Real Estate Investments (Tables)

12 Months Ended

Dec. 31, 2020

Schedule of future minimum base rents receivable

Future minimum base rents receivable under the remaining non-cancelable terms of operating leases excluding the effects of straight-line rent, amortization of lease inducement and renewal options are as follows (in thousands):


	Cash
	Rent ⁽¹⁾
2021	$	139,053
2022		129,864
2023		130,477
2024		129,407
2025		116,296
Thereafter		507,352

(1)	Represents contractual annual cash rent, except for Anthem Memory Care (“Anthem”) master lease which is based on estimated cash payments. See below for more disclosures relating to Anthem.

Summary of components of our rental income

The following table summarizes components of our rental income for the years ended December 31, 2020, 2019 and 2018 (in thousands):


	Year Ended December 31,
Rental Income		2020			2019			2018
Base cash rental income	$	132,789		$	134,117		$	127,477
Variable cash rental income		15,167	⁽¹⁾		16,462	⁽¹⁾		470	⁽¹⁾
Straight-line rent		1,778	⁽²⁾		4,487	⁽²⁾		9,550	⁽²⁾
Adjustment for collectability of rental income and lease incentives		(23,214)	⁽³⁾		(1,926)	⁽⁴⁾		—
Amortization of lease incentives		(426)			(385)			(2,092)
Total	$	126,094		$	152,755		$	135,405

(1)

The variable rental income for the year ended December 31, 2020 and 2019 includes contingent rental income of $111 and $464, respectively. Additionally, the variable rental income for the year ended December 31, 2020 and 2019 includes reimbursement of real estate taxes by our lessees. As discussed above, we adopted ASC 842 using a modified retrospective approach as of the adoption date of January 1, 2019. Accordingly, we are not required to report this revenue stream for periods prior to January 1, 2019. Accordingly, the variable income for the year ended December 31, 2018, represents contingent rental income.

(2)

In accordance with ASC 842 lease accounting guidance, we evaluated the collectibility of lease payments through maturity and determined it was not probable that we would collect substantially all of the contractual obligations from certain master leases through maturity. Decreased due to these leases being accounted for on cash-basis.

(3)	Represents the write-off of straight-line rent receivable balances related to Senior Lifestyle, Genesis and another operator.

(4)	During the first quarter of 2019, we terminated a lease agreement and transitioned two operating seniors housing communities under the lease agreement to a new operator. As a result of the lease termination, we wrote-off $1,926 straight-line rent receivable in accordance with ASC 842.

Summary of information about purchase options included in our lease agreements

Some of our lease agreements provide purchase options allowing the lessees to purchase the properties they currently lease from us. The following table summarizes information about purchase options included in our lease agreements (dollar amount in thousands):


	Type	Number
	of	of		Gross		Carrying	Option
State	Property	Properties		Investments		Value	Window
California	ALF/MC	2	$	38,895	$	35,601	2024-2029
California	ALF	2		30,849		17,092	2021-TBD	⁽¹⁾
Florida	MC	1		14,835		13,031	2028-2029
Kentucky and Ohio	MC	2		30,342		27,315	2028-2029
Texas	MC	2		25,265		23,715	2025-2027
South Carolina	ALF/MC	1		11,680		10,213	2028-2029
Total			$	151,866	$	126,967

(1)	The option window ending date will be either 24 months or 48 months after the option window commences, based on certain contingencies.

Summary of investments acquired

Acquisitions. The following table summarizes our acquisitions for the years ended December 31, 2020 through 2018. (dollar amounts in thousands):


						Total		Number	Number
		Purchase		Transaction		Acquisition		of	of
Year	Type of Property	Price		Costs ⁽¹⁾		Costs		Properties	Beds/Units
2020	Skilled Nursing ⁽²⁾	$	13,500	$	81	$	13,581	1	140

2019	Assisted Living ⁽³⁾	$	35,719	$	315	$	36,034	3	230
	Skilled Nursing ⁽⁴⁾		19,500		97		19,597	1	90
	Land ⁽⁵⁾		2,732		51		2,783	—	—
Total		$	57,951	$	463	$	58,414	4	320

2018	Assisted Living ⁽⁶⁾⁽⁷⁾	$	39,600	$	65	$	39,665	3	177
	Land ⁽⁸⁾		695		48		743	—	—
Total		$	40,295	$	113	$	40,408	3	177

(1)

Represents cost associated with our acquisitions; however, upon adoption of ASU 2017-01, our acquisitions meet the definition of an asset acquisition resulting in capitalization of transaction costs to the properties’ basis. For our land purchases with forward development commitments, transaction costs are capitalized as part of construction in progress. Transaction costs per our Consolidated Statements of Income and Comprehensive Income represents current and prior year transaction costs due to timing and terminated transactions.

(2)	We acquired a SNF located in Texas.

(3)

We entered into a JV (consolidated on our financial statements) to purchase an existing operational 74-unit ALF/MC community. The non-controlling partner contributed $919 of equity and we contributed $15,976 in cash. Our economic interest in the real estate JV is approximately 95%. Additionally, we acquired an 80-unit MC and a 76-unit ALF/MC in Michigan for an aggregate purchase price of $19,000.

(4)	We acquired a newly constructed 90-bed SNF located in Missouri.

(5)	We acquired a parcel of land adjacent to an existing SNF in California. Additionally, we acquired a parcel of land and committed to develop a 90-bed SNF in Missouri. The commitment totals approximately $17,400.

(6)	We acquired two MC in Texas.

(7)	We entered into a JV (consolidated on our financial statements) to purchase an existing operational 89-unit ILF for $14,400 and to own the real estate and develop a 78-unit ALF/MC for $18,108 in Oregon.

(8)	We acquired an ALF and a MC in California, a MC in Ohio and an ALF/MC in Missouri. Furthermore, we entered into a JV and acquired an ALF/MC community.

(9)	We entered into a JV for the acquisition of land and development of an ILF/ALF/MC community in Wisconsin.

Schedule of investment in development and improvement projects

Developments and Improvements. During the years ended December 31, 2020, 2019 and 2018, we invested the following in development and improvement projects (in thousands):


	Year Ended December 31,
	2020				2019				2018
Type of Property	Developments		Improvements		Developments		Improvements		Developments		Improvements
Assisted Living Communities	$	4,491	$	6,842	$	14,088	$	2,544	$	27,505	$	2,292
Skilled Nursing Centers		12,208		71		6,436		—		7,774		500
Other		—		—		—		295		—		457
Total	$	16,699	$	6,913	$	20,524	$	2,839	$	35,279	$	3,249

Schedule of completed projects

Completed Projects. The following table summarizes our completed projects during the years ended December 31, 2020, 2019 and 2018 (dollar amounts in thousands):


		Number	Type	Number
		of	of	of			Total
Year	Type of Project	Properties	Property	Beds/Units	State	Investment
2020	Development	1	ALF/MC	78	Oregon	$	18,447
	Development	1	SNF	90	Missouri		16,587
Total		2		168		$	35,034

2019	Development	1	SNF	143	Kentucky	$	24,974
	Development	1	ILF/ALF/MC	110	Wisconsin		21,999
Total		2		253		$	46,973

2018	Development	1	MC	66	Illinois	$	14,668
Total		1		66		$	14,668

Summary of properties held-for-sale

Properties held-for-sale. The following table summarizes our properties held-for-sale at years ended December 31, 2020 and 2019 (dollar amounts in thousands):


		Type	Number	Number
		of	of	of		Gross		Accumulated
At December 31,	State	Property	Properties	Beds/units		Investment		Depreciation
2020	n/a	n/a	—	—	$	—	$	—

2019	Colorado	SNF	3	275	$	8,045	$	3,774
	Iowa	SNF	7	544		14,610		9,723
	Kansas	SNF	3	250		14,111		6,674
	Texas	SNF	7	1,148		25,203		14,942
Total			20	2,217	$	61,969	$	35,113

Schedule of real estate investment property sold

Property Sales. The following table summarizes property sales during the years ended December 31, 2020 through 2018 (dollar amounts in thousands):


		Type		Number	Number
		of		of	of		Sales		Carrying		Net
Year	State	Properties		Properties	Beds/Units		Price		Value		Gain (Loss)
2020	N/A	N/A		—	—	$	—	$	—	$	129	⁽¹⁾
	Arizona	SNF		1	194		12,550		2,229		10,293
	Colorado	SNF		3	275		15,000		4,271		10,364
	Iowa	SNF	⁽²⁾	7	544		14,500		4,886		9,051
	Kansas	SNF		3	250		9,750		7,438		1,993
	Texas	SNF		7	1,148		23,000		10,260		12,287
Total 2020 ⁽³⁾				21	2,411	$	74,800	$	29,084	$	44,117	⁽³⁾

2019	N/A	n/a		—	—	$	—	$	—	$	500	⁽⁴⁾
	Arizona, Georgia and Texas	SNF	⁽⁵⁾	3	478		15,310		8,995		5,556
	Texas	ALF	⁽⁶⁾	1	140		1		3,830		(3,950)
Total 2019				4	618	$	15,311	$	12,825	$	2,106

2018	Alabama	SNF		4	454	$	27,975	$	5,695	$	21,987
	Kansas	ALF	⁽⁷⁾	—	—		350		346		—
	Ohio and Pennsylvania	ALF		6	320		67,500		16,352		48,695
Total 2018				10	774	$	95,825	$	22,393	$	70,682

(1)	Gain recognized from the $90 repayment of a holdback related to a property sold during the fourth quarter of 2019 and the reassessment adjustment of $39 from the holdback under the expected value model per ASC Topic 606, Contracts with Customers (“ASC 606”).

(2)

This transaction includes a holdback of $838 which is held in an interest-bearing account with an escrow holder on behalf of the buyer for potential specific losses. Using the expected value model per ASC 606, we estimated and recorded the holdback value of $471. During the year ended December 31, 2020, we received $150 of the holdback. We reassessed the holdback under the expected value model and recorded an additional gain of $229.

(3)	Properties sold within the Preferred Care portfolio.

(4)	Gain recognized due to the receipt of funds held in escrow related to a portfolio of six ALFs sold during the second quarter of 2018.

(5)

We sold a property, previously operated by Preferred Care, located in Texas with a carrying value of $871 for $140. Additionally, we sold a property, previously operated by Preferred Care, located in Arizona with a carrying value of $6,485 for $7,250. This transaction includes a holdback of $1,091 which is held in an interest-bearing account with an escrow holder on behalf of the buyer for potential specific losses. Using the expected value model per ASC 606, we estimated and recorded the holdback value of $613. Also, we sold a SNF located in Georgia with a carrying value of $1,639 for $7,920.

(6)	We sold an ALF located in Texas with a carrying value of $3,830.

(7)	We sold land adjacent to an existing ALF community in Kansas.

Schedule of mortgage loan activity

The following table summarizes our mortgage loan activity for the years ended December 31, 2020, 2019 and 2018 (in thousands):


	2020			2019			2018
Originations and funding under mortgage loans receivable	$	4,253	⁽¹⁾	$	12,342	⁽²⁾	$	21,364	⁽³⁾
Pay-offs received		—			—			(1,086)
Scheduled principal payments received		(1,065)			(1,065)			(1,050)
Mortgage loan premium amortization		(4)			(4)			(4)
Provision for loan loss reserve		(32)			(113)			(192)
Net increase in mortgage loans receivable	$	3,152		$	11,160		$	19,032

(1)	During 2020, we funded an additional $2,000 under and existing mortgage loan. The incremental funding bears interest at 8.89% and escalating by 2.25% thereafter.

(2)	During 2019, we funded an additional $7,500 under an existing mortgage loan. The incremental funding bears interest at 9.41% fixed for two years and escalating by 2.25% thereafter.

(3)

During 2018, we funded an additional $7,400 under an existing mortgage loan for the purchase of a 112-bed SNF in Michigan. The incremental funding bears interest at 8.7%, fixed for five years, and escalating by 2.25% thereafter. Also, we funded additional loan proceeds of $7,125 under an existing mortgage loan for the purchase of a 126-bed SNF in Michigan. This incremental funding bears interest at 9.41%, fixed for five years, and escalating by 2.25% thereafter.

Scheduled principal payments on mortgage loan receivables

Scheduled principal payments on mortgage loan receivables are as follows (in thousands):


	Scheduled
	Principal
2021	$	1,175
2022		1,175
2023		1,175
2024		1,175
2025		1,175
Thereafter		253,968
Total	$	259,843

Schedule of early mortgage loan payoffs