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Segment Reporting
6 Months Ended
Jun. 30, 2017
Segment Reporting Information Line Items  
Segment Reporting
15. Segment Reporting
ASC Topic 280, Segment Reporting, establishes standards for reporting financial and descriptive information about a public entity’s reportable segments. As of June 30, 2017, we evaluated our business and made resource allocations based on two reportable business segments — medical office buildings and senior housing. Our medical office buildings are typically leased to multiple tenants under separate leases in each building, thus requiring active management and responsibility for many of the associated operating expenses (although many of these are, or can effectively be, passed through to the tenants). Our senior housing facilities are primarily single-tenant properties for which we lease the facilities to unaffiliated tenants under “triple-net” and generally “master” leases that transfer the obligation for all facility operating costs (including maintenance, repairs, taxes, insurance and capital expenditures) to the tenant.
We evaluate performance based upon segment net operating income. We define segment net operating income as total revenues, less rental expenses, which excludes depreciation and amortization, general and administrative expenses, acquisition related expenses, interest expense and interest income for each segment. We believe that net income (loss), as defined by GAAP, is the most appropriate earnings measurement. However, we believe that segment net operating income serves as an appropriate supplemental performance measure to net income (loss) because it allows investors and our management to measure unlevered property-level operating results and to compare our operating results to the operating results of other real estate companies and between periods on a consistent basis.
Interest expense, depreciation and amortization and other expenses not attributable to individual properties are not allocated to individual segments for purposes of assessing segment performance.
Non-segment assets primarily consist of corporate assets including cash and cash equivalents, other receivables, real estate deposits and other assets not attributable to individual properties.
Summary information for the reportable segments during the three and six months ended June 30, 2017 and 2016 was as follows:


Medical Office Buildings

Senior Housing

Three Months Ended
June 30, 2017
Revenue:






Real estate revenue

$
5,455,000


$
743,000


$
6,198,000

Expenses:






Rental expenses

1,534,000


77,000


1,611,000

Segment net operating income

$
3,921,000


$
666,000


$
4,587,000

Expenses:






General and administrative





$
952,000

Acquisition related expenses





140,000

Depreciation and amortization





2,466,000

Income from operations





1,029,000

Other income (expense):






Interest expense (including amortization of deferred financing costs and debt premium)





(409,000
)
Interest income





1,000

Net income





$
621,000



Medical Office Buildings

Senior Housing

Three Months Ended
June 30, 2016
Revenue:






Real estate revenue

$
26,000


$


$
26,000

Expenses:






Rental expenses

23,000




23,000

Segment net operating income

$
3,000


$


$
3,000

Expenses:
 
 
 
 
 
 
General and administrative





$
246,000

Acquisition related expenses





370,000

Net loss





$
(613,000
)
 
 
Medical Office Buildings
 
Senior Housing
 
Six Months Ended
June 30, 2017
Revenue:
 
 
 
 
 
 
Real estate revenue
 
$
9,126,000

 
$
1,124,000

 
$
10,250,000

Expenses:
 
 
 
 
 
 
Rental expenses
 
2,686,000

 
112,000

 
2,798,000

Segment net operating income
 
$
6,440,000

 
$
1,012,000

 
$
7,452,000

Expenses:
 
 
 
 
 
 
General and administrative
 
 
 
 
 
$
1,700,000

Acquisition related expenses
 
 
 
 
 
213,000

Depreciation and amortization
 
 
 
 
 
4,177,000

Income from operations
 
 
 
 
 
1,362,000

Other income (expense):
 
 
 
 
 
 
Interest expense (including amortization of deferred financing costs and debt premium)
 
 
 
 
 
(827,000
)
Interest income
 
 
 
 
 
1,000

Net income
 
 
 
 
 
$
536,000

 
 
Medical Office Buildings
 
Senior Housing
 
Six Months Ended
June 30, 2016
Revenue:
 
 
 
 
 
 
Real estate revenue
 
$
26,000

 
$

 
$
26,000

Expenses:
 
 
 
 
 
 
Rental expenses
 
23,000

 

 
23,000

Segment net operating income
 
$
3,000

 
$

 
$
3,000

Expenses:
 
 
 
 
 
 
General and administrative
 
 
 
 
 
$
396,000

Acquisition related expenses
 
 
 
 
 
370,000

Net loss
 
 
 
 
 
$
(763,000
)

Assets by reportable segment as of June 30, 2017 and December 31, 2016 were as follows:
 
June 30,
2017
 
December 31,
2016
Medical office buildings
$
249,132,000

 
$
123,223,000

Senior housing
97,509,000

 
16,758,000

Other
2,833,000

 
2,777,000

Total assets
$
349,474,000

 
$
142,758,000