Investment in Unconsolidated Joint Ventures (Tables)

9 Months Ended

Sep. 30, 2020

Investment in Unconsolidated Joint Ventures

Summary of the preferred equity investments

Type

Total

Contractual

Number

Preferred

Cash

Investment

Carrying

State

Properties

Investment

Return

Portion

Beds/ Units

Commitment

Value

Washington

UDP

Preferred Equity

⁽¹⁾

—

⁽¹⁾

6,340

⁽¹⁾

Washington

UDP

Preferred Equity

⁽²⁾

—

13,000

⁽²⁾

Total

—

13,000

6,340

(1)

Invested $6,340 of preferred equity in an entity that will develop a 95-unit ALF/MC in Washington. Our investment represents 15.5% of the estimated total investment. The preferred equity investment earns an initial cash rate of 7% increasing to 9% in year four until the internal rate of return (“IRR”) is 8%. After achieving an 8% IRR, the cash rate drops to 8% with an IRR ranging between 12% to 14%.

(2)

Entered into a preferred equity agreement in an entity that will develop and own a 267-unit ILF/ALF in Washington. Our investment represents 11.6% of the estimated total investment. Upon the satisfaction of certain conditions which are projected to be met by year-end, LTC will invest $13,000 into the entity. The preferred equity investment will earn an initial cash rate of 8% and a 12% IRR.

Summary of capital contributions, income recognized and cash interest received from investments in unconsolidated joint ventures

The following table summarizes our capital contributions, income recognized, and cash interest received related to our investments in unconsolidated joint ventures for the nine months ended September 30, 2020 and 2019 (in thousands):


	Type
	of			Capital			Income			Cash Interest
Year	Properties			Contribution			Recognized			Received
2020	ALF/MC/ILF	⁽¹⁾	$	58	⁽¹⁾	$	231	⁽¹⁾	$	231	⁽¹⁾
	UDP			6,340	⁽²⁾		56	⁽²⁾		18	⁽²⁾
Total			$	6,398		$	287		$	249

2019	ALF/MC/ILF		$	394	⁽¹⁾	$	614	⁽¹⁾	$	1,166	⁽¹⁾
	ALF/ILF/MC	⁽³⁾		—	⁽³⁾		955	⁽³⁾		979	⁽³⁾
	ALF/MC	⁽⁴⁾		—	⁽⁴⁾		404	⁽⁴⁾		432	⁽⁴⁾
Total			$	394		$	1,973		$	2,577

(1)	Relates to our preferred equity investment in Arizona discussed above with a total preferred return of 15%. During the nine months ended September 30, 2020, the properties comprising the JV were sold.

(2)	During the third quarter of 2020, we provided a total preferred equity investment of $6,340 to a JV for the development of a 95-unit ALF and MC.

(3)

We had a $2,900 mezzanine loan commitment for a 99-unit seniors housing community in Florida with a total preferred return of 15%. The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. Since interest payments were deferred and no interest was recorded for the first twelve months of the loan, we used the effective interest method in accordance with GAAP to recognize interest income and recorded the difference between the effective interest income and cash interest income to the loan principal balance. During the third quarter of 2019, the mezzanine loan was paid off.

(4)

We had a $3,400 mezzanine loan commitment for the development of a 127-unit seniors housing community in Florida with a total preferred return of 15%. The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. During the first quarter of 2019, the mezzanine loan was paid off.