Real Property Acquisitions and Development

3 Months Ended

Mar. 31, 2022

Real Property Acquisitions and Development

Real Property Acquisitions and Development The total purchase price for all properties acquired has been allocated to the tangible and identifiable intangible assets and liabilities at cost on a relative fair value basis. Liabilities assumed and any associated noncontrolling interests are reflected at fair value. 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 acquisitions, including due diligence costs, fees for legal and valuation services, termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees and other acquisition-related costs. Transaction costs related to asset acquisitions are capitalized as a component of purchase price and all other non-capitalizable costs are reflected in other expenses on our Consolidated Statements of Comprehensive Income.

The following is a summary of our real property investment activity by segment for the periods presented (in thousands):


	Three Months Ended
	March 31, 2022								March 31, 2021
	Seniors Housing Operating		Triple-net		Outpatient Medical		Totals		Seniors Housing Operating		Triple-net		Outpatient Medical		Totals
Land and land improvements	$	43,897	$	—	$	240	$	44,137	$	1,240	$	24,154	$	2,273	$	27,667
Buildings and improvements	402,342		171		131,412		533,925		3,491		170,362		10,570		184,423
Acquired lease intangibles	31,366		—		16,978		48,344		339		—		1,439		1,778


Right of use assets, net	—		—		3,852		3,852		—		—		—		—
Total net real estate assets	477,605		171		152,482		630,258		5,070		194,516		14,282		213,868
Receivables and other assets	1,630		—		—		1,630		34		—		—		34
Total assets acquired	479,235		171		152,482		631,888		5,104		194,516		14,282		213,902

Lease liabilities	—		—		(3,852)		(3,852)		—		—		—		—
Accrued expenses and other liabilities	(4,154)		—		—		(4,154)		—		(8,703)		(36)		(8,739)
Total liabilities acquired	(4,154)		—		(3,852)		(8,006)		—		(8,703)		(36)		(8,739)
Noncontrolling interests (1)	(20,348)		(4)		—		(20,352)		—		(2,056)		—		(2,056)
Non-cash acquisition related activity(2)	(2,120)		—		—		(2,120)		—		—		—		—
Cash disbursed for acquisitions	452,613		167		148,630		601,410		5,104		183,757		14,246		203,107
Construction in progress additions	113,407		20,756		9,642		143,805		38,373		31,809		7,601		77,783
Less: Capitalized interest	(4,179)		(1,089)		(211)		(5,479)		(2,980)		(524)		(992)		(4,496)
Accruals (3)	(1,963)		—		1,778		(185)		7		—		311		318
Cash disbursed for construction in progress	107,265		19,667		11,209		138,141		35,400		31,285		6,920		73,605
Capital improvements to existing properties	68,612		8,294		13,323		90,229		(3,159)		25,295		6,644		28,780
Total cash invested in real property, net of cash acquired	$	628,490	$	28,128	$	173,162	$	829,780	$	37,345	$	240,337	$	27,810	$	305,492

(1) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests.

(2) Relates to the acquisition of assets previously recognized as investments in unconsolidated entities.

(3) Represents non-cash accruals for amounts to be paid in future periods for properties that converted, off-set by amounts paid in the current period.

Effective on April 1, 2022, our leasehold interest relating to the master lease with National Health Investors, Inc. (“NHI”) for 17 properties assumed in conjunction with the Holiday Retirement acquisition was terminated as a result of the transition or sale of the properties by NHI. The lease termination was part of an agreement to resolve outstanding litigation with NHI. In conjunction with the agreement, a wholly owned subsidiary and the lessee on the master lease agreed to release $6,883,000 of cash to the landlord, which represents the net cash flow generated from the properties since we assumed the leasehold interest. As of March 31, 2022, a right of use asset of $77,080,000 and a related lease liability of $135,701,000 were recorded on the Consolidated Balance Sheet.

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, 2022		March 31, 2021
Development projects:
Seniors Housing Operating	$	73,458	$	—
Triple-net	—		22,990



Total construction in progress conversions	$	73,458	$	22,990