Real Property Acquisitions and Development | 9 Months Ended |
Sep. 30, 2013 |
Real Property Acquisitions and Development [Abstract] | ' |
Real Property Acquisitions and Development | ' |
3. Real Property Acquisitions and Development |
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The total purchase price for all properties acquired has been allocated to the tangible and identifiable intangible assets, liabilities and noncontrolling interests based upon their respective fair values in accordance with our accounting policies. The results of operations for these acquisitions have been included in our consolidated results of operations since the date of acquisition and are a component of the appropriate segments. Transaction costs primarily represent costs incurred with property acquisitions, including due diligence costs, fees for legal and valuation services and termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees and other acquisition-related costs. |
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Seniors Housing Triple-net Activity |
| | Nine Months Ended | | | |
(In thousands) | September 30, 2013(1) | 30-Sep-12 | | | |
Land and land improvements | | $ | 56,665 | | $ | 79,325 | | | |
Buildings and improvements | | | 211,903 | | | 935,036 | | | |
| Total assets acquired | | | 268,568 | | | 1,014,361 | | | |
Secured debt | | | - | | | -86,186 | | | |
Accrued expenses and other liabilities | | | - | | | -3,340 | | | |
| Total liabilities assumed | | | - | | | -89,526 | | | |
Capital in excess of par | | | - | | | 1,024 | | | |
Noncontrolling interests | | | - | | | -16,826 | | | |
Non-cash acquisition related activity | | | - | | | -310 | | | |
| Cash disbursed for acquisitions | | | 268,568 | | | 908,723 | | | |
Construction in progress additions | | | 103,951 | | | 131,579 | | | |
Less: | Capitalized interest | | | -3,337 | | | -4,228 | | | |
Cash disbursed for construction in progress | | | 100,614 | | | 127,351 | | | |
Capital improvements to existing properties | | | 27,819 | | | 48,450 | | | |
| Total cash invested in real property, net of cash acquired | | $ | 397,001 | | $ | 1,084,524 | | | |
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(1) Includes acquisitions with an aggregate purchase price of $268,568,000 for which the allocation of the purchase price consideration is preliminary and subject to change. | | |
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Seniors Housing Operating Activity |
Acquisitions of seniors housing operating properties are structured under RIDEA, which is described in Note 18. This structure results in the inclusion of all resident revenues and related property operating expenses from the operation of these qualified health care properties in our consolidated statements of comprehensive income. Certain of our subsidiaries’ functional currencies are the local currencies of their respective countries. See Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012, as updated by our Current Report on Form 8-K filed on August 6, 2013, for information regarding our foreign currency policies. |
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| | Nine Months Ended | | | |
(In thousands) | September 30, 2013(1) | 30-Sep-12 | | | |
Land and land improvements | | $ | 437,046 | | $ | 46,391 | | | |
Building and improvements | | | 4,214,254 | | | 450,255 | | | |
Acquired lease intangibles | | | 377,929 | | | 39,875 | | | |
Restricted cash | | | 41,524 | | | - | | | |
Receivables and other assets | | | 81,546 | | | 2,247 | | | |
| Total assets acquired(2) | | | 5,152,299 | | | 538,768 | | | |
Secured debt | | | -1,261,093 | | | -8,684 | | | |
Accrued expenses and other liabilities | | | -86,412 | | | -5,480 | | | |
| Total liabilities assumed | | | -1,347,505 | | | -14,164 | | | |
Noncontrolling interests | | | -230,441 | | | -2,054 | | | |
Non-cash acquisition related activity(3) | | | -856,103 | | | - | | | |
| Cash disbursed for acquisitions | | | 2,718,250 | | | 522,550 | | | |
Construction in progress additions | | | 1,521 | | | - | | | |
Less: | Capitalized interest | | | -18 | | | - | | | |
Cash disbursed for construction in progress | | | 1,503 | | | - | | | |
Capital improvements to existing properties | | | 36,813 | | | 13,325 | | | |
| Total cash invested in real property, net of cash acquired | | $ | 2,756,566 | | $ | 535,875 | | | |
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(1) Includes acquisitions with an aggregate purchase price of $5,152,299,000 for which the allocation of the purchase price consideration is preliminary and subject to change. | | |
(2) Excludes $87,406,000 and $4,369,000 of cash acquired during the nine months ended September 30, 2013 and 2012, respectively. | | |
(3) Represents Sunrise loan and noncontrolling interests acquisitions. | | | |
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Sunrise Merger |
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In August 2012, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Sunrise Senior Living, Inc. (“Sunrise”), pursuant to which we agreed to acquire Sunrise in an all-cash merger (the “Merger”) in which Sunrise stockholders would receive $14.50 in cash for each share of Sunrise common stock. On January 9, 2013, we completed our acquisition of the Sunrise property portfolio. The Sunrise Merger advances our strategic vision to own higher-end, private pay properties located in major metropolitan markets. On July 1, 2013, we acquired the remaining interests in 49 previously unconsolidated properties. As of September 30, 2013, 120 properties are wholly owned and 5 properties are held in unconsolidated entities (see Note 7 for additional information). The total estimated purchase price of approximately $4,155,052,000, including approximately $2,456,011,000 of cash consideration, has been allocated on a preliminary basis to the tangible and identifiable intangible assets and liabilities in the table above based on respective fair values in accordance with our accounting policies. We funded the cash consideration and other associated costs of the acquisition from cash on-hand as well as draws on our primary unsecured line of credit and unsecured term loan (see Notes 9 and 10 for additional information). |
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We recognized $201,941,000 and $443,221,000 of revenues and $65,942,000 and $145,264,000 of net operating income from continuing operations related to the consolidated Sunrise portfolio during the three and nine month periods ended September 30, 2013, respectively. In addition, we incurred $72,337,000 of transaction costs, which include advisory fees, due diligence costs, severances, and fees for legal and valuation services during the nine month period ended September 30, 2013. These amounts are included in the seniors housing operating results reflected in Note 17. |
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The following unaudited pro forma consolidated results of operation have been prepared as if the Sunrise Merger had occurred as of January 1, 2012 based on the preliminary purchase price allocations discussed above. Amounts are in thousands, except per share data: |
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| | | Nine Months Ended | | | |
| | | September 30, | | September 30, | | | |
| | | 2013 | | 2012 | | | |
Revenues | | $ | 2,268,062 | | $ | 1,828,395 | | | |
Income (loss) from continuing operations attributable to common stockholders | | $ | -2,079 | | $ | -59,769 | | | |
Income (loss) from continuing operations attributable to common stockholders per share: | | | | | | | | | |
| Basic | | $ | -0.01 | | $ | -0.28 | | | |
| Diluted | | $ | -0.01 | | $ | -0.28 | | | |
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Medical Facilities Activity |
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| | Nine Months Ended | | | |
(In thousands) | September 30, 2013(1) | | 30-Sep-12 | | | |
Land and land improvements | | $ | - | | $ | 53,493 | | | |
Buildings and improvements | | | 144,708 | | | 487,255 | | | |
Acquired lease intangibles | | | - | | | 93,392 | | | |
Restricted cash | | | 505 | | | 975 | | | |
Receivables and other assets | | | 151 | | | 4,311 | | | |
| Total assets acquired | | | 145,364 | | | 639,426 | | | |
Secured debt | | | -26,300 | | | -238,589 | | | |
Accrued expenses and other liabilities | | | -479 | | | -18,075 | | | |
| Total liabilities assumed | | | -26,779 | | | -256,664 | | | |
Non-cash acquisition activity | | | (12,056)(2) | | | -880 | | | |
| Cash disbursed for acquisitions | | | 106,529 | | | 381,882 | | | |
Construction in progress additions | | | 87,882 | | | 94,462 | | | |
Less: | Capitalized interest | | | -1,343 | | | -2,885 | | | |
| Accruals(3) | | | -9,806 | | | -4,567 | | | |
Cash disbursed for construction in progress | | | 76,733 | | | 87,010 | | | |
Capital improvements to existing properties | | | 17,887 | | | 30,505 | | | |
| Total cash invested in real property | | $ | 201,149 | | $ | 499,397 | | | |
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(1) Includes acquisitions with an aggregate purchase price of $145,364,000 for which the allocation of purchase price consideration is preliminary and subject to change. | | |
(2) Represents non-cash consideration exchanged in an asset swap transaction. Please see Note 5 for additional information. | | |
(3) Represents non-cash accruals for amounts to be paid in future periods relating to properties that converted in the periods noted above. | | |
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Construction Activity |
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The following is a summary of the construction projects that were placed into service and began generating revenues during the periods presented (in thousands): |
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| | | | Nine Months Ended |
| | | | 30-Sep-13 | | 30-Sep-12 |
| Development projects: | | | | | | | | |
| | Seniors housing triple-net | | | $ | 105,265 | | | $ | 84,271 |
| | Medical facilities | | | | 78,839 | | | | 111,327 |
| | Total development projects | | | | 184,104 | | | | 195,598 |
| Expansion projects | | | | 14,229 | | | | 240 |
Total construction in progress conversions | | | $ | 198,333 | | | $ | 195,838 |
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