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 |
• | uncertainty regarding the outcome of our exploration of strategic alternatives, including whether it will result in any transaction being consummated; |
• | our ability to successfully manage the proposed transition to self-management; |
• | 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 stockholders, particularly in light of the cash shortfall described in our risk factors under Item 1A. and 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 tenant 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, 2018, accounted for 76.4% of net operating income (“NOI”) from our Managed Properties segment and 91.3% 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 tenant 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 tenant; |
• | the ability of our property managers and tenant to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to us and third parties; |
• | 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 merger of Fortress Investment Group LLC with affiliates of SoftBank Group Corp. (“Softbank”); |
• | 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, 2018 | December 31, 2017 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Real estate investments: | |||||||
Land | $ | 182,238 | $ | 182,238 | |||
Buildings, improvements and other | 2,346,680 | 2,329,524 | |||||
Accumulated depreciation | (318,982 | ) | (275,794 | ) | |||
Net real estate property | 2,209,936 | 2,235,968 | |||||
Acquired lease and other intangible assets | 8,638 | 264,438 | |||||
Accumulated amortization | (2,682 | ) | (249,198 | ) | |||
Net real estate intangibles | 5,956 | 15,240 | |||||
Net real estate investments | 2,215,892 | 2,251,208 | |||||
Cash and cash equivalents | 170,762 | 137,327 | |||||
Straight-line rent receivables | 3,148 | 82,445 | |||||
Receivables and other assets, net | 38,513 | 37,047 | |||||
Total Assets | $ | 2,428,315 | $ | 2,508,027 | |||
Liabilities and Equity | |||||||
Liabilities | |||||||
Mortgage notes payable, net | $ | 1,951,042 | $ | 1,907,928 | |||
Due to affiliates | 13,140 | 9,550 | |||||
Accrued expenses and other liabilities | 53,391 | 84,664 | |||||
Total Liabilities | $ | 2,017,573 | $ | 2,002,142 | |||
Commitments and contingencies (Note 14) | |||||||
Equity | |||||||
Preferred stock $0.01 par value, 100,000,000 shares authorized and none issued or outstanding as of both June 30, 2018 and December 31, 2017 | $ | — | $ | — | |||
Common stock $0.01 par value, 2,000,000,000 shares authorized, 82,148,869 shares issued and outstanding as of both June 30, 2018 and December 31, 2017, respectively | 821 | 821 | |||||
Additional paid-in capital | 898,135 | 898,132 | |||||
Accumulated deficit | (488,214 | ) | (393,068 | ) | |||
Total Equity | $ | 410,742 | $ | 505,885 | |||
Total Liabilities and Equity | $ | 2,428,315 | $ | 2,508,027 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues | |||||||||||||||
Resident fees and services | $ | 96,484 | $ | 86,039 | $ | 171,827 | $ | 172,765 | |||||||
Rental revenue | 12,368 | 28,247 | 36,243 | 56,494 | |||||||||||
Total revenues | 108,852 | 114,286 | 208,070 | 229,259 | |||||||||||
Expenses | |||||||||||||||
Property operating expense | 63,510 | 58,668 | 115,609 | 118,252 | |||||||||||
Depreciation and amortization | 24,521 | 35,943 | 51,246 | 73,461 | |||||||||||
Interest expense | 25,755 | 23,505 | 47,678 | 46,571 | |||||||||||
Acquisition, transaction and integration expense | 8,683 | 446 | 11,571 | 794 | |||||||||||
Management fees and incentive compensation to affiliate | 3,687 | 6,754 | 7,439 | 10,578 | |||||||||||
General and administrative expense | 3,140 | 3,726 | 6,892 | 7,737 | |||||||||||
Loss on extinguishment of debt | 58,544 | 297 | 58,544 | 672 | |||||||||||
Other expense | 32 | 26 | 1,412 | 161 | |||||||||||
Total expenses | $ | 187,872 | $ | 129,365 | $ | 300,391 | $ | 258,226 | |||||||
Gain on sale of real estate | — | 18,347 | — | 22,546 | |||||||||||
Gain on lease termination | 40,090 | — | 40,090 | — | |||||||||||
(Loss) income before income taxes | (38,930 | ) | 3,268 | (52,231 | ) | (6,421 | ) | ||||||||
Income tax expense | 151 | 147 | 199 | 353 | |||||||||||
Net (loss) income | $ | (39,081 | ) | $ | 3,121 | $ | (52,430 | ) | $ | (6,774 | ) | ||||
Net (loss) income per share of common stock (A) | |||||||||||||||
Basic | $ | (0.48 | ) | $ | 0.04 | $ | (0.64 | ) | $ | (0.08 | ) | ||||
Diluted | $ | (0.48 | ) | $ | 0.04 | $ | (0.64 | ) | $ | (0.08 | ) | ||||
Weighted average number of shares of common stock outstanding | |||||||||||||||
Basic | 82,148,869 | 82,142,562 | 82,148,869 | 82,141,661 | |||||||||||
Diluted (B) | 82,148,869 | 82,778,761 | 82,148,869 | 82,141,661 | |||||||||||
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, 2017 | 82,148,869 | $ | 821 | $ | (393,068 | ) | $ | 898,132 | $ | 505,885 | |||||||||
Fair value of stock options issued | — | — | — | 3 | 3 | ||||||||||||||
Dividends declared | — | — | (42,716 | ) | — | (42,716 | ) | ||||||||||||
Net loss | — | — | (52,430 | ) | — | (52,430 | ) | ||||||||||||
Equity at June 30, 2018 | 82,148,869 | $ | 821 | $ | (488,214 | ) | $ | 898,135 | $ | 410,742 |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cash Flows From Operating Activities | |||||||
Net loss | $ | (52,430 | ) | $ | (6,774 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation of tangible assets and amortization of intangible assets | 51,281 | 73,535 | |||||
Amortization of deferred financing costs | 5,294 | 4,774 | |||||
Amortization of deferred revenue, net | 1,196 | 204 | |||||
Amortization of premium on mortgage notes payable | — | (296 | ) | ||||
Non-cash straight line rent | (5,019 | ) | (9,133 | ) | |||
Gain on sale of real estate | — | (22,546 | ) | ||||
Non-cash adjustment on lease termination (A) | 29,910 | — | |||||
Loss on extinguishment of debt | 58,544 | 672 | |||||
Provision for uncollectible receivables | 900 | 1,242 | |||||
Other non-cash expense | 1,257 | 206 | |||||
Changes in: | |||||||
Receivables and other assets, net | (5,103 | ) | 238 | ||||
Due to affiliates | 3,590 | 514 | |||||
Accrued expenses and other liabilities | 12,464 | 5,374 | |||||
Net cash provided by operating activities | $ | 101,884 | $ | 48,010 | |||
Cash Flows From Investing Activities | |||||||
Proceeds from the sale of real estate, net | $ | — | $ | 47,354 | |||
Capital expenditures, net of insurance proceeds | (8,185 | ) | (10,309 | ) | |||
Net cash (used in) provided by investing activities | $ | (8,185 | ) | $ | 37,045 | ||
Cash Flows From Financing Activities | |||||||
Principal payments of mortgage notes payable | $ | (12,782 | ) | $ | (11,657 | ) | |
Proceeds from mortgage notes payable | 720,000 | — | |||||
Repayments of mortgage notes payable and capital lease obligations | (663,796 | ) | (27,968 | ) | |||
Payment of exit fee on extinguishment of debt | (51,886 | ) | (311 | ) | |||
Payment of deferred financing costs | (12,320 | ) | — | ||||
Purchase of interest rate caps | (341 | ) | — | ||||
Payment of common stock dividend | (42,716 | ) | (42,714 | ) | |||
Net cash used in financing activities | $ | (63,841 | ) | $ | (82,650 | ) | |
Net increase (decrease) in cash, cash equivalents and restricted cash | 29,858 | 2,405 | |||||
Cash, cash equivalents and restricted cash, beginning of period | 157,485 | 97,517 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 187,343 | $ | 99,922 | |||
Supplemental Disclosure of Cash Flow Information | |||||||
Cash paid during the period for interest expense | $ | 42,234 | $ | 42,134 | |||
Cash paid during the period for income taxes | 326 | 271 | |||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities | |||||||
Issuance of common stock | $ | — | $ | 214 | |||
Capital lease obligations | 121 | — | |||||
Furniture, fixtures, equipment and other improvements (B) | 9,975 | — |
(A) | Primarily includes the non-cash write-offs of straight-line rent receivables and net above-market rent lease intangible assets, offset by the fair value of furniture, fixtures, equipment and other improvements received by us as a result of the Lease Termination (as defined in Note 1). Refer to Note 3 for additional details related to the Lease Termination. |
(B) | Fair value of furniture, fixtures, equipment and other improvements received by us as a result of the Lease Termination. Refer to Note 3 for additional details related to the Lease Termination. |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Reconciliation of Cash, Cash Equivalents and Restricted Cash | |||||||
Cash and cash equivalents | $ | 137,327 | $ | 58,048 | |||
Restricted cash (A) | 20,158 | 39,469 | |||||
Total, beginning of period | $ | 157,485 | $ | 97,517 | |||
Cash and cash equivalents | $ | 170,762 | $ | 60,497 | |||
Restricted cash (A) | 16,581 | 39,425 | |||||
Total, end of period | $ | 187,343 | $ | 99,922 |
(A) | Consists of (i) amounts held by lenders in tax, insurance, replacement reserve and other escrow accounts and (ii) security deposits and is included in “Receivables and other assets, net” in the Consolidated Balance Sheets. |
1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3. | LEASE TERMINATION |
4. | DISPOSITIONS |
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | ||||||||||||||||||||||
Triple Net Lease Properties | Managed Properties | Consolidated | Triple Net Lease Properties | Managed Properties | Consolidated | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Resident fees and services | $ | — | $ | 96,484 | $ | 96,484 | $ | — | $ | 86,039 | $ | 86,039 | |||||||||||
Rental revenue | 12,368 | — | 12,368 | 28,247 | — | 28,247 | |||||||||||||||||
Less: Property operating expense | — | 63,510 | 63,510 | — | 58,668 | 58,668 | |||||||||||||||||
Segment NOI | $ | 12,368 | $ | 32,974 | $ | 45,342 | $ | 28,247 | $ | 27,371 | $ | 55,618 | |||||||||||
Depreciation and amortization | 24,521 | 35,943 | |||||||||||||||||||||
Interest expense | 25,755 | 23,505 | |||||||||||||||||||||
Acquisition, transaction and integration expense | 8,683 | 446 | |||||||||||||||||||||
Management fees and incentive compensation to affiliate | 3,687 | 6,754 | |||||||||||||||||||||
General and administrative expense | 3,140 | 3,726 | |||||||||||||||||||||
Loss on extinguishment of debt | 58,544 | 297 | |||||||||||||||||||||
Other expense | 32 | 26 | |||||||||||||||||||||
Total expenses | 124,362 | 70,697 | |||||||||||||||||||||
Gain on sale of real estate | — | 18,347 | |||||||||||||||||||||
Gain on lease termination | 40,090 | — | |||||||||||||||||||||
(Loss) income before income taxes | (38,930 | ) | 3,268 | ||||||||||||||||||||
Income tax expense | 151 | 147 | |||||||||||||||||||||
Net (loss) income | $ | (39,081 | ) | $ | 3,121 |
Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | ||||||||||||||||||||||
Triple Net Lease Properties | Managed Properties | Consolidated | Triple Net Lease Properties | Managed Properties | Consolidated | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Resident fees and services | $ | — | $ | 171,827 | $ | 171,827 | $ | — | $ | 172,765 | $ | 172,765 | |||||||||||
Rental revenue | 36,243 | — | 36,243 | 56,494 | — | 56,494 | |||||||||||||||||
Less: Property operating expense | — | 115,609 | 115,609 | — | 118,252 | 118,252 | |||||||||||||||||
Segment NOI | $ | 36,243 | $ | 56,218 | $ | 92,461 | $ | 56,494 | $ | 54,513 | $ | 111,007 | |||||||||||
Depreciation and amortization | 51,246 | 73,461 | |||||||||||||||||||||
Interest expense | 47,678 | 46,571 | |||||||||||||||||||||
Acquisition, transaction and integration expense | 11,571 | 794 | |||||||||||||||||||||
Management fees and incentive compensation to affiliate | 7,439 | 10,578 | |||||||||||||||||||||
General and administrative expense | 6,892 | 7,737 | |||||||||||||||||||||
Loss on extinguishment of debt | 58,544 | 672 | |||||||||||||||||||||
Other expense | 1,412 | 161 | |||||||||||||||||||||
Total expenses | 184,782 | 139,974 | |||||||||||||||||||||
Gain on sale of real estate | — | 22,546 | |||||||||||||||||||||
Gain on lease termination | 40,090 | — | |||||||||||||||||||||
Loss before income taxes | (52,231 | ) | (6,421 | ) | |||||||||||||||||||
Income tax expense | 199 | 353 | |||||||||||||||||||||
Net loss | $ | (52,430 | ) | $ | (6,774 | ) |
June 30, 2018 | December 31, 2017 | ||||||||||||
Amount | Percentage | Amount | Percentage | ||||||||||
Managed Properties | $ | 2,266,975 | 93.4 | % | $ | 1,430,957 | 57.1 | % | |||||
Triple Net Lease Properties | 58,939 | 2.4 | % | 980,666 | 39.1 | % | |||||||
All other assets (A) | 102,401 | 4.2 | % | 96,404 | 3.8 | % | |||||||
Total assets | $ | 2,428,315 | 100.0 | % | $ | 2,508,027 | 100.0 | % |
(A) | Primarily consists of corporate cash which is not directly attributable to our reportable business segments. |
As of and for the six months ended June 30, 2018 | As of and for the six months ended June 30, 2017 | ||||||||||
Number of Communities | % of Total Revenue | Number of Communities | % of Total Revenue | ||||||||
Florida | 15 | 12.6 | % | 24 | 19.0 | % | |||||
California | 11 | 11.4 | % | 11 | 9.8 | % | |||||
Texas | 13 | 9.5 | % | 19 | 12.2 | % | |||||
North Carolina | 9 | 7.3 | % | 9 | 6.5 | % | |||||
Pennsylvania | 7 | 7.0 | % | 7 | 5.9 | % | |||||
Oregon | 9 | 5.8 | % | 9 | 4.9 | % | |||||
Other | 69 | 46.4 | % | 69 | 41.7 | % | |||||
Total | 133 | 100.0 | % | 148 | 100.0 | % |
6. | REAL ESTATE INVESTMENTS |
June 30, 2018 | December 31, 2017 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Depreciation | Net Carrying Value | Gross Carrying Amount | Accumulated Depreciation | Net Carrying Value | ||||||||||||||||||
Land | $ | 182,238 | $ | — | $ | 182,238 | $ | 182,238 | $ | — | $ | 182,238 | |||||||||||
Building and improvements | 2,221,301 | (240,239 | ) | 1,981,062 | 2,216,461 | (208,540 | ) | 2,007,921 | |||||||||||||||
Furniture, fixtures and equipment | 125,379 | (78,743 | ) | 46,636 | 113,063 | (67,254 | ) | 45,809 | |||||||||||||||
Total real estate investments | $ | 2,528,918 | $ | (318,982 | ) | $ | 2,209,936 | $ | 2,511,762 | $ | (275,794 | ) | $ | 2,235,968 |
June 30, 2018 | December 31, 2017 | ||||||||||||||||||||||||||
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 (A) | $ | — | $ | — | $ | — | 0.0 years | $ | 1,607 | $ | (380 | ) | $ | 1,227 | 12.9 years | ||||||||||||
In-place lease and other intangibles | 8,638 | (2,682 | ) | 5,956 | 41.6 years | 262,831 | (248,818 | ) | 14,013 | 18.3 years | |||||||||||||||||
Total intangibles | $ | 8,638 | $ | (2,682 | ) | $ | 5,956 | $ | 264,438 | $ | (249,198 | ) | $ | 15,240 |
(A) | Represents balances related to the triple net leases with affiliates of Holiday, which were written-off in conjunction with the Lease Termination. |
7. | STRAIGHT-LINE RENT RECEIVABLES |
8. | RECEIVABLES AND OTHER ASSETS, NET |
June 30, 2018 | December 31, 2017 | ||||||
Escrows held by lenders (A) | $ | 13,956 | $ | 16,936 | |||
Prepaid expenses | 3,864 | 4,490 | |||||
Resident receivables, net | 3,289 | 2,672 | |||||
Deferred tax assets, net | 5,388 | 5,475 | |||||
Security deposits | 2,625 | 3,222 | |||||
Income tax receivable | 989 | 802 | |||||
Other assets and receivables | 8,402 | 3,450 | |||||
Total receivables and other assets | $ | 38,513 | $ | 37,047 |
(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, | |||||||
2018 | 2017 | ||||||
Balance, beginning of period | $ | 938 | $ | 976 | |||
Provision for uncollectible receivables | 900 | 1,242 | |||||
Write-offs, net of recoveries | (798 | ) | (1,056 | ) | |||
Balance, end of period | $ | 1,040 | $ | 1,162 |
9. | MORTGAGE NOTES PAYABLE, NET |
June 30, 2018 | December 31, 2017 | ||||||||||||||||||||
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 | $ | 562,462 | $ | 559,448 | Aug 2019 - Sep 2025 | 3.65% to 4.93% | 6.0 | $ | 563,526 | $ | 560,182 | ||||||||||
Floating Rate (B)(C) | 1,355,440 | 1,341,021 | May 2019 - May 2022 | 1M LIBOR + 2.20% to 1M LIBOR + 7.00% | 2.2 | 640,880 | 636,166 | ||||||||||||||
Triple Net Lease Properties | |||||||||||||||||||||
Fixed Rate (D) | — | — | — | — | 0.0 | 669,656 | 660,646 | ||||||||||||||
Floating Rate (E) | 50,626 | 50,573 | Apr 2019 | 3M LIBOR + 3.00% | 0.8 | 51,036 | 50,934 | ||||||||||||||
Total | $ | 1,968,528 | $ | 1,951,042 | 3.2 | $ | 1,925,098 | $ | 1,907,928 |
(A) | The totals are reported net of deferred financing costs of $17.5 million and $17.2 million as of June 30, 2018 and December 31, 2017, respectively. |
(B) | Substantially all of these loans have LIBOR caps that range between 3.30% and 3.71% as of June 30, 2018. |
(C) | Includes loans with an outstanding face amount of $720.0 million as of June 30, 2018, for which interest rates will increase by 0.50% in November 2018 and an additional 0.50% in February 2019. |
(D) | The amounts as of December 31, 2017 represents loans under previous terms, which were refinanced and replaced in May 2018. See below for further information. |
(E) | We have an option to extend the maturity date to April 2020, subject to a fee of 0.125% of the then-outstanding principal balance. |
10. | ACCRUED EXPENSES AND OTHER LIABILITIES |
June 30, 2018 | December 31, 2017 | ||||||
Security deposits payable (A) | $ | 2,898 | $ | 46,291 | |||
Escrow liabilities (B) | 470 | 6,664 | |||||
Accounts payable | 12,406 | 9,794 | |||||
Mortgage interest payable | 6,446 | 6,297 | |||||
Deferred community fees, net | 5,329 | 4,612 | |||||
Rent collected in advance | 3,240 | 2,091 | |||||
Property tax payable | 7,280 | 3,331 | |||||
Other liabilities | 15,322 | 5,584 | |||||
Total accrued expenses and other liabilities | $ | 53,391 | $ | 84,664 |
(A) | Decrease from December 31, 2017 represents the retention of security deposits by us as a result of the Lease Termination. Refer to Note 3 for additional details related to the Lease Termination. |
(B) | 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. |
11. | TRANSACTIONS WITH AFFILIATES |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Included in: | |||||||||||||||
General and administrative expense | $ | 1,494 | $ | 1,887 | $ | 3,270 | $ | 3,907 | |||||||
Acquisition, transaction and integration expense | 362 | 288 | 850 | 650 | |||||||||||
Total reimbursements to the Manager | $ | 1,856 | $ | 2,175 | $ | 4,120 | $ | 4,557 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Property management fees | $ | 4,959 | $ | 4,706 | $ | 8,840 | $ | 9,633 | |||||||
Travel reimbursement costs | 57 | 80 | 113 | 165 | |||||||||||
Property-level payroll expenses | 23,873 | 23,720 | 43,234 | 48,611 |
12. | INCOME TAXES |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Current | |||||||||||||||
Federal | $ | — | $ | — | $ | (42 | ) | $ | — | ||||||
State and local | 126 | 83 | 153 | 154 | |||||||||||
Total current provision | 126 | 83 | 111 | 154 | |||||||||||
Deferred | |||||||||||||||
Federal | 20 | 57 | 79 | 152 | |||||||||||
State and local | 5 | 7 | 9 | 47 | |||||||||||
Total deferred provision | 25 | 64 | 88 | 199 | |||||||||||
Total provision for income taxes | $ | 151 | $ | 147 | $ | 199 | $ | 353 |
June 30, 2018 | December 31, 2017 | ||||||
Deferred tax assets: | |||||||
Prepaid fees and rent | $ | 816 | $ | 790 | |||
Net operating losses | 4,185 | 4,050 | |||||
Deferred rent | 506 | 949 | |||||
Tax credits | — | 42 | |||||
Other | 106 | 99 | |||||
Total deferred tax assets | 5,613 | 5,930 | |||||
Less valuation allowance | — | — | |||||
Net deferred tax assets | 5,613 | 5,930 | |||||
Deferred tax liabilities: | |||||||
Depreciation and amortization | 225 | 455 | |||||
Total deferred tax liabilities | 225 | 455 | |||||
Total net deferred tax assets | $ | 5,388 | $ | 5,475 |
13. | EQUITY |
14. | COMMITMENTS AND CONTINGENCIES |
15. | SUBSEQUENT EVENTS |
Three Months Ended June 30, | Increase (Decrease) | |||||||||||||
(dollars in thousands) | 2018 | 2017 | Amount | Percentage | ||||||||||
Segment NOI for Managed Properties | $ | 32,974 | $ | 27,371 | $ | 5,603 | 20.5 | % | ||||||
Segment NOI for Triple Net Lease Properties | 12,368 | 28,247 | (15,879 | ) | (56.2 | )% | ||||||||
Total segment NOI | 45,342 | 55,618 | (10,276 | ) | (18.5 | )% | ||||||||
Expenses | ||||||||||||||
Depreciation and amortization | 24,521 | 35,943 | (11,422 | ) | (31.8 | )% | ||||||||
Interest expense | 25,755 | 23,505 | 2,250 | 9.6 | % | |||||||||
Acquisition, transaction and integration expense | 8,683 | 446 | 8,237 | NM | ||||||||||
Management fees and incentive compensation to affiliate | 3,687 | 6,754 | (3,067 | ) | (45.4 | )% | ||||||||
General and administrative expense | 3,140 | 3,726 | (586 | ) | (15.7 | )% | ||||||||
Loss on extinguishment of debt | 58,544 | 297 | 58,247 | NM | ||||||||||
Other expense | 32 | 26 | 6 | 23.1 | % | |||||||||
Total expenses | 124,362 | 70,697 | 53,665 | 75.9 | % | |||||||||
Gain on sale of real estate | — | 18,347 | (18,347 | ) | (100.0 | )% | ||||||||
Gain on lease termination | 40,090 | — | 40,090 | NM | ||||||||||
(Loss) income before income taxes | (38,930 | ) | 3,268 | (42,198 | ) | NM | ||||||||
Income tax expense | 151 | 147 | 4 | 2.7 | % | |||||||||
Net (loss) income | $ | (39,081 | ) | $ | 3,121 | $ | (42,202 | ) | NM |
Same Store Portfolio | Total Portfolio | ||||||||||||||||||||||||||||
(dollars in thousands, except per bed data) | 2018 | 2017 | Change | % | 2018 | 2017 | Change | % | |||||||||||||||||||||
Resident fees and services | $ | 71,254 | $ | 71,345 | $ | (91 | ) | (0.1 | )% | $ | 96,484 | $ | 86,039 | $ | 10,445 | 12.1 | % | ||||||||||||
Less: Property operating expense | 47,278 | 46,700 | 578 | 1.2 | % | 63,510 | 58,668 | 4,842 | 8.3 | % | |||||||||||||||||||
NOI | $ | 23,976 | $ | 24,645 | (669 | ) | (2.7 | )% | $ | 32,974 | $ | 27,371 | $ | 5,603 | 20.5 | % | |||||||||||||
Total properties | 77 | 77 | 132 | 90 | |||||||||||||||||||||||||
Average available beds | 8,890 | 8,883 | 11,494 | 11,128 | |||||||||||||||||||||||||
Average occupancy (%) | 85.4 | 86.8 | 85.1 | 85.6 | |||||||||||||||||||||||||
Average monthly revenue per occupied bed | $ | 3,128 | $ | 3,085 | $ | 3,288 | $ | 3,012 |
Same Store Portfolio | Total Portfolio | ||||||||||||||||||||||||||||
(dollars in thousands) | 2018 | 2017 | Change | % | 2018 | 2017 | Change | % | |||||||||||||||||||||
Rental revenue | $ | 1,582 | $ | 1,581 | $ | 1 | 0.1 | % | $ | 12,368 | $ | 28,247 | $ | (15,879 | ) | (56.2 | )% | ||||||||||||
NOI | $ | 1,582 | $ | 1,581 | $ | 1 | 0.1 | % | $ | 12,368 | $ | 28,247 | $ | (15,879 | ) | (56.2 | )% | ||||||||||||
Total properties | 1 | 1 | 1 | 58 | |||||||||||||||||||||||||
Average available beds | 463 | 463 | 2,412 | 7,543 | |||||||||||||||||||||||||
Average occupancy (%) | 89.3 | 89.8 | 85.5 | 87.0 |
Six Months Ended June 30, | Increase (Decrease) | |||||||||||||
(dollars in thousands) | 2018 | 2017 | Amount | Percentage | ||||||||||
Segment NOI for Managed Properties | $ | 56,218 | $ | 54,513 | $ | 1,705 | 3.1 | % | ||||||
Segment NOI for Triple Net Lease Properties | 36,243 | 56,494 | (20,251 | ) | (35.8 | )% | ||||||||
Total segment NOI | 92,461 | 111,007 | (18,546 | ) | (16.7 | )% | ||||||||
Expenses | ||||||||||||||
Depreciation and amortization | 51,246 | 73,461 | (22,215 | ) | (30.2 | )% | ||||||||
Interest expense | 47,678 | 46,571 | 1,107 | 2.4 | % | |||||||||
Acquisition, transaction and integration expense | 11,571 | 794 | 10,777 | NM | ||||||||||
Management fees and incentive compensation to affiliate | 7,439 | 10,578 | (3,139 | ) | (29.7 | )% | ||||||||
General and administrative expense | 6,892 | 7,737 | (845 | ) | (10.9 | )% | ||||||||
Loss on extinguishment of debt | 58,544 | 672 | 57,872 | NM | ||||||||||
Other expense | 1,412 | 161 | 1,251 | NM | ||||||||||
Total expenses | 184,782 | 139,974 | 44,808 | 32.0 | % | |||||||||
Gain on sale of real estate | — | 22,546 | (22,546 | ) | (100.0 | )% | ||||||||
Gain on lease termination | 40,090 | — | 40,090 | NM | ||||||||||
Loss before income taxes | (52,231 | ) | (6,421 | ) | (45,810 | ) | NM | |||||||
Income tax expense | 199 | 353 | (154 | ) | (43.6 | )% | ||||||||
Net loss | $ | (52,430 | ) | $ | (6,774 | ) | $ | (45,656 | ) | NM |
Same Store Portfolio | Total Portfolio | ||||||||||||||||||||||||||||
(dollars in thousands, except per bed data) | 2018 | 2017 | Change | % | 2018 | 2017 | Change | % | |||||||||||||||||||||
Resident fees and services | $ | 142,175 | $ | 142,295 | $ | (120 | ) | (0.1 | )% | $ | 171,827 | $ | 172,765 | $ | (938 | ) | (0.5 | )% | |||||||||||
Less: Property operating expense | 95,596 | 93,889 | 1,707 | 1.8 | % | 115,609 | 118,252 | (2,643 | ) | (2.2 | )% | ||||||||||||||||||
NOI | $ | 46,579 | $ | 48,406 | $ | (1,827 | ) | (3.8 | )% | $ | 56,218 | $ | 54,513 | $ | 1,705 | 3.1 | % | ||||||||||||
Total properties | 77 | 77 | 132 | 90 | |||||||||||||||||||||||||
Average available beds | 8,889 | 8,879 | 10,519 | 11,212 | |||||||||||||||||||||||||
Average occupancy (%) | 85.4 | 86.9 | 84.9 | 85.8 | |||||||||||||||||||||||||
Average monthly revenue per occupied bed | $ | 3,121 | $ | 3,074 | $ | 3,207 | $ | 2,991 |
Same Store Portfolio | Total Portfolio | ||||||||||||||||||||||||||||
(dollars in thousands) | 2018 | 2017 | Change | % | 2018 | 2017 | Change | % | |||||||||||||||||||||
Rental revenue | $ | 3,163 | $ | 3,162 | $ | 1 | — | % | $ | 36,243 | $ | 56,494 | $ | (20,251 | ) | (35.8 | )% | ||||||||||||
NOI | $ | 3,163 | $ | 3,162 | $ | 1 | — | % | $ | 36,243 | $ | 56,494 | $ | (20,251 | ) | (35.8 | )% | ||||||||||||
Total properties | 1 | 1 | 1 | 58 | |||||||||||||||||||||||||
Average available beds | 463 | 463 | 4,360 | 7,542 | |||||||||||||||||||||||||
Average occupancy (%) | 89.3 | 89.8 | 85.5 | 87.0 |
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 | 2 | 223 | — | — | 2 | 223 | ||||||||||||
Arkansas | 1 | 113 | — | — | 1 | 113 | ||||||||||||
California | 11 | 1,284 | — | — | 11 | 1,284 | ||||||||||||
Colorado | 5 | 558 | — | — | 5 | 558 | ||||||||||||
Connecticut | 2 | 277 | — | — | 2 | 277 | ||||||||||||
Florida | 15 | 1,858 | — | — | 15 | 1,858 | ||||||||||||
Georgia | 2 | 194 | — | — | 2 | 194 | ||||||||||||
Hawaii | 1 | 123 | — | — | 1 | 123 | ||||||||||||
Idaho | 1 | 121 | — | — | 1 | 121 | ||||||||||||
Illinois | 2 | 177 | — | — | 2 | 177 | ||||||||||||
Indiana | 1 | 114 | — | — | 1 | 114 | ||||||||||||
Iowa | 2 | 215 | — | — | 2 | 215 | ||||||||||||
Kansas | 3 | 355 | — | — | 3 | 355 | ||||||||||||
Kentucky | 1 | 117 | — | — | 1 | 117 | ||||||||||||
Louisiana | 2 | 223 | — | — | 2 | 223 | ||||||||||||
Massachusetts | 2 | 255 | — | — | 2 | 255 | ||||||||||||
Michigan | 2 | 240 | — | — | 2 | 240 | ||||||||||||
Mississippi | 2 | 161 | — | — | 2 | 161 | ||||||||||||
Missouri | 3 | 320 | — | — | 3 | 320 | ||||||||||||
Montana | 2 | 242 | — | — | 2 | 242 | ||||||||||||
Nebraska | 1 | 117 | — | — | 1 | 117 | ||||||||||||
Nevada | 2 | 295 | — | — | 2 | 295 | ||||||||||||
New Hampshire | 4 | 265 | — | — | 4 | 265 | ||||||||||||
New York | 3 | 354 | — | — | 3 | 354 | ||||||||||||
North Carolina | 9 | 1,156 | — | — | 9 | 1,156 | ||||||||||||
Ohio | 3 | 354 | — | — | 3 | 354 | ||||||||||||
Oklahoma | 1 | 121 | — | — | 1 | 121 | ||||||||||||
Oregon | 9 | 941 | — | — | 9 | 941 | ||||||||||||
Pennsylvania | 6 | 752 | 1 | 463 | 7 | 1,215 | ||||||||||||
South Carolina | 1 | 120 | — | — | 1 | 120 | ||||||||||||
South Dakota | 1 | 114 | — | — | 1 | 114 | ||||||||||||
Tennessee | 4 | 345 | — | — | 4 | 345 | ||||||||||||
Texas | 13 | 1,717 | — | — | 13 | 1,717 | ||||||||||||
Utah | 6 | 710 | — | — | 6 | 710 | ||||||||||||
Virginia | 3 | 354 | — | — | 3 | 354 | ||||||||||||
Washington | 2 | 275 | — | — | 2 | 275 | ||||||||||||
Wisconsin | 2 | 233 | — | — | 2 | 233 | ||||||||||||
Total | 132 | 15,393 | 1 | 463 | 133 | 15,856 |
• | 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 or refinancing of existing debt, including the expected refinancing of the Term Loan, 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, including (without limitation) a failure by the guarantors of our leases to satisfy certain financial covenants that depend in part on the performance of our leased assets, which is outside of our control, 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) | 2018 | 2017 | |||||
Net cash provided by (used in) | |||||||
Operating activities | $ | 101,884 | $ | 48,010 | |||
Investing activities | (8,185 | ) | 37,045 | ||||
Financing activities | (63,841 | ) | (82,650 | ) | |||
Net increase in cash, cash equivalents and restricted cash | 29,858 | 2,405 | |||||
Cash, cash equivalents and restricted cash, beginning of period | 157,485 | 97,517 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 187,343 | $ | 99,922 |
Period from July 1, 2018 to December 31, 2018 | 2019 (A) | 2020 | 2021 | 2022 | Thereafter | Total | |||||||||||||||||||||
Principal payments | $ | 6,795 | $ | 13,152 | $ | 13,716 | $ | 19,647 | $ | 11,130 | $ | 22,914 | $ | 87,354 | |||||||||||||
Balloon payments | — | 865,376 | 24,950 | — | 566,523 | 424,325 | 1,881,174 | ||||||||||||||||||||
Subtotal | 6,795 | 878,528 | 38,666 | 19,647 | 577,653 | 447,239 | 1,968,528 | ||||||||||||||||||||
Interest (B) | 50,290 | 69,354 | 47,006 | 45,143 | 27,473 | 51,728 | 290,994 | ||||||||||||||||||||
Total obligations (C) | $ | 57,085 | $ | 947,882 | $ | 85,672 | $ | 64,790 | $ | 605,126 | $ | 498,967 | $ | 2,259,522 |
(A) | We have an option to extend a balloon payment of approximately $50.0 million to April 2020, subject to a fee of 0.125% of the then-outstanding principal balance. |
(B) | Estimated interest payments on floating rate debt is calculated using LIBOR rates in effect at June 30, 2018 and may not be indicative of actual payments. Actual payments may vary significantly due to LIBOR fluctuations. See Note 9 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) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net (loss) income | $ | (39,081 | ) | $ | 3,121 | $ | (52,430 | ) | $ | (6,774 | ) | ||||
Gain on sale of real estate | — | (18,347 | ) | — | (22,546 | ) | |||||||||
Depreciation and amortization | 24,521 | 35,943 | 51,246 | 73,461 | |||||||||||
FFO | (14,560 | ) | 20,717 | (1,184 | ) | 44,141 | |||||||||
Acquisition, transaction and integration expense | 8,683 | 446 | 11,571 | 794 | |||||||||||
Loss on extinguishment of debt | 58,544 | 297 | 58,544 | 672 | |||||||||||
Incentive compensation on sale of real estate (A) | — | 2,930 | — | 2,930 | |||||||||||
Gain on lease termination | (40,090 | ) | — | (40,090 | ) | — | |||||||||
Other expense (B) | 32 | 26 | 1,412 | 161 | |||||||||||
Normalized FFO | 12,609 | 24,416 | 30,253 | 48,698 | |||||||||||
Interest expense | 25,755 | 23,505 | 47,678 | 46,571 | |||||||||||
Income tax expense | 151 | 147 | 199 | 353 | |||||||||||
Adjusted EBITDA | $ | 38,515 | $ | 48,068 | $ | 78,130 | $ | 95,622 |
(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 a loss associated with the Florida Generator Bill and reduction in fair value of our interest rate caps. |
• | 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 or a default by our lease counterparty (including a failure by the lease guarantor to satisfy certain financial covenants that depend on the performance of our leased assets, which are outside of our control) 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. |
• | Our ability to obtain refinancing, including through refinancing existing debt (such as the Term Loan), on favorable 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 historic 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: | |
Separation and Distribution Agreement dated October 16, 2014, between the Registrant and Drive Shack Inc. (incorporated by reference to Drive Shack Inc.’s Report on Form 10-Q, Exhibit 2.2, filed on November 5, 2014). | |
Purchase and Sale Agreement, dated as of June 22, 2015, by and among the purchaser named therein and the sellers named therein (incorporated by reference to New Senior’s Report on Form 8-K, Exhibit 2.1, filed on June 22, 2015). | |
Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to New Senior’s Report on Form 10-Q, Exhibit 3.1, filed on November 25, 2014). | |
Amended and Restated Bylaws of the Registrant (incorporated by reference to New Senior’s Report on Form 10-Q, Exhibit 3.2, filed on November 25, 2014). | |
Management Agreement between the Registrant and FIG LLC (incorporated by reference to the Registrant’s Current Report on Form 8-K, filed November 12, 2014). | |
Form of Indemnification Agreement by and between New Senior Investment Group Inc. and its directors and officers (incorporated by reference to Amendment No. 1 to the Registrant’s Registration Statement on Form 10, filed July 29, 2014). | |
New Senior Investment Group Inc. Nonqualified Stock Option and Incentive Award Plan (incorporated by reference to New Senior’s report on Form 10-Q, Exhibit 10.3, filed on November 25, 2014). | |
Purchase and Sale Agreement, dated November 18, 2013, by and between the Sellers named therein and the Purchasers named therein (incorporated by reference to Drive Shack Inc.’s Report on Form 10-K, Exhibit 10.16, filed on March 3, 2014). | |
Master Lease, dated December 23, 2013, by and among the Landlords named therein and NCT Master Tenant I LLC (incorporated by reference to Drive Shack Inc.’s Report on Form 10-K, Exhibit 10.17, filed on March 3, 2014). | |
Guaranty of Lease, dated December 23, 2013, by Holiday AL Holdings LP in favor of the Landlords named therein (incorporated by reference to Drive Shack Inc.’s Report on Form 10-K, Exhibit 10.18, filed on March 3, 2014). | |
Purchase and Sale Agreement, dated as of December 21, 2014, by and among the Purchasers named therein and the Sellers named therein, each of which is an affiliate of Hawthorn Retirement Group LLC (incorporated by reference to New Senior’s Report on Form 10-K, Exhibit 10.17, filed on February 26, 2015). | |
Multifamily Loan and Security Agreement - Seniors Housing, dated as of March 27, 2015, by and between NIC 11 Ashford Court Owner LLC, a Delaware limited liability company, as Borrower, and Walker & Dunlop, LLC, as Lender (incorporated by reference to New Senior’s Report on Form 8-K, Exhibit 10.1, filed on May 14, 2015). | |
Multifamily Note - Floating Rate, dated March 27, 2015, executed by Borrower in favor of Lender, as defined in Exhibit 10.8 (incorporated by reference to New Senior’s Report on Form 8-K, Exhibit 10.2, filed on May 14, 2015). | |
Multifamily Loan and Security Agreement - Seniors Housing dated as of August 12, 2015, by and between SNR 27 Alexis Gardens Owner LLC, a Delaware limited liability company, as Borrower, and Walker & Dunlop, LLC, as Lender (incorporated by reference to New Senior’s report on Form 8-K, Exhibit 10.1, filed August 17, 2015). | |
Multifamily Note - Fixed Rate Defeasance, dated as of August 12, 2015, executed by Borrower in favor of Lender, as defined in Exhibit 10.10 (incorporated by reference to New Senior’s report on Form 8-K, Exhibit 10.2, filed August 17, 2015). | |
Settlement Agreement, dated as of February 23, 2016, by and among the Registrant and Levin Capital Strategies, L.P. and the other persons listed on Schedule A thereto (incorporated by reference to New Senior’s report on Form 10-K, Exhibit 10.12, filed on February 26, 2016). | |
Loan Agreement, dated as of May 14, 2018, by and among the entities listed on Schedule 1-A thereto, as borrower, and Lender (incorporated by reference to New Senior’s report on Form 8-K, Exhibit 10.1, filed on May 16, 2018). | |
Mezzanine Loan Agreement, dated as of May 14, 2018, by and among NIC 12 Owner LLC and NIC 13 Owner LLC, as borrower, and Lender (incorporated by reference to New Senior’s report on Form 8-K, Exhibit 10.2, filed on May 16, 2018). | |
Certification of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
Certification of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
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 9, 2018 | ||
By: | /s/ Bhairav Patel | |
Bhairav Patel | ||
Interim Chief Financial Officer, Treasurer and Chief Accounting Officer | ||
August 9, 2018 |
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 9, 2018 | /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 9, 2018 | /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 9, 2018 | /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 9, 2018 | /s/ Bhairav Patel |
Bhairav Patel | |
Interim Chief Financial Officer, Treasurer and Chief Accounting Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Aug. 03, 2018 |
|
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 | 2018 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
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 | 82,148,869 |
Common stock, shares outstanding (in shares) | 82,148,869 | 82,148,869 |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
||||||
Revenues | |||||||||
Resident fees and services | $ 96,484 | $ 86,039 | $ 171,827 | $ 172,765 | |||||
Rental revenue | 12,368 | 28,247 | 36,243 | 56,494 | |||||
Total revenues | 108,852 | 114,286 | 208,070 | 229,259 | |||||
Expenses | |||||||||
Property operating expense | 63,510 | 58,668 | 115,609 | 118,252 | |||||
Depreciation and amortization | 24,521 | 35,943 | 51,246 | 73,461 | |||||
Interest expense | 25,755 | 23,505 | 47,678 | 46,571 | |||||
Acquisition, transaction and integration expense | 8,683 | 446 | 11,571 | 794 | |||||
Management fees and incentive compensation to affiliate | 3,687 | 6,754 | 7,439 | 10,578 | |||||
General and administrative expense | 3,140 | 3,726 | 6,892 | 7,737 | |||||
Loss on extinguishment of debt | 58,544 | 297 | 58,544 | 672 | |||||
Other expense | 32 | 26 | 1,412 | 161 | |||||
Total expenses | 187,872 | 129,365 | 300,391 | 258,226 | |||||
Gain on sale of real estate | 0 | 18,347 | 0 | 22,546 | |||||
Gain on lease termination | 40,090 | 0 | 40,090 | 0 | |||||
(Loss) income before income taxes | (38,930) | 3,268 | (52,231) | (6,421) | |||||
Income tax expense | 151 | 147 | 199 | 353 | |||||
Net (loss) income | $ (39,081) | $ 3,121 | $ (52,430) | $ (6,774) | |||||
Earnings Per Share, Basic | [1] | $ (0.48) | $ 0.04 | $ (0.64) | $ (0.08) | ||||
Earnings Per Share, Diluted | [1] | $ (0.48) | $ 0.04 | $ (0.64) | $ (0.08) | ||||
Weighted Average Number of Shares Outstanding, Basic | 82,148,869 | 82,142,562 | 82,148,869 | 82,141,661 | |||||
Weighted Average Number of Shares Outstanding, Diluted | [2] | 82,148,869 | 82,778,761 | 82,148,869 | 82,141,661 | ||||
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 | |||||
Expenses | |||||||||
Property operating expense | 0 | 0 | 0 | 0 | |||||
Managed Properties [Member] | |||||||||
Revenues | |||||||||
Rental revenue | 0 | 0 | $ 0 | $ 0 | |||||
Expenses | |||||||||
Property operating expense | $ 63,510 | $ 58,668 | |||||||
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - 6 months ended Jun. 30, 2018 - USD ($) $ in Thousands |
Total |
Common Stock [Member] |
Accumulated Deficit [Member] |
Additional Paid-in Capital [Member] |
---|---|---|---|---|
Equity at Dec. 31, 2017 | $ 505,885 | $ 821 | $ (393,068) | $ 898,132 |
Equity (in shares) at Dec. 31, 2017 | 82,148,869 | 82,148,869 | ||
Increase (Decrease) in Equity [Roll Forward] | ||||
Fair value of stock options issued | $ 3 | $ 0 | 0 | 3 |
Dividends declared | (42,716) | 0 | (42,716) | 0 |
Net loss | (52,430) | 0 | (52,430) | 0 |
Equity at Jun. 30, 2018 | $ 410,742 | $ 821 | $ (488,214) | $ 898,135 |
Equity (in shares) at Jun. 30, 2018 | 82,148,869 | 82,148,869 |
ORGANIZATION |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
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, 2018, we owned a diversified portfolio of 133 primarily private pay senior housing properties located across 37 states. We are listed on the New York Stock Exchange (“NYSE”) under the symbol “SNR” and are headquartered in New York, New York. We operate in two reportable segments: (1) Managed Properties and (2) Triple Net Lease Properties. Managed Properties – We have engaged property managers to manage 132 of our properties on a day-to-day basis under the Managed Properties segment. These properties consist of 102 independent living (“IL”) facilities and 30 assisted living/memory care (“AL/MC”) facilities. Our 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”) under property management agreements. Pursuant to the property management agreements, the property managers are responsible for the day-to-day operations of our senior housing properties and are entitled to a management fee in accordance with the terms of the property management agreements. Our property management agreements have initial five-year or ten-year terms, with successive, automatic one-year renewal periods. We pay property management fees of 5% to 7% of effective gross income pursuant to our property management agreements with Holiday and, in certain cases, Holiday is eligible to earn an incentive fee based on operating performance. We pay 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 (“NOI”) and (ii) when eligible, an incentive fee based on operating performance, pursuant to our property management agreements with other managers. On May 9, 2018, we entered into a lease termination agreement to terminate our triple net leases with affiliates of Holiday relating to 51 IL properties (the “Holiday Portfolio”). The lease termination was effective May 14, 2018 (the “Lease Termination”). Concurrently with the Lease Termination, we entered into property management agreements with Holiday to manage the properties in the Holiday Portfolio following the Lease Termination in exchange for a property management fee. As a result, such properties are now included in the Managed Properties segment. Refer to Note 3 for additional details related to the Lease Termination. Triple Net Lease Properties – We own one Continuing Care Retirement Community (“CCRC”) in the United States and lease this property to a healthcare operating company under a triple net lease agreement. 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. Our triple net lease agreement has an initial term of 15 years and includes a renewal option and annual rent increases ranging from 2.75% to 3.25%. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
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. We consolidate those entities in which we have 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 our consolidated financial statements and notes thereto included on Form 10-K for the year ended December 31, 2017, 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 our significant accounting policies disclosed in our Form 10-K for the year ended December 31, 2017. Recently Adopted Accounting Pronouncements On January 1, 2018, we adopted ASU 2014-09, Revenues from Contracts with Customers (“ASC 606”) using the modified retrospective method of adoption. This standard requires revenue to be recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. The adoption did not result in an adjustment to beginning retained earnings and did not have a significant impact on our consolidated financial statements. Substantially all of our revenue is generated through our triple net lease and managed property leasing arrangements, which are specifically excluded from ASC 606, and are accounted for under other applicable GAAP standards. We account for ancillary revenue under ASC 606. The timing and pattern of revenue recognition of our ancillary revenue under ASC 606 is consistent with that under the prior accounting model. Additionally, real estate sales are within the scope of ASC 606, as amended by ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASU 2017-05”). ASU 2017-05 clarifies the scope of subtopic 610-20, Other Income - Gains and Losses from Derecognition of Nonfinancial Assets, and adds guidance for partial sales of nonfinancial assets. Under these models, income recognition for real estate sales is largely based on the transfer of control versus continuing involvement under the current guidance. As a result, more transactions may qualify as sales of real estate and gains or losses may be recognized earlier. Sales of our real estate are generally not executory across points in time and our performance obligations from these contracts are expected to fall within a single period. On January 1, 2018, we adopted ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash, which requires that the statement of cash flows include a reconciliation and explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This standard impacts the presentation of our Consolidated Statements of Cash Flows as activity between cash and cash equivalents and restricted cash is no longer presented in our operating, financing or investing activities. Upon adoption, the changes in classification within the statement of cash flows is applied retrospectively to all periods presented. The adoption of this standard resulted in a $3.5 million increase to the amount of net cash provided by operating activities and a $3.6 million decrease to the amount of net cash provided by investing activities for the six months ended June 30, 2017. On January 1, 2018, we adopted ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments, which provides guidance on how certain cash receipts and cash payments are to be presented and classified on the statement of cash flows. The adoption of this standard did not have a material impact on our consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In February 2016, the Financial Accounting Standards Board (“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. We continue to assess the guidance and the impact it may have on our consolidated financial statements and have initiated a review to identify non-lease components, if any, in our 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. We are assessing the impact this guidance may have on our consolidated financial statements. |
LEASE TERMINATION AND PROPERTY MANAGEMENT AGREEMENT WITH HOLIDAY (Notes) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
LEASE TERMINATION AND PROPERTY MANAGEMENT AGREEMENT WITH HOLIDAY [Abstract] | |
Unusual or Infrequent Items, or Both, Disclosure [Text Block] | LEASE TERMINATION On May 9, 2018, we entered into a lease termination agreement with affiliates of Holiday to terminate our triple net leases relating to the Holiday Portfolio. The Lease Termination was effective May 14, 2018. We received total consideration of $115.6 million, including a $70.0 million termination payment and retention of $45.6 million in security deposits held by us. In connection with the Lease Termination, we also assumed ownership of certain furniture, fixtures, equipment and other improvements with a fair market value of $10.0 million. As a result of the Lease Termination, we recognized a gain on lease termination of $40.1 million after adjusting for write-offs of straight-line rent receivables of $84.3 million and net above-market rent lease intangible assets of $1.2 million. Concurrently with the Lease Termination, we entered into property management agreements with Holiday pursuant to which we pay a management fee equal to a monthly base fee in the amount of 5% of effective gross income in the first year of the term and 4.5% of effective gross income for the remainder of the term. In addition, Holiday is eligible to earn an annual incentive fee of up to 2% of effective gross income if the Holiday Portfolio achieves certain performance thresholds. The agreements may be terminated without penalty after the first year of the term. |
DISPOSITIONS |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Dispositions [Abstract] | |
DISPOSITIONS | DISPOSITIONS We did not have any dispositions during the six months ended June 30, 2018. During the six months ended June 30, 2017, we sold two AL/MC and two IL properties in the Managed Properties segment for a combined sale price of $48.5 million, and recognized a gain on sale of $22.5 million, net of selling costs which is included in “Gain on sale of real estate” in the Consolidated Statements of Operations. In connection with this sale, we repaid $28.0 million of debt. |
SEGMENT REPORTING |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | SEGMENT REPORTING We operate in two reportable business segments: Managed Properties and Triple Net Lease Properties. Under our Managed Properties segment, we invest in senior housing properties throughout the United States and engage property managers to manage those senior housing properties. Under our Triple Net Lease Properties segment, we invest in senior housing and healthcare properties throughout the United States and lease 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. We evaluate performance of the combined properties in each reportable business segment based on segment NOI. We define NOI as total revenues less property-level operating expenses, which include property management fees and travel cost reimbursements. We believe that net income, as defined by GAAP, is the most appropriate earnings measurement. However, we believe 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 our 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. Effective May 14, 2018, we terminated our triple net leases with respect to the properties in the Holiday Portfolio and concurrently entered into property management agreements with Holiday with respect to such properties. The NOI for such properties following the Lease Termination has been included in the Managed Properties segment. This resulted in a significant increase in the segment NOI of the Managed Properties with a corresponding decrease in the segment NOI of the Triple Net Lease Properties during the three and six months ended June 30, 2018. In addition, assets related to such properties are included in the Managed Properties segment as of June 30, 2018, resulting in a significant increase in the Managed Properties segment assets, and a corresponding decrease in the Triple Net Lease Properties segment assets as of June 30, 2018. 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, gain on sale of real estate, gain on lease termination and income tax expense are not allocated to individual segments for purposes of assessing segment performance. There are no intersegment sales.
Property operating expense includes property management fees, property-level payroll expense and travel reimbursement costs. See Note 11 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 9.9% and 19.5% of our total revenues for the three months ended June 30, 2018 and 2017, respectively, and 15.9% and 19.4% for the six months ended June 30, 2018 and 2017, respectively. The decrease in rental revenue received from Holiday is due to the Lease Termination as it only includes rental revenue received by us up to the Lease Termination. 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 $21.9 million and $23.5 million for the three months ended June 30, 2018 and 2017, respectively, and $43.2 million and $46.7 million for the six months ended June 30, 2018 and 2017, respectively. The following table summarizes our real estate intangibles:
Amortization expense was $2.6 million and $12.4 million for the three months ended June 30, 2018 and 2017, respectively, and $8.1 million and $26.7 million for the six months ended June 30, 2018 and 2017, respectively. During the six months ended June 30, 2018, we wrote-off $254.2 million of fully amortized in-place lease and other intangible assets. We evaluated long-lived assets, primarily consisting of our real estate investments, for impairment indicators. In performing this evaluation, market conditions and our current intentions with respect to holding or disposing of the asset are considered. Where indicators of impairment are present, we evaluated whether the sum of the expected future undiscounted cash flows is less than book value. Based on such assessment, the future undiscounted cash flows of the underlying operations exceeds the carrying value of such real estate investments, including definite lived intangible assets. Therefore, we did not recognize any impairment loss during the periods presented. |
STRAIGHT-LINE RENT RECEIVABLES |
6 Months Ended |
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Jun. 30, 2018 | |
STRAIGHT-LINE RENT RECEIVABLES [Abstract] | |
STRAIGHT-LINE RENT RECEIVABLES | STRAIGHT-LINE RENT RECEIVABLES Rental revenue from the Triple Net Lease Properties segment is recognized on a straight-line basis over the applicable term of the lease when collectability is reasonably assured. Recognizing rental revenue on a straight-line basis typically results in recognizing revenue in excess of cash amounts contractually due from our tenants during the first half of the lease term, creating a straight-line rent receivable. Our straight-line rent receivables were $3.1 million and $82.4 million as of June 30, 2018 and December 31, 2017, respectively. The decrease in straight-line rent receivables is due to the write-off of $84.3 million in conjunction with the Lease Termination, effective as of May 14, 2018, and is included in the “Gain on lease termination” in the Consolidated Statements of Operations. Refer to Note 3 for additional details related to the Lease Termination. We assess the collectability of straight-line rent receivables on an ongoing basis. This assessment is based on several qualitative and quantitative factors, including and as appropriate, the payment history of the triple net lease tenant, the tenant’s ability to satisfy its lease obligations, the value of the underlying collateral or deposit, if any, and current economic conditions. We considered the timeliness of lease payments, compliance with lease terms, security and other deposits posted by the tenant and collateral provided by the lease guarantor and determined no reserve was necessary for the periods presented. |
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
In May 2018, we repaid $663.8 million of secured loans in conjunction with the Lease Termination. We recognized a loss on extinguishment of debt of $58.5 million, comprised of $51.9 million in prepayment penalties and $6.6 million in the write-off of deferred financing costs on the loans. The repayment was facilitated by a one-year secured term loan of $720.0 million (the “Term Loan”). We incurred a total of $12.3 million in deferred financing costs, which have been capitalized and will be amortized over the life of the loan and included in interest expense on the Consolidated Statements of Operations. During the six months ended June 30, 2017, we repaid $28.0 million of debt associated with the sale of two AL/MC and two IL properties in the Managed Properties segment and recognized a loss on extinguishment of debt of $0.7 million, which represents the write-off of related unamortized deferred financing costs and other exit fees. During the six months ended June 30, 2018, we exercised an option to extend a balloon payment of $50.7 million from April 2018 to April 2019. The carrying value of the collateral relating to the fixed rate and floating rate mortgages was $0.6 billion and $1.6 billion as of June 30, 2018 and $1.5 billion and $0.8 billion as of December 31, 2017, respectively. Our 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. We were in compliance with the covenants in our mortgage notes payable agreements as of June 30, 2018. The fair values of mortgage notes payable as of June 30, 2018 and December 31, 2017 was $2.0 billion and $1.9 billion, 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. Interest rate caps In May 2018, we paid $0.1 million to enter into an interest rate cap on the Term Loan, which caps LIBOR at 3.50%, has a notional value of $720.0 million and is effective through May 2019. In March 2018, we paid $0.3 million to renew an interest rate cap on our floating rate debt, which caps LIBOR at 3.66%, has a notional value of $591.2 million and is effective through April 2020. Our interest rate caps are level 2 instruments and we estimate the fair value based on pricing models that consider inputs including forward yield curves, cap strike rates, cap volatility and discount rates. We recognized fair value losses of $0.1 million and $0.0 million for the three months ended June 30, 2018 and 2017, respectively, and $0.2 million and $0.1 million for the six months ended June 30, 2018 and 2017, respectively, which are included in “Other expense” in the Consolidated Statements of Operations and “Other non-cash expense” in the Consolidated Statements of Cash Flows. The fair value was $0.1 million as of June 30, 2018 and is included in “Receivables and other assets, net” in the Consolidated Balance Sheets. The fair value as of December 31, 2017 was not material. |
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 We are party to a management agreement (the “Management Agreement”) with the Manager, under which the Manager advises us on various aspects of our business and manages our day-to-day operations, subject to the supervision of our board of directors. For its management services, the Manager is entitled to a base management fee of 1.5% per annum of our gross equity. Gross equity is generally defined as the equity invested by Drive Shack Inc. (“Drive Shack”) (including cash contributed to us) 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. We incurred management fees of $3.7 million and $3.8 million during the three months ended June 30, 2018 and 2017, respectively, and $7.4 million and $7.6 million during the six months ended June 30, 2018 and 2017, 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, 2018 and December 31, 2017, we had a payable for management fees of $2.5 million and $1.3 million, 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 New Senior (including cash contributed to us) as of the completion of the spin-off and the price per share of our common stock in any offerings by us (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 did not earn incentive compensation during the three and six months ended June 30, 2018 and earned incentive compensation of $2.9 million during the three and six months ended June 30, 2017. 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. We are also required to pay all operating expenses, except those specifically required to be borne by the Manager under the Management Agreement. We are 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 our 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 (including commitment fees, legal fees, closing costs, etc.), expenses associated with other securities offerings, the costs of printing and mailing proxies and reports to our stockholders, costs incurred by employees or agents of the Manager for travel on our behalf, costs associated with any computer software or hardware that is used by us, costs to obtain liability insurance to indemnify directors and officers and the compensation and expenses of our transfer agent. The following table summarizes our reimbursement to the Manager for costs incurred for tasks and other services performed by the Manager under the Management Agreement:
As of June 30, 2018 and December 31, 2017, we had a payable for Manager reimbursements of $2.0 million and $1.3 million, respectively, which is included in “Due to affiliates” in the Consolidated Balance Sheets. Property Management Agreements Within our Managed Properties segment, we are 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, we pay monthly property management fees. For AL/MC properties managed by Blue Harbor and Holiday, we pay 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, we generally pay management fees equal to 5% of effective gross income. For certain property management agreements, we 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, 2018 and 2017. 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. In May 2018, concurrently with the Lease Termination, we entered into property management agreements with Holiday, pursuant to which we pay a management fee equal to a monthly base fee in the amount of 5% of effective gross income in the first year and 4.5% of effective gross income for the remainder of the term. In addition, Holiday is eligible to earn an annual incentive fee of up to 2% of effective gross income if the Holiday Portfolio achieves certain performance thresholds. The agreements may be terminated without penalty after the first year of the term. Refer to Note 3 for additional details related to the Lease Termination. The following table summarizes property management fees and reimbursements paid to property managers affiliated with Fortress:
As of June 30, 2018 and December 31, 2017, we had payables for property management fees of $2.0 million and $1.4 million, respectively, and property-level payroll expenses of $6.6 million and $5.6 million, 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 On May 9, 2018, we entered into a lease termination agreement to terminate our triple net leases with affiliates of Holiday. The Lease Termination was effective May 14, 2018. We received total consideration of $115.6 million, including a $70.0 million termination payment and retention of $45.6 million in security deposits held by us. Prior to the Lease Termination, we received monthly rent payments in accordance with the terms of the leases. Such payments amounted to $9.3 million and $18.6 million during the three months ended June 30, 2018 and 2017, respectively, and $28.5 million and $37.1 million during the six months ended June 30, 2018 and 2017, 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 our activities are conducted through our 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 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. We have not recorded a valuation allowance against our deferred tax assets as of June 30, 2018 or December 31, 2017 as management believes that it is more likely than not that our deferred tax assets will be realized. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act includes a number of significant changes to existing U.S. corporate income tax laws, most notably a reduction of the U.S. corporate income tax rate from 35 percent to 21 percent, effective January 1, 2018. We measure deferred tax assets using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Accordingly, our deferred tax assets were remeasured to reflect the reduction in the U.S. corporate income tax rate, resulting in a non-recurring $3.0 million increase in income tax expense for the year ended December 31, 2017 and a corresponding decrease of the same amount in our deferred tax assets as of December 31, 2017. |
EQUITY |
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Jun. 30, 2018 | |
Equity [Abstract] | |
EQUITY | EQUITY In the first quarter of 2018, strike prices for outstanding options were reduced by $1.04, reflecting the portion of our 2017 dividends which were deemed return of capital. In March 2018, we granted options to a new director relating to 5,000 shares of common stock, the grant date fair value of which was not material. As of June 30, 2018, approximately 1.3 million shares of our common stock were held by Fortress, through its affiliates, and its principals. |
COMMITMENTS AND CONTINGENCIES |
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Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES As of June 30, 2018, management believes there are no material contingencies that would affect our results of operations, cash flows or financial position. Certain Obligations, Liabilities and Litigation We are and may become subject to various obligations, liabilities, investigations, inquiries and litigation assumed in connection with or arising from our 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 in advance. Any such obligations or liabilities could have a material adverse effect on our financial position, cash flows and results of operations, particularly if we are not entitled to indemnification, or if a responsible third party fails to indemnify us. Certain Tax-Related Covenants If we are 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, we 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 us to fail to qualify as a REIT, (ii) covenanted to use commercially reasonable efforts to cooperate with New Senior as necessary to enable us to qualify for taxation as a REIT and receive customary legal opinions concerning REIT status, including providing information and representations to us and our 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 us 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, we are party to certain legal actions, regulatory investigations and claims for which third parties are contractually obligated to indemnify, defend and hold us harmless. While we are presently not being defended by any tenant and other obligated third parties in these types of matters, there is no assurance that our tenants, their affiliates or other obligated third parties will defend us in these matters in the future, or that such parties will have sufficient assets, income and access to financing to enable them to satisfy their defense and indemnification obligations to us. Environmental Costs As a commercial real estate owner, we are subject to potential environmental costs. As of June 30, 2018, management is not aware of any environmental concerns that would have a material adverse effect on our financial position or results of operations. Capital Improvement and Repair Commitments We have agreed to make $1.0 million available for capital improvements during the 15 year lease period to the triple net lease property under Watermark, none of which has been funded as of June 30, 2018. Upon funding these capital improvements, we will be entitled to a rent increase. |
SUBSEQUENT EVENTS |
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Jun. 30, 2018 | |
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, 2018 (referred to as subsequent events) through the issuance of the consolidated financial statements. On August 8, 2018, the Company’s board of directors declared a cash dividend on its common stock of $0.13 per common share for the quarter ended June 30, 2018. The dividend is payable on September 21, 2018 to shareholders of record on September 7, 2018. On August 9, 2018, our board of directors authorized the repurchase of up to $100.0 million of the Company’s common stock over the next 12 months. Under the program, the Company may purchase its shares from time to time in the open market or in privately negotiated transactions. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Jun. 30, 2018 | |
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. We consolidate those entities in which we have 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 our consolidated financial statements and notes thereto included on Form 10-K for the year ended December 31, 2017, 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 | Recently Adopted Accounting Pronouncements On January 1, 2018, we adopted ASU 2014-09, Revenues from Contracts with Customers (“ASC 606”) using the modified retrospective method of adoption. This standard requires revenue to be recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. The adoption did not result in an adjustment to beginning retained earnings and did not have a significant impact on our consolidated financial statements. Substantially all of our revenue is generated through our triple net lease and managed property leasing arrangements, which are specifically excluded from ASC 606, and are accounted for under other applicable GAAP standards. We account for ancillary revenue under ASC 606. The timing and pattern of revenue recognition of our ancillary revenue under ASC 606 is consistent with that under the prior accounting model. Additionally, real estate sales are within the scope of ASC 606, as amended by ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASU 2017-05”). ASU 2017-05 clarifies the scope of subtopic 610-20, Other Income - Gains and Losses from Derecognition of Nonfinancial Assets, and adds guidance for partial sales of nonfinancial assets. Under these models, income recognition for real estate sales is largely based on the transfer of control versus continuing involvement under the current guidance. As a result, more transactions may qualify as sales of real estate and gains or losses may be recognized earlier. Sales of our real estate are generally not executory across points in time and our performance obligations from these contracts are expected to fall within a single period. On January 1, 2018, we adopted ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash, which requires that the statement of cash flows include a reconciliation and explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This standard impacts the presentation of our Consolidated Statements of Cash Flows as activity between cash and cash equivalents and restricted cash is no longer presented in our operating, financing or investing activities. Upon adoption, the changes in classification within the statement of cash flows is applied retrospectively to all periods presented. The adoption of this standard resulted in a $3.5 million increase to the amount of net cash provided by operating activities and a $3.6 million decrease to the amount of net cash provided by investing activities for the six months ended June 30, 2017. On January 1, 2018, we adopted ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments, which provides guidance on how certain cash receipts and cash payments are to be presented and classified on the statement of cash flows. The adoption of this standard did not have a material impact on our consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In February 2016, the Financial Accounting Standards Board (“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. We continue to assess the guidance and the impact it may have on our consolidated financial statements and have initiated a review to identify non-lease components, if any, in our 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. We are assessing the impact this guidance may have on our consolidated financial statements. |
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 11 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:
|
REAL ESTATE INVESTMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Investments |
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Real Estate Intangibles | The following table summarizes our real estate intangibles:
|
RECEIVABLES AND OTHER ASSETS, NET (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
MORTGAGE NOTES PAYABLE, NET (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Notes Payable, Net |
|
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other Liabilities |
|
TRANSACTIONS WITH AFFILIATES Transactions With Affiliates (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions With Affiliates [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reimbursement to the Manager for Services Performed by the Manager | The following table summarizes our 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 to property managers affiliated with Fortress:
|
INCOME TAXES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for Income Taxes | The following table presents the provision for income taxes:
|
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Deferred Tax Assets | The following table presents the significant components of deferred tax assets:
|
ORGANIZATION (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
segment
Property
| |
Organization [Abstract] | |
Number of Real Estate Properties | 133 |
Number of states in which properties are located | 37 |
Number of reportable segments | segment | 2 |
Managed Properties [Member] | |
Organization [Abstract] | |
Number of Real Estate Properties | 132 |
Extension period after initial term of Property Management Agreements | 1 year |
Managed Properties [Member] | Minimum [Member] | |
Organization [Abstract] | |
Initial term of Property Management Agreements | 5 years |
Managed Properties [Member] | Maximum [Member] | |
Organization [Abstract] | |
Initial term of Property Management Agreements | 10 years |
Managed Properties [Member] | Holiday Acquisitions Holdings LLC [Member] | Minimum [Member] | |
Organization [Abstract] | |
Percentage of property's effective gross income paid as property management fees | 5.00% |
Managed Properties [Member] | Holiday Acquisitions Holdings LLC [Member] | Maximum [Member] | |
Organization [Abstract] | |
Percentage of property's effective gross income paid as property management fees | 7.00% |
Managed Properties [Member] | Other Property Managers [Member] | Minimum [Member] | |
Organization [Abstract] | |
Percentage of property's gross revenues paid as property management fees | 3.00% |
Managed Properties [Member] | Other Property Managers [Member] | Maximum [Member] | |
Organization [Abstract] | |
Percentage of property's gross revenues paid as property management fees | 7.00% |
Managed Properties [Member] | Independent Living Properties [Member] | |
Organization [Abstract] | |
Number of Real Estate Properties | 102 |
Managed Properties [Member] | Independent Living Properties [Member] | Holiday Acquisitions Holdings LLC [Member] | |
Organization [Abstract] | |
Number of Real Estate Properties | 51 |
Managed Properties [Member] | Assisted Living and Memory Care Properties [Member] | |
Organization [Abstract] | |
Number of Real Estate Properties | 30 |
Triple Net Lease Properties [Member] | Minimum [Member] | |
Organization [Abstract] | |
Term of lease agreements | 15 years |
Rent increase percentage in lease agreements | 2.75% |
Triple Net Lease Properties [Member] | Maximum [Member] | |
Organization [Abstract] | |
Rent increase percentage in lease agreements | 3.25% |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Revenue Recognition [Abstract] | |
Adjustment to net cash provided by operating activities due to adoption of ASU 2016-18 | $ 3.5 |
Adjustment to net cash provided by investing activities due to adoption of ASU 2016-18 | $ 3.6 |
LEASE TERMINATION AND PROPERTY MANAGEMENT AGREEMENT WITH HOLIDAY (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
||||||
Segment Reporting Information [Line Items] | ||||||||||
Gain on lease termination | $ 40,090,000 | $ 0 | $ 40,090,000 | $ 0 | ||||||
Consideration Received, Lease Termination Agreement | 115,600,000 | |||||||||
Termination Payment, Lease Termination Agreement | 70,000,000 | |||||||||
Security Deposit | 2,625,000 | 2,625,000 | $ 3,222,000 | |||||||
Property, Plant and Equipment, Additions | [1] | 9,975,000 | $ 0 | |||||||
Deferred Rent Asset, Net, Current | 84,316,000 | $ 84,316,000 | ||||||||
Incentive fee percentage | 2.00% | |||||||||
Holiday Acquisitions Holdings LLC [Member] | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Other Intangible Assets, Net | 1,192,000 | $ 1,192,000 | ||||||||
Gain on lease termination | [2] | 40,090,000 | ||||||||
Security Deposit | $ 45,600,000 | $ 45,600,000 | ||||||||
Managed Properties [Member] | Holiday Acquisitions Holdings LLC [Member] | ||||||||||
Segment Reporting Information [Line Items] | ||||||||||
Percentage of property's effective gross income paid as property management fees, year two and onward | 4.50% | |||||||||
Percentage of property's effective gross income paid as property management fees, year one | 5.00% | |||||||||
|
DISPOSITIONS (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jan. 31, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
|
Discontinued Operations and Disposal Groups [Abstract] | |||||
Sale price | $ 48,500 | ||||
Gain on sale of real estate | $ 22,546 | $ 0 | $ 18,347 | $ 0 | $ 22,546 |
Early repayment of debt | 663,796 | 27,968 | |||
Mortgages [Member] | |||||
Discontinued Operations and Disposal Groups [Abstract] | |||||
Early repayment of debt | $ (663,800) | $ 28,000 | |||
Managed Properties [Member] | Independent Living Properties [Member] | |||||
Discontinued Operations and Disposal Groups [Abstract] | |||||
Number of properties sold | 2 | 2 | |||
Managed Properties [Member] | Assisted Living and Memory Care Properties [Member] | |||||
Discontinued Operations and Disposal Groups [Abstract] | |||||
Number of properties sold | 2 | 2 |
SEGMENT REPORTING (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
Property
|
Jun. 30, 2017
USD ($)
Property
|
Jun. 30, 2018
USD ($)
segment
Property
|
Jun. 30, 2017
USD ($)
Property
|
Dec. 31, 2017
USD ($)
|
||||
Segment Reporting Information [Line Items] | |||||||||
Number of reportable segments | segment | 2 | ||||||||
Assets | $ 2,428,315 | $ 2,428,315 | $ 2,508,027 | ||||||
Percentage of assets | 100.00% | 100.00% | 100.00% | ||||||
Revenues | |||||||||
Resident fees and services | $ 96,484 | $ 86,039 | $ 171,827 | $ 172,765 | |||||
Rental revenue | 12,368 | 28,247 | 36,243 | 56,494 | |||||
Less: Property operating expense | 63,510 | 58,668 | 115,609 | 118,252 | |||||
Segment NOI | 45,342 | 55,618 | 92,461 | 111,007 | |||||
Depreciation and amortization | 24,521 | 35,943 | 51,246 | 73,461 | |||||
Interest expense | 25,755 | 23,505 | 47,678 | 46,571 | |||||
Acquisition, transaction and integration expense | 8,683 | 446 | 11,571 | 794 | |||||
Management fees and incentive compensation to affiliate | 3,687 | 6,754 | 7,439 | 10,578 | |||||
General and administrative expense | 3,140 | 3,726 | 6,892 | 7,737 | |||||
Loss on extinguishment of debt | 58,544 | 297 | 58,544 | 672 | |||||
Other expense | 32 | 26 | 1,412 | 161 | |||||
Total expenses | 124,362 | 70,697 | 184,782 | 139,974 | |||||
Gain on sale of real estate | $ 22,546 | 0 | 18,347 | 0 | 22,546 | ||||
Gain on lease termination | 40,090 | 0 | 40,090 | 0 | |||||
(Loss) income before income taxes | (38,930) | 3,268 | (52,231) | (6,421) | |||||
Total provision for income taxes | 151 | 147 | 199 | 353 | |||||
Net loss | $ (39,081) | 3,121 | $ (52,430) | (6,774) | |||||
Major Customers [Abstract] | |||||||||
Number of communities | Property | 133 | 133 | |||||||
Nonsegment and Other [Member] | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Assets | [1] | $ 102,401 | $ 102,401 | $ 96,404 | |||||
Percentage of assets | [1] | 4.20% | 4.20% | 3.80% | |||||
Triple Net Lease Properties [Member] | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Assets | $ 58,939 | $ 58,939 | $ 980,666 | ||||||
Percentage of assets | 2.40% | 2.40% | 39.10% | ||||||
Revenues | |||||||||
Resident fees and services | $ 0 | 0 | $ 0 | 0 | |||||
Less: Property operating expense | 0 | 0 | 0 | 0 | |||||
Segment NOI | 12,368 | 28,247 | 36,243 | 56,494 | |||||
Managed Properties [Member] | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Assets | $ 2,266,975 | $ 2,266,975 | $ 1,430,957 | ||||||
Percentage of assets | 93.40% | 93.40% | 57.10% | ||||||
Revenues | |||||||||
Rental revenue | $ 0 | 0 | $ 0 | 0 | |||||
Less: Property operating expense | 63,510 | 58,668 | |||||||
Segment NOI | $ 32,974 | $ 27,371 | $ 56,218 | $ 54,513 | |||||
Major Customers [Abstract] | |||||||||
Number of communities | Property | 132 | 132 | |||||||
Sales Revenue, Net [Member] | |||||||||
Major Customers [Abstract] | |||||||||
Number of communities | Property | 133 | 148 | 133 | 148 | |||||
Percentage of revenue | 100.00% | 100.00% | |||||||
Sales Revenue, Net [Member] | Florida | |||||||||
Major Customers [Abstract] | |||||||||
Number of communities | Property | 15 | 24 | 15 | 24 | |||||
Percentage of revenue | 12.60% | 19.00% | |||||||
Sales Revenue, Net [Member] | California | |||||||||
Major Customers [Abstract] | |||||||||
Number of communities | Property | 11 | 11 | 11 | 11 | |||||
Percentage of revenue | 11.40% | 9.80% | |||||||
Sales Revenue, Net [Member] | Texas | |||||||||
Major Customers [Abstract] | |||||||||
Number of communities | Property | 13 | 19 | 13 | 19 | |||||
Percentage of revenue | 9.50% | 12.20% | |||||||
Sales Revenue, Net [Member] | North Carolina | |||||||||
Major Customers [Abstract] | |||||||||
Number of communities | Property | 9 | 9 | 9 | 9 | |||||
Percentage of revenue | 7.30% | 6.50% | |||||||
Sales Revenue, Net [Member] | Pennsylvania | |||||||||
Major Customers [Abstract] | |||||||||
Number of communities | Property | 7 | 7 | 7 | 7 | |||||
Percentage of revenue | 7.00% | 5.90% | |||||||
Sales Revenue, Net [Member] | Oregon | |||||||||
Major Customers [Abstract] | |||||||||
Number of communities | Property | 9 | 9 | 9 | 9 | |||||
Percentage of revenue | 5.80% | 4.90% | |||||||
Sales Revenue, Net [Member] | Other | |||||||||
Major Customers [Abstract] | |||||||||
Number of communities | Property | 69 | 69 | 69 | 69 | |||||
Percentage of revenue | 46.40% | 41.70% | |||||||
Tenant for Holiday Portfolios [Member] | Sales Revenue, Net [Member] | |||||||||
Major Customers [Abstract] | |||||||||
Percentage of revenue | 9.90% | 19.50% | 15.90% | 19.40% | |||||
|
REAL ESTATE INVESTMENTS, Real Estate Assets and Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Property, Plant and Equipment [Line Items] | |||||
Depreciation expense | $ 21,900 | $ 23,500 | $ 43,200 | $ 46,700 | |
Real Estate Investments, Net [Abstract] | |||||
Gross carrying amount | 2,528,918 | 2,528,918 | $ 2,511,762 | ||
Accumulated depreciation | (318,982) | (318,982) | (275,794) | ||
Net real estate property | 2,209,936 | 2,209,936 | 2,235,968 | ||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization expense | 2,600 | $ 12,400 | 8,100 | $ 26,700 | |
Fully amortized in-place lease and other intangibles, write-off | 254,200 | ||||
Real Estate Intangibles [Abstract] | |||||
Gross carrying amount | 8,638 | 8,638 | 264,438 | ||
Accumulated amortization | (2,682) | (2,682) | (249,198) | ||
Net real estate intangibles | 5,956 | 5,956 | 15,240 | ||
Land [Member] | |||||
Real Estate Investments, Net [Abstract] | |||||
Gross carrying amount | 182,238 | 182,238 | 182,238 | ||
Accumulated depreciation | 0 | 0 | 0 | ||
Net real estate property | 182,238 | 182,238 | 182,238 | ||
Building and Improvements [Member] | |||||
Real Estate Investments, Net [Abstract] | |||||
Gross carrying amount | 2,221,301 | 2,221,301 | 2,216,461 | ||
Accumulated depreciation | (240,239) | (240,239) | (208,540) | ||
Net real estate property | 1,981,062 | 1,981,062 | 2,007,921 | ||
Furniture, Fixtures and Equipment [Member] | |||||
Real Estate Investments, Net [Abstract] | |||||
Gross carrying amount | 125,379 | 125,379 | 113,063 | ||
Accumulated depreciation | (78,743) | (78,743) | (67,254) | ||
Net real estate property | 46,636 | 46,636 | 45,809 | ||
Above/Below Market Lease Intangibles, Net [Member] | |||||
Real Estate Intangibles [Abstract] | |||||
Gross carrying amount | 0 | 0 | 1,607 | ||
Accumulated amortization | 0 | 0 | (380) | ||
Net real estate intangibles | 0 | $ 0 | $ 1,227 | ||
Weighted average remaining amortization period | 0 years | 12 years 11 months | |||
In-Place Lease and Other Intangibles [Member] | |||||
Real Estate Intangibles [Abstract] | |||||
Gross carrying amount | 8,638 | $ 8,638 | $ 262,831 | ||
Accumulated amortization | (2,682) | (2,682) | (248,818) | ||
Net real estate intangibles | $ 5,956 | $ 5,956 | $ 14,013 | ||
Weighted average remaining amortization period | 41 years 7 months | 18 years 4 months |
STRAIGHT-LINE RENT RECEIVABLES (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
STRAIGHT-LINE RENT RECEIVABLES [Abstract] | ||
Straight-line rent receivables | $ 3,148 | $ 82,445 |
Deferred Rent Asset, Net, Current | $ 84,316 |
RECEIVABLES AND OTHER ASSETS, NET (Details) - USD ($) $ in Thousands |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|||
Receivables and Other Assets [Abstract] | |||||
Escrows held by lenders | [1] | $ 13,956 | $ 16,936 | ||
Prepaid expenses | 3,864 | 4,490 | |||
Resident receivables, net | 3,289 | 2,672 | |||
Deferred tax assets, net | 5,388 | 5,475 | |||
Security deposits | 2,625 | 3,222 | |||
Income tax receivable | 989 | 802 | |||
Other assets and receivables | 8,402 | 3,450 | |||
Total receivables and other assets | 38,513 | $ 37,047 | |||
Allowance for Doubtful Accounts [Roll Forward] | |||||
Balance, beginning of period | 938 | $ 976 | |||
Provision for uncollectible receivables | 900 | 1,242 | |||
Write-offs, net of recoveries | (798) | (1,056) | |||
Balance, end of period | $ 1,040 | $ 1,162 | |||
|
MORTGAGE NOTES PAYABLE, NET (Details) |
3 Months Ended | 6 Months Ended | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
|
|||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Outstanding face amount | $ 1,968,528,000 | $ 1,968,528,000 | $ 1,925,098,000 | ||||||||||||||||
Carrying value | [1] | 1,951,042,000 | $ 1,951,042,000 | 1,907,928,000 | |||||||||||||||
Weighted average maturity (years) | 3 years 2 months | ||||||||||||||||||
Balloon payment extension fee, percentage | 0.125% | ||||||||||||||||||
Early repayment of debt | $ 663,796,000 | $ 27,968,000 | |||||||||||||||||
Loss on extinguishment of debt | 58,544,000 | $ 297,000 | 58,544,000 | 672,000 | |||||||||||||||
Payment of exit fee on extinguishment of debt | (51,886,000) | (311,000) | |||||||||||||||||
Write off of Deferred Debt Issuance Cost | 6.6 | ||||||||||||||||||
Payments of Financing Costs | 12,320,000 | 0 | |||||||||||||||||
Balloon payment | 50,700,000 | 50,700,000 | |||||||||||||||||
Payments for Derivative Instrument, Financing Activities | 341,000 | 0 | |||||||||||||||||
Interest rate cap, notional value | 591,200,000 | 591,200,000 | |||||||||||||||||
Fair value adjustment on interest rate caps | 100,000 | 0 | 200,000 | 100,000 | |||||||||||||||
Interest rate cap, fair value | 100,000 | $ 100,000 | |||||||||||||||||
LIBOR [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Basis spread on variable rate | 3.66% | ||||||||||||||||||
Mortgage Notes Payable [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Deferred financing costs | 17,500,000 | $ 17,500,000 | 17,200,000 | ||||||||||||||||
Early repayment of debt | (663,800,000) | $ 28,000,000 | |||||||||||||||||
Mortgage Notes Payable [Member] | Level 3 [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Fair value of mortgage notes payable | 2,000,000,000 | 2,000,000,000 | 1,900,000,000 | ||||||||||||||||
Mortgage Notes Payable [Member] | Fixed Rate [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Carrying value of collateral | 600,000,000 | 600,000,000 | 1,500,000,000 | ||||||||||||||||
Mortgage Notes Payable [Member] | Floating Rate [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Carrying value of collateral | 1,600,000,000 | $ 1,600,000,000 | 800,000,000 | ||||||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | LIBOR [Member] | Minimum [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Basis spread on variable rate | 3.30% | ||||||||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | LIBOR [Member] | Maximum [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Basis spread on variable rate | 3.71% | ||||||||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | Fixed Rate [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Outstanding face amount | 562,462,000 | $ 562,462,000 | 563,526,000 | ||||||||||||||||
Carrying value | [1] | 559,448,000 | $ 559,448,000 | 560,182,000 | |||||||||||||||
Stated interest rate | 3.65% to 4.93% | ||||||||||||||||||
Weighted average maturity (years) | 6 years | ||||||||||||||||||
Payments for Derivative Instrument, Financing Activities | $ (300,000) | ||||||||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | Fixed Rate [Member] | Minimum [Member] | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Interest rate | 3.65% | ||||||||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | Fixed Rate [Member] | Maximum [Member] | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Interest rate | 4.93% | ||||||||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | Floating Rate [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Outstanding face amount | [2],[3] | 1,355,440,000 | $ 1,355,440,000 | 640,880,000 | |||||||||||||||
Carrying value | [1],[2],[3] | 1,341,021,000 | $ 1,341,021,000 | 636,166,000 | |||||||||||||||
Stated interest rate | [2],[3] | 1M LIBOR + 2.20% to 1M LIBOR + 7.00% | |||||||||||||||||
Weighted average maturity (years) | [2],[3] | 2 years 2 months | |||||||||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | Floating Rate [Member] | LIBOR [Member] | Minimum [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Basis spread on variable rate | 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 | 2.70% | ||||||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Fixed Rate [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Outstanding face amount | [2] | 0 | $ 0 | 669,656,000 | [4] | ||||||||||||||
Carrying value | [1],[2] | 0 | $ 0 | 660,646,000 | [4] | ||||||||||||||
Stated interest rate | [2] | 0 | |||||||||||||||||
Weighted average maturity (years) | [2] | 0 years | |||||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Fixed Rate [Member] | Minimum [Member] | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Interest rate | 3.80% | ||||||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Fixed Rate [Member] | Maximum [Member] | |||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||
Interest rate | 7.40% | ||||||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Floating Rate [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Outstanding face amount | 50,626,000 | [5] | $ 50,626,000 | [5] | 51,036,000 | ||||||||||||||
Carrying value | [1] | $ 50,573,000 | [5] | $ 50,573,000 | [5] | $ 50,934,000 | |||||||||||||
Stated interest rate | 3M LIBOR + 3.00% | ||||||||||||||||||
Weighted average maturity (years) | 9 months | ||||||||||||||||||
Triple Net Lease Properties [Member] | Mortgage Notes Payable [Member] | Floating Rate [Member] | LIBOR [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Basis spread on variable rate | 3.00% | ||||||||||||||||||
Assisted Living and Memory Care Properties [Member] | Managed Properties [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Number of properties sold | 2 | 2 | |||||||||||||||||
Independent Living Properties [Member] | Managed Properties [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Number of properties sold | 2 | 2 | |||||||||||||||||
Holiday Acquisitions Holdings LLC [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Basis spread on variable rate | 0.50% | ||||||||||||||||||
Payments for Derivative Instrument, Financing Activities | $ 100,000 | ||||||||||||||||||
Interest rate cap, notional value | $ 720,000,000 | $ 720,000,000 | |||||||||||||||||
Holiday Acquisitions Holdings LLC [Member] | LIBOR [Member] | |||||||||||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||||||||||
Basis spread on variable rate | 3.50% | ||||||||||||||||||
|
ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
|||||
---|---|---|---|---|---|---|---|
Accounts Payable and Accrued Liabilities [Abstract] | |||||||
Security deposits payable (A) | [1] | $ 2,898 | $ 46,291 | ||||
Escrow liabilities | [2] | 470 | 6,664 | ||||
Accounts payable | 12,406 | 9,794 | |||||
Mortgage interest payable | 6,446 | 6,297 | |||||
Deferred community fees, net | 5,329 | 4,612 | |||||
Rent collected in advance | 3,240 | 2,091 | |||||
Property tax payable | 7,280 | 3,331 | |||||
Other liabilities | 15,322 | 5,584 | |||||
Total accrued expenses and other liabilities | $ 53,391 | $ 84,664 | |||||
|
TRANSACTIONS WITH AFFILIATES (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Management Agreements [Abstract] | |||||
Management fees and incentive compensation to affiliate | $ 3,687 | $ 6,754 | $ 7,439 | $ 10,578 | |
Due to affiliates | 13,140 | 13,140 | $ 9,550 | ||
Property Management Agreements [Abstract] | |||||
Property management fees | 4,959 | 4,706 | 8,840 | 9,633 | |
Travel reimbursement costs | 57 | 80 | 113 | 165 | |
Property-level payroll expenses | 23,873 | 23,720 | 43,234 | 48,611 | |
Consideration Received, Lease Termination Agreement | 115,600 | ||||
Termination Payment, Lease Termination Agreement | 70,000 | ||||
Security Deposit | 2,625 | 2,625 | 3,222 | ||
Triple Net Lease Agreements [Abstract] | |||||
Rental revenue | 12,368 | 28,247 | $ 36,243 | 56,494 | |
Management Fees, Incentive Revenue | 2,900 | ||||
Incentive fee percentage | 2.00% | ||||
Manager [Member] | |||||
Management Agreements [Abstract] | |||||
Management fee rate payable | 1.50% | ||||
Management fees and incentive compensation to affiliate | 3,700 | 3,800 | $ 7,400 | 7,600 | |
Percentage used in calculation of annual incentive compensation paid to Manager | 25.00% | ||||
Interest rate used in calculation of annual incentive compensation paid to Manager | 10.00% | ||||
Reimbursement to manager for tasks and other services under the management agreement | 1,856 | 2,175 | $ 4,120 | 4,557 | |
Manager [Member] | General and Administrative Expense [Member] | |||||
Management Agreements [Abstract] | |||||
Reimbursement to manager for tasks and other services under the management agreement | 1,494 | 1,887 | 3,270 | 3,907 | |
Manager [Member] | Acquisition, Transaction and Integration Expense [Member] | |||||
Management Agreements [Abstract] | |||||
Reimbursement to manager for tasks and other services under the management agreement | 362 | 288 | 850 | 650 | |
Manager [Member] | Management Fees Under Management Agreement [Member] | |||||
Management Agreements [Abstract] | |||||
Due to affiliates | 2,500 | 2,500 | 1,300 | ||
Manager [Member] | Reimbursement for Tasks and Other Services Performed Under the Management Agreement [Member] | |||||
Management Agreements [Abstract] | |||||
Due to affiliates | 2,000 | 2,000 | 1,300 | ||
Property Managers [Member] | Property Management Fees Under Property Management Agreement [Member] | |||||
Management Agreements [Abstract] | |||||
Due to affiliates | 2,000 | 2,000 | 1,400 | ||
Property Managers [Member] | Reimbursement of Property-Level Payroll Expenses Under Property Management Agreement [Member] | |||||
Management Agreements [Abstract] | |||||
Due to affiliates | 6,600 | 6,600 | $ 5,600 | ||
Holiday Acquisitions Holdings LLC [Member] | |||||
Property Management Agreements [Abstract] | |||||
Security Deposit | 45,600 | $ 45,600 | |||
Managed Properties [Member] | |||||
Property Management Agreements [Abstract] | |||||
Extension period after initial term of Property Management Agreements | 1 year | ||||
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 | 6.00% | ||||
Percentage of property's gross income paid as property management fees thereafter | 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 | 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 Acquisitions Holdings LLC [Member] | |||||
Property Management Agreements [Abstract] | |||||
Percentage of property's effective gross income paid as property management fees, year one | 5.00% | ||||
Triple Net Lease Agreements [Abstract] | |||||
Percentage of property's effective gross income paid as property management fees, year two and onward | 4.50% | ||||
Triple Net Lease Properties [Member] | Holiday Acquisitions Holdings LLC [Member] | |||||
Triple Net Lease Agreements [Abstract] | |||||
Rental revenue | $ 9,300 | $ 18,600 | $ 28,500 | $ 37,100 | |
Minimum [Member] | Managed Properties [Member] | |||||
Property Management Agreements [Abstract] | |||||
Initial term of Property Management Agreements | 5 years | ||||
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 Acquisitions Holdings LLC [Member] | |||||
Property Management Agreements [Abstract] | |||||
Percentage of property's effective gross income paid as property management fees | 5.00% | ||||
Maximum [Member] | Managed Properties [Member] | |||||
Property Management Agreements [Abstract] | |||||
Initial term of Property Management Agreements | 10 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 Acquisitions Holdings LLC [Member] | |||||
Property Management Agreements [Abstract] | |||||
Percentage of property's effective gross income paid as property management fees | 7.00% |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Prior federal corporate income tax rate | 35.00% | ||||
Federal corporate tax rate under the tax cuts and jobs act | 21.00% | ||||
Adjustment to deferred tax assets | $ 3,000 | ||||
Current | |||||
Federal | $ 0 | $ 0 | $ (42) | $ 0 | |
State and local | 126 | 83 | 153 | 154 | |
Total current provision | 126 | 83 | 111 | 154 | |
Deferred | |||||
Federal | 20 | 57 | 79 | 152 | |
State and local | 5 | 7 | 9 | 47 | |
Total deferred provision | 25 | 64 | 88 | 199 | |
Total provision for income taxes | 151 | $ 147 | 199 | $ 353 | |
Deferred tax assets: | |||||
Prepaid fees and rent | 816 | 816 | 790 | ||
Net operating losses | 4,185 | 4,185 | 4,050 | ||
Deferred rent | 506 | 506 | 949 | ||
Tax credits | 0 | 0 | 42 | ||
Other | 106 | 106 | 99 | ||
Total deferred tax assets | 5,613 | 5,613 | 5,930 | ||
Less valuation allowance | 0 | 0 | 0 | ||
Net deferred tax assets | 5,613 | 5,613 | 5,930 | ||
Deferred tax liabilities: | |||||
Depreciation and amortization | 225 | 225 | 455 | ||
Total deferred tax liabilities | 225 | 225 | 455 | ||
Deferred tax assets, net | $ 5,388 | $ 5,388 | $ 5,475 |
EQUITY (Details) |
Jun. 30, 2018
$ / shares
shares
|
---|---|
Equity [Abstract] | |
Strike price reduction for outstanding options | $ / shares | $ 1.04 |
Number of options granted to new director | 5,000 |
Fortress Investment Group, LLC [Member] | |
Related Party Transaction [Line Items] | |
Common stock outstanding | 1,300,000 |
COMMITMENTS AND CONTINGENCIES (Details) - Triple Net Lease [Member] - Watermark [Member] $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Capital Improvement and Repair Commitments [Abstract] | |
Lease period | 15 years |
Additional Capital Improvements [Member] | |
Capital Improvement and Repair Commitments [Abstract] | |
Capital improvements | $ 1,000 |
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Aug. 08, 2018 |
|
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 | $ 0.13 | |||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 100 |
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