Discontinued Operations

12 Months Ended

Dec. 31, 2012

Discontinued Operations [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

As described in Note 2, we have reclassified, for all periods presented, the operations of facilities meeting the accounting criteria as either being sold or held for sale as discontinued operations.

In December 2012, our tenant Sunrise Senior Living exercised its purchase option to acquire our assisted living facility in Edison, NJ. The net gain on the sale of the facility was $11,966,000 for financial statement purposes. Our lease revenue from the facility was $1,302,000, $1,372,000, and $1,372,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

In December 2012, we entered into a letter of agreement with NHC to sell six skilled nursing facilities for $21,000,000 on December 31, 2013. Our lease revenue from the facilities was $3,368,000, $3,377,000, and $3,227,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

In January 2011, we completed the sale of a skilled nursing facility in Texas having a carrying value of $4,039,000 for cash proceeds of $4,500,000. Our lease revenue from the facilities was $43,000, and $565,000 for the years ended December 31, 2011 and 2010, respectively.

In February 2011, we completed the sale of two medical office buildings to our current tenant.  The net gain on the sale of these facilities in 2011 was $1,838,000 for financial statement purposes. Our lease revenue from the facilities was $41,000, and $584,000 for the years ended December 31, 2011 and 2010, respectively.

In August 2011, we completed the sale of a 60-unit assisted living facility located in Daytona Beach, Florida to the current tenant.  The net gain on the sale of these facilities was $1,048,000 for financial statement purposes.  Our lease revenue from the facilities was $202,000 and $364,000 for the years ended December 31, 2011 and 2010, respectively.

In June 2010, we completed the sale of two skilled nursing facilities in Texas to the current lessee, Legend.  The net gain on the sale of these facilities was $2,004,000 for financial statement purposes.  Our lease revenue from the facilities was $107,000 for the year ended December 31, 2010.

Income from discontinued operations for the year ended December 31, 2010 includes a $14,000 refund related to a previously closed facility in Bellingham, Washington.

Income from discontinued operations is summarized below (in thousands, except per share amounts):

	Year Ended December 31,
	2012		2011		2010
Revenues:
Rental income	$	4,671	$	5,035	$	6,219
Expenses:
Depreciation	402		443		602
Facility operating expenses	—		—		(14		)
	402		443		588
Operating income	4,269		4,592		5,631
Gain on sales of real estate	11,966		3,348		2,004
Total discontinued operations	$	16,235	$	7,940	$	7,635
Weighted average common shares outstanding:
Basic	27,811,813		27,719,096		27,664,482
Diluted	27,838,720		27,792,592		27,732,959
Discontinued operations income per common share:
Basic	$	.58	$	.29	$	.28
Diluted	$	.58	$	.29	$	.27

Reclassification

As described in Note 2, in September 2012, we canceled our agreement to sell five skilled nursing facilities in Texas to our current tenant, Fundamental, because of several factors, including obstacles Fundamental faced in securing HUD financing for the entire group of properties. We have extended the lease term for an additional three years ending February 29, 2016.

This portfolio no longer meets the accounting criteria as discontinued operations and we have reclassified our lease revenue of $4,965,000, $4,777,000 and $4,226,000 for the years ended December 31, 2012, 2011 and 2010, respectively, into continuing operations in our Consolidated Statements of Income. We have made provision for $2,398,000 in depreciation expense in the third quarter of 2012 which is the cumulative amount that would have been recognized as depreciation on these properties had the disposal group been continuously classified as held for use.