Commitments. Contingencies and Uncertainties

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments, Contingencies and Uncertainties

In the normal course of business, we enter into a variety of commitments, typically consisting of funding 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 that 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.

As of September 30, 2023, we had working capital, construction and mezzanine loan commitments to six operators or borrowers for an aggregate of $145.4 million, of which we had funded $102.0 million toward these commitments. Loan funded amounts do not reflect the effects of discounts or commitment fees.

As of September 30, 2023, we had $23.2 million of development commitments for construction and renovation for seven properties of which we had funded $18.8 million toward these commitments. One of our consolidated real estate partnerships,

NHI REIT of DSL PropCo, LLC, has committed to fund up to $2.0 million toward the purchase of condominium units located at one of the facilities of which $1.0 million had been funded as of September 30, 2023.

As of September 30, 2023, we had an aggregate of $13.9 million in remaining contingent lease inducement commitments in five lease agreements which are generally based on the performance of facility operations and may or may not be met by the tenant. In the nine months ended September 30, 2023, we funded $10.0 million to Timber Ridge OpCo based upon the achievement of all performance conditions as discussed in Note 7.

The credit loss liability for unfunded loan commitments is estimated using the same methodology as used for our funded mortgage and other notes receivable based on the estimated amount that we expect to fund. We applied the same market adjustments as discussed in Note 4.

The liability for expected credit losses on our unfunded loans reflected in “Accounts payable and accrued expenses” on the Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 is presented in the following table for the nine months ended September 30, 2023 ($ in thousands):


Beginning balance January 1, 2023	$	683
Provision for expected credit losses	(385)
Balance at September 30, 2023	$	298

The disposal transactions for three Bickford properties in 2022 included $2.4 million in contingent consideration representing cash placed in escrow to be returned to the buyers to the extent the sold properties generate negative monthly cash flows over the twelve months following the dates of sale. As of September 30, 2023, all the escrowed funds were returned to the buyers.

COVID-19 Pandemic Contingencies

Rental income for the three and nine months ended September 30, 2023 includes $2.1 million and $5.5 million, respectively, related to repayments and other reductions of pandemic-related rent deferrals. Rental income for the nine months ended September 30, 2023 includes the $2.5 million in reduced pandemic-related rent deferrals in connection with the acquisition in the first quarter of 2023 of the ALF located in Chesapeake, Virginia discussed in Note 3. There were no pandemic-related rent concessions granted for the three and nine months ended September 30, 2023. As of September 30, 2023, aggregate pandemic-related rent concessions granted to tenants that were initially accounted for as variable lease payments totaled approximately $26.9 million, net of cumulative repayments and other reductions of $9.2 million and excluding any interest accrued.

There were no pandemic-related rent concessions granted for the three months ended September 30, 2022. Pandemic-related rent concessions granted for the nine months ended September 30, 2022 totaled approximately $10.7 million, of which Bickford accounted for approximately $5.5 million.