Owned Properties. As of December 31, 2021, we owned 153 health care real estate properties located in 26 states and consisting of 102 ALFs, 50 SNFs and 1 behavioral health care hospital. These properties are operated by 30 operators.

Independent living communities, assisted living communities, memory care communities and combinations thereof are included in the assisted living property classification (collectively “ALF”). Any reference to the number of

properties, number of units, number of beds, and yield on investments in real estate are unaudited and outside the scope of our independent registered public accounting firm’s review of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board.

During 2018, Senior Care Centers, LLC and affiliates and subsidiaries (“Senior Care”) filed for Chapter 11 bankruptcy. During 2019, while in bankruptcy, Senior Care assumed LTC’s master lease and in March 2020, Senior Care emerged from bankruptcy. Concurrent with their emergence from bankruptcy, in accordance with the order confirming Senior Care’s plan of reorganization, Abri Health Services, LLC (“Abri Health”) was formed as the parent company of reorganized Senior Care and became co-tenant and co-obligor with reorganized Senior Care under our master lease. In March 2021, Senior Care and Abri Health (collectively, “Lessee”) defaulted on payment obligations owed under the master lease. Accordingly, we sent a notice of default and applied proceeds from letters of credit to certain obligations owed under the master lease. Furthermore, we sent the Lessee a notice of termination of the master lease to be effective April 17, 2021. On April 16, 2021, the Lessee filed for Chapter 11 bankruptcy. In August 2021, the United States Bankruptcy Court approved a settlement agreement between the Lessee and LTC. The settlement provided for, among other things, a one-time payment of $3,250,000 from LTC to the affiliates of the Lessee which we expensed as transaction costs and paid in 2021.

Depreciation expense on buildings and improvements, including properties classified as held-for-sale, was $38,192,000, $38,945,000, and $39,094,000 for the years ended December 31, 2021, 2020 and 2019, respectively.

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):

(1)	Represents contractual cash rent, except for certain master leases which are based on estimated cash payments and the Senior Care and Abri Health master lease.

We monitor the collectibility of our receivable balances, including deferred rent receivable balances, on an ongoing basis. We write-off uncollectible operator receivable balances, including straight-line rent receivable and lease incentives balances, as a reduction to rental income in the period such balances are no longer probable of being collected. Therefore, recognition of rental income is limited to the lesser of the amount of cash collected or rental income reflected on a straight-line basis for those customer receivable balances deemed uncollectible. As of December 31, 2021, we have 19 operators that are being accounted for on a cash-basis representing approximately 52.6% of our rental income for the year ended December 31, 2021. We wrote-off straight-line rent receivable and lease incentives balances of $758,000, $23,214,000 and $1,926,000 for the years ended December 31, 2021, 2020 and 2019, respectively.

The following table summarizes components of our rental income for the years ended December 31, 2021, 2020 and 2019 (in thousands):


	Year Ended December 31,
Rental Income		2021			2020			2019
Base cash rental income	$	107,692	⁽¹⁾	$	132,789		$	134,117
Variable cash rental income		14,332	⁽²⁾		15,167	⁽²⁾		16,462	⁽¹⁾
Straight-line rent		467	⁽³⁾		1,778	⁽³⁾		4,487	⁽²⁾
Adjustment for collectibility of rental income and lease incentives		(758)	⁽⁴⁾		(23,214)	⁽⁴⁾		(1,926)	⁽⁴⁾
Amortization of lease incentives		(608)			(426)			(385)
Total	$	121,125		$	126,094		$	152,755

(1)

Decreased primarily due to defaults of payments for lease obligations from Senior Lifestyle Corporation (“Senior Lifestyle”) and Senior Care and Abri Health, abated and deferred rent and reduced rent from a sold property. This decrease was partially offset by increased rent from re-leasing 18 properties previously leased to Senior Lifestyle, completion of development projects and contractual rent increases.

(2)

The variable rental income for the years ended December 31, 2021, 2020 and 2019 includes contingent rental income of $0, $111 and $464, respectively. Additionally, the variable rental income for the years ended December 31, 2021, 2020 and 2019 includes reimbursement of real estate taxes by our lessees.

(3)	Decreased due to more leases accounted for on a cash basis.

(4)	Represents straight-line rent receivable and lease incentives write-offs.

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	$	34,660	2024-2029
California	ALF	2		31,814		17,034	2021-TBD	⁽¹⁾
Colorado	ALF	1		6,764		5,338	2022-2026
Florida	MC	1		15,201		12,956	2028-2029
Kentucky and Ohio	MC	2		30,421		26,595	2028-2029
Nebraska	ALF	3		7,633		3,188	TBD	⁽²⁾
Texas	MC	2		25,265		23,095	2021-2027
South Carolina	ALF/MC	1		11,680		9,632	2028-2029
Total			$	167,673	$	132,498

(1)

The option window ending date will be either 24 months or 48 months after the option window commences, based on certain contingencies. Subsequent to December 31, 2021, the current operator of the ALFs with a total of 232 units exercised the purchase option under their lease for approximately $43,700.

(2)	Subject to the properties achieving certain coverage ratios.

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, and on March 13, 2020, the United States declared a national emergency with regard to COVID-19. At December 31, 2021, in conjunction with the continued levels of uncertainty related to the adverse effects of COVID-19, we assessed the probability of collecting substantially all of our lease payments through maturity and concluded that we did not have sufficient information available to evaluate the impact of COVID-19 on the collectibility of our lease payments. The extent to which COVID-19 could impact our operators and the collectibility of our future lease payments will depend on the future developments including the financial impact significance, government support and subsidies and the duration of the pandemic.

In recognition of the pandemic impact affecting our operators, we have agreed to rent abatements totaling $3,359,000 and rent deferrals, net of repayments, for certain operators totaling $4,639,000 during the year ended December 31, 2021. The $7,998,000 in rent abatements and deferrals, net of repayments, during the year ended December 31, 2021, represented approximately 5.1% of our contractual rent for the year ended December 31, 2021. Additionally, we proactively reduced 2021 rent and interest escalations by 50% to support eligible operators during the

continuing COVID-19 crisis. The rent and interest escalation reductions were given in the form of a rent and interest credit in recognition of operators’ increased costs due to COVID-19. We have elected to recognize the rent credits given to the eligible operators where we accrue rent on a straight-line basis over the remaining life of those respective leases. During the year ended December 31, 2021, we recognized a decrease of $528,000 of GAAP revenue and $1,337,000 of cash revenue.

Acquisitions. The following table summarizes our acquisitions for the years ended December 31, 2021 through 2019 (dollar amounts in thousands):


						Total		Number	Number
		Purchase		Transaction		Acquisition		of	of
Year	Type of Property	Price		Costs		Costs		Properties	Beds/Units
2021	n/a	$	—	$	—	$	—	—	—

2020	Skilled Nursing ⁽¹⁾	$	13,500	$	81	$	13,581	1	140

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

(1)	We acquired a SNF located in Texas.

(2)

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.

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

(4)	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.

For further discussion related to the JV transactions discussed above and our partnerships and non-controlling interests, see Note 10. Equity.

Developments and Improvements. During the years ended December 31, 2021, 2020 and 2019, we invested the following in development and improvement projects (in thousands):


	Year Ended December 31,
	2021				2020				2019
Type of Property	Developments		Improvements		Developments		Improvements		Developments		Improvements
Assisted Living Communities	$	—	$	5,846	$	4,491	$	6,842	$	14,088	$	2,544
Skilled Nursing Centers		—		452		12,208		71		6,436		—
Other		—		—		—		—		—		295
Total	$	—	$	6,298	$	16,699	$	6,913	$	20,524	$	2,839

Completed Projects. The following table summarizes our completed development projects during the years ended December 31, 2021, 2020 and 2019 (dollar amounts in thousands):


	Number	Type	Number
	of	of	of			Total
Year	Properties	Property	Beds/Units	State	Investment
2021	—	n/a	—	n/a	$	—

2020	1	ALF/MC	78	Oregon	$	18,447
	1	SNF	90	Missouri		16,587
Total 2020	2		168		$	35,034

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

Property Sales. The following table summarizes property sales during the years ended December 31, 2021 through 2019 (dollar amounts in thousands):


		Type	Number	Number
		of	of	of		Sales		Carrying		Net
Year ⁽¹⁾	State	Properties	Properties	Beds/Units		Price		Value		Gain (loss)⁽²⁾
2021	n/a	n/a	—	—	$	—	$	—	$	363	⁽³⁾
	Florida	ALF	1	—		2,000		2,626		(858)
	Nebraska	ALF	1	40		900		1,079		(200)
	Washington	SNF	1	123		7,700		4,513		2,562
	Wisconsin	ALF	3	263		35,000		28,295		5,595
Total 2021			6	426	$	45,600	$	36,513	$	7,462

2020	n/a	n/a	—	—	$	—	$	—	$	129	⁽³⁾
	Arizona	SNF	1	194		12,550		2,229		10,293
	Colorado	SNF	3	275		15,000		4,271		10,364
	Iowa	SNF	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			21	2,411	$	74,800	$	29,084	$	44,117

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

(1)

Subsequent to December 31, 2021, an operator of two ALFs in California with a total of 232 units exercised the purchase option under their lease for approximately $43,700. The communities have a gross book value of $31,800 and a net book value of $17,000 Additionally, we entered into an agreement with the current operator to sell a 74-unit ALF in Virginia for $16,900. The community has a gross value of $16,900 and a net book value of $15,700. In connection with the sale, the current operator will pay a $1,200 lease termination fee.

(2)	Calculation of net gain (loss) includes cost of sales.

(3)	We recognized additional gain due to the reassessment adjustment of the holdbacks related to properties sold during 2020 and 2019.

(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.

Mortgage Loans. The following table summarizes our investments in mortgage loans secured by first mortgages at December 31, 2021 (dollar amounts in thousands):


					Type	Percentage		Number of					Investment
			Gross		of	of					SNF	ALF	per
Interest Rate	Maturity	State	Investment		Property	Investment		Loans ⁽¹⁾	Properties ⁽²⁾		Beds	Units	Bed/Unit
7.5%	2022	MO	$	1,780	OTH	0.5	%	1	—	⁽³⁾	—	—	$	n/a
7.5%	2024	LA		27,101	SNF	7.8	%	1	1		189	—	$	143.39
7.8%	2025	FL		11,880	ALF	3.4	%	1	1		—	68	$	174.71
7.3%	2025	NC/SC		48,006	ALF	13.8	%	1	13		—	523	$	91.79
10.4% ⁽⁴⁾	2043	MI		185,358	SNF	53.3	%	1	15		1,875	—	$	98.86
9.5% ⁽⁴⁾	2045	MI		39,140	SNF	11.2	%	1	4		501	—	$	78.12
9.6%⁽⁴⁾	2045	MI		19,750	SNF	5.7	%	1	2		205	—	$	96.34
9.6% ⁽⁴⁾	2045	MI		14,900	SNF	4.3	%	1	1		146	—	$	102.05
Total			$	347,915		100.0	%	8	37		2,916	591	$	99.21

(1)	Some loans contain certain guarantees and/or provide for certain facility fees.

(2)	Our mortgage loans are secured by properties located in six states with five borrowers.

(3)	Represents a mortgage loan secured by a parcel of land for the future development of a 91-bed post-acute SNF.

(4)	Mortgage loans provide for 2.25% annual increases in the interest rate after a certain time period.

The following table summarizes our mortgage loan activity for the years ended December 31, 2021, 2020 and 2019 (in thousands):


	Year Ended December 31,
	2021			2020			2019
Originations and funding under mortgage loans receivable	$	88,955	⁽¹⁾	$	4,253	⁽²⁾	$	12,342	⁽³⁾
Application of interest reserve		298			—			—
Scheduled principal payments received		(1,175)			(1,065)			(1,065)
Mortgage loan premium amortization		(6)			(4)			(4)
Provision for loan loss reserve		(881)			(32)			(113)
Net increase in mortgage loans receivable	$	87,191		$	3,152		$	11,160

(1)	During 2021, we funded the following:

$1,638 mortgage loan secured by a parcel of land for the future development of a 91-bed post-acute SNF in Missouri and withheld an interest reserve of $142. The mortgage loan term is one year at a yield of 7.5%;

$27,047 mortgage loan secured by a 189-bed skilled nursing center in Louisiana with a regional operator new to us. The mortgage loan has a three-year term with one 12-month extension option and a yield of 7.5%;

$11,724 mortgage loan secured by a 68-unit assisted living and memory care community in Florida operated by a regional operator new to us. At origination, we withheld an interest reserve of $806 and applied $156 of the reserve during 2021. The mortgage loan term is approximately 4 years at a 7.75% yield and includes an additional $4,177 loan commitment for the construction of a memory care addition to the property to be funded at a later date subject to satisfaction of various conditions;

$48,006 mortgage loan for the purchase of a 13-property seniors housing portfolio located in North (12) and South Carolina (1). The communities are operated by an existing LTC operator. At origination, we withheld an interest reserve of $4,496. The loan term is 4 years at a 7.25% yield and includes a commitment of $6,097 for capital improvements and $650 for working capital; and

$540 additional capital funding under our existing mortgage loans.

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

(3)	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.

At December 31, 2021 and 2020 the carrying values of the mortgage loans were $344,442,000 and $257,251,000, respectively. Scheduled principal payments on mortgage loan receivables are as follows (in thousands):


	Scheduled
	Principal
2022	$	2,955
2023		1,175
2024		28,222
2025		61,061
2026		1,175
Thereafter		253,327
Total	$	347,915