Real Property Acquisitions and Development

12 Months Ended

Dec. 31, 2023

Real Estate [Abstract]

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 directly 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. Our acquisition of properties are at times subject to earn out provisions based on the future operating performance of the acquired properties, which could result in incremental payments in the future. Our policy is to recognize such contingent consideration when the contingency is resolved and the consideration becomes payable. As of December 31, 2023, we do not expect future payments under these provisions to be material and no liabilities for such amounts have been accrued.

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

	Year Ended December 31, 2023
	Seniors Housing Operating		Triple-net		Outpatient Medical		Total
Land and land improvements	$	251,507	$	127,523	$	79,506	$	458,536
Buildings and improvements	2,006,021		969,481		343,252		3,318,754
Acquired lease intangibles	208,239		—		50,373		258,612
Construction in progress	165,934		—		—		165,934
Right of use assets, net	24,212		—		927		25,139
Total net real estate assets	2,655,913		1,097,004		474,058		4,226,975
Receivables and other assets	21,999		—		1,632		23,631
Total assets acquired(1)	2,677,912		1,097,004		475,690		4,250,606
Secured debt	(372,482)		—		(40,953)		(413,435)
Lease liabilities	(24,212)		—		(953)		(25,165)
Accrued expenses and other liabilities	(26,666)		—		(11,528)		(38,194)
Total liabilities acquired	(423,360)		—		(53,434)		(476,794)
Noncontrolling interests(2)	(32,692)		—		(925)		(33,617)
Non-cash acquisition related activity(3)	(181,929)		—		—		(181,929)
Cash disbursed for acquisitions	2,039,931		1,097,004		421,331		3,558,266
Construction in progress additions	646,466		25,646		422,103		1,094,215
Less: Capitalized interest	(39,799)		(2,416)		(8,484)		(50,699)
Accruals(4)	(4,735)		(1,358)		(22,488)		(28,581)
Cash disbursed for construction in progress	601,932		21,872		391,131		1,014,935
Capital improvements to existing properties	399,130		33,592		84,960		517,682
Total cash invested in real property, net of cash acquired	$	3,040,993	$	1,152,468	$	897,422	$	5,090,883

(1) Excludes $4,708,000 of unrestricted and restricted cash acquired.

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

(3) Relates to the acquisition of assets previously financed as loans receivable and the acquisition of assets previously recognized as investments in unconsolidated entities.

(4) 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.

	Year Ended December 31, 2022
	Seniors Housing Operating		Triple-net		Outpatient Medical		Total
Land and land improvements	$	206,618	$	7,536	$	68,379	$	282,533
Buildings and improvements	2,067,051		59,248		253,358		2,379,657
Acquired lease intangibles	129,429		—		35,316		164,745
Construction in progress	108,141		—		—		108,141
Right of use assets, net	169		—		3,852		4,021
Total net real estate assets	2,511,408		66,784		360,905		2,939,097
Receivables and other assets	14,406		—		501		14,907
Total assets acquired(1)	2,525,814		66,784		361,406		2,954,004
Secured debt	(279,788)		(39,574)		—		(319,362)
Lease liabilities	—		—		(3,852)		(3,852)
Accrued expenses and other liabilities	(112,962)		(1,428)		(1,414)		(115,804)
Total liabilities acquired	(392,750)		(41,002)		(5,266)		(439,018)
Noncontrolling interests(2)	(115,112)		(4)		(1,095)		(116,211)
Non-cash acquisition related activity(3)	(64,975)		(27,780)		—		(92,755)
Cash disbursed for acquisitions	1,952,977		(2,002)		355,045		2,306,020
Construction in progress additions	489,001		83,368		91,662		664,031
Less: Capitalized interest	(24,432)		(4,210)		(1,849)		(30,491)
Accruals (4)	(4,621)		—		2,818		(1,803)
Cash disbursed for construction in progress	459,948		79,158		92,631		631,737
Capital improvements to existing properties	352,099		48,052		75,865		476,016
Total cash invested in real property, net of cash acquired	$	2,765,024	$	125,208	$	523,541	$	3,413,773

(1) Excludes $6,563,000 of unrestricted and restricted cash acquired.

(2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests. For the year ended December 31, 2022, 1,227,000 OP Units were issued as a component of funding for certain transactions.

(3) Relates to the acquisition of assets previously financed as loans receivable and the acquisition of assets previously recognized as investments in unconsolidated entities.

(4) 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.

	Year Ended December 31, 2021
	Seniors Housing Operating		Triple-net		Outpatient Medical		Total
Land and land improvements	$	449,335	$	88,839	$	64,843	$	603,017
Buildings and improvements	2,347,609		809,328		313,864		3,470,801
Acquired lease intangibles	264,589		—		24,751		289,340
Right of use assets, net	77,455		—		—		77,455
Total net real estate assets	3,138,988		898,167		403,458		4,440,613
Receivables and other assets	6,096		411		3,534		10,041
Total assets acquired(1)	3,145,084		898,578		406,992		4,450,654
Lease liabilities	(138,126)		—		—		(138,126)
Accrued expenses and other liabilities	(191,454)		(8,703)		(266)		(200,423)
Total liabilities acquired	(329,580)		(8,703)		(266)		(338,549)
Noncontrolling interests(2)	(4,942)		(6,449)		(16,540)		(27,931)
Cash disbursed for acquisitions	2,810,562		883,426		390,186		4,084,174
Construction in progress additions	322,050		77,412		42,464		441,926
Less: Capitalized interest	(13,834)		(3,078)		(2,440)		(19,352)
Accruals(3)	35		—		(4,646)		(4,611)
Cash disbursed for construction in progress	308,251		74,334		35,378		417,963
Capital improvements to existing properties	197,829		37,345		47,414		282,588
Total cash invested in real property, net of cash acquired	$	3,316,642	$	995,105	$	472,978	$	4,784,725

(1) Excludes $4,201,000 of unrestricted and restricted cash acquired.

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

(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.

Canadian Pension Plan Investment Board ("CPPIB")

During the year ended December 31, 2023, we paid $69,606,000 to acquire the 45% redeemable noncontrolling ownership interest in two consolidated joint ventures with CPPIB, which owned interests in ten medical office buildings. In conjunction with the transaction, $118,256,000 was removed from redeemable noncontrolling interests with the difference recorded to capital in excess of par value on our Consolidated Balance Sheets. The transaction is excluded from the table above.

Holiday Retirement Acquisition

On July 30, 2021, we acquired a portfolio of 85 seniors housing properties owned by Holiday Retirement for $1,576,600,000, which are included in our Seniors Housing Operating segment and in the table above for the year ended December 31, 2021. Atria Senior Living assumed operations of the portfolio following its acquisition of the Holiday Retirement management company pursuant to an incentive-based management agreement. As part of this transaction, a wholly owned subsidiary assumed the leasehold interest in a 26 property portfolio and subsequently purchased eight of the leased properties and one of the properties was sold by the landlord, National Health Investors ("NHI"), and removed from the master lease. Effective April 1, 2022, our leasehold interest related to the master lease with NHI for the remaining 17 properties 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. Additionally, in conjunction with the lease termination, during the year ended December 31, 2022, we recognized $58,621,000 in other income on our Consolidated Statements of Comprehensive Income from the derecognition of the right of use asset and related liability.

Affinity Living Communities ("Affinity") Acquisition

In February 2024, we entered into a definitive agreement to acquire 25 Seniors Housing Operating properties for a total purchase price of $969 million, which will be managed under the Affinity brand. The transaction is expected to be funded through a combination of cash and the assumption of $523 million of secured debt, subject to customary closing conditions and lender consents.

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):

	Year Ended
	December 31, 2023		December 31, 2022		December 31, 2021
Development projects:
Seniors Housing Operating	$	463,644	$	227,796	$	117,386
Triple-net	141,142		—		22,990
Outpatient Medical	190,770		44,777		125,179
Total development projects	795,556		272,573		265,555
Expansion projects	71,250		18,280		5,292
Total construction in progress conversions	$	866,806	$	290,853	$	270,847