
Operator	Date	Properties	Asset Class	Land		Building and Improvements		Total
Vizion Health	Q2 2021	1	HOSP	$	1,470	$	38,780	$	40,250
Navion Senior Solutions	Q2 2021	1	SHO	531		6,069		6,600
				$	2,001	$	44,849	$	46,850

In May 2021, we acquired a 64-bed specialty behavioral hospital located in Oklahoma for a total purchase price of $40.3 million, including $0.3 million in closing costs, and concurrently leased the hospital to an affiliate of Vizion Health. The 15-year master lease, which includes two five-year extension options, has an initial lease rate of 8.5% with fixed annual escalators of 2.5%. We have committed to additional funding of capital improvements for the hospital of up to $2.0 million which will be added to the lease base as funded. At December 31, 2021, no funds have been drawn.

In June 2021, we acquired a 48-unit assisted living and memory care community in Tennessee for a purchase price of $6.6 million, including closing costs of $0.1 million. The community was added to an existing master lease with Navion Senior Solutions (“Navion”) whose term was reset for 12 years, has a lease rate of 7.5% with fixed annual escalators of 2.5% and offers two optional extensions of five years each.


Operator	Date	Properties	Asset Class	Land		Building and Improvements		Total
Bickford Senior Living	Q1 2020	1	SHO	$	1,588	$	13,512	$	15,100
Life Care Services	Q1 2020	1	SHO	4,370		130,522		134,892
Autumn Trace	Q2 2020	2	SHO	344		13,906		14,250
Encore Senior Living1	Q3 2020	1	SHO	504		11,796		12,300
				$	6,806	$	169,736	$	176,542

In January 2020, we acquired a 60-unit assisted living/memory care facility located in Shelby, Michigan, from Bickford. The acquisition price was $15.1 million and included the full payment of an outstanding construction note receivable to us of $14.1 million, 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.

In January 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.

Total consideration for NHI’s interests in the combined venture was $125.0 million, comprised of the $59.3 million remaining balance of a mortgage note initially funded in 2015, an additional loan of $21.7 million, and cash of $43.1 million to

Timber Ridge PropCo and $0.9 million to Timber Ridge OpCo. Total debt due from Timber Ridge PropCo of $81.0 million, which is eliminated upon consolidation, bears interest to NHI at 5.75%. LCS paid $10.8 million for its 20% equity stake in Timber Ridge PropCo and provided $2.6 million for a 75% equity participation in Timber Ridge OpCo.

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. 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 $10.0 million based on the attainment of certain operating metrics. See Note 5 for a discussion of Timber Ridge PropCo.

In May 2020, we acquired two senior housing facilities each with 44 assisted living units for a total purchase price of $14.3 million, including $0.2 million in closing costs. The facilities are located in Indiana and are leased to Autumn Trace Senior Communities, which was 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.

In September 2020, we acquired a 43-unit assisted living and memory care facility located in Bellevue, Wisconsin from Encore Senior Living, (“Encore”), formerly 41 Management. The acquisition price was $12.3 million and included the full payment of an outstanding mortgage loan of $3.9 million, plus accrued interest. The property is leased to an affiliate of Encore 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.


Operator	Date	Properties	Asset Class	Net Proceeds		Net Real Estate Investment		Other1		Gain/(Impairment)2
Bickford	Q2 2021	6	SHO	$	39,924	$	34,485	$	1,871	$	3,568
Community Health Systems	Q2 2021	1	MOB	3,887		946		62		2,879
TrustPoint Hospital	Q3 2021	1	HOSP	31,215		21,018		1,562		8,635
Holiday	Q3 2021	8	SHO	114,133		113,611		(1,360)		1,882
Quorum Health	Q3 2021	1	HOSP	8,314		9,568		—		(1,254)
Senior Living Management	Q3 2021	1	SHO	12,847		3,212		210		9,425
Holiday	Q3 2021	1	SHO	5,666		10,388		(81)		(4,641)
Brookdale Senior Living	Q4 2021	1	ALF	11,880		11,696		—		184
Senior Living Management	Q4 2021	1	SLC	7,275		3,335		256		3,684
Genesis	Q4 2021	1	SLC	3,723		1,677		(166)		2,211
				$	238,864	$	209,936	$	2,354	$	26,573

During the second quarter of 2021, we sold to affiliates of Bickford a portfolio of six properties that were being leased to Bickford for a purchase price of $52.9 million. We received approximately $39.9 million in cash consideration upon sale and originated a second mortgage note receivable for the remaining purchase price of $13.0 million. A gain was not recognized related to the $13.0 million second mortgage note receivable, which is discussed in more detail in Note 4. We recorded a gain upon completion of this transaction totaling approximately $3.6 million representing the excess of the $39.9 million cash consideration received over the net book value of the assets sold of $34.5 million and the write off of straight-line rents

receivable of approximately $1.9 million. Rental income from this portfolio was $1.6 million, $5.6 million and $6.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Upon completion of the sale, Bickford satisfied the terms of our prior agreement that contingently abated $2.1 million in rental income for the third quarter of 2020. These six properties were part of our ongoing negotiations for the sale to Bickford of nine properties being leased to Bickford. One property was classified as assets held for sale on our Consolidated Balance Sheet as of December 31, 2021. We continue to explore our options for the remaining two properties, which could include a sale to a third party, re-tenanting, or retaining the existing lease with Bickford. Reference Note 8 for discussion of additional contingent consideration associated with this disposition that was not included in the transaction price at the time of closing.

During the second quarter of 2021, we sold a medical office building located in Florida for approximately $4.3 million in cash consideration, and incurred $0.4 million of transaction costs, resulting in a gain of approximately $2.9 million. Revenue for this property was $0.1 million for the year ended December 31, 2021 and $0.3 million for both the years ended December 31, 2020 and 2019, respectively.

In July 2021, we sold a behavioral hospital located in Tennessee for cash consideration of $31.2 million and recorded a gain of approximately $8.6 million. Rental income was $1.4 million for the year ended December 31, 2021 and $2.7 million for both the years ended December 31, 2020 and 2019, respectively.

In August 2021, we sold a portfolio of eight properties that was leased to Holiday with an aggregate net book value of $113.6 million for total cash consideration of $115.0 million, and incurred transaction costs of $0.9 million, and recognized a gain of approximately $1.9 million associated with this transaction. Rental income was $5.9 million for the year ended December 31, 2021 and $10.0 million for both the years ended December 31, 2020 and 2019, respectively.

In September 2021, we sold a property that was leased to Holiday located in Indiana with a net book value of $10.4 million for total cash consideration of $5.8 million, incurred transactions costs of $0.1 million, and recognized an impairment of approximately $4.6 million associated with this transaction. Rental income was $0.4 million for the year ended December 31, 2021 and $0.6 million for both the years ended December 31, 2020 and 2019, respectively.

In September 2021, we sold an acute care hospital located in Kentucky for cash consideration of $9.0 million, incurred $0.7 million of transaction costs, and recorded an impairment charge of approximately $1.3 million. Rental income was $2.5 million, $3.1 million and $3.4 million, for the years ended December 31, 2021, 2020 and 2019, respectively.

In September 2021, we sold a senior living community located in Florida for cash consideration of $14.0 million, incurred transaction costs of $1.2 million and recorded a gain of approximately $9.4 million. Rental income was $0.8 million for the year ended December 31, 2021 and $1.3 million for both the years ended December 31, 2020 and 2019, respectively.

In December 2021, we sold a senior living community located in Florida for cash consideration of $7.8 million, incurred transaction costs of $0.5 million and recorded a gain of approximately $3.7 million. Rental income was $0.5 million for the year ended December 31, 2021 and $0.7 million for both the years ended December 31, 2020 and 2019, respectively.

In December 2021, we sold an assisted living facility located in Ohio for cash consideration of $12.0 million, incurred transactions cost of $0.1 million and recorded a gain of approximately $0.2 million. We received a net lease termination fee of $2.5 million for the year ended December 31, 2021 included in “Interest income and other” on the Consolidated Statement of Income. Rental income was $1.4 million for the years ended December 31, 2021, 2020 and 2019.

In December 2021, we sold a senior living community located in Idaho for cash consideration of $3.9 million, incurred transaction costs of $0.2 million and recorded a gain of approximately $2.2 million. Rental income was $0.8 million for the year ended December 31, 2021 and $0.7 million for both the years ended December 31, 2020 and 2019, respectively.

In January 2020, we sold a portfolio of eight assisted living properties located in Arizona (4), Tennessee (3) and South Carolina (1) to Brookdale Senior Living for cash consideration of $39.3 million pursuant to the exercise of its option to purchase the properties. These properties were classified in assets held for sale on the Consolidated Balance Sheet as of December 31, 2019. We recorded a gain of $20.8 million from the sale. We recognized rental income from this portfolio of $0.2 million and $4.3 million for the years ended December 31, 2020 and 2019, respectively.

In February 2020, we disposed of two assisted living properties previously classified as held for sale in exchange for a term note of $4.0 million from the buyer, Bickford. The note, which is due February 2025 and bears interest at 7%, began amortizing on a twenty-five-year basis in January 2021.

At December 31, 2021, we classified ten properties, including three transition properties, to assets held for sale on our Consolidated Balance Sheet. Rental income associated with these properties was $5.4 million, $8.0 million and $8.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

In 2021, we recorded $5.9 million in impairment charges on two properties that were sold during the year. We recorded impairment charges of $39.5 million on seven properties that were classified to assets held for sale during the year and $6.4 million on one transitioning property held in use. These impairment charges are included in “Loan and realty losses” in the Consolidated Statement of Income. In 2019, we recognized an impairment loss of $2.5 million, related to the disposition of two Bickford properties located in Indiana.

We reduced the carrying values of the impaired properties to their estimated fair values or, with respect to the properties classified as held for sale, to their estimated fair value less costs to sell. To estimate the fair values of the properties, we utilized a market approach which considered binding agreements for sales (Level 1 inputs), non-binding offers to purchase from unrelated third parties and/or broker quotes of estimated values (Level 3 inputs), and/or independent third-party valuations (Level 1 and 3 inputs).

In January 2022, we sold a medical office building located in Texas for approximately $5.1 million in cash consideration, and incurred $0.3 million of transaction costs, resulting in a gain of approximately $3.0 million. The property was classified as assets held for sale on the Consolidated Balance Sheet as of December 31, 2021. Revenue for this property was $0.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The following table contains information regarding tenant concentration in our portfolio, including properties classified as held for sale, $2.6 million for our corporate office and a credit loss reserve balance of $5.2 million, based on the percentage of revenues for the years ended December 31, 2021, 2020 and 2019 related to tenants or affiliates of tenants, that exceed 10% of total revenue ($ in thousands):


	as of December 31, 2021					Revenues1
	Asset	Real		Notes		Year Ended December 31,
	Class	Estate2		Receivable		2021			2020			2019

Senior Living Communities	EFC	$	573,631	$	42,266	$	50,726	17%	$	50,734	15%	$	48,450	15%
National HealthCare Corporation	SNF	171,188		—		37,735		12%	37,820		11%	38,131		12%
Bickford Senior Living	ALF	490,308		40,599		34,599		12%	49,451		15%	56,210		17%
Holiday3	ILF	377,735		—		N/A		N/A	40,705		12%	40,459		13%
All others, net	Various	1,414,475		222,297		164,017		55%	144,448		44%	129,033		41%
Escrow funds received from tenants
for property operating expenses	Various	—		—		11,638		4%	9,653		3%	5,798		2%
		$	3,027,337	$	305,162	$	298,715		$	332,811		$318,081

At December 31, 2021, the two states in which we had an investment concentration of 10% or more were South Carolina, (11.6%) and Texas (10.3%). At December 31, 2020, the two states in which we had an investment concentration of 10% or more were South Carolina (10.9%) and Texas (10.5%).

As of December 31, 2021, we leased ten retirement communities totaling 2,068 units to Senior Living Communities, LLC (“Senior Living”). The 15-year master lease, which began in December 2014, contains two renewal options of five years each and provides for an annual escalator of 3% effective January 1, 2019. Straight-line rent revenue of $2.5 million, $4.3 million and $4.9 million was recognized from the Senior Living Communities lease for the years ended December 31, 2021, 2020 and 2019, respectively.

The facilities leased to NHC, a publicly held company, are under two master leases and consist of three independent living facilities and 39 skilled nursing facilities (four of which are subleased to other parties for whom the lease payments are guaranteed to us by NHC). These facilities are leased to NHC under the terms of an amended master lease agreement originally dated October 17, 1991 (“the 1991 lease”), which includes our 35 legacy properties and a master lease agreement dated August 30, 2013 (“the 2013 lease”), which includes seven skilled nursing facilities acquired in 2013.

The 1991 lease expiration is December 31, 2026. There are two additional five-year renewal options, each at fair rental value as negotiated between the parties and determined without including the value attributable to any improvements to the leased property voluntarily made by NHC at its expense. Under the terms of the 1991 lease, the base annual rental is $30.8 million and rent escalates by 4% of the increase, if any, in each facility’s revenue over a 2007 base year. The 2013 lease provides for a base annual rental of $3.5 million and has a lease expiration of August 2028. Under the terms of the 2013 lease, rent escalates 4% of any increase in each facility’s revenue over the 2014 base year. For both the 1991 lease and the 2013 lease, we refer to this additional rent component as “percentage rent.” During the last three years of the 2013 lease, NHC will have the option to purchase the facilities for $49.0 million.

1 For purposes of the percentage rent calculation described in the master lease agreement, NHC’s annual revenue by facility for a given year is certified to NHI by March 31st of the following year.

As of December 31, 2021, we leased 38 facilities, excluding four facilities classified as assets held for sale, under four master leases to Bickford Senior Living. Lease maturity dates range from 2023 through 2033. Straight-line rent revenue of $1.7 million, $2.8 million and $4.5 million was recognized from the Bickford leases for the years ended December 31, 2021, 2020 and 2019, respectively. As previously discussed, we disposed of six properties that were leased to Bickford in 2021. As discussed more fully in Note 8, we granted lease concessions to Bickford in 2021 and 2020 as a result of the COVID-19 pandemic.

As of December 31, 2021, we leased 16 ILFs, excluding one property classified as assets held for sale, to Holiday. The master lease, which matures in 2035, provides for annual lease escalators beginning November 1, 2020, with a floor of 2% and a ceiling of 3%. Straight-line rent revenue of $5.3 million, $6.5 million, and $6.6 million was recognized from the Holiday lease for the years ended December 31, 2021, 2020 and 2019, respectively. As previously discussed, we disposed of nine properties that were leased to Holiday in 2021.

On July 30, 2021, Welltower completed the acquisition of a portfolio of legacy Holiday properties from Fortress Investment Group and a new agreement with Atria Senior Living to assume operations of the Holiday portfolio. These transactions resulted in a Welltower-controlled subsidiary becoming the tenant under our existing master lease for the NHI-owned Holiday real estate assets. We have received no rent due under the master lease for these facilities since this change in tenant ownership occurred. Accordingly, we have placed the tenant on cash basis and filed suit against Welltower, Inc. and certain subsidiaries for default under the master lease. Rent due but uncollected and unrecognized for the year ended December 31, 2021, excluding penalties and interest, totaled $11.4 million. As of December 31, 2021, we have a lease deposit of $8.8 million. See Note 8. Commitment and Contingencies for more detail regarding litigation.

Nine properties were transitioned during 2019 to five new tenants following a period of non-compliance by the former operators. We recognized rental income from these nine properties of $3.0 million, $4.6 million and $3.6 million for the years ended December 31, 2021, 2020 and 2019, respectively. As previously noted, we recognized real estate impairment charges on four of the transition properties, of which three of the properties were classified as assets held for sale on our Consolidated Balance Sheet as of December 31, 2021. No properties were transitioned during 2021 or 2020.

Certain of our leases contain purchase options allowing tenants to acquire the leased properties. At December 31, 2021, we had a net investment of $12.4 million in two real estate properties, included in assets held for sale, which are subject to exercisable tenant purchase options. Tenant purchase options on ten properties in which we had an aggregate net investment of $89.8 million at December 31, 2021, become exercisable between 2022 and 2028.

Rental income from leased properties with tenant purchase options either currently exercisable or exercisable in the future was $12.8 million, $12.3 million and $12.2 million for the years ended December 31, 2021, 2020 and 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.

In June 2021, we received notification of a tenant’s intention to acquire, pursuant to a purchase option, a hospital located in California. The purchase option calls for a minimum purchase price of $15.0 million with any appreciation above $15.0 million to be split evenly between the parties. The net investment at December 31, 2021 was $13.6 million and was classified in assets held for sale on the Consolidated Balance Sheet as of December 31, 2021. Rental income was $1.9 million, for the years ended December 31, 2021, 2020 and 2019, respectively. The transaction will close no earlier than one year after the receipt of the notice of exercise.

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):



	Year Ended December 31,
		2021		2020		2019
Lease payments based on fixed escalators, net of deferrals		$	241,172	$	272,630	$	262,178
Lease payments based on variable escalators		4,662		5,501		4,967
Straight-line rent income		14,603		20,411		22,084
Escrow funds received from tenants for property operating expenses		11,638		9,653		5,798
Amortization of lease incentives		(1,026)		(987)		(845)
Rental income		$	271,049	$	307,208	$	294,182