Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 17, 2017 | Jun. 30, 2016 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | FIVE STAR QUALITY CARE, INC. | ||
Entity Central Index Key | 1,159,281 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 102.1 | ||
Entity Common Stock, Shares Outstanding | 49,995,932 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 16,608 | $ 14,672 |
Accounts receivable, net of allowance of $3,191 and $3,592 at December 31, 2016 and 2015, respectively | 38,324 | 37,829 |
Due from related persons | 17,010 | 9,731 |
Prepaid expenses | 11,342 | 9,456 |
Investments in available for sale securities, of which $9,659 and $11,471 are restricted as of December 31, 2016 and 2015, respectively | 24,081 | 26,417 |
Restricted cash | 15,059 | 3,301 |
Other current assets | 5,953 | 9,682 |
Assets of discontinued operations | 1,010 | 981 |
Total current assets | 129,387 | 112,069 |
Property and equipment, net | 351,929 | 383,858 |
Equity investment of an investee | 7,116 | 6,827 |
Restricted cash | 1,909 | 2,821 |
Restricted investments in available for sale securities | 16,589 | 23,166 |
Other long term assets | 2,804 | 3,029 |
Total assets | 509,734 | 531,770 |
Current liabilities: | ||
Revolving credit facilities | 0 | 50,000 |
Accounts payable and accrued expenses | 68,453 | 93,205 |
Accrued compensation and benefits | 35,939 | 32,127 |
Due to related persons | 18,378 | 17,870 |
Mortgage notes payable | 1,903 | 1,807 |
Accrued real estate taxes | 12,784 | 12,207 |
Security deposits and current portion of continuing care contracts | 5,099 | 6,129 |
Other current liabilities | 30,430 | 30,399 |
Liabilities of discontinued operations | 7 | 176 |
Total current liabilities | 172,993 | 243,920 |
Long term liabilities: | ||
Mortgage notes payable | 58,494 | 60,396 |
Accrued self insurance obligations | 36,637 | 37,588 |
Deferred gain on sale and leaseback transaction with Senior Housing Properties Trust | 72,695 | 0 |
Other long term liabilities | 4,649 | 5,414 |
Total long term liabilities | 172,475 | 103,398 |
Commitments and contingencies | ||
Shareholders’ equity: | ||
Common stock, par value $.01: 75,000,000 shares authorized, 49,995,932 and 49,476,611 shares issued and outstanding at December 31, 2016 and 2015, respectively | 500 | 494 |
Additional paid in capital | 359,853 | 358,665 |
Accumulated deficit | (199,521) | (177,622) |
Accumulated other comprehensive income | 3,434 | 2,915 |
Total shareholders’ equity | 164,266 | 184,452 |
Total liabilities and shareholders' equity | $ 509,734 | $ 531,770 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance (in dollars) | $ 3,191 | $ 3,592 |
Investments in available for sale securities, restricted (in dollars) | $ 9,659 | $ 11,471 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 49,995,932 | 49,476,611 |
Common stock, shares outstanding | 49,995,932 | 49,476,611 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues: | |||
Senior living revenue | $ 1,115,551 | $ 1,113,971 | $ 1,099,228 |
Management fee revenue | 12,350 | 10,728 | 9,765 |
Reimbursed costs incurred on behalf of managed communities | 250,207 | 240,711 | 219,082 |
Total revenues | 1,378,108 | 1,365,410 | 1,328,075 |
Operating expenses: | |||
Senior living wages and benefits | 545,603 | 539,086 | 533,549 |
Other senior living operating expenses | 284,533 | 293,501 | 292,457 |
Costs incurred on behalf of managed communities | 250,207 | 240,711 | 219,082 |
Rent expense | 201,667 | 199,075 | 197,359 |
General and administrative expenses | 73,516 | 70,757 | 72,385 |
Depreciation and amortization expense | 38,052 | 33,815 | 31,834 |
Goodwill impairment | 0 | 25,344 | 0 |
Long lived asset impairment | 502 | 145 | 589 |
Total operating expenses | 1,394,080 | 1,402,434 | 1,347,255 |
Operating loss | (15,972) | (37,024) | (19,180) |
Interest, dividend and other income | 984 | 982 | 867 |
Interest and other expense | (4,912) | (4,927) | (5,131) |
Gain on early extinguishment of debt | 0 | 692 | 0 |
Gain on sale of available for sale securities reclassified from accumulated other comprehensive income | 107 | 160 | 392 |
Loss from continuing operations before income taxes and equity in earnings of an investee | (19,793) | (40,117) | (23,052) |
Provision for income taxes | (2,351) | (662) | (56,385) |
Equity in earnings of an investee | 137 | 20 | 87 |
Loss from continuing operations | (22,007) | (40,759) | (79,350) |
Income (loss) from discontinued operations, net of tax | 194 | (2,324) | (6,056) |
Net loss | $ (21,813) | $ (43,083) | $ (85,406) |
Weighted average shares outstanding—basic and diluted | 48,815 | 48,406 | 48,028 |
Basic and diluted loss per share from: | |||
Continuing operations (in dollars per share) | $ (0.45) | $ (0.84) | $ (1.65) |
Discontinued operations (in dollars per share) | 0 | (0.05) | (0.13) |
Net loss per share - basic and diluted (in dollars per share) | $ (0.45) | $ (0.89) | $ (1.78) |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (21,813) | $ (43,083) | $ (85,406) |
Other comprehensive income (loss): | |||
Unrealized gain (loss) on investments in available for sale securities, net of tax of $273, $0, and $151, respectively | 424 | (595) | 612 |
Equity in unrealized gain (loss) of an investee, net of tax | 152 | (20) | 2 |
Realized gain on investments in available for sale securities reclassified and included in net loss, net of tax of $50, $0, and $150, respectively | (57) | (160) | (242) |
Other comprehensive income (loss) | 519 | (775) | 372 |
Comprehensive loss | $ (21,294) | $ (43,858) | $ (85,034) |
CONSOLIDATED STATEMENTS OF COM6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Unrealized (loss) gain on investments in available for sale securities tax | $ 273 | $ 0 | $ 151 |
Realized (gain) loss on investments in available for sale securities reclassified and included in net loss, tax provision (benefit) | $ 50 | $ 0 | $ 150 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income |
Balance at Dec. 31, 2013 | $ 310,378 | $ 486 | $ 355,570 | $ (48,996) | $ 3,318 |
Balance (in shares) at Dec. 31, 2013 | 48,613,442 | ||||
Comprehensive loss: | |||||
Net loss | (85,406) | (85,406) | |||
Unrealized gain (loss) on investments in available for sale securities, net of tax | 612 | 612 | |||
Realized (gain) loss on investments in available for sale securities reclassified and included in net loss, net of tax | (242) | (242) | |||
Equity in unrealized gain (loss) of an investee, net of tax | 2 | 2 | |||
Comprehensive loss | (85,034) | (85,406) | 372 | ||
Grants under share award plan and share based compensation | 1,485 | $ 4 | 1,481 | ||
Grants under share award plan and share based compensation (in shares) | 403,050 | ||||
Repurchases under share award plan | (47) | (47) | |||
Repurchases under share award plan (in shares) | (19,177) | ||||
Balance at Dec. 31, 2014 | 226,782 | $ 490 | 357,051 | (134,449) | 3,690 |
Balance (in shares) at Dec. 31, 2014 | 48,997,315 | ||||
Comprehensive loss: | |||||
Net loss | (43,083) | (43,083) | |||
Unrealized gain (loss) on investments in available for sale securities, net of tax | (595) | (595) | |||
Realized (gain) loss on investments in available for sale securities reclassified and included in net loss, net of tax | (160) | (160) | |||
Equity in unrealized gain (loss) of an investee, net of tax | (20) | (20) | |||
Comprehensive loss | (43,858) | (43,083) | (775) | ||
Grants under share award plan and share based compensation | 1,618 | $ 4 | 1,614 | ||
Grants under share award plan and share based compensation (in shares) | 521,900 | ||||
Repurchases under share award plan | (90) | (90) | |||
Repurchases under share award plan (in shares) | (42,604) | ||||
Balance at Dec. 31, 2015 | $ 184,452 | $ 494 | 358,665 | (177,622) | 2,915 |
Balance (in shares) at Dec. 31, 2015 | 49,476,611 | 49,476,611 | |||
Comprehensive loss: | |||||
Net loss | $ (21,813) | (21,813) | |||
Unrealized gain (loss) on investments in available for sale securities, net of tax | 424 | 424 | |||
Realized (gain) loss on investments in available for sale securities reclassified and included in net loss, net of tax | (57) | (57) | |||
Equity in unrealized gain (loss) of an investee, net of tax | 152 | 152 | |||
Comprehensive loss | (21,294) | (21,813) | 519 | ||
Grants under share award plan and share based compensation | 1,194 | $ 6 | 1,188 | ||
Grants under share award plan and share based compensation (in shares) | 569,400 | ||||
Repurchases under share award plan | (86) | (86) | |||
Repurchases under share award plan (in shares) | (50,079) | ||||
Balance at Dec. 31, 2016 | $ 164,266 | $ 500 | $ 359,853 | $ (199,521) | $ 3,434 |
Balance (in shares) at Dec. 31, 2016 | 49,995,932 | 49,995,932 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||
Net loss | $ (21,813) | $ (43,083) | $ (85,406) |
Adjustments to reconcile net loss to cash (used in) provided by operating activities: | |||
Depreciation and amortization expense | 38,052 | 33,815 | 31,834 |
Gain on early extinguishment of debt | 0 | (742) | 0 |
(Income) loss from discontinued operations before income tax | (194) | 2,324 | 5,977 |
Gain on sale of available for sale securities reclassified from accumulated other comprehensive income | (107) | (160) | (392) |
Loss on disposal of property and equipment | 121 | 102 | 0 |
Goodwill impairment | 0 | 25,344 | 0 |
Long lived asset impairment | 502 | 145 | 589 |
Equity in earnings of an investee | (137) | (20) | (87) |
Stock-based compensation | 1,194 | 1,618 | 1,485 |
Deferred income taxes | 0 | 0 | 55,334 |
Provision for losses on receivables | 4,033 | 4,646 | 4,777 |
Amortization of deferred gain on sale and leaseback transaction with Senior Housing Properties Trust | (3,340) | 0 | 0 |
Other non-cash (income) expense adjustments, net | (531) | (143) | 1,636 |
Changes in assets and liabilities: | |||
Accounts receivable | (4,528) | (3,661) | (6,651) |
Prepaid expenses and other assets | 521 | 2,391 | (279) |
Accounts payable and accrued expenses | (24,661) | 8,582 | 13,387 |
Accrued compensation and benefits | 3,812 | (2,044) | 2,283 |
Due (to) from related persons, net | (7,923) | 809 | (1,601) |
Other current and long term liabilities | (8,454) | 10,617 | (549) |
Cash (used in) provided by operating activities | (23,453) | 40,540 | 22,337 |
Cash flows from investing activities: | |||
(Increase) decrease in restricted cash and investment accounts, net | (10,846) | (737) | 13,683 |
Acquisition of property and equipment | (55,419) | (57,480) | (49,916) |
Acquisition of senior living communities | 0 | (9,200) | (5,926) |
Purchases of intangible assets | 0 | (191) | 0 |
Purchases of available for sale securities | (8,388) | (17,870) | (22,431) |
Investment in an investee | 0 | 0 | (825) |
Proceeds from sale of property and equipment to Senior Housing Properties Trust | 21,437 | 21,323 | 25,804 |
Proceeds from sale and leaseback transaction with Senior Housing Properties Trust | 112,350 | 0 | 0 |
Proceeds from sale of available for sale securities | 17,905 | 10,857 | 10,876 |
Cash provided by (used in) investing activities | 77,039 | (53,298) | (28,735) |
Cash flows from financing activities: | |||
Proceeds from borrowings on credit facilities | 25,000 | 40,000 | 20,000 |
Repayments of borrowings on credit facilities | (75,000) | (25,000) | (20,000) |
Repayments of mortgage notes payable | (1,260) | (5,998) | (1,979) |
Payment of deferred financing fees | (300) | (300) | 0 |
Payment of employee tax obligations on withheld shares | (86) | (90) | (47) |
Cash (used in) provided by financing activities | (51,646) | 8,612 | (2,026) |
Cash flows from discontinued operations: | |||
Net cash provided by (used in) operating activities | 11 | (2,151) | 5,519 |
Net cash (used in) provided by investing activities | (15) | (19) | 265 |
Net cash flows (used in) provided by discontinued operations | (4) | (2,170) | 5,784 |
Change in cash and cash equivalents | 1,936 | (6,316) | (2,640) |
Cash and cash equivalents at beginning of period | 14,672 | 20,988 | 23,628 |
Cash and cash equivalents at end of period | 16,608 | 14,672 | 20,988 |
Supplemental cash flow information: | |||
Cash paid for interest | 4,855 | 4,078 | 3,557 |
Cash paid for income taxes, net | 3,213 | 658 | 1,179 |
Non-cash activities: | |||
Real estate acquisition | 0 | (18,254) | (15,518) |
Assumption of mortgage note payable | $ 0 | $ 18,254 | $ 15,518 |
Organization and Business
Organization and Business | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business We are a corporation formed under the laws of the State of Maryland in 2001. Effective March 3, 2017, we changed our name from "Five Star Quality Care, Inc." to "Five Star Senior Living Inc." We operate senior living communities, including independent living communities, assisted living communities and skilled nursing facilities, or SNFs. As of December 31, 2016 , we operated 283 senior living communities located in 32 states with 31,830 living units, including 253 primarily independent and assisted living communities with 29,229 living units and 30 SNFs with 2,601 living units. As of December 31, 2016 , we owned and operated 26 communities ( 2,703 living units), we leased and operated 189 communities ( 20,339 living units) and we managed 68 communities ( 8,788 living units). Our 283 senior living communities, as of December 31, 2016 , included 10,772 independent living apartments, 16,179 assisted living suites and 4,879 skilled nursing beds. The foregoing numbers exclude living units categorized as out of service. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation. The accompanying consolidated financial statements include our accounts and those of all of our consolidated subsidiaries. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Use of Estimates. Preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that may affect the amounts reported in these financial statements and related notes. Some significant estimates are included in our revenue recognition, including contractual allowances, self insurance reserves, the allowance for doubtful accounts, goodwill, other intangibles and long lived assets. We are also required to estimate income taxes payable in each of the jurisdictions in which we operate. The process involves estimating actual current tax expense along with assessing temporary differences resulting from differing treatment of items for financial statement and tax purposes. These timing differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. We are required to record a valuation allowance to reduce deferred tax assets if we are not able to conclude that it is more likely than not these assets will be realized. Our actual results could differ from our estimates. We periodically review estimates and assumptions and we reflect the effects of changes, if any, in the consolidated financial statements in the period that they are determined. Earnings Per Share. We calculate basic earnings per common share, or EPS, by dividing net income (loss) (and income (loss) from continuing operations and income (loss) from discontinued operations) by the weighted average number of common shares outstanding during the year. We calculate diluted EPS using the more dilutive of the two-class method or the treasury stock method. Cash and Cash Equivalents. Cash and cash equivalents, consisting of short term, highly liquid investments and money market funds with original maturities of three months or less at the date of purchase, are carried at cost plus accrued interest, which approximates market. Equity Method Investments. As of December 31, 2016 , we and six other shareholders each owned approximately 14.3% of the outstanding equity of Affiliates Insurance Company, or AIC. Although we owned less than 20% of AIC, we use the equity method to account for this investment because we believe that we have significant influence over AIC, as all of our Directors are also directors of AIC. Under the equity method, we recorded our percentage share of net earnings from AIC in our consolidated statements of operations. If we determine there is an “other than temporary impairment” in the fair value of this investment, we would record a charge to earnings. In evaluating the fair value of this investment, we have considered, among other things, the assets and liabilities held by AIC, AIC’s overall financial condition and earning trends, and the financial condition and prospects for the insurance industry generally. As of December 31, 2016 , we have invested $6,034 in AIC. Investment Securities. Investment securities that are held principally for resale in the near term are classified as “trading” and are carried at fair value with changes in fair value recorded in earnings. We did not hold any trading securities during the years ended December 31, 2016 , 2015 or 2014. Securities not classified as “trading” are classified as “available for sale” and carried at fair value, with unrealized gains and losses reported as a separate component of shareholders’ equity and “other than temporary impairment” losses recorded in our consolidated statements of operations. Realized gains and losses on all available for sale securities are recognized based on specific identification. Our available for sale securities at December 31, 2016 and 2015 consisted primarily of debt and equity securities. Restricted investments in available for sale securities are kept as security for obligations arising from our self insurance programs. At December 31, 2016 , these available for sale securities had a fair value of $40,670 and an unrealized holding gain of $2,133 . At December 31, 2015 , these available for sale securities had a fair value of $49,583 and an unrealized holding gain of $1,543 . In 2016 , 2015 and 2014 , our available for sale securities generated interest and dividend income of $930 , $912 and $788 , respectively, which is included in interest, dividend and other income in our consolidated statements of operations. The following table summarizes the fair value and gross unrealized losses related to our “available for sale” securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position for the years ended: December 31, 2016 Less than 12 months Greater than 12 months Total Fair Value Unrealized Loss Fair Value Unrealized Fair Value Unrealized Investments $ 8,502 $ 233 $ 937 $ 64 $ 9,439 $ 297 December 31, 2015 Less than 12 months Greater than 12 months Total Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized Investments $ 14,436 $ 238 $ 1,986 $ 332 $ 16,422 $ 570 We routinely evaluate our available for sale securities to determine if they have been impaired. If the fair value of an investment is less than its book or carrying value and we expect that situation to continue for a more than temporary period, we will record an “other than temporary impairment” loss in our consolidated statements of operations. We evaluate the fair value of our available for sale securities by reviewing each security’s current market price, the ratings of the security, the financial condition of the issuer and our intent and ability to retain the security during temporary market price fluctuations or until maturity. In evaluating the factors described above, we presume a decline in value to be an “other than temporary impairment” if the quoted market price of the security is below the security’s cost basis for an extended period. However, this presumption may be overcome if there is persuasive evidence indicating the value decline is temporary in nature, such as when the operating performance of the obligor is strong or if the market price of the security is historically volatile. Additionally, there may be instances in which impairment losses are recognized even if the decline in value does not meet the criteria described above, such as if we plan to sell the security in the near term and the fair value is below our cost basis. When we believe that a change in fair value of an available for sale security is temporary, we record a corresponding credit or charge to other comprehensive income for any unrealized gains and losses. When we determine that impairment in the fair value of an available for sale security is an “other than temporary impairment”, we record a charge to earnings. We did not record such an impairment charge for the years ended December 31, 2016 , 2015 and 2014 . Restricted Cash. Restricted cash as of December 31, 2016 and 2015 includes cash that we deposited as security for obligations arising from our self insurance programs and other amounts for which we are required to establish escrows, including: real estate taxes and capital expenditures as required by our mortgages and certain resident security deposits. 2016 2015 Current Long term Current Long term Insurance reserves $ 1,111 $ 1,909 $ 1,397 $ 2,821 Real estate taxes and capital expenditures as required by our mortgages 1,624 — 1,279 — Resident security deposits 588 — 625 — Workers' compensation letter of credit collateral $ 11,736 $ — $ — $ — Total $ 15,059 $ 1,909 $ 3,301 $ 2,821 Accounts Receivable and Allowance for Doubtful Accounts. We record accounts receivable at their estimated net realizable value. Included in accounts receivable as of December 31, 2016 and 2015 are amounts due from the Medicare program of $10,744 and $9,607 , respectively, and amounts due from various state Medicaid programs of $11,951 and $12,692 , respectively. We estimate allowances for uncollectible amounts and contractual allowances based upon factors which include, but are not limited to, the age of the receivable and the terms of the agreements, the residents’ or third party payers’ stated intent to pay, the payers’ financial capacity to pay and other factors which may include likelihood and cost of litigation. Accounts receivable allowances are estimates. We periodically review and revise these estimates based on new information and these revisions may be material. Our SNFs record their provision for doubtful accounts as a reduction of revenue, which amounts totaled $1,162 , $1,963 and $1,321 during 2016 , 2015 and 2014 , respectively. Our allowance for doubtful accounts consists of the following: Balance January 1, 2014 $ 4,281 Provision for doubtful accounts 4,777 Write-offs (5,642 ) Balance December 31, 2014 3,416 Provision for doubtful accounts 4,646 Write-offs (4,470 ) Balance December 31, 2015 3,592 Provision for doubtful accounts 4,033 Write-offs (4,434 ) Balance December 31, 2016 $ 3,191 Deferred Finance Costs. We capitalize issuance costs related to our secured credit facilities and amortize the deferred costs over the terms of the respective agreements. Our unamortized balance of deferred finance costs was $50 and $100 at December 31, 2016 and 2015 , respectively, and was included in other current assets on our consolidated balance sheets. Accumulated amortization related to deferred finance costs was $175 and $380 at December 31, 2016 and 2015 , respectively. At December 31, 2016 , the weighted average amortization period remaining is less than one year . We expect the amortization expense to be incurred during 2017 is approximately $50 . Property and Equipment. Property and equipment is stated at cost, less accumulated depreciation. We record depreciation on property and equipment on a straight line basis over estimated useful lives of up to 40 years for buildings, up to 15 years for building improvements and up to seven years for personal property. We regularly evaluate whether events or changes in circumstances have occurred that could indicate impairment in the value of our long lived assets. If there is an indication that the carrying value of an asset is not recoverable, we determine the amount of impairment loss, if any, by comparing the historical carrying value of the asset to its estimated fair value. We determine estimated fair value through an evaluation of recent financial performance, recent transactions for similar assets, market conditions and projected cash flows using standard industry valuation techniques. Goodwill and Other Intangible Assets. Goodwill represents the costs of business acquisitions in excess of the fair value of identifiable net assets acquired. We recorded an impairment charge in the year ended December 31, 2015 for the then full balance of our goodwill (see Note 4 for further discussion). We continue to not have any goodwill recorded on our consolidated balance sheet as of December 31, 2016. Historically, we evaluated the recoverability of goodwill annually in the fourth quarter of each fiscal year, or more frequently, if events or changes in circumstances indicated that goodwill might have been impaired. If our review indicated that the carrying amount of goodwill exceeded its fair value, we would reduce the carrying amount of goodwill to fair value. We evaluated goodwill for impairment at the reporting unit level, which we determined to be our operating segments, by comparing the fair value of the reporting unit as determined by its discounted cash flows and market approaches with its carrying value. The key assumptions used in the discounted cash flow analysis included future revenue growth, gross margins and our weighted average cost of capital. We selected a growth rate based on our view of the growth prospect of each of our reporting units. If the carrying value of the reporting unit exceeded its fair value, we compared the implied fair value of the reporting unit’s goodwill with its carrying amount to measure the amount of the potential impairment loss. At acquisition, we estimate and record the fair value of purchased intangible assets primarily using discounted cash flow analyses of anticipated cash flows reflecting incremental revenues and/or cost savings resulting from the acquired intangible asset, reflecting market participant assumptions. Amortization of intangible assets with finite lives is recognized over their estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise realized. We regularly evaluate whether events or changes in circumstances have occurred that could indicate impairment in the value of our other intangible assets. If there is an indication that the carrying value of an asset is not recoverable, we determine the amount of impairment loss, if any, by comparing the historical carrying value of the asset to its estimated fair value. We determine estimated fair value through an evaluation of recent financial performance, recent transactions for similar assets, market conditions and projected cash flows using standard industry valuation techniques. Legal Proceedings and Claims. We have been, are currently, and expect in the future to be involved in claims, lawsuits, and regulatory and other government audits, investigations and proceedings arising in the ordinary course of our business, some of which may involve material amounts. Also, the defense and resolution of these claims, lawsuits, and regulatory and other government audits, investigations and proceedings may require us to incur significant expense. We account for claims and litigation losses in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification ™ , or ASC, Topic 450, Contingencies . Under FASB ASC Topic 450, loss contingency provisions are recorded for probable and estimable losses at our best estimate of a loss or, when a best estimate cannot be made, at our estimate of the minimum loss. These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment, and are refined as additional information becomes known. Accordingly, we are often initially unable to develop a best estimate of loss and therefore the estimated minimum loss amount, which could be zero , is recorded; then, as information becomes known, the minimum loss amount is updated, as appropriate. Occasionally, a minimum or best estimate amount may be increased or decreased when events result in a changed expectation. Self Insurance. We self insure up to certain limits for workers’ compensation, professional and general liability claims, automobile claims and property losses. Claims in excess of these limits are insured up to contractual limits, over which we are self insured. We fully self insure all health related claims for our covered employees. We have established an offshore captive insurance company subsidiary which participates in our workers’ compensation and professional and general liability insurance programs. Determining reserves for the casualty, liability, workers’ compensation and healthcare losses and costs that we have incurred as of the end of a reporting period involves significant judgments based upon our experience and our expectations of future events, including projected settlements for pending claims, known incidents that we expect may result in claims, estimates of incurred but not yet reported claims, expected changes in premiums for insurance provided by insurers whose policies provide for retroactive adjustments, estimated litigation costs and other factors. Since these reserves are based on estimates, the actual expenses we incur may differ from the amount reserved. We regularly adjust these estimates to reflect changes in the foregoing factors, our actual claims experience, recommendations from our professional consultants, changes in market conditions and other factors; it is possible that such adjustments may be material. Our total self insurance reserves were $65,526 and $64,966 as of the year ended December 31, 2016 and 2015 , respectively, and are included in accrued compensation and benefits, other current liabilities and accrued self insurance obligations in our consolidated balance sheets. Continuing Care Contracts. Residents at one of our communities may enter into continuing care contracts with us. We offer one form of continuing care contract to new residents at this community. This form of contract provides that 10% of the resident admission fee becomes non‑refundable upon occupancy, and the remaining 90% becomes non‑refundable at the rate of 1.5% per month of the original amount over the subsequent 60 months . Four other forms of continuing care contracts are in effect for existing residents but are not offered to new residents. One historical form of contract provides that the resident admission fee is 10% non‑refundable upon occupancy and 90% refundable. The second historical form of contract provides that the resident admission fee is 100% refundable. The third historical form of contract provides that the resident admission fee is 1% refundable and 99% non‑refundable upon admission. The fourth historical form of contract provides that 30% of the resident admission fee is non‑refundable upon occupancy and 70% is refundable. In each case, we amortize the non‑refundable part of these fees into revenue over the actuarially determined remaining life of the resident, which is the expected period of occupancy by the resident. We pay refunds of these admission fees when residents relocate from our communities. We report the refundable amount of these admission fees as current liabilities and the non‑refundable amount as deferred revenue, a portion of which is classified as a current liability. The balance of our refundable admission fees as of December 31, 2016 and 2015 were $1,905 and $2,709 , respectively, and were included in security deposits and current portion of continuing care contracts on our consolidated balance sheets. The balance of non-refundable admission fees as of December 31, 2016 and 2015 were $1,252 and $1,561 , respectively, of which $1,031 and $1,267 , respectively, were included in other long term liabilities on our consolidated balance sheets. Leases. On the inception date of a lease and upon any relevant amendments to such lease, we test the classification of such lease as either a capital lease or an operating lease. None of our leases have met any of the criteria to be classified as a capital lease under FASB ASC Topic 840, Leases , and, therefore, we have accounted for all of our leases as operating leases. Other aspects of our lease accounting policies relate to the accounting for sale leaseback transactions, including the appropriate amortization of related deferred liabilities and any deferred gains or losses, and the accounting for lease incentives. Taxes. FASB ASC Topic 740, Income Taxes , prescribes how we should recognize, measure and present in our consolidated financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. We can recognize a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized. We pay franchise taxes in certain states in which we have operations. We have included franchise taxes in general and administrative and other senior living operating expenses in our consolidated statements of operations. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences to be included in our financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse, while the effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations. In the future, if we determine that we would be able to realize our deferred tax assets in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance and record an income tax benefit. Fair Value of Financial Instruments. Our financial instruments are limited to cash and cash equivalents, accounts receivable, available for sale securities, accounts payable and mortgage notes payable. Except for our mortgage debt, the fair value of these financial instruments was not materially different from their carrying values at December 31, 2016 and 2015 . We estimate the fair values of our mortgage debt using market quotes when available, discounted cash flow analyses and current prevailing interest rates. Revenue Recognition. We derive our revenues primarily from services to residents at our senior living communities, and we record revenues when services are provided. We receive payment from governments or other third party payers for some of our services. We derived approximately 22% , 22% and 23% of our senior living revenues in 2016 , 2015 and 2014 , respectively, from payments under Medicare and Medicaid programs. Revenues under some of these programs are subject to audit and retroactive adjustment. Medicare revenues from continuing operations at our senior living communities totaled $112,116 , $122,018 and $129,212 during 2016 , 2015 and 2014 , respectively. Medicaid revenues from continuing operations at our senior living communities totaled $126,209 , $122,821 and $118,536 during 2016 , 2015 and 2014 , respectively. Some of our senior living communities require new private pay residents to pay community fees. Substantially all community fees received are non‑refundable and are recorded initially as deferred revenue and are included in other current liabilities in our consolidated balance sheets. The deferred amounts are amortized over the life of the contract. One-time Employee Termination Benefits. FASB ASC Topic 420, Exit or Disposal Cost Obligations , or ASC Topic 420, specifies the criteria for recognizing a one-time employee termination arrangement. In December 2015, we entered into a letter agreement with our former chief financial officer and treasurer in connection with the termination of his employment. Pursuant to that letter agreement, we agreed to pay severance in the amount of $604 beginning in February 2016 through December 2017 with no future services required after the termination date, which was December 31, 2015. Our arrangement with our former chief financial officer and treasurer meets the criteria in ASC Topic 420, and, as a result, we recorded the full severance amount of $604 in the year ended December 31, 2015 , which is included in general and administrative expenses in our consolidated statements of operations. In accordance with the letter agreement, our Compensation Committee of our Board of Directors also awarded our former Chief Financial Officer and Treasurer a stock grant of 35,000 common shares and agreed to accelerate the vesting of his unvested common shares including those awarded in prior years. In accordance with FASB ASC Topic 718, Stock Compensation , we recorded non-cash stock compensation expense of approximately $234 in the year ended December 31, 2015 , which is included in general and administrative expenses in our consolidated statements of operations. Reclassifications. We have made reclassifications to the prior years’ financial statements to conform to the current year’s presentation. These reclassifications had no effect on net income or shareholders’ equity. Recent Accounting Pronouncements. In December 2015, we early adopted FASB Accounting Standards Update, or ASU, No. 2015-17, Balance Sheet Classification of Deferred Taxes , which requires that deferred tax assets and liabilities be classified as noncurrent in a consolidated balance sheet rather than the former presentation of separating deferred tax assets and liabilities into current and noncurrent amounts. We adopted this ASU using prospective application. Since we have recognized a full deferred tax valuation allowance since 2014, and our deferred tax assets and liabilities net to zero, the implementation of this ASU did not have a material impact on our consolidated financial statements. On January 1, 2016, we adopted FASB ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs , which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability, and ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting , which addresses the presentation of debt issuance costs related to line of credit arrangements. The implementation of ASU No. 2015-03 did not have a material impact on our consolidated financial statements and the adoption of ASU No. 2015-15 did not result in any changes in the classification of capitalized debt issuance costs related to our secured revolving credit facility. On January 1, 2016, we adopted FASB ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments , which eliminates the requirement for an acquirer in a business combination to account for measurement period adjustments retrospectively. Instead, acquirers must recognize measurement period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts that would have been recorded in previous periods if the accounting had been completed at the acquisition date. The implementation of this ASU did not have a material impact on our consolidated financial statements. On January 1, 2016, we adopted FASB ASU 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern , which requires an entity to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the financial statements are available to be issued when applicable) and to provide related footnote disclosures in certain circumstances. The implementation of this ASU did not have an impact on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. This ASU is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted subject to certain conditions. Currently, changes in fair value of these investments are recorded through other comprehensive income. Under this ASU, these changes will be recorded through earnings. We are continuing to evaluate this ASU, but we expect the implementation of this ASU will affect how we record changes in fair value of the available for sale securities that we hold. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are in the process of evaluating the effects the adoption of this update may have on our consolidated financial statements. We believe the adoption of this update will have a material impact on our consolidated balance sheets due to the recognition of the lease rights and obligations as assets and liabilities. While the adoption will have no effect on the cash we pay, we expect amounts within our statements of operations and comprehensive (loss) income to change materially. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718) , which identifies areas for simplification involving several aspects of accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. This ASU is effective for reporting periods beginning after December 15, 2016. We will adopt the new standard as required effective January 1, 2017. The new standard requires prospective recognition of excess tax benefits and deficiencies resulting from share based compensation awards vesting and exercises be recognized in our consolidated statements of operations. Previously, these amounts were recognized in additional paid in capital, and were not material to our consolidated financial statements. Excess tax benefits from share based compensation awards will continue to be reported as an operating activity, and cash paid on employees’ behalf related to shares withheld for tax purposes will continue to be classified as a financing activity on the statement of cash flows. In addition, forfeitures will be recognized as they occur as permitted by the new standard. We do not expect that the adoption of this ASU will have a material impact on our consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This ASU clarifies the principles for recognizing revenue by, among other things, removing inconsistencies in revenue requirements, improving comparability of revenue recognition practices across entities and industries and providing improved disclosure requirements. In July 2015, the FASB approved a one year deferral of the effective date for this ASU to interim and annual reporting periods beginning after December 15, 2017. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which clarifies how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements, such as service transactions. These ASUs may be applied retrospectively to each prior period (ful |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consists of the following: December 31, December 31, 2016 2015 Land $ 22,261 $ 25,410 Buildings and improvements 304,044 338,522 Furniture, fixtures and equipment 193,286 165,497 Property and equipment, at cost 519,591 529,429 Accumulated depreciation (167,662 ) (145,571 ) Property and equipment, net $ 351,929 $ 383,858 We recorded depreciation expense relating to our property and equipment of $36,462 , $33,129 and $29,434 for the years ended December 31, 2016 , 2015 and 2014 , respectively. We review the carrying value of long lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If there is an indication that the carrying value of an asset is not recoverable, we determine the amount of impairment loss, if any, by comparing the historical carrying value of the asset to its estimated fair value. We determine estimated fair value based on input from market participants, our experience selling similar assets, market conditions and internally developed cash flow models that our assets or asset groups are expected to generate, and we consider these estimates to be a Level 3 fair value measurement. As a result of our long lived assets impairment review, we recorded $502 , $145 and $589 of impairment charges to certain of our long lived assets in continuing operations for the years ended December 31, 2016 , 2015 and 2014 , respectively. The fair values of the impaired assets were $337 , $319 and $478 as of December 31, 2016 , 2015 and 2014 , respectively. As of December 31, 2015 , we had $8,289 of assets related to our leased senior living communities included in our property and equipment that we subsequently sold during the year ended December 31, 2016 to Senior Housing Properties Trust or its subsidiaries, or SNH, for increased rent pursuant to the terms of our leases with SNH. As of December 31, 2016 , we had $7,255 of assets related to our leased senior living communities included in our property and equipment that we currently expect to request that SNH purchase from us for an increase in future rent; however, SNH is not obligated to purchase such amounts. See Note 9 for more information regarding our leases with SNH. |
Other Intangible Assets and Goo
Other Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets and Goodwill | Other Intangible Assets and Goodwill Other Intangible assets. The other intangible assets balance is made up of management agreements, trademarks, resident agreements, liquor licenses and other intangible assets that we primarily acquired in connection with our acquisitions of senior living communities. The changes in the carrying amount of our other intangible assets for the years ended December 31, 2016 and 2015 are as follows: December 31, 2016 December 31, 2015 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Indefinite lived intangible assets 191 — 191 191 — 191 Definite lived intangible assets 1,866 (1,590 ) 276 2,469 (726 ) 1,743 2,057 (1,590 ) 467 2,660 (726 ) 1,934 We amortize definite lived intangible assets using the straight line method over the useful lives of the assets which have identifiable useful lives commencing on the date of acquisition. Total amortization expense for definite lived intangible assets for the years ended December 31, 2016 , 2015 and 2014 was $1,590 , $726 and $2,440 , respectively. At December 31, 2016 , the weighted average amortization period remaining for these intangible assets is approximately one year . Amortization expense is estimated to be approximately $196 in 2017 and $80 in 2018 . Goodwill. We evaluated the recoverability of goodwill annually in the fourth quarter of each fiscal year, or more frequently if events or changes in circumstances indicated that goodwill might have been impaired. We evaluated goodwill for impairment at the reporting unit level; our reporting units are equivalent to our two operating segments. All of our goodwill was included in our senior living reporting unit. As part of the preparation of our 2015 third quarter financial statements, we determined that, as a result of the significant decline in our stock price subsequent to the announcement of our financial and operating results for the second quarter of 2015 and the overall decline in values of other comparable publicly traded senior living operating companies, potential indicators of impairment existed and an interim assessment of goodwill for impairment was completed. In step one of the goodwill impairment test, or Step 1, the carrying value of a reporting unit is compared to its estimated fair value. We estimated the fair value of the senior living reporting unit using a weighting of fair values derived from the income approach and the market approach. The results of the Step 1 analysis indicated that the carrying value of the senior living reporting unit exceeded its estimated fair value. Accordingly, we performed step two of the goodwill impairment test, or Step 2. In Step 2, the fair value of a reporting unit is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill as if the reporting unit had been acquired in a business combination. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss is recognized for the difference. As a result of our Step 2 analysis, the goodwill in our senior living reporting unit was determined to have an implied fair value of zero, and therefore we recorded a non-cash charge for goodwill impairment of $25,344 for the year ended December 31, 2015, which is included in goodwill impairment in our consolidated statements of operations, and which amount represents the then full balance of our goodwill included in our continuing operations immediately prior to recording the charge. We also recorded additional goodwill impairment of $63 , which is included in loss from discontinued operations in our consolidated statements of operations. These non-cash charges for goodwill impairment did not impact our compliance with our then existing debt covenants or our borrowing capacity under our then existing secured revolving credit facility. Fair values used in our goodwill impairment analysis were determined primarily using discounted cash flow models that incorporate assumptions for short and long term revenue growth rates, operating margins and discount rates, which represented our best estimates of the then current and forecasted market conditions, our cost structure, and the implied rate of return that our management believed a market participant would require for an investment in a company having similar risks and business characteristics to the reporting unit being assessed, all of which are considered to be Level 3 fair value measurements. We continue to not have any goodwill recorded on our consolidated balance sheet as of December 31, 2016. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Significant components of our deferred tax assets and liabilities at December 31, 2016 and 2015 , were as follows: 2016 2015 Non-current deferred tax assets: Continuing care contracts 491 621 Allowance for doubtful accounts 1,254 1,448 Deferred gains on sale lease back transactions 33,121 2,236 Insurance reserves 3,976 4,303 Tax credits 21,647 19,426 Tax loss carry forwards 41,160 61,911 Impairment of securities 360 371 Depreciable assets 1,795 975 Goodwill 6,478 6,699 Other 1,152 4,272 Total non-current deferred tax assets before valuation allowance 111,434 102,262 Valuation allowance: (100,524 ) (90,726 ) Total non-current deferred tax assets 10,910 11,536 Non-current deferred tax liabilities: Lease expense (9,660 ) (10,531 ) Employee stock grants (72 ) (88 ) Identifiable intangibles/other liabilities (1,178 ) (917 ) Total non-current deferred tax liabilities (10,910 ) (11,536 ) Net deferred tax asset (liabilities) $ — $ — As of December 31, 2016 , our federal net operating loss carry forwards, which are scheduled to begin expiring in 2026 if unused, were approximately $71,156 , and our tax credit carry forwards, which begin expiring in 2022 if unused, were approximately $21,647 . We have an additional $518 of federal net operating loss carry forwards not reflected in the deferred taxes table above attributable to unvested stock grants which will be recorded as an increase to additional paid in capital once they are realized in accordance with FASB ASC Topic 718. The Internal Revenue Service, or IRS, has completed its examination of our 2014 federal income tax return and there were no adjustments. At December 31, 2016, our federal tax returns filed for the 2013 and 2015 tax years are subject to examination and our net operating loss carry forwards and tax credit carry forwards are subject to adjustment by the IRS. Management assessed the available positive and negative evidence to estimate if sufficient future taxable income will be generated to realize the existing deferred tax assets. An important piece of objective negative evidence evaluated was the significant losses incurred over the two year period ending December 31, 2014 and that, as a result of those losses, we expected to be, and it turned out were, in a cumulative loss position for the three year period ending December 31, 2015 . That objective negative evidence is difficult to overcome and would require a substantial amount of objectively verifiable positive evidence beyond projections of future income to support the realizability of our deferred tax assets. Accordingly, on the basis of that assessment, as of December 31, 2014 , we determined it was more likely than not that our net deferred tax assets would not be realized and concluded that a full valuation allowance was required. As of and for the years ended December 31, 2016 and 2015 , management continued to assess the available positive and negative evidence to estimate if sufficient future taxable income would be generated to realize the existing deferred tax assets. On the basis of that assessment we determined it was more likely than not that our net deferred tax assets would not be realized and concluded that a full valuation allowance was required. In the future, if we believe that we will more likely than not realize the benefit of these deferred tax assets, we will adjust our valuation allowance and recognize an income tax benefit, which may affect our results of operations. The changes in our valuation allowance for deferred tax assets were as follows: Balance at Beginning of Period Amounts Charged To Expense Amounts Charged Off, Net of Recoveries Amounts Charged (Credited) to Equity Balance at End of Period Year Ended December 31, 2014 $ 3,603 $ 73,470 $ — $ (152 ) $ 76,921 Year Ended December 31, 2015 $ 76,921 $ 13,491 $ — $ 314 $ 90,726 Year Ended December 31, 2016 $ 90,726 $ 10,021 $ — $ (223 ) $ 100,524 For the year ended December 31, 2016 , we recognized a provision for income taxes from continuing operations of $2,351 , which consists of current state tax expense of $2,670 , related primarily to the gain on sale for tax purposes associated with our June 2016 sale and leaseback transaction with SNH, net of federal intraperiod tax allocation benefits totaling $319 related to the unrealized gains on our available for sale securities and discontinued operations. We have not recognized any federal income tax expense attributable to federal taxable income because in the year ended December 31, 2016 , such income and expense were offset by our federal net operating loss carry forwards and tax credit carry forwards. We recognized an immaterial amount of tax expense from discontinued operations in 2016 and 2014 and did not recognize any income tax expense or benefit from our discontinued operations in 2015. See Note 9 for further information regarding the June 2016 sale and leaseback transaction with SNH. The provision for income taxes from continuing operations is as follows: Years Ended December 31, 2016 2015 2014 Current tax provision: Federal $ (319 ) $ — $ — State $ 2,670 $ 1,018 $ 848 Total current tax provision 2,351 1,018 848 Deferred tax (benefit) provision: Federal — 114 43,040 State — (470 ) 12,497 Total deferred tax (benefit) provision — (356 ) 55,537 Total tax provision $ 2,351 $ 662 $ 56,385 The principal reasons for the difference between our effective tax rate on continuing operations and the U.S. federal statutory income tax rate are as follows: For the years ended December 31, 2016 2015 2014 Taxes at statutory U.S. federal income tax rate (35.0 )% (35.0 )% (35.0 )% State and local income taxes, net of federal tax benefit (0.7 )% 1.0 % (6.5 )% Tax credits (9.1 )% (3.4 )% (5.4 )% Change in valuation allowance 55.6 % 32.7 % 287.5 % Goodwill — % 4.1 % — % Other differences, net 1.3 % 2.2 % 4.9 % Effective tax rate 12.1 % 1.6 % 245.6 % We utilize a two step process for the measurement of uncertain tax positions that have been taken or are expected to be taken on a tax return. The first step is a determination of whether the tax position should be recognized in the financial statements. The second step determines the measurement of the tax position. A reconciliation of the beginning and ending amount of unrecognized tax benefits is summarized as follows for the years ended December 31, 2016 , 2015 and 2014 : For the years ended December 31, 2016 2015 2014 Unrecognized tax benefits at January 1 $ — $ 1,379 $ 1,245 Decreases for tax positions of prior years — (1,379 ) — Additions for tax positions of current year — — 134 Unrecognized tax benefits at December 31 $ — $ — $ 1,379 As of December 31, 2016 , there are no unrecognized tax benefits. We recognize interest and penalties related to uncertain tax positions in income tax expense and such amounts were not material for the years ended December 31, 2016 , 2015 and 2014 . |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share We calculated EPS for the years ended December 31, 2016 , 2015 and 2014 using the weighted average number of common shares outstanding during the periods. When applicable, diluted EPS reflects the more dilutive earnings per common share amount calculated using the two class method or the treasury stock method. The years ended December 31, 2016 , 2015 and 2014 had 866,041 , 604,200 and 482,844 , respectively, of potentially dilutive restricted unvested common shares that were not included in the calculation of diluted EPS because to do so would have been antidilutive. |
Fair Values of Assets and Liabi
Fair Values of Assets and Liabilities | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Values of Assets and Liabilities | Fair Values of Assets and Liabilities Our assets recorded at fair value have been categorized based upon a fair value hierarchy in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures . We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and quoted prices in inactive markets. Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. Recurring Fair Value Measures The tables below present the assets measured at fair value at December 31, 2016 and 2015 categorized by the level of inputs used in the valuation of each asset. As of December 31, 2016 Description Total Quoted Prices in Active Markets for Identical (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents (1) $ 17,702 $ 17,702 $ — $ — Available for sale securities: (2) Equity securities Financial services industry 2,149 2,149 — — REIT industry 393 393 — — Other 4,791 4,791 — — Total equity securities 7,333 7,333 — — Debt securities International bond fund (3) 2,452 — 2,452 — High yield fund (4) 2,587 — 2,587 — Industrial bonds 5,394 — 5,394 — Government bonds 10,403 6,326 4,077 — Financial bonds 1,754 — 1,754 — Other 10,747 — 10,747 — Total debt securities 33,337 6,326 27,011 — Total available for sale securities 40,670 13,659 27,011 — Total $ 58,372 $ 31,361 $ 27,011 $ — As of December 31, 2015 Description Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents (1) $ 5,936 $ 5,936 $ — $ — Available for sale securities: (2) Equity securities Financial services industry 3,746 3,746 — — REIT industry 270 270 — — Other 3,807 3,807 — — Total equity securities 7,823 7,823 — — Debt securities International bond fund (3) 2,399 — 2,399 — High yield fund (4) 2,245 — 2,245 — Industrial bonds 6,007 — 6,007 — Government bonds 16,612 8,661 7,951 — Financial bonds 3,157 — 3,157 — Other 11,340 — 11,340 — Total debt securities 41,760 8,661 33,099 — Total available for sale securities 49,583 16,484 33,099 — Total $ 55,519 $ 22,420 $ 33,099 $ — _______________________________________ (1) Cash equivalents consist of short term, highly liquid investments and money market funds held principally for obligations arising from our self insurance programs. Cash equivalents are reported in our consolidated balance sheets as cash and cash equivalents and current and long term restricted cash. Cash equivalents include $14,638 and $4,027 of balances that are restricted at December 31, 2016 and 2015 , respectively. (2) As of December 31, 2016 , our investments in available for sale securities had a fair value of $40,670 with an amortized cost of $38,537 ; the difference between the fair value and amortized cost amounts resulted from unrealized gains of $2,430 , net of unrealized losses of $297 . As of December 31, 2015 , our investments in available for sale securities had a fair value of $49,583 with an amortized cost of $48,040 ; the difference between the fair value and amortized cost amounts resulted from unrealized gains of $2,113 , net of unrealized losses of $570 . At December 31, 2016 , 30 of the securities we hold, with a fair value of $8,502 , have been in a loss position for less than 12 months and 8 of the securities we hold, with a fair value of $937 , have been in a loss position for greater than 12 months. We do not believe these securities are impaired primarily because they have not been in a loss position for an extended period of time, the financial conditions of the issuers of these securities remain strong with solid fundamentals, or we intend to hold these securities until recovery, and other factors that support our conclusion that the loss is temporary. During the years ended December 31, 2016 , 2015 and 2014 , we received gross proceeds of $17,905 , $10,857 and $10,876 , respectively, in connection with the sales of available for sale securities and recorded gross realized gains totaling $446 , $188 and $478 , respectively, and gross realized losses totaling $339 , $28 and $86 , respectively. We record gains and losses on the sales of our available for sale securities using the specific identification method. (3) The investment strategy of this fund is to invest principally in fixed income securities issued by non-U.S. issuers. The fund invests in such securities or investment vehicles as it considers appropriate to achieve the fund’s investment objective, which is to provide an above average rate of total return while attempting to limit investment risk by investing in a diversified portfolio of U.S. dollar investment grade fixed income securities. There are no unfunded commitments and the investment can be redeemed weekly. (4) The investment strategy of this fund is to invest principally in fixed income securities. The fund invests in such securities or investment vehicles as it considers appropriate to achieve the fund’s investment objective, which is to provide an above average rate of total return while attempting to limit investment risk by investing in a diversified portfolio of primarily fixed income securities issued by companies with below investment grade ratings. There are no unfunded commitments and the investment can be redeemed weekly. During the year ended December 31, 2016 , we did not change the type of inputs used to determine the fair value of any of our assets and liabilities that we measure at fair value. Accordingly, there were no transfers of assets or liabilities between levels of the fair value hierarchy during the year ended December 31, 2016 . The carrying values of accounts receivable and accounts payable approximate fair value as of December 31, 2016 and December 31, 2015 . The carrying value and fair value of our mortgage notes payable were $60,397 and $64,905 , respectively, as of December 31, 2016 and $62,203 and $65,999 , respectively, as of December 31, 2015 , and are categorized in Level 3 of the fair value hierarchy in their entirety. We estimate the fair values of our mortgage notes payable by using discounted cash flow analyses and currently prevailing market terms as of the measurement date. Nonrecurring Fair Value Measures We review the carrying value of our long lived assets, including our property and equipment and other intangible assets, excluding goodwill, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. See Note 3 for further information regarding fair value measurements related to impairments of our long lived assets we recorded in continuing operations and Note 12 for more information regarding fair value measurements related to impairments of our long lived assets in discontinued operations. We evaluated the recoverability of goodwill annually in the fourth quarter of each fiscal year, or more frequently if events or changes in circumstances indicated that goodwill might have been impaired. As part of the preparation of our 2015 third quarter financial statements, we conducted an interim assessment of goodwill at which time we recorded an impairment charge for the then full balance of our goodwill. See Note 4 for further information regarding fair value measurements related to impairment of our goodwill. The fair value of assets held for sale is determined based on the use of appraisals, input from market participants, our experience selling similar assets and/or internally developed cash flow models, all of which are considered to be Level 3 fair value measurements. See Note 11 for a discussion of fair value measurements related to acquisitions that occurred during 2015 and 2014. |
Indebtedness
Indebtedness | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Indebtedness | Indebtedness We previously had a $100,000 secured revolving credit facility, or our prior credit facility, which was scheduled to mature in April 2017. In February 2017, we replaced our prior credit facility with a new $100,000 secured revolving credit facility, or our new credit facility, which is available for general business purposes, including acquisitions. Our new credit facility matures in February 2020. Subject to our payment of extension fees and meeting other conditions, we have options to extend the stated maturity date of our new credit facility for two , one year periods. Other terms of our new credit facility are substantially similar to those of our prior credit facility, including that we are required to pay interest at an annual rate of LIBOR plus a premium of 250 basis points on outstanding borrowings; that we are also required to pay a quarterly commitment fee of 0.35% per annum on the unused part of the available borrowings; and that we can borrow, repay and re-borrow funds available until maturity, and no principal repayment is due until maturity. As of December 31, 2016, the annual interest rate under our prior credit facility of LIBOR plus a premium of 250 basis points was 3.22% . The weighted average annual interest rate for borrowings under our prior credit facility was 3.32% , 2.93% and 2.76% for the years ended December 31, 2016 , 2015 and 2014 , respectively. As of December 31, 2016 , we had no borrowings outstanding and $85,332 available to borrow under our prior credit facility. We incurred interest expense and other associated costs related to our prior credit facility of $1,621 , $1,959 and $2,272 for the years ended December 31, 2016 , 2015 and 2014 , respectively. Certain of our subsidiaries guarantee our obligations under our new credit facility, which is secured by real estate mortgages on 10 senior living communities with a combined 1,219 living units owned by our guarantor subsidiaries and our guarantor subsidiaries’ accounts receivable and related collateral. Certain of our subsidiaries guaranteed our obligations under our prior credit facility, which was secured by mortgages on 10 senior living communities with a combined 1,178 living units owned by our guarantor subsidiaries and our guarantor subsidiaries’ accounts receivable and related collateral. The amount of available borrowings under our new credit facility, and under our prior credit facility, is subject to our having qualified collateral, which is and was primarily based on the value of the properties securing our obligations under the applicable facility. Accordingly, the availability of borrowings under our new credit facility at any time may be, and under our prior credit facility at any time may have been, less than $100,000 . Our new credit facility provides, and our prior credit facility provided, for acceleration of payment of all amounts outstanding under the applicable facility upon the occurrence and continuation of certain events of default, including a change of control of us, as defined. The agreement that governs our new credit facility contains, and the agreement that governed our prior credit facility contained, a number of financial and other covenants, including covenants that restrict our ability to incur indebtedness or to pay dividends or make other distributions under certain circumstances, and the applicable agreement requires or required us to maintain financial ratios and a minimum net worth. In April 2016, we extended the maturity date of our prior credit facility to April 13, 2017, and we paid a fee of $300 in connection with this extension. In connection with the June 2016 sale and leaseback transaction with SNH, we reduced the aggregate commitments under our prior credit facility from $150,000 to $100,000 because, as part of that transaction, we sold to SNH five senior living communities that had been collateral under our prior credit facility before the sale. We previously had a $25,000 secured revolving line of credit that matured on March 18, 2016, that we did not extend or replace. We had no borrowings outstanding under this line of credit during the years ended December 31, 2016 , 2015 or 2014. We incurred associated costs of $45 , $192 and $192 related to this line of credit for the years ended December 31, 2016 , 2015 and 2014 , respectively. In June 2016, we initiated a so-called “step up” letter of credit for $11,700 as security for our workers’ compensation insurance program collateralized by cash equivalents. This letter of credit matures in June 2017. The cash collateral is classified as short term restricted cash in our consolidated balance sheet at December 31, 2016 , and includes accumulated interest. At December 31, 2016 , we had seven other irrevocable standby letters of credit outstanding, totaling $1,309 , which secure certain of our other obligations. These letters of credit currently mature between April 2017 and September 2017 but are renewed annually. Our obligations under these letters of credit are secured by cash or cash equivalents. At December 31, 2016 , six of our senior living communities were encumbered by mortgages with a carrying value of $60,397 : (1) two of our communities were encumbered by Federal National Mortgage Association, or FNMA mortgages, (2) two of our communities were encumbered by Federal Home Loan Mortgage Corporation, or FMCC, mortgages; and (3) two of our communities was encumbered by a mortgage from a commercial lender. These mortgages contain standard mortgage covenants. We recorded mortgage discounts or premiums in connection with the assumption of certain of this mortgage debt as part of our acquisitions of the encumbered communities in order to record the assumed mortgage debt at their estimated fair value. We are amortizing the mortgage discounts or premiums as an increase or reduction of interest expense until the maturity of the respective mortgage debt. The weighted average annual interest rate on this mortgage debt was 6.27% as of December 31, 2016 . Payments of principal and interest are due monthly under this mortgage debt until maturities at varying dates ranging from June 2018 to September 2032. The following table is a summary of this mortgage debt as of December 31, 2016 : Balance as of Contractual Stated Effective Monthly December 31, 2016 (1) Interest Rate Interest Rate Maturity Date Payment $ 13,305 6.47 % 3.45 % June 2018 $ 95 17,010 5.75 % 4.83 % October 2022 105 17,141 6.64 % 5.86 % June 2023 123 2,524 6.36 % 6.70 % September 2028 25 8,816 6.20 % 6.70 % September 2032 72 $ 58,796 6.27 % (2) 5.15 % $ 420 _______________________________________ (1) Contractual premium payments excluding unamortized net premium and debt issuance costs of $1,601. (2) Weighted average annual interest rate. We incurred mortgage interest expense, including net premium amortization, of $3,235 , $2,771 and $2,665 for the years ended December 31, 2016 , 2015 and 2014 , respectively. Our mortgage debt requires monthly payments into escrows for taxes, insurance and property replacement funds; certain withdrawals from escrows for our FNMA and FMCC mortgages require applicable FNMA and FMCC approval. In June 2015, we prepaid a mortgage that had an outstanding principal balance of $4,873 and required interest at an annual rate of 8.99% . In connection with this prepayment, we recorded a gain of $692 on early extinguishment of debt, net of unamortized premiums and a 1% prepayment penalty on the principal amount we prepaid, for the year ended December 31, 2015 . See Note 11 for information regarding mortgage debt we assumed in connection with our acquisition of two senior living communities in 2015. Principal payments due under the terms of these mortgages are as follows: 2017 $ 1,354 2018 14,191 2019 1,231 2020 1,304 2021 1,396 Thereafter 39,320 $ 58,796 Add: Unamortized net premium and debt issuance costs $ 1,601 Total mortgage notes payable $ 60,397 Less: Short term portion of mortgage notes payable $ (1,903 ) Long term portion of mortgage notes payable $ 58,494 As of December 31, 2016 , we believe we were in compliance with all applicable covenants under our prior credit facility and mortgage debt. |
Leases with SNH and HCP and Man
Leases with SNH and HCP and Management Agreements with SNH | 12 Months Ended |
Dec. 31, 2016 | |
Leases [Abstract] | |
Leases with SNH and HCP and Management Agreements with SNH | Leases with SNH and HCP and Management Agreements with SNH Senior Living Communities Leased from SNH . We are SNH’s largest tenant and SNH is our largest landlord. We leased 185 , 177 and 181 senior living communities from SNH as of December 31, 2016, 2015 and 2014, respectively. We lease senior living communities from SNH pursuant to five leases with SNH. Under our leases with SNH, we pay SNH annual rent plus percentage rent equal to 4% of the increase in gross revenues at certain of SNH’s senior living communities over base year gross revenues as specified in the applicable lease. Our obligation to pay percentage rent under Lease No. 5 commences in 2018. Our total annual rent payable to SNH was $203,824 as of December 31, 2016, excluding percentage rent. Our total rent expense under all of our leases with SNH, net of lease inducement amortization and the amortization of the deferred gain from the sale and leaseback transaction with SNH described below, was $198,786 , $196,255 and $195,538 for the years ended December 31, 2016, 2015 and 2014, respectively, which amounts included $5,646 , $5,698 and $5,775 , respectively, of percentage rent. As of December 31, 2016 and 2015, we had outstanding rent due and payable to SNH of $18,338 and $17,497 , respectively, which are presented in due to related persons in our consolidated balance sheets. Under our leases with SNH, we have the option to extend the lease term for two consecutive 10 or 15 year terms. SNH has the right, in connection with a financing or other capital raising transaction, to reassign one or more of the communities covered by Lease No. 5, and, after repayment of certain mortgage debt financing of SNH's, to reassign one or more of the communities covered by Lease No. 3, to another of our long term lease agreements with SNH. Our leases with SNH are so called “triple net” leases which generally require us to pay rent and all property operating expenses, to indemnify SNH from liability which may arise by reason of its ownership of the properties, to maintain the properties at our expense, to remove and dispose of hazardous substances on the properties in compliance with applicable law and to maintain insurance on the properties for SNH’s and our benefit. In the event of any damage, or immaterial condemnation, of a leased property, we are generally required to rebuild with insurance or condemnation proceeds or, if such proceeds are insufficient, other amounts made available by SNH, if any, but if other amounts are made available by SNH, our rent will be increased accordingly. In the event of any material or total condemnation of a leased property, the lease shall terminate with respect to such leased property, in which event SNH shall be entitled to the condemnation proceeds and our rent will be reduced accordingly. In the event of any material or total destruction of a leased property, we may terminate the lease with respect to such leased property, in which event we are required to pay to SNH any shortfall in the amount of proceeds SNH receives from insurance compared to the replacement cost of such leased property and our rent will be reduced accordingly. Under our leases with SNH, we may request that SNH purchase certain improvements to the leased communities in return for rent increases in accordance with a formula specified in the applicable lease; however, SNH is not obligated to purchase such improvements and we are not obligated to sell them to SNH. During the years ended December 31, 2016, 2015 and 2014, SNH purchased $21,437 , $21,323 and $25,804 , respectively, of such improvements and our annual rent payable to SNH increased by $1,720 , $1,724 and $2,066 , respectively, in accordance with the terms of the applicable leases. At December 31, 2016, our property and equipment balance included $7,255 of improvements of the type we typically request that SNH purchase for an increase in rent; however SNH is not obligated to purchase these improvements. Since January 1, 2014, we and SNH sold 10 senior living communities that we leased from SNH, had agreed with SNH to sell and had classified as discontinued operations, and our rent payable to SNH was reduced as these sales occurred, in accordance with the terms of the applicable lease, as follows: • In January 2014, we and SNH sold an assisted living community located in Texas with 48 living units, and our annual rent payable to SNH decreased by $210 as a result. • In June 2014, we and SNH sold two SNFs located in Wisconsin with a combined 139 living units, and our annual rent payable to SNH decreased by $452 as a result. • In October 2014, we and SNH sold an assisted living community located in Virginia with 55 living units, and our annual rent payable to SNH decreased by $285 as a result. • Also in October 2014, we and SNH sold an assisted living community and a SNF located in Arizona with a combined 160 living units, and our annual rent payable to SNH decreased by $590 as a result. • In February 2015, we and SNH sold a vacant assisted living community located in Pennsylvania and our annual rent payable to SNH decreased by $23 as a result. • In July 2015, we and SNH sold a SNF located in Iowa with 12 living units, and our annual rent payable to SNH decreased by $16 as a result. • In August 2015, we and SNH sold a SNF located in Wisconsin with 39 living units, and our annual rent payable to SNH decreased by $85 as a result. • In December 2015, we and SNH sold a SNF located in Iowa with 117 living units, and our annual rent payable to SNH decreased by $2 as a result. In September 2016, we and SNH sold a vacant SNF located in Wisconsin that was not classified as held for sale and our annual rent payable to SNH decreased by $25 as a result. See Note 12 for further information regarding the effects of the foregoing dispositions of senior living communities that were classified as discontinued operations on our consolidated financial statements and Note 11 for further information regarding the effects of the foregoing dispositions on our leases with SNH. Since January 1, 2014, we and SNH added senior living communities to our leases with SNH and engaged in other transactions impacting our leases with SNH, as follows: • In February 2015, SNH acquired a land parcel adjacent to a senior living community we lease from SNH located in Florida which was added to the lease for that senior living community, and our annual rent payable to SNH increased by $39 as a result. • In September 2016, SNH acquired an additional living unit at a senior living community we lease from SNH located in Florida which was added to the lease for that senior living community, and our annual rent payable to us increased by $10 as a result. • In December 2016, we began leasing from SNH two senior living communities located in Illinois with a combined 126 living units which were added to one of our leases with SNH, and our annual rent payable to SNH increased by $1,400 as a result. In June 2016, we entered into a transaction agreement, or the Transaction Agreement, and related agreements with SNH. Pursuant to the Transaction Agreement, on June 29, 2016, we sold seven senior living communities to SNH for an aggregate purchase price of $112,350 , and SNH simultaneously leased these communities back to us under a new long term lease agreement, or the New Lease. Pursuant to the New Lease, we are required to pay SNH initial annual rent of $8,426 , plus, beginning in 2018, percentage rent equal to 4% of the amount by which gross revenues, as defined in the New Lease, of each community exceeds gross revenues of such community in 2017. The initial term of the New Lease expires on December 31, 2028, subject to our options to extend the term of the New Lease for two consecutive 15 year terms. Pursuant to the New Lease, SNH has the right, in connection with a financing or other capital raising transaction by SNH, to reassign one or more of the communities covered by the New Lease to another existing or new long term lease agreement between us and SNH. In accordance with FASB ASC Topic 840, Leases , the June 2016 sale and leaseback transaction with SNH qualifies for sale-leaseback accounting and we have classified the New Lease as an operating lease. Accordingly, the carrying value of the senior living communities we sold to SNH of $29,706 was removed from our condensed consolidated balance sheets, and the gain generated from the sale of $82,644 was deferred and will be amortized as a reduction of rent expense over the initial term of the New Lease. As of December 31, 2016, the short term part of the deferred gain in the amount of $6,609 is presented in other current liabilities in our consolidated balance sheet, and the long term part of $72,695 is presented separately in our consolidated balance sheet. We incurred transaction costs of approximately $750 in connection with the sale of the senior living communities to SNH, which amount was expensed in full during the year ended December 31, 2016. Senior Living Communities Leased from HCP . As of December 31, 2016 , we leased four senior living communities under one lease with HCP. This lease is also a “triple net” lease which require that we pay all costs incurred in the operation of the communities, including the cost of insurance and real estate taxes, maintaining the communities, and indemnifying the landlord for any liability which may arise from the operations during the lease term. Our lease with HCP contains a minimum annual escalator of 2% , but not greater than 4% , depending on increases in certain cost of living indexes and expires on April 30, 2028 and includes one 10 year renewal option. The following table is a summary of our leases with SNH and with HCP as of December 31, 2016 : Number of Properties Annual Minimum Rent as of December 31, 2016 Current Expiration date Remaining Renewal Options 1. Lease No. 1 for SNFs and independent and assisted living communities 83 $ 59,214 December 31, 2024 Two 15-year renewal options. 2. Lease No. 2 for SNFs and independent and assisted living communities 47 64,720 June 30, 2026 Two 10-year renewal options. 3. Lease No. 3 for independent and assisted living communities (1) 17 34,949 December 31, 2028 Two 15-year renewal options. 4. Lease No. 4 for SNFs and independent and assisted living communities 29 35,119 April 30, 2032 Two 15-year renewal options. 5. Lease No. 5 for independent and assisted living communities (2) 9 9,822 December 31, 2028 Two 15-year renewal options. 6. One HCP lease 4 2,653 April 30, 2028 One 10-year renewal option. Totals 189 $ 206,477 _______________________________________ (1) Lease No. 3 exists to accommodate certain mortgage financing by SNH. (2) Lease No. 5 was entered into in connection with the June 2016 sale and leaseback transaction with SNH. The future minimum rents required by our leases as of December 31, 2016 , are as follows: 2017 206,513 2018 206,566 2019 206,621 2020 206,677 2021 206,734 Thereafter 1,164,996 $ 2,198,107 Senior Living Communities Managed for the Account of SNH . We managed 68 , 60 and 46 senior living communities for the account of SNH as of December 31, 2016, 2015 and 2014, respectively, pursuant to long term management agreements and pooling agreements that combine various calculations of revenues and expenses from the operations of the communities covered by the applicable pooling agreement. We earned base management fees from SNH of $11,548 , $10,518 and $9,543 for the years ended December 31, 2016 , 2015 and 2014 , respectively. In addition, we earned incentive fees of $108 and fees for our management of capital expenditure projects at the communities we managed for the account of SNH of $432 for the year ended December 31, 2016 , which amounts are included in management fee revenue in our consolidated statement of operations. Since January 1, 2014, we began managing additional senior living communities of SNH, the terms of which are described below, and engaged in other transactions relevant to our management and pooling arrangements with SNH, as follows: • In December 2014, we began managing for the account of SNH two senior living communities located in Wisconsin with a combined 228 living units. • In May 2015, we began managing for the account of SNH 14 senior living communities located in four states with a combined 838 living units. • Also in May 2015, we began managing for the account of SNH a senior living community located in Georgia with 40 living units. This senior living community is adjacent to another community that we manage for the account of SNH, and the operations of these two communities are now conducted as a single integrated community. • In April, May and July 2016, we began managing for the account of SNH three senior living communities located in North Carolina, Georgia and Alabama with a combined 301 living units. • In December 2016, we began managing for the account of SNH five senior living communities located in Georgia with a combined 395 living units. • Also in December 2016, SNH acquired a land parcel adjacent to a senior living community located in Georgia that we manage for the account of SNH which was added to the management agreement for the senior living community. • Also in December 2016, SNH sold a memory care building located in Florida that we historically managed, and the separate management agreement for this building was terminated as a result. As part of the June 2016 sale and leaseback transaction described above, and pursuant to the Transaction Agreement, on June 29, 2016, we and SNH terminated three of our four then existing pooling agreements and entered into 10 new pooling agreements, or the New Pooling Agreements, that combine our management agreements with SNH for senior living communities that include assisted living units, or our AL Management Agreements. Our management agreements with SNH for the part of the senior living community owned by SNH and located in Yonkers, New York that is not subject to the requirements of New York healthcare licensing laws, as described elsewhere herein, and for the assisted living community owned by SNH and located in Villa Valencia, California, are not currently included in any of our pooling agreements with SNH. Pursuant to our AL Management Agreements and the New Pooling Agreements, we receive from SNH: • a management fee equal to either 3% or 5% of the gross revenues realized at the applicable communities, • reimbursement for our direct costs and expenses related to such communities, • an annual incentive fee equal to either 35% or 20% of the annual net operating income of such communities remaining after SNH realizes an annual minimum return equal to either 8% or 7% of its invested capital, or, in the case of 10 communities, a specified amount plus 7% of its invested capital since December 31, 2015, and • a fee for our management of capital expenditure projects equal to 3% of amounts funded by SNH. Under the New Pooling Agreements, the calculations of our fees and of SNH’s annual minimum return related to AL Management Agreements that became effective before May 2015 and had been pooled under one of the previously existing pooling agreements are generally the same as they were under the previously existing pooling agreements. However, for certain communities, the New Pooling Agreements reduced SNH’s annual minimum return to 7% , and also, with respect to 10 communities, reset SNH’s annual minimum return as of January 1, 2016 to specified amounts. For AL Management Agreements that became effective from and after May 2015, the New Pooling Agreements increased our management fee from 3% to 5% of the gross revenues realized at the applicable community, and changed our annual incentive fee from 35% to 20% of the annual net operating income of the applicable community remaining after SNH realizes its requisite annual minimum return. In December 2016, in connection with our entering into management agreements with SNH for the five senior living communities located in Georgia with a combined 395 living units, we entered into an additional pooling agreement with SNH on terms substantially consistent with those of the New Pooling Agreements. We also have a pooling agreement with SNH that combines our management agreements with SNH for senior living communities consisting only of independent living units. Our management agreements with SNH generally expire between 2030 and 2040, and are subject to automatic renewal for two consecutive 15 year terms, unless earlier terminated or timely notice of nonrenewal is delivered. These management agreements also provide that SNH has, and in some cases we have, the option to terminate the agreements upon the acquisition by a person or group of more than 9.8% of the other’s voting stock and upon certain change in control events affecting the other party, as defined in the applicable agreements, including the adoption of any stockholder proposal (other than a precatory proposal) with respect to the other party, or the election to the board of directors or trustees, as applicable, of the other party of any individual, if such proposal or individual was not approved, nominated or appointed, as the case may be, by a majority of the other party’s board of directors or board of trustees, as applicable, in office immediately prior to the making of such proposal or the nomination or appointment of such individual. D&R Yonkers LLC . In order to accommodate certain requirements of New York healthcare licensing laws, a part of the senior living community SNH owns and we manage that is located in Yonkers, New York is subleased by a subsidiary of SNH to D&R Yonkers LLC. D&R Yonkers LLC is owned by our Chief Financial Officer and Treasurer and SNH’s president and chief operating officer. We manage this part of the community pursuant to a long term management agreement with D&R Yonkers LLC under which we earn a management fee equal to 3% of the gross revenues realized at that part of the community and no incentive fee is payable to us. Our management agreement with D&R Yonkers LLC expires on August 31, 2017, and is subject to renewal for nine consecutive five year terms, unless earlier terminated or timely notice of nonrenewal is delivered. Pursuant to our management agreement with D&R Yonkers LLC, we earned management fees of $262 , $210 and $222 for the years ended December 31, 2016, 2015 and 2014, respectively, which are included in management fee revenue in our consolidated statements of operations. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity We have common shares available for issuance under the terms of our 2014 Equity Compensation Plan, or our 2014 Plan. We issued 569,400 , 521,900 and 403,050 of our common shares in 2016 , 2015 and 2014 , respectively, to our Directors, officers and others who provide services to us. We valued these shares based upon the closing price of our common shares on the applicable stock exchange on which our common shares were listed on the dates of grant, or $1,373 in 2016 , based on a $2.41 weighted average share price, $1,707 in 2015 , based on a $3.27 weighted average share price, and $1,742 in 2014 , based on a $4.32 weighted average share price. Shares issued to Directors vest immediately; one fifth of the shares issued to our officers and others (other than our Directors) vest on the date of grant and on the four succeeding anniversaries of the date of grant. Our unvested common shares totaled 836,010 , 685,910 and 647,330 as of the years ended December 31, 2016 , 2015 and 2014 , respectively. Share based compensation expense is recognized ratably over the vesting period and is included in general and administrative expenses in our consolidated statements of operations. We recorded share based compensation expense of $1,194 , $1,618 and $1,485 for the years ended December 31, 2016 , 2015 and 2014 , respectively. As of December 31, 2016 , the estimated future stock compensation expense for unvested shares was $2,480 based on the grant date closing share price for awards granted to our officers and others, and based on the closing share price of $2.70 on December 31, 2016 for awards granted to certain non-employees. The weighted average period over which stock compensation expense will be recorded is approximately 2.0 years. As of December 31, 2016 , 3,458,920 of our common shares remain available for issuance under our 2014 Plan. In 2016 and 2015, employees and officers of us or RMR LLC who were recipients of our share awards were permitted to elect to have us withhold the number of their then vesting common shares with a fair market value sufficient to fund the minimum required tax withholding obligations with respect to their vesting share awards in satisfaction of those tax withholding obligations. During 2016 and 2015, we acquired through this share withholding process 34,999 and 26,404 , respectively, common shares with an aggregate value of approximately $86 and $91 , respectively, which is reflected as an increase to accumulated deficit in our consolidated balance sheet. In December 2015, we entered into a letter agreement with our former Chief Financial Officer and Treasurer in connection with the termination of his employment. Pursuant to that letter agreement, our Compensation Committee of our Board of Directors awarded our former Chief Financial Officer and Treasurer a stock grant of 35,000 common shares and agreed to accelerate the vesting of his unvested common shares including those awarded in prior years. In accordance with FASB ASC Topic 718, Stock Compensation , we recorded non-cash stock compensation expense of approximately $234 in the year ended December 31, 2015 , which is included in general and administrative expenses in our consolidated statements of operations. |
Acquisitions and Dispositions
Acquisitions and Dispositions | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Acquisitions and Dispositions | Acquisitions and Dispositions Acquisitions. In November 2015, we acquired two independent living communities with 68 and 84 living units for an aggregate purchase price of approximately $26,193 , excluding closing costs. These communities primarily offer independent and assisted living services that are currently 100% paid by residents from their private resources. We funded the purchase with cash on hand and by assuming approximately $17,291 of mortgage debt. In addition, we recorded a mortgage premium of $963 in connection with the assumption of this mortgage debt in order to record the assumed mortgage debt at its estimated fair value. We incurred acquisition related costs of approximately $450 during the year ended December 31, 2015 . These costs include transaction costs, professional fees and other acquisition related expenses. The allocation of the purchase price was based on management’s judgment after evaluating several factors, including valuation assessments of tangible and intangible assets, and estimates of the fair value of liabilities assumed. The definite lived intangible assets were valued using the income approach and are categorized in Level 3 of the fair value hierarchy. The valuation of certain tangible assets and liabilities acquired was determined using the cost approach or comparable sales approach. For personal property, we primarily used the cost approach to estimate reproduction or replacement cost. The fair value of these assets and liabilities are also categorized in Level 3 of the fair value hierarchy. The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed: Land $ 1,239 Buildings and improvements 22,500 Furniture, fixtures and equipment 1,508 Total property, plant and equipment 25,247 Intangible assets 1,909 Premium on assumed mortgage debt (963 ) $ 26,193 In May 2014, we acquired a senior living community with 116 living units for an aggregate purchase price of $19,914 , including the assumption of approximately $13,920 of mortgage debt, and $68 of net working capital liabilities, excluding closing costs. In addition, we recorded a mortgage premium of $1,598 in connection with the assumption of this mortgage debt in order to record the assumed mortgage at its estimated fair value. This community primarily offers independent and assisted living services that are currently 100% paid by residents from their private resources. We funded the cash portion of this acquisition with cash on hand and borrowings under our prior credit facility. We incurred acquisition related costs of $81 during the year ended December 31, 2014. These costs include transaction costs, professional fees and other acquisition related expenses. The allocation of the purchase price was based on management’s judgment after evaluating several factors, including valuation assessments of tangible and intangible assets, and estimates of the fair value of liabilities assumed. The definite lived intangible assets were valued using the income approach and are categorized in Level 3 of the fair value hierarchy. The valuation of certain tangible assets and liabilities acquired was determined using the cost approach. For personal property, we primarily used the cost approach to estimate reproduction or replacement cost. The fair value of these assets and liabilities are also categorized in Level 3 of the fair value hierarchy. The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed: Land $ 1,208 Buildings and improvements 17,946 Furniture, fixtures and equipment 421 Total property, plant and equipment 19,575 Intangible assets 1,937 Premium on assumed mortgage debt (1,598 ) $ 19,914 Dispositions . In June 2016, we entered into the Transaction Agreement with SNH pursuant to which, among other things, we sold seven senior living communities to SNH and SNH simultaneously leased these communities back to us under the New Lease. In September 2016, we sold an assisted living community we owned and classified as discontinued operations, and we and SNH sold a vacant SNF we leased from SNH. During 2014 and 2015 we and SNH sold 10 senior living communities we leased from SNH that we and SNH had previously agreed to sell and were classified as discontinued operations. See Notes 9, 12 and 16 for more information regarding the June 2016 sale and leaseback and related transactions with SNH and the sale of senior living communities we previously classified as discontinued operations. |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Dec. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations In September 2016, we sold an assisted living community we owned with 32 living units located in Alabama for $225 , excluding closing costs. We recorded long lived asset impairment charges totaling $112 for the year ended December 31, 2016 to reduce the carrying value of this community to its estimated fair value, less costs to sell. As of December 31, 2016 , we have no senior living communities classified as held for sale. See Note 9 for a discussion of 10 senior living communities that we leased from SNH which are included in discontinued operations for the applicable periods presented in these consolidated financial statements; all of which had been sold as of December 31, 2015. Below is a summary of the operating results of these discontinued operations included in the consolidated financial statements for the years ended December 31, 2016 , 2015 and 2014 : Year Ended December 31, 2016 2015 2014 Revenues $ 932 $ 4,191 $ 22,051 Expenses (500 ) (5,818 ) (28,028 ) Impairment on discontinued assets (112 ) (697 ) — Provision for income taxes (126 ) — (79 ) Income (loss) from discontinued operations, net of tax $ 194 $ (2,324 ) $ (6,056 ) |
Off Balance Sheet Arrangements
Off Balance Sheet Arrangements | 12 Months Ended |
Dec. 31, 2016 | |
Pledged Assets, Not Separately Reported on Statement of Financial Position [Abstract] | |
Off Balance Sheet Arrangements | Off Balance Sheet Arrangements As of December 31, 2016 , we have pledged certain of our assets, including accounts receivable, with a carrying value of $15,462 , related to our operation of 17 properties we lease from SNH to secure SNH’s borrowings from its lender, FNMA. As of December 31, 2016 , we had no other off balance sheet arrangements that have had or that we expect would be reasonably likely to have a future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. |
Legal Proceedings and Claims
Legal Proceedings and Claims | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings and Claims | Legal Proceedings and Claims We have been, are currently, and expect in the future to be involved in claims, lawsuits, and regulatory and other government audits, investigations and proceedings arising in the ordinary course of our business, some of which may involve material amounts. Also, the defense and resolution of these claims, lawsuits, and regulatory and other government audits, investigations and proceedings may require us to incur significant expense. We account for claims and litigation losses in accordance with FASB ASC Topic 450, Contingencies , or ASC 450. Under ASC 450, loss contingency provisions are recorded for probable and estimable losses at our best estimate of a loss or, when a best estimate cannot be made, at our estimate of the minimum loss. These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment and are refined as additional information becomes known. Accordingly, we are often initially unable to develop a best estimate of loss and therefore the estimated minimum loss amount, which could be zero , is recorded; then, as information becomes known, the minimum loss amount is updated, as appropriate. A minimum or best estimate amount may be increased or decreased when events result in a changed expectation. As previously disclosed, as a result of our compliance program to review medical records related to our Medicare billing practices, during 2014 we discovered potentially inadequate documentation and other issues at one of our leased SNFs. This compliance review was not initiated in response to any specific complaint or allegation, but was a review of the type that we periodically undertake to test our own compliance with applicable Medicare billing rules. As a result of these discoveries, in February 2015, we made a voluntary disclosure of deficiencies to the Health and Human Services Office of Inspector General, or OIG, pursuant to the OIG’s Provider Self-Disclosure Protocol. We completed our investigation and assessment of these matters and submitted a final supplemental disclosure to the OIG in May 2015. As of and for the year ended December 31, 2014, we had accrued a revenue reserve of $4,333 for historical Medicare payments we received that we then expected to repay as a result of these deficiencies, which reserve was included in accounts payable and accrued expenses in our consolidated balance sheets. For the year ended December 31, 2015, this revenue reserve was increased by $2,400 and totaled $6,733 as of December 31, 2015. In addition, we had recorded expense for additional costs we incurred or expected to incur, including OIG imposed penalties, as a result of this matter totaling $4,756 and $3,606 for the years ending December 31, 2015 and 2014, respectively, which charges were included in other senior living operating expenses in our consolidated statement of operations. In June 2016, we settled this matter with the OIG and agreed to pay approximately $8,600 in exchange for a customary release but did not admit any liability. We previously accrued a total liability of $10,100 related to this matter, all of which was accrued at December 31, 2015. As a result of the accrued liability exceeding the final settlement amount, we recorded an increase to earnings in our results of operations for the year ended December 31, 2016 of approximately $1,500 . Of the total increase to earnings, $1,000 was recorded as an increase to senior living revenue and $500 as a decrease to other senior living operating expenses in our consolidated statements of operations consistent with the classification of the original charges. We were defendants in a lawsuit filed in the Superior Court of Maricopa County, Arizona by the estate of a former resident of a senior living community operated by us. The complaint asserted claims against us for pain and suffering as a result of improper treatment constituting violations of the Arizona Adult Protective Services Act and wrongful death. In May 2015, the jury rendered a decision in our favor on the wrongful death claim, and against us on the remaining claims, returning verdicts awarding damages of approximately $19,200 , which consisted of $2,500 for pain and suffering and the remainder in punitive damages. In March 2016, pursuant to a settlement agreement we entered into with the plaintiff, $7,250 was paid to the plaintiff, of which $3,021 was paid by our liability insurer and the balance by us. We believe our liability insurer may be financially responsible for more than $3,021 , and we are seeking additional payments from our liability insurer; however, we cannot predict the outcome of our ongoing negotiations or potential future litigation with our liability insurer. As a result, we recorded a $4,229 charge for the year ended December 31, 2015, which was included in other senior living operating expenses in our consolidated statements of operations, and the liability for which was included in other current liabilities in our consolidated balance sheet. |
Business Management Agreement w
Business Management Agreement with RMR LLC | 12 Months Ended |
Dec. 31, 2016 | |
Management Agreement [Abstract] | |
Business Management Agreement with RMR LLC | Business Management Agreement with RMR LLC RMR LLC provides business management services to us pursuant to our business management agreement. These business management services may include, but are not limited to, services related to compliance with various laws and rules applicable to our status as a publicly owned company, maintenance of our senior living communities, evaluation of business opportunities, accounting and financial reporting, capital markets and financing activities, investor relations and general oversight of our daily business activities, including legal matters, human resources, insurance programs and the like. Fees . We pay RMR LLC an annual business management fee equal to 0.6% of our revenues. Revenues are defined as our total revenues from all sources reportable under U.S. generally accepted accounting principles, or GAAP, less any revenues reportable by us with respect to communities for which we provide management services plus the gross revenues at those communities determined in accordance with GAAP. In addition, in connection with certain information technology services that RMR LLC provided to us until October 1, 2014, we historically reimbursed RMR LLC for a percentage of its information technology employee expenses (other than RMR LLC’s chief information officer). Pursuant to our business management agreement, we recognized business management fees of $8,932 , $8,737 and $8,461 for the years ended December 31, 2016, 2015 and 2014, respectively, and information system service charges of $4,024 for the year ended December 31, 2014. Term and Termination. The current term of our business management agreement ends on December 31, 2017 and automatically renews for successive one year terms unless we or RMR LLC gives notice of nonrenewal before the end of an applicable term. RMR LLC may terminate our business management agreement upon 120 days’ written notice, and we continue to have the right to terminate our business management agreement upon 60 days’ written notice, subject to approval by a majority vote of our Independent Directors. If we terminate or elect not to renew our business management agreement other than for cause, as defined, we are obligated to pay RMR LLC a termination fee equal to 2.875 times the sum of the annual base management fee and the annual internal audit services expense, which amounts are based on averages during the 24 consecutive calendar months prior to the date of notice of nonrenewal or termination. Expense Reimbursement . We are generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf. Under our business management agreement, we reimburse RMR LLC for our allocable costs for our internal audit function. Our Audit Committee appoints our Director of Internal Audit and our Compensation Committee approves the costs of our internal audit function. The amounts recognized as expense for internal audit costs were $235 , $259 and $286 for the years ended December 31, 2016, 2015 and 2014, respectively. These amounts are included in general and administrative expenses in our consolidated statements of operations for these periods. Transition Services. RMR LLC has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR LLC. Vendors . Pursuant to our management agreement with RMR LLC, RMR LLC may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter agreements with RMR LLC and other companies to which RMR LLC provides management services for the purpose of obtaining more favorable terms from such vendors and suppliers. |
Related Person Transactions
Related Person Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Person Transactions | Related Person Transactions SNH . We were formerly 100% owned subsidiary until SNH distributed our common shares to its shareholders in 2001. SNH is currently one of our largest stockholders, owning, as of December 31, 2016 , 4,235,000 of our common shares, or 8.5% of our outstanding common shares. SNH is our largest landlord and we manage certain senior living communities for SNH. One of our Managing Directors, Barry Portnoy, is a managing trustee of SNH. Barry Portnoy’s son, Adam Portnoy, also serves as a managing trustee of SNH. Our Chief Financial Officer and Treasurer was formerly SNH’s chief financial officer and treasurer. RMR LLC provides management services to both us and SNH. RMR Inc., the managing member of RMR LLC, is controlled by Barry Portnoy and Adam Portnoy. SNH’s executive officers are officers of RMR LLC. Our President and Chief Executive Officer, Chief Financial Officer and Treasurer and Senior Vice President and General Counsel are officers of RMR LLC. In order to effect SNH’s distribution of our common shares to its shareholders in 2001 and to govern our relations with SNH thereafter, we entered into agreements with SNH and others, including RMR LLC. Since then, we have entered into various leases, management agreements and other agreements with SNH that include provisions that confirm and modify these undertakings. Among other things, these agreements provide that: • so long as SNH remains a real estate investment trust, or a REIT, we may not waive the share ownership restrictions in our charter that prohibit any person or group from acquiring more than 9.8% (in value or number of shares, whichever is more restrictive) of the outstanding shares of any class of our stock without SNH’s consent ; • so long as we are a tenant of, or manager for, SNH, we will not permit nor take any action that, in the reasonable judgment of SNH, might jeopardize SNH’s qualification for taxation as a REIT; • SNH has the right to terminate our leases and management agreements upon the acquisition by a person or group of more than 9.8% of our voting stock or other change in control events affecting us, as defined therein, including the adoption of any stockholder proposal (other than a precatory proposal) or the election to our Board of Directors of any individual, if such proposal or individual was not approved, nominated or appointed, as the case may be, by a majority of our Directors in office immediately prior to the making of such proposal or the nomination or appointment of such individual; and • so long as we are a tenant of, or manager for, SNH or so long as we have a business management agreement with RMR LLC, we will not acquire or finance any real estate of a type then owned or financed by SNH or any other company managed by RMR LLC without first giving SNH or such company managed by RMR LLC, as applicable, the opportunity to acquire or finance that real estate. Senior Living Communities Leased From or Managed For SNH . As of December 31, 2016, 2015 and 2014, we leased 185 , 177 and 181 senior living communities from SNH, respectively, pursuant to five leases, and we managed 68 , 60 and 46 senior living communities for the account of SNH, respectively. See Note 9 for more information regarding our leases and management arrangements with SNH. D&R Yonkers LLC . In order to accommodate certain requirements of New York healthcare licensing laws, a part of the senior living community SNH owns and we manage that is located in Yonkers, New York is subleased by a subsidiary of SNH to D&R Yonkers LLC, and D&R Yonkers LLC is owned by our Chief Financial Officer and Treasurer and SNH’s president and chief operating officer. We manage this part of the community pursuant to a long term management agreement with D&R Yonkers LLC. See Note 9 for more information regarding our relationship, agreements and transactions with D&R Yonkers LLC and SNH. Our Manager, RMR LLC. RMR LLC provides business management services to us pursuant to our business management agreement. We have relationships and historical and continuing transactions with RMR LLC, RMR Inc. and others related to them. RMR LLC is a subsidiary of RMR Inc. ABP Trust is the controlling shareholder of RMR Inc. and owns membership interests in RMR LLC. One of our Managing Directors, Barry Portnoy, and his son, Adam Portnoy, are the owners of ABP Trust. ABP Acquisition LLC, our largest stockholder, is a subsidiary of ABP Trust. Barry Portnoy is a managing director, officer and controlling shareholder (through ABP Trust) of RMR Inc. and an officer of RMR LLC. Adam Portnoy is a managing director, president and chief executive officer and controlling shareholder (through ABP Trust) of RMR Inc. and an officer of RMR LLC. Bruce J. Mackey Jr., our President and Chief Executive Officer, Richard A. Doyle, our Chief Financial Officer and Treasurer, and Katherine E. Potter, our Senior Vice President and General Counsel, are officers of RMR LLC. A majority of our Independent Directors also serve as independent directors or independent trustees of other companies to which RMR LLC or its affiliates provide management services. Barry Portnoy serves as a managing director or managing trustee of all of the public companies to which RMR LLC or its affiliates provide management services and Adam Portnoy serves as a managing trustee of a majority of those companies. In addition, officers of RMR LLC and RMR Inc. serve as our officers and officers of other companies to which RMR LLC or its affiliates provide management services. See Note 15 for more information regarding our relationship with RMR LLC. Share Awards to RMR LLC Employees . We have historically granted share awards to certain RMR LLC employees who are not also Directors, officers or employees of us under our equity compensation plans. During the years ended December 31, 2016, 2015 and 2014, we awarded to certain employees of RMR LLC who are not also Directors, officers or employees of us annual share grants of 87,000 , 98,500 and 81,150 of our common shares, respectively, valued at $213 , $313 and $357 , respectively, based upon the closing price of our common shares on the applicable stock exchange on which our common shares were listed on the dates of grant. One fifth of these awards vested on the applicable grant dates and one fifth vests on each of the next four anniversaries of the grant dates. These awards to such RMR LLC employees are in addition to the fees we paid to RMR LLC and the share awards granted to our Directors, officers and employees. On September 30, 2016 and December 7, 2016, we purchased an aggregate of 751 and 15,362 , respectively, of our common shares, valued at $1.91 and $2.45 per common share, respectively, the closing prices of our common shares on The NASDAQ Stock Market LLC on those days, from certain current and former employees of RMR LLC who are not also Directors, officers or employees of us in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of common shares. In December 2015, we purchased an aggregate of 12,488 of our common shares, valued at $3.18 per common share, the closing price of our common shares on the New York Stock Exchange on that day, from certain employees of RMR LLC who are not also Directors, officers or employees of us in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. ABP Trust . We lease our headquarters from a subsidiary of ABP Trust, which is owned by one of our Managing Directors, Barry Portnoy, and his son, Adam Portnoy. Our headquarters lease currently requires us to pay annual rent of $923 , which amount is subject to fixed increases. Our rent expense for our headquarters, including utilities and real estate taxes that we pay as additional rent, was $1,796 , $1,673 , and $1,402 for the years ended December 31, 2016, 2015 and 2014, respectively. Tender Offer for Our Common Shares . On October 2, 2016, our Board of Directors granted a conditional exception from certain ownership limitations under our organizational documents, SNH granted certain consents and waivers under its leases, management or other agreements with us and our lenders granted certain consents and waivers under the agreement governing our prior credit facility that allowed Adam Portnoy, Barry Portnoy and certain of their related persons, or collectively, the ABP Parties, to acquire, subject to the satisfaction of specified conditions, in aggregate up to 38% of our issued and outstanding common shares, subject to certain limitations. On November 10, 2016, ABP Acquisition LLC, a company owned indirectly by Adam Portnoy and Barry Portnoy, completed the acquisition of 17,999,999 of our common shares at a purchase price of $3.00 per share pursuant to a tender offer. In connection with the ABP Parties’ request that our Board of Directors grant the required exceptions and approvals, on October 2, 2016, we entered into a Consent, Standstill, Registration Rights and Lock-Up Agreement, or the Standstill and Lock-Up Agreement, with the ABP Parties, which, among other things, stipulated conditions to the effectiveness of the granting of those exceptions and approvals. Under the Standstill and Lock-Up Agreement, the ABP Parties each agreed not to transfer, except for certain permitted transfers as provided for therein, any of our common shares acquired after October 2, 2016, including our common shares acquired in the tender offer but not including our common shares issued to Barry Portnoy or Adam Portnoy under our equity compensation plans, for a lock-up period that ends on the earlier of (1) the 10 year anniversary of the Standstill and Lock-Up Agreement, (2) January 1st of the fourth calendar year after our first taxable year to which no then existing net operating loss or certain other tax benefits may be carried forward by us, but no earlier than January 1, 2022, (3) the date that we enter into a definitive binding agreement for a transaction that, if consummated, would result in a change of control of us, (4) the date that our Board of Directors otherwise approves and recommends that our stockholders accept a transaction that, if consummated, would result in a change of control of us; and (5) the consummation of a change of control of us. Under the Standstill and Lock-Up Agreement, the ABP Parties each agreed, for a period of 10 years , not to engage in certain activities involving us without the approval of our Board of Directors, including not to (1) effect or seek to effect any tender or exchange offer, merger, business combination, recapitalization, restructuring, liquidation or other extraordinary transaction involving us, other than the acquisition by the ABP Parties, in aggregate, of up to 18,000,000 of our common shares prior to March 31, 2017, or solicit any proxies to vote any of our voting securities, (2) deposit our common shares or other voting securities in a voting trust or subject our common shares to a voting agreement or other arrangement with respect to the voting of such common shares; (3) publicly request that we amend or waive any provision of the Standstill and Lock-Up Agreement; (4) take any action which would reasonably be expected to result in us making a public announcement regarding any of the types of matters set forth above; or (5) encourage, assist or enter into any discussions or arrangements with any third party with respect to any of the foregoing. These provisions do not restrict activities taken by an individual in her or his capacity as a director, officer or employee of us. The Standstill and Lock-Up Agreement also provides the ABP Parties with certain demand and piggy-back registration rights that they may exercise at any time after the lock-up period described above, subject to specified terms and conditions. As of December 31, 2016, Barry Portnoy and Adam Portnoy beneficially owned in aggregate 18,354,621 of our common shares, representing 36.7% of our outstanding common shares. In connection with the tender offer, Standstill and Lock-Up Agreement and related matters, we incurred various legal and other expenses that were reimbursed to us by the ABP Parties under the Standstill and Lock-up Agreement. These fees totaled $438 and are recorded in general and administrative expenses in our consolidated statement of operations as an offset to the original expense. AIC. We, ABP Trust, SNH and four other companies to which RMR LLC provides management services currently own AIC, an Indiana insurance company, in equal amounts, and are parties to an amended and restated shareholders agreement regarding AIC. All of our Directors and all of the trustees and directors of the other AIC shareholders currently serve on the board of directors of AIC. RMR LLC provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC. Pursuant to this agreement, AIC pays RMR LLC a service fee equal to 3% of the total annual earned premiums payable under then active policies issued or underwritten by AIC or by a vendor or an agent of AIC on its behalf or in furtherance of AIC’s business. We and the other AIC shareholders participate in a combined property insurance program arranged and reinsured in part by AIC. We paid aggregate annual premiums, including taxes and fees, of $4,595 , $4,085 and $3,901 in connection with this insurance program for the policy years ending June 30, 2017, 2016 and 2015, respectively, which amount for the current policy year ending June 30, 2017 may be adjusted from time to time as we acquire and dispose of properties that are included in this insurance program. As of December 31, 2016 and 2015 , our investment in AIC had a carrying value of $7,116 and $6,827 , respectively. These amounts are presented as an equity investment in our consolidated balance sheets. We recognized income of $137 , $20 and $87 related to our investment in AIC for the years ended December 31, 2016, 2015 and 2014, respectively. Our other comprehensive income includes our proportionate part of unrealized gains (losses) on securities which are owned by AIC of $152 , $(20) and $2 related to our investment in AIC for the years ended December 31, 2016, 2015 and 2014, respectively. Directors’ and Officers’ Liability Insurance. We, RMR Inc., RMR LLC and certain companies to which RMR LLC provides management services, including SNH, participate in a combined directors’ and officers’ liability insurance policy. The combined policy expires in September 2018. We paid aggregate premiums of $217 , $234 and $357 in 2016, 2015 and 2014, respectively, for these policies. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans We have an employee savings plan under the provisions of Section 401(k) of the Internal Revenue Code. All of our employees are eligible to participate in our plan and are entitled upon termination or retirement to receive their vested portion of the plan assets. We match a certain amount of employee contributions. We also pay certain expenses related to our plan. Expenses for our plan, including our contributions, were $989 , $1,276 and $1,257 for the years ended December 31, 2016 , 2015 and 2014 , respectively, of which $ 826 , $ 1,063 and $ 1,031 , respectively, was recorded to senior living wages and benefits in our consolidated statement of operations and $ 163 , $ 213 and $ 226 , respectively, was recorded to general and administrative expenses in our consolidated statement of operations. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected Quarterly Financial Data (Unaudited) | Selected Quarterly Financial Data (Unaudited) The following is a summary of unaudited quarterly results of operations for the years ended December 31, 2016 and 2015 : 2016 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ 344,212 $ 342,933 $ 344,711 $ 346,252 Operating loss (754 ) (3,528 ) (6,095 ) (5,595 ) Net loss from continuing operations (2,311 ) (7,900 ) (5,844 ) (5,952 ) Net loss (2,623 ) (7,666 ) (5,897 ) (5,627 ) Net loss per common share—Basic and diluted $ (0.06 ) $ (0.16 ) $ (0.12 ) $ (0.11 ) 2015 First Second Third Fourth Revenues $ 333,973 $ 342,269 $ 344,572 $ 344,596 Operating loss (3,487 ) (2,923 ) (25,593 ) (5,021 ) Net loss from continuing operations (4,833 ) (3,364 ) (26,250 ) (6,312 ) Net loss (5,302 ) (3,910 ) (27,488 ) (6,383 ) Net loss per common share—Basic and diluted $ (0.11 ) $ (0.08 ) $ (0.57 ) $ (0.13 ) |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation. The accompanying consolidated financial statements include our accounts and those of all of our consolidated subsidiaries. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. |
Use of Estimates | Use of Estimates. Preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that may affect the amounts reported in these financial statements and related notes. Some significant estimates are included in our revenue recognition, including contractual allowances, self insurance reserves, the allowance for doubtful accounts, goodwill, other intangibles and long lived assets. We are also required to estimate income taxes payable in each of the jurisdictions in which we operate. The process involves estimating actual current tax expense along with assessing temporary differences resulting from differing treatment of items for financial statement and tax purposes. These timing differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. We are required to record a valuation allowance to reduce deferred tax assets if we are not able to conclude that it is more likely than not these assets will be realized. Our actual results could differ from our estimates. We periodically review estimates and assumptions and we reflect the effects of changes, if any, in the consolidated financial statements in the period that they are determined. |
Earnings Per Share | Earnings Per Share. We calculate basic earnings per common share, or EPS, by dividing net income (loss) (and income (loss) from continuing operations and income (loss) from discontinued operations) by the weighted average number of common shares outstanding during the year. We calculate diluted EPS using the more dilutive of the two-class method or the treasury stock method. |
Cash and Cash Equivalents | Cash and Cash Equivalents. Cash and cash equivalents, consisting of short term, highly liquid investments and money market funds with original maturities of three months or less at the date of purchase, are carried at cost plus accrued interest, which approximates market. |
Equity Method Investments | Equity Method Investments. As of December 31, 2016 , we and six other shareholders each owned approximately 14.3% of the outstanding equity of Affiliates Insurance Company, or AIC. Although we owned less than 20% of AIC, we use the equity method to account for this investment because we believe that we have significant influence over AIC, as all of our Directors are also directors of AIC. Under the equity method, we recorded our percentage share of net earnings from AIC in our consolidated statements of operations. If we determine there is an “other than temporary impairment” in the fair value of this investment, we would record a charge to earnings. In evaluating the fair value of this investment, we have considered, among other things, the assets and liabilities held by AIC, AIC’s overall financial condition and earning trends, and the financial condition and prospects for the insurance industry generally. As of December 31, 2016 , we have invested $6,034 in AIC. |
Investment Securities | Investment Securities. Investment securities that are held principally for resale in the near term are classified as “trading” and are carried at fair value with changes in fair value recorded in earnings. We did not hold any trading securities during the years ended December 31, 2016 , 2015 or 2014. Securities not classified as “trading” are classified as “available for sale” and carried at fair value, with unrealized gains and losses reported as a separate component of shareholders’ equity and “other than temporary impairment” losses recorded in our consolidated statements of operations. Realized gains and losses on all available for sale securities are recognized based on specific identification. Our available for sale securities at December 31, 2016 and 2015 consisted primarily of debt and equity securities. Restricted investments in available for sale securities are kept as security for obligations arising from our self insurance programs. At December 31, 2016 , these available for sale securities had a fair value of $40,670 and an unrealized holding gain of $2,133 . At December 31, 2015 , these available for sale securities had a fair value of $49,583 and an unrealized holding gain of $1,543 . In 2016 , 2015 and 2014 , our available for sale securities generated interest and dividend income of $930 , $912 and $788 , respectively, which is included in interest, dividend and other income in our consolidated statements of operations. The following table summarizes the fair value and gross unrealized losses related to our “available for sale” securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position for the years ended: December 31, 2016 Less than 12 months Greater than 12 months Total Fair Value Unrealized Loss Fair Value Unrealized Fair Value Unrealized Investments $ 8,502 $ 233 $ 937 $ 64 $ 9,439 $ 297 December 31, 2015 Less than 12 months Greater than 12 months Total Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized Investments $ 14,436 $ 238 $ 1,986 $ 332 $ 16,422 $ 570 We routinely evaluate our available for sale securities to determine if they have been impaired. If the fair value of an investment is less than its book or carrying value and we expect that situation to continue for a more than temporary period, we will record an “other than temporary impairment” loss in our consolidated statements of operations. We evaluate the fair value of our available for sale securities by reviewing each security’s current market price, the ratings of the security, the financial condition of the issuer and our intent and ability to retain the security during temporary market price fluctuations or until maturity. In evaluating the factors described above, we presume a decline in value to be an “other than temporary impairment” if the quoted market price of the security is below the security’s cost basis for an extended period. However, this presumption may be overcome if there is persuasive evidence indicating the value decline is temporary in nature, such as when the operating performance of the obligor is strong or if the market price of the security is historically volatile. Additionally, there may be instances in which impairment losses are recognized even if the decline in value does not meet the criteria described above, such as if we plan to sell the security in the near term and the fair value is below our cost basis. When we believe that a change in fair value of an available for sale security is temporary, we record a corresponding credit or charge to other comprehensive income for any unrealized gains and losses. When we determine that impairment in the fair value of an available for sale security is an “other than temporary impairment”, we record a charge to earnings. We did not record such an impairment charge for the years ended December 31, 2016 , 2015 and 2014 . |
Restricted Cash | Restricted Cash. Restricted cash as of December 31, 2016 and 2015 includes cash that we deposited as security for obligations arising from our self insurance programs and other amounts for which we are required to establish escrows, including: real estate taxes and capital expenditures as required by our mortgages and certain resident security deposits. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts. We record accounts receivable at their estimated net realizable value. Included in accounts receivable as of December 31, 2016 and 2015 are amounts due from the Medicare program of $10,744 and $9,607 , respectively, and amounts due from various state Medicaid programs of $11,951 and $12,692 , respectively. We estimate allowances for uncollectible amounts and contractual allowances based upon factors which include, but are not limited to, the age of the receivable and the terms of the agreements, the residents’ or third party payers’ stated intent to pay, the payers’ financial capacity to pay and other factors which may include likelihood and cost of litigation. Accounts receivable allowances are estimates. We periodically review and revise these estimates based on new information and these revisions may be material. |
Deferred Finance Costs | Deferred Finance Costs. We capitalize issuance costs related to our secured credit facilities and amortize the deferred costs over the terms of the respective agreements. |
Property and Equipment | Property and Equipment. Property and equipment is stated at cost, less accumulated depreciation. We record depreciation on property and equipment on a straight line basis over estimated useful lives of up to 40 years for buildings, up to 15 years for building improvements and up to seven years for personal property. We regularly evaluate whether events or changes in circumstances have occurred that could indicate impairment in the value of our long lived assets. If there is an indication that the carrying value of an asset is not recoverable, we determine the amount of impairment loss, if any, by comparing the historical carrying value of the asset to its estimated fair value. We determine estimated fair value through an evaluation of recent financial performance, recent transactions for similar assets, market conditions and projected cash flows using standard industry valuation techniques. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets. Goodwill represents the costs of business acquisitions in excess of the fair value of identifiable net assets acquired. We recorded an impairment charge in the year ended December 31, 2015 for the then full balance of our goodwill (see Note 4 for further discussion). We continue to not have any goodwill recorded on our consolidated balance sheet as of December 31, 2016. Historically, we evaluated the recoverability of goodwill annually in the fourth quarter of each fiscal year, or more frequently, if events or changes in circumstances indicated that goodwill might have been impaired. If our review indicated that the carrying amount of goodwill exceeded its fair value, we would reduce the carrying amount of goodwill to fair value. We evaluated goodwill for impairment at the reporting unit level, which we determined to be our operating segments, by comparing the fair value of the reporting unit as determined by its discounted cash flows and market approaches with its carrying value. The key assumptions used in the discounted cash flow analysis included future revenue growth, gross margins and our weighted average cost of capital. We selected a growth rate based on our view of the growth prospect of each of our reporting units. If the carrying value of the reporting unit exceeded its fair value, we compared the implied fair value of the reporting unit’s goodwill with its carrying amount to measure the amount of the potential impairment loss. At acquisition, we estimate and record the fair value of purchased intangible assets primarily using discounted cash flow analyses of anticipated cash flows reflecting incremental revenues and/or cost savings resulting from the acquired intangible asset, reflecting market participant assumptions. Amortization of intangible assets with finite lives is recognized over their estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise realized. We regularly evaluate whether events or changes in circumstances have occurred that could indicate impairment in the value of our other intangible assets. If there is an indication that the carrying value of an asset is not recoverable, we determine the amount of impairment loss, if any, by comparing the historical carrying value of the asset to its estimated fair value. We determine estimated fair value through an evaluation of recent financial performance, recent transactions for similar assets, market conditions and projected cash flows using standard industry valuation techniques. |
Legal Proceedings and Claims | Legal Proceedings and Claims. We have been, are currently, and expect in the future to be involved in claims, lawsuits, and regulatory and other government audits, investigations and proceedings arising in the ordinary course of our business, some of which may involve material amounts. Also, the defense and resolution of these claims, lawsuits, and regulatory and other government audits, investigations and proceedings may require us to incur significant expense. We account for claims and litigation losses in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification ™ , or ASC, Topic 450, Contingencies . Under FASB ASC Topic 450, loss contingency provisions are recorded for probable and estimable losses at our best estimate of a loss or, when a best estimate cannot be made, at our estimate of the minimum loss. These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment, and are refined as additional information becomes known. Accordingly, we are often initially unable to develop a best estimate of loss and therefore the estimated minimum loss amount, which could be zero , is recorded; then, as information becomes known, the minimum loss amount is updated, as appropriate. Occasionally, a minimum or best estimate amount may be increased or decreased when events result in a changed expectation. |
Self Insurance | Self Insurance. We self insure up to certain limits for workers’ compensation, professional and general liability claims, automobile claims and property losses. Claims in excess of these limits are insured up to contractual limits, over which we are self insured. We fully self insure all health related claims for our covered employees. We have established an offshore captive insurance company subsidiary which participates in our workers’ compensation and professional and general liability insurance programs. Determining reserves for the casualty, liability, workers’ compensation and healthcare losses and costs that we have incurred as of the end of a reporting period involves significant judgments based upon our experience and our expectations of future events, including projected settlements for pending claims, known incidents that we expect may result in claims, estimates of incurred but not yet reported claims, expected changes in premiums for insurance provided by insurers whose policies provide for retroactive adjustments, estimated litigation costs and other factors. Since these reserves are based on estimates, the actual expenses we incur may differ from the amount reserved. We regularly adjust these estimates to reflect changes in the foregoing factors, our actual claims experience, recommendations from our professional consultants, changes in market conditions and other factors; it is possible that such adjustments may be material. |
Continuing Care Contracts | Continuing Care Contracts. Residents at one of our communities may enter into continuing care contracts with us. We offer one form of continuing care contract to new residents at this community. This form of contract provides that 10% of the resident admission fee becomes non‑refundable upon occupancy, and the remaining 90% becomes non‑refundable at the rate of 1.5% per month of the original amount over the subsequent 60 months . Four other forms of continuing care contracts are in effect for existing residents but are not offered to new residents. One historical form of contract provides that the resident admission fee is 10% non‑refundable upon occupancy and 90% refundable. The second historical form of contract provides that the resident admission fee is 100% refundable. The third historical form of contract provides that the resident admission fee is 1% refundable and 99% non‑refundable upon admission. The fourth historical form of contract provides that 30% of the resident admission fee is non‑refundable upon occupancy and 70% is refundable. In each case, we amortize the non‑refundable part of these fees into revenue over the actuarially determined remaining life of the resident, which is the expected period of occupancy by the resident. We pay refunds of these admission fees when residents relocate from our communities. We report the refundable amount of these admission fees as current liabilities and the non‑refundable amount as deferred revenue, a portion of which is classified as a current liability. |
Leases | Leases. On the inception date of a lease and upon any relevant amendments to such lease, we test the classification of such lease as either a capital lease or an operating lease. None of our leases have met any of the criteria to be classified as a capital lease under FASB ASC Topic 840, Leases , and, therefore, we have accounted for all of our leases as operating leases. Other aspects of our lease accounting policies relate to the accounting for sale leaseback transactions, including the appropriate amortization of related deferred liabilities and any deferred gains or losses, and the accounting for lease incentives. |
Taxes | Taxes. FASB ASC Topic 740, Income Taxes , prescribes how we should recognize, measure and present in our consolidated financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. We can recognize a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized. We pay franchise taxes in certain states in which we have operations. We have included franchise taxes in general and administrative and other senior living operating expenses in our consolidated statements of operations. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences to be included in our financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse, while the effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations. In the future, if we determine that we would be able to realize our deferred tax assets in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance and record an income tax benefit. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments. Our financial instruments are limited to cash and cash equivalents, accounts receivable, available for sale securities, accounts payable and mortgage notes payable. Except for our mortgage debt, the fair value of these financial instruments was not materially different from their carrying values at December 31, 2016 and 2015 . We estimate the fair values of our mortgage debt using market quotes when available, discounted cash flow analyses and current prevailing interest rates. |
Revenue Recognition | Revenue Recognition. We derive our revenues primarily from services to residents at our senior living communities, and we record revenues when services are provided. We receive payment from governments or other third party payers for some of our services. We derived approximately 22% , 22% and 23% of our senior living revenues in 2016 , 2015 and 2014 , respectively, from payments under Medicare and Medicaid programs. Revenues under some of these programs are subject to audit and retroactive adjustment. Medicare revenues from continuing operations at our senior living communities totaled $112,116 , $122,018 and $129,212 during 2016 , 2015 and 2014 , respectively. Medicaid revenues from continuing operations at our senior living communities totaled $126,209 , $122,821 and $118,536 during 2016 , 2015 and 2014 , respectively. Some of our senior living communities require new private pay residents to pay community fees. Substantially all community fees received are non‑refundable and are recorded initially as deferred revenue and are included in other current liabilities in our consolidated balance sheets. The deferred amounts are amortized over the life of the contract. |
Reclassifications | Reclassifications. We have made reclassifications to the prior years’ financial statements to conform to the current year’s presentation. These reclassifications had no effect on net income or shareholders’ equity. |
Recently Issued Accounting Pronouncements | Recent Accounting Pronouncements. In December 2015, we early adopted FASB Accounting Standards Update, or ASU, No. 2015-17, Balance Sheet Classification of Deferred Taxes , which requires that deferred tax assets and liabilities be classified as noncurrent in a consolidated balance sheet rather than the former presentation of separating deferred tax assets and liabilities into current and noncurrent amounts. We adopted this ASU using prospective application. Since we have recognized a full deferred tax valuation allowance since 2014, and our deferred tax assets and liabilities net to zero, the implementation of this ASU did not have a material impact on our consolidated financial statements. On January 1, 2016, we adopted FASB ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs , which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability, and ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting , which addresses the presentation of debt issuance costs related to line of credit arrangements. The implementation of ASU No. 2015-03 did not have a material impact on our consolidated financial statements and the adoption of ASU No. 2015-15 did not result in any changes in the classification of capitalized debt issuance costs related to our secured revolving credit facility. On January 1, 2016, we adopted FASB ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments , which eliminates the requirement for an acquirer in a business combination to account for measurement period adjustments retrospectively. Instead, acquirers must recognize measurement period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts that would have been recorded in previous periods if the accounting had been completed at the acquisition date. The implementation of this ASU did not have a material impact on our consolidated financial statements. On January 1, 2016, we adopted FASB ASU 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern , which requires an entity to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the financial statements are available to be issued when applicable) and to provide related footnote disclosures in certain circumstances. The implementation of this ASU did not have an impact on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. This ASU is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted subject to certain conditions. Currently, changes in fair value of these investments are recorded through other comprehensive income. Under this ASU, these changes will be recorded through earnings. We are continuing to evaluate this ASU, but we expect the implementation of this ASU will affect how we record changes in fair value of the available for sale securities that we hold. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are in the process of evaluating the effects the adoption of this update may have on our consolidated financial statements. We believe the adoption of this update will have a material impact on our consolidated balance sheets due to the recognition of the lease rights and obligations as assets and liabilities. While the adoption will have no effect on the cash we pay, we expect amounts within our statements of operations and comprehensive (loss) income to change materially. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718) , which identifies areas for simplification involving several aspects of accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. This ASU is effective for reporting periods beginning after December 15, 2016. We will adopt the new standard as required effective January 1, 2017. The new standard requires prospective recognition of excess tax benefits and deficiencies resulting from share based compensation awards vesting and exercises be recognized in our consolidated statements of operations. Previously, these amounts were recognized in additional paid in capital, and were not material to our consolidated financial statements. Excess tax benefits from share based compensation awards will continue to be reported as an operating activity, and cash paid on employees’ behalf related to shares withheld for tax purposes will continue to be classified as a financing activity on the statement of cash flows. In addition, forfeitures will be recognized as they occur as permitted by the new standard. We do not expect that the adoption of this ASU will have a material impact on our consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This ASU clarifies the principles for recognizing revenue by, among other things, removing inconsistencies in revenue requirements, improving comparability of revenue recognition practices across entities and industries and providing improved disclosure requirements. In July 2015, the FASB approved a one year deferral of the effective date for this ASU to interim and annual reporting periods beginning after December 15, 2017. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which clarifies how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements, such as service transactions. These ASUs may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). We will adopt the new ASUs as required effective January 1, 2018 and currently expect to apply the modified retrospective approach. While we are continuing to assess the impact adopting these ASUs (and related clarifying guidance issued by the FASB) will have on our consolidated financial statements, we currently believe its adoption will not have a material impact on the timing of our revenue recognition. We do expect the adoption will result in expanded disclosures related to the nature, amount, timing, and uncertainty of revenue and cash flows arising from our contracts with customers that are included in the scope of these ASUs. A substantial portion of our revenue relates to contracts with residents that are generally short term in nature and fall under ASC Topic 840, Leases , which are specifically excluded from the scope of ASU No. 2014-09. Our contracts with residents and other customers that are included in the scope of these ASUs are also generally short term in nature and revenue is recognized when services are provided. As we complete our evaluation of these ASUs, new information may arise that could change our current understanding of the impact to revenue recognized. Additionally, we will continue to monitor industry activities and any additional guidance provided by regulators, standards setters and the accounting profession and will adjust our assessment and implementation plans accordingly. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) , which requires a financial asset or a group of financial assets measured at amortized cost basis, to be presented at the net amount expected to be collected. This ASU eliminates the probable initial recognition threshold and instead reflects an entity’s current estimate of all expected credit losses. In addition, this ASU amends the current available for sale security other-than-temporary impairment model for debt securities. The length of time that the fair value of an available for sale debt security has been below the amortized cost will no longer impact the determination of whether a credit loss exists and credit losses will now be limited to the difference between a security’s amortized cost basis and its fair value. This ASU is effective for reporting periods beginning after December 15, 2019. We are currently assessing the potential impact the adoption of this ASU will have on our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU No. 2016-15 is effective for reporting periods beginning after December 15, 2017. We are currently assessing the potential impact the adoption of this ASU will have on our consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash , which requires that the reconciliation of the beginning-of-period and end-of-period amounts shown in the statement of cash flows include restricted cash and restricted cash equivalent. In the event restricted cash is presented separately from cash and cash equivalents on the balance sheet, companies will be required to reconcile the amounts presented on the statement of cash flows to the amounts on the balance sheet and disclose information about the nature of the restrictions. ASU No. 2016-18 is effective for reporting periods beginning after December 15, 2017. We are currently assessing the potential impact the adoption of this ASU will have on our consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805) , which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or of businesses. The amendments in this ASU provide a screen to determine when an acquired set of activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This ASU is effective for reporting periods beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact adopting this ASU will have on our consolidated financial statements, but we expect that most future acquisitions, if completed with terms similar to historical transactions, will be treated as acquisitions of assets rather than as business combinations, as substantially all of the fair value of the assets we typically acquire is concentrated in real estate. In an acquisition of assets, certain acquisition costs are capitalized as opposed to expensed under business combination guidance. |
Segment Information | Segment Information. We have two operating segments: (i) senior living communities and (ii) rehabilitation and wellness. In the senior living community segment, we operate for our own account or manage for the account of other independent living communities, assisted living communities and SNFs that are subject to centralized oversight and provide housing and services to elderly residents. In the rehabilitation and wellness operating segment we provide services in the inpatient setting and in outpatient clinics. We have determined that our two operating segments meet the aggregation criteria as prescribed under FASB ASC Topic 280, Segment Reporting , and therefore, we have determined that our business is comprised of one reportable segment, senior living. All of our operations and assets are located in the United States, except for the operations of our Cayman Islands organized captive insurance company subsidiary, which participates in our workers’ compensation and professional and general liability insurance programs. |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of fair value and gross unrealized losses related to available for sale securities | December 31, 2016 Less than 12 months Greater than 12 months Total Fair Value Unrealized Loss Fair Value Unrealized Fair Value Unrealized Investments $ 8,502 $ 233 $ 937 $ 64 $ 9,439 $ 297 December 31, 2015 Less than 12 months Greater than 12 months Total Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized Investments $ 14,436 $ 238 $ 1,986 $ 332 $ 16,422 $ 570 |
Schedule of restricted cash as security for self-insurance | 2016 2015 Current Long term Current Long term Insurance reserves $ 1,111 $ 1,909 $ 1,397 $ 2,821 Real estate taxes and capital expenditures as required by our mortgages 1,624 — 1,279 — Resident security deposits 588 — 625 — Workers' compensation letter of credit collateral $ 11,736 $ — $ — $ — Total $ 15,059 $ 1,909 $ 3,301 $ 2,821 |
Schedule of allowance for doubtful accounts | Balance January 1, 2014 $ 4,281 Provision for doubtful accounts 4,777 Write-offs (5,642 ) Balance December 31, 2014 3,416 Provision for doubtful accounts 4,646 Write-offs (4,470 ) Balance December 31, 2015 3,592 Provision for doubtful accounts 4,033 Write-offs (4,434 ) Balance December 31, 2016 $ 3,191 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consists of the following: December 31, December 31, 2016 2015 Land $ 22,261 $ 25,410 Buildings and improvements 304,044 338,522 Furniture, fixtures and equipment 193,286 165,497 Property and equipment, at cost 519,591 529,429 Accumulated depreciation (167,662 ) (145,571 ) Property and equipment, net $ 351,929 $ 383,858 |
Other Intangible Assets and G30
Other Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of indefinite-lived intangible assets | The changes in the carrying amount of our other intangible assets for the years ended December 31, 2016 and 2015 are as follows: December 31, 2016 December 31, 2015 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Indefinite lived intangible assets 191 — 191 191 — 191 Definite lived intangible assets 1,866 (1,590 ) 276 2,469 (726 ) 1,743 2,057 (1,590 ) 467 2,660 (726 ) 1,934 |
Schedule of finite-lived intangible assets | The changes in the carrying amount of our other intangible assets for the years ended December 31, 2016 and 2015 are as follows: December 31, 2016 December 31, 2015 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Indefinite lived intangible assets 191 — 191 191 — 191 Definite lived intangible assets 1,866 (1,590 ) 276 2,469 (726 ) 1,743 2,057 (1,590 ) 467 2,660 (726 ) 1,934 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax assets and liabilities | 2016 2015 Non-current deferred tax assets: Continuing care contracts 491 621 Allowance for doubtful accounts 1,254 1,448 Deferred gains on sale lease back transactions 33,121 2,236 Insurance reserves 3,976 4,303 Tax credits 21,647 19,426 Tax loss carry forwards 41,160 61,911 Impairment of securities 360 371 Depreciable assets 1,795 975 Goodwill 6,478 6,699 Other 1,152 4,272 Total non-current deferred tax assets before valuation allowance 111,434 102,262 Valuation allowance: (100,524 ) (90,726 ) Total non-current deferred tax assets 10,910 11,536 Non-current deferred tax liabilities: Lease expense (9,660 ) (10,531 ) Employee stock grants (72 ) (88 ) Identifiable intangibles/other liabilities (1,178 ) (917 ) Total non-current deferred tax liabilities (10,910 ) (11,536 ) Net deferred tax asset (liabilities) $ — $ — |
Schedule of changes in valuation allowance | Balance at Beginning of Period Amounts Charged To Expense Amounts Charged Off, Net of Recoveries Amounts Charged (Credited) to Equity Balance at End of Period Year Ended December 31, 2014 $ 3,603 $ 73,470 $ — $ (152 ) $ 76,921 Year Ended December 31, 2015 $ 76,921 $ 13,491 $ — $ 314 $ 90,726 Year Ended December 31, 2016 $ 90,726 $ 10,021 $ — $ (223 ) $ 100,524 |
Schedule of provision for income taxes from continuing operations | Years Ended December 31, 2016 2015 2014 Current tax provision: Federal $ (319 ) $ — $ — State $ 2,670 $ 1,018 $ 848 Total current tax provision 2,351 1,018 848 Deferred tax (benefit) provision: Federal — 114 43,040 State — (470 ) 12,497 Total deferred tax (benefit) provision — (356 ) 55,537 Total tax provision $ 2,351 $ 662 $ 56,385 |
Schedule of difference between effective tax rate on continuing operations and the U.S. Federal statutory income tax rate | For the years ended December 31, 2016 2015 2014 Taxes at statutory U.S. federal income tax rate (35.0 )% (35.0 )% (35.0 )% State and local income taxes, net of federal tax benefit (0.7 )% 1.0 % (6.5 )% Tax credits (9.1 )% (3.4 )% (5.4 )% Change in valuation allowance 55.6 % 32.7 % 287.5 % Goodwill — % 4.1 % — % Other differences, net 1.3 % 2.2 % 4.9 % Effective tax rate 12.1 % 1.6 % 245.6 % |
Schedule of reconciliation of unrecognized tax benefits | For the years ended December 31, 2016 2015 2014 Unrecognized tax benefits at January 1 $ — $ 1,379 $ 1,245 Decreases for tax positions of prior years — (1,379 ) — Additions for tax positions of current year — — 134 Unrecognized tax benefits at December 31 $ — $ — $ 1,379 |
Fair Values of Assets and Lia32
Fair Values of Assets and Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets measured at fair value on a recurring basis | The tables below present the assets measured at fair value at December 31, 2016 and 2015 categorized by the level of inputs used in the valuation of each asset. As of December 31, 2016 Description Total Quoted Prices in Active Markets for Identical (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents (1) $ 17,702 $ 17,702 $ — $ — Available for sale securities: (2) Equity securities Financial services industry 2,149 2,149 — — REIT industry 393 393 — — Other 4,791 4,791 — — Total equity securities 7,333 7,333 — — Debt securities International bond fund (3) 2,452 — 2,452 — High yield fund (4) 2,587 — 2,587 — Industrial bonds 5,394 — 5,394 — Government bonds 10,403 6,326 4,077 — Financial bonds 1,754 — 1,754 — Other 10,747 — 10,747 — Total debt securities 33,337 6,326 27,011 — Total available for sale securities 40,670 13,659 27,011 — Total $ 58,372 $ 31,361 $ 27,011 $ — As of December 31, 2015 Description Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents (1) $ 5,936 $ 5,936 $ — $ — Available for sale securities: (2) Equity securities Financial services industry 3,746 3,746 — — REIT industry 270 270 — — Other 3,807 3,807 — — Total equity securities 7,823 7,823 — — Debt securities International bond fund (3) 2,399 — 2,399 — High yield fund (4) 2,245 — 2,245 — Industrial bonds 6,007 — 6,007 — Government bonds 16,612 8,661 7,951 — Financial bonds 3,157 — 3,157 — Other 11,340 — 11,340 — Total debt securities 41,760 8,661 33,099 — Total available for sale securities 49,583 16,484 33,099 — Total $ 55,519 $ 22,420 $ 33,099 $ — _______________________________________ (1) Cash equivalents consist of short term, highly liquid investments and money market funds held principally for obligations arising from our self insurance programs. Cash equivalents are reported in our consolidated balance sheets as cash and cash equivalents and current and long term restricted cash. Cash equivalents include $14,638 and $4,027 of balances that are restricted at December 31, 2016 and 2015 , respectively. (2) As of December 31, 2016 , our investments in available for sale securities had a fair value of $40,670 with an amortized cost of $38,537 ; the difference between the fair value and amortized cost amounts resulted from unrealized gains of $2,430 , net of unrealized losses of $297 . As of December 31, 2015 , our investments in available for sale securities had a fair value of $49,583 with an amortized cost of $48,040 ; the difference between the fair value and amortized cost amounts resulted from unrealized gains of $2,113 , net of unrealized losses of $570 . At December 31, 2016 , 30 of the securities we hold, with a fair value of $8,502 , have been in a loss position for less than 12 months and 8 of the securities we hold, with a fair value of $937 , have been in a loss position for greater than 12 months. We do not believe these securities are impaired primarily because they have not been in a loss position for an extended period of time, the financial conditions of the issuers of these securities remain strong with solid fundamentals, or we intend to hold these securities until recovery, and other factors that support our conclusion that the loss is temporary. During the years ended December 31, 2016 , 2015 and 2014 , we received gross proceeds of $17,905 , $10,857 and $10,876 , respectively, in connection with the sales of available for sale securities and recorded gross realized gains totaling $446 , $188 and $478 , respectively, and gross realized losses totaling $339 , $28 and $86 , respectively. We record gains and losses on the sales of our available for sale securities using the specific identification method. (3) The investment strategy of this fund is to invest principally in fixed income securities issued by non-U.S. issuers. The fund invests in such securities or investment vehicles as it considers appropriate to achieve the fund’s investment objective, which is to provide an above average rate of total return while attempting to limit investment risk by investing in a diversified portfolio of U.S. dollar investment grade fixed income securities. There are no unfunded commitments and the investment can be redeemed weekly. (4) The investment strategy of this fund is to invest principally in fixed income securities. The fund invests in such securities or investment vehicles as it considers appropriate to achieve the fund’s investment objective, which is to provide an above average rate of total return while attempting to limit investment risk by investing in a diversified portfolio of primarily fixed income securities issued by companies with below investment grade ratings. There are no unfunded commitments and the investment can be redeemed weekly. |
Indebtedness (Tables)
Indebtedness (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Summary of mortgage notes | The following table is a summary of this mortgage debt as of December 31, 2016 : Balance as of Contractual Stated Effective Monthly December 31, 2016 (1) Interest Rate Interest Rate Maturity Date Payment $ 13,305 6.47 % 3.45 % June 2018 $ 95 17,010 5.75 % 4.83 % October 2022 105 17,141 6.64 % 5.86 % June 2023 123 2,524 6.36 % 6.70 % September 2028 25 8,816 6.20 % 6.70 % September 2032 72 $ 58,796 6.27 % (2) 5.15 % $ 420 _______________________________________ (1) Contractual premium payments excluding unamortized net premium and debt issuance costs of $1,601. (2) Weighted average annual interest rate. |
Schedule of principal payments due under mortgage notes | Principal payments due under the terms of these mortgages are as follows: 2017 $ 1,354 2018 14,191 2019 1,231 2020 1,304 2021 1,396 Thereafter 39,320 $ 58,796 Add: Unamortized net premium and debt issuance costs $ 1,601 Total mortgage notes payable $ 60,397 Less: Short term portion of mortgage notes payable $ (1,903 ) Long term portion of mortgage notes payable $ 58,494 |
Leases with SNH and HCP and M34
Leases with SNH and HCP and Management Agreements with SNH (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Leases [Abstract] | |
Summary of real property leases | The following table is a summary of our leases with SNH and with HCP as of December 31, 2016 : Number of Properties Annual Minimum Rent as of December 31, 2016 Current Expiration date Remaining Renewal Options 1. Lease No. 1 for SNFs and independent and assisted living communities 83 $ 59,214 December 31, 2024 Two 15-year renewal options. 2. Lease No. 2 for SNFs and independent and assisted living communities 47 64,720 June 30, 2026 Two 10-year renewal options. 3. Lease No. 3 for independent and assisted living communities (1) 17 34,949 December 31, 2028 Two 15-year renewal options. 4. Lease No. 4 for SNFs and independent and assisted living communities 29 35,119 April 30, 2032 Two 15-year renewal options. 5. Lease No. 5 for independent and assisted living communities (2) 9 9,822 December 31, 2028 Two 15-year renewal options. 6. One HCP lease 4 2,653 April 30, 2028 One 10-year renewal option. Totals 189 $ 206,477 _______________________________________ (1) Lease No. 3 exists to accommodate certain mortgage financing by SNH. (2) Lease No. 5 was entered into in connection with the June 2016 sale and leaseback transaction with SNH. |
Schedule of future minimum rents | The future minimum rents required by our leases as of December 31, 2016 , are as follows: 2017 206,513 2018 206,566 2019 206,621 2020 206,677 2021 206,734 Thereafter 1,164,996 $ 2,198,107 |
Acquisitions and Dispositions (
Acquisitions and Dispositions (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Summary of allocation of purchase price to estimated fair values | The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed: Land $ 1,208 Buildings and improvements 17,946 Furniture, fixtures and equipment 421 Total property, plant and equipment 19,575 Intangible assets 1,937 Premium on assumed mortgage debt (1,598 ) $ 19,914 The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed: Land $ 1,239 Buildings and improvements 22,500 Furniture, fixtures and equipment 1,508 Total property, plant and equipment 25,247 Intangible assets 1,909 Premium on assumed mortgage debt (963 ) $ 26,193 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Discontinued operations, held-for-sale or disposed of by sale | |
Summary of the operating results of discontinued operations included in the financial statements | Below is a summary of the operating results of these discontinued operations included in the consolidated financial statements for the years ended December 31, 2016 , 2015 and 2014 : Year Ended December 31, 2016 2015 2014 Revenues $ 932 $ 4,191 $ 22,051 Expenses (500 ) (5,818 ) (28,028 ) Impairment on discontinued assets (112 ) (697 ) — Provision for income taxes (126 ) — (79 ) Income (loss) from discontinued operations, net of tax $ 194 $ (2,324 ) $ (6,056 ) |
Selected Quarterly Financial 37
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of unaudited quarterly results of operations | The following is a summary of unaudited quarterly results of operations for the years ended December 31, 2016 and 2015 : 2016 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ 344,212 $ 342,933 $ 344,711 $ 346,252 Operating loss (754 ) (3,528 ) (6,095 ) (5,595 ) Net loss from continuing operations (2,311 ) (7,900 ) (5,844 ) (5,952 ) Net loss (2,623 ) (7,666 ) (5,897 ) (5,627 ) Net loss per common share—Basic and diluted $ (0.06 ) $ (0.16 ) $ (0.12 ) $ (0.11 ) 2015 First Second Third Fourth Revenues $ 333,973 $ 342,269 $ 344,572 $ 344,596 Operating loss (3,487 ) (2,923 ) (25,593 ) (5,021 ) Net loss from continuing operations (4,833 ) (3,364 ) (26,250 ) (6,312 ) Net loss (5,302 ) (3,910 ) (27,488 ) (6,383 ) Net loss per common share—Basic and diluted $ (0.11 ) $ (0.08 ) $ (0.57 ) $ (0.13 ) |
Organization and Business (Deta
Organization and Business (Details) | Dec. 31, 2016statecommunitybedliving_unitsuitefacilityapartmentproperty |
Real estate properties | |
Number of real estate properties leased | property | 189 |
Senior living communities | |
Real estate properties | |
Number of properties operated | community | 283 |
Number of states in which real estate properties are located | state | 32 |
Number of living units in properties operated | 31,830 |
Number of properties owned and operated | community | 26 |
Number of living units in properties owned and operated | 2,703 |
Number of real estate properties leased | community | 189 |
Number of units leased and operated | 20,339 |
Number of properties managed | community | 68 |
Number of units in properties managed | 8,788 |
Independent and assisted living communities | |
Real estate properties | |
Number of properties operated | community | 253 |
Number of living units in properties operated | 29,229 |
SNF | |
Real estate properties | |
Number of properties operated | facility | 30 |
Number of living units in properties operated | 2,601 |
Independent living apartment | |
Real estate properties | |
Number of living units in properties operated | apartment | 10,772 |
Assisted living suites | |
Real estate properties | |
Number of living units in properties operated | suite | 16,179 |
Skilled nursing units | |
Real estate properties | |
Number of living units in properties operated | bed | 4,879 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Details) $ in Thousands | Dec. 31, 2016USD ($)shareholder | Dec. 31, 2015USD ($) |
Equity Method Investments | ||
Equity investment of an investee | $ 7,116 | $ 6,827 |
AIC | ||
Equity Method Investments | ||
Number of other current shareholders of the related party | shareholder | 6 | |
Ownership percentage | 14.30% | |
Equity investment of an investee | $ 6,034 |
Summary of Significant Accoun40
Summary of Significant Accounting Policies - Cash and Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Investment Securities | |||
Available for sale securities | $ 40,670 | $ 49,583 | |
Unrealized holding gain | 2,133 | 1,543 | |
Available for sale securities, interest and dividend income | 930 | 912 | $ 788 |
Available for sale securities | |||
Available for sale securities, Fair Value, Less than 12 months | 8,502 | 14,436 | |
Available for sale securities, Unrealized Loss , Less than 12 months | 233 | 238 | |
Available for sale securities, Fair Value, Greater than 12 months | 937 | 1,986 | |
Available for sale securities, Unrealized Loss, Greater than 12 months | 64 | 332 | |
Available for sale securities, Fair Value, Total | 9,439 | 16,422 | |
Available for sale securities, Unrealized Loss, Total | 297 | 570 | |
Restricted cash | |||
Current | 15,059 | 3,301 | |
Long term | 1,909 | 2,821 | |
Insurance reserves | |||
Restricted cash | |||
Current | 1,111 | 1,397 | |
Long term | 1,909 | 2,821 | |
Real estate taxes and capital expenditures as required by the entity's mortgages | |||
Restricted cash | |||
Current | 1,624 | 1,279 | |
Resident security deposits | |||
Restricted cash | |||
Current | 588 | 625 | |
Workers' compensation letter of credit collateral | |||
Restricted cash | |||
Current | $ 11,736 | $ 0 |
Summary of Significant Accoun41
Summary of Significant Accounting Policies - Receivables and Financing Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accounts Receivable and Allowance for Doubtful Accounts | |||
Amounts due from the Medicare program | $ 10,744 | $ 9,607 | |
Amounts due from various state Medicaid programs | 11,951 | 12,692 | |
Allowance for doubtful accounts | |||
Balance at the beginning of the period | 3,592 | 3,416 | $ 4,281 |
Provision for doubtful accounts | 4,033 | 4,646 | 4,777 |
Write-offs | (4,434) | (4,470) | (5,642) |
Balance at the end of the period | 3,191 | 3,592 | 3,416 |
Deferred Finance Costs | |||
Unamortized gross balance of deferred financing costs | 50 | 100 | |
Accumulated amortization related to deferred financing costs | 175 | 380 | |
Amortization of deferred financing fees | |||
2,017 | 50 | ||
SNF | |||
Allowance for doubtful accounts | |||
Provision for doubtful accounts | $ 1,162 | $ 1,963 | $ 1,321 |
Minimum | |||
Deferred Finance Costs | |||
Weighted average amortization period of deferred financing costs | 1 year |
Summary of Significant Accoun42
Summary of Significant Accounting Policies - Property Plant & Equip (Details) - Maximum | 12 Months Ended |
Dec. 31, 2016 | |
Buildings | |
Property and Equipment | |
Estimated useful lives | 40 years |
Building improvements | |
Property and Equipment | |
Estimated useful lives | 15 years |
Personal property | |
Property and Equipment | |
Estimated useful lives | 7 years |
Summary of Significant Accoun43
Summary of Significant Accounting Policies - Continuing Care Contracts (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016USD ($)contract | Dec. 31, 2015USD ($) | |
Continuing care contracts | ||
Estimated minimum loss amount | $ 0 | |
Self insurance reserve | $ 65,526 | $ 64,966 |
Number of forms of contracts offered to new residents | contract | 1 | |
Number of forms of contracts offered to existing residents | contract | 4 | |
Refundable admission fees | $ 1,905 | 2,709 |
One form | ||
Continuing care contracts | ||
Percentage of resident admission fee that becomes non-refundable | 10.00% | |
Remaining percentage of resident admission fee that becomes non-refundable | 90.00% | |
Monthly reduction in refundable fee, as a percentage of original admission fee | 1.50% | |
Period during which admission fee becomes non-refundable | 60 months | |
Historical form | ||
Continuing care contracts | ||
Percentage of resident admission fee that becomes non-refundable | 10.00% | |
Percentage of admission fee that become refundable | 90.00% | |
Second historical form | ||
Continuing care contracts | ||
Percentage of admission fee that become refundable | 100.00% | |
Third historical form | ||
Continuing care contracts | ||
Percentage of resident admission fee that becomes non-refundable | 99.00% | |
Percentage of admission fee that become refundable | 1.00% | |
Fourth historical form | ||
Continuing care contracts | ||
Percentage of resident admission fee that becomes non-refundable | 30.00% | |
Percentage of admission fee that become refundable | 70.00% | |
Security Deposits and Current Portion of Continuing Care Contracts | ||
Continuing care contracts | ||
Continuing care contracts | $ 1,252 | 1,561 |
Other long term liabilities | ||
Continuing care contracts | ||
Continuing care contracts | $ 1,031 | $ 1,267 |
Summary of Significant Accoun44
Summary of Significant Accounting Policies - Revenue Recognition (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)segmentshares | Dec. 31, 2015USD ($)shares | Dec. 31, 2014USD ($) | |
Former Employee Benefits Information | |||
Term of future service required | 0 years | ||
Share based compensation | $ 234 | ||
Segment Information | |||
Number of operating segments | segment | 2 | ||
Number of reportable segments | segment | 1 | ||
Senior living communities | |||
Revenue recognition | |||
Percentage of revenues derived from payments under the Medicare and Medicaid programs | 22.00% | 22.00% | 23.00% |
Medicare revenues | $ 112,116 | $ 122,018 | $ 129,212 |
Medicaid revenues | $ 126,209 | 122,821 | $ 118,536 |
Former Treasurer and CFO | |||
Former Employee Benefits Information | |||
Severance costs agreement | $ 604 | ||
Grants under share award plan and share based compensation (in shares) | shares | 35,000 | 35,000 | |
Share based compensation | $ 234 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property and Equipment | |||
Property and equipment, gross | $ 519,591 | $ 529,429 | |
Accumulated depreciation | (167,662) | (145,571) | |
Property and equipment, net | 351,929 | 383,858 | |
Depreciation expense | 36,462 | 33,129 | $ 29,434 |
Long lived asset impairment | 502 | 145 | 589 |
SNH | |||
Property and Equipment | |||
Assets held for sale for increased rent pursuant to the terms of leases with SNH | 7,255 | 8,289 | |
Level 3 | |||
Property and Equipment | |||
Fair values of the impaired assets | 337 | 319 | $ 478 |
Land | |||
Property and Equipment | |||
Property and equipment, gross | 22,261 | 25,410 | |
Building and Improvements | |||
Property and Equipment | |||
Property and equipment, gross | 304,044 | 338,522 | |
Furniture, fixtures and equipment | |||
Property and Equipment | |||
Property and equipment, gross | $ 193,286 | $ 165,497 |
Other Intangible Assets and G46
Other Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Indefinite lived intangible assets | $ 191 | $ 191 | |
Definite lived intangible assets, gross | 1,866 | 2,469 | |
Definite lived intangible assets, Accumulated amortization | (1,590) | (726) | |
Definite lived intangible assets, Net | 276 | 1,743 | |
Intangible assets, gross carrying amount | 2,057 | 2,660 | |
Intangible assets, Accumulated amortization | (1,590) | (726) | |
Intangible assets, Net | 467 | 1,934 | |
Amortization of intangibles | $ 1,590 | 726 | $ 2,440 |
Weighted average amortization period | 1 year | ||
Estimated amortization expense | |||
2,017 | $ 196 | ||
2,018 | 80 | ||
Goodwill impairment | $ 0 | 25,344 | $ 0 |
Discontinued Operations | Senior Living Reporting Unit | |||
Estimated amortization expense | |||
Goodwill impairment | $ 63 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Non-current deferred tax assets: | |||
Continuing care contracts | $ 491 | $ 621 | |
Allowance for doubtful accounts | 1,254 | 1,448 | |
Deferred gains on sale lease back transactions | 33,121 | 2,236 | |
Insurance reserves | 3,976 | 4,303 | |
Tax credits | 21,647 | 19,426 | |
Tax loss carry forwards | 41,160 | 61,911 | |
Impairment of securities | 360 | 371 | |
Depreciable assets | 1,795 | 975 | |
Goodwill | 6,478 | 6,699 | |
Other | 1,152 | 4,272 | |
Total non-current deferred tax assets before valuation allowance | 111,434 | 102,262 | |
Valuation allowance: | (100,524) | (90,726) | |
Total non-current deferred tax assets | 10,910 | 11,536 | |
Non-current deferred tax liabilities: | |||
Lease expense | (9,660) | (10,531) | |
Employee stock grants | (72) | (88) | |
Identifiable intangibles/other liabilities | (1,178) | (917) | |
Total non-current deferred tax liabilities | (10,910) | (11,536) | |
Net deferred tax asset | 0 | 0 | |
Income Taxes | |||
Tax credit carry forward, which begins to expire in 2022 if unused | $ 21,647 | ||
Assessment period to identify significant losses occured | 2 years | ||
Period expected to be in cumulative loss position | 3 years | ||
Movement in valuation allowance for deferred tax assets | |||
Balance at Beginning of Period | $ 90,726 | 76,921 | $ 3,603 |
Amounts Charged To Expense | 10,021 | 13,491 | 73,470 |
Amounts Charged (Credited) to Equity | (223) | 314 | (152) |
Balance at End of Period | 100,524 | 90,726 | 76,921 |
Income tax expense from continuing operations | 2,351 | ||
State | 2,670 | $ 1,018 | $ 848 |
Intraperiod tax allocation benefits related to unrealized gain on available for sale securities | 319 | ||
Federal | |||
Income Taxes | |||
Net operating loss carry forward, which begins to expire in 2026 if unused | 71,156 | ||
Net operating losses attributable to stock option exercises | $ 518 |
Income Taxes - Current and Defe
Income Taxes - Current and Deferred Tax Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current tax provision: | |||
Federal | $ (319) | $ 0 | $ 0 |
State | 2,670 | 1,018 | 848 |
Total current tax provision | 2,351 | 1,018 | 848 |
Deferred tax (benefit) provision: | |||
Federal | 0 | 114 | 43,040 |
State | 0 | (470) | 12,497 |
Total deferred tax provision (benefit) | 0 | (356) | 55,537 |
Total tax provision (benefit) | $ 2,351 | $ 662 | $ 56,385 |
Difference between the entity's effective tax (benefit) rate on continuing operations and the U.S. Federal statutory income tax (benefit) rate | |||
Taxes at statutory U.S. federal income tax rate (as a percent) | (35.00%) | (35.00%) | (35.00%) |
State and local income taxes, net of federal tax benefit (as a percent) | (0.70%) | 1.00% | (6.50%) |
Tax credits (as a percent) | (9.10%) | (3.40%) | (5.40%) |
Change in valuation allowance (as a percent) | 55.60% | 32.70% | 287.50% |
Goodwill (as a percent) | (0.00%) | 4.10% | (0.00%) |
Other differences, net (as a percent) | 1.30% | 2.20% | 4.90% |
Effective tax rate (as a percent) | 12.10% | 1.60% | 245.60% |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | |||
Unrecognized tax benefits at beginning of the year | $ 0 | $ 1,379 | $ 1,245 |
Decreases for tax positions of prior years | 0 | (1,379) | 0 |
Additions for tax positions of current year | 0 | 0 | 134 |
Unrecognized tax benefits at end of the year | $ 0 | $ 0 | $ 1,379 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share [Abstract] | |||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 866,041 | 604,200 | 482,844 |
Fair Values of Assets and Lia50
Fair Values of Assets and Liabilities - Recurring Measurements (Details) | 12 Months Ended | ||
Dec. 31, 2016USD ($)security | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Fair Values of Assets and Liabilities | |||
Cash equivalents | $ 17,702,000 | $ 5,936,000 | |
Available for sale securities | 40,670,000 | 49,583,000 | |
Total | 58,372,000 | 55,519,000 | |
Restricted cash equivalents | 14,638,000 | 4,027,000 | |
Amortized cost of available for sale securities | 38,537,000 | 48,040,000 | |
Unrealized gains on available for sale securities | 2,430,000 | 2,113,000 | |
Unrealized losses on available for sale securities | $ 297,000 | 570,000 | |
Number of available for sale securities in a loss position less than 12 months | security | 30 | ||
Fair value of securities which are in loss position for less than 12 months | $ 8,502,000 | ||
Number of available for sale securities in a loss position 12 months or longer | security | 8 | ||
Fair value of securities which are in loss position for greater than 12 months | $ 937,000 | ||
Gross proceeds from sale of available for sale securities | 17,905,000 | 10,857,000 | $ 10,876,000 |
Gross realized gains recorded on sale of available for sale securities | 446,000 | 188,000 | 478,000 |
Gross realized losses recorded on sale of available for sale securities | 339,000 | 28,000 | $ 86,000 |
Mortgage notes payable | 58,494,000 | 60,396,000 | |
Equity securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 7,333,000 | 7,823,000 | |
Financial services industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,149,000 | 3,746,000 | |
REIT industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 393,000 | 270,000 | |
Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,791,000 | 3,807,000 | |
Debt securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 33,337,000 | 41,760,000 | |
International bond fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,452,000 | 2,399,000 | |
Unfunded investment commitments | 0 | ||
High yield fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,587,000 | 2,245,000 | |
Unfunded investment commitments | 0 | ||
Industrial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 5,394,000 | 6,007,000 | |
Government bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 10,403,000 | 16,612,000 | |
Financial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 1,754,000 | 3,157,000 | |
Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 10,747,000 | 11,340,000 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Values of Assets and Liabilities | |||
Cash equivalents | 17,702,000 | 5,936,000 | |
Available for sale securities | 13,659,000 | 16,484,000 | |
Total | 31,361,000 | 22,420,000 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 7,333,000 | 7,823,000 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Financial services industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,149,000 | 3,746,000 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | REIT industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 393,000 | 270,000 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,791,000 | 3,807,000 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Debt securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 6,326,000 | 8,661,000 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Government bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 6,326,000 | 8,661,000 | |
Significant Other Observable Inputs (Level 2) | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 27,011,000 | 33,099,000 | |
Total | 27,011,000 | 33,099,000 | |
Significant Other Observable Inputs (Level 2) | Debt securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 27,011,000 | 33,099,000 | |
Significant Other Observable Inputs (Level 2) | International bond fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,452,000 | 2,399,000 | |
Significant Other Observable Inputs (Level 2) | High yield fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,587,000 | 2,245,000 | |
Significant Other Observable Inputs (Level 2) | Industrial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 5,394,000 | 6,007,000 | |
Significant Other Observable Inputs (Level 2) | Government bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,077,000 | 7,951,000 | |
Significant Other Observable Inputs (Level 2) | Financial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 1,754,000 | 3,157,000 | |
Significant Other Observable Inputs (Level 2) | Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | $ 10,747,000 | $ 11,340,000 |
Fair Values of Assets and Lia51
Fair Values of Assets and Liabilities - Non-recurring Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Carrying value and fair value | ||
Transfers of assets between Level 1 to Level 2 | $ 0 | |
Mortgage notes payable | 58,494 | $ 60,396 |
Carrying value | Level 3 | ||
Carrying value and fair value | ||
Mortgage notes payable | 60,397 | 62,203 |
Total | Level 3 | ||
Carrying value and fair value | ||
Mortgage notes payable | $ 64,905 | $ 65,999 |
Indebtedness - Debt Instruments
Indebtedness - Debt Instruments Summary (Details) | 1 Months Ended | 12 Months Ended | 36 Months Ended | ||||||
Feb. 28, 2017living_unitperiodproperty | Apr. 30, 2016USD ($) | Jun. 30, 2015USD ($)property | Dec. 31, 2016USD ($)communitypropertyagreement | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2016USD ($)communitypropertyagreement | Jun. 30, 2016USD ($) | May 31, 2016USD ($) | |
Indebtedness | |||||||||
Line of credit facility, extension fee | $ 300,000 | ||||||||
Amount borrowed during the period | $ 25,000,000 | $ 40,000,000 | $ 20,000,000 | ||||||
Mortgage notes payable outstanding principal balance | 58,494,000 | 60,396,000 | $ 58,494,000 | ||||||
Gain, net of related unamortized costs, on early extinguishment of debt | 0 | $ 692,000 | $ 0 | ||||||
Letter of credit | |||||||||
Indebtedness | |||||||||
Maximum borrowing capacity | $ 11,700,000 | ||||||||
Standby letters of credit | |||||||||
Indebtedness | |||||||||
Maximum borrowing capacity | $ 1,309,000 | $ 1,309,000 | |||||||
Number of credit agreements | agreement | 7 | 7 | |||||||
Credit Facility | |||||||||
Indebtedness | |||||||||
Maximum borrowing capacity | $ 25,000,000 | $ 25,000,000 | $ 150,000,000 | ||||||
Weighted average interest rate (as a percent) | 3.32% | 2.93% | 2.76% | 3.32% | |||||
Remaining borrowing capacity | $ 85,332,000 | $ 85,332,000 | |||||||
Interest expense and other associated costs incurred | 1,621,000 | $ 1,959,000 | $ 2,272,000 | ||||||
Amount outstanding under credit facility | $ 0 | 0 | |||||||
Credit Facility | Senior living communities | |||||||||
Indebtedness | |||||||||
Number of real estate properties securing borrowings on the new credit facility | property | 10 | ||||||||
Number of units in real estate properties securing borrowings on the new credit facility | property | 1,178 | ||||||||
Credit Facility | LIBOR | |||||||||
Indebtedness | |||||||||
Basis spread (as a percent) | 2.50% | ||||||||
Revolving credit facility | |||||||||
Indebtedness | |||||||||
Maximum borrowing capacity | $ 100,000,000 | $ 100,000,000 | |||||||
Interest rate at period end (as a percent) | 3.22% | 3.22% | |||||||
Quarterly commitment fee on the unused part of borrowing availability (as a percent) | 0.35% | ||||||||
Interest expense and other associated costs incurred | $ 45,000 | 192,000 | 192,000 | ||||||
Amount borrowed during the period | $ 0 | 0 | |||||||
Revolving credit facility | LIBOR | |||||||||
Indebtedness | |||||||||
Basis spread (as a percent) | 2.50% | ||||||||
Mortgage notes | |||||||||
Indebtedness | |||||||||
Weighted average interest rate (as a percent) | 6.27% | 6.27% | |||||||
Interest expense and other associated costs incurred | $ 3,235,000 | 2,771,000 | $ 2,665,000 | ||||||
Mortgage notes payable outstanding principal balance | $ 4,873,000 | ||||||||
Interest rate (as a percent) | 8.99% | 6.27% | 6.27% | ||||||
Gain, net of related unamortized costs, on early extinguishment of debt | $ 692,000 | ||||||||
Prepayment penalty (in percent) | 1.00% | ||||||||
Mortgage notes | FNMA | |||||||||
Indebtedness | |||||||||
Number of real estate properties mortgaged | community | 2 | 2 | |||||||
Mortgage notes | FMCC | |||||||||
Indebtedness | |||||||||
Number of real estate properties mortgaged | community | 2 | 2 | |||||||
Mortgage notes | Commercial Lender | |||||||||
Indebtedness | |||||||||
Number of real estate properties mortgaged | community | 2 | 2 | |||||||
Mortgage notes | Senior living communities | |||||||||
Indebtedness | |||||||||
Number of real estate properties mortgaged | property | 6 | 6 | |||||||
SNH | Senior living communities | |||||||||
Indebtedness | |||||||||
Number of real estate properties sold | 5 | 10 | |||||||
Level 3 | Carrying value | |||||||||
Indebtedness | |||||||||
Mortgage notes payable outstanding principal balance | $ 60,397,000 | $ 62,203,000 | $ 60,397,000 | ||||||
Subsequent Event | Revolving credit facility | |||||||||
Indebtedness | |||||||||
Number of extension options | period | 2 | ||||||||
Extension period | 1 year | ||||||||
Subsequent Event | Line of Credit | Credit Facility | Revolving credit facility | |||||||||
Indebtedness | |||||||||
Number of real estate properties securing borrowings on the new credit facility | property | 10 | ||||||||
Number of units in real estate properties securing borrowings on the new credit facility | living_unit | 1,219 |
Indebtedness - Payments of Prin
Indebtedness - Payments of Principal and Interest (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2015 | |
Indebtedness | ||||
Mortgage Notes | $ 58,796 | |||
Principal payments due under terms of mortgages | ||||
2,017 | 1,354 | |||
2,018 | 14,191 | |||
2,019 | 1,231 | |||
2,020 | 1,304 | |||
2,021 | 1,396 | |||
Thereafter | 39,320 | |||
Mortgage Notes | 58,796 | |||
Add: Unamortized net premium and debt issuance costs | 1,601 | |||
Total mortgage notes payable | 60,397 | |||
Less: Short term portion of mortgage notes payable | (1,903) | |||
Long term portion of mortgage notes payable | 58,494 | |||
Mortgage notes | ||||
Indebtedness | ||||
Mortgage Notes | $ 58,796 | |||
Contractual Stated Interest Rate (as a percent) | 6.27% | 8.99% | ||
Effective Interest Rate (as a percent) | 5.15% | |||
Monthly Payment | $ 420 | |||
Interest expense and other associated costs incurred | 3,235 | $ 2,771 | $ 2,665 | |
Principal payments due under terms of mortgages | ||||
Mortgage Notes | 58,796 | |||
June 2,018 | ||||
Indebtedness | ||||
Mortgage Notes | $ 13,305 | |||
Contractual Stated Interest Rate (as a percent) | 6.47% | |||
Effective Interest Rate (as a percent) | 3.45% | |||
Monthly Payment | $ 95 | |||
Principal payments due under terms of mortgages | ||||
Mortgage Notes | 13,305 | |||
June 2,023 | ||||
Indebtedness | ||||
Mortgage Notes | $ 17,010 | |||
Contractual Stated Interest Rate (as a percent) | 5.75% | |||
Effective Interest Rate (as a percent) | 4.83% | |||
Monthly Payment | $ 105 | |||
Principal payments due under terms of mortgages | ||||
Mortgage Notes | 17,010 | |||
February 2,025 | ||||
Indebtedness | ||||
Mortgage Notes | $ 17,141 | |||
Contractual Stated Interest Rate (as a percent) | 6.64% | |||
Effective Interest Rate (as a percent) | 5.86% | |||
Monthly Payment | $ 123 | |||
Principal payments due under terms of mortgages | ||||
Mortgage Notes | 17,141 | |||
September 2,028 | ||||
Indebtedness | ||||
Mortgage Notes | $ 2,524 | |||
Contractual Stated Interest Rate (as a percent) | 6.36% | |||
Effective Interest Rate (as a percent) | 6.70% | |||
Monthly Payment | $ 25 | |||
Principal payments due under terms of mortgages | ||||
Mortgage Notes | 2,524 | |||
September 2,032 | ||||
Indebtedness | ||||
Mortgage Notes | $ 8,816 | |||
Contractual Stated Interest Rate (as a percent) | 6.20% | |||
Effective Interest Rate (as a percent) | 6.70% | |||
Monthly Payment | $ 72 | |||
Principal payments due under terms of mortgages | ||||
Mortgage Notes | $ 8,816 |
Leases with SNH and HCP and M54
Leases with SNH and HCP and Management Agreements with SNH - Lease Summary (Details) $ in Thousands | Jun. 29, 2016communityagreementterm | Dec. 31, 2016USD ($)statecommunityliving_unitproperty | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($)communityterm | Dec. 31, 2015USD ($)communityliving_unit | Aug. 31, 2015USD ($)living_unit | Jul. 31, 2015USD ($)living_unit | Jun. 30, 2015property | May 31, 2015statecommunityliving_unit | Feb. 28, 2015USD ($) | Dec. 31, 2014USD ($)communityliving_unit | Oct. 31, 2014USD ($)living_unit | Jun. 30, 2014USD ($)living_unitproperty | Jan. 31, 2014USD ($)living_unit | Jun. 30, 2016USD ($) | Jul. 31, 2016communityliving_unit | Dec. 31, 2016USD ($)statecommunityperiodpropertyterm | Dec. 31, 2015USD ($)community | Dec. 31, 2014USD ($)community | Dec. 31, 2016USD ($)statecommunityproperty |
Leases | ||||||||||||||||||||
Number of properties leased and operated | property | 189 | 189 | 189 | |||||||||||||||||
Annual minimum rent | $ 206,477 | |||||||||||||||||||
Total minimum annual rent payable | $ 2,198,107 | 2,198,107 | $ 2,198,107 | |||||||||||||||||
Gain recognized on sale leaseback transaction | 3,340 | $ 0 | $ 0 | |||||||||||||||||
Deferred gain on sale and leaseback transaction with Senior Housing Properties Trust | $ 72,695 | $ 0 | 72,695 | 0 | $ 72,695 | |||||||||||||||
Management fee revenue | $ 12,350 | 10,728 | 9,765 | |||||||||||||||||
Lease No. 1 | Two 15-year renewal options | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of properties leased and operated | property | 83 | 83 | 83 | |||||||||||||||||
Annual minimum rent | $ 59,214 | |||||||||||||||||||
Number of renewal options | term | 2 | |||||||||||||||||||
Renewal term | 15 years | |||||||||||||||||||
Lease No. 2 | Two 10-year renewal options | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of properties leased and operated | property | 47 | 47 | 47 | |||||||||||||||||
Annual minimum rent | $ 64,720 | |||||||||||||||||||
Number of renewal options | term | 2 | |||||||||||||||||||
Renewal term | 10 years | |||||||||||||||||||
Lease No. 3 | Two 15-year renewal options | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of properties leased and operated | property | 17 | 17 | 17 | |||||||||||||||||
Annual minimum rent | $ 34,949 | |||||||||||||||||||
Number of renewal options | term | 2 | |||||||||||||||||||
Renewal term | 15 years | |||||||||||||||||||
Lease No. 4 | Two 15-year renewal options | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of properties leased and operated | property | 29 | 29 | 29 | |||||||||||||||||
Annual minimum rent | $ 35,119 | |||||||||||||||||||
Number of renewal options | term | 2 | |||||||||||||||||||
Renewal term | 15 years | |||||||||||||||||||
Lease No. 5 | Two 15-year renewal options | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of properties leased and operated | property | 9 | 9 | 9 | |||||||||||||||||
Annual minimum rent | $ 9,822 | |||||||||||||||||||
Number of renewal options | term | 2 | |||||||||||||||||||
Renewal term | 15 years | |||||||||||||||||||
One HCP lease | One 10-year renewal options | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of properties leased and operated | property | 4 | 4 | 4 | |||||||||||||||||
Annual minimum rent | $ 2,653 | |||||||||||||||||||
Number of renewal options | term | 1 | |||||||||||||||||||
Renewal term | 10 years | |||||||||||||||||||
SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Total minimum annual rent payable | $ 203,824 | $ 203,824 | $ 203,824 | |||||||||||||||||
Rent expense under leases, net of lease inducement amortization | 198,786 | 196,255 | 195,538 | |||||||||||||||||
Outstanding rent due and payable | 18,338 | 17,497 | 18,338 | 17,497 | 18,338 | |||||||||||||||
Amount funded for leasehold improvements | 21,437 | 21,323 | $ 25,804 | 21,437 | 21,323 | 25,804 | 21,437 | |||||||||||||
Increase (decrease) in annual lease rent payable | 1,720 | 1,724 | 2,066 | |||||||||||||||||
Assets held for sale for increased rent pursuant to the terms of leases with SNH | $ 7,255 | $ 8,289 | 7,255 | 8,289 | $ 7,255 | |||||||||||||||
Management fee revenue | $ 11,548 | $ 10,518 | $ 9,543 | |||||||||||||||||
Minimum percentage of ownership interest of voting stock above which the option to cancel all the lease rights exist | 9.80% | 9.80% | 9.80% | |||||||||||||||||
SNH | Two 10-year renewal options | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Renewal term | 10 years | |||||||||||||||||||
SNH | Two 15-year renewal options | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Renewal term | 15 years | |||||||||||||||||||
Senior living communities | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of properties leased and operated | community | 189 | 189 | 189 | |||||||||||||||||
Number of states in which real estate properties are located | state | 32 | 32 | 32 | |||||||||||||||||
Senior living communities | HCP | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of properties leased and operated | community | 4 | 4 | 4 | |||||||||||||||||
Renewal term | 10 years | |||||||||||||||||||
Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of properties leased and operated | community | 185 | 177 | 181 | 185 | 177 | 181 | 185 | |||||||||||||
Percentage rent | $ 5,646 | $ 5,698 | $ 5,775 | |||||||||||||||||
Number of real estate properties sold | 5 | 10 | ||||||||||||||||||
Number of communities purchased by related party | community | 7 | |||||||||||||||||||
Aggregate purchase price | $ 112,350 | |||||||||||||||||||
Carrying value of sale leaseback | $ 29,706 | $ 29,706 | ||||||||||||||||||
Gain recognized on sale leaseback transaction | $ 82,644 | |||||||||||||||||||
Transaction costs in connection with sale | $ 750 | |||||||||||||||||||
Number of communities managed | community | 68 | 60 | 46 | |||||||||||||||||
Incentive fee revenue | $ 108 | |||||||||||||||||||
Capital expenditure management revenue | $ 432 | |||||||||||||||||||
Number of communities managed, additions | community | 14 | 3 | ||||||||||||||||||
Number of living units in communities managed, additions | living_unit | 838 | 301 | ||||||||||||||||||
Number of states in which real estate properties are located | state | 4 | |||||||||||||||||||
Number of communities under special pooling agreement | community | 10 | |||||||||||||||||||
Capital expenditure projects fee as a percentage of amount funded by related party | 7.00% | |||||||||||||||||||
Senior living communities | SNH | D&R Yonkers LLC | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of renewal options | period | 9 | |||||||||||||||||||
Renewal term | 5 years | |||||||||||||||||||
Management fee revenue | $ 262 | $ 210 | $ 222 | |||||||||||||||||
Management fees as a percentage of gross revenues | 3.00% | 3.00% | 3.00% | |||||||||||||||||
SNF | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Increase (decrease) in annual lease rent payable | $ (2) | |||||||||||||||||||
Number of units within the community that was sold | living_unit | 117 | |||||||||||||||||||
Minimum | Senior living communities | HCP | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Minimum annual escalator percentage rent (as a percent) | 2.00% | |||||||||||||||||||
Maximum | Senior living communities | HCP | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Minimum annual escalator percentage rent (as a percent) | 4.00% | |||||||||||||||||||
New Long Term Lease Agreement | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Rent as percentage of gross revenue | 4.00% | 4.00% | ||||||||||||||||||
Initial annual rent | $ 8,426 | |||||||||||||||||||
Number of consecutive years of lease term | term | 2 | 2 | ||||||||||||||||||
Lease term | 15 years | 15 years | ||||||||||||||||||
New Long Term Lease Agreement | Minimum | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of communities reassigned to another agreement | community | 1 | |||||||||||||||||||
Existing Pooling Agreements | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of pooling agreements terminated | agreement | 3 | |||||||||||||||||||
Number of existing pooling agreements | agreement | 4 | |||||||||||||||||||
New Pooling Agreement | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of new pooling agreements | agreement | 10 | |||||||||||||||||||
New Pooling Agreement | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of communities managed | community | 10 | |||||||||||||||||||
Management fees as a percentage of gross revenues | 5.00% | |||||||||||||||||||
Incentive fee as percentage of the annual net operating income after the entity realizes an annual return equal to 8% of invested capital | 20.00% | |||||||||||||||||||
Annual return as a percentage of invested surplus specified as a base for determining incentive fee | 7.00% | |||||||||||||||||||
AL Management Agreement Before May 2015 | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Management fees as a percentage of gross revenues | 3.00% | |||||||||||||||||||
Incentive fee as percentage of the annual net operating income after the entity realizes an annual return equal to 8% of invested capital | 35.00% | |||||||||||||||||||
AL Management Agreement Before May 2015 | Minimum | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Management fees as a percentage of gross revenues | 3.00% | |||||||||||||||||||
Incentive fee as percentage of the annual net operating income after the entity realizes an annual return equal to 8% of invested capital | 35.00% | |||||||||||||||||||
Annual return as a percentage of invested surplus specified as a base for determining incentive fee | 8.00% | |||||||||||||||||||
AL Management Agreement On Or After May 2015 | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Capital expenditure projects fee as a percentage of amount funded by related party | 3.00% | |||||||||||||||||||
AL Management Agreement On Or After May 2015 | Maximum | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Management fees as a percentage of gross revenues | 5.00% | |||||||||||||||||||
Incentive fee as percentage of the annual net operating income after the entity realizes an annual return equal to 8% of invested capital | 20.00% | |||||||||||||||||||
Annual return as a percentage of invested surplus specified as a base for determining incentive fee | 7.00% | |||||||||||||||||||
Texas | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Increase (decrease) in annual lease rent payable | $ (210) | |||||||||||||||||||
Number of units within the community that was sold | living_unit | 48 | |||||||||||||||||||
Wisconsin | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of communities managed, additions | community | 2 | |||||||||||||||||||
Number of living units in communities managed, additions | living_unit | 228 | |||||||||||||||||||
Wisconsin | SNF | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Increase (decrease) in annual lease rent payable | $ (25) | $ (85) | $ (452) | |||||||||||||||||
Number of real estate properties sold | property | 2 | |||||||||||||||||||
Number of units within the community that was sold | living_unit | 39 | 139 | ||||||||||||||||||
Virginia | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Increase (decrease) in annual lease rent payable | $ (285) | |||||||||||||||||||
Number of units within the community that was sold | living_unit | 55 | |||||||||||||||||||
Arizona | SNF | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Increase (decrease) in annual lease rent payable | $ (590) | |||||||||||||||||||
Pennsylvania | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Increase (decrease) in annual lease rent payable | $ (23) | |||||||||||||||||||
Iowa | SNF | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Increase (decrease) in annual lease rent payable | $ (16) | |||||||||||||||||||
Number of units within the community that was sold | living_unit | 12 | |||||||||||||||||||
Florida | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Increase (decrease) in annual lease rent payable | 10 | $ 39 | ||||||||||||||||||
Illinois | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Increase (decrease) in annual lease rent payable | $ 1,400 | |||||||||||||||||||
Number of communities acquired | community | 2 | |||||||||||||||||||
Number of units acquired | living_unit | 126 | |||||||||||||||||||
Georgia | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Number of communities managed, additions | community | 5 | 2 | ||||||||||||||||||
Number of living units in communities managed, additions | living_unit | 395 | 40 | ||||||||||||||||||
Other Current Liabilities | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Deferred gain on sale and leaseback transaction with Senior Housing Properties Trust | $ 6,609 | |||||||||||||||||||
Other Noncurrent Liabilities | Senior living communities | SNH | ||||||||||||||||||||
Leases | ||||||||||||||||||||
Deferred gain on sale and leaseback transaction with Senior Housing Properties Trust | $ 72,695 | $ 72,695 | $ 72,695 |
Leases with SNH and HCP and M55
Leases with SNH and HCP and Management Agreements with SNH - Future Minimum Payments (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Future minimum rents | |
2,017 | $ 206,513 |
2,018 | 206,566 |
2,019 | 206,621 |
2,020 | 206,677 |
2,021 | 206,734 |
Thereafter | 1,164,996 |
Total | $ 2,198,107 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Shareholders' Equity | |||
Share based compensation | $ 234 | ||
Weighted average amortization period stock based compensation | 2 years | ||
Directors, officers and others | |||
Shareholders' Equity | |||
Common shares issued (in shares) | 569,400 | 521,900 | 403,050 |
Aggregate market value of shares issued | $ 1,373 | $ 1,707 | $ 1,742 |
Weighted average share price (in dollars per share) | $ 2.41 | $ 3.27 | $ 4.32 |
Officers and others | |||
Shareholders' Equity | |||
Portion of awards that vest on the date of grant | one fifth | ||
Award vesting percentage | 20.00% | ||
Vesting period | 4 years | ||
Former Treasurer and CFO | |||
Shareholders' Equity | |||
Common shares issued (in shares) | 35,000 | 35,000 | |
Share based compensation | $ 234 | ||
Share Award Plans | |||
Shareholders' Equity | |||
Weighted average share price (in dollars per share) | $ 2.70 | ||
Unvested common shares | 836,010 | 685,910 | 647,330 |
Share based compensation | $ 1,194 | $ 1,618 | $ 1,485 |
Estimated future stock based compensation expense | $ 2,480 | ||
Remaining common shares available for issuance | 3,458,920 | ||
Share Award Plans | Officers and others | |||
Shareholders' Equity | |||
Shares acquired | 34,999 | 26,404,000 | |
Aggregare acquired price | $ 86,000 | $ 91 |
Acquisitions and Dispositions57
Acquisitions and Dispositions (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | 36 Months Ended | |||
Jun. 30, 2016community | Nov. 30, 2015USD ($)communityliving_unit | Jun. 30, 2015property | May 31, 2014USD ($)living_unit | Jun. 30, 2016USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2016communityliving_unit | |
Independent living community | Acquisition One | |||||||
Acquisitions | |||||||
Number of properties owned and operated | community | 2 | ||||||
Gross amount paid on acquisition | $ 26,193 | ||||||
Percentage amount of living services paid by residents | 100.00% | ||||||
Mortgage debt assumed | 17,291 | ||||||
Acquisition related expenses | $ 450 | ||||||
Allocation of purchase price to the estimated fair values | |||||||
Land | 1,239 | ||||||
Building and improvements | 22,500 | ||||||
Furniture, fixtures and equipment | 1,508 | ||||||
Total property, plant and equipment | 25,247 | ||||||
Intangible assets | 1,909 | ||||||
Premium on assumed mortgage debt | (963) | ||||||
Total assets acquired and liabilities assumed | $ 26,193 | ||||||
Independent living community one | Acquisition One | |||||||
Acquisitions | |||||||
Number of units in properties managed | living_unit | 68 | ||||||
Independent living community two | Acquisition One | |||||||
Acquisitions | |||||||
Number of units in properties managed | living_unit | 84 | ||||||
Senior living communities | |||||||
Acquisitions | |||||||
Number of properties owned and operated | community | 26 | ||||||
Number of units in properties managed | living_unit | 8,788 | ||||||
Senior living communities | Acquisition Two | |||||||
Acquisitions | |||||||
Number of units in properties managed | living_unit | 116 | ||||||
Gross amount paid on acquisition | $ 20,000 | ||||||
Percentage amount of living services paid by residents | 100.00% | ||||||
Mortgage debt assumed | $ 13,920 | ||||||
Net working capital liabilities | 68 | ||||||
Mortgage premium | 1,598 | ||||||
Acquisition related expenses | $ 81 | ||||||
Allocation of purchase price to the estimated fair values | |||||||
Land | 1,208 | ||||||
Building and improvements | 17,946 | ||||||
Furniture, fixtures and equipment | 421 | ||||||
Total property, plant and equipment | 19,575 | ||||||
Intangible assets | 1,937 | ||||||
Premium on assumed mortgage debt | (1,598) | ||||||
Total assets acquired and liabilities assumed | $ 19,914 | ||||||
SNH | Senior living communities | |||||||
Allocation of purchase price to the estimated fair values | |||||||
Number of communities purchased by related party | community | 7 | ||||||
Number of real estate properties sold | 5 | 10 |
Discontinued Operations (Detail
Discontinued Operations (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | 36 Months Ended | |||
Sep. 30, 2016USD ($)living_unit | Jun. 30, 2015property | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2016community | |
Summary of the operating results of discontinued operations | ||||||
Income (loss) from discontinued operations, net of tax | $ 194 | $ (2,324) | $ (6,056) | |||
Discontinued operations, disposed of by sale | SNH | ||||||
Summary of the operating results of discontinued operations | ||||||
Revenues | 932 | 4,191 | 22,051 | |||
Expenses | (500) | (5,818) | (28,028) | |||
Impairment on discontinued assets | (112) | (697) | 0 | |||
Provision for income taxes | (126) | 0 | (79) | |||
Income (loss) from discontinued operations, net of tax | 194 | $ (2,324) | $ (6,056) | |||
Assisted living communities | Discontinued operations, disposed of by sale | ||||||
Discontinued Operations | ||||||
Number of living units sold | living_unit | 32 | |||||
Proceeds from sale of real estate excluding closing costs | $ 225 | |||||
Impairment of long-lived assets | $ 112 | |||||
Senior living communities | SNH | ||||||
Discontinued Operations | ||||||
Number of real estate properties sold | 5 | 10 |
Off Balance Sheet Arrangements
Off Balance Sheet Arrangements (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($)property | |
Pledged Assets, Not Separately Reported on Statement of Financial Position [Abstract] | |
Carrying value of accounts receivable and other assets pledged | $ 15,462 |
Number of properties leased from SNH on which pledge arises | property | 17 |
Off balance sheet arrangements, liability | $ 0 |
Off balance sheet arrangements, asset | $ 0 |
Legal Proceedings and Claims (D
Legal Proceedings and Claims (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Jun. 30, 2016 | Mar. 31, 2016 | May 31, 2015 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |||||||
Estimated minimum loss | $ 0 | ||||||
Revenue reserve for payment of historical medicare payments | $ 6,733 | $ 4,000 | |||||
Additional revenue reserve for historical medicare obligations | 2,400 | ||||||
OIG payment in exchange for customary release | $ 8,600 | 4,756 | $ 3,606 | ||||
Accrued costs and penalties expected to incur related to the compliance assessment not yet paid | 10,100 | ||||||
Increase In revenue | $ 1,500 | ||||||
Increase in senior living revenue | 1,000 | ||||||
Decrease in other senior living operating expenses | $ 500 | ||||||
Damages awarded | $ 19,200 | ||||||
Damages awarded for pain and suffering | $ 2,500 | ||||||
Settlement amount | $ 7,250 | ||||||
Insurance reimbursement receivable | $ 3,021 | ||||||
Accrued litigation costs | $ 4,229 |
Business Management Agreement61
Business Management Agreement with RMR LLC - Narrative (Details) - RMR LLC - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Business Management Agreement [Line Items] | |||
Business management fee (as a percent) | 0.60% | ||
Business management fees | $ 8,932 | $ 8,737 | $ 8,461 |
Information system service charge | 4,024 | ||
RMR LLC notice period for termination of agreement | 120 days | ||
Company notice period for termination of agreement | 60 days | ||
Termination fee (as a percent of base management fee) | 287.50% | ||
Management agreement, termination fee, base management fee period | 24 months | ||
Reimbursable expenses, internal audit costs | $ 235 | $ 259 | $ 286 |
Transition service period | 120 days |
Related Person Transactions - S
Related Person Transactions - SNH (Details) | 12 Months Ended | ||
Dec. 31, 2016communitypropertyshares | Dec. 31, 2015community | Dec. 31, 2014community | |
Related person transactions | |||
Number of real estate properties leased | property | 189 | ||
Senior living communities | |||
Related person transactions | |||
Number of real estate properties leased | 189 | ||
SNH | |||
Related person transactions | |||
Ownership percentage by former parent | 100.00% | ||
Number of shares owned | shares | 4,235,000 | ||
Percentage of outstanding common shares owned | 8.50% | ||
Minimum percentage of ownership interest beyond which consent of related party required | 9.80% | ||
Minimum percentage of ownership interest of voting stock above which the option to cancel all the lease rights exist | 9.80% | ||
SNH | Senior living communities | |||
Related person transactions | |||
Number of real estate properties leased | 185 | 177 | 181 |
Number of communities managed | 68 | 60 | 46 |
Related Person Transactions - R
Related Person Transactions - REITs, for which RMR LLC provides Management Services (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 07, 2016 | Nov. 10, 2016 | Oct. 02, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Related person transactions | ||||||||
Utilities and real estate taxes | $ 201,667 | $ 199,075 | $ 197,359 | |||||
Equity investment of an investee | $ 6,827 | 7,116 | 6,827 | |||||
Income (loss) arising from investment | 137 | 20 | 87 | |||||
Other comprehensive income (loss) | $ 152 | $ (20) | $ 2 | |||||
RMR LLC | ||||||||
Related person transactions | ||||||||
Number of shares granted under the award plan (in shares) | 87,000 | 98,500 | 81,150 | |||||
Aggregate value of awards granted during the period | $ 213 | $ 313 | $ 357 | |||||
Shares repurchased during period (in shares) | 15,362 | 751 | 12,488 | |||||
Weighted average share price (in dollars per share) | $ 2.45 | $ 1.91 | $ 3.18 | $ 3.18 | ||||
Rent expense under leases | 923 | |||||||
Utilities and real estate taxes | 1,796 | $ 1,673 | 1,402 | |||||
Payments for directors' and officers' insurance premiums | $ 217 | 234 | 357 | |||||
ABP Trust | ||||||||
Related person transactions | ||||||||
Shares authorized to be acquired by related party, up to (as a percent) | 38.00% | |||||||
Shares acquired by related party | 17,999,999 | |||||||
Price per share (in dollars per share) | $ 3 | |||||||
Standstill and lock-up agreement period | 10 years | |||||||
Shares, amount under Standstill and Lock-Up Agreement | 18,000,000 | |||||||
Number of shares owned | 18,354,621 | |||||||
Beneficial ownership percentage | 36.70% | |||||||
AIC | ||||||||
Related person transactions | ||||||||
Service fee paid to related party (as a percent) | 3.00% | |||||||
Property insurance premium | $ 4,595 | 4,085 | 3,901 | |||||
Equity investment of an investee | $ 6,827 | 7,116 | 6,827 | |||||
Income (loss) arising from investment | 137 | 20 | 87 | |||||
Other comprehensive income (loss) | $ 152 | $ (20) | $ 2 | |||||
General and Administrative Expenses | ABP Trust | ||||||||
Related person transactions | ||||||||
Expenses from transactions with related party | $ 438 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Employee Benefit Plans | |||
Expenses for plans including contributions | $ 989 | $ 1,276 | $ 1,257 |
Senior Living Wages and Benefits | |||
Employee Benefit Plans | |||
Expenses for plans including contributions | 826 | 1,063 | 1,031 |
General and Administrative Expenses | |||
Employee Benefit Plans | |||
Expenses for plans including contributions | $ 163 | $ 213 | $ 226 |
Selected Quarterly Financial 65
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Selected Quarterly Financial Information [Abstract] | |||||||||||
Revenues | $ 346,252 | $ 344,711 | $ 342,933 | $ 344,212 | $ 344,596 | $ 344,572 | $ 342,269 | $ 333,973 | $ 1,378,108 | $ 1,365,410 | $ 1,328,075 |
Operating loss | (5,595) | (6,095) | (3,528) | (754) | (5,021) | (25,593) | (2,923) | (3,487) | (15,972) | (37,024) | (19,180) |
Net loss from continuing operations | (5,952) | (5,844) | (7,900) | (2,311) | (6,312) | (26,250) | (3,364) | (4,833) | (22,007) | (40,759) | (79,350) |
Net loss | $ (5,627) | $ (5,897) | $ (7,666) | $ (2,623) | $ (6,383) | $ (27,488) | $ (3,910) | $ (5,302) | $ (21,813) | $ (43,083) | $ (85,406) |
Net loss per share - basic and diluted (in dollars per share) | $ (0.11) | $ (0.12) | $ (0.16) | $ (0.06) | $ (0.13) | $ (0.57) | $ (0.08) | $ (0.11) | $ (0.45) | $ (0.89) | $ (1.78) |