COMMITMENTS AND CONTINGENCIES

In the normal course of business, we enter into a variety of commitments, typical of which are those for the funding of revolving credit arrangements, construction and mezzanine loans to our operators to conduct expansions and acquisitions for their own account, and commitments for the funding of construction for expansion or renovation to our existing properties under lease. In our leasing operations we offer to our tenants and to sellers of newly-acquired properties a variety of inducements which originate contractually as contingencies but which may become commitments upon the satisfaction of the contingent event. Contingent payments earned will be included in the respective lease bases when funded. The tables below summarize our existing, known commitments and contingencies according to the nature of their impact on our leasehold or loan portfolios.



	Asset Class	Type	Total		Funded			Remaining
Loan Commitments:
LCS Sagewood Note A	SHO	Construction	$	118,800,000	$	(76,653,000	)	$	42,147,000
LCS Sagewood Note B	SHO	Construction	61,200,000		(10,165,000		)	51,035,000
LCS Timber Ridge Note A	SHO	Construction	60,000,000		(58,158,000		)	1,842,000
Bickford Senior Living	SHO	Construction	56,700,000		(32,471,000		)	24,229,000
Senior Living Communities	SHO	Revolving Credit	15,000,000		(1,900,000		)	13,100,000
			$	311,700,000	$	(179,347,000	)	$	132,353,000

See Note 3 to our consolidated financial statements for full details of our loan commitments. As provided above, loans funded do not include the effects of discounts or commitment fees.



	Asset Class	Type	Total		Funded			Remaining
Development Commitments:
Ignite Medical Resorts	SNF	Construction	25,350,000		(4,674,000		)	20,676,000
Woodland Village	SHO	Renovation	7,450,000		(6,867,000		)	583,000
Senior Living Communities	SHO	Renovation	6,830,000		(4,772,000		)	2,058,000
Bickford Senior Living	SHO	Renovation	1,750,000		(1,597,000		)	153,000
Navion Senior Solutions	SHO	Construction	650,000		—			650,000
Discovery Senior Living	SHO	Renovation	500,000		(289,000		)	211,000
			$	42,530,000	$	(18,199,000	)	$	24,331,000



	Asset Class	Type	Total		Funded			Remaining
Contingencies:
Bickford Senior Living	SHO	Lease Inducement	$	10,000,000	$	(7,500,000	)	$	2,500,000
Bickford Senior Living	SHO	Incentive Loan Draws	8,000,000		(250,000		)	7,750,000
Navion Senior Solutions	SHO	Lease Inducement	4,850,000		—			4,850,000
Ignite Medical Resorts	SNF	Lease Inducement	2,000,000		—			2,000,000
			$	24,850,000	$	(7,750,000	)	$	17,100,000

Contingent lease inducement payments of $10,000,000 related to the five Bickford development properties constructed in 2016 and 2017 include a licensure incentive of $250,000 per property and a three-tiered operator incentive schedule paying up to an additional $1,750,000, based on the attainment of certain performance metrics. Upon funding, these payments are added to the lease base and amortized against rental income.

Litigation

On June 15, 2018, East Lake Capital Management LLC and certain related entities, including Regency, filed suit against NHI and NHI-REIT of Axel, LLC, in the District Court of Dallas County, Texas; 95th Judicial District for injunctive and declaratory relief and unspecified monetary damages, including attorney’s fees. The suit sought, among other things, to enjoin NHI from making certain references to East Lake in NHI’s public filings. In response to this lawsuit, related litigation, and other circumstances, we entered motions calling for the immediate appointment of a receiver and for pre-judgment possession, hearing, and bond.

Resulting from these claims and counterclaims, on December 6, 2018, the plaintiff parties entered into an agreement with NHI under Texas Rule of Civil Procedure 11, which rule ensures the enforceability of an agreement between lawyers in a case when the agreement is in writing and filed in the papers of the court. The agreement provided that Regency vacate our facilities in Indiana and North Carolina on December 7, 2018 and in Tennessee on December 14, 2018. Further, Regency agreed to provide minimal levels of cooperation in transitioning the facilities.

The original libel action of the East Lake affiliated entities survives the Rule 11 agreement and is set to continue in January 2019. NHI is not precluded from further action in damages under terms of the lease.

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 effect on our financial statements.