Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 24, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2020 | |
Entity File Number | 1-11314 | |
Entity Registrant Name | LTC PROPERTIES INC | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 71-0720518 | |
Entity Address, Address Line One | 2829 Townsgate Road, Suite 350 | |
Entity Address, City or Town | Westlake Village | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 91361 | |
City Area Code | 805 | |
Local Phone Number | 981-8655 | |
Title of 12(b) Security | Common stock, $.01 par value | |
Trading Symbol | LTC | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 39,217,848 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0000887905 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Investments: | ||
Land | $ 127,774 | $ 126,703 |
Buildings and improvements | 1,310,403 | 1,295,899 |
Accumulated depreciation and amortization | (320,332) | (312,642) |
Operating real estate property, net | 1,117,845 | 1,109,960 |
Properties held-for-sale, net of accumulated depreciation: 2020-$0; 2019-$35,113 | 26,856 | |
Real property investments, net | 1,117,845 | 1,136,816 |
Mortgage loans receivable, net of loan loss reserve: 2020-$2,563; 2019-$2,560 | 254,396 | 254,099 |
Real estate investments, net | 1,372,241 | 1,390,915 |
Notes receivable, net of loan loss reserve: 2020-$180; 2019-$181 | 17,769 | 17,927 |
Investments in unconsolidated joint ventures | 19,061 | 19,003 |
Investments, net | 1,409,071 | 1,427,845 |
Other assets: | ||
Cash and cash equivalents | 30,888 | 4,244 |
Debt issue costs related to bank borrowings | 1,948 | 2,164 |
Interest receivable | 28,097 | 26,586 |
Straight-line rent receivable | 46,541 | 45,703 |
Lease incentives | 2,764 | 2,552 |
Prepaid expenses and other assets | 5,476 | 5,115 |
Total assets | 1,524,785 | 1,514,209 |
LIABILITIES | ||
Bank borrowings | 89,900 | 93,900 |
Senior unsecured notes, net of debt issue costs: 2020-$773; 2019-$812 | 599,527 | 599,488 |
Accrued interest | 3,503 | 4,983 |
Accrued expenses and other liabilities | 25,800 | 30,412 |
Total liabilities | 718,730 | 728,783 |
Stockholders' equity: | ||
Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2020-39,218; 2019-39,752 | 392 | 398 |
Capital in excess of par value | 847,572 | 867,346 |
Cumulative net income | 1,357,115 | 1,293,482 |
Cumulative distributions | (1,407,450) | (1,384,283) |
Total LTC Properties, Inc. stockholders' equity | 797,629 | 776,943 |
Non-controlling interests | 8,426 | 8,483 |
Total equity | 806,055 | 785,426 |
Total liabilities and equity | $ 1,524,785 | $ 1,514,209 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Properties held-for-sale, accumulated depreciation | $ 0 | $ 35,113 |
Mortgage loans receivable, loan loss reserve | 2,563 | 2,560 |
Notes receivable, loan loss reserve | $ 179 | $ 181 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000 | 60,000 |
Common stock, shares issued | 39,218 | 39,752 |
Common stock, shares outstanding | 39,218 | 39,752 |
Senior Unsecured Notes | ||
Debt issue costs, net | $ 773 | $ 812 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues: | ||
Rental income | $ 38,035 | $ 37,624 |
Interest income from mortgage loans | 7,777 | 7,311 |
Interest and other income | 598 | 521 |
Total revenues | 46,410 | 45,456 |
Expenses: | ||
Interest expense | 7,710 | 7,467 |
Depreciation and amortization | 9,669 | 9,607 |
Provision for doubtful accounts | 1 | 83 |
Transaction costs | 70 | |
Property tax expense | 4,223 | 4,386 |
General and administrative expenses | 5,100 | 4,571 |
Total expenses | 26,773 | 26,114 |
Other operating income: | ||
Gain on sale of real estate, net | 43,854 | |
Operating income | 63,491 | 19,342 |
Income from unconsolidated joint ventures | 231 | 1,085 |
Net income | 63,722 | 20,427 |
Income allocated to non-controlling interests | (89) | (81) |
Net income attributable to LTC Properties, Inc. | 63,633 | 20,346 |
Income allocated to participating securities | (263) | (92) |
Net income available to common stockholders | $ 63,370 | $ 20,254 |
Earnings per common share: | ||
Basic (in dollars per share) | $ 1.60 | $ 0.51 |
Diluted (in dollars per share) | $ 1.60 | $ 0.51 |
Weighted average shares used to calculate earnings per common share: | ||
Basic (in shares) | 39,539 | 39,532 |
Diluted (in shares) | 39,541 | 39,874 |
Dividends declared and paid per common share (in dollars per share) | $ 0.57 | $ 0.57 |
Comprehensive Income: | ||
Net income | $ 63,722 | $ 20,427 |
Comprehensive income | $ 63,722 | $ 20,427 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands | Parent | Common Stock | Capital in Excess of Par Value | Cumulative Net Income | Cumulative Distributions | Non-controlling Interests | Total |
Balance at beginning of period at Dec. 31, 2018 | $ 825,490 | $ 397 | $ 862,712 | $ 1,255,764 | $ (1,293,383) | $ 7,481 | $ 832,971 |
Balance (in shares) at Dec. 31, 2018 | 39,657 | ||||||
Equity activity | |||||||
Common stock cash distributions | (22,631) | (22,631) | (22,631) | ||||
Vesting of performance-based stock units | (300) | (300) | (300) | ||||
Vesting of performance-based stock units | 48 | ||||||
Issuance of restricted stock | (1) | (1) | (1) | ||||
Issuance of restricted stock (in shares) | 78 | ||||||
Stock-based compensation expense | 1,689 | 1,689 | 1,689 | ||||
Net income | 20,346 | 20,346 | 81 | 20,427 | |||
Non-controlling interests contributions | 919 | 919 | |||||
Non-controlling interest distributions | (89) | (89) | |||||
Other | (2,024) | (2,024) | (2,024) | ||||
Other (in shares) | (44) | ||||||
Balance at end of period at Mar. 31, 2019 | 779,761 | $ 397 | 862,376 | 1,233,302 | (1,316,314) | 8,392 | 788,153 |
Balance (in shares) at Mar. 31, 2019 | 39,739 | ||||||
Equity activity | |||||||
Cumulative effect of the adoption of the ASC 842 | (42,808) | (42,808) | (42,808) | ||||
As Adjusted Balance at January 1, 2019 | 782,682 | $ 397 | 862,712 | 1,212,956 | (1,293,383) | 7,481 | 790,163 |
Common stock cash distributions | (22,653) | (22,653) | (22,653) | ||||
Issuance of restricted stock | (6) | (6) | (6) | ||||
Issuance of restricted stock (in shares) | 8 | ||||||
Stock-based compensation expense | 1,623 | 1,623 | 1,623 | ||||
Net income | 20,446 | 20,446 | 88 | 20,534 | |||
Non-controlling interests contributions | 46 | 46 | |||||
Non-controlling interest distributions | (87) | (87) | |||||
Balance at end of period at Jun. 30, 2019 | 779,171 | $ 397 | 863,993 | 1,253,748 | (1,338,967) | 8,439 | 787,610 |
Balance (in shares) at Jun. 30, 2019 | 39,747 | ||||||
Equity activity | |||||||
Common stock cash distributions | (22,658) | (22,658) | (22,658) | ||||
Stock option exercises | 123 | $ 1 | 122 | 123 | |||
Stock option exercises (in shares) | 5 | ||||||
Stock-based compensation expense | 1,626 | 1,626 | 1,626 | ||||
Net income | 27,192 | 27,192 | 88 | 27,280 | |||
Non-controlling interest distributions | (67) | (67) | |||||
Other | (20) | (20) | (20) | ||||
Balance at end of period at Sep. 30, 2019 | 785,434 | $ 398 | 865,721 | 1,280,940 | (1,361,625) | 8,460 | 793,894 |
Balance (in shares) at Sep. 30, 2019 | 39,752 | ||||||
Equity activity | |||||||
Common stock cash distributions | (22,658) | (22,658) | (22,658) | ||||
Stock-based compensation expense | 1,625 | 1,625 | 1,625 | ||||
Net income | 12,542 | 12,542 | 89 | 12,631 | |||
Non-controlling interest distributions | (66) | (66) | |||||
Balance at end of period at Dec. 31, 2019 | 776,943 | $ 398 | 867,346 | 1,293,482 | (1,384,283) | 8,483 | 785,426 |
Balance (in shares) at Dec. 31, 2019 | 39,752 | ||||||
Equity activity | |||||||
Common stock cash distributions | (22,581) | (22,581) | (22,581) | ||||
Vesting of performance-based stock units | (586) | (586) | (586) | ||||
Vesting of performance-based stock units | 82 | ||||||
Issuance of restricted stock | $ 1 | (1) | |||||
Issuance of restricted stock (in shares) | 76 | ||||||
Repurchase of common stock | (18,012) | $ (6) | (18,006) | (18,012) | |||
Repurchase of common stock (in shares) | (616) | ||||||
Stock-based compensation expense | 1,777 | 1,777 | 1,777 | ||||
Net income | 63,633 | 63,633 | 89 | 63,722 | |||
Non-controlling interest distributions | (146) | (146) | |||||
Other | (3,545) | $ (1) | (3,544) | (3,545) | |||
Other (in shares) | (76) | ||||||
Balance at end of period at Mar. 31, 2020 | $ 797,629 | $ 392 | $ 847,572 | $ 1,357,115 | $ (1,407,450) | $ 8,426 | $ 806,055 |
Balance (in shares) at Mar. 31, 2020 | 39,218 |
CONSOLIDATED STATEMENTS OF EQ_2
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | ||||
Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | |
CONSOLIDATED STATEMENTS OF EQUITY | |||||
Common Stock cash distributions | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | |
OPERATING ACTIVITIES: | ||||
Net income | $ 63,722 | $ 12,631 | $ 20,534 | $ 20,427 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 9,669 | 9,607 | ||
Stock-based compensation expense | 1,777 | 1,689 | ||
Gain on sale of real estate, net | (43,854) | |||
Income from unconsolidated joint ventures | (231) | (1,085) | ||
Income distributions from unconsolidated joint ventures | 231 | 1,105 | ||
Straight-line rental income | (839) | (1,238) | ||
Adjustment for collectability of rental income | 1,926 | |||
Lease incentives funded | (13) | |||
Amortization of lease incentives | 101 | 87 | ||
Provision for doubtful accounts | 1 | 83 | ||
Other non-cash items, net | 256 | 252 | ||
Increase in interest receivable | (1,511) | (1,444) | ||
(Decrease) increase in accrued interest payable | (1,480) | 13 | ||
Net change in other assets and liabilities | (3,975) | (4,635) | ||
Net cash provided by operating activities | 23,854 | 26,787 | ||
INVESTING ACTIVITIES: | ||||
Investment in real estate properties | (13,581) | (15,971) | ||
Investment in real estate developments | (4,854) | (6,957) | ||
Investment in real estate capital improvements | (1,119) | (259) | ||
Capitalized interest | (191) | (260) | ||
Proceeds from sale of real estate, net | 71,905 | 225 | ||
Investment in real estate mortgage loans receivable | (366) | (1,454) | ||
Principal payments received on mortgage loans receivable | 65 | 65 | ||
Investments in unconsolidated joint ventures | (58) | (293) | ||
Proceeds from dissolution of unconsolidated joint ventures | 3,400 | |||
Advances and originations under notes receivable | (141) | (6,953) | ||
Principal payments received on notes receivable | 41 | |||
Net cash provided by (used in) investing activities | 51,660 | (28,416) | ||
FINANCING ACTIVITIES: | ||||
Bank borrowings | 24,000 | 36,900 | ||
Repayment of bank borrowings | (28,000) | (2,000) | ||
Principal payments on senior unsecured notes | (4,167) | |||
Stock repurchase plan | (18,012) | |||
Distributions paid to stockholders | (23,167) | (22,931) | ||
Distributions paid to non-controlling interests | (146) | (90) | ||
Other | (3,545) | (2,024) | ||
Net cash (used in) provided by financing activities | (48,870) | 5,688 | ||
Increase in cash, cash equivalents and restricted cash | 26,644 | 4,059 | ||
Cash, cash equivalents and restricted cash, beginning of period | 4,244 | $ 8,823 | 4,764 | |
Cash, cash equivalents and restricted cash, end of period | 30,888 | $ 4,244 | 8,823 | |
Supplemental disclosure of cash flow information: | ||||
Interest paid | 8,935 | 7,202 | ||
Non-cash investing and financing transactions: | ||||
Right of use asset | 1,445 | |||
Lease liability | $ 1,445 | |||
Reclassified to lease incentives | $ 300 |
General
General | 3 Months Ended |
Mar. 31, 2020 | |
General | |
General | 1. Genera l LTC Properties, Inc., a health care real estate investment trust (“REIT”), was incorporated on May 12, 1992 in the State of Maryland and commenced operations on August 25, 1992. We invest primarily in seniors housing and health care properties primarily through sale-leaseback transactions, mortgage financing and structured finance solutions including mezzanine lending. We conduct and manage our business as one operating segment, rather than multiple operating segments, for internal reporting and internal decision-making purposes. Our primary objectives are to create, sustain and enhance stockholder equity value and provide current income for distribution to stockholders through real estate investments in seniors housing and health care properties managed by experienced operators. Our primary seniors housing and health care property classifications include skilled nursing centers (“SNF”), assisted living communities (“ALF”), independent living communities (“ILF”), memory care communities (“MC”) and combinations thereof. To meet these objectives, we attempt to invest in properties that provide opportunity for additional value and current returns to our stockholders and diversify our investment portfolio by geographic location, operator, property classification and form of investment. We have prepared consolidated financial statements included herein without audit and in the opinion of management have included all adjustments necessary for a fair presentation of the consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to rules and regulations governing the presentation of interim financial statements. The accompanying consolidated financial statements include the accounts of our company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three months ended March 31, 2020 and 2019 are not necessarily indicative of the results for a full year. No provision has been made for federal or state income taxes. Our company qualifies as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As such, we generally are not taxed on income that is distributed to our stockholders. New Accounting Pronouncements New Accounting Standards Adopted by Our Company In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02 (“ASU 2016-02”), Leases Topic 842, Leases ● Modify the accounting and lease classification criteria; ● On a quarterly basis, on an individual lease basis, assess the collectibility of substantially all of the lease payments through maturity. If collectibility is not probable, the lease income recorded during the period would be limited to lesser of the income that would have been recognized if collection were probable, and the lease payments received; and ● Exclude the lessor costs that are directly paid by the lessee to third parties on lessor’s behalf from variable payments. However, the lessor costs that are paid by the lessor and reimbursed by the lessee are required to be included in variable payments. As a result of adopting ASU 2016-02 on January 1, 2019, using the modified retrospective transition approach, we evaluated the collectibility of our lease payments and determined that the level of collectibility certainty cannot be achieved for certain operators. Accordingly, we recognized a cumulative effect adjustment to equity of $42,808,000. Additionally, we now report real estate taxes that are reimbursed by our operators as Rental income Property tax expense Consolidated Statements of Income and Comprehensive Income In April 2020, the FASB staff released a set of four questions and answers to provide guidance regarding accounting for lease concessions in response to the novel coronavirus (“COVID-19”) pandemic. The FASB staff guidance indicates that lessors could elect an accounting policy to not evaluate whether rent concessions provided in response to the COVID-19 pandemic are lease modifications. When only the timing of payments is impacted by the rent deferrals, but the amount of the consideration is substantially the same as required by the original lease agreement, the FASB listed two methods for lessors to account for the rent deferrals. We are still evaluating these methods: ● Account for the rent deferrals as if there were no changes made to the lease agreement. Accordingly, increase the lease receivable and continue to recognize income. ● Account for the rent deferrals as variable lease payments. In 2016, the FASB issued ASU No. 2016-13 , Measurement of Credit Losses on Financial Instruments We adopted ASU 2016-13 on January 1, 2020 and determined our Mortgage loans receivable and Notes receivable are within the scope of this ASU. We deem delinquency a credit quality indicator and consider delinquency to be 60 days of non-payment of amounts due. We utilize the probability of default and discounted cash flow methods to estimate expected credit losses. Additionally, we stress-tested the results to reflect the impact of unknown adverse future events including recessions, public health outbreaks and pandemics or epidemics, such as the coronavirus pandemic (“COVID-19”). We concluded that the adoption of ASU 2016-13 did not have a material impact on our financial statements at March 31, 2020 given that the historical reserves we had previously established approximated the expected credit losses computed by the models we utilized in the adoption of ASU 2016-13. The expected credit losses for our financial instruments that are within the scope of ASU 2016-13 are as follows (in thousands): Increase /(Decrease) Balance in Expected Balance Balance Sheet at Credit Loss at Description Location 12/31/2019 During the Quarter 3/31/2020 Expected credit losses for mortgage loans receivable Mortgage loans receivable, net of loan loss reserve $ 2,560 $ 3 $ 2,563 Expected credit losses for notes receivable Notes receivable, net of loan loss reserve $ 181 $ (2) $ 179 We elected not to measure an allowance for expected credit losses on accrued interest receivables as we have a policy in place to reserve or write off accrued interest receivables in a timely manner through our quarterly review of the loan and property performance. Therefore, we elected the policy to write off accrued interest receivables by reversing interest income and/or recognizing credit loss expense. As of March 31, 2020, total balance of accrued interest receivables of $28,097,000 was not included in the measurement of expected credit loss. For the three months ended March 31, 2020 and 2019, Company did not recognize any write-off of accrued interest receivables. |
Real Estate Investments
Real Estate Investments | 3 Months Ended |
Mar. 31, 2020 | |
Real Estate Investments | |
Real Estate Investments | 2. Real Estate Investments Assisted living communities, independent living communities, memory care communities and combinations thereof are included in the assisted living property classification (collectively “ALF”). Any reference to the number of properties or facilities, number of units, number of beds, number of operators and yield on investments in real estate are unaudited and outside the scope of our independent registered public accounting firm’s review of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board. Owned Properties. Our Owned properties are leased pursuant to non-cancelable operating leases generally with an initial term of 10 to 15 years . Each lease is a triple net lease which requires the lessee to pay all taxes, insurance, maintenance and repairs, capital and non-capital expenditures and other costs necessary in the operations of the facilities. Many of the leases contain renewal options. The leases provide for fixed minimum base rent during the initial and renewal periods. The majority of our leases contain provisions for specified annual increases over the rents of the prior year that are generally computed in one of four ways depending on specific provisions of each lease: (i) a specified percentage increase over the prior year’s rent, generally between 2.0% and 2.5% ; (ii) a calculation based on the Consumer Price Index; (iii) as a percentage of facility net patient revenues in excess of base amounts; or (iv) specific dollar increases. Our leases that contain fixed annual rental escalations and/or have annual rental escalations that are contingent upon changes in the Consumer Price Index, are generally recognized on a straight-line basis over the minimum lease period. Certain leases have annual rental escalations that are contingent upon changes in the gross operating revenues of the property. This revenue is not recognized until the appropriate contingencies have been resolved. The following table summarizes our investments in owned properties at March 31, 2020 (dollar amounts in thousands) Average Percentage Number Number of Investment Gross of of SNF ALF per Type of Property Investment Investment Properties (1) Beds Units Bed/Unit Assisted Living $ 876,319 60.9 % 107 — 6,164 $ 142.17 Skilled Nursing 543,814 37.8 % 50 6,283 212 $ 83.73 Under Development (2) 6,684 0.5 % — — — — Other (3) 11,360 0.8 % 1 118 — — Total $ 1,438,177 100.0 % 158 6,401 6,376 (1) We own properties in 27 states that are leased to 29 different operators. (2) Represents a 90 -bed SNF development project located in Missouri. (3) Includes three parcels of land held-for-use, and one behavioral health care hospital. Future minimum base rents receivable under the remaining non-cancelable terms of operating leases excluding the effects of straight-line rent receivable, amortization of lease incentives and renewal options are as follows (in thousands): Cash Rent (1) 2020 $ 101,584 2021 127,050 2022 128,250 2023 129,900 2024 126,374 Thereafter 625,531 (1) Represents contractual cash rent, except for Anthem Memory Care (“Anthem”) lease which is based on cash rent received. See below for more information. Anthem operates 11 operational memory care communities under a master lease and was placed in default in 2017 resulting from Anthem’s partial payment of its minimum rent. However, we did not enforce our rights and remedies pertaining to the event of default, under the stipulation that Anthem achieves sufficient performance and pays agreed upon rent. We currently anticipate that Anthem will pay $9,900,000 of annual cash rent during 2020. However, COVID-19 may adversely impact Anthem’s operating cash flow and ability to pay rent. In accordance with ASC 842 lease accounting guidance, at January 1, 2019, we evaluated the collectibility of straight-line rent receivable and lease incentive balances related to Anthem and determined that it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance. Preferred Care, Inc. (“Preferred Care”) and affiliated entities filed for Chapter 11 bankruptcy in 2017 as a result of a multi-million-dollar judgment in a lawsuit in Kentucky against Preferred Care and certain affiliated entities. Preferred Care leased 24 properties (“Properties”) under two master leases from us and the Preferred Care operating entities that sublease those Properties did not file for bankruptcy. In accordance with ASC 842 lease accounting guidance, at January 1, 2019, we evaluated the collectibility of straight-line rent receivable and lease incentive balances related to Preferred Care and determined it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance. Preferred Care did not affirm our master leases and subsequently filed for Chapter 7 bankruptcy in 2019. The monthly contractual obligation under the master leases was approximately $1,000,000, however, during the third quarter of 2019, Preferred Care began paying only $55,000 of monthly rent. During the fourth quarter of 2019, we entered into multiple contracts to sell the Properties, all of which were completed during the first quarter of 2020. The combined net proceeds from the sales, including the 2019 transactions, was approximately $77,900,000 resulting in a total gain of approximately $44,000,000. The Properties had a combined net book value of $35,600,000. The 21 properties sold in the first quarter of 2020, which included 2,411 beds in Arizona, Colorado, Iowa, Kansas and Texas, were sold through multiple transactions and generated net proceeds of approximately $71,900,000. These 21 properties had a combined net book value of $29,100,000 and resulted in total gain on sale of $43,900,000 in the first quarter of 2020 which was recorded as Gain on sale of real estate, net Senior Care Centers, LLC and affiliates and subsidiaries (“Senior Care”) filed for Chapter 11 bankruptcy as a result of lease terminations from certain landlords and on-going operational challenges in December 2018. Senior Care did not pay us December 2018 rent and accordingly, in December 2018, we placed Senior Care on a cash basis. In accordance with ASC 842 lease accounting guidance, at January 1, 2019, we evaluated the collectibility of straight-line rent receivable and lease incentive balance related to Senior Care and determined it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance. During 2019, we received a court ordered reimbursement from Senior Care for the December 2018 unpaid rent, late fees and legal costs totaling $1,596,000. In March 2020, Senior Care emerged from bankruptcy and affirmed our master lease. Senior Care is current on all its rent, real estate property tax escrow and maintenance deposits. The following table summarizes components of our rental income for the three months ended March 31, 2020 and 2019 (in thousands): Rental Income 2020 2019 Base cash rental income $ 33,015 $ 33,914 Variable cash rental income 4,282 (1) 4,485 (1) Straight-line rent 839 1,238 Adjustment for collectibility of rental income — (1,926) (2) Amortization of lease incentives (101) (87) Total $ 38,035 $ 37,624 (1) The variable rental income for the three months ended March 31, 2020, includes $60 related to contingent rental income and $4,222 related to our real estate taxes which were reimbursed by our operators. The variable rental income for the three months ended March 31, 2019 includes $150 related to contingent rental income and $4,335 related to our real estate taxes which were reimbursed by our operators. Per the provisions of ASC 842, any lessor cost, paid by the lessor and reimbursed by the lessee, must be included as a lease payment. (2) During the first quarter of 2019, we terminated a lease agreement and transitioned two operating seniors housing communities under the lease agreement to a new operator. As a result of the lease termination, we wrote-off $1,926 straight-line rent receivable to contra-revenue in accordance with ASC 842. Some of our lease agreements provide purchase options allowing the lessees to purchase the properties they currently lease from us. The following table summarizes information about purchase options included in our lease agreements (dollar amount in thousands): Type Number of of Gross Carrying Option State Property Properties Investments Value Window California ALF/MC 2 $ 38,895 $ 36,307 2024-2029 California ALF 2 29,655 16,588 2021-TBD (1) Florida MC 1 14,201 12,670 2028-2029 Kentucky and Ohio MC 2 30,152 27,698 2028-2029 Texas MC 2 25,265 24,180 2025-2027 South Carolina ALF/MC 1 11,680 10,648 2028-2029 Total $ 149,848 $ 128,091 (1) The option window ending date will be either 24 months or 48 months after the option window commences, based on certain contingencies. On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, and on March 13, 2020, the United States declared a national emergency with regard to COVID-19. As required by ASC 842, we assess the collectibility of our lease payments through maturity on a quarterly basis. At March 31, 2020, in conjunction with the rising levels of uncertainty related to the adverse effects of COVID-19, we assessed the probability of collecting substantially all of our lease payments through maturity and concluded that we did not have sufficient information available to evaluate the impact of COVID-19 on the collectibility of our lease payments. The extent to which COVID-19 could impact our operators and the collectibility of our future lease payments will depend on the future developments including the financial impact significance and the duration of the pandemic. We will continue to evaluate the collectibility of our lease payments through maturity on a quarterly basis, including the financial impact of COVID-19. If we determine that we do not have the level of collectibility certainty required by ASC 842 related to certain operators, all or a portion of our straight-line rent receivable and other lease receivables will be written-off. In recognition of the unique conditions affecting our operators, we have agreed to rent deferrals for certain operators totaling $772,000 for April 2020, of which $137,000 was returned back to us. The $772,000 April rent deferrals represent approximately 7% of our April contractual rent. Acquisitions and Developments: The following table summarizes our acquisitions for the three months ended March 31, 2020 and 2019 (dollar amounts in thousands): Total Number Number Purchase Transaction Acquisition of of Year Type of Property Price Costs (1) Costs Properties Beds/Units 2020 Skilled Nursing (2) $ 13,500 $ 81 $ 13,581 1 140 2019 Assisted Living (3) $ 16,719 $ 171 $ 16,890 1 74 (1) Represents cost associated with our acquisitions; however, upon adoption of ASU 2017-01, our acquisitions meet the definition of an asset acquisition resulting in capitalization of transaction costs to the properties’ basis. For our land purchases with forward development commitments, transaction costs are capitalized as part of construction in progress. Transaction costs per our Consolidated Statements of Income and Comprehensive Income represents current and prior year transaction costs due to timing and terminated transactions. (2) We acquired a SNF located in Texas. (3) We entered into a joint venture (“ JV”) (consolidated on our financial statements) to purchase an existing operational 74 -unit ALF/MC community. The non-controlling partner contributed $919 of equity and we contributed $15,971 in cash. Our economic interest in the real estate JV is approximately 95% . During he following in development and improvement projects (in thousands) : 2020 2019 Type of Property Developments Improvements Developments Improvements Assisted Living Communities $ 2,386 $ 1,116 $ 4,507 $ 256 Skilled Nursing Centers 2,468 3 2,450 — Other — — — 3 Total $ 4,854 $ 1,119 $ 6,957 $ 259 Completed Developments. (dollar amounts in thousands): Number Type Number of of of Total Year Type of Project Properties Property Beds/Units State Investment 2020 Development (1) 1 ALF/MC 78 Oregon $ 16,341 2019 Development 1 SNF 143 Kentucky $ 24,974 (1) Certificate of occupancy was received in March 2020, however, due to the COVID-19 pandemic, we have consented to delay the opening of this community to a later date to be determined. Properties Sold. (dollar amounts in thousands): Type Number Number of of of Sales Carrying Net Year State Properties Properties Beds/Units Price Value Gain 2020 Arizona SNF 1 194 $ 12,550 $ 2,229 $ 10,293 Colorado SNF 3 275 15,000 4,271 10,365 Iowa SNF (1) 7 544 14,500 4,886 8,914 Kansas SNF 3 250 9,750 7,438 1,994 Texas SNF 7 1,148 23,000 10,260 12,288 Total 2020 (2) 21 (2) 2,411 (2) $ 74,800 (2) $ 29,084 (2) $ 43,854 (2) 2019 N/A N/A — — $ — $ — $ — ( (1) This transaction includes a holdback of $838 which is held in an interest-bearing account with an escrow holder on behalf of the buyer for potential specific losses. Using the expected value model per ASC Topic 606, Contracts with Customers , we estimated and recorded the holdback value of $471 . (2) Properties sold within the Preferred Care portfolio. Mortgage Loans. (dollar amounts in thousands) Type Percentage Number of Investment Gross of of SNF per Interest Rate (1) Maturity Investment Property Investment Loans (2) Properties (3) Beds Bed/Unit 9.9% 2043 $ 186,159 SNF 72.4 % 1 15 1,941 $ 95.91 9.2% 2045 36,362 SNF 14.2 % 1 4 501 $ 72.58 9.4% 2045 19,513 SNF 7.6 % 1 2 205 $ 95.19 9.6% 2045 14,925 SNF 5.8 % 1 1 157 $ 95.06 Total $ 256,959 100.0 % 4 22 2,804 $ 91.64 (1) The majority of the mortgage loans provide for annual increases in the interest rate after a certain time period based upon a specified increase of 2.25% . (2) Some loans contain certain guarantees, provide for certain facility fees and the majority of the mortgage loans have a 30 -year term. (3) The properties securing these mortgage loans are located in one state and are operated by one operator. The following table summarizes our mortgage loan activity for the three months ended March 31, 2020 and 2019 (in thousands): 2020 2019 Originations and funding under mortgage loans receivable $ 366 $ 1,454 Scheduled principal payments received (65) (65) Mortgage loan premium amortization (1) — Provision for loan loss reserve (3) (14) Net increase in mortgage loans receivable $ 297 $ 1,375 |
Investment in Unconsolidated Jo
Investment in Unconsolidated Joint Ventures | 3 Months Ended |
Mar. 31, 2020 | |
Investment in Unconsolidated Joint Ventures | |
Investment in Unconsolidated Joint Ventures | 3. Investment in Unconsolidated Joint Ventures The following table summarizes our investment in an unconsolidated joint venture as of March 31, 2020 (dollar amounts in thousands): Type Type Total Contractual Number of of Preferred Cash of Investment Carrying State Properties Investment Return Portion Beds/ Units Commitment Value Arizona ALF/MC/ILF Preferred Equity (1) 15 % 8 % (2) 585 $ — $ 19,061 (3) Total 585 $ — $ 19,061 (1) We have concluded that the JV is a variable interest entity (“VIE”) in accordance with GAAP. However, because we do not control the entity, nor do we have any role in the day-to-day management, we are not the primary beneficiary of the JV. Therefore, we account for the JV investment using the equity method. (2) Effective second quarter of 2019, this JV was placed on the cash basis due to delinquency of our preferred return. (3) During the fourth quarter of 2019, we recorded an impairment loss of $5,500 to write-down our preferred equity investment to its estimated fair value. See below for more detail. During the fourth quarter of 2019, the JV in which we hold our preferred equity investment signed a contract to sell the four properties comprising the JV(“Properties”). The contract was subject to standard due diligence and other contingencies to close, all of which were met in January 2020. Accordingly, based on the information available to us regarding alternatives and courses of action, we performed a recoverability test on the carrying value of our preferred equity investment and concluded that a portion of our preferred equity investment will not be recoverable. Therefore, we recorded an impairment loss from investment in unconsolidated joint ventures of $5,500,000 and wrote our preferred equity investment down to its estimated fair value. In April 2020, the Properties were sold and we received partial liquidation proceeds of $17,200,000. We anticipate receiving additional proceeds of approximately $1,300,000 and expect to recognize a loss on liquidation of unconsolidated joint ventures of approximately $600,000 in the second quarter of 2020 related to the dissolution of this joint venture. The following table summarizes our capital contributions, income recognized, and cash interest received related to our investments in unconsolidated joint ventures for the three months ended March31, 2020 and 2019 (in thousands): Type of Capital Income Cash Interest Year Properties Contribution Recognized Received 2020 ALF/MC/ILF $ 58 $ 231 $ 231 Total $ 58 $ 231 $ 231 2019 ALF/MC/ILF $ 293 $ 553 $ 552 ALF/ILF/MC (1) — (1) 128 (1) 121 (1) ALF/MC (2) — (2) 404 (2) 432 (2) Total $ 293 $ 1,085 $ 1,105 (1) We had a $2,900 mezzanine loan commitment for a 99 -unit seniors housing community in Florida with a total preferred return of 15% . The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. Since interest payments were deferred and no interest was recorded for the first twelve months of the loan, we used the effective interest method in accordance with GAAP to recognize interest income and recorded the difference between the effective interest income and cash interest income to the loan principal balance. During the third quarter of 2019, the mezzanine loan was paid off. (2) We had a $3,400 mezzanine loan commitment for the development of a 127 -unit seniors housing community in Florida with a total preferred return of 15% . The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. During the first quarter of 2019, the mezzanine loan was paid off. |
Notes Receivable
Notes Receivable | 3 Months Ended |
Mar. 31, 2020 | |
Notes Receivable. | |
Notes Receivable | 4. Notes Receivable Notes receivable consists of mezzanine loans and other loan arrangements. The following table is a summary of our notes receivable components as of March 31, 2020 and December 31, 2019 (in thousands): March 31, 2020 December 31, 2019 Mezzanine loans $ 13,284 $ 13,284 Other loans 4,664 4,824 Notes receivable reserve (179) (181) Total $ 17,769 $ 17,927 The following table summarizes our notes receivable activity for the three months ended March 31, 2020 and 2019 (in thousands): Three Months Ended March 31, 2020 2019 Advances under notes receivable $ 141 $ 6,953 Principal payments received under notes receivable — (41) Reclassified to lease incentives (300) (1) — Notes receivable reserve 1 (69) Total $ (158) $ 6,843 (1) Represents an interim working capital loan related to a development project which matured upon completion of the development project and commencement of the lease. |
Lease Incentives
Lease Incentives | 3 Months Ended |
Mar. 31, 2020 | |
Lease Incentives | |
Lease Incentives | 5. Lease Incentives Our lease incentive balances at March 31, 2020 and December 31, 2019 are as follows (in thousands): March 31, 2020 December 31, 2019 Non-contingent lease incentives $ 2,764 $ 2,552 The following table summarizes our lease incentives activity for the three months ended March 31, 2020 and 2019 (in thousands) 2020 2019 Funding Amortization Reclassification Funding Amortization Write-off Non-contingent lease incentives $ 13 $ (101) $ 300 (1) $ — $ (87) $ (12,093) (2) (1) We reclassified a $300 interim working capital loan as lease incentive. See Note 4. Notes Receivable for further discussion. (2) In accordance with ASC 842 lease standard adopted on January 1, 2019, we wrote-off $12,093 of lease incentives related to leases for which we determined it is not probable we will collect substantially all of the contractual lease obligation through maturity. See Note 1. General for further discussion. Non-contingent lease incentives represent payments made to our lessees for various reasons including entering into a new lease or lease amendments and extensions. Contingent lease incentives represent potential contingent earn-out payments that may be made to our lessees in the future, as part of our lease agreements. From time to time, we may commit to provide contingent payments to our lessees, upon our properties achieving certain rent coverage ratios. Once the contingent payment becomes probable and estimable, the contingent payment is recorded as a lease incentive. Lease incentives are amortized as a yield adjustment to rental income over the remaining life of the lease. |
Debt Obligations
Debt Obligations | 3 Months Ended |
Mar. 31, 2020 | |
Debt Obligations | |
Debt Obligations | 6. Debt Obligations Bank Borrowings. We have an unsecured credit agreement that provides for a revolving aggregate commitment of the lenders of up to $600,000,000 with the opportunity to increase the commitment size of the credit agreement up to a total of $1,000,000,000 . The unsecured credit agreement matures on June 27, 2022 and provides for a one-year extension option at our discretion, subject to customary conditions. Based on our leverage at March 31, 2020 , the facility provides for interest annually at LIBOR plus 115 basis points and a facility fee of 20 basis points. At March 31, 2020 , we were in compliance with all covenants. Senior Unsecured Notes. affiliates and managed accounts of The debt obligations by component as of March 31, 2020 and December 31, 2019 are as follows ( dollar amounts in thousands): At March 31, 2020 At December 31, 2019 Applicable Available Available Interest Outstanding for Outstanding for Debt Obligations Rate (1) Balance Borrowing Balance Borrowing Bank borrowings 2.22% $ 89,900 $ 510,100 $ 93,900 $ 506,100 Senior unsecured notes, net of debt issue costs 4.39% 599,527 — 599,488 21,500 Total 4.10% $ 689,427 $ 510,100 $ 693,388 $ 527,600 (1) Represents weighted average of interest rate as of March 31, 2020 . Our borrowings and repayments are as follows (in thousands): Three Months Ended March 31, 2020 2019 Debt Obligations Borrowings Repayments Borrowings Repayments Bank borrowings $ 24,000 $ (28,000) $ 36,900 $ (2,000) Senior unsecured notes — — — (4,167) Total $ 24,000 $ (28,000) $ 36,900 $ (6,167) |
Equity
Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity | |
Equity | 7. Equity Common Stock. During the three months ended March 31, 2020 and 2019, we acquired 76,067 shares and 44,543 shares, respectively, of common stock held by employees who tendered owned shares to satisfy tax withholding obligations. Stock Repurchase Plan. Non-controlling Interests. As of March 31,2020, we have the following consolidated VIEs (in thousands): Gross Investment Property Consolidated Non-Controlling Year Purpose Type State Assets Interests 2019 Owned real estate ALF/MC VA $ 16,895 $ 919 2018 Owned real estate ILF OR 14,400 2,857 2018 Owned real estate and development ALF/MC OR 16,341 1,081 2017 Owned real estate and development ILF/ALF/MC WI 22,009 2,305 2017 Owned real estate ALF/MC SC 11,680 1,264 Total $ 81,325 $ 8,426 Available Shelf Registration. Distributions. (in thousands) Three Months Ended March 31, 2020 2019 Declared Paid Declared Paid Common Stock (1) $ 23,167 (2) $ 23,167 (2) $ 22,931 (3) $ 22,931 (3) (1) Represents $0.19 per share per month for the three months ended March 31, 2020 and 2019 . (2) Includes $586 related to the vesting of performance-based stock units. (3) Includes $300 related to the vesting of performance-based stock units. In April 2020, we declared a monthly cash dividend of $0.19 per share on our common stock for the months of April, May and June 2020, payable on April 30, May 29, and June 30, 2020, respectively, to stockholders of record on April 22, May 21, and June 22, 2020, respectively. Stock-Based Compensation Under our 2015 Equity Participation Plan (“the 2015 Plan”), 1,400,000 shares of common stock have been reserved for awards, including nonqualified stock option grants and restricted stock grants to officers, employees, non-employee directors and consultants. The terms of the awards granted under the 2015 Plan are set by our compensation committee at its discretion. At March 31, 2020 , we had 15,000 stock options outstanding and exercisable. During the three months ended March 31, 2020 and 2019 , no stock options were granted or exercised. The following table summarizes our restricted stock and performance-based stock units activity for the three months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 Outstanding, January 1 345,633 325,750 Granted 142,491 139,112 Vested (156,555) (1) (117,997) (2) Outstanding, March 31 331,569 346,865 (1) Includes 81,574 performance-based stock units. (2) Includes 48,225 performance-based stock units. During the three months ended March 31, 2020 and 2019 , we granted restricted stock and performance-based stock units under the 2015 Plan as follows: No. of Price per Year Shares/Units Share Vesting Period 2020 76,464 $ 48.95 ratably over 3 years 66,027 $ 49.98 TSR targets (1) 142,491 2019 78,276 $ 46.54 ratably over 3 years 60,836 $ 46.54 TSR targets (1) 139,112 (1) Vesting is based on achieving certain total shareholder return (“TSR”) targets in 4 years with acceleration opportunity in 3 years . Compensation expense recognized related to the vesting of restricted common stock and performance-based stock units for the three months ended March 31, 2020 and 2019 were $1,777,000 and $1,689,000 , respectively. At March 31, 2020 , the remaining compensation expense to be recognized related to the future service period of unvested outstanding restricted common stock and performance-based stock units are as follows (in thousands): Remaining Compensation Vesting Date Expense 2020 $ 4,993 2021 4,851 2022 2,536 2023 196 Total $ 12,576 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments and Contingencies At March 31, 2020, we had commitments as follows (in thousands): Total Investment 2020 Commitment Remaining Commitment Funding Funded Commitment Real estate properties Note 2. Real Estate Investments $ 41,336 (1) $ 5,602 $ 23,963 $ 17,373 Accrued incentives and earn-out liabilities (Note 5. Lease Incentives) 10,500 — — 10,500 Mortgage loans ( Note 2. Real Estate Investments 27,200 (2) 326 6,271 20,929 Notes receivable ( Note 4. Notes Receivable 1,354 50 50 1,304 Total $ 80,390 $ 5,978 $ 30,284 $ 50,106 (1) Represents commitments to purchase land and improvements, if applicable, and to develop, re-develop, renovate or expand seniors housing and health care properties. (2) Represents $9,200 of commitments to expand and renovate the seniors housing and health care properties securing the mortgage loans and $18,000 represents contingent funding upon the borrower achieving certain coverage ratios. Also, some of our lease agreements provide purchase options allowing the lessee to purchase the properties they currently lease from us. See Note 2. Real Estate Investments We are a party from time to time to various general and professional liability claims and lawsuits asserted against the lessees or borrowers of our properties, which in our opinion are not singularly or in the aggregate material to our results of operations or financial condition. These types of claims and lawsuits may include matters involving general or professional liability, which we believe under applicable legal principles are not our responsibility as a non-possessory landlord or mortgage holder. We believe that these matters are the responsibility of our lessees and borrowers pursuant to general legal principles and pursuant to insurance and indemnification provisions in the applicable leases or mortgages. We intend to continue to vigorously defend such claims. |
Major Operators
Major Operators | 3 Months Ended |
Mar. 31, 2020 | |
Major Operators | |
Major Operators | 9. Major Operators We have two operators from each of which we derive 10% or more of our combined rental revenue and interest income from mortgage loans. The following table sets forth information regarding our major operators as of March 31, 2020: Number of Number of Percentage of SNF ALF Total Total Operator SNF ALF Beds Units Revenue (1) Assets Prestige Healthcare 24 — 2,922 93 17.7 % 17.3 % Senior Lifestyle Corporation — 23 — 1,457 10.9 % 10.1 % Total 24 23 2,922 1,550 28.6 % 27.4 % (1) Includes rental income from owned properties and interest income from mortgage loans as of March 31, 2020 and excludes rental income from lessee reimbursement and sold properties. Our financial position and ability to make distributions may be adversely affected if Prestige Healthcare, Senior Lifestyle Corporation, or any of our lessees and borrowers face financial difficulties, including any bankruptcies, inability to emerge from bankruptcy, insolvency or general downturn in business of any such operator, impact upon services or occupancy levels due to COVID-19, or in the event any such operator does not renew and/or extend its relationship with us. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings per Share | |
Earnings per Share | 10. Earnings per Share The following table sets forth the computation of basic and diluted net income per share ( in thousands, except per share amounts March 31, 2020 2019 Net income $ 63,722 $ 20,427 Less income allocated to non-controlling interests (89) (81) Less income allocated to participating securities: Non-forfeitable dividends on participating securities (94) (92) Income allocated to participating securities (169) — Total net income allocated to participating securities (263) (92) Net income available to common stockholders 63,370 20,254 Effect of dilutive securities: Participating securities — 92 Net income for diluted net income per share $ 63,370 $ 20,346 Shares for basic net income per share 39,539 39,532 Effect of dilutive securities: Stock options 2 4 Performance-based stock units — (1) 181 Participating securities — (2) 157 Total effect of dilutive securities 2 342 Shares for diluted net income per share 39,541 39,874 Basic net income per share $ 1.60 $ 0.51 Diluted net income per share $ 1.60 $ 0.51 (1) At March 31, 2020, no performance-based stock units would be earned based on TSR targets. (2) For the three months ended March 31, 2020, the participating securities have been excluded from the computation of diluted net income per share as such inclusion would be anti-dilutive. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | 11. Fair Value Measurements In accordance with the accounting guidance regarding the fair value option for financial assets and financial liabilities, entities are permitted to choose to measure certain financial assets and liabilities at fair value, with the change in unrealized gains and losses reported in earnings. We did not elect the fair value option for any of our financial assets and financial liabilities. The carrying amount of cash and cash equivalents approximates fair value because of the short-term maturity of these instruments. We do not invest our cash in auction rate securities. The carrying value and fair value of our financial instruments as of March 31, 2020 and December 31, 2019 assuming election of fair value for our financial assets and financial liabilities were as follows ( in thousands At March 31, 2020 At December 31, 2019 Carrying Fair Carrying Fair Value Value Value Value Mortgage loans receivable $ 254,396 $ 316,295 (1) $ 254,099 $ 312,824 (1) Bank borrowings 89,900 89,900 (2) 93,900 93,900 (2) Senior unsecured notes, net of debt issue costs 599,527 564,050 (3) 599,488 612,375 (3) (1) Our investment in mortgage loans receivable is classified as Level 3. The fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is determined using our assumption on market conditions adjusted for market and credit risk and current returns on our investments. The discount rate used to value our future cash inflows of the mortgage loans receivable at March 31, 2020 and December 31, 2019 was 9.0% . (2) Our bank borrowings bear interest at a variable interest rate. The estimated fair value of our bank borrowings approximated their carrying values at March 31, 2020 and December 31, 2019 based upon prevailing market interest rates for similar debt arrangements. (3) Our obligation under our senior unsecured notes is classified as Level 3 and thus the fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is measured based upon management’s estimates of rates currently prevailing for comparable loans available to us, and instruments of comparable maturities. At March 31, 2020, the discount rate used to value our future cash outflow of our senior unsecured notes was 5.25% for those maturing before year 2026 and 5.50% for those maturing at or beyond year 2026. At December 31, 2019, the discount rate used to value our future cash outflow of our senior unsecured notes was 3.70% for those maturing before year 2026 and 3.90% for those maturing at or beyond year 2026. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events | |
Subsequent Events | 12. Subsequent Events Subsequent to March 31, 2020 the following events occurred: Investment in Unconsolidated Joint Ventures: Equity: |
General (Policies)
General (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
General | |
Basis of Presentation | We have prepared consolidated financial statements included herein without audit and in the opinion of management have included all adjustments necessary for a fair presentation of the consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to rules and regulations governing the presentation of interim financial statements. The accompanying consolidated financial statements include the accounts of our company and its wholly-owned subsidiaries. |
Reclassifications | All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three months ended March 31, 2020 and 2019 are not necessarily indicative of the results for a full year. |
Income taxes | No provision has been made for federal or state income taxes. Our company qualifies as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As such, we generally are not taxed on income that is distributed to our stockholders. |
New Accounting Pronouncement | New Accounting Pronouncements New Accounting Standards Adopted by Our Company In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02 (“ASU 2016-02”), Leases Topic 842, Leases ● Modify the accounting and lease classification criteria; ● On a quarterly basis, on an individual lease basis, assess the collectibility of substantially all of the lease payments through maturity. If collectibility is not probable, the lease income recorded during the period would be limited to lesser of the income that would have been recognized if collection were probable, and the lease payments received; and ● Exclude the lessor costs that are directly paid by the lessee to third parties on lessor’s behalf from variable payments. However, the lessor costs that are paid by the lessor and reimbursed by the lessee are required to be included in variable payments. As a result of adopting ASU 2016-02 on January 1, 2019, using the modified retrospective transition approach, we evaluated the collectibility of our lease payments and determined that the level of collectibility certainty cannot be achieved for certain operators. Accordingly, we recognized a cumulative effect adjustment to equity of $42,808,000. Additionally, we now report real estate taxes that are reimbursed by our operators as Rental income Property tax expense Consolidated Statements of Income and Comprehensive Income In April 2020, the FASB staff released a set of four questions and answers to provide guidance regarding accounting for lease concessions in response to the novel coronavirus (“COVID-19”) pandemic. The FASB staff guidance indicates that lessors could elect an accounting policy to not evaluate whether rent concessions provided in response to the COVID-19 pandemic are lease modifications. When only the timing of payments is impacted by the rent deferrals, but the amount of the consideration is substantially the same as required by the original lease agreement, the FASB listed two methods for lessors to account for the rent deferrals. We are still evaluating these methods: ● Account for the rent deferrals as if there were no changes made to the lease agreement. Accordingly, increase the lease receivable and continue to recognize income. ● Account for the rent deferrals as variable lease payments. In 2016, the FASB issued ASU No. 2016-13 , Measurement of Credit Losses on Financial Instruments We adopted ASU 2016-13 on January 1, 2020 and determined our Mortgage loans receivable and Notes receivable are within the scope of this ASU. We deem delinquency a credit quality indicator and consider delinquency to be 60 days of non-payment of amounts due. We utilize the probability of default and discounted cash flow methods to estimate expected credit losses. Additionally, we stress-tested the results to reflect the impact of unknown adverse future events including recessions, public health outbreaks and pandemics or epidemics, such as the coronavirus pandemic (“COVID-19”). We concluded that the adoption of ASU 2016-13 did not have a material impact on our financial statements at March 31, 2020 given that the historical reserves we had previously established approximated the expected credit losses computed by the models we utilized in the adoption of ASU 2016-13. The expected credit losses for our financial instruments that are within the scope of ASU 2016-13 are as follows (in thousands): Increase /(Decrease) Balance in Expected Balance Balance Sheet at Credit Loss at Description Location 12/31/2019 During the Quarter 3/31/2020 Expected credit losses for mortgage loans receivable Mortgage loans receivable, net of loan loss reserve $ 2,560 $ 3 $ 2,563 Expected credit losses for notes receivable Notes receivable, net of loan loss reserve $ 181 $ (2) $ 179 We elected not to measure an allowance for expected credit losses on accrued interest receivables as we have a policy in place to reserve or write off accrued interest receivables in a timely manner through our quarterly review of the loan and property performance. Therefore, we elected the policy to write off accrued interest receivables by reversing interest income and/or recognizing credit loss expense. As of March 31, 2020, total balance of accrued interest receivables of $28,097,000 was not included in the measurement of expected credit loss. For the three months ended March 31, 2020 and 2019, Company did not recognize any write-off of accrued interest receivables. |
General (Tables)
General (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
General | |
Schedule of expected credit losses for our financial instruments | Increase /(Decrease) Balance in Expected Balance Balance Sheet at Credit Loss at Description Location 12/31/2019 During the Quarter 3/31/2020 Expected credit losses for mortgage loans receivable Mortgage loans receivable, net of loan loss reserve $ 2,560 $ 3 $ 2,563 Expected credit losses for notes receivable Notes receivable, net of loan loss reserve $ 181 $ (2) $ 179 |
Real Estate Investments (Tables
Real Estate Investments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Real Estate Investments | |
Summary of investments in owned properties | The following table summarizes our investments in owned properties at March 31, 2020 (dollar amounts in thousands) Average Percentage Number Number of Investment Gross of of SNF ALF per Type of Property Investment Investment Properties (1) Beds Units Bed/Unit Assisted Living $ 876,319 60.9 % 107 — 6,164 $ 142.17 Skilled Nursing 543,814 37.8 % 50 6,283 212 $ 83.73 Under Development (2) 6,684 0.5 % — — — — Other (3) 11,360 0.8 % 1 118 — — Total $ 1,438,177 100.0 % 158 6,401 6,376 (1) We own properties in 27 states that are leased to 29 different operators. (2) Represents a 90 -bed SNF development project located in Missouri. (3) Includes three parcels of land held-for-use, and one behavioral health care hospital. |
Schedule of future minimum base rents receivable | Future minimum base rents receivable under the remaining non-cancelable terms of operating leases excluding the effects of straight-line rent receivable, amortization of lease incentives and renewal options are as follows (in thousands): Cash Rent (1) 2020 $ 101,584 2021 127,050 2022 128,250 2023 129,900 2024 126,374 Thereafter 625,531 (1) Represents contractual cash rent, except for Anthem Memory Care (“Anthem”) lease which is based on cash rent received. See below for more information. |
Summary of components of our rental income | The following table summarizes components of our rental income for the three months ended March 31, 2020 and 2019 (in thousands): Rental Income 2020 2019 Base cash rental income $ 33,015 $ 33,914 Variable cash rental income 4,282 (1) 4,485 (1) Straight-line rent 839 1,238 Adjustment for collectibility of rental income — (1,926) (2) Amortization of lease incentives (101) (87) Total $ 38,035 $ 37,624 (1) The variable rental income for the three months ended March 31, 2020, includes $60 related to contingent rental income and $4,222 related to our real estate taxes which were reimbursed by our operators. The variable rental income for the three months ended March 31, 2019 includes $150 related to contingent rental income and $4,335 related to our real estate taxes which were reimbursed by our operators. Per the provisions of ASC 842, any lessor cost, paid by the lessor and reimbursed by the lessee, must be included as a lease payment. (2) During the first quarter of 2019, we terminated a lease agreement and transitioned two operating seniors housing communities under the lease agreement to a new operator. As a result of the lease termination, we wrote-off $1,926 straight-line rent receivable to contra-revenue in accordance with ASC 842. |
Summary of information about purchase options included in our lease agreements | Some of our lease agreements provide purchase options allowing the lessees to purchase the properties they currently lease from us. The following table summarizes information about purchase options included in our lease agreements (dollar amount in thousands): Type Number of of Gross Carrying Option State Property Properties Investments Value Window California ALF/MC 2 $ 38,895 $ 36,307 2024-2029 California ALF 2 29,655 16,588 2021-TBD (1) Florida MC 1 14,201 12,670 2028-2029 Kentucky and Ohio MC 2 30,152 27,698 2028-2029 Texas MC 2 25,265 24,180 2025-2027 South Carolina ALF/MC 1 11,680 10,648 2028-2029 Total $ 149,848 $ 128,091 (1) The option window ending date will be either 24 months or 48 months after the option window commences, based on certain contingencies. |
Summary of investments acquired | Acquisitions and Developments: The following table summarizes our acquisitions for the three months ended March 31, 2020 and 2019 (dollar amounts in thousands): Total Number Number Purchase Transaction Acquisition of of Year Type of Property Price Costs (1) Costs Properties Beds/Units 2020 Skilled Nursing (2) $ 13,500 $ 81 $ 13,581 1 140 2019 Assisted Living (3) $ 16,719 $ 171 $ 16,890 1 74 (1) Represents cost associated with our acquisitions; however, upon adoption of ASU 2017-01, our acquisitions meet the definition of an asset acquisition resulting in capitalization of transaction costs to the properties’ basis. For our land purchases with forward development commitments, transaction costs are capitalized as part of construction in progress. Transaction costs per our Consolidated Statements of Income and Comprehensive Income represents current and prior year transaction costs due to timing and terminated transactions. (2) We acquired a SNF located in Texas. (3) We entered into a joint venture (“ JV”) (consolidated on our financial statements) to purchase an existing operational 74 -unit ALF/MC community. The non-controlling partner contributed $919 of equity and we contributed $15,971 in cash. Our economic interest in the real estate JV is approximately 95% . |
Schedule of investment in development and improvement projects | During he following in development and improvement projects (in thousands) : 2020 2019 Type of Property Developments Improvements Developments Improvements Assisted Living Communities $ 2,386 $ 1,116 $ 4,507 $ 256 Skilled Nursing Centers 2,468 3 2,450 — Other — — — 3 Total $ 4,854 $ 1,119 $ 6,957 $ 259 |
Schedule of completed projects | Completed Developments. (dollar amounts in thousands): Number Type Number of of of Total Year Type of Project Properties Property Beds/Units State Investment 2020 Development (1) 1 ALF/MC 78 Oregon $ 16,341 2019 Development 1 SNF 143 Kentucky $ 24,974 (1) Certificate of occupancy was received in March 2020, however, due to the COVID-19 pandemic, we have consented to delay the opening of this community to a later date to be determined. |
Schedule of real estate investment property sold | Properties Sold. (dollar amounts in thousands): Type Number Number of of of Sales Carrying Net Year State Properties Properties Beds/Units Price Value Gain 2020 Arizona SNF 1 194 $ 12,550 $ 2,229 $ 10,293 Colorado SNF 3 275 15,000 4,271 10,365 Iowa SNF (1) 7 544 14,500 4,886 8,914 Kansas SNF 3 250 9,750 7,438 1,994 Texas SNF 7 1,148 23,000 10,260 12,288 Total 2020 (2) 21 (2) 2,411 (2) $ 74,800 (2) $ 29,084 (2) $ 43,854 (2) 2019 N/A N/A — — $ — $ — $ — ( (1) This transaction includes a holdback of $838 which is held in an interest-bearing account with an escrow holder on behalf of the buyer for potential specific losses. Using the expected value model per ASC Topic 606, Contracts with Customers , we estimated and recorded the holdback value of $471 . (2) Properties sold within the Preferred Care portfolio. |
Summary of investments in mortgage loans secured by first mortgages | Mortgage Loans. (dollar amounts in thousands) Type Percentage Number of Investment Gross of of SNF per Interest Rate (1) Maturity Investment Property Investment Loans (2) Properties (3) Beds Bed/Unit 9.9% 2043 $ 186,159 SNF 72.4 % 1 15 1,941 $ 95.91 9.2% 2045 36,362 SNF 14.2 % 1 4 501 $ 72.58 9.4% 2045 19,513 SNF 7.6 % 1 2 205 $ 95.19 9.6% 2045 14,925 SNF 5.8 % 1 1 157 $ 95.06 Total $ 256,959 100.0 % 4 22 2,804 $ 91.64 (1) The majority of the mortgage loans provide for annual increases in the interest rate after a certain time period based upon a specified increase of 2.25% . (2) Some loans contain certain guarantees, provide for certain facility fees and the majority of the mortgage loans have a 30 -year term. (3) The properties securing these mortgage loans are located in one state and are operated by one operator. |
Schedule of mortgage loan activity | The following table summarizes our mortgage loan activity for the three months ended March 31, 2020 and 2019 (in thousands): 2020 2019 Originations and funding under mortgage loans receivable $ 366 $ 1,454 Scheduled principal payments received (65) (65) Mortgage loan premium amortization (1) — Provision for loan loss reserve (3) (14) Net increase in mortgage loans receivable $ 297 $ 1,375 |
Investment in Unconsolidated _2
Investment in Unconsolidated Joint Ventures (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Investment in Unconsolidated Joint Ventures | |
Summary of investments in unconsolidated joint ventures | The following table summarizes our investment in an unconsolidated joint venture as of March 31, 2020 (dollar amounts in thousands): Type Type Total Contractual Number of of Preferred Cash of Investment Carrying State Properties Investment Return Portion Beds/ Units Commitment Value Arizona ALF/MC/ILF Preferred Equity (1) 15 % 8 % (2) 585 $ — $ 19,061 (3) Total 585 $ — $ 19,061 (1) We have concluded that the JV is a variable interest entity (“VIE”) in accordance with GAAP. However, because we do not control the entity, nor do we have any role in the day-to-day management, we are not the primary beneficiary of the JV. Therefore, we account for the JV investment using the equity method. (2) Effective second quarter of 2019, this JV was placed on the cash basis due to delinquency of our preferred return. (3) During the fourth quarter of 2019, we recorded an impairment loss of $5,500 to write-down our preferred equity investment to its estimated fair value. See below for more detail. |
Summary of capital contributions, income recognized and cash interest received from investments in unconsolidated joint ventures | The following table summarizes our capital contributions, income recognized, and cash interest received related to our investments in unconsolidated joint ventures for the three months ended March31, 2020 and 2019 (in thousands): Type of Capital Income Cash Interest Year Properties Contribution Recognized Received 2020 ALF/MC/ILF $ 58 $ 231 $ 231 Total $ 58 $ 231 $ 231 2019 ALF/MC/ILF $ 293 $ 553 $ 552 ALF/ILF/MC (1) — (1) 128 (1) 121 (1) ALF/MC (2) — (2) 404 (2) 432 (2) Total $ 293 $ 1,085 $ 1,105 (1) We had a $2,900 mezzanine loan commitment for a 99 -unit seniors housing community in Florida with a total preferred return of 15% . The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. Since interest payments were deferred and no interest was recorded for the first twelve months of the loan, we used the effective interest method in accordance with GAAP to recognize interest income and recorded the difference between the effective interest income and cash interest income to the loan principal balance. During the third quarter of 2019, the mezzanine loan was paid off. (2) We had a $3,400 mezzanine loan commitment for the development of a 127 -unit seniors housing community in Florida with a total preferred return of 15% . The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. During the first quarter of 2019, the mezzanine loan was paid off. |
Notes Receivable (Tables)
Notes Receivable (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Notes Receivable. | |
Summary of mezzanine loans and other loan arrangements | Notes receivable consists of mezzanine loans and other loan arrangements. The following table is a summary of our notes receivable components as of March 31, 2020 and December 31, 2019 (in thousands): March 31, 2020 December 31, 2019 Mezzanine loans $ 13,284 $ 13,284 Other loans 4,664 4,824 Notes receivable reserve (179) (181) Total $ 17,769 $ 17,927 |
Lease Incentives (Tables)
Lease Incentives (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Lease Incentives | |
Summary of lease incentives by component | Our lease incentive balances at March 31, 2020 and December 31, 2019 are as follows (in thousands): March 31, 2020 December 31, 2019 Non-contingent lease incentives $ 2,764 $ 2,552 |
Summary of lease incentive activity | 2020 2019 Funding Amortization Reclassification Funding Amortization Write-off Non-contingent lease incentives $ 13 $ (101) $ 300 (1) $ — $ (87) $ (12,093) (2) (1) We reclassified a $300 interim working capital loan as lease incentive. See Note 4. Notes Receivable for further discussion. (2) In accordance with ASC 842 lease standard adopted on January 1, 2019, we wrote-off $12,093 of lease incentives related to leases for which we determined it is not probable we will collect substantially all of the contractual lease obligation through maturity. See Note 1. General for further discussion. |
Debt Obligations (Tables)
Debt Obligations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Obligations | |
Schedule of Debt Obligations | The debt obligations by component as of March 31, 2020 and December 31, 2019 are as follows ( dollar amounts in thousands): At March 31, 2020 At December 31, 2019 Applicable Available Available Interest Outstanding for Outstanding for Debt Obligations Rate (1) Balance Borrowing Balance Borrowing Bank borrowings 2.22% $ 89,900 $ 510,100 $ 93,900 $ 506,100 Senior unsecured notes, net of debt issue costs 4.39% 599,527 — 599,488 21,500 Total 4.10% $ 689,427 $ 510,100 $ 693,388 $ 527,600 (1) Represents weighted average of interest rate as of March 31, 2020 . |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity | |
Schedule of consolidated VIEs | As of March 31,2020, we have the following consolidated VIEs (in thousands): Gross Investment Property Consolidated Non-Controlling Year Purpose Type State Assets Interests 2019 Owned real estate ALF/MC VA $ 16,895 $ 919 2018 Owned real estate ILF OR 14,400 2,857 2018 Owned real estate and development ALF/MC OR 16,341 1,081 2017 Owned real estate and development ILF/ALF/MC WI 22,009 2,305 2017 Owned real estate ALF/MC SC 11,680 1,264 Total $ 81,325 $ 8,426 |
Schedule of cash dividends declared and paid | Distributions. (in thousands) Three Months Ended March 31, 2020 2019 Declared Paid Declared Paid Common Stock (1) $ 23,167 (2) $ 23,167 (2) $ 22,931 (3) $ 22,931 (3) (1) Represents $0.19 per share per month for the three months ended March 31, 2020 and 2019 . (2) Includes $586 related to the vesting of performance-based stock units. (3) Includes $300 related to the vesting of performance-based stock units. |
Schedule of restricted stock activity | The following table summarizes our restricted stock and performance-based stock units activity for the three months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 Outstanding, January 1 345,633 325,750 Granted 142,491 139,112 Vested (156,555) (1) (117,997) (2) Outstanding, March 31 331,569 346,865 (1) Includes 81,574 performance-based stock units. (2) Includes 48,225 performance-based stock units. |
Schedule of restricted stock granted | During the three months ended March 31, 2020 and 2019 , we granted restricted stock and performance-based stock units under the 2015 Plan as follows: No. of Price per Year Shares/Units Share Vesting Period 2020 76,464 $ 48.95 ratably over 3 years 66,027 $ 49.98 TSR targets (1) 142,491 2019 78,276 $ 46.54 ratably over 3 years 60,836 $ 46.54 TSR targets (1) 139,112 (1) Vesting is based on achieving certain total shareholder return (“TSR”) targets in 4 years with acceleration opportunity in 3 years . |
Schedule of restricted common stock and performance-based stock unit scheduled to vest and remaining compensation expense | Remaining Compensation Vesting Date Expense 2020 $ 4,993 2021 4,851 2022 2,536 2023 196 Total $ 12,576 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies | |
Schedule of commitments | At March 31, 2020, we had commitments as follows (in thousands): Total Investment 2020 Commitment Remaining Commitment Funding Funded Commitment Real estate properties Note 2. Real Estate Investments $ 41,336 (1) $ 5,602 $ 23,963 $ 17,373 Accrued incentives and earn-out liabilities (Note 5. Lease Incentives) 10,500 — — 10,500 Mortgage loans ( Note 2. Real Estate Investments 27,200 (2) 326 6,271 20,929 Notes receivable ( Note 4. Notes Receivable 1,354 50 50 1,304 Total $ 80,390 $ 5,978 $ 30,284 $ 50,106 (1) Represents commitments to purchase land and improvements, if applicable, and to develop, re-develop, renovate or expand seniors housing and health care properties. (2) Represents $9,200 of commitments to expand and renovate the seniors housing and health care properties securing the mortgage loans and $18,000 represents contingent funding upon the borrower achieving certain coverage ratios. |
Major Operators (Tables)
Major Operators (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Major Operators | |
Schedule of concentration of risk by major operators | Number of Number of Percentage of SNF ALF Total Total Operator SNF ALF Beds Units Revenue (1) Assets Prestige Healthcare 24 — 2,922 93 17.7 % 17.3 % Senior Lifestyle Corporation — 23 — 1,457 10.9 % 10.1 % Total 24 23 2,922 1,550 28.6 % 27.4 % (1) Includes rental income from owned properties and interest income from mortgage loans as of March 31, 2020 and excludes rental income from lessee reimbursement and sold properties. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings per Share | |
Schedule of basic and diluted net income per share | The following table sets forth the computation of basic and diluted net income per share ( in thousands, except per share amounts March 31, 2020 2019 Net income $ 63,722 $ 20,427 Less income allocated to non-controlling interests (89) (81) Less income allocated to participating securities: Non-forfeitable dividends on participating securities (94) (92) Income allocated to participating securities (169) — Total net income allocated to participating securities (263) (92) Net income available to common stockholders 63,370 20,254 Effect of dilutive securities: Participating securities — 92 Net income for diluted net income per share $ 63,370 $ 20,346 Shares for basic net income per share 39,539 39,532 Effect of dilutive securities: Stock options 2 4 Performance-based stock units — (1) 181 Participating securities — (2) 157 Total effect of dilutive securities 2 342 Shares for diluted net income per share 39,541 39,874 Basic net income per share $ 1.60 $ 0.51 Diluted net income per share $ 1.60 $ 0.51 (1) At March 31, 2020, no performance-based stock units would be earned based on TSR targets. (2) For the three months ended March 31, 2020, the participating securities have been excluded from the computation of diluted net income per share as such inclusion would be anti-dilutive. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Measurements | |
Schedule of carrying value and fair value of the entity's financial instruments | At March 31, 2020 At December 31, 2019 Carrying Fair Carrying Fair Value Value Value Value Mortgage loans receivable $ 254,396 $ 316,295 (1) $ 254,099 $ 312,824 (1) Bank borrowings 89,900 89,900 (2) 93,900 93,900 (2) Senior unsecured notes, net of debt issue costs 599,527 564,050 (3) 599,488 612,375 (3) (1) Our investment in mortgage loans receivable is classified as Level 3. The fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is determined using our assumption on market conditions adjusted for market and credit risk and current returns on our investments. The discount rate used to value our future cash inflows of the mortgage loans receivable at March 31, 2020 and December 31, 2019 was 9.0% . (2) Our bank borrowings bear interest at a variable interest rate. The estimated fair value of our bank borrowings approximated their carrying values at March 31, 2020 and December 31, 2019 based upon prevailing market interest rates for similar debt arrangements. (3) Our obligation under our senior unsecured notes is classified as Level 3 and thus the fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is measured based upon management’s estimates of rates currently prevailing for comparable loans available to us, and instruments of comparable maturities. At March 31, 2020, the discount rate used to value our future cash outflow of our senior unsecured notes was 5.25% for those maturing before year 2026 and 5.50% for those maturing at or beyond year 2026. At December 31, 2019, the discount rate used to value our future cash outflow of our senior unsecured notes was 3.70% for those maturing before year 2026 and 3.90% for those maturing at or beyond year 2026. |
General (Details)
General (Details) | 3 Months Ended | ||||
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Jan. 01, 2019USD ($) | |
Number of operating segments | segment | 1 | ||||
Provision for federal or state income taxes | $ 0 | ||||
Real estate taxes reimbursed | 4,222,000 | $ 4,335,000 | |||
Cumulative effect of the adoption of the ASC 842 | (42,808,000) | ||||
Expected credit losses for financial instruments | |||||
Interest Receivable | $ 28,097,000 | $ 28,097,000 | $ 26,586,000 | ||
Mortgage Loans Receivable | |||||
Expected credit losses for financial instruments | |||||
Balance at the Beginning of the period | 2,563,000 | ||||
Increase/Decreaes in Expected Credit Loss | 2,563,000 | 2,563,000 | 2,560,000 | ||
Balance at the End of the Period | 2,560,000 | ||||
Notes Receivable | |||||
Expected credit losses for financial instruments | |||||
Balance at the Beginning of the period | 179,000 | ||||
Increase/Decreaes in Expected Credit Loss | 179,000 | $ 179,000 | 181,000 | ||
Balance at the End of the Period | 181,000 | ||||
ASU 2016-02 | |||||
Cumulative effect of the adoption of the ASC 842 | $ 42,808,000 | ||||
ASU 2016-13 | |||||
Delinquency period | 60 days | ||||
ASU 2016-13 | Restatement Adjustment | Mortgage Loans Receivable | |||||
Expected credit losses for financial instruments | |||||
Increase/Decreaes in Expected Credit Loss | 3,000 | 3,000 | |||
Balance at the End of the Period | 3,000 | ||||
ASU 2016-13 | Restatement Adjustment | Notes Receivable | |||||
Expected credit losses for financial instruments | |||||
Increase/Decreaes in Expected Credit Loss | (2,000) | $ (2,000) | |||
Balance at the End of the Period | $ (2,000) |
Real Estate Investments - Owned
Real Estate Investments - Owned Properties (Details) - Real Estate Investment $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)itempropertystate$ / item | |
Real Estate [Line Items] | |
Gross Investment | $ | $ 1,438,177 |
Percentage of Investment | 100.00% |
Number of properties | property | 158 |
Number of states | state | 27 |
Number of operators | 29 |
Operating leases | |
Number of ways to compute annual rent increases | 4 |
Minimum | |
Operating leases | |
Initial lease term | 10 years |
Specified annual increase over the prior year's rent (as a percent) | 2.00% |
Maximum | |
Operating leases | |
Initial lease term | 15 years |
Specified annual increase over the prior year's rent (as a percent) | 2.50% |
SNF Beds | |
Real Estate [Line Items] | |
Number of beds/units | 6,401 |
ALF Units | |
Real Estate [Line Items] | |
Number of beds/units | 6,376 |
ALF | |
Real Estate [Line Items] | |
Gross Investment | $ | $ 876,319 |
Percentage of Investment | 60.90% |
Number of properties | property | 107 |
Investment per Bed/Unit | $ / item | 142.17 |
ALF | ALF Units | |
Real Estate [Line Items] | |
Number of beds/units | 6,164 |
SNF | |
Real Estate [Line Items] | |
Gross Investment | $ | $ 543,814 |
Percentage of Investment | 37.80% |
Number of properties | property | 50 |
Investment per Bed/Unit | $ / item | 83.73 |
SNF | SNF Beds | |
Real Estate [Line Items] | |
Number of beds/units | 6,283 |
SNF | ALF Units | |
Real Estate [Line Items] | |
Number of beds/units | 212 |
Properties under Development | |
Real Estate [Line Items] | |
Gross Investment | $ | $ 6,684 |
Percentage of Investment | 0.50% |
Properties under Development | Combination ALF and MC community | Oregon | Developments | |
Real Estate [Line Items] | |
Number of beds/units under development | 90 |
Other | |
Real Estate [Line Items] | |
Gross Investment | $ | $ 11,360 |
Percentage of Investment | 0.80% |
Number of properties | property | 1 |
Number of parcels of land | 3 |
Other | SNF Beds | |
Real Estate [Line Items] | |
Number of beds/units | 118 |
Hospital | |
Real Estate [Line Items] | |
Number of properties | property | 1 |
Real Estate Investments - Base
Real Estate Investments - Base Rents (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Future minimum base rents receivable | |
2020 | $ 101,584 |
2021 | 127,050 |
2022 | 128,250 |
2023 | 129,900 |
2024 | 126,374 |
Thereafter | $ 625,531 |
Real Estate Investments - Opera
Real Estate Investments - Operator changes (Details) | Oct. 04, 2019USD ($) | Mar. 31, 2020USD ($)propertyitem | Sep. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2020USD ($)property | Dec. 31, 2020USD ($) | Dec. 31, 2017item | Dec. 31, 2019USD ($) |
Other disclosures | ||||||||
Rental income | $ 38,035,000 | $ 37,624,000 | ||||||
Proceeds from sale of real estate, net | 71,905,000 | $ 225,000 | ||||||
Gain on sale of real estate, net | 43,854,000 | |||||||
Net book value | $ 26,856,000 | |||||||
Rent in year two | 127,050,000 | $ 127,050,000 | ||||||
Rent in year three | 128,250,000 | 128,250,000 | ||||||
Rent in year four | $ 129,900,000 | 129,900,000 | ||||||
Anthem Memory Care | ||||||||
Other disclosures | ||||||||
Number of properties in default | property | 11 | |||||||
Anthem Memory Care | Forecast | ||||||||
Other disclosures | ||||||||
Minimum cash rent received | $ 9,900,000 | |||||||
Preferred Care, Inc. | ||||||||
Other disclosures | ||||||||
Minimum cash rent received | $ 55,000 | |||||||
Number of properties under two master leases | item | 24 | |||||||
Number of master leases | item | 2 | |||||||
Number of properties sold | property | 21 | |||||||
Minimum cash rent receivable | $ 1,000,000 | |||||||
Number of beds or units in property sold | item | 2,411 | |||||||
Proceeds from sale of real estate, net | $ 71,900,000 | 77,900,000 | ||||||
Gain on sale of real estate, net | 43,900,000 | 44,000,000 | ||||||
Net book value | $ 29,100,000 | $ 29,100,000 | $ 35,600,000 | |||||
Senior Care Centers | ||||||||
Other disclosures | ||||||||
Court ordered payment amount | $ 1,596,000 | |||||||
Real Estate Investment | ||||||||
Other disclosures | ||||||||
Number of properties | property | 158 | 158 | ||||||
Real Estate Investment | Maximum | ||||||||
Other disclosures | ||||||||
Initial lease term | 15 years | 15 years |
Real Estate Investments - Lease
Real Estate Investments - Lease (Details) | Apr. 23, 2020USD ($) | Mar. 31, 2020USD ($)property | Mar. 31, 2019USD ($)item | Dec. 31, 2019USD ($) |
Real estate investments | ||||
Carrying value | $ 1,117,845,000 | $ 1,136,816,000 | ||
Income and Expenses, Lessor [Abstract] | ||||
Base cash rental income | 33,015,000 | $ 33,914,000 | ||
Variable cash rental income | 4,282,000 | 4,485,000 | ||
Straight-Line Rent | 839,000 | 1,238,000 | ||
Adjustment for collectability of rental income | (1,926,000) | |||
Amortization of Lease Incentives | (101,000) | (87,000) | ||
Total Rental Income | 38,035,000 | 37,624,000 | ||
Reimbursement Of Real Estate Tax Expense | 4,222,000 | 4,335,000 | ||
Contingent rental income | 60,000 | $ 150,000 | ||
Number of operating seniors | item | 2 | |||
Rent receivable written off | $ 1,926,000 | |||
Rent deferral | $ 772,000 | |||
Rent deferral, as a percent of contractual rent | 7.00% | |||
Subsequent Event | ||||
Income and Expenses, Lessor [Abstract] | ||||
Deferred Rent Received | $ 137,000 | |||
Purchase Option in Lease Arrangements | ||||
Real estate investments | ||||
Gross Investment | $ 149,848,000 | |||
Carrying value | $ 128,091,000 | |||
ALF | Purchase Option in Lease Arrangements | California | ||||
Real estate investments | ||||
Number of properties | property | 2 | |||
Gross Investment | $ 29,655,000 | |||
Carrying value | $ 16,588,000 | |||
ALF | Purchase Option in Lease Arrangements | California | Minimum | ||||
Real estate investments | ||||
Purchase option ending period | 24 months | |||
ALF | Purchase Option in Lease Arrangements | California | Maximum | ||||
Real estate investments | ||||
Purchase option ending period | 48 months | |||
MC | Purchase Option in Lease Arrangements | Florida | ||||
Real estate investments | ||||
Number of properties | property | 1 | |||
Gross Investment | $ 14,201,000 | |||
Carrying value | $ 12,670,000 | |||
MC | Purchase Option in Lease Arrangements | Ohio and Kentucky | ||||
Real estate investments | ||||
Number of properties | property | 2 | |||
Gross Investment | $ 30,152,000 | |||
Carrying value | $ 27,698,000 | |||
MC | Purchase Option in Lease Arrangements | Texas | ||||
Real estate investments | ||||
Number of properties | property | 2 | |||
Gross Investment | $ 25,265,000 | |||
Carrying value | $ 24,180,000 | |||
ALF and MC | Purchase Option in Lease Arrangements | California | ||||
Real estate investments | ||||
Number of properties | property | 2 | |||
Gross Investment | $ 38,895,000 | |||
Carrying value | $ 36,307,000 | |||
ALF and MC | Purchase Option in Lease Arrangements | South Carolina | ||||
Real estate investments | ||||
Number of properties | property | 1 | |||
Gross Investment | $ 11,680,000 | |||
Carrying value | $ 10,648,000 | |||
Real Estate Investment | ||||
Real estate investments | ||||
Number of properties | property | 158 | |||
Gross Investment | $ 1,438,177,000 | |||
Real Estate Investment | ALF | ||||
Real estate investments | ||||
Number of properties | property | 107 | |||
Gross Investment | $ 876,319,000 |
Real Estate Investments - Acqui
Real Estate Investments - Acquisitions and Developments (Details) | 3 Months Ended | ||
Mar. 31, 2020USD ($)item | Mar. 31, 2019USD ($)item | Dec. 31, 2019USD ($) | |
Real estate investments | |||
Investment Commitment | $ 80,390,000 | ||
Non-controlling interests | 8,426,000 | $ 8,483,000 | |
ALF and MC | 74-Unit ALF/MC | |||
Real estate investments | |||
Investment Commitment | $ 15,971,000 | ||
Non-controlling interests | 919,000 | ||
2020 Acquisitions | SNF | |||
Real estate investments | |||
Purchase Price | 13,500,000 | ||
Transaction Costs | 81,000 | ||
Total Acquisition Costs | $ 13,581,000 | ||
Number of properties acquired | 1 | ||
Number of beds/units acquired | item | 140 | ||
2019 Acquisitions | ALF | |||
Real estate investments | |||
Purchase Price | 16,719,000 | ||
Transaction Costs | 171,000 | ||
Total Acquisition Costs | $ 16,890,000 | ||
Number of properties acquired | 1 | ||
Number of beds/units acquired | item | 74 | ||
2019 Acquisitions | ALF and MC | 74-Unit ALF/MC | |||
Real estate investments | |||
Number of units under development | item | 74 | ||
Economic interest in joint venture | 95.00% |
Real Estate Investments - Types
Real Estate Investments - Types of property Development and Improvement (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Real estate investments | ||
Invested in projects | $ 5,978,000 | |
Developments | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 4,854,000 | $ 6,957,000 |
Improvements | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 1,119,000 | 259,000 |
ALF | Developments | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 2,386,000 | 4,507,000 |
ALF | Improvements | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 1,116,000 | 256,000 |
SNF | Developments | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 2,468,000 | 2,450,000 |
SNF | Improvements | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | $ 3,000 | |
Other | Improvements | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | $ 3,000 |
Real Estate Investments - Devel
Real Estate Investments - Development and Improvement Projects (Details) - Developments - Real Estate Development Commitments - Real Estate Investment Completed Projects $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)propertyitem | Mar. 31, 2019USD ($)itemproperty | |
ALF and MC | Oregon | ||
Completed development and improvement projects | ||
Number of Properties | property | 1 | |
Number of Beds/Units | item | 78 | |
Total Investment | $ | $ 16,341 | |
SNF | Kentucky | ||
Completed development and improvement projects | ||
Number of Properties | property | 1 | |
Number of Beds/Units | item | 143 | |
Total Investment | $ | $ 24,974 |
Real Estate Investments - Prope
Real Estate Investments - Property Sales (Details) | 3 Months Ended | 6 Months Ended | |
Mar. 31, 2020USD ($)itemproperty | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Disposals and other | |||
Carrying value | $ 1,117,845,000 | $ 1,117,845,000 | $ 1,136,816,000 |
Net Gain (Loss) | $ 43,854,000 | ||
Properties sold | |||
Disposals and other | |||
Number of properties sold | property | 21 | ||
Number of beds or units in property sold | item | 2,411 | ||
Sales price | $ 74,800,000 | ||
Carrying value | 29,084,000 | 29,084,000 | |
Net Gain (Loss) | $ 43,854,000 | ||
Properties sold | SNF | Arizona | |||
Disposals and other | |||
Number of properties sold | property | 1 | ||
Number of beds or units in property sold | item | 194 | ||
Sales price | $ 12,550,000 | ||
Carrying value | 2,229,000 | 2,229,000 | |
Net Gain (Loss) | $ 10,293,000 | ||
Properties sold | SNF | Colorado | |||
Disposals and other | |||
Number of properties sold | property | 3 | ||
Number of beds or units in property sold | item | 275 | ||
Sales price | $ 15,000,000 | ||
Carrying value | 4,271,000 | 4,271,000 | |
Net Gain (Loss) | $ 10,365,000 | ||
Properties sold | SNF | Kansas | |||
Disposals and other | |||
Number of properties sold | property | 3 | ||
Number of beds or units in property sold | item | 250 | ||
Sales price | $ 9,750,000 | ||
Carrying value | 7,438,000 | 7,438,000 | |
Net Gain (Loss) | $ 1,994,000 | ||
Properties sold | SNF | Iowa | |||
Disposals and other | |||
Number of properties sold | property | 7 | ||
Number of beds or units in property sold | item | 544 | ||
Sales price | $ 14,500,000 | ||
Carrying value | 4,886,000 | 4,886,000 | |
Net Gain (Loss) | 8,914,000 | ||
Holdback amount | 838,000 | 838,000 | |
Realizable holdback amount | $ 471,000 | ||
Properties sold | SNF | Texas | |||
Disposals and other | |||
Number of properties sold | property | 7 | ||
Number of beds or units in property sold | item | 1,148 | ||
Sales price | $ 23,000,000 | ||
Carrying value | 10,260,000 | 10,260,000 | |
Net Gain (Loss) | $ 12,288,000 | ||
Preferred Care, Inc. | |||
Disposals and other | |||
Number of properties sold | property | 21 | ||
Number of beds or units in property sold | item | 2,411 | ||
Net Gain (Loss) | $ 43,900,000 | $ 44,000,000 |
Real Estate Investments - Mortg
Real Estate Investments - Mortgage Loan (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)loanitempropertystate$ / item | |
Mortgage Loans | |
Real Estate [Line Items] | |
Gross Investment | $ | $ 256,959 |
Percentage of Investment | 100.00% |
Number of Loans | loan | 4 |
Number of properties | property | 22 |
Investment per Bed/Unit | $ / item | 91.64 |
Specified basis points for annual increase in interest rate (as a percent) | 2.25% |
Loan Term | 30 years |
Number of states | state | 1 |
Number of operators | 1 |
Mortgage loans with 9.90% Interest Maturing 2043 | SNF | Mortgage Loans | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 9.90% |
Gross Investment | $ | $ 186,159 |
Percentage of Investment | 72.40% |
Number of Loans | loan | 1 |
Number of properties | property | 15 |
Investment per Bed/Unit | $ / item | 95.91 |
Mortgage loans with 9.20% Interest Maturing 2045 | SNF | Mortgage Loans | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 9.20% |
Gross Investment | $ | $ 36,362 |
Percentage of Investment | 14.20% |
Number of Loans | loan | 1 |
Number of properties | property | 4 |
Investment per Bed/Unit | $ / item | 72.58 |
Mortgage loans with 9.40% Interest Maturing 2045 | SNF | Mortgage Loans | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 9.40% |
Gross Investment | $ | $ 19,513 |
Percentage of Investment | 7.60% |
Number of Loans | loan | 1 |
Number of properties | property | 2 |
Investment per Bed/Unit | $ / item | 95.19 |
Mortgage loans with 9.6% Interest Maturing 2045 | SNF | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 9.60% |
Mortgage loans with 9.6% Interest Maturing 2045 | SNF | Mortgage Loans | |
Real Estate [Line Items] | |
Gross Investment | $ | $ 14,925 |
Percentage of Investment | 5.80% |
Number of Loans | loan | 1 |
Number of properties | property | 1 |
Investment per Bed/Unit | $ / item | 95.06 |
SNF Beds | Mortgage Loans | |
Real Estate [Line Items] | |
Number of beds/units | 2,804 |
SNF Beds | Mortgage loans with 9.90% Interest Maturing 2043 | SNF | Mortgage Loans | |
Real Estate [Line Items] | |
Number of beds/units | 1,941 |
SNF Beds | Mortgage loans with 9.20% Interest Maturing 2045 | SNF | Mortgage Loans | |
Real Estate [Line Items] | |
Number of beds/units | 501 |
SNF Beds | Mortgage loans with 9.40% Interest Maturing 2045 | SNF | Mortgage Loans | |
Real Estate [Line Items] | |
Number of beds/units | 205 |
SNF Beds | Mortgage loans with 9.6% Interest Maturing 2045 | SNF | Mortgage Loans | |
Real Estate [Line Items] | |
Number of beds/units | 157 |
Real Estate Investments - Mor_2
Real Estate Investments - Mortgage Loans Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Mortgage Loans | ||
Originations and fundings under mortgage loans receivable | $ 366 | $ 1,454 |
Scheduled principal payments received | (65) | (65) |
Mortgage loan premium amortization | (1) | |
(Provision for) recovery of loan loss reserve | (3) | (14) |
Net increase (decrease) in mortgage loans receivable | $ 297 | $ 1,375 |
Investment in Unconsolidated _3
Investment in Unconsolidated Joint Ventures - Investment (Details) | Apr. 20, 2020USD ($)property | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($)item | Dec. 31, 2019USD ($)property | Mar. 31, 2019USD ($)item |
Investment in Unconsolidated Joint Ventures | |||||
Carrying Value | $ 19,061,000 | $ 19,003,000 | |||
Cash Interest Received | 231,000 | $ 1,105,000 | |||
Income Recognized | $ 231,000 | 1,085,000 | |||
Liquidation proceeds | 3,400,000 | ||||
Joint Venture | |||||
Investment in Unconsolidated Joint Ventures | |||||
Number of beds/units | item | 585 | ||||
Carrying Value | $ 19,061,000 | ||||
Joint Venture | Subsequent Event | |||||
Investment in Unconsolidated Joint Ventures | |||||
Number of properties owned by joint venture | property | 4 | ||||
Liquidation proceeds | $ 17,200,000 | ||||
Additional proceeds | $ 1,300,000 | ||||
Amount of gains (losses) on liquidation | $ 600,000 | ||||
Joint Venture | Not primary beneficiary | |||||
Investment in Unconsolidated Joint Ventures | |||||
Cash Interest Received | 231,000 | 1,105,000 | |||
Capital Contributions | 58,000 | 293,000 | |||
Income Recognized | $ 231,000 | 1,085,000 | |||
Combination ILF, ALF and MC community | Preferred Equity Investment | Joint Venture | Not primary beneficiary | |||||
Investment in Unconsolidated Joint Ventures | |||||
Preferred return percentage | 15.00% | ||||
Contractual cash portion | 8.00% | ||||
Number of beds/units | item | 585 | ||||
Carrying Value | $ 19,061,000 | ||||
Cash Interest Received | 231,000 | 552,000 | |||
Number of properties owned by joint venture | property | 4 | ||||
Capital Contributions | 58,000 | 293,000 | |||
Income Recognized | $ 231,000 | $ 553,000 | |||
Impairment loss from investments in unconsolidated joint ventures | $ 5,500,000 | ||||
Combination ALF/IL/MC | Mezzanine Loans | Joint Venture | Not primary beneficiary | |||||
Investment in Unconsolidated Joint Ventures | |||||
Preferred return percentage | 15.00% | ||||
Number of beds/units | item | 99 | ||||
Investment commitment | $ 2,900,000 | ||||
Cash Interest Received | 121,000 | ||||
Income Recognized | $ 128,000 | ||||
Combination UDP-ALF/MC | Mezzanine Loans | Joint Venture | Not primary beneficiary | |||||
Investment in Unconsolidated Joint Ventures | |||||
Preferred return percentage | 15.00% | ||||
Number of beds/units | item | 127 | ||||
Investment commitment | $ 3,400,000 | ||||
Cash Interest Received | 432,000 | ||||
Income Recognized | $ 404,000 |
Notes Receivable - Components (
Notes Receivable - Components (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | |
Notes receivable activities | |||
Notes receivable reserve | $ (179) | $ (181) | |
Total | 17,769 | 17,927 | |
Principal payments received on notes receivable | $ 41 | ||
Mezzanine loan with 12.0% Interest | |||
Notes receivable activities | |||
Mezzanine loan Funded | 13,284 | 13,284 | |
Other loans | |||
Notes receivable activities | |||
Mezzanine loan Funded | $ 4,664 | $ 4,824 |
Notes Receivable - Notes Receiv
Notes Receivable - Notes Receivable Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Notes receivable activities | ||
Advances under notes receivable | $ 141 | $ 6,953 |
Principal payments received under notes receivable | (41) | |
Reclassified to lease incentives | (300) | |
Notes receivable reserve | (1) | 69 |
Total | $ (158) | $ 6,843 |
Lease Incentives (Details)
Lease Incentives (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Lease Incentives | |||
Non-contingent lease incentives | $ 2,764 | $ 2,552 | |
Non-contingent lease incentives, funding | 13 | ||
Non-contingent lease incentives, Amortization | (101) | $ (87) | |
Reclassification of Notes Receivable to Lease Incentives | $ 300 | ||
Non-contingent lease incentives, Write off | $ (12,093) |
Debt Obligations - Bank Borrowi
Debt Obligations - Bank Borrowings Terms (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Feb. 16, 2020 | Dec. 31, 2018 | |
Bank Borrowings | |||
Debt Obligations | |||
Maximum available under facility | $ 1,000,000,000 | $ 600,000,000 | |
Additional extension period option | 1 year | ||
Unused commitment fee (as a percent) | 0.20% | ||
Bank Borrowings | LIBOR | |||
Debt Obligations | |||
Basis spread over base rate (as a percent) | 1.15% | ||
Senior Unsecured Notes | Private Shelf Agreement Prudential | |||
Debt Obligations | |||
Maximum available under facility | $ 337,500,000 | ||
Availability | $ 21,500,000 |
Debt Obligations - Summary (Det
Debt Obligations - Summary (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Debt Obligations | |||
Applicable Interest Rate (as a percent) | 4.10% | ||
Borrowings | $ 24,000 | $ 36,900 | |
Outstanding Balance | 689,427 | $ 693,388 | |
Available for borrowing | $ 510,100 | 527,600 | |
Principal payments on senior unsecured notes | 4,167 | ||
Bank Borrowings | |||
Debt Obligations | |||
Applicable Interest Rate (as a percent) | 2.22% | ||
Outstanding Balance | $ 89,900 | 93,900 | |
Available for borrowing | $ 510,100 | 506,100 | |
Senior Unsecured Notes | |||
Debt Obligations | |||
Applicable Interest Rate (as a percent) | 4.39% | ||
Outstanding Balance | $ 599,527 | 599,488 | |
Available for borrowing | $ 21,500 | ||
Principal payments on senior unsecured notes | $ 4,167 |
Debt Obligations - Borrowings a
Debt Obligations - Borrowings and Repayments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Borrowings | ||
Bank borrowings | $ 24,000 | $ 36,900 |
Total | 24,000 | 36,900 |
Repayments | ||
Repayment of bank borrowings | (28,000) | (2,000) |
Principal payments on senior unsecured notes | (4,167) | |
Total | (28,000) | (6,167) |
Bank Borrowings | ||
Borrowings | ||
Bank borrowings | 24,000 | 36,900 |
Repayments | ||
Repayment of bank borrowings | $ (28,000) | (2,000) |
Senior Unsecured Notes | ||
Repayments | ||
Principal payments on senior unsecured notes | $ (4,167) |
Equity - Class of Stock Disclos
Equity - Class of Stock Disclosures - Common Stock and Shelf Registrations (Details) - Common Stock - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Equity | ||
Number of shares repurchased | 76,067 | 44,543 |
Equity Distribution Agreements | ||
Equity | ||
Maximum offering capacity under shelf registration statement | $ 200,000,000 | |
Shares common stock sold | 0 | |
Amount available under effective shelf registration statement | $ 200,000,000 |
Equity - Share Repurchase Plan
Equity - Share Repurchase Plan (Details) | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Equity | |
Shares authorized for repurchase | 5,000,000 |
Number of shares purchased | 615,827 |
Average price per share | $ / shares | $ 29.25 |
Total purchase price of shares | $ | $ 18,000,000 |
Equity - Noncontrolling Interes
Equity - Noncontrolling Interest (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | |
Noncontrolling interest | |||
Gross Consolidated Assets | $ 1,524,785 | $ 1,514,209 | |
Non-controlling interests | 8,426 | $ 8,483 | |
Investment Commitment | 80,390 | ||
Partnership | |||
Noncontrolling interest | |||
Gross Consolidated Assets | 81,325 | ||
Non-controlling interests | 8,426 | ||
2019 Acquisitions | ALF | |||
Noncontrolling interest | |||
Purchase Price | $ 16,719 | ||
Virginia | 2019 Acquisitions | Partnership | ALF and MC | |||
Noncontrolling interest | |||
Gross Consolidated Assets | 16,895 | ||
Non-controlling interests | 919 | ||
Oregon | 2018 Acquisitions | Partnership | Properties under Development | |||
Noncontrolling interest | |||
Gross Consolidated Assets | 16,341 | ||
Non-controlling interests | 1,081 | ||
Oregon | 2018 Acquisitions | Partnership | ILF | |||
Noncontrolling interest | |||
Gross Consolidated Assets | 14,400 | ||
Non-controlling interests | 2,857 | ||
Wisconsin | 2017 Acquisitions | Partnership | Properties under Development | |||
Noncontrolling interest | |||
Gross Consolidated Assets | 22,009 | ||
Non-controlling interests | 2,305 | ||
South Carolina | 2017 Acquisitions | Partnership | ALF | |||
Noncontrolling interest | |||
Gross Consolidated Assets | 11,680 | ||
Non-controlling interests | $ 1,264 |
Equity - Class of Stock Discl_2
Equity - Class of Stock Disclosures - Dividends and AOCI (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||||||
Jun. 30, 2020 | May 31, 2020 | Apr. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | |
Dividend Distributions | ||||||||
Paid | $ 23,167 | $ 22,931 | ||||||
Dividends declared and paid per common share (in dollars per share) | $ 0.57 | $ 0.57 | ||||||
Common Stock cash distributions | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | |||
Common Stock | ||||||||
Dividend Distributions | ||||||||
Declared | $ 23,167 | $ 22,931 | ||||||
Paid | $ 23,167 | $ 22,931 | ||||||
Common Stock cash distributions | $ 0.19 | $ 0.19 | ||||||
Common Stock | Subsequent Event | ||||||||
Dividend Distributions | ||||||||
Dividends declared and paid per common share (in dollars per share) | $ 0.19 | $ 0.19 | $ 0.19 | |||||
Common Stock | Performance-based stock units | ||||||||
Dividend Distributions | ||||||||
Paid | $ 586 | $ 300 |
Equity - Options (Details)
Equity - Options (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock Based Compensation Plans | ||
Options outstanding (in shares) | 15,000 | |
Options exercisable (in shares) | 15,000 | |
Stock options granted (in shares) | 0 | 0 |
2015 Plan | ||
Stock Based Compensation Plans | ||
Total shares reserved for issuance of common stock related to the conversion of preferred stock | 1,400,000 |
Equity - Restricted Stock and p
Equity - Restricted Stock and performance-based stock units (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Restricted stock and performance-based stock units | ||
Restricted stock and performance based stock units activity | ||
Outstanding at the beginning of the year (in shares) | 345,633 | 325,750 |
Granted (in shares) | 142,491 | 139,112 |
Vested (in shares) | (156,555) | (117,997) |
Outstanding at the end of the year (in shares) | 331,569 | 346,865 |
Performance-based stock units | ||
Restricted stock and performance based stock units activity | ||
Granted (in shares) | 0 | |
Vested (in shares) | (81,574) | (48,225) |
Equity - Restricted Stock (Deta
Equity - Restricted Stock (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Performance-based stock units | ||
Restricted stock awards | ||
Number of shares granted | 0 | |
Restricted stock and performance-based stock units | ||
Restricted stock awards | ||
Number of shares granted | 142,491 | 139,112 |
Compensation expense related to share-based award | $ 1,777,000 | $ 1,689,000 |
Nonvested awards | ||
Remaining compensation expense | 12,576,000 | |
2020 | Restricted stock and performance-based stock units | ||
Nonvested awards | ||
Remaining compensation expense | 4,993,000 | |
2021 | Restricted stock and performance-based stock units | ||
Nonvested awards | ||
Remaining compensation expense | 4,851,000 | |
2022 | Restricted stock and performance-based stock units | ||
Nonvested awards | ||
Remaining compensation expense | 2,536,000 | |
2023 | Restricted stock and performance-based stock units | ||
Nonvested awards | ||
Remaining compensation expense | $ 196,000 | |
Grant Date Price $48.95 | Three year vesting | Restricted stock and performance-based stock units | ||
Restricted stock awards | ||
Number of shares granted | 76,464 | |
Granted (in dollars per share) | $ 48.95 | |
Vesting period | 3 years | |
Grant Date Price $49.98 | TSR Targets | Restricted stock and performance-based stock units | ||
Restricted stock awards | ||
Number of shares granted | 66,027 | |
Granted (in dollars per share) | $ 49.98 | |
Vesting period | 4 years | |
Grant Date Price $49.98 | Accelerated TSR Targets | Restricted stock and performance-based stock units | ||
Restricted stock awards | ||
Vesting period | 3 years | |
Grant Date Price $46.54 | Three year vesting | Restricted stock and performance-based stock units | ||
Restricted stock awards | ||
Number of shares granted | 78,276 | |
Granted (in dollars per share) | $ 46.54 | |
Vesting period | 3 years | |
Grant Date Price $46.54 | TSR Targets | Restricted stock and performance-based stock units | ||
Restricted stock awards | ||
Number of shares granted | 60,836 | |
Granted (in dollars per share) | $ 46.54 | |
Vesting period | 4 years | |
Grant Date Price $46.54 | Accelerated TSR Targets | Restricted stock and performance-based stock units | ||
Restricted stock awards | ||
Vesting period | 3 years |
Commitments and Contingencies -
Commitments and Contingencies - Summary of Commitments (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Commitments and Contingencies | |
Investment Commitment | $ 80,390 |
2019 Funding | 5,978 |
Total Commitments funded | 30,284 |
Remaining commitment | 50,106 |
Real estate properties | |
Commitments and Contingencies | |
Investment Commitment | 41,336 |
2019 Funding | 5,602 |
Total Commitments funded | 23,963 |
Remaining commitment | 17,373 |
Accrued incentives and earn-out liabilities | |
Commitments and Contingencies | |
Investment Commitment | 10,500 |
Remaining commitment | 10,500 |
Mortgage loans | |
Commitments and Contingencies | |
Investment Commitment | 27,200 |
2019 Funding | 326 |
Total Commitments funded | 6,271 |
Remaining commitment | 20,929 |
Commitments To Expand and Renovate Properties | |
Commitments and Contingencies | |
Investment Commitment | 9,200 |
Contingent Funding Commitments | |
Commitments and Contingencies | |
Investment Commitment | 18,000 |
Notes receivable | |
Commitments and Contingencies | |
Investment Commitment | 1,354 |
2019 Funding | 50 |
Total Commitments funded | 50 |
Remaining commitment | $ 1,304 |
Major Operators (Details)
Major Operators (Details) | 3 Months Ended |
Mar. 31, 2020itemproperty | |
Major Operators | |
Number of major operators | 2 |
Prestige Healthcare | SNF | |
Major Operators | |
Number of beds | property | 24 |
Number of beds/units | 2,922 |
Prestige Healthcare | ALF | |
Major Operators | |
Number of beds/units | 93 |
Senior Lifestyle Corporation | ALF | |
Major Operators | |
Number of beds | property | 23 |
Number of beds/units | 1,457 |
Operator Concentration Risk | SNF | |
Major Operators | |
Number of beds | property | 24 |
Number of beds/units | 2,922 |
Operator Concentration Risk | ALF | |
Major Operators | |
Number of beds | property | 23 |
Number of beds/units | 1,550 |
Total Revenue | Operator Concentration Risk | |
Major Operators | |
Concentration risk (as a percent) | 28.60% |
Total Revenue | Operator Concentration Risk | Prestige Healthcare | |
Major Operators | |
Concentration risk (as a percent) | 17.70% |
Total Revenue | Operator Concentration Risk | Senior Lifestyle Corporation | |
Major Operators | |
Concentration risk (as a percent) | 10.90% |
Total Assets | Operator Concentration Risk | |
Major Operators | |
Concentration risk (as a percent) | 27.40% |
Total Assets | Credit Concentration Risk | Prestige Healthcare | |
Major Operators | |
Concentration risk (as a percent) | 17.30% |
Total Assets | Credit Concentration Risk | Senior Lifestyle Corporation | |
Major Operators | |
Concentration risk (as a percent) | 10.10% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | |
Net income | $ 63,722 | $ 12,631 | $ 27,280 | $ 20,534 | $ 20,427 |
Less income allocated to non-controlling interests | (89) | (81) | |||
Less income allocated to participating securities: | |||||
Non-forfeitable dividends on participating securities | (94) | (92) | |||
Income allocated to participating securities | (169) | ||||
Total net income allocated to participating securities | (263) | (92) | |||
Net income available to common stockholders | 63,370 | 20,254 | |||
Effect of dilutive securities: | |||||
Participating securities | 92 | ||||
Net income for diluted net income per share | $ 63,370 | $ 20,346 | |||
Reconciliation of shares | |||||
Shares for basic net income per share | 39,539,000 | 39,532,000 | |||
Effect of dilutive securities: (Shares) | |||||
Total effect of dilutive securities (in shares) | 2,000 | 342,000 | |||
Shares for diluted net income per share | 39,541,000 | 39,874,000 | |||
Basic (in dollars per share) | $ 1.60 | $ 0.51 | |||
Diluted (in dollars per share) | $ 1.60 | $ 0.51 | |||
Stock options | |||||
Effect of dilutive securities: (Shares) | |||||
Stock options and performance-based stock units (in shares) | 2,000 | 4,000 | |||
Performance-based stock units | |||||
Effect of dilutive securities: (Shares) | |||||
Stock options and performance-based stock units (in shares) | 181,000 | ||||
Number of shares granted | 0 | ||||
Participating Securities | |||||
Effect of dilutive securities: (Shares) | |||||
Participating securities | 157,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Thousands | Mar. 31, 2020USD ($)item | Dec. 31, 2019USD ($)item |
Fair value measurements | ||
Mortgage loans receivable | $ 254,396 | $ 254,099 |
Senior unsecured notes, net of debt issue costs | $ 599,527 | $ 599,488 |
Level 3 | Senior Unsecured Notes maturing before 2026 | Discount Rate | ||
Fair value measurements | ||
Future cash outflows discount rate (as a percent) | item | 0.0525 | 0.0370 |
Level 3 | Senior Unsecured Notes maturing 2026 and after | Discount Rate | ||
Fair value measurements | ||
Future cash outflows discount rate (as a percent) | item | 0.0550 | 0.0390 |
Level 3 | Mortgage Loans Receivable | Discount Rate | ||
Fair value measurements | ||
Future cash inflows discount rate (as a percent) | item | 0.090 | 0.090 |
Carrying Value | ||
Fair value measurements | ||
Mortgage loans receivable | $ 254,396 | $ 254,099 |
Bank borrowings | 89,900 | 93,900 |
Senior unsecured notes, net of debt issue costs | 599,527 | 599,488 |
Fair Value | ||
Fair value measurements | ||
Bank borrowings | 89,900 | 93,900 |
Fair Value | Level 3 | ||
Fair value measurements | ||
Mortgage loans receivable | 316,295 | 312,824 |
Senior unsecured notes, net of debt issue costs | $ 564,050 | $ 612,375 |
Subsequent Events - Investment
Subsequent Events - Investment in Unconsolidated Joint Ventures (Details) | Apr. 20, 2020USD ($)property | Jun. 30, 2020USD ($) | Mar. 31, 2019USD ($) |
Subsequent Events | |||
Liquidation proceeds | $ 3,400,000 | ||
Subsequent Event | Joint Venture | |||
Subsequent Events | |||
Number of properties owned by joint venture | property | 4 | ||
Liquidation proceeds | $ 17,200,000 | ||
Additional proceeds | $ 1,300,000 | ||
Amount of gains (losses) on liquidation | $ 600,000 |
Subsequent Events - Equity (Det
Subsequent Events - Equity (Details) - $ / shares | 1 Months Ended | 3 Months Ended | |||
Jun. 30, 2020 | May 31, 2020 | Apr. 30, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | |
Equity | |||||
Dividends declared and paid per common share (in dollars per share) | $ 0.57 | $ 0.57 | |||
Subsequent Event | Common Stock | |||||
Equity | |||||
Dividends declared and paid per common share (in dollars per share) | $ 0.19 | $ 0.19 | $ 0.19 |