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Real Property Acquisitions and Development
 3 Months Ended
Mar. 31, 2013
Real Property Acquisitions and Development [Abstract]  
Real Property Acquisitions and Development

3. Real Property Acquisitions and Development

  The total purchase price for all properties acquired has been allocated to the tangible and identifiable intangible assets, liabilities and noncontrolling interests based upon their respective fair values in accordance with our accounting policies. The results of operations for these acquisitions have been included in our consolidated results of operations since the date of acquisition and are a component of the appropriate segments. 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. During the three months ended March 31, 2013, we finalized our purchase price allocation of certain previously reported acquisitions and there were no material changes from those previously disclosed.

 

Seniors Housing Triple-net Activity

  Three Months Ended 
  March 31, 2013(1)March 31, 2012 
  (in thousands) 
Land and land improvements $ 8,533 $ 5,950 
Buildings and improvements   47,993   89,333 
 Total assets acquired   56,526   95,283 
Accrued expenses and other liabilities    -   (232) 
 Cash disbursed for acquisitions   56,526   95,051 
Construction in progress additions   23,946   38,467 
Less:Capitalized interest   (1,227)   (1,242) 
Cash disbursed for construction in progress   22,719   37,225 
Capital improvements to existing properties   8,336   9,948 
 Total cash invested in real property, net of cash acquired $ 87,581 $ 142,224 
         
         
(1) Includes acquisitions with an aggregate purchase price of $56,526,000 for which the allocation of the purchase price consideration is preliminary and subject to change.

Seniors Housing Operating Activity

Acquisitions of seniors housing operating properties are structured under RIDEA, which is described in Note 18. This structure results in the inclusion of all resident revenues and related property operating expenses from the operation of these qualified health care properties in our consolidated statements of comprehensive income. Certain of our subsidiaries' functional currencies are the local currencies of their respective countries. See Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012 for information regarding our foreign currency policies.

  Three Months Ended 
  March 31, 2013(2)March 31, 2012 
   (In thousands) 
Land and land improvements $ 216,949 $ 18,980 
Building and improvements   2,074,770   174,467 
Acquired lease intangibles   142,054   16,656 
Restricted cash   22,863   - 
Receivables and other assets   3,225   1,182 
 Total assets acquired(1)   2,459,861   211,285 
Secured debt   (138,259)   - 
Accrued expenses and other liabilities    (31,302)   (1,649) 
 Total liabilities assumed   (169,561)   (1,649) 
Noncontrolling interests   (4,868)   (2,054) 
Non-cash acquisition related activity(3)   (555,562)   - 
 Cash disbursed for acquisitions   1,729,870   207,582 
Construction in progress additions   235   - 
Less:Capitalized interest   (2)   - 
Cash disbursed for construction in progress   233   - 
Capital improvements to existing properties   10,604   3,040 
 Total cash invested in real property, net of cash acquired $ 1,740,707 $ 210,622 
        
         
(1) Excludes $51,803,000 and $1,619,000 of cash acquired during the three months ended March 31, 2013 and 2012, respectively.
(2) Includes acquisitions with an aggregate purchase price of $2,819,436,000 for which the allocation of the purchase price consideration is preliminary and subject to change.
(3) Represents Sunrise loan and noncontrolling interests acquisitions. 

Sunrise Merger

 

In August 2012, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Sunrise Senior Living, Inc. (“Sunrise”), pursuant to which we agreed to acquire Sunrise in an all-cash merger (the “Merger”) in which Sunrise stockholders would receive $14.50 in cash for each share of Sunrise common stock. On January 9, 2013, we completed our acquisition of the Sunrise property portfolio. The Sunrise Merger advances our strategic vision to own higher-end, private pay properties located in major metropolitan markets. As of March 31, 2013, 71 properties are wholly owned and 54 properties are held in unconsolidated entities (see Note 7 for additional information). The total estimated purchase price of approximately $2,763,336,000, including approximately $2,041,893,000 of cash consideration has been allocated on a preliminary basis to the tangible and identifiable intangible assets and liabilities in the table above based on respective fair values in accordance with our accounting policies. We funded the cash consideration and other associated costs of the acquisition from cash on-hand as well as draws on our primary unsecured line of credit and unsecured term loan (see Notes 9 and 10 for additional information).

 

Subsequent to the date of acquisition, we recognized $112,093,000 of revenues and $36,901,000 of net operating income from continuing operations related to the Sunrise portfolio during the three months ended March 31, 2013. In addition, we incurred $63,779,000 of transaction costs, which include advisory fees, due diligence costs, severances, and fees for legal and valuation services. These amounts are included in the seniors housing operating results reflected in Note 17.

The following unaudited pro forma consolidated results of operation have been prepared as if the Sunrise merger had occurred as of January 1, 2012 based on the preliminary purchase price allocations discussed above. Amounts are in thousands, except per share data:

 

   Three Months Ended
   March 31, March 31,
   2013 2012
Revenues $ 647,269 $ 531,936
Income (loss) from continuing operations attributable to common stockholders $ (30,479) $ 23,164
Income (loss) from continuing operations attributable to common stockholders per share:      
 Basic $ (0.12) $ 0.12
 Diluted $ (0.12) $ 0.11

Medical Facilities Activity

  Three Months Ended 
  March 31, 2013 March 31, 2012 
   (In thousands) 
Land and land improvements $ - $ 9,509 
Buildings and improvements   -   320,481 
Acquired lease intangibles   -   39,619 
Receivables and other assets   -   4,158 
 Total assets acquired   -   373,767 
Secured debt   -   (172,856) 
Accrued expenses and other liabilities   -   (9,255) 
 Total liabilities assumed    0    (182,111) 
 Cash disbursed for acquisitions   0   191,656 
Construction in progress additions   35,139   40,557 
Less:Capitalized interest   (377)   (1,178) 
 Accruals(1)   (17,661)   (20,752) 
Cash disbursed for construction in progress   17,101   18,627 
Capital improvements to existing properties   5,189   7,071 
 Total cash invested in real property $ 22,290 $ 217,354 
        
         
(1) Represents non-cash accruals for amounts to be paid in future periods relating to properties that converted in the periods noted above.
 

Construction Activity

 

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

    Three Months Ended
    March 31, 2013 March 31, 2012
 Development projects:        
  Seniors housing triple-net  $ 67,317  $ 23,859
  Medical facilities    60,536    93,676
  Total development projects    127,853    117,535
 Expansion projects    7,631    240
Total construction in progress conversions  $ 135,484  $ 117,775