Loans Receivable

12 Months Ended

Dec. 31, 2022

Receivables [Abstract]

Loans Receivable

Loans Receivable

Loans receivable are recorded on our Consolidated Balance Sheets in real estate loans receivable, net of allowance for credit losses, or for non-real estate loans receivable, in receivables and other assets, net of allowance for credit losses.

Accrued interest receivable was $22,878,000 and $26,659,000 as of December 31, 2022 and December 31, 2021, respectively, and is included in receivables and other assets on the Consolidated Balance Sheets. The following is a summary of our loans receivable (in thousands):

	Year Ended December 31,
	2022		2021
Mortgage loans	$	707,464	$	889,556
Other real estate loans	195,566		194,477
Allowance for credit losses on real estate loans receivable	(12,186)		(15,352)
Real estate loans receivable, net of credit allowance	890,844		1,068,681
Non-real estate loans	441,231		375,060
Allowance for credit losses on non-real estate loans receivable	(152,063)		(151,433)
Non-real estate loans receivable, net of credit allowance	289,168		223,627
Total loans receivable, net of credit allowance	$	1,180,012	$	1,292,308

The following is a summary of our loan activity for the periods presented (in thousands):

	Year Ended
	December 31, 2022		December 31, 2021		December 31, 2020
Advances on loans receivable	$	156,045	$	997,449	$	247,543
Less: Receipts on loans receivable	196,310		343,260		31,548
Net cash advances (receipts) on loans receivable	$	(40,265)	$	654,189	$	215,995

During the year ended December 31, 2021, we provided £540 million (approximately $750,330,000 based on the Sterling/ U.S. Dollar exchange rate as of the date of funding) of senior loan financing and a £30 million delayed facility for working capital and capital expenditures to affiliates of Safanad, a global real estate and private equity firm, as part of the recapitalization of its investment in HC-One Group. The loan has a five-year term and is fully collateralized by the shares and assets of the HC-One Group, including its underlying portfolio of owned assets across the U.K. As part of the transaction, we received equity warrants which provide us the right to participate in the capital appreciation of HC-One Group above a designated price upon liquidation. See Note 12 for additional details.

The following is a summary of our loans by credit loss category (in thousands):

	December 31, 2022
Loan category	Years of Origination	Loan Carrying Value		Allowance for Credit Loss		Net Loan Balance		No. of Loans
Deteriorated loans	2007 - 2018	$	174,841	$	(148,438)	$	26,403	3
Collective loan pool	2007 - 2017	202,762		(2,754)		200,008		12
Collective loan pool	2018	3,100		(42)		3,058		1
Collective loan pool	2019	23,278		(316)		22,962		4
Collective loan pool	2020	53,014		(720)		52,294		6
Collective loan pool	2021	754,530		(10,193)		744,337		18
Collective loan pool	2022	132,736		(1,786)		130,950		29
Total loans		$	1,344,261	$	(164,249)	$	1,180,012	73

In 2020, we recognized a provision for loan losses of $88,201,000 as a result of the current collateral estimates for loans with deteriorated credit, primarily relating to our outstanding loans to Genesis Healthcare ("Genesis"). During the year ended December 31, 2021, we entered into definitive agreements to substantially exit our operating relationship with Genesis primarily through the transition of 51 properties to other operators. To effectuate this transition, we agreed to provide Genesis a lease termination fee of $86 million upon successful transition of all properties, which will be used to immediately repay indebtedness to us. Additionally, upon achievement of certain restructuring milestones, we will reduce Genesis' indebtedness by an additional $170 million in exchange for an equity interest in Genesis. Upon conclusion of the aforementioned loan transactions, Genesis will have $167 million of indebtedness to us, exclusive of additional paid in kind interest, which will carry a maturity date of January 1, 2024. As of December 31, 2022, our total carrying value of Genesis loans receivable, net of allowances for credit losses, was $168,949,000.

The total allowance for credit losses is deemed to be sufficient to absorb expected losses relating to our loan portfolio. The following is a summary of the allowance for credit losses on loans receivable for the periods presented (in thousands):

	Year Ended December 31,
	2022		2021		2020
Balance at beginning of year	$	166,785	$	224,036	$	68,372
Adoption of ASU 2016-13	—		—		5,212
Provision for loan losses, net(1)	(1,394)		7,270		94,436
Loan write-offs(2)	—		(64,075)		(7,000)
Foreign currency translation	(1,142)		(446)		197
Reclassification of deferred gain as credit loss(3)	—		—		62,819
Balance at end of year	$	164,249	$	166,785	$	224,036
(1) Excludes $11,714,000 related to the provision for loss on held-to-maturity debt securities.
(2) Includes $64,075,000 related to the Genesis lease terminations for the twelve months ended December 31, 2021.
(3) During the year ended December 31, 2020, two loans originated in 2016 to Genesis with an aggregate carrying value of $62,753,000 were transferred to the deteriorated loan pool. In addition, deferred gains of $62,819,000 previously recorded in accrued expenses and other liabilities were reclassified to the allowance for credit losses.

The following is a summary of our deteriorated loans (in thousands):

	Year Ended December 31,
	2022		2021		2020
Balance of deteriorated loans at end of year	$	174,841	$	178,369	$	242,319
Allowance for credit losses	(148,438)		(148,438)		(212,514)
Balance of deteriorated loans not reserved	$	26,403	$	29,931	$	29,805
Interest recognized on deteriorated loans(1)	$	—	$	3,185	$	18,937

(1 Represents cash interest recognized in the period.