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Real Property Acquisitions and Development
 9 Months Ended
Sep. 30, 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.


Seniors Housing Triple-net Activity

Nine Months Ended
(In thousands)September 30, 2013(1)September 30, 2012
Land and land improvements$ 56,665$ 79,325
Buildings and improvements 211,903 935,036
Total assets acquired 268,568 1,014,361
Secured debt - (86,186)
Accrued expenses and other liabilities - (3,340)
Total liabilities assumed - (89,526)
Capital in excess of par - 1,024
Noncontrolling interests - (16,826)
Non-cash acquisition related activity - (310)
Cash disbursed for acquisitions 268,568 908,723
Construction in progress additions 103,951 131,579
Less:Capitalized interest (3,337) (4,228)
Cash disbursed for construction in progress 100,614 127,351
Capital improvements to existing properties 27,819 48,450
Total cash invested in real property, net of cash acquired$ 397,001$ 1,084,524
(1) Includes acquisitions with an aggregate purchase price of $268,568,000 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, as updated by our Current Report on Form 8-K filed on August 6, 2013, for information regarding our foreign currency policies.

Nine Months Ended
(In thousands)September 30, 2013(1)September 30, 2012
Land and land improvements$ 437,046$ 46,391
Building and improvements 4,214,254 450,255
Acquired lease intangibles 377,929 39,875
Restricted cash 41,524 -
Receivables and other assets 81,546 2,247
Total assets acquired(2) 5,152,299 538,768
Secured debt (1,261,093) (8,684)
Accrued expenses and other liabilities (86,412) (5,480)
Total liabilities assumed (1,347,505) (14,164)
Noncontrolling interests (230,441) (2,054)
Non-cash acquisition related activity(3) (856,103) -
Cash disbursed for acquisitions 2,718,250 522,550
Construction in progress additions 1,521 -
Less:Capitalized interest (18) -
Cash disbursed for construction in progress 1,503 -
Capital improvements to existing properties 36,813 13,325
Total cash invested in real property, net of cash acquired$ 2,756,566$ 535,875
(1) Includes acquisitions with an aggregate purchase price of $5,152,299,000 for which the allocation of the purchase price consideration is preliminary and subject to change.
(2) Excludes $87,406,000 and $4,369,000 of cash acquired during the nine months ended September 30, 2013 and 2012, respectively.
(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. On July 1, 2013, we acquired the remaining interests in 49 previously unconsolidated properties. As of September 30, 2013, 120 properties are wholly owned and 5 properties are held in unconsolidated entities (see Note 7 for additional information). The total estimated purchase price of approximately $4,155,052,000, including approximately $2,456,011,000 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).

We recognized $201,941,000 and $443,221,000 of revenues and $65,942,000 and $145,264,000 of net operating income from continuing operations related to the consolidated Sunrise portfolio during the three and nine month periods ended September 30, 2013, respectively. In addition, we incurred $72,337,000 of transaction costs, which include advisory fees, due diligence costs, severances, and fees for legal and valuation services during the nine month period ended September 30, 2013. 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:

Nine Months Ended
September 30,September 30,
20132012
Revenues$ 2,268,062$ 1,828,395
Income (loss) from continuing operations attributable to common stockholders$ (2,079)$ (59,769)
Income (loss) from continuing operations attributable to common stockholders per share:
Basic$ (0.01)$ (0.28)
Diluted$ (0.01)$ (0.28)

Medical Facilities Activity

Nine Months Ended
(In thousands)September 30, 2013(1)September 30, 2012
Land and land improvements$ -$ 53,493
Buildings and improvements 144,708 487,255
Acquired lease intangibles - 93,392
Restricted cash 505 975
Receivables and other assets 151 4,311
Total assets acquired 145,364 639,426
Secured debt (26,300) (238,589)
Accrued expenses and other liabilities (479) (18,075)
Total liabilities assumed (26,779) (256,664)
Non-cash acquisition activity (12,056)(2) (880)
Cash disbursed for acquisitions 106,529 381,882
Construction in progress additions 87,882 94,462
Less:Capitalized interest (1,343) (2,885)
Accruals(3) (9,806) (4,567)
Cash disbursed for construction in progress 76,733 87,010
Capital improvements to existing properties 17,887 30,505
Total cash invested in real property$ 201,149$ 499,397
(1) Includes acquisitions with an aggregate purchase price of $145,364,000 for which the allocation of purchase price consideration is preliminary and subject to change.
(2) Represents non-cash consideration exchanged in an asset swap transaction. Please see Note 5 for additional information.
(3) 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):

Nine Months Ended
September 30, 2013September 30, 2012
Development projects:
Seniors housing triple-net $ 105,265$ 84,271
Medical facilities 78,839 111,327
Total development projects 184,104 195,598
Expansion projects 14,229 240
Total construction in progress conversions $ 198,333$ 195,838