
Operator	Date	Properties	Asset Class	Land		Improvements		Total
Bickford Senior Living	Q1	1	SHO	$	1,588	$	13,512	$	15,100
Life Care Services	Q1	1	SHO	4,370		130,522		134,892
Autumn Trace	Q2	2	SHO	344		13,906		14,250
The Courtyard at Bellevue	Q3	1	SHO	504		11,796		12,300
				$	6,806	$	169,736	$	176,542

On January 27, 2020, we acquired a 60-unit assisted living/memory care facility located in Shelby, Michigan, from Bickford. The acquisition price was $15,100,000 and included the full payment of an outstanding construction note receivable of $14,091,000, including interest. We added the facility to an existing master lease for a term of twelve years at an initial lease rate of 8%, with CPI escalators subject to a floor and ceiling.

On January 31, 2020 we acquired an 80% equity interest in a property company, NHI-LCS JV I, LLC (“Timber Ridge PropCo”), which owns a 401-unit Continuing Care Retirement Community (“CCRC”) located in Issaquah, Washington comprising 330 independent living units, 26 assisted living/memory care units and 45 skilled nursing beds. The same transaction conveyed to NHI a 25% equity interest in the newly formed operating company, Timber Ridge OpCo, LLC (“Timber Ridge OpCo”).

Total consideration for NHI’s interests in the combined venture was $124,989,000, comprised of the $59,350,000 remaining balance of a mortgage note initially funded in 2015, an additional loan of $21,650,000, and cash of $43,114,000 to Timber Ridge PropCo and $875,000 to Timber Ridge OpCo. Total debt due from Timber Ridge PropCo of $81,000,000, bears interest to NHI at

The lease between Timber Ridge PropCo and Timber Ridge OpCo carries a rate of 6.75% for an initial term of seven years plus renewal options and has a CPI-based lease escalator, subject to floor and ceiling. Including interest payments on debt to NHI and our lease participation in the Timber Ridge PropCo, as detailed above, we will receive approximately $8,216,000 in the first twelve months plus 25% of the remaining Timber Ridge OpCo cash flow. NHI’s contribution was allocated to our interest in the tangible assets of Timber Ridge PropCo with no material fair value allocated to Timber Ridge OpCo beyond our initial investment. The lease between Timber Ridge PropCo and Timber Ridge OpCo includes an “earn out” provision whereby Timber Ridge OpCo could become eligible for a payment of $10,000,000 based on the attainment of certain operating metrics. See Note 5 for a discussion of Timber Ridge OpCo.

On May 1, 2020, we completed a purchase leaseback to acquire two senior housing facilities each with 44 assisted living units for a total purchase price of $14,250,000, including $150,000 in closing costs. The facilities are located in Indiana and are leased to Autumn Trace Senior Communities, which is a new operator relationship for NHI. The 15-year master lease has an initial lease rate of 7.25% with fixed annual escalators of 2.25% and offers two optional extensions of five years each. NHI was also granted a purchase option on a newly opened Indiana facility.

On September 30, 2020, we acquired a 43-unit assisted living and memory care facility located in Bellevue, Wisconsin from 41 Management. The acquisition price was $12,300,000 and included the full payment of an outstanding mortgage loan of $3,870,000, plus accrued interest. The property is leased to an affiliate of 41 Management pursuant to a 15-year master lease that has an initial lease rate of 7.5% with fixed annual escalators of 2.5% and offers two optional extensions of five years each.

The following table contains information regarding tenant concentration in our portfolio, based on the percentage of revenues for the nine months ended September 30, 2020 and 2019, related to tenants or affiliates of tenants, that exceed 10% of total revenue ($ in thousands):


	as of September 30, 2020					Revenues1
	Number of	Real		Notes		Nine Months Ended September 30,
	Properties	Estate		Receivable		2020			2019

Bickford Senior Living	48	$	534,376	$	33,458	$	39,142	16%	$	39,356	17%
Senior Living Communities	10	573,631		38,870		38,972		15%	36,914		16%
Holiday Retirement	26	531,378		—		30,529		12%	30,283		13%
National HealthCare Corporation (NHC)	42	171,297		—		28,362		11%	28,670		12%
All others		1,451,204		219,861		114,567			100,663
		$	3,261,886	$	292,189	$	251,572		$	235,886

Certain of our leases contain purchase options allowing tenants to acquire the leased properties. At September 30, 2020, we had a net investment of $11,712,000 in two real estate properties which are subject to exercisable tenant purchase options. Tenant

Rental income from leased properties with tenant purchase options either currently exercisable or exercisable in the future was $4,703,000 and $13,418,000 for the three and nine months ended September 30, 2020 and $4,547,000 and $13,763,000 for the three and nine months ended September 30, 2019, respectively. We cannot reasonably estimate at this time the probability that these purchase options will be exercised in the future. Consideration to be received from the exercise of any tenant purchase option is expected to exceed our net investment in the leased property or properties.

Nine properties were transitioned during 2019 to five new tenants following a period of non-compliance by the former operator. Two leases with the new tenants for six of these properties specify periods during which rental income is based on operating income, net of management fees. We recognized rental income from these nine properties of $930,000 and $3,741,000 for the three and nine months ended September 30, 2020, respectively and $1,103,000 and $2,310,000 for the three and nine months ended September 30, 2019, respectively.

In the future, NHI may be deemed the primary beneficiary of the operations if the tenants do not have adequate liquidity to accept the risks and rewards as the tenant and operator of the stabilizing properties and might be required to consolidate the statements of financial position and results of operations of the operators into our consolidated financial statements.

In September 2019, we classified a portfolio of eight assisted living properties located in Arizona (4), Tennessee (3) and South Carolina (1) as held for sale, after the current tenant, Brookdale Senior Living, expressed an intention to exercise its purchase option on the properties. The purchase option called for the parties to split any appreciation on an equal basis above $37,520,000. During the first quarter of 2020, NHI and the tenant agreed to a fair valuation of $41,000,000 for the properties, and, accordingly, on January 22, 2020, we disposed of the properties at the agreed price of $39,260,000 and recognized a gain of $20,752,000. For the three and nine months ended September 30, 2020 we recognized $— and $229,000, respectively and $1,062,000 and $3,187,000 for the three and nine months ended September 30, 2019, respectively, of rental income from this portfolio.

On February 21, 2020, we disposed of two assisted living properties previously classified as held-for-sale in exchange for a term note of $4,000,000 from the buyer, Bickford. The note, which is due February 2025 and bears interest at 7%, will begin amortizing on a twenty-five-year basis in January 2021. In the first quarter of 2019, we recorded an adjustment to write off straight-line rent receivables of $124,000 and recognized an impairment loss of $2,500,000, included in loan and realty (gains) losses on the Condensed Consolidated Statements of Income to write down the properties to their estimated net realizable value upon classification of these properties as held-for-sale.

We assess the collectability of lease payments to be received from our tenants, which includes receivables, consisting primarily of straight-line rents receivable, based on several factors, including payment history, the financial strength of the tenant

and any guarantors, historical operations and operating trends of the property, and current economic conditions. If our evaluation of these factors indicates it is not probable that we will be able to collect substantially all of the lease payments, we recognize lease payments on a cash basis and de-recognize all rent receivable assets, including the straight-line rent receivable asset as a reduction in rental revenue.

Most of our existing leases contain annual escalators in rent payments. For financial statement purposes, rental income is recognized on a straight-line basis over the term of the lease where the lease contains fixed escalators. Some of our leases contain escalators that are determined annually based on a variable index or other factor that is indeterminable at the inception of the lease. The table below indicates the revenue recognized as a result of fixed and variable lease escalators (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Lease payments based on fixed escalators, net of deferrals	$	67,342	$	66,671	$	205,444	$	194,706
Lease payments based on variable escalators	1,386		1,248		4,151		3,611
Straight-line rent income	5,086		5,720		15,481		16,255
Escrow funds received from tenants	4,007		1,608		7,190		4,205
Rental income	$	77,821	$	75,247	$	232,266	$	218,777