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Commitments And Contingencies
12 Months Ended
Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]  
Commitments And Contingencies
COMMITMENTS AND CONTINGENCIES

Bickford

In February 2015 our joint venture with Bickford announced plans to develop five senior housing facilities in Illinois and Virginia. Each community will be managed by Bickford and consist of 60 private-pay assisted living and memory care units. These five properties will represent the culmination of plans announced in 2012 between NHI and Bickford to construct a total of eight facilities. The first three communities, all in Indiana, opened in 2013 and 2014. Pre-development and land acquisition on the five facilities started in mid-2015 with openings planned beginning in late 2016. The total estimated project cost is $55,000,000. As of December 31, 2015, land and pre-development costs incurred on the project totaled $17,436,000.

In February 2014 we entered into a commitment on a letter of credit for the benefit of Sycamore which holds a minority interest in PropCo. At December 31, 2015, our commitment on the letter of credit totaled $3,550,000.

In June 2014 we entered into a $500,000 revolving loan with Bickford affiliate, Sycamore, to fund pre-development expenses related to potential future projects. Interest is payable monthly at 10% and the note matures in June 2018. At December 31, 2015 the revolving loan had an outstanding balance of $461,000.

Chancellor

At December 31, 2015, we have a continuing commitment with Chancellor Health Care ("Chancellor") to provide up to $650,000 for renovations and improvements related to a recently acquired senior housing community in Oregon. Renovations began on this property during the second quarter of 2015, and we have funded $33,000 as of December 31, 2015. We receive rent income on funds advanced for our construction projects. In September 2015 we completed previously announced $7,500,000 and $500,000 commitments to fund construction of a 46-unit free-standing community on our Linda Valley campus in California and renovation of our recent Maryland acquisition leased to Chancellor, respectively. Beginning October 1, 2015, we entered into a lease with Chancellor for the Linda Valley facility, providing for an initial lease term of 15 years at an annual rate of 9% plus a fixed annual escalator. Funds provided for the Maryland project were added to the facility lease on October 1, 2015, at lease rates in effect at the time the renovations were placed in service and subject to fixed annual escalation.

Discovery

As a lease inducement, we have a contingent commitment to fund a series of payments up to $2,500,000 in connection with our September 2013 lease to Discovery of a senior living campus in Rainbow City, Alabama. Discovery would earn the contingent payments upon gaining, and maintaining, a specified lease coverage ratio. Remaining payments will be assessed for funding in installments of $750,000 through September 2016 when the residual is potentially due. As of December 31, 2015, incurring the contingent payments was not considered probable. Accordingly, no provision for these payments is reflected in the Consolidated Balance Sheet.

East Lake

In connection with our July 2015 lease, NHI has committed to East Lake certain lease incentive payments of $8,000,000 contingent on reaching and maintaining certain metrics, a contingent earnout of $750,000 payable to the seller upon attaining certain metrics, and the funding of an additional $400,000 for specified capital improvements. At acquisition, we estimated the seller contingent earnout payment to be probable and accordingly, have reflected that amount in our Condensed Consolidated Balance Sheet at December 31, 2015. Contingent payments earned will be included in the lease base when funded.

Life Care Services

See Note 4 for a discussion of our loan commitments to Timber Ridge, an affiliate of Life Care Services.

Prestige

In connection with four facilities we purchased and accounted for as an asset acquisition in March 2014 and leased to Prestige Senior Living, we committed to fund contingent earn out payments up to a maximum of $6,390,000 based on the achievement of certain financial metrics as measured periodically through December 31, 2015. At acquisition, we estimated contingent payments of $3,000,000 to be probable of settlement. At December 31, 2015, the facilities had not achieved the required operating metrics and therefore did not qualify for the contingent payments. Accordingly, at December 31, 2015, we wrote off the initial contingent liability of $3,000,000 and recorded a corresponding basis adjustment to the underlying real estate assets.

Santé

We are committed to fund a $3,500,000 expansion and renovation program at our Silverdale, Washington senior living campus and as of December 31, 2015, had funded $2,621,000, which was added to the basis on which the lease amount is calculated. In addition, we have a contingent commitment to fund two lease inducement payments of $1,000,000 each. Santé would earn the payments upon attaining and sustaining a specified lease coverage ratio. If earned, the first payment would be due following calendar year 2015 and the second payment would be due following calendar year 2016. At acquisition, incurring the contingent payments was not considered probable. Accordingly, no provision for these payments is reflected in the Condensed Consolidated Balance Sheet.

Senior Living Communities

In connection with our December 2014 Senior Living acquisition, we have provided a $15,000,000 revolving line of credit to Senior Living, the maturity of which mirrors the term of the master lease. Borrowings will be used to finance construction projects within the Senior Living Portfolio, including building additional units. Up to $5,000,000 of the facility may be used to meet general working capital needs. Amounts outstanding under the facility, $6,282,000 at December 31, 2015, bear interest at an annual rate equal to the 10-year U.S. Treasury rate, 2.27% at December 31, 2015, plus 6%.

Senior Living Management

During 2015 the scope of planned renovations begun in 2014 for an SLM operated facility expanded to include other facilities, including additional work on Louisiana properties recently brought under SLM management, so that the commitment as of December 31, 2015 now totals $1,430,000. When the renovations on each facility are complete, the total amount will be added to the lease base. As of December 31, 2015, $1,165,000 had been funded on these projects.

Signature

In 2012 we provided an affiliate of Signature Senior Living with a revolving loan facility of $1,500,000, bearing interest at a current rate of 10%, to fund pre-development activities internationally. With the extension of $250,000 in funding on March 31, 2015, the facility is fully drawn.

Litigation

Our facilities are subject to claims and suits in the ordinary course of business. Our lessees and borrowers have indemnified, and are obligated to continue to indemnify us, against all liabilities arising from the operation of the facilities, and are further obligated to indemnify us against environmental or title problems affecting the real estate underlying such facilities. While there may be lawsuits pending against certain of the owners and/or lessees of the facilities, management believes that the ultimate resolution of all such pending proceedings will have no material adverse effect on our financial condition, results of operations or cash flows.