Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 20, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
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, $.01 par value | |
Trading Symbol | LTC | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 40,504,791 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000887905 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Investments: | ||
Land | $ 124,665,000 | $ 123,239,000 |
Buildings and improvements | 1,270,722,000 | 1,285,318,000 |
Accumulated depreciation and amortization | (379,915,000) | (374,606,000) |
Operating real estate property, net | 1,015,472,000 | 1,033,951,000 |
Properties held-for-sale, net of accumulated depreciation: 2022-$2,305; 2021-$0 | 10,710,000 | |
Operating real estate property, net | 1,026,182,000 | 1,033,951,000 |
Financing receivable, net of credit loss reserve: 2022-$760; 2021-$0 | 75,507,000 | |
Real estate investments, net | 1,484,695,000 | 1,378,393,000 |
Mortgage loans receivable, net of credit loss reserve: 2022-$3,862; 2021-$3,473 | 383,006,000 | 344,442,000 |
Notes receivable, net of credit loss reserve: 2022-$590; 2021-$286 | 58,424,000 | 28,337,000 |
Investments in unconsolidated joint ventures | 19,340,000 | 19,340,000 |
Investments, net | 1,562,459,000 | 1,426,070,000 |
Other assets: | ||
Cash and cash equivalents | 6,478,000 | 5,161,000 |
Debt issue costs related to revolving line of credit | 2,480,000 | 3,057,000 |
Interest receivable | 44,290,000 | 39,522,000 |
Straight-line rent receivable | 22,253,000 | 24,146,000 |
Lease incentives | 2,001,000 | 2,678,000 |
Prepaid expenses and other assets | 12,004,000 | 4,191,000 |
Total assets | 1,651,965,000 | 1,504,825,000 |
LIABILITIES | ||
Revolving line of credit | 151,000,000 | 110,900,000 |
Term loans, net of debt issue costs: 2022-$526; 2021-$637 | 99,474,000 | 99,363,000 |
Senior unsecured notes, net of debt issue costs: 2022-$1,533; 2021-$524 | 543,287,000 | 512,456,000 |
Accrued interest | 3,120,000 | 3,745,000 |
Accrued expenses and other liabilities | 29,915,000 | 33,234,000 |
Total liabilities | 826,796,000 | 759,698,000 |
Stockholders' equity: | ||
Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2022-40,505; 2021-39,374 | 404,000 | 394,000 |
Capital in excess of par value | 899,921,000 | 856,895,000 |
Cumulative net income | 1,526,721,000 | 1,444,636,000 |
Accumulated other comprehensive income (loss) | 9,445,000 | (172,000) |
Cumulative distributions | (1,633,241,000) | (1,565,039,000) |
Total LTC Properties, Inc. stockholders' equity | 803,250,000 | 736,714,000 |
Non-controlling interests | 21,919,000 | 8,413,000 |
Total equity | 825,169,000 | 745,127,000 |
Total liabilities and equity | $ 1,651,965,000 | $ 1,504,825,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Properties held-for-sale, accumulated depreciation | $ 2,305 | $ 0 |
Financial Receivable credit loss reserve | 760 | 0 |
Mortgage loans receivable, loan loss reserve | 3,862 | 3,473 |
Notes receivable, loan loss reserve | $ 590 | $ 286 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000 | 60,000 |
Common stock, shares issued | 40,505 | 39,374 |
Common stock, shares outstanding | 40,505 | 39,374 |
Term loans | ||
Debt issue costs, net | $ 526 | $ 637 |
Senior Unsecured Notes | ||
Debt issue costs, net | $ 1,533 | $ 524 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues: | ||||
Rental income | $ 31,585,000 | $ 29,320,000 | $ 93,537,000 | $ 91,097,000 |
Interest income from financing receivable | 357,000 | 357,000 | ||
Interest income from mortgage loans | 10,379,000 | 7,924,000 | 30,112,000 | 23,779,000 |
Interest and other income | 1,182,000 | 228,000 | 3,308,000 | 1,005,000 |
Total revenues | 43,503,000 | 37,472,000 | 127,314,000 | 115,881,000 |
Expenses: | ||||
Interest expense | 7,941,000 | 6,610,000 | 22,607,000 | 20,442,000 |
Depreciation and amortization | 9,385,000 | 9,462,000 | 28,202,000 | 28,847,000 |
Impairment charges | 1,286,000 | 1,286,000 | ||
Provision for credit losses | 795,000 | 68,000 | 1,454,000 | 59,000 |
Transaction costs | 629,000 | 4,046,000 | 728,000 | 4,271,000 |
Property tax expense | 4,179,000 | 3,932,000 | 12,180,000 | 11,713,000 |
General and administrative expenses | 5,888,000 | 5,318,000 | 17,407,000 | 15,688,000 |
Total expenses | 30,103,000 | 29,436,000 | 83,864,000 | 81,020,000 |
Other operating income: | ||||
(Loss) gain on sale of real estate, net | (387,000) | 2,702,000 | 37,809,000 | 7,392,000 |
Operating income | 13,013,000 | 10,738,000 | 81,259,000 | 42,253,000 |
Income from unconsolidated joint ventures | 376,000 | 376,000 | 1,127,000 | 1,041,000 |
Net income | 13,389,000 | 11,114,000 | 82,386,000 | 43,294,000 |
Income allocated to non-controlling interests | (99,000) | (92,000) | (301,000) | (271,000) |
Net income attributable to LTC Properties, Inc. | 13,290,000 | 11,022,000 | 82,085,000 | 43,023,000 |
Income allocated to participating securities | (131,000) | (113,000) | (481,000) | (346,000) |
Net income available to common stockholders | $ 13,159,000 | $ 10,909,000 | $ 81,604,000 | $ 42,677,000 |
Earnings per common share: | ||||
Basic (in dollars per share) | $ 0.33 | $ 0.28 | $ 2.06 | $ 1.09 |
Diluted (in dollars per share) | $ 0.32 | $ 0.28 | $ 2.04 | $ 1.09 |
Weighted average shares used to calculate earnings per common share: | ||||
Basic (in shares) | 40,270 | 39,177 | 39,658 | 39,149 |
Diluted (in shares) | 40,552 | 39,177 | 39,939 | 39,149 |
Dividends declared and paid per common share (in dollars per share) | $ 0.57 | $ 0.57 | $ 1.71 | $ 1.71 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 13,389 | $ 11,114 | $ 82,386 | $ 43,294 |
Unrealized gain on cash flow hedges before reclassification | 3,501 | 9,361 | ||
(Gains) losses reclassified from accumulated other comprehensive income to interest expense | (195) | 256 | ||
Comprehensive income | 16,695 | 11,114 | 92,003 | 43,294 |
Less: Comprehensive income allocated to non-controlling interests | (99) | (92) | (301) | (271) |
Comprehensive income attributable to LTC Properties, Inc. | $ 16,596 | $ 11,022 | $ 91,702 | $ 43,023 |
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 | Accumulated Other Comprehensive Income (Loss) | Cumulative Distributions | Non-controlling Interests | Total |
Balance at beginning of period at Dec. 31, 2020 | $ 767,402 | $ 392 | $ 852,780 | $ 1,388,775 | $ (1,474,545) | $ 8,404 | $ 775,806 | |
Balance (in shares) at Dec. 31, 2020 | 39,242 | |||||||
Equity activity | ||||||||
Common stock cash distributions | (22,405) | (22,405) | (22,405) | |||||
Vesting of performance-based stock units, including the payment of distributions | (764) | $ 1 | (1) | (764) | (764) | |||
Vesting of performance-based stock units, including the payment of distributions (in shares) | 109 | |||||||
Stock-based compensation expense | 1,852 | 1,852 | 1,852 | |||||
Net income | 13,762 | 13,762 | 88 | 13,850 | ||||
Non-controlling interest distributions | (88) | (88) | ||||||
Cash paid for taxes in lieu of common shares | (3,470) | (3,470) | (3,470) | |||||
Cash paid for taxes in lieu of common shares (in shares) | (84) | |||||||
Other | (10) | $ 1 | (11) | (10) | ||||
Other (in shares) | 95 | |||||||
Balance (in shares) at Mar. 31, 2021 | 39,362 | |||||||
Balance at end of period at Mar. 31, 2021 | 756,367 | $ 394 | 851,150 | 1,402,537 | (1,497,714) | 8,404 | 764,771 | |
Balance at beginning of period at Dec. 31, 2020 | 767,402 | $ 392 | 852,780 | 1,388,775 | (1,474,545) | 8,404 | 775,806 | |
Balance (in shares) at Dec. 31, 2020 | 39,242 | |||||||
Equity activity | ||||||||
Net income | 43,294 | |||||||
Balance (in shares) at Sep. 30, 2021 | 39,374 | |||||||
Balance at end of period at Sep. 30, 2021 | 744,517 | $ 394 | 854,921 | 1,431,798 | (1,542,596) | 8,413 | 752,930 | |
Balance at beginning of period at Mar. 31, 2021 | 756,367 | $ 394 | 851,150 | 1,402,537 | (1,497,714) | 8,404 | 764,771 | |
Balance (in shares) at Mar. 31, 2021 | 39,362 | |||||||
Equity activity | ||||||||
Common stock cash distributions | (22,439) | (22,439) | (22,439) | |||||
Stock-based compensation expense | 1,958 | 1,958 | 1,958 | |||||
Net income | 18,239 | 18,239 | 91 | 18,330 | ||||
Non-controlling interest distributions | (91) | (91) | ||||||
Cash paid for taxes in lieu of common shares | (103) | (103) | (103) | |||||
Cash paid for taxes in lieu of common shares (in shares) | (3) | |||||||
Other | (46) | (46) | (46) | |||||
Other (in shares) | 15 | |||||||
Balance (in shares) at Jun. 30, 2021 | 39,374 | |||||||
Balance at end of period at Jun. 30, 2021 | 753,976 | $ 394 | 852,959 | 1,420,776 | (1,520,153) | 8,404 | 762,380 | |
Equity activity | ||||||||
Common stock cash distributions | (22,443) | (22,443) | (22,443) | |||||
Stock-based compensation expense | 1,975 | 1,975 | 1,975 | |||||
Net income | 11,022 | 11,022 | 92 | 11,114 | ||||
Non-controlling interest distributions | (92) | (92) | ||||||
Non-controlling interests contributions | 9 | 9 | ||||||
Other | (13) | (13) | (13) | |||||
Balance (in shares) at Sep. 30, 2021 | 39,374 | |||||||
Balance at end of period at Sep. 30, 2021 | 744,517 | $ 394 | 854,921 | 1,431,798 | (1,542,596) | 8,413 | 752,930 | |
Equity activity | ||||||||
Common stock cash distributions | (22,443) | (22,443) | (22,443) | |||||
Stock-based compensation expense | 1,975 | 1,975 | 1,975 | |||||
Net income | 12,838 | 12,838 | 92 | 12,930 | ||||
Non-controlling interest distributions | (92) | (92) | ||||||
Fair market valuation adjustment for interest rate swap | (172) | $ (172) | (172) | |||||
Other | (1) | (1) | (1) | |||||
Balance (in shares) at Dec. 31, 2021 | 39,374 | |||||||
Balance at end of period at Dec. 31, 2021 | 736,714 | $ 394 | 856,895 | 1,444,636 | (172) | (1,565,039) | 8,413 | 745,127 |
Equity activity | ||||||||
Common stock cash distributions | (22,480) | (22,480) | (22,480) | |||||
Stock-based compensation expense | 1,925 | 1,925 | 1,925 | |||||
Net income | 14,412 | 14,412 | 95 | 14,507 | ||||
Non-controlling interest distributions | (95) | (95) | ||||||
Cash paid for taxes in lieu of common shares | (1,255) | (1,255) | (1,255) | |||||
Cash paid for taxes in lieu of common shares (in shares) | (37) | |||||||
Fair market valuation adjustment for interest rate swap | 4,876 | 4,876 | 4,876 | |||||
Other | (6) | $ 1 | (7) | (6) | ||||
Other (in shares) | 123 | |||||||
Balance (in shares) at Mar. 31, 2022 | 39,460 | |||||||
Balance at end of period at Mar. 31, 2022 | 734,186 | $ 395 | 857,558 | 1,459,048 | 4,704 | (1,587,519) | 8,413 | 742,599 |
Balance at beginning of period at Dec. 31, 2021 | 736,714 | $ 394 | 856,895 | 1,444,636 | (172) | (1,565,039) | 8,413 | 745,127 |
Balance (in shares) at Dec. 31, 2021 | 39,374 | |||||||
Equity activity | ||||||||
Net income | 82,386 | |||||||
Balance (in shares) at Sep. 30, 2022 | 40,505 | |||||||
Balance at end of period at Sep. 30, 2022 | 803,250 | $ 404 | 899,921 | 1,526,721 | 9,445 | (1,633,241) | 21,919 | 825,169 |
Balance at beginning of period at Mar. 31, 2022 | 734,186 | $ 395 | 857,558 | 1,459,048 | 4,704 | (1,587,519) | 8,413 | 742,599 |
Balance (in shares) at Mar. 31, 2022 | 39,460 | |||||||
Equity activity | ||||||||
Issuance of common stock | 33,693 | $ 9 | 33,684 | 33,693 | ||||
Issuance of common stock (in shares) | 910 | |||||||
Common stock cash distributions | (22,635) | (22,635) | (22,635) | |||||
Stock-based compensation expense | 2,012 | 2,012 | 2,012 | |||||
Net income | 54,383 | 54,383 | 107 | 54,490 | ||||
Non-controlling interest distributions | (998) | (998) | ||||||
Cash paid for taxes in lieu of common shares | (100) | (100) | (100) | |||||
Cash paid for taxes in lieu of common shares (in shares) | (2) | |||||||
Fair market valuation adjustment for interest rate swap | 1,435 | 1,435 | 1,435 | |||||
Other (in shares) | 12 | |||||||
Balance (in shares) at Jun. 30, 2022 | 40,380 | |||||||
Balance at end of period at Jun. 30, 2022 | 802,974 | $ 404 | 893,154 | 1,513,431 | 6,139 | (1,610,154) | 7,522 | 810,496 |
Equity activity | ||||||||
Issuance of common stock | 4,753 | 4,753 | 4,753 | |||||
Issuance of common stock (in shares) | 125 | |||||||
Common stock cash distributions | (23,087) | (23,087) | (23,087) | |||||
Stock-based compensation expense | 2,014 | 2,014 | 2,014 | |||||
Net income | 13,290 | 13,290 | 99 | 13,389 | ||||
Non-controlling interest distributions | (77) | (77) | ||||||
Non-controlling interests contributions | 14,375 | 14,375 | ||||||
Fair market valuation adjustment for interest rate swap | 3,306 | 3,306 | 3,306 | |||||
Balance (in shares) at Sep. 30, 2022 | 40,505 | |||||||
Balance at end of period at Sep. 30, 2022 | $ 803,250 | $ 404 | $ 899,921 | $ 1,526,721 | $ 9,445 | $ (1,633,241) | $ 21,919 | $ 825,169 |
CONSOLIDATED STATEMENTS OF EQ_2
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONSOLIDATED STATEMENTS OF EQUITY | |||||||||
Common Stock cash distributions | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 1.71 | $ 1.71 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
OPERATING ACTIVITIES: | ||
Net income | $ 82,386,000 | $ 43,294,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 28,202,000 | 28,847,000 |
Stock-based compensation expense | 5,951,000 | 5,785,000 |
Impairment charges | 1,286,000 | |
Gain on sale of real estate, net | (37,809,000) | (7,392,000) |
Income from unconsolidated joint ventures | (1,127,000) | (1,041,000) |
Income distributions from unconsolidated joint ventures | 351,000 | |
Straight-line rental adjustment (income) | 963,000 | (619,000) |
Adjustment for collectability of lease incentives and rental income | 256,000 | 758,000 |
Amortization of lease incentives | 665,000 | 386,000 |
Provision for credit losses | 1,454,000 | 59,000 |
Application of interest reserve | (4,348,000) | |
Amortization of debt issue costs | 841,000 | 778,000 |
Non-cash interest related to contingent liabilities | 841,000 | 778,000 |
Other non-cash items, net | (170,000) | 4,000 |
Change in operating assets and liabilities | ||
Lease incentives funded | (418,000) | (650,000) |
Increase in interest receivable | (4,768,000) | (4,730,000) |
Decrease in accrued interest payable | (625,000) | (1,044,000) |
Net change in other assets and liabilities | (318,000) | 5,146,000 |
Net cash provided by operating activities | 72,772,000 | 69,581,000 |
INVESTING ACTIVITIES: | ||
Investment in real estate properties | (51,815,000) | |
Investment in real estate developments | (105,000) | |
Investment in real estate capital improvements | (4,555,000) | (4,839,000) |
Proceeds from sale of real estate, net | 72,628,000 | 43,628,000 |
Investment in financing receivable | (61,661,000) | |
Investment in real estate mortgage loans receivable | (35,234,000) | (2,081,000) |
Principal payments received on mortgage loans receivable | 625,000 | 625,000 |
Investments in unconsolidated joint ventures | (5,676,000) | |
Advances and originations under notes receivable | (37,008,000) | (6,453,000) |
Principal payments received on notes receivable | 6,618,000 | 2,553,000 |
Net cash (used in) provided by investing activities | (110,507,000) | 27,757,000 |
FINANCING ACTIVITIES: | ||
Borrowings from revolving line of credit | 194,000,000 | 92,500,000 |
Repayment of revolving line of credit | (153,900,000) | (48,000,000) |
Proceeds from issuance of senior unsecured notes | 75,000,000 | |
Principal payments on senior unsecured notes | (43,160,000) | (32,160,000) |
Proceeds from common stock issued | 38,957,000 | |
Distributions paid to stockholders | (68,202,000) | (68,051,000) |
Contribution from non-controlling interests | 50,000 | 9,000 |
Distributions paid to non-controlling interests | (1,170,000) | (271,000) |
Financing costs paid | (1,162,000) | (35,000) |
Cash paid for taxes in lieu of shares upon vesting of restricted stock and performance-based stock units | (1,355,000) | (3,573,000) |
Other | (6,000) | (70,000) |
Net cash provided by (used in) financing activities | 39,052,000 | (59,651,000) |
Increase (decrease) in cash and cash equivalents | 1,317,000 | 37,687,000 |
Cash and cash equivalents, beginning of period | 5,161,000 | 7,772,000 |
Cash and cash equivalents, end of period | 6,478,000 | 45,459,000 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 22,391,000 | 20,708,000 |
Non-cash investing and financing transactions: | ||
Contribution of financing receivable from non-controlling interest | 14,325,000 | |
Mortgage loan receivable reserve withheld at origination (See Footnote 2. Real Estate Investments) | 102,000 | 142,000 |
Preferred return reserve related to investments in unconsolidated joint ventures (See Footnote 3. Investment in Unconsolidated Joint Ventures) | 2,324,000 | |
Accretion of interest reserve recorded as mortgage loan receivable (See Note 2. Real Estate Investments) | 4,348,000 | |
Increase in fair value of interest rate swap agreements (See Footnote 6. Debt Obligations) | $ 9,617,000 | |
Notes receivable reserve withheld at origination (See Footnote 4. Notes Receivable) | $ 353,000 |
General
General | 9 Months Ended |
Sep. 30, 2022 | |
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-leasebacks, mortgage financing, joint ventures and structured finance solutions including preferred equity and 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. We also invest in other (“OTH”) types of properties, such as land parcels, projects under development (“UDP”) and behavioral health care hospitals. 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 and nine months ended September 30, 2022 and 2021 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. |
Real Estate Investments
Real Estate Investments | 9 Months Ended |
Sep. 30, 2022 | |
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. The following table summarizes our investments in owned properties at September 30, 2022 (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 $ 797,426 56.6 % 99 — 5,497 $ 145.07 Skilled Nursing 599,058 42.5 % 52 6,348 236 $ 90.99 Other (2) 11,918 0.9 % 1 118 — — Total $ 1,408,402 100.0 % 152 6,466 5,733 (1) We own properties in 26 states that are leased to 24 different operators. (2) 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) 2022 $ 31,970 2023 114,037 2024 94,257 2025 85,460 2026 68,784 Thereafter 263,280 (1) Represents contractual cash rent, except for certain master leases which are based on estimated cash payments. Includes rent from subsequent acquisitions and excludes rent from subsequent dispositions. See Note 12. Subsequent Events for more information. We monitor the collectability of our receivable balances, including deferred rent receivable balances, on an ongoing basis. We write-off uncollectible operator receivable balances, including straight- line rent receivable and lease incentives balances, as a reduction to rental income in the period such balances are no longer probable of being collected. Therefore, recognition of rental income is limited to the lesser of the amount of cash collected or rental income reflected on a “straight-line” basis for those customer receivable balances deemed uncollectible. We wrote-off straight-line rent receivable and lease incentives balances of $256,000 and $758,000 for the nine months ended September 30, 2022 and 2021, respectively, as a result of lease terminations and transitioning rental revenue recognition to cash basis. We continue to take into account the current financial condition of our operators, including consideration of the impact of COVID-19, in our estimation of uncollectible accounts and deferred rents receivable at September 30, 2022. We are closely monitoring the collectability of such rents and will adjust future estimations as appropriate as further information becomes known. The following table summarizes components of our rental income for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, Rental Income 2022 2021 2022 2021 Base cash rental income $ 28,180 (1) $ 25,934 (1) $ 83,203 (2) $ 80,967 (2) Variable cash rental income 4,160 (3) 3,588 (3) 12,218 (3) 10,655 (3) Straight-line rent (436) (4) (44) (4) (963) (5) 619 (5) Adjustment for lease incentives and rental income (83) (6) — (256) (7) (758) (8) Amortization of lease incentives (236) (158) (665) (386) Total $ 31,585 $ 29,320 $ 93,537 $ 91,097 (1) Increased primarily due to rent received from properties transitioned from the former Senior Care Centers, LLC (“Senior Care”) and Senior Lifestyle Corporation (“Senior Lifestyle”) portfolios and rental income from acquisitions, completed development projects and annual rent escalations. (2) Increased primarily due to (1) above. Also relates to a $1,181 lease termination fee received in connection with the sale of a 74 -unit ALF. (3) The variable rental income for the three and nine months ended September 30, 2022, primarily includes reimbursement of real estate taxes by our lessees of $4,160 and $12,161 , respectively. The variable rental income for the three and nine months ended September 30, 2021, only includes reimbursement of real estate taxes by our lessees of $3,588 and $10,655 . Increases primarily due to properties transitioned from Senior Care and new acquisitions partially offset by properties sold. (4) Decreased primarily due to a deferred rent repayment and normal amortization. (5) Decreased primarily due to (4) above. Also relates to the impact of prior year’s 50% reduction of 2021 rent escalations for those leases accounted for on a straight-line basis. (6) Represents lease incentive balance write-off related to two properties that were transitioned to another operator in our portfolio. (7) Represents a lease incentive balance write-off related to a closed property and subsequent lease termination and (6) above. (8) Represents a straight-line rent receivable write-off due to transitioning rental revenue recognition to cash basis for one lease in accordance with Accounting Standard Codification Topic 842, Leases . 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 amounts in thousands): Type Number of of Gross Carrying Option State Property Properties Investments Value Window California ALF/MC 2 $ 38,895 $ 33,954 2023-2029 Florida MC 1 15,201 12,614 2029 Florida SNF 3 76,267 76,267 2025-2027 (1) Nebraska ALF 3 7,633 3,008 TBD (2) South Carolina ALF/MC 1 11,680 9,197 2029 Texas SNF 4 51,816 51,157 2027-2029 (3) Total $ 201,492 $ 186,197 (1) During the third quarter of 2022, we entered into a joint venture (“JV”) to purchase three skilled nursing centers. The JV leased the properties under a 10-year master lease. For more information regarding this transaction see Financing Receivable below. (2) Subject to the properties achieving certain coverage ratios. (3) During the second quarter of 2022, we purchased four skilled nursing centers and leased these properties under a 10-year lease with an existing operator. The lease provides the operator to elect either an earn-out payment or purchase option. If neither option is elected within the timeframe defined in the lease, both elections are terminated. For more information regarding the earn-out see Note 8. Commitments and 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. At September 30, 2022, in conjunction with the continued 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 collectability of our lease payments. The extent to which COVID-19 could impact our operators and the collectability of our future lease payments will depend on the future developments including the financial impact significance, government support and subsidies and the duration of the pandemic. In recognition of the pandemic’s ongoing impact affecting our operators, we have agreed to provide assistance in form of rent abatements and rent deferrals and we will continue to provide assistance as needed. Impairment Charges. During 2022, we made the decision to sell an assisted living community located in Kentucky which decreased the period over which we could recover the carrying value of the community. As a result of our decision to sell, we determined that the property’s carrying value would not be fully recoverable and recorded an impairment loss of Properties Held -for-Sale: dollar amounts in thousands Type Number Number of of of Gross Accumulated State Property Properties Beds/units Investment Depreciation KY ALF 1 60 $ 13,015 $ 2,305 Acquisitions and Improvements: During the nine months ended September 30, 2021 we did not have any acquisitions. The following table summarizes our acquisitions for the nine months ended September 30, 2022 ( dollar amounts in thousands ): Total Number Number Purchase Transaction Acquisition of of Year Type of Property Price Costs Costs Properties Beds/Units 2022 SNF $ 51,534 $ 281 $ 51,815 4 339 We accounted for the above acquisition as an asset acquisition. The properties are located in Texas and are leased to an affiliate of an existing operator under a 10-year lease with two 5-year renewal options. Additionally, the lease provides the operator to elect either an earn-out payment or purchase option. If neither option is elected within the timeframe defined in the lease, both elections are terminated. The earn-out payment is available, contingent on achieving certain thresholds per the lease, beginning at the end of the second lease year through the end of the fifth lease year. The purchase option is available beginning in the sixth lease year through the end of the seventh lease year. The initial cash yield is 8% for the first year, increasing to 8.25% for the second year, then increases annually by 2.0% to 4.0% based on the change in the Medicare Market Basket Rate. In connection with the transaction, we provided the lessee a 10-year working capital loan for up to $2,000 , of which $1,867 has been funded, at 8% for first year, increasing to 8.25% for the second year, then increasing annually with the lease rate. During he following developments and improvements projects (in thousands) : Type of Property 2022 2021 Developments Improvements Developments Improvements Assisted Living Communities $ 105 $ 3,015 $ — $ 4,560 Skilled Nursing Centers — 981 — 279 Other — 559 — — Total $ 105 $ 4,555 $ — $ 4,839 Properties Sold . (dollar amounts in thousands): Type Number Number of of of Sales Carrying Net Year State Properties Properties Beds/Units Price Value Gain (loss) (1) 2022 California ALF 2 232 $ 43,715 $ 17,832 $ 25,867 California SNF 1 121 13,250 1,846 10,846 Texas SNF 1 — 485 697 (434) Virginia ALF 1 74 16,895 15,549 1,344 (2) n/a n/a — — — — 186 (3) Total 2022 5 427 $ 74,345 $ 35,924 $ 37,809 2021 Florida ALF 1 — $ 2,000 $ 2,626 $ (858) Nebraska ALF 1 40 900 1,079 (198) Washington SNF 1 123 7,700 4,528 2,562 Wisconsin ALF 3 263 35,000 28,295 5,594 n/a n/a — — — — 292 (3) Total 2021 6 426 $ 45,600 $ 36,528 $ 7,392 ( (1) Calculation of net gain (loss) includes cost of sales and write-off of straight-line receivable and lease incentives, when applicable. (2) In connection with this sale, the former operator paid us a lease termination fee of $1,181 which is not included in the gain on sale. (3) We recognized additional gain due to the reassessment adjustment of the holdbacks related to properties sold during 2019 and 2020, under the expected value model per ASC Topic 606, Contracts with Customers (“ASC 606”). Financing Receivable. As part of our acquisitions, we may from time to time, invest in sale and leaseback transactions. In accordance with ASC Topic 842, Leases (“ACS 842”), we are required to determine whether the sale and leaseback transaction qualifies as a sale. ASC 842 clarifies that an option for the seller-lessee to repurchase a real estate asset would generally preclude accounting for the transfer of the asset as a sale. Therefore, a sale and leaseback transaction of real estate that includes a seller-lessee repurchase option is accounted for as a failed sale and leaseback transaction. As a result, the purchased assets of a failed sale and leaseback transaction would be presented as a Financing receivable on our Consolidated Balance Sheets and the rental revenue from these properties is recorded as Interest income from financing receivable on our Consolidated Statements of Income . Furthermore, upon expiration of the purchase option if the purchase option remains unexercised by the seller-lessee, the purchased assets will be reclassified from Financing receivable to Real property investments on our Consolidated Balance Sheets . During the third quarter of 2022, we entered into a joint venture and contributed $61,661,000 into the JV that purchased three skilled nursing centers located in Florida for $75,825,000 . Our JV partner contributed the remaining $14,325,000 of equity. The JV leased the centers back to an affiliate of the seller under a 10-year master lease, with two five-year renewal options and provided the seller-lessee with a purchase option, exercisable at the beginning of the fourth year through the end of the fifth year. Accordingly, the transaction has been accounted for as a failed sale and leaseback transaction and recorded as a Financing receivable. During this quarter, we recognized $357,000 of Interest income from financing receivable on our Consolidated Statements of Income . Additionally, we recorded $760,000 provision for expected loan losses during the three months ended September 30, 2022. Mortgage Loans. (dollar amounts in thousands) Type Percentage Number of Investment Gross of of SNF ALF per Interest Rate Maturity State Investment Property Investment Loans (1) Properties (2) Beds Units Bed/Unit 7.5% 2023 MO $ 1,886 OTH 0.5 % 1 — (3) — — $ n/a 7.5% 2024 LA 27,347 SNF 7.1 % 1 1 189 — $ 144.69 7.8% 2025 FL 13,123 ALF 3.4 % 1 1 — 68 $ 192.99 7.3% (4) 2025 NC/SC 52,812 ALF 13.6 % 1 13 — 523 $ 100.98 7.3% 2026 NC 32,373 ALF 8.4 % 1 4 — 217 $ 149.18 7.3% 2026 NC 782 OTH 0.2 % 1 — (5) — — $ n/a 10.4% (6) 2043 MI 184,854 SNF 47.8 % 1 15 1,875 — $ 98.59 9.5% (6) 2045 MI 39,066 SNF 10.1 % 1 4 501 — $ 77.98 9.9% (6) 2045 MI 19,750 SNF 5.1 % 1 2 205 — $ 96.34 10% (6) 2045 MI 14,875 SNF 3.8 % 1 1 146 — $ 101.88 Total $ 386,868 100.0 % 10 41 2,916 808 $ 103.89 (1) Some loans contain certain guarantees and provide for certain facility fees. (2) Our mortgage loans are secured by properties located in six states with five borrowers. (3) Represents a mortgage loan secured by a parcel of land for the future development of a 91 -bed post-acute SNF. (4) Represents the initial rate. This loan has an IRR of 8% . (5) Represents a mortgage loan secured by a parcel of land in North Carolina held for future development of a seniors housing community. (6) Mortgage loans provide for 2.25% annual increases in the interest rate after a certain time period. The following table summarizes our mortgage loan activity for the nine months ended September 30, 2022 and 2021 (in thousands): Nine Months Ended September 30, 2022 2021 Originations and funding under mortgage loans receivable $ 35,234 (1) $ 2,223 Application of interest reserve 4,348 — Scheduled principal payments received (625) (625) Mortgage loan premium amortization (4) (4) (Provision) recovery for loan loss reserve (389) (16) Net increase in mortgage loans receivable $ 38,564 $ 1,578 (1) We originated two senior mortgage loans, secured by four ALFs operated by an existing operator, as well as a land parcel in North Carolina. The communities have a combined total of 217 units, with an average age of less than four years . The land parcel is approximately 7.6 acres adjacent to one of the ALFs and is being held for the future development of a seniors housing community. The mortgage loans have a four-year term, an interest rate of 7.25% and an IRR of 8% . We apply , Measurement of Credit Losses on Financial Instruments receivable . As of September 30, 2022, the accrued interest receivable of $44,290,000 was not included in the measurement of expected credit losses on the mortgage loan receivable and notes receivable (see Note 4. Notes Receivable |
Investment in Unconsolidated Jo
Investment in Unconsolidated Joint Ventures | 9 Months Ended |
Sep. 30, 2022 | |
Investment in Unconsolidated Joint Ventures | |
Investment in Unconsolidated Joint Ventures | 3. Investment in Unconsolidated Joint Ventures We have preferred equity investments in two joint ventures. We determined that each of these JVs meets the accounting criteria to be considered a variable interest entity (“VIE”). We are not the primary beneficiary of the JVs as we do not have the power to direct the activities that most significantly affect the JVs’ economic performance. However, we do have significant influence over the JVs. Therefore, we have accounted for the JVs using the equity method of accounting. The following table provides information regarding these preferred equity investments (dollar amounts in thousands): Type Type Total Contractual Number of of Preferred Cash of Carrying State Properties Investment Return Portion Beds/ Units Value Washington ALF/MC Preferred Equity (1) 12 % 7 % 95 $ 6,340 (1) Washington UDP Preferred Equity (2) 12 % 8 % — 13,000 (2) Total 95 $ 19,340 (1) Represents a preferred equity in an entity that developed and owns a 95 -unit ALF and MC in Washington. Our investment represents 15.5% of the total investment. The preferred equity investment earns an initial cash rate of 7% increasing to 9% in year four until the internal rate of return (“IRR”) is 8% . After achieving an 8% IRR, the cash rate drops to 8% until achieving an IRR ranging between 12% to 14% , depending upon timing of redemption. During the fourth quarter of 2021, the entity completed the development project and received its certificate of occupancy. We have the option to require the JV partner to purchase our preferred equity interest at any time between August 17, 2031 and December 31, 2036. (2) Represents a preferred equity in an entity that will develop and own a 267 -unit ILF and ALF in Washington. Our investment represents 11.6% of the estimated total investment. The preferred equity investment earns an initial cash rate of 8% with an IRR of 12% . The JV partner has the option to buy out our investment at any time after August 31, 2023 at the IRR rate. Also, we have the option to require the JV partner to purchase our preferred equity interest at any time between August 31, 2027 and, upon project completion and leasing the property, prior to the end of the first renewal term of the lease. During the three months ended September 30, 2022 and 2021, we recognized $376,000 in income from 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 nine months ended September 30, 2022 and 2021 (in thousands): Type of Capital Income Cash Interest Application of Year Properties Contribution Recognized Earned Interest Reserve 2022 ALF/MC $ — $ 337 $ — $ 337 UDP (1) — 790 351 439 Total $ — $ 1,127 $ 351 $ 776 2021 ALF/MC $ — $ 337 $ — $ 300 UDP (1) 8,000 704 — 616 Total $ 8,000 $ 1,041 $ — $ 916 (1) During 2021, we funded the remaining $8,000 related to a $13,000 preferred equity investment commitment in an entity that will develop and own a 267 -unit ILF and ALF in Washington. Additionally, we withheld $2,324 from the $8,000 funding for a total reserve of $3,777 related to this preferred equity investment. |
Notes Receivable
Notes Receivable | 9 Months Ended |
Sep. 30, 2022 | |
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 September 30, 2022 and December 31, 2021 (in thousands): September 30, 2022 December 31, 2021 Mezzanine loans (1) $ 36,816 $ 11,815 Other loans 22,198 16,808 Notes receivable credit loss reserve (590) (286) Total $ 58,424 $ 28,337 (1) During the first quarter of 2022, we originated a $25,000 mezzanine loan for the recapitalization of a five -property seniors housing portfolio. The mezzanine loan has a term of approximately five years , with two one-year extension options and bears interest at 8% with an IRR of 11% . The five communities are located in Oregon and Montana, have a total of 621 units, and include independent living, assisted living and memory care. The following table summarizes our notes receivable activity for the nine months ended September 30, 2022 and 2021 (in thousands): Nine Months Ended September 30, 2022 2021 Advances under notes receivable $ 37,008 (1) $ 6,453 Interest reserve withheld — 353 Principal payments received under notes receivable (6,618) (2,553) Provision for credit losses (303) 43 Net increase in notes receivable $ 30,087 $ 4,296 (1) Includes origination of a $25,000 mezzanine loan for the recapitalization of five assisted living communities located in Oregon and Montana. Additionally includes origination of a working capital loan for a commitment of up to $2,000 , of which $1,867 has been funded and $9,761 of funding under a working capital loan to HMG Healthcare, LLC (“HMG”). |
Lease Incentives
Lease Incentives | 9 Months Ended |
Sep. 30, 2022 | |
Lease Incentives | |
Lease Incentives | 5. Lease Incentives Our non-contingent lease incentive balances at September 30, 2022 and December 31, 2021 were $2,001,000 and $2,678,000 , respectively. The following table summarizes our lease incentives activity for the nine months ended September 30, 2022 and 2021 (in thousands) : Nine Months Ended September 30, 2022 2021 Adjustment Funding Amortization Write-off Funding Amortization Non-contingent lease incentives $ (174) (1) $ 418 $ (665) $ (256) (2) $ 650 $ (386) (1) Primarily relates to the sale of two ALFs in California during the second quarter of 2022. (2) Represents the lease incentive balance write-off related to a closed property and subsequent lease termination and lease incentive balance write-off related to 12 assisted living communities transitioned to an existing operator. 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 | 9 Months Ended |
Sep. 30, 2022 | |
Debt Obligations | |
Debt Obligations | 6. Debt Obligations Unsecured Credit Facility. We have an unsecured credit agreement (the “Credit Agreement”) that provides for an aggregate commitment of the lenders of up to $500,000,000 comprising of a $400,000,000 revolving credit facility (the “Revolving Line of Credit”) and two $50,000,000 term loans (the “Term Loans”). The Credit Agreement permits us to request increases to the Revolving Line of Credit and Term Loans commitments up to a total of $1,000,000,000 . The Revolving Line of Credit matures November 19, 2025 and provides for a one-year extension option at our discretion, subject to customary conditions. The Term Loans mature on November 19, 2025 and November 19, 2026. Based on our leverage at September 30, 2022, the facility provides for interest annually at LIBOR plus 115 basis points and a facility fee of 20 basis points. At September 30, 2022, we were in compliance with all covenants. Interest Rate Swap Agreements. In connection with entering into the Term Loans described above, we entered into two receive variable/pay fixed interest rate swap agreements (the “Interest Rate Swaps”) with maturities of November 19, 2025 and November 19, 2026, respectively, that serve to lock-in the forecasted interest payments on the borrowings under the Term Loans over their four and five year terms. The Interest Rate Swaps are considered cash flow hedges and are recorded on our Consolidated Balance Sheets at fair value in prepaid expenses and other assets, with cumulative changes in the fair value of these instruments recognized in Accumulated other comprehensive income (loss) on our Consolidated Balance Sheets . During the three and nine months ended September 30, 2022, we recorded increase in fair value of Interest Rate Swaps of $3,306,000 and $9,617,000 , respectively. During the three and nine months ended September 30, 2021, we did not record an adjustment to the fair value of Interest Rate Swaps. As of September 30, 2022 and December 31, 2021, the terms of the Interest Rate Swaps are as follows ( dollar amounts in thousands Notional Fair Value at Date Entered Maturity Date Swap Rate Rate Index Amount September 30, 2022 December 31, 2021 November 2021 November 19, 2025 2.56 % 1-month LIBOR $ 50,000 $ 4,300 $ (38) November 2021 November 19, 2026 2.69 % 1-month LIBOR 50,000 5,145 (134) $ 100,000 $ 9,445 $ (172) Senior Unsecured Notes. We have senior unsecured notes held by institutional investors with interest rates ranging from 3.66% to 5.03% . The senior unsecured notes mature between 2024 and 2033. During the nine months ended September 30, 2022, we sold $75,000,000 aggregate principal amount of 3.66% senior unsecured notes. The notes have an average 10-year life, scheduled principal payments and mature in May 2033. The senior unsecured notes and the Credit Agreement, including the Revolving Line of Credit and the Term Loans, contain financial covenants, which are measured quarterly, that require us to maintain, among other things: ● a ratio of total indebtedness to total asset value not greater than 0.6 to 1.0; ● a ratio of secured debt to total asset value not greater than 0.35 to 1.0; ● a ratio of unsecured debt to the value of the unencumbered asset value not greater than 0.6 to 1.0; and ● a ratio of EBITDA, as calculated in the debt obligation, to fixed charges not less than 1.50 to 1.0. At September 30, 2022, we were in compliance with all applicable financial covenants. These debt obligations also contain additional customary covenants and events of default that are subject to a number of important and significant limitations, qualifications and exceptions. The following table sets forth information regarding debt obligations by component as of September 30, 2022 and December 31, 2021 ( dollar amounts in thousands): At September 30, 2022 At December 31, 2021 Applicable Available Available Interest Outstanding for Outstanding for Debt Obligations Rate (1) Balance Borrowing Balance Borrowing Revolving line of credit 4.21% $ 151,000 $ 249,000 $ 110,900 $ 289,100 Term loans, net of debt issue costs 2.63% 99,474 — 99,363 — Senior unsecured notes, net of debt issue costs 4.25% 543,287 — 512,456 — Total 4.04% $ 793,761 $ 249,000 $ 722,719 $ 289,100 (1) Represents weighted average of interest rate as of September 30, 2022. Our borrowings and repayments are as follows (in thousands): Nine Months Ended September 30, 2022 2021 Debt Obligations Borrowings Repayments Borrowings Repayments Revolving line of credit $ 194,000 $ (153,900) $ 92,500 $ (48,000) Term loans — — — — Senior unsecured notes 75,000 (43,160) — (32,160) Total $ 269,000 $ (197,060) $ 92,500 $ (80,160) |
Equity
Equity | 9 Months Ended |
Sep. 30, 2022 | |
Equity | |
Equity | 7. Equity Non-controlling Interests. As of September 30, 2022, we have the following consolidated VIEs (in thousands): Gross Investment Property Consolidated Non-Controlling Year Purpose Type State Assets Interests 2022 Owned real estate (1) SNF FL $ 76,267 $ 14,325 2018 Owned real estate ILF OR 14,650 2,906 2018 Owned real estate and development ALF/MC OR 18,452 1,142 2017 Owned real estate and development ILF/ALF/MC WI 22,007 2,305 2017 Owned real estate ALF/MC SC 11,680 1,241 Total $ 143,056 $ 21,919 (1) During the third quarter of 2022, we entered into a joint venture and contributed $61,661 into the JV that purchased three skilled nursing centers located in Florida for $75,825 . Our JV partner contributed the remaining $14,325 of equity. Additionally, we incurred $161 of costs associated with this transaction. The JV leased the centers back to an affiliate of the seller under a 10-year master lease, with two five-year renewal options and provided the seller-lessee with a purchase option, exercisable at the beginning of the fourth year through the end of the fifth year. See Note 2. Real Estate Investments for more information. Common Stock. During the nine months ended September 30, 2022 and 2021, we acquired 39,463 shares and 87,249 shares, respectively, of common stock held by employees who tendered owned shares to satisfy tax withholding obligations. Available Shelf Registration. Distributions. (in thousands) Nine Months Ended September 30, 2022 2021 Declared Paid Declared Paid Common Stock (1) $ 68,202 $ 68,202 $ 68,051 (2) $ 68,051 (2) (1) Represents $0.19 per share per month for the nine months ended September 30, 2022 and 2021. (2) Includes $764 of distributions that were paid as a result of the vesting of performance-based stock units. In October 2022, we declared a monthly cash dividend of $0.19 per share on our common stock for the months of October , November and December 2022, payable on October 31, November 30, and December 30, 2022, respectively, to stockholders of record on October 21, November 22, and December 22, 2022, respectively. Stock-Based Compensation At September 30, 2022, we had 10,000 stock options outstanding and exercisable. During the nine months ended September 30, 2022, 5,000 stock options expired and were cancelled. During the nine months ended September 30, 2022 and 2021, no stock options were granted or exercised. The following table summarizes our restricted stock activity for the nine months ended September 30, 2022 and 2021 : Nine Months Ended September 30, 2022 2021 Outstanding, January 1 197,422 180,440 Granted 135,210 110,348 Vested (103,396) (93,366) Outstanding, September 30 229,236 197,422 During the nine months ended September 30, 2022 and 2021, we granted 86,332 and 71,892 , respectively, of performance-based stock units. Additionally, no performance-based stock units vested during the nine months ended September 30, 2022 and 108,720 performance-based stock units vested during the nine months ended September 30, 2021. During the nine months ended September 30, 2022 and 2021, we granted restricted stock and performance-based stock units under the 2021 Plan and 2015 Plan as follows: No. of Price per Year Shares/Units Share Reward Type Vesting Period 2022 122,865 $ 33.94 Restricted stock ratably over 3 years 86,332 $ 33.94 Performance-based stock units TSR targets (1) 12,345 $ 38.48 Restricted stock May 25,2023 221,542 2021 95,293 $ 42.27 Restricted stock ratably over 3 years 71,892 $ 42.27 Performance-based stock units TSR targets (1) 12,055 $ 39.40 Restricted stock May 26, 2022 3,000 $ 43.14 Restricted stock April 1, 2022 182,240 (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 nine months ended September 30, 2022 and 2021 were $5,951,000 and $5,785,000 , respectively. At September 30, 2022, 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 October - December 2022 $ 2,013 2023 5,603 2024 2,853 2025 309 Total $ 10,778 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments and Contingencies At September 30, 2022, we had commitments as follows (in thousands): Total Investment 2022 Commitment Remaining Commitment Funding Funded Commitment Real estate properties Note 2. Real Estate Investments $ 21,038 (1) $ 3,054 $ 4,692 $ 16,346 Accrued incentives and earn-out liabilities (Note 5. Lease Incentives) 12,000 (2) — — 12,000 Mortgage loans ( Note 2. Real Estate Investments 32,507 (3) 2,187 5,928 26,579 Notes receivable ( Note 4. Notes Receivable 27,541 12,008 15,778 11,763 Total $ 93,086 $ 17,249 $ 26,398 $ 66,688 (1) Represents commitments to purchase land and improvements, if applicable, and to develop, re-develop, renovate or expand seniors housing and skilled nursing properties. (2) Includes an earn-out payment of up to $3,000 to an operator under a master lease on four skilled nursing centers in Texas which were acquired during the nine months ended September 30, 2022. The master lease provides either an earn-out payment up to $3,000 or a purchase option. The earn-out payment is available, contingent on achieving certain thresholds per the lease, beginning at the end of the second lease year through the end of the fifth lease year. If neither option is elected within the timeframe defined in the lease, both elections are terminated. (3) Represents $14,507 of commitments for the expansion, renovation and working capital related to seniors housing and skilled nursing properties securing the mortgage loans and $18,000 of commitments which are contingent upon the borrower achieving certain coverage ratios. Additionally, 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 | 9 Months Ended |
Sep. 30, 2022 | |
Major Operators | |
Major Operators | 9. Major Operators We have one operator that represents 10% or more of our combined rental revenue and interest income from mortgage loans. The following table sets forth information regarding our major operator as of September 30, 2022: Number of Number of Percentage of SNF ALF Total Total Operator SNF ALF Beds Units Revenue (1) Assets (2) Prestige Healthcare (3) 24 — 2,845 93 19.7 % 16.0 % (1) Includes rental income from owned properties and interest income from mortgage loans as of September 30, 2022. (2) Represents the net carrying value of the mortgage loans and properties we own divided by the Total assets on the Consolidated Balance Sheets. (3) The majority of the revenue derived from this operator relates to interest income from mortgage loans. Our financial position and ability to make distributions may be adversely affected if Prestige Healthcare 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, continuing 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 | 9 Months Ended |
Sep. 30, 2022 | |
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 Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Net income $ 13,389 $ 11,114 $ 82,386 $ 43,294 Less income allocated to non-controlling interests (99) (92) (301) (271) Less income allocated to participating securities: Non-forfeitable dividends on participating securities (131) (113) (401) (346) Income allocated to participating securities — — (80) — Total net income allocated to participating securities (131) (113) (481) (346) Net income available to common stockholders 13,159 10,909 81,604 42,677 Effect of dilutive securities: Participating securities (1) — — — — Net income for diluted net income per share $ 13,159 $ 10,909 $ 81,604 $ 42,677 Shares for basic net income per share 40,270 39,177 39,658 39,149 Effect of dilutive securities: Stock options 1 — (1) — (1) — (1) Performance-based stock units 281 — (2) 281 — (2) Participating securities (3) — — — — Total effect of dilutive securities 282 — 281 — Shares for diluted net income per share 40,552 39,177 39,939 39,149 Basic net income per share $ 0.33 $ 0.28 $ 2.06 $ 1.09 Diluted net income per share $ 0.32 $ 0.28 $ 2.04 $ 1.09 (1) For the nine months ended September 30, 2022 and the three and nine months ended September 30, 2021, stock options have been excluded from the computation of diluted net income per share as such inclusion would be anti-dilutive. (2) For the three and nine months ended September 30, 2021, no performance-based stock units would be earned based on TSR targets. (3) For the three and nine months ended September 30, 2022, and 2021, 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 | 9 Months Ended |
Sep. 30, 2022 | |
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. As of September 30, 2022, we had two interest rate swaps related to our term loans that were designated as cash flow hedges of interest rate risk with a total notional amount of $100,000,000. See Note 6. Debt Obligations inputs to evaluate the likelihood of default by us and our counterparties. The carrying amount of cash and cash equivalents, prepaid expenses and other assets (excluding the interest rate swaps which are marked for fair value each reporting period), accrued interest, accrued expenses and other liabilities 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 estimated fair value of our financial instruments as of September 30, 2022 and December 31, 2021 were as follows ( in thousands ): At September 30, 2022 At December 31, 2021 Carrying Fair Carrying Fair Value Value Value Value Financing receivable, net of credit loss reserve $ 75,507 $ 75,507 (1) $ — $ — Mortgage loans receivable, net of credit loss reserve 383,006 454,185 (2) 344,442 405,162 (2) Notes receivable, net of credit loss reserve 58,424 62,741 (3) 28,337 28,653 (3) Revolving line of credit 151,000 151,000 (4) 110,900 110,900 (4) Term loans, net of debt issue costs 99,474 100,000 (4) 99,363 100,000 (4) Senior unsecured notes, net of debt issue costs 543,287 496,955 (5) 512,456 540,045 (5) (1) Our investment in financing receivable is classified as Level 3. At September 30, 2022, the fair value of our financing receivable approximated its carrying value since the asset was acquired during the third quarter of 2022. (2) 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 September 30, 2022 and December 31, 2021 was 9.2% and 9.5% , respectively. (3) Our investments in notes receivable are classified as Level 3. 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 flows of the notes receivable at September 30, 2022 and December 31, 2021, were 6.6% and 5.6% , respectively. (4) Our revolving line of credit and term loans bear interest at a variable interest rate. The estimated fair value of our revolving line of credit and term loans approximated their carrying values at September 30, 2022 and December 31, 2021 based upon prevailing market interest rates for similar debt arrangements. (5) 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 September 30, 2022, the discount rate used to value our future cash outflow of our senior unsecured notes was 6.5% for those maturing before year 2030 and 7.0% for those maturing at or beyond year 2030. At December 31, 2021, the discount rate used to value our future cash outflow of our senior unsecured notes was 3.00% for those maturing before year 2030 and 3.25% for those maturing at or beyond year 2030. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events | |
Subsequent Events | 12. Subsequent Events Subsequent to September 30, 2022 the following events occurred: Rental Income: We received $300,000 repayment of Anthem’s temporary rent reduction. Also, we provided $240,000 of abated rent in October 2022, and agreed to provide rent abatements of up to $215,000 for each of November and December 2022 to an operator pursuant to a master lease covering two assisted living communities. Equity: We declared a monthly cash dividend of $0.19 per share on our common stock for the months of October , November and December 2022, payable on October 31, November 30, and December 30, 2022, respectively to stockholders of record on October 21, November 22, and December 22, 2022, respectively. |
General (Policies)
General (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
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 and nine months ended September 30, 2022 and 2021 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. |
Real Estate Investments (Tables
Real Estate Investments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Real Estate Investments | |
Summary of investments in owned properties | The following table summarizes our investments in owned properties at September 30, 2022 (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 $ 797,426 56.6 % 99 — 5,497 $ 145.07 Skilled Nursing 599,058 42.5 % 52 6,348 236 $ 90.99 Other (2) 11,918 0.9 % 1 118 — — Total $ 1,408,402 100.0 % 152 6,466 5,733 (1) We own properties in 26 states that are leased to 24 different operators. (2) 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) 2022 $ 31,970 2023 114,037 2024 94,257 2025 85,460 2026 68,784 Thereafter 263,280 (1) Represents contractual cash rent, except for certain master leases which are based on estimated cash payments. Includes rent from subsequent acquisitions and excludes rent from subsequent dispositions. See Note 12. Subsequent Events for more information. |
Summary of components of our rental income | The following table summarizes components of our rental income for the three and nine months ended September 30, 2022 and 2021 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, Rental Income 2022 2021 2022 2021 Base cash rental income $ 28,180 (1) $ 25,934 (1) $ 83,203 (2) $ 80,967 (2) Variable cash rental income 4,160 (3) 3,588 (3) 12,218 (3) 10,655 (3) Straight-line rent (436) (4) (44) (4) (963) (5) 619 (5) Adjustment for lease incentives and rental income (83) (6) — (256) (7) (758) (8) Amortization of lease incentives (236) (158) (665) (386) Total $ 31,585 $ 29,320 $ 93,537 $ 91,097 (1) Increased primarily due to rent received from properties transitioned from the former Senior Care Centers, LLC (“Senior Care”) and Senior Lifestyle Corporation (“Senior Lifestyle”) portfolios and rental income from acquisitions, completed development projects and annual rent escalations. (2) Increased primarily due to (1) above. Also relates to a $1,181 lease termination fee received in connection with the sale of a 74 -unit ALF. (3) The variable rental income for the three and nine months ended September 30, 2022, primarily includes reimbursement of real estate taxes by our lessees of $4,160 and $12,161 , respectively. The variable rental income for the three and nine months ended September 30, 2021, only includes reimbursement of real estate taxes by our lessees of $3,588 and $10,655 . Increases primarily due to properties transitioned from Senior Care and new acquisitions partially offset by properties sold. (4) Decreased primarily due to a deferred rent repayment and normal amortization. (5) Decreased primarily due to (4) above. Also relates to the impact of prior year’s 50% reduction of 2021 rent escalations for those leases accounted for on a straight-line basis. (6) Represents lease incentive balance write-off related to two properties that were transitioned to another operator in our portfolio. (7) Represents a lease incentive balance write-off related to a closed property and subsequent lease termination and (6) above. (8) Represents a straight-line rent receivable write-off due to transitioning rental revenue recognition to cash basis for one lease in accordance with Accounting Standard Codification Topic 842, Leases . |
Summary of information about purchase options included in our lease agreements | The following table summarizes information about purchase options included in our lease agreements (dollar amounts in thousands): Type Number of of Gross Carrying Option State Property Properties Investments Value Window California ALF/MC 2 $ 38,895 $ 33,954 2023-2029 Florida MC 1 15,201 12,614 2029 Florida SNF 3 76,267 76,267 2025-2027 (1) Nebraska ALF 3 7,633 3,008 TBD (2) South Carolina ALF/MC 1 11,680 9,197 2029 Texas SNF 4 51,816 51,157 2027-2029 (3) Total $ 201,492 $ 186,197 (1) During the third quarter of 2022, we entered into a joint venture (“JV”) to purchase three skilled nursing centers. The JV leased the properties under a 10-year master lease. For more information regarding this transaction see Financing Receivable below. (2) Subject to the properties achieving certain coverage ratios. (3) During the second quarter of 2022, we purchased four skilled nursing centers and leased these properties under a 10-year lease with an existing operator. The lease provides the operator to elect either an earn-out payment or purchase option. If neither option is elected within the timeframe defined in the lease, both elections are terminated. For more information regarding the earn-out see Note 8. Commitments and Contingencies . |
Schedule of properties held-for-sale | Type Number Number of of of Gross Accumulated State Property Properties Beds/units Investment Depreciation KY ALF 1 60 $ 13,015 $ 2,305 |
Summary of acquisitions | Total Number Number Purchase Transaction Acquisition of of Year Type of Property Price Costs Costs Properties Beds/Units 2022 SNF $ 51,534 $ 281 $ 51,815 4 339 We accounted for the above acquisition as an asset acquisition. The properties are located in Texas and are leased to an affiliate of an existing operator under a 10-year lease with two 5-year renewal options. Additionally, the lease provides the operator to elect either an earn-out payment or purchase option. If neither option is elected within the timeframe defined in the lease, both elections are terminated. The earn-out payment is available, contingent on achieving certain thresholds per the lease, beginning at the end of the second lease year through the end of the fifth lease year. The purchase option is available beginning in the sixth lease year through the end of the seventh lease year. The initial cash yield is 8% for the first year, increasing to 8.25% for the second year, then increases annually by 2.0% to 4.0% based on the change in the Medicare Market Basket Rate. In connection with the transaction, we provided the lessee a 10-year working capital loan for up to $2,000 , of which $1,867 has been funded, at 8% for first year, increasing to 8.25% for the second year, then increasing annually with the lease rate. |
Schedule of improvement projects | During he following developments and improvements projects (in thousands) : Type of Property 2022 2021 Developments Improvements Developments Improvements Assisted Living Communities $ 105 $ 3,015 $ — $ 4,560 Skilled Nursing Centers — 981 — 279 Other — 559 — — Total $ 105 $ 4,555 $ — $ 4,839 |
Schedule of property sold | Type Number Number of of of Sales Carrying Net Year State Properties Properties Beds/Units Price Value Gain (loss) (1) 2022 California ALF 2 232 $ 43,715 $ 17,832 $ 25,867 California SNF 1 121 13,250 1,846 10,846 Texas SNF 1 — 485 697 (434) Virginia ALF 1 74 16,895 15,549 1,344 (2) n/a n/a — — — — 186 (3) Total 2022 5 427 $ 74,345 $ 35,924 $ 37,809 2021 Florida ALF 1 — $ 2,000 $ 2,626 $ (858) Nebraska ALF 1 40 900 1,079 (198) Washington SNF 1 123 7,700 4,528 2,562 Wisconsin ALF 3 263 35,000 28,295 5,594 n/a n/a — — — — 292 (3) Total 2021 6 426 $ 45,600 $ 36,528 $ 7,392 ( (1) Calculation of net gain (loss) includes cost of sales and write-off of straight-line receivable and lease incentives, when applicable. (2) In connection with this sale, the former operator paid us a lease termination fee of $1,181 which is not included in the gain on sale. (3) We recognized additional gain due to the reassessment adjustment of the holdbacks related to properties sold during 2019 and 2020, under the expected value model per ASC Topic 606, Contracts with Customers (“ASC 606”). |
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 ALF per Interest Rate Maturity State Investment Property Investment Loans (1) Properties (2) Beds Units Bed/Unit 7.5% 2023 MO $ 1,886 OTH 0.5 % 1 — (3) — — $ n/a 7.5% 2024 LA 27,347 SNF 7.1 % 1 1 189 — $ 144.69 7.8% 2025 FL 13,123 ALF 3.4 % 1 1 — 68 $ 192.99 7.3% (4) 2025 NC/SC 52,812 ALF 13.6 % 1 13 — 523 $ 100.98 7.3% 2026 NC 32,373 ALF 8.4 % 1 4 — 217 $ 149.18 7.3% 2026 NC 782 OTH 0.2 % 1 — (5) — — $ n/a 10.4% (6) 2043 MI 184,854 SNF 47.8 % 1 15 1,875 — $ 98.59 9.5% (6) 2045 MI 39,066 SNF 10.1 % 1 4 501 — $ 77.98 9.9% (6) 2045 MI 19,750 SNF 5.1 % 1 2 205 — $ 96.34 10% (6) 2045 MI 14,875 SNF 3.8 % 1 1 146 — $ 101.88 Total $ 386,868 100.0 % 10 41 2,916 808 $ 103.89 (1) Some loans contain certain guarantees and provide for certain facility fees. (2) Our mortgage loans are secured by properties located in six states with five borrowers. (3) Represents a mortgage loan secured by a parcel of land for the future development of a 91 -bed post-acute SNF. (4) Represents the initial rate. This loan has an IRR of 8% . (5) Represents a mortgage loan secured by a parcel of land in North Carolina held for future development of a seniors housing community. (6) Mortgage loans provide for 2.25% annual increases in the interest rate after a certain time period. |
Schedule of mortgage loan activity | The following table summarizes our mortgage loan activity for the nine months ended September 30, 2022 and 2021 (in thousands): Nine Months Ended September 30, 2022 2021 Originations and funding under mortgage loans receivable $ 35,234 (1) $ 2,223 Application of interest reserve 4,348 — Scheduled principal payments received (625) (625) Mortgage loan premium amortization (4) (4) (Provision) recovery for loan loss reserve (389) (16) Net increase in mortgage loans receivable $ 38,564 $ 1,578 (1) We originated two senior mortgage loans, secured by four ALFs operated by an existing operator, as well as a land parcel in North Carolina. The communities have a combined total of 217 units, with an average age of less than four years . The land parcel is approximately 7.6 acres adjacent to one of the ALFs and is being held for the future development of a seniors housing community. The mortgage loans have a four-year term, an interest rate of 7.25% and an IRR of 8% . |
Investment in Unconsolidated _2
Investment in Unconsolidated Joint Ventures (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Investment in Unconsolidated Joint Ventures | |
Summary of the preferred equity investments | Type Type Total Contractual Number of of Preferred Cash of Carrying State Properties Investment Return Portion Beds/ Units Value Washington ALF/MC Preferred Equity (1) 12 % 7 % 95 $ 6,340 (1) Washington UDP Preferred Equity (2) 12 % 8 % — 13,000 (2) Total 95 $ 19,340 (1) Represents a preferred equity in an entity that developed and owns a 95 -unit ALF and MC in Washington. Our investment represents 15.5% of the total investment. The preferred equity investment earns an initial cash rate of 7% increasing to 9% in year four until the internal rate of return (“IRR”) is 8% . After achieving an 8% IRR, the cash rate drops to 8% until achieving an IRR ranging between 12% to 14% , depending upon timing of redemption. During the fourth quarter of 2021, the entity completed the development project and received its certificate of occupancy. We have the option to require the JV partner to purchase our preferred equity interest at any time between August 17, 2031 and December 31, 2036. (2) Represents a preferred equity in an entity that will develop and own a 267 -unit ILF and ALF in Washington. Our investment represents 11.6% of the estimated total investment. The preferred equity investment earns an initial cash rate of 8% with an IRR of 12% . The JV partner has the option to buy out our investment at any time after August 31, 2023 at the IRR rate. Also, we have the option to require the JV partner to purchase our preferred equity interest at any time between August 31, 2027 and, upon project completion and leasing the property, prior to the end of the first renewal term of the lease. |
Summary of capital contributions, income recognized and cash interest received from investments in unconsolidated joint ventures | During the three months ended September 30, 2022 and 2021, we recognized $376,000 in income from 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 nine months ended September 30, 2022 and 2021 (in thousands): Type of Capital Income Cash Interest Application of Year Properties Contribution Recognized Earned Interest Reserve 2022 ALF/MC $ — $ 337 $ — $ 337 UDP (1) — 790 351 439 Total $ — $ 1,127 $ 351 $ 776 2021 ALF/MC $ — $ 337 $ — $ 300 UDP (1) 8,000 704 — 616 Total $ 8,000 $ 1,041 $ — $ 916 (1) During 2021, we funded the remaining $8,000 related to a $13,000 preferred equity investment commitment in an entity that will develop and own a 267 -unit ILF and ALF in Washington. Additionally, we withheld $2,324 from the $8,000 funding for a total reserve of $3,777 related to this preferred equity investment. |
Notes Receivable (Tables)
Notes Receivable (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Notes Receivable. | |
Summary of mezzanine loans and other loan arrangements | The following table is a summary of our notes receivable components as of September 30, 2022 and December 31, 2021 (in thousands): September 30, 2022 December 31, 2021 Mezzanine loans (1) $ 36,816 $ 11,815 Other loans 22,198 16,808 Notes receivable credit loss reserve (590) (286) Total $ 58,424 $ 28,337 (1) During the first quarter of 2022, we originated a $25,000 mezzanine loan for the recapitalization of a five -property seniors housing portfolio. The mezzanine loan has a term of approximately five years , with two one-year extension options and bears interest at 8% with an IRR of 11% . The five communities are located in Oregon and Montana, have a total of 621 units, and include independent living, assisted living and memory care. |
Summary of notes receivable activity | The following table summarizes our notes receivable activity for the nine months ended September 30, 2022 and 2021 (in thousands): Nine Months Ended September 30, 2022 2021 Advances under notes receivable $ 37,008 (1) $ 6,453 Interest reserve withheld — 353 Principal payments received under notes receivable (6,618) (2,553) Provision for credit losses (303) 43 Net increase in notes receivable $ 30,087 $ 4,296 (1) Includes origination of a $25,000 mezzanine loan for the recapitalization of five assisted living communities located in Oregon and Montana. Additionally includes origination of a working capital loan for a commitment of up to $2,000 , of which $1,867 has been funded and $9,761 of funding under a working capital loan to HMG Healthcare, LLC (“HMG”). |
Lease Incentives (Tables)
Lease Incentives (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Lease Incentives | |
Summary of lease incentive activity | September 30, 2022 and December 31, 2021 were $2,001,000 and $2,678,000 , respectively. The following table summarizes our lease incentives activity for the nine months ended September 30, 2022 and 2021 (in thousands) : Nine Months Ended September 30, 2022 2021 Adjustment Funding Amortization Write-off Funding Amortization Non-contingent lease incentives $ (174) (1) $ 418 $ (665) $ (256) (2) $ 650 $ (386) (1) Primarily relates to the sale of two ALFs in California during the second quarter of 2022. (2) Represents the lease incentive balance write-off related to a closed property and subsequent lease termination and lease incentive balance write-off related to 12 assisted living communities transitioned to an existing operator. |
Debt Obligations (Tables)
Debt Obligations (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Obligations | |
Schedule of interest rate swaps | As of September 30, 2022 and December 31, 2021, the terms of the Interest Rate Swaps are as follows ( dollar amounts in thousands Notional Fair Value at Date Entered Maturity Date Swap Rate Rate Index Amount September 30, 2022 December 31, 2021 November 2021 November 19, 2025 2.56 % 1-month LIBOR $ 50,000 $ 4,300 $ (38) November 2021 November 19, 2026 2.69 % 1-month LIBOR 50,000 5,145 (134) $ 100,000 $ 9,445 $ (172) |
Schedule of Debt Obligations | The following table sets forth information regarding debt obligations by component as of September 30, 2022 and December 31, 2021 ( dollar amounts in thousands): At September 30, 2022 At December 31, 2021 Applicable Available Available Interest Outstanding for Outstanding for Debt Obligations Rate (1) Balance Borrowing Balance Borrowing Revolving line of credit 4.21% $ 151,000 $ 249,000 $ 110,900 $ 289,100 Term loans, net of debt issue costs 2.63% 99,474 — 99,363 — Senior unsecured notes, net of debt issue costs 4.25% 543,287 — 512,456 — Total 4.04% $ 793,761 $ 249,000 $ 722,719 $ 289,100 (1) Represents weighted average of interest rate as of September 30, 2022. |
Schedule of borrowings and repayments | Our borrowings and repayments are as follows (in thousands): Nine Months Ended September 30, 2022 2021 Debt Obligations Borrowings Repayments Borrowings Repayments Revolving line of credit $ 194,000 $ (153,900) $ 92,500 $ (48,000) Term loans — — — — Senior unsecured notes 75,000 (43,160) — (32,160) Total $ 269,000 $ (197,060) $ 92,500 $ (80,160) |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity | |
Schedule of consolidated VIEs | As of September 30, 2022, we have the following consolidated VIEs (in thousands): Gross Investment Property Consolidated Non-Controlling Year Purpose Type State Assets Interests 2022 Owned real estate (1) SNF FL $ 76,267 $ 14,325 2018 Owned real estate ILF OR 14,650 2,906 2018 Owned real estate and development ALF/MC OR 18,452 1,142 2017 Owned real estate and development ILF/ALF/MC WI 22,007 2,305 2017 Owned real estate ALF/MC SC 11,680 1,241 Total $ 143,056 $ 21,919 (1) During the third quarter of 2022, we entered into a joint venture and contributed $61,661 into the JV that purchased three skilled nursing centers located in Florida for $75,825 . Our JV partner contributed the remaining $14,325 of equity. Additionally, we incurred $161 of costs associated with this transaction. The JV leased the centers back to an affiliate of the seller under a 10-year master lease, with two five-year renewal options and provided the seller-lessee with a purchase option, exercisable at the beginning of the fourth year through the end of the fifth year. See Note 2. Real Estate Investments for more information. |
Schedule of cash dividends declared and paid | Distributions. (in thousands) Nine Months Ended September 30, 2022 2021 Declared Paid Declared Paid Common Stock (1) $ 68,202 $ 68,202 $ 68,051 (2) $ 68,051 (2) (1) Represents $0.19 per share per month for the nine months ended September 30, 2022 and 2021. (2) Includes $764 of distributions that were paid as a result of the vesting of performance-based stock units. |
Schedule of restricted stock activity | The following table summarizes our restricted stock activity for the nine months ended September 30, 2022 and 2021 : Nine Months Ended September 30, 2022 2021 Outstanding, January 1 197,422 180,440 Granted 135,210 110,348 Vested (103,396) (93,366) Outstanding, September 30 229,236 197,422 |
Schedule of restricted stock granted | No. of Price per Year Shares/Units Share Reward Type Vesting Period 2022 122,865 $ 33.94 Restricted stock ratably over 3 years 86,332 $ 33.94 Performance-based stock units TSR targets (1) 12,345 $ 38.48 Restricted stock May 25,2023 221,542 2021 95,293 $ 42.27 Restricted stock ratably over 3 years 71,892 $ 42.27 Performance-based stock units TSR targets (1) 12,055 $ 39.40 Restricted stock May 26, 2022 3,000 $ 43.14 Restricted stock April 1, 2022 182,240 (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 | At September 30, 2022, 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 October - December 2022 $ 2,013 2023 5,603 2024 2,853 2025 309 Total $ 10,778 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies | |
Schedule of commitments | At September 30, 2022, we had commitments as follows (in thousands): Total Investment 2022 Commitment Remaining Commitment Funding Funded Commitment Real estate properties Note 2. Real Estate Investments $ 21,038 (1) $ 3,054 $ 4,692 $ 16,346 Accrued incentives and earn-out liabilities (Note 5. Lease Incentives) 12,000 (2) — — 12,000 Mortgage loans ( Note 2. Real Estate Investments 32,507 (3) 2,187 5,928 26,579 Notes receivable ( Note 4. Notes Receivable 27,541 12,008 15,778 11,763 Total $ 93,086 $ 17,249 $ 26,398 $ 66,688 (1) Represents commitments to purchase land and improvements, if applicable, and to develop, re-develop, renovate or expand seniors housing and skilled nursing properties. (2) Includes an earn-out payment of up to $3,000 to an operator under a master lease on four skilled nursing centers in Texas which were acquired during the nine months ended September 30, 2022. The master lease provides either an earn-out payment up to $3,000 or a purchase option. The earn-out payment is available, contingent on achieving certain thresholds per the lease, beginning at the end of the second lease year through the end of the fifth lease year. If neither option is elected within the timeframe defined in the lease, both elections are terminated. (3) Represents $14,507 of commitments for the expansion, renovation and working capital related to seniors housing and skilled nursing properties securing the mortgage loans and $18,000 of commitments which are contingent upon the borrower achieving certain coverage ratios. |
Major Operators (Tables)
Major Operators (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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 (2) Prestige Healthcare (3) 24 — 2,845 93 19.7 % 16.0 % (1) Includes rental income from owned properties and interest income from mortgage loans as of September 30, 2022. (2) Represents the net carrying value of the mortgage loans and properties we own divided by the Total assets on the Consolidated Balance Sheets. (3) The majority of the revenue derived from this operator relates to interest income from mortgage loans. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Measurements | |
Schedule of carrying value and fair value of the entity's financial instruments | The carrying value and estimated fair value of our financial instruments as of September 30, 2022 and December 31, 2021 were as follows ( in thousands ): At September 30, 2022 At December 31, 2021 Carrying Fair Carrying Fair Value Value Value Value Financing receivable, net of credit loss reserve $ 75,507 $ 75,507 (1) $ — $ — Mortgage loans receivable, net of credit loss reserve 383,006 454,185 (2) 344,442 405,162 (2) Notes receivable, net of credit loss reserve 58,424 62,741 (3) 28,337 28,653 (3) Revolving line of credit 151,000 151,000 (4) 110,900 110,900 (4) Term loans, net of debt issue costs 99,474 100,000 (4) 99,363 100,000 (4) Senior unsecured notes, net of debt issue costs 543,287 496,955 (5) 512,456 540,045 (5) (1) Our investment in financing receivable is classified as Level 3. At September 30, 2022, the fair value of our financing receivable approximated its carrying value since the asset was acquired during the third quarter of 2022. (2) 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 September 30, 2022 and December 31, 2021 was 9.2% and 9.5% , respectively. (3) Our investments in notes receivable are classified as Level 3. 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 flows of the notes receivable at September 30, 2022 and December 31, 2021, were 6.6% and 5.6% , respectively. (4) Our revolving line of credit and term loans bear interest at a variable interest rate. The estimated fair value of our revolving line of credit and term loans approximated their carrying values at September 30, 2022 and December 31, 2021 based upon prevailing market interest rates for similar debt arrangements. (5) 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 September 30, 2022, the discount rate used to value our future cash outflow of our senior unsecured notes was 6.5% for those maturing before year 2030 and 7.0% for those maturing at or beyond year 2030. At December 31, 2021, the discount rate used to value our future cash outflow of our senior unsecured notes was 3.00% for those maturing before year 2030 and 3.25% for those maturing at or beyond year 2030. |
General (Details)
General (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) segment | |
General | |
Number of operating segments | segment | 1 |
Provision for federal or state income taxes | $ | $ 0 |
Real Estate Investments - Owned
Real Estate Investments - Owned Properties (Details) | 9 Months Ended |
Sep. 30, 2022 USD ($) property state item $ / item | |
Real Estate [Line Items] | |
Number of beds/units | 217 |
Real Estate Investment | |
Real Estate [Line Items] | |
Gross Investment | $ | $ 1,408,402,000 |
Percentage of Investment | 100% |
Number of properties | property | 152 |
Number of states | state | 26 |
Number of operators | 24 |
Real Estate Investment | SNF Beds | |
Real Estate [Line Items] | |
Number of beds/units | 6,466 |
Real Estate Investment | ALF Units | |
Real Estate [Line Items] | |
Number of beds/units | 5,733 |
ALF | |
Real Estate [Line Items] | |
Number of properties | property | 2 |
Number of beds/units | $ | 74 |
ALF | Real Estate Investment | |
Real Estate [Line Items] | |
Gross Investment | $ | $ 797,426,000 |
Percentage of Investment | 56.60% |
Number of properties | property | 99 |
Average Investment per Bed/Unit | $ / item | 145.07 |
ALF | Real Estate Investment | ALF Units | |
Real Estate [Line Items] | |
Number of beds/units | 5,497 |
SNF | Real Estate Investment | |
Real Estate [Line Items] | |
Gross Investment | $ | $ 599,058,000 |
Percentage of Investment | 42.50% |
Number of properties | property | 52 |
Average Investment per Bed/Unit | $ / item | 90.99 |
SNF | Real Estate Investment | SNF Beds | |
Real Estate [Line Items] | |
Number of beds/units | 6,348 |
SNF | Real Estate Investment | ALF Units | |
Real Estate [Line Items] | |
Number of beds/units | 236 |
Other | Real Estate Investment | |
Real Estate [Line Items] | |
Gross Investment | $ | $ 11,918,000 |
Percentage of Investment | 0.90% |
Number of properties | property | 1 |
Number of parcels of land | 3 |
Other | Real Estate Investment | SNF Beds | |
Real Estate [Line Items] | |
Number of beds/units | 118 |
Hospital | Real Estate Investment | |
Real Estate [Line Items] | |
Number of properties | property | 1 |
Real Estate Investments - Base
Real Estate Investments - Base Rents (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Future minimum base rents receivable | |
2022 | $ 31,970 |
2023 | 114,037 |
2024 | 94,257 |
2025 | 85,460 |
2026 | 68,784 |
Thereafter | $ 263,280 |
Real Estate Investments - Lease
Real Estate Investments - Lease (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 USD ($) property item | Jun. 30, 2022 item | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) property item | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Real estate investments | ||||||
Write-off of straight-line rent and lease incentives balances | $ 256,000 | $ 758,000 | ||||
Carrying value | $ 1,026,182,000 | 1,026,182,000 | $ 1,033,951,000 | |||
(Loss) gain on sale of real estate, net | $ (387,000) | $ 2,702,000 | $ 37,809,000 | 7,392,000 | ||
Number of units | item | 217 | 217 | ||||
Income and Expenses, Lessor [Abstract] | ||||||
Base cash rental income | $ 28,180,000 | 25,934,000 | $ 83,203,000 | 80,967,000 | ||
Variable cash rental income | 4,160,000 | 3,588,000 | 12,218,000 | 10,655,000 | ||
Straight-Line Rent | (436,000) | (44,000) | (963,000) | 619,000 | ||
Adjustment for lease incentives and rental income | (83,000) | (256,000) | (758,000) | |||
Amortization of Lease Incentives | (236,000) | (158,000) | (665,000) | (386,000) | ||
Total Rental Income | 31,585,000 | 29,320,000 | 93,537,000 | 91,097,000 | ||
Real estate taxes reimbursed | $ 4,160,000 | $ 3,588,000 | $ 12,161,000 | $ 10,655,000 | ||
Lease term | 10 years | 10 years | ||||
Percentage of reduction in rent and interest escalations | 50% | |||||
Kentucky | ||||||
Real estate investments | ||||||
Other than temporary impairment loss | $ 1,286,000 | |||||
Purchase Option in Lease Arrangements | ||||||
Real estate investments | ||||||
Gross Investment | $ 201,492,000 | 201,492,000 | ||||
Carrying value | $ 186,197,000 | $ 186,197,000 | ||||
ALF | ||||||
Real estate investments | ||||||
Number of properties | property | 2 | 2 | ||||
Lease termination fee received | $ 1,181,000 | |||||
Number of units | 74 | 74 | ||||
ALF | California | ||||||
Real estate investments | ||||||
Number of properties | property | 4 | 4 | ||||
ALF | Purchase Option in Lease Arrangements | Nebraska | ||||||
Real estate investments | ||||||
Number of properties | property | 3 | 3 | ||||
Gross Investment | $ 7,633,000 | $ 7,633,000 | ||||
Carrying value | $ 3,008,000 | $ 3,008,000 | ||||
MC | Purchase Option in Lease Arrangements | ||||||
Income and Expenses, Lessor [Abstract] | ||||||
Number of properties acquired | item | 3 | |||||
MC | Purchase Option in Lease Arrangements | Florida | ||||||
Real estate investments | ||||||
Number of properties | property | 1 | 1 | ||||
Gross Investment | $ 15,201,000 | $ 15,201,000 | ||||
Carrying value | $ 12,614,000 | $ 12,614,000 | ||||
ALF & MC | Purchase Option in Lease Arrangements | California | ||||||
Real estate investments | ||||||
Number of properties | property | 2 | 2 | ||||
Gross Investment | $ 38,895,000 | $ 38,895,000 | ||||
Carrying value | $ 33,954,000 | $ 33,954,000 | ||||
ALF & MC | Purchase Option in Lease Arrangements | South Carolina | ||||||
Real estate investments | ||||||
Number of properties | property | 1 | 1 | ||||
Gross Investment | $ 11,680,000 | $ 11,680,000 | ||||
Carrying value | $ 9,197,000 | $ 9,197,000 | ||||
SNF | ||||||
Income and Expenses, Lessor [Abstract] | ||||||
Number of properties acquired | property | 4 | |||||
Acquisition Costs | $ 51,815,000 | |||||
Lease term | 10 years | 10 years | ||||
SNF | Purchase Option in Lease Arrangements | ||||||
Income and Expenses, Lessor [Abstract] | ||||||
Number of properties acquired | item | 4 | |||||
Lease term | 10 years | 10 years | 10 years | |||
SNF | Purchase Option in Lease Arrangements | Florida | ||||||
Real estate investments | ||||||
Number of properties | property | 3 | 3 | ||||
Gross Investment | $ 76,267,000 | $ 76,267,000 | ||||
Carrying value | $ 76,267,000 | $ 76,267,000 | ||||
SNF | Purchase Option in Lease Arrangements | Texas | ||||||
Real estate investments | ||||||
Number of properties | property | 4 | 4 | ||||
Gross Investment | $ 51,816,000 | $ 51,816,000 | ||||
Carrying value | $ 51,157,000 | $ 51,157,000 |
Real Estate Investments - Held-
Real Estate Investments - Held-For-Sale Properties (Details) $ in Thousands | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) |
Real Estate Properties [Line Items] | |||
Accumulated depreciation | $ 379,915 | $ 374,606 | |
ALF | Kentucky | |||
Real Estate Properties [Line Items] | |||
Number of Properties | 1 | ||
Number of Beds/units | 60 | ||
Gross Investment | $ 13,015 | ||
Accumulated depreciation | $ 2,305 |
Real Estate Investments - Acqui
Real Estate Investments - Acquisitions and Improvements (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) item property | |
Real estate investments | |
Lease term | 10 years |
Maximum | |
Real estate investments | |
Annual increase in cash yield percentage | 4% |
SNF | |
Real estate investments | |
Purchase Price | $ 51,534 |
Transaction Costs | 281 |
Acquisition Costs | $ 51,815 |
Number of properties acquired | property | 4 |
Number of beds/units acquired | item | 339 |
Lease term | 10 years |
Renewal term | 5 years |
Number of options available for renewal | item | 2 |
Working Capital Loan Funded | $ 1,867 |
Cash yield percentage | 8% |
Cash yield percentage year two | 8.25% |
SNF | Minimum | |
Real estate investments | |
Annual increase in cash yield percentage | 2% |
SNF | Maximum | |
Real estate investments | |
Working Capital Loan Funded | $ 2,000 |
Real Estate Investments - Prope
Real Estate Investments - Properties Sold (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) property | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) item property | Sep. 30, 2021 USD ($) property item | Dec. 31, 2021 USD ($) | |
Disposals and other | |||||
Carrying value | $ 1,026,182 | $ 1,026,182 | $ 1,033,951 | ||
Net Gain (loss) | (387) | $ 2,702 | 37,809 | $ 7,392 | |
Impairment charges | $ 1,286 | $ 1,286 | |||
ALF | |||||
Disposals and other | |||||
Number of properties | property | 2 | 2 | |||
ALF | California | |||||
Disposals and other | |||||
Number of properties | property | 4 | 4 | |||
ALF | Virginia | |||||
Disposals and other | |||||
Lease termination fee payable | $ 1,181 | $ 1,181 | |||
Properties sold | |||||
Disposals and other | |||||
Number of properties sold | property | 5 | 6 | |||
Number of beds or units in property sold | item | 427 | 426 | |||
Sales price | $ 74,345 | $ 45,600 | |||
Carrying value | 35,924 | 36,528 | 35,924 | 36,528 | |
Net Gain (loss) | 37,809 | 7,392 | |||
Net Gain (loss) | $ 186 | $ 292 | |||
Properties sold | SNF | Texas | |||||
Disposals and other | |||||
Number of properties sold | property | 1 | ||||
Sales price | $ 485 | ||||
Carrying value | 697 | 697 | |||
Net Gain (loss) | $ (434) | ||||
Properties sold | SNF | Washington | |||||
Disposals and other | |||||
Number of properties sold | property | 1 | ||||
Number of beds or units in property sold | item | 123 | ||||
Sales price | $ 7,700 | ||||
Carrying value | 4,528 | 4,528 | |||
Net Gain (loss) | $ 2,562 | ||||
Properties sold | SNF | California | |||||
Disposals and other | |||||
Number of properties sold | property | 1 | ||||
Number of beds or units in property sold | item | 121 | ||||
Sales price | $ 13,250 | ||||
Carrying value | 1,846 | 1,846 | |||
Net Gain (loss) | $ 10,846 | ||||
Properties sold | ALF | Florida | |||||
Disposals and other | |||||
Number of properties sold | property | 1 | ||||
Sales price | $ 2,000 | ||||
Carrying value | 2,626 | 2,626 | |||
Net Gain (loss) | $ (858) | ||||
Properties sold | ALF | Nebraska | |||||
Disposals and other | |||||
Number of properties sold | property | 1 | ||||
Number of beds or units in property sold | item | 40 | ||||
Sales price | $ 900 | ||||
Carrying value | 1,079 | 1,079 | |||
Net Gain (loss) | $ (198) | ||||
Properties sold | ALF | Wisconsin | |||||
Disposals and other | |||||
Number of properties sold | property | 3 | ||||
Number of beds or units in property sold | item | 263 | ||||
Sales price | $ 35,000 | ||||
Carrying value | $ 28,295 | 28,295 | |||
Net Gain (loss) | $ 5,594 | ||||
Properties sold | ALF | California | |||||
Disposals and other | |||||
Number of properties sold | property | 2 | ||||
Number of beds or units in property sold | item | 232 | ||||
Sales price | $ 43,715 | ||||
Carrying value | 17,832 | 17,832 | |||
Net Gain (loss) | $ 25,867 | ||||
Properties sold | ALF | Virginia | |||||
Disposals and other | |||||
Number of properties sold | property | 1 | ||||
Number of beds or units in property sold | item | 74 | ||||
Sales price | $ 16,895 | ||||
Carrying value | $ 15,549 | 15,549 | |||
Net Gain (loss) | $ 1,344 |
Real Estate Investments - Finan
Real Estate Investments - Financing Receivable (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 USD ($) lease Center | Sep. 30, 2022 USD ($) | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Contribution to JV | $ 61,661,000 | |
Skilled nursing center purchased | Center | 3 | |
Real estate property acquired | $ 75,825,000 | |
Lease term | 10 years | 10 years |
Number of operating lease renewals | lease | 2 | |
Lease renewal term | 5 years | 5 years |
Interest income from financing receivable | $ 357,000 | $ 357,000 |
Provision for expected loan losses | 760,000 | |
JV Partner | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Contribution to JV | $ 14,325,000 |
Real Estate Investments - Mortg
Real Estate Investments - Mortgage Loan (Details) | 9 Months Ended |
Sep. 30, 2022 USD ($) loan property item state $ / item | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 7.25% |
Number of beds/units | 217 |
Internal Rate of Return | 8% |
ALF | |
Real Estate [Line Items] | |
Number of properties | property | 2 |
Number of beds/units | $ | 74 |
Mortgage loans with 7.3% Interest Maturing 2025 | ALF | |
Real Estate [Line Items] | |
Internal Rate of Return | 8% |
Mortgage Loans | |
Real Estate [Line Items] | |
Gross Investment | $ | $ 386,868,000 |
Percentage of Investment | 100% |
Number of Loans | loan | 10 |
Number of properties | property | 41 |
Average Investment per Bed/Unit | $ / item | 103.89 |
Number of states | state | 6 |
Number of operators | 5 |
Mortgage Loans | SNF Beds | |
Real Estate [Line Items] | |
Number of beds/units | 2,916 |
Mortgage Loans | ALF Units | |
Real Estate [Line Items] | |
Number of beds/units | 808 |
Mortgage Loans | SNF | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 2.25% |
Mortgage Loans | Mortgage loans with 7.5% Interest Maturing 2022 | OTH | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 7.50% |
Gross Investment | $ | $ 1,886,000 |
Percentage of Investment | 0.50% |
Number of Loans | loan | 1 |
Mortgage Loans | Mortgage loans with 7.5% Interest Maturing 2022 | OTH | SNF Beds | |
Real Estate [Line Items] | |
Number of beds/units | 91 |
Mortgage Loans | Mortgage loans with 7.5% Interest Maturing 2024 | SNF | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 7.50% |
Gross Investment | $ | $ 27,347,000 |
Percentage of Investment | 7.10% |
Number of Loans | loan | 1 |
Number of properties | property | 1 |
Average Investment per Bed/Unit | $ / item | 144.69 |
Mortgage Loans | Mortgage loans with 7.5% Interest Maturing 2024 | SNF | SNF Beds | |
Real Estate [Line Items] | |
Number of beds/units | 189 |
Mortgage Loans | Mortgage loans with 7.8% Interest Maturing 2025 | ALF | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 7.80% |
Gross Investment | $ | $ 13,123,000 |
Percentage of Investment | 3.40% |
Number of Loans | loan | 1 |
Number of properties | property | 1 |
Average Investment per Bed/Unit | $ / item | 192.99 |
Mortgage Loans | Mortgage loans with 7.8% Interest Maturing 2025 | ALF | ALF Units | |
Real Estate [Line Items] | |
Number of beds/units | 68 |
Mortgage Loans | Mortgage loans with 7.3% Interest Maturing 2025 | ALF | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 7.30% |
Gross Investment | $ | $ 52,812,000 |
Percentage of Investment | 13.60% |
Number of Loans | loan | 1 |
Number of properties | property | 13 |
Average Investment per Bed/Unit | $ / item | 100.98 |
Mortgage Loans | Mortgage loans with 7.3% Interest Maturing 2025 | ALF | ALF Units | |
Real Estate [Line Items] | |
Number of beds/units | 523 |
Mortgage Loans | Mortgage loans with 7.3% Interest Maturing 2026 | OTH | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 7.30% |
Gross Investment | $ | $ 782,000 |
Percentage of Investment | 0.20% |
Number of Loans | loan | 1 |
Mortgage Loans | Mortgage loans with 7.3% Interest Maturing 2026 | ALF | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 7.30% |
Gross Investment | $ | $ 32,373,000 |
Percentage of Investment | 8.40% |
Number of Loans | loan | 1 |
Number of properties | property | 4 |
Average Investment per Bed/Unit | $ / item | 149.18 |
Mortgage Loans | Mortgage loans with 7.3% Interest Maturing 2026 | ALF | ALF Units | |
Real Estate [Line Items] | |
Number of beds/units | 217 |
Mortgage Loans | Mortgage loans with 10.4% Interest Maturing 2043 | SNF | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 10.40% |
Gross Investment | $ | $ 184,854,000 |
Percentage of Investment | 47.80% |
Number of Loans | loan | 1 |
Number of properties | property | 15 |
Average Investment per Bed/Unit | $ / item | 98.59 |
Mortgage Loans | Mortgage loans with 10.4% Interest Maturing 2043 | SNF | SNF Beds | |
Real Estate [Line Items] | |
Number of beds/units | 1,875 |
Mortgage Loans | Mortgage loans with 9.5% Interest Maturing 2045 | SNF | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 9.50% |
Gross Investment | $ | $ 39,066,000 |
Percentage of Investment | 10.10% |
Number of Loans | loan | 1 |
Number of properties | property | 4 |
Average Investment per Bed/Unit | $ / item | 77.98 |
Mortgage Loans | Mortgage loans with 9.5% Interest Maturing 2045 | SNF | SNF Beds | |
Real Estate [Line Items] | |
Number of beds/units | 501 |
Mortgage Loans | Mortgage loans with 9.8% Interest Maturing 2045 | SNF | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 9.90% |
Gross Investment | $ | $ 19,750,000 |
Percentage of Investment | 5.10% |
Number of Loans | loan | 1 |
Number of properties | property | 2 |
Average Investment per Bed/Unit | $ / item | 96.34 |
Mortgage Loans | Mortgage loans with 9.8% Interest Maturing 2045 | SNF | SNF Beds | |
Real Estate [Line Items] | |
Number of beds/units | 205 |
Mortgage Loans | Mortgage loans with 10.0% Interest Maturing 2045 | SNF | |
Real Estate [Line Items] | |
Interest rate (as a percent) | 10% |
Gross Investment | $ | $ 14,875,000 |
Percentage of Investment | 3.80% |
Number of Loans | loan | 1 |
Number of properties | property | 1 |
Average Investment per Bed/Unit | $ / item | 101.88 |
Mortgage Loans | Mortgage loans with 10.0% Interest Maturing 2045 | SNF | SNF Beds | |
Real Estate [Line Items] | |
Number of beds/units | 146 |
Real Estate Investments - Mor_2
Real Estate Investments - Mortgage Loans Activity (Details) | 9 Months Ended | ||
Sep. 30, 2022 USD ($) a property item loan | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Mortgage Loans | |||
Originations and funding under mortgage loans receivable | $ 35,234,000 | $ 2,223,000 | |
Application of interest reserve | 4,348,000 | ||
Scheduled principal payments received | (625,000) | (625,000) | |
Mortgage loan premium amortization | (4,000) | (4,000) | |
Provision (recovery) for loan loss reserve | (389,000) | (16,000) | |
Net increase (decrease) in mortgage loans receivable | $ 38,564,000 | 1,578,000 | |
Number of senior mortgage loans | loan | 2 | ||
Number of beds/units | item | 217 | ||
Area of land | a | 7.6 | ||
Loan Term | 4 years | ||
Interest rate (as a percent) | 7.25% | ||
Internal Rate of Return | 8% | ||
Interest receivable | $ 44,290,000 | $ 39,522,000 | |
Write-off of accrued interest receivable | $ 0 | $ 0 | |
Maximum | |||
Mortgage Loans | |||
Loan Term | 4 years | ||
ALF | |||
Mortgage Loans | |||
Number of properties | property | 2 | ||
Number of beds/units | 74 | ||
California | ALF | |||
Mortgage Loans | |||
Number of properties | property | 4 |
Real Estate Investments - Types
Real Estate Investments - Types of property Improvement (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Real estate investments | ||
Invested in projects | $ 17,249 | |
Development | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 105 | |
Improvements | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 4,555 | $ 4,839 |
ALF | Development | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 105 | |
ALF | Improvements | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 3,015 | 4,560 |
SNF | Improvements | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 981 | $ 279 |
Other | Improvements | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | $ 559 |
Investment in Unconsolidated _3
Investment in Unconsolidated Joint Ventures - Investment (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) item | Sep. 30, 2021 USD ($) item | Sep. 30, 2022 USD ($) item | Sep. 30, 2021 USD ($) item | Dec. 31, 2021 USD ($) | |
Investment in Unconsolidated Joint Ventures | |||||
Number of beds/units | item | 217 | 217 | |||
Carrying Value | $ 19,340,000 | $ 19,340,000 | $ 19,340,000 | ||
Income from unconsolidated joint ventures | $ 376,000 | $ 376,000 | 1,127,000 | $ 1,041,000 | |
Application of Interest Reserve | 4,348,000 | ||||
Joint Venture | Not primary beneficiary | |||||
Investment in Unconsolidated Joint Ventures | |||||
Capital Contributions | 8,000,000 | ||||
Income Recognized | 1,127,000 | 1,041,000 | |||
Cash Interest Earned | 351,000 | ||||
Application of Interest Reserve | $ 776,000 | 916,000 | |||
Preferred Equity Investment | Joint Venture | Not primary beneficiary | |||||
Investment in Unconsolidated Joint Ventures | |||||
Number of beds/units | item | 95 | 95 | |||
Carrying Value | $ 19,340,000 | $ 19,340,000 | |||
UDP | Preferred Equity Investment | Joint Venture | Not primary beneficiary | |||||
Investment in Unconsolidated Joint Ventures | |||||
Capital Contributions | 8,000,000 | ||||
Income Recognized | 790,000 | 704,000 | |||
Cash Interest Earned | 351,000 | ||||
Application of Interest Reserve | $ 439,000 | 616,000 | |||
UDP | Preferred Equity Investment | Joint Venture | Not primary beneficiary | Washington | |||||
Investment in Unconsolidated Joint Ventures | |||||
Preferred return percentage | 12% | ||||
Contractual cash portion | 8% | ||||
Number of beds/units | item | 267 | 267 | |||
Carrying Value | $ 13,000,000 | $ 13,000,000 | |||
Percentage of Investment | 11.60% | 11.60% | |||
Percentage of cash return | 8% | ||||
Percentage of internal rate of return | 12% | ||||
Combination ALF/MC | Preferred Equity Investment | Joint Venture | Not primary beneficiary | |||||
Investment in Unconsolidated Joint Ventures | |||||
Income Recognized | $ 337,000 | 337,000 | |||
Application of Interest Reserve | $ 337,000 | $ 300,000 | |||
Combination ALF/MC | Preferred Equity Investment | Joint Venture | Not primary beneficiary | Internal Rate of Return is Until Eight Percent | |||||
Investment in Unconsolidated Joint Ventures | |||||
Percentage of internal rate of return | 8% | ||||
Combination ALF/MC | Preferred Equity Investment | Joint Venture | Not primary beneficiary | The Internal Rate of Return is Between Twelve and Fourteen Percent | Minimum | |||||
Investment in Unconsolidated Joint Ventures | |||||
Percentage of internal rate of return | 12% | ||||
Combination ALF/MC | Preferred Equity Investment | Joint Venture | Not primary beneficiary | The Internal Rate of Return is Between Twelve and Fourteen Percent | Maximum | |||||
Investment in Unconsolidated Joint Ventures | |||||
Percentage of internal rate of return | 14% | ||||
Combination ALF/MC | Preferred Equity Investment | Joint Venture | Not primary beneficiary | Washington | |||||
Investment in Unconsolidated Joint Ventures | |||||
Preferred return percentage | 12% | ||||
Contractual cash portion | 7% | ||||
Number of beds/units | item | 95 | 95 | |||
Carrying Value | $ 6,340,000 | $ 6,340,000 | |||
Percentage of Investment | 15.50% | 15.50% | |||
Combination ALF/MC | Preferred Equity Investment | Joint Venture | Not primary beneficiary | Washington | Internal Rate of Return is Until Eight Percent | Minimum | |||||
Investment in Unconsolidated Joint Ventures | |||||
Percentage of cash return | 7% | ||||
Combination ALF/MC | Preferred Equity Investment | Joint Venture | Not primary beneficiary | Washington | Internal Rate of Return is Until Eight Percent | Maximum | |||||
Investment in Unconsolidated Joint Ventures | |||||
Percentage of cash return | 9% | ||||
Combination ILF/ALF | Preferred Equity Investment | Joint Venture | Not primary beneficiary | Washington | |||||
Investment in Unconsolidated Joint Ventures | |||||
Number of beds/units | item | 267 | 267 | |||
Reserve withheld | $ 2,324 | $ 2,324 | |||
Additional preferred capital contributions in joint venture committed | 8,000,000 | ||||
Amount of joint venture investment | 13,000,000 | 13,000,000 | |||
Reserve for preferred equity investment | $ 3,777 | $ 3,777 |
Notes Receivable - Components (
Notes Receivable - Components (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Notes receivable activities | ||
Notes receivable loan loss reserve | $ (590) | $ (286) |
Total | 58,424 | 28,337 |
Mezzanine loan | ||
Notes receivable activities | ||
Mezzanine loan | 36,816 | 11,815 |
Other loans | ||
Notes receivable activities | ||
Mezzanine loan | $ 22,198 | $ 16,808 |
Notes Receivable - Notes Receiv
Notes Receivable - Notes Receivable Activity (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Notes receivable activities | ||
Advances under notes receivable | $ 37,008 | $ 6,453 |
Interest reserve withheld | 353 | |
Principal payments received under notes receivable | (6,618) | (2,553) |
Provision for credit losses | (303) | 43 |
Net increase (decrease) in notes receivable | $ 30,087 | $ 4,296 |
Notes Receivable (Details)
Notes Receivable (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2022 USD ($) property item | Sep. 30, 2022 USD ($) item property | Sep. 30, 2021 USD ($) | |
Notes receivable activities | |||
Amounts funded | $ 37,008 | $ 6,453 | |
Loan Term | 4 years | ||
Interest rate (as a percent) | 7.25% | ||
Number of units | item | 217 | ||
Interest reserve withheld | $ 353 | ||
Maximum | |||
Notes receivable activities | |||
Loan Term | 4 years | ||
Mezzanine loan | |||
Notes receivable activities | |||
Amounts funded | $ 25,000 | $ 25,000 | |
Number of property | property | 5 | 5 | |
Loan Term | 5 years | ||
Extension term number of options | item | 2 | ||
Extension term | 1 year | ||
Interest rate (as a percent) | 8% | ||
IRR on mortgage loan on real estate property | 11% | ||
Number of real estate property communities | property | 5 | ||
Number of units | property | 621 | ||
Mezzanine loan | Adjustment | |||
Notes receivable activities | |||
Working capital loan funded | $ 1,867 | ||
Mezzanine loan | Maximum | |||
Notes receivable activities | |||
Working capital loan funded | 2,000 | ||
HMG Healthcare, LLC | Mezzanine loan | |||
Notes receivable activities | |||
Funded under working capital | $ 9,761 |
Lease Incentives (Details)
Lease Incentives (Details) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 property | Sep. 30, 2022 USD ($) item | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Lease Incentives | ||||
Non-contingent lease incentives | $ 2,001,000 | $ 2,678,000 | ||
Non-contingent lease incentives, Adjustment | (174,000) | |||
Non-contingent lease incentives, funding | 418,000 | $ 650,000 | ||
Non-contingent lease incentives, Amortization | (665,000) | $ (386,000) | ||
Contingent lease incentives, Write off | $ (256,000) | |||
Number of properties with lease incentives write-offs | item | 12 | |||
Number of properties with lease incentive adjustment | property | 2 |
Debt Obligations - Bank Borrowi
Debt Obligations - Bank Borrowings (Details) | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Revolving line of credit | |
Debt Obligations | |
Unused commitment fee (as a percent) | 0.20% |
Financial covenants | |
Maximum ratio of total indebtedness to total asset value | 0.6 |
Maximum ratio of secured debt to total asset value | 0.35 |
Maximum ratio of unsecured debt to the value of the unencumbered asset pool | 0.6 |
Minimum ratio of EBITDA to fixed charges | 1.50 |
Revolving line of credit | LIBOR | |
Debt Obligations | |
Basis spread over base rate (as a percent) | 1.15% |
Credit Agreement | |
Debt Obligations | |
Maximum available under facility | $ 500,000,000 |
Contingent increase in maximum borrowing capacity | $ 1,000,000,000 |
Additional extension period option | 1 year |
Revolving Credit Facility | |
Debt Obligations | |
Maximum available under facility | $ 400,000,000 |
Term loans | |
Debt Obligations | |
Maximum available under facility | $ 50,000,000 |
Debt Obligations - Interest Rat
Debt Obligations - Interest Rate Swap Agreement (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 USD ($) item | Sep. 30, 2022 USD ($) item | Dec. 31, 2021 USD ($) | |
Debt Obligations | |||
Number of interest rate swaps | item | 2 | 2 | |
Notional Amount | $ 100,000,000 | $ 100,000,000 | |
Fair Value | $ 9,445,000 | $ 9,445,000 | $ 172,000 |
Interest Rate Swap | |||
Debt Obligations | |||
Number of interest rate swaps | item | 2 | 2 | |
Interest Rate Swap | Minimum | |||
Debt Obligations | |||
Debt instrument term | 4 years | ||
Interest Rate Swap | Maximum | |||
Debt Obligations | |||
Debt instrument term | 5 years | ||
Interest Rate Swap | Cash Flow Hedging | |||
Debt Obligations | |||
Increase in fair value | $ 3,306,000 | $ 9,617,000 | |
Interest Rate Swap | Cash Flow Hedging | Maturing on November 19, 2025 | |||
Debt Obligations | |||
Notional Amount | 50,000,000 | 50,000,000 | |
Fair Value | 4,300,000 | 4,300,000 | 38,000 |
Interest Rate Swap | Cash Flow Hedging | Maturing on November 19, 2026 | |||
Debt Obligations | |||
Notional Amount | 50,000,000 | 50,000,000 | |
Fair Value | $ 5,145,000 | $ 5,145,000 | $ 134 |
Interest Rate Swap | Cash Flow Hedging | LIBOR | Maturing on November 19, 2025 | |||
Debt Obligations | |||
Swap rate (in percentage) | 2.56% | 2.56% | |
Interest Rate Swap | Cash Flow Hedging | LIBOR | Maturing on November 19, 2026 | |||
Debt Obligations | |||
Swap rate (in percentage) | 2.69% | 2.69% |
Debt Obligations - Component (D
Debt Obligations - Component (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Debt Obligations | |||
Interest rate (as a percent) | 7.25% | ||
Applicable Interest Rate (as a percent) | 4.04% | ||
Amount borrowed | $ 194,000 | $ 92,500 | |
Repayment paid | 153,900 | 48,000 | |
Term loans, net of debt issue cost | 793,761 | $ 722,719 | |
Available for borrowing | $ 249,000 | 289,100 | |
Revolving line of credit | |||
Debt Obligations | |||
Applicable Interest Rate (as a percent) | 4.21% | ||
Amount borrowed | $ 194,000 | 92,500 | |
Repayment paid | 153,900 | $ 48,000 | |
Term loans, net of debt issue cost | 151,000 | 110,900 | |
Available for borrowing | $ 249,000 | 289,100 | |
Term loans | |||
Debt Obligations | |||
Applicable Interest Rate (as a percent) | 2.63% | ||
Term loans, net of debt issue cost | $ 99,474 | 99,363 | |
Senior Unsecured Notes | |||
Debt Obligations | |||
Applicable Interest Rate (as a percent) | 4.25% | ||
Term loans, net of debt issue cost | $ 543,287 | $ 512,456 | |
Senior Unsecured Notes | Minimum | |||
Debt Obligations | |||
Interest rate (as a percent) | 3.66% | ||
Senior Unsecured Notes | Maximum | |||
Debt Obligations | |||
Interest rate (as a percent) | 5.03% |
Debt Obligations - Senior Unsec
Debt Obligations - Senior Unsecured Notes (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Debt Obligations | |||
Interest rate (as a percent) | 7.25% | ||
Payments on debt | $ 43,160,000 | $ 32,160,000 | |
Available for borrowing | 249,000,000 | $ 289,100,000 | |
Senior Unsecured Notes | |||
Debt Obligations | |||
Face amount of debt | $ 75,000,000 | ||
Fixed interest rate (as a percent) | 3.66% | ||
Debt instrument term | 10 years | ||
Senior unsecured notes | $ 75,000,000 | ||
Payments on debt | $ 43,160,000 | $ 32,160,000 | |
Senior Unsecured Notes | Maximum | |||
Debt Obligations | |||
Interest rate (as a percent) | 5.03% |
Debt Obligations - Borrowings a
Debt Obligations - Borrowings and Repayments (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Borrowings | |||
Borrowings from revolving line of credit | $ 194,000,000 | $ 92,500,000 | |
Total | 269,000,000 | 92,500,000 | |
Repayments | |||
Revolving line of credit | (153,900,000) | (48,000,000) | |
Senior unsecured notes | (43,160,000) | (32,160,000) | |
Total | (197,060,000) | (80,160,000) | |
Term loans, net of debt issue cost | 793,761,000 | $ 722,719,000 | |
Repayment paid | 153,900,000 | 48,000,000 | |
Available for borrowing | 249,000,000 | 289,100,000 | |
Revolving line of credit | |||
Borrowings | |||
Borrowings from revolving line of credit | 194,000,000 | 92,500,000 | |
Repayments | |||
Revolving line of credit | (153,900,000) | (48,000,000) | |
Term loans, net of debt issue cost | 151,000,000 | 110,900,000 | |
Repayment paid | 153,900,000 | 48,000,000 | |
Available for borrowing | 249,000,000 | 289,100,000 | |
Senior Unsecured Notes | |||
Borrowings | |||
Senior unsecured notes | 75,000,000 | ||
Repayments | |||
Senior unsecured notes | (43,160,000) | $ (32,160,000) | |
Term loans, net of debt issue cost | $ 543,287,000 | $ 512,456,000 | |
Debt instrument term | 10 years | ||
Face amount of debt | $ 75,000,000 | ||
Fixed interest rate (as a percent) | 3.66% |
Equity - Noncontrolling Interes
Equity - Noncontrolling Interest (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 USD ($) lease property item Center | Sep. 30, 2022 USD ($) item | Dec. 31, 2021 USD ($) | |
Noncontrolling interest | |||
Gross Consolidated Assets | $ 1,651,965,000 | $ 1,651,965,000 | $ 1,504,825,000 |
Non-controlling interests | 21,919,000 | $ 21,919,000 | 8,413,000 |
Contribution to JV | $ 61,661,000 | ||
Skilled nursing center purchased | Center | 3 | ||
Real estate property acquired | $ 75,825,000 | ||
Lease term | 10 years | 10 years | |
Lease renewal term | 5 years | 5 years | |
Number of operating lease renewals | lease | 2 | ||
Number of units | item | 217 | 217 | |
Carrying value | $ 1,026,182,000 | $ 1,026,182,000 | $ 1,033,951,000 |
JV Partner | |||
Noncontrolling interest | |||
Contribution to JV | 14,325,000 | ||
SNF | |||
Noncontrolling interest | |||
Contribution to JV | $ 61,661,000 | ||
Skilled nursing center purchased | property | 3 | ||
Transaction costs | $ 161,000 | ||
Real estate property acquired | $ 75,825,000 | ||
Lease term | 10 years | 10 years | |
Lease renewal term | 5 years | 5 years | |
Number of operating lease renewals | item | 2 | ||
Purchase Price | $ 51,534,000 | ||
SNF | JV Partner | |||
Noncontrolling interest | |||
Contribution to JV | $ 14,325,000 | ||
ALF | |||
Noncontrolling interest | |||
Number of units | 74 | 74 | |
Partnership | |||
Noncontrolling interest | |||
Gross Consolidated Assets | $ 143,056,000 | $ 143,056,000 | |
Non-controlling interests | 21,919,000 | 21,919,000 | |
Florida | 2022 Acquisitions | Partnership | SNF | |||
Noncontrolling interest | |||
Gross Consolidated Assets | 76,267,000 | 76,267,000 | |
Non-controlling interests | 14,325,000 | 14,325,000 | |
Oregon | 2018 Acquisitions | Partnership | ALF & MC | |||
Noncontrolling interest | |||
Gross Consolidated Assets | 18,452,000 | 18,452,000 | |
Non-controlling interests | 1,142,000 | 1,142,000 | |
Oregon | 2018 Acquisitions | Partnership | ILF | |||
Noncontrolling interest | |||
Gross Consolidated Assets | 14,650,000 | 14,650,000 | |
Non-controlling interests | 2,906,000 | 2,906,000 | |
Wisconsin | 2017 Acquisitions | Partnership | ALF/ILF/MC | |||
Noncontrolling interest | |||
Gross Consolidated Assets | 22,007,000 | 22,007,000 | |
Non-controlling interests | 2,305,000 | 2,305,000 | |
South Carolina | 2017 Acquisitions | Partnership | ALF & MC | |||
Noncontrolling interest | |||
Gross Consolidated Assets | 11,680,000 | 11,680,000 | |
Non-controlling interests | $ 1,241,000 | $ 1,241,000 |
Equity - Common Stock (Details)
Equity - Common Stock (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Oct. 29, 2022 | |
Equity | |||
Proceeds from common stock issued | $ 38,957,000 | ||
Equity Distribution Agreements | Subsequent Event | |||
Equity | |||
Amount available under effective shelf registration statement | $ 160,349,000 | ||
Common Stock | |||
Equity | |||
Number of shares repurchased | 39,463 | 87,249 | |
Common Stock | Equity Distribution Agreements | |||
Equity | |||
Maximum offering capacity under shelf registration statement | $ 200,000,000 | ||
Shares common stock sold | 1,035,000 | ||
Proceeds from common stock issued | $ 38,957,000 | ||
Compensation paid to sales agents | 694,000 | ||
Reclassification of accumulated costs to additional paid in capital | $ 511,000 |
Equity - Distributions (Details
Equity - Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||
Dec. 31, 2022 | Nov. 30, 2022 | Oct. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Dividend Distributions | ||||||||||||
Paid | $ 68,202 | $ 68,051 | ||||||||||
Common Stock cash distributions | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 1.71 | $ 1.71 | |||
Subsequent Event | Dividend Payable, July 29, 2022 | ||||||||||||
Dividend Distributions | ||||||||||||
Dividends declared and paid per common share | $ 0.19 | |||||||||||
Subsequent Event | Dividend Payable, August 31, 2022 | ||||||||||||
Dividend Distributions | ||||||||||||
Dividends declared and paid per common share | $ 0.19 | |||||||||||
Subsequent Event | Dividend Payable, September 30, 2022 | ||||||||||||
Dividend Distributions | ||||||||||||
Dividends declared and paid per common share | $ 0.19 | |||||||||||
Common Stock | ||||||||||||
Dividend Distributions | ||||||||||||
Declared | $ 68,202 | $ 68,051 | $ 68,202 | $ 68,051 | ||||||||
Paid | $ 68,202 | $ 68,051 | ||||||||||
Common Stock cash distributions | $ 0.19 | $ 0.19 | ||||||||||
Common Stock | Subsequent Event | Dividend Payable, July 29, 2022 | ||||||||||||
Dividend Distributions | ||||||||||||
Dividends declared and paid per common share | $ 0.19 | |||||||||||
Common Stock | Subsequent Event | Dividend Payable, August 31, 2022 | ||||||||||||
Dividend Distributions | ||||||||||||
Dividends declared and paid per common share | $ 0.19 | |||||||||||
Common Stock | Subsequent Event | Dividend Payable, September 30, 2022 | ||||||||||||
Dividend Distributions | ||||||||||||
Dividends declared and paid per common share | $ 0.19 | |||||||||||
Common Stock | Performance-based stock units | ||||||||||||
Dividend Distributions | ||||||||||||
Paid | $ 764 |
Equity - Stock-Based Compensati
Equity - Stock-Based Compensation (Details) | 9 Months Ended | |
Sep. 30, 2022 shares | Sep. 30, 2021 shares | |
Stock Based Compensation Plans | ||
Options outstanding (in shares) | 10,000 | |
Options exercisable (in shares) | 10,000 | |
Options expired and cancelled (in shares) | 5,000 | |
Stock options granted (in shares) | 0 | 0 |
2015 Plan | ||
Stock Based Compensation Plans | ||
Ratio of shares subject to award granted | 1 | |
2021 Plan | ||
Stock Based Compensation Plans | ||
Total shares reserved for issuance of common stock related to the conversion of preferred stock | 1,900,000 |
Equity - Restricted Stock and p
Equity - Restricted Stock and performance-based stock units (Details) - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Stock Based Compensation Plans | ||
Stock options granted (in shares) | 0 | 0 |
Restricted stock | ||
Restricted stock and performance based stock units activity | ||
Outstanding at the beginning of the period (in shares) | 197,422 | 180,440 |
Granted (in shares) | 135,210 | 110,348 |
Vested (in shares) | (103,396) | (93,366) |
Outstanding at the end of the period (in shares) | 229,236 | 197,422 |
Equity - Restricted Stock (Deta
Equity - Restricted Stock (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Restricted stock | ||
Restricted stock awards | ||
Number of shares granted | 135,210 | 110,348 |
Number of vesting of performance-based stock units (in shares) | 103,396 | 93,366 |
Performance-based stock units | ||
Restricted stock awards | ||
Number of shares granted | 86,332 | 71,892 |
Number of vesting of performance-based stock units (in shares) | 0 | 108,720 |
Restricted stock and performance-based stock units | ||
Restricted stock awards | ||
Number of shares granted | 221,542 | 182,240 |
Compensation expense related to share-based award | $ 5,951,000 | $ 5,785,000 |
Nonvested awards | ||
Remaining compensation expense | 10,778,000 | |
July - December 2022 | Restricted stock and performance-based stock units | ||
Nonvested awards | ||
Remaining compensation expense | 2,013,000 | |
2023 | Restricted stock and performance-based stock units | ||
Nonvested awards | ||
Remaining compensation expense | 5,603,000 | |
2024 | Restricted stock and performance-based stock units | ||
Nonvested awards | ||
Remaining compensation expense | 2,853,000 | |
2025 | Restricted stock and performance-based stock units | ||
Nonvested awards | ||
Remaining compensation expense | $ 309,000 | |
Grant Date Price $33.94 | Three year vesting | Restricted stock and performance-based stock units | ||
Restricted stock awards | ||
Number of shares granted | 122,865 | |
Granted (in dollars per share) | $ 33.94 | |
Vesting period | 3 years | |
Grant Date Price $33.94 | TSR Targets | Restricted stock and performance-based stock units | ||
Restricted stock awards | ||
Number of shares granted | 86,332 | |
Granted (in dollars per share) | $ 33.94 | |
Vesting period | 4 years | |
Grant Date Price $33.94 | Accelerated TSR Targets | Restricted stock and performance-based stock units | ||
Restricted stock awards | ||
Vesting period | 3 years | |
Grant Date Price $38.48 | Vesting Date, May 25, 2023 | Restricted stock | ||
Restricted stock awards | ||
Number of shares granted | 12,345 | |
Granted (in dollars per share) | $ 38.48 | |
Grant Date Price $42.27 | Three year vesting | Restricted stock and performance-based stock units | ||
Restricted stock awards | ||
Number of shares granted | 95,293 | |
Granted (in dollars per share) | $ 42.27 | |
Vesting period | 3 years | |
Grant Date Price $42.27 | TSR Targets | Restricted stock and performance-based stock units | ||
Restricted stock awards | ||
Number of shares granted | 71,892 | |
Granted (in dollars per share) | $ 42.27 | |
Vesting period | 4 years | |
Grant Date Price $42.27 | Accelerated TSR Targets | Restricted stock and performance-based stock units | ||
Restricted stock awards | ||
Vesting period | 3 years | |
Grant Date Price $39.40 | Vesting Date, May 26, 20222 | Restricted stock | ||
Restricted stock awards | ||
Number of shares granted | 12,055 | |
Granted (in dollars per share) | $ 39.40 | |
Grant Date Price $43.14 | Vesting Date, April 1, 20222 | Restricted stock | ||
Restricted stock awards | ||
Number of shares granted | 3,000 | |
Granted (in dollars per share) | $ 43.14 |
Commitments and Contingencies -
Commitments and Contingencies - Summary of Commitments (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) property | |
Commitments and Contingencies | |
Investment Commitment | $ 93,086 |
2022 Funding | 17,249 |
Total Commitment funded | 26,398 |
Remaining commitment | $ 66,688 |
Initial lease term | 10 years |
Skilled Nursing Centers | |
Commitments and Contingencies | |
Fair value of earn-out liability | $ 3,000 |
Earn-out liability, Write off | $ 3,000 |
Number of properties acquired | property | 4 |
Real estate properties | |
Commitments and Contingencies | |
Investment Commitment | $ 21,038 |
2022 Funding | 3,054 |
Total Commitment funded | 4,692 |
Remaining commitment | 16,346 |
Accrued incentives and earn-out liabilities | |
Commitments and Contingencies | |
Investment Commitment | 12,000 |
Remaining commitment | 12,000 |
Mortgage loans | |
Commitments and Contingencies | |
Investment Commitment | 32,507 |
2022 Funding | 2,187 |
Total Commitment funded | 5,928 |
Remaining commitment | 26,579 |
Commitments To Expand and Renovate Properties | |
Commitments and Contingencies | |
Investment Commitment | 14,507 |
Contingent Funding Commitments | |
Commitments and Contingencies | |
Investment Commitment | 18,000 |
Notes receivable | |
Commitments and Contingencies | |
Investment Commitment | 27,541 |
2022 Funding | 12,008 |
Total Commitment funded | 15,778 |
Remaining commitment | $ 11,763 |
Major Operators (Details)
Major Operators (Details) | 9 Months Ended |
Sep. 30, 2022 property USD ($) item | |
Major Operators | |
Number of major operators | 1 |
Number of beds/units | 217 |
ALF | |
Major Operators | |
Number of beds/units | $ | 74 |
Prestige Healthcare | SNF | |
Major Operators | |
Number of beds | property | 24 |
Number of beds/units | 2,845 |
Prestige Healthcare | ALF | |
Major Operators | |
Number of beds/units | 93 |
Total Revenue | Operator Concentration Risk | Prestige Healthcare | |
Major Operators | |
Concentration risk (as a percent) | 19.70% |
Total Assets | Credit Concentration Risk | Prestige Healthcare | |
Major Operators | |
Concentration risk (as a percent) | 16% |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Net income | $ 13,389 | $ 54,490 | $ 14,507 | $ 12,930 | $ 11,114 | $ 18,330 | $ 13,850 | $ 82,386 | $ 43,294 |
Less income allocated to non-controlling interests | (99) | (92) | (301) | (271) | |||||
Less income allocated to participating securities: | |||||||||
Non-forfeitable dividends on participating securities | (131) | (113) | (401) | (346) | |||||
Income allocated to participating securities | (80) | ||||||||
Total net income allocated to participating securities | (131) | (113) | (481) | (346) | |||||
Net income available to common stockholders | 13,159 | 10,909 | 81,604 | 42,677 | |||||
Net income for diluted net income per share | $ 13,159 | $ 10,909 | $ 81,604 | $ 42,677 | |||||
Reconciliation of shares | |||||||||
Shares for basic net income per share | 40,270,000 | 39,177,000 | 39,658,000 | 39,149,000 | |||||
Effect of dilutive securities: | |||||||||
Total effect of dilutive securities (in shares) | 282,000 | 281,000 | |||||||
Shares for diluted net income per share | 40,552,000 | 39,177,000 | 39,939,000 | 39,149,000 | |||||
Basic net income per share (in dollars per share) | $ 0.33 | $ 0.28 | $ 2.06 | $ 1.09 | |||||
Diluted net income per share (in dollars per share) | $ 0.32 | $ 0.28 | $ 2.04 | $ 1.09 | |||||
Stock options | |||||||||
Effect of dilutive securities: | |||||||||
Stock options and performance-based stock units (in shares) | 1,000 | ||||||||
Performance-based stock units | |||||||||
Effect of dilutive securities: | |||||||||
Stock options and performance-based stock units (in shares) | 281,000 | 0 | 281,000 | 0 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) | Sep. 30, 2022 USD ($) item | Dec. 31, 2021 USD ($) item |
Fair value measurements | ||
Number of interest rate swaps | item | 2 | |
Notional Amount | $ 100,000,000 | |
Mortgage loans receivable, net of loan loss reserve | 383,006,000 | $ 344,442,000 |
Notes receivable, net of loan loss reserve | 58,424,000 | 28,337,000 |
Term loans, net of debt issue cost | 793,761,000 | 722,719,000 |
Senior unsecured notes, net of debt issue costs | $ 543,287,000 | $ 512,456,000 |
Level 3 | Senior Unsecured Notes maturing before 2030 | Discount Rate | ||
Fair value measurements | ||
Future cash outflows discount rate (as a percent) | item | 0.065 | 0.0300 |
Level 3 | Senior Unsecured Notes maturing 2030 and after | Discount Rate | ||
Fair value measurements | ||
Future cash outflows discount rate (as a percent) | item | 0.070 | 0.0325 |
Level 3 | Mortgage Loans Receivable | Discount Rate | ||
Fair value measurements | ||
Future cash inflows discount rate (as a percent) | 0.092 | 0.095 |
Level 3 | Notes Receivable | Discount Rate | ||
Fair value measurements | ||
Future cash inflows discount rate (as a percent) | item | 0.066 | 0.056 |
Carrying Value | ||
Fair value measurements | ||
Mortgage loans receivable, net of loan loss reserve | $ 383,006,000 | $ 344,442,000 |
Revolving line of credit | 151,000,000 | 110,900,000 |
Term loans, net of debt issue cost | 99,474,000 | 99,363,000 |
Senior unsecured notes, net of debt issue costs | 543,287,000 | 512,456,000 |
Carrying Value | Financing Receivable | ||
Fair value measurements | ||
Notes receivable, net of loan loss reserve | 75,507,000 | |
Carrying Value | Notes Receivable | ||
Fair value measurements | ||
Notes receivable, net of loan loss reserve | 58,424,000 | 28,337,000 |
Fair Value | ||
Fair value measurements | ||
Revolving line of credit | 151,000,000 | 110,900,000 |
Term loans, net of debt issue cost | 100,000,000 | 100,000,000 |
Fair Value | Financing Receivable | ||
Fair value measurements | ||
Notes receivable, net of loan loss reserve | 75,507,000 | |
Fair Value | Level 3 | ||
Fair value measurements | ||
Mortgage loans receivable, net of loan loss reserve | 454,185,000 | 405,162,000 |
Senior unsecured notes, net of debt issue costs | 496,955,000 | 540,045,000 |
Fair Value | Level 3 | Notes Receivable | ||
Fair value measurements | ||
Notes receivable, net of loan loss reserve | $ 62,741,000 | $ 28,653,000 |
Subsequent Events (Details)
Subsequent Events (Details) | 1 Months Ended | 9 Months Ended | |||||
Dec. 31, 2022 USD ($) $ / shares | Nov. 30, 2022 USD ($) $ / shares | Oct. 31, 2022 USD ($) $ / shares | Sep. 30, 2022 USD ($) item property shares | Sep. 30, 2021 USD ($) | Oct. 29, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Real Estate Investments | |||||||
Lease renewal term | 5 years | ||||||
Number of Units in Real Estate Property | item | 217 | ||||||
Deferred rent | $ 22,253,000 | $ 24,146,000 | |||||
Debt: | |||||||
Amount borrowed | 194,000,000 | $ 92,500,000 | |||||
Repayment paid | 153,900,000 | 48,000,000 | |||||
Term loans, net of debt issue cost | 793,761,000 | 722,719,000 | |||||
Available for borrowing | 249,000,000 | 289,100,000 | |||||
Unsecured revolving line of credit | 151,000,000 | 110,900,000 | |||||
Equity | |||||||
Proceeds from common stock issued | $ 38,957,000 | ||||||
Common Stock | Equity Distribution Agreements | |||||||
Equity | |||||||
Shares common stock sold | shares | 1,035,000 | ||||||
Proceeds from common stock issued | $ 38,957,000 | ||||||
Revolving line of credit | |||||||
Debt: | |||||||
Amount borrowed | 194,000,000 | 92,500,000 | |||||
Repayment paid | 153,900,000 | $ 48,000,000 | |||||
Term loans, net of debt issue cost | 151,000,000 | 110,900,000 | |||||
Available for borrowing | 249,000,000 | 289,100,000 | |||||
Senior Unsecured Notes | |||||||
Debt: | |||||||
Term loans, net of debt issue cost | $ 543,287,000 | $ 512,456,000 | |||||
ALF | |||||||
Real Estate Investments | |||||||
Number of properties | property | 2 | ||||||
Number of Units in Real Estate Property | 74 | ||||||
Subsequent Event | |||||||
Real Estate Investments | |||||||
Proceeds from Sale and Collection of Lease Receivables | $ 300,000 | ||||||
Rent Receivable Abated | $ 215,000 | $ 215,000 | 240,000 | ||||
Rent abated | $ 215,000 | $ 215,000 | $ 240,000 | ||||
Subsequent Event | Dividend Payable, July 29, 2022 | |||||||
Equity | |||||||
Dividends declared and paid per common share | $ / shares | $ 0.19 | ||||||
Subsequent Event | Dividend Payable, August 31, 2022 | |||||||
Equity | |||||||
Dividends declared and paid per common share | $ / shares | $ 0.19 | ||||||
Subsequent Event | Dividend Payable, September 30, 2022 | |||||||
Equity | |||||||
Dividends declared and paid per common share | $ / shares | $ 0.19 | ||||||
Subsequent Event | Equity Distribution Agreements | |||||||
Equity | |||||||
Amount available under effective shelf registration statement | $ 160,349,000 | ||||||
Subsequent Event | Common Stock | Dividend Payable, July 29, 2022 | |||||||
Equity | |||||||
Dividends declared and paid per common share | $ / shares | $ 0.19 | ||||||
Subsequent Event | Common Stock | Dividend Payable, August 31, 2022 | |||||||
Equity | |||||||
Dividends declared and paid per common share | $ / shares | $ 0.19 | ||||||
Subsequent Event | Common Stock | Dividend Payable, September 30, 2022 | |||||||
Equity | |||||||
Dividends declared and paid per common share | $ / shares | $ 0.19 |