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.) |
55 West 46th Street, New York, NY | 10036 | |
(Address of principal executive offices) | (Zip Code) |
(646) 822-3700 |
N/A |
(Former name, former address and former fiscal year, if changed since last report) |
Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o | |
Smaller reporting company o | Emerging growth company o |
• | our ability to successfully manage the recent transition to self-management and its impact on our business and operations; |
• | 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 three months ended March 31, 2019, accounted for 84.2% of net operating income (“NOI”) from our Managed Properties segments; |
• | 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 “Former Manager”) or our operators; |
• | 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 | ||
March 31, 2019 | December 31, 2018 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Real estate investments: | |||||||
Land | $ | $ | |||||
Buildings, improvements and other | |||||||
Accumulated depreciation | ( | ) | ( | ) | |||
Net real estate property | |||||||
Acquired lease and other intangible assets | |||||||
Accumulated amortization | ( | ) | ( | ) | |||
Net real estate intangibles | |||||||
Net real estate investments | |||||||
Cash and cash equivalents | |||||||
Receivables and other assets, net | |||||||
Total Assets | $ | $ | |||||
Liabilities, Redeemable Preferred Stock and Equity | |||||||
Liabilities | |||||||
Debt, net | $ | $ | |||||
Due to affiliates | |||||||
Accrued expenses and other liabilities | |||||||
Total Liabilities | |||||||
Commitments and contingencies (Note 11) | |||||||
Redeemable preferred stock, $0.01 par value with $100 liquidation preference, 400,000 shares authorized, issued and outstanding as of March 31, 2019 and December 31, 2018, respectively | |||||||
Equity | |||||||
Preferred stock, $0.01 par value, 99,600,000 shares (excluding 400,000 shares of redeemable preferred stock) authorized, none issued or outstanding as of March 31, 2019 and December 31, 2018 | |||||||
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 82,209,844 and 82,148,869 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively | |||||||
Additional paid-in capital | |||||||
Accumulated deficit | ( | ) | ( | ) | |||
Total Equity | |||||||
Total Liabilities, Redeemable Preferred Stock and Equity | $ | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Revenues | |||||||
Resident fees and services | $ | $ | |||||
Rental revenue | |||||||
Total revenues | |||||||
Expenses | |||||||
Property operating expense | |||||||
Depreciation and amortization | |||||||
Interest expense | |||||||
General and administrative expense | |||||||
Acquisition, transaction and integration expense | |||||||
Management fees and incentive compensation to affiliate | |||||||
Other expense | |||||||
Total expenses | $ | $ | |||||
Loss before income taxes | ( | ) | ( | ) | |||
Income tax expense | |||||||
Net loss | $ | ( | ) | $ | ( | ) | |
Deemed dividend on redeemable preferred stock | ( | ) | |||||
Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | |
Net loss per share of common stock | |||||||
Basic and diluted (A) | $ | ( | ) | $ | ( | ) | |
Weighted average number of shares of common stock outstanding | |||||||
Basic and diluted (B) | |||||||
Dividends declared per share of common stock | $ | $ |
(A) |
(B) | A |
Common Stock | |||||||||||||||||||
Shares | Amount | Accumulated Deficit | Additional Paid-in Capital | Total Equity | |||||||||||||||
Balance at December 31, 2018 | $ | $ | ( | ) | $ | $ | |||||||||||||
Amortization of equity-based compensation | — | — | — | 449 | 449 | ||||||||||||||
Directors shares issued | — | ||||||||||||||||||
Dividends declared - common stock | — | ( | ) | ( | ) | ||||||||||||||
Dividends declared - restricted stock award | — | — | ( | ) | — | ( | ) | ||||||||||||
Deemed dividend on redeemable preferred stock | — | — | ( | ) | — | ( | ) | ||||||||||||
Net loss | — | ( | ) | ( | ) | ||||||||||||||
Balance at March 31, 2019 | $ | $ | ( | ) | $ | $ |
Common Stock | |||||||||||||||||||
Shares | Amount | Accumulated Deficit | Additional Paid-in Capital | Total Equity | |||||||||||||||
Balance at December 31, 2017 | $ | $ | ( | ) | $ | $ | |||||||||||||
Fair value of stock options issued | — | — | — | ||||||||||||||||
Dividends declared - common stock | — | — | ( | ) | — | ( | ) | ||||||||||||
Net loss | — | — | ( | ) | — | ( | ) | ||||||||||||
Balance at March 31, 2018 | $ | $ | ( | ) | $ | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Cash Flows From Operating Activities | |||||||
Net loss | $ | ( | ) | $ | ( | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Depreciation of tangible assets and amortization of intangible assets | |||||||
Amortization of deferred financing costs | |||||||
Amortization of deferred revenue, net | |||||||
Non-cash straight line rental revenue | ( | ) | ( | ) | |||
Provision for bad debt | |||||||
Amortization of equity-based compensation | |||||||
Other non-cash expense | |||||||
Changes in: | |||||||
Receivables and other assets, net | ( | ) | ( | ) | |||
Due to affiliates | ( | ) | ( | ) | |||
Accrued expenses and other liabilities | |||||||
Net cash provided by (used in) operating activities | $ | ( | ) | $ | |||
Cash Flows From Investing Activities | |||||||
Capital expenditures, net of insurance proceeds | $ | ( | ) | $ | ( | ) | |
Net cash (used in) investing activities | $ | ( | ) | $ | ( | ) | |
Cash Flows From Financing Activities | |||||||
Principal payments of mortgage notes payable and capital lease obligations | $ | ( | ) | $ | ( | ) | |
Payment of deferred financing costs | ( | ) | ( | ) | |||
Purchase of interest rate caps | ( | ) | ( | ) | |||
Payment of common stock dividend | ( | ) | ( | ) | |||
Net cash (used in) financing activities | $ | ( | ) | $ | ( | ) | |
Net (decrease) in cash, cash equivalents and restricted cash | ( | ) | ( | ) | |||
Cash, cash equivalents and restricted cash, beginning of period | |||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||
Supplemental Disclosure of Cash Flow Information | |||||||
Cash paid during the period for interest expense | $ | $ | |||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities | |||||||
Issuance of common stock | $ | $ | |||||
Capital lease obligations |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Reconciliation of Cash, Cash Equivalents and Restricted Cash | |||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash (A) | |||||||
Total, beginning of period | $ | $ | |||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash (A) | |||||||
Total, end of period | $ | $ |
(A) |
1. |
2. |
Three Months Ended March 31, 2019 | |||||||||||||||
Triple Net Lease Properties | Managed Properties | Consolidated | |||||||||||||
IL | AL/MC | ||||||||||||||
Revenues | |||||||||||||||
Resident fees and services | $ | $ | $ | $ | |||||||||||
Rental revenue | |||||||||||||||
Less: Property operating expense | |||||||||||||||
Segment NOI | $ | $ | $ | $ | |||||||||||
Depreciation and amortization | |||||||||||||||
Interest expense | |||||||||||||||
General and administrative expense | |||||||||||||||
Acquisition, transaction and integration expense | |||||||||||||||
Other expense | |||||||||||||||
Total expenses | |||||||||||||||
Loss before income taxes | ( | ) | |||||||||||||
Income tax expense | |||||||||||||||
Net loss | $ | ( | ) |
Three Months Ended March 31, 2018 | |||||||||||||||
Triple Net Lease Properties | Managed Properties | Consolidated | |||||||||||||
IL | AL/MC | ||||||||||||||
Revenues | |||||||||||||||
Resident fees and services | $ | $ | $ | $ | |||||||||||
Rental revenue | |||||||||||||||
Less: Property operating expense | |||||||||||||||
Segment NOI | $ | $ | $ | $ | |||||||||||
Depreciation and amortization | |||||||||||||||
Interest expense | |||||||||||||||
General and administrative expense | |||||||||||||||
Acquisition, transaction and integration expense | |||||||||||||||
Management fees and incentive compensation to affiliate | |||||||||||||||
Other expense | |||||||||||||||
Total expenses | |||||||||||||||
Loss before income taxes | ( | ) | |||||||||||||
Income tax expense | |||||||||||||||
Net loss | $ | ( | ) |
March 31, 2019 | December 31, 2018 | ||||||||||||
Amount | Percentage | Amount | Percentage | ||||||||||
Managed IL Properties | $ | % | $ | % | |||||||||
Managed AL/MC Properties | % | % | |||||||||||
Triple Net Lease Properties | % | % | |||||||||||
All other assets (A) | % | % | |||||||||||
Total assets | $ | % | $ | % |
(A) |
As of and for the three months ended March 31, 2019 | As of and for the three months ended March 30, 2018 | ||||||||||
Number of Communities | % of Total Revenue | Number of Communities | % of Total Revenue | ||||||||
Florida | % | % | |||||||||
California | % | % | |||||||||
Texas | % | % | |||||||||
North Carolina | % | % | |||||||||
Pennsylvania | % | % | |||||||||
Oregon | % | % | |||||||||
Other | % | % | |||||||||
Total | % | % |
4. |
March 31, 2019 | December 31, 2018 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Depreciation | Net Carrying Value | Gross Carrying Amount | Accumulated Depreciation | Net Carrying Value | ||||||||||||||||||
Land | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Building and improvements | ( | ) | ( | ) | |||||||||||||||||||
Furniture, fixtures and equipment | ( | ) | ( | ) | |||||||||||||||||||
Total real estate investments | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ |
March 31, 2019 | December 31, 2018 | ||||||||||||||||||||||||||
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 | ||||||||||||||||||||
Intangible lease assets | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||
Total intangibles | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ |
5. |
March 31, 2019 | December 31, 2018 | ||||||
Escrows held by lenders (A) | $ | $ | |||||
Prepaid expenses | |||||||
Resident receivables, net | |||||||
Security deposits | |||||||
Income tax receivable | |||||||
Assets held for sale (B) | |||||||
Straight-line rent receivable | |||||||
Other assets and receivables | |||||||
Total receivables and other assets | $ | $ |
(A) |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Balance, beginning of period | $ | $ | |||||
Provision for uncollectible receivables | |||||||
Write-offs, net of recoveries | ( | ) | ( | ) | |||
Balance, end of period | $ | $ |
2019 (nine months) | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total future minimum lease payments | $ |
6. | DEBT, NET |
March 31, 2019 | December 31, 2018 | ||||||||||||||||||||
Outstanding Face Amount | Carrying Value (A) | Maturity Date | Stated Interest Rate | Weighted Average Maturity (Years) | Outstanding Face Amount | Carrying Value (A) | |||||||||||||||
Fixed Rate | $ | $ | Sep 2025 | $ | $ | ||||||||||||||||
Floating Rate (B)(C) | Dec 2021 - Nov 2025 | + 2.29% to 1M LIBOR + 2.75% | |||||||||||||||||||
Total | $ | $ | $ | $ |
(B) |
(C) | Includes $69.0 million of borrowings outstanding under our revolving credit facility secured by certain properties as of March 31, 2019 and December 31, 2018. |
7. |
March 31, 2019 | December 31, 2018 | ||||||
Security deposits payable | $ | $ | |||||
Accounts payable | |||||||
Mortgage interest payable | |||||||
Deferred community fees, net | |||||||
Rent collected in advance | |||||||
Property tax payable | |||||||
Operating lease liability | 2,424 | — | |||||
Other liabilities | |||||||
Total accrued expenses and other liabilities | $ | $ |
8. |
9. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Current | |||||||
Federal | $ | $ | ( | ) | |||
State and local | |||||||
Total current provision | ( | ) | |||||
Deferred | |||||||
Federal | |||||||
State and local | |||||||
Total deferred provision | |||||||
Total provision for income taxes | $ | $ |
March 31, 2019 | December 31, 2018 | ||||||
Deferred tax assets: | |||||||
Prepaid fees and rent | $ | $ | |||||
Net operating losses | |||||||
Deferred rent | |||||||
Depreciation | |||||||
Other | |||||||
Total deferred tax assets | |||||||
Less valuation allowance | ( | ) | ( | ) | |||
Net deferred tax assets | |||||||
Deferred tax liabilities: | |||||||
Depreciation and amortization | |||||||
Total deferred tax liabilities | |||||||
Total net deferred tax assets | $ | $ |
10. | REDEEMABLE PREFERRED STOCK, |
Balance as of December 31, 2018 | $ | ||
Deemed dividend on Redeemable Preferred Stock | |||
Balance as of March 31, 2019 | $ |
Options valuation date | |||
Expected volatility | % | ||
Expected dividend yield | % | ||
Expected remaining term | |||
Risk free rate | % | ||
Fair value at valuation date | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Numerator | |||||||
Net loss | $ | ( | ) | $ | ( | ) | |
Deemed dividend on redeemable preferred stock | ( | ) | |||||
Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | |
Denominator | |||||||
Basic weighted average common shares outstanding | |||||||
Dilutive common shares - restricted stock and option awards (A) | — | — | |||||
Diluted weighted average common shares outstanding | |||||||
Net loss per share of common stock | |||||||
Basic | $ | ( | ) | $ | ( | ) | |
Diluted | $ | ( | ) | $ | ( | ) |
(A) |
11. |
Year | Operating Leases | ||
2019 (nine months) | $ | 488 | |
2020 | 599 | ||
2021 | 552 | ||
2022 | 489 | ||
2023 | 466 | ||
Thereafter | 545 | ||
Total future minimum lease payments | $ | 3,139 | |
Less imputed interest | (715 | ) | |
Total operating lease liability | $ | 2,424 |
12. |
Three Months Ended March 31, | Increase (Decrease) | |||||||||||||
(dollars in thousands) | 2019 | 2018 | Amount | Percentage | ||||||||||
Segment NOI for Managed Properties | ||||||||||||||
IL Properties | $ | 33,025 | $ | 16,335 | $ | 16,690 | 102.2 | % | ||||||
AL/MC Properties | 5,665 | 6,909 | (1,244 | ) | (18.0 | )% | ||||||||
Segment NOI for Triple Net Lease Properties | 1,582 | 23,875 | (22,293 | ) | (93.4 | )% | ||||||||
Total segment NOI | 40,272 | 47,119 | (6,847 | ) | (14.5 | )% | ||||||||
Expenses | ||||||||||||||
Depreciation and amortization | 20,787 | 26,725 | (5,938 | ) | (22.2 | )% | ||||||||
Interest expense | 23,719 | 21,923 | 1,796 | 8.2 | % | |||||||||
General and administrative expense | 4,984 | 3,752 | 1,232 | 32.8 | % | |||||||||
Acquisition, transaction and integration expense | 650 | 2,888 | (2,238 | ) | (77.5 | )% | ||||||||
Management fees and incentive compensation to affiliate | — | 3,752 | (3,752 | ) | NM | |||||||||
Other expense | 1,245 | 1,380 | (135 | ) | (9.8 | )% | ||||||||
Total expenses | 51,385 | 60,420 | (9,035 | ) | (15.0 | )% | ||||||||
Loss before income taxes | (11,113 | ) | (13,301 | ) | 2,188 | (16.4 | )% | |||||||
Income tax expense | 80 | 48 | 32 | 66.7 | % | |||||||||
Net loss | $ | (11,193 | ) | $ | (13,349 | ) | $ | 2,156 | (16.2 | )% |
Same Store Portfolio | Total Portfolio | ||||||||||||||||||||||||||||
(dollars in thousands, except per bed data) | 2019 | 2018 | Change | % | 2019 | 2018 | Change | % | |||||||||||||||||||||
Resident fees and services | $ | 43,425 | $ | 42,555 | $ | 870 | 2.0 | % | $ | 83,744 | $ | 42,555 | $ | 41,189 | 96.8 | % | |||||||||||||
Less: Property operating expense | 25,905 | 26,220 | (315 | ) | (1.2 | )% | 50,719 | 26,220 | 24,499 | 93.4 | % | ||||||||||||||||||
NOI | $ | 17,520 | $ | 16,335 | $ | 1,185 | 7.3 | % | $ | 33,025 | $ | 16,335 | $ | 16,690 | 102.2 | % | |||||||||||||
Total properties | 51 | 51 | 102 | 51 | |||||||||||||||||||||||||
Average available beds | 6,127 | 6,126 | 11,974 | 6,126 | |||||||||||||||||||||||||
Average occupancy (%) | 86.7 | 87.3 | 87.0 | 87.3 | |||||||||||||||||||||||||
Average monthly revenue per occupied bed | $ | 2,726 | $ | 2,653 | $ | 2,680 | $ | 2,653 |
Same Store Portfolio | Total Portfolio | ||||||||||||||||||||||||||||
(dollars in thousands, except per bed data) | 2019 | 2018 | Change | % | 2019 | 2018 | Change | % | |||||||||||||||||||||
Resident fees and services | $ | 23,344 | $ | 23,229 | $ | 115 | 0.5 | % | $ | 32,293 | $ | 32,788 | $ | (495 | ) | (1.5 | )% | ||||||||||||
Less: Property operating expense | 18,258 | 17,496 | 762 | 4.4 | % | 26,628 | 25,879 | 749 | 2.9 | % | |||||||||||||||||||
NOI | $ | 5,086 | $ | 5,733 | $ | (647 | ) | (11.3 | )% | $ | 5,665 | $ | 6,909 | $ | (1,244 | ) | (18.0 | )% | |||||||||||
Total properties | 19 | 19 | 30 | 30 | |||||||||||||||||||||||||
Average available beds | 2,297 | 2,296 | 3,418 | 3,417 | |||||||||||||||||||||||||
Average occupancy (%) | 81.6 | 82.3 | 78.2 | 80 | |||||||||||||||||||||||||
Average monthly revenue per occupied bed | $ | 4,150 | $ | 4,097 | $ | 4,025 | $ | 4,000 |
Same Store Portfolio | Total Portfolio | ||||||||||||||||||||||||||||
(dollars in thousands) | 2019 | 2018 | Change | % | 2019 | 2018 | Change | % | |||||||||||||||||||||
Rental revenue | $ | 1,582 | $ | 1,581 | $ | 1 | 0.1 | % | $ | 1,582 | $ | 23,875 | $ | (22,293 | ) | (93.4 | )% | ||||||||||||
NOI | $ | 1,582 | $ | 1,581 | $ | 1 | 0.1 | % | $ | 1,582 | $ | 23,875 | $ | (22,293 | ) | (93.4 | )% | ||||||||||||
Total properties | 1 | 1 | 1 | 52 | |||||||||||||||||||||||||
Average available beds | 463 | 463 | 463 | 6,309 | |||||||||||||||||||||||||
Average occupancy (%) | 86.5 | 90.0 | 86.4 | 85.4 |
• | 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 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. |
Three Months Ended March 31, | Increase (Decrease) | ||||||||||
(dollars in thousands) | 2019 | 2018 | Amount | ||||||||
Net cash provided by (used in) | |||||||||||
Operating activities | $ | (11,095 | ) | $ | 15,730 | $ | (26,825 | ) | |||
Investing activities | (6,647 | ) | (3,561 | ) | (3,086 | ) | |||||
Financing activities | (14,241 | ) | (29,385 | ) | 15,144 | ||||||
Net decrease in cash, cash equivalents and restricted cash | (31,983 | ) | (17,216 | ) | (14,767 | ) | |||||
Cash, cash equivalents and restricted cash, beginning of period | 92,656 | 157,485 | (64,829 | ) | |||||||
Cash, cash equivalents and restricted cash, end of period | $ | 60,673 | $ | 140,269 | $ | (79,596 | ) |
Period from April 1, 2019 to December 31, 2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | |||||||||||||||||||||
Principal payments | $ | 7,268 | $ | 12,505 | $ | 20,062 | $ | 22,016 | $ | 19,817 | $ | 37,179 | $ | 118,847 | |||||||||||||
Balloon payments | — | — | 69,000 | 616,620 | — | 1,098,354 | 1,783,974 | ||||||||||||||||||||
Subtotal | 7,268 | 12,505 | 89,062 | 638,636 | 19,817 | 1,135,533 | 1,902,821 | ||||||||||||||||||||
Interest (A) | 68,181 | 90,273 | 89,369 | 64,056 | 53,388 | 96,828 | 462,095 | ||||||||||||||||||||
Leases | 488 | 599 | 552 | 489 | 466 | 545 | 3,139 | ||||||||||||||||||||
Total obligations (B) | $ | 75,937 | $ | 103,377 | $ | 178,983 | $ | 703,181 | $ | 73,671 | $ | 1,232,906 | $ | 2,368,055 |
(A) | Estimated interest payments on floating rate debt are calculated using LIBOR rates in effect at March 31, 2019 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. |
(B) | Total obligations include an estimate of interest payments on floating rate debt, see Note A above. |
Three Months Ended March 31, | |||||||
(dollars in thousands) | 2019 | 2018 | |||||
Net loss attributable to common stockholders | $ | (11,791 | ) | $ | (13,349 | ) | |
Depreciation and amortization | 20,787 | 26,725 | |||||
FFO | 8,996 | 13,376 | |||||
Acquisition, transaction and integration expense | 650 | 2,888 | |||||
Compensation expense related to transition awards | 601 | — | |||||
Other expense | 1,306 | 1,380 | |||||
Normalized FFO | 11,553 | 17,644 | |||||
Straight line rental revenue | (173 | ) | (3,326 | ) | |||
Amortization of deferred financing costs | 1,208 | 2,132 | |||||
Amortization of deferred community fees and other | 569 | 353 | |||||
Adjusted FFO | $ | 13,157 | $ | 16,803 |
Three Months Ended March 31, | |||||||
(dollars in thousands) | 2019 | 2018 | |||||
Net loss attributable to common stockholders | $ | (11,791 | ) | $ | (13,349 | ) | |
Depreciation and amortization | 20,787 | 26,725 | |||||
FFO | 8,996 | 13,376 | |||||
Acquisition, transaction and integration expense | 650 | 2,888 | |||||
Amortization of transitions awards | 601 | — | |||||
Other expense | 1,306 | 1,380 | |||||
Normalized FFO | 11,553 | 17,644 | |||||
Interest expense | 23,719 | 21,923 | |||||
Income tax expense | 80 | 48 | |||||
Adjusted EBITDA | $ | 35,352 | $ | 39,615 |
• | 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 financing or refinancing 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 operations conducted by third parties, 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 |
• | part of the income and gain recognized by a tax-exempt investor with respect to our stock would constitute unrelated business taxable income if the investor incurs debt in order to acquire the stock. |
• | a shift in our investor base; |
• | our quarterly or annual earnings, or those of other comparable companies; |
• | actual or anticipated fluctuations in our operating results; |
• | changes in accounting standards, policies, guidance, interpretations or principles; |
• | announcements by us or our competitors of significant investments, acquisitions or dispositions; |
• | the failure of securities analysts to cover our common stock; |
• | changes in earnings estimates by securities analysts or our ability to meet those estimates; |
• | the operating and stock price performance of other comparable companies; |
• | overall market fluctuations; and |
• | general economic conditions. |
• | a classified board of directors with staggered three-year terms; |
• | amendment of provisions in our certificate of incorporation and bylaws regarding the election of directors, classes of directors, the term of office of directors, the filling of director vacancies and the resignation and removal of directors only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon; |
• | amendment of provisions in our certificate of incorporation regarding corporate opportunity only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon; |
• | removal of directors only for cause and only with the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote in the election of directors; |
• | our board of directors to determine the powers, preferences and rights of our preferred stock and to issue such preferred stock without stockholder approval; |
• | advance notice requirements applicable to stockholders for director nominations and actions to be taken at annual meetings; and |
• | a prohibition, in our certificate of incorporation, stating that no holder of shares of our common stock will have cumulative voting rights in the election of directors, which means that the holders of a majority of the issued and outstanding shares of common stock can elect all the directors standing for election. |
Exhibits filed with this Form 10-Q: | |
101.INS | XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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. |
* | Management contract or compensatory plan or arrangement. |
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 10.12 and Exhibit 10.13, 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 10.12 and Exhibit 10.13, 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 10.14 and Exhibit 10.15, 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 10.14 and Exhibit 10.15, 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 | ||
Director and Chief Executive Officer | ||
May 3, 2019 | ||
By: | /s/ David Smith | |
David Smith | ||
Executive Vice President, Chief Financial Officer | ||
May 3, 2019 | ||
By: | /s/ Bhairav Patel | |
Bhairav Patel | ||
Executive Vice President of Finance and Accounting | ||
May 3, 2019 |
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. |
May 3, 2019 | /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. |
May 3, 2019 | /s/ David Smith |
David Smith | |
Executive Vice President, Chief Financial 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. |
May 3, 2019 | /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. |
May 3, 2019 | /s/ David Smith |
David Smith | |
Executive Vice President, Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Apr. 26, 2019 |
|
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 Current Reporting Status | Yes | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 82,209,844 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Sep. 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 ($) |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
||||||
Weighted Average Number of Shares Outstanding, Basic and Diluted | [1] | 82,203,069 | 82,148,869 | ||||
Earnings Per Share, Basic and Diluted | [2] | $ (0.14) | $ (0.16) | ||||
Revenues | |||||||
Resident fees and services | $ 116,037,000 | $ 75,343,000 | |||||
Rental revenue | 1,582,000 | 23,875,000 | |||||
Total revenues | 117,619,000 | 99,218,000 | |||||
Expenses | |||||||
Property operating expense | 77,347,000 | 52,099,000 | |||||
Depreciation and amortization | 20,787,000 | 26,725,000 | |||||
Interest expense | 23,719,000 | 21,923,000 | |||||
Acquisition, transaction and integration expense | 650,000 | 2,888,000 | |||||
Management fees and incentive compensation to affiliate | 0 | 3,752,000 | |||||
General and administrative expense | 4,984,000 | 3,752,000 | |||||
Other expense | 1,245,000 | 1,380,000 | |||||
Total expenses | 128,732,000 | 112,519,000 | |||||
Loss before income taxes | (11,113,000) | (13,301,000) | |||||
Income tax expense | 80,000 | 48,000 | |||||
Net loss | (11,193,000) | (13,349,000) | |||||
Deemed dividend on redeemable preferred stock | 598,000 | 0 | |||||
Net (loss) income attributable to common stockholders | $ (11,791,000) | $ (13,349,000) | |||||
Weighted average number of shares of common stock outstanding | |||||||
Common Stock, Dividends, Per Share, Declared | $ 0.13 | $ 0.26 | |||||
Triple Net Lease Properties [Member] | |||||||
Revenues | |||||||
Resident fees and services | $ 0 | $ 0 | |||||
Expenses | |||||||
Property operating expense | $ 0 | $ 0 | |||||
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - USD ($) |
Total |
Common Stock [Member] |
Accumulated Deficit [Member] |
Additional Paid-in Capital [Member] |
Restricted Stock [Member] |
Restricted Stock [Member]
Equity Award [Domain]
|
---|---|---|---|---|---|---|
Equity at Dec. 31, 2017 | $ 505,885,000 | $ 821,000 | $ (393,068,000) | $ 898,132,000 | ||
Equity (in shares) at Dec. 31, 2017 | 82,148,869 | 82,148,869 | ||||
Increase (Decrease) in Equity [Roll Forward] | ||||||
Issuance of common stock | $ 0 | |||||
Dividends declared - common stock | (21,359,000) | |||||
Deemed dividend on redeemable preferred stock | 0 | |||||
Net loss | (13,349,000) | (13,349,000) | ||||
Equity at Mar. 31, 2018 | 471,180,000 | $ 821,000 | (427,776,000) | 898,135,000 | ||
Equity (in shares) at Mar. 31, 2018 | 82,148,869 | |||||
Equity at Dec. 31, 2018 | 282,452,000 | $ 821,000 | (616,504,000) | 898,135,000 | ||
Equity (in shares) at Dec. 31, 2018 | 82,148,869 | |||||
Increase (Decrease) in Equity [Roll Forward] | ||||||
Fair value of stock options issued | $ 3,000 | |||||
Stock Issued During Period, Shares, Issued for Services | 60,975 | |||||
Issuance of common stock | $ 275,000 | $ 1,000 | 274,000 | |||
Dividends declared - common stock | (10,687,000) | 0 | (10,687,000) | 0 | ||
Dividends, Cash | $ (104,000) | $ (104,000) | ||||
Deemed dividend on redeemable preferred stock | (598,000) | |||||
Net loss | (11,193,000) | 0 | (11,193,000) | 0 | ||
Equity at Mar. 31, 2019 | $ 260,594,000 | $ 822,000 | $ (639,086,000) | $ 898,858,000 | ||
Equity (in shares) at Mar. 31, 2019 | 82,209,844 |
ORGANIZATION |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
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 March 31, 2019, 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. Through December 31, 2018, we were externally managed and advised by FIG LLC (the “Former Manager”), an affiliate of Fortress Investment Group LLC (“Fortress”). On November 19, 2018, we entered into definitive agreements with the Former Manager to internalize our management, effective December 31, 2018 (the “Internalization”). In connection with the Internalization, we also entered into a Transition Services Agreement with the Former Manager to continue to provide certain services for a transition period. In connection with the termination of the Management Agreement, we (i) made a one-time cash payment of $10.0 million to the Former Manager in January 2019, and (ii) issued to the Former Manager 400,000 shares of our newly created Redeemable Series A Cumulative Perpetual Preferred Stock (the “Redeemable Preferred Stock”), with an aggregate fair value of $40.0 million. We operate in three reportable segments: (1) Managed Independent Living (“IL”) Properties, (2) Managed Assisted Living/Memory Care (“AL/MC”) Properties, and (3) 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 segments. These properties consist of 102 IL facilities and 30 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 our Former Manager (an affiliate of Fortress), FHC Property Management LLC (together with its subsidiaries, “Blue Harbor”), an affiliate of our Former Manager, Jerry Erwin Associates, Inc. (“JEA”), Grace Management, Inc. (“Grace”), Watermark Retirement Communities, Inc. (“Watermark”), Integral Senior Living Management, LLC (“Integral”) and Phoenix Senior Living LLC (“Phoenix”) (collectively, the “Property Managers”), under property management agreements (collectively, the “Property Management Agreements”). Under 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 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. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
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, 2018, 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 Equity-Based Compensation Compensation expense for equity-based awards with graded vesting schedules granted to employees is recognized in “General and administrative expense” in our Consolidated Statements of Operations on a straight-line basis over the vesting period based on the grant date fair value of the award. Forfeitures of equity-based awards are recognized as they occur. Earnings per Share Basic earnings per share of common stock is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share of common stock is calculated by including the effect of dilutive securities. Refer to our significant accounting policies disclosed in our Form 10-K for the year ended December 31, 2018 for other significant accounting policies. Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, (codified under Accounting Standards Codification (“ASC”) 842, 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. As lessee, a right-of-use asset and corresponding liability for future obligations under a leasing arrangement would be recognized on the balance sheet. As lessor, gross leases will be subject to allocation between lease and non-lease service components, with the latter accounted for under the new revenue recognition standard. Additionally, under the new lease standard, only incremental initial direct costs incurred in the execution of a lease can be capitalized by the lessor and lessee. We adopted ASC 842 on January 1, 2019 under the modified retrospective transition approach using the effective date as the date of initial application. Therefore, financial information and disclosures under ASC 842 will not be provided for periods prior to January 1, 2019. We elected the “package of practical expedients”, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We also elected the short-term lease practical expedient, which permits us to not recognize right-of-use asset or lease liability for operating leases with an initial lease term equal to or less than 12 months. In addition, we made an accounting policy election to treat lease and related non-lease components in a contract as a single performance obligation to the extent that the timing and pattern of revenue recognition are the same for the lease and non-lease components and the combined single lease component is classified as an operating lease. Lessor Accounting As a lessor, our recognition of rental revenue remained consistent with prior accounting guidance. 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. Resident leases within our Managed Properties segments contain service components. We elected the practical expedient to account for our resident leases as a single lease component. Lessee Accounting We determine if a contract is or contains a lease at inception. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use asset and lease liability are recognized at the commencement date based on the present value of lease payments over the lease term. We use our incremental borrowing rate to determine the present value of lease payments as the rates implicit in our leases are not readily determinable. Upon adoption on January 1, 2019 and as of March 31, 2019, our operating lease right-of-use asset and lease liability are $2.6 million and $2.4 million, respectively, for our corporate office, land and equipment leases. Our operating lease right-of-use asset is included in “Buildings, improvements and other” and our operating lease liability is included in “Accrued expenses and other liabilities” on our Consolidated Balance Sheets. The weighted-average remaining lease term for our operating leases was 4.9 years and 5.1 years at March 31, 2019 and December 31, 2018, respectively. The weighted-average discount rate was 6.03% and 6.02% at March 31, 2019 and December 31, 2018, respectively. Upon the adoption of ASC 842, capital leases under prior accounting guidance were classified as finance leases, which did not have a significant change to our accounting for such leases. Recently Issued Accounting Pronouncements Not Yet Adopted |
SEGMENT REPORTING |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | SEGMENT REPORTING We operate in three reportable business segments: Managed IL Properties, Managed AL/MC Properties and Triple Net Lease Properties. Under our Managed Properties segments, 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 IL Properties segment. This resulted in a significant increase in the segment NOI of the Managed IL Properties with a corresponding decrease in the segment NOI of the Triple Net Lease Properties during the three months ended March 31, 2019. Depreciation and amortization, interest expense, acquisition, transaction and integration expense, termination fee, management fees and incentive compensation to affiliate, general and administrative expense, loss on extinguishment of debt, impairment of real estate, other expense (income), gain on sale of real estate, gain on lease termination and income tax expense (benefit) are not allocated to individual segments for purposes of assessing segment performance. There are no intersegment sales.
For the three months ended March 31, 2019, no rental revenue was attributable to Holiday due to the Lease Termination in May 2018. For the three months ended March 31, 2018, rental revenue attributable to our triple net leases with Holiday accounted for 22.5% of our total revenue. Assets by reportable business segment are reconciled to total assets as follows:
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 $20.7 million and $21.2 million for the three months ended March 31, 2019 and 2018, respectively. The following table summarizes our real estate intangibles:
Amortization expense was $0.1 million and $5.5 million for the three months ended March 31, 2019 and 2018, respectively. During the three months ended March 31, 2019, no intangible lease assets were written off and for the three months ended March 31, 2018, $195.3 million of fully amortized intangible lease assets were written off. |
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 our Consolidated Statements of Operations. Straight-line Rent Receivable 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 of substantially all rents is probable. 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. 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. If our evaluation of these factors indicates it is probable that we will be unable to collect substantially all rents, we recognize a charge to rental revenue for the amount we deemed uncollectible. The following table sets forth future contracted minimum lease payments from the tenant within the Triple Net Lease Properties segment, excluding contingent payment escalations, as of March 31, 2019:
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MORTGAGE NOTES PAYABLE, NET |
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Mar. 31, 2019 | |||||||||
Debt Disclosure [Abstract] | |||||||||
MORTGAGE NOTES PAYABLE, NET | (A) The totals are reported net of deferred financing costs of $20.2 million and $20.6 million as of March 31, 2019 and December 31, 2018, respectively.
The carrying value of the collateral relating to the fixed rate and floating rate debt was $0.5 billion and $1.6 billion as of March 31, 2019, respectively, and $0.5 billion and $1.6 billion as of December 31, 2018, respectively. The fair values of our debt as of March 31, 2019 and December 31, 2018 were $1.8 billion and $1.9 billion, respectively. Our debt is not measured at fair value in our Consolidated Balance Sheets. The disclosed fair value of our debt, 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. Our debt contains 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 debt agreements as of March 31, 2019. Interest rate caps |
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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Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
TRANSACTIONS WITH AFFILIATES | TRANSACTIONS WITH AFFILIATES The following disclosures describe transactions with Fortress, Holiday and Blue Harbor prior to the Internalization. For additional information regarding the Internalization, the termination of the Management Agreement with our Former Manager and the transition arrangements between the parties, please refer to Note 1. Management Agreements Prior to January 1, 2019, we were party to a management agreement (the “Management Agreement”) with the Former Manager, under which the Former Manager advised 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 Former Manager was entitled to a base management fee of 1.5% per annum of our gross equity. Gross equity was 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 $3.8 million of management fees during the three months ended March 31, 2018, under the Management Agreement, which is included in “Management fees and incentive compensation to affiliate” in our Consolidated Statements of Operations. As of December 31, 2018, we had management fee payable of $3.7 million, which is included in “Due to affiliates” in our Consolidated Balance Sheets. The Former Manager was 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 Former Manager did not earn incentive compensation during the three months ended March 31, 2018. The Former Manager was 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 Former Manager’s employees performed certain legal, accounting, due diligence, asset management and other services that outside professionals or outside consultants otherwise would perform, the Former Manager was 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 were also required to pay all operating expenses, except those specifically required to be borne by the Former Manager under the Management Agreement. We were 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 Former Manager for travel on our behalf, costs associated with any computer software or hardware that was used by us, costs to obtain liability insurance to indemnify directors and officers and the compensation and expenses of our transfer agent. For the three months ended March 31, 2018, our reimbursement to the Former Manager for costs incurred for tasks and other services performed under the Management Agreement was $2.3 million, of which $1.8 million was included in “General and administrative expense” and $0.5 million was included in “Acquisition, transaction and integration expense” in our Consolidated Statements of Operations. As of December 31, 2018, we had reimbursements payable to the Former Manager of $2.2 million, which is included in “Due to affiliates” in our 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 our 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 three months ended March 31, 2019 and 2018. Property management fees are included in “Property operating expense” in our Consolidated Statements of Operations. Other amounts paid to managers affiliated with the Former Manager 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. For the three months ended March 31, 2018, we incurred property management fees, travel reimbursement costs and property-level payroll expenses of $3.9 million, $0.1 million and $19.4 million, respectively, to property managers affiliated with the Former Manager, which are included in “Property operating expense” in our Consolidated Statements of Operations. |
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 recorded a valuation allowance of $5.7 million against our net deferred tax assets as of March 31, 2019 as management believes that it is more likely than not that our net deferred tax assets will not be realized. However, the amount of the deferred tax asset considered realizable could be adjusted if (i) estimates of future taxable income during the carryforward period are reduced or increased or (ii) objective negative evidence in the form of cumulative losses is no longer present. |
EQUITY |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY | EQUITY AND EARNINGS PER SHARE Redeemable Preferred Stock On December 31, 2018, we issued 400,000 shares of our Redeemable Preferred Stock to the Former Manager as consideration for the termination of the Management Agreement. The Redeemable Preferred Stock are non-voting and have a $100 liquidation preference. Holders of the Redeemable Preferred Stock are entitled to cumulative cash dividends at a rate per annum of 6.00% on the liquidation preference amount plus all accumulated and unpaid dividends. In the event of any voluntary or involuntary liquidation, dissolution or winding up, the holders of shares of the Redeemable Preferred Stock will receive out of the assets of the Company legally available for distribution to its stockholders before any payment is made to the holders of any series of preferred stock ranking junior to the Redeemable Preferred Stock or to any holder of the Company’s common stock but subject to the rights of any class or series of securities ranking senior to or on parity with the Redeemable Preferred Stock, a payment per share equal to the liquidation preference plus any accumulated and unpaid dividends. We may redeem, at any time, all but not less than all of the shares of Redeemable Preferred Stock for cash at a price equal to the liquidation preference amount of the Redeemable Preferred Stock plus all accumulated and unpaid dividends thereon (the “Redemption Price”). On or after December 31, 2020 the holders of a majority of the then outstanding shares of Redeemable Preferred Stock will have the right to require us to redeem up to 50% of the outstanding shares of Redeemable Preferred Stock, and on or after December 31, 2021, the holders of a majority of the then outstanding shares of Redeemable Preferred Stock will have the right to require us to redeem all or any portion of the outstanding shares of Redeemable Preferred Stock, in each case, for cash at the Redemption Price. Upon the occurrence of a Change of Control (as defined in the certificate of designation governing the Redeemable Preferred Stock), the Redeemable Preferred Stock is required to be redeemed in whole at the Redemption Price. Due to the ability of the holders to require us to redeem the outstanding shares, the Redeemable Preferred Stock is excluded from Equity and reflected in our Consolidated Balance Sheets at its initial fair value of $40.0 million. The carrying value of the Redeemable Preferred Stock is increased by the accumulated and unpaid dividends in the period with a corresponding increase in accumulated deficit. Accrued dividends are treated as deductions in the calculation of net income (loss) applicable to common stockholders. The following table is a rollforward of our Redeemable Preferred Stock for the three months ended March 31, 2019:
Amended and Restated Stock Option and Incentive Award Plan Our board of directors adopted as of January 1, 2019 an Amended and Restated Nonqualified Stock Option and Incentive Award Plan (the “Plan”) providing for the grant of equity-based awards, including restricted stock, stock options, stock appreciation rights, performance awards and other equity-based and non-equity based awards, in each case to our directors, officers, employees, service providers, consultants and advisors. We have reserved 27,922,570 shares of our common stock for issuance under the Plan. In January 2019, we granted 800,381 shares of restricted stock and 2,999,900 options, with a total award value of $4.8 million to officers and employees as transition awards in connection with the Internalization. The awards will vest based on service conditions and compensation expense equal to the award value will be recognized over the vesting period on a straight-line basis. As of March 31, 2019, none of the awards have fully vested. The fair value of restricted stock and options was estimated on the date of grant using a Black-Scholes option-pricing model. The fair value of the options was determined using the following assumptions:
For the three months ended March 31, 2019, we recognized $0.4 million of compensation expense relating to these awards, which is included in “General and administrative expense” in our Consolidated Statements of Operations. As of March 31, 2019, the total unrecognized compensation cost related to outstanding restricted stock and options was $4.4 million, which we expect to recognize over a weighted-average period of 2.65 years. Prior to the spin-off, Drive Shack had issued rights relating to shares of Drive Shack’s common stock (the “Drive Shack options”) to the Former Manager in connection with capital raising activities. In connection with the spin-off, 5.5 million options that were held by the Former Manager, or by the directors, officers or employees of the Former Manager, were converted into an adjusted Drive Shack option and a right relating to a number of shares of New Senior common stock (the “New Senior option”). The exercise price of each adjusted Drive Shack option and New Senior option was set to collectively maintain the intrinsic value of the Drive Shack option immediately prior to the spin-off and to maintain the ratio of the exercise price of the adjusted Drive Shack option and the New Senior option, respectively, to the fair market value of the underlying shares as of the spin-off date, in each case based on the five day average closing price subsequent to the spin-off date. The options expired or expire, as applicable, between January 12, 2015 and August 18, 2024. Equity and Dividends In the first quarter of 2019, strike prices for outstanding options were reduced by $0.78, reflecting the portion of our 2018 dividends which were deemed return of capital pursuant to the terms of the Plan. In January 2019, we issued an aggregate of 60,975 shares of common stock to directors who elected shares as a form of payment for services provided in 2018. Earnings per Share For the three months ended March 31, 2019 and 2018, basic and diluted net loss per share was computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding during the period. The following table sets forth the computation of basic and diluted loss per share of common stock for the three months ended March 31, 2019 and 2018 (in thousands, except per share amounts):
(A) During the three months ended March 31, 2019 and 2018, 892,626 and 589,178 dilutive shares, respectively, were excluded given our loss position, so basic and diluted EPS were the same for each reporting period.
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COMMITMENTS AND CONTINGENCIES |
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COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES As of March 31, 2019, 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 continue to defend us in these matters, or that such parties will have sufficient assets, income and access to financing to enable them to satisfy their defense and indemnification obligations to us. Environmental Costs As a commercial real estate owner, we are subject to potential environmental costs. As of March 31, 2019, 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 March 31, 2019. Upon funding these capital improvements, we will be entitled to a rent increase. Leases As the lessee, we currently lease our corporate office space located in New York, New York under an operating lease agreement. The lease requires fixed monthly rent payments, expires on June 30, 2024 and does not have any renewal option. We also currently lease equipment (dishwashers, copy machines and buses) used at certain of our Managed Properties under operating lease agreements. Our leases have remaining lease terms ranging from one month to 5.3 years. We do not include any renewal options in our lease terms for calculating our lease liability as we are not reasonably certain if we will exercise these renewal options at this time. As of March 31, 2019, our future minimum lease payments under our operating leases are as follows:
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SUBSEQUENT EVENTS |
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Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS These consolidated financial statements include a discussion of material events, if any, which have occurred subsequent to March 31, 2019 (referred to as subsequent events) through the issuance of the consolidated financial statements. On May 1, 2019, our board of directors declared a cash dividend on our common stock of $0.13 per share for the quarter ended March 31, 2019. The dividend is payable on June 21, 2019 to stockholders of record on June 7, 2019. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | 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, 2018, as filed with the SEC. |
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, 2018, 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 |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Equity-Based Compensation Compensation expense for equity-based awards with graded vesting schedules granted to employees is recognized in “General and administrative expense” in our Consolidated Statements of Operations on a straight-line basis over the vesting period based on the grant date fair value of the award. Forfeitures of equity-based awards are recognized as they occur. |
Earnings Per Share, Policy [Policy Text Block] | Earnings per Share Basic earnings per share of common stock is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share of common stock is calculated by including the effect of dilutive securities. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, (codified under Accounting Standards Codification (“ASC”) 842, 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. As lessee, a right-of-use asset and corresponding liability for future obligations under a leasing arrangement would be recognized on the balance sheet. As lessor, gross leases will be subject to allocation between lease and non-lease service components, with the latter accounted for under the new revenue recognition standard. Additionally, under the new lease standard, only incremental initial direct costs incurred in the execution of a lease can be capitalized by the lessor and lessee. We adopted ASC 842 on January 1, 2019 under the modified retrospective transition approach using the effective date as the date of initial application. Therefore, financial information and disclosures under ASC 842 will not be provided for periods prior to January 1, 2019. We elected the “package of practical expedients”, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We also elected the short-term lease practical expedient, which permits us to not recognize right-of-use asset or lease liability for operating leases with an initial lease term equal to or less than 12 months. In addition, we made an accounting policy election to treat lease and related non-lease components in a contract as a single performance obligation to the extent that the timing and pattern of revenue recognition are the same for the lease and non-lease components and the combined single lease component is classified as an operating lease. Lessor Accounting As a lessor, our recognition of rental revenue remained consistent with prior accounting guidance. 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. Resident leases within our Managed Properties segments contain service components. We elected the practical expedient to account for our resident leases as a single lease component. Lessee Accounting We determine if a contract is or contains a lease at inception. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use asset and lease liability are recognized at the commencement date based on the present value of lease payments over the lease term. We use our incremental borrowing rate to determine the present value of lease payments as the rates implicit in our leases are not readily determinable. Upon adoption on January 1, 2019 and as of March 31, 2019, our operating lease right-of-use asset and lease liability are $2.6 million and $2.4 million, respectively, for our corporate office, land and equipment leases. Our operating lease right-of-use asset is included in “Buildings, improvements and other” and our operating lease liability is included in “Accrued expenses and other liabilities” on our Consolidated Balance Sheets. The weighted-average remaining lease term for our operating leases was 4.9 years and 5.1 years at March 31, 2019 and December 31, 2018, respectively. The weighted-average discount rate was 6.03% and 6.02% at March 31, 2019 and December 31, 2018, respectively. Upon the adoption of ASC 842, capital leases under prior accounting guidance were classified as finance leases, which did not have a significant change to our accounting for such leases. Recently Issued Accounting Pronouncements Not Yet Adopted |
SEGMENT REPORTING (Tables) |
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Segment Reporting |
For the three months ended March 31, 2019, no rental revenue was attributable to Holiday due to the Lease Termination in May 2018. For the three months ended March 31, 2018, rental revenue attributable to our triple net leases with Holiday accounted for 22.5% of our total revenue. Assets by reportable business segment are reconciled to total assets as follows:
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Percentage of Total Revenues by Geographic Location | The following table presents the percentage of total revenues by geographic location:
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REAL ESTATE INVESTMENTS (Tables) |
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Real Estate Investments |
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Real Estate Intangibles | The following table summarizes our real estate intangibles:
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RECEIVABLES AND OTHER ASSETS, NET (Tables) |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables and Other Assets, Net |
(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.
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Allowance for Doubtful Accounts and Related Provision for Resident Receivables | The following table summarizes the allowance for doubtful accounts and the related provision for uncollectible receivables:
|
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Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | The following table sets forth future contracted minimum lease payments from the tenant within the Triple Net Lease Properties segment, excluding contingent payment escalations, as of March 31, 2019:
|
MORTGAGE NOTES PAYABLE, NET (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Notes Payable, Net |
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ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other Liabilities |
|
TRANSACTIONS WITH AFFILIATES Transactions With Affiliates (Tables) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Transactions With Affiliates [Abstract] | |
Reimbursement to the Manager for Services Performed by the Manager | |
Property Management Fees and Other Expenses Reimbursed to Property Managers | property management fees, travel reimbursement costs and property-level payroll expenses of $3.9 million, $0.1 million and $19.4 million, respectively, to property managers affiliated with the Former Manager, which are included in “Property operating expense” in our Consolidated Statements of Operations. |
INCOME TAXES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
SUBSEQUENT EVENTS Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Note 14 Commitment and Contingencies - Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Lessee, Operating Lease, Disclosure [Table Text Block] | As of March 31, 2019, our future minimum lease payments under our operating leases are as follows:
|
ORGANIZATION (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
segment
Property
shares
| |
Organization [Abstract] | |
Number of Real Estate Properties | 133 |
Number of states in which properties are located | 37 |
Termination fee to affiliate | $ | $ 10.0 |
Temporary Equity, Shares Issued | shares | 400,000 |
Temporary Equity, Liquidation Preference | $ | $ 40.0 |
Number of reportable segments | segment | 3 |
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] | 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] | |
Organization [Abstract] | |
Number of Real Estate Properties | 1 |
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 Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Revenue Recognition [Abstract] | |
Operating Lease, Liability | $ 2,400 |
LEASE TERMINATION AND PROPERTY MANAGEMENT AGREEMENT WITH HOLIDAY (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Security Deposit | $ 2,980 | $ 2,966 |
Deferred Rent Asset, Net, Current | $ 3,667 | $ 3,494 |
SEGMENT REPORTING (Details) $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2019
USD ($)
segment
Property
|
Mar. 31, 2018
USD ($)
Property
|
Dec. 31, 2018
USD ($)
|
||||
Segment Reporting Information [Line Items] | ||||||
Number of reportable segments | segment | 3 | |||||
Assets | $ 2,245,868 | $ 2,286,258 | ||||
Percentage of assets | 100.00% | 100.00% | ||||
Revenues | ||||||
Resident fees and services | $ 116,037 | $ 75,343 | ||||
Rental revenue | 1,582 | 23,875 | ||||
Less: Property operating expense | 77,347 | 52,099 | ||||
Segment NOI | 40,272 | 47,119 | ||||
Depreciation and amortization | 20,787 | 26,725 | ||||
Interest expense | 23,719 | 21,923 | ||||
Acquisition, transaction and integration expense | 650 | 2,888 | ||||
Management fees and incentive compensation to affiliate | 0 | 3,752 | ||||
General and administrative expense | 4,984 | 3,752 | ||||
Other expense | 1,245 | 1,380 | ||||
Total expenses | 51,385 | 60,420 | ||||
Loss before income taxes | (11,113) | (13,301) | ||||
Total provision for income taxes | 80 | 48 | ||||
Net loss | $ (11,193) | $ (13,349) | ||||
Major Customers [Abstract] | ||||||
Number of communities | Property | 133 | |||||
Sales Revenue, Net [Member] | ||||||
Major Customers [Abstract] | ||||||
Number of communities | Property | 133 | 133 | ||||
Percentage of revenue | 100.00% | 100.00% | ||||
Sales Revenue, Net [Member] | Florida | ||||||
Major Customers [Abstract] | ||||||
Number of communities | Property | 15 | 15 | ||||
Percentage of revenue | 12.00% | 12.90% | ||||
Sales Revenue, Net [Member] | California | ||||||
Major Customers [Abstract] | ||||||
Number of communities | Property | 11 | 11 | ||||
Percentage of revenue | 10.90% | 11.60% | ||||
Sales Revenue, Net [Member] | Texas | ||||||
Major Customers [Abstract] | ||||||
Number of communities | Property | 13 | 13 | ||||
Percentage of revenue | 9.80% | 9.20% | ||||
Sales Revenue, Net [Member] | North Carolina | ||||||
Major Customers [Abstract] | ||||||
Number of communities | Property | 9 | 9 | ||||
Percentage of revenue | 7.30% | 7.50% | ||||
Sales Revenue, Net [Member] | Pennsylvania | ||||||
Major Customers [Abstract] | ||||||
Number of communities | Property | 7 | 7 | ||||
Percentage of revenue | 6.40% | 7.20% | ||||
Sales Revenue, Net [Member] | Oregon | ||||||
Major Customers [Abstract] | ||||||
Number of communities | Property | 9 | 9 | ||||
Percentage of revenue | 6.10% | 5.80% | ||||
Sales Revenue, Net [Member] | Other | ||||||
Major Customers [Abstract] | ||||||
Number of communities | Property | 69 | 69 | ||||
Percentage of revenue | 47.50% | 45.80% | ||||
Independent Living Properties [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Assets | $ 1,779,800 | $ 1,791,707 | ||||
Percentage of assets | 79.20% | 78.40% | ||||
Revenues | ||||||
Resident fees and services | $ 83,744 | $ 42,555 | ||||
Rental revenue | 0 | 0 | ||||
Less: Property operating expense | 50,719 | 26,220 | ||||
Segment NOI | 33,025 | 16,335 | ||||
Assisted Living and Memory Care Properties [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Assets | $ 396,526 | $ 400,432 | ||||
Percentage of assets | 17.70% | 17.50% | ||||
Revenues | ||||||
Resident fees and services | $ 32,293 | 32,788 | ||||
Rental revenue | 0 | 0 | ||||
Less: Property operating expense | 26,628 | 25,879 | ||||
Segment NOI | 5,665 | 6,909 | ||||
Triple Net Lease Properties [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Assets | $ 57,501 | $ 58,270 | ||||
Percentage of assets | 2.60% | 2.50% | ||||
Revenues | ||||||
Resident fees and services | $ 0 | 0 | ||||
Less: Property operating expense | 0 | 0 | ||||
Segment NOI | $ 1,582 | $ 23,875 | ||||
Major Customers [Abstract] | ||||||
Number of communities | Property | 1 | |||||
Nonsegment and Other [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Assets | [1] | $ 12,041 | $ 35,849 | |||
Percentage of assets | [1] | 0.50% | 1.60% | |||
Tenant for Holiday Portfolios [Member] | Sales Revenue, Net [Member] | ||||||
Major Customers [Abstract] | ||||||
Percentage of revenue | 0.00% | 22.50% | ||||
|
REAL ESTATE INVESTMENTS, Real Estate Assets and Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Property, Plant and Equipment [Line Items] | |||
Depreciation expense | $ 20,700 | $ 21,200 | |
Real Estate Investments, Net [Abstract] | |||
Gross carrying amount | 2,522,910 | $ 2,513,769 | |
Accumulated depreciation | (379,065) | (358,368) | |
Net real estate property | 2,143,845 | 2,155,401 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | 100 | 5,500 | |
Fully amortized in-place lease and other intangibles, write-off | 0 | $ 195,300 | |
Real Estate Intangibles [Abstract] | |||
Gross carrying amount | 8,638 | 8,638 | |
Accumulated amortization | (2,966) | (2,877) | |
Net real estate intangibles | 5,672 | 5,761 | |
Land [Member] | |||
Real Estate Investments, Net [Abstract] | |||
Gross carrying amount | 177,956 | 177,956 | |
Accumulated depreciation | 0 | 0 | |
Net real estate property | 177,956 | 177,956 | |
Building and Improvements [Member] | |||
Real Estate Investments, Net [Abstract] | |||
Gross carrying amount | 2,215,706 | 2,211,318 | |
Accumulated depreciation | (285,236) | (269,137) | |
Net real estate property | 1,930,470 | 1,942,181 | |
Furniture, Fixtures and Equipment [Member] | |||
Real Estate Investments, Net [Abstract] | |||
Gross carrying amount | 129,248 | 124,495 | |
Accumulated depreciation | (93,829) | (89,231) | |
Net real estate property | 35,419 | 35,264 | |
In-Place Lease and Other Intangibles [Member] | |||
Real Estate Intangibles [Abstract] | |||
Gross carrying amount | 8,638 | 8,638 | |
Accumulated amortization | (2,966) | (2,877) | |
Net real estate intangibles | $ 5,672 | $ 5,761 | |
Weighted average remaining amortization period | 42 years 3 months 18 days | 42 years 1 month 6 days |
STRAIGHT-LINE RENT RECEIVABLES (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
STRAIGHT-LINE RENT RECEIVABLES [Abstract] | ||
Deferred Rent Asset, Net, Current | $ 3,667 | $ 3,494 |
RECEIVABLES AND OTHER ASSETS, NET (Details) - USD ($) $ in Thousands |
3 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||
Operating Leases, Future Minimum Payments Receivable, Current | $ 4,335 | |||||||
Property management fees | $ 19,400 | |||||||
Receivables and Other Assets [Abstract] | ||||||||
Escrows held by lenders | [1] | 16,174 | $ 17,268 | |||||
Prepaid expenses | 8,727 | 5,451 | ||||||
Resident receivables, net | 3,848 | 3,200 | ||||||
Security deposits | 2,980 | 2,966 | ||||||
Income tax receivable | 702 | 782 | ||||||
Real Estate Held-for-sale | [2] | 13,223 | 13,223 | |||||
Deferred Rent Asset, Net, Current | 3,667 | 3,494 | ||||||
Other assets and receivables | 5,511 | 6,290 | ||||||
Total receivables and other assets | 54,832 | $ 52,674 | ||||||
Allowance for Doubtful Accounts [Roll Forward] | ||||||||
Balance, beginning of period | 1,512 | 938 | ||||||
Provision for bad debt | 0 | 345 | ||||||
Write-offs, net of recoveries | (892) | (448) | ||||||
Balance, end of period | 620 | $ 835 | ||||||
Operating Leases, Future Minimum Payments Receivable, in Two Years | 5,904 | |||||||
Operating Leases, Future Minimum Payments Receivable, in Three Years | 6,066 | |||||||
Operating Leases, Future Minimum Payments Receivable, in Four Years | 6,233 | |||||||
Operating Leases, Future Minimum Payments Receivable, in Five Years | 6,405 | |||||||
Operating Leases, Future Minimum Payments Receivable, Thereafter | 45,469 | |||||||
Operating Leases, Future Minimum Payments Receivable | $ 74,412 | |||||||
|
MORTGAGE NOTES PAYABLE, NET (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2018 |
||||||||
Mortgage Notes Payable [Abstract] | |||||||||||
Outstanding face amount | $ 1,902,821 | $ 1,905,522 | |||||||||
Carrying value | [1] | 1,882,636 | 1,884,882 | ||||||||
Weighted average maturity (years) | 5 years 1 month 6 days | ||||||||||
Payments of Financing Costs | $ 753 | 587 | |||||||||
Payments for Derivative Instrument, Financing Activities | 35 | 280 | |||||||||
Fair value adjustment on interest rate caps | 500 | ||||||||||
Interest rate cap, fair value | 100 | 600 | |||||||||
Mortgage Notes Payable [Member] | |||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||
Deferred financing costs | 20,200 | 20,600 | |||||||||
Mortgage Notes Payable [Member] | Level 3 [Member] | |||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||
Fair value of mortgage notes payable | 1,800,000 | 1,900,000 | |||||||||
Mortgage Notes Payable [Member] | Fixed Rate [Member] | |||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||
Carrying value of collateral | 500,000 | 500,000 | |||||||||
Mortgage Notes Payable [Member] | Floating Rate [Member] | |||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||
Carrying value of collateral | $ 1,600,000 | 1,600,000 | |||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | LIBOR [Member] | Minimum [Member] | |||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||
Basis spread on variable rate | 3.66% | ||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | LIBOR [Member] | Maximum [Member] | |||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||
Basis spread on variable rate | 3.75% | ||||||||||
Managed Properties [Member] | Mortgage Notes Payable [Member] | Fixed Rate [Member] | |||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||
Outstanding face amount | 464,680 | 464,680 | |||||||||
Carrying value | [1] | 462,236 | 462,139 | ||||||||
Stated interest rate | 4.25% | ||||||||||
Weighted average maturity (years) | 6 years 3 months 18 days | ||||||||||
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] | 1,438,141 | 1,440,842 | ||||||||
Carrying value | [1],[2],[3] | $ 1,420,400 | $ 1,422,743 | ||||||||
Stated interest rate | [2],[3] | 1M LIBOR+ 2.29% to1M LIBOR+ 2.75% | |||||||||
Weighted average maturity (years) | [2],[3] | 4 years 9 months 18 days | |||||||||
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] | 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] | LIBOR [Member] | |||||||||||
Mortgage Notes Payable [Abstract] | |||||||||||
Basis spread on variable rate | 3.00% | ||||||||||
|
ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Accounts Payable and Accrued Liabilities [Abstract] | ||
Security deposits payable | $ 2,683 | $ 2,766 |
Accounts payable | 13,416 | 13,232 |
Mortgage interest payable | 7,769 | 7,441 |
Deferred community fees, net | 6,751 | 6,454 |
Rent collected in advance | 3,094 | 3,843 |
Property tax payable | 5,559 | 4,880 |
Other liabilities | 20,344 | 14,063 |
Total accrued expenses and other liabilities | $ 62,040 | $ 52,679 |
TRANSACTIONS WITH AFFILIATES (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Management Agreements [Abstract] | ||||
Management fees and incentive compensation to affiliate | $ 0 | $ 3,752 | ||
Due to affiliates | 0 | $ 26,245 | ||
Property Management Agreements [Abstract] | ||||
Property management fees | 19,400 | |||
Travel reimbursement costs | 100 | |||
Property-level payroll expenses | 3,900 | |||
Security Deposit | 2,980 | 2,966 | ||
Triple Net Lease Agreements [Abstract] | ||||
Rental revenue | $ 1,582 | 23,875 | ||
FIG LLC [Member] | ||||
Management Agreements [Abstract] | ||||
Reimbursement to manager for tasks and other services under the management agreement | 2,300 | |||
FIG LLC [Member] | General and Administrative Expense [Member] | ||||
Management Agreements [Abstract] | ||||
Reimbursement to manager for tasks and other services under the management agreement | 1,800 | |||
FIG LLC [Member] | Acquisition, Transaction and Integration Expense [Member] | ||||
Management Agreements [Abstract] | ||||
Reimbursement to manager for tasks and other services under the management agreement | 500 | |||
FIG LLC [Member] | ||||
Management Agreements [Abstract] | ||||
Management fee rate payable | 1.50% | |||
Management fees and incentive compensation to affiliate | $ 3,800 | |||
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% | |||
FIG LLC [Member] | Management Fees Under Management Agreement [Member] | ||||
Management Agreements [Abstract] | ||||
Due to affiliates | 3,700 | |||
FIG LLC [Member] | Reimbursement for Tasks and Other Services Performed Under the Management Agreement [Member] | ||||
Management Agreements [Abstract] | ||||
Due to affiliates | 2,200 | |||
Property Managers [Member] | Property Management Fees Under Property Management Agreement [Member] | ||||
Management Agreements [Abstract] | ||||
Due to affiliates | 2,100 | |||
Property Managers [Member] | Reimbursement of Property-Level Payroll Expenses Under Property Management Agreement [Member] | ||||
Management Agreements [Abstract] | ||||
Due to affiliates | $ 8,200 | |||
Managed Properties [Member] | ||||
Property Management Agreements [Abstract] | ||||
Extension period after initial term of Property Management Agreements | 1 year | |||
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 | |||
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 | |||
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 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Current | |||
Federal | $ 0 | $ (41) | |
State and local | 80 | 27 | |
Total current provision | 80 | (14) | |
Deferred | |||
Federal | 0 | 58 | |
State and local | 0 | 4 | |
Total deferred provision | 0 | 62 | |
Total provision for income taxes | 80 | $ 48 | |
Deferred tax assets: | |||
Prepaid fees and rent | 776 | $ 770 | |
Net operating losses | 4,488 | 4,225 | |
Deferred rent | 258 | 272 | |
Other | 122 | ||
Total deferred tax assets | 5,668 | 5,389 | |
Less valuation allowance | (5,668) | (5,354) | |
Net deferred tax assets | 0 | 35 | |
Deferred tax liabilities: | |||
Depreciation and amortization | 0 | 35 | |
Total deferred tax liabilities | 0 | 35 | |
Deferred tax assets, net | 0 | 0 | |
Operating loss carryforwards | 17,900 | ||
Reduced Depreciation [Member] | |||
Deferred tax assets: | |||
Other | 89 | ||
Reduced Depreciation [Member] | |||
Deferred tax assets: | |||
Other | 57 | $ 0 | |
State and Local Jurisdiction | |||
Deferred tax liabilities: | |||
Operating loss carryforwards | $ 19,300 |
EQUITY (Details) - USD ($) |
3 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
||||||
Related Party Transaction [Line Items] | ||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 892,626 | 589,178 | ||||||
Net loss | $ (11,193,000) | $ (13,349,000) | ||||||
Deemed dividend on redeemable preferred stock | $ (598,000) | 0 | ||||||
transition option award valuation date | Jan. 01, 2019 | |||||||
Redeemable preferred stock, $0.01 par value with $100 liquidation preference, 400,000 shares authorized, issued and outstanding as of March 31, 2019 and December 31, 2018, respectively | $ 40,598,000 | $ 40,000,000 | ||||||
Temporary Equity, Shares Issued | 400,000 | |||||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Outstanding Options | 27,922,570 | |||||||
Deferred Compensation Equity | $ 4,800,000 | |||||||
Allocated Share-based Compensation Expense | 400,000 | |||||||
Deferred Compensation Arrangement with Individual, Allocated Share-based Compensation Expense | $ 4,400,000 | |||||||
number of options converted in connection with spin-off | 5,500,000 | |||||||
Stock Issued During Period, Shares, Issued for Services | 60,975 | |||||||
Redeemable Preferred Stock Dividends | $ 598,000 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Weighted Average Volatility Rate | 34.00% | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 9.30% | |||||||
Option Award - expected remaining term | 6 years | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 2.70% | |||||||
Transition option award - fair value at valuation date | $ 1,500,000 | |||||||
Net (loss) income attributable to common stockholders | $ (11,791,000) | $ (13,349,000) | ||||||
Weighted Average Number of Shares Outstanding, Basic and Diluted | [1] | 82,203,069 | 82,148,869 | |||||
Weighted Average Number of Shares Outstanding, Diluted | [1] | 82,203,069 | 82,148,869 | |||||
Earnings Per Share, Basic and Diluted | [2] | $ (0.14) | $ (0.16) | |||||
Earnings Per Share, Diluted | $ (0.14) | $ (0.16) | ||||||
Preferred Stock, Liquidation Preference, Value | $ 100 | |||||||
Preferred Stock, Dividend Rate, Percentage | 6.00% | |||||||
Temporary Equity, Liquidation Preference | $ 40,000,000.0 | |||||||
Employee Stock | ||||||||
Related Party Transaction [Line Items] | ||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | 800,381 | |||||||
Employee Stock Option | ||||||||
Related Party Transaction [Line Items] | ||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | 2,999,900 | |||||||
|
COMMITMENTS AND CONTINGENCIES (Details) - Triple Net Lease [Member] - Watermark [Member] - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Sep. 30, 2018 |
|
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 Thousands |
3 Months Ended | ||
---|---|---|---|
May 01, 2019 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Subsequent Event [Line Items] | |||
Common Stock, Dividends, Per Share, Declared | $ 0.13 | $ 0.26 | |
Payments of Financing Costs | $ 753 | $ 587 | |
Payments for Derivative Instrument, Financing Activities | $ 35 | $ 280 | |
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Common Stock, Dividends, Per Share, Declared | $ 0.13 |
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