Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 09, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 000-55190 | |
Entity Registrant Name | NORTHSTAR HEALTHCARE INCOME, INC. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 27-3663988 | |
Entity Address, Address Line One | 16 East 34th Street | |
Entity Address, Address Line Two | 18th Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10016 | |
City Area Code | 929 | |
Local Phone Number | 777-3135 | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 195,287,174 | |
Entity Central Index Key | 0001503707 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | |
Assets | |||
Cash and cash equivalents | $ 95,145 | $ 200,473 | |
Restricted cash | 12,537 | 10,465 | |
Operating real estate, net | 932,730 | 972,599 | |
Investments in unconsolidated ventures | 205,207 | 212,309 | |
Receivables, net | 3,454 | 3,666 | |
Intangible assets, net | 2,337 | 2,590 | |
Other assets | 7,829 | 10,771 | |
Total assets | [1] | 1,259,239 | 1,412,873 |
Liabilities | |||
Mortgage and other notes payable, net | 915,964 | 929,811 | |
Due to related party | 3,347 | 7,338 | |
Escrow deposits payable | 1,427 | 1,171 | |
Accounts payable and accrued expenses | 19,052 | 24,671 | |
Other liabilities | 2,392 | 3,064 | |
Total liabilities | [1] | 942,182 | 966,055 |
Commitments and contingencies (Note 12) | |||
NorthStar Healthcare Income, Inc. Stockholders’ Equity | |||
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of September 30, 2022 and December 31, 2021 | 0 | 0 | |
Common stock, $0.01 par value, 400,000,000 shares authorized, 195,078,539 and 193,120,940 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 1,951 | 1,930 | |
Additional paid-in capital | 1,728,383 | 1,720,719 | |
Retained earnings (accumulated deficit) | (1,410,309) | (1,277,688) | |
Accumulated other comprehensive income (loss) | (5,088) | (486) | |
Total NorthStar Healthcare Income, Inc. stockholders’ equity | 314,937 | 444,475 | |
Non-controlling interests | 2,120 | 2,343 | |
Total equity | 317,057 | 446,818 | |
Total liabilities and equity | $ 1,259,239 | $ 1,412,873 | |
[1]Represents the consolidated assets and liabilities of NorthStar Healthcare Income Operating Partnership, LP (the “Operating Partnership”). The Operating Partnership is a consolidated variable interest entity (“VIE”), of which NorthStar Healthcare Income, Inc. (together with its consolidated subsidiaries, the “Company”) is the sole general partner and owns approximately 99.99%. As of September 30, 2022, the Operating Partnership includes $224.2 million and $178.8 million of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. Refer to Note 2, “Summary of Significant Accounting Policies.” |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2022 | Dec. 31, 2021 | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | |
Preferred stock, shares issued (in shares) | 0 | 0 | |
Preferred stock, shares outstanding (in shares) | 0 | 0 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares authorized (in shares) | 400,000,000 | 400,000,000 | |
Common stock, shares issued (in shares) | 195,078,539 | 195,078,539 | |
Common stock, shares outstanding (in shares) | 193,120,940 | 193,120,940 | |
Assets | [1] | $ 1,259,239 | $ 1,412,873 |
Liabilities | [1] | $ 942,182 | $ 966,055 |
Primary Beneficiary | |||
Ownership interest in operating partnership | 99.99% | ||
Primary Beneficiary | Northstar Healthcare Income Operating Partnership, LP | |||
Ownership interest in operating partnership | 99.99% | ||
Northstar Healthcare Income Operating Partnership, LP | Primary Beneficiary | |||
Assets | $ 224,200 | ||
Liabilities | $ 178,800 | ||
[1]Represents the consolidated assets and liabilities of NorthStar Healthcare Income Operating Partnership, LP (the “Operating Partnership”). The Operating Partnership is a consolidated variable interest entity (“VIE”), of which NorthStar Healthcare Income, Inc. (together with its consolidated subsidiaries, the “Company”) is the sole general partner and owns approximately 99.99%. As of September 30, 2022, the Operating Partnership includes $224.2 million and $178.8 million of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. Refer to Note 2, “Summary of Significant Accounting Policies.” |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Property and other revenues | |||||
Resident fee income | $ 11,274,000 | $ 27,370,000 | $ 32,987,000 | $ 83,906,000 | |
Rental income | 36,165,000 | 37,006,000 | 103,001,000 | 101,669,000 | |
Other revenue | 300,000 | 38,000 | 457,000 | 80,000 | |
Total property and other revenues | 47,739,000 | 64,414,000 | 136,445,000 | 185,655,000 | |
Interest income | |||||
Interest income on debt investments | 0 | 1,067,000 | 0 | 4,667,000 | |
Expenses | |||||
Property operating expenses | 35,134,000 | 45,784,000 | 101,258,000 | 136,503,000 | |
Interest expense | 11,014,000 | 15,780,000 | 31,877,000 | 47,767,000 | |
Transaction costs | 857,000 | 0 | 857,000 | 54,000 | |
Asset management fees - related party | 2,428,000 | 2,769,000 | 7,532,000 | 8,307,000 | |
General and administrative expenses | 2,859,000 | 2,432,000 | 10,300,000 | 8,544,000 | |
Depreciation and amortization | 9,642,000 | 13,828,000 | 29,105,000 | 44,772,000 | |
Impairment loss | 18,500,000 | 4,600,000 | 31,502,000 | 5,386,000 | |
Total expenses | 80,434,000 | 85,193,000 | 212,431,000 | 251,333,000 | |
Other income (loss) | |||||
Other income, net | 0 | 0 | 77,000 | 6,892,000 | |
Realized gain (loss) on investments and other | 325,000 | 75,000 | 660,000 | 7,479,000 | |
Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax expense | (32,370,000) | (19,637,000) | (75,249,000) | (46,640,000) | |
Equity in earnings (losses) of unconsolidated ventures | 2,872,000 | 7,943,000 | 39,427,000 | 17,819,000 | |
Income tax expense | (15,000) | (59,000) | (45,000) | (85,000) | |
Net income (loss) | (29,513,000) | (11,753,000) | (35,867,000) | (28,906,000) | |
Net (income) loss attributable to non-controlling interests | 73,000 | 100,000 | 298,000 | (73,000) | |
Net income (loss) attributable to NorthStar Healthcare Income, Inc. common stockholders | (29,440,000) | (11,653,000) | (35,569,000) | (28,979,000) | |
Net income (loss) attributable to NorthStar Healthcare Income, Inc. common stockholders | $ (29,440,000) | $ (11,653,000) | $ (35,569,000) | $ (28,979,000) | |
Net income (loss) per share of common stock, basic (in dollars per share) | [1] | $ (0.15) | $ (0.06) | $ (0.18) | $ (0.15) |
Net income (loss) per share of common stock, diluted (in dollars per share) | [1] | $ (0.15) | $ (0.06) | $ (0.18) | $ (0.15) |
Weighted average number of shares of common stock outstanding, basic (in shares) | [1] | 194,670,948 | 191,937,161 | 194,032,819 | 191,285,186 |
Weighted average number of shares of common stock outstanding, diluted (in shares) | [1] | 194,670,948 | 191,937,161 | 194,032,819 | 191,285,186 |
Distributions declared per share of common stock (in dollars per share) | $ 0 | $ 0 | $ 0.50 | $ 0 | |
[1]The Company issued 49,872 and 66,840 restricted stock units during the nine months ended September 30, 2022 and 2021, respectively. The impact of the restricted stock units on the diluted earnings per share calculation is de minimis for the three and nine months ended September 30, 2022 and 2021. |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||
Number of shares granted to independent directors (in shares) | 49,872 | 66,840 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (29,513) | $ (11,753) | $ (35,867) | $ (28,906) |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustments related to investment in unconsolidated venture | (1,664) | (671) | (4,602) | (1,253) |
Total other comprehensive income (loss) | (1,664) | (671) | (4,602) | (1,253) |
Comprehensive income (loss) | (31,177) | (12,424) | (40,469) | (30,159) |
Comprehensive (income) loss attributable to non-controlling interests | 73 | 100 | 298 | (73) |
Comprehensive income (loss) attributable to NorthStar Healthcare Income, Inc. common stockholders | $ (31,104) | $ (12,324) | $ (40,171) | $ (30,232) |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total | Total Company’s Stockholders’ Equity | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interests |
Beginning Balance (in shares) at Dec. 31, 2020 | 190,409,000 | ||||||
Beginning Balance at Dec. 31, 2020 | $ 412,062 | $ 409,639 | $ 1,904 | $ 1,710,023 | $ (1,302,755) | $ 467 | $ 2,423 |
Increase (Decrease) in Stockholder's Equity | |||||||
Share-based payment of advisor assets management fees (in shares) | 643,000 | ||||||
Share-based payment of advisor asset management fees | 2,500 | 2,500 | $ 6 | 2,494 | |||
Amortization of equity-based compensation | 46 | 46 | 46 | ||||
Non-controlling interests - contributions | 240 | 240 | |||||
Non-controlling interests - distributions | (350) | (350) | |||||
Other comprehensive income (loss) | (474) | (474) | (474) | ||||
Net income (loss) | (10,155) | (10,463) | (10,463) | 308 | |||
Ending Balance (in shares) at Mar. 31, 2021 | 191,052,000 | ||||||
Ending Balance at Mar. 31, 2021 | 403,869 | 401,248 | $ 1,910 | 1,712,563 | (1,313,218) | (7) | 2,621 |
Beginning Balance (in shares) at Dec. 31, 2020 | 190,409,000 | ||||||
Beginning Balance at Dec. 31, 2020 | 412,062 | 409,639 | $ 1,904 | 1,710,023 | (1,302,755) | 467 | 2,423 |
Increase (Decrease) in Stockholder's Equity | |||||||
Other comprehensive income (loss) | (1,253) | ||||||
Net income (loss) | (28,906) | ||||||
Ending Balance (in shares) at Sep. 30, 2021 | 192,407,000 | ||||||
Ending Balance at Sep. 30, 2021 | 390,031 | 387,318 | $ 1,923 | 1,717,915 | (1,331,734) | (786) | 2,713 |
Beginning Balance (in shares) at Mar. 31, 2021 | 191,052,000 | ||||||
Beginning Balance at Mar. 31, 2021 | 403,869 | 401,248 | $ 1,910 | 1,712,563 | (1,313,218) | (7) | 2,621 |
Increase (Decrease) in Stockholder's Equity | |||||||
Share-based payment of advisor assets management fees (in shares) | 643,000 | ||||||
Share-based payment of advisor asset management fees | 2,500 | 2,500 | $ 6 | 2,494 | |||
Amortization of equity-based compensation | 73 | 73 | 73 | ||||
Non-controlling interests - contributions | 146 | 146 | |||||
Non-controlling interests - distributions | (33) | (33) | |||||
Other comprehensive income (loss) | (108) | (108) | (108) | ||||
Net income (loss) | (6,998) | (6,863) | (6,863) | (135) | |||
Ending Balance (in shares) at Jun. 30, 2021 | 191,695,000 | ||||||
Ending Balance at Jun. 30, 2021 | 399,449 | 396,850 | $ 1,916 | 1,715,130 | (1,320,081) | (115) | 2,599 |
Increase (Decrease) in Stockholder's Equity | |||||||
Share-based payment of advisor assets management fees (in shares) | 712,000 | ||||||
Share-based payment of advisor asset management fees | 2,769 | 2,769 | $ 7 | 2,762 | |||
Amortization of equity-based compensation | 23 | 23 | 23 | ||||
Non-controlling interests - contributions | 259 | 259 | |||||
Non-controlling interests - distributions | (45) | (45) | |||||
Other comprehensive income (loss) | (671) | (671) | (671) | ||||
Net income (loss) | (11,753) | (11,653) | (11,653) | (100) | |||
Ending Balance (in shares) at Sep. 30, 2021 | 192,407,000 | ||||||
Ending Balance at Sep. 30, 2021 | $ 390,031 | 387,318 | $ 1,923 | 1,717,915 | (1,331,734) | (786) | 2,713 |
Beginning Balance (in shares) at Dec. 31, 2021 | 195,078,539 | 193,121,000 | |||||
Beginning Balance at Dec. 31, 2021 | $ 446,818 | 444,475 | $ 1,930 | 1,720,719 | (1,277,688) | (486) | 2,343 |
Increase (Decrease) in Stockholder's Equity | |||||||
Share-based payment of advisor assets management fees (in shares) | 698,000 | ||||||
Share-based payment of advisor asset management fees | 2,729 | 2,729 | $ 7 | 2,722 | |||
Amortization of equity-based compensation | 15 | 15 | 15 | ||||
Non-controlling interests - contributions | 64 | 64 | |||||
Non-controlling interests - distributions | (53) | (53) | |||||
Other comprehensive income (loss) | (568) | (568) | (568) | ||||
Net income (loss) | (12,981) | (12,936) | (12,936) | (45) | |||
Ending Balance (in shares) at Mar. 31, 2022 | 193,819,000 | ||||||
Ending Balance at Mar. 31, 2022 | $ 436,024 | 433,715 | $ 1,937 | 1,723,456 | (1,290,624) | (1,054) | 2,309 |
Beginning Balance (in shares) at Dec. 31, 2021 | 195,078,539 | 193,121,000 | |||||
Beginning Balance at Dec. 31, 2021 | $ 446,818 | 444,475 | $ 1,930 | 1,720,719 | (1,277,688) | (486) | 2,343 |
Increase (Decrease) in Stockholder's Equity | |||||||
Share-based payment of advisor assets management fees (in shares) | 2,000,000 | ||||||
Other comprehensive income (loss) | $ (4,602) | ||||||
Net income (loss) | $ (35,867) | ||||||
Ending Balance (in shares) at Sep. 30, 2022 | 195,078,539 | 195,079,000 | |||||
Ending Balance at Sep. 30, 2022 | $ 317,057 | 314,937 | $ 1,951 | 1,728,383 | (1,410,309) | (5,088) | 2,120 |
Beginning Balance (in shares) at Mar. 31, 2022 | 193,819,000 | ||||||
Beginning Balance at Mar. 31, 2022 | 436,024 | 433,715 | $ 1,937 | 1,723,456 | (1,290,624) | (1,054) | 2,309 |
Increase (Decrease) in Stockholder's Equity | |||||||
Share-based payment of advisor assets management fees (in shares) | 637,000 | ||||||
Share-based payment of advisor asset management fees | 2,515 | 2,515 | $ 8 | 2,507 | |||
Amortization of equity-based compensation | 13 | 13 | 13 | ||||
Non-controlling interests - contributions | 113 | 113 | |||||
Non-controlling interests - distributions | (61) | (61) | |||||
Dividends | (97,052) | (97,052) | (97,052) | ||||
Other comprehensive income (loss) | (2,370) | (2,370) | (2,370) | ||||
Net income (loss) | 6,627 | 6,807 | 6,807 | (180) | |||
Ending Balance (in shares) at Jun. 30, 2022 | 194,456,000 | ||||||
Ending Balance at Jun. 30, 2022 | 345,809 | 343,628 | $ 1,945 | 1,725,976 | (1,380,869) | (3,424) | 2,181 |
Increase (Decrease) in Stockholder's Equity | |||||||
Share-based payment of advisor assets management fees (in shares) | 623,000 | ||||||
Share-based payment of advisor asset management fees | 2,413 | 2,413 | $ 6 | 2,407 | |||
Non-controlling interests - contributions | 86 | 86 | |||||
Non-controlling interests - distributions | (74) | (74) | |||||
Other comprehensive income (loss) | (1,664) | (1,664) | (1,664) | ||||
Net income (loss) | $ (29,513) | (29,440) | (29,440) | (73) | |||
Ending Balance (in shares) at Sep. 30, 2022 | 195,078,539 | 195,079,000 | |||||
Ending Balance at Sep. 30, 2022 | $ 317,057 | $ 314,937 | $ 1,951 | $ 1,728,383 | $ (1,410,309) | $ (5,088) | $ 2,120 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (35,867) | $ (28,906) |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||
Equity in (earnings) losses of unconsolidated ventures | (39,427) | (17,819) |
Depreciation and amortization | 29,105 | 44,772 |
Impairment loss | 31,502 | 5,386 |
Amortization of below market debt | 2,428 | 2,369 |
Straight-line rental (income) loss, net | 0 | 7,432 |
Amortization of discount/accretion of premium on investments | 0 | (697) |
Amortization of deferred financing costs | 475 | 1,354 |
Amortization of equity-based compensation | 150 | 142 |
Paid-in-kind interest on real estate debt investment | 0 | (194) |
Realized (gain) loss on investments and other | (660) | (7,479) |
Change in allowance for uncollectible accounts | 326 | 108 |
Issuance of common stock as payment for asset management fees | 7,532 | 7,769 |
Changes in assets and liabilities: | ||
Receivables | (114) | 1,191 |
Other assets | 3,583 | (7,560) |
Due to related party | (3,868) | (5,421) |
Escrow deposits payable | 256 | 1,758 |
Accounts payable and accrued expenses | (8,727) | (8,866) |
Other liabilities | (298) | 306 |
Net cash (used in) provided by operating activities | (13,604) | (4,355) |
Cash flows from investing activities: | ||
Capital expenditures for operating real estate | (17,924) | (17,344) |
Sales of operating real estate | 0 | 28,078 |
Repayment of real estate debt investment | 0 | 74,376 |
Investments in unconsolidated ventures | 0 | (400) |
Distributions from unconsolidated ventures | 42,173 | 6,971 |
Real estate debt investment modification fee | 0 | 686 |
Net cash provided by (used in) investing activities | 24,249 | 92,367 |
Cash flows from financing activities: | ||
Borrowings from mortgage notes | 0 | 26,000 |
Repayments of mortgage notes | (16,514) | (61,121) |
Repayment of borrowings from line of credit - related party | 0 | (35,000) |
Payment of deferred financing costs | (36) | (708) |
Payments under finance leases | (408) | (446) |
Distributions paid on common stock | (97,018) | 0 |
Contributions from non-controlling interests | 263 | 645 |
Distributions to non-controlling interests | (188) | (428) |
Net cash (used in) provided by financing activities | (113,901) | (71,058) |
Net increase (decrease) in cash, cash equivalents and restricted cash | (103,256) | 16,954 |
Cash, cash equivalents and restricted cash-beginning of period | 210,938 | 93,570 |
Cash, cash equivalents and restricted cash-end of period | 107,682 | 110,524 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 28,625 | 50,277 |
Cash paid for income taxes | 41 | 45 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Accrued capital expenditures | 2,561 | 1,391 |
Assets acquired under finance leases | 0 | 144 |
Assets acquired under operating leases | 0 | 100 |
Reclassification of assets held for sale | $ 0 | $ 488,241 |
Business and Organization
Business and Organization | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Organization | Business and Organization NorthStar Healthcare Income, Inc., together with its consolidated subsidiaries (the “Company”), manages a diversified portfolio of investments in healthcare real estate, owned directly or through joint ventures, with a focus on the seniors housing sector, which the Company defines as assisted living (“ALF”), memory care (“MCF”), skilled nursing (“SNF”), independent living facilities (“ILF”) and continuing care retirement communities (“CCRC”), which have ILF, ALF, SNF, and MCF available on one campus. The Company is also invested in other healthcare property types, including medical office buildings (“MOB”), hospitals, rehabilitation facilities and ancillary healthcare services businesses. The Company’s investments are predominantly in the United States, but through a joint venture it also has international investments in the United Kingdom. The Company was formed in October 2010 as a Maryland corporation and commenced operations in February 2013. The Company elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), commencing with the taxable year ended December 31, 2013. The Company has conducted its operations, and intends to do so in the future, so as to continue to qualify as a REIT for U.S. federal income tax purposes. Substantially all of the Company’s business is conducted through NorthStar Healthcare Income Operating Partnership, LP (the “Operating Partnership”). The Company is the sole general partner of the Operating Partnership. The limited partners of the Operating Partnership are NorthStar Healthcare Income Advisor, LLC and NorthStar Healthcare Income OP Holdings, LLC (the “Special Unit Holder”). NorthStar Healthcare Income Advisor, LLC invested $1,000 in the Operating Partnership in exchange for common units and the Special Unit Holder invested $1,000 in the Operating Partnership and was issued a separate class of limited partnership units (the “Special Units”), which are collectively recorded as non-controlling interests on the accompanying consolidated balance sheets as of September 30, 2022 and December 31, 2021. As the Company issued shares, it contributed substantially all of the proceeds from its continuous, public offerings to the Operating Partnership as a capital contribution. As of September 30, 2022, the Company’s limited partnership interest in the Operating Partnership was 99.99%. The Company’s charter authorizes the issuance of up to 400.0 million shares of common stock with a par value of $0.01 per share and up to 50.0 million shares of preferred stock with a par value of $0.01 per share. The board of directors of the Company is authorized to amend its charter, without the approval of the stockholders, to increase the aggregate number of authorized shares of capital stock or the number of shares of any class or series that the Company has authority to issue. Since inception through October 21, 2022, the Company was externally managed by CNI NSHC Advisors, LLC or its predecessor (the “Advisor”), an affiliate of NRF Holdco, LLC (the “Sponsor”). The Advisor was responsible for managing the Company’s operations, subject to the supervision of the Company’s board of directors, pursuant to an advisory agreement. On October 21, 2022, the Company completed the internalization of the Company’s management function (the “Internalization”). In connection with the Internalization, the Company agreed with the Advisor to terminate the advisory agreement and arranged for the Advisor to continue to provide certain services for a transition period. Going forward, the Company will be self-managed under the leadership of Kendall Young, who was appointed by the board of directors as Chief Executive Officer and President concurrent with the Internalization. Refer to Note 13, “Subsequent Events” for further discussion. From inception through September 30, 2022, the Company raised $2.0 billion in total gross proceeds from the sale of shares of common stock in its continuous, public offerings (the “Offering”), including $232.6 million pursuant to its distribution reinvestment plan (the “DRP”). Impact of COVID-19 The Company's healthcare real estate business and investments have been challenged by suboptimal occupancy levels, lower labor force participation rates, which has driven increased labor costs, and inflationary pressures on other operating expenses. These lasting effects from the response to the coronavirus 2019 (“COVID-19”) pandemic will continue to impact Company’s operational and financial performance. An extended recovery period increases the risk of a prolonged negative impact on the Company’s financial condition and results of operations. While the Company has the ability to meet its near term liquidity needs, general market concerns over credit and liquidity continue, and the effects of COVID-19 may also lead to heightened risk of litigation, with an ensuing increase in litigation and related costs. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Accounting The accompanying unaudited consolidated financial statements and related notes of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally included in the consolidated financial statements prepared under U.S. GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the U.S. Securities and Exchange Commission on March 18, 2022. Principles of Consolidation The consolidated financial statements include the accounts of the Company, the Operating Partnership and their consolidated subsidiaries. The Company consolidates entities in which it has a controlling financial interest by first considering if an entity meets the definition of a variable interest entity (“VIE”) for which the Company is deemed to be the primary beneficiary or if the Company has the power to control an entity through majority voting interest or other arrangements. All significant intercompany balances are eliminated in consolidation. Variable Interest Entities A VIE is an entity that lacks one or more of the characteristics of a voting interest entity. A VIE is defined as an entity in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The determination of whether an entity is a VIE includes both a qualitative and quantitative analysis. The Company bases its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and relevant financial agreements and the quantitative analysis on the forecasted cash flow of the entity. The Company reassesses its initial evaluation of an entity as a VIE upon the occurrence of certain reconsideration events. A VIE must be consolidated only by its primary beneficiary, which is defined as the party who, along with its affiliates and agents, has both the: (i) power to direct the activities that most significantly impact the VIE’s economic performance; and (ii) obligation to absorb the losses of the VIE or the right to receive the benefits from the VIE, which could be significant to the VIE. The Company determines whether it is the primary beneficiary of a VIE by considering qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of its investment; the obligation or likelihood for the Company or other interests to provide financial support; consideration of the VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders and the similarity with and significance to the business activities of the Company and the other interests. The Company reassesses its determination of whether it is the primary beneficiary of a VIE each reporting period. Judgments related to these determinations include estimates about the current and future fair value and performance of investments held by these VIEs and general market conditions. The Company evaluates its investments and financings, including investments in unconsolidated ventures and securitization financing transactions to determine whether each investment or financing is a VIE. The Company analyzes new investments and financings, as well as reconsideration events for existing investments and financings, which vary depending on type of investment or financing. As of September 30, 2022, the Company has identified certain consolidated and unconsolidated VIEs. Assets of each of the VIEs, other than the Operating Partnership, may only be used to settle obligations of the respective VIE. Creditors of each of the VIEs have no recourse to the general credit of the Company. Consolidated VIEs The most significant consolidated VIEs are the Operating Partnership and certain properties that have non-controlling interests. These entities are VIEs because the non-controlling interests do not have substantive kick-out or participating rights. The Operating Partnership consolidates certain properties that have non-controlling interests. Included in operating real estate, net on the Company’s consolidated balance sheet as of September 30, 2022 is $214.2 million related to such consolidated VIEs. Included in mortgage and other notes payable, net on the Company’s consolidated balance sheet as of September 30, 2022 is $173.8 million, collateralized by the real estate assets of the related consolidated VIEs. Unconsolidated VIEs As of September 30, 2022, the Company identified unconsolidated VIEs related to its real estate equity investments with a carrying value of $205.2 million. The Company’s maximum exposure to loss as of September 30, 2022 would not exceed the carrying value of its investment in the VIEs. Based on management’s analysis, the Company determined that it is not the primary beneficiary of these VIEs and, accordingly, they are not consolidated in the Company’s financial statements as of September 30, 2022. The Company did not provide financial support to its unconsolidated VIEs during the nine months ended September 30, 2022. As of September 30, 2022, there were no explicit arrangements or implicit variable interests that could require the Company to provide financial support to its unconsolidated VIEs. Voting Interest Entities A voting interest entity is an entity in which the total equity investment at risk is sufficient to enable it to finance its activities independently and the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the Company has a majority voting interest in a voting interest entity, the entity will generally be consolidated. The Company does not consolidate a voting interest entity if there are substantive participating rights by other parties and/or kick-out rights by a single party or through a simple majority vote. The Company performs on-going reassessments of whether entities previously evaluated under the voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework. Investments in Unconsolidated Ventures A non-controlling, unconsolidated ownership interest in an entity may be accounted for using the equity method or the Company may elect the fair value option. The Company will account for an investment under the equity method of accounting if it has the ability to exercise significant influence over the operating and financial policies of an entity, but does not have a controlling financial interest. Under the equity method, the investment is adjusted each period for capital contributions and distributions and its share of the entity’s net income (loss). Capital contributions, distributions and net income (loss) of such entities are recorded in accordance with the terms of the governing documents. An allocation of net income (loss) may differ from the stated ownership percentage interest in such entity as a result of preferred returns and allocation formulas, if any, as described in such governing documents. Equity method investments are recognized using a cost accumulation model, in which the investment is recognized based on the cost to the investor, which includes acquisition fees. The Company records as an expense certain acquisition costs and fees associated with consolidated investments deemed to be business combinations and capitalizes these costs for investments deemed to be acquisitions of an asset, including an equity method investment. Non-controlling Interests A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to the Company. A non-controlling interest is required to be presented as a separate component of equity on the consolidated balance sheets and presented separately as net income (loss) and comprehensive income (loss) attributable to controlling and non-controlling interests. An allocation to a non-controlling interest may differ from the stated ownership percentage interest in such entity as a result of a preferred return and allocation formula, if any, as described in such governing documents. Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that could affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates and assumptions. Any estimates of the effects of COVID-19 pandemic, inflation, rising interest rates, risk of recession and other economic conditions as reflected and/or discussed in these financial statements are based upon the Company's best estimates using information known to the Company as of the date of this Quarterly Report on Form 10-Q. Such estimates may change and the impact of which could be material. Cash, Cash Equivalents and Restricted Cash The Company considers all highly-liquid investments with an original maturity date of three months or less to be cash equivalents. Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250,000 per institution. The Company mitigates credit risk by placing cash and cash equivalents with major financial institutions. To date, the Company has not experienced any losses on cash and cash equivalents. Restricted cash consists of amounts related to operating real estate (escrows for taxes, insurance, capital expenditures, security deposits received from residents and payments required under certain lease agreements) and other escrows required by lenders of the Company’s borrowings. The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported on the consolidated balance sheets to the total of such amounts as reported on the consolidated statements of cash flows (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 Cash and cash equivalents $ 95,145 $ 200,473 Restricted cash 12,537 10,465 Total cash, cash equivalents and restricted cash $ 107,682 $ 210,938 Operating Real Estate Operating real estate is carried at historical cost less accumulated depreciation. Major replacements and betterments which improve or extend the life of the asset are capitalized and depreciated over their useful life. Ordinary repairs and maintenance are expensed as incurred. Operating real estate is depreciated using the straight-line method over the estimated useful life of the assets, summarized as follows: Category: Term: Building 30 to 50 years Building improvements Lesser of the useful life or remaining life of the building Land improvements 9 to 15 years Tenant improvements Lesser of the useful life or remaining term of the lease Furniture, fixtures and equipment 5 to 14 years Construction costs incurred in connection with the Company’s investments are capitalized and included in operating real estate, net on the consolidated balance sheets. Construction in progress is not depreciated until the asset is available for its intended use. Lessee Accounting A leasing arrangement, a right to control the use of an identified asset for a period of time in exchange for consideration, is classified by the lessee either as a finance lease, which represents a financed purchase of the leased asset, or as an operating lease. For leases with terms greater than 12 months, a lease asset and a lease liability are recognized on the balance sheet at commencement date based on the present value of lease payments over the lease term. Lease renewal or termination options are included in the lease asset and lease liability only if it is reasonably certain that the option to extend would be exercised or the option to terminate would not be exercised. As the implicit rate in most leases are not readily determinable, the Company’s incremental borrowing rate for each lease at commencement date is used to determine the present value of lease payments. Consideration is given to the Company’s recent debt financing transactions, as well as publicly available data for instruments with similar characteristics, adjusted for the respective lease term, when estimating incremental borrowing rates. Lease expense is recognized over the lease term based on an effective interest method for finance leases and on a straight-line basis for operating leases. Right of Use (“ROU”) - Finance Assets The Company has entered into finance leases for equipment which are included in operating real estate, net The following table presents the future minimum lease payments under finance leases and the present value of the minimum lease payments, which are included in other liabilities October 1 through December 31, 2022 $ 69 Years Ending December 31: 2023 93 2024 60 2025 29 2026 24 Thereafter 28 Total minimum lease payments $ 303 Less: Amount representing interest (29) Present value of minimum lease payments $ 274 The weighted average interest rate related to the finance lease obligations is 7.2% with a weighted average lease term of 3.4 years. As of September 30, 2022, there were no leases that had yet to commence which would create significant rights and obligations to the Company as lessee. Intangible Assets and Deferred Costs Deferred Costs Deferred costs primarily include deferred financing costs and deferred leasing costs. Deferred financing costs represent commitment fees, legal and other third-party costs associated with obtaining financing. These costs are recorded against the carrying value of such financing and are amortized to interest expense over the term of the financing using the effective interest method. Unamortized deferred financing costs are expensed to realized gain (loss) on investments and other, when the associated borrowing is repaid before maturity. Costs incurred in seeking financing transactions which do not close are expensed in the period in which it is determined that the financing will not occur. Deferred lease costs consist of fees incurred to initiate and renew operating leases, which are amortized on a straight-line basis over the remaining lease term and are recorded to depreciation and amortization in the consolidated statements of operations. Identified Intangibles The Company records acquired identified intangibles, such as the value of in-place leases and other intangibles, based on estimated fair value at the acquisition date. The value allocated to the identified intangibles is amortized over the remaining lease term. In-place leases are amortized into depreciation and amortization expense. Impairment analysis for identified intangible assets is performed in connection with the impairment assessment of the related operating real estate. An impairment establishes a new basis for the identified intangible asset and any impairment loss recognized is not subject to subsequent reversal. Refer to “—Impairment on Operating Real Estate and Investments in Unconsolidated Ventures” for additional information. Identified intangible assets are recorded in intangible assets, net on the consolidated balance sheets. Intangible assets relate to the Company’s in-place lease values for the Company’s four net lease properties. The following table presents intangible assets, net (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 In-place lease value $ 120,149 $ 120,149 Less: Accumulated amortization (117,812) (117,559) Intangible assets, net $ 2,337 $ 2,590 The Company recorded $0.1 million and $0.3 million of amortization expense for in-place leases for the three and nine months ended September 30, 2022, respectively. For the three and nine months ended September 30, 2021, amortization expense for in-place leases and deferred costs was $0.3 million and $1.3 million, respectively. The following table presents future amortization of in-place lease value (dollars in thousands): October 1 through December 31, 2022 $ 84 Years Ending December 31: 2023 337 2024 337 2025 337 2026 337 Thereafter 905 Total $ 2,337 Revenue Recognition Operating Real Estate Rental income from operating real estate is derived from leasing of space to healthcare operators, including rent received from the Company’s net lease properties and rent, ancillary service fees and other related revenue earned from ILF residents. Rental income recognition commences when the operator takes legal possession of the leased space and the leased space is substantially ready for its intended use. The leases are for fixed terms of varying length and generally provide for rentals and expense reimbursements to be paid in monthly installments. Rental income from leases, which includes community and move-in fees, is recognized over the term of the respective leases. ILF resident agreements are generally short-term in nature and may allow for termination with 30 days’ notice. The Company also generates revenue from operating healthcare properties. Revenue related to operating healthcare properties includes resident room and care charges, ancillary fees and other resident service charges. Rent is charged and revenue is recognized when such services are provided, generally defined per the resident agreement as of the date upon which a resident occupies a room or uses the services. Resident agreements are generally short-term in nature and may allow for termination with 30 days’ notice. Revenue derived from our ALFs, MCFs and CCRCs is recorded in resident fee income in the consolidated statements of operations. Revenue from operators and residents is recognized at lease commencement only to the extent collection is expected to be probable. This assessment is based on several qualitative and quantitative factors, including and as appropriate, the payment history, ability to satisfy its lease obligations, the value of the underlying collateral or deposit, if any, and current economic conditions. If collection is assessed to not be probable thereafter, lease income recognized is limited to amounts collected, with the reversal of any revenue recognized to date in excess of amounts received. If collection is subsequently reassessed to be probable, revenue is adjusted to reflect the amount that would have been recognized had collection always been assessed as probable. The operator of the Company’s remaining four net lease properties failed to remit contractual monthly rent obligations and the Company deemed it not probable that these obligations will be satisfied in the foreseeable future. For the nine months ended September 30, 2022, the Company recorded rental income to the extent rental payments were received. For the three months ended September 30, 2022 and 2021, total property and other revenues includes variable lease revenue of $2.1 million and $3.5 million, respectively. For the nine months ended September 30, 2022 and 2021, total property and other revenue includes variable lease revenue of $9.2 million and $10.1 million, respectively. Variable lease revenue includes ancillary services provided to operator/residents, as well as non-recurring services and fees at the Company’s operating facilities. The Company did not receive or recognize any grant income from the Provider Relief Fund administered by the U.S. Department of Health and Human Services during the nine months ended September 30, 2022. During the nine months ended September 30, 2021, the Company recognized $7.4 million of grant income. The grant income is classified as other income, net in the consolidated statements of operations. These grants are intended to mitigate the negative financial impact of the COVID-19 pandemic as reimbursements for expenses incurred to prevent, prepare for and respond to COVID-19 and lost revenues attributable to COVID-19. Provided that the Company attests to and complies with certain terms and conditions of the grants, the Company will not be required to repay these grants in the future. Real Estate Debt Investments Interest income is recognized on an accrual basis and any related premium, discount, origination costs and fees are amortized over the life of the investment using the effective interest method. The amortization is reflected as an adjustment to interest income in the consolidated statements of operations. The amortization of a premium or accretion of a discount is discontinued if such investment is reclassified to held for sale. The Company had one debt investment, which was repaid in full in August 2021. Impairment on Operating Real Estate and Investments in Unconsolidated Ventures At this time, it is difficult for the Company to assess and estimate the future economic effects of the COVID-19 pandemic, inflation, rising interest rates, risk of recession and other economic conditions with any meaningful precision. The future economic effects will depend on many factors beyond the Company’s control and knowledge. The resulting effect on impairment of the Company's real estate held for investment and held for sale and investments in unconsolidated ventures may materially differ from the Company's current expectations and further impairment charges may be recorded in future periods. Operating Real Estate The Company’s real estate portfolio is reviewed on a quarterly basis, or more frequently as necessary, to assess whether there are any indicators that the value of its operating real estate may be impaired or that its carrying value may not be recoverable. A property’s value is considered impaired if the Company’s estimate of the aggregate expected future undiscounted cash flow generated by the property is less than the carrying value. In conducting this review, the Company considers U.S. macroeconomic factors, real estate and healthcare sector conditions, together with asset specific and other factors. To the extent an impairment has occurred, the loss is measured as the excess of the carrying value of the property over the estimated fair value and recorded in impairment loss in the consolidated statements of operations. Real estate held for sale is stated at the lower of its carrying amount or estimated fair value less disposal cost, with any write-down to disposal cost recorded as an impairment loss. For any increase in fair value less disposal cost subsequent to classification as held for sale, the impairment may be reversed, but only up to the amount of cumulative loss previously recognized. The Company considered the potential impact of the lasting effects of the COVID-19 pandemic, inflation, rising interest rates, risk of recession and other economic conditions on the future net operating income of its healthcare real estate held for investment as an indicator of impairment. Fair values were estimated based upon the income capitalization approach, using net operating income for each property and applying indicative capitalization rates. During the nine months ended September 30, 2022, the Company recorded impairment losses on its operating real estate totaling $31.5 million. The Company recorded impairment losses of $18.5 million, $8.5 million and $3.9 million for facilities in its Arbors, Winterfell and Rochester portfolios, respectively, as a result of declining operating margins and lower projected future cash flows. In addition, the Company recorded impairment losses totaling $0.6 million for property damage sustained by facilities in its Winterfell portfolio. During the nine months ended September 30, 2021, the Company recorded impairment losses totaling $5.4 million, consisting of $4.6 million recognized for one independent living facility within its Winterfell portfolio and $0.8 million for its Smyrna net lease property, which was sold in May 2021. Investments in Unconsolidated Ventures The Company reviews its investments in unconsolidated ventures for which the Company did not elect the fair value option on a quarterly basis, or more frequently as necessary, to assess whether there are any indicators that the value may be impaired or that its carrying value may not be recoverable. An investment is considered impaired if the projected net recoverable amount over the expected holding period is less than the carrying value. In conducting this review, the Company considers global macroeconomic factors, including real estate sector conditions, together with investment specific and other factors. To the extent an impairment has occurred and is considered to be other than temporary, the loss is measured as the excess of the carrying value of the investment over the estimated fair value and recorded in equity in earnings (losses) of unconsolidated ventures in the consolidated statements of operations. During the nine months ended September 30, 2022, the Company did not impair any of its investments in unconsolidated ventures, however, the underlying joint ventures recorded impairments and reserves on properties in their respective portfolios, which the Company recognized through equity in earnings (losses), of which the Company’s proportionate share was de minimis. During the nine months ended September 30, 2021, the Company did not impair any of its investments in unconsolidated ventures, nor did the underlying joint ventures record any impairments or reserves on properties in their respective portfolios. Credit Losses on Receivables The current expected credit loss model, in estimating expected credit losses over the life of a financial instrument at the time of origination or acquisition, considers historical loss experiences, current conditions and the effects of reasonable and supportable expectations of changes in future macroeconomic conditions. The Company assesses the estimate of expected credit losses on a quarterly basis or more frequently as necessary. The Company considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Company measures expected credit losses of receivables on a collective basis when similar risk characteristics exist. If the Company determines that a particular receivable does not share risk characteristics with its other receivables, the Company evaluates the receivable for expected credit losses on an individual basis. When developing an estimate of expected credit losses on receivables, the Company considers available information relevant to assessing the collectability of cash flows. This information may include internal information, external information, or a combination of both relating to past events, current conditions, and reasonable and supportable forecasts. The Company considers relevant qualitative and quantitative factors that relate to the environment in which the Company operates and are specific to the borrower. Further, the fair value of the collateral, less estimated costs to sell, may be used when determining the allowance for credit losses for a receivable for which the repayment is expected to be provided substantially through the sale of the collateral when the borrower is experiencing financial difficulty. As of September 30, 2022, the Company has not recorded an allowance for credit losses on its receivables. Acquisition Fees and Expenses The total of all acquisition fees and expenses for an investment, including acquisition fees to the Advisor, cannot exceed, in the aggregate, 6.0% of the contract purchase price of such investment unless such excess is approved by a majority of the Company’s directors, including a majority of its independent directors. The Company records as an expense for certain acquisition costs and fees associated with transactions deemed to be business combinations in which it consolidates the asset and capitalizes these costs for transactions deemed to be acquisitions of an asset, including an equity investment. Effective January 1, 2018, the Advisor no longer receives an acquisition fee in connection with the Company’s acquisitions of real estate properties or debt investments. On October 21, 2022, the advisory agreement was terminated. Refer to Note 13, “Subsequent Events” for further discussion. Equity-Based Compensation The Company accounts for equity-based compensation awards using the fair value method, which requires an estimate of fair value of the award at the time of grant. All fixed equity-based awards to directors, which have no vesting conditions other than time of service, are amortized to compensation expense over the awards’ vesting period on a straight-line basis. Equity-based compensation is classified within general and administrative expenses in the consolidated statements of operations. Income Taxes The Company elected to be taxed as a REIT and to comply with the related provisions of the Internal Revenue Code beginning in its taxable year ended December 31, 2013. Accordingly, the Company will generally not be subject to U.S. federal income tax to the extent of its distributions to stockholders as long as certain asset, gross income and share ownership tests are met. To maintain its qualification as a REIT, the Company must annually distribute dividends equal to at least 90.0% of its REIT taxable income (with certain adjustments) to its stockholders and meet certain other requirements. The Company believes that all of the criteria to maintain the Company’s REIT qualification have been met for the applicable periods, but there can be no assurance that these criteria will continue to be met in subsequent periods. If the Company were to fail to meet these requirements, it would be subject to U.S. federal income tax and potential interest and penalties, which could have a material adverse impact on its results of operations and amounts available for distributions to its stockholders. The Company’s accounting policy with respect to interest and penalties is to classify these amounts as a component of income tax expense, where applicable. The Company has assessed its tax positions for all open tax years, which include 2018 to 2021, and concluded there were no material uncertainties to be recognized. The Company may also be subject to certain state, local and franchise taxes. Under certain circumstances, federal income and excise taxes may be due on its undistributed taxable income. The Company made a joint election to treat certain subsidiaries as taxable REIT subsidiaries (“TRS”) which may be subject to U.S. federal, state and local income taxes. In general, a TRS of the Company may perform services for managers/operators/residents of the Company, hold assets that the Company cannot hold directly and may engage in any real estate or non-real estate related business. Certain subsidiaries of the Company are subject to taxation by federal and state authorities for the periods presented. Income taxes are accounted for by the asset/liability approach in accordance with U.S. GAAP. Deferred taxes, if any, represent the expected future tax consequences when the reported amounts of assets and liabilities are recovered or paid. Such amounts arise from differences between the financial reporting and tax bases of assets and liabilities and are adjusted for changes in tax laws and tax rates in the period which such changes are enacted. A provision for income tax represents the total of income taxes paid or payable for the current period, plus the change in deferred taxes. Current and deferred taxes are provided on the portion of ear |
Operating Real Estate
Operating Real Estate | 9 Months Ended |
Sep. 30, 2022 | |
Real Estate [Abstract] | |
Operating Real Estate | Operating Real Estate The following table presents operating real estate, net (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 Land $ 121,518 $ 121,518 Land improvements 18,453 17,798 Buildings and improvements 945,526 965,630 Tenant improvements 322 — Construction in progress 12,154 8,141 Furniture, fixtures and equipment 88,910 84,813 Subtotal $ 1,186,883 $ 1,197,900 Less: Accumulated depreciation (254,153) (225,301) Operating real estate, net $ 932,730 $ 972,599 For the three and nine months ended September 30, 2022, depreciation expense was $9.6 million and $28.9 million, respectively. For the three and nine months ended September 30, 2021, depreciation expense was $13.5 million and $43.5 million, respectively. Within the table above, buildings and improvements have been reduced by accumulated impairment losses of $181.2 million and $149.7 million as of September 30, 2022 and December 31, 2021, respectively. Impairment loss, as presented on the consolidated statements of operations, totaled $31.5 million and $5.4 million for the nine months ended September 30, 2022 and 2021, respectively. Refer to Note 2, “Summary of Significant Accounting Policies” for further discussion. |
Investments in Unconsolidated V
Investments in Unconsolidated Ventures | 9 Months Ended |
Sep. 30, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments in Unconsolidated Ventures | Investments in Unconsolidated Ventures All investments in unconsolidated ventures are accounted for under the equity method. The following table presents the Company’s investments in unconsolidated ventures (dollars in thousands): Carrying Value (1) Portfolio Acquisition Date Ownership September 30, 2022 (Unaudited) December 31, 2021 Trilogy Dec-2015 23.2 % $ 130,224 $ 126,366 Diversified US/UK Dec-2014 14.3 % 69,815 80,766 Eclipse May-2014 5.6 % 3,295 4,856 Espresso (2) Jul-2015 36.7 % 1,593 — Subtotal $ 204,927 $ 211,988 Solstice (3) Jul-2017 20.0 % 280 321 Total $ 205,207 $ 212,309 _______________________________________ (1) Includes $1.3 million, $13.4 million and $9.8 million of capitalized acquisition costs for the Company’s investments in the Eclipse, Diversified US/UK, and Trilogy joint ventures, respectively. (2) As a result of impairments and other non-cash reserves recorded by the joint venture, the Company’s carrying value of its investment in Espresso was reduced to zero in the fourth quarter of 2018. The Company recognized its proportionate share of earnings and losses of the Espresso joint venture through the carrying value of its mezzanine loan debt investment, which was originated to a subsidiary of the Espresso joint venture, through the time of its repayment in August 2021. During the nine months ended September 30, 2022, the Espresso joint venture recognized gains on sub-portfolio sales, which increased the Company’s carrying value in its investment as of September 30, 2022. (3) Represents investment in Solstice Senior Living, LLC (“Solstice”), the manager of the Winterfell portfolio. Solstice is a joint venture between affiliates of Integral Senior Living, LLC (“ISL”), a management company of ILF, ALF and MCF founded in 2000, which owns 80.0%, and the Company, which owns 20.0%. The following table presents the results of the Company’s investment in unconsolidated ventures (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Portfolio Equity in Earnings (Losses) Cash Distribution Equity in Earnings (Losses) Cash Distribution Equity in Earnings (Losses) Cash Distribution Equity in Earnings (Losses) Cash Distribution Trilogy $ 6,052 $ 2,300 $ 763 $ — $ 10,757 $ 6,900 $ (2,839) $ — Diversified US/UK (2,611) 358 (330) 966 (4,060) 2,290 (2,387) 3,256 Eclipse (344) — (194) 2,898 (940) 620 3,739 2,898 Espresso (1) (242) 1,375 7,693 — 33,711 32,363 18,636 — Envoy — — — 78 — — 740 817 Subtotal $ 2,855 $ 4,033 $ 7,932 $ 3,942 $ 39,468 $ 42,173 $ 17,889 $ 6,971 Solstice 17 — 11 — (41) — (70) — Total $ 2,872 $ 4,033 $ 7,943 $ 3,942 $ 39,427 $ 42,173 $ 17,819 $ 6,971 _______________________________________ (1) During the nine months ended September 30, 2022, the Espresso joint venture recognized net gains related to sub-portfolio sales, of which the Company’s proportionate share totaled $32.0 million. The Company was distributed its proportionate share of the net proceeds generated from the sales totaling $27.4 million. Summarized Financial Data The following table presents the Trilogy unconsolidated venture’s balance sheets as of September 30, 2022 and December 31, 2021 and statements of operations for the three and nine months ended September 30, 2022 and 2021 (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Assets Operating real estate, net $ 1,364,535 $ 1,271,376 Total revenues $ 328,072 $ 264,848 $ 895,722 $ 753,056 Other assets 755,164 575,573 Net income (loss) $ 26,081 $ 3,298 $ 46,361 $ (12,199) Total assets $ 2,119,699 $ 1,846,949 Liabilities and equity Total liabilities $ 1,583,870 $ 1,327,531 Equity 535,829 519,418 Total liabilities and equity $ 2,119,699 $ 1,846,949 |
Borrowings
Borrowings | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings The following table presents the Company’s mortgage and other notes payable (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 Recourse vs. Non-Recourse Initial Contractual Interest Rate (1) Principal Amount (2) Carrying Value (2) Principal (2) Carrying (2) Mortgage notes payable, net Watermark Aqua Portfolio Frisco, TX (3) Non-recourse Feb 2026 3.0% $ 26,000 $ 25,527 $ 26,000 $ 25,431 Milford, OH Non-recourse Sep 2026 LIBOR + 2.68% 18,394 18,169 18,661 18,388 Rochester Portfolio Rochester, NY Non-recourse Feb 2025 4.25% 18,385 18,338 18,911 18,853 Rochester, NY (4) Non-recourse Aug 2027 LIBOR + 2.34% 101,081 100,443 101,224 100,495 Rochester, NY Non-recourse Aug 2023 LIBOR + 2.90% 11,383 11,354 11,732 11,716 Arbors Portfolio (5) Various locations Non-recourse Feb 2025 3.99% 83,919 83,498 85,369 84,799 Winterfell Portfolio (6) Various locations Non-recourse Jun 2025 4.17% 599,574 590,652 608,810 597,460 Avamere Portfolio (7) Various locations Non-recourse Feb 2027 4.66% 68,314 67,983 69,144 68,755 Subtotal mortgage notes payable, net $ 927,050 $ 915,964 $ 939,851 $ 925,897 Other notes payable Oak Cottage Santa Barbara, CA (8) Non-recourse Repaid 6.00% $ — $ — $ 3,914 $ 3,914 Subtotal other notes payable, net $ — $ — $ 3,914 $ 3,914 Total mortgage and other notes payable, net $ 927,050 $ 915,964 $ 943,765 $ 929,811 _______________________________________ (1) Floating-rate borrowings total $130.9 million of principal outstanding and reference one-month LIBOR. (2) The difference between principal amount and carrying value of mortgage notes payable is attributable to deferred financing costs, net for all borrowings, other than the Winterfell portfolio which is attributable to below market debt intangibles. (3) The mortgage note carries a fixed interest rate of 3.0% through February 2024, followed by the greater of the fixed rate or one-month LIBOR plus 2.80% through the initial maturity date of February 2026. (4) Composed of seven individual mortgage notes payable secured by seven healthcare real estate properties, cross-collateralized and subject to cross-default. (5) Composed of four individual mortgage notes payable secured by four healthcare real estate properties, cross-collateralized and subject to cross-default. (6) Composed of 32 individual mortgage notes payable secured by 32 healthcare real estate properties, cross-collateralized and subject to cross-default. (7) Composed of five individual mortgage notes payable secured by five healthcare real estate properties, cross-collateralized and subject to cross-default. (8) In June 2022, the Company repaid the outstanding financing on the Oak Cottage portfolio at discounted payoff of $3.7 million. The following table presents future scheduled principal payments on mortgage and other notes payable based on initial maturity (dollars in thousands): October 1 through December 31, 2022 $ 4,948 Years Ending December 31: 2023 31,032 2024 20,406 2025 670,302 2026 46,964 Thereafter 153,398 Total $ 927,050 As of September 30, 2022, the operator for the Arbors portfolio failed to remit contractual rent and comply with other contractual terms of its lease agreements, which resulted in defaults under the operator’s leases, which in turn, resulted in a non-monetary default under the mortgage notes collateralized by the properties. During the nine months ended September 30, 2022, the Company remitted contractual debt service and is in compliance with the other contractual terms under the mortgage notes collateralized by the properties. The financial covenant requirements under a mortgage note secured by a property in the Rochester portfolio have been waived by the lender through December 31, 2022. During the nine months ended September 30, 2022, the Company remitted contractual debt service and is in compliance with the other contractual terms under the mortgage note. As of September 30, 2022, the mortgage note payable had an outstanding principal balance of $18.4 million, which matures in February 2025. The mortgage note payable is not cross collateralized by the other properties in the Rochester portfolio. Line of Credit - Related Party In October 2017, the Company obtained a revolving line of credit from an affiliate of the Sponsor (the “Sponsor Line”). As of September 30, 2022, the Sponsor Line had a borrowing capacity of $35.0 million at an interest rate of 3.5% plus LIBOR and had a maturity date of February 2024. As of September 30, 2022 and December 31, 2021, the Company had no outstanding borrowings under the Sponsor Line. The Sponsor Line was terminated on October 21, 2022 in connection with the termination of the advisory agreement. No amounts were outstanding under the Sponsor Line at the time of termination. Refer to Note 13, “Subsequent Events” for further discussion. |
Related Party Arrangements
Related Party Arrangements | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Arrangements | Related Party Arrangements Advisor Prior to the Internalization, the Advisor was responsible for managing the Company’s affairs on a day-to-day basis and for identifying, acquiring, originating and asset managing investments on behalf of the Company. For such services, to the extent permitted by law and regulations, the Advisor received fees and reimbursements from the Company. Pursuant to the advisory agreement, the Advisor could defer or waive fees in its discretion. In connection with the Internalization, the advisory agreement was terminated on October 21, 2022. Refer to Note 13, “Subsequent Events” for further discussion. Fees to Advisor Asset Management Fee Prior to the termination of the advisory agreement, the Advisor received a monthly asset management fee equal to one-twelfth of 1.5% of the Company’s most recently published aggregate estimated net asset value, as may be subsequently adjusted for any special distribution declared by the board of directors in connection with a sale, transfer or other disposition of a substantial portion of the Company’s assets. From January 1, 2022 through the October 21, 2022 termination of the advisory agreement, the fee was reduced if the Company’s corporate cash balance exceeded $75.0 million, subject to the terms and conditions set forth in the advisory agreement. Effective July 1, 2021, the asset management fee was paid entirely in shares of the Company’s common stock at a price per share equal to the most recently published net asset value per share. Acquisition Fee Effective January 1, 2018, the Advisor no longer received an acquisition fee in connection with the Company’s acquisitions of real estate properties or debt investments. Disposition Fee Effective June 30, 2020, the Advisor no longer had the potential to receive a disposition fee in connection with the sale of real estate properties or debt investments. Reimbursements to Advisor Operating Costs Prior to the termination of the advisory agreement, the Advisor was entitled to receive reimbursement for direct and indirect operating costs incurred by the Advisor in connection with administrative services provided to the Company. The Advisor allocated, in good faith, indirect costs to the Company related to the Advisor’s and its affiliates’ employees, occupancy and other general and administrative costs and expenses in accordance with the terms of, and subject to the limitations contained in, the advisory agreement with the Advisor. The indirect costs included the Company’s allocable share of the Advisor’s compensation and benefit costs associated with dedicated or partially dedicated personnel who spent all or a portion of their time managing the Company’s affairs, based upon the percentage of time devoted by such personnel to the Company’s affairs. The indirect costs also included rental and occupancy, technology, office supplies and other general and administrative costs and expenses. However, there was no reimbursement for personnel costs related to executive officers (although reimbursement for certain executive officers of the Advisor was permissible) and other personnel involved in activities for which the Advisor received an acquisition fee or a disposition fee. The Advisor allocated these costs to the Company relative to its and its affiliates’ other managed companies in good faith and reviewed the allocation with the Company’s board of directors, including its independent directors. The Advisor updated the board of directors on a quarterly basis of any material changes to the expense allocation and provided a detailed review to the board of directors, at least annually, and as otherwise requested by the board of directors. The Company reimbursed the Advisor quarterly for operating costs (including the asset management fee) based on a calculation for the four preceding fiscal quarters not to exceed the greater of: (i) 2.0% of its average invested assets; or (ii) 25.0% of its net income determined without reduction for any additions to reserves for depreciation, loan losses or other similar non-cash reserves and excluding any gain from the sale of assets for that period. Notwithstanding the above, the Company could reimburse the Advisor for expenses in excess of this limitation if a majority of the Company’s independent directors determines that such excess expenses are justified based on unusual and non-recurring factors. The Company had calculated the expense reimbursement quarterly based upon the trailing twelve-month period. As of September 30, 2022, the Advisor did not have any unreimbursed operating costs which remained eligible to be allocated to the Company. As of September 30, 2022, the outstanding operating costs reimbursable to the Advisor totaled $2.5 million and were reimbursed by the Company during the fourth quarter of 2022. The Advisor continued to incur direct and indirect operating costs on behalf of the Company through the termination of the advisory agreement on October 21, 2022. In addition, the Company will pay the Advisor’s costs for certain services for a transition period. Refer to Note 13, “Subsequent Events” for further discussion. Summary of Fees and Reimbursements The following table presents the fees and reimbursements incurred and paid to the Advisor (dollars in thousands): Type of Fee or Reimbursement Due to Related Party as of December 31, 2021 Nine months Ended September 30, 2022 Due to Related Party as of September 30, 2022 (Unaudited) Financial Statement Location Incurred Paid Fees to Advisor Entities Asset management Asset management fees-related party $ 937 $ 7,532 $ (7,657) $ 812 Reimbursements to Advisor Entities Operating costs General and administrative expenses 6,401 8,789 (12,655) 2,535 Total $ 7,338 $ 16,321 $ (20,312) $ 3,347 Pursuant to the advisory agreement, for the nine months ended September 30, 2022, the Company issued 2.0 million shares totaling $7.7 million, based on the estimated value per share on the date of each issuance, to an affiliate of the Advisor as part of its asset management fee. The Company will issue shares to satisfy outstanding asset management fees incurred and payable through the termination of the advisory agreement on October 21, 2022. As of September 30, 2022, the Advisor, the Sponsor and their affiliates owned a total of 9.4 million shares, or $36.6 million of the Company’s common stock based on the Company’s most recent estimated value per share. As of September 30, 2022, the Advisor, the Sponsor and their affiliates owned 4.8% of the total outstanding shares of the Company’s common stock. Incentive Fee The Special Unit Holder, an affiliate of the Advisor, is entitled to receive distributions equal to 15.0% of net cash flows of the Company, whether from continuing operations, repayment of loans, disposition of assets or otherwise, but only after stockholders have received, in the aggregate, cumulative distributions equal to their invested capital plus a 6.75% cumulative, non-compounded annual pre-tax return on such invested capital. From inception through September 30, 2022, the Special Unit Holder has not received any incentive fees from the Company. Investments in Joint Ventures Solstice, the manager of the Winterfell portfolio, is a joint venture between affiliates of ISL, which owns 80.0%, and the Company, which owns 20.0%. For the nine months ended September 30, 2022, the Company recognized property management fee expense of $4.1 million paid to Solstice related to the Winterfell portfolio. The below table indicates the Company’s investments for which the Sponsor is also an equity partner in the joint venture. Each investment was approved by the Company’s board of directors, including all of its independent directors. Refer to Note 4, “Investments in Unconsolidated Ventures” for further discussion of these investments: Portfolio Partner(s) Acquisition Date Ownership Eclipse NRF and Partner/ May 2014 5.6% Diversified US/UK NRF and Partner December 2014 14.3% Line of Credit - Related Party The Company had a Sponsor Line, which provided up to $35.0 million at an interest rate of 3.5% plus LIBOR. The Sponsor Line was terminated on October 21, 2022 in connection with the termination of the advisory agreement. Refer to Note 13, “Subsequent Events” for further discussion. |
Equity-Based Compensation
Equity-Based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Equity-Based Compensation | Equity-Based Compensation The Company adopted a long-term incentive plan, as amended (the “Plan”), which it may use to attract and retain qualified officers, directors, employees and consultants, as well as an independent directors compensation plan, which is a component of the Plan. Under the Plan, 2.0 million shares of restricted common stock were eligible to be issued for any equity-based awards granted under the Plan. Pursuant to the Plan, as of September 30, 2022, the Company’s independent directors were granted a total of 159,932 shares of restricted common stock and 116,712 restricted stock units totaling $1.3 million and $0.5 million, respectively, based on the share price on the date of each grant. The restricted common stock and restricted stock units granted generally vest quarterly over two years in equal installments and will become fully vested on the earlier occurrence of: (i) the termination of the independent director’s service as a director due to his or her death or disability; or (ii) a change in control of the Company. The restricted stock units are convertible, on a one-for-one basis, into shares of the Company’s common stock upon the earlier occurrence of: (i) the termination of the independent director’s service as a director; or (ii) a change in control of the Company. The Company recognized equity-based compensation expense of $56,875 and $55,625 for the three months ended September 30, 2022 and 2021, respectively, and $150,042 and $174,458 for the nine months ended September 30, 2022 and 2021, respectively. Equity-based compensation expense is recorded in general and administrative expenses in the consolidated statements of operations. Unrecognized expense related to unvested restricted common stock and restricted stock units totaled $268,125 and $223,167 as of September 30, 2022 and December 31, 2021, respectively. The Company had 4,800 shares of restricted common stock that were unvested as of December 31, 2021 and have fully vested as of September 30, 2022. Unvested restricted stock units totaled 68,703 and 50,130 as of September 30, 2022 and December 31, 2021, respectively. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Common Stock The Company stopped accepting subscriptions for its Offering on December 17, 2015 and all of the shares initially registered for its Offering were issued on or before January 19, 2016. The Company issued 173.4 million shares of common stock generating gross proceeds of $1.7 billion, excluding proceeds from the DRP. Distribution Reinvestment Plan The Company adopted the DRP through which common stockholders may elect to reinvest an amount equal to the distributions declared on their shares in additional shares of the Company’s common stock in lieu of receiving cash distributions. The purchase price under the Company’s initial DRP was $9.50. In connection with its determination of the offering price for shares of the Company’s common stock in the follow-on offering, the board of directors determined that distributions may be reinvested in shares of the Company’s common stock at a price of $9.69 per share, which was approximately 95% of the offering price of $10.20 per share established for purposes of the follow-on offering. In April 2016, the board of directors determined that distributions may be reinvested in shares of the Company’s common stock at a price equal to the most recent estimated value per share of common stock. The following table presents the estimated value per share of common stock based on when the value became effective: Effective Date Estimated Value per Share Valuation Date April 2016 $ 8.63 12/31/2015 December 2016 9.10 6/30/2016 December 2017 8.50 6/30/2017 December 2018 7.10 6/30/2018 December 2019 6.25 6/30/2019 December 2020 3.89 6/30/2020 November 2021 3.91 6/30/2021 Refer to Part II, Item 5. “Other Items” for additional details on the Company’s most recent published estimated value per share of common stock. No selling commissions or dealer manager fees were paid on shares issued pursuant to the DRP. The board of directors of the Company may amend, suspend or terminate the DRP for any reason upon ten-days’ notice to participants, except that the Company may not amend the DRP to eliminate a participant’s ability to withdraw from the DRP. In April 2022, the Company’s board of directors elected to suspend the DRP, effective April 30, 2022. As a result, all future distributions, if any, will be paid in cash. Since inception, the Company issued 25.7 million shares of common stock, generating gross offering proceeds of $232.6 million pursuant to the DRP. For the nine months ended September 30, 2022, the Company has not issued shares of common stock pursuant to the DRP. Distributions Effective February 1, 2019, the Company’s board of directors determined to suspend recurring distributions in order to preserve capital and liquidity. On April 20, 2022, the Company’s board of directors declared a special distribution of $0.50 per share (the “Special Distribution”) for each stockholder of record on May 2, 2022 totaling $97.1 million. On or around May 5, 2022, $97.0 million of the Special Distribution was paid in cash and an outstanding distribution payable as of September 30, 2022 is attributable to restricted stock units and will be paid upon the conversion of the units to shares of the Company’s common stock. The outstanding distribution payable of $33,419 is recorded as other liabilities on the accompanying consolidated balance sheets as of September 30, 2022. In order to continue to qualify as a REIT, the Company must distribute annually dividends equal to at least 90% of its REIT taxable income (with certain adjustments). The Company did not have REIT taxable income for its taxable year ending December 31, 2021, therefore, it was not required to make distributions to its stockholders in 2021 to qualify as a REIT. The Company’s most recently filed tax return is for the year ended December 31, 2021 and includes a net operating loss carry-forward of $226.5 million. Share Repurchase Program The Company adopted the share repurchase program (the “Share Repurchase Program”) that enabled stockholders to sell their shares to the Company in limited circumstances. The Company is not obligated to repurchase shares under the Share Repurchase Program. The Company may amend, suspend or terminate the Share Repurchase Program at its discretion at any time, subject to certain notice requirements. In April 2020, the Company’s board of directors determined to suspend all repurchases under the Share Repurchase Program effective April 30, 2020 in order to preserve capital and liquidity and has not repurchased any shares during the nine months ended September 30, 2022. |
Non-controlling Interests
Non-controlling Interests | 9 Months Ended |
Sep. 30, 2022 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interests | Non-controlling Interests Operating Partnership Non-controlling interests include the aggregate limited partnership interests in the Operating Partnership held by limited partners, other than the Company. Income (loss) attributable to the non-controlling interests is based on the limited partners’ ownership percentage of the Operating Partnership. Income (loss) allocated to the Operating Partnership non-controlling interests for the three and nine months ended September 30, 2022 and 2021 was de minimis. Other Other non-controlling interests represent third-party equity interests in ventures that are consolidated with the Company’s financial statements. Net loss attributable to the other non-controlling interests was $0.1 million and $0.3 million for the three and nine months ended September 30, 2022, respectively. Net loss attributable to the other non-controlling interests was $0.1 million for the three months ended September 30, 2021 and net income attributable to the other non-controlling interests was $0.1 million for the nine months ended September 30, 2021. |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value Fair Value Measurement The fair value of financial instruments is categorized based on the priority of the inputs to the valuation technique and categorized into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Financial assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows: Level 1. Quoted prices for identical assets or liabilities in an active market. Level 2. Financial assets and liabilities whose values are based on the following: a) Quoted prices for similar assets or liabilities in active markets. b) Quoted prices for identical or similar assets or liabilities in non-active markets. c) Pricing models whose inputs are observable for substantially the full term of the asset or liability. d) Pricing models whose inputs are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability. Level 3. Prices or valuation techniques based on inputs that are both unobservable and significant to the overall fair value measurement. Fair Value of Financial Instruments U.S. GAAP requires disclosure of fair value about all financial instruments. The following disclosure of estimated fair value of financial instruments was determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value. The following table presents the principal amount, carrying value and fair value of certain financial assets and liabilities (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 Principal Amount Carrying Value Fair Value Principal Amount Carrying Value Fair Value Financial liabilities: (1) Mortgage and other notes payable, net $ 927,050 $ 915,964 $ 883,040 $ 943,765 $ 929,811 $ 889,485 _______________________________________ (1) The fair value of other financial instruments not included in this table is estimated to approximate their carrying value. Disclosure about fair value of financial instruments is based on pertinent information available to management as of the reporting date. Although management is not aware of any factors that would significantly affect fair value, such amounts have not been comprehensively revalued for purposes of these consolidated financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein. Mortgage and Other Notes Payable The Company primarily uses rates currently available with similar terms and remaining maturities to estimate fair value. These measurements are determined using comparable U.S. Treasury and LIBOR rates as of the end of the reporting period. These fair value measurements are based on observable inputs, and as such, are classified as Level 2 of the fair value hierarchy. Derivative Instruments For certain mortgage notes payable, the Company has interest rate caps with fair values that are de minimis as of September 30, 2022 . Nonrecurring Fair Values The Company measures fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Adjustments to fair value generally result from the application of lower of amortized cost or fair value accounting for assets held for sale or otherwise, write-down of asset values due to impairment. The following table summarizes the fair value, measured at the time of impairment, of Level 3 assets which have been measured at fair value on a nonrecurring basis during the periods presented and the associated impairment losses (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 Fair Value Impairment Losses Fair Value Impairment Losses Operating real estate, net (1) $ 80,931 $ 30,900 $ 11,793 $ 5,386 _______________________________________ (1) During the nine months ended September 30, 2022, the Company recorded impairment losses totaling $0.6 million for property damage sustained by facilities in its Winterfell portfolio. The fair value and impairment losses of these facilities are excluded from the table as of September 30, 2022. Operating Real Estate, Net Operating real estate that is impaired is carried at fair value at the time of impairment. Impairment was driven by various factors that impacted undiscounted future net cash flows, including declines in operating performance, market growth assumptions, and expected margins to be generated by the properties. Fair value of impaired operating real estate was estimated based upon various approaches including discounted cash flow analysis using terminal capitalization rates ranging from 6.0% to 8.0% and discount rates ranging from 8.5% to 10.5%, third party appraisals and offer prices. Assets Held For Sale Assets held for sale are carried at the lower of amortized cost or fair value. Assets held for sale that were written down to fair value were generally valued using either broker opinions of value, or a combination of market information, including third-party appraisals and indicative sale prices, adjusted as deemed appropriate by management to account for the inherent risk associated with specific properties. In all cases, fair value of real estate held for sale is reduced for estimated selling costs. As of September 30, 2022 and December 31, 2021, the Company did not have any assets classified as held for sale. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company conducts its business through the following five segments, which are based on how management reviews and manages its business. • Direct Investments - Operating - Healthcare properties operated pursuant to management agreements with healthcare managers. • Direct Investments - Net Lease - Healthcare properties operated under net leases with an operator. • Unconsolidated Investments - Healthcare joint ventures, including properties operated under net leases with operators or pursuant to management agreements with healthcare managers, in which the Company owns a minority interest. • Debt Investments - Mortgage loans or mezzanine loans to owners of healthcare real estate. The Company’s remaining mezzanine loan was repaid in August 2021. • Corporate - The corporate segment includes corporate level asset management fees - related party and general and administrative expenses. The Company primarily generates rental and resident fee income from its direct investments. Additionally, the Company reports its proportionate interest of revenues and expenses from unconsolidated investments through equity in earnings (losses) of unconsolidated ventures. During the three and nine months ended September 30, 2021, the Company generated interest income on its real estate debt investment. The following tables present segment reporting (dollars in thousands): Direct Investments Three Months Ended September 30, 2022 Net Lease Operating Unconsolidated Investments Debt Investment Corporate (1) Total Property and other revenues $ 724 $ 46,715 $ — $ — $ 300 $ 47,739 Interest income on debt investments — — — — — — Property operating expenses — (35,134) — — — (35,134) Interest expense (907) (10,107) — — — (11,014) Transaction costs — — — — (857) (857) Asset management fees - related party — — — — (2,428) (2,428) General and administrative expenses — (8) — — (2,851) (2,859) Depreciation and amortization (870) (8,772) — — — (9,642) Impairment loss (18,500) — — — — (18,500) Other income, net — — — — — — Realized gain (loss) on investments and other — 325 — — — 325 Equity in earnings (losses) of unconsolidated ventures — — 2,872 — — 2,872 Income tax expense — (15) — — — (15) Net income (loss) $ (19,553) $ (6,996) $ 2,872 $ — $ (5,836) $ (29,513) _______________________________________ (1) Includes unallocated asset management fee-related party and general and administrative expenses. Direct Investments Three Months Ended September 30, 2021 Net Lease Operating Unconsolidated Investments Debt Investment Corporate (1) Total Property and other revenues $ 6,012 $ 58,364 $ — $ — $ 38 $ 64,414 Interest income on debt investments — — — 1,067 — 1,067 Real estate properties - operating expenses — (45,784) — — — (45,784) Interest expense (2,907) (12,768) — — (105) (15,780) Transaction costs — — — — — — Asset management fees - related party — — — — (2,769) (2,769) General and administrative expenses (64) (111) — — (2,257) (2,432) Depreciation and amortization (3,027) (10,801) — — — (13,828) Impairment loss — (4,600) — — — (4,600) Other income, net — — — — — — Realized gain (loss) on investments and other — — 75 — — 75 Equity in earnings (losses) of unconsolidated ventures — — 7,943 — — 7,943 Income tax benefit (expense) — (59) — — — (59) Net income (loss) $ 14 $ (15,759) $ 8,018 $ 1,067 $ (5,093) $ (11,753) _______________________________________ (1) Includes unallocated asset management fee-related party and general and administrative expenses. Direct Investments Nine Months Ended September 30, 2022 Net Lease Operating Unconsolidated Investments Debt Investment Corporate (1) Total Property and other revenues $ 1,220 $ 134,768 $ — $ — $ 457 $ 136,445 Interest income on debt investments — — — — — — Property operating expenses (35) (101,223) — — — (101,258) Interest expense (2,708) (29,169) — — — (31,877) Transaction costs — — — — (857) (857) Asset management fees - related party — — — — (7,532) (7,532) General and administrative expenses — (24) — — (10,276) (10,300) Depreciation and amortization (2,601) (26,504) — — — (29,105) Impairment loss (18,500) (13,002) — — — (31,502) Other income, net — 77 — — — 77 Realized gain (loss) on investments and other (206) 620 246 — — 660 Equity in earnings (losses) of unconsolidated ventures — — 39,427 — — 39,427 Income tax expense — (45) — — — (45) Net income (loss) $ (22,830) $ (34,502) $ 39,673 $ — $ (18,208) $ (35,867) _______________________________________ (1) Includes unallocated asset management fee-related party and general and administrative expenses. Direct Investments Nine Months Ended September 30, 2021 Net Lease Operating Unconsolidated Investments Debt Investment Corporate (1) Total Property and other revenues $ 10,942 $ 174,633 $ — $ — $ 80 $ 185,655 Interest income on debt investments — — — 4,667 — 4,667 Property operating expenses (25) (136,478) — — — (136,503) Interest expense (8,670) (38,355) — — (742) (47,767) Transaction costs — (54) — — — (54) Asset management fees - related party — — — — (8,307) (8,307) General and administrative expenses (171) (225) — — (8,148) (8,544) Depreciation and amortization (10,887) (33,885) — — — (44,772) Impairment loss (786) (4,600) — — — (5,386) Other income, net — 6,892 — — — 6,892 Realized gain (loss) on investments and other (159) 7,563 75 — — 7,479 Equity in earnings (losses) of unconsolidated ventures — — 17,819 — — 17,819 Income tax benefit (expense) — (85) — — — (85) Net income (loss) $ (9,756) $ (24,594) $ 17,894 $ 4,667 $ (17,117) $ (28,906) _______________________________________ (1) Includes unallocated asset management fee-related party and general and administrative expenses. The following table presents total assets by segment (dollars in thousands): Direct Investments Total Assets: Net Lease Operating Unconsolidated Investments Debt Investment Corporate (1) Total September 30, 2022 (Unaudited) $ 84,668 $ 891,283 $ 205,207 $ — $ 78,081 $ 1,259,239 December 31, 2021 104,809 908,517 212,309 — 187,238 1,412,873 ______________________________________ (1) Represents primarily corporate cash and cash equivalents balances. The following table presents the operators and managers of the Company’s properties, excluding properties owned through unconsolidated joint ventures (dollars in thousands): As of September 30, 2022 Nine Months Ended September 30, 2022 Operator / Manager Properties Under Management Units Under Management (1) Property and Other Revenues (2) % of Total Property and Other Revenues Solstice Senior Living (3) 32 4,000 $ 82,607 60.5 % Watermark Retirement Communities 14 1,753 33,770 24.8 % Avamere Health Services 5 453 14,764 10.8 % Integral Senior Living 1 44 3,628 2.7 % Arcadia Management (4) 4 572 1,220 0.9 % Other (5) — — 456 0.3 % Total 56 6,822 $ 136,445 100.0 % ______________________________________ (1) Represents rooms for ALFs and ILFs and beds for MCFs and SNFs, based on predominant type. (2) Includes rental income received from the Company’s net lease properties as well as rental income, ancillary service fees and other related revenue earned from ILF residents and resident fee income derived from the Company’s ALFs and MCFs, which includes resident room and care charges, ancillary fees and other resident service charges. (3) Solstice is a joint venture of which affiliates of ISL own 80%. (4) During the nine months ended September 30, 2022, the Company recorded rental income to the extent payments were received. (5) Consists primarily of interest income earned on corporate-level cash accounts. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies As of September 30, 2022, the Company believes there are no material contingencies that would affect its results of operations, cash flows or financial position. Litigation and Claims The Company may be involved in various litigation matters arising in the ordinary course of its business. Although the Company is unable to predict with certainty the eventual outcome of any litigation, any current legal proceedings are not expected to have a material adverse effect on its financial position or results of operations. The Company’s tenants, operators and managers may be involved in various litigation matters arising in the ordinary course of their business. The unfavorable resolution of any such actions, investigations or claims could, individually or in the aggregate, materially adversely affect such tenants’, operators’ or managers’ liquidity, financial condition or results of operations and their ability to satisfy their respective obligations to the Company, which, in turn, could have a material adverse effect on the Company. The effects of COVID-19 may also lead to heightened risk of litigation, with an ensuing increase in litigation-related costs. Environmental Matters The Company follows a policy of monitoring its properties for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist at its properties, the Company is not currently aware of any environmental liability with respect to its properties that would have a material effect on its consolidated financial position, results of operations or cash flows. Further, the Company is not aware of any material environmental liability or any unasserted claim or assessment with respect to an environmental liability that it believes would require additional disclosure or the recording of a loss contingency. General Uninsured Losses The Company obtains various types of insurance to mitigate the impact of professional liability, property, business interruption, liability, flood, windstorm, earthquake, environmental and terrorism related losses. The Company attempts to obtain appropriate policy terms, conditions, limits and deductibles considering the relative risk of loss, the cost of such coverage and current industry practice. There are, however, certain types of extraordinary losses, such as those due to acts of war or other events, including those that are related to the COVID-19 pandemic, that may be either uninsurable or not economically insurable. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The following is a discussion of material events which have occurred subsequent to September 30, 2022 through the issuance of the consolidated financial statements. Internalization On October 21, 2022, the Company completed the Internalization. In connection with the Internalization, on October 21, 2022, the Company entered into a Termination Agreement with the Advisor, the Sponsor and the Operating Partnership, which provides for the immediate termination of the advisory agreement, as well as the final settlement of any amounts owing under the advisory agreement and the transition of certain employees from the Advisor to the Company (including our assumption of certain related employment liabilities). In addition, the Advisor agreed to vote its shares of the Company’s common stock in favor of the director nominees recommended by the board of directors and say-on-pay at the first annual meeting following the Internalization, provided the Advisor retains a minimum share ownership. No termination fee will be paid by the Company to the Advisor in connection with the Internalization. Sponsor Line of Credit In connection with the termination of the advisory agreement, the Company’s Sponsor Line was terminated on October 21, 2022. No amounts were outstanding under the Sponsor Line at the time of termination. Transition Services Agreement In connection with the Internalization, on October 21, 2022, the Company, the Operating Partnership and the Advisor entered into a Transition Services Agreement (the “TSA”) to facilitate an orderly transition of the Company’s management of its operations. The TSA provides for, among other things, the Advisor to provide certain services for a transition period of up to six months following the Internalization, with the Operating Partnership having the option to extend the initial term once for up to three months. Treasury and accounts payable services will be provided for 12 months and will continue until either party provides at least six months’ notice of termination. The services primarily include technology, insurance, legal, treasury and accounts payable services. The Company will reimburse the Advisor for costs to provide the services, including the allocated cost of employee wages and compensation and incurred out-of-pocket expenses. Distribution from Unconsolidated Venture In October 2022, the Espresso joint venture completed the sale of 17 properties. As result of the sale, the Company received a distribution totaling $22.3 million in November 2022. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Accounting The accompanying unaudited consolidated financial statements and related notes of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally included in the consolidated financial statements prepared under U.S. GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the U.S. Securities and Exchange Commission on March 18, 2022. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company, the Operating Partnership and their consolidated subsidiaries. The Company consolidates entities in which it has a controlling financial interest by first considering if an entity meets the definition of a variable interest entity (“VIE”) for which the Company is deemed to be the primary beneficiary or if the Company has the power to control an entity through majority voting interest or other arrangements. All significant intercompany balances are eliminated in consolidation. |
Variable Interest Entities | Variable Interest Entities A VIE is an entity that lacks one or more of the characteristics of a voting interest entity. A VIE is defined as an entity in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The determination of whether an entity is a VIE includes both a qualitative and quantitative analysis. The Company bases its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and relevant financial agreements and the quantitative analysis on the forecasted cash flow of the entity. The Company reassesses its initial evaluation of an entity as a VIE upon the occurrence of certain reconsideration events. A VIE must be consolidated only by its primary beneficiary, which is defined as the party who, along with its affiliates and agents, has both the: (i) power to direct the activities that most significantly impact the VIE’s economic performance; and (ii) obligation to absorb the losses of the VIE or the right to receive the benefits from the VIE, which could be significant to the VIE. The Company determines whether it is the primary beneficiary of a VIE by considering qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of its investment; the obligation or likelihood for the Company or other interests to provide financial support; consideration of the VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders and the similarity with and significance to the business activities of the Company and the other interests. The Company reassesses its determination of whether it is the primary beneficiary of a VIE each reporting period. Judgments related to these determinations include estimates about the current and future fair value and performance of investments held by these VIEs and general market conditions. The Company evaluates its investments and financings, including investments in unconsolidated ventures and securitization financing transactions to determine whether each investment or financing is a VIE. The Company analyzes new investments and financings, as well as reconsideration events for existing investments and financings, which vary depending on type of investment or financing. As of September 30, 2022, the Company has identified certain consolidated and unconsolidated VIEs. Assets of each of the VIEs, other than the Operating Partnership, may only be used to settle obligations of the respective VIE. Creditors of each of the VIEs have no recourse to the general credit of the Company. Consolidated VIEs The most significant consolidated VIEs are the Operating Partnership and certain properties that have non-controlling interests. These entities are VIEs because the non-controlling interests do not have substantive kick-out or participating rights. The Operating Partnership consolidates certain properties that have non-controlling interests. Included in operating real estate, net on the Company’s consolidated balance sheet as of September 30, 2022 is $214.2 million related to such consolidated VIEs. Included in mortgage and other notes payable, net on the Company’s consolidated balance sheet as of September 30, 2022 is $173.8 million, collateralized by the real estate assets of the related consolidated VIEs. Unconsolidated VIEs |
Voting Interest Entities | Voting Interest Entities A voting interest entity is an entity in which the total equity investment at risk is sufficient to enable it to finance its activities independently and the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the Company has a majority voting interest in a voting interest entity, the entity will generally be consolidated. The Company does not consolidate a voting interest entity if there are substantive participating rights by other parties and/or kick-out rights by a single party or through a simple majority vote. The Company performs on-going reassessments of whether entities previously evaluated under the voting interest framework have become VIEs, based on certain events, and therefore subject to the VIE consolidation framework. |
Investments in Unconsolidated Ventures | Investments in Unconsolidated Ventures A non-controlling, unconsolidated ownership interest in an entity may be accounted for using the equity method or the Company may elect the fair value option. The Company will account for an investment under the equity method of accounting if it has the ability to exercise significant influence over the operating and financial policies of an entity, but does not have a controlling financial interest. Under the equity method, the investment is adjusted each period for capital contributions and distributions and its share of the entity’s net income (loss). Capital contributions, distributions and net income (loss) of such entities are recorded in accordance with the terms of the governing documents. An allocation of net income (loss) may differ from the stated ownership percentage interest in such entity as a result of preferred returns and allocation formulas, if any, as described in such governing documents. Equity method investments are recognized using a cost accumulation model, in which the investment is recognized based on the cost to the investor, which includes acquisition fees. The Company records as an expense certain acquisition costs and fees associated with consolidated investments deemed to be business combinations and capitalizes these costs for investments deemed to be acquisitions of an asset, including an equity method investment. |
Non-controlling Interests | Non-controlling Interests A non-controlling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to the Company. A non-controlling interest is required to be presented as a separate component of equity on the consolidated balance sheets and presented separately as net income (loss) and comprehensive income (loss) attributable to controlling and non-controlling interests. An allocation to a non-controlling interest may differ from the stated ownership percentage interest in such entity as a result of a preferred return and allocation formula, if any, as described in such governing documents. |
Estimates | Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that could affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates and assumptions. Any estimates of the effects of COVID-19 pandemic, inflation, rising interest rates, risk of recession and other economic conditions as reflected and/or discussed in these financial statements are based upon the Company's best estimates using information known to the Company as of the date of this Quarterly Report on Form 10-Q. Such estimates may change and the impact of which could be material. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash The Company considers all highly-liquid investments with an original maturity date of three months or less to be cash equivalents. Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250,000 per institution. The Company mitigates credit risk by placing cash and cash equivalents with major financial institutions. To date, the Company has not experienced any losses on cash and cash equivalents. |
Operating Real Estate | Operating Real Estate Operating real estate is carried at historical cost less accumulated depreciation. Major replacements and betterments which improve or extend the life of the asset are capitalized and depreciated over their useful life. Ordinary repairs and maintenance are expensed as incurred. Operating real estate is depreciated using the straight-line method over the estimated useful life of the assets, summarized as follows: Category: Term: Building 30 to 50 years Building improvements Lesser of the useful life or remaining life of the building Land improvements 9 to 15 years Tenant improvements Lesser of the useful life or remaining term of the lease Furniture, fixtures and equipment 5 to 14 years |
Lessee Accounting | Lessee Accounting A leasing arrangement, a right to control the use of an identified asset for a period of time in exchange for consideration, is classified by the lessee either as a finance lease, which represents a financed purchase of the leased asset, or as an operating lease. For leases with terms greater than 12 months, a lease asset and a lease liability are recognized on the balance sheet at commencement date based on the present value of lease payments over the lease term. Lease renewal or termination options are included in the lease asset and lease liability only if it is reasonably certain that the option to extend would be exercised or the option to terminate would not be exercised. As the implicit rate in most leases are not readily determinable, the Company’s incremental borrowing rate for each lease at commencement date is used to determine the present value of lease payments. Consideration is given to the Company’s recent debt financing transactions, as well as publicly available data for instruments with similar characteristics, adjusted for the respective lease term, when estimating incremental borrowing rates. Lease expense is recognized over the lease term based on an effective interest method for finance leases and on a straight-line basis for operating leases. Right of Use (“ROU”) - Finance Assets operating real estate, net |
Deferred Costs | Deferred Costs Deferred costs primarily include deferred financing costs and deferred leasing costs. Deferred financing costs represent commitment fees, legal and other third-party costs associated with obtaining financing. These costs are recorded against the carrying value of such financing and are amortized to interest expense over the term of the financing using the effective interest method. Unamortized deferred financing costs are expensed to realized gain (loss) on investments and other, when the associated borrowing is repaid before maturity. Costs incurred in seeking financing transactions which do not close are expensed in the period in which it is determined that the financing will not occur. Deferred lease costs consist of fees incurred to initiate and renew operating leases, which are amortized on a straight-line basis over the remaining lease term and are recorded to depreciation and amortization in the consolidated statements of operations. |
Identified Intangibles | Identified Intangibles The Company records acquired identified intangibles, such as the value of in-place leases and other intangibles, based on estimated fair value at the acquisition date. The value allocated to the identified intangibles is amortized over the remaining lease term. In-place leases are amortized into depreciation and amortization expense. Impairment analysis for identified intangible assets is performed in connection with the impairment assessment of the related operating real estate. An impairment establishes a new basis for the identified intangible asset and any impairment loss recognized is not subject to subsequent reversal. Refer to “—Impairment on Operating Real Estate and Investments in Unconsolidated Ventures” for additional information. |
Revenue Recognition | Revenue Recognition Operating Real Estate Rental income from operating real estate is derived from leasing of space to healthcare operators, including rent received from the Company’s net lease properties and rent, ancillary service fees and other related revenue earned from ILF residents. Rental income recognition commences when the operator takes legal possession of the leased space and the leased space is substantially ready for its intended use. The leases are for fixed terms of varying length and generally provide for rentals and expense reimbursements to be paid in monthly installments. Rental income from leases, which includes community and move-in fees, is recognized over the term of the respective leases. ILF resident agreements are generally short-term in nature and may allow for termination with 30 days’ notice. The Company also generates revenue from operating healthcare properties. Revenue related to operating healthcare properties includes resident room and care charges, ancillary fees and other resident service charges. Rent is charged and revenue is recognized when such services are provided, generally defined per the resident agreement as of the date upon which a resident occupies a room or uses the services. Resident agreements are generally short-term in nature and may allow for termination with 30 days’ notice. Revenue derived from our ALFs, MCFs and CCRCs is recorded in resident fee income in the consolidated statements of operations. Revenue from operators and residents is recognized at lease commencement only to the extent collection is expected to be probable. This assessment is based on several qualitative and quantitative factors, including and as appropriate, the payment history, ability to satisfy its lease obligations, the value of the underlying collateral or deposit, if any, and current economic conditions. If collection is assessed to not be probable thereafter, lease income recognized is limited to amounts collected, with the reversal of any revenue recognized to date in excess of amounts received. If collection is subsequently reassessed to be probable, revenue is adjusted to reflect the amount that would have been recognized had collection always been assessed as probable. The operator of the Company’s remaining four net lease properties failed to remit contractual monthly rent obligations and the Company deemed it not probable that these obligations will be satisfied in the foreseeable future. For the nine months ended September 30, 2022, the Company recorded rental income to the extent rental payments were received. For the three months ended September 30, 2022 and 2021, total property and other revenues includes variable lease revenue of $2.1 million and $3.5 million, respectively. For the nine months ended September 30, 2022 and 2021, total property and other revenue includes variable lease revenue of $9.2 million and $10.1 million, respectively. Variable lease revenue includes ancillary services provided to operator/residents, as well as non-recurring services and fees at the Company’s operating facilities. The Company did not receive or recognize any grant income from the Provider Relief Fund administered by the U.S. Department of Health and Human Services during the nine months ended September 30, 2022. During the nine months ended September 30, 2021, the Company recognized $7.4 million of grant income. The grant income is classified as other income, net in the consolidated statements of operations. These grants are intended to mitigate the negative financial impact of the COVID-19 pandemic as reimbursements for expenses incurred to prevent, prepare for and respond to COVID-19 and lost revenues attributable to COVID-19. Provided that the Company attests to and complies with certain terms and conditions of the grants, the Company will not be required to repay these grants in the future. Real Estate Debt Investments Interest income is recognized on an accrual basis and any related premium, discount, origination costs and fees are amortized over the life of the investment using the effective interest method. The amortization is reflected as an adjustment to interest income in the consolidated statements of operations. The amortization of a premium or accretion of a discount is discontinued if such investment is reclassified to held for sale. The Company had one debt investment, which was repaid in full in August 2021. |
Impairment on Operating Real Estate and Investments in Unconsolidated Ventures | Impairment on Operating Real Estate and Investments in Unconsolidated Ventures At this time, it is difficult for the Company to assess and estimate the future economic effects of the COVID-19 pandemic, inflation, rising interest rates, risk of recession and other economic conditions with any meaningful precision. The future economic effects will depend on many factors beyond the Company’s control and knowledge. The resulting effect on impairment of the Company's real estate held for investment and held for sale and investments in unconsolidated ventures may materially differ from the Company's current expectations and further impairment charges may be recorded in future periods. Operating Real Estate The Company’s real estate portfolio is reviewed on a quarterly basis, or more frequently as necessary, to assess whether there are any indicators that the value of its operating real estate may be impaired or that its carrying value may not be recoverable. A property’s value is considered impaired if the Company’s estimate of the aggregate expected future undiscounted cash flow generated by the property is less than the carrying value. In conducting this review, the Company considers U.S. macroeconomic factors, real estate and healthcare sector conditions, together with asset specific and other factors. To the extent an impairment has occurred, the loss is measured as the excess of the carrying value of the property over the estimated fair value and recorded in impairment loss in the consolidated statements of operations. Real estate held for sale is stated at the lower of its carrying amount or estimated fair value less disposal cost, with any write-down to disposal cost recorded as an impairment loss. For any increase in fair value less disposal cost subsequent to classification as held for sale, the impairment may be reversed, but only up to the amount of cumulative loss previously recognized. The Company considered the potential impact of the lasting effects of the COVID-19 pandemic, inflation, rising interest rates, risk of recession and other economic conditions on the future net operating income of its healthcare real estate held for investment as an indicator of impairment. Fair values were estimated based upon the income capitalization approach, using net operating income for each property and applying indicative capitalization rates. Investments in Unconsolidated Ventures The Company reviews its investments in unconsolidated ventures for which the Company did not elect the fair value option on a quarterly basis, or more frequently as necessary, to assess whether there are any indicators that the value may be impaired or that its carrying value may not be recoverable. An investment is considered impaired if the projected net recoverable amount over the expected holding period is less than the carrying value. In conducting this review, the Company considers global macroeconomic factors, including real estate sector conditions, together with investment specific and other factors. To the extent an impairment has occurred and is considered to be other than temporary, the loss is measured as the excess of the carrying value of the investment over the estimated fair value and recorded in equity in earnings (losses) of unconsolidated ventures in the consolidated statements of operations. During the nine months ended September 30, 2022, the Company did not impair any of its investments in unconsolidated ventures, however, the underlying joint ventures recorded impairments and reserves on properties in their respective portfolios, which the Company recognized through equity in earnings (losses), of which the Company’s proportionate share was de minimis. During the nine months ended September 30, 2021, the Company did not impair any of its investments in unconsolidated ventures, nor did the underlying joint ventures record any impairments or reserves on properties in their respective portfolios. |
Credit Losses on Receivables | Credit Losses on Receivables The current expected credit loss model, in estimating expected credit losses over the life of a financial instrument at the time of origination or acquisition, considers historical loss experiences, current conditions and the effects of reasonable and supportable expectations of changes in future macroeconomic conditions. The Company assesses the estimate of expected credit losses on a quarterly basis or more frequently as necessary. The Company considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Company measures expected credit losses of receivables on a collective basis when similar risk characteristics exist. If the Company determines that a particular receivable does not share risk characteristics with its other receivables, the Company evaluates the receivable for expected credit losses on an individual basis. When developing an estimate of expected credit losses on receivables, the Company considers available information relevant to assessing the collectability of cash flows. This information may include internal information, external information, or a combination of both relating to past events, current conditions, and reasonable and supportable forecasts. The Company considers relevant qualitative and quantitative factors that relate to the environment in which the Company operates and are specific to the borrower. |
Acquisition Fees and Expenses | Acquisition Fees and ExpensesThe total of all acquisition fees and expenses for an investment, including acquisition fees to the Advisor, cannot exceed, in the aggregate, 6.0% of the contract purchase price of such investment unless such excess is approved by a majority of the Company’s directors, including a majority of its independent directors. The Company records as an expense for certain acquisition costs and fees associated with transactions deemed to be business combinations in which it consolidates the asset and capitalizes these costs for transactions deemed to be acquisitions of an asset, including an equity investment. Effective January 1, 2018, the Advisor no longer receives an acquisition fee in connection with the Company’s acquisitions of real estate properties or debt investments. On October 21, 2022, the advisory agreement was terminated. Refer to Note 13, “Subsequent Events” for further discussion. |
Equity-Based Compensation | Equity-Based Compensation The Company accounts for equity-based compensation awards using the fair value method, which requires an estimate of fair value of the award at the time of grant. All fixed equity-based awards to directors, which have no vesting conditions other than time of service, are amortized to compensation expense over the awards’ vesting period on a straight-line basis. Equity-based compensation is classified within general and administrative expenses in the consolidated statements of operations. |
Income Taxes | Income Taxes The Company elected to be taxed as a REIT and to comply with the related provisions of the Internal Revenue Code beginning in its taxable year ended December 31, 2013. Accordingly, the Company will generally not be subject to U.S. federal income tax to the extent of its distributions to stockholders as long as certain asset, gross income and share ownership tests are met. To maintain its qualification as a REIT, the Company must annually distribute dividends equal to at least 90.0% of its REIT taxable income (with certain adjustments) to its stockholders and meet certain other requirements. The Company believes that all of the criteria to maintain the Company’s REIT qualification have been met for the applicable periods, but there can be no assurance that these criteria will continue to be met in subsequent periods. If the Company were to fail to meet these requirements, it would be subject to U.S. federal income tax and potential interest and penalties, which could have a material adverse impact on its results of operations and amounts available for distributions to its stockholders. The Company’s accounting policy with respect to interest and penalties is to classify these amounts as a component of income tax expense, where applicable. The Company has assessed its tax positions for all open tax years, which include 2018 to 2021, and concluded there were no material uncertainties to be recognized. The Company may also be subject to certain state, local and franchise taxes. Under certain circumstances, federal income and excise taxes may be due on its undistributed taxable income. The Company made a joint election to treat certain subsidiaries as taxable REIT subsidiaries (“TRS”) which may be subject to U.S. federal, state and local income taxes. In general, a TRS of the Company may perform services for managers/operators/residents of the Company, hold assets that the Company cannot hold directly and may engage in any real estate or non-real estate related business. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) |
Foreign Currency | Foreign Currency Assets and liabilities denominated in a foreign currency for which the functional currency is a foreign currency are translated using the currency exchange rate in effect at the end of the period presented and the results of operations for such entities are translated into U.S. dollars using the average currency exchange rate in effect during the period. The resulting foreign currency translation adjustment is recorded as a component of accumulated OCI in the consolidated statements of equity. Assets and liabilities denominated in a foreign currency for which the functional currency is the U.S. dollar are remeasured using the currency exchange rate in effect at the end of the period presented and the results of operations for such entities are remeasured into U.S. dollars using the average currency exchange rate in effect during the period. As of September 30, 2022 and December 31, 2021, the Company had exposure to foreign currency through an investment in an unconsolidated venture, the effects of which are reflected as a component of accumulated OCI in the consolidated statements of equity and in equity in earnings (losses) in the consolidated statements of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Standards Adopted in 2022 Disclosures by Business Entities about Government Assistance— In November 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2021-10: Disclosures by Business Entities about Government Assistance. The guidance requires expanded disclosure for transactions involving the receipt of government assistance. Required disclosures include a description of the nature of transactions with government entities, accounting policies for such transactions and their impact to the Company’s consolidated financial statements. The Company adopted ASU No. 2021-10 on January 1, 2022, with no transitional impact upon adoption. Certain Leases with Variable Lease Payments —In July 2021, the FASB issued ASU No. 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments . The guidance in ASU No. 2021-05 amends the lease classification requirements for the lessors under certain leases containing variable payments to align with practice under ASC 840. Under the guidance, the lessor should classify and account for a lease with variable lease payments that does not depend on a reference index or a rate as an operating lease if both of the following criteria are met: 1) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria in ASC No. 842-10-25-2 through 25-3; and 2) the lessor would have otherwise recognized a day-one loss. The amendments in ASU No. 2021-05 are effective for fiscal years beginning after December 15, 2021. The Company adopted ASU No. 2021-05 on January 1, 2022, with no transitional impact upon adoption. Future Application of Accounting Standards Reference Rate Reform— In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The guidance in ASU No. 2020-04 is optional, the election of which provides temporary relief for the accounting effects on contracts, hedging relationships and other transactions impacted by the transition from interbank offered rates (such as London Interbank Offered Rate (“LIBOR”)) to alternative reference rates (such as Secured Overnight Financing Rate). Modification of contractual terms to effect the reference rate reform transition on debt, leases, derivatives and other contracts is eligible for relief from modification accounting and accounted for as a continuation of the existing contract. ASU No. 2020-04 is effective upon issuance through December 31, 2022, and may be applied retrospectively to January 1, 2020. The Company may elect practical expedients or exceptions as applicable over time as reference rate reform activities occur. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope . The guidance amends the scope of the recent reference rate reform guidance issued in ASU No. 2020-04. New optional expedients allow derivative instruments impacted by changes in the interest rate used for margining, discounting, or contract price alignment to qualify for certain optional relief. The guidance was effective immediately and may be applied retrospectively to January 1, 2020. The Company may elect practical expedients or exceptions as applicable over time as reference rate reform activities occur. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Reconciliation of Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported on the consolidated balance sheets to the total of such amounts as reported on the consolidated statements of cash flows (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 Cash and cash equivalents $ 95,145 $ 200,473 Restricted cash 12,537 10,465 Total cash, cash equivalents and restricted cash $ 107,682 $ 210,938 |
Reconciliation of Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported on the consolidated balance sheets to the total of such amounts as reported on the consolidated statements of cash flows (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 Cash and cash equivalents $ 95,145 $ 200,473 Restricted cash 12,537 10,465 Total cash, cash equivalents and restricted cash $ 107,682 $ 210,938 |
Schedule of Operating Real Estate Estimated Useful Life | Operating real estate is depreciated using the straight-line method over the estimated useful life of the assets, summarized as follows: Category: Term: Building 30 to 50 years Building improvements Lesser of the useful life or remaining life of the building Land improvements 9 to 15 years Tenant improvements Lesser of the useful life or remaining term of the lease Furniture, fixtures and equipment 5 to 14 years |
Schedule of Future Minimum Lease Payments for Capital Leases | The following table presents the future minimum lease payments under finance leases and the present value of the minimum lease payments, which are included in other liabilities October 1 through December 31, 2022 $ 69 Years Ending December 31: 2023 93 2024 60 2025 29 2026 24 Thereafter 28 Total minimum lease payments $ 303 Less: Amount representing interest (29) Present value of minimum lease payments $ 274 |
Schedule of Intangible Assets, Net | The following table presents intangible assets, net (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 In-place lease value $ 120,149 $ 120,149 Less: Accumulated amortization (117,812) (117,559) Intangible assets, net $ 2,337 $ 2,590 |
Schedule of Deferred Costs and Intangible Assets, Future Amortization Expense | The following table presents future amortization of in-place lease value (dollars in thousands): October 1 through December 31, 2022 $ 84 Years Ending December 31: 2023 337 2024 337 2025 337 2026 337 Thereafter 905 Total $ 2,337 |
Operating Real Estate (Tables)
Operating Real Estate (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Real Estate [Abstract] | |
Schedule of Operating Real Estate | The following table presents operating real estate, net (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 Land $ 121,518 $ 121,518 Land improvements 18,453 17,798 Buildings and improvements 945,526 965,630 Tenant improvements 322 — Construction in progress 12,154 8,141 Furniture, fixtures and equipment 88,910 84,813 Subtotal $ 1,186,883 $ 1,197,900 Less: Accumulated depreciation (254,153) (225,301) Operating real estate, net $ 932,730 $ 972,599 |
Investments in Unconsolidated_2
Investments in Unconsolidated Ventures (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | All investments in unconsolidated ventures are accounted for under the equity method. The following table presents the Company’s investments in unconsolidated ventures (dollars in thousands): Carrying Value (1) Portfolio Acquisition Date Ownership September 30, 2022 (Unaudited) December 31, 2021 Trilogy Dec-2015 23.2 % $ 130,224 $ 126,366 Diversified US/UK Dec-2014 14.3 % 69,815 80,766 Eclipse May-2014 5.6 % 3,295 4,856 Espresso (2) Jul-2015 36.7 % 1,593 — Subtotal $ 204,927 $ 211,988 Solstice (3) Jul-2017 20.0 % 280 321 Total $ 205,207 $ 212,309 _______________________________________ (1) Includes $1.3 million, $13.4 million and $9.8 million of capitalized acquisition costs for the Company’s investments in the Eclipse, Diversified US/UK, and Trilogy joint ventures, respectively. (2) As a result of impairments and other non-cash reserves recorded by the joint venture, the Company’s carrying value of its investment in Espresso was reduced to zero in the fourth quarter of 2018. The Company recognized its proportionate share of earnings and losses of the Espresso joint venture through the carrying value of its mezzanine loan debt investment, which was originated to a subsidiary of the Espresso joint venture, through the time of its repayment in August 2021. During the nine months ended September 30, 2022, the Espresso joint venture recognized gains on sub-portfolio sales, which increased the Company’s carrying value in its investment as of September 30, 2022. (3) Represents investment in Solstice Senior Living, LLC (“Solstice”), the manager of the Winterfell portfolio. Solstice is a joint venture between affiliates of Integral Senior Living, LLC (“ISL”), a management company of ILF, ALF and MCF founded in 2000, which owns 80.0%, and the Company, which owns 20.0%. The following table presents the results of the Company’s investment in unconsolidated ventures (dollars in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Portfolio Equity in Earnings (Losses) Cash Distribution Equity in Earnings (Losses) Cash Distribution Equity in Earnings (Losses) Cash Distribution Equity in Earnings (Losses) Cash Distribution Trilogy $ 6,052 $ 2,300 $ 763 $ — $ 10,757 $ 6,900 $ (2,839) $ — Diversified US/UK (2,611) 358 (330) 966 (4,060) 2,290 (2,387) 3,256 Eclipse (344) — (194) 2,898 (940) 620 3,739 2,898 Espresso (1) (242) 1,375 7,693 — 33,711 32,363 18,636 — Envoy — — — 78 — — 740 817 Subtotal $ 2,855 $ 4,033 $ 7,932 $ 3,942 $ 39,468 $ 42,173 $ 17,889 $ 6,971 Solstice 17 — 11 — (41) — (70) — Total $ 2,872 $ 4,033 $ 7,943 $ 3,942 $ 39,427 $ 42,173 $ 17,819 $ 6,971 _______________________________________ (1) During the nine months ended September 30, 2022, the Espresso joint venture recognized net gains related to sub-portfolio sales, of which the Company’s proportionate share totaled $32.0 million. The Company was distributed its proportionate share of the net proceeds generated from the sales totaling $27.4 million. Summarized Financial Data The following table presents the Trilogy unconsolidated venture’s balance sheets as of September 30, 2022 and December 31, 2021 and statements of operations for the three and nine months ended September 30, 2022 and 2021 (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Assets Operating real estate, net $ 1,364,535 $ 1,271,376 Total revenues $ 328,072 $ 264,848 $ 895,722 $ 753,056 Other assets 755,164 575,573 Net income (loss) $ 26,081 $ 3,298 $ 46,361 $ (12,199) Total assets $ 2,119,699 $ 1,846,949 Liabilities and equity Total liabilities $ 1,583,870 $ 1,327,531 Equity 535,829 519,418 Total liabilities and equity $ 2,119,699 $ 1,846,949 The below table indicates the Company’s investments for which the Sponsor is also an equity partner in the joint venture. Each investment was approved by the Company’s board of directors, including all of its independent directors. Refer to Note 4, “Investments in Unconsolidated Ventures” for further discussion of these investments: Portfolio Partner(s) Acquisition Date Ownership Eclipse NRF and Partner/ May 2014 5.6% Diversified US/UK NRF and Partner December 2014 14.3% |
Borrowings (Tables)
Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Summary of Borrowings | The following table presents the Company’s mortgage and other notes payable (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 Recourse vs. Non-Recourse Initial Contractual Interest Rate (1) Principal Amount (2) Carrying Value (2) Principal (2) Carrying (2) Mortgage notes payable, net Watermark Aqua Portfolio Frisco, TX (3) Non-recourse Feb 2026 3.0% $ 26,000 $ 25,527 $ 26,000 $ 25,431 Milford, OH Non-recourse Sep 2026 LIBOR + 2.68% 18,394 18,169 18,661 18,388 Rochester Portfolio Rochester, NY Non-recourse Feb 2025 4.25% 18,385 18,338 18,911 18,853 Rochester, NY (4) Non-recourse Aug 2027 LIBOR + 2.34% 101,081 100,443 101,224 100,495 Rochester, NY Non-recourse Aug 2023 LIBOR + 2.90% 11,383 11,354 11,732 11,716 Arbors Portfolio (5) Various locations Non-recourse Feb 2025 3.99% 83,919 83,498 85,369 84,799 Winterfell Portfolio (6) Various locations Non-recourse Jun 2025 4.17% 599,574 590,652 608,810 597,460 Avamere Portfolio (7) Various locations Non-recourse Feb 2027 4.66% 68,314 67,983 69,144 68,755 Subtotal mortgage notes payable, net $ 927,050 $ 915,964 $ 939,851 $ 925,897 Other notes payable Oak Cottage Santa Barbara, CA (8) Non-recourse Repaid 6.00% $ — $ — $ 3,914 $ 3,914 Subtotal other notes payable, net $ — $ — $ 3,914 $ 3,914 Total mortgage and other notes payable, net $ 927,050 $ 915,964 $ 943,765 $ 929,811 _______________________________________ (1) Floating-rate borrowings total $130.9 million of principal outstanding and reference one-month LIBOR. (2) The difference between principal amount and carrying value of mortgage notes payable is attributable to deferred financing costs, net for all borrowings, other than the Winterfell portfolio which is attributable to below market debt intangibles. (3) The mortgage note carries a fixed interest rate of 3.0% through February 2024, followed by the greater of the fixed rate or one-month LIBOR plus 2.80% through the initial maturity date of February 2026. (4) Composed of seven individual mortgage notes payable secured by seven healthcare real estate properties, cross-collateralized and subject to cross-default. (5) Composed of four individual mortgage notes payable secured by four healthcare real estate properties, cross-collateralized and subject to cross-default. (6) Composed of 32 individual mortgage notes payable secured by 32 healthcare real estate properties, cross-collateralized and subject to cross-default. (7) Composed of five individual mortgage notes payable secured by five healthcare real estate properties, cross-collateralized and subject to cross-default. |
Schedule of Principal on Borrowings based on Final Maturity | The following table presents future scheduled principal payments on mortgage and other notes payable based on initial maturity (dollars in thousands): October 1 through December 31, 2022 $ 4,948 Years Ending December 31: 2023 31,032 2024 20,406 2025 670,302 2026 46,964 Thereafter 153,398 Total $ 927,050 |
Related Party Arrangements (Tab
Related Party Arrangements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of the Fees and Reimbursements Incurred to the Advisor and Dealer Manager | The following table presents the fees and reimbursements incurred and paid to the Advisor (dollars in thousands): Type of Fee or Reimbursement Due to Related Party as of December 31, 2021 Nine months Ended September 30, 2022 Due to Related Party as of September 30, 2022 (Unaudited) Financial Statement Location Incurred Paid Fees to Advisor Entities Asset management Asset management fees-related party $ 937 $ 7,532 $ (7,657) $ 812 Reimbursements to Advisor Entities Operating costs General and administrative expenses 6,401 8,789 (12,655) 2,535 Total $ 7,338 $ 16,321 $ (20,312) $ 3,347 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of Dividend Investment Estimated Value per Share | The following table presents the estimated value per share of common stock based on when the value became effective: Effective Date Estimated Value per Share Valuation Date April 2016 $ 8.63 12/31/2015 December 2016 9.10 6/30/2016 December 2017 8.50 6/30/2017 December 2018 7.10 6/30/2018 December 2019 6.25 6/30/2019 December 2020 3.89 6/30/2020 November 2021 3.91 6/30/2021 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of the Principal Amount, Carrying Value and Fair Value of Certain Financial Assets and Liabilities | The following table presents the principal amount, carrying value and fair value of certain financial assets and liabilities (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 Principal Amount Carrying Value Fair Value Principal Amount Carrying Value Fair Value Financial liabilities: (1) Mortgage and other notes payable, net $ 927,050 $ 915,964 $ 883,040 $ 943,765 $ 929,811 $ 889,485 _______________________________________ (1) The fair value of other financial instruments not included in this table is estimated to approximate their carrying value. The following table summarizes the fair value, measured at the time of impairment, of Level 3 assets which have been measured at fair value on a nonrecurring basis during the periods presented and the associated impairment losses (dollars in thousands): September 30, 2022 (Unaudited) December 31, 2021 Fair Value Impairment Losses Fair Value Impairment Losses Operating real estate, net (1) $ 80,931 $ 30,900 $ 11,793 $ 5,386 _______________________________________ |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Summary of Segment Reporting | The following tables present segment reporting (dollars in thousands): Direct Investments Three Months Ended September 30, 2022 Net Lease Operating Unconsolidated Investments Debt Investment Corporate (1) Total Property and other revenues $ 724 $ 46,715 $ — $ — $ 300 $ 47,739 Interest income on debt investments — — — — — — Property operating expenses — (35,134) — — — (35,134) Interest expense (907) (10,107) — — — (11,014) Transaction costs — — — — (857) (857) Asset management fees - related party — — — — (2,428) (2,428) General and administrative expenses — (8) — — (2,851) (2,859) Depreciation and amortization (870) (8,772) — — — (9,642) Impairment loss (18,500) — — — — (18,500) Other income, net — — — — — — Realized gain (loss) on investments and other — 325 — — — 325 Equity in earnings (losses) of unconsolidated ventures — — 2,872 — — 2,872 Income tax expense — (15) — — — (15) Net income (loss) $ (19,553) $ (6,996) $ 2,872 $ — $ (5,836) $ (29,513) _______________________________________ (1) Includes unallocated asset management fee-related party and general and administrative expenses. Direct Investments Three Months Ended September 30, 2021 Net Lease Operating Unconsolidated Investments Debt Investment Corporate (1) Total Property and other revenues $ 6,012 $ 58,364 $ — $ — $ 38 $ 64,414 Interest income on debt investments — — — 1,067 — 1,067 Real estate properties - operating expenses — (45,784) — — — (45,784) Interest expense (2,907) (12,768) — — (105) (15,780) Transaction costs — — — — — — Asset management fees - related party — — — — (2,769) (2,769) General and administrative expenses (64) (111) — — (2,257) (2,432) Depreciation and amortization (3,027) (10,801) — — — (13,828) Impairment loss — (4,600) — — — (4,600) Other income, net — — — — — — Realized gain (loss) on investments and other — — 75 — — 75 Equity in earnings (losses) of unconsolidated ventures — — 7,943 — — 7,943 Income tax benefit (expense) — (59) — — — (59) Net income (loss) $ 14 $ (15,759) $ 8,018 $ 1,067 $ (5,093) $ (11,753) _______________________________________ (1) Includes unallocated asset management fee-related party and general and administrative expenses. Direct Investments Nine Months Ended September 30, 2022 Net Lease Operating Unconsolidated Investments Debt Investment Corporate (1) Total Property and other revenues $ 1,220 $ 134,768 $ — $ — $ 457 $ 136,445 Interest income on debt investments — — — — — — Property operating expenses (35) (101,223) — — — (101,258) Interest expense (2,708) (29,169) — — — (31,877) Transaction costs — — — — (857) (857) Asset management fees - related party — — — — (7,532) (7,532) General and administrative expenses — (24) — — (10,276) (10,300) Depreciation and amortization (2,601) (26,504) — — — (29,105) Impairment loss (18,500) (13,002) — — — (31,502) Other income, net — 77 — — — 77 Realized gain (loss) on investments and other (206) 620 246 — — 660 Equity in earnings (losses) of unconsolidated ventures — — 39,427 — — 39,427 Income tax expense — (45) — — — (45) Net income (loss) $ (22,830) $ (34,502) $ 39,673 $ — $ (18,208) $ (35,867) _______________________________________ (1) Includes unallocated asset management fee-related party and general and administrative expenses. Direct Investments Nine Months Ended September 30, 2021 Net Lease Operating Unconsolidated Investments Debt Investment Corporate (1) Total Property and other revenues $ 10,942 $ 174,633 $ — $ — $ 80 $ 185,655 Interest income on debt investments — — — 4,667 — 4,667 Property operating expenses (25) (136,478) — — — (136,503) Interest expense (8,670) (38,355) — — (742) (47,767) Transaction costs — (54) — — — (54) Asset management fees - related party — — — — (8,307) (8,307) General and administrative expenses (171) (225) — — (8,148) (8,544) Depreciation and amortization (10,887) (33,885) — — — (44,772) Impairment loss (786) (4,600) — — — (5,386) Other income, net — 6,892 — — — 6,892 Realized gain (loss) on investments and other (159) 7,563 75 — — 7,479 Equity in earnings (losses) of unconsolidated ventures — — 17,819 — — 17,819 Income tax benefit (expense) — (85) — — — (85) Net income (loss) $ (9,756) $ (24,594) $ 17,894 $ 4,667 $ (17,117) $ (28,906) _______________________________________ (1) Includes unallocated asset management fee-related party and general and administrative expenses. |
Summary of Assets by Segment | The following table presents total assets by segment (dollars in thousands): Direct Investments Total Assets: Net Lease Operating Unconsolidated Investments Debt Investment Corporate (1) Total September 30, 2022 (Unaudited) $ 84,668 $ 891,283 $ 205,207 $ — $ 78,081 $ 1,259,239 December 31, 2021 104,809 908,517 212,309 — 187,238 1,412,873 ______________________________________ |
Schedule of Real Estate Properties | The following table presents the operators and managers of the Company’s properties, excluding properties owned through unconsolidated joint ventures (dollars in thousands): As of September 30, 2022 Nine Months Ended September 30, 2022 Operator / Manager Properties Under Management Units Under Management (1) Property and Other Revenues (2) % of Total Property and Other Revenues Solstice Senior Living (3) 32 4,000 $ 82,607 60.5 % Watermark Retirement Communities 14 1,753 33,770 24.8 % Avamere Health Services 5 453 14,764 10.8 % Integral Senior Living 1 44 3,628 2.7 % Arcadia Management (4) 4 572 1,220 0.9 % Other (5) — — 456 0.3 % Total 56 6,822 $ 136,445 100.0 % ______________________________________ (1) Represents rooms for ALFs and ILFs and beds for MCFs and SNFs, based on predominant type. (2) Includes rental income received from the Company’s net lease properties as well as rental income, ancillary service fees and other related revenue earned from ILF residents and resident fee income derived from the Company’s ALFs and MCFs, which includes resident room and care charges, ancillary fees and other resident service charges. (3) Solstice is a joint venture of which affiliates of ISL own 80%. (4) During the nine months ended September 30, 2022, the Company recorded rental income to the extent payments were received. (5) Consists primarily of interest income earned on corporate-level cash accounts. |
Business and Organization (Deta
Business and Organization (Details) - USD ($) | 9 Months Ended | 92 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Class of Stock [Line Items] | |||
Common stock, shares authorized (in shares) | 400,000,000 | 400,000,000 | 400,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | 50,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Net proceeds from issuance of common stock | $ 2,000,000,000 | ||
Dividend Reinvestment Plan | |||
Class of Stock [Line Items] | |||
Net proceeds from issuance of common stock | $ 232,600,000 | ||
Primary Beneficiary | |||
Class of Stock [Line Items] | |||
Limited partnership interest in operating partnership | 99.99% | ||
Advisor | |||
Class of Stock [Line Items] | |||
Non-controlling interest investment in operating partnership | $ 1,000 | ||
Special Unit Holder | |||
Class of Stock [Line Items] | |||
Non-controlling interest investment in operating partnership | $ 1,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) portfolio day | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) portfolio day | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Variable Interest Entities | |||||
Operating real estate, net | $ 932,730,000 | $ 932,730,000 | $ 972,599,000 | ||
Mortgage and other notes payable, net | 915,964,000 | 915,964,000 | 929,811,000 | ||
Investments in unconsolidated ventures | $ 205,207,000 | $ 205,207,000 | $ 212,309,000 | ||
Finance Lease Liability | |||||
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Operating real estate, net | Operating real estate, net | |||
Finance leases for equipment | $ 2,500,000 | $ 2,500,000 | |||
Payments of finance lease obligations | $ 400,000 | $ 500,000 | |||
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Other liabilities | Other liabilities | |||
Weighted average interest rate (percent) | 7.20% | 7.20% | |||
Remaining lease term (years) | 3 years 4 months 24 days | 3 years 4 months 24 days | |||
Identified Intangibles | |||||
Number of triple net lease portfolios | portfolio | 4 | 4 | |||
Amortization expense for in-place leases and deferred costs | $ 100,000 | $ 300,000 | $ 300,000 | 1,300,000 | |
Days notice required for lease termination | day | 30 | 30 | |||
Variable lease revenues | $ 2,100,000 | 3,500,000 | $ 9,200,000 | 10,100,000 | |
Impairment loss | 18,500,000 | 4,600,000 | 31,502,000 | 5,386,000 | |
Impairment loss on property damages | 600,000 | ||||
Investments in Unconsolidated Ventures | |||||
Impairment recognized | 0 | 0 | |||
Allowance for credit losses on receivables | $ 0 | $ 0 | |||
Acquisition Fees and Expenses | |||||
Acquisition fee and expense cap | 6% | 6% | |||
Income Taxes | |||||
Deferred tax asset | $ 14,500,000 | $ 14,500,000 | |||
Income tax expense | 15,000 | $ 59,000 | 45,000 | 85,000 | |
Arbors | |||||
Identified Intangibles | |||||
Impairment loss | 18,500,000 | ||||
Winterfell | |||||
Identified Intangibles | |||||
Impairment loss | 8,500,000 | 4,600,000 | |||
Rochester, NY | |||||
Identified Intangibles | |||||
Impairment loss | 3,900,000 | ||||
Smyrna | |||||
Identified Intangibles | |||||
Impairment loss | 800,000 | ||||
Other Income | |||||
Identified Intangibles | |||||
Grant income | $ 7,400,000 | ||||
Variable Interest Entity, Primary Beneficiary | |||||
Variable Interest Entities | |||||
Operating real estate, net | 214,200,000 | 214,200,000 | |||
Mortgage and other notes payable, net | $ 173,800,000 | $ 173,800,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 95,145 | $ 200,473 | ||
Restricted cash | 12,537 | 10,465 | ||
Total cash, cash equivalents and restricted cash | $ 107,682 | $ 210,938 | $ 110,524 | $ 93,570 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Estimated Useful Lives (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Building | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 30 years |
Building | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 50 years |
Land improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 9 years |
Land improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 15 years |
Furniture, fixtures and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 5 years |
Furniture, fixtures and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 14 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Future Minimum Lease Payments from Capital Leases (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Accounting Policies [Abstract] | |
October 1 through December 31, 2022 | $ 69 |
2023 | 93 |
2024 | 60 |
2025 | 29 |
2026 | 24 |
Thereafter | 28 |
Total minimum lease payments | 303 |
Less: Amount representing interest | (29) |
Present value of minimum lease payments | $ 274 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Deferred Costs and Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Less: Accumulated amortization | $ (117,812) | $ (117,559) |
Intangible assets, net | 2,337 | 2,590 |
In-place lease value | ||
Finite-Lived Intangible Assets [Line Items] | ||
In-place lease value | $ 120,149 | $ 120,149 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Schedule of Future Amortization Expense (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Accounting Policies [Abstract] | |
October 1 through December 31, 2022 | $ 84 |
2023 | 337 |
2024 | 337 |
2025 | 337 |
2026 | 337 |
Thereafter | 905 |
Total | $ 2,337 |
Operating Real Estate - Identif
Operating Real Estate - Identifiable Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Real Estate [Abstract] | ||
Land | $ 121,518 | $ 121,518 |
Land improvements | 18,453 | 17,798 |
Buildings and improvements | 945,526 | 965,630 |
Tenant improvements | 322 | 0 |
Construction in progress | 12,154 | 8,141 |
Furniture, fixtures and equipment | 88,910 | 84,813 |
Subtotal | 1,186,883 | 1,197,900 |
Less: Accumulated depreciation | (254,153) | (225,301) |
Operating real estate, net | $ 932,730 | $ 972,599 |
Operating Real Estate - Narrati
Operating Real Estate - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Real Estate [Line Items] | |||||
Depreciation | $ 9.6 | $ 13.5 | $ 28.9 | $ 43.5 | |
Impairment loss | 31.5 | $ 5.4 | |||
Building and Building Improvements | |||||
Real Estate [Line Items] | |||||
Accumulated impairment | $ 181.2 | $ 181.2 | $ 149.7 |
Investments in Unconsolidated_3
Investments in Unconsolidated Ventures - Changes in Carrying Value (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2018 | |
Schedule of Equity Method Investments [Line Items] | ||||||
Carrying value | $ 205,207,000 | $ 205,207,000 | $ 212,309,000 | |||
Equity in earnings (losses) of unconsolidated ventures | 2,872,000 | $ 7,943,000 | 39,427,000 | $ 17,819,000 | ||
Cash Distribution | 4,033,000 | 3,942,000 | 42,173,000 | 6,971,000 | ||
Eclipse, Envoy, Diversified US/UK, Espresso, Trilogy | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Carrying value | 204,927,000 | 204,927,000 | 211,988,000 | |||
Equity in earnings (losses) of unconsolidated ventures | 2,855,000 | 7,932,000 | 39,468,000 | 17,889,000 | ||
Cash Distribution | $ 4,033,000 | 3,942,000 | $ 42,173,000 | 6,971,000 | ||
Trilogy | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership interest (as a percentage) | 23.20% | 23.20% | ||||
Carrying value | $ 130,224,000 | $ 130,224,000 | 126,366,000 | |||
Capitalized acquisition costs | 9,800,000 | 9,800,000 | 9,800,000 | |||
Equity in earnings (losses) of unconsolidated ventures | 6,052,000 | 763,000 | 10,757,000 | (2,839,000) | ||
Cash Distribution | $ 2,300,000 | 0 | $ 6,900,000 | 0 | ||
Diversified US/UK | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership interest (as a percentage) | 14.30% | 14.30% | ||||
Carrying value | $ 69,815,000 | $ 69,815,000 | 80,766,000 | |||
Capitalized acquisition costs | 13,400,000 | 13,400,000 | 13,400,000 | |||
Equity in earnings (losses) of unconsolidated ventures | (2,611,000) | (330,000) | (4,060,000) | (2,387,000) | ||
Cash Distribution | $ 358,000 | 966,000 | $ 2,290,000 | 3,256,000 | ||
Eclipse | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership interest (as a percentage) | 5.60% | 5.60% | ||||
Carrying value | $ 3,295,000 | $ 3,295,000 | 4,856,000 | |||
Capitalized acquisition costs | 1,300,000 | 1,300,000 | 1,300,000 | |||
Equity in earnings (losses) of unconsolidated ventures | (344,000) | (194,000) | (940,000) | 3,739,000 | ||
Cash Distribution | $ 0 | 2,898,000 | $ 620,000 | 2,898,000 | ||
Espresso | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership interest (as a percentage) | 36.70% | 36.70% | ||||
Carrying value | $ 1,593,000 | $ 1,593,000 | 0 | |||
Equity in earnings (losses) of unconsolidated ventures | (242,000) | 7,693,000 | 33,711,000 | 18,636,000 | ||
Cash Distribution | 1,375,000 | 0 | 32,363,000 | 0 | ||
Gains related to sub portfolio sales | 32,000,000 | |||||
Proceeds from sale of building | 27,400,000 | |||||
Envoy | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Equity in earnings (losses) of unconsolidated ventures | 0 | 0 | 0 | 740,000 | ||
Cash Distribution | $ 0 | 78,000 | $ 0 | 817,000 | ||
Solstice | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership interest (as a percentage) | 20% | 20% | ||||
Carrying value | $ 280,000 | $ 280,000 | $ 321,000 | |||
Equity in earnings (losses) of unconsolidated ventures | 17,000 | 11,000 | (41,000) | (70,000) | ||
Cash Distribution | $ 0 | $ 0 | $ 0 | $ 0 | ||
Mezzanine loans | Espresso | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Carrying value | $ 0 | |||||
Solstice | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Noncontrolling interest, ownership percentage by parent (as a percentage) | 80% | 80% | ||||
Winterfell | Solstice | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership interest (as a percentage) | 20% | 20% | ||||
Winterfell | Solstice | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Noncontrolling interest, ownership percentage by parent (as a percentage) | 80% | 80% |
Investments in Unconsolidated_4
Investments in Unconsolidated Ventures - Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Operating real estate, net | $ 932,730 | $ 932,730 | $ 972,599 | ||||||||
Other assets | 7,829 | 7,829 | 10,771 | ||||||||
Total assets | [1] | 1,259,239 | 1,259,239 | 1,412,873 | |||||||
Total liabilities | [1] | 942,182 | 942,182 | 966,055 | |||||||
Equity | 317,057 | $ 345,809 | $ 436,024 | $ 390,031 | $ 399,449 | $ 403,869 | 317,057 | $ 390,031 | 446,818 | $ 412,062 | |
Total liabilities and equity | 1,259,239 | 1,259,239 | 1,412,873 | ||||||||
Total revenues | 47,739 | 64,414 | 136,445 | 185,655 | |||||||
Net income (loss) | (29,513) | $ 6,627 | $ (12,981) | (11,753) | $ (6,998) | $ (10,155) | (35,867) | (28,906) | |||
Diversified US/UK and Trilogy | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Operating real estate, net | 1,364,535 | 1,364,535 | 1,271,376 | ||||||||
Other assets | 755,164 | 755,164 | 575,573 | ||||||||
Total assets | 2,119,699 | 2,119,699 | 1,846,949 | ||||||||
Total liabilities | 1,583,870 | 1,583,870 | 1,327,531 | ||||||||
Equity | 535,829 | 535,829 | 519,418 | ||||||||
Total liabilities and equity | 2,119,699 | 2,119,699 | $ 1,846,949 | ||||||||
Total revenues | 328,072 | 264,848 | 895,722 | 753,056 | |||||||
Net income (loss) | $ 26,081 | $ 3,298 | $ 46,361 | $ (12,199) | |||||||
[1]Represents the consolidated assets and liabilities of NorthStar Healthcare Income Operating Partnership, LP (the “Operating Partnership”). The Operating Partnership is a consolidated variable interest entity (“VIE”), of which NorthStar Healthcare Income, Inc. (together with its consolidated subsidiaries, the “Company”) is the sole general partner and owns approximately 99.99%. As of September 30, 2022, the Operating Partnership includes $224.2 million and $178.8 million of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. Refer to Note 2, “Summary of Significant Accounting Policies.” |
Borrowings - Schedule of Borrow
Borrowings - Schedule of Borrowings (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) debt_instrument property | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Debt Instrument [Line Items] | ||||
Carrying Value | $ 927,050 | |||
Repayments of notes payable | $ 16,514 | $ 61,121 | ||
Winterfell | ||||
Debt Instrument [Line Items] | ||||
Number of healthcare real estate properties | property | 32 | |||
Mortgages and other notes payable | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 927,050 | $ 943,765 | ||
Carrying Value | 915,964 | 929,811 | ||
Mortgage notes payable, net | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 927,050 | 943,765 | ||
Mortgage notes payable, net | Rochester, NY | ||||
Debt Instrument [Line Items] | ||||
Number of debt instruments | debt_instrument | 7 | |||
Number of healthcare real estate properties | property | 7 | |||
Mortgage notes payable, net | Arbors | ||||
Debt Instrument [Line Items] | ||||
Number of debt instruments | debt_instrument | 4 | |||
Number of healthcare real estate properties | property | 4 | |||
Mortgage notes payable, net | Winterfell | ||||
Debt Instrument [Line Items] | ||||
Number of debt instruments | debt_instrument | 32 | |||
Mortgage notes payable, net | Avamere Portfolio | ||||
Debt Instrument [Line Items] | ||||
Number of debt instruments | debt_instrument | 5 | |||
Number of healthcare real estate properties | property | 5 | |||
Mortgage notes payable, net | Frisco, TX Non-recourse | Frisco, TX | ||||
Debt Instrument [Line Items] | ||||
Fixed interest rate | 3% | |||
Principal Amount | $ 26,000 | 26,000 | ||
Carrying Value | $ 25,527 | 25,431 | ||
Mortgage notes payable, net | Frisco, TX Non-recourse | Frisco, TX | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable interest rate | 2.80% | |||
Mortgage notes payable, net | Milford, OH Non-recourse | Milford, OH | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 18,394 | 18,661 | ||
Carrying Value | $ 18,169 | 18,388 | ||
Mortgage notes payable, net | Milford, OH Non-recourse | Milford, OH | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable interest rate | 2.68% | |||
Mortgage notes payable, net | Rochester, NY Non-recourse, February 2025 | Rochester, NY | ||||
Debt Instrument [Line Items] | ||||
Fixed interest rate | 4.25% | |||
Principal Amount | $ 18,385 | 18,911 | ||
Carrying Value | 18,338 | 18,853 | ||
Mortgage notes payable, net | Rochester, NY Non-recourse, August 2027 | Rochester, NY | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 101,081 | 101,224 | ||
Carrying Value | $ 100,443 | 100,495 | ||
Mortgage notes payable, net | Rochester, NY Non-recourse, August 2027 | Rochester, NY | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable interest rate | 2.34% | |||
Mortgage notes payable, net | Rochester NY Nonrecourse August 2022 | Rochester, NY | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 11,383 | 11,732 | ||
Carrying Value | $ 11,354 | 11,716 | ||
Mortgage notes payable, net | Rochester NY Nonrecourse August 2022 | Rochester, NY | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable interest rate | 2.90% | |||
Mortgage notes payable, net | Non-Recourse | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 927,050 | 939,851 | ||
Carrying Value | $ 915,964 | 925,897 | ||
Mortgage notes payable, net | Non-Recourse | Arbors | ||||
Debt Instrument [Line Items] | ||||
Fixed interest rate | 3.99% | |||
Principal Amount | $ 83,919 | 85,369 | ||
Carrying Value | $ 83,498 | 84,799 | ||
Mortgage notes payable, net | Non-Recourse | Winterfell | ||||
Debt Instrument [Line Items] | ||||
Fixed interest rate | 4.17% | |||
Principal Amount | $ 599,574 | 608,810 | ||
Carrying Value | $ 590,652 | 597,460 | ||
Mortgage notes payable, net | Non-Recourse | Avamere Portfolio | ||||
Debt Instrument [Line Items] | ||||
Fixed interest rate | 4.66% | |||
Principal Amount | $ 68,314 | 69,144 | ||
Carrying Value | 67,983 | 68,755 | ||
Mortgage notes payable, net | One-Month LIBOR | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 130,900 | |||
Other notes payable | Non-Recourse | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | 0 | 3,914 | ||
Carrying Value | $ 0 | 3,914 | ||
Other notes payable | Non-Recourse | Oak Cottage | ||||
Debt Instrument [Line Items] | ||||
Fixed interest rate | 6% | |||
Principal Amount | $ 0 | 3,914 | ||
Carrying Value | $ 0 | $ 3,914 | ||
Repayments of notes payable | $ 3,700 |
Borrowings - Maturity Schedule
Borrowings - Maturity Schedule (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Debt Disclosure [Abstract] | |
October 1 through December 31, 2022 | $ 4,948 |
2023 | 31,032 |
2024 | 20,406 |
2025 | 670,302 |
2026 | 46,964 |
Thereafter | 153,398 |
Total | $ 927,050 |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) - Digital Bridge - Line of Credit - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity | $ 35,000,000 | |
Long-term Line of Credit | $ 0 | $ 0 |
Related Party Arrangements - Fe
Related Party Arrangements - Fees to Advisor (Narrative) (Details) - Advisor - USD ($) $ in Millions | Jan. 01, 2018 | Sep. 30, 2022 |
Related Party Transaction [Line Items] | ||
Threshold for asset management fee deduction | $ 75 | |
Asset Management Fees | ||
Related Party Transaction [Line Items] | ||
Monthly asset management fees as a percentage of investment amount | 0.125% |
Related Party Arrangements - Re
Related Party Arrangements - Reimbursements to Advisor (Narrative) (Details) - Advisor - Operating Costs | 9 Months Ended |
Sep. 30, 2022 USD ($) quarter | |
Related Party Transaction [Line Items] | |
Reimbursement of personnel costs related to executive officers and other personnel involved in activities for which the Advisor receives an acquisition fee or disposition fee | $ | $ 0 |
Number of preceding fiscal quarters | quarter | 4 |
Percentage of average invested assets reimbursable as operating costs | 2% |
Expense reimbursement period (months) | 12 months |
Maximum | |
Related Party Transaction [Line Items] | |
Percentage of net income, without reduction for any additions to reserves for depreciation, loan losses or other similar non-cash reserves and excluding any gain from the sale of the company's assets | 25% |
Related Party Arrangements - Su
Related Party Arrangements - Summary of Fees and Reimbursements (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Related Party Transaction, Due to Related Parties [Roll Forward] | |
Due to related party, beginning balance | $ 7,338 |
Incurred | 16,321 |
Paid | (20,312) |
Due to related party, ending balance | 3,347 |
Advisor | Asset management | Asset management fees-related party | |
Related Party Transaction, Due to Related Parties [Roll Forward] | |
Due to related party, beginning balance | 937 |
Incurred | 7,532 |
Paid | (7,657) |
Due to related party, ending balance | 812 |
Advisor | Operating costs | |
Related Party Transaction, Due to Related Parties [Roll Forward] | |
Due to related party, ending balance | 2,500 |
Advisor | Operating costs | General and administrative expenses | |
Related Party Transaction, Due to Related Parties [Roll Forward] | |
Due to related party, beginning balance | 6,401 |
Incurred | 8,789 |
Paid | (12,655) |
Due to related party, ending balance | $ 2,535 |
Related Party Arrangements - Is
Related Party Arrangements - Issuance of Common Stock to the Advisor (Narrative) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | ||
Share-based payment of advisor assets management fees (in shares) | 2,000,000 | |
Issuance of common stock as payment for asset management fees | $ 7,700 | |
Common stock (in shares) | 195,078,539 | 195,078,539 |
Common stock | $ 1,951 | $ 1,930 |
The Advisor, the Sponsor, and affiliates | ||
Related Party Transaction [Line Items] | ||
Common stock (in shares) | 9,400,000 | |
Common stock | $ 36,600 | |
Common stock, outstanding (percentage) | 4.80% |
Related Party Arrangements - In
Related Party Arrangements - Incentive Fee (Narrative) (Details) - Advisor - Incentive Fee | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transaction [Line Items] | |
Incentive fee distributions, percent of net cash flows | 15% |
Incentive fee distributions, minimum non-compounded annual pre-tax return on invested capital | 6.75% |
Related Party Arrangements - _2
Related Party Arrangements - Investments in Joint Ventures (Narrative) (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Solstice | |
Related Party Transaction [Line Items] | |
Ownership interest (as a percentage) | 20% |
Solstice | |
Related Party Transaction [Line Items] | |
Noncontrolling interest, ownership percentage by parent (as a percentage) | 80% |
Winterfell | Solstice | |
Related Party Transaction [Line Items] | |
Ownership interest (as a percentage) | 20% |
Winterfell | Solstice | |
Related Party Transaction [Line Items] | |
Noncontrolling interest, ownership percentage by parent (as a percentage) | 80% |
Property management fee expense paid to joint venture | $ 4.1 |
Related Party Arrangements - Sc
Related Party Arrangements - Schedule of Joint Ventures (Details) | Sep. 30, 2022 |
Eclipse | |
Related Party Transaction [Line Items] | |
Ownership interest (as a percentage) | 5.60% |
Diversified US/UK | |
Related Party Transaction [Line Items] | |
Ownership interest (as a percentage) | 14.30% |
NRF and Partner/ Formation Capital, LLC | Eclipse | |
Related Party Transaction [Line Items] | |
Ownership interest (as a percentage) | 5.60% |
NRF and Partner | Diversified US/UK | |
Related Party Transaction [Line Items] | |
Ownership interest (as a percentage) | 14.30% |
Related Party Arrangements - Li
Related Party Arrangements - Line of Credit - Related Party (Narrative) (Details) - Line of Credit - Digital Bridge - USD ($) | Oct. 21, 2022 | Sep. 30, 2022 |
Related Party Transaction [Line Items] | ||
Maximum borrowing capacity | $ 35,000,000 | |
LIBOR | Subsequent event | ||
Related Party Transaction [Line Items] | ||
Basis spread on variable interest rate | 3.50% |
Equity-Based Compensation (Deta
Equity-Based Compensation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Equity-based compensation | |||||
Number of shares granted to independent directors (in shares) | 49,872 | 66,840 | |||
Equity-based compensation expense | $ 56,875 | $ 55,625 | $ 150,042 | $ 174,458 | |
Unrecognized equity-based compensation | $ 268,125 | $ 268,125 | $ 223,167 | ||
Restricted stock | |||||
Equity-based compensation | |||||
Number of shares authorized | 2,000,000 | 2,000,000 | |||
Restricted common shares grant vesting period | 2 years | ||||
Number of vested restricted stock (in shares) | 4,800 | ||||
Restricted Stock Units (RSUs) | |||||
Equity-based compensation | |||||
Restricted common shares grant vesting period | 2 years | ||||
Unvested shares (in shares) | 68,703 | 68,703 | 50,130 | ||
Independent Directors | Restricted stock | |||||
Equity-based compensation | |||||
Number of shares granted to independent directors (in shares) | 159,932 | ||||
Aggregate value for restricted common shares granted to independent directors | $ 1,300,000 | $ 1,300,000 | |||
Independent Directors | Restricted Stock Units (RSUs) | |||||
Equity-based compensation | |||||
Number of shares granted to independent directors (in shares) | 116,712 | ||||
Aggregate value for restricted common shares granted to independent directors | $ 500,000 | $ 500,000 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock (Details) - USD ($) shares in Millions, $ in Billions | 1 Months Ended | 92 Months Ended |
Jan. 19, 2016 | Sep. 30, 2022 | |
Class of Stock [Line Items] | ||
Value of common stock issued | $ 2 | |
Common Stock | ||
Class of Stock [Line Items] | ||
Number of shares issued (in shares) | 173.4 | |
Value of common stock issued | $ 1.7 |
Stockholders' Equity - Distribu
Stockholders' Equity - Distribution Reinvestment Plan (Details) - USD ($) $ / shares in Units, shares in Millions | 1 Months Ended | 9 Months Ended | 81 Months Ended | 92 Months Ended | |||||||
Jan. 19, 2016 | Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | Nov. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Apr. 30, 2016 | |
Class of Stock [Line Items] | |||||||||||
Value of common stock issued | $ 2,000,000,000 | ||||||||||
Common Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued (in shares) | 173.4 | ||||||||||
Value of common stock issued | $ 1,700,000,000 | ||||||||||
Dividend Reinvestment Plan | |||||||||||
Class of Stock [Line Items] | |||||||||||
Share price (in dollars per share) | $ 3.91 | $ 3.89 | $ 6.25 | $ 7.10 | $ 8.50 | $ 9.10 | $ 8.63 | ||||
Selling commissions or dealer manager fees paid | $ 0 | ||||||||||
Notice period served by board of directors to amend or terminate DRP (in days) | 10 days | ||||||||||
Dividend Reinvestment Plan | Common Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued (in shares) | 25.7 | ||||||||||
Value of common stock issued | $ 232,600,000 | ||||||||||
Initial Distribution Support Agreement | Dividend Reinvestment Plan | |||||||||||
Class of Stock [Line Items] | |||||||||||
Share price (in dollars per share) | $ 9.50 | $ 9.50 | $ 9.50 | ||||||||
Follow-on Distribution Reinvestment Plan | |||||||||||
Class of Stock [Line Items] | |||||||||||
Share price (in dollars per share) | $ 10.20 | $ 10.20 | $ 10.20 | ||||||||
Percentage of offering price | 95% | 95% | 95% | ||||||||
Follow-on Distribution Reinvestment Plan | Dividend Reinvestment Plan | |||||||||||
Class of Stock [Line Items] | |||||||||||
Share price (in dollars per share) | $ 9.69 | $ 9.69 | $ 9.69 |
Stockholders' Equity - Distri_2
Stockholders' Equity - Distributions (Details) - USD ($) | May 05, 2022 | Sep. 30, 2022 | May 02, 2022 | Dec. 31, 2021 |
Equity [Abstract] | ||||
Special distribution (dollars per share) | $ 0.50 | |||
Dividends payable | $ 33,419 | $ 97,100,000 | ||
Payments of dividends | $ 97,000,000 | |||
Operating loss carryforwards | $ 226,500,000 |
Stockholders' Equity - Share Re
Stockholders' Equity - Share Repurchase Program (Details) | 9 Months Ended |
Sep. 30, 2022 shares | |
Equity [Abstract] | |
Shares repurchased during period (in shares) | 0 |
Non-controlling Interests (Deta
Non-controlling Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Noncontrolling Interest [Abstract] | ||||
Net income (loss) attributable to non-controlling interests | $ (73) | $ (100) | $ (298) | $ 73 |
Fair Value - Schedule of the Pr
Fair Value - Schedule of the Principal Amount, Carrying Value and Fair Value of Certain Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Financial Liabilities | ||
Carrying Value | $ 915,964 | $ 929,811 |
Mortgage and other notes payable, net | ||
Financial Liabilities | ||
Principal Amount | 927,050 | 943,765 |
Carrying Value | 915,964 | 929,811 |
Fair Value | $ 883,040 | $ 889,485 |
Fair Value - Nonrecurring Fair
Fair Value - Nonrecurring Fair Value (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Operating real estate, net | $ 932,730 | $ 972,599 | |
Impairment loss | 31,500 | $ 5,400 | |
Nonrecurring | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Operating real estate, net | 80,931 | 11,793 | |
Nonrecurring | Level 3 | Operating Real Estate | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Impairment loss | $ 30,900 | $ 5,386 |
Fair Value - Narrative (Details
Fair Value - Narrative (Details) - Discounted cash flow method - Real estate investment - Nonrecurring | Sep. 30, 2022 |
Minimum | Terminal capitalization rate | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Measurement input (percentage) | 6% |
Minimum | Discount rate | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Measurement input (percentage) | 8.50% |
Maximum | Terminal capitalization rate | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Measurement input (percentage) | 8% |
Maximum | Discount rate | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Measurement input (percentage) | 10.50% |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 9 Months Ended |
Sep. 30, 2022 segment | |
Segment Reporting [Abstract] | |
Number of segments | 5 |
Segment Reporting - Segment Sta
Segment Reporting - Segment Statement of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting Information [Line Items] | ||||||||
Property and other revenues | $ 47,739 | $ 64,414 | $ 136,445 | $ 185,655 | ||||
Interest income on debt investments | 0 | 1,067 | 0 | 4,667 | ||||
Property operating expenses | (35,134) | (45,784) | (101,258) | (136,503) | ||||
Interest expense | (11,014) | (15,780) | (31,877) | (47,767) | ||||
Transaction costs | (857) | 0 | (857) | (54) | ||||
Asset management fees - related party | (2,428) | (2,769) | (7,532) | (8,307) | ||||
General and administrative expenses | (2,859) | (2,432) | (10,300) | (8,544) | ||||
Depreciation and amortization | (9,642) | (13,828) | (29,105) | (44,772) | ||||
Impairment loss | (18,500) | (4,600) | (31,502) | (5,386) | ||||
Other income, net | 0 | 0 | 77 | 6,892 | ||||
Realized gain (loss) on investments and other | 325 | 75 | 660 | 7,479 | ||||
Equity in earnings (losses) of unconsolidated ventures | 2,872 | 7,943 | 39,427 | 17,819 | ||||
Income tax expense | (15) | (59) | (45) | (85) | ||||
Net income (loss) | (29,513) | $ 6,627 | $ (12,981) | (11,753) | $ (6,998) | $ (10,155) | (35,867) | (28,906) |
Direct Investments - Net Lease Segment | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Property and other revenues | 724 | 6,012 | 1,220 | 10,942 | ||||
Interest income on debt investments | 0 | 0 | 0 | 0 | ||||
Property operating expenses | 0 | 0 | (35) | (25) | ||||
Interest expense | (907) | (2,907) | (2,708) | (8,670) | ||||
Transaction costs | 0 | 0 | 0 | 0 | ||||
Asset management fees - related party | 0 | 0 | 0 | 0 | ||||
General and administrative expenses | 0 | (64) | 0 | (171) | ||||
Depreciation and amortization | (870) | (3,027) | (2,601) | (10,887) | ||||
Impairment loss | (18,500) | 0 | (18,500) | (786) | ||||
Other income, net | 0 | 0 | 0 | 0 | ||||
Realized gain (loss) on investments and other | 0 | 0 | (206) | (159) | ||||
Equity in earnings (losses) of unconsolidated ventures | 0 | 0 | 0 | 0 | ||||
Income tax expense | 0 | 0 | 0 | 0 | ||||
Net income (loss) | (19,553) | 14 | (22,830) | (9,756) | ||||
Direct Investments - Operating Segment | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Property and other revenues | 46,715 | 58,364 | 134,768 | 174,633 | ||||
Interest income on debt investments | 0 | 0 | 0 | 0 | ||||
Property operating expenses | (35,134) | (45,784) | (101,223) | (136,478) | ||||
Interest expense | (10,107) | (12,768) | (29,169) | (38,355) | ||||
Transaction costs | 0 | 0 | 0 | (54) | ||||
Asset management fees - related party | 0 | 0 | 0 | 0 | ||||
General and administrative expenses | (8) | (111) | (24) | (225) | ||||
Depreciation and amortization | (8,772) | (10,801) | (26,504) | (33,885) | ||||
Impairment loss | 0 | (4,600) | (13,002) | (4,600) | ||||
Other income, net | 0 | 0 | 77 | 6,892 | ||||
Realized gain (loss) on investments and other | 325 | 0 | 620 | 7,563 | ||||
Equity in earnings (losses) of unconsolidated ventures | 0 | 0 | 0 | 0 | ||||
Income tax expense | (15) | (59) | (45) | (85) | ||||
Net income (loss) | (6,996) | (15,759) | (34,502) | (24,594) | ||||
Unconsolidated Investments | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Property and other revenues | 0 | 0 | 0 | 0 | ||||
Interest income on debt investments | 0 | 0 | 0 | 0 | ||||
Property operating expenses | 0 | 0 | 0 | 0 | ||||
Interest expense | 0 | 0 | 0 | 0 | ||||
Transaction costs | 0 | 0 | 0 | 0 | ||||
Asset management fees - related party | 0 | 0 | 0 | 0 | ||||
General and administrative expenses | 0 | 0 | 0 | 0 | ||||
Depreciation and amortization | 0 | 0 | 0 | 0 | ||||
Impairment loss | 0 | 0 | 0 | 0 | ||||
Other income, net | 0 | 0 | 0 | 0 | ||||
Realized gain (loss) on investments and other | 0 | 75 | 246 | 75 | ||||
Equity in earnings (losses) of unconsolidated ventures | 2,872 | 7,943 | 39,427 | 17,819 | ||||
Income tax expense | 0 | 0 | 0 | 0 | ||||
Net income (loss) | 2,872 | 8,018 | 39,673 | 17,894 | ||||
Debt Investment | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Property and other revenues | 0 | 0 | 0 | 0 | ||||
Interest income on debt investments | 0 | 1,067 | 0 | 4,667 | ||||
Property operating expenses | 0 | 0 | 0 | 0 | ||||
Interest expense | 0 | 0 | 0 | 0 | ||||
Transaction costs | 0 | 0 | 0 | 0 | ||||
Asset management fees - related party | 0 | 0 | 0 | 0 | ||||
General and administrative expenses | 0 | 0 | 0 | 0 | ||||
Depreciation and amortization | 0 | 0 | 0 | 0 | ||||
Impairment loss | 0 | 0 | 0 | 0 | ||||
Other income, net | 0 | 0 | 0 | 0 | ||||
Realized gain (loss) on investments and other | 0 | 0 | 0 | 0 | ||||
Equity in earnings (losses) of unconsolidated ventures | 0 | 0 | 0 | 0 | ||||
Income tax expense | 0 | 0 | 0 | 0 | ||||
Net income (loss) | 0 | 1,067 | 0 | 4,667 | ||||
Corporate | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Property and other revenues | 300 | 38 | 457 | 80 | ||||
Interest income on debt investments | 0 | 0 | 0 | 0 | ||||
Property operating expenses | 0 | 0 | 0 | 0 | ||||
Interest expense | 0 | (105) | 0 | (742) | ||||
Transaction costs | (857) | 0 | (857) | 0 | ||||
Asset management fees - related party | (2,428) | (2,769) | (7,532) | (8,307) | ||||
General and administrative expenses | (2,851) | (2,257) | (10,276) | (8,148) | ||||
Depreciation and amortization | 0 | 0 | 0 | 0 | ||||
Impairment loss | 0 | 0 | 0 | 0 | ||||
Other income, net | 0 | 0 | 0 | 0 | ||||
Realized gain (loss) on investments and other | 0 | 0 | 0 | 0 | ||||
Equity in earnings (losses) of unconsolidated ventures | 0 | 0 | 0 | 0 | ||||
Income tax expense | 0 | 0 | 0 | 0 | ||||
Net income (loss) | $ (5,836) | $ (5,093) | $ (18,208) | $ (17,117) |
Segment Reporting - Summary of
Segment Reporting - Summary of Assets by Segment (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | |
Segment Reporting Information [Line Items] | |||
Assets | [1] | $ 1,259,239 | $ 1,412,873 |
Direct Investments - Net Lease Segment | |||
Segment Reporting Information [Line Items] | |||
Assets | 84,668 | 104,809 | |
Direct Investments - Operating Segment | |||
Segment Reporting Information [Line Items] | |||
Assets | 891,283 | 908,517 | |
Unconsolidated Investments | |||
Segment Reporting Information [Line Items] | |||
Assets | 205,207 | 212,309 | |
Debt Investment | |||
Segment Reporting Information [Line Items] | |||
Assets | 0 | 0 | |
Corporate | |||
Segment Reporting Information [Line Items] | |||
Assets | $ 78,081 | $ 187,238 | |
[1]Represents the consolidated assets and liabilities of NorthStar Healthcare Income Operating Partnership, LP (the “Operating Partnership”). The Operating Partnership is a consolidated variable interest entity (“VIE”), of which NorthStar Healthcare Income, Inc. (together with its consolidated subsidiaries, the “Company”) is the sole general partner and owns approximately 99.99%. As of September 30, 2022, the Operating Partnership includes $224.2 million and $178.8 million of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership. Refer to Note 2, “Summary of Significant Accounting Policies.” |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Properties (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) unit property property1 | |
Real Estate Properties [Line Items] | |
Properties Under Management | property | 56 |
Units Under Management | unit | 6,822 |
Property and Other Revenues | $ | $ 136,445 |
Revenue | Customer Concentration Risk | |
Real Estate Properties [Line Items] | |
Percentage of Total Property and Other Revenues | 100% |
Solstice | |
Real Estate Properties [Line Items] | |
Properties Under Management | property | 32 |
Units Under Management | unit | 4,000 |
Property and Other Revenues | $ | $ 82,607 |
Solstice | Revenue | Customer Concentration Risk | |
Real Estate Properties [Line Items] | |
Percentage of Total Property and Other Revenues | 60.50% |
Watermark Retirement Communities | |
Real Estate Properties [Line Items] | |
Properties Under Management | property | 14 |
Units Under Management | unit | 1,753 |
Property and Other Revenues | $ | $ 33,770 |
Watermark Retirement Communities | Revenue | Customer Concentration Risk | |
Real Estate Properties [Line Items] | |
Percentage of Total Property and Other Revenues | 24.80% |
Avamere Health Services | |
Real Estate Properties [Line Items] | |
Properties Under Management | property | 5 |
Units Under Management | unit | 453 |
Property and Other Revenues | $ | $ 14,764 |
Avamere Health Services | Revenue | Customer Concentration Risk | |
Real Estate Properties [Line Items] | |
Percentage of Total Property and Other Revenues | 10.80% |
Integral Senior Living | |
Real Estate Properties [Line Items] | |
Properties Under Management | property | 1 |
Units Under Management | unit | 44 |
Property and Other Revenues | $ | $ 3,628 |
Integral Senior Living | Revenue | Customer Concentration Risk | |
Real Estate Properties [Line Items] | |
Percentage of Total Property and Other Revenues | 2.70% |
Arcadia Management | |
Real Estate Properties [Line Items] | |
Properties Under Management | property | 4 |
Units Under Management | unit | 572 |
Property and Other Revenues | $ | $ 1,220 |
Arcadia Management | Revenue | Customer Concentration Risk | |
Real Estate Properties [Line Items] | |
Percentage of Total Property and Other Revenues | 0.90% |
Other | |
Real Estate Properties [Line Items] | |
Properties Under Management | property1 | 0 |
Units Under Management | unit | 0 |
Property and Other Revenues | $ | $ 456 |
Other | Revenue | Customer Concentration Risk | |
Real Estate Properties [Line Items] | |
Percentage of Total Property and Other Revenues | 0.30% |
Solstice | |
Real Estate Properties [Line Items] | |
Noncontrolling interest, ownership percentage by parent (as a percentage) | 80% |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - Subsequent event $ in Millions | 1 Months Ended | ||
Nov. 10, 2022 USD ($) | Oct. 21, 2022 | Oct. 31, 2022 property | |
Subsequent Event [Line Items] | |||
Number of properties sold | property | 17 | ||
Proceeds from sale of building | $ | $ 22.3 | ||
Related Party Transition Services Agreement | |||
Subsequent Event [Line Items] | |||
Related party transaction, term of agreement | 6 months | ||
Term of contract, extension option | 3 months | ||
Minimum notice of termination of contract | 6 months | ||
Related Party Transition Services Agreement, Treasury and Accounts Payable Services | |||
Subsequent Event [Line Items] | |||
Related party transaction, term of agreement | 12 months |