Commitments and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies

Commitments and Contingencies

7. Commitments and Contingencies

As part of an acquisition in 2011, we committed to provide a contingent payment if certain operational thresholds are met.  The contingent payment was recorded at fair value, which was estimated using a discounted cash flow analysis, and we are accreting the contingent liability to the estimated settlement amount as of the payment date.  The fair value of such contingent liability is re-evaluated on a quarterly basis based on changes in estimates of future operating results and changes in market discount rates. Any changes in estimated fair value are recognized in our results of operations. During  the three months ended March 31, 2013 and 2012, we recorded non-cash interest expense of $110,000 related to the contingent liability. At March 31, 2013 and December 31, 2012, the contingent liability had a carrying value of $6,854,000 and $6,744,000, respectively.

At March 31, 2013, we had outstanding commitments totaling $77,571,000 to develop, re-develop, renovate or expand six skilled nursing properties with a total of 785 beds, a memory care property with 60 units, an independent living property with 140 units, two assisted living and memory care combination properties with a total of 158 units, and three assisted living properties with a total of 136 units.  We also have a commitment to provide, under certain conditions, up to $5,000,000 per year through December 2014 to an existing operator for expansion of the 37 properties they lease from us.  See Note 2. Real Estate Investments for further discussion of these commitments. Additionally at March 31, 2013, we had a $10,600,000 mortgage and construction commitment. As of March 31, 2013, we funded $3,530,000 under this commitment and have a remaining commitment of $7,070,000. See Note 2. Real Estate Investments for further discussion of this mortgage and construction loan.  We also committed to provide $1,525,000 in loan and line of credit agreements to certain operators. As of March 31, 2013, we had funded $209,000 under these commitments and have a remaining commitment of $1,316,000. See Note 3. Notes Receivables for further discussion of these commitments.