Mortgage And Other Notes Receivable

3 Months Ended

Mar. 31, 2013

Financing Receivable, Net [Abstract]

Mortgage Notes Receivable

MORTGAGE AND OTHER NOTES RECEIVABLE

At March 31, 2013, we had (1) investments in mortgage notes receivable with a carrying value of $64,059,000 secured by real estate and UCC liens on the personal property of 27 health care properties and (2) other notes receivable with a carrying value of $16,000,000 guaranteed by significant parties to the notes or by cross-collateralization of properties with the same owner. Due to non-receipt of contractual payments, we evaluated the recoverability of mortgage notes receivable with an aggregate carrying amount of $28,972,000 due from two nonprofit borrowers (SeniorTrust of Florida, Inc. and ElderTrust of Florida, Inc.). Using a discounted cash flow analysis, we evaluated the declining net operating income of SeniorTrust over the previous twelve months and recognized an impairment to the carrying value of the SeniorTrust notes in the total amount of $4,037,000, thereby reducing the carrying value of the SeniorTrust notes receivable to $15,000,000. We recognized $246,000 of interest income from SeniorTrust during the period. No allowance for doubtful accounts was considered necessary at March 31, 2013. We recognize interest income in the period in which cash is received on a mortgage note receivable which was previously classified as non-performing and had a carrying value of $1,250,000 at March 31, 2013.

See Note 13 for information related to the April 2013 settlement of litigation with the borrowers, ElderTrust and SeniorTrust.