121 | ) | (17.6 | )% | ||||||||
Gain on sale of real estate | 18,347 | — | 18,347 | NM | ||||||||||
Income (loss) before income taxes | 3,268 | (27,883 | ) | 31,151 | NM | |||||||||
Income tax expense (benefit) | 147 | (525 | ) | 672 | NM | |||||||||
Net income (loss) | $ | 3,121 | $ | (27,358 | ) | $ | 30,479 | NM |
As of and for the three months ended June 30, | |||||
2017 | 2016 | ||||
Total properties | 90 | 96 | |||
Total beds | 10,929 | 11,543 | |||
Average occupancy rate | 85.6 | % | 88.3 | % |
Three Months Ended June 30, | Increase (Decrease) | |||||||||||||
(dollars in thousands) | 2017 | 2016 | Amount | Percentage | ||||||||||
Resident fees and services | $ | 79,937 | $ | 80,485 | $ | (548 | ) | (0.7 | )% | |||||
Less: Property operating expense | 53,886 | 53,042 | 844 | 1.6 | % | |||||||||
Same store segment NOI | 26,051 | 27,443 | (1,392 | ) | (5.1 | )% | ||||||||
Segment NOI for non-same store properties | 1,320 | 2,248 | (928 | ) | (41.3 | )% | ||||||||
Total segment NOI | $ | 27,371 | $ | 29,691 | $ | (2,320 | ) | (7.8 | )% |
Six Months Ended June 30, | Increase (Decrease) | |||||||||||||
(dollars in thousands) | 2017 | 2016 | Amount | Percentage | ||||||||||
Revenues | ||||||||||||||
Resident fees and services | $ | 172,765 | $ | 180,003 | $ | (7,238 | ) | (4.0 | )% | |||||
Rental revenue | 56,494 | 56,483 | 11 | — | % | |||||||||
Total revenues | 229,259 | 236,486 | (7,227 | ) | (3.1 | )% | ||||||||
Expenses | ||||||||||||||
Property operating expense | 118,252 | 121,231 | (2,979 | ) | (2.5 | )% | ||||||||
Depreciation and amortization | 73,461 | 101,233 | (27,772 | ) | (27.4 | )% | ||||||||
Interest expense | 46,571 | 45,593 | 978 | 2.1 | % | |||||||||
Acquisition, transaction and integration expense | 794 | 1,406 | (612 | ) | (43.5 | )% | ||||||||
Management fees and incentive compensation to affiliate | 10,578 | 8,358 | 2,220 | 26.6 | % | |||||||||
General and administrative expense | 7,737 | 7,924 | (187 | ) | (2.4 | )% | ||||||||
Loss on extinguishment of debt | 672 | — | 672 | NM | ||||||||||
Other expense | 161 | 698 | (537 | ) | (76.9 | )% | ||||||||
Total expenses | $ | 258,226 | $ | 286,443 | $ | (28,217 | ) | (9.9 | )% | |||||
Gain on sale of real estate | 22,546 | — | 22,546 | NM | ||||||||||
Loss before income taxes | (6,421 | ) | (49,957 | ) | 43,536 | 87.1 | % | |||||||
Income tax expense (benefit) | 353 | (751 | ) | 1,104 | NM | |||||||||
Net loss | $ | (6,774 | ) | $ | (49,206 | ) | $ | 42,432 | 86.2 | % |
Six Months Ended June 30, | Increase (Decrease) | |||||||||||||
(dollars in thousands) | 2017 | 2016 | Amount | Percentage | ||||||||||
Managed Properties | ||||||||||||||
Resident fees and services | $ | 172,765 | $ | 180,003 | $ | (7,238 | ) | (4.0 | )% | |||||
Less: Property operating expense | 118,252 | 121,231 | (2,979 | ) | (2.5 | )% | ||||||||
Segment NOI for Managed Properties | 54,513 | 58,772 | (4,259 | ) | (7.2 | )% | ||||||||
Triple Net Lease Properties | ||||||||||||||
Rental revenue | 56,494 | 56,483 | 11 | — | % | |||||||||
Segment NOI for Triple Net Lease Properties | $ | 56,494 | $ | 56,483 | $ | 11 | — | % |
Six Months Ended June 30, | Increase (Decrease) | |||||||||||||
(dollars in thousands) | 2017 | 2016 | Amount | Percentage | ||||||||||
Total revenue | $ | 229,259 | $ | 236,486 | $ | (7,227 | ) | (3.1 | )% | |||||
Segment NOI for Managed Properties | 54,513 | 58,772 | (4,259 | ) | (7.2 | )% | ||||||||
Segment NOI for Triple Net Lease Properties | 56,494 | 56,483 | 11 | — | % | |||||||||
Total segment NOI | 111,007 | 115,255 | (4,248 | ) | (3.7 | )% | ||||||||
Expenses | ||||||||||||||
Depreciation and amortization | 73,461 | 101,233 | (27,772 | ) | (27.4 | )% | ||||||||
Interest expense | 46,571 | 45,593 | 978 | 2.1 | % | |||||||||
Acquisition, transaction and integration expense | 794 | 1,406 | (612 | ) | (43.5 | )% | ||||||||
Management fees and incentive compensation to affiliate | 10,578 | 8,358 | 2,220 | 26.6 | % | |||||||||
General and administrative expense | 7,737 | 7,924 | (187 | ) | (2.4 | )% | ||||||||
Loss on extinguishment of debt | 672 | — | 672 | NM | ||||||||||
Other expense | 161 | 698 | (537 | ) | (76.9 | )% | ||||||||
Total expenses | 139,974 | 165,212 | (25,238 | ) | (15.3 | )% | ||||||||
Gain on sale of real estate | 22,546 | — | 22,546 | NM | ||||||||||
Loss before income taxes | (6,421 | ) | (49,957 | ) | 43,536 | 87.1 | % | |||||||
Income tax expense (benefit) | 353 | (751 | ) | 1,104 | NM | |||||||||
Net loss | $ | (6,774 | ) | $ | (49,206 | ) | $ | 42,432 | 86.2 | % |
As of and for the six months ended June 30, | |||||
2017 | 2016 | ||||
Total properties | 90 | 96 | |||
Total beds | 10,929 | 11,543 | |||
Average occupancy rate | 85.8 | % | 88.3 | % |
Six Months Ended June 30, | Increase (Decrease) | |||||||||||||
(dollars in thousands) | 2017 | 2016 | Amount | Percentage | ||||||||||
Resident fees and services | $ | 159,570 | $ | 160,565 | $ | (995 | ) | (0.6 | )% | |||||
Less: Property operating expense | 107,839 | 106,075 | 1,764 | 1.7 | % | |||||||||
Same store segment NOI | 51,731 | 54,490 | (2,759 | ) | (5.1 | )% | ||||||||
Segment NOI for non-same store properties | 2,782 | 4,282 | (1,500 | ) | (35.0 | )% | ||||||||
Total segment NOI | $ | 54,513 | $ | 58,772 | $ | (4,259 | ) | (7.2 | )% |
Managed Properties | Triple Net Lease Properties | Total | ||||||||||||||||
Location | Number of Communities | Number of Beds | Number of Communities | Number of Beds | Number of Communities | Number of Beds | ||||||||||||
Arizona | 1 | 108 | 1 | 115 | 2 | 223 | ||||||||||||
Arkansas | 1 | 113 | — | — | 1 | 113 | ||||||||||||
California | 9 | 1,048 | 2 | 235 | 11 | 1,283 | ||||||||||||
Colorado | 1 | 119 | 4 | 439 | 5 | 558 | ||||||||||||
Connecticut | — | — | 2 | 277 | 2 | 277 | ||||||||||||
Florida | 21 | 2,878 | 3 | 370 | 24 | 3,248 | ||||||||||||
Georgia | 2 | 194 | — | — | 2 | 194 | ||||||||||||
Hawaii | 1 | 123 | — | — | 1 | 123 | ||||||||||||
Idaho | 1 | 121 | — | — | 1 | 121 | ||||||||||||
Illinois | 1 | 66 | 1 | 111 | 2 | 177 | ||||||||||||
Indiana | 1 | 114 | — | — | 1 | 114 | ||||||||||||
Iowa | — | — | 2 | 215 | 2 | 215 | ||||||||||||
Kansas | 1 | 117 | 2 | 238 | 3 | 355 | ||||||||||||
Kentucky | — | — | 1 | 117 | 1 | 117 | ||||||||||||
Louisiana | 1 | 118 | 1 | 103 | 2 | 221 | ||||||||||||
Massachusetts | 2 | 255 | — | — | 2 | 255 | ||||||||||||
Michigan | 1 | 119 | 1 | 121 | 2 | 240 | ||||||||||||
Mississippi | 1 | 67 | 1 | 94 | 2 | 161 | ||||||||||||
Missouri | — | — | 3 | 320 | 3 | 320 | ||||||||||||
Montana | 1 | 127 | 1 | 115 | 2 | 242 | ||||||||||||
Nebraska | 1 | 117 | — | — | 1 | 117 | ||||||||||||
Nevada | 1 | 174 | 1 | 121 | 2 | 295 | ||||||||||||
New Hampshire | 4 | 263 | — | — | 4 | 263 | ||||||||||||
New York | 1 | 120 | 2 | 234 | 3 | 354 | ||||||||||||
North Carolina | 7 | 917 | 2 | 240 | 9 | 1,157 | ||||||||||||
Ohio | 3 | 354 | — | — | 3 | 354 | ||||||||||||
Oklahoma | 1 | 120 | — | — | 1 | 120 | ||||||||||||
Oregon | 3 | 340 | 6 | 601 | 9 | 941 | ||||||||||||
Pennsylvania | 3 | 406 | 4 | 808 | 7 | 1,214 | ||||||||||||
South Carolina | 1 | 120 | — | — | 1 | 120 | ||||||||||||
South Dakota | 1 | 114 | — | — | 1 | 114 | ||||||||||||
Tennessee | 3 | 235 | 1 | 110 | 4 | 345 | ||||||||||||
Texas | 5 | 745 | 14 | 2,206 | 19 | 2,951 | ||||||||||||
Utah | 5 | 592 | 1 | 117 | 6 | 709 | ||||||||||||
Virginia | 2 | 233 | 1 | 120 | 3 | 353 | ||||||||||||
Washington | 2 | 275 | — | — | 2 | 275 | ||||||||||||
Wisconsin | 1 | 117 | 1 | 116 | 2 | 233 | ||||||||||||
Total | 90 | 10,929 | 58 | 7,543 | 148 | 18,472 |
• | Access to Financing: Decisions by investors, counterparties and lenders to enter into transactions with us will depend upon a number of factors, such as our historical and projected financial performance, compliance with covenant terms, industry and market trends, the availability of capital and our investors’, counterparties’ and lenders’ policies and rates applicable thereto and the relative attractiveness of alternative investment or lending opportunities. |
• | Impact of Expected Additional Borrowings or Sales of Assets on Cash Flows: The availability and timing of and proceeds from additional borrowings may be different than expected or may not occur as expected. The timing of any sale of assets, and the proceeds from any such sales, are unpredictable and may vary materially from an asset’s estimated fair value and carrying value. |
• | Compliance with Debt Obligations: Our financings subject us and our operators to a number of obligations, and a failure to satisfy certain obligations could give rise to a requirement to prepay outstanding debt or result in an event of default and the acceleration of the maturity date for repayment. We may also seek amendments to these debt covenants, and there can be no assurance that we will be able to obtain any such amendment on commercially reasonable terms, if at all. |
Six Months Ended June 30, | |||||||
(dollars in thousands) | 2017 | 2016 | |||||
Net cash provided by (used in) | |||||||
Operating activities | $ | 44,485 | $ | 59,393 | |||
Investing activities | 40,614 | (11,200 | ) | ||||
Financing activities | (82,650 | ) | (81,444 | ) | |||
Net increase (decrease) in cash and cash equivalents | 2,449 | (33,251 | ) | ||||
Cash and cash equivalents, beginning of period | 58,048 | 116,881 | |||||
Cash and cash equivalents, end of period | $ | 60,497 | $ | 83,630 |
Period from July 1, 2017 to December 31, 2017 | 2018 (A) | 2019 | 2020 | 2021 | Thereafter | Total | |||||||||||||||||||||
Principal payments | $ | 15,666 | $ | 31,860 | $ | 30,433 | $ | 31,685 | $ | 30,505 | $ | 52,082 | $ | 192,231 | |||||||||||||
Balloon payments | — | 178,152 | 95,345 | 31,636 | 311,518 | 1,308,266 | 1,924,917 | ||||||||||||||||||||
Subtotal | 15,666 | 210,012 | 125,778 | 63,321 | 342,023 | 1,360,348 | 2,117,148 | ||||||||||||||||||||
Interest (B) | 42,805 | 82,425 | 78,768 | 74,483 | 56,649 | 108,090 | 443,220 | ||||||||||||||||||||
Total obligations (C) | $ | 58,471 | $ | 292,437 | $ | 204,546 | $ | 137,804 | $ | 398,672 | $ | 1,468,438 | $ | 2,560,368 |
(A) | We have options to extend all balloon payments by an additional year. |
(B) | Estimated interest payments on floating rate debt is calculated using LIBOR rates in effect at June 30, 2017 and may not be indicative of actual payments. Actual payments may vary significantly due to LIBOR fluctuations. See Note 7 to the consolidated financial statements for further information about interest rates. |
(C) | Total obligations includes an estimate of interest payments on floating rate debt, see Note B above. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(dollars in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net income (loss) | $ | 3,121 | $ | (27,358 | ) | $ | (6,774 | ) | $ | (49,206 | ) | ||||
Gain on sale of real estate | (18,347 | ) | — | (22,546 | ) | — | |||||||||
Depreciation and amortization | 35,943 | 53,866 | 73,461 | 101,233 | |||||||||||
FFO | 20,717 | 26,508 | 44,141 | 52,027 | |||||||||||
Acquisition, transaction and integration expense | 446 | 652 | 794 | 1,406 | |||||||||||
Loss on extinguishment of debt | 297 | — | 672 | — | |||||||||||
Incentive compensation on sale of real estate (A) | 2,930 | — | 2,930 | — | |||||||||||
Other expense (B) | 26 | 511 | 161 | 698 | |||||||||||
Normalized FFO | 24,416 | 27,671 | 48,698 | 54,131 | |||||||||||
Interest expense | 23,505 | 22,805 | 46,571 | 45,593 | |||||||||||
Income tax expense (benefit) | 147 | (525 | ) | 353 | (751 | ) | |||||||||
Adjusted EBITDA | $ | 48,068 | $ | 49,951 | $ | 95,622 | $ | 98,973 |
(A) | Represents incentive compensation directly related to the gain on sale of real estate, which may represent a portion of total incentive compensation earned by the Manager in a given quarter, as reported in “Management fees and incentive compensation to affiliate” in the Consolidated Statements of Operations. The calculation of gain on sale for purposes of the incentive compensation calculation differs significantly from gain on sale calculated in accordance with GAAP. |
(B) | Primarily includes changes in the fair value of financial instruments, casualty related charges and restructuring costs. |
• | Our stock price performance could impair our ability to access the capital markets, and any disruption to the capital markets or other sources of financing generally could also negatively affect our liquidity. |
• | Our failure to comply with the terms of our financings could result in the acceleration of the requirement to repay our indebtedness or require us to seek amendments to such agreements, which we may not be able to obtain on commercially reasonable terms, if at all. |
• | Real estate investments are relatively illiquid, and our ability to quickly sell or exchange our properties in response to changes in economic or other conditions is limited. In the event we desire or need to sell any of our properties, the value of those properties and our ability to sell at a price or on terms acceptable to us could be adversely affected by a downturn in the real estate industry generally, weakness in the senior housing and healthcare industries or other factors. |
• | Because we derive substantially all of our revenues from the operators of our triple net lease and managed properties, any inability or unwillingness by these operators to satisfy their respective obligations to us or to renew their leases with us upon expiration of the terms thereof could have a material adverse effect on our liquidity, financial condition, our ability to service our indebtedness and to make distributions to our stockholders. |
• | To comply with the 90% distribution requirement applicable to REITs and to avoid income and excise taxes, we must make distributions to our stockholders. Our actual distributions to stockholders have historically been higher than the REIT distribution requirement. Distributions will limit our ability to finance investments and may limit our ability to engage in transactions that are otherwise in the best interests of our stockholders. Although we do not anticipate any inability to satisfy the REIT distribution requirement, from time to time, we may not have sufficient cash or other liquid assets to do so. For example, timing differences between the actual receipt of income and actual payment of deductible expenses, on the one hand, and the inclusion of that income and deduction of those expenses in arriving at our taxable income, on the other hand, or non-deductible expenses such as principal amortization or repayments or capital expenditures in excess of non-cash deductions may cause us to fail to have sufficient cash or liquid assets to enable us to satisfy the 90% distribution requirement. In the event that timing differences occur or we decide to retain cash or to distribute such greater amount as may be necessary to avoid income and excise taxation, we may seek to borrow funds, issue additional equity securities, pay taxable stock dividends, distribute other property or securities or engage in a transaction intended to enable us to meet the REIT distribution requirements. Any of these actions may require us to raise additional capital to meet our obligations; however, limitations on our ability to access capital, as described above, could have an adverse effect on our ability to make required payments on our debt obligations, make distributions to our stockholders or make future investments necessary to implement our business strategy. The terms of the instruments governing our existing indebtedness restrict our ability to engage in certain types of these transactions. |
(a) | Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information is recorded, processed, summarized and reported accurately and on a timely basis. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective. |
(b) | Changes in Internal Control Over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d- 15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. |
• | general availability of credit and market conditions, including rising interest rates and increasing borrowing costs; |
• | the market price of the shares of our equity securities; |
• | the market’s perception of our growth potential, compliance with applicable laws and our current and potential future earnings and cash distributions; |
• | our degree of financial leverage and operational flexibility; |
• | the financing integrity of our lenders, which might impair their ability to meet their commitments to us or their willingness to make additional loans to us, and our inability to replace the financing commitment of any such lender on favorable terms, or at all; |
• | the stability in the market value of our properties; |
• | the financial performance and general market perception of our property managers and tenants; |
• | changes in the credit ratings on United States government debt securities or default or delay in payment by the United States of its obligations; and |
• | issues facing the healthcare industry, including, but not limited to, healthcare reform and changes in government reimbursement policies. |
• | part of the income and gain recognized by certain qualified employee pension trusts with respect to our stock may be treated as unrelated business taxable income if shares of our stock are predominantly held by qualified employee pension trusts, and we are required to rely on a special look-through rule for purposes of meeting one of the REIT ownership tests, and we are not operated in a manner to avoid treatment of such income or gain as unrelated business taxable income; and |
• | part of the income and gain recognized by a tax-exempt investor with respect to our stock would constitute unrelated business taxable income if the investor incurs debt in order to acquire the stock. |
• | a shift in our investor base; |
• | our quarterly or annual earnings, or those of other comparable companies; |
• | actual or anticipated fluctuations in our operating results; |
• | changes in accounting standards, policies, guidance, interpretations or principles; |
• | announcements by us or our competitors of significant investments, acquisitions or dispositions; |
• | the failure of securities analysts to cover our common stock; |
• | changes in earnings estimates by securities analysts or our ability to meet those estimates; |
• | the operating and stock price performance of other comparable companies; |
• | overall market fluctuations; and |
• | general economic conditions. |
• | a classified board of directors with staggered three-year terms; |
• | amendment of provisions in our certificate of incorporation and bylaws regarding the election of directors, classes of directors, the term of office of directors, the filling of director vacancies and the resignation and removal of directors only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon; |
• | amendment of provisions in our certificate of incorporation regarding corporate opportunity only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon; |
• | removal of directors only for cause and only with the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote in the election of directors; |
• | our board of directors to determine the powers, preferences and rights of our preferred stock and to issue such preferred stock without stockholder approval; |
• | advance notice requirements applicable to stockholders for director nominations and actions to be taken at annual meetings; and |
• | a prohibition, in our certificate of incorporation, stating that no holder of shares of our common stock will have cumulative voting rights in the election of directors, which means that the holders of a majority of the issued and outstanding shares of common stock can elect all the directors standing for election. |
Exhibits filed with this Form 10-Q: | |
101.INS* | XBRL Instance Document. |
101.SCH* | XBRL Taxonomy Extension Schema Document. |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. |
* | XBRL (Extensible Business Reporting Language) information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934. |
** | The schedules to the Purchase Agreement included as Exhibit 2.2 have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish copies of such schedules to the SEC upon request. |
The following Master Lease and Guaranty of Lease are substantially identical in all material respects, except as to the parties thereto, to the Master Lease and Guaranty of Lease that are filed as Exhibits 10.5 and 10.6, respectively, hereto and are being omitted in reliance on Instruction 2 to Item 601 of Regulation S-K: |
Master Lease, dated December 23, 2013, by and among the Landlords named therein and NCT Master Tenant II LLC. |
Guaranty of Lease, dated December 23, 2013, by Holiday AL Holdings LP in favor of the Landlords named therein. |
In accordance with Instruction 2 to Item 601 of Regulation S-K, the Company has filed only one of 52 Multifamily Loan and Security Agreements dated as of March 27, 2015 and the related Multifamily Notes as Exhibit 10.8 and Exhibit 10.9, respectively, as the omitted Multifamily Loan and Security Agreements and the related Multifamily Notes are substantially identical in all material respects to the loan and note included as Exhibit 10.8 and Exhibit 10.9, respectively, except as to the borrower thereto, the principal amount and certain property-specific provisions. |
In accordance with Instruction 2 to Item 601 of Regulation S-K, the Company has filed only one of 28 Multifamily Loan and Security Agreements dated as of August 12, 2015 and the related Multifamily Notes as Exhibit 10.10 and Exhibit 10.11, respectively, as the omitted Multifamily Loan and Security Agreements and the related Multifamily Notes are substantially identical in all material respects to the loan and note included as Exhibit 10.10 and Exhibit 10.11, respectively, except as to the borrower thereto, the principal amount and certain property-specific provisions. |
NEW SENIOR INVESTMENT GROUP INC. | ||
By: | /s/ Susan Givens | |
Susan Givens | ||
Chief Executive Officer | ||
August 3, 2017 | ||
By: | /s/ Bhairav Patel | |
Bhairav Patel | ||
Interim Chief Financial Officer, Treasurer and Chief Accounting Officer | ||
August 3, 2017 |
1. | I have reviewed this quarterly report on Form 10-Q of New Senior Investment Group Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
August 3, 2017 | /s/ Susan Givens |
Susan Givens | |
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of New Senior Investment Group Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
August 3, 2017 | /s/ Bhairav Patel |
Bhairav Patel | |
Interim Chief Financial Officer, Treasurer and Chief Accounting Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
August 3, 2017 | /s/ Susan Givens | |
Susan Givens | ||
Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
August 3, 2017 | /s/ Bhairav Patel | |
Bhairav Patel | ||
Interim Chief Financial Officer, Treasurer and Chief Accounting Officer |
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Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jul. 28, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | New Senior Investment Group Inc. | |
Entity Central Index Key | 0001610114 | |
Current Fiscal Year End Date | --12-31 | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 82,148,869 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Equity | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued (in shares) | 82,148,869 | 82,127,247 |
Common stock, shares outstanding (in shares) | 82,148,869 | 82,127,247 |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
||||||
Revenues | |||||||||
Resident fees and services | $ 86,039 | $ 90,297 | $ 172,765 | $ 180,003 | |||||
Rental revenue | 28,247 | 28,244 | 56,494 | 56,483 | |||||
Total revenues | 114,286 | 118,541 | 229,259 | 236,486 | |||||
Expenses | |||||||||
Property operating expense | 58,668 | 60,606 | 118,252 | 121,231 | |||||
Depreciation and amortization | 35,943 | 53,866 | 73,461 | 101,233 | |||||
Interest expense | 23,505 | 22,805 | 46,571 | 45,593 | |||||
Acquisition, transaction and integration expense | 446 | 652 | 794 | 1,406 | |||||
Management fees and incentive compensation to affiliate | 6,754 | 4,430 | 10,578 | 8,358 | |||||
General and administrative expense | 3,726 | 3,554 | 7,737 | 7,924 | |||||
Loss on extinguishment of debt | 297 | 0 | 672 | 0 | |||||
Other expense | 26 | 511 | 161 | 698 | |||||
Total expenses | 129,365 | 146,424 | 258,226 | 286,443 | |||||
Gain on sale of real estate | 18,347 | 0 | 22,546 | 0 | |||||
Income (loss) before income taxes | 3,268 | (27,883) | (6,421) | (49,957) | |||||
Income tax expense (benefit) | 147 | (525) | 353 | (751) | |||||
Net income (loss) | $ 3,121 | $ (27,358) | $ (6,774) | $ (49,206) | |||||
Earnings per share - Basic | [1] | $ 0.04 | $ (0.33) | $ (0.08) | $ (0.60) | ||||
Earnings per share - Diluted | [1] | $ 0.04 | $ (0.33) | $ (0.08) | $ (0.60) | ||||
Weighted average number of shares outstanding - Basic | [2] | 82,142,562 | 82,114,218 | 82,141,661 | 82,590,408 | ||||
Weighted average number of shares outstanding - Diluted | [2] | 82,778,761 | 82,114,218 | 82,141,661 | 82,590,408 | ||||
Weighted average number of shares of common stock outstanding | |||||||||
Dividends declared per share of common stock | $ 0.26 | $ 0.26 | $ 0.52 | $ 0.52 | |||||
Triple Net Lease Properties [Member] | |||||||||
Revenues | |||||||||
Resident fees and services | $ 0 | $ 0 | $ 0 | $ 0 | |||||
Rental revenue | 28,247 | 28,244 | 56,494 | 56,483 | |||||
Expenses | |||||||||
Property operating expense | 0 | 0 | 0 | 0 | |||||
Managed Properties [Member] | |||||||||
Revenues | |||||||||
Resident fees and services | 86,039 | 90,297 | 172,765 | 180,003 | |||||
Rental revenue | 0 | 0 | 0 | 0 | |||||
Expenses | |||||||||
Property operating expense | $ 58,668 | $ 60,606 | $ 118,252 | $ 121,231 | |||||
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - 6 months ended Jun. 30, 2017 - USD ($) $ in Thousands |
Total |
Common Stock [Member] |
Accumulated Deficit [Member] |
Additional Paid-in Capital [Member] |
---|---|---|---|---|
Equity at Dec. 31, 2016 | $ 578,895 | $ 821 | $ (319,844) | $ 897,918 |
Equity (in shares) at Dec. 31, 2016 | 82,127,247 | 82,127,247 | ||
Increase (Decrease) in Equity [Roll Forward] | ||||
Dividends declared | $ (42,714) | $ 0 | (42,714) | 0 |
Director’s shares issued | 21,622 | |||
Director’s shares issued, value | $ 214 | 0 | 0 | 214 |
Net loss | (6,774) | 0 | (6,774) | 0 |
Equity at Jun. 30, 2017 | $ 529,621 | $ 821 | $ (369,332) | $ 898,132 |
Equity (in shares) at Jun. 30, 2017 | 82,148,869 | 82,148,869 |
ORGANIZATION |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION New Senior is a REIT primarily focused on investing in private pay senior housing properties. As of June 30, 2017, New Senior owned a diversified portfolio of 148 primarily private pay senior housing properties located across 37 states. The Company is listed on the New York Stock Exchange (“NYSE”) under the symbol “SNR” and is headquartered in New York, New York. The Company operates in two reportable segments: (1) Managed Properties and (2) Triple Net Lease Properties. Managed Properties – The Company has engaged property managers to manage 90 of its properties on a day-to-day basis under the Managed Properties segment. These properties consist of 51 dedicated independent living (“IL”) facilities and 39 properties with a combination of assisted living/memory care (“AL/MC”) facilities. The Company’s Managed Properties are managed by Holiday Retirement (“Holiday”), a portfolio company that is majority owned by private equity funds managed by an affiliate of FIG LLC (the “Manager”), a subsidiary of Fortress Investment Group LLC (“Fortress”), FHC Property Management LLC (together with its subsidiaries, “Blue Harbor”), an affiliate of the Manager, Jerry Erwin Associates, Inc. (“JEA”), Thrive Senior Living LLC (“Thrive”), Grace Management, Inc. (“Grace”) and Watermark Retirement Communities, Inc. (“Watermark”), collectively, the “Property Managers,” under property management agreements (the “Property Management Agreements”). Under the Property Management Agreements, the Property Managers are responsible for the day-to-day operations of the Company’s senior housing properties and are entitled to a management fee in accordance with the terms of the Property Management Agreements. The Company’s Property Management Agreements have initial five-year or ten-year terms, with successive, automatic one-year renewal periods. The Company pays property management fees of 5% to 7% of effective gross income pursuant to its Property Management Agreements with Holiday and, in some cases, Holiday is eligible to earn an incentive fee based on operating performance. The Company pays property management fees of 3% to 7% of gross revenues and, for certain properties, i) a property management fee based on a percentage of net operating income and ii) when eligible, an incentive fee based on operating performance, pursuant to its property management agreements with other managers. Triple Net Lease Properties – The Company owns 58 properties subject to triple net lease arrangements (substantially all of which are leased to Holiday). These properties consist of 52 IL properties, 5 rental Continuing Care Retirement Communities (“CCRC”) properties and 1 AL/MC property. In a triple net lease arrangement, the lessee agrees to operate and maintain the property at its own expense, including maintenance, utilities, taxes, insurance, repairs, capital improvements and the payroll expense of property-level employees. The Company’s triple net lease agreements have initial terms of approximately 15 or 17 years and include renewal options and annual rent increases ranging from 2.5% to 4.5%. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP’’) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The consolidated financial statements include the accounts of New Senior and its consolidated subsidiaries. All significant intercompany transactions and balances have been eliminated. New Senior consolidates those entities in which it has control over significant operating, financial and investing decisions of the entity. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included on Form 10-K for the year ended December 31, 2016, as filed with the SEC. Certain prior period amounts have been reclassified to conform to the current period’s presentation. Use of Estimates Management is required to make estimates and assumptions when preparing financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the accompanying consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from management’s estimates. Significant Accounting Policies There were no material changes to the Company’s significant accounting policies disclosed in the Company’s Form 10-K for the year ended December 31, 2016. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09 Revenues from Contracts with Customers (Topic 606). The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In August 2015, the FASB deferred the effective date of this standard by one year, which will be for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company has begun its process of assessing the impact of the guidance. To date the Company’s assessment efforts include the identification of various revenue streams within the scope of the guidance and the evaluation of certain revenue contracts with residents. The Company continues to evaluate the standard (and related clarifying guidance issued by the FASB) and the allowable methods of adoption and, currently, it expects to adopt the standard under the modified retrospective approach. ASU 2014-09 may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). Although the Company’s evaluation of the guidance is ongoing, it does not expect the adoption to have a material impact on its consolidated financial statements as a substantial portion of its revenue consists of rental income from leasing arrangements, which is excluded from ASU 2014-09. In February 2016, the FASB issued ASU 2016-02 Leases. This standard amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The effective date of the standard will be for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, and early adoption is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company continues to assess the guidance and the impact it may have on its consolidated financial statements and has initiated a review to identify non-lease components, if any, in its lease agreements. In June 2016, the FASB issued ASU 2016-13 Financial Instruments - Credit Losses, Measurement of Credit Losses on Financial Instruments. This standard replaces the current incurred loss methodology with a methodology that reflects expected credit losses. Under this methodology, a company would recognize an impairment allowance equal to its current estimate of all contractual cash flows that it does not expect to collect from financial assets measured at amortized cost. The effective date of the standard will be for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, and early adoption is permitted beginning after December 15, 2018. The Company is assessing the impact this guidance may have on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18 Statement of Cash Flows (Topic 230) - Restricted Cash, related to the classification of restricted cash on the statement of cash flows. This ASU requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The effective date of the standard will be for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted. The Company is assessing the impact this guidance may have on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01 Business Combinations (Topic 805) - Clarifying the Definition of a Business. This standard narrows the FASB’s definition of a business and provides a framework that assists entities with making reasonable judgments about whether a transaction involves an asset or business. ASU 2017-01 states that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The effective date of the standard will be for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted. The ASU is to be applied prospectively and upon adoption the Company expects that the majority of its acquisitions will be deemed asset acquisitions which will result in the capitalization of related third party transaction costs. |
DISPOSITIONS |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Dispositions [Abstract] | |
Dispositions Disclosure [Table Text Block] | DISPOSITIONS On January 31, 2017, the Company sold two AL/MC properties in the Managed Properties segment for consideration of $14,956, net of selling costs, and recognized a gain on sale of $4,199 which is included in “Gain on sale of real estate” in the Consolidated Statements of Operations. In connection with this sale, the Company repaid $14,730 of debt. On June 15, 2017, the Company sold two IL properties in the Managed Properties segment for consideration of $32,398, net of selling costs, and recognized a gain on sale of $18,347 which is included in “Gain on sale of real estate” in the Consolidated Statements of Operations. In connection with this sale, the Company repaid $13,238 of debt. |
SEGMENT REPORTING |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | SEGMENT REPORTING As of June 30, 2017, the Company operated in two reportable business segments: Managed Properties and Triple Net Lease Properties. Under its Managed Properties segment, the Company invests in senior housing properties throughout the United States and engages property managers to manage those senior housing properties. Under its Triple Net Lease Properties segment, the Company invests in senior housing and healthcare properties throughout the United States and leases those properties to healthcare operating companies under triple net leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, taxes, insurance, repairs, capital improvements and the payroll expense of property-level employees. The Company evaluates performance of the combined properties in each reportable business segment based on segment NOI. The Company defines NOI as total revenues less property-level operating expenses, which include property management fees and travel cost reimbursements. The Company believes that net income, as defined by GAAP, is the most appropriate earnings measurement. However, the Company believes that segment NOI serves as a useful supplement to net income because it allows investors, analysts and management to measure unlevered property-level operating results and to compare the Company’s operating results between periods and to the operating results of other real estate companies on a consistent basis. Segment NOI should not be considered as an alternative to net income as determined in accordance with GAAP. Depreciation and amortization, interest expense, acquisition, transaction and integration expense, management fees and incentive compensation to affiliate, general and administrative expense, loss on extinguishment of debt, other expense (income), gain on sale of real estate and income tax expense (benefit) are not allocated to individual segments for purposes of assessing segment performance. There are no intersegment sales or transfers.
Property operating expense includes property management fees, property-level payroll expense and travel reimbursement costs. See Note 10 for additional information on these expenses related to Blue Harbor and Holiday. Assets by reportable business segment are reconciled to total assets as follows:
Rental revenue attributable to our triple net leases with Holiday accounted for 19.5% and 18.8% of the Company’s total revenues for the three months ended June 30, 2017 and 2016, respectively, and 19.4% and 18.9% for the six months ended June 30, 2017 and 2016, respectively. The following table presents the percentage of total revenues by geographic location:
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REAL ESTATE INVESTMENTS |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REAL ESTATE INVESTMENTS | REAL ESTATE INVESTMENTS
Depreciation expense was $23,514 and $22,002 for the three months ended June 30, 2017 and 2016, respectively, and $46,737 and $44,420 for the six months ended June 30, 2017 and 2016, respectively. The following table summarizes the Company’s real estate intangibles:
Amortization expense was $12,429 and $31,864 for the three months ended June 30, 2017 and 2016, respectively, and $26,724 and $56,813 for the six months ended June 30, 2017 and 2016, respectively. Additionally, amortization of above/below market leases was $37 and $35 for the three months ended June 30, 2017 and 2016, respectively, and $74 and $71 for the six months ended June 30, 2017 and 2016, respectively, and is reported as a net reduction to “Rental revenue” in the Consolidated Statements of Operations. |
RECEIVABLES AND OTHER ASSETS, NET |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RECEIVABLES AND OTHER ASSETS, NET | RECEIVABLES AND OTHER ASSETS, NET
The following table summarizes the allowance for doubtful accounts and the related provision for uncollectible receivables:
The provision for resident receivables and related write-offs are included in “Property operating expense” in the Consolidated Statements of Operations. |
MORTGAGE NOTES PAYABLE, NET |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MORTGAGE NOTES PAYABLE, NET | MORTGAGE NOTES PAYABLE, NET
During the three and six months ended June 30, 2017, the Company repaid $13,238 and $27,968 of debt, respectively, associated with the sale of four properties in the Managed Properties segment and recognized a loss on extinguishment of debt of $297 and $672, respectively, which represents the write-off of related unamortized deferred financing costs and other exit fees. During April 2017, the Company exercised an option to extend a floating rate debt balloon payment of approximately $98,000 from October 2017 to October 2018. The carrying value of the collateral relating to the fixed rate and floating rate mortgages was $1,567,642 and $974,297 as of June 30, 2017, respectively, and $1,600,019 and $1,018,245 as of December 31, 2016, respectively. The Company’s mortgage notes payable contain various customary financial and other covenants, in some cases including Debt Service Coverage Ratio and Project Yield, as defined in the agreements. The Company was in compliance with the covenants in its mortgage notes payable agreements as of June 30, 2017. The fair values of mortgage notes payable as of June 30, 2017 and December 31, 2016 was $2,097,516 and $2,137,097, respectively. Mortgage notes payable are not measured at fair value in the Consolidated Balance Sheets. The disclosed fair value of mortgage notes payable, classified as level 3 within the fair value hierarchy, is based on a discounted cash flow valuation model. Significant inputs in the model include amounts and timing of expected future cash flows and market yields which are constructed based on inputs implied from similar debt offerings. |
DERIVATIVE INSTRUMENTS |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS As of June 30, 2017, the Company held interest rate caps to hedge future payments on floating rate debt obligations. The interest rate caps are carried at fair value and are included in “Receivables and other assets, net” in the Consolidated Balance Sheets. The Company estimates the fair value of these instruments using pricing models that consider forward yield curves, cap strike rates, cap volatility and discount rates, which are classified as level 2 inputs. Significant inputs to the valuation of level 2 derivatives can be verified to market transactions, broker or dealer quotations or other pricing sources with reasonable levels of price transparency. The Company does not apply hedge accounting. The fair value adjustment on the Company’s interest rate caps was a loss of $36 and $60 for the three months ended June 30, 2017 and 2016, respectively, and $87 and $247 for the six months ended June 30, 2017 and 2016, respectively, and is included in “Other expense” in the Consolidated Statements of Operations. The following table presents information related to the Company’s outstanding interest rate caps:
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ACCRUED EXPENSES AND OTHER LIABILITIES |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES AND OTHER LIABILITIES | ACCRUED EXPENSES AND OTHER LIABILITIES
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TRANSACTIONS WITH AFFILIATES |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TRANSACTIONS WITH AFFILIATES | TRANSACTIONS WITH AFFILIATES Management Agreements New Senior is party to a management agreement (the “Management Agreement”) with the Manager, under which the Manager advises the Company on various aspects of its business and manages its day-to-day operations, subject to the supervision of the Company’s board of directors. For its management services, the Manager is entitled to a base management fee of 1.5% per annum of the Company’s gross equity. Gross equity is generally defined as the equity invested by Drive Shack Inc. (“Drive Shack”) (including cash contributed to the Company) as of the completion of the spin-off from Drive Shack, plus the aggregate offering price from stock offerings, plus certain capital contributions to subsidiaries, less capital distributions (calculated without regard to depreciation and amortization) and repurchases of common stock, calculated and payable monthly in arrears in cash. The Company incurred management fees of $3,824 and $3,839 during the three months ended June 30, 2017 and 2016, respectively, and $7,648 and $7,723 during the six months ended June 30, 2017 and 2016, respectively, under the Management Agreement, which are included in “Management fees and incentive compensation to affiliate” in the Consolidated Statements of Operations. As of June 30, 2017 and December 31, 2016, the Company had a payable for management fees of $1,275 and $1,280, respectively, which is included in “Due to affiliates” in the Consolidated Balance Sheets. The Manager is entitled to receive, on a quarterly basis, incentive compensation on a cumulative, but not compounding basis, in an amount equal to the product of (A) 25% of the dollar amount by which (1)(a) funds from operations (as defined in the Management Agreement) before the incentive compensation per share of common stock, plus (b) gains (or losses) from sales of property per share of common stock, plus (c) internal and third party acquisition-related expenses, plus (d) unconsummated transaction expenses, and plus (e) other non-routine items (as defined in the Management Agreement), exceed (2) an amount equal to (a) the weighted average value per share of the equity invested by Drive Shack in the assets of the Company (including cash contributed to the Company) as of the completion of the spin-off and the price per share of the Company’s common stock in any offerings by the Company (adjusted for prior capital dividends or capital distributions, which shall be calculated without regard to depreciation and amortization and repurchases of common stock) multiplied by (b) a simple interest rate of 10% per annum, multiplied by (B) the weighted average number of shares of common stock outstanding. The Manager earned incentive compensation of $2,930 and $591 during the three months ended June 30, 2017 and 2016, respectively, and $2,930 and $635 during the six months ended June 30, 2017 and 2016, respectively, which are included in “Management fees and incentive compensation to affiliate” in the Consolidated Statements of Operations. As of June 30, 2017 and December 31, 2016, the Company had a payable for incentive compensation of $2,930 and $2,106, respectively, which is included in “Due to affiliates” in the Consolidated Balance Sheets. The Manager is also entitled to receive, upon the successful completion of an equity offering, options with respect to 10% of the number of shares sold in the offering with an exercise price equal to the price paid by the purchaser in the offering. Because the Manager’s employees perform certain legal, accounting, due diligence, asset management and other services that outside professionals or outside consultants otherwise would perform, the Manager is paid or reimbursed, pursuant to the Management Agreement, for the cost of performing such tasks, provided that such costs and reimbursements are no greater than those which would be paid to outside professionals or consultants on an arm’s-length basis. The Company is also required to pay all operating expenses, except those specifically required to be borne by the Manager under the Management Agreement. The Company is required to pay expenses that include, but are not limited to, issuance and transaction costs incidental to the sourcing, evaluation, acquisition, management, disposition, and financing of the Company’s investments, legal, underwriting, sourcing, asset management and accounting and auditing fees and expenses, the compensation and expenses of independent directors, the costs associated with the establishment and maintenance of any credit facilities and other indebtedness of the Company (including commitment fees, legal fees, closing costs, etc.), expenses associated with other securities offerings of the Company, the costs of printing and mailing proxies and reports to the Company’s stockholders, costs incurred by employees or agents of the Manager for travel on the Company’s behalf, costs associated with any computer software or hardware that is used by the Company, costs to obtain liability insurance to indemnify directors and officers and the compensation and expenses of the Company’s transfer agent. The following table summarizes the Company’s reimbursement to the Manager for costs incurred for tasks and other services performed by the Manager under the Management Agreement:
As of June 30, 2017 and December 31, 2016, the Company had a payable for Manager reimbursements of $1,222 and $1,046, respectively, which is included in “Due to affiliates” in the Consolidated Balance Sheets. Property Management Agreements Within the Company’s Managed Properties segment, the Company is party to Property Management Agreements with Blue Harbor, an affiliate of Fortress, and Holiday, a portfolio company that is majority owned by a private equity fund managed by an affiliate of Fortress, to manage most of its senior housing properties. Pursuant to these Property Management Agreements, the Company pays monthly property management fees. For AL/MC properties managed by Blue Harbor and Holiday, the Company pays management fees equal to 6% of effective gross income for the first two years and 7% thereafter. For IL properties managed by Blue Harbor and Holiday, the Company generally pays management fees equal to 5% of effective gross income. For certain property management agreements, the Company may also pay an incentive fee based on operating performance of the properties. No incentive fees were incurred during the six months ended June 30, 2017 and 2016. Property management fees are included in “Property operating expense” in the Consolidated Statements of Operations. Other amounts paid to affiliated managers that are included in property operating expense are payroll expense and travel reimbursement costs. The payroll expense is structured as a reimbursement to the Property Manager, who is the employer of record. The following table summarizes property management fees and reimbursements paid by the Company to Property Managers affiliated with Fortress:
As of June 30, 2017 and December 31, 2016, the Company had payables for property management fees of $1,613 and $1,676, respectively, and property-level payroll expenses of $5,097 and $5,515, respectively, which are included in “Due to affiliates” in the Consolidated Balance Sheets. The Property Management Agreements with affiliated managers have initial terms of 5 or 10 years and provide for automatic one-year extensions after the initial term, subject to termination rights. Triple Net Lease Agreements Within the Company’s Triple Net Lease segment, the Company is party to triple net leases with Holiday. Pursuant to the leases, the tenant is required to pay monthly rent payments in accordance with the lease terms. Such payments amounted to $18,553 and $17,754 for the three months ended June 30, 2017 and 2016, respectively, and $37,106 and $35,508 for the six months ended June 30, 2017 and 2016, respectively. |
INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES New Senior is organized and conducts its operations to qualify as a REIT under the requirements of the Internal Revenue Code of 1986, as amended (the “Code”). However, certain of the Company’s activities are conducted through its taxable REIT subsidiary (“TRS”) and therefore are subject to federal and state income taxes at regular corporate tax rates. The following table presents the provision (benefit) for income taxes:
The following table presents the significant components of deferred tax assets:
In assessing the recoverability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income by the TRS during the periods in which temporary differences become deductible and before the net operating loss carryforward expires. The Company has not recorded a valuation allowance against its deferred tax assets as of June 30, 2017 or December 31, 2016 as management believes that it is more likely than not that its deferred tax assets will be realized. |
EQUITY |
6 Months Ended |
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Jun. 30, 2017 | |
Equity [Abstract] | |
EQUITY | EQUITY In January 2017 and June 2017, the Company issued an aggregate of 13,969 shares and 7,653 shares, respectively, of its common stock to its independent directors as compensation. In the first quarter of 2017, strike prices for outstanding options were reduced by $0.97, reflecting the portion of the Company’s 2016 dividends which were deemed return of capital. As of June 30, 2017, approximately 1.3 million shares of the Company’s common stock were held by Fortress, through its affiliates, and its principals. |
COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
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Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES As of June 30, 2017, management believes there are no material contingencies that would affect the Company’s results of operations, cash flows or financial position. Certain Obligations, Liabilities and Litigation The Company is and may become subject to various obligations, liabilities, investigations, inquiries and litigation assumed in connection with or arising from its on-going business, as well as acquisitions, sales, leasing and other activities. These obligations and liabilities (including the costs associated with investigations, inquiries and litigation) may be greater than expected or may not be known to the Company in advance. Any such obligations or liabilities could have a material adverse effect on the Company’s financial position, cash flows and results of operations, particularly if the Company is not entitled to indemnification, or if a responsible third party fails to indemnify the Company. Certain Tax-Related Covenants If New Senior is treated as a successor to Drive Shack under applicable U.S. federal income tax rules, and if Drive Shack failed to qualify as a REIT for a taxable year ending on or before December 31, 2015, New Senior could be prohibited from electing to be a REIT. Accordingly, in the separation and distribution agreement entered into to effect our spin-off from Drive Shack (“Separation and Distribution Agreement”), Drive Shack (i) represented that it had no knowledge of any fact or circumstance that would cause New Senior to fail to qualify as a REIT, (ii) covenanted to use commercially reasonable efforts to cooperate with New Senior as necessary to enable New Senior to qualify for taxation as a REIT and receive customary legal opinions concerning REIT status, including providing information and representations to New Senior and its tax counsel with respect to the composition of Drive Shack’s income and assets, the composition of its stockholders and its operation as a REIT, and (iii) covenanted to use its reasonable best efforts to maintain its REIT status for each of Drive Shack’s taxable years ending on or before December 31, 2015 (unless Drive Shack obtains an opinion from a nationally recognized tax counsel or a private letter ruling from the Internal Revenue Service (“IRS”) to the effect that Drive Shack’s failure to maintain its REIT status will not cause New Senior to fail to qualify as a REIT under the successor REIT rule referred to above). Proceedings Indemnified and Defended by Third Parties From time to time, the Company is party to certain legal actions, regulatory investigations and claims for which third parties are contractually obligated to indemnify, defend and hold the Company harmless. While the Company is presently not being defended by any tenant and other obligated third parties in these types of matters, there is no assurance that its tenants, their affiliates or other obligated third parties will continue to defend the Company in these matters, or that such parties will have sufficient assets, income and access to financing to enable them to satisfy their defense and indemnification obligations to the Company. Environmental Costs As a commercial real estate owner, the Company is subject to potential environmental costs. As of June 30, 2017, management of the Company is not aware of any environmental concerns that would have a material adverse effect on the Company’s financial position or results of operations. Capital Improvement and Repair Commitments The Company has agreed to make $11,500 and $1,000 available for capital improvements during the 15 year lease periods to the triple net lease properties under the Life Care Services Portfolio and Watermark, respectively, none of which has been funded as of June 30, 2017. Upon funding these capital improvements, the Company will be entitled to a rent increase. |
SUBSEQUENT EVENTS |
6 Months Ended |
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Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS These consolidated financial statements include a discussion of material events, if any, which have occurred subsequent to June 30, 2017 (referred to as subsequent events) through the issuance of the consolidated financial statements. On August 1, 2017, the Company’s board of directors declared a cash dividend on its common stock of $0.26 per common share for the quarter ended June 30, 2017. The dividend is payable on September 22, 2017 to shareholders of record on September 8, 2017. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
6 Months Ended |
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Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | The accompanying consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP’’) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The consolidated financial statements include the accounts of New Senior and its consolidated subsidiaries. All significant intercompany transactions and balances have been eliminated. New Senior consolidates those entities in which it has control over significant operating, financial and investing decisions of the entity. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included on Form 10-K for the year ended December 31, 2016, as filed with the SEC. |
Reclassifications | Certain prior period amounts have been reclassified to conform to the current period’s presentation. |
Use of Estimates | Use of Estimates Management is required to make estimates and assumptions when preparing financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the accompanying consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from management’s estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09 Revenues from Contracts with Customers (Topic 606). The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In August 2015, the FASB deferred the effective date of this standard by one year, which will be for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company has begun its process of assessing the impact of the guidance. To date the Company’s assessment efforts include the identification of various revenue streams within the scope of the guidance and the evaluation of certain revenue contracts with residents. The Company continues to evaluate the standard (and related clarifying guidance issued by the FASB) and the allowable methods of adoption and, currently, it expects to adopt the standard under the modified retrospective approach. ASU 2014-09 may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). Although the Company’s evaluation of the guidance is ongoing, it does not expect the adoption to have a material impact on its consolidated financial statements as a substantial portion of its revenue consists of rental income from leasing arrangements, which is excluded from ASU 2014-09. In February 2016, the FASB issued ASU 2016-02 Leases. This standard amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The effective date of the standard will be for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, and early adoption is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company continues to assess the guidance and the impact it may have on its consolidated financial statements and has initiated a review to identify non-lease components, if any, in its lease agreements. In June 2016, the FASB issued ASU 2016-13 Financial Instruments - Credit Losses, Measurement of Credit Losses on Financial Instruments. This standard replaces the current incurred loss methodology with a methodology that reflects expected credit losses. Under this methodology, a company would recognize an impairment allowance equal to its current estimate of all contractual cash flows that it does not expect to collect from financial assets measured at amortized cost. The effective date of the standard will be for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, and early adoption is permitted beginning after December 15, 2018. The Company is assessing the impact this guidance may have on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18 Statement of Cash Flows (Topic 230) - Restricted Cash, related to the classification of restricted cash on the statement of cash flows. This ASU requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The effective date of the standard will be for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted. The Company is assessing the impact this guidance may have on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01 Business Combinations (Topic 805) - Clarifying the Definition of a Business. This standard narrows the FASB’s definition of a business and provides a framework that assists entities with making reasonable judgments about whether a transaction involves an asset or business. ASU 2017-01 states that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The effective date of the standard will be for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted. The ASU is to be applied prospectively and upon adoption the Company expects that the majority of its acquisitions will be deemed asset acquisitions which will result in the capitalization of related third party transaction costs. |
SEGMENT REPORTING (Tables) |
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Segment Reporting |
Property operating expense includes property management fees, property-level payroll expense and travel reimbursement costs. See Note 10 for additional information on these expenses related to Blue Harbor and Holiday. Assets by reportable business segment are reconciled to total assets as follows:
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Percentage of Total Revenues by Geographic Location | The following table presents the percentage of total revenues by geographic location:
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REAL ESTATE INVESTMENTS (Tables) |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Investments |
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Real Estate Intangibles | The following table summarizes the Company’s real estate intangibles:
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RECEIVABLES AND OTHER ASSETS, NET (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables and Other Assets, Net |
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Allowance for Doubtful Accounts and Related Provision for Resident Receivables | The following table summarizes the allowance for doubtful accounts and the related provision for uncollectible receivables:
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MORTGAGE NOTES PAYABLE, NET (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Notes Payable, Net |
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DERIVATIVE INSTRUMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Interest Rate Caps | The following table presents information related to the Company’s outstanding interest rate caps:
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ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other Liabilities |
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TRANSACTIONS WITH AFFILIATES Transactions With Affiliates (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Transactions With Affiliates [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reimbursement to the Manager for Services Performed by the Manager | The following table summarizes the Company’s reimbursement to the Manager for costs incurred for tasks and other services performed by the Manager under the Management Agreement:
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Property Management Fees and Other Expenses Reimbursed to Property Managers | The following table summarizes property management fees and reimbursements paid by the Company to Property Managers affiliated with Fortress:
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INCOME TAXES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for Income Taxes | The following table presents the provision (benefit) for income taxes:
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Deferred Tax Assets | The following table presents the significant components of deferred tax assets:
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DISPOSITIONS (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jan. 31, 2017
USD ($)
Property
|
Jun. 30, 2017
USD ($)
Property
|
Mar. 31, 2017
USD ($)
|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2017
USD ($)
Property
|
Jun. 30, 2016
USD ($)
|
Jun. 15, 2017
USD ($)
Property
|
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Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Number of properties sold | Property | 2 | 4 | 4 | 2 | |||
Total consideration received, net of selling costs | $ 14,956 | $ 32,398 | |||||
Gain on sale of real estate | $ 4,199 | $ 18,347 | $ 0 | $ 22,546 | $ 0 | ||
Early repayment of debt | 27,968 | $ 0 | |||||
Mortgages [Member] | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Early repayment of debt | $ 13,238 | $ 14,730 | $ 27,968 |
REAL ESTATE INVESTMENTS, Real Estate Assets and Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
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Real Estate Investments, Net [Abstract] | |||||
Gross Carrying Amount | $ 2,768,409 | $ 2,768,409 | $ 2,773,179 | ||
Accumulated depreciation | (263,756) | (263,756) | (218,968) | ||
Net real estate property | 2,504,653 | 2,504,653 | 2,554,211 | ||
Depreciation expense | 23,514 | $ 22,002 | 46,737 | $ 44,420 | |
Real Estate Intangibles [Abstract] | |||||
Gross Carrying Amount | 317,773 | 317,773 | 319,929 | ||
Accumulated amortization | (280,234) | (280,234) | (255,452) | ||
Net real estate intangibles | 37,539 | 37,539 | 64,477 | ||
Amortization expense | 12,429 | 31,864 | 26,724 | 56,813 | |
Accretion of above/below market leases | 37 | $ 35 | 74 | $ 71 | |
Land [Member] | |||||
Real Estate Investments, Net [Abstract] | |||||
Gross Carrying Amount | 218,356 | 218,356 | 220,317 | ||
Accumulated depreciation | 0 | 0 | 0 | ||
Net real estate property | 218,356 | 218,356 | 220,317 | ||
Building and Improvements [Member] | |||||
Real Estate Investments, Net [Abstract] | |||||
Gross Carrying Amount | 2,422,839 | 2,422,839 | 2,430,658 | ||
Accumulated depreciation | (196,804) | (196,804) | (163,670) | ||
Net real estate property | 2,226,035 | 2,226,035 | 2,266,988 | ||
Furniture, Fixtures and Equipment [Member] | |||||
Real Estate Investments, Net [Abstract] | |||||
Gross Carrying Amount | 127,214 | 127,214 | 122,204 | ||
Accumulated depreciation | (66,952) | (66,952) | (55,298) | ||
Net real estate property | 60,262 | 60,262 | 66,906 | ||
Above/Below Market Lease Intangibles, Net [Member] | |||||
Real Estate Intangibles [Abstract] | |||||
Gross Carrying Amount | 5,868 | 5,868 | 5,868 | ||
Accumulated amortization | (653) | (653) | (556) | ||
Net real estate intangibles | 5,215 | $ 5,215 | $ 5,312 | ||
Weighted Average Remaining Amortization Period | 54 years 1 month | 53 years 8 months 6 days | |||
In-Place Lease Intangibles [Member] | |||||
Real Estate Intangibles [Abstract] | |||||
Gross Carrying Amount | 306,109 | $ 306,109 | $ 308,265 | ||
Accumulated amortization | (277,054) | (277,054) | (252,684) | ||
Net real estate intangibles | 29,055 | $ 29,055 | $ 55,581 | ||
Weighted Average Remaining Amortization Period | 2 years 8 months | 2 years 8 months 18 days | |||
Other Intangibles [Member] | |||||
Real Estate Intangibles [Abstract] | |||||
Gross Carrying Amount | 5,796 | $ 5,796 | $ 5,796 | ||
Accumulated amortization | (2,527) | (2,527) | (2,212) | ||
Net real estate intangibles | $ 3,269 | $ 3,269 | $ 3,584 | ||
Weighted Average Remaining Amortization Period | 9 years 7 months | 9 years 6 months 6 days |
RECEIVABLES AND OTHER ASSETS, NET (Details) - USD ($) $ in Thousands |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
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Receivables and Other Assets [Abstract] | |||||
Escrows held by lenders | [1] | $ 36,028 | $ 36,231 | ||
Prepaid expenses | 2,555 | 3,617 | |||
Resident receivables, net | 2,780 | 3,085 | |||
Deferred tax assets, net | 8,461 | 8,660 | |||
Security deposits | 3,397 | 3,238 | |||
Income tax receivable | 972 | 1,313 | |||
Assets held for sale | 0 | 10,824 | |||
Other assets and receivables | 4,001 | 4,266 | |||
Total receivables and other assets | 58,194 | $ 71,234 | |||
Allowance for Doubtful Accounts [Roll Forward] | |||||
Balance, beginning of period | 976 | $ 509 | |||
Provision for uncollectible receivables | 1,242 | 1,058 | |||
Write-offs, net of recoveries | (1,056) | (580) | |||
Balance, end of period | $ 1,162 | $ 987 | |||
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MORTGAGE NOTES PAYABLE, NET (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017
USD ($)
Property
|
Mar. 31, 2017
USD ($)
|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2017
USD ($)
Property
|
Jun. 30, 2016
USD ($)
|
Jun. 15, 2017
Property
|
Apr. 13, 2017
USD ($)
|
Jan. 31, 2017
Property
|
Dec. 31, 2016
USD ($)
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Mortgage Notes Payable [Abstract] | ||||||||||||||||
Outstanding Face Amount | $ 2,117,148 | $ 2,117,148 | $ 2,156,774 | |||||||||||||
Carrying value | [1] | $ 2,095,601 | $ 2,095,601 | 2,130,387 | ||||||||||||
Weighted Average Maturity (Years) | 5 years | |||||||||||||||
Early repayment of debt | $ 27,968 | $ 0 | ||||||||||||||
Number of properties sold | Property | 4 | 4 | 2 | 2 | ||||||||||||
Loss on extinguishment of debt | $ 297 | $ 0 | $ 672 | $ 0 | ||||||||||||
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid | $ 98,000 | |||||||||||||||
Mortgage Notes Payable [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Deferred financing costs | 22,662 | 22,662 | 27,797 | |||||||||||||
Early repayment of debt | 13,238 | $ 14,730 | 27,968 | |||||||||||||
Mortgage Notes Payable [Member] | Level 3 [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Fair value of mortgage notes payable | 2,097,516 | 2,097,516 | 2,137,097 | |||||||||||||
Mortgage Notes Payable [Member] | Fixed Rate [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Carrying value of collateral | 1,567,642 | 1,567,642 | 1,600,019 | |||||||||||||
Mortgage Notes Payable [Member] | Floating Rate [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Carrying value of collateral | 974,297 | $ 974,297 | 1,018,245 | |||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | LIBOR [Member] | Minimum [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Basis spread on variable rate (in hundredths) | 3.30% | |||||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | LIBOR [Member] | Maximum [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Basis spread on variable rate (in hundredths) | 3.80% | |||||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | Fixed Rate [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Outstanding Face Amount | 603,340 | $ 603,340 | 604,749 | |||||||||||||
Carrying value | [1] | 600,057 | $ 600,057 | 601,232 | ||||||||||||
Stated Interest Rate | 3.65% to 6.76% | |||||||||||||||
Weighted Average Maturity (Years) | 6 years 8 months | |||||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | Fixed Rate [Member] | Minimum [Member] | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Debt Instrument, Interest Rate During Period | 3.65% | |||||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | Fixed Rate [Member] | Maximum [Member] | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Debt Instrument, Interest Rate During Period | 6.76% | |||||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | Floating Rate [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Outstanding Face Amount | [2] | 687,048 | $ 687,048 | 717,254 | ||||||||||||
Carrying value | [1],[2] | 681,497 | $ 681,497 | 710,672 | ||||||||||||
Stated Interest Rate | [2] | 1M LIBOR + 2.20% to 1M LIBOR + 2.70% | ||||||||||||||
Weighted Average Maturity (Years) | [2] | 4 years 6 months | ||||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | Floating Rate [Member] | LIBOR [Member] | Minimum [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Basis spread on variable rate (in hundredths) | 2.20% | |||||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | Floating Rate [Member] | LIBOR [Member] | Maximum [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Basis spread on variable rate (in hundredths) | 2.70% | |||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Mortgage Loans, Outstanding Face Amount of $345,467 | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Outstanding Face Amount | $ 340,301 | $ 340,301 | ||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Mortgage Loans, Outstanding Face Amount of $345,467 | Through January 2019 [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Stated interest rate (in hundredths) | 4.00% | 4.00% | ||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Mortgage Loans, Outstanding Face Amount of $345,467 | After January 2019 [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Stated interest rate (in hundredths) | 4.99% | 4.99% | ||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Mortgage Loans, Outstanding Face Amount $293,531 | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Outstanding Face Amount | $ 289,360 | $ 289,360 | ||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Mortgage Loans, Outstanding Face Amount $293,531 | Through January 2019 [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Stated interest rate (in hundredths) | 3.80% | 3.80% | ||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Mortgage Loans, Outstanding Face Amount $293,531 | After January 2019 [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Stated interest rate (in hundredths) | 4.55% | 4.55% | ||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Fixed Rate [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Outstanding Face Amount | [3] | $ 676,428 | $ 676,428 | 683,137 | ||||||||||||
Carrying value | [1],[3] | 664,133 | $ 664,133 | 667,579 | ||||||||||||
Stated Interest Rate | [3] | 3.80% to 7.40% | ||||||||||||||
Weighted Average Maturity (Years) | [3] | 4 years 9 months | ||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Fixed Rate [Member] | Minimum [Member] | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Debt Instrument, Interest Rate During Period | 3.80% | |||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Fixed Rate [Member] | Maximum [Member] | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Debt Instrument, Interest Rate During Period | 7.40% | |||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Floating Rate [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Outstanding Face Amount | 150,332 | $ 150,332 | 151,634 | |||||||||||||
Carrying value | [1] | $ 149,914 | $ 149,914 | $ 150,904 | ||||||||||||
Stated Interest Rate | 3M LIBOR + 3.00% to 3M LIBOR + 3.25% | |||||||||||||||
Weighted Average Maturity (Years) | 1 year 1 month | |||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Floating Rate [Member] | LIBOR [Member] | Minimum [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Basis spread on variable rate (in hundredths) | 3.00% | |||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Floating Rate [Member] | LIBOR [Member] | Maximum [Member] | ||||||||||||||||
Mortgage Notes Payable [Abstract] | ||||||||||||||||
Basis spread on variable rate (in hundredths) | 3.25% | |||||||||||||||
|
DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Derivative Instruments [Abstract] | |||||
Outstanding notional amount | $ 730,838 | $ 730,838 | $ 731,007 | ||
Fair value | $ 28 | $ 28 | $ 115 | ||
LIBOR [Member] | Minimum [Member] | |||||
Derivative Instruments [Abstract] | |||||
Interest rate cap percentage | 3.30% | 3.30% | |||
LIBOR [Member] | Maximum [Member] | |||||
Derivative Instruments [Abstract] | |||||
Interest rate cap percentage | 3.80% | 3.80% | |||
Interest Rate Cap [Member] | |||||
Derivative Instruments [Abstract] | |||||
Fair value loss adjustment | $ 36 | $ 60 | $ 87 | $ 247 |
ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
||
---|---|---|---|---|
Accounts Payable and Accrued Liabilities [Abstract] | ||||
Security deposits payable | $ 60,431 | $ 57,186 | ||
Escrow Liabilities | [1] | 11,712 | 10,503 | |
Accounts payable | 10,356 | 10,398 | ||
Mortgage interest payable | 6,624 | 6,671 | ||
Deferred community fees, net | 5,209 | 5,257 | ||
Rent collected in advance | 3,571 | 3,180 | ||
Property tax payable | 4,542 | 3,877 | ||
Other liabilities | 3,970 | 3,751 | ||
Total accrued expenses and other liabilities | $ 106,415 | $ 100,823 | ||
|
TRANSACTIONS WITH AFFILIATES (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Management Agreements [Abstract] | |||||
Management fees and incentive compensation to affiliate | $ 6,754 | $ 4,430 | $ 10,578 | $ 8,358 | |
Due to affiliates | 12,137 | 12,137 | $ 11,623 | ||
Management Fees, Incentive Revenue | 2,930 | 591 | 2,930 | 635 | |
Property Management Agreements [Abstract] | |||||
Property management fees | 4,706 | 5,110 | 9,633 | 9,635 | |
Travel reimbursement costs | 80 | 92 | 165 | 184 | |
Property-level payroll expenses | 23,720 | 25,851 | 48,611 | 51,844 | |
Triple Net Lease Agreements [Abstract] | |||||
Rental revenue | 28,247 | 28,244 | $ 56,494 | 56,483 | |
Manager [Member] | |||||
Management Agreements [Abstract] | |||||
Management fee rate payable (in hundredths) | 1.50% | ||||
Management fees and incentive compensation to affiliate | 3,824 | 3,839 | $ 7,648 | 7,723 | |
Percentage used in calculation of annual incentive compensation paid to Manager (in hundredths) | 25.00% | ||||
Interest rate used in calculation of annual incentive compensation paid to Manager (in hundredths) | 10.00% | ||||
Reimbursement to manager for tasks and other services under the management agreement | 2,175 | 2,969 | $ 4,557 | 5,198 | |
Manager [Member] | General and Administrative Expense [Member] | |||||
Management Agreements [Abstract] | |||||
Reimbursement to manager for tasks and other services under the management agreement | 1,887 | 2,402 | 3,907 | 4,272 | |
Manager [Member] | Acquisition, Transaction and Integration Expense [Member] | |||||
Management Agreements [Abstract] | |||||
Reimbursement to manager for tasks and other services under the management agreement | 288 | 567 | 650 | 926 | |
Manager [Member] | Management Fees Under Management Agreement [Member] | |||||
Management Agreements [Abstract] | |||||
Due to affiliates | 1,275 | 1,275 | 1,280 | ||
Manager [Member] | Payable for Incentive Compensation [Member] | |||||
Management Agreements [Abstract] | |||||
Due to affiliates | 2,930 | 2,930 | 2,106 | ||
Manager [Member] | Reimbursement of Property-Level Payroll Expenses Under Property Management Agreement [Member] | |||||
Management Agreements [Abstract] | |||||
Due to affiliates | 1,222 | 1,222 | 1,046 | ||
Property Managers [Member] | Property Management Fees Under Property Management Agreement [Member] | |||||
Management Agreements [Abstract] | |||||
Due to affiliates | 1,613 | 1,613 | 1,676 | ||
Property Managers [Member] | Reimbursement of Property-Level Payroll Expenses Under Property Management Agreement [Member] | |||||
Management Agreements [Abstract] | |||||
Due to affiliates | 5,097 | 5,097 | $ 5,515 | ||
Managed Properties [Member] | |||||
Triple Net Lease Agreements [Abstract] | |||||
Rental revenue | 0 | 0 | $ 0 | 0 | |
Managed Properties [Member] | Blue Harbor and Holiday [Member] | Assisted Living and Memory Care Properties [Member] | |||||
Property Management Agreements [Abstract] | |||||
Percentage of property's gross income paid as property management fees for first two years (in hundredths) | 6.00% | ||||
Percentage of property's gross income paid as property management fees thereafter (in hundredths) | 7.00% | ||||
Initial term of Property Management Agreements | 2 years | ||||
Managed Properties [Member] | Blue Harbor and Holiday [Member] | Independent Living Properties [Member] | |||||
Property Management Agreements [Abstract] | |||||
Percentage of property's effective gross income paid as property management fees (in hundredths) | 5.00% | ||||
Managed Properties [Member] | Property Managers [Member] | |||||
Property Management Agreements [Abstract] | |||||
Extension period after initial term of Property Management Agreements | 1 year | ||||
Managed Properties [Member] | Holiday [Member] | |||||
Property Management Agreements [Abstract] | |||||
Extension period after initial term of Property Management Agreements | 1 year | ||||
Triple Net Lease Properties [Member] | |||||
Triple Net Lease Agreements [Abstract] | |||||
Rental revenue | 28,247 | 28,244 | $ 56,494 | 56,483 | |
Triple Net Lease Properties [Member] | Holiday [Member] | |||||
Triple Net Lease Agreements [Abstract] | |||||
Rental revenue | $ 18,553 | $ 17,754 | $ 37,106 | $ 35,508 | |
Minimum [Member] | Managed Properties [Member] | Property Managers [Member] | |||||
Property Management Agreements [Abstract] | |||||
Initial term of Property Management Agreements | 5 years | ||||
Minimum [Member] | Managed Properties [Member] | Holiday [Member] | |||||
Property Management Agreements [Abstract] | |||||
Percentage of property's effective gross income paid as property management fees (in hundredths) | 5.00% | ||||
Initial term of Property Management Agreements | 5 years | ||||
Maximum [Member] | Managed Properties [Member] | Property Managers [Member] | |||||
Property Management Agreements [Abstract] | |||||
Initial term of Property Management Agreements | 10 years | ||||
Maximum [Member] | Managed Properties [Member] | Holiday [Member] | |||||
Property Management Agreements [Abstract] | |||||
Percentage of property's effective gross income paid as property management fees (in hundredths) | 7.00% | ||||
Initial term of Property Management Agreements | 10 years |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Current | |||||
Federal | $ 0 | $ 0 | $ 0 | $ 0 | |
State and local | 83 | 46 | 154 | 121 | |
Total current provision | 83 | 46 | 154 | 121 | |
Deferred | |||||
Federal | 57 | (519) | 152 | (798) | |
State and local | 7 | (52) | 47 | (74) | |
Total deferred provision (benefit) | 64 | (571) | 199 | (872) | |
Total provision (benefit) for income taxes | 147 | $ (525) | 353 | $ (751) | |
Deferred tax assets: | |||||
Prepaid fees and rent | 1,797 | 1,797 | $ 1,816 | ||
Net operating losses | 4,854 | 4,854 | 4,386 | ||
Deferred rent | 2,193 | 2,193 | 3,129 | ||
Tax credits | 42 | 42 | 42 | ||
Other | 169 | 169 | 113 | ||
Total deferred tax assets | 9,055 | 9,055 | 9,486 | ||
Less valuation allowance | 0 | 0 | 0 | ||
Net deferred tax assets | 9,055 | 9,055 | 9,486 | ||
Deferred tax liabilities: | |||||
Depreciation and amortization | 594 | 594 | 826 | ||
Total deferred tax liabilities | 594 | 594 | 826 | ||
Deferred tax assets, net | $ 8,461 | $ 8,461 | $ 8,660 |
EQUITY (Details) - $ / shares |
6 Months Ended | ||
---|---|---|---|
Jun. 15, 2017 |
Jan. 04, 2017 |
Jun. 30, 2017 |
|
Equity [Abstract] | |||
Director’s shares issued | 7,653 | 13,969 | 21,622 |
Strike price reduction for outstanding options | $ 0.97 | ||
Fortress Investment Group, LLC [Member] | |||
Related Party Transaction [Line Items] | |||
Common stock outstanding | 1,300,000 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Capital Improvement and Repair Commitments [Abstract] | ||
Funding for capital improvements | $ 3,569 | $ 2,221 |
Triple Net Lease [Member] | LCS Portfolio [Member] | ||
Capital Improvement and Repair Commitments [Abstract] | ||
Lease period | 15 years | |
Triple Net Lease [Member] | LCS Portfolio [Member] | Additional Capital Improvements [Member] | ||
Capital Improvement and Repair Commitments [Abstract] | ||
Capital improvements | $ 11,500 | |
Triple Net Lease [Member] | Watermark [Member] | Additional Capital Improvements [Member] | ||
Capital Improvement and Repair Commitments [Abstract] | ||
Capital improvements | $ 1,000 |
SUBSEQUENT EVENTS (Details) - $ / shares |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Aug. 01, 2017 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Subsequent Event [Line Items] | |||||
Dividends declared per share of common stock | $ 0.26 | $ 0.26 | $ 0.52 | $ 0.52 | |
Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Dividends declared per share of common stock | $ 0.26 |
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