Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2024 | May 07, 2024 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
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 | 575 Lexington Avenue | |
Entity Address, Address Line Two | 14th Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10022 | |
City Area Code | 929 | |
Local Phone Number | 777-3135 | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 185,712,103 | |
Entity Central Index Key | 0001503707 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Former Address | ||
Document Information [Line Items] | ||
Entity Address, Address Line One | 16 East 34th Street | |
Entity Address, Address Line Two | 18th Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10016 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | |
Assets | |||
Cash and cash equivalents | $ 80,989 | $ 85,037 | |
Restricted cash | 6,191 | 7,906 | |
Operating real estate, net | 815,400 | 821,270 | |
Investments in unconsolidated ventures ($142 held at fair value as of March 31, 2024 and December 31, 2023) | 123,963 | 122,949 | |
Assets held for sale | 495 | 11,611 | |
Receivables, net | 1,857 | 1,558 | |
Intangible assets, net | 1,832 | 1,916 | |
Other assets | 6,404 | 7,172 | |
Total assets | [1] | 1,037,131 | 1,059,419 |
Liabilities | |||
Mortgage notes payable, net | 883,839 | 898,154 | |
Escrow deposits payable | 874 | 507 | |
Accounts payable and accrued expenses | 27,271 | 27,502 | |
Total liabilities | [1] | 913,467 | 927,739 |
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 March 31, 2024 and December 31, 2023 | 0 | 0 | |
Common stock, $0.01 par value, 400,000,000 shares authorized, 185,712,103 shares issued and outstanding as of March 31, 2024 and December 31, 2023 | 1,857 | 1,857 | |
Additional paid-in capital | 1,716,813 | 1,716,757 | |
Retained earnings (accumulated deficit) | (1,593,657) | (1,585,725) | |
Total NorthStar Healthcare Income, Inc. stockholders’ equity | 125,013 | 132,889 | |
Non-controlling interests | (1,349) | (1,209) | |
Total equity | 123,664 | 131,680 | |
Total liabilities and equity | 1,037,131 | 1,059,419 | |
Related Party | |||
Liabilities | |||
Due to related party | 0 | 121 | |
Other liabilities | 0 | 121 | |
Nonrelated Party | |||
Liabilities | |||
Due to related party | 1,483 | 1,455 | |
Other liabilities | $ 1,483 | $ 1,455 | |
[1] Includes $107.6 million and $174.9 million of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership as of March 31, 2024. Refer to Note 2, “Summary of Significant Accounting Policies.” |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | |
Equity method investment, fair value | $ 142 | $ 142 | |
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) | 185,712,103 | 185,712,103 | |
Common stock, shares outstanding (in shares) | 185,712,103 | 185,712,103 | |
Assets | [1] | $ 1,037,131 | $ 1,059,419 |
Liabilities | [1] | 913,467 | $ 927,739 |
Northstar Healthcare Income Operating Partnership, LP | Primary Beneficiary | |||
Assets | 107,600 | ||
Liabilities | $ 174,900 | ||
[1] Includes $107.6 million and $174.9 million of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership as of March 31, 2024. Refer to Note 2, “Summary of Significant Accounting Policies.” |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | ||
Property and other revenues | |||
Resident fee income | $ 12,296,000 | $ 11,850,000 | |
Rental income | 35,559,000 | 36,999,000 | |
Other revenue | 897,000 | 719,000 | |
Total property and other revenues | 48,752,000 | 49,568,000 | |
Expenses | |||
Property operating expenses | 33,381,000 | 35,077,000 | |
Interest expense | 12,862,000 | 11,359,000 | |
Transaction costs | 16,000 | 97,000 | |
General and administrative expenses | 3,327,000 | 3,910,000 | |
Depreciation and amortization | 8,901,000 | 9,649,000 | |
Impairment loss | 456,000 | 0 | |
Total expenses | 58,943,000 | 60,092,000 | |
Other income (loss) | |||
Other income, net | 1,000,000 | 132,000 | |
Gain (loss) on investments and other | 150,000 | 332,000 | |
Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax expense | (9,041,000) | (10,060,000) | |
Equity in earnings (losses) of unconsolidated ventures | 1,014,000 | (3,922,000) | |
Income tax expense | (20,000) | (15,000) | |
Net income (loss) | (8,047,000) | (13,997,000) | |
Net (income) loss attributable to non-controlling interests | 114,761 | 71,242 | |
Net income (loss) attributable to NorthStar Healthcare Income, Inc. common stockholders | (7,932,000) | (13,926,000) | |
Net income (loss) attributable to NorthStar Healthcare Income, Inc. common stockholders | $ (7,932,000) | $ (13,926,000) | |
Net income (loss) per share of common stock, basic (in dollars per share) | [1] | $ (0.04) | $ (0.07) |
Net income (loss) per share of common stock, diluted (in dollars per share) | [1] | $ (0.04) | $ (0.07) |
Weighted average number of shares of common stock outstanding, basic (in shares) | [1] | 185,712,103 | 195,421,656 |
Weighted average number of shares of common stock outstanding, diluted (in shares) | [1] | 185,712,103 | 195,421,656 |
Distributions declared per share of common stock (in dollars per share) | $ 0 | $ 0 | |
[1]The Company had issued 203,742 and 116,712 restricted stock units as of March 31, 2024 and 2023, respectively. The restricted stock units have been excluded from the diluted earnings per share calculation as their impact is anti-dilutive due to the net loss generated during the three months ended March 31, 2024 and 2023. |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - shares | Mar. 31, 2024 | Mar. 31, 2023 |
Income Statement [Abstract] | ||
Number of restricted stock units issued (in shares) | 203,742 | 116,712 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ (8,047) | $ (13,997) |
Other comprehensive income (loss) | ||
Foreign currency translation adjustments related to investment in unconsolidated venture | 0 | 1,248 |
Total other comprehensive income (loss) | 0 | 1,248 |
Comprehensive income (loss) | (8,047) | (12,749) |
Comprehensive (income) loss attributable to non-controlling interests | 115 | 71 |
Comprehensive income (loss) attributable to NorthStar Healthcare Income, Inc. common stockholders | $ (7,932) | $ (12,678) |
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, 2022 | 195,422,000 | ||||||
Beginning Balance at Dec. 31, 2022 | $ 301,072 | $ 299,024 | $ 1,954 | $ 1,729,589 | $ (1,428,840) | $ (3,679) | $ 2,048 |
Increase (Decrease) in Stockholder's Equity | |||||||
Non-controlling interests - contributions | 45 | 45 | |||||
Non-controlling interests - distributions | (22) | (22) | |||||
Other comprehensive income (loss) | 1,248 | 1,248 | 1,248 | ||||
Net income (loss) | (13,997) | (13,926) | (13,926) | (71) | |||
Ending Balance (in shares) at Mar. 31, 2023 | 195,422,000 | ||||||
Ending Balance at Mar. 31, 2023 | $ 288,346 | 286,346 | $ 1,954 | 1,729,589 | (1,442,766) | (2,431) | 2,000 |
Beginning Balance (in shares) at Dec. 31, 2023 | 185,712,103 | 185,712,000 | |||||
Beginning Balance at Dec. 31, 2023 | $ 131,680 | 132,889 | $ 1,857 | 1,716,757 | (1,585,725) | 0 | (1,209) |
Increase (Decrease) in Stockholder's Equity | |||||||
Amortization of equity-based compensation | 56 | 56 | 56 | ||||
Non-controlling interests - contributions | 13 | 13 | |||||
Non-controlling interests - distributions | (38) | (38) | |||||
Other comprehensive income (loss) | 0 | ||||||
Net income (loss) | $ (8,047) | (7,932) | (7,932) | (115) | |||
Ending Balance (in shares) at Mar. 31, 2024 | 185,712,103 | 185,712,000 | |||||
Ending Balance at Mar. 31, 2024 | $ 123,664 | $ 125,013 | $ 1,857 | $ 1,716,813 | $ (1,593,657) | $ 0 | $ (1,349) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (8,047) | $ (13,997) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Equity in (earnings) losses of unconsolidated ventures | (1,014) | 3,922 |
Depreciation and amortization | 8,901 | 9,649 |
Impairment loss | 456 | 0 |
Amortization of below market debt | 844 | 824 |
Amortization of deferred financing costs | 140 | 155 |
Amortization of equity-based compensation | 56 | 57 |
(Gain) loss on investments and other | 178 | (332) |
Change in allowance for uncollectible accounts | 139 | 167 |
Changes in assets and liabilities: | ||
Receivables | (438) | 587 |
Other assets | 628 | (374) |
Due to related party | (121) | (208) |
Escrow deposits payable | 367 | 330 |
Accounts payable and accrued expenses | (1,203) | (4,445) |
Other liabilities | 41 | 129 |
Net cash provided by (used in) operating activities | 927 | (3,536) |
Cash flows from investing activities: | ||
Capital expenditures for operating real estate | (2,926) | (3,810) |
Sales of real estate | 11,573 | 135 |
Distributions from unconsolidated ventures | 0 | 2,334 |
Sales of other assets | 0 | 523 |
Net cash provided by (used in) investing activities | 8,647 | (818) |
Cash flows from financing activities: | ||
Repayments of mortgage notes | (15,299) | (4,819) |
Payments on financing and other obligations | (13) | (32) |
Contributions from non-controlling interests | 13 | 45 |
Distributions to non-controlling interests | (38) | (22) |
Net cash provided by (used in) financing activities | (15,337) | (4,828) |
Net increase (decrease) in cash, cash equivalents and restricted cash | (5,763) | (9,182) |
Cash, cash equivalents and restricted cash-beginning of period | 92,943 | 115,660 |
Cash, cash equivalents and restricted cash-end of period | 87,180 | 106,478 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 8,673 | 10,434 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Accrued capital expenditures | 972 | 1,071 |
Reclassification of assets held for sale | $ 534 | $ 0 |
Business and Organization
Business and Organization | 3 Months Ended |
Mar. 31, 2024 | |
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”), owns a diversified portfolio of seniors housing properties, including independent living facilities (“ILF”), assisted living facilities (“ALF”) and memory care facilities (“MCF”) located throughout the United States. In addition, the Company has an investment through a non-controlling interest in a joint venture that invests in integrated senior health campuses, which provide services associated with ILFs, ALFs, MCFs and skilled nursing facilities (“SNF”), across the Midwest region of the United States. 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”), which became indirect subsidiaries of the Company on June 9, 2023. 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 were collectively recorded as non-controlling interests on the accompanying consolidated balance sheets prior to June 9, 2023. 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 March 31, 2024, the Company’s limited partnership interest in the Operating Partnership, directly or indirectly, was 100%. 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. 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”). The Internalization |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Accounting The accompanying 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, 2023, which was filed with the U.S. Securities and Exchange Commission on March 22, 2024. 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. As of March 31, 2024, the Company has identified certain consolidated and unconsolidated VIEs. Assets of each of the VIEs 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 VIEs of the Company are certain entities that are consolidated by the Operating Partnership. These entities are VIEs because of non-controlling interests owned by third parties, which do not have substantive kick-out or participating rights. Included in operating real estate, net and mortgage notes payable, net on the Company’s consolidated balance sheet as of March 31, 2024 is $100.3 million and $160.8 million, respectively, related to such consolidated VIEs. Unconsolidated VIEs As of March 31, 2024, the Company identified unconsolidated VIEs related to its investments in unconsolidated ventures with a carrying value of $124.0 million. The Company’s maximum exposure to loss as of March 31, 2024 would not exceed the carrying value of its investment in the VIEs. 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 March 31, 2024. The Company did not provide financial support to its unconsolidated VIEs during the three months ended March 31, 2024. As of March 31, 2024, 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. The Company may elect the fair value option of accounting for an investment that would otherwise be accounted for under the equity method. The fair value option election allows an entity to make an irrevocable election of fair value for certain financial assets and liabilities on an instrument-by-instrument basis at the initial or subsequent measurement. The decision to elect the fair value option must be applied to an entire instrument and is irrevocable once elected. Under the fair value option, the Company records its share of the changes to fair value of the investment and any unrealized gains and losses. On June 30, 2023, the Company elected the fair value option method to account for its investment in the Espresso joint venture, which is included in investments in unconsolidated ventures on the consolidated balance sheets. The Company’s assessment for the recoverability of its investment took into consideration the joint venture’s remaining assets and estimated future cash distributions, less transaction and wind down costs. The Company will record any changes to its investment’s fair value in gain (loss) on investments and other in the consolidated statements of operations. From the date of the election of fair value through March 31, 2024, the Company did not record any changes to the fair value of its investment in the Espresso joint venture. Refer to Note 4 “Investment in Unconsolidated Ventures” and Note 10 “Fair Value” for further discussion. 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 the relevant 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 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 and money market funds invested in short-term U.S. government securities. 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): March 31, 2024 (Unaudited) December 31, 2023 Cash and cash equivalents $ 80,989 $ 85,037 Restricted cash 6,191 7,906 Total cash, cash equivalents and restricted cash $ 87,180 $ 92,943 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 39 to 49 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 on the Company’s consolidated balance sheets. As of March 31, 2024, furniture, fixtures and equipment under finance leases totaled $0.2 million. The leased equipment is amortized on a straight-line basis. Payments for finance leases totaled $9,399 and $29,070 for the three months ended March 31, 2024 and 2023, respectively. 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 April 1 through December 31, 2024 $ 28 Years Ending December 31: 2025 $ 38 2026 33 2027 18 2028 10 Total minimum lease payments $ 127 Less: Amount representing interest (20) Present value of minimum lease payments $ 107 The weighted average interest rate related to the finance lease obligations is 6.6% with a weighted average lease term of 3.6 years. As of March 31, 2024, there were no leases that had yet to commence which would create significant rights and obligations to the Company as lessee. Assets Held For Sale The Company classifies certain long-lived assets as held for sale once the criteria, as defined by U.S. GAAP, have been met and are expected to sell within one year. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell, with any write-down recorded to impairment loss on the consolidated statements of operations. Depreciation and amortization is not recorded for assets classified as held for sale. In March 2024, the Company entered into an agreement to sell a land parcel within the Rochester portfolio for $0.5 million, and as of March 31, 2024, has classified the property as held for sale on its consolidated balance sheets. At the time of the reclassification to held for sale, the Company recorded an impairment loss of $39,000. As of December 31, 2023, the Company had one property within the Rochester portfolio classified as held for sale, which was sold in February 2024. Intangible Assets and Deferred Costs Deferred Costs Deferred costs consist of deferred financing 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 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. 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. Intangible assets, net, as presented on the consolidated balance sheets 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): March 31, 2024 (Unaudited) December 31, 2023 In-place lease value $ 120,149 $ 120,149 Less: Accumulated amortization (118,317) (118,233) Intangible assets, net $ 1,832 $ 1,916 The Company recorded $0.1 million of amortization expense for in-place leases for the three months ended March 31, 2024 and 2023. The following table presents future amortization of in-place lease value (dollars in thousands): April 1 through December 31, 2024 $ 253 Years Ending December 31: 2025 337 2026 337 2027 337 2028 337 Thereafter 231 Total $ 1,832 Derivative Instruments The Company uses derivative instruments to manage its interest rate risk. The Company’s derivative instruments are recorded at fair value. The accounting for changes in fair value of derivatives depends upon whether or not the Company has elected to designate the derivative in a hedging relationship and the derivative qualifies for hedge accounting. Under hedge accounting, changes in fair value for derivatives are recorded through other comprehensive income. When hedge accounting is not elected, changes in fair value for derivatives are recorded through the income statement. The Company has interest rate caps that have not been designated for hedge accounting. The fair value of the Company's interest rate caps totaled $0.2 million and $0.4 million as of March 31, 2024 and December 31, 2023, respectively, and are included in other assets on the consolidated balance sheets. Changes in fair value of derivatives Revenue Recognition Operating Real Estate Rental income from operating real estate is derived from leasing of space to operators and residents, 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 and MCFs 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. Beginning in February 2021, the operator of the Company’s 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. On March 27, 2023, the Company entered into a lease forbearance and modification agreement (the “Forbearance Agreement”) with the existing operator, pursuant to which, among other things, the Company will be entitled to receive all cash flow in excess of permitted expenses, and be required to fund any operating deficits, through 2025, subject to the terms and conditions thereof. For the three months ended March 31, 2024 and 2023, the Company did not receive any excess cash flow or fund any operating deficits and, as such, did not record any rental income related to its net lease properties. For the three months ended March 31, 2024 and 2023, total property and other revenue includes variable lease revenue of $3.5 million and $3.4 million, respectively. Variable lease revenue includes ancillary services provided to residents, as well as non-recurring services and fees at the Company’s operating facilities. Impairment on Operating Real Estate and Investments in Unconsolidated Ventures Operating Real Estate and Assets Held for Sale 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 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 three months ended March 31, 2024, the Company recorded impairment losses on its operating real estate totaling $0.5 million to reflect the market value of a land parcel within the Rochester portfolio designated as held for sale and for property damage sustained by facilities within the Winterfell and Aqua portfolios. During the three months ended March 31, 2023, the Company did not record any impairment losses on its operating real estate. Investments in Unconsolidated Ventures The Company reviews its investments in unconsolidated ventures 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 on the Company’s investment in unconsolidated ventures, 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 impairment loss in the consolidated statements of operations. During the three months ended March 31, 2024 and 2023, 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 March 31, 2024, the Company has not recorded an allowance for credit losses on its receivables. Acquisition Fees and Expenses The Company recorded an expense for certain acquisition costs and fees associated with transactions deemed to be business combinations in which it consolidated the asset and capitalized these costs for transactions deemed to be acquisitions of an asset, including an equity investment. 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. For the taxable year ended December 31, 2023, the Company anticipates that its REIT taxable income, if any, will be offset by its net operating loss carry-forward and as such, the Company will not be subject to the distribution requirements. The Company’s most recently filed tax return is for the year ended December 31, 2022 and includes a net operating loss carry-forward of $248.5 million. 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 2019 to 2023, 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 earnings (losses) recognized by the Company with respect to its interest in the TRS. The Company recorded an income tax expense of $20,000 and $15,000 for the three months ended March 31, 2024 and 2023, respectively. Deferred income tax assets and liabilities are cal |
Operating Real Estate
Operating Real Estate | 3 Months Ended |
Mar. 31, 2024 | |
Real Estate [Abstract] | |
Operating Real Estate | Operating Real Estate The following table presents operating real estate, net (dollars in thousands): March 31, 2024 (Unaudited) December 31, 2023 Land $ 115,225 $ 115,758 Land improvements 12,819 12,705 Buildings and improvements 865,304 861,452 Tenant improvements 372 372 Construction in progress 3,635 5,493 Furniture, fixtures and equipment 94,746 93,373 Subtotal $ 1,092,101 $ 1,089,153 Less: Accumulated depreciation (276,701) (267,883) Operating real estate, net $ 815,400 $ 821,270 For the three months ended March 31, 2024 and 2023, depreciation expense was $8.8 million and $9.6 million, respectively. Within the table above, operating real estate has been reduced by accumulated impairment losses of $163.3 million and $162.9 million as of March 31, 2024 and December 31, 2023, respectively. Impairment losses, as presented on the consolidated statements of operations, for the Company’s operating real estate and properties held for sale totaled $0.5 million for the three months ended March 31, 2024. There were no impairment losses recorded for the three months ended March 31, 2023. Refer to Note 2, “Summary of Significant Accounting Policies” for further discussion. The following table presents the operators and managers of the Company’s operating real estate (dollars in thousands): As of March 31, 2024 Three Months Ended March 31, 2024 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 3,969 $ 33,695 69.1 % Watermark Retirement Communities (4) 6 723 7,346 15.1 % Avamere Health Services 5 453 5,690 11.7 % Integral Senior Living 1 40 1,141 2.3 % Arcadia Management (5) 4 564 — — % Other (6) — — 880 1.8 % Total 48 5,749 $ 48,752 100.0 % ______________________________________ (1) Represents rooms for ALFs, ILFs and MCFs. (2) Includes rental income received from the Company’s net lease properties, 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 Integral Senior Living own 80%. (4) Property count and units exclude the properties within the Rochester Sub-Portfolio, which were placed into a receivership in October 2023. (5) During the three months ended March 31, 2024, the Company did not record any rental income from its net lease operator. (6) Consists primarily of interest income earned on corporate-level cash and cash equivalents. Rochester Sub-Portfolio As a result of the mortgage loan payment defaults in July 2023, on October 30, 2023, the Rochester Sub-Portfolio (as defined in Note 5, “Borrowings”) was placed into a receivership. The receiver now has effective control of the properties until ownership of the properties transfers to the lender or its designee. As a result of the loss of control, the Company discontinued recognizing revenues and expenses related to the Rochester Sub-Portfolio as of October 30, 2023 and derecognized the properties and related assets from the Company’s financial statements, which resulted in a $59.0 million loss recognized in accordance with ASC 610-20, “Gains and Losses from the Derecognition of Nonfinancial Assets.” Arbors Portfolio |
Investments in Unconsolidated V
Investments in Unconsolidated Ventures | 3 Months Ended |
Mar. 31, 2024 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments in Unconsolidated Ventures | Investments in Unconsolidated Ventures The Company’s investments in unconsolidated ventures are accounted for under the equity method or fair value option. The following table presents the Company’s investments in unconsolidated ventures (dollars in thousands): Carrying Value Portfolio Acquisition Date Ownership March 31, 2024 (Unaudited) December 31, 2023 Trilogy Dec-2015 23.8 % $ 123,391 $ 122,339 Solstice Jul-2017 20.0 % 430 468 Espresso Jul-2015 36.7 % 142 142 Investments in Unconsolidated Ventures $ 123,963 $ 122,949 Trilogy Trilogy Investors, LLC (“Trilogy”) indirectly owns 126 integrated senior health campuses located in the Midwest, which are all operating properties managed pursuant to a management agreement with Trilogy Management Services, as well as ancillary services businesses, including a therapy business and a pharmacy business. Affiliates of American Healthcare REIT, Inc.(“AHR”) own approximately 75.4% of Trilogy, with management of Trilogy owning the remaining 0.8%. In November 2023, the Company entered into an agreement giving AHR the right to purchase the Company’s ownership interests in Trilogy at any time prior to September 30, 2025, assuming AHR exercises all of its extension options and subject to satisfaction of certain closing conditions, ranging from $240.5 million to up to $260 million depending upon the purchase price consideration, timing of the closing and certain additional fees that AHR may pay us in the interim. Solstice Solstice Senior Living, LLC (“Solstice”), the manager of the Winterfell portfolio, 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% . Espresso During the year ended December 31, 2023, the Espresso joint venture completed the sale of its remaining sub-portfolios. The Company’s elected the fair value option method to account for its investment in the Espresso joint venture on June 30, 2023. As of March 31, 2024, the remaining carrying value represents the Company’s proportionate share of available cash, less wind down costs and other expenses. The following table presents the results of the Company’s investment in unconsolidated ventures (dollars in thousands): Three Months Ended March 31, 2024 2023 Portfolio Equity in Earnings (Losses) Cash Distribution Equity in Earnings (Losses) Cash Distribution Trilogy $ 1,052 $ — $ (309) $ 2,334 Solstice (38) — (29) — Espresso (1) — — 109 — Investments sold — — (3,693) — Total $ 1,014 $ — $ (3,922) $ 2,334 _______________________________________ (1) The Company elected to the fair value option method to account for the joint venture on June 30, 2023, which resulted in no equity in earnings (losses) recorded subsequent to the accounting policy election. Investments Sold |
Borrowings
Borrowings | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings The following table presents the Company’s mortgage notes payable (dollars in thousands): March 31, 2024 (Unaudited) December 31, 2023 Recourse vs. Non-Recourse (1) Initial Contractual Interest Rate (2) Principal Amount (3) Carrying Value (3) Principal (3) Carrying (3) Aqua Portfolio Frisco, TX Non-recourse Feb 2026 SOFR + 2.91% $ 26,000 $ 25,728 $ 26,000 $ 25,694 Milford, OH Non-recourse Sep 2026 SOFR + 2.79% 18,133 17,992 18,173 18,015 Rochester Portfolio Rochester, NY Non-recourse Feb 2025 4.25% 17,282 17,263 17,470 17,448 Rochester, NY (4) Non-recourse Jul 2023 SOFR + 2.45% 99,786 99,786 99,786 99,786 Rochester, NY (5) Non-recourse Repaid SOFR + 2.93% — — 10,874 10,853 Arbors Portfolio (6) Various locations Non-recourse Feb 2025 3.99% 80,874 80,732 81,397 81,209 Winterfell Portfolio (7) Various locations Non-recourse Jun 2025 4.17% 580,135 576,202 583,471 578,694 Avamere Portfolio (8) Various locations Non-recourse Feb 2027 4.66% 66,353 66,136 66,691 66,455 Mortgage notes payable, net $ 888,563 $ 883,839 $ 903,862 $ 898,154 _______________________________________ (1) Subject to non-recourse carve-outs. (2) Floating-rate borrowings total $143.9 million of principal outstanding and reference one-month of the Secured Overnight Financing Rate (“SOFR”). (3) 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. (4) Composed of seven individual mortgage notes payable secured by the Rochester Sub-Portfolio (as defined below), cross-collateralized and subject to cross-default. (5) Upon the sale of the underlying collateral property, the mortgage note was repaid in full in February 2024. (6) Composed of four individual mortgage notes payable secured by four healthcare real estate properties, cross-collateralized and subject to cross-default. (7) Composed of 32 individual mortgage notes payable secured by 32 healthcare real estate properties, cross-collateralized and subject to cross-default. (8) Composed of five individual mortgage notes payable secured by five healthcare real estate properties, cross-collateralized and subject to cross-default. The following table presents future scheduled principal payments on mortgage notes payable based on initial maturity as of March 31, 2024 (dollars in thousands): April 1 through December 31, 2024 (1) $ 113,275 Years Ending December 31: 2025 667,741 2026 45,151 2027 62,396 Total $ 888,563 _______________________________________ (1) Includes the outstanding principal of the Rochester Sub-Portfolio Loan (as defined below), which is in default. Rochester Sub-Portfolio Loan In July 2023, the Company elected not to use cash reserves to pay July debt service on seven cross-defaulted and cross-collateralized mortgage notes with an aggregate principal amount outstanding of $99.8 million (the “Rochester Sub-Portfolio Loan") secured by seven healthcare real estate properties (the “Rochester Sub-Portfolio") that did not generate sufficient cash flow to pay debt service in full. The Rochester Sub-Portfolio Loan is non-recourse to the Company, subject to limited customary exceptions. As a result of the payment default, on October 25, 2023, the lender filed a complaint seeking the appointment of a receiver and foreclosure on the underlying properties and to enforce its rights in its collateral under the loan documents and, on October 30, 2023, the Rochester Sub-Portfolio was placed into a receivership to facilitate an orderly transition of the operations, and eventually ownership, of the properties. Once legal ownership of the Rochester Sub-Portfolio transfers and the obligations under the Rochester Sub-Portfolio Loan are extinguished, the Company expects to recognize a gain related to the debt extinguishment in accordance with ASC 470, “Debt.” However, until the extinguishment occurs, default interest expense and any other expenses related to the Rochester Sub-Portfolio Loan will continue to accrue. As of March 31, 2024, $99.8 million of outstanding mortgage debt and $11.0 million of accrued interest expense were included on the Company's consolidated balance sheets related to the Rochester Sub-Portfolio Loan. Arbors Portfolio |
Related Party Arrangements
Related Party Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
Related Party Arrangements | Related Party Arrangements Former Advisor In connection with the Internalization, on October 21, 2022, the advisory agreement was terminated and, along with the Operating Partnership and the Former Advisor, the Company entered into a Transition Services Agreement (the “TSA”) to facilitate an orderly transition of the Company’s management of its operations. As of December 31, 2023, the TSA was effectively terminated. Prior to the Internalization, the Former 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 Former Advisor received fees and reimbursements from the Company. Pursuant to the advisory agreement, the Former Advisor could defer or waive fees in its discretion. Investments in Unconsolidated 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 three months ended March 31, 2024, the Company recognized property management fee expense of $1.7 million payable to Solstice related to the Winterfell portfolio. |
Equity-Based Compensation
Equity-Based Compensation | 3 Months Ended |
Mar. 31, 2024 | |
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 March 31, 2024, the Company’s independent directors were granted a total of 159,932 shares of restricted common stock and 203,742 restricted stock units totaling $1.3 million and $0.7 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 $56,250 and $56,875 for the three months ended March 31, 2024 and 2023, respectively. Equity-based compensation expense is recorded in general and administrative expenses in the consolidated statements of operations. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2024 | |
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 were able to 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. Since inception, the Company issued 25.7 million shares of common stock, generating gross offering proceeds of $232.6 million pursuant to the DRP. No selling commissions or dealer manager fees were paid on shares issued pursuant to the DRP. In April 2022, the Company’s board of directors elected to end the DRP, effective April 30, 2022. Distributions Effective February 1, 2019, the Company’s board of directors determined to stop 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 approximately $97.0 million. Share Repurchase Program |
Non-controlling Interests
Non-controlling Interests | 3 Months Ended |
Mar. 31, 2024 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interests | Non-controlling Interests Operating Partnership Non-controlling interests included 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 was based on the limited partners’ ownership percentage of the Operating Partnership. As a result of the Sale of Minority Interests on June 9, 2023, the Company’s limited partnership interest in the Operating Partnership, directly or indirectly, is 100% as of March 31, 2024. Income (loss) allocated to the Operating Partnership non-controlling interests for the period prior to June 9, 2023 was de minimis. Other |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2024 | |
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. Derivative Instruments Derivative instruments consist of interest rate contracts and foreign exchange contracts that are generally traded over-the-counter, and are valued using a third-party service provider. Quotations on over-the-counter derivatives are not adjusted and are generally valued using observable inputs such as contractual cash flows, yield curve, foreign currency rates and credit spreads, and are classified as Level 2 of the fair value hierarchy. Although credit valuation adjustments, such as the risk of default, rely on Level 3 inputs, these inputs are not significant to the overall valuation of its derivatives. As a result, derivative valuations in their entirety are classified as Level 2 of the fair value hierarchy. Fair Value Hierarchy Financial assets recorded at fair value on a recurring basis are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table presents financial assets that were accounted for at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 by level within the fair value hierarchy (dollars in thousands): March 31, 2024 (Unaudited) December 31, 2023 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Financial assets: Derivative assets - interest rate caps $ — $ 223 $ — $ — $ 433 $ — Investment in Espresso joint venture — — 142 — — 142 Derivative Assets - Interest Rate Caps The Company’s interest rate caps fair values are determined using models developed by the respective counterparty that use the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The floating interest rates used in the calculation of projected receipts on the caps are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. Investment in Espresso Joint Venture The Company’s assessment of fair value for its unconsolidated investment in the Espresso joint venture took into consideration its proportionate share of available cash, less wind down costs and other expenses. The Company believes the assessment of fair value to be reasonable as of March 31, 2024 and did not make any fair value adjustments during the three months ended March 31, 2024. 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): March 31, 2024 (Unaudited) December 31, 2023 Principal Amount Carrying Value Fair Value Principal Amount Carrying Value Fair Value Financial liabilities: (1) Mortgage notes payable, net $ 888,563 $ 883,839 $ 831,911 $ 903,862 $ 898,154 $ 842,559 _______________________________________ (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 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 SOFR 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. 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 or write-down of asset values due to impairment. The following table summarizes the fair value and impairment losses of Level 3 assets which have been measured at fair value on a nonrecurring basis at the time of impairment during the periods presented (dollars in thousands): Three Months Ended Year Ended March 31, 2024 (Unaudited) December 31, 2023 Fair Value Impairment Losses (1) Fair Value Impairment Losses (1) Operating real estate, net $ — $ — $ 56,718 $ 44,294 Investments in unconsolidated ventures — — 3,075 4,728 Assets held for sale 495 39 11,611 355 _______________________________________ (1) Excludes impairment losses for property damage sustained by facilities. 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 6.25% to 8.50% and discount rates ranging from 7.75% to 10.50%, third party appraisals and offer prices. Investments in Unconsolidated Ventures In June 2023, the Company impaired its investment in the Espresso joint venture by $4.7 million, which reduced the carrying value of its investment to $3.1 million as of June 30, 2023. The Company’s assessment of fair value at the time of impairment for its investment took into consideration the net proceeds that are estimated to be realized from the sales, under contract, of the remaining real estate owned by the joint venture as well as the Company’s proportionate share of available cash, less wind down costs and other expenses. Upon impairing its investment, the Company elected the fair value option method to account for its investment in the Espresso joint venture on June 30, 2023. Assets Held For Sale |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company conducts its business through the following segments, which are based on how management reviews and manages its business. • Direct Operating Investments - Properties operated pursuant to management agreements with healthcare managers. • Direct Net Lease Investments - Properties operated under net leases with an operator. • Unconsolidated Investments - Joint venture investments, in which the Company owns a minority, non-controlling interest. Our chief operating decision maker (“CODM”) evaluates performance of each reportable business segment and determines how to allocate resources to those segments, in significant part, based on net operating income (“NOI”) and related measures for each segment. The Company defines NOI as property and other revenues, less property operating expenses. While the Company believes that net income (loss), as defined by GAAP, is the most appropriate earnings measurement, the Company believes that NOI provides useful information to stockholders and provides management with a performance measure to compare the Company's operating results to the operating results of other healthcare real estate companies between periods on a consistent basis. The following tables present the NOI of the Company’s direct investments segments and the Company's proportionate share of the NOI generated by the joint ventures of its unconsolidated investments segment (dollars in thousands): Direct Investments Three Months Ended March 31, 2024 Net Lease Operating Unconsolidated Investments Non-Segment (2) Adjustments (3) Total (4) Property and other revenues (1) $ — $ 47,872 $ 92,022 $ 880 $ (92,022) $ 48,752 Property operating expenses — (33,381) (81,899) — 81,899 (33,381) Net operating income $ — $ 14,491 $ 10,123 $ 880 $ (10,123) $ 15,371 Interest expense (12,862) Transaction costs (16) General and administrative expenses (3,327) Depreciation and amortization (8,901) Impairment loss (456) Other income, net 1,000 Gain (loss) on investments and other 150 Equity in earnings (losses) of unconsolidated ventures 1,014 Income tax expense (20) Net income (loss) $ (8,047) _______________________________________ (1) Includes rental income received from net lease properties, if any, as well as resident room and care charges, ancillary service fees and other related revenue earned from operating properties. (2) Primarily consists of interest income earned on corporate cash and equivalents. (3) Represents adjustments to eliminate the NOI presented for the unconsolidated investments segment, in order to reconcile to the Company's net income (loss) prepared in accordance with GAAP. For investments accounted for under the equity method of accounting, the Company records its proportionate share of the net income of its unconsolidated investments through equity in earnings (losses) of unconsolidated ventures as presented on its consolidated statements of operations. (4) Non-NOI items are not allocated to individual segments for purposes of assessing segment performance. Direct Investments Three Months Ended March 31, 2023 Net Lease Operating Unconsolidated Investments (2) Non-Segment (3) Adjustments (4) Total (5) Property and other revenues (1) $ — $ 48,849 $ 94,655 $ 719 $ (94,655) $ 49,568 Property operating expenses — (35,077) (81,615) — 81,615 (35,077) Net operating income $ — $ 13,772 $ 13,040 $ 719 $ (13,040) $ 14,491 Interest expense (11,359) Transaction costs (97) General and administrative expenses (3,910) Depreciation and amortization (9,649) Other income, net 132 Gain (loss) on investments and other 332 Equity in earnings (losses) of unconsolidated ventures (3,922) Income tax expense (15) Net income (loss) $ (13,997) _______________________________________ (1) Includes rental income received from net lease properties, if any, as well as resident room and care charges, ancillary service fees and other related revenue earned from operating properties. (2) Includes the Company's proportionate share of revenues and expenses of the Diversified US/UK and Eclipse Portfolios prior to the Sale of Minority Interests in June 2023. (3) Primarily consists of interest income earned on corporate cash and equivalents. (4) Represents adjustments to eliminate the NOI presented for the unconsolidated investments segment, in order to reconcile to the Company's net income (loss) prepared in accordance with GAAP. For investments accounted for under the equity method of accounting, the Company records its proportionate share of the net income of its unconsolidated investments through equity in earnings (losses) of unconsolidated ventures as presented on its consolidated statements of operations. (5) Non-NOI items are not allocated to individual segments for purposes of assessing segment performance. The following table presents total assets by segment (dollars in thousands): Direct Investments Total Assets: Net Lease Operating Unconsolidated Investments Non-Segment (1) Total March 31, 2024 $ 73,633 $ 770,400 $ 123,963 $ 69,135 $ 1,037,131 December 31, 2023 74,655 787,925 122,949 73,890 1,059,419 ______________________________________ (1) Represents primarily corporate cash and cash equivalents balances. The following table presents capital expenditures made by the Company for each of its reportable segments (dollars in thousands): Direct Investments Total Capital Expenditures for the Three Months Ended: Net Lease Operating Unconsolidated Investments Non-Segment Total March 31, 2024 $ — 2,926 $ — $ — $ 2,926 March 31, 2023 — 3,810 — — 3,810 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies As of March 31, 2024, the Company believes there are no material unrecorded 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 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 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. As of March 31, 2024, the Company has an accrued reserve of $0.6 million, inclusive of legal fees, relating to a resolution of claims against a manager of one of the Company’s direct operating investments, for which the Company has indemnification obligations under the management agreement. 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. Disruptions in insurance markets may increase the costs of coverage and result in the Company retaining more risk, to the extent it is more commercially reasonable to do so. In addition, there are also certain types of extraordinary losses, such as those due to acts of war or other events, that may be either uninsurable or not economically insurable. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events There were no material events which have occurred subsequent to March 31, 2024 through the issuance of the consolidated financial statements. |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Accounting The accompanying 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, 2023, which was filed with the U.S. Securities and Exchange Commission on March 22, 2024. |
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. As of March 31, 2024, the Company has identified certain consolidated and unconsolidated VIEs. Assets of each of the VIEs 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 VIEs of the Company are certain entities that are consolidated by the Operating Partnership. These entities are VIEs because of non-controlling interests owned by third parties, which do not have substantive kick-out or participating rights. Included in operating real estate, net and mortgage notes payable, net on the Company’s consolidated balance sheet as of March 31, 2024 is $100.3 million and $160.8 million, respectively, related to such 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. The Company may elect the fair value option of accounting for an investment that would otherwise be accounted for under the equity method. The fair value option election allows an entity to make an irrevocable election of fair value for certain financial assets and liabilities on an instrument-by-instrument basis at the initial or subsequent measurement. The decision to elect the fair value option must be applied to an entire instrument and is irrevocable once elected. Under the fair value option, the Company records its share of the changes to fair value of the investment and any unrealized gains and losses. On June 30, 2023, the Company elected the fair value option method to account for its investment in the Espresso joint venture, which is included in investments in unconsolidated ventures on the consolidated balance sheets. The Company’s assessment for the recoverability of its investment took into consideration the joint venture’s remaining assets and estimated future cash distributions, less transaction and wind down costs. The Company will record any changes to its investment’s fair value in gain (loss) on investments and other in the consolidated statements of operations. From the date of the election of fair value through March 31, 2024, the Company did not record any changes to the fair value of its investment in the Espresso joint venture. Refer to Note 4 “Investment in Unconsolidated Ventures” and Note 10 “Fair Value” for further discussion. |
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 the relevant 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 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 and money market funds invested in short-term U.S. government securities. 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 39 to 49 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 |
Assets Held For Sale | The Company classifies certain long-lived assets as held for sale once the criteria, as defined by U.S. GAAP, have been met and are expected to sell within one year. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value minus cost to sell, with any write-down recorded to impairment loss on the consolidated statements of operations. Depreciation and amortization is not recorded for assets classified as held for sale. |
Deferred Costs | Deferred Costs Deferred costs consist of deferred financing 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 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. |
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. |
Derivative Instruments | Derivative Instruments |
Revenue Recognition | Revenue Recognition Operating Real Estate Rental income from operating real estate is derived from leasing of space to operators and residents, 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 and MCFs 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. Beginning in February 2021, the operator of the Company’s 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. On March 27, 2023, the Company entered into a lease forbearance and modification agreement (the “Forbearance Agreement”) with the existing operator, pursuant to which, among other things, the Company will be entitled to receive all cash flow in excess of permitted expenses, and be required to fund any operating deficits, through 2025, subject to the terms and conditions thereof. For the three months ended March 31, 2024 and 2023, the Company did not receive any excess cash flow or fund any operating deficits and, as such, did not record any rental income related to its net lease properties. For the three months ended March 31, 2024 and 2023, total property and other revenue includes variable lease revenue of $3.5 million and $3.4 million, respectively. Variable lease revenue includes ancillary services provided to residents, as well as non-recurring services and fees at the Company’s operating facilities. |
Impairment on Operating Real Estate and Investments in Unconsolidated Ventures | Impairment on Operating Real Estate and Investments in Unconsolidated Ventures Operating Real Estate and Assets Held for Sale 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 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 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 on the Company’s investment in unconsolidated ventures, 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 impairment loss in the consolidated statements of operations. |
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 Expenses |
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. For the taxable year ended December 31, 2023, the Company anticipates that its REIT taxable income, if any, will be offset by its net operating loss carry-forward and as such, the Company will not be subject to the distribution requirements. The Company’s most recently filed tax return is for the year ended December 31, 2022 and includes a net operating loss carry-forward of $248.5 million. 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 2019 to 2023, 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 earnings (losses) recognized by the Company with respect to its interest in the TRS. The Company recorded an income tax expense of $20,000 and $15,000 for the three months ended March 31, 2024 and 2023, respectively. Deferred income tax assets and liabilities are calculated based on temporary differences between the Company’s U.S. GAAP consolidated financial statements and the federal and state income tax basis of assets and liabilities as of the consolidated balance sheet date. The Company evaluates the realizability of its deferred tax assets (e.g., net operating loss and capital loss carryforwards) and recognizes a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of its deferred tax assets will not be realized. When evaluating the realizability of its deferred tax assets, the Company considers estimates of expected future taxable income, existing and projected book/tax differences, tax planning strategies available and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires the Company to forecast its business and general economic environment in future periods. Changes in estimate of deferred tax asset realizability, if any, are included in provision for income tax expense in the consolidated statements of operations. The Company has a deferred tax asset and continues to have a full valuation allowance recognized, as there are no changes in the facts and circumstances to indicate that the Company should release the valuation allowance. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) |
Foreign Currency | Foreign Currency The Company is no longer exposed to foreign currency as a result of the Sale of Minority Interests (as defined in Note 4, “Investments in Unconsolidated Ventures”). Prior to the Sale of Minority Interests on June 9, 2023, the Company had exposure to foreign currency through an investment in an unconsolidated venture, the effects of which were recorded as a component of accumulated OCI in the consolidated statements of equity and in equity in earnings (losses) in the consolidated statements of operations. Upon the Sale of Minority Interests, the accumulated foreign currency losses were reclassified to gain (loss) on investments and other on the consolidated statements of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Standards Adopted in 2024 None. Future Application of Accounting Standards In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures of significant segment expenses. ASU No. 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and requires retrospective application to all periods presented upon adoption. Early adoption is permitted. The Company plans to adopt ASU No. 2023-07 on its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and does not anticipate the application of the accounting standards will have a material impact on the Company’s financial statements. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU No. 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company plans to adopt ASU No. 2023-09 on its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and does not anticipate the application of the accounting standards will have a material impact on the Company’s financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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): March 31, 2024 (Unaudited) December 31, 2023 Cash and cash equivalents $ 80,989 $ 85,037 Restricted cash 6,191 7,906 Total cash, cash equivalents and restricted cash $ 87,180 $ 92,943 |
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): March 31, 2024 (Unaudited) December 31, 2023 Cash and cash equivalents $ 80,989 $ 85,037 Restricted cash 6,191 7,906 Total cash, cash equivalents and restricted cash $ 87,180 $ 92,943 |
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 39 to 49 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 April 1 through December 31, 2024 $ 28 Years Ending December 31: 2025 $ 38 2026 33 2027 18 2028 10 Total minimum lease payments $ 127 Less: Amount representing interest (20) Present value of minimum lease payments $ 107 |
Schedule of Intangible Assets, Net | The following table presents intangible assets, net (dollars in thousands): March 31, 2024 (Unaudited) December 31, 2023 In-place lease value $ 120,149 $ 120,149 Less: Accumulated amortization (118,317) (118,233) Intangible assets, net $ 1,832 $ 1,916 |
Schedule of Deferred Costs and Intangible Assets, Future Amortization Expense | The following table presents future amortization of in-place lease value (dollars in thousands): April 1 through December 31, 2024 $ 253 Years Ending December 31: 2025 337 2026 337 2027 337 2028 337 Thereafter 231 Total $ 1,832 |
Schedule of Deferred Tax Assets and Liabilities | The components of the Company’s deferred tax assets as of March 31, 2024 and December 31, 2023 are as follows (in thousands): March 31, 2024 (Unaudited) December 31, 2023 Fixed assets and other $ 634 $ 656 Net operating losses 16,079 15,827 Total deferred tax assets $ 16,713 $ 16,483 Valuation allowance (16,713) (16,483) Net deferred income tax assets $ — $ — |
Operating Real Estate (Tables)
Operating Real Estate (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Real Estate [Abstract] | |
Schedule of Operating Real Estate | The following table presents operating real estate, net (dollars in thousands): March 31, 2024 (Unaudited) December 31, 2023 Land $ 115,225 $ 115,758 Land improvements 12,819 12,705 Buildings and improvements 865,304 861,452 Tenant improvements 372 372 Construction in progress 3,635 5,493 Furniture, fixtures and equipment 94,746 93,373 Subtotal $ 1,092,101 $ 1,089,153 Less: Accumulated depreciation (276,701) (267,883) Operating real estate, net $ 815,400 $ 821,270 |
Schedule of Real Estate Properties | The following table presents the operators and managers of the Company’s operating real estate (dollars in thousands): As of March 31, 2024 Three Months Ended March 31, 2024 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 3,969 $ 33,695 69.1 % Watermark Retirement Communities (4) 6 723 7,346 15.1 % Avamere Health Services 5 453 5,690 11.7 % Integral Senior Living 1 40 1,141 2.3 % Arcadia Management (5) 4 564 — — % Other (6) — — 880 1.8 % Total 48 5,749 $ 48,752 100.0 % ______________________________________ (1) Represents rooms for ALFs, ILFs and MCFs. (2) Includes rental income received from the Company’s net lease properties, 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 Integral Senior Living own 80%. (4) Property count and units exclude the properties within the Rochester Sub-Portfolio, which were placed into a receivership in October 2023. (5) During the three months ended March 31, 2024, the Company did not record any rental income from its net lease operator. (6) Consists primarily of interest income earned on corporate-level cash and cash equivalents. |
Investments in Unconsolidated_2
Investments in Unconsolidated Ventures (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | The following table presents the Company’s investments in unconsolidated ventures (dollars in thousands): Carrying Value Portfolio Acquisition Date Ownership March 31, 2024 (Unaudited) December 31, 2023 Trilogy Dec-2015 23.8 % $ 123,391 $ 122,339 Solstice Jul-2017 20.0 % 430 468 Espresso Jul-2015 36.7 % 142 142 Investments in Unconsolidated Ventures $ 123,963 $ 122,949 The following table presents the results of the Company’s investment in unconsolidated ventures (dollars in thousands): Three Months Ended March 31, 2024 2023 Portfolio Equity in Earnings (Losses) Cash Distribution Equity in Earnings (Losses) Cash Distribution Trilogy $ 1,052 $ — $ (309) $ 2,334 Solstice (38) — (29) — Espresso (1) — — 109 — Investments sold — — (3,693) — Total $ 1,014 $ — $ (3,922) $ 2,334 _______________________________________ (1) The Company elected to the fair value option method to account for the joint venture on June 30, 2023, which resulted in no equity in earnings (losses) recorded subsequent to the accounting policy election. |
Borrowings (Tables)
Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Summary of Borrowings | The following table presents the Company’s mortgage notes payable (dollars in thousands): March 31, 2024 (Unaudited) December 31, 2023 Recourse vs. Non-Recourse (1) Initial Contractual Interest Rate (2) Principal Amount (3) Carrying Value (3) Principal (3) Carrying (3) Aqua Portfolio Frisco, TX Non-recourse Feb 2026 SOFR + 2.91% $ 26,000 $ 25,728 $ 26,000 $ 25,694 Milford, OH Non-recourse Sep 2026 SOFR + 2.79% 18,133 17,992 18,173 18,015 Rochester Portfolio Rochester, NY Non-recourse Feb 2025 4.25% 17,282 17,263 17,470 17,448 Rochester, NY (4) Non-recourse Jul 2023 SOFR + 2.45% 99,786 99,786 99,786 99,786 Rochester, NY (5) Non-recourse Repaid SOFR + 2.93% — — 10,874 10,853 Arbors Portfolio (6) Various locations Non-recourse Feb 2025 3.99% 80,874 80,732 81,397 81,209 Winterfell Portfolio (7) Various locations Non-recourse Jun 2025 4.17% 580,135 576,202 583,471 578,694 Avamere Portfolio (8) Various locations Non-recourse Feb 2027 4.66% 66,353 66,136 66,691 66,455 Mortgage notes payable, net $ 888,563 $ 883,839 $ 903,862 $ 898,154 _______________________________________ (1) Subject to non-recourse carve-outs. (2) Floating-rate borrowings total $143.9 million of principal outstanding and reference one-month of the Secured Overnight Financing Rate (“SOFR”). (3) 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. (4) Composed of seven individual mortgage notes payable secured by the Rochester Sub-Portfolio (as defined below), cross-collateralized and subject to cross-default. (5) Upon the sale of the underlying collateral property, the mortgage note was repaid in full in February 2024. (6) Composed of four individual mortgage notes payable secured by four healthcare real estate properties, cross-collateralized and subject to cross-default. (7) Composed of 32 individual mortgage notes payable secured by 32 healthcare real estate properties, cross-collateralized and subject to cross-default. (8) 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 notes payable based on initial maturity as of March 31, 2024 (dollars in thousands): April 1 through December 31, 2024 (1) $ 113,275 Years Ending December 31: 2025 667,741 2026 45,151 2027 62,396 Total $ 888,563 _______________________________________ (1) Includes the outstanding principal of the Rochester Sub-Portfolio Loan (as defined below), which is in default. |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Schedule of the Principal Amount, Carrying Value and Fair Value of Certain Financial Assets and Liabilities | The following table presents financial assets that were accounted for at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 by level within the fair value hierarchy (dollars in thousands): March 31, 2024 (Unaudited) December 31, 2023 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Financial assets: Derivative assets - interest rate caps $ — $ 223 $ — $ — $ 433 $ — Investment in Espresso joint venture — — 142 — — 142 The following table presents the principal amount, carrying value and fair value of certain financial assets and liabilities (dollars in thousands): March 31, 2024 (Unaudited) December 31, 2023 Principal Amount Carrying Value Fair Value Principal Amount Carrying Value Fair Value Financial liabilities: (1) Mortgage notes payable, net $ 888,563 $ 883,839 $ 831,911 $ 903,862 $ 898,154 $ 842,559 _______________________________________ (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 and impairment losses of Level 3 assets which have been measured at fair value on a nonrecurring basis at the time of impairment during the periods presented (dollars in thousands): Three Months Ended Year Ended March 31, 2024 (Unaudited) December 31, 2023 Fair Value Impairment Losses (1) Fair Value Impairment Losses (1) Operating real estate, net $ — $ — $ 56,718 $ 44,294 Investments in unconsolidated ventures — — 3,075 4,728 Assets held for sale 495 39 11,611 355 _______________________________________ (1) Excludes impairment losses for property damage sustained by facilities. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Summary of Segment Reporting | The following tables present the NOI of the Company’s direct investments segments and the Company's proportionate share of the NOI generated by the joint ventures of its unconsolidated investments segment (dollars in thousands): Direct Investments Three Months Ended March 31, 2024 Net Lease Operating Unconsolidated Investments Non-Segment (2) Adjustments (3) Total (4) Property and other revenues (1) $ — $ 47,872 $ 92,022 $ 880 $ (92,022) $ 48,752 Property operating expenses — (33,381) (81,899) — 81,899 (33,381) Net operating income $ — $ 14,491 $ 10,123 $ 880 $ (10,123) $ 15,371 Interest expense (12,862) Transaction costs (16) General and administrative expenses (3,327) Depreciation and amortization (8,901) Impairment loss (456) Other income, net 1,000 Gain (loss) on investments and other 150 Equity in earnings (losses) of unconsolidated ventures 1,014 Income tax expense (20) Net income (loss) $ (8,047) _______________________________________ (1) Includes rental income received from net lease properties, if any, as well as resident room and care charges, ancillary service fees and other related revenue earned from operating properties. (2) Primarily consists of interest income earned on corporate cash and equivalents. (3) Represents adjustments to eliminate the NOI presented for the unconsolidated investments segment, in order to reconcile to the Company's net income (loss) prepared in accordance with GAAP. For investments accounted for under the equity method of accounting, the Company records its proportionate share of the net income of its unconsolidated investments through equity in earnings (losses) of unconsolidated ventures as presented on its consolidated statements of operations. (4) Non-NOI items are not allocated to individual segments for purposes of assessing segment performance. Direct Investments Three Months Ended March 31, 2023 Net Lease Operating Unconsolidated Investments (2) Non-Segment (3) Adjustments (4) Total (5) Property and other revenues (1) $ — $ 48,849 $ 94,655 $ 719 $ (94,655) $ 49,568 Property operating expenses — (35,077) (81,615) — 81,615 (35,077) Net operating income $ — $ 13,772 $ 13,040 $ 719 $ (13,040) $ 14,491 Interest expense (11,359) Transaction costs (97) General and administrative expenses (3,910) Depreciation and amortization (9,649) Other income, net 132 Gain (loss) on investments and other 332 Equity in earnings (losses) of unconsolidated ventures (3,922) Income tax expense (15) Net income (loss) $ (13,997) _______________________________________ (1) Includes rental income received from net lease properties, if any, as well as resident room and care charges, ancillary service fees and other related revenue earned from operating properties. (2) Includes the Company's proportionate share of revenues and expenses of the Diversified US/UK and Eclipse Portfolios prior to the Sale of Minority Interests in June 2023. (3) Primarily consists of interest income earned on corporate cash and equivalents. (4) Represents adjustments to eliminate the NOI presented for the unconsolidated investments segment, in order to reconcile to the Company's net income (loss) prepared in accordance with GAAP. For investments accounted for under the equity method of accounting, the Company records its proportionate share of the net income of its unconsolidated investments through equity in earnings (losses) of unconsolidated ventures as presented on its consolidated statements of operations. (5) Non-NOI items are not allocated to individual segments for purposes of assessing segment performance. The following table presents capital expenditures made by the Company for each of its reportable segments (dollars in thousands): Direct Investments Total Capital Expenditures for the Three Months Ended: Net Lease Operating Unconsolidated Investments Non-Segment Total March 31, 2024 $ — 2,926 $ — $ — $ 2,926 March 31, 2023 — 3,810 — — 3,810 |
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 Non-Segment (1) Total March 31, 2024 $ 73,633 $ 770,400 $ 123,963 $ 69,135 $ 1,037,131 December 31, 2023 74,655 787,925 122,949 73,890 1,059,419 ______________________________________ (1) |
Business and Organization (Deta
Business and Organization (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Class of Stock [Line Items] | ||
Common stock, shares authorized (in shares) | 400,000,000 | 400,000,000 |
Common 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, par value (in dollars per share) | $ 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 | Northstar Healthcare Income Operating Partnership, LP | ||
Class of Stock [Line Items] | ||
Limited partnership interest in operating partnership | 100% | |
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) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2023 USD ($) | Mar. 31, 2024 USD ($) property day | Mar. 31, 2023 USD ($) | Mar. 31, 2024 USD ($) property day | Dec. 31, 2023 USD ($) property | Dec. 31, 2022 USD ($) | |
Variable Interest Entities | ||||||
Operating real estate, net | $ 815,400,000 | $ 815,400,000 | $ 821,270,000 | |||
Mortgage notes payable, net | 883,839,000 | 883,839,000 | 898,154,000 | |||
Investments in unconsolidated ventures ($142 held at fair value as of March 31, 2024 and December 31, 2023) | 123,963,000 | 123,963,000 | $ 122,949,000 | |||
Impairment recognized | 0 | $ 0 | ||||
Finance Lease Liability | ||||||
Finance leases for equipment | 200,000 | $ 200,000 | ||||
Payments of finance lease obligations | $ 9,399,000 | $ 29,070,000 | ||||
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Other liabilities | Other liabilities | Other liabilities | |||
Weighted average interest rate (percent) | 6.60% | 6.60% | ||||
Remaining lease term (years) | 3 years 7 months 6 days | 3 years 7 months 6 days | ||||
Assets Held-for-Sale | ||||||
Number of properties classified as held-for-sale | property | 1 | 1 | 1 | |||
Identified Intangibles | ||||||
Number of triple net lease portfolios | property | 4 | 4 | ||||
Amortization expense for in-place leases and deferred costs | $ 100,000 | $ 100,000 | ||||
Derivative | ||||||
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Gain (loss) on investments and other | Gain (loss) on investments and other | ||||
Derivative, gain (loss) on derivative, net | $ (100,000) | $ (200,000) | ||||
Revenue Recognition | ||||||
Days notice required for lease termination | day | 30 | 30 | ||||
Number of triple net lease portfolios | property | 4 | 4 | ||||
Variable lease revenues | $ 3,500,000 | 3,400,000 | ||||
Impairment on Operating Real Estate and Investments in Unconsolidated Ventures | ||||||
Impairment recognized | 0 | 0 | ||||
Financing Receivable, after Allowance for Credit Loss | ||||||
Allowance for credit losses on receivables | 0 | $ 0 | ||||
Income Taxes | ||||||
Operating loss carryforwards | $ 248,500,000 | |||||
Income tax expense | 20,000 | 15,000 | ||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Rochester Portfolio Property | ||||||
Assets Held-for-Sale | ||||||
Consideration received | 500,000 | 500,000 | ||||
Espresso | ||||||
Variable Interest Entities | ||||||
Investments in unconsolidated ventures ($142 held at fair value as of March 31, 2024 and December 31, 2023) | $ 3,100,000 | 142,000 | 142,000 | $ 142,000 | ||
Impairment recognized | 4,700,000 | 0 | ||||
Impairment on Operating Real Estate and Investments in Unconsolidated Ventures | ||||||
Impairment recognized | $ 4,700,000 | 0 | ||||
Rochester Portfolio | ||||||
Assets Held-for-Sale | ||||||
Impairment of real estate held for sale | 39,000 | |||||
Operating real estate, net | ||||||
Impairment on Operating Real Estate and Investments in Unconsolidated Ventures | ||||||
Impairment losses | 500,000 | $ 0 | ||||
Primary Beneficiary | ||||||
Variable Interest Entities | ||||||
Operating real estate, net | 100,300,000 | 100,300,000 | ||||
Mortgage notes payable, net | 160,800,000 | 160,800,000 | ||||
Interest Rate Cap | ||||||
Derivative | ||||||
Derivative asset | $ 200,000 | $ 200,000 | $ 400,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 80,989 | $ 85,037 | ||
Restricted cash | 6,191 | 7,906 | ||
Total cash, cash equivalents and restricted cash | $ 87,180 | $ 92,943 | $ 106,478 | $ 115,660 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Estimated Useful Lives (Details) | Mar. 31, 2024 |
Building | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 39 years |
Building | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 49 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 | Mar. 31, 2024 USD ($) |
Accounting Policies [Abstract] | |
April 1 through December 31, 2024 | $ 28 |
2025 | 38 |
2026 | 33 |
2027 | 18 |
2028 | 10 |
Total minimum lease payments | 127 |
Less: Amount representing interest | (20) |
Present value of minimum lease payments | $ 107 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Deferred Costs and Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Finite-Lived Intangible Assets [Line Items] | ||
Less: Accumulated amortization | $ (118,317) | $ (118,233) |
Intangible assets, net | 1,832 | 1,916 |
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 | Mar. 31, 2024 USD ($) |
Accounting Policies [Abstract] | |
April 1 through December 31, 2024 | $ 253 |
2025 | 337 |
2026 | 337 |
2027 | 337 |
2028 | 337 |
Thereafter | 231 |
Total | $ 1,832 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Schedule of Deferred Tax Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Accounting Policies [Abstract] | ||
Fixed assets and other | $ 634 | $ 656 |
Net operating losses | 16,079 | 15,827 |
Total deferred tax assets | 16,713 | 16,483 |
Valuation allowance | (16,713) | (16,483) |
Net deferred income tax assets | $ 0 | $ 0 |
Operating Real Estate - Identif
Operating Real Estate - Identifiable Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Real Estate [Abstract] | ||
Land | $ 115,225 | $ 115,758 |
Land improvements | 12,819 | 12,705 |
Buildings and improvements | 865,304 | 861,452 |
Tenant improvements | 372 | 372 |
Construction in progress | 3,635 | 5,493 |
Furniture, fixtures and equipment | 94,746 | 93,373 |
Subtotal | 1,092,101 | 1,089,153 |
Less: Accumulated depreciation | (276,701) | (267,883) |
Operating real estate, net | $ 815,400 | $ 821,270 |
Operating Real Estate - Narrati
Operating Real Estate - Narrative (Details) | 1 Months Ended | 3 Months Ended | ||
Feb. 28, 2021 property | Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Real Estate [Line Items] | ||||
Depreciation | $ 8,800,000 | $ 9,600,000 | ||
Derecognition of operating real estate placed into a receivership | (59,000,000) | |||
Arbors Portfolio | ||||
Real Estate [Line Items] | ||||
Number of healthcare real estate properties | property | 4 | |||
Operating real estate, net | ||||
Real Estate [Line Items] | ||||
Impairment losses | 500,000 | $ 0 | ||
Building and Building Improvements | ||||
Real Estate [Line Items] | ||||
Accumulated impairment | $ 163,300,000 | $ 162,900,000 |
Operating Real Estate - Schedul
Operating Real Estate - Schedule of Properties (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) unit property | |
Total | |
Real Estate Properties [Line Items] | |
Properties Under Management | property | 48 |
Units Under Management | unit | 5,749 |
Property and Other Revenues | $ | $ 48,752 |
Total | Revenue | Customer Concentration Risk | |
Real Estate Properties [Line Items] | |
% of Total Property and Other Revenues | 100% |
Solstice Senior Living | |
Real Estate Properties [Line Items] | |
Properties Under Management | property | 32 |
Units Under Management | unit | 3,969 |
Property and Other Revenues | $ | $ 33,695 |
Solstice Senior Living | Revenue | Customer Concentration Risk | |
Real Estate Properties [Line Items] | |
% of Total Property and Other Revenues | 69.10% |
Watermark Retirement Communities | |
Real Estate Properties [Line Items] | |
Properties Under Management | property | 6 |
Units Under Management | unit | 723 |
Property and Other Revenues | $ | $ 7,346 |
Watermark Retirement Communities | Revenue | Customer Concentration Risk | |
Real Estate Properties [Line Items] | |
% of Total Property and Other Revenues | 15.10% |
Avamere Health Services | |
Real Estate Properties [Line Items] | |
Properties Under Management | property | 5 |
Units Under Management | unit | 453 |
Property and Other Revenues | $ | $ 5,690 |
Avamere Health Services | Revenue | Customer Concentration Risk | |
Real Estate Properties [Line Items] | |
% of Total Property and Other Revenues | 11.70% |
Integral Senior Living | |
Real Estate Properties [Line Items] | |
Properties Under Management | property | 1 |
Units Under Management | unit | 40 |
Property and Other Revenues | $ | $ 1,141 |
Integral Senior Living | Revenue | Customer Concentration Risk | |
Real Estate Properties [Line Items] | |
% of Total Property and Other Revenues | 2.30% |
Arcadia Management | |
Real Estate Properties [Line Items] | |
Properties Under Management | property | 4 |
Units Under Management | unit | 564 |
Property and Other Revenues | $ | $ 0 |
Arcadia Management | Revenue | Customer Concentration Risk | |
Real Estate Properties [Line Items] | |
% of Total Property and Other Revenues | 0% |
Other | |
Real Estate Properties [Line Items] | |
Properties Under Management | property | 0 |
Units Under Management | unit | 0 |
Property and Other Revenues | $ | $ 880 |
Other | Revenue | Customer Concentration Risk | |
Real Estate Properties [Line Items] | |
% of Total Property and Other Revenues | 1.80% |
Solstice Senior Living | |
Real Estate Properties [Line Items] | |
Noncontrolling interest, ownership percentage by parent (as a percentage) | 80% |
Investments in Unconsolidated_3
Investments in Unconsolidated Ventures - Changes in Carrying Value (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Jun. 30, 2023 |
Schedule of Equity Method Investments [Line Items] | |||
Carrying value | $ 123,963 | $ 122,949 | |
Trilogy | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership interest (as a percentage) | 23.80% | ||
Carrying value | $ 123,391 | 122,339 | |
Solstice | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership interest (as a percentage) | 20% | ||
Carrying value | $ 430 | 468 | |
Espresso | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership interest (as a percentage) | 36.70% | ||
Carrying value | $ 142 | $ 142 | $ 3,100 |
Investments in Unconsolidated_4
Investments in Unconsolidated Ventures - Narrative (Details) $ in Millions | 1 Months Ended | 3 Months Ended | ||
Jun. 30, 2023 USD ($) facility home shares | Mar. 31, 2024 campus shares | Sep. 30, 2025 USD ($) | Dec. 31, 2023 shares | |
Schedule of Equity Method Investments [Line Items] | ||||
Common stock, shares outstanding (in shares) | 185,712,103 | 185,712,103 | ||
Preferred stock, shares outstanding (in shares) | 0 | 0 | ||
Solstice | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Noncontrolling interest, ownership percentage by parent (as a percentage) | 80% | |||
Winterfell Portfolio | Solstice | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Noncontrolling interest, ownership percentage by parent (as a percentage) | 80% | |||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Trilogy | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Number of senior care homes owned | campus | 126 | |||
Minimum | Forecast | Disposal Group, Disposed of by Sale, Not Discontinued Operations | Trilogy | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Consideration received | $ | $ 240.5 | |||
Maximum | Forecast | Disposal Group, Disposed of by Sale, Not Discontinued Operations | Trilogy | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Consideration received | $ | $ 260 | |||
Former Sponsor and Affiliates | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Payments for divestiture of interest in joint venture | $ | $ 1.1 | |||
Common stock, shares outstanding (in shares) | 9,709,553 | |||
Common unit, outstanding (in shares) | 100 | |||
Preferred stock, shares outstanding (in shares) | 100 | |||
Eclipse | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Number of senior care homes owned | facility | 34 | |||
Ownership interest (as a percentage) | 6% | |||
Diversified US/UK | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Number of senior care homes owned | home | 48 | |||
Ownership interest (as a percentage) | 14% | |||
Solstice | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percentage) | 20% | |||
Solstice | Winterfell Portfolio | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percentage) | 20% | |||
Trilogy | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percentage) | 23.80% | |||
Trilogy | Trilogy | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percentage) | 0.80% | |||
Trilogy | American Healthcare REIT, Inc. (AHR) | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership interest (as a percentage) | 75.40% |
Investments in Unconsolidated_5
Investments in Unconsolidated Ventures - Summary of Investments in Unconsolidated Ventures (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Schedule of Equity Method Investments [Line Items] | ||
Equity in earnings (losses) of unconsolidated ventures | $ 1,014 | $ (3,922) |
Cash Distribution | 0 | 2,334 |
Trilogy | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity in earnings (losses) of unconsolidated ventures | 1,052 | (309) |
Cash Distribution | 0 | 2,334 |
Solstice | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity in earnings (losses) of unconsolidated ventures | (38) | (29) |
Cash Distribution | 0 | 0 |
Espresso | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity in earnings (losses) of unconsolidated ventures | 0 | 109 |
Cash Distribution | 0 | 0 |
Investments Sold | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity in earnings (losses) of unconsolidated ventures | 0 | (3,693) |
Cash Distribution | $ 0 | $ 0 |
Borrowings - Schedule of Borrow
Borrowings - Schedule of Borrowings (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2023 USD ($) debt_instrument property | Feb. 28, 2021 debt_instrument property | Mar. 31, 2024 USD ($) property debt_instrument | Dec. 31, 2023 USD ($) | |
Debt Instrument [Line Items] | ||||
Carrying Value | $ 888,563 | |||
Arbors Portfolio | ||||
Debt Instrument [Line Items] | ||||
Number of healthcare real estate properties | property | 4 | |||
Winterfell Portfolio | ||||
Debt Instrument [Line Items] | ||||
Number of healthcare real estate properties | property | 32 | |||
Mortgages and other notes payable | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 888,563 | $ 903,862 | ||
Carrying Value | 883,839 | 898,154 | ||
Mortgages | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 888,563 | 903,862 | ||
Mortgages | Rochester, NY | ||||
Debt Instrument [Line Items] | ||||
Number of debt instruments | debt_instrument | 7 | 7 | ||
Number of healthcare real estate properties | property | 7 | |||
Mortgages | Arbors Portfolio | ||||
Debt Instrument [Line Items] | ||||
Number of debt instruments | debt_instrument | 4 | 4 | ||
Number of healthcare real estate properties | property | 4 | 4 | ||
Mortgages | Winterfell Portfolio | ||||
Debt Instrument [Line Items] | ||||
Number of debt instruments | debt_instrument | 32 | |||
Mortgages | Avamere Portfolio | ||||
Debt Instrument [Line Items] | ||||
Number of debt instruments | debt_instrument | 5 | |||
Number of healthcare real estate properties | property | 5 | |||
Mortgages | Frisco, TX Non-recourse, February 2026 | Frisco, TX | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 26,000 | 26,000 | ||
Carrying Value | $ 25,728 | 25,694 | ||
Mortgages | Frisco, TX Non-recourse, February 2026 | Frisco, TX | Secured Overnight Financing Rate (SOFR) | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable interest rate | 2.91% | |||
Mortgages | Milford, OH Non-recourse, September 2026 | Milford, OH | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 18,133 | 18,173 | ||
Carrying Value | $ 17,992 | 18,015 | ||
Mortgages | Milford, OH Non-recourse, September 2026 | Milford, OH | Secured Overnight Financing Rate (SOFR) | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable interest rate | 2.79% | |||
Mortgages | Rochester, NY Non-recourse, February 2025 | Rochester, NY | ||||
Debt Instrument [Line Items] | ||||
Fixed interest rate | 4.25% | |||
Principal Amount | $ 17,282 | 17,470 | ||
Carrying Value | 17,263 | 17,448 | ||
Mortgages | Rochester, NY Non-recourse, July 2023 | Rochester, NY | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 99,800 | 99,786 | 99,786 | |
Carrying Value | $ 99,786 | 99,786 | ||
Mortgages | Rochester, NY Non-recourse, July 2023 | Rochester, NY | Secured Overnight Financing Rate (SOFR) | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable interest rate | 2.45% | |||
Mortgages | Rochester NY Nonrecourse Repaid | Rochester, NY | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 0 | 10,874 | ||
Carrying Value | $ 0 | 10,853 | ||
Mortgages | Rochester NY Nonrecourse Repaid | Rochester, NY | Secured Overnight Financing Rate (SOFR) | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable interest rate | 2.93% | |||
Mortgages | Non-Recourse | Arbors Portfolio | ||||
Debt Instrument [Line Items] | ||||
Fixed interest rate | 3.99% | |||
Principal Amount | $ 80,874 | 81,397 | ||
Carrying Value | $ 80,732 | 81,209 | ||
Mortgages | Non-Recourse | Winterfell Portfolio | ||||
Debt Instrument [Line Items] | ||||
Fixed interest rate | 4.17% | |||
Principal Amount | $ 580,135 | 583,471 | ||
Carrying Value | $ 576,202 | 578,694 | ||
Mortgages | Non-Recourse | Avamere Portfolio | ||||
Debt Instrument [Line Items] | ||||
Fixed interest rate | 4.66% | |||
Principal Amount | $ 66,353 | 66,691 | ||
Carrying Value | 66,136 | $ 66,455 | ||
Mortgages | One-Month LIBOR | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 143,900 |
Borrowings - Maturity Schedule
Borrowings - Maturity Schedule (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Debt Disclosure [Abstract] | |
April 1 through December 31, 2024 | $ 113,275 |
2025 | 667,741 |
2026 | 45,151 |
2027 | 62,396 |
Total | $ 888,563 |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2023 USD ($) debt_instrument property | Feb. 28, 2021 debt_instrument property | Mar. 31, 2024 USD ($) debt_instrument property | Dec. 31, 2023 USD ($) | |
Mortgages | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 888,563 | $ 903,862 | ||
Rochester, NY | Mortgages | ||||
Debt Instrument [Line Items] | ||||
Number of debt instruments | debt_instrument | 7 | 7 | ||
Number of healthcare real estate properties | property | 7 | |||
Rochester, NY | Rochester, NY Non-recourse, July 2023 | ||||
Debt Instrument [Line Items] | ||||
Interest payable | $ 11,000 | |||
Rochester, NY | Rochester, NY Non-recourse, July 2023 | Mortgages | ||||
Debt Instrument [Line Items] | ||||
Principal Amount | $ 99,800 | $ 99,786 | $ 99,786 | |
Arbors Portfolio | ||||
Debt Instrument [Line Items] | ||||
Number of healthcare real estate properties | property | 4 | |||
Arbors Portfolio | Mortgages | ||||
Debt Instrument [Line Items] | ||||
Number of debt instruments | debt_instrument | 4 | 4 | ||
Number of healthcare real estate properties | property | 4 | 4 | ||
Repayments of long-term debt | $ 1,500 |
Related Party Arrangements (Det
Related Party Arrangements (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Solstice | |
Related Party Transaction [Line Items] | |
Ownership interest (as a percentage) | 20% |
Solstice | Winterfell Portfolio | |
Related Party Transaction [Line Items] | |
Ownership interest (as a percentage) | 20% |
Related party transaction, amounts of transaction | $ 1.7 |
Winterfell Portfolio | 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% |
Solstice | Winterfell Portfolio | |
Related Party Transaction [Line Items] | |
Noncontrolling interest, ownership percentage by parent (as a percentage) | 80% |
Equity-Based Compensation (Deta
Equity-Based Compensation (Details) - USD ($) | 3 Months Ended | ||||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Equity-based compensation | |||||
Number of shares granted to independent directors (in shares) | 203,742 | 116,712 | |||
Equity-based compensation expense | $ 56,250 | $ 56,875 | |||
Unrecognized equity-based compensation | $ 183,750 | $ 183,750 | $ 240,000 | ||
Restricted stock | |||||
Equity-based compensation | |||||
Number of shares authorized (in shares) | 2,000,000 | 2,000,000 | |||
Restricted common shares grant vesting period | 2 years | ||||
Restricted Stock Units (RSUs) | |||||
Equity-based compensation | |||||
Restricted common shares grant vesting period | 2 years | ||||
Share-based compensation arrangement by share-based payment award shares issued per award exercised (in shares) | 1 | 1 | |||
Unvested shares (in shares) | 60,628 | 60,628 | 77,741 | ||
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) | 203,742 | ||||
Aggregate value for restricted common shares granted to independent directors | $ 700,000 | $ 700,000 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock and Distribution Reinvestment Plan (Details) - USD ($) shares in Millions | 1 Months Ended | 3 Months Ended | 76 Months Ended |
Jan. 19, 2016 | Mar. 31, 2024 | Apr. 30, 2022 | |
Class of Stock [Line Items] | |||
Value of common stock issued | $ 2,000,000,000 | ||
Dividend Reinvestment Plan | |||
Class of Stock [Line Items] | |||
Selling commissions or dealer manager fees paid | $ 0 | ||
Common Stock | |||
Class of Stock [Line Items] | |||
Number of shares issued (in shares) | 173.4 | ||
Value of common stock issued | $ 1,700,000,000 | ||
Common Stock | Dividend Reinvestment Plan | |||
Class of Stock [Line Items] | |||
Number of shares issued (in shares) | 25.7 | ||
Value of common stock issued | $ 232,600,000 |
Stockholders' Equity - Distribu
Stockholders' Equity - Distributions (Details) $ / shares in Units, $ in Millions | May 02, 2022 USD ($) $ / shares |
Equity [Abstract] | |
Special distribution (dollars per share) | $ / shares | $ 0.50 |
Dividends payable | $ | $ 97 |
Non-controlling Interests (Deta
Non-controlling Interests (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Noncontrolling Interest [Line Items] | ||
Net income (loss) attributable to non-controlling interests | $ (114,761) | $ (71,242) |
Primary Beneficiary | Northstar Healthcare Income Operating Partnership, LP | ||
Noncontrolling Interest [Line Items] | ||
Ownership interest in operating partnership | 100% |
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 | Mar. 31, 2024 | Dec. 31, 2023 | Jun. 30, 2023 |
Financial assets: | |||
Investment in Espresso joint venture | $ 123,963 | $ 122,949 | |
Financial liabilities | |||
Mortgage notes payable, net | 883,839 | 898,154 | |
Mortgages | |||
Financial liabilities | |||
Principal Amount | 888,563 | 903,862 | |
Mortgage notes payable, net | 883,839 | 898,154 | |
Fair Value | 831,911 | 842,559 | |
Espresso | |||
Financial assets: | |||
Investment in Espresso joint venture | 142 | 142 | $ 3,100 |
Interest Rate Cap | |||
Financial assets: | |||
Derivative assets - interest rate caps | 200 | 400 | |
Level 1 | Espresso | |||
Financial assets: | |||
Investment in Espresso joint venture | 0 | 0 | |
Level 1 | Interest Rate Cap | |||
Financial assets: | |||
Derivative assets - interest rate caps | 0 | 0 | |
Level 2 | Espresso | |||
Financial assets: | |||
Investment in Espresso joint venture | 0 | 0 | |
Level 2 | Interest Rate Cap | |||
Financial assets: | |||
Derivative assets - interest rate caps | 223 | 433 | |
Level 3 | Espresso | |||
Financial assets: | |||
Investment in Espresso joint venture | 142 | 142 | |
Level 3 | Interest Rate Cap | |||
Financial assets: | |||
Derivative assets - interest rate caps | $ 0 | $ 0 |
Fair Value - Nonrecurring Fair
Fair Value - Nonrecurring Fair Value (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Operating real estate, net | $ 815,400,000 | $ 821,270,000 | |
Assets held for sale | 495,000 | 11,611,000 | |
Operating real estate, net | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Impairment losses | 500,000 | $ 0 | |
Nonrecurring | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Operating real estate, net | 0 | 56,718,000 | |
Investments in unconsolidated ventures | 0 | 3,075,000 | |
Assets held for sale | 495,000 | 11,611,000 | |
Nonrecurring | Level 3 | Operating real estate, net | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Impairment losses | 0 | 44,294,000 | |
Nonrecurring | Level 3 | Investments in unconsolidated ventures | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Impairment losses | 0 | 4,728,000 | |
Nonrecurring | Level 3 | Assets held for sale | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Impairment losses | $ 39,000 | $ 355,000 |
Fair Value - Narrative (Details
Fair Value - Narrative (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2023 USD ($) | Mar. 31, 2024 USD ($) property | Mar. 31, 2023 USD ($) | Mar. 31, 2024 USD ($) property | Dec. 31, 2023 USD ($) property | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Impairment recognized | $ 0 | $ 0 | |||
Investments in unconsolidated ventures ($142 held at fair value as of March 31, 2024 and December 31, 2023) | $ 123,963,000 | $ 123,963,000 | $ 122,949,000 | ||
Number of properties classified as held-for-sale | property | 1 | 1 | 1 | ||
Espresso | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Impairment recognized | $ 4,700,000 | $ 0 | |||
Investments in unconsolidated ventures ($142 held at fair value as of March 31, 2024 and December 31, 2023) | $ 3,100,000 | $ 142,000 | $ 142,000 | $ 142,000 | |
Discounted cash flow method | Minimum | Real Estate Investment | Terminal capitalization rate | Nonrecurring | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Measurement input (percentage) | 6.25% | 6.25% | |||
Discounted cash flow method | Minimum | Real Estate Investment | Discount rate | Nonrecurring | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Measurement input (percentage) | 7.75% | 7.75% | |||
Discounted cash flow method | Maximum | Real Estate Investment | Terminal capitalization rate | Nonrecurring | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Measurement input (percentage) | 8.50% | 8.50% | |||
Discounted cash flow method | Maximum | Real Estate Investment | Discount rate | Nonrecurring | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Measurement input (percentage) | 10.50% | 10.50% |
Segment Reporting - Segment Sta
Segment Reporting - Segment Statement of Operations (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Segment Reporting Information [Line Items] | ||
Property and other revenues | $ 48,752,000 | $ 49,568,000 |
Property operating expenses | (33,381,000) | (35,077,000) |
Net operating income | 15,371,000 | 14,491,000 |
Interest expense | (12,862,000) | (11,359,000) |
Transaction costs | (16,000) | (97,000) |
General and administrative expenses | (3,327,000) | (3,910,000) |
Depreciation and amortization | (8,901,000) | (9,649,000) |
Impairment loss | (456,000) | 0 |
Other income, net | 1,000,000 | 132,000 |
Gain (loss) on investments and other | 150,000 | 332,000 |
Equity in earnings (losses) of unconsolidated ventures | 1,014,000 | (3,922,000) |
Income tax expense | (20,000) | (15,000) |
Net income (loss) | (8,047,000) | (13,997,000) |
Non-Segment | ||
Segment Reporting Information [Line Items] | ||
Property and other revenues | 880,000 | 719,000 |
Property operating expenses | 0 | 0 |
Net operating income | 880,000 | 719,000 |
Adjustments | ||
Segment Reporting Information [Line Items] | ||
Property and other revenues | (92,022,000) | (94,655,000) |
Property operating expenses | 81,899,000 | 81,615,000 |
Net operating income | (10,123,000) | (13,040,000) |
Net Lease | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Property and other revenues | 0 | 0 |
Property operating expenses | 0 | 0 |
Net operating income | 0 | 0 |
Operating | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Property and other revenues | 47,872,000 | 48,849,000 |
Property operating expenses | (33,381,000) | (35,077,000) |
Net operating income | 14,491,000 | 13,772,000 |
Unconsolidated Investments | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Property and other revenues | 92,022,000 | 94,655,000 |
Property operating expenses | (81,899,000) | (81,615,000) |
Net operating income | $ 10,123,000 | $ 13,040,000 |
Segment Reporting - Summary of
Segment Reporting - Summary of Assets by Segment (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | |
Segment Reporting Information [Line Items] | |||
Assets | [1] | $ 1,037,131 | $ 1,059,419 |
Non-Segment | |||
Segment Reporting Information [Line Items] | |||
Assets | 69,135 | 73,890 | |
Net Lease | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Assets | 73,633 | 74,655 | |
Operating | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Assets | 770,400 | 787,925 | |
Unconsolidated Investments | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Assets | $ 123,963 | $ 122,949 | |
[1] Includes $107.6 million and $174.9 million of assets and liabilities, respectively, of certain VIEs that are consolidated by the Operating Partnership as of March 31, 2024. Refer to Note 2, “Summary of Significant Accounting Policies.” |
Segment Reporting - Summary o_2
Segment Reporting - Summary of Capital Expenditures by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Segment Reporting Information [Line Items] | ||
Payments to improve real estate | $ 2,926 | $ 3,810 |
Operating Segments | Net Lease | ||
Segment Reporting Information [Line Items] | ||
Payments to improve real estate | 0 | 0 |
Operating Segments | Operating | ||
Segment Reporting Information [Line Items] | ||
Payments to improve real estate | 2,926 | 3,810 |
Operating Segments | Unconsolidated Investments | ||
Segment Reporting Information [Line Items] | ||
Payments to improve real estate | 0 | 0 |
Non-Segment | ||
Segment Reporting Information [Line Items] | ||
Payments to improve real estate | $ 0 | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Millions | Mar. 31, 2024 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Loss contingency accrual | $ 0.6 |