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Equity

12 Months Ended

Dec. 31, 2023

Equity

Equity

10. Equity

Non-controlling Interests. We have entered into partnerships to develop and/or own real estate. Given that our limited members do not have the substantive kick-out rights, liquidation rights, or participation rights, we have concluded that the partnerships are VIEs. As we exercise power over and receive benefits from the VIEs, we are considered the primary beneficiary. Accordingly, we consolidate the VIEs and record the non-controlling interests on the consolidated financial statements. As of December 31, 2023, we have the following consolidated VIEs (in thousands):


									Gross
Investment				Property					Consolidated			Non-Controlling
Year		Purpose		Type		State			Assets ⁽¹⁾			Interests
2023		Owned real estate	⁽²⁾	ILF/ALF/MC		OH		$	54,717		$	9,134
2023		Owned real estate	⁽³⁾	ALF/MC		NC			121,321			3,831
2022		Owned real estate	⁽⁴⁾	SNF		FL			76,691			14,325
2018		Owned real estate		ILF		OR			14,650			2,907
2018		Owned real estate and development		ALF/MC		OR			18,452			1,246
2017		Owned real estate and development	⁽⁵⁾	ILF/ALF/MC		WI			22,007			2,305
2017		Owned real estate		ALF/MC		SC			11,680			1,240
Total								$	319,518		$	34,988

(1)	Includes the total real estate investments and excludes intangible assets.

(2)	During the second quarter of 2023, we entered into a JV that purchased an ILF/ALF/MC in Ohio with a total of 242 units. For more information see Note 5. Real Estate Investments —Acquisitions.

(3)	During the first quarter of 2023, we entered into a JV that purchased 11 ALFs and MCs with a total of 523 units. For more information regarding this transaction See Note 5. Real Estate Investments —Financing Receivables.

(4)	During 2022, we entered into a JV that purchased three SNFs with a total of 299 beds. For more information regarding this transaction see Note 5. Real Estate Investments —Financing Receivables.

(5)

Subsequent to December 31, 2023, we sold our interest in this JV for $23,120, which includes repayment of $1,814 of abated and $563 of deferred rent, as well as the payoff of a $550 note receivable. The JV owns a 110-unit community in Wisconsin. At December 31, 2023, this community was classified as held-for-sale. See Note 5. Real Estate Investments— Properties Held-for-

Sale.

Common Stock. We have separate equity distribution agreements (collectively, “Equity Distribution Agreements”) to offer and sell, from time to time, up to $200,000,000 in aggregate offering price of shares of our common shares. The Equity Distribution Agreements provide for sales of common shares to be made by means of ordinary brokers’ transactions, which may include block trades, or transactions that are deemed to be “at the market” offerings.

During the year ended December 31, 2021, no shares were issued under the Equity Distribution Agreements. During the year ended December 31, 2022, we sold 1,792,400 shares of common stock for $68,156,000 in net proceeds under our Equity Distribution Agreements. In conjunction with the sale of common stock, we incurred $513,000 of costs associated with this agreement which have been recorded in additional paid in capital as a reduction of proceeds received.

During the year ended December 31, 2023, we sold 1,658,400 shares of common stock for $53,687,000 in net proceeds under our Equity Distribution Agreements. In conjunction with the sale of common stock, we incurred $836,000 of costs associated with this agreement which have been recorded in additional paid in capital as a reduction of proceeds received. At December 31, 2023, we had $76,018,000 available under the Equity Distribution Agreements.

Subsequent to December 31, 2023, we sold 91,100 shares of common stock for $2,927,000 in net proceeds under our Equity Distribution Agreements. Accordingly, we have $73,074,000 available under our Equity Distribution Agreements.

During the years ended December 31, 2023, 2022 and 2021, we acquired 43,933 shares, 39,463 shares and 87,249 shares, respectively, of common stock held by employees who tendered owned shares to satisfy tax withholding obligations.

Shelf Registration Statement. We have an automatic shelf registration statement on file with the SEC, and currently have the ability to file additional automatic shelf registration statements, to provide us with capacity to publicly offer an indeterminate amount of common stock, preferred stock, warrants, debt, depositary shares, or units. We may from time to time publicly raise capital under our automatic shelf registration statement in amounts, at prices, and on terms to be announced when and if the securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of the offering. Our shelf registration statement expires on February 17, 2025.

Distributions. We declared and paid the following cash dividends (in thousands):


		Year Ended December 31,
		2023						2022						2021
		Declared			Paid			Declared			Paid			Declared			Paid
Common Stock ⁽¹⁾		$	94,764		$	94,764		$	91,509		$	91,509		$	90,494	⁽²⁾	$	90,494	⁽²⁾

(1)	Represents $0.19 per share per month for the years ended December 31, 2023, 2022 and 2021.

(2)	During the year ended December 31, 2021, we paid $764 as a result of vesting of the performance-based stock units.

In January 2024, we declared a monthly cash dividend of $0.19 per share on our common stock for the months of January, February and March 2024 payable on January 31, February 29, and March 29, 2024, respectively, to stockholders of record on January 23, February 21, and March 21, 2024, respectively.

Stock Based Compensation Plans. During 2021, we adopted, and our stockholders approved the 2021 Equity Participation Plan (the “2021 Plan”) which replaces the 2015 Equity Participation Plan (the “2015 Plan”). Under the 2021 Plan, 1,900,000 shares of common stock have been authorized and reserved for awards, less one share for every one share that was subject to an award granted under the 2015 plan after December 31, 2020 and prior to adoption. In addition, any shares that are not issued under outstanding awards under the 2015 Plan because the shares were forfeited

or cancelled after December 31, 2020 will be added to and again be available for awards under the 2021 Plan. Under the 2021 Plan, the shares were authorized and reserved for awards to officers, employees, non-employee directors and consultants. The terms of the awards granted under the 2021 Plan and the 2015 Plan are set by our compensation committee at its discretion. As of December 31, 2023, we have 1,580,006 shares of common stock reserved for awards under the 2021 Plan.

Restricted Stock and Performance-Based Stock Units. Restricted stock activity for the years ended December 31, 2023, 2022 and 2021was as follows:


		Year Ended December 31,
		2023			2022			2021
Outstanding, January 1			229,236			197,422			180,440
Granted			146,020			135,210			110,348
Vested			(115,551)			(103,396)			(93,366)
Cancelled			(1,085)			—			—
Outstanding, December 31			258,620			229,236			197,422

During the years ended December 31, 2023, 2022 and 2021, we granted 86,867, 86,332 and 71,892, respectively, of performance-based stock units. During the years ended December 31, 2023 and 2022 no performance-based stock units vested. During the year ended December 31, 2021, 108,720 performance-based stock units were vested. Total compensation expense related to restricted stock and performance-based stock units for the years ended December 31, 2023, 2022 and 2021 were $8,481,000, $7,964,000 and $7,760,000.

During 2023, 2022 and 2021, we granted 232,887, 221,542 and 182,240 shares of restricted common stock and performance-based stock units, respectively, under the 2021 Plan as follows:


		No. of		Price per
Year		Shares/Units		Share			Reward Type		Vesting Period
2023		127,960		$	37.16		Restricted stock		ratably over 3 years
		86,867		$	37.16		Performance-based stock units		TSR targets ⁽¹⁾
		15,060		$	31.54		Restricted stock		May 24,2024
		3,000		$	35.45		Restricted stock		July 25, 2024
		232,887

2022		122,865		$	33.94		Restricted stock		ratably over 3 years
		86,332		$	33.94		Performance-based stock units		TSR targets ⁽¹⁾
		12,345		$	38.48		Restricted stock		May 25, 2023
		221,542

2021		95,293		$	42.27		Restricted stock		ratably over 3 years
		71,892		$	42.27		Performance-based stock units		TSR targets ⁽¹⁾
		12,055		$	39.40		Restricted stock		May 26, 2022
		3,000		$	43.14		Restricted stock		April 1, 2022
		182,240

(1)	Vesting is based on achieving certain total shareholder return (“TSR”) targets in 4 years with acceleration opportunity in 3 years.

At December 31, 2023, the remaining compensation expense to be recognized related to the future service period of unvested outstanding restricted common stock and performance-based stock units are as follows (dollar amount in thousands):


		Remaining
		Compensation
Vesting Date		Expense
2024		$	6,026
2025			3,238
2026			356
Total		$	9,620

Stock Options. During 2023, 2022 and 2021, we did not issue any stock options. Nonqualified stock option activity for the years ended December 31, 2023, 2022 and 2021 was as follows:


								Weighted Average
		Shares						Price
		2023		2022		2021		2023				2022		2021
Outstanding, January 1		10,000		15,000		15,000		$	38.43		$	38.43		$	38.43
Granted		—		—		—			n/a			n/a			n/a
Exercised		—		—		—			n/a			n/a			n/a
Canceled		(5,000)		(5,000)		—		$	38.43			n/a			n/a
Outstanding, December 31		5,000		10,000		15,000		$	38.43		$	38.43		$	38.43

Exercisable, December 31⁽¹⁾		5,000		10,000		15,000		$	38.43		$	38.43		$	38.43

(1)

The aggregate intrinsic value of exercisable options at December 31, 2023, based upon the closing price of our common shares at December 29, 2023, the last trading day of 2023, was approximately $0. Options exercisable at December 31, 2023, 2022 and 2021 had a weighted average remaining contractual life of approximately 0.2 years, 0.7 years, and 1.2 years, respectively.

We use the Black-Scholes-Merton formula to estimate the value of stock options granted to employees. This model requires management to make certain estimates including stock volatility, expected dividend yield and the expected term. No compensation expense related to the vesting of stock options was recorded for the years ended December 31, 2023, 2022 and 2021.