Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Jun. 30, 2014 | Dec. 12, 2014 | |
Document and Entity Information | ||
Entity Registrant Name | FIVE STAR QUALITY CARE INC | |
Entity Central Index Key | 1159281 | |
Document Type | 10-Q | |
Document Period End Date | 30-Jun-14 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 48,661,042 | |
Document Fiscal Year Focus | 2014 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $35,085 | $23,628 |
Accounts receivable, net of allowance | 38,588 | 36,940 |
Due from related persons | 8,897 | 11,659 |
Investments in available for sale securities, including restricted | 22,738 | 19,150 |
Restricted cash | 5,077 | 9,003 |
Prepaid and other current assets | 33,229 | 33,799 |
Assets of discontinued operations | 2,758 | 16,705 |
Total current assets | 146,372 | 150,884 |
Property and equipment, net | 357,046 | 340,276 |
Equity investment in an investee | 6,801 | 5,913 |
Restricted cash | 5,821 | 9,795 |
Restricted investments in available for sale securities | 14,460 | 11,905 |
Goodwill and other intangible assets | 27,357 | 26,407 |
Other long term assets | 47,704 | 45,003 |
TOTAL ASSETS | 605,561 | 590,183 |
Current liabilities: | ||
Revolving credit facility, secured, principally by real estate | 20,000 | 35,000 |
Accounts payable and accrued expenses | 83,353 | 69,343 |
Accrued compensation and benefits | 39,984 | 31,888 |
Due to related persons | 21,647 | 20,587 |
Mortgage notes payable | 1,805 | 1,159 |
Accrued real estate taxes | 10,566 | 9,934 |
Security deposits and current portion of continuing care contracts | 7,179 | 8,025 |
Other current liabilities | 23,718 | 18,607 |
Liabilities of discontinued operations | 543 | 3,985 |
Total current liabilities | 208,795 | 198,528 |
Long term liabilities: | ||
Mortgage notes payable | 50,712 | 36,461 |
Continuing care contracts | 1,422 | 1,531 |
Accrued self-insurance obligations | 36,842 | 38,002 |
Other long term liabilities | 5,143 | 5,283 |
Total long term liabilities | 94,119 | 81,277 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common stock, $.01 par value: 75,000,000 shares authorized, 48,661,042 shares issued and outstanding | 486 | 486 |
Additional paid in capital | 356,129 | 355,570 |
Accumulated deficit | -57,646 | -48,996 |
Accumulated other comprehensive income | 3,678 | 3,318 |
Total shareholders' equity | 302,647 | 310,378 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $605,561 | $590,183 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance (in dollars) | $4,035 | $4,281 |
Investments in available for sale securities, restricted (in dollars) | $7,829 | $4,690 |
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 | 48,613,442 | 48,613,442 |
Common stock, shares outstanding | 48,613,442 | 48,613,442 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Revenues: | ||||
Senior living revenue | $275,388 | $268,833 | $547,169 | $538,139 |
Management fee revenue | 2,433 | 2,281 | 4,858 | 4,583 |
Reimbursed costs incurred on behalf of managed communities | 54,978 | 52,333 | 109,183 | 104,577 |
Total revenues | 332,799 | 323,447 | 661,210 | 647,299 |
Operating expenses: | ||||
Senior living wages and benefits | 134,179 | 130,637 | 266,962 | 263,283 |
Other senior living operating expenses | 70,334 | 64,884 | 143,151 | 130,339 |
Costs incurred on behalf of managed communities | 54,978 | 52,333 | 109,183 | 104,577 |
Rent expense | 49,203 | 48,279 | 98,277 | 96,292 |
General and administrative | 16,574 | 15,059 | 36,322 | 30,515 |
Depreciation and amortization | 7,975 | 6,585 | 15,251 | 12,955 |
Total operating expenses | 333,243 | 317,777 | 669,146 | 637,961 |
Operating (loss) income | -444 | 5,670 | -7,936 | 9,338 |
Interest, dividend and other income | 213 | 211 | 409 | 408 |
Interest and other expense | -1,261 | -1,355 | -2,479 | -2,811 |
Gain (loss) on sale of available for sale securities reclassified from other comprehensive (loss) income | 13 | -117 | 326 | -30 |
(Loss) income from continuing operations before income taxes and equity in (loss) earnings of an investee | -1,479 | 4,409 | -9,680 | 6,905 |
Benefit from (provision for) income taxes | 364 | -1,533 | 2,795 | -912 |
Equity in (loss) earnings of an investee | 118 | 79 | 21 | 155 |
(Loss) income from continuing operations | -997 | 2,955 | -6,864 | 6,148 |
(Loss) income from discontinued operations | -894 | -1,499 | -1,786 | -2,300 |
Net (loss) income | ($1,891) | $1,456 | ($8,650) | $3,848 |
Weighted average shares outstanding - diluted | 48,013,000 | 50,166,000 | 48,007,000 | 48,244,000 |
Basic and diluted (loss) income per share from: | ||||
Continuing operations | ($0.02) | $0.06 | ($0.14) | $0.13 |
Discontinued operations | ($0.02) | ($0.03) | ($0.04) | ($0.05) |
Net (loss) income per share - basic and diluted | ($0.04) | $0.03 | ($0.18) | $0.08 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net (loss) income | ($1,891) | $1,456 | ($8,650) | $3,848 |
Other comprehensive income (loss): | ||||
Unrealized gain (loss) on investments in available for sale securities, net of tax | 268 | -233 | 521 | -173 |
Unrealized gain (loss) of an equity investment in an investee | 22 | -73 | 41 | -81 |
Less: Realized gain on investments in available for sale securities reclassified and included in net income, net of tax | -8 | 70 | -202 | 18 |
Other comprehensive (loss) income | 282 | -236 | 360 | -236 |
Comprehensive (loss) income | ($1,609) | $1,220 | ($8,290) | $3,612 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
Cash flows from operating activities: | ||
Net (loss) income | ($8,650) | $3,848 |
Adjustments to reconcile net (loss) income to cash provided by operating activities: | ||
Depreciation and amortization | 15,774 | 13,595 |
Loss from discontinued operations before income tax | 2,757 | 3,902 |
(Gain) loss on sale of available for sale securities | -326 | 30 |
Equity in loss (earnings) of an investee | -21 | -155 |
Stock-based compensation | 559 | 588 |
Deferred income taxes | -4,756 | -1,597 |
Provision for losses on receivables | 2,607 | 2,740 |
Changes in assets and liabilities: | ||
Accounts receivable | -4,255 | -7,975 |
Prepaid expenses and other assets | 1,832 | 10,922 |
Accounts payable and accrued expenses | 15,096 | -16,224 |
Accrued compensation and benefits | 8,096 | 3,510 |
Due from (to) related persons, net | 2,742 | -9 |
Other current and long term liabilities | 3,569 | -1,053 |
Cash provided by operating activities | 35,024 | 12,122 |
Cash flows from investing activities: | ||
Payments into (from) restricted cash and investment accounts, net | 7,900 | -3,684 |
Acquisition of property and equipment | -28,906 | -23,712 |
Acquisition of senior living communities, net of liabilities assumed | -5,926 | |
Purchase of available for sale securities | -13,585 | -5,333 |
Investment in Affiliates Insurance Company | -825 | |
Proceeds from sale of property and equipment to Senior Housing Properties Trust | 17,423 | 13,334 |
Proceeds from sale of available for sale securities | 8,225 | 5,213 |
Cash provided by (used in) investing activities | -15,694 | -14,182 |
Cash flows from financing activities: | ||
Proceeds from borrowings on credit facilities | 5,000 | 20,000 |
Repayments of borrowings on credit facilities | -20,000 | -20,000 |
Repayments of mortgage notes payable | -621 | -538 |
Cash provided by (used in) financing activities | -15,621 | -538 |
Cash flows from discontinued operations: | ||
Net cash provided by (used in) operating activities | 7,748 | -3,822 |
Net cash used in investing activities | 8,627 | |
Net cash used in financing activities | -7,534 | |
Net cash flows provided by (used in) discontinued operations | 7,748 | -2,729 |
Change in cash and cash equivalents | 11,457 | -5,327 |
Cash and cash equivalents at beginning of period | 23,628 | 24,638 |
Cash and cash equivalents at end of period | 35,085 | 19,311 |
Supplemental cash flow information: | ||
Cash paid for interest | 1,599 | 1,788 |
Cash paid (refunded) for income taxes, net | 749 | 1,394 |
Non-cash activities: | ||
Issuance of common stock | 182 | |
Real estate acquisition | -15,518 | |
Assumption of mortgage note payable | $15,518 |
Basis_of_Presentation_and_Orga
Basis of Presentation and Organization | 6 Months Ended |
Jun. 30, 2014 | |
Organization and Business | |
Organization and Business | Note 1. Basis of Presentation and Organization |
General | |
The accompanying condensed consolidated financial statements of Five Star Quality Care, Inc. and its subsidiaries, which we refer to as we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2013, or our Annual Report. In the opinion of our management, all adjustments, which include only normal recurring adjustments, considered necessary for a fair presentation have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior year’s condensed consolidated financial statements to conform to the current year’s presentation. | |
We operate senior living communities, including independent living communities, assisted living communities and skilled nursing facilities, or SNFs. As of June 30, 2014, we operated 256 senior living communities located in 31 states containing 30,114 living units, including 225 primarily independent and assisted living communities with 27,292 living units and 31 SNFs with 2,822 living units. As of June 30, 2014, we owned and operated 31 communities (3,061 living units), we leased and operated 181 communities (20,002 living units) and we managed 44 communities (7,051 living units). These 256 senior living communities included 10,464 independent living apartments, 14,440 assisted living suites and 5,210 skilled nursing units. The foregoing numbers exclude: (i) 38 living units in one assisted living community that has been temporarily closed for a major renovation; (ii) one assisted living community with 32 living units that we own which is being offered for sale and is classified as a discontinued operation; and (iii) four SNFs and three assisted living communities with a total of 480 living units that we lease from Senior Housing Properties Trust or its subsidiaries, or SNH, that are being offered for sale and are classified as discontinued operations. | |
Revisions to Prior Period Financial Statements | |
As discussed further in the notes to our financial statements contained in our Annual Report, we identified errors related to our accounts payable and certain other matters that affected previously reported interim periods in 2013. We have revised the prior year’s condensed consolidated financial statements to correct for these errors in the periods in which they occurred. | |
Segment Information | |
We have two operating segments: senior living communities and rehabilitation and wellness. In the senior living community segment, we operate for our own account or manage for the account of SNH independent living communities, assisted living communities and SNFs that are subject to centralized oversight and provide housing and services to elderly residents. Our rehabilitation and wellness operating segment does not meet any of the quantitative thresholds for a reportable segment as prescribed under Financial Accounting Standards Board, or FASB, Accounting Standards Codification TM, or ASC, Topic 280 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 captive insurance company subsidiary, which participates in our workers’ compensation, professional liability and automobile insurance programs, that is organized in the Cayman Islands. | |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2014 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Note 2. Recent Accounting Pronouncements |
In August 2014, the FASB issued Accounting Standards Update 2014-15, Presentation of Financial Statements – Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The update 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 update is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter with early adoption permitted. The implementation of this update is not expected to cause any significant changes to our condensed consolidated financial statements. | |
Property_and_Equipment
Property and Equipment | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Property and Equipment | ||||||||
Property and Equipment | Note 3. Property and Equipment | |||||||
Property and equipment consists of the following: | ||||||||
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
Land | $ | 24,172 | $ | 22,214 | ||||
Buildings and improvements | 304,150 | 286,467 | ||||||
Furniture, fixtures and equipment | 126,176 | 114,765 | ||||||
Property and equipment, at cost | 454,498 | 423,446 | ||||||
Accumulated depreciation | -97,452 | -83,170 | ||||||
Property and equipment, net | $ | 357,046 | $ | 340,276 | ||||
We recorded depreciation expense of $7,290 and $6,298 for the three months ended June 30, 2014 and 2013, respectively, and $14,283 and $12,382 for the six months ended June 30, 2014 and 2013, respectively, relating to our property and equipment. | ||||||||
As of June 30, 2014, we had $7,474 of assets included in our property and equipment associated with certain senior living communities that we lease from SNH that we typically request that SNH purchase from us for an increase in future rent; however, we are not obligated to make these sales and SNH is not obligated to fund such amounts. See Note 10. | ||||||||
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income | 6 Months Ended | |||||||||
Jun. 30, 2014 | ||||||||||
Accumulated Other Comprehensive Income | ||||||||||
Accumulated Other Comprehensive Income | Note 4. Accumulated Other Comprehensive Income | |||||||||
The following table details the changes in accumulated other comprehensive income, net of tax, for the six months ended June 30, 2014: | ||||||||||
Equity Investment in an Investee | Investments in Available for Sale Securities | Accumulated Other Comprehensive Income | ||||||||
Balance at January 1, 2014 | $ | 48 | $ | 3,270 | $ | 3,318 | ||||
Unrealized gain on investments, net of tax | — | 253 | 253 | |||||||
Equity interest in an investee’s unrealized gain on investments | 19 | — | 19 | |||||||
Reclassification adjustment: | ||||||||||
Realized gain on investments, net of tax | — | -194 | -194 | |||||||
Balance at March 31, 2014 | 67 | 3,329 | 3,396 | |||||||
Unrealized gain on investments, net of tax | — | 268 | 268 | |||||||
Equity interest in an investee’s unrealized gain on investments | 22 | — | 22 | |||||||
Reclassification adjustment: | ||||||||||
Realized gain on investments, net of tax | — | -8 | -8 | |||||||
Balance at June 30, 2014 | $ | 89 | $ | 3,589 | $ | 3,678 | ||||
Accumulated other comprehensive income represents the unrealized appreciation of our investments, net of tax, and our share of other comprehensive income of Affiliates Insurance Company, or AIC. | ||||||||||
Income_Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2014 | |
Income Taxes | |
Income Taxes | Note 5. Income Taxes |
For the six months ended June 30, 2014, we recognized a net tax benefit from continuing operations of $2,795. We also recognized a tax benefit from discontinued operations of $971. As of December 31, 2013, our federal net operating loss carry forward, which begins to expire in 2026 if unused, was approximately $81,583. This includes $278 of federal net operating losses that are 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. As of December 31, 2013, our tax credit carry forward, which begins to expire in 2022 if unused, was approximately $15,235. Our net operating loss carry forwards and tax credit carry forwards are subject to possible audit and adjustments by the Internal Revenue Service. | |
We maintain a partial valuation allowance against certain deferred tax assets related to impaired investments and certain state net operating loss carry forwards. When we believe that we will more likely than not realize the benefit of these deferred tax assets, we will record deferred tax assets as an income tax benefit in our condensed consolidated statement of operations, which will affect our results of operations. | |
Earnings_Per_Share
Earnings Per Share | 6 Months Ended | |||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Earnings Per Share | Note 6. Earnings Per Share | |||||||||||||||||
We computed basic earnings per common share, or EPS, for the three and six months ended June 30, 2014 and 2013 using the weighted average number of shares of our common stock, $.01 par value per share, or our common shares, outstanding during the periods. Diluted EPS reflects the more dilutive earnings per common share amount calculated using the two-class method or the treasury stock method. For the six months ended June 30, 2013, 1,913 potentially dilutive common shares related to our former convertible senior notes due in 2026, or the Notes, were not included in the computation of diluted EPS because to do so would have been antidilutive. | ||||||||||||||||||
The following table provides a reconciliation of income (loss) from continuing operations and loss from discontinued operations and the number of common shares used in the calculations of diluted EPS: | ||||||||||||||||||
Three Months Ended June 30, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Income | Per | Income | Per | |||||||||||||||
(loss) | Shares | Share | (loss) | Shares | Share | |||||||||||||
(Loss) income from continuing operations | $ | -997 | 48,013 | $ | -0.02 | $ | 2,955 | 48,253 | $ | 0.06 | ||||||||
Effect of the Notes | — | — | 159 | 1,913 | ||||||||||||||
Diluted (loss) income from continuing operations | $ | -997 | 48,013 | $ | -0.02 | $ | 3,114 | 50,166 | $ | 0.06 | ||||||||
Diluted loss from discontinued operations | $ | -894 | 48,013 | $ | -0.02 | $ | -1,499 | 50,166 | $ | -0.03 | ||||||||
Six Months Ended June 30, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Income | Per | Income | Per | |||||||||||||||
(loss) | Shares | Share | (loss) | Shares | Share | |||||||||||||
(Loss) income from continuing operations | $ | -6,864 | 48,007 | $ | -0.14 | $ | 6,148 | 48,244 | $ | 0.13 | ||||||||
Effect of the Notes | — | — | — | — | ||||||||||||||
Diluted (loss) income from continuing operations | $ | -6,864 | 48,007 | $ | -0.14 | $ | 6,148 | 48,244 | $ | 0.13 | ||||||||
Diluted loss from discontinued operations | $ | -1,786 | 48,007 | $ | -0.04 | $ | -2,300 | 48,244 | $ | -0.05 | ||||||||
Fair_Values_of_Assets_and_Liab
Fair Values of Assets and Liabilities | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Fair Values of Assets and Liabilities | |||||||||||||
Fair Values of Assets and Liabilities | Note 7. 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. 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 June 30, 2014 and December 31, 2013 categorized by the level of inputs used in the valuation of each asset. | |||||||||||||
As of June 30, 2014 | |||||||||||||
Quoted Prices in | |||||||||||||
Active Markets | Significant Other | Significant | |||||||||||
for Identical | Observable | Unobservable | |||||||||||
Assets | Inputs | Inputs | |||||||||||
Description | Total | (Level 1) | (Level 2) | (Level 3) | |||||||||
Cash equivalents(1) | $ | 10,544 | $ | 10,544 | $ | — | $ | — | |||||
Available for sale securities:(2) | |||||||||||||
Equity securities | |||||||||||||
Financial services industry | 4,000 | 4,000 | — | — | |||||||||
REIT industry | 403 | 403 | — | — | |||||||||
Other | 3,722 | 3,722 | — | — | |||||||||
Total equity securities | 8,125 | 8,125 | — | — | |||||||||
Debt securities | |||||||||||||
International bond fund(3) | 2,376 | — | 2,376 | — | |||||||||
High yield fund(4) | 2,445 | — | 2,445 | — | |||||||||
Industrial bonds | 4,503 | — | 4,503 | — | |||||||||
Government bonds | 7,498 | 4,931 | 2,567 | — | |||||||||
Financial bonds | 2,707 | — | 2,707 | — | |||||||||
Other | 9,544 | — | 9,544 | — | |||||||||
Total debt securities | 29,073 | 4,931 | 24,142 | — | |||||||||
Total available for sale securities | 37,198 | 13,056 | 24,142 | — | |||||||||
Total | $ | 47,742 | $ | 23,600 | $ | 24,142 | $ | — | |||||
As of December 31, 2013 | |||||||||||||
Quoted Prices in | |||||||||||||
Active Markets | Significant Other | Significant | |||||||||||
for Identical | Observable | Unobservable | |||||||||||
Assets | Inputs | Inputs | |||||||||||
Description | Total | (Level 1) | (Level 2) | (Level 3) | |||||||||
Cash equivalents(1) | $ | 14,866 | $ | 14,866 | $ | — | $ | — | |||||
Available for sale securities:(2) | |||||||||||||
Equity securities | |||||||||||||
Financial services industry | 3,668 | 3,668 | — | — | |||||||||
REIT industry | 704 | 704 | — | — | |||||||||
Other | 3,875 | 3,875 | — | — | |||||||||
Total equity securities | 8,247 | 8,247 | — | — | |||||||||
Debt securities | |||||||||||||
International bond fund(3) | 2,329 | — | 2,329 | — | |||||||||
High yield fund(4) | 2,309 | — | 2,309 | — | |||||||||
Industrial bonds | 5,234 | — | 5,234 | — | |||||||||
Government bonds | 7,075 | 4,558 | 2,517 | — | |||||||||
Financial bonds | 1,154 | — | 1,154 | — | |||||||||
Other | 4,706 | — | 4,706 | — | |||||||||
Total debt securities | 22,807 | 4,558 | 18,249 | — | |||||||||
Total available for sale securities | 31,054 | 12,805 | 18,249 | — | |||||||||
Total | $ | 45,920 | $ | 27,671 | $ | 18,249 | $ | — | |||||
-1 | Cash equivalents, consisting of money market funds held principally for obligations arising from our self-insurance programs. Cash equivalents are reported on our balance sheet as cash and cash equivalents and current and long term restricted cash. Cash equivalents include $8,583 and $13,181 of balances that are restricted at June 30, 2014 and December 31, 2013, respectively. | ||||||||||||
-2 | Investments in available for sale securities are reported on our balance sheet as current and long term investments in available for sale securities and are reported at fair value of $22,738 and $14,460, respectively, at June 30, 2014 and $19,150 and $11,905, respectively, at December 31, 2013. Our investments in available for sale securities had amortized costs of $34,758 and $29,127 as of June 30, 2014 and December 31, 2013, respectively, had unrealized gains of $2,561 and $2,185 as of June 30, 2014 and December 31, 2013, respectively, and had unrealized losses of $121 and $257 as of June 30, 2014 and December 31, 2013, respectively. At June 30, 2014, 17 of the securities we hold, with a fair value of $3,002, have been in a loss position for less than 12 months and nine of the securities we hold, with a fair value of $1,216, 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 six months ended June 30, 2014 and 2013, we received gross proceeds of $8,225 and $5,213, respectively, in connection with the sales of available for sale securities and recorded gross realized gains totaling $349 and $264, respectively, and gross realized losses totaling $23 and $294, 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. 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 six months ended June 30, 2014, 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 six months ended June 30, 2014. | |||||||||||||
The carrying values of accounts receivable and accounts payable approximate fair value as of June 30, 2014 and December 31, 2013. The carrying value and fair value of our mortgage notes payable were $52,517 and $56,019, respectively, as of June 30, 2014 and $37,620 and $41,113, respectively, as of December 31, 2013, 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. Because these Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value. We measured the fair value of our equity investment in AIC, an Indiana insurance company that we owned at June 30, 2014 in equal proportion with each of the other six shareholders of that company (see Note 10), categorized in Level 2 of the fair value hierarchy in its entirety, by considering, among other things, the individual 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. | |||||||||||||
Non-Recurring Fair Value Measures | |||||||||||||
We evaluate the recoverability of goodwill assets in the fourth quarter of each fiscal year, or more frequently if events or changes in circumstances indicate that goodwill or other intangible assets may be impaired. As of October 1, 2013, we evaluated our goodwill for impairment and determined that the fair value of our reporting units exceeded their carrying values on that date. As of June 30, 2014, no events or changes in circumstances had occurred that would trigger the need for an additional impairment review. | |||||||||||||
Goodwill was valued primarily using discounted cash flow models that incorporate assumptions for each reporting unit’s short and long term revenue growth rates, operating margins, and discount rates, which represent our best estimates of current and forecasted market conditions, current cost structure, and the implied rate of return that management believes a market participant would require for an investment in a company having similar risks and business characteristics to the reporting unit being assessed. | |||||||||||||
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 discussion of fair value measurements related to an acquisition that occurred during the second quarter of 2014. | |||||||||||||
Indebtedness
Indebtedness | 6 Months Ended |
Jun. 30, 2014 | |
Indebtedness | |
Indebtedness | Note 8. Indebtedness |
We have a $25,000 revolving secured line of credit, or our Credit Agreement, that is available for general business purposes, including acquisitions. The maturity date of our Credit Agreement is March 18, 2016. Borrowings under our Credit Agreement typically bear interest at LIBOR plus a premium of 250 basis points, or 2.65% as of June 30, 2014. We are also required to pay a quarterly commitment fee of 0.35% per annum on the unused part of our borrowing availability under our Credit Agreement. We may draw, repay and redraw funds under our Credit Agreement until maturity, and no principal repayment is due until maturity. We made no borrowings under our Credit Agreement during the six months ended June 30, 2014 and 2013. As of June 30, 2014, we had no amounts outstanding under our Credit Agreement. We incurred interest expense and other associated costs related to our Credit Agreement of $48 and $90 for the three months ended June 30, 2014 and 2013, respectively, and $96 and $242 for the six months ended June 30, 2014 and 2013, respectively. | |
We are the borrower under our Credit Agreement and certain of our subsidiaries guarantee our obligations under our Credit Agreement, which is secured by our and our guarantor subsidiaries’ accounts receivable and certain related collateral. Our Credit Agreement provides for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as a change of control of us, which includes termination of our business management and shared services agreement, or our business management agreement, with Reit Management & Research LLC, or RMR. | |
We also have a $150,000 secured revolving credit facility, or our Credit Facility, that is available for general business purposes, including acquisitions. The maturity date of our Credit Facility is April 13, 2015, and, subject to the payment of extension fees and meeting certain other conditions, our Credit Facility includes options for us to extend its stated maturity date for two consecutive one-year periods. Borrowings under our Credit Facility typically bear interest at LIBOR plus a premium of 250 basis points, or 2.65% as of June 30, 2014. We are also required to pay a quarterly commitment fee of 0.35% per annum on the unused part of our borrowing availability under our Credit Facility. We may draw, repay and redraw funds under our Credit Facility until maturity, and no principal repayment is due until maturity. The weighted average interest rate for borrowings under our Credit Facility was 2.79% and 4.75% for the six months ended June 30, 2014 and 2013, respectively. As of June 30, 2014, we had $20,000 outstanding under our Credit Facility. We incurred interest expense and other associated costs related to our Credit Facility of $542 and $433 for the three months ended June 30, 2014 and 2013, respectively, and $1,135 and $900 for the six months ended June 30, 2014 and 2013, respectively. | |
We are the borrower under our Credit Facility, and certain of our subsidiaries guarantee our obligations under our Credit Facility, which is secured by real estate mortgages on 15 senior living communities with 1,549 living units owned by our guarantor subsidiaries and our guarantor subsidiaries’ accounts receivable and certain related collateral. Our Credit Facility provides for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as a change of control of us. | |
Our Credit Agreement and our Credit Facility contain 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 require us to maintain financial ratios and a minimum net worth. Our Credit Agreement and Credit Facility require that we deliver quarterly and annual financial statements within the time periods specified within those agreements. The lenders under each of our Credit Agreement and Credit Facility have waived until December 31, 2014 any default resulting from our not timely delivering our financial statements for the quarters ended March 31, 2014, June 30, 2014, and September 30, 2014 as required under those agreements. Our condensed consolidated financial statements for the quarters ended March 31, 2014, June 30, 2014, and September 30, 2014, are being delivered to our lenders contemporaneously with the filing of this Quarterly Report on Form 10-Q and the filing of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014, and September 30, 2014, which are being filed substantially concurrently with this Quarterly Report. | |
In October 2006, we issued $126,500 principal amount of the Notes. Our net proceeds from this issuance were approximately $122,600. The Notes bore interest at a rate of 3.75% per annum and were convertible into our common shares at any time. The conversion rate, which was subject to adjustment, was 76.9231 common shares per $1 principal amount of the Notes, which represented a conversion price of $13.00 per share. The Notes were guaranteed by certain of our wholly owned subsidiaries. The Notes were scheduled to mature on October 15, 2026. We were entitled to prepay the Notes at any time and the holders were entitled to require us to purchase all or a portion of these Notes on each of October 15, 2013, 2016 and 2021 at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest. We periodically repurchased Notes in open market transactions or in privately negotiated transactions, and, on July 8, 2013, we redeemed all of the $24,872 principal amount of the Notes then outstanding at a redemption price equal to the principal amount, plus accrued and unpaid interest. We incurred interest expense and other associated costs related to the Notes of $245 and $490 for the three and six months ended June 30, 2013, respectively. | |
At June 30, 2014, five of our senior living communities were encumbered by mortgage notes with an aggregate outstanding principal balance of $52,517 : (1) two of our communities were encumbered by a Federal National Mortgage Association, or FNMA, mortgage note and (2) three of our communities were encumbered by Federal Home Loan Mortgage Corporation, or FMCC, mortgage notes. These mortgages contain FNMA and FMCC, respectively, standard mortgage covenants. We recorded mortgage premiums in connection with our assumption of the FNMA and FMCC mortgage notes at the time of our acquisitions of the encumbered communities in order to record the assumed mortgage notes at their estimated fair value. We are amortizing the mortgage premiums as a reduction of interest expense until the maturity of the respective mortgage notes. The weighted average interest rate on these five notes was 6.77% as of June 30, 2014. Payments of principal and interest are due monthly under these mortgage notes until maturities at varying dates ranging from June 2018 to September 2032. We incurred mortgage interest expense, including premium amortization, of $671 and $1,145 for the three months ended June 30, 2014 and 2013, respectively and $1,248 and $1,844 for the six months ended June 30, 2014 and 2013, respectively, and including some interest expense recorded in discontinued operations. Our mortgages require monthly payments into escrows for taxes, insurance and property replacement funds; withdrawals from these escrows require applicable lender approvals. As of June 30, 2014, we believe we were in compliance with all applicable covenants under these mortgages. | |
Off_Balance_Sheet_Arrangement
Off Balance Sheet Arrangement | 6 Months Ended |
Jun. 30, 2014 | |
Off Balance Sheet Arrangement | |
Off Balance Sheet Arrangement | Note 9. Off Balance Sheet Arrangements |
We have pledged certain of our assets, including our accounts receivable with a carrying value, as of June 30, 2014, of $14,191, arising from our operation of 26 properties owned by SNH and leased to us to secure SNH’s borrowings from its lender, FNMA. As of June 30, 2014, 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. | |
Related_Person_Transactions
Related Person Transactions | 6 Months Ended |
Jun. 30, 2014 | |
Related Person Transactions | |
Related Person Transactions | Note 10. Related Person Transactions |
We were formerly a 100% owned subsidiary of SNH, SNH is our largest landlord and our largest stockholder and we manage senior living communities for SNH. In 2001, SNH distributed substantially all of our then outstanding common shares to its shareholders. As of June 30, 2014, SNH owned 4,235 of our common shares, or approximately 8.7% of our outstanding common shares. One of our Managing Directors, Mr. Barry Portnoy, is a managing trustee of SNH. Mr. Barry Portnoy’s son, Mr. Adam Portnoy, also serves as a managing trustee of SNH. | |
As of June 30, 2014, we leased 184 senior living communities (including seven that we have classified as discontinued operations) from SNH. Under our leases with SNH, we pay SNH minimum rent plus percentage rent based on increases in gross revenues at certain properties. Our total minimum annual rent payable to SNH as of June 30, 2014 was $190,867, excluding percentage rent. Our total rent expense (which includes rent for all properties we lease from SNH, including properties that we have classified as discontinued operations) under all of our leases with SNH, net of lease inducement amortization, was $48,822 and $50,866 for the three months ended June 30, 2014 and 2013, respectively, and $97,581 and $101,466 for the six months ended June 30, 2014 and 2013, respectively. As of June 30, 2014 and 2013, we had outstanding rent due and payable to SNH of $17,252 and $17,883, respectively. During the six months ended June 30, 2014, pursuant to the terms of our leases with SNH, we sold $17,423 of improvements made to properties leased from SNH, and, as a result, our annual rent payable to SNH increased by approximately $1,395. As of June 30, 2014, our property and equipment included $7,474 for similar improvements we have made to properties we lease from SNH that we typically request that SNH purchase from us for an increase in future rent; however, we are not obligated to make these sales and SNH is not obligated to fund such amounts. In September 2014, we sold to SNH $6,353 of improvements for an increase in minimum annual rent payable to SNH of $508. | |
We and SNH previously agreed that SNH would offer for sale 11 senior living communities we lease from SNH, which we have classified as discontinued operations. Our rent payable to SNH is reduced as these sales occur pursuant to terms set in our leases with SNH. In August 2013, we and SNH sold one of these communities, a SNF located in Missouri with 112 living units, for a sale price of $2,550, and as a result of this sale, our annual minimum rent payable to SNH decreased by $255 in accordance with the terms of the applicable lease. In January 2014, we and SNH sold one of these communities, an assisted living community located in Texas with 48 assisted living units, for a sale price of $2,400, and as a result of this sale, our annual minimum rent payable to SNH decreased by $210 in accordance with the terms of the applicable lease. In June 2014, we and SNH sold two of these communities, both of which are SNFs located in Wisconsin, with a combined total of 139 living units, for a sale price of $4,500, and as a result of this sale, our annual minimum rent payable to SNH decreased by $450 in accordance with the terms of the applicable lease. In October 2014, we and SNH sold one of these communities, an assisted living community in Virginia with 55 assisted living units, for a sale price of $2,850, and as a result of this sale, our annual minimum rent payable to SNH decreased by $285 in accordance with the terms of the applicable lease. Also in October 2014, we and SNH sold one assisted living community and one SNF located in Arizona with a combined total of 160 living units, for a sale price of $5,900, and as a result of this sale, our annual minimum rent payable to SNH decreased by $590 in accordance with the terms of the applicable lease. We can provide no assurance that the remaining four senior living communities that we and SNH have agreed to offer for sale will be sold or what the terms of any such sales may provide. | |
Concurrent and in connection with entering into the Villa Valencia Agreement, described below, we and SNH entered into the Fifth Amendment to the Amended and Restated Master Lease Agreement (Lease No. 4), or Lease No. 4. Under this Lease No. 4 amendment, we exercised the first of our existing options under Lease No. 4, extending the term from April 30, 2017 to April 30, 2032, and a third option for us to extend the term of Lease No. 4 from May 1, 2047 to April 30, 2062, was added. | |
As of June 30, 2014, we managed 44 senior living communities for the account of SNH. In connection with these management agreements, we and SNH have entered into four combination agreements, or pooling agreements: three pooling agreements combine our management agreements with SNH for communities that include assisted living units, or the AL Pooling Agreements, and a fourth pooling agreement combines our management agreements with SNH for communities that include only independent living units, or the IL Pooling Agreement. The management agreements that are included in each of our pooling agreements are on substantially similar terms. Our first AL Pooling Agreement includes 20 identified communities and our second AL Pooling Agreement includes 19 identified communities. The third AL Pooling Agreement currently includes the management agreement for a community we began managing in November 2013 and two communities we began managing in December 2014. The IL Pooling Agreement currently includes management agreements for two communities that have only independent living units. A senior living community in New York and one senior living community in California described below that we manage for SNH are not included in any of our pooling agreements. Each of the AL Pooling Agreements and the IL Pooling Agreement aggregates the determination of fees and expenses of the various communities that are subject to such pooling agreement, including determinations of our incentive fees and SNH’s return on its invested capital. We earned management fees from SNH of $2,433 and $2,281 for the three months ended June 30, 2014 and 2013, respectively, and $4,858 and $4,576 for the six months ended June 30, 2014 and 2013, respectively. | |
Our second AL Pooling Agreement previously included the management agreement for the assisted living community known as Villa Valencia, which is located in California. On July 10, 2014, we entered into an agreement with SNH, pursuant to which the management agreement for Villa Valencia was removed from the second AL Pooling Agreement as of July 1, 2014. We expect that the management agreement affecting the Villa Valencia community will not be included in any pooling agreement until after extensive renovations planned at that community are completed. | |
Also on July 10, 2014, we entered into an amendment to the management agreements with SNH that include assisted living units to (i) extend the term of each of the management agreements between us and SNH for Villa Valencia and the 19 assisted living communities currently included in the second AL Pooling Agreement from December 31, 2031 to December 31, 2033 and (ii) extend the term of the management agreement between us and SNH for the senior living community known as Willow Pointe, which is currently included in the third AL Pooling Agreement, from December 31, 2031 to December 31, 2035. On July 10, 2014, we also entered into an amendment to our management agreements with SNH that include only independent living units to extend the term of the management agreements between us and SNH for two independent living communities from December 31, 2031 to December 31, 2032. The term of the 20 management agreements included in the first AL Pooling Agreement were not affected by these amendments and those management agreements expire on December 31, 2031. | |
We manage a portion of a senior living community in New York that is not subject to the requirements of New York healthcare licensing laws, consisting of 199 living units, pursuant to a long term management agreement with SNH. In order to accommodate certain requirements of New York healthcare licensing laws, SNH subleases another portion of this senior living community that is subject to those requirements, consisting of 111 living units, to an entity, D&R Yonkers LLC, which is owned by SNH’s President and Chief Operating Officer and its Treasurer and Chief Financial Officer. We manage this portion of the community pursuant to a long term management agreement with D&R Yonkers LLC. | |
We may enter into additional management arrangements with SNH for us to manage senior living communities that SNH may acquire in the future. We expect that these management arrangements will be pursuant to long term management agreements on terms similar to our existing management agreements and that those agreements may be added to our existing pooling agreements or that we may enter into additional pooling agreements with SNH with respect to these management agreements. | |
RMR provides business management and shared services to us pursuant to our business management agreement. RMR also provides management services to SNH. One of our Managing Directors, Mr. Barry Portnoy, is Chairman, majority owner and an employee of RMR. Mr. Barry Portnoy’s son, Mr. Adam Portnoy, is an owner of RMR and serves as President, Chief Executive Officer and a director of RMR. Our other Managing Director, Mr. Gerard Martin, is a director of RMR. Mr. Bruce Mackey, our President and Chief Executive Officer, and Mr. Paul Hoagland, our Treasurer and Chief Financial Officer, are officers of RMR. RMR provides management services to SNH, SNH’s officers are executive officers of RMR and SNH’s President and Chief Operating Officer serves as a director of RMR. Our Independent Directors also serve as independent directors or independent trustees of other public companies (but not SNH) to which RMR or its affiliates provide management services. Mr. Barry Portnoy serves as a managing director or managing trustee of those companies and Mr. Adam Portnoy serves as a managing trustee of a majority of those companies. In addition, officers of RMR serve as officers of those companies. | |
Pursuant to our business management agreement with RMR, we recognized aggregate business management, administrative and information system service fees of $3,517 and $3,829 for the three months ended June 30, 2014 and 2013, respectively, and $7,043 and $7,161 for the six months ended June 30, 2014 and 2013, respectively. These amounts are included in general and administrative expenses in our condensed consolidated statements of operations. We also lease our headquarters from an affiliate of RMR for annual rent of approximately $767, which amount is subject to fixed increases. Our rent expense for our headquarters, which included our utilities and real estate taxes that we are required to pay as additional rent, under this lease, was $317 and $347 for the three months ended June 30, 2014 and 2013, respectively, and $672 and $694 for the six months ended June 30, 2014 and 2013, respectively. | |
We, RMR, SNH, and four other companies to which RMR provides management services currently own AIC, an Indiana insurance company. All of our Directors and most of the trustees and directors of the other AIC shareholders currently serve on the board of directors of AIC. RMR provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC. | |
On March 25, 2014, as a result of the removal, without cause, of all of the trustees of Equity Commonwealth (formerly known as CommonWealth REIT), or EQC, EQC underwent a change in control, as defined in the shareholders agreement among us, the other shareholders of AIC and AIC. As a result of that change in control and in accordance with the terms of the shareholders agreement, on May 9, 2014, we and those other shareholders purchased pro rata the AIC shares EQC owned. Pursuant to that purchase, we purchased 2,857 AIC shares from EQC for $825. Following these purchases, we and the other remaining six shareholders each owned approximately 14.3% of AIC. | |
In June 2014, we and the other shareholders of AIC renewed our participation in an insurance program arranged by AIC. In connection with that renewal, we purchased a one-year property insurance policy providing $500,000 of coverage with respect to which AIC is a reinsurer of certain coverage amounts. We paid AIC a premium, including taxes and fees, of approximately $3,901 in connection with that policy, which amount may be adjusted from time to time as we acquire or dispose of properties that are included in the policy. | |
As of June 30, 2014, we have invested $6,034 in AIC since its formation in 2008. Although we own 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 because all of our Directors are also directors of AIC. Our investment in AIC had a carrying value of $6,801 and $5,913 as of June 30, 2014 and December 31, 2013, respectively. We recognized income of $118 and $79 for the three months ended June 30, 2014 and 2013, respectively, and $21 and $155 for the six months ended June 30, 2014 and 2013, respectively, related to our investment in AIC. | |
In June 2014, we, RMR, SNH and three other companies to which RMR provides management services extended our and their combined directors’ and officers’ liability insurance policy through August 31, 2014. In September 2014, we purchased a two year combined directors’ and officers’ insurance policy with RMR and five other companies managed by RMR that provides $10,000 in aggregate primary coverage, including certain errors and omission coverage. At that time, we also purchased separate additional one year directors’ and officers’ liability insurance policies that provide $20,000 of aggregate excess coverage plus $5,000 of excess non-indemnifiable coverage. The total premium payable by us for these policies purchased in September 2014 was approximately $357. | |
Acquisitions
Acquisitions | 6 Months Ended | ||
Jun. 30, 2014 | |||
Acquisitions | |||
Acquisitions | Note 11. Acquisition | ||
In May 2014, we acquired a senior living community with 116 living units located in Alabama for approximately $19,914, including the assumption of approximately $13,920 of mortgage debt and the assumption of approximately $68 of net working capital liabilities, but excluding closing costs. This community primarily offers independent and assisted living services that are currently 100% paid by residents from their private resources. We funded this acquisition with cash on hand and borrowings under our Credit Facility. We incurred acquisition related costs of $81 during the second quarter of 2014. These costs include transaction costs, professional fees and other acquisition related expenses. The preliminary 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 preliminary 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 | ||
Net working capital liabilities assumed | -68 | ||
Mortgage debt assumed | -13,920 | ||
Premium on assumed mortgage debt | -1,598 | ||
Net cash paid | $ | 5,926 | |
Discontinued_Operations
Discontinued Operations | 6 Months Ended | ||||||||||||||
Jun. 30, 2014 | |||||||||||||||
Discontinued Operations | |||||||||||||||
Discontinued Operations | Note 12. Discontinued Operations | ||||||||||||||
In September 2012, we completed the sale of our pharmacy business to Omnicare, Inc., or Omnicare. In connection with the sale, Omnicare did not acquire the real estate we own associated with one pharmacy located in South Carolina. In July 2014, we sold this real estate for a sale price of $205. | |||||||||||||||
In June 2013, we decided to offer for sale one assisted living community we own with 32 living units. We are in the process of offering this community for sale. | |||||||||||||||
Please see Note 10 above for a discussion of 11 senior living communities that we lease or had leased from SNH which are included in discontinued operations for all of the periods presented in these condensed consolidated financial statements; four of which had been sold as of June 30, 2014 and three additional of which were sold in October 2014. | |||||||||||||||
We can provide no assurance that we will be able to sell the senior living community that we are offering for sale, or that we and SNH will be able to sell the senior living communities we lease from SNH that are being offered for sale, or what the terms or timing of any such sales may be. | |||||||||||||||
We have reclassified our condensed consolidated balance sheets and condensed consolidated statements of operations for all periods presented to show the financial position and results of operations of our senior living communities, pharmacies and rehabilitation hospitals which have been sold or are expected to be sold as discontinued. Below is a summary of the operating results of these discontinued operations included in the condensed consolidated financial statements for the three and six months ended June 30, 2014 and 2013: | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues | $ | 6,302 | $ | 38,055 | $ | 13,803 | $ | 80,134 | |||||||
Expenses | -7,694 | -39,264 | -16,560 | -82,805 | |||||||||||
Impairment on discontinued assets | — | -1,231 | — | -1,231 | |||||||||||
Benefit from income taxes | 498 | 941 | 971 | 1,602 | |||||||||||
Net loss | $ | -894 | $ | -1,499 | $ | -1,786 | $ | -2,300 | |||||||
Legal_Proceedings_and_Claims
Legal Proceedings and Claims | 6 Months Ended |
Jun. 30, 2014 | |
Loss Contingency, Information about Litigation Matters [Abstract] | |
Legal Proceedings and Claims | Note 13. Legal Proceedings and Claims |
We have been, are currently, and expect in the future to be involved in claims, lawsuits, and regulatory and other governmental 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 governmental audits, investigations and proceedings may require us to incur significant expense. We account for claims and litigation losses in accordance with 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. Occasionally, a minimum or best estimate amount may be increased or decreased when events result in a changed expectation. | |
In August 2014, in connection with an ongoing and routine compliance audit of medical records, we became aware of certain potential inadequate medical record documentation and other possible failures to comply with appropriate policies at one of our SNFs. We have commenced an in depth review of these matters that is ongoing. We have determined that a loss in connection with this matter is reasonably possible, but cannot be reasonably estimated at this time; accordingly, we have not recorded any loss for this matter at this time. However, such loss could have a material adverse impact on our business, financial condition, and results of operations. | |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Property and Equipment | ||||||||
Schedule of property and equipment | ||||||||
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
Land | $ | 24,172 | $ | 22,214 | ||||
Buildings and improvements | 304,150 | 286,467 | ||||||
Furniture, fixtures and equipment | 126,176 | 114,765 | ||||||
Property and equipment, at cost | 454,498 | 423,446 | ||||||
Accumulated depreciation | -97,452 | -83,170 | ||||||
Property and equipment, net | $ | 357,046 | $ | 340,276 | ||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Tables) | 6 Months Ended | |||||||||
Jun. 30, 2014 | ||||||||||
Accumulated Other Comprehensive Income | ||||||||||
Schedule of changes in accumulated other comprehensive income, net of tax | ||||||||||
Equity Investment in an Investee | Investments in Available for Sale Securities | Accumulated Other Comprehensive Income | ||||||||
Balance at January 1, 2014 | $ | 48 | $ | 3,270 | $ | 3,318 | ||||
Unrealized gain on investments, net of tax | — | 253 | 253 | |||||||
Equity interest in an investee’s unrealized gain on investments | 19 | — | 19 | |||||||
Reclassification adjustment: | ||||||||||
Realized gain on investments, net of tax | — | -194 | -194 | |||||||
Balance at March 31, 2014 | 67 | 3,329 | 3,396 | |||||||
Unrealized gain on investments, net of tax | — | 268 | 268 | |||||||
Equity interest in an investee’s unrealized gain on investments | 22 | — | 22 | |||||||
Reclassification adjustment: | ||||||||||
Realized gain on investments, net of tax | — | -8 | -8 | |||||||
Balance at June 30, 2014 | $ | 89 | $ | 3,589 | $ | 3,678 | ||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 6 Months Ended | |||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||
Earnings Per Share | ||||||||||||||||||
Schedule of reconciliation of income from continuing operations and income (loss) from discontinued operations and the number of common shares used in the computations of diluted EPS | ||||||||||||||||||
Three Months Ended June 30, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Income | Per | Income | Per | |||||||||||||||
(loss) | Shares | Share | (loss) | Shares | Share | |||||||||||||
(Loss) income from continuing operations | $ | -997 | 48,013 | $ | -0.02 | $ | 2,955 | 48,253 | $ | 0.06 | ||||||||
Effect of the Notes | — | — | 159 | 1,913 | ||||||||||||||
Diluted (loss) income from continuing operations | $ | -997 | 48,013 | $ | -0.02 | $ | 3,114 | 50,166 | $ | 0.06 | ||||||||
Diluted loss from discontinued operations | $ | -894 | 48,013 | $ | -0.02 | $ | -1,499 | 50,166 | $ | -0.03 | ||||||||
Six Months Ended June 30, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Income | Per | Income | Per | |||||||||||||||
(loss) | Shares | Share | (loss) | Shares | Share | |||||||||||||
(Loss) income from continuing operations | $ | -6,864 | 48,007 | $ | -0.14 | $ | 6,148 | 48,244 | $ | 0.13 | ||||||||
Effect of the Notes | — | — | — | — | ||||||||||||||
Diluted (loss) income from continuing operations | $ | -6,864 | 48,007 | $ | -0.14 | $ | 6,148 | 48,244 | $ | 0.13 | ||||||||
Diluted loss from discontinued operations | $ | -1,786 | 48,007 | $ | -0.04 | $ | -2,300 | 48,244 | $ | -0.05 | ||||||||
Fair_Values_of_Assets_and_Liab1
Fair Values of Assets and Liabilities (Tables) | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Fair Values of Assets and Liabilities | |||||||||||||
Schedule of assets and liabilities measured at fair value on a recurring and non recurring basis, categorized by the level of inputs used in the valuation of each asset | |||||||||||||
As of June 30, 2014 | |||||||||||||
Quoted Prices in | |||||||||||||
Active Markets | Significant Other | Significant | |||||||||||
for Identical | Observable | Unobservable | |||||||||||
Assets | Inputs | Inputs | |||||||||||
Description | Total | (Level 1) | (Level 2) | (Level 3) | |||||||||
Cash equivalents(1) | $ | 10,544 | $ | 10,544 | $ | — | $ | — | |||||
Available for sale securities:(2) | |||||||||||||
Equity securities | |||||||||||||
Financial services industry | 4,000 | 4,000 | — | — | |||||||||
REIT industry | 403 | 403 | — | — | |||||||||
Other | 3,722 | 3,722 | — | — | |||||||||
Total equity securities | 8,125 | 8,125 | — | — | |||||||||
Debt securities | |||||||||||||
International bond fund(3) | 2,376 | — | 2,376 | — | |||||||||
High yield fund(4) | 2,445 | — | 2,445 | — | |||||||||
Industrial bonds | 4,503 | — | 4,503 | — | |||||||||
Government bonds | 7,498 | 4,931 | 2,567 | — | |||||||||
Financial bonds | 2,707 | — | 2,707 | — | |||||||||
Other | 9,544 | — | 9,544 | — | |||||||||
Total debt securities | 29,073 | 4,931 | 24,142 | — | |||||||||
Total available for sale securities | 37,198 | 13,056 | 24,142 | — | |||||||||
Total | $ | 47,742 | $ | 23,600 | $ | 24,142 | $ | — | |||||
As of December 31, 2013 | |||||||||||||
Quoted Prices in | |||||||||||||
Active Markets | Significant Other | Significant | |||||||||||
for Identical | Observable | Unobservable | |||||||||||
Assets | Inputs | Inputs | |||||||||||
Description | Total | (Level 1) | (Level 2) | (Level 3) | |||||||||
Cash equivalents(1) | $ | 14,866 | $ | 14,866 | $ | — | $ | — | |||||
Available for sale securities:(2) | |||||||||||||
Equity securities | |||||||||||||
Financial services industry | 3,668 | 3,668 | — | — | |||||||||
REIT industry | 704 | 704 | — | — | |||||||||
Other | 3,875 | 3,875 | — | — | |||||||||
Total equity securities | 8,247 | 8,247 | — | — | |||||||||
Debt securities | |||||||||||||
International bond fund(3) | 2,329 | — | 2,329 | — | |||||||||
High yield fund(4) | 2,309 | — | 2,309 | — | |||||||||
Industrial bonds | 5,234 | — | 5,234 | — | |||||||||
Government bonds | 7,075 | 4,558 | 2,517 | — | |||||||||
Financial bonds | 1,154 | — | 1,154 | — | |||||||||
Other | 4,706 | — | 4,706 | — | |||||||||
Total debt securities | 22,807 | 4,558 | 18,249 | — | |||||||||
Total available for sale securities | 31,054 | 12,805 | 18,249 | — | |||||||||
Total | $ | 45,920 | $ | 27,671 | $ | 18,249 | $ | — | |||||
-1 | Cash equivalents, consisting of money market funds held principally for obligations arising from our self-insurance programs. Cash equivalents are reported on our balance sheet as cash and cash equivalents and current and long term restricted cash. Cash equivalents include $8,583 and $13,181 of balances that are restricted at June 30, 2014 and December 31, 2013, respectively. | ||||||||||||
-2 | Investments in available for sale securities are reported on our balance sheet as current and long term investments in available for sale securities and are reported at fair value of $22,738 and $14,460, respectively, at June 30, 2014 and $19,150 and $11,905, respectively, at December 31, 2013. Our investments in available for sale securities had amortized costs of $34,758 and $29,127 as of June 30, 2014 and December 31, 2013, respectively, had unrealized gains of $2,561 and $2,185 as of June 30, 2014 and December 31, 2013, respectively, and had unrealized losses of $121 and $257 as of June 30, 2014 and December 31, 2013, respectively. At June 30, 2014, 17 of the securities we hold, with a fair value of $3,002, have been in a loss position for less than 12 months and nine of the securities we hold, with a fair value of $1,216, 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 six months ended June 30, 2014 and 2013, we received gross proceeds of $8,225 and $5,213, respectively, in connection with the sales of available for sale securities and recorded gross realized gains totaling $349 and $264, respectively, and gross realized losses totaling $23 and $294, 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. 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. | ||||||||||||
Acquisition_Tables
Acquisition (Tables) | 6 Months Ended | ||
Jun. 30, 2014 | |||
Acquisitions | |||
Summary of allocation of purchase price to the estimated fair values | |||
Land | $ | 1,208 | |
Buildings and improvements | 17,946 | ||
Furniture, fixtures and equipment | 421 | ||
Total property, plant and equipment | 19,575 | ||
Intangible assets | 1,937 | ||
Net working capital liabilities assumed | -68 | ||
Mortgage debt assumed | -13,920 | ||
Premium on assumed mortgage debt | -1,598 | ||
Net cash paid | $ | 5,926 | |
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 6 Months Ended | ||||||||||||||
Jun. 30, 2014 | |||||||||||||||
Discontinued Operations | |||||||||||||||
Summary of the operating results of discontinued operations included in the financial statements | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues | $ | 6,302 | $ | 38,055 | $ | 13,803 | $ | 80,134 | |||||||
Expenses | -7,694 | -39,264 | -16,560 | -82,805 | |||||||||||
Impairment on discontinued assets | — | -1,231 | — | -1,231 | |||||||||||
Benefit from income taxes | 498 | 941 | 971 | 1,602 | |||||||||||
Net loss | $ | -894 | $ | -1,499 | $ | -1,786 | $ | -2,300 | |||||||
Basis_of_Presentation_and_Orga1
Basis of Presentation and Organization (Details) | 6 Months Ended |
Jun. 30, 2014 | |
segment | |
Segment Information | |
Number of Operating Segments | 2 |
Senior Living Communities | |
Real estate properties | |
Number of properties operated | 256 |
Number of states in which real estate properties are located | 31 |
Number of living units in properties operated | 30,114 |
Number of living units in properties excluded due to temporary closing for renovations | 38 |
Number of properties from which 38 living units were excluded | 1 |
Number of properties owned and operated | 31 |
Number of living units in properties owned and operated | 3,061 |
Number of properties leased and operated | 181 |
Number of units in properties leased and operated | 20,002 |
Number of properties managed | 44 |
Number of units in properties managed | 7,051 |
Independent and assisted living communities | |
Real estate properties | |
Number of properties operated | 225 |
Number of living units in properties operated | 27,292 |
SNF | |
Real estate properties | |
Number of properties operated | 31 |
Number of living units in properties operated | 2,822 |
Independent living apartment | |
Real estate properties | |
Number of living units in properties operated | 10,464 |
Assisted living suites | |
Real estate properties | |
Number of living units in properties operated | 14,440 |
Skilled nursing units | |
Real estate properties | |
Number of living units in properties operated | 5,210 |
Assisted living communities | |
Real estate properties | |
Number of real estate properties classified as discontinued operations | 1 |
Number of units in real estate property classified as discontinued operations | 32 |
SNH | Senior Living Communities | |
Real estate properties | |
Number of properties leased and operated | 184 |
Number of properties managed | 44 |
Number of real estate properties classified as discontinued operations | 7 |
SNH | SNF | |
Real estate properties | |
Number of real estate properties classified as discontinued operations | 4 |
SNH | Assisted living communities | |
Real estate properties | |
Number of real estate properties classified as discontinued operations | 3 |
Number of units in real estate property classified as discontinued operations | 480 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 |
Property and Equipment | |||||
Property and equipment, gross | $454,498 | $454,498 | $423,446 | ||
Accumulated depreciation | -97,452 | -97,452 | -83,170 | ||
Property and equipment, net | 357,046 | 357,046 | 340,276 | ||
Depreciation expense | 7,290 | 6,298 | 14,283 | 12,382 | |
SNH | |||||
Property and Equipment | |||||
Assets held for sale for increased rent pursuant to the terms of leases with SNH | 7,474 | 7,474 | |||
Land | |||||
Property and Equipment | |||||
Property and equipment, gross | 24,172 | 24,172 | 22,214 | ||
Building and Improvements | |||||
Property and Equipment | |||||
Property and equipment, gross | 304,150 | 304,150 | 286,467 | ||
Furniture, fixtures and equipment | |||||
Property and Equipment | |||||
Property and equipment, gross | $126,176 | $126,176 | $114,765 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Details) (USD $) | 3 Months Ended | 6 Months Ended |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2014 |
Changes in accumulated other comprehensive income | ||
Balance at the beginning of the period | $3,396 | $3,318 |
Unrealized gain (loss) on investments, net of tax | 268 | 253 |
Equity interest in an investee's unrealized gain (loss) on investments | 22 | 19 |
Realized gain on investments, net of tax | -8 | -194 |
Balance at the end of the period | 3,678 | 3,678 |
Equity Investment in Affiliates Insurance Company | ||
Changes in accumulated other comprehensive income | ||
Balance at the beginning of the period | 67 | 48 |
Equity interest in an investee's unrealized gain (loss) on investments | 22 | 19 |
Balance at the end of the period | 89 | 89 |
Investments in Available for Sale Securities | ||
Changes in accumulated other comprehensive income | ||
Balance at the beginning of the period | 3,329 | 3,270 |
Unrealized gain (loss) on investments, net of tax | 268 | 253 |
Realized gain on investments, net of tax | -8 | -194 |
Balance at the end of the period | $3,589 | $3,589 |
Income_Taxes_Detail
Income Taxes (Detail) (USD $) | 3 Months Ended | 6 Months Ended | |||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 |
Benefit from (provision for) income taxes | $364 | ($1,533) | $2,795 | ($912) | |
Benefit from income taxes | -498 | -941 | -971 | -1,602 | |
Tax credit carry forward, which begins to expire in 2022 if unused | 15,235 | ||||
Federal | |||||
Net operating loss carry forward, which begins to expire in 2026 if unused | 81,583 | ||||
Net operating losses that are attributable to unvested stock grants | $278 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 |
Earnings Per Share | |||||
Common stock, par value (in dollars per share) | $0.01 | $0.01 | $0.01 | ||
Income (loss) | |||||
(Loss) income from continuing operations | ($997) | $2,955 | ($6,864) | $6,148 | |
Effect of the Notes | 159 | ||||
Diluted (loss) income from continuing operations | -997 | 3,114 | -6,864 | 6,148 | |
Diluted income (loss) from discontinued operations | ($894) | ($1,499) | ($1,786) | ($2,300) | |
Shares | |||||
(Loss) income from continuing operations (in shares) | 48,013,000 | 48,253,000 | 48,007,000 | 48,244,000 | |
Effect of the Notes (in shares) | 1,913,000 | ||||
Diluted (loss) income from continuing operations (in shares) | 48,013,000 | 50,166,000 | 48,007,000 | 48,244,000 | |
Diluted loss from discontinued operations (in shares) | 48,013,000 | 50,166,000 | 48,007,000 | 48,244,000 | |
Per Share | |||||
(Loss) income from continuing operations (in dollars per share) | ($0.02) | $0.06 | ($0.14) | $0.13 | |
Diluted (loss) income from continuing operations (in dollars per share) | ($0.02) | $0.06 | ($0.14) | $0.13 | |
Diluted loss from discontinued operations (in dollars per share) | ($0.02) | ($0.03) | ($0.04) | ($0.05) |
Fair_Values_of_Assets_and_Liab2
Fair Values of Assets and Liabilities (Details) (USD $) | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 |
item | |||
Fair Values of Assets and Liabilities | |||
Restricted cash equivalents | $8,583 | $13,181 | |
Available for sale securities, current | 22,738 | 19,150 | |
Long term investments in available for sale securities | 14,460 | 11,905 | |
Amortized cost of available for sale securities | 34,758 | 29,127 | |
Unrealized gains on available for sale securities | 2,561 | 2,185 | |
Unrealized losses on available for sale securities | 121 | 257 | |
Number of available for sale securities in a loss position less than 12 months | 17 | ||
Fair value of securities which are in loss position for less than 12 months | 3,002 | ||
Number of available for sale securities in a loss position 12 months or longer | 9 | ||
Fair value of securities which are in loss position for greater than 12 months | 1,216 | ||
Gross proceeds from sale of available for sale securities | 8,225 | 5,213 | |
Gross realized gains recorded on sale of available for sale securities | 349 | 264 | |
Gross realized losses recorded on sale of available for sale securities | 23 | 294 | |
Total | |||
Fair Values of Assets and Liabilities | |||
Cash equivalents | 10,544 | 14,866 | |
Available for sale securities | 37,198 | 31,054 | |
Total | 47,742 | 45,920 | |
Total | Equity securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 8,125 | 8,247 | |
Total | Financial services industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,000 | 3,668 | |
Total | REIT industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 403 | 704 | |
Total | Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 3,722 | 3,875 | |
Total | Debt securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 29,073 | 22,807 | |
Total | International bond fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,376 | 2,329 | |
Total | High yield fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,445 | 2,309 | |
Total | Industrial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,503 | 5,234 | |
Total | Government bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 7,498 | 7,075 | |
Total | Financial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,707 | 1,154 | |
Total | Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 9,544 | 4,706 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Values of Assets and Liabilities | |||
Cash equivalents | 10,544 | 14,866 | |
Available for sale securities | 13,056 | 12,805 | |
Total | 23,600 | 27,671 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 8,125 | 8,247 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Financial services industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,000 | 3,668 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | REIT industry | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 403 | 704 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 3,722 | 3,875 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Debt securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,931 | 4,558 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Government bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,931 | 4,558 | |
Significant Other Observable Inputs (Level 2) | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 24,142 | 18,249 | |
Total | 24,142 | 18,249 | |
Significant Other Observable Inputs (Level 2) | Debt securities | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 24,142 | 18,249 | |
Significant Other Observable Inputs (Level 2) | International bond fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,376 | 2,329 | |
Significant Other Observable Inputs (Level 2) | High yield fund | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,445 | 2,309 | |
Significant Other Observable Inputs (Level 2) | Industrial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 4,503 | 5,234 | |
Significant Other Observable Inputs (Level 2) | Government bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,567 | 2,517 | |
Significant Other Observable Inputs (Level 2) | Financial bonds | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | 2,707 | 1,154 | |
Significant Other Observable Inputs (Level 2) | Other | |||
Fair Values of Assets and Liabilities | |||
Available for sale securities | $9,544 | $4,706 |
Fair_Values_of_Assets_and_Liab3
Fair Values of Assets and Liabilities (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Carrying value and fair value | ||
Transfers of liabilities between Level 1 to Level 2 | $0 | |
Transfers of assets between Level 2 to Level 1 | 0 | |
Transfers of liabilities between Level 2 to Level 1 | 0 | |
Mortgage notes payable | 50,712 | 36,461 |
Significant Unobservable Inputs (Level 3) | ||
Carrying value and fair value | ||
Mortgage notes payable | 56,019 | 41,113 |
Carrying value | ||
Carrying value and fair value | ||
Mortgage notes payable | $52,517 | $37,620 |
Indebtedness_Details
Indebtedness (Details) (USD $) | 6 Months Ended | 3 Months Ended | 0 Months Ended | 1 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jul. 08, 2013 | Oct. 31, 2006 | |
Indebtedness | ||||||
Amount borrowed during the period | $5,000,000 | $20,000,000 | ||||
Senior Living Communities | ||||||
Indebtedness | ||||||
Number of properties operated | 256 | 256 | ||||
Credit Agreement | ||||||
Indebtedness | ||||||
Maximum borrowing capacity | 25,000,000 | 25,000,000 | ||||
Basis spread (as a percent) | 2.50% | |||||
Interest rate at period end (as a percent) | 2.65% | 2.65% | ||||
Quarterly commitment fee on the unused part of borrowing availability (as a percent) | 0.35% | |||||
Principal repayment | 0 | |||||
Amount borrowed during the period | 0 | 0 | ||||
Amount outstanding under credit facility | 0 | 0 | ||||
Number of extensions to maturity date | 2 | |||||
Interest expense and other associated costs incurred | 96,000 | 242,000 | 48,000 | 90,000 | ||
Credit Agreement | LIBOR | ||||||
Indebtedness | ||||||
Variable rate basis | LIBOR | |||||
Credit Facility | ||||||
Indebtedness | ||||||
Maximum borrowing capacity | 150,000,000 | 150,000,000 | ||||
Basis spread (as a percent) | 2.50% | |||||
Interest rate at period end (as a percent) | 2.65% | 2.65% | ||||
Quarterly commitment fee on the unused part of borrowing availability (as a percent) | 0.35% | |||||
Amount outstanding under credit facility | 20,000,000 | 20,000,000 | ||||
Extension period available | 1 year | |||||
Weighted average interest rate (as a percent) | 2.79% | 4.75% | 2.79% | 4.75% | ||
Interest expense and other associated costs incurred | 1,135,000 | 900,000 | 542,000 | 433,000 | ||
Credit Facility | Senior Living Communities | ||||||
Indebtedness | ||||||
Number of real estate properties securing borrowings on the new credit facility | 15 | 15 | ||||
Number of units in real estate properties securing borrowings on the new credit facility | 1,549 | 1,549 | ||||
Credit Facility | LIBOR | ||||||
Indebtedness | ||||||
Variable rate basis | LIBOR | |||||
Notes | ||||||
Indebtedness | ||||||
Loan amount | 126,500,000 | |||||
Proceeds from issue of notes | 122,600,000 | |||||
Interest rate (as a percent) | 3.75% | |||||
Conversion ratio, number of common shares per $1,000 principal amount | 0.769231 | |||||
Initial conversion price of shares (in dollars per share) | $13 | |||||
Percentage of principal amount at which notes may be required to be repurchased in event of fundamental change | 100.00% | |||||
Amount of notes outstanding redeemed | 24,872,000 | |||||
Interest expense and other associated costs incurred | 245,000 | 490,000 | ||||
Mortgage notes | ||||||
Indebtedness | ||||||
Weighted average interest rate (as a percent) | 6.77% | 6.77% | ||||
Interest expense and other associated costs incurred | 1,248,000 | 1,844,000 | 671,000 | 1,145,000 | ||
Mortgage notes | FNMA | ||||||
Indebtedness | ||||||
Number of real estate properties mortgaged | 2 | 2 | ||||
Mortgage notes | FMCC | ||||||
Indebtedness | ||||||
Number of real estate properties mortgaged | 3 | 3 | ||||
Mortgage notes | Senior Living Communities | ||||||
Indebtedness | ||||||
Number of real estate properties mortgaged | 5 | 5 | ||||
Mortgage notes, total | $52,517,000 | $52,517,000 |
Off_Balance_Sheet_Arrangement_
Off Balance Sheet Arrangement (Details) (USD $) | 6 Months Ended |
In Thousands, unless otherwise specified | Jun. 30, 2014 |
property | |
Off Balance Sheet Arrangement | |
Carrying value of accounts receivable and other assets pledged | $14,191 |
Number of properties leased from SNH on which pledge arises | 26 |
Off balance sheet arrangements, asset | 0 |
Off balance sheet arrangements, liability | $0 |
Related_Person_Transactions_De
Related Person Transactions (Details) (USD $) | 3 Months Ended | 6 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | |||||||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Oct. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2014 | Aug. 31, 2013 | Jan. 31, 2014 | Jun. 30, 2014 | Jul. 10, 2014 |
property | item | item | property | property | property | item | ||||||
item | item | |||||||||||
Related person transactions | ||||||||||||
Management fee revenue | $2,433 | $2,281 | $4,858 | $4,583 | ||||||||
Assisted living communities | ||||||||||||
Related person transactions | ||||||||||||
Number of properties to be sold | 1 | 1 | ||||||||||
Arizona | SNF | ||||||||||||
Related person transactions | ||||||||||||
Number of real estate properties sold | 1 | |||||||||||
Arizona | Assisted living communities | ||||||||||||
Related person transactions | ||||||||||||
Number of real estate properties sold | 1 | |||||||||||
Arizona | Senior Living Communities, SNF and Assisted living communities [Member] | ||||||||||||
Related person transactions | ||||||||||||
Decrease in annual lease rent payable | 590 | |||||||||||
Number of units in real estate property offered for sale | 160 | |||||||||||
Sales price | 5,900 | |||||||||||
Senior Living Communities | ||||||||||||
Related person transactions | ||||||||||||
Number of real estate properties leased | 181 | 181 | 181 | 181 | ||||||||
Number of properties managed | 44 | 44 | 44 | 44 | ||||||||
Number of units in properties managed | 7,051 | 7,051 | 7,051 | 7,051 | ||||||||
Assisted living communities | ||||||||||||
Related person transactions | ||||||||||||
Number of real estate properties classified as discontinued operations | 1 | 1 | 1 | 1 | ||||||||
Number of units in real estate property offered for sale | 32 | 32 | 32 | 32 | ||||||||
SNH | ||||||||||||
Related person transactions | ||||||||||||
Ownership percentage by former parent | 100.00% | 100.00% | 100.00% | 100.00% | ||||||||
Number of shares owned | 4,235 | 4,235 | 4,235 | 4,235 | ||||||||
Percentage of outstanding common shares owned | 8.70% | 8.70% | 8.70% | 8.70% | ||||||||
Total minimum annual rent payable | 190,867 | 190,867 | 190,867 | 190,867 | ||||||||
Rent expense under leases, net of lease inducement amortization | 48,822 | 50,866 | 97,581 | 101,466 | ||||||||
Outstanding rent due and payable | 17,252 | 17,883 | 17,252 | 17,883 | 17,252 | 17,252 | ||||||
Real estate improvements sold | 17,423 | 6,353 | ||||||||||
Increase (decrease) in annual lease rent payable | 1,395 | 508 | ||||||||||
Assets held for sale for increased rent pursuant to the terms of leases with SNH | 7,474 | 7,474 | 7,474 | 7,474 | ||||||||
Number of combination agreements | 4 | |||||||||||
Number of pooling agreements for communities that include assisted living units | 3 | |||||||||||
Management fee revenue | 2,433 | 2,281 | 4,858 | 4,576 | ||||||||
Number of independent living communities for which agreement is entered for extension of term | 2 | |||||||||||
SNH | Senior Living Communities | ||||||||||||
Related person transactions | ||||||||||||
Number of real estate properties offered for sale classified as discontinued operations | 11 | 11 | 11 | 11 | ||||||||
Number of real estate properties sold | 4 | 3 | ||||||||||
SNH | First AL Pooling Agreements | ||||||||||||
Related person transactions | ||||||||||||
Number of communities | 20 | |||||||||||
SNH | Second AL Pooling Agreements | ||||||||||||
Related person transactions | ||||||||||||
Number of communities | 19 | |||||||||||
SNH | Third AL Pooling Agreement [Member] | ||||||||||||
Related person transactions | ||||||||||||
Number of communities | 2 | |||||||||||
SNH | IL Pooling Agreement | ||||||||||||
Related person transactions | ||||||||||||
Number of communities | 2 | |||||||||||
SNH | Senior Living Communities | ||||||||||||
Related person transactions | ||||||||||||
Number of real estate properties leased | 184 | 184 | 184 | 184 | ||||||||
Number of real estate properties classified as discontinued operations | 7 | 7 | 7 | 7 | ||||||||
Number of real estate properties offered for sale classified as discontinued operations | 11 | 11 | 11 | 11 | ||||||||
Number of properties managed | 44 | 44 | 44 | 44 | ||||||||
Number of communities | 1 | |||||||||||
SNH | Senior Living Communities | Forecast | ||||||||||||
Related person transactions | ||||||||||||
Number of remaining real estate properties classified as discontinued operations | 4 | 4 | 4 | 4 | ||||||||
SNH | Senior Living Communities | New York | ||||||||||||
Related person transactions | ||||||||||||
Number of units in properties managed | 199 | 199 | 199 | 199 | ||||||||
SNH | Senior Living Communities | Missouri | ||||||||||||
Related person transactions | ||||||||||||
Decrease in annual lease rent payable | 255 | |||||||||||
Number of real estate properties sold | 1 | |||||||||||
Number of units in real estate property offered for sale | 112 | |||||||||||
Sales price | 2,550 | |||||||||||
SNH | Senior Living Communities | Texas | ||||||||||||
Related person transactions | ||||||||||||
Decrease in annual lease rent payable | 210 | |||||||||||
Number of real estate properties sold | 1 | |||||||||||
Number of units in real estate property offered for sale | 48 | |||||||||||
Sales price | 2,400 | |||||||||||
SNH | Senior Living Communities | Wisconsin | ||||||||||||
Related person transactions | ||||||||||||
Decrease in annual lease rent payable | 450 | |||||||||||
Number of real estate properties sold | 2 | |||||||||||
Number of units in real estate property offered for sale | 139 | 139 | 139 | 139 | ||||||||
Sales price | 4,500 | |||||||||||
SNH | Senior Living Communities | Virginia | ||||||||||||
Related person transactions | ||||||||||||
Decrease in annual lease rent payable | 285 | |||||||||||
Number of real estate properties sold | 1 | |||||||||||
Number of units in real estate property offered for sale | 55 | |||||||||||
Sales price | 2,850 | |||||||||||
SNH | Senior Living Communities | D&R Yonkers LLC | New York | ||||||||||||
Related person transactions | ||||||||||||
Number of units in properties managed | 111 | 111 | 111 | 111 | ||||||||
SNH | Assisted living communities | ||||||||||||
Related person transactions | ||||||||||||
Number of real estate properties classified as discontinued operations | 3 | 3 | 3 | 3 | ||||||||
Number of units in real estate property offered for sale | 480 | 480 | 480 | 480 | ||||||||
SNH | Assisted living communities | Second AL Pooling Agreements | ||||||||||||
Related person transactions | ||||||||||||
Number of independent living communities for which agreement is entered for extension of term | 19 |
Related_Person_Transactions_De1
Related Person Transactions (Details) (USD $) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 |
item | item | item | ||||
Related person transactions | ||||||
Utilities and real estate taxes | $49,203 | $48,279 | $98,277 | $96,292 | ||
Equity investment in an investee | 6,801 | 6,801 | 5,913 | |||
Income (loss) arising from investment | 118 | 79 | 21 | 155 | ||
Number of entities to whom RMR provides management services | 3 | 3 | ||||
Aggregate coverage of combined directors' and officers' liability insurance policy purchased by the related party | 10,000 | |||||
Aggregate excess layer coverage of combined directors' and officers' liability insurance policy purchased by the related party | 20,000 | |||||
Period for which directors' and officers' insurance coverage | 2 years | |||||
Number of entities to whom RMR manages | 5 | |||||
Period for which additional directors' and officers' insurance coverage | 1 year | |||||
Aggregate excess non-indemnifiable coverage of combined directors' and officers' liability insurance policy purchased by the related party | 5,000 | |||||
RMR | ||||||
Related person transactions | ||||||
Business management fees | 3,517 | 3,829 | 7,043 | 7,161 | ||
Annual rent expense under leases | 767 | |||||
Utilities and real estate taxes | 317 | 347 | 672 | 694 | ||
AIC | ||||||
Related person transactions | ||||||
Amount invested in equity investee | 6,034 | 6,034 | ||||
Equity investment in an investee | 6,801 | 5,913 | 6,801 | 5,913 | ||
Income (loss) arising from investment | 118 | 79 | 21 | 155 | ||
Coverage of property insurance | 500,000 | |||||
Annual premiums paid | 3,901 | |||||
Premium paid for combined directors' and officers' liability insurance policy | 357 | |||||
AIC | CWH | ||||||
Related person transactions | ||||||
Number of other current shareholders of the related party | 6 | 6 | ||||
Ownership percentage | 14.30% | 14.30% | ||||
Shares purchased (in shares) | 2,857 | 2,857 | ||||
Value of shares issued by related party | $825 |
Acquisitions_Details
Acquisitions (Details) (USD $) | 1 Months Ended | 3 Months Ended |
In Thousands, unless otherwise specified | 31-May-14 | Jun. 30, 2014 |
item | ||
Senior Living Communities | ||
Acquisitions | ||
Number of units in properties managed | 7,051 | |
Alabama senior living community | ||
Acquisitions | ||
Number of units in properties managed | 116 | |
Gross amount paid on acquisition | $19,914 | |
Acquisition related expenses | 81 | |
Percentage amount of living services paid by residents | 100.00% | |
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 | |
Net working capital liabilities assumed | -68 | |
Mortgage debt assumed | -13,920 | |
Premium on assumed mortgage debt | -1,598 | |
Total assets acquired and liabilities assumed | $5,926 |
Discontinued_Operations_Detail
Discontinued Operations (Details) (USD $) | 3 Months Ended | 6 Months Ended | 1 Months Ended | ||||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Oct. 31, 2014 | Jul. 31, 2014 | Sep. 30, 2012 |
property | item | ||||||
Discontinued Operations | |||||||
Impairment on discontinued assets | $1,231 | $1,231 | |||||
Summary of the operating results of discontinued operations | |||||||
Revenues | 6,302 | 38,055 | 13,803 | 80,134 | |||
Expenses | -7,694 | -39,264 | -16,560 | -82,805 | |||
Impairment on discontinued assets | -1,231 | -1,231 | |||||
Benefit from income taxes | 498 | 941 | 971 | 1,602 | |||
Net (loss) income | -894 | -1,499 | -1,786 | -2,300 | |||
Assisted living communities | |||||||
Discontinued Operations | |||||||
Number of properties to be sold | 1 | 1 | |||||
Number of living units in property to be sold | 32 | 32 | |||||
Assisted living communities | Arizona | |||||||
Discontinued Operations | |||||||
Number of real estate properties sold | 1 | ||||||
Senior Living Communities | SNH | |||||||
Discontinued Operations | |||||||
Number of real estate properties offered for sale classified as discontinued operations | 11 | 11 | |||||
Number of real estate properties sold | 4 | 3 | |||||
Pharmacy business | South Carolina | |||||||
Discontinued Operations | |||||||
Sale consideration | 205 | ||||||
Number of pharmacies whose real estate was not acquired by Omnicare | 1 | ||||||
SNF | Arizona | |||||||
Discontinued Operations | |||||||
Number of real estate properties sold | 1 | ||||||
Senior Living Communities, SNF and Assisted living communities [Member] | Arizona | |||||||
Discontinued Operations | |||||||
Number of units in real estate property offered for sale | 160 | ||||||
Sale consideration | 5,900 | ||||||
Decrease in annual lease rent payable | 590 |