Real Property Acquisitions and Development

3 Months Ended

Mar. 31, 2024

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.

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


	Three Months Ended
	March 31, 2024								March 31, 2023
	Seniors Housing Operating		Triple-net		Outpatient Medical		Totals		Seniors Housing Operating		Triple-net		Outpatient Medical		Totals
Land and land improvements	$	26,691	$	710	$	—	$	27,401	$	2,517	$	7,370	$	60,527	$	70,414
Buildings and improvements	48,615		253		—		48,868		16,434		74,289		255,706		346,429
Acquired lease intangibles	5,861		—		—		5,861		865		—		39,090		39,955


Right of use assets, net	—		—		—		—		—		—		927		927
Total net real estate assets	81,167		963		—		82,130		19,816		81,659		356,250		457,725
Receivables and other assets	24		—		—		24		234		—		358		592
Total assets acquired	81,191		963		—		82,154		20,050		81,659		356,608		458,317
Secured debt	—		—		—		—		(5,501)		—		(40,953)		(46,454)
Lease liabilities	—		—		—		—		—		—		(953)		(953)
Accrued expenses and other liabilities	(532)		—		—		(532)		(120)		—		(8,071)		(8,191)
Total liabilities acquired	(532)		—		—		(532)		(5,621)		—		(49,977)		(55,598)

Non-cash acquisition related activity(1)	(18,141)		(710)		—		(18,851)		—		—		—		—
Cash disbursed for acquisitions	62,518		253		—		62,771		14,429		81,659		306,631		402,719
Construction in progress additions	165,140		28		83,529		248,697		131,944		4,995		101,609		238,548
Less: Capitalized interest	(11,660)		—		(2,149)		(13,809)		(7,950)		(1,248)		(1,137)		(10,335)
Accruals (2)	2,248		72		(5,445)		(3,125)		2,303		—		(4,290)		(1,987)
Cash disbursed for construction in progress	155,728		100		75,935		231,763		126,297		3,747		96,182		226,226
Capital improvements to existing properties	104,812		6,064		21,633		132,509		69,783		4,427		17,129		91,339
Total cash invested in real property, net of cash acquired	$	323,058	$	6,417	$	97,568	$	427,043	$	210,509	$	89,833	$	419,942	$	720,284

(1) Primarily relates to the acquisition of assets previously financed as real estate loans receivable.

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

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 close in the second quarter of 2024 and will 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):


	Three Months Ended
	March 31, 2024		March 31, 2023
Development projects:
Seniors Housing Operating	$	88,680	$	26,712

Outpatient Medical	91,248		9,351
Total development projects	179,928		36,063
Expansion projects	3,083		17,245
Total construction in progress conversions	$	183,011	$	53,308