Loans Receivable

12 Months Ended

Dec. 31, 2023

The following table summarizes the Company’s loans receivable (in thousands):


	December 31,
	2023		2022
Secured loans(1)	$	178,678	$	350,837
CCRC resident loans	42,733		33,083
Unamortized discounts and fees	(131)		(808)
Reserve for loan losses	(2,830)		(8,280)


Loans receivable, net	$	218,450	$	374,832

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(1)At December 31, 2023 and 2022, the Company had $29 million and $40 million, respectively, remaining of commitments to fund additional loans for senior housing redevelopment and capital expenditure projects.

During the years ended December 31, 2023, 2022, and 2021, the Company recognized $22 million, $22 million, and $36 million, respectively, of interest income related to loans secured by real estate.

Sunrise Senior Housing Portfolio Seller Financing

In conjunction with the sale of 32 SHOP facilities for $664 million in January 2021 (see Note 4), the Company provided the buyer with initial financing of $410 million. The remainder of the sales price was received in cash at the time of sale. Additionally, the Company agreed to provide up to $92 million of additional financing for capital expenditures (up to 65% of the estimated cost of capital expenditures). The initial and additional financing is secured by the buyer’s equity ownership in each property. In June 2023, the interest rate on this secured loan was converted from a variable rate based on LIBOR to a variable rate based on Term SOFR (plus a 10 basis point adjustment related to SOFR transition).

In June 2021, February 2022, July 2022, and December 2022, the Company received principal repayments of $246 million, $8 million, $27 million, and $10 million, respectively, in conjunction with the disposition of the underlying collateral. In connection with these principal repayments, the additional financing available was reduced to $40 million, of which $11 million had been funded as of December 31, 2023. At December 31, 2023 and 2022, this secured loan had an outstanding principal balance of $131 million and $120 million, respectively.

In February 2024, the loan reached its maturity. The Company provided a short-term extension to the borrower, and the Company and the borrower are currently negotiating long-term refinance and extension terms.

Other Seller Financing

In conjunction with the sale of 16 additional SHOP facilities for $230 million in January 2021 (see Note 4), the Company provided the buyer with financing of $150 million. The remainder of the sales price was received in cash at the time of sale. The financing is secured by the buyer’s equity ownership in each property. Upon maturity in January 2023, the borrower did not make the required principal repayment. In February 2023, the borrower made a partial principal repayment of $102 million and the remaining balance owed was refinanced with the Company. In connection with the refinance, the maturity date of the loan was extended to January 2024 and the interest rate on the loan was increased to a variable rate based on Term SOFR (plus an 11 basis point adjustment related to SOFR transition) plus 6.0% for the first six months of the extended term, increasing to 7.0% for the last six months of the extended term. The Company also received a $1 million extension fee in connection with the refinance, which is recognized in interest income over the remaining term of the loan. At December 31, 2023 and 2022, this secured loan had an outstanding principal balance of $48 million and $150 million, respectively.

In January 2024, the loan was refinanced with the Company. In connection with the refinance, the maturity date of the loan was extended to January 2025. The interest rate on the loan will remain as Term SOFR (plus an 11 basis point adjustment related to SOFR transition) plus 7.0% but is now subject to a fixed floor of 12%. The Company also received a $1 million extension fee in connection with the refinance, which is recognized in interest income over the remaining term of the loan.

2023 Other Loans Receivable Transactions

In February 2023, the Company received full repayment of the outstanding balance of one $35 million secured loan.

In April 2023, the Company received full repayment of the outstanding balance of one $14 million secured loan.

In May 2023, the Company received full repayment of two outstanding secured loans with an aggregate balance of $12 million.

Also in May 2023, the interest rate on one secured loan with an outstanding balance of $21 million was converted from a variable rate based on LIBOR to a variable rate based on Term SOFR (plus a 10 basis point adjustment related to SOFR transition). In October 2023, the Company received full repayment of the outstanding balance of this $21 million secured loan.

2022 Other Loans Receivable Transactions

In May 2022, the Company received full repayment of the outstanding balance of one $2 million secured loan.

In November 2022, the Company received full repayment of the outstanding balance of one $1 million mezzanine loan.

In December 2022, the Company extended the maturity dates of four secured loans with an aggregate outstanding balance of $61 million, originally scheduled to mature in December 2022, by one year to December 2023. In connection with the extensions, the interest rates on the loans were increased to a variable rate based on Term SOFR (plus an 11 basis point adjustment related to SOFR transition) with a floor of 8.5% for the first six months of the extended term, increasing to a floor of 10.5% for the last six months of the extended term. All four of these secured loans were repaid during 2023 as discussed above.

2021 Other Loans Receivable Transactions

The Company classifies a loan receivable as held for sale when management no longer has the intent or ability to hold the loan receivable for the foreseeable future or until maturity. If a loan receivable is classified as held for sale, previously recorded reserves for loan losses are reversed and the loan is reported at the lower of amortized cost or fair value. During the second quarter of 2021, two loans receivable with a total amortized cost of $64 million were classified as held for sale. Upon the transfer of these two loans to held for sale, the carrying value was decreased by $11 million to an estimated fair value of $53 million, $8 million of which was previously recognized as a reserve for loan losses. As a result, a $3 million net loss was recognized in impairments and loan loss reserves (recoveries), net during the year ended December 31, 2021. In September 2021, the Company sold one of the loans receivable previously classified as held for sale for its carrying value of $2 million. In November 2021, the Company sold the other loan receivable previously classified as held for sale for its carrying value of $51 million.

These fair value estimates were made for each individual loan classified as held for sale and primarily relied on a market approach, utilizing comparable market transactions, forecasted sales prices, and negotiations with prospective buyers. These estimates are considered to be a Level 3 measurement within the fair value hierarchy, and are subject to inherent uncertainties.

Additionally, in April 2021, the Company sold two mezzanine loans as part of the Discovery SHOP Portfolio disposition (see Note 4), resulting in no gain or loss on sale of the mezzanine loans.

In May 2021, the Company received a $10 million principal repayment related to one of its secured loans. In September 2021, the Company received repayment of the remaining $15 million balance.

In July 2021, the Company received full repayment of the outstanding balance of an $8 million secured loan.

CCRC Resident Loans

For certain residents that qualify, CCRCs may offer to lend residents the necessary funds to satisfy the entrance fee requirements so that they are able to move into a community while still continuing the process of selling their previous home. The loans are due upon sale of the resident’s previous home. At December 31, 2023 and 2022, the Company held $43 million and $33 million, respectively, of such notes receivable.

Loans Receivable Internal Ratings

Refer to Note 2 for a discussion of the Company’s quarterly review process over its loans receivable and the related internal ratings process. The following table summarizes, by year of origination, the Company’s internal ratings for loans receivable, net of unamortized discounts, fees, and reserves for loan losses, as of December 31, 2023 (in thousands):


Investment Type	Year of Origination												Total
	2023		2022		2021(1)		2020		2019		Prior
Secured loans
Risk rating:
Performing loans	$	—	$	—	$	175,717	$	—	$	—	$	—	$	175,717
Watch list loans	—		—		—		—		—		—		—
Workout loans	—		—		—		—		—		—		—
Total secured loans	$	—	$	—	$	175,717	$	—	$	—	$	—	$	175,717
Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—		—		—		—		—		—
Current period net write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CCRC resident loans
Risk rating:
Performing loans	$	42,132	$	601	$	—	$	—	$	—	$	—	$	42,733
Watch list loans	—		—		—		—		—		—		—
Workout loans	—		—		—		—		—		—		—
Total CCRC resident loans	$	42,132	$	601	$	—	$	—	$	—	$	—	$	42,733
Current period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—		—		—		—		—		—
Current period net write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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(1)Additional financing funded on the Sunrise Senior Housing Portfolio Seller Financing (as discussed above) is included in the year of origination of the initial financing.

Reserve for Loan Losses

Refer to Note 2 for a discussion of the Company’s assessment of current expected credit losses for loans receivable and unfunded loan commitments. The following table summarizes the Company’s reserve for loan losses (in thousands):


	December 31, 2023						December 31, 2022
	Secured Loans		Other(1)		Total		Secured Loans		Other(1)		Total
Reserve for loan losses, beginning of period	$	8,280	$	—	$	8,280	$	1,804	$	9	$	1,813

Provision for expected loan losses	2,088		—		2,088		6,527		7		6,534
Expected loan losses (recoveries) related to loans sold or repaid	(7,538)		—		(7,538)		(51)		(16)		(67)



Reserve for loan losses, end of period	$	2,830	$	—	$	2,830	$	8,280	$	—	$	8,280

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(1)Includes CCRC resident loans and other loan activity.

Additionally, at December 31, 2023 and 2022, a liability of $0.7 million and $0.8 million, respectively, related to expected credit losses for unfunded loan commitments was included in accounts payable, accrued liabilities, and other liabilities.

The change in the reserve for expected loan losses during the year ended December 31, 2023 is primarily due to: (i) principal repayments on seller financing, (ii) increased interest rates on variable rate loans, and (iii) macroeconomic conditions.