9. Debt Obligations

Bank Borrowings. During 2012, we amended our Unsecured Credit Agreement increasing the commitment to $240,000,000 with the opportunity to increase the credit amount up to a total of $350,000,000. Additionally, the drawn pricing was decreased by 25 basis points, the undrawn pricing was decreased by 10 basis points and the maturity of the facility was extended for one additional year to May 25, 2016. The amendment also provides for a one-year extension option at our discretion, subject to customary conditions. Based on our leverage ratios at December 31, 2013, the amended facility provides for interest annually at LIBOR plus 125 basis points and the unused commitment fee was 25 basis points.

Financial covenants contained in the Unsecured Credit Agreement, which are measured quarterly, require us to maintain, among other things:

(i)

a ratio of total indebtedness to total asset value not greater than 0.5 to 1.0;

(ii)

a ratio of secured debt to total asset value not greater than 0.35 to 1.0;

(iii)

a ratio of unsecured debt to the value of the unencumbered asset pool not greater than 0.6 to 1.0; and

(iv)

a ratio of EBITDA, as calculated in the Unsecured Credit Agreement, to fixed charges not less than 1.50 to 1.0.

During 2013 we borrowed $93,000,000 and repaid $187,500,000 under our Unsecured Credit Agreement. At December 31, 2013, we had $21,000,000 outstanding at an interest rate of LIBOR plus 1.25% and $219,000,000 available for borrowing. In January 2014, we borrowed $11,500,000 at an interest rate of LIBOR plus 1.25% under our unsecured revolving line of credit. Accordingly, we have $32,500,000 outstanding and $207,500,000 available for borrowing. At December 31, 2013 and 2012, we were in compliance with all covenants.

Senior Unsecured Notes. At December 31, 2013, we had $255,800,000 outstanding under our Senior Unsecured Notes with a weighted average interest rate of 4.85%. During 2013, we sold to affiliates and managed accounts of Prudential Investment Management, Inc. (or individually and collectively Prudential) $70,000,000 aggregate principal amount of 3.99% senior unsecured term notes fully amortizing to maturity on November 20, 2021. We used the proceeds to pay down our unsecured revolving line of credit.

On October 30, 2013, we entered into an amended and restated note purchase and private shelf agreement with Prudential. The shelf agreement with Prudential, as amended, conforms the definitions and financial covenants contained therein and previously issued senior unsecured promissory notes outstanding to Prudential and certain of its affiliates and managed accounts to those contained in our unsecured credit facility and to covenants contained in the senior unsecured notes sold in July 2012. Any notes sold by us to Prudential under the shelf agreement will be in amounts at fixed interest rates and have maturity dates (each note to have a final maturity not greater than 12 years and an average life not greater than 10 years from the date of issuance) subject to further agreement by us and Prudential.

The shelf agreement with Prudential contains standard covenants including requirements to maintain financial ratios such as debt to asset value ratios. Under the shelf agreement, maximum total indebtedness shall not exceed 50% of total asset value as defined in the shelf agreement, as amended. Borrowings under the shelf agreement are limited by reference to the value of unencumbered assets. Under the shelf agreement, maximum unsecured debt shall not exceed 60% of the value of the unencumbered asset pool as defined in the shelf agreement.

During 2012, we sold 12-year senior unsecured notes in the aggregate amount of $85,800,000 to a group of institutional investors in a private placement transaction. The notes bear interest at 5.0%, mature on July 19, 2024 and have scheduled annual principal pay downs in years 8 through 12. During 2011, we sold to Prudential $50,000,000 aggregate principal amount of 4.80% senior unsecured term notes fully amortizing to maturity on July 20, 2021.

Bonds Payable. At December 31, 2013 and 2012 we had outstanding principal of $2,035,000 and $2,635,000, respectively, on multifamily tax-exempt revenue bonds that are secured by five assisted living properties in Washington. These bonds bear interest at a variable rate that is reset weekly and mature during 2015. For the year ended December 31, 2013, the weighted average interest rate, including letter of credit fees, on the outstanding bonds was 2.9%. During 2013 and 2012 we paid $600,000 and $565,000, respectively, in regularly scheduled principal payments. At December 31, 2013 and 2012, the aggregate carrying value of real estate properties securing our bonds payable was $6,386,000 and $6,650,000, respectively.

Scheduled Principal Payments. The following table represents our long term contractual obligations (scheduled principal payments and amounts due at maturity) as of December 31, 2013, and excludes the effects of interest (in thousands):

	Total		2014		2015		2016		2017		2018		Thereafter

Bank borrowings	$	21,000	$	—	$	—	$	21,000	$	—	$	—	$	—
Senior unsecured notes		255,800		4,167		29,166		26,667		26,167		28,167		141,466
Bonds payable		2,035		635		1,400		—		—		—		—


	$	278,835	$	4,802	$	30,566	$	47,667	$	26,167	$	28,167	$	141,466