Real Property Acquisitions and Development

3 Months Ended

Sep. 30, 2012

Real Property Acquisitions and Development [Abstract]

Real Property Acquisitions and Development

3. Real Property Acquisition and Development

Seniors Housing Triple-net Activity

During the nine months ended September 30, 2012, we completed the acquisition of49seniors housing triple-net properties. The total purchase price for the communities acquired has been allocated to the tangible and identifiable intangible assets and liabilities based upon their respective fair values in accordance with our accounting policies. Also during the three months ended March 31, 2012, we finalized our purchase price allocation of the previously acquired Genesis HealthCare Corporationreal estate assets. There were no material changes in the Genesis purchase accounting allocation from those previously disclosed in Note 3 to our Annual Report on Form 10-K for the year ended December 31, 2011, as updated by our Current Report on Form 8-K filed on August 6, 2012. The following summarizesour purchase price allocations and other seniors housing triple-net real property investment activity for the periods presented (in thousands):

		Nine Months Ended
		September 30, 2012(1)			September 30, 2011
			Amount			Amount
Land and land improvements			$	79,325		$	210,956
Buildings and improvements				935,036			2,991,317
	Total assets acquired(2)			1,014,361			3,202,273
Assumed debt				(86,186)			(93,425)
Accrued expenses and other liabilities				(3,340)			(75,144)
	Total liabilities assumed			(89,526)			(168,569)
Capital in excess of par				1,024			-
Noncontrolling interest				(16,826)			-
Non-cash acquisition related activity				(310)			-
	Cash disbursed for acquisitions			908,723			3,033,704
Construction in progress additions				131,579			121,382
Less: Capitalized interest				(4,228)			(4,077)
Cash disbursed for construction in progress				127,351			117,305
Capital improvements to existing properties				48,450			16,453
Total cash invested in real property, net of cash acquired			$	1,084,524		$	3,167,462
(1) Includes acquisitions with an aggregate purchase price of $777,916,000 for which the allocation of the purchase price consideration is preliminary and subject to change.
(2) Excludes $2,031,000 of cash acquired during the nine months ended September 30, 2012.

Seniors Housing Operating Activity

Under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”), for taxable years beginning after July 30, 2008, we may lease “qualified health care properties” on an arm's-length basis to our taxable REIT subsidiary (“TRS”) if the property is operated on behalf of such subsidiary by a person who qualifies as an eligible independent contractor (“EIK”). A “qualified health care property” includes real property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility, or other licensed facility which extends medical or nursing or ancillary services to patients. The “qualified health care properties” are operated by an EIK under a management agreement. The lease agreement required under RIDEA between us and our TRS is eliminated for accounting purposes in consolidation. All of our seniors housing operating properties are structured under RIDEA.

During the nine months ended September 30, 2012, we completed the acquisition of 53 seniors housing operating properties. Certain of our subsidiaries' functional currencies are the local currencies of their respective countries. We translate the results of operations of our foreign subsidiaries into U.S. dollars using average rates of exchange in effect during the period, and we translate balance sheet accounts using exchange rates in effect at the end of the period. We record resulting currency translation adjustments in accumulated other comprehensive income, a component of stockholders' equity, on our balance sheet.The total purchase price for the properties acquired has been allocated to the tangible and identifiable intangible assets and liabilities based upon their respective fair values in accordance with our accounting policies. The following is a summary of our seniors housing operating real property investment activity for the periods presented (in thousands):

		Nine Months Ended
		September 30, 2012(2)			September 30, 2011
			Amount			Amount
Land and land improvements			$	46,391		$	71,610
Building and improvements				450,255			968,727
Acquired lease intangibles				39,875			88,285
Restricted cash				-			8,186
Receivables and other assets				2,247			18,415
	Total assets acquired(1)			538,768			1,155,223
Assumed debt				(8,684)			(585,656)
Accrued expenses and other liabilities				(5,480)			(39,044)
	Total liabilities assumed			(14,164)			(624,700)
Capital in excess of par				-			(6,017)
Noncontrolling interests				(2,054)			(27,560)
Non-cash acquisition related activity				-			(27,298)
Cash disbursed for acquisitions				522,550			469,648
Capital improvements to existing properties				13,325			14,847
Total cash invested in real property, net of cash acquired			$	535,875		$	484,495
(1) Excludes $4,369,000 and $34,342,000 of cash acquired during the nine months ended September 30, 2012 and 2011, respectively.
(2) Includes acquisitions with an aggregate purchase price of $330,013,000 for which the allocation of the purchase price consideration is preliminary and subject to change.

Medical Facilities Activity

During the nine months ended September 30, 2012, we acquired 22 medical office buildings, one hospital, and one parcel of land. The total purchase price for the communities acquired has been allocated to the tangible and identifiable intangible assets and liabilities based upon their respective fair values in accordance with our accounting policies. The following is a summary of our medical facilitiesreal property investment activity for the periods presented (in thousands):

		Nine Months Ended
		September 30, 2012(2)			September 30, 2011
			Amount		Amount
Land and land improvements			$	53,493	$	7,711
Buildings and improvements				487,255		303,848
Acquired lease intangibles				93,392		1,126
Restricted cash				975		-
Receivables and other assets				4,311		-
	Total assets acquired			639,426		312,685
Assumed debt				(238,589)		(48,801)
Accrued expenses and other liabilities				(18,075)		(568)
	Total liabilities assumed			(256,664)		(49,369)
Non-controlling interests				-		(5,853)
Non-cash acquisition activity				(880)		-
Cash disbursed for acquisitions				381,882		257,463
Construction in progress additions:				94,462		138,898
Less: Capitalized interest				(2,885)		(6,013)
	Accruals(1)			(4,567)		(33,451)
Cash disbursed for construction in progress				87,010		99,434
Capital improvements to existing properties				30,505		21,590
Total cash invested in real property			$	499,397	$	378,487
(1) Represents non-cash accruals for amounts to be paid in future periods relating to properties that converted in the periods noted above.
(2) Includes acquisitions with an aggregate purchase price of $486,014,000 for which the allocation of the purchase price consideration is preliminary and subject to change.

Development Conversions

The following is a summary of the construction projects that were placed into service and began generating revenues during the periods presented:

			Nine Months Ended
			September 30, 2012			September 30, 2011
	Development projects:
		Seniors housing triple-net		$	84,271		$	39,462
		Medical facilities			111,327			325,562
		Total development projects			195,598			365,024
	Expansion projects				240			43,793
Total construction in progress conversions				$	195,838		$	408,817

Transaction Costs

Transaction costs primarily represent costs incurred with property acquisitions,including due diligence costs, fees for legal and valuation services and termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees and other acquisition-related costs.