Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 21, 2023 | Jun. 30, 2022 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Transition Report | false | ||
Entity File Number | 000-52566 | ||
Entity Registrant Name | SUMMIT HEALTHCARE REIT, INC. | ||
Entity Incorporation, State or Country Code | MD | ||
Entity Tax Identification Number | 73-1721791 | ||
Entity Address, Address Line One | 23382 Mill Creek Drive, Suite 125 | ||
Entity Address, City or Town | Laguna Hills | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 92653 | ||
City Area Code | 800 | ||
Local Phone Number | 978-8136 | ||
Title of 12(g) Security | Common stock, $0.001 par value | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 23,027,978 | ||
Entity Central Index Key | 0001310383 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
No Trading Symbol Flag | true | ||
Auditor Name | BDO USA, LLP | ||
Auditor Firm ID | 243 | ||
Auditor Location | Costa Mesa, California |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
ASSETS | ||
Cash and cash equivalents | $ 11,572,000 | $ 10,488,000 |
Restricted cash | 2,591,000 | 2,673,000 |
Real estate properties, net | 173,127,000 | 179,102,000 |
Intangible lease assets, net | 13,704,000 | 14,687,000 |
Tenant and other receivables, net | 5,020,000 | 3,386,000 |
Deferred leasing commissions, net | 387,000 | 466,000 |
Other assets, net | 1,720,000 | 422,000 |
Equity-method investments | 5,182,000 | 7,902,000 |
Total assets | 213,303,000 | 219,126,000 |
LIABILITIES AND EQUITY | ||
Accounts payable and accrued liabilities | 5,585,000 | 2,551,000 |
Security deposits | 4,651,000 | 4,651,000 |
Loans payable, net of debt issuance costs | 180,169,000 | 180,370,000 |
Total liabilities | 190,405,000 | 187,572,000 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding at December 31, 2022 and 2021 | ||
Common stock, $0.001 par value; 290,000,000 shares authorized; 23,027,978 shares issued and outstanding at December 31, 2022 and 2021 | 23,000 | 23,000 |
Additional paid-in capital | 116,432,000 | 116,401,000 |
Accumulated deficit | (93,734,000) | (85,041,000) |
Total stockholders' equity | 22,721,000 | 31,383,000 |
Noncontrolling interests | 177,000 | 171,000 |
Total equity | 22,898,000 | 31,554,000 |
Total liabilities and equity | $ 213,303,000 | $ 219,126,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 290,000,000 | 290,000,000 |
Common stock, shares issued | 23,027,978 | 23,027,978 |
Common stock, shares outstanding | 23,027,978 | 23,027,978 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues: | ||
Total rental revenues | $ 21,957,000 | $ 5,974,000 |
Resident fees and services | 3,678,000 | |
Asset management fees | 659,000 | 953,000 |
Interest income from notes receivable | 26,000 | |
Total operating revenue | 26,294,000 | 6,953,000 |
Expenses: | ||
Property operating costs | 3,139,000 | 1,023,000 |
Resident costs | 3,713,000 | |
General and administrative | 4,580,000 | 5,245,000 |
Depreciation and amortization | 7,311,000 | 1,841,000 |
Total operating expenses | 18,743,000 | 8,109,000 |
Operating income (loss) | 7,551,000 | (1,156,000) |
Loss from equity-method investees | (2,898,000) | (354,000) |
Gain on sale of equity-method investment | 3,515,000 | |
Other income | 252,000 | 20,000 |
Interest expense | (13,534,000) | (2,535,000) |
Net loss | (8,629,000) | (510,000) |
Noncontrolling interests' share in net (income) loss | (64,000) | (75,000) |
Net loss applicable to common stockholders | $ (8,693,000) | $ (585,000) |
Basic and diluted: | ||
Basic, Net loss applicable to common stockholders | $ (0.38) | $ (0.03) |
Diluted, Net loss applicable to common stockholders | $ (0.38) | $ (0.03) |
Weighted average shares used to calculate earnings per common share: | ||
Basic | 23,027,978 | 23,027,978 |
Diluted | 23,027,978 | 23,027,978 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit [Member] | Total Stockholders' Equity | Noncontrolling Interests | Total |
Balance at the beginning at Dec. 31, 2020 | $ 23,000 | $ 116,335,000 | $ (84,456,000) | $ 31,902,000 | $ 195,000 | $ 32,097,000 |
Balance at the beginning (in shares) at Dec. 31, 2020 | 23,027,978 | |||||
Stock-based compensation | $ 0 | 66,000 | 0 | 66,000 | 0 | 66,000 |
Distributions paid to noncontrolling interests | 0 | 0 | 0 | 0 | (99,000) | (99,000) |
Net (loss) income | 0 | 0 | (585,000) | (585,000) | 75,000 | (510,000) |
Balance at the end at Dec. 31, 2021 | $ 23,000 | 116,401,000 | (85,041,000) | 31,383,000 | 171,000 | 31,554,000 |
Balance at the end (in shares) at Dec. 31, 2021 | 23,027,978 | |||||
Stock-based compensation | $ 0 | 31,000 | 0 | 31,000 | 0 | 31,000 |
Distributions paid to noncontrolling interests | 0 | 0 | 0 | 0 | (58,000) | (58,000) |
Net (loss) income | 0 | 0 | (8,693,000) | (8,693,000) | 64,000 | (8,629,000) |
Balance at the end at Dec. 31, 2022 | $ 23,000 | $ 116,432,000 | $ (93,734,000) | $ 22,721,000 | $ 177,000 | $ 22,898,000 |
Balance at the end (in shares) at Dec. 31, 2022 | 23,027,978 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (8,629,000) | $ (510,000) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Amortization of debt issuance costs | 912,000 | 108,000 |
Depreciation and amortization | 7,311,000 | 1,841,000 |
Amortization of above/below market lease intangible | 64,000 | 32,000 |
Straight line rents | (1,467,000) | 377,000 |
Stock-based compensation expense | 31,000 | 66,000 |
Gain on sale of equity-method investment | (3,515,000) | |
Loss from equity-method investees | 2,898,000 | 354,000 |
Change in operating assets and liabilities: | ||
Tenant and other receivables, net | (2,000) | 763,000 |
Other assets | (143,000) | 682,000 |
Accounts payable and accrued liabilities | 2,223,000 | 114,000 |
Security deposits | 4,064,000 | |
Net cash provided by operating activities | 3,198,000 | 4,376,000 |
Cash flows from investing activities: | ||
Real estate acquisitions | (150,664,000) | |
Additions to real estate and other assets | (506,000) | |
Investments in equity-method investees | (1,111,000) | (590,000) |
Proceeds from sale of equity-method investment | 5,411,000 | |
Distributions received from equity-method investees | 769,000 | 1,888,000 |
Payments from notes receivable | 262,000 | |
Net cash used in investing activities | (848,000) | (143,693,000) |
Cash flows from financing activities: | ||
Proceeds from issuance of loans payable | 138,750,000 | |
Payments of loans payable | (1,113,000) | (1,061,000) |
Distributions paid to noncontrolling interests | (58,000) | (99,000) |
Debt issuance costs | (177,000) | (2,703,000) |
Net cash (used in) provided by financing activities | (1,348,000) | 134,887,000 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 1,002,000 | (4,430,000) |
Cash, cash equivalents and restricted cash - beginning of year | 13,161,000 | 17,591,000 |
Cash, cash equivalents and restricted cash - end of year | 14,163,000 | 13,161,000 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest: | $ 11,318,000 | $ 2,014,000 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2022 | |
Organization | |
Organization | 1. Organization Summit Healthcare REIT, Inc. (“Summit”) is a real estate investment trust that owns 100% of 14 properties, 95.3% of four properties, a 10% equity interest in an unconsolidated equity-method investment that holds 17 properties, a 35% equity interest in an unconsolidated equity-method investment that holds one property, a 20% equity interest in an unconsolidated equity-method investment that holds two properties, a 10% equity interest in an unconsolidated equity-method investment that holds nine properties, and a 10% equity interest in an unconsolidated equity-method investment that holds six properties. In June 2021, we sold our 15% equity interest in an unconsolidated equity-method investment that held 14 properties. Summit is a Maryland corporation, formed in 2004 under the General Corporation Law of Maryland for the purpose of investing in and owning real estate. As used in these notes, the “Company”, “we”, “us” and “our” refer to Summit and its consolidated subsidiaries, including Summit Healthcare Operating Partnership, L.P. (the “Operating Partnership”), except where the context otherwise requires. We conduct substantially all of our operations through the Operating Partnership, which is a Delaware limited partnership. We own a 99.88% general partner interest in the Operating Partnership, and Cornerstone Realty Advisors, LLC (“CRA”), a former affiliate, owns a 0.12% limited partnership interest. Summit and the Operating Partnership are managed and operated as one entity, and Summit has no significant assets other than its investment in the Operating Partnership. Summit, as the general partner of the Operating Partnership, controls the Operating Partnership and consolidates the assets, liabilities, and results of operations of the Operating Partnership. Cornerstone Healthcare Partners LLC – Consolidated Joint Venture We own 95 % of Cornerstone Healthcare Partners LLC (“CHP LLC”), which was formed in 2012, and the remaining 5% noncontrolling interest is owned by Cornerstone Healthcare Real Estate Fund, Inc. (“CHREF”), an affiliate of CRA. CHP LLC is consolidated within our financial statements and owns four properties (the “JV Properties”) with another partially owned subsidiary. As of December 31, 2022 and 2021, we own a 95.3% interest in the four JV Properties, and CHREF owns a 4.7% interest. Summit Union Life Holdings, LLC – Equity-Method Investment In April, 2015, through our Operating Partnership, we entered into a limited liability company agreement with Best Years, LLC (“Best Years”), an unrelated entity and a U.S.-based affiliate of Union Life Insurance Co, Ltd. (a Chinese corporation), and formed Summit Union Life Holdings, LLC (the “SUL JV”). The SUL JV is not consolidated in our consolidated financial statements and is accounted for under the equity-method in our consolidated financial statements (see Note 5). As of December 31, 2022 and 2021, we have a 10% interest in the SUL JV which owns 17 properties. Summit Fantasia Holdings, LLC – Equity-Method Investment In September 2016, through our Operating Partnership, we entered into a limited liability company agreement with Fantasia Investment III LLC (“Fantasia”), an unrelated entity and a U.S.-based affiliate of Fantasia Holdings Group Co., Limited (a Chinese corporation listed on the Stock Exchange of Hong Kong (HKEX)), and formed Summit Fantasia Holdings, LLC (the “Fantasia JV”). The Fantasia JV is not consolidated in our consolidated financial statements and is accounted for under the equity-method in our consolidated financial statements. As of December 31, 2022 and 2021, we have a 35% in the Fantasia JV which owns one property as of December 31, 2022 and owned two properties at December 31, 2021. Summit Fantasia Holdings II, LLC – Equity-Method Investment In December 2016, through our Operating Partnership, we entered into a limited liability company agreement (the “Fantasia II LLC Agreement”) with Fantasia, and formed Summit Fantasia Holdings II, LLC (the “Fantasia II JV”). The Fantasia II JV is not consolidated in our consolidated financial statements and is accounted for under the equity-method in our consolidated financial statements. As of December 31, 2022 and 2021, we have a 20% interest in the Fantasia II JV which owns two properties. Summit Fantasia Holdings III, LLC - Equity-Method Investment In July 2017, through our Operating Partnership, we entered into a limited liability company agreement with Fantasia and formed Summit Fantasia Holdings III, LLC (the “Fantasia III JV”). The Fantasia III JV is not consolidated in our consolidated financial statements and is accounted for under the equity-method in our consolidated financial statements. As of December 31, 2022 and 2021, we have a 10% interest in the Fantasia III JV which owns nine properties. Summit Fantasy Pearl Holdings, LLC – Equity-Method Investment In October 2017, through our Operating Partnership, we entered into a limited liability company agreement with Fantasia, Atlantis Senior Living 9, LLC, a Delaware limited liability company (“Atlantis”), and Fantasy Pearl LLC, a Delaware limited liability company (“Fantasy”), and formed Summit Fantasy Pearl Holdings, LLC (the “FPH JV”). The FPH JV is not consolidated in our consolidated financial statements and is accounted for under the equity-method in our consolidated financial statements. As of December 31, 2022 and 2021, we have a 10% interest in the FPH JV which owns six properties. Indiana JV– Equity-Method Investment In June 2021, we sold our 15% interest in the Indiana joint venture (the “Indiana JV”) for approximately $5.4 million. See Note 5 for further information. The Indiana JV was not consolidated in our consolidated financial statements and was accounted for under the equity-method prior to the sale of our equity interest. As of December 31, 2022 and 2021, we had a 0% interest in the Indiana JV which owned 14 properties. Taxable REIT Subsidiaries Summit Healthcare Asset Management, LLC Summit Healthcare Asset Management, LLC (“SAM TRS”) is our wholly-owned taxable REIT subsidiary (“TRS”). We serve as the manager of the SUL JV, Fantasia JV, Fantasia II JV, Fantasia III JV, FPH JV and the Indiana JV prior to the sale of our equity interest (collectively, our “Equity-Method Investments”), and provide management services in exchange for fees and reimbursements. All asset management fees earned by us are paid to SAM TRS and expenses incurred by us, as the manager, are reimbursed from SAM TRS. See Notes 5 and 7 for further information. SHOP TRS LLC SHOP TRS LLC (“SHOP TRS”) is our wholly-owned taxable REIT subsidiary that is the sole member for two of our real estate properties that no longer have a lease with an unrelated tenant. Each of these properties are leased to an affiliated subsidiary (see Note 3 under Pennington Gardens Operations LLC (“Pennington Gardens”) and Sundial Operations LLC (“Sundial”), collectively, the “Operated Properties”) and the operations are consolidated in our financial statements. Coronavirus (COVID-19) The world was, and continues to be, impacted by the COVID-19 pandemic. The healthcare industry was among those most adversely affected by the COVID-19 pandemic. Two of our tenants have experienced a material adverse effect on their operations related to COVID-19, which has affected their ability to make rent payments in 2022 and 2021 (see Note 3 for further information on its impact on us). Additionally, see Note 5 for further issues related to our Equity-Method Investments. The extent to which COVID-19 could continue to impact our business, cash flow and results of operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence. The fluidity of this situation precludes any prediction as to the ultimate material adverse impact on the demand for senior housing and skilled nursing and presents material uncertainty and risk with respect to our business, operations, financial condition and liquidity, including recording impairments, lease modifications and credit losses in future periods. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies The summary of significant accounting policies presented below is designed to assist in understanding our consolidated financial statements. Such consolidated financial statements and accompanying notes are the representations of our management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, or GAAP, in all material respects, and have been consistently applied in preparing the accompanying consolidated financial statements. Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, the Operating Partnership, and its consolidated companies and are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. The Financial Accounting Standards Board (“FASB”) issued Accounting Standard Codification (“ASC”) 810, Consolidation Use of Estimates The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base these estimates on various assumptions that we believe to be reasonable under the circumstances, and these estimates form the basis for our judgments concerning the carrying values of assets and liabilities that are not readily apparent from other sources. We periodically evaluate these estimates and judgments based on available information and experience. Actual results could differ from our estimates under different assumptions and conditions. If actual results significantly differ from our estimates, our financial condition and results of operations could be materially impacted. The most significant estimates made include that of real estate acquisition valuation and the allocation of property purchase price to tangible and intangible assets acquired and liabilities assumed at relative fair value, the evaluation of potential impairment of long-lived assets and equity method investments, and the estimated useful lives of real estate assets and intangibles. Cash and Cash Equivalents We consider all short-term, highly liquid investments that are readily convertible to cash with a maturity of three months or less at the time of purchase to be cash equivalents. As of December 31, 2022, we had cash accounts in excess of FDIC-insured limits. To date, the Company has not experienced losses or lack of access to cash in its cash and cash equivalent accounts. Restricted Cash Restricted cash represent restricted cash held by our lenders in interest bearing accounts related to impound reserve accounts for property taxes, insurance and capital funds as required under the terms of the loan agreements. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown on the consolidated statements of cash flows: December 31, December 31, 2022 2021 Cash and cash equivalents $ 11,572,000 $ 10,488,000 Restricted cash 2,591,000 2,673,000 Total cash, cash equivalents, and restricted cash shown on the consolidated statements of cash flows $ 14,163,000 $ 13,161,000 Investments in Real Estate and Depreciation We allocate the purchase price of our properties in accordance with ASC 805 – Business Combinations. If the acquisition does not meet the definition of a business, we record the acquisition as an asset acquisition. For transactions that are business combinations, acquisition costs are expensed as incurred. For transactions that are an asset acquisition, acquisition costs are capitalized as incurred. Upon an asset acquisition of a property, we allocate the purchase price of the property based upon the relative fair value of the tangible and intangible assets acquired and liabilities assumed, which generally consists of land, buildings, site improvements, furniture and fixtures and intangible assets. The determination of fair value involves the use of significant judgment and estimation. We value land based on various inputs, which may include internal analysis of recently acquired properties, existing comparable properties within our portfolio, or third party appraisals or valuations based on comparable sales. We allocate the purchase price to tangible assets of an acquired property by valuing the property as if it were vacant. We are required to make subjective assessments as to the estimated useful lives of our depreciable assets. We consider the period of future benefit of the assets to determine the appropriate estimated useful lives. Depreciation of our assets is being charged to expense on a straight-line basis over the estimated useful lives. We depreciate the fair value allocated to building and improvements over estimated useful lives ranging from 15 to 39 years. We estimate the value of furniture and fixtures based on the assets’ depreciated replacement cost. We depreciate the fair value allocated to furniture and fixtures over estimated useful lives ranging from three In allocating the purchase price to identified intangible assets and liabilities of an acquired property, the value of above/below-market leases and in-place leases are estimated as follows: The value of above/below market leases is based on the differences between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) estimated fair market lease rates from the perspective of a market participant for the corresponding in-place leases, measured, for above-market leases, over a period equal to the remaining non-cancelable term of the lease and, for below-market leases, over a period equal to the initial term plus any below market fixed rate renewal periods. The above/below market leases are amortized as an adjustment to rental revenue over the remaining term of the respective leases. The value of in-place leases consisting of tenant origination and absorption costs and leasing commissions avoided is based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during expected lease-up periods, current market conditions, discount rates, and costs to execute similar leases. The value of in-place leases are amortized over the remaining term of the respective leases and included in depreciation and amortization in the consolidated statements of operations. If a tenant vacates its space prior to its contractual expiration date, any unamortized balance of their related intangible asset is recorded in the consolidated statements of operations. Assets held for sale are not depreciated. Impairment of Real Estate Properties We evaluate the recoverability of the carrying value of our real estate properties on a property-by-property basis. We review our properties for recoverability when events or circumstances, including changes in the Company’s use of property or the strategy for its overall business, plans to sell a property before its depreciable life has ended, occupancy changes, significant near-term lease expirations, significant deteriorations of the underlying cash flows of the property, and other market factors indicate that the carrying amount of the property may not be recoverable. Impairment is measured as the amount by which the carrying amount of the property exceeds the fair value of the property. As a result of our ongoing analysis for potential impairment of our investments in real estate, we may be required to adjust the carrying value of certain assets to their estimated fair values, or estimated fair value less selling costs, under certain circumstances. No impairments were recorded during the years ended December 31, 2022 or 2021. Fair Value Measurements Fair value represents the estimate of the proceeds to be received, or paid in the case of a liability, in a current transaction between willing parties. ASC 820, Fair Value Measurement, independent sources and unobservable inputs reflect the reporting entity’s assumptions about market participant assumptions used to value an asset or liability. Financial assets and liabilities are categorized based on the inputs to the valuation techniques as follows: Level 1. Level 2. Level 3. Assets and liabilities measured at fair value are classified according to the lowest level input that is significant to their valuation. A financial instrument that has a significant unobservable input along with significant observable inputs may still be classified as a Level 3 instrument. We generally determine or calculate the fair value of financial instruments using quoted market prices in active markets when such information is available or use appropriate present value or other valuation techniques, such as discounted cash flow analyses, incorporating available market discount rate information for similar types of instruments and our estimates for non-performance and liquidity risk. These techniques are significantly affected by the assumptions used, including the discount rate, credit spreads, and estimates of future cash flow. As of and for the year ended December 31, 2022, our equity method investments in the Fantasia JV and FPH JV were measured at fair value, on a nonrecurring basis using unobservable (level 3) inputs. We estimated the fair value of our equity-method investments based on discounted future cash flows. As a result, we recognized an impairment loss of $0.4 million (See Note 5). There were no assets or liabilities measured at fair value on a nonrecurring basis during the year ended December 31, 2022. Fair Value Measurement of Financial Instruments Our consolidated balance sheets include the following financial instruments: cash and cash equivalents, restricted cash, tenant and other receivables, certain other assets, accounts payable and accrued liabilities, security deposits and loans payable. With the exception of the loans payable discussed below, we consider the carrying values to approximate fair value for such financial instruments because of the short period of time between origination of the instruments and their expected payment. As of December 31, 2022 and 2021, the fair value of our HUD-insured loans payable was $38.9 million and $52.5 million, compared to the principal balance (excluding debt discount) of $45.0 million and $46.1 million, respectively. The fair value of loans payable was estimated using lending rates available to us for financial instruments with similar terms and maturities. The fair value of our fixed and variable rate debt was estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. As the inputs to our valuation estimate are neither observable in nor supported by market activity, our loans payable are classified as Level 3 liability within the fair value hierarchy. As of December 31, 2022 and 2021, we believe the carrying amounts of our variable rate debt are reasonably estimated at their notional amounts as there have been minimal changes to the fixed spread portion of interest rates for similar loans observed in the market, and as the variable portion of our interest rates fluctuate with the associated market indices. At December 31, 2022 and 2021, we do not have any significant financial assets or financial liabilities that are measured at fair value on a recurring basis in our consolidated financial statements. Variable Interest Entities We analyze our contractual and/or other interests to determine whether such interests constitute an interest in a VIE in accordance with ASC 810, Consolidation Tenant and Other Receivables Tenant and other receivables are comprised mainly of the cumulative amount of future adjustments necessary to present tenant rental income on a straight-line basis, accounts receivable due from residents for our Operated Properties, asset management fees and distributions receivable. Allowance for Credit Losses The allowance for credit losses is maintained on all receivables except for lease receivables and is maintained at a level believed adequate to absorb potential losses in our receivables. The determination of the credit allowance is based on a quarterly evaluation of each of these receivables, including general economic conditions and estimated collectability. We evaluate the collectability of our receivables based on a combination of credit quality indicators, including, but not limited to, payment status, historical charge-offs, and financial strength of the lessee or equity method investment. A receivable is considered to have deteriorated in credit quality when, based on current information and events, it is probable that we will be unable to collect all amounts due. As of December 31, 2022 and 2021, the allowance for credit losses is immaterial. Deferred Financing Costs Costs incurred with potential financing arrangements are recorded as deferred debt issuance costs. Costs incurred in connection with completed debt financing are recorded as debt issuance costs. Debt issuance costs are amortized using the straight-line basis which approximates the effective interest rate method, over the contractual terms of the respective financings, and are presented net of loans payable in loans payable, net of debt issuance costs, in the consolidated balance sheets. Deferred Leasing Commissions Leasing commissions (paid to CRA prior to April 1, 2014) were capitalized at cost and are being amortized on a straight-line basis over the related lease term. As of December 31, 2022 and 2021, total costs incurred were $1.0 million and $1.1 million, respectively, and the unamortized balance was approximately $0.4 million and $0.5 million, respectively. Amortization expense for each of the years ended December 31, 2022 and 2021 was approximately $79,000 and $70,000, respectively. Other Assets Other assets consist primarily of deferred financing costs, deposits, prepaid insurance, property taxes and other and corporate assets. Additionally, other assets will be amortized to expense over their future service periods. Balances without future economic benefit are expensed as they are identified. Equity-Method Investments We report our investments in unconsolidated entities, over whose operating and financial policies we have the ability to exercise significant influence but not control, under the equity method of accounting. Under this method of accounting, our pro rata share of the applicable entity’s earnings or losses is included in our consolidated statements of operations. We initially record our investments based on either the carrying value for properties contributed or the cash invested. We evaluate our Equity-Method Investments for impairment whenever events or changes in circumstances indicate that the carrying value of our investments may exceed the fair value. If it is determined that a decline in the fair value of our investments is not temporary, and if such reduced fair value is below its carrying value, an impairment is recorded. Determining fair value involves significant judgment. Our estimates consider available evidence including the present value of the expected future cash flows discounted at market rates, general economic conditions and other relevant factors. For the year ended December 31, 2022, we recorded impairment of approximately $0.4 million related to our equity-method investments. We did not record any impairments related to our equity-method investments for the year ended December 31, 2021. Rental Revenue We recognize rental revenue based on FASB Accounting Standards Update (“ASU”) 2016-02, Leases Additionally, where real estate taxes and insurance expenses were paid directly by our tenants to taxing authorities, we do not record any revenue or expense. For our triple-net leasing arrangements in which the tenant remits payment for certain costs to us and we pay the vendor, we have reported the amounts gross in total rental revenues and property operating costs on the consolidated statements of operations. We also made an accounting policy election to keep short-term leases less than twelve months off the balance sheet for all classes of underlying assets. Additionally, under Topic 842, we must assess if substantially all payments due under the lease are likely to be collected. If tenant lease payments are not likely to be collected, then the revenues will be recognized on a cash basis (or if the answer changes at a later date, the revenues are adjusted to reflect what it would have been on a cash basis) and the adjustments will be recorded through rental revenues, rather than bad debt expense. During 2022 and 2021, we determined that two of our leases were uncollectible (see Note 3) and therefore, we recorded rental revenue received from those tenants on the cash basis. Resident Fees and Services Revenue We recognize resident fees and services revenue at the amount that we expect to be entitled to in exchange for providing resident care and services. Resident fees are recognized and billed monthly based on the contracted rate in the resident lease agreements and the reimbursements from Medicaid are based on contracted reimbursement rates. These amounts are paid directly from the residents and/or third-party payors (currently only Medicaid). Revenue is recognized as performance obligations are satisfied. Performance obligations are determined based on the nature of the services provided by us. The majority of resident fees and services is attributable to the portion of the base monthly lease fee in the resident lease agreement. The Company has elected the lessor practical expedient within ASC 842, Leases (“ASC 842”) and recognizes the resident fee revenue based upon the predominant component, either the lease or non-lease component, of the contracts. The Company has determined that the lease component is the predominant component and the services included under the resident agreements have the same timing and pattern of transfer and are performance obligations that are satisfied over time. Resident services consist of care level services and certain other ancillary services (i.e., housekeeping, laundry, etc.). These services are provided and paid for in addition to the standard fees included in each resident lease (i.e., room and board, standard meals, etc.). Asset Management Fees We record asset management fee revenue based on ASC 606, Revenue from Contracts with Customers (Topic 606) obligation (managing the properties) comprised of a series of distinct services (handling issues with our tenants, etc.). We believe that the overall service of asset management is substantially the same each day and has the same pattern of performance over the term of the agreement. As a result, each day of service represents a performance obligation satisfied at that point in time. These fees are recognized at the end of each period for services performed during that period, billed monthly and paid quarterly. Stock-Based Compensation We record stock-based compensation expense for share-based payments to employees and directors, including grants of stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. Compensation expense is recognized ratably over the vesting term and is included in general and administrative expense in our consolidated statements of operations. Forfeitures are recognized as they occur. See Note 12 for further information. Noncontrolling Interest in Consolidated Subsidiary Noncontrolling interest relates to the interest in the consolidated entities that are not wholly-owned by us. As of December 31, 2022 and 2021, the noncontrolling interest mainly relates to CHP, LLC. ASC 810-10-65, Consolidation We periodically evaluate individual noncontrolling interests for the ability to continue to recognize the noncontrolling interest as permanent equity in the consolidated balance sheets. Any noncontrolling interest that fails to qualify as permanent equity will be reclassified as temporary equity and adjusted to the greater of (a) the carrying amount, or (b) its redemption value as of the end of the period in which the determination is made. Income Taxes We have elected to be taxed as a REIT, under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”) beginning with our taxable year ending December 31, 2006. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to currently distribute at least 90% of the REIT’s ordinary taxable income to stockholders. As a REIT, we generally will not be subject to federal income tax on taxable income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will then be subject to federal income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service were to grant us relief under certain statutory provisions. Such an event could materially and adversely affect our net income and net cash available for distribution to stockholders. However, we believe that we will be organized and operate in such a manner as to qualify for treatment as a REIT and intend to operate for the foreseeable future in such a manner so that we will remain qualified as a REIT for federal income tax purposes. Given the applicable statute of limitations, we generally are subject to audit by the Internal Revenue Service (“IRS”) for the year ended December 31, 2018 and subsequent years, and state income tax returns are subject to audit for the year ended December 31, 2017 and subsequent years. We have elected to treat SAM TRS and SHOP TRS as taxable REIT subsidiaries, which generally may engage in any business, including the provision of customary or non-customary services for our tenants. Both TRS’ are treated as a regular corporation and are subject to federal income tax and applicable state income and franchise taxes at regular corporate rates. SAM TRS has deferred tax assets related to their net operating losses (“NOL”) for a total of $2,523,000 and $1,779,000, respectively, which has a full valuation allowance as of December 31, 2022 and 2021. SHOP TRS has deferred tax assets related to their NOL for a total of $862,000, which has a full valuation allowance as of December 31, 2022. Due to the losses incurred and the full valuation allowance on deferred tax assets, there was no tax provision related to SAM TRS or SHOP TRS in 2022 and 2021. Uncertain Tax Positions In accordance with the requirements of ASC 740, Income Taxes, computing our annual taxable income, which results in our taxable income being passed through to our stockholders. A REIT is subject to a 100% tax on the net income from prohibited transactions. A “prohibited transaction” is the sale or other disposition of property held primarily for sale to customers in the ordinary course of a trade or business. There is a safe harbor provision which, if met, expressly prevents the Internal Revenue Service from asserting the prohibited transaction test. We have no income tax expense, deferred tax assets or deferred tax liabilities associated with any such uncertain tax positions for the operations of any entity included in the consolidated results of operations. We classify interest and penalties related to uncertain tax positions, if any, in our consolidated financial statements as a component of general and administrative expense. Basic and Diluted Net Income (Loss) and Distributions per Common Share Basic earnings per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares are calculated in accordance with the treasury stock method. For the years ended December 31, 2022 and 2021, all stock options outstanding were considered to be anti-dilutive. Reclassification of Intangible Lease Assets The following table provides a reconciliation for the reclassification of our intangible lease assets as of December 31, 2021 in our consolidated balance sheets to conform to the presentation as of December 31, 2022: As previously reported Increase (decrease) As reclassified Real estate properties, net $ 192,862,000 $ (13,760,000) $ 179,102,000 Intangible lease assets, net $ — $ 14,687,000 $ 14,687,000 Other assets, net $ 1,349,000 $ (927,000) $ 422,000 Total assets $ 219,126,000 $ — $ 219,126,000 The intangible lease assets related to our acquisitions in 2021 were reclassified from real estate properties, net and other assets, net into a separate line item as of December 31, 2022. The result of this reclassification did not have any effect on our total assets, liabilities, accumulated deficit, net loss or statements of cash flows. |
Investments in Real Estate Prop
Investments in Real Estate Properties | 12 Months Ended |
Dec. 31, 2022 | |
Investments in Real Estate Properties | |
Investments in Real Estate Properties | 3. Investments in Real Estate Properties As of December 31, 2022 and 2021, investments in real estate properties including those held by our consolidated subsidiaries (excluding the 35 properties owned by our unconsolidated Equity-Method Investments) are set forth below: December 31, December 31, 2022 2021 Land $ 15,565,000 $ 15,565,000 Buildings and improvements 166,989,000 166,989,000 Less: accumulated depreciation (15,985,000) (11,395,000) Buildings and improvements, net 151,004,000 155,594,000 Furniture and fixtures 12,440,000 12,137,000 Less: accumulated depreciation (5,882,000) (4,194,000) Furniture and fixtures, net 6,558,000 7,943,000 Real estate properties, net $ 173,127,000 $ 179,102,000 Depreciation and amortization expense (excluding intangible lease amortization and leasing commission amortization) for the years ended December 31, 2022 and 2021 was approximately $6.3 million and $1.8 million, respectively. As of December 31, 2022, our portfolio consisted of 18 real estate properties, 16 of which were 100% leased to the tenants of the related facilities. The other two properties are each 100% leased to an affiliated subsidiary (see below under Pennington Gardens Operations LLC and Sundial Operations LLC) During 2022 and 2021, our tenants for the Pennington Gardens and Sundial Assisted Living facilities experienced a material adverse effect on their operations related to COVID-19 and other operator issues, that affected their ability to make their rent payments in 2022 and 2021. As a result, we experienced the following impacts: Pennington Gardens Operations LLC In March 2021, under a receivership, we began recording rent payments on a cash basis for our Pennington Gardens facility and wrote off the remaining straight-line rent receivable of $0.4 million. In October 2021 , we reached an agreement with the tenant to terminate the lease. We notified the lender and the U.S. Department of Housing and Urban Development (“HUD”) and requested emergency approval to change the operator and terminate the lease. In November 2022, the operator change was approved by HUD. On February 3, 2022, the current receiver, who was acting as the operator, received the license to be the licensed operator. As such, on February 10, 2022, the tenant’s lease was terminated, and we received $0.2 million from the tenant as part of the settlement agreement and lease termination which is recorded in total rental revenues in the consolidated statements of operations for the year ended December 31, 2022. Concurrently, we entered into a new lease agreement with Pennington Gardens Operations LLC, the newly formed operating company for Pennington Gardens, which is a wholly owned subsidiary of SHOP TRS. As such, the operations of Pennington Gardens are consolidated in our financial statements beginning February 11, 2022, and all intercompany transactions have been eliminated. For the period from February 11, 2022 through December 31, 2022, revenues from Pennington Gardens Operations are recorded under resident fees and services and costs are recorded under resident costs in the consolidated statements of operations. Sundial Operations LLC In October 2021, we reached an agreement with the tenant of our Sundial Assisted Living facility in Redding, California to terminate the lease, and we requested approval from HUD to terminate the lease and install a new licensed operator/manager. Beginning in June 2021, we recorded rent payments on a cash basis and in May 2021, wrote off the remaining straight-line rent receivable of $0.1 million. On June 6, 2022, the new operator received approval to be the licensed operator of the facility and the previous tenant’s lease was terminated. We received $0.2 million from the tenant as part of the settlement agreement and lease termination, which is recorded in total rental revenues in the consolidated statements of operations for the year ended December 31, 2022. On June 7, 2022, we entered into a new lease agreement with Sundial Operations LLC, the newly formed operating company for Sundial Assisted Living, which is a wholly owned subsidiary of SHOP TRS. As such, the operations of Sundial Assisted Living are consolidated in our financial statements as of June 7, 2022. For the period from June 7, 2022 through December 31, 2022, revenues from Sundial Operations are recorded under resident fees and services and costs are recorded under resident costs in the consolidated statements of operations. The following table provides summary information regarding our portfolio (excluding the 35 properties owned by our unconsolidated Equity-Method Investments and the $12.75 million loan from Oxford (see Note 4) with Summit Georgia Holdings LLC, our wholly-owned subsidiary) as of December 31, 2022: Loans Payable, Excluding Debt Purchase Issuance Property Location Date Purchased Type (1) Price Costs Sheridan Care Center Sheridan, OR August 3, 2012 SNF $ 4,100,000 $ 4,000,000 Fernhill Care Center Portland, OR August 3, 2012 SNF 4,500,000 3,511,000 Friendship Haven Healthcare and Rehabilitation Center Galveston County, TX September 14, 2012 SNF 15,000,000 11,327,000 Pacific Health and Rehabilitation Center Tigard, OR December 24, 2012 SNF 8,140,000 5,853,000 Brookstone of Aledo Aledo, IL July 2, 2013 AL 8,625,000 6,600,000 Sundial Assisted Living Redding, CA December 18, 2013 AL 3,500,000 3,684,000 Pennington Gardens Chandler, AZ July 17, 2017 AL/MC 13,400,000 10,039,000 Yucaipa Hill Post Acute Yucaipa, CA July 2, 2021 SNF 10,715,000 8,014,000 Creekside Post Acute Yucaipa, CA July 2, 2021 SNF 4,780,000 3,575,000 University Post Acute Mentone, CA July 2, 2021 SNF 4,560,000 3,412,000 Calhoun Health Center Calhoun, GA December 30, 2021 SNF 7,670,000 6,549,000 Maple Ridge Health Care Center Cartersville, GA December 30, 2021 SNF 13,548,000 11,568,000 Chatsworth Health Care Center Chatsworth, GA December 30, 2021 SNF 29,785,000 25,432,000 East Lake Arbor Decatur, GA December 30, 2021 SNF 15,640,000 13,354,000 Fairburn Health Care Center Fairburn, GA December 30, 2021 SNF 14,644,000 12,503,000 Grandview Health Care Center Jasper, GA December 30, 2021 SNF 10,061,000 8,591,000 Rosemont at Stone Mountain Stone Mountain, GA December 30, 2021 SNF 23,908,000 20,414,000 Willowwood Nursing Center & Rehab Flowery Branch, GA December 30, 2021 SNF 14,744,000 12,589,000 Total: $ 207,320,000 $ 171,015,000 (1) SNF is an abbreviation for skilled nursing facility. AL is an abbreviation for assisted living facility. MC is an abbreviation for memory care facility. Future Minimum Lease Payments The future minimum lease payments to be received under existing operating leases (not including intercompany leases) for our consolidated properties as of December 31, 2022 are as follows: Years ending December 31, 2023 17,983,000 2024 18,272,000 2025 18,566,000 2026 18,865,000 2027 19,168,000 Thereafter 146,294,000 $ 239,148,000 2022 Acquisitions None 2021 Acquisitions CA3 Properties On July 2, 2021, through our wholly-owned subsidiary, we acquired three skilled nursing facilities, two located in Yucaipa, California and one located in Mentone, California (collectively, the “CA3 Properties”), for the purchase price of $20,055,000, which was funded through cash on hand plus the proceeds from the loan described in Note 4. We incurred approximately $80,000 in acquisition costs in connection with these acquisitions. The CA3 Properties are leased to three tenants under three separate 15-year triple net leases, each of which has GA8 Properties On December 30, 2021, through our wholly-owned subsidiary, we acquired eight skilled nursing facilities located in Georgia (collectively, the “GA8 Properties”), for the total purchase price of $130,000,000, which was funded through cash on hand plus the proceeds from the loans described in Note 4. The GA8 Properties are leased to eight tenants under eight separate 15-year triple net leases, each of which has |
Loans Payable
Loans Payable | 12 Months Ended |
Dec. 31, 2022 | |
Loans Payable | |
Loans Payable | 4. Loans Payable As of December 31, 2022 and 2021, loans payable consisted of the following December 31, 2022 December 31, 2021 Loans payable to Lument (formerly ORIX Real Estate Capital, LLC) (insured by HUD) in monthly installments of approximately $183,000, including interest, ranging from a fixed rate of 2.79% to 4.2%, due in September 2039 through April 2055, and as of December 31, 2022 and 2021, collateralized by Sheridan, Fernhill, Pacific Health, Aledo, Sundial and Friendship Haven. $ 34,976,000 $ 35,934,000 Loan payable to Capital One Multifamily Finance, LLC (insured by HUD) in monthly installments of approximately $49,000, including interest at a fixed rate of 4.23%, due in September 2053, and collateralized by Pennington Gardens. 10,039,000 10,194,000 Loan payable to CIBC Bank, USA in monthly installments of approximately of $106,000 including cash collateral fund payments, variable interest rate as noted below (8.2% and 5% at December 31, 2022 and 2021, respectively), due in July 2024, and as of December 31, 2022, collateralized by Yucaipa Hill Post Acute, Creekside Post Acute and University Post Acute. 15,000,000 15,000,000 Loan payable to CIBC Bank, USA in monthly installments of approximately $600,000 (interest only through December 2023) variable interest rate as noted below (7.7% and 4% at December 31, 2022 and 2021, respectively), due in December 2024, and as of December 31, 2022, collateralized by Calhoun Health Center, Maple Ridge Health Care Center, Chatsworth Health Care Center, East Lake Arbor, Fairburn Health Care Center, Grandview Health Care Center, Rosemont at Stone Mountain, and Willowwood Nursing Center & Rehab. 91,000,000 91,000,000 Loan payable to Oxford Finance, LLC in monthly installments of approximately $260,000 (interest only through maturity), variable interest rate as noted below (15.1% and 12% at December 31, 2022 and 2021, respectively) due in March 2025, collateralized in second position by Calhoun Health Center, Maple Ridge Health Care Center, Chatsworth Health Care Center, East Lake Arbor, Fairburn Health Care Center, Grandview Health Care Center, Rosemont at Stone Mountain, and Willowwood Nursing Center & Rehab. 20,000,000 20,000,000 Mezzanine Loan payable to Oxford Finance, LLC in monthly installments of approximately $168,000 (interest only through maturity), variable interest rate as noted below (15.1% and 12% at December 31, 2022 and 2021, respectively) due in December 2026, secured by the equity interests of our wholly-owned subsidiary, Summit Georgia Holdings LLC, the parent holding company for the GA8 Properties. 12,750,000 12,750,000 183,765,000 184,878,000 Less debt issuance costs (3,596,000) (4,508,000) Total loans payable $ 180,169,000 $ 180,370,000 As of December 31, 2022, we have total debt obligations of approximately $183.8 million that will mature between 2024 and 2055. See Note 3 for loans payable balance for each property. All of the loans payable have certain financial and non-financial covenants, including ratios and financial statement considerations. As of December 31, 2022, we were in compliance with all of our debt covenants. During the years ended December 31, 2022 and 2021, we incurred approximately $12.0 million and $2.4 million of interest expense, respectively (excluding debt issuance costs amortization and interest expense related to the Oxford mezzanine loan as noted below (“Oxford Monthly Fee”)), related to our loans payable. During the years ended December 31, 2022 and 2021, we incurred approximately $0.6 million and $0 million of interest expense, respectively, related to the Oxford Monthly Fee, which is included in interest expense in our consolidated statements of operations. In connection with our loans payable, we incurred debt issuance costs. As of December 31, 2022 and 2021, the unamortized balance of the debt issuance costs was approximately $3.6 million and $4.5 million, respectively. These debt issuance costs are being amortized over the life of their respective financing agreements using the straight-line basis which approximates the effective interest rate method. For the years ended December 31, 2022 and 2021, approximately $0.9 million and $0.1 million, respectively, of debt issuance costs were amortized and included in interest expense in our consolidated statements of operations. The principal payments due on the loans payable (excluding debt issuance costs and cash collateral funds) for each of the five following years and thereafter ending December 31 are as follows: Principal Year Amount 2023 1,158,000 2024 107,201,000 2025 21,246,000 2026 14,042,000 2027 1,460,000 Thereafter 38,658,000 $ 183,765,000 The following information notes our loan activity: CA3 Properties On July 2, 2021, in conjunction with the acquisition of the CA3 Properties (see Note 3), we entered into a first priority $15.0 million mortgage loan collateralized by the CA3 Properties with CIBC Bank, USA (“CIBC”). The loan bears interest at the One Month London Interbank Offer Rate (“LIBOR”) (with a floor of 1%) plus 4.00%, or the Secured Overnight Financing Rate (“SOFR”) when LIBOR is discontinued, and matures on July 2, 2024. The loan is interest only for the first year and thereafter requires additional monthly installments of principal that are held by the lender in a cash loan guarantee fund until maturity. The loan may be prepaid at any time with no penalty if the CA3 Properties are refinanced through HUD, otherwise we would be required to pay a prepayment premium equal to three percent (3%), two percent (2%) and one percent (1%) of the amount of the outstanding principal balance of the Loan prepaid if such prepayment occurs on or prior to the first (1st), second (2nd) and third (3rd) year anniversary of the closing date, respectively. In the event the Company sells or transfers one or more properties, we would be required to pay an exit fee equal to (i) one-half of one percent (0.5%) of the amount of the outstanding principal balance of the Loan if such sale or transfer occurs on or prior to the second (2nd) year anniversary of the Closing Date; and (ii) zero percent (0%) if such sale or transfer occurs after the second (2nd) year anniversary of the Closing Date. GA8 Properties We acquired our interest in the GA8 Properties subject to a $91 million first priority mortgage loan collateralized by those properties, a $20 million subordinated term loan collateralized by those properties and a $12.75 million mezzanine loan secured by the equity interests of the wholly-owned subsidiary, Summit Georgia Holdings LLC, the parent holding company for the GA8 Properties. On December 30, 2021, we entered into a loan agreement with CIBC for $91.0 million in principal amount. The loan bears interest at the SOFR plus 3.50% with a SOFR floor of 50 basis points, or the bank’s base rate plus 0.75% (with a minimum of 4.0%), and matures on December 30, 2024. The loan is interest-only for two years and then requires additional monthly installments of principal that are held by the lender in a cash loan guarantee fund until maturity. The loan may be prepaid at any time with no penalty if the GA8 Properties are refinanced through HUD, otherwise we would be required to pay an a prepayment premium equal to three percent (3%), two percent (2%) and one percent (1%) of the amount of the outstanding principal balance of the Loan prepaid if such prepayment occurs on or prior to the first (1st), second (2nd) and third (3rd) year anniversary of the closing date, respectively. In the event the Company sells or transfers one or more properties, we would be required to pay an exit fee equal to (i) one-half of one percent (0.5%) of the amount of the outstanding principal balance of the Loan if such sale or transfer occurs on or prior to the second (2nd) year anniversary of the Closing Date; and (ii) zero percent (0%) if such sale or transfer occurs after the second (2nd) year anniversary of the Closing Date. On December 30, 2021, we entered into a subordinated term loan agreement with Oxford for $20.0 million in principal amount. The loan bears interest at LIBOR plus 11.0% with a LIBOR floor of 100 basis points (or with a LIBOR replacement rate), and matures on March 31, 2025. The loan is interest only. The entire loan may be prepaid at any time and would be subject at that time to a prepayment premium fee equal to five percent (5%), two percent (2%) and one percent (1%) of the amount repaid if the repayment is made or the loan is accelerated prior to first (1st), second (2nd) and third (3rd) year anniversary of the closing date, respectively, or no prepayment fee if the GA8 Properties are refinanced through HUD. Additionally, we are required to pay an exit fee of $100,000 if the loan is paid off by December 31, 2024, or $140,000 if the loan is paid off after that date. On December 30, 2021, we entered into a mezzanine loan agreement with Oxford for $12.75 million in principal amount. The loan bears interest at LIBOR plus 11.0% with a LIBOR floor of 100 basis points (or with a LIBOR replacement rate), and matures on December 30, 2026. The loan is interest-only and requires a monthly fee in the amount of (i) twenty-two percent (22%) of net cash flow attributable to each month or portion thereof during the loan term, and (ii) five percent (5%) of net cash flow attributable to each month or portion thereof during the post-repayment period which is the earlier of (i) the second anniversary of the loan repayment date and (ii) the date upon which Summit no longer owns any direct or indirect interest in any of the properties and all accrued monthly fees, all excess cash fees and all other liabilities then due agent or lenders are indefeasibly paid in full. The entire Oxford mezzanine loan may be prepaid at any time prior to the three-year anniversary and would be subject at that time to a yield maintenance premium fee equal to the interest that would have been paid for the full three years, which will be due and payable upon the earliest of the maturity or acceleration of the loan, or payment of the loan in full. HUD-insured loans We have six properties with HUD-insured loans from Lument Capital (formerly ORIX Real Estate Capital, LLC) and one property with a HUD-insured loan from Capital One Multifamily Finance, LLC. See table above listing loans payable for further information. All of the HUD-insured loans are subject to customary representations, warranties and ongoing covenants and agreements with respect to the operation of the facilities, including the provision for certain maintenance and other reserve accounts for property tax, insurance, and capital expenditures, with respect to the facilities all as described in the HUD agreements. These reserves are included in restricted cash in our consolidated balance sheets. |
Equity-Method Investments
Equity-Method Investments | 12 Months Ended |
Dec. 31, 2022 | |
Equity-Method Investments | |
Equity-Method Investments | 5. Equity-Method Investments As of December 31, 2022 and 2021, the balances of our Equity-Method Investments were approximately $5.2 million and $7.9 million, respectively, and are as follows: Summit Union Life Holdings, LLC The SUL JV will exist until an event of dissolution occurs, as defined in the limited liability company agreement of the SUL JV (the “SUL LLC Agreement”). Under the SUL LLC Agreement, net operating cash flow of the SUL JV will be distributed monthly, first to the Operating Partnership and Best Years pari passu pari passu For the year ended December 31, 2022, we invested approximately $821,000 related to capital calls for the SUL JV. During 2022, the SUL JV entered into agreements with brokers to market three properties for sale, however, no agreements for such sales have been executed and due to the provisions under the HUD-insured loans payable, none of the properties are considered held for sale as of December 31, 2022. In 2022, the SUL JV recorded an aggregate impairment charge of approximately $6.8 million on several of the properties in the SUL JV and we recorded our 10% share of the impairment of approximately $0.7 million in loss from equity-method investees in the consolidated statements of operations. As of December 31, 2022 and 2021, the balance of our equity-method investment related to the SUL JV was approximately $2.4 million and $2.9 million, respectively. Summit Fantasia Holdings, LLC The Fantasia JV will exist until an event of dissolution occurs, as defined in the limited liability company agreement of the Fantasia JV (the “Fantasia LLC Agreement”). Under the Fantasia LLC Agreement, as amended in April 2018, net operating cash flow of the Fantasia JV will be distributed quarterly, first to the Operating Partnership and Fantasia pari passu pari passu For the year ended December 31, 2022, we invested approximately $290,000 related to capital calls for the Fantasia JV. In 2022, the Fantasia JV recorded an impairment charge of approximately $6.4 million on one of the properties in the Fantasia JV and we recorded our 35% share of the impairment of approximately $2.2 million in loss from equity-method investees in the consolidated statements of operations. Additionally, we determined the fair value of our investment in the Fantasia JV to be impaired and recorded an aggregate impairment of $0.2 million and wrote off distributions receivable of approximately $0.2 million in 2022, which is recorded in the loss from equity-method investees in the consolidated statements of operations for the year ended December 31, 2022, and consequently, reduced our equity-method investment balance to $0. In August 2022, the Fantasia JV agreed to sell its remaining property, Sun Oak Assisted Living; therefore the property is considered as held for sale in the Fantasia JV as of December 31, 2022. As of December 31, 2022 and 2021, the balance of our equity-method investment related to the Fantasia JV was approximately $0 and $2.0 million. Summit Fantasia Holdings II, LLC The Fantasia II JV will exist until an event of dissolution occurs, as defined in the limited liability company agreement of the Fantasia II JV (the “Fantasia II LLC Agreement”). Under the Fantasia II LLC Agreement, net operating cash flow of the Fantasia JV will be distributed quarterly, first to the Operating Partnership and Fantasia pari passu pari passu As of December 31, 2022 and 2021, the balance of our equity-method investment related to the Fantasia II JV was approximately $1.2 million and $1.3 million, respectively. Summit Fantasia Holdings III, LLC The Fantasia III JV will continue until an event of dissolution occurs, as defined in the limited liability company agreement of the Fantasia III JV (the “Fantasia III LLC Agreement”). Under the Fantasia III LLC Agreement, net operating cash flow of the Fantasia III JV will be distributed quarterly, first to the Operating Partnership and Fantasia pari passu pari passu As of December 31, 2022 and 2021, the balance of our equity-method investment related to the Fantasia III JV was approximately $1.6 million and $1.5 million, respectively. Summit Fantasy Pearl Holdings, LLC The FPH JV will continue until an event of dissolution occurs, as defined in the limited liability company agreement of the FPH JV (the “FPH LLC Agreement”). Under the FPH LLC Agreement, net operating cash flow of the FPH JV will be distributed quarterly, first to the members pari passu pari passu In December 2022, Summit recorded an impairment of approximately $0.2 million in the FPH JV due to issues related to tenant operations, which is recorded in the loss from equity-method investees in the consolidated statements of operations for the year ended December 31, 2022, and consequently, reduced our equity-method investment balance to $0. As of December 31, 2022 and 2021, the balance of our equity-method investment related to the FPH JV was approximately $0 and $0.2 million, respectively. Indiana JV In June 2021, we sold our 15% interest in the Indiana JV for approximately $5.4 million in cash. For the year ended December 31, 2021, we recorded approximately $3.5 million in gain on the sale from this equity-method investment which is included in our consolidated statements of operations under gain on sale of equity-method investment. As of December 31, 2022 and 2021, we have a 0% interest in the Indiana JV. Summarized Financial Data for Equity-Method Investments Our Equity-Method Investments are significant equity-method investments in the aggregate. The results of operations of our Equity-Method Investments for the year ended December 31, 2022 are summarized below: Fantasia Fantasia Fantasia FPH Combined SUL JV JV II JV III JV JV Total Revenue $ 19,927,000 $ 2,556,000 $ 2,863,000 $ 8,333,000 $ 1,695,000 $ 35,374,000 Income (loss) from operations $ (1,845,000) $ (5,818,000) $ 1,991,000 $ 4,066,000 $ (258,000) $ (1,864,000) Net income (loss) $ (6,487,000) $ (5,979,000) $ 1,066,000 $ 1,663,000 $ 801,000 $ (8,936,000) Summit interest in Equity-Method Investments net income (loss) $ (648,000) $ (2,092,000) $ 213,000 $ 166,000 $ 80,000 $ (2,281,000) (1) (1) Included in the loss from equity-method investees in the consolidated statements of operations is an additional $0.6 million of impairments and write off of distributions related to the Fantasia JV and FPH JV Equity-Method Investments for the year ended December 31, 2022. The results of operations of our Equity-Method Investments for the year ending December 31, 2021 are summarized below: Fantasia Fantasia Fantasia FPH Indiana Combined SUL JV JV II JV III JV JV JV Total Revenue $ 20,575,000 $ 3,591,000 $ 3,716,000 $ 8,213,000 $ 3,615,000 $ (3,166,000) (1) $ 36,544,000 Income (loss) from operations $ 6,911,000 $ 129,000 $ 1,935,000 $ 4,131,000 $ 1,680,000 $ (5,093,000) $ 9,693,000 Net income (loss) $ 2,594,000 $ 298,000 $ 988,000 $ 2,015,000 $ 1,685,000 $ (8,567,000) $ (987,000) Summit interest in Equity-Method Investments net income (loss) $ 259,000 $ 104,000 $ 198,000 $ 202,000 $ 169,000 $ (1,286,000) $ (354,000) (1) This amount includes the revenues of the Indiana JV prior to the sale of our 15% interest, which include $1.5 million in above market lease amortization and $2.1 million in straight-line rent receivable write off related to a change in the collectability assessment for lease payments due from the Indiana JV’s tenants as well as $0.5 million in interest income. Distributions from Equity-Method Investments As of December 31, 2022 and 2021, we have distributions receivable, which is included in tenant and other receivables in our consolidated balance sheets, as follows: December 31, December 31, 2022 2021 SULH JV $ 259,000 $ 273,000 Fantasia JV — 205,000 Fantasia II JV 55,000 54,000 Fantasia III JV 22,000 22,000 FPH JV 64,000 28,000 Total $ 400,000 $ 582,000 For the years ended December 31, 2022 and 2021, we received cash distributions, which are included in our cash flows from operating activities in the change in tenant and other receivables, and cash flows from investing activities, using the cumulative earnings approach, as follows: Year Ended December 31, 2022 Year Ended December 31, 2021 Total Cash Cash Flow Cash Flow Total Cash Cash Flow Cash Flow Distributions from from Distributions from from Received Operating Investing Received Operating Investing SUL JV $ 615,000 $ — $ 615,000 $ 837,000 $ 259,000 $ 578,000 Fantasia JV — — — — — — Fantasia II JV 311,000 213,000 98,000 301,000 197,000 104,000 Fantasia III JV 134,000 134,000 — 500,000 202,000 298,000 FPH JV 56,000 — 56,000 153,000 18,000 135,000 Indiana JV — — — 773,000 — 773,000 Total $ 1,116,000 $ 347,000 $ 769,000 $ 2,564,000 $ 676,000 $ 1,888,000 Asset Management Fees We serve as the manager of our Equity-Method Investments and provide management services in exchange for fees and reimbursements. As the manager, we are paid an annual asset management fee for managing the properties held by our Equity-Method Investments, as defined in the agreements. For the years ended December 31, 2022 and 2021, we recorded approximately $0.7 million and $1.0 million, respectively, in asset management fees from our Equity-Method Investments. |
Receivables
Receivables | 12 Months Ended |
Dec. 31, 2022 | |
Receivables | |
Receivables | 6. Receivables Tenant and Other Receivables, net Tenant and other receivables, net consists of: December 31, December 31, 2022 2021 Straight-line rent receivables $ 3,862,000 $ 2,395,000 Distribution receivables from Equity-Method Investments 400,000 582,000 Asset management fees 375,000 323,000 Other receivables 383,000 86,000 Total $ 5,020,000 $ 3,386,000 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Related Party Transactions | 7. Related Party Transactions Equity-Method Investments See Notes 5 and 6 for further discussion of distributions and asset management fees related to our Equity-Method Investments. |
Intangible Lease Assets
Intangible Lease Assets | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Lease Assets | |
Intangible Lease Assets | 8. Intangible Lease Assets Intangible lease assets as of December 31, 2022 and 2021 are as follows: December 31, December 31, 2022 2021 In-place leases $ 13,778,000 $ 13,778,000 Less: accumulated amortization (937,000) (18,000) In-place leases, net 12,841,000 13,760,000 Above-market leases 959,000 959,000 Less: accumulated amortization (96,000) (32,000) Above-market leases, net 863,000 927,000 Total intangible lease assets, net $ 13,704,000 $ 14,687,000 For the year ended ended December 31, 2022 and 2021, amortization expense for intangible lease assets was approximately $1.0 million and $50,000, respectively, of which approximately $64,000 and $32,000, respectively, relates to the amortization of above-market leases which is included within rental revenues in the accompanying consolidated statements of operations. Expected future amortization of the intangible lease assets as of December 31, 2022 and for each of the five following years and thereafter ending December 31 are as follows: Years ending December 31, 2023 $ 980,000 2024 980,000 2025 980,000 2026 980,000 2027 980,000 Thereafter 8,804,000 $ 13,704,000 |
Right of Use Asset - Operating
Right of Use Asset - Operating Lease | 12 Months Ended |
Dec. 31, 2022 | |
Right of Use Asset - Operating Lease | |
Right of Use Asset - Operating Lease | 9. Right of Use Asset – Operating Lease On April 1, 2022, we entered into a temporary space license agreement (“Temporary License”) and a standard office lease (“New Lease”) with Lakehills CM-CG LLC (collectively, the “LH Lease”). The Temporary License, for space located in Laguna Hills, California, began on April 22, 2022 and expired on November 15, 2022. We were entitled to use such office space at no cost during the term of the Temporary License. Concurrent with the execution of the Temporary License, we entered into the New Lease, as amended, which began on November 16, 2022 for a period of sixty-six The LH Lease is classified as an operating lease. A right of use (“ROU”) asset represents the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The LH Lease did not provide an explicit rate of interest; therefore we used an estimated incremental borrowing rate of 5% based on a fully collateralized and fully amortizing loan with a maturity date of the same length as the lease that is based on information available at the commencement date in determining the present value of lease payments. At inception, we recorded an ROU asset and lease liability of approximately $0.9 million. As a result, the Company had non-cash liabilities Supplemental balance sheet information related to the LH Lease as of December 31, 2022 is as follows: Component Consolidated Balance Sheet Caption Right of use asset - operating Other assets, net $ 833,000 Lease liability - operating Accounts payable and accrued liabilities $ 933,000 Lease expense is presented as part of continuing operations within general and administrative expenses in the consolidated statements of operations. For the year ended December 31, 2022, we recognized approximately $87,000 in lease expense related to this lease. The lease payments are classified within operating activities in the consolidated statements of cash flows. As of December 31, 2022, we paid approximately $26,000 in lease payments and the weighted average remaining lease term is 5.3 years. Pursuant to ASC 842, lease payments on the LH Lease for each of the four following years and thereafter ending December 31 are as follows: Year Lease payments 2023 $ 103,000 2024 211,000 2025 217,000 2026 224,000 2027 231,000 Thereafter 98,000 Total lease payments $ 1,084,000 Less imputed interest (151,000) Total lease liability $ 933,000 |
Concentration of Risk
Concentration of Risk | 12 Months Ended |
Dec. 31, 2022 | |
Concentration of Risk | |
Concentration of Risk | 10. Concentration of Risk As of December 31, 2022, we owned eight properties in Georgia, four properties in California, three properties in Oregon, one property in Texas, one property in Illinois, and one property in Arizona (excluding the 35 properties held by our Equity-Method Investments). Accordingly, there is a geographic concentration of risk subject to economic conditions in certain states. Additionally, as of December 31, 2022, we leased our 16 real estate properties to 14 different tenants under long-term triple net leases. For the year ended December 31, 2022, three of the 14 tenants each had rental revenue greater than 10% (16%, 14%, and 10%). As of December 31, 2021, we leased our 18 real estate properties to 16 different tenants under long-term triple net leases. For the year ended December 31, 2021, three of the sixteen tenants each had rental revenue greater than 10% (38%, 26%, and 16%). As of December 31, 2022, our GA8 Properties are considered to be a significant asset concentration as the aggregate net assets of the GA8 Properties were greater than 20% of our total assets due to cross-default provisions in the leases. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | 11. Commitments and Contingencies We inspect our properties under a Phase I assessment for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist, we are not currently aware of any environmental liability with respect to the properties that would have a material effect on our consolidated financial condition, results of operations and cash flows. Further, we are not aware of any environmental liability or any unasserted claim or assessment with respect to an environmental liability that we believe would require additional disclosure or the recording of a loss contingency. Our commitments and contingencies include the usual obligations of real estate owners and licensed operators in the normal course of business. In the opinion of management, these matters are not expected to have a material impact on our consolidated financial condition, results of operations and cash flows. We are also subject to contingent losses resulting from litigation against the Company. Legal Proceedings In September 2015, a bankruptcy petition was filed against Healthcare Real Estate Partners, LLC (“HCRE”) by the investors in Healthcare Real Estate Fund, LLC and Healthcare Real Estate Qualified Purchasers Fund, LLC (collectively, the “Funds”). HCRE did not timely respond to the involuntary petition and the Bankruptcy Court entered an Order of Relief making HCRE a debtor in bankruptcy. As a result, HCRE was removed as manager under the Funds’ operating agreement. Thereafter the Company became the manager of the Funds and purchased the investors’ interests in the Funds for approximately $0.9 million. Following the subsequent dismissal of the involuntary bankruptcy petition filed against it, HCRE filed a motion for attorneys’ fees and damages and a separate complaint for violation of the automatic stay against the petitioning creditors and the Company in the United States Bankruptcy Court of the District of Delaware. The Bankruptcy Court granted a motion to dismiss the complaint for violation of the automatic stay filed jointly by the petitioning creditors and us, and dismissed the complaint with prejudice. HCRE appealed the Bankruptcy Court’s decision to the United States District Court for the District of Delaware which affirmed the Bankruptcy Court’s dismissal of the complaint in a decision dated September 9, 2018. On October 11, 2018, HCRE appealed the District Court’s decision affirming the Bankruptcy Court’s dismissal of the complaint to the United States Court of Appeals for the Third Circuit. On October 22, 2019, the Third Circuit granted HCRE’s appeal, reversing the District Court and holding that HCRE could assert the adversary complaint seeking damages for violation of the automatic stay. The Company filed a Petition for Rehearing on November 5, 2019 asserting that HCRE is not entitled to assert a claim for damages for violation of the automatic stay. This Petition was denied and the mandate was issued sending the matter back to the Bankruptcy Court. The Bankruptcy Court held a status conference on February 4, 2021, and subsequently entered scheduling orders to govern discovery and pretrial matters, and discovery is ongoing. The parties have filed dispositive motions, including a motion filed by the Company and the petitioning creditors for judgment on the pleadings. On February 4, 2022, the Bankruptcy Court entered an order denying the motion for judgment on the pleadings on the basis that the Bankruptcy Court would consider the points raised therein after trial. The Bankruptcy Court also entered an order denying HCRE’s motion to dismiss certain counterclaims and severing certain other counterclaims asserted by the petitioning creditors and the Company against HCRE on jurisdictional grounds, with the effect that such counterclaims may be pursued in the United States District Court. Trial in the Bankruptcy Court was conducted on January 9 and 10, 2023, with final concluding arguments presented on January 19, 2023. At the conclusion of the trial, the Bankruptcy Court took the matter under advisement and has not yet issued a decision. Based on the assessment by management, the Company believes that a loss is currently not probable or estimable under ASC 450, “Contingencies”, and as of December 31, 2022 and 2021 no accrual has been made with regard to the claim. Indemnification and Employment Agreements We have entered into indemnification agreements with certain of our executive officers and directors which indemnify them against all judgments, penalties, fines and amounts paid in settlement and all expenses actually and reasonably incurred by him or her in connection with any proceeding. Additionally, effective October 19, 2021, we entered into new employment agreements with our executive officers for a term of three years. These employment agreements include customary terms relating to salary, bonus, position, duties and benefits (including eligibility for equity compensation), as well as a cash payment following a change in control of the Company, as defined in such agreements. Management of our Equity-Method Investments As the manager of our Equity-Method Investments, we are responsible for managing the day-to-day operations. Additionally, we could be subject to a capital call from our Equity-Method Investments. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2022 | |
Equity | |
Equity | 12. Equity Distributions The Company declared no cash distributions per common share during the years ended December 31, 2022 and 2021. Our distribution reinvestment plan was suspended indefinitely effective December 31, 2010. At this time, we cannot provide any assurance as to if or when we will resume our distribution reinvestment plan. Share-Based Compensation Plans Upon the grant of stock options, we determine the exercise price by using our estimated per-share value, which is calculated by aggregating the estimated fair value of our investments in real estate and the estimated fair value of our other assets, subtracting the book value of our liabilities, utilizing a discount for the fact that the shares are not currently traded on a national securities exchange and a lack of a control premium, and divided the total by the number of our common shares outstanding at the time the options were granted. The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model. Assumptions required by the model include the risk-free interest rate, the expected life of the options, the expected stock price volatility over the expected life of the options, and the expected distribution yield. Compensation expense for employee stock options is recognized ratably over the vesting term. The expected life of the options was based on the simplified method as we do not have sufficient historical exercise data. The risk-free interest rate was based on the U.S. Treasury yield curve at the date of grant using the expected life of the options at the date of grant. Volatility was based on historical volatility of the stock prices for a sample of publicly traded companies with risk profiles similar to ours. The valuation model applied in this calculation utilizes highly subjective assumptions that could potentially change over time, including the expected stock price volatility and the expected life of an option. Summit Healthcare REIT, Inc. 2015 Omnibus Incentive Plan On October 28, 2015, we adopted the Summit Healthcare REIT, Inc. 2015 Omnibus Incentive Plan (“Incentive Plan”). The purpose of the Incentive Plan is to provide a means through which to attract and retain key personnel and to provide a means whereby current or prospective directors, officers, employees, consultants and advisors can acquire and maintain an equity interest in us, or be paid incentive compensation, including incentive compensation measured by reference to the value of our common stock, thereby strengthening their commitment to our welfare and aligning their interests with those of our stockholders. We may grant non-qualified stock options and incentive stock options, stock appreciation rights, restricted stock and restricted stock units, and performance based compensation awards. Stock options granted under the Incentive Plan are required to have a per share exercise price that is not less than 100% of the fair market value of our common stock underlying such stock options on the date an option is granted (other than in the case of options that are substitute awards). All stock options that are intended to qualify as incentive stock options must be granted pursuant to an award agreement expressly stating that the option is intended to qualify as an incentive stock option, and will be subject to the terms and conditions that comply with the rules as may be prescribed by Section 422 of the Code. The maximum term for stock options granted under the Incentive Plan will be ten years from the initial date of grant. The Incentive Plan provides that the total number of shares of common stock that may be issued is 3,000,000, of which 1,051,092 is available for future issuances as of December 31, 2022. On April 1, 2022, we granted 81,000 stock options to our non-executive employees under our Summit Healthcare REIT, Inc. 2015 Omnibus Incentive Plan (“Incentive Plan”). The stock options vest monthly beginning on May 1, 2022 and continuing over a three-year period through April 1, 2025. The options expire 10 years from the grant date. The weighted-average fair value per share of the stock options granted was $0.91. The estimated fair value using the Black-Scholes option-pricing model with the following weighted average assumptions: 2022 Stock options granted 81,000 Expected volatility 36.50 % Expected term 5.75 years Risk-free interest rate 2.53 % Dividend yield 0 % Fair value per stock option $ 0.91 In December 2022, the Compensation Committee of the Board of Directors approved the issuance of 80,000 stock options under our Summit Healthcare REIT, Inc. 2015 Omnibus Incentive Plan (“Incentive Plan”) to be issued to our non-executive employees in 2023. The following table summarizes our stock options as of December 31, 2022: Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Price Term Value Options outstanding at January 1, 2021 1,871,908 $ 2.09 Granted — Exercised — Cancelled/forfeited (4,000) 2.26 Options outstanding at December 31, 2021 1,867,908 $ 2.09 Granted 81,000 2.35 Exercised — Cancelled/forfeited — Options outstanding at December 31, 2022 1,948,908 $ 2.10 4.99 $ 1,235,000 Options exercisable at December 31, 2022 1,884,713 $ 2.09 4.85 $ 1,210,000 For our outstanding non-vested options as of December 31, 2022, the weighted average grant date fair value per share was $0.90. As of December 31, 2022, we have unrecognized stock-based compensation expense related to unvested stock options which is expected to be recognized as follows: Years Ending December 31, 2023 25,000 2024 25,000 2025 8,000 $ 58,000 The stock-based compensation expense reported for the years ended December 31, 2022 and 2021 was approximately $31,000 and $66,000, respectively, and is included in general and administrative expense in the consolidated statements of operations. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting | |
Segment Reporting | 13. Segment Reporting ASC 280, Segment Reporting |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events | |
Subsequent Events | 14. Subsequent Events None. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, the Operating Partnership, and its consolidated companies and are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. The Financial Accounting Standards Board (“FASB”) issued Accounting Standard Codification (“ASC”) 810, Consolidation |
Use of Estimates | Use of Estimates The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base these estimates on various assumptions that we believe to be reasonable under the circumstances, and these estimates form the basis for our judgments concerning the carrying values of assets and liabilities that are not readily apparent from other sources. We periodically evaluate these estimates and judgments based on available information and experience. Actual results could differ from our estimates under different assumptions and conditions. If actual results significantly differ from our estimates, our financial condition and results of operations could be materially impacted. The most significant estimates made include that of real estate acquisition valuation and the allocation of property purchase price to tangible and intangible assets acquired and liabilities assumed at relative fair value, the evaluation of potential impairment of long-lived assets and equity method investments, and the estimated useful lives of real estate assets and intangibles. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all short-term, highly liquid investments that are readily convertible to cash with a maturity of three months or less at the time of purchase to be cash equivalents. As of December 31, 2022, we had cash accounts in excess of FDIC-insured limits. To date, the Company has not experienced losses or lack of access to cash in its cash and cash equivalent accounts. |
Restricted Cash | Restricted Cash Restricted cash represent restricted cash held by our lenders in interest bearing accounts related to impound reserve accounts for property taxes, insurance and capital funds as required under the terms of the loan agreements. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown on the consolidated statements of cash flows: December 31, December 31, 2022 2021 Cash and cash equivalents $ 11,572,000 $ 10,488,000 Restricted cash 2,591,000 2,673,000 Total cash, cash equivalents, and restricted cash shown on the consolidated statements of cash flows $ 14,163,000 $ 13,161,000 |
Investments in Real Estate and Depreciation | Investments in Real Estate and Depreciation We allocate the purchase price of our properties in accordance with ASC 805 – Business Combinations. If the acquisition does not meet the definition of a business, we record the acquisition as an asset acquisition. For transactions that are business combinations, acquisition costs are expensed as incurred. For transactions that are an asset acquisition, acquisition costs are capitalized as incurred. Upon an asset acquisition of a property, we allocate the purchase price of the property based upon the relative fair value of the tangible and intangible assets acquired and liabilities assumed, which generally consists of land, buildings, site improvements, furniture and fixtures and intangible assets. The determination of fair value involves the use of significant judgment and estimation. We value land based on various inputs, which may include internal analysis of recently acquired properties, existing comparable properties within our portfolio, or third party appraisals or valuations based on comparable sales. We allocate the purchase price to tangible assets of an acquired property by valuing the property as if it were vacant. We are required to make subjective assessments as to the estimated useful lives of our depreciable assets. We consider the period of future benefit of the assets to determine the appropriate estimated useful lives. Depreciation of our assets is being charged to expense on a straight-line basis over the estimated useful lives. We depreciate the fair value allocated to building and improvements over estimated useful lives ranging from 15 to 39 years. We estimate the value of furniture and fixtures based on the assets’ depreciated replacement cost. We depreciate the fair value allocated to furniture and fixtures over estimated useful lives ranging from three In allocating the purchase price to identified intangible assets and liabilities of an acquired property, the value of above/below-market leases and in-place leases are estimated as follows: The value of above/below market leases is based on the differences between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) estimated fair market lease rates from the perspective of a market participant for the corresponding in-place leases, measured, for above-market leases, over a period equal to the remaining non-cancelable term of the lease and, for below-market leases, over a period equal to the initial term plus any below market fixed rate renewal periods. The above/below market leases are amortized as an adjustment to rental revenue over the remaining term of the respective leases. The value of in-place leases consisting of tenant origination and absorption costs and leasing commissions avoided is based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during expected lease-up periods, current market conditions, discount rates, and costs to execute similar leases. The value of in-place leases are amortized over the remaining term of the respective leases and included in depreciation and amortization in the consolidated statements of operations. If a tenant vacates its space prior to its contractual expiration date, any unamortized balance of their related intangible asset is recorded in the consolidated statements of operations. Assets held for sale are not depreciated. |
Impairment of Real Estate Properties | Impairment of Real Estate Properties We evaluate the recoverability of the carrying value of our real estate properties on a property-by-property basis. We review our properties for recoverability when events or circumstances, including changes in the Company’s use of property or the strategy for its overall business, plans to sell a property before its depreciable life has ended, occupancy changes, significant near-term lease expirations, significant deteriorations of the underlying cash flows of the property, and other market factors indicate that the carrying amount of the property may not be recoverable. Impairment is measured as the amount by which the carrying amount of the property exceeds the fair value of the property. As a result of our ongoing analysis for potential impairment of our investments in real estate, we may be required to adjust the carrying value of certain assets to their estimated fair values, or estimated fair value less selling costs, under certain circumstances. No impairments were recorded during the years ended December 31, 2022 or 2021. |
Fair Value Measurements | Fair Value Measurements Fair value represents the estimate of the proceeds to be received, or paid in the case of a liability, in a current transaction between willing parties. ASC 820, Fair Value Measurement, independent sources and unobservable inputs reflect the reporting entity’s assumptions about market participant assumptions used to value an asset or liability. Financial assets and liabilities are categorized based on the inputs to the valuation techniques as follows: Level 1. Level 2. Level 3. Assets and liabilities measured at fair value are classified according to the lowest level input that is significant to their valuation. A financial instrument that has a significant unobservable input along with significant observable inputs may still be classified as a Level 3 instrument. We generally determine or calculate the fair value of financial instruments using quoted market prices in active markets when such information is available or use appropriate present value or other valuation techniques, such as discounted cash flow analyses, incorporating available market discount rate information for similar types of instruments and our estimates for non-performance and liquidity risk. These techniques are significantly affected by the assumptions used, including the discount rate, credit spreads, and estimates of future cash flow. As of and for the year ended December 31, 2022, our equity method investments in the Fantasia JV and FPH JV were measured at fair value, on a nonrecurring basis using unobservable (level 3) inputs. We estimated the fair value of our equity-method investments based on discounted future cash flows. As a result, we recognized an impairment loss of $0.4 million (See Note 5). There were no assets or liabilities measured at fair value on a nonrecurring basis during the year ended December 31, 2022. |
Fair Value Measurement Of Financial Instruments | Fair Value Measurement of Financial Instruments Our consolidated balance sheets include the following financial instruments: cash and cash equivalents, restricted cash, tenant and other receivables, certain other assets, accounts payable and accrued liabilities, security deposits and loans payable. With the exception of the loans payable discussed below, we consider the carrying values to approximate fair value for such financial instruments because of the short period of time between origination of the instruments and their expected payment. As of December 31, 2022 and 2021, the fair value of our HUD-insured loans payable was $38.9 million and $52.5 million, compared to the principal balance (excluding debt discount) of $45.0 million and $46.1 million, respectively. The fair value of loans payable was estimated using lending rates available to us for financial instruments with similar terms and maturities. The fair value of our fixed and variable rate debt was estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. As the inputs to our valuation estimate are neither observable in nor supported by market activity, our loans payable are classified as Level 3 liability within the fair value hierarchy. As of December 31, 2022 and 2021, we believe the carrying amounts of our variable rate debt are reasonably estimated at their notional amounts as there have been minimal changes to the fixed spread portion of interest rates for similar loans observed in the market, and as the variable portion of our interest rates fluctuate with the associated market indices. At December 31, 2022 and 2021, we do not have any significant financial assets or financial liabilities that are measured at fair value on a recurring basis in our consolidated financial statements. |
Variable Interest Entities | Variable Interest Entities We analyze our contractual and/or other interests to determine whether such interests constitute an interest in a VIE in accordance with ASC 810, Consolidation |
Tenant and Other Receivables | Tenant and Other Receivables Tenant and other receivables are comprised mainly of the cumulative amount of future adjustments necessary to present tenant rental income on a straight-line basis, accounts receivable due from residents for our Operated Properties, asset management fees and distributions receivable. |
Allowance for Credit Losses | Allowance for Credit Losses The allowance for credit losses is maintained on all receivables except for lease receivables and is maintained at a level believed adequate to absorb potential losses in our receivables. The determination of the credit allowance is based on a quarterly evaluation of each of these receivables, including general economic conditions and estimated collectability. We evaluate the collectability of our receivables based on a combination of credit quality indicators, including, but not limited to, payment status, historical charge-offs, and financial strength of the lessee or equity method investment. A receivable is considered to have deteriorated in credit quality when, based on current information and events, it is probable that we will be unable to collect all amounts due. As of December 31, 2022 and 2021, the allowance for credit losses is immaterial. |
Deferred Financing Costs | Deferred Financing Costs Costs incurred with potential financing arrangements are recorded as deferred debt issuance costs. Costs incurred in connection with completed debt financing are recorded as debt issuance costs. Debt issuance costs are amortized using the straight-line basis which approximates the effective interest rate method, over the contractual terms of the respective financings, and are presented net of loans payable in loans payable, net of debt issuance costs, in the consolidated balance sheets. |
Deferred Leasing Commissions | Deferred Leasing Commissions Leasing commissions (paid to CRA prior to April 1, 2014) were capitalized at cost and are being amortized on a straight-line basis over the related lease term. As of December 31, 2022 and 2021, total costs incurred were $1.0 million and $1.1 million, respectively, and the unamortized balance was approximately $0.4 million and $0.5 million, respectively. Amortization expense for each of the years ended December 31, 2022 and 2021 was approximately $79,000 and $70,000, respectively. |
Other Assets | Other Assets Other assets consist primarily of deferred financing costs, deposits, prepaid insurance, property taxes and other and corporate assets. Additionally, other assets will be amortized to expense over their future service periods. Balances without future economic benefit are expensed as they are identified. |
Equity-Method Investments | Equity-Method Investments We report our investments in unconsolidated entities, over whose operating and financial policies we have the ability to exercise significant influence but not control, under the equity method of accounting. Under this method of accounting, our pro rata share of the applicable entity’s earnings or losses is included in our consolidated statements of operations. We initially record our investments based on either the carrying value for properties contributed or the cash invested. We evaluate our Equity-Method Investments for impairment whenever events or changes in circumstances indicate that the carrying value of our investments may exceed the fair value. If it is determined that a decline in the fair value of our investments is not temporary, and if such reduced fair value is below its carrying value, an impairment is recorded. Determining fair value involves significant judgment. Our estimates consider available evidence including the present value of the expected future cash flows discounted at market rates, general economic conditions and other relevant factors. For the year ended December 31, 2022, we recorded impairment of approximately $0.4 million related to our equity-method investments. We did not record any impairments related to our equity-method investments for the year ended December 31, 2021. |
Rental Revenue | Rental Revenue We recognize rental revenue based on FASB Accounting Standards Update (“ASU”) 2016-02, Leases Additionally, where real estate taxes and insurance expenses were paid directly by our tenants to taxing authorities, we do not record any revenue or expense. For our triple-net leasing arrangements in which the tenant remits payment for certain costs to us and we pay the vendor, we have reported the amounts gross in total rental revenues and property operating costs on the consolidated statements of operations. We also made an accounting policy election to keep short-term leases less than twelve months off the balance sheet for all classes of underlying assets. Additionally, under Topic 842, we must assess if substantially all payments due under the lease are likely to be collected. If tenant lease payments are not likely to be collected, then the revenues will be recognized on a cash basis (or if the answer changes at a later date, the revenues are adjusted to reflect what it would have been on a cash basis) and the adjustments will be recorded through rental revenues, rather than bad debt expense. During 2022 and 2021, we determined that two of our leases were uncollectible (see Note 3) and therefore, we recorded rental revenue received from those tenants on the cash basis. |
Resident Fees and Services Revenue | Resident Fees and Services Revenue We recognize resident fees and services revenue at the amount that we expect to be entitled to in exchange for providing resident care and services. Resident fees are recognized and billed monthly based on the contracted rate in the resident lease agreements and the reimbursements from Medicaid are based on contracted reimbursement rates. These amounts are paid directly from the residents and/or third-party payors (currently only Medicaid). Revenue is recognized as performance obligations are satisfied. Performance obligations are determined based on the nature of the services provided by us. The majority of resident fees and services is attributable to the portion of the base monthly lease fee in the resident lease agreement. The Company has elected the lessor practical expedient within ASC 842, Leases (“ASC 842”) and recognizes the resident fee revenue based upon the predominant component, either the lease or non-lease component, of the contracts. The Company has determined that the lease component is the predominant component and the services included under the resident agreements have the same timing and pattern of transfer and are performance obligations that are satisfied over time. Resident services consist of care level services and certain other ancillary services (i.e., housekeeping, laundry, etc.). These services are provided and paid for in addition to the standard fees included in each resident lease (i.e., room and board, standard meals, etc.). |
Asset Management Fees | Asset Management Fees We record asset management fee revenue based on ASC 606, Revenue from Contracts with Customers (Topic 606) obligation (managing the properties) comprised of a series of distinct services (handling issues with our tenants, etc.). We believe that the overall service of asset management is substantially the same each day and has the same pattern of performance over the term of the agreement. As a result, each day of service represents a performance obligation satisfied at that point in time. These fees are recognized at the end of each period for services performed during that period, billed monthly and paid quarterly. |
Stock-Based Compensation | Stock-Based Compensation We record stock-based compensation expense for share-based payments to employees and directors, including grants of stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. Compensation expense is recognized ratably over the vesting term and is included in general and administrative expense in our consolidated statements of operations. Forfeitures are recognized as they occur. See Note 12 for further information. |
Noncontrolling Interest in Consolidated Subsidiary | Noncontrolling Interest in Consolidated Subsidiary Noncontrolling interest relates to the interest in the consolidated entities that are not wholly-owned by us. As of December 31, 2022 and 2021, the noncontrolling interest mainly relates to CHP, LLC. ASC 810-10-65, Consolidation We periodically evaluate individual noncontrolling interests for the ability to continue to recognize the noncontrolling interest as permanent equity in the consolidated balance sheets. Any noncontrolling interest that fails to qualify as permanent equity will be reclassified as temporary equity and adjusted to the greater of (a) the carrying amount, or (b) its redemption value as of the end of the period in which the determination is made. |
Income Taxes | Income Taxes We have elected to be taxed as a REIT, under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”) beginning with our taxable year ending December 31, 2006. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to currently distribute at least 90% of the REIT’s ordinary taxable income to stockholders. As a REIT, we generally will not be subject to federal income tax on taxable income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will then be subject to federal income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service were to grant us relief under certain statutory provisions. Such an event could materially and adversely affect our net income and net cash available for distribution to stockholders. However, we believe that we will be organized and operate in such a manner as to qualify for treatment as a REIT and intend to operate for the foreseeable future in such a manner so that we will remain qualified as a REIT for federal income tax purposes. Given the applicable statute of limitations, we generally are subject to audit by the Internal Revenue Service (“IRS”) for the year ended December 31, 2018 and subsequent years, and state income tax returns are subject to audit for the year ended December 31, 2017 and subsequent years. We have elected to treat SAM TRS and SHOP TRS as taxable REIT subsidiaries, which generally may engage in any business, including the provision of customary or non-customary services for our tenants. Both TRS’ are treated as a regular corporation and are subject to federal income tax and applicable state income and franchise taxes at regular corporate rates. SAM TRS has deferred tax assets related to their net operating losses (“NOL”) for a total of $2,523,000 and $1,779,000, respectively, which has a full valuation allowance as of December 31, 2022 and 2021. SHOP TRS has deferred tax assets related to their NOL for a total of $862,000, which has a full valuation allowance as of December 31, 2022. Due to the losses incurred and the full valuation allowance on deferred tax assets, there was no tax provision related to SAM TRS or SHOP TRS in 2022 and 2021. |
Uncertain Tax Positions | Uncertain Tax Positions In accordance with the requirements of ASC 740, Income Taxes, computing our annual taxable income, which results in our taxable income being passed through to our stockholders. A REIT is subject to a 100% tax on the net income from prohibited transactions. A “prohibited transaction” is the sale or other disposition of property held primarily for sale to customers in the ordinary course of a trade or business. There is a safe harbor provision which, if met, expressly prevents the Internal Revenue Service from asserting the prohibited transaction test. We have no income tax expense, deferred tax assets or deferred tax liabilities associated with any such uncertain tax positions for the operations of any entity included in the consolidated results of operations. We classify interest and penalties related to uncertain tax positions, if any, in our consolidated financial statements as a component of general and administrative expense. |
Basic and Diluted Net Income (Loss) and Distributions per Common Share | Basic and Diluted Net Income (Loss) and Distributions per Common Share Basic earnings per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares are calculated in accordance with the treasury stock method. For the years ended December 31, 2022 and 2021, all stock options outstanding were considered to be anti-dilutive. |
Reclassification of Intangible Lease Assets | Reclassification of Intangible Lease Assets The following table provides a reconciliation for the reclassification of our intangible lease assets as of December 31, 2021 in our consolidated balance sheets to conform to the presentation as of December 31, 2022: As previously reported Increase (decrease) As reclassified Real estate properties, net $ 192,862,000 $ (13,760,000) $ 179,102,000 Intangible lease assets, net $ — $ 14,687,000 $ 14,687,000 Other assets, net $ 1,349,000 $ (927,000) $ 422,000 Total assets $ 219,126,000 $ — $ 219,126,000 The intangible lease assets related to our acquisitions in 2021 were reclassified from real estate properties, net and other assets, net into a separate line item as of December 31, 2022. The result of this reclassification did not have any effect on our total assets, liabilities, accumulated deficit, net loss or statements of cash flows. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Schedule of reconciliation of cash, cash equivalents, and restricted cash | December 31, December 31, 2022 2021 Cash and cash equivalents $ 11,572,000 $ 10,488,000 Restricted cash 2,591,000 2,673,000 Total cash, cash equivalents, and restricted cash shown on the consolidated statements of cash flows $ 14,163,000 $ 13,161,000 |
Schedule of reconciliation for reclassification of intangible lease assets | As previously reported Increase (decrease) As reclassified Real estate properties, net $ 192,862,000 $ (13,760,000) $ 179,102,000 Intangible lease assets, net $ — $ 14,687,000 $ 14,687,000 Other assets, net $ 1,349,000 $ (927,000) $ 422,000 Total assets $ 219,126,000 $ — $ 219,126,000 |
Investments in Real Estate Pr_2
Investments in Real Estate Properties (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Investments in Real Estate Properties | |
Schedule of investments in real estate properties | December 31, December 31, 2022 2021 Land $ 15,565,000 $ 15,565,000 Buildings and improvements 166,989,000 166,989,000 Less: accumulated depreciation (15,985,000) (11,395,000) Buildings and improvements, net 151,004,000 155,594,000 Furniture and fixtures 12,440,000 12,137,000 Less: accumulated depreciation (5,882,000) (4,194,000) Furniture and fixtures, net 6,558,000 7,943,000 Real estate properties, net $ 173,127,000 $ 179,102,000 |
Schedule of real estate properties | Loans Payable, Excluding Debt Purchase Issuance Property Location Date Purchased Type (1) Price Costs Sheridan Care Center Sheridan, OR August 3, 2012 SNF $ 4,100,000 $ 4,000,000 Fernhill Care Center Portland, OR August 3, 2012 SNF 4,500,000 3,511,000 Friendship Haven Healthcare and Rehabilitation Center Galveston County, TX September 14, 2012 SNF 15,000,000 11,327,000 Pacific Health and Rehabilitation Center Tigard, OR December 24, 2012 SNF 8,140,000 5,853,000 Brookstone of Aledo Aledo, IL July 2, 2013 AL 8,625,000 6,600,000 Sundial Assisted Living Redding, CA December 18, 2013 AL 3,500,000 3,684,000 Pennington Gardens Chandler, AZ July 17, 2017 AL/MC 13,400,000 10,039,000 Yucaipa Hill Post Acute Yucaipa, CA July 2, 2021 SNF 10,715,000 8,014,000 Creekside Post Acute Yucaipa, CA July 2, 2021 SNF 4,780,000 3,575,000 University Post Acute Mentone, CA July 2, 2021 SNF 4,560,000 3,412,000 Calhoun Health Center Calhoun, GA December 30, 2021 SNF 7,670,000 6,549,000 Maple Ridge Health Care Center Cartersville, GA December 30, 2021 SNF 13,548,000 11,568,000 Chatsworth Health Care Center Chatsworth, GA December 30, 2021 SNF 29,785,000 25,432,000 East Lake Arbor Decatur, GA December 30, 2021 SNF 15,640,000 13,354,000 Fairburn Health Care Center Fairburn, GA December 30, 2021 SNF 14,644,000 12,503,000 Grandview Health Care Center Jasper, GA December 30, 2021 SNF 10,061,000 8,591,000 Rosemont at Stone Mountain Stone Mountain, GA December 30, 2021 SNF 23,908,000 20,414,000 Willowwood Nursing Center & Rehab Flowery Branch, GA December 30, 2021 SNF 14,744,000 12,589,000 Total: $ 207,320,000 $ 171,015,000 (1) SNF is an abbreviation for skilled nursing facility. AL is an abbreviation for assisted living facility. MC is an abbreviation for memory care facility. |
Schedule of future minimum lease payments | Years ending December 31, 2023 17,983,000 2024 18,272,000 2025 18,566,000 2026 18,865,000 2027 19,168,000 Thereafter 146,294,000 $ 239,148,000 |
Loans Payable (Tables)
Loans Payable (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Loans Payable | |
Schedule of debt | December 31, 2022 December 31, 2021 Loans payable to Lument (formerly ORIX Real Estate Capital, LLC) (insured by HUD) in monthly installments of approximately $183,000, including interest, ranging from a fixed rate of 2.79% to 4.2%, due in September 2039 through April 2055, and as of December 31, 2022 and 2021, collateralized by Sheridan, Fernhill, Pacific Health, Aledo, Sundial and Friendship Haven. $ 34,976,000 $ 35,934,000 Loan payable to Capital One Multifamily Finance, LLC (insured by HUD) in monthly installments of approximately $49,000, including interest at a fixed rate of 4.23%, due in September 2053, and collateralized by Pennington Gardens. 10,039,000 10,194,000 Loan payable to CIBC Bank, USA in monthly installments of approximately of $106,000 including cash collateral fund payments, variable interest rate as noted below (8.2% and 5% at December 31, 2022 and 2021, respectively), due in July 2024, and as of December 31, 2022, collateralized by Yucaipa Hill Post Acute, Creekside Post Acute and University Post Acute. 15,000,000 15,000,000 Loan payable to CIBC Bank, USA in monthly installments of approximately $600,000 (interest only through December 2023) variable interest rate as noted below (7.7% and 4% at December 31, 2022 and 2021, respectively), due in December 2024, and as of December 31, 2022, collateralized by Calhoun Health Center, Maple Ridge Health Care Center, Chatsworth Health Care Center, East Lake Arbor, Fairburn Health Care Center, Grandview Health Care Center, Rosemont at Stone Mountain, and Willowwood Nursing Center & Rehab. 91,000,000 91,000,000 Loan payable to Oxford Finance, LLC in monthly installments of approximately $260,000 (interest only through maturity), variable interest rate as noted below (15.1% and 12% at December 31, 2022 and 2021, respectively) due in March 2025, collateralized in second position by Calhoun Health Center, Maple Ridge Health Care Center, Chatsworth Health Care Center, East Lake Arbor, Fairburn Health Care Center, Grandview Health Care Center, Rosemont at Stone Mountain, and Willowwood Nursing Center & Rehab. 20,000,000 20,000,000 Mezzanine Loan payable to Oxford Finance, LLC in monthly installments of approximately $168,000 (interest only through maturity), variable interest rate as noted below (15.1% and 12% at December 31, 2022 and 2021, respectively) due in December 2026, secured by the equity interests of our wholly-owned subsidiary, Summit Georgia Holdings LLC, the parent holding company for the GA8 Properties. 12,750,000 12,750,000 183,765,000 184,878,000 Less debt issuance costs (3,596,000) (4,508,000) Total loans payable $ 180,169,000 $ 180,370,000 |
Schedule of maturities of long-term debt | Principal Year Amount 2023 1,158,000 2024 107,201,000 2025 21,246,000 2026 14,042,000 2027 1,460,000 Thereafter 38,658,000 $ 183,765,000 |
Equity-Method Investments (Tabl
Equity-Method Investments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Equity-Method Investments | |
Schedule of results of operations | The results of operations of our Equity-Method Investments for the year ended December 31, 2022 are summarized below: Fantasia Fantasia Fantasia FPH Combined SUL JV JV II JV III JV JV Total Revenue $ 19,927,000 $ 2,556,000 $ 2,863,000 $ 8,333,000 $ 1,695,000 $ 35,374,000 Income (loss) from operations $ (1,845,000) $ (5,818,000) $ 1,991,000 $ 4,066,000 $ (258,000) $ (1,864,000) Net income (loss) $ (6,487,000) $ (5,979,000) $ 1,066,000 $ 1,663,000 $ 801,000 $ (8,936,000) Summit interest in Equity-Method Investments net income (loss) $ (648,000) $ (2,092,000) $ 213,000 $ 166,000 $ 80,000 $ (2,281,000) (1) (1) Included in the loss from equity-method investees in the consolidated statements of operations is an additional $0.6 million of impairments and write off of distributions related to the Fantasia JV and FPH JV Equity-Method Investments for the year ended December 31, 2022. The results of operations of our Equity-Method Investments for the year ending December 31, 2021 are summarized below: Fantasia Fantasia Fantasia FPH Indiana Combined SUL JV JV II JV III JV JV JV Total Revenue $ 20,575,000 $ 3,591,000 $ 3,716,000 $ 8,213,000 $ 3,615,000 $ (3,166,000) (1) $ 36,544,000 Income (loss) from operations $ 6,911,000 $ 129,000 $ 1,935,000 $ 4,131,000 $ 1,680,000 $ (5,093,000) $ 9,693,000 Net income (loss) $ 2,594,000 $ 298,000 $ 988,000 $ 2,015,000 $ 1,685,000 $ (8,567,000) $ (987,000) Summit interest in Equity-Method Investments net income (loss) $ 259,000 $ 104,000 $ 198,000 $ 202,000 $ 169,000 $ (1,286,000) $ (354,000) |
Schedule of distributions receivable | December 31, December 31, 2022 2021 SULH JV $ 259,000 $ 273,000 Fantasia JV — 205,000 Fantasia II JV 55,000 54,000 Fantasia III JV 22,000 22,000 FPH JV 64,000 28,000 Total $ 400,000 $ 582,000 |
Schedule of cash distributions | Year Ended December 31, 2022 Year Ended December 31, 2021 Total Cash Cash Flow Cash Flow Total Cash Cash Flow Cash Flow Distributions from from Distributions from from Received Operating Investing Received Operating Investing SUL JV $ 615,000 $ — $ 615,000 $ 837,000 $ 259,000 $ 578,000 Fantasia JV — — — — — — Fantasia II JV 311,000 213,000 98,000 301,000 197,000 104,000 Fantasia III JV 134,000 134,000 — 500,000 202,000 298,000 FPH JV 56,000 — 56,000 153,000 18,000 135,000 Indiana JV — — — 773,000 — 773,000 Total $ 1,116,000 $ 347,000 $ 769,000 $ 2,564,000 $ 676,000 $ 1,888,000 |
Receivables (Tables)
Receivables (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Receivables | |
Schedule of tenant and other receivables | December 31, December 31, 2022 2021 Straight-line rent receivables $ 3,862,000 $ 2,395,000 Distribution receivables from Equity-Method Investments 400,000 582,000 Asset management fees 375,000 323,000 Other receivables 383,000 86,000 Total $ 5,020,000 $ 3,386,000 |
Intangible Lease Assets (Tables
Intangible Lease Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Lease Assets | |
Schedule of intangible lease assets | December 31, December 31, 2022 2021 In-place leases $ 13,778,000 $ 13,778,000 Less: accumulated amortization (937,000) (18,000) In-place leases, net 12,841,000 13,760,000 Above-market leases 959,000 959,000 Less: accumulated amortization (96,000) (32,000) Above-market leases, net 863,000 927,000 Total intangible lease assets, net $ 13,704,000 $ 14,687,000 |
Schedule of expected future amortization of the intangible lease assets | Years ending December 31, 2023 $ 980,000 2024 980,000 2025 980,000 2026 980,000 2027 980,000 Thereafter 8,804,000 $ 13,704,000 |
Right of Use Asset - Operatin_2
Right of Use Asset - Operating Lease (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Right of Use Asset - Operating Lease | |
Schedule of supplemental balance sheet information related to the LH Lease | Component Consolidated Balance Sheet Caption Right of use asset - operating Other assets, net $ 833,000 Lease liability - operating Accounts payable and accrued liabilities $ 933,000 |
Schedule of lease payments on the LH Lease | Year Lease payments 2023 $ 103,000 2024 211,000 2025 217,000 2026 224,000 2027 231,000 Thereafter 98,000 Total lease payments $ 1,084,000 Less imputed interest (151,000) Total lease liability $ 933,000 |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Equity | |
Schedule of estimated fair value using assumptions | 2022 Stock options granted 81,000 Expected volatility 36.50 % Expected term 5.75 years Risk-free interest rate 2.53 % Dividend yield 0 % Fair value per stock option $ 0.91 |
Schedule of stock options | Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Price Term Value Options outstanding at January 1, 2021 1,871,908 $ 2.09 Granted — Exercised — Cancelled/forfeited (4,000) 2.26 Options outstanding at December 31, 2021 1,867,908 $ 2.09 Granted 81,000 2.35 Exercised — Cancelled/forfeited — Options outstanding at December 31, 2022 1,948,908 $ 2.10 4.99 $ 1,235,000 Options exercisable at December 31, 2022 1,884,713 $ 2.09 4.85 $ 1,210,000 |
Schedule of unrecognized stock-based compensation expense | Years Ending December 31, 2023 25,000 2024 25,000 2025 8,000 $ 58,000 |
Organization (Details)
Organization (Details) | 1 Months Ended | 12 Months Ended | |
Jun. 30, 2021 USD ($) | Dec. 31, 2022 USD ($) property | Dec. 31, 2021 USD ($) property | |
Organization | |||
Equity-method investments | $ | $ 5,182,000 | $ 7,902,000 | |
Summit Healthcare REIT, Inc | |||
Organization | |||
Equity method investment ownership percentage | 100% | ||
Number of owned properties | 14 | ||
Indiana JV | |||
Organization | |||
Equity method investment ownership percentage | 15% | ||
Summit Healthcare Operating Partnership, L.P | |||
Organization | |||
Limited partnership interest | 99.88% | ||
Cornerstone Healthcare Partners LLC | |||
Organization | |||
Limited partnership interest | 95% | ||
Cornerstone Healthcare Real Estate Fund | |||
Organization | |||
Noncontrolling interest, ownership percentage by noncontrolling owners | 5% | ||
JV Properties | |||
Organization | |||
Limited partnership interest | 95.30% | 95.30% | |
Noncontrolling interest, ownership percentage by noncontrolling owners | 4.70% | 4.70% | |
Number of owned properties | 4 | 4 | |
Summit Union Life Holdings, LLC | |||
Organization | |||
Limited partnership interest | 10% | 10% | |
Number of owned properties | 17 | 17 | |
Fantasia III JV | |||
Organization | |||
Limited partnership interest | 10% | 10% | |
Number of owned properties | 9 | 9 | |
Summit Fantasy Pearl Holdings, LLC | |||
Organization | |||
Limited partnership interest | 10% | 10% | |
Number of owned properties | 6 | 6 | |
Fantasia II JV | |||
Organization | |||
Limited partnership interest | 20% | 20% | |
Number of owned properties | 2 | 2 | |
Fantasia JV | |||
Organization | |||
Limited partnership interest | 35% | 35% | |
Number of owned properties | 1 | 2 | |
Indiana JV | |||
Organization | |||
Limited partnership interest | 15% | 0% | 0% |
Equity-method investments | $ | $ 5,400,000 | ||
Number of owned properties | 14 | 14 | |
Cornerstone Realty Advisors, LLC | |||
Organization | |||
Limited partnership interest | 0.12% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Summary of Significant Accounting Policies | |||
Cash and cash equivalents | $ 11,572,000 | $ 10,488,000 | |
Restricted cash | 2,591,000 | 2,673,000 | |
Total cash, cash equivalents, and restricted cash shown on the consolidated statements of cash flows | $ 14,163,000 | $ 13,161,000 | $ 17,591,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Reclassification of Intangible Lease Assets (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Summary of Significant Accounting Policies | ||
Real estate properties, net | $ 173,127,000 | $ 179,102,000 |
Intangible lease assets, net | 13,704,000 | 14,687,000 |
Other assets, net | 1,720,000 | 422,000 |
Total assets | $ 213,303,000 | 219,126,000 |
As previously reported | ||
Summary of Significant Accounting Policies | ||
Real estate properties, net | 192,862,000 | |
Other assets, net | 1,349,000 | |
Total assets | 219,126,000 | |
Increase (decrease) | ||
Summary of Significant Accounting Policies | ||
Real estate properties, net | (13,760,000) | |
Intangible lease assets, net | 14,687,000 | |
Other assets, net | $ (927,000) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Additional information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Summary of Significant Accounting Policies | ||
Assets fair value | $ 0 | |
Fair value of loans payable | 38,900,000 | $ 52,500,000 |
Long-term debt, gross | 183,765,000 | 184,878,000 |
Impairment loss | 400,000 | |
Deferred costs | 1,000,000 | 1,100,000 |
Deferred leasing commissions, net | 387,000 | 466,000 |
Amortization expense | 79,000 | 70,000 |
Deferred tax assets valuation allowance | 2,523,000 | 2,523,000 |
Impairment loss of related to equity-method investments | 400,000 | |
Impairment for investment in real estate | 0 | 0 |
SHOP TRS | ||
Summary of Significant Accounting Policies | ||
Total deferred tax assets related to NOL | 862,000 | |
HUD-insured | ||
Summary of Significant Accounting Policies | ||
Long-term debt, gross | $ 45,000,000 | $ 46,100,000 |
Real Estate Investment Trust | ||
Summary of Significant Accounting Policies | ||
Percentage Of taxable income | 90% | |
Minimum | Buildings and improvements | ||
Summary of Significant Accounting Policies | ||
Estimated useful life | 15 years | |
Minimum | Furniture and Fixture | ||
Summary of Significant Accounting Policies | ||
Estimated useful life | 3 years | |
Maximum | Buildings and improvements | ||
Summary of Significant Accounting Policies | ||
Estimated useful life | 39 years | |
Maximum | Furniture and Fixture | ||
Summary of Significant Accounting Policies | ||
Estimated useful life | 6 years |
Investments in Real Estate Pr_3
Investments in Real Estate Properties - Investments in real estate properties (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Investments in Real Estate Properties | ||
Real estate properties, net | $ 173,127,000 | $ 179,102,000 |
Land | ||
Investments in Real Estate Properties | ||
Real estate properties, net | 15,565,000 | 15,565,000 |
Buildings and improvements | ||
Investments in Real Estate Properties | ||
Investments in real estate | 166,989,000 | 166,989,000 |
Less: accumulated depreciation | (15,985,000) | (11,395,000) |
Real estate properties, net | 151,004,000 | 155,594,000 |
Furniture and Fixture | ||
Investments in Real Estate Properties | ||
Investments in real estate | 12,440,000 | 12,137,000 |
Less: accumulated depreciation | (5,882,000) | (4,194,000) |
Real estate properties, net | $ 6,558,000 | $ 7,943,000 |
Investments in Real Estate Pr_4
Investments in Real Estate Properties - Summary information regarding portfolio (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Investments in Real Estate Properties | |
Purchase Price | $ 207,320,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 171,015,000 |
Sheridan Care Center | |
Investments in Real Estate Properties | |
Location | Sheridan, OR |
Date Purchased | Aug. 03, 2012 |
Type | SNF |
Purchase Price | $ 4,100,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 4,000,000 |
Fernhill Care Center | |
Investments in Real Estate Properties | |
Location | Portland, OR |
Date Purchased | Aug. 03, 2012 |
Type | SNF |
Purchase Price | $ 4,500,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 3,511,000 |
Friendship Haven Healthcare and Rehabilitation Center | |
Investments in Real Estate Properties | |
Location | Galveston County, TX |
Date Purchased | Sep. 14, 2012 |
Type | SNF |
Purchase Price | $ 15,000,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 11,327,000 |
Pacific Health and Rehabilitation Center | |
Investments in Real Estate Properties | |
Location | Tigard, OR |
Date Purchased | Dec. 24, 2012 |
Type | SNF |
Purchase Price | $ 8,140,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 5,853,000 |
Brookstone of Aledo | |
Investments in Real Estate Properties | |
Location | Aledo, IL |
Date Purchased | Jul. 02, 2013 |
Type | AL |
Purchase Price | $ 8,625,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 6,600,000 |
Sundial Assisted Living | |
Investments in Real Estate Properties | |
Location | Redding, CA |
Date Purchased | Dec. 18, 2013 |
Type | AL |
Purchase Price | $ 3,500,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 3,684,000 |
Pennington Gardens | |
Investments in Real Estate Properties | |
Location | Chandler, AZ |
Date Purchased | Jul. 17, 2017 |
Type | AL/MC |
Purchase Price | $ 13,400,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 10,039,000 |
Yucaipa Hill Post Acute | |
Investments in Real Estate Properties | |
Location | Yucaipa, CA |
Date Purchased | Jul. 02, 2021 |
Type | SNF |
Purchase Price | $ 10,715,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 8,014,000 |
Creekside Post Acute | |
Investments in Real Estate Properties | |
Location | Yucaipa, CA |
Date Purchased | Jul. 02, 2021 |
Type | SNF |
Purchase Price | $ 4,780,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 3,575,000 |
University Post Acute | |
Investments in Real Estate Properties | |
Location | Mentone, CA |
Date Purchased | Jul. 02, 2021 |
Type | SNF |
Purchase Price | $ 4,560,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 3,412,000 |
Calhoun Health Center | |
Investments in Real Estate Properties | |
Location | Calhoun, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 7,670,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 6,549,000 |
Maple Ridge Health Care Center | |
Investments in Real Estate Properties | |
Location | Cartersville, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 13,548,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 11,568,000 |
Chatsworth Health Care Center | |
Investments in Real Estate Properties | |
Location | Chatsworth, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 29,785,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 25,432,000 |
East Lake Arbor | |
Investments in Real Estate Properties | |
Location | Decatur, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 15,640,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 13,354,000 |
Fairburn Health Care Center | |
Investments in Real Estate Properties | |
Location | Fairburn, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 14,644,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 12,503,000 |
Grandview Health Care Center | |
Investments in Real Estate Properties | |
Location | Jasper, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 10,061,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 8,591,000 |
Rosemont at Stone Mountain | |
Investments in Real Estate Properties | |
Location | Stone Mountain, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 23,908,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 20,414,000 |
Willowwood Nursing Center & Rehab | |
Investments in Real Estate Properties | |
Location | Flowery Branch, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 14,744,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 12,589,000 |
Investments in Real Estate Pr_5
Investments in Real Estate Properties - Future Minimum Lease Payments (Details) | Dec. 31, 2022 USD ($) |
Investments in Real Estate Properties | |
2023 | $ 17,983,000 |
2024 | 18,272,000 |
2025 | 18,566,000 |
2026 | 18,865,000 |
2027 | 19,168,000 |
Thereafter | 146,294,000 |
Future minimum lease payments | $ 239,148,000 |
Investments in Real Estate Pr_6
Investments in Real Estate Properties (Details) | 1 Months Ended | 12 Months Ended | ||||||||
Jun. 06, 2022 USD ($) | Feb. 10, 2022 USD ($) | Dec. 30, 2021 USD ($) tenant facility | Jul. 02, 2021 USD ($) facility item | May 31, 2021 USD ($) | Mar. 31, 2021 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) property | Dec. 31, 2022 | Dec. 31, 2022 property | |
Investments in Real Estate Properties | ||||||||||
Depreciation and amortization expense | $ 6,300,000 | $ 1,800,000 | ||||||||
Number of leased real estate properties | 18 | 18 | 16 | |||||||
Percentage of real estate properties | 100% | |||||||||
Rent proceeds received, settlement | $ 200,000 | |||||||||
Number of properties owned by our unconsolidated equity-method investments | property | 35 | |||||||||
Principal amount of loan | $ 12,750,000 | $ 12,750,000 | ||||||||
CA3 Properties | ||||||||||
Investments in Real Estate Properties | ||||||||||
Number of skilled nursing facilities acquired | facility | 3 | |||||||||
Total purchase price plus acquisition costs | $ 20,055,000 | |||||||||
Acquisition costs | $ 80,000 | |||||||||
Number of unrelated parties for lease under acquisition | item | 3 | |||||||||
Lease term under three separate triple net leases | 15 years | |||||||||
CA3 Properties | First renewal options | ||||||||||
Investments in Real Estate Properties | ||||||||||
Lease renewal options | 5 years | |||||||||
CA3 Properties | Second renewal options | ||||||||||
Investments in Real Estate Properties | ||||||||||
Lease renewal options | 5 years | |||||||||
CA3 Properties | Yucaipa, California | ||||||||||
Investments in Real Estate Properties | ||||||||||
Number of skilled nursing facilities acquired | facility | 2 | |||||||||
CA3 Properties | Mentone, California | ||||||||||
Investments in Real Estate Properties | ||||||||||
Number of skilled nursing facilities acquired | facility | 1 | |||||||||
GA8 Properties | ||||||||||
Investments in Real Estate Properties | ||||||||||
Number of skilled nursing facilities acquired | facility | 8 | |||||||||
Total purchase price plus acquisition costs | $ 130,000,000 | |||||||||
Number of unrelated parties for lease under acquisition | tenant | 8 | |||||||||
Lease term under three separate triple net leases | 15 years | |||||||||
GA8 Properties | First renewal options | ||||||||||
Investments in Real Estate Properties | ||||||||||
Lease renewal options | 5 years | |||||||||
GA8 Properties | Second renewal options | ||||||||||
Investments in Real Estate Properties | ||||||||||
Lease renewal options | 5 years | |||||||||
Pennington Gardens facility in Chandler, Arizona | ||||||||||
Investments in Real Estate Properties | ||||||||||
Rent receivable written off | $ 400,000 | |||||||||
Rent proceeds received, settlement | $ 200,000 | |||||||||
Sundial Assisted Living facility in Redding, California | ||||||||||
Investments in Real Estate Properties | ||||||||||
Rent receivable written off | $ 100,000 |
Loans Payable - Debt (Details)
Loans Payable - Debt (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Loans Payable | ||
Long-term debt, gross | $ 183,765,000 | $ 184,878,000 |
Less debt issuance costs | (3,596,000) | (4,508,000) |
Total loans payable | 180,169,000 | 180,370,000 |
Lument Capital (formerly ORIX Real Estate Capital, LLC) | ||
Loans Payable | ||
Long-term debt, gross | 34,976,000 | 35,934,000 |
Capital One Multifamily Finance LLC | ||
Loans Payable | ||
Long-term debt, gross | 10,039,000 | 10,194,000 |
CIBC Bank | LIBOR | ||
Loans Payable | ||
Long-term debt, gross | 15,000,000 | 15,000,000 |
CIBC Bank | SOFR | ||
Loans Payable | ||
Long-term debt, gross | 91,000,000 | 91,000,000 |
US Oxford Finance, LLC | LIBOR | ||
Loans Payable | ||
Long-term debt, gross | 20,000,000 | 20,000,000 |
US Oxford Finance, LLC | GA8 Properties | ||
Loans Payable | ||
Long-term debt, gross | $ 12,750,000 | $ 12,750,000 |
Loans Payable - (Parenthetical)
Loans Payable - (Parenthetical) (Details) - USD ($) | 12 Months Ended | |||
Jul. 02, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 30, 2021 | |
Loans Payable | ||||
Stated percentage on interest rate | 11% | |||
Principal amount of loan | $ 12,750,000 | $ 12,750,000 | ||
LIBOR | ||||
Loans Payable | ||||
Variable interest rate | 12% | |||
Lument Capital (formerly ORIX Real Estate Capital, LLC) | ||||
Loans Payable | ||||
Debt instrument, periodic payment | $ 183,000 | |||
Lument Capital (formerly ORIX Real Estate Capital, LLC) | Minimum | ||||
Loans Payable | ||||
Stated percentage on interest rate | 2.79% | |||
Lument Capital (formerly ORIX Real Estate Capital, LLC) | Maximum | ||||
Loans Payable | ||||
Stated percentage on interest rate | 4.20% | |||
Capital One Multifamily Finance LLC | ||||
Loans Payable | ||||
Debt instrument, periodic payment | $ 49,000 | |||
Stated percentage on interest rate | 4.23% | |||
CIBC Bank | SOFR | ||||
Loans Payable | ||||
Debt instrument, periodic payment | $ 600,000 | |||
Variable interest rate | 7.70% | 4% | ||
CIBC Bank | CA3 Properties | ||||
Loans Payable | ||||
Debt instrument, periodic payment | $ 106,000 | |||
Principal amount of loan | $ 15,000,000 | |||
LIBOR floor (as a percentage) | 4% | |||
Variable interest rate | 1% | 8.20% | 5% | |
US Oxford Finance, LLC | ||||
Loans Payable | ||||
Debt instrument, periodic payment | $ 260,000 | |||
Periodic payment | $ 168,000 | |||
US Oxford Finance, LLC | LIBOR | ||||
Loans Payable | ||||
Variable interest rate | 15.10% | 12% |
Loans Payable - Maturities of l
Loans Payable - Maturities of long term debt (Details) | Dec. 31, 2022 USD ($) |
Loans Payable | |
2023 | $ 1,158,000 |
2024 | 107,201,000 |
2025 | 21,246,000 |
2026 | 14,042,000 |
2027 | 1,460,000 |
Thereafter | 38,658,000 |
Total | $ 183,765,000 |
Loans Payable - Additional info
Loans Payable - Additional information (Details) - USD ($) | 12 Months Ended | ||||
Dec. 30, 2021 | Jul. 02, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2024 | |
Loans Payable | |||||
Stated percentage on interest rate | 11% | ||||
Loans payable | $ 183,765,000 | $ 184,878,000 | |||
Interest expense (excluding debt issuance costs amortization and interest expense related to the Oxford mezzanine loan) | 12,000,000 | 2,400,000 | |||
Debt instrument unamortized cost | 3,596,000 | 4,508,000 | |||
Amortization of debt issuance costs | 900,000 | 100,000 | |||
Interest expense, debt | 600,000 | 0 | |||
Exit fee of loan | $ 100,000 | ||||
Monthly interest fee percentage | 22% | ||||
Payments of debt issuance costs | 177,000 | $ 2,703,000 | |||
Description of variable rate | 100 | ||||
Prepayment premium percentage prior to first anniversary | 5% | ||||
Loan paid off after due date | 140,000 | ||||
Principal amount of loan | $ 12,750,000 | 12,750,000 | |||
LIBOR | |||||
Loans Payable | |||||
Interest on loan with LIBOR | 12% | ||||
GA8 Properties | SOFR | |||||
Loans Payable | |||||
Stated percentage on interest rate | 0.75% | ||||
Description of variable rate | 50 | ||||
Interest on loan with LIBOR | 3.50% | ||||
GA8 Properties | SOFR | Minimum | |||||
Loans Payable | |||||
Stated percentage on interest rate | 4% | ||||
GA8 Properties | LIBOR | |||||
Loans Payable | |||||
Description of variable rate | 100 | ||||
GA8 Properties | Summit Georgia Holdings LLC | |||||
Loans Payable | |||||
Principal amount of loan | 12,750,000 | ||||
CIBC Bank | SOFR | |||||
Loans Payable | |||||
Debt instrument, periodic payment | 600,000 | ||||
Loans payable | $ 91,000,000 | $ 91,000,000 | |||
Interest on loan with LIBOR | 7.70% | 4% | |||
CIBC Bank | LIBOR | |||||
Loans Payable | |||||
Loans payable | $ 15,000,000 | $ 15,000,000 | |||
CIBC Bank | CA3 Properties | |||||
Loans Payable | |||||
Debt instrument, periodic payment | $ 106,000 | ||||
Interest on loan with LIBOR | 1% | 8.20% | 5% | ||
Principal amount of loan | $ 15,000,000 | ||||
LIBOR floor (as a percentage) | 4% | ||||
Percentage of prepayment premium if prepayment occurs on or prior to first year anniversary | 3% | ||||
Percentage of prepayment premium if prepayment occurs on second year anniversary | 2% | ||||
Percentage of prepayment premium if prepayment occurs on third year anniversary | 1% | ||||
Percentage of exit fee if sale or transfer occurs on or prior to second year anniversary | 0.50% | ||||
Percentage of exit fee if sale or transfer occurs after second year anniversary | 0% | ||||
CIBC Bank | GA8 Properties | |||||
Loans Payable | |||||
Debt instrument, periodic payment | $ 91,000,000 | ||||
US Oxford Finance, LLC | |||||
Loans Payable | |||||
Debt instrument, periodic payment | $ 260,000 | ||||
US Oxford Finance, LLC | LIBOR | |||||
Loans Payable | |||||
Loans payable | $ 20,000,000 | $ 20,000,000 | |||
Interest on loan with LIBOR | 15.10% | 12% | |||
US Oxford Finance, LLC | GA8 Properties | |||||
Loans Payable | |||||
Debt instrument, periodic payment | $ 20,000,000 | ||||
Loans payable | $ 12,750,000 | $ 12,750,000 | |||
Percentage of prepayment premium if prepayment occurs on or prior to first year anniversary | 5% | ||||
Percentage of prepayment premium if prepayment occurs on second year anniversary | 2% | ||||
Percentage of prepayment premium if prepayment occurs on third year anniversary | 1% | ||||
US Oxford Finance, LLC | GA8 Properties | LIBOR | |||||
Loans Payable | |||||
Stated percentage on interest rate | 11% | ||||
Lument Capital (formerly ORIX Real Estate Capital, LLC) | |||||
Loans Payable | |||||
Debt instrument, periodic payment | 183,000 | ||||
Loans payable | $ 34,976,000 | $ 35,934,000 | |||
Lument Capital (formerly ORIX Real Estate Capital, LLC) | Minimum | |||||
Loans Payable | |||||
Stated percentage on interest rate | 2.79% | ||||
Lument Capital (formerly ORIX Real Estate Capital, LLC) | Maximum | |||||
Loans Payable | |||||
Stated percentage on interest rate | 4.20% | ||||
First priority mortgage loan | GA8 Properties | |||||
Loans Payable | |||||
Principal amount of loan | $ 91,000,000 | ||||
Percentage of prepayment premium if prepayment occurs on or prior to first year anniversary | 3% | 3% | |||
Percentage of prepayment premium if prepayment occurs on second year anniversary | 2% | ||||
Percentage of prepayment premium if prepayment occurs on third year anniversary | 1% | ||||
Percentage of exit fee if sale or transfer occurs on or prior to second year anniversary | 0.50% | ||||
Percentage of exit fee if sale or transfer occurs after second year anniversary | 0% | ||||
Second priority mortgage loan | GA8 Properties | |||||
Loans Payable | |||||
Principal amount of loan | $ 20,000,000 |
Equity-Method Investments - Sum
Equity-Method Investments - Summarized Financial Data for Equity-Method Investments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Equity-Method Investments | ||
Revenue | $ 26,294,000 | $ 6,953,000 |
Income (loss) from operations | 9,693,000 | |
Net income (loss) | (8,693,000) | (585,000) |
Straight-line rent receivables | 3,862,000 | 2,395,000 |
SUL JV | ||
Equity-Method Investments | ||
Income (loss) from operations | (1,845,000) | 6,911,000 |
Summit interest in Equity-Method Investments net income (loss) | (648,000) | |
Fantasia JV | ||
Equity-Method Investments | ||
Income (loss) from operations | (5,818,000) | 129,000 |
Summit interest in Equity-Method Investments net income (loss) | (2,092,000) | |
Fantasia II JV | ||
Equity-Method Investments | ||
Income (loss) from operations | 1,991,000 | 1,935,000 |
Summit interest in Equity-Method Investments net income (loss) | 213,000 | |
Fantasia III JV | ||
Equity-Method Investments | ||
Income (loss) from operations | 4,066,000 | 4,131,000 |
Summit interest in Equity-Method Investments net income (loss) | 166,000 | |
FPH JV [Member] | ||
Equity-Method Investments | ||
Income (loss) from operations | (258,000) | 1,680,000 |
Summit interest in Equity-Method Investments net income (loss) | 80,000 | |
Indiana JV | ||
Equity-Method Investments | ||
Income (loss) from operations | (1,864,000) | (5,093,000) |
Summit interest in Equity-Method Investments net income (loss) | (2,281,000) | |
Equity Method Investment, Nonconsolidated Investee or Group of Investees | ||
Equity-Method Investments | ||
Revenue | 36,544,000 | |
Income (loss) from operations | (987,000) | |
Net income (loss) | (354,000) | |
Equity Method Investment, Nonconsolidated Investee or Group of Investees | SUL JV | ||
Equity-Method Investments | ||
Revenue | 19,927,000 | 20,575,000 |
Income (loss) from operations | 2,594,000 | |
Net income (loss) | (6,487,000) | 259,000 |
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Fantasia JV | ||
Equity-Method Investments | ||
Revenue | 2,556,000 | 3,591,000 |
Income (loss) from operations | 298,000 | |
Net income (loss) | (5,979,000) | 104,000 |
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Fantasia II JV | ||
Equity-Method Investments | ||
Revenue | 2,863,000 | 3,716,000 |
Income (loss) from operations | 988,000 | |
Net income (loss) | 1,066,000 | 198,000 |
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Fantasia III JV | ||
Equity-Method Investments | ||
Revenue | 8,333,000 | 8,213,000 |
Income (loss) from operations | 2,015,000 | |
Net income (loss) | 1,663,000 | 202,000 |
Equity Method Investment, Nonconsolidated Investee or Group of Investees | FPH JV [Member] | ||
Equity-Method Investments | ||
Revenue | 1,695,000 | 3,615,000 |
Income (loss) from operations | 1,685,000 | |
Net income (loss) | 801,000 | 169,000 |
Equity Method Investment, Nonconsolidated Investee or Group of Investees | Indiana JV | ||
Equity-Method Investments | ||
Revenue | 35,374,000 | (3,166,000) |
Income (loss) from operations | (8,567,000) | |
Net income (loss) | $ (8,936,000) | $ (1,286,000) |
Indiana JV | Above-market leases | ||
Equity-Method Investments | ||
Revenue interest rate | 15% | |
Accumulated Amortization | $ 1,500,000 | |
Straight-line rent receivables | 2,100,000 | |
Interest income | $ 500,000 |
Equity-Method Investments - Dis
Equity-Method Investments - Distributions receivable (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Equity-Method Investments | ||
Distributions receivable | $ 400,000 | $ 582,000 |
SULH JV | ||
Equity-Method Investments | ||
Distributions receivable | 259,000 | 273,000 |
Fantasia II JV | ||
Equity-Method Investments | ||
Distributions receivable | 55,000 | 54,000 |
Fantasia JV | ||
Equity-Method Investments | ||
Distributions receivable | 205,000 | |
Fantasia III JV | ||
Equity-Method Investments | ||
Distributions receivable | 22,000 | 22,000 |
FPH JV | ||
Equity-Method Investments | ||
Distributions receivable | $ 64,000 | $ 28,000 |
Equity-Method Investments - Cas
Equity-Method Investments - Cash Distributions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Equity-Method Investments | ||
Total Cash Distributions Received | $ 1,116,000 | $ 2,564,000 |
Cash Flow from Operating Activities | 347,000 | 676,000 |
Cash Flow from Investing Activities | 769,000 | 1,888,000 |
SUL JV | ||
Equity-Method Investments | ||
Total Cash Distributions Received | 615,000 | 837,000 |
Cash Flow from Operating Activities | 0 | 259,000 |
Cash Flow from Investing Activities | 615,000 | 578,000 |
Fantasia JV | ||
Equity-Method Investments | ||
Total Cash Distributions Received | 0 | |
Cash Flow from Operating Activities | 0 | |
Cash Flow from Investing Activities | 0 | |
Fantasia II JV | ||
Equity-Method Investments | ||
Total Cash Distributions Received | 311,000 | 301,000 |
Cash Flow from Operating Activities | 213,000 | 197,000 |
Cash Flow from Investing Activities | 98,000 | 104,000 |
Fantasia III JV | ||
Equity-Method Investments | ||
Total Cash Distributions Received | 134,000 | 500,000 |
Cash Flow from Operating Activities | 134,000 | 202,000 |
Cash Flow from Investing Activities | 0 | 298,000 |
FPH JV | ||
Equity-Method Investments | ||
Total Cash Distributions Received | 56,000 | 153,000 |
Cash Flow from Operating Activities | 0 | 18,000 |
Cash Flow from Investing Activities | 56,000 | 135,000 |
Indiana JV | ||
Equity-Method Investments | ||
Total Cash Distributions Received | 0 | 773,000 |
Cash Flow from Operating Activities | 0 | |
Cash Flow from Investing Activities | $ 0 | $ 773,000 |
Equity-Method Investments - Add
Equity-Method Investments - Additional information (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Dec. 31, 2022 | Jun. 30, 2021 | Apr. 30, 2018 | Dec. 31, 2022 | Dec. 31, 2021 | |
Equity-Method Investments | |||||
Equity Method Investment, Amount Sold | $ 3,500,000 | ||||
Impairment charge | $ 700,000 | ||||
Equity-method investment | $ 5,182,000 | 5,182,000 | 7,902,000 | ||
Above market lease amortization | 600,000 | ||||
Investment amount | 1,111,000 | 590,000 | |||
Impairment loss of related to equity-method investments | 400,000 | ||||
Equity-method investments | 5,182,000 | 5,182,000 | 7,902,000 | ||
Indiana JV | |||||
Equity-Method Investments | |||||
Equity-method investment | 0 | 0 | 0 | ||
Equity-method investments | 0 | $ 0 | $ 0 | ||
Operating Partnership | |||||
Equity-Method Investments | |||||
Percentage of Interest | 50% | ||||
Percentage of interest in capital proceeds from the sale of properties held | 50% | ||||
Indiana JV | |||||
Equity-Method Investments | |||||
Equity-method investment | $ 5,400,000 | ||||
Limited partnership interest | 15% | 0% | 0% | ||
Equity-method investments | $ 5,400,000 | ||||
Summit Fantasia Holdings III, LLC | |||||
Equity-Method Investments | |||||
Equity-method investment | 1,600,000 | $ 1,600,000 | $ 1,500,000 | ||
Equity-method investments | $ 1,600,000 | $ 1,600,000 | 1,500,000 | ||
Indiana JV | |||||
Equity-Method Investments | |||||
Equity method investment ownership percentage | 15% | ||||
SUL JV. | |||||
Equity-Method Investments | |||||
Equity method investment ownership percentage | 10% | 10% | |||
SUL JV. | Minimum | |||||
Equity-Method Investments | |||||
Equity method investment ownership percentage | 9% | 9% | |||
SUL JV. | Maximum | |||||
Equity-Method Investments | |||||
Equity method investment ownership percentage | 10% | 10% | |||
Fantasia JV. | |||||
Equity-Method Investments | |||||
Equity method investment ownership percentage | 35% | 35% | |||
Equity-method investment | $ 0 | $ 0 | 2,000,000 | ||
Equity-method investments | 0 | 0 | 2,000,000 | ||
Summit Fantasia ll Holdings LLC | |||||
Equity-Method Investments | |||||
Equity-method investment | 1,200,000 | 1,200,000 | 1,300,000 | ||
Equity-method investments | 1,200,000 | 1,200,000 | 1,300,000 | ||
Summit Fantasia ll Holdings LLC | Asset Management | |||||
Equity-Method Investments | |||||
Equity-method investment | 700,000 | 700,000 | 1,000,000 | ||
Equity-method investments | 700,000 | $ 700,000 | 1,000,000 | ||
Summit Fantasia Holdings III, LLC | |||||
Equity-Method Investments | |||||
Percentage of interest in annual return | 9% | ||||
Indiana JV | |||||
Equity-Method Investments | |||||
Invested to capital calls | $ 5,400,000 | ||||
Summit Union Life Holdings, LLC | |||||
Equity-Method Investments | |||||
Minimum percentage of interest in annual return | 9% | ||||
Percentage of interest in annual return | 10% | ||||
Percentage of Interest | 75% | ||||
Equity-method investment | 2,400,000 | $ 2,400,000 | 2,900,000 | ||
Equity-method investments | 2,400,000 | $ 2,400,000 | 2,900,000 | ||
Summit Union Life Holdings, LLC | Best Years Llc | |||||
Equity-Method Investments | |||||
Percentage of interest in capital proceeds from the sale of properties held | 75% | ||||
Summit Union Life Holdings, LLC | Operating Partnership | |||||
Equity-Method Investments | |||||
Percentage of Interest | 25% | ||||
Percentage of interest in capital proceeds from the sale of properties held | 25% | ||||
Fantasia JV | |||||
Equity-Method Investments | |||||
Impairment charge | $ 2,200,000 | ||||
Equity-method investment | 0 | 0 | |||
Investment amount | 290,000 | ||||
Impairment loss of related to equity-method investments | 6,400,000 | ||||
Aggregate impairment loss fair value on equity method investment | 200,000 | ||||
Fair Value of distributions receivable | 200,000 | 200,000 | |||
Equity-method investments | 0 | 0 | |||
SUL JV | |||||
Equity-Method Investments | |||||
Investment amount | 821,000 | ||||
Impairment loss of related to equity-method investments | $ 6,800,000 | ||||
Summit Fantasia Holdings Llc | |||||
Equity-Method Investments | |||||
Percentage of interest in annual return | 8% | ||||
Summit Fantasia Holdings Llc | Operating Partnership | |||||
Equity-Method Investments | |||||
Percentage of Interest | 50% | ||||
Percentage of interest in capital proceeds from the sale of properties held | 50% | ||||
Summit Fantasia ll Holdings LLC | |||||
Equity-Method Investments | |||||
Percentage of interest in annual return | 8% | ||||
Summit Fantasia ll Holdings LLC | Operating Partnership | |||||
Equity-Method Investments | |||||
Percentage of Interest | 30% | ||||
Percentage of interest in capital proceeds from the sale of properties held | 30% | ||||
Summit Fantasia ll Holdings LLC | Fantasia Investment III LLC | |||||
Equity-Method Investments | |||||
Percentage of Interest | 70% | ||||
Percentage of interest in capital proceeds from the sale of properties held | 70% | ||||
Summit Fantasia Holdings III, LLC | |||||
Equity-Method Investments | |||||
Percentage of interest in annual return | 9% | ||||
Summit Fantasia Holdings III, LLC | Operating Partnership | |||||
Equity-Method Investments | |||||
Percentage of Interest | 25% | ||||
Percentage of interest in capital proceeds from the sale of properties held | 25% | ||||
Summit Fantasia Holdings III, LLC | Fantasia Investment III LLC | |||||
Equity-Method Investments | |||||
Percentage of Interest | 75% | ||||
Percentage of interest in capital proceeds from the sale of properties held | 75% | ||||
Summit Fantasy Pearl Holdings, LLC | |||||
Equity-Method Investments | |||||
Percentage of interest in annual return | 9% | ||||
Impairment charge | 200,000 | ||||
Equity-method investment | 0 | $ 0 | 200,000 | ||
Equity-method investments | $ 0 | $ 0 | $ 200,000 | ||
Summit Fantasy Pearl Holdings, LLC | Operating Partnership | |||||
Equity-Method Investments | |||||
Percentage of Interest | 20% | ||||
Percentage of interest in capital proceeds from the sale of properties held | 20% | ||||
Summit Fantasy Pearl Holdings, LLC | Fantasia Investment III LLC | |||||
Equity-Method Investments | |||||
Percentage of Interest | 7.25% | ||||
Percentage of interest in capital proceeds from the sale of properties held | 7.25% | ||||
Summit Fantasy Pearl Holdings, LLC | Summit Fantasy Pearl Holdings, LLC- Equity-Method Investment | |||||
Equity-Method Investments | |||||
Percentage of Interest | 65.25% | ||||
Percentage of interest in capital proceeds from the sale of properties held | 65.25% | ||||
Summit Fantasy Pearl Holdings, LLC | Atlantis | |||||
Equity-Method Investments | |||||
Percentage of Interest | 7.50% | ||||
Percentage of interest in capital proceeds from the sale of properties held | 7.50% |
Receivables (Details)
Receivables (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Receivables | ||
Straight-line rent receivables | $ 3,862,000 | $ 2,395,000 |
Distribution receivables from Equity-Method Investments | 400,000 | 582,000 |
Asset management fees | 375,000 | 323,000 |
Other receivables | 383,000 | 86,000 |
Total | $ 5,020,000 | $ 3,386,000 |
Intangible Lease Assets (Detail
Intangible Lease Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Intangible Lease Assets | ||
Intangible lease assets, net | $ 13,704,000 | $ 14,687,000 |
In-place leases | ||
Intangible Lease Assets | ||
Intangible lease assets, gross | 13,778,000 | 13,778,000 |
Less: accumulated amortization | (937,000) | (18,000) |
Intangible lease assets, net | 12,841,000 | 13,760,000 |
In-place leases | Rental revenues | ||
Intangible Lease Assets | ||
Amortization expense for intangible lease assets | 1,000,000 | 50,000 |
Above-market leases | ||
Intangible Lease Assets | ||
Intangible lease assets, gross | 959,000 | 959,000 |
Less: accumulated amortization | (96,000) | (32,000) |
Intangible lease assets, net | 863,000 | 927,000 |
Above-market leases | Rental revenues | ||
Intangible Lease Assets | ||
Amortization of above market leases | $ 64,000 | $ 32,000 |
Intangible Lease Assets - Expec
Intangible Lease Assets - Expected future amortization (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Intangible Lease Assets | ||
2023 | $ 980,000 | |
2024 | 980,000 | |
2025 | 980,000 | |
2026 | 980,000 | |
2027 | 980,000 | |
Thereafter | 8,804,000 | |
Intangible lease assets, net | $ 13,704,000 | $ 14,687,000 |
Right of Use Asset - Operatin_3
Right of Use Asset - Operating Lease (Details) - USD ($) | Nov. 16, 2022 | Dec. 31, 2022 | Apr. 01, 2022 |
Right of Use Asset - Operating Lease | |||
Estimated incremental borrowing rate | 5% | ||
Right of use asset - operating | $ 900,000 | ||
Right of use asset - operating, Location | Other Assets | ||
Lease liability - operating | $ 933,000 | $ 900,000 | |
Lease liability, location | Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities | |
Operating lease, weighted average remaining lease term | 5 years 3 months 18 days | ||
Standard Office Lease | |||
Right of Use Asset - Operating Lease | |||
Lease term under three separate triple net leases | 66 months 15 days | ||
Lease renewal options | 5 years | ||
Initial annual base rent | $ 204,399 | ||
Increase in initial annual base rent (as a percent) | 3% |
Right of Use Asset - Operatin_4
Right of Use Asset - Operating Lease (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Apr. 01, 2022 | |
Right of Use Asset - Operating Lease | ||
Right of use asset - operating | $ 900,000 | |
Right of use asset - operating, Location | Other Assets | |
Lease liability - operating | $ 933,000 | $ 900,000 |
Lease liability, location | Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities |
Operating lease expense | $ 87,000 | |
LH Lease | ||
Right of Use Asset - Operating Lease | ||
Right of use asset - operating | $ 833,000 | |
Right of use asset - operating, Location | Other Assets | |
Lease liability - operating | $ 933,000 | |
Lease liability, location | Accounts Payable and Accrued Liabilities | |
Operating lease expense | $ 26,000 |
Right of Use Asset-Operating Le
Right of Use Asset-Operating Lease (Details) - USD ($) | Dec. 31, 2022 | Apr. 01, 2022 |
Maturity of lease payments | ||
2023 | $ 103,000 | |
2024 | 211,000 | |
2025 | 217,000 | |
2026 | 224,000 | |
2027 | 231,000 | |
Thereafter | 98,000 | |
Total lease payments | 1,084,000 | |
Less imputed interest | (151,000) | |
Total lease liability | $ 933,000 | $ 900,000 |
Lease liability, location | Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities |
Concentration of Risk (Details)
Concentration of Risk (Details) | 12 Months Ended | ||
Dec. 31, 2022 tenant | Dec. 31, 2021 tenant property | Dec. 31, 2022 property | |
Concentration of Risk | |||
Number of owned properties held by equity method investment | 35 | ||
Number of leased real estate properties | 18 | 18 | 16 |
Number of tenants under long-term triple net leases | tenant | 14 | 16 | |
Number of tenants represents more than 10% of our rental revenue | tenant | 3 | 3 | |
Customer concentration risk | Tenant | Assets, Total | |||
Concentration of Risk | |||
Concentration risk, percentage | 20% | ||
Customer concentration risk | Tenant One | Tenant One Concentration Risk [Member] | |||
Concentration of Risk | |||
Concentration risk, percentage | 10% | 10% | |
Customer concentration risk | Tenant Two | Tenant Two Concentration Risk | |||
Concentration of Risk | |||
Concentration risk, percentage | 16% | 38% | |
Customer concentration risk | Tenant Three | Tenant Three Concentration Risk | |||
Concentration of Risk | |||
Concentration risk, percentage | 14% | 26% | |
Customer concentration risk | Tenant Five | Tenant Five Concentration Risk | |||
Concentration of Risk | |||
Concentration risk, percentage | 10% | 16% | |
Georgia | |||
Concentration of Risk | |||
Number of owned properties | 8 | ||
California | |||
Concentration of Risk | |||
Number of owned properties | 4 | ||
Oregon | |||
Concentration of Risk | |||
Number of owned properties | 3 | ||
Texas | |||
Concentration of Risk | |||
Number of owned properties | 1 | ||
Illinois | |||
Concentration of Risk | |||
Number of owned properties | 1 | ||
Arizona | |||
Concentration of Risk | |||
Number of owned properties | 1 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Commitments and Contingencies | |
Purchased the investors' interests | $ 0.9 |
Equity - Black-Scholes option-p
Equity - Black-Scholes option-pricing model (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Equity | ||
Stock options granted | 81,000 | |
Expected volatility | 36.50% | |
Expected term | 5 years 9 months | |
Risk-free interest rate | 2.53% | |
Dividend yield | 0% | |
Fair value per stock option | $ 0.91 |
Equity - Stock options (Details
Equity - Stock options (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Equity | ||
Options outstanding, Beginning Balance | 1,867,908 | 1,871,908 |
Options outstanding, Granted | 81,000 | |
Options outstanding, Exercised | 0 | |
Cancelled/forfeited | (4,000) | |
Options outstanding, Ending Balance | 1,948,908 | 1,867,908 |
Options exercisable, Ending Balance | 1,884,713 | |
Weighted Average Exercise Price, Outstanding at Beginning Balance | $ 2.09 | $ 2.09 |
Weighted Average Exercise Price, Granted | 2.35 | |
Weighted Average Exercise Price, Cancelled/forfeited | 2.26 | |
Weighted Average Exercise Price, Outstanding at Ending Balance | 2.10 | $ 2.09 |
Weighted Average Exercise Price, Exercisable at Ending Balance | $ 2.09 | |
Options outstanding, Weighted Average Remaining Contractual Term | 4 years 11 months 26 days | |
Options exercisable, Weighted Average Remaining Contractual Term | 4 years 10 months 6 days | |
Options outstanding, Aggregate Intrinsic Value | $ 1,235,000 | |
Options exercisable, Aggregate Intrinsic Value | $ 1,210,000 |
Equity - Unrecognized stock-bas
Equity - Unrecognized stock-based compensation expense (Details) | Dec. 31, 2022 USD ($) |
Equity | |
Unrecognized stock-based compensation expense related to unvested stock options, net of forfeitures | $ 58,000 |
2023 | |
Equity | |
Unrecognized stock-based compensation expense related to unvested stock options, net of forfeitures | 25,000 |
2024 | |
Equity | |
Unrecognized stock-based compensation expense related to unvested stock options, net of forfeitures | 25,000 |
2025 | |
Equity | |
Unrecognized stock-based compensation expense related to unvested stock options, net of forfeitures | $ 8,000 |
Equity - Additional Information
Equity - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Apr. 01, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Equity | |||
Cash distributions per common share | $ 0 | ||
Stock options granted | 81,000 | ||
Fair value per stock option | $ 0.91 | ||
Weighted average grant date fair value (per share) | $ 0.90 | ||
General and administrative expense | |||
Equity | |||
Stock-based compensation expense | $ 31,000 | $ 66,000 | |
Board of Directors | |||
Equity | |||
Stock options granted | 81,000 | ||
Incentive Plan | |||
Equity | |||
Stock options granted | 80,000 | ||
Total number of shares of common stock issued | 3,000,000 | ||
Issuance of common stock | 1,051,092 |
Segment Reporting (Details)
Segment Reporting (Details) - segment | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Segment Reporting | ||
Number of reportable segments | 1 | 1 |