Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 06, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-52566 | |
Entity Registrant Name | SUMMIT HEALTHCARE REIT, INC. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 73-1721791 | |
Entity Address, Address Line One | 23382 MILL CREEK DRIVE, SUITE 125, | |
Entity Address, City or Town | LAGUNA HILLS | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92653 | |
City Area Code | 800 | |
Local Phone Number | 978-8136 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 23,027,978 | |
Entity Central Index Key | 0001310383 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
ASSETS | ||
Cash and cash equivalents | $ 11,289,000 | $ 11,572,000 |
Restricted cash | 3,199,000 | 2,591,000 |
Real estate properties, net | 158,343,000 | 173,127,000 |
Intangible lease assets, net | 11,870,000 | 13,704,000 |
Tenant and other receivables, net | 4,633,000 | 5,020,000 |
Other assets, net | 1,714,000 | 2,107,000 |
Equity-method investments | 3,394,000 | 5,182,000 |
Total assets | 194,442,000 | 213,303,000 |
LIABILITIES AND EQUITY | ||
Accounts payable and accrued liabilities | 7,116,000 | 5,585,000 |
Security deposits | 4,231,000 | 4,651,000 |
Loans payable, net of debt issuance costs | 179,992,000 | 180,169,000 |
Total liabilities | 191,339,000 | 190,405,000 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding at September 30, 2023 and December 31, 2022 | ||
Common stock, $0.001 par value; 290,000,000 shares authorized; 23,027,978 shares issued and outstanding at September 30, 2023 and December 31, 2022 | 23,000 | 23,000 |
Additional paid-in capital | 116,461,000 | 116,432,000 |
Accumulated deficit | (113,500,000) | (93,734,000) |
Total stockholders' equity | 2,984,000 | 22,721,000 |
Noncontrolling interests | 119,000 | 177,000 |
Total equity | 3,103,000 | 22,898,000 |
Total liabilities and equity | $ 194,442,000 | $ 213,303,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 290,000,000 | 290,000,000 |
Common stock, shares issued | 23,027,978 | 23,027,978 |
Common stock, shares outstanding | 23,027,978 | 23,027,978 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues: | ||||
Total rental revenues | $ 4,552,000 | $ 5,416,000 | $ 15,298,000 | $ 16,392,000 |
Resident fees and services | 2,084,000 | 1,125,000 | 5,086,000 | 2,396,000 |
Asset management fees | 129,000 | 165,000 | 423,000 | 495,000 |
Total operating revenue | 6,765,000 | 6,706,000 | 20,807,000 | 19,283,000 |
Expenses: | ||||
Property operating costs | 917,000 | 846,000 | 2,469,000 | 2,385,000 |
Resident costs | 2,095,000 | 1,281,000 | 4,362,000 | 2,474,000 |
General and administrative | 1,403,000 | 1,280,000 | 3,598,000 | 3,460,000 |
Depreciation and amortization | 2,066,000 | 1,813,000 | 5,685,000 | 5,498,000 |
Impairment of real estate properties | 11,387,000 | 11,387,000 | ||
Total operating expenses | 17,868,000 | 5,220,000 | 27,501,000 | 13,817,000 |
Operating (loss) income | (11,103,000) | 1,486,000 | (6,694,000) | 5,466,000 |
Loss from equity-method investees | (1,671,000) | (7,000) | (1,429,000) | (496,000) |
Other income | 103,000 | 43,000 | 299,000 | 206,000 |
Interest expense | (4,542,000) | (3,498,000) | (13,010,000) | (9,634,000) |
Gain on consolidation of interest in unconsolidated equity-method investment | 1,066,000 | 1,066,000 | ||
Net loss | (16,147,000) | (1,976,000) | (19,768,000) | (4,458,000) |
Noncontrolling interests' share in net (income) loss | 38,000 | (12,000) | 2,000 | (49,000) |
Net loss applicable to common stockholders | $ (16,109,000) | $ (1,988,000) | $ (19,766,000) | $ (4,507,000) |
Basic and diluted loss per common share: | ||||
Basic, Net loss applicable to common stockholders | $ (0.70) | $ (0.09) | $ (0.86) | $ (0.20) |
Diluted, Net loss applicable to common stockholders | $ (0.70) | $ (0.09) | $ (0.86) | $ (0.20) |
Weighted average shares used to calculate earnings per common share: | ||||
Basic | 23,027,978 | 23,027,978 | 23,027,978 | 23,027,978 |
Diluted | 23,027,978 | 23,027,978 | 23,027,978 | 23,027,978 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders' Equity | Noncontrolling Interests | Total |
Balance at the beginning at Dec. 31, 2021 | $ 23,000 | $ 116,401,000 | $ (85,041,000) | $ 31,383,000 | $ 171,000 | $ 31,554,000 |
Balance at the beginning (in shares) at Dec. 31, 2021 | 23,027,978 | |||||
Stock-based compensation | $ 0 | 8,000 | 0 | 8,000 | 0 | 8,000 |
Distributions paid to noncontrolling interests | 0 | 0 | 0 | 0 | (18,000) | (18,000) |
Net (loss) income | 0 | 0 | (325,000) | (325,000) | 19,000 | (306,000) |
Balance at the ending at Mar. 31, 2022 | $ 23,000 | 116,409,000 | (85,366,000) | 31,066,000 | 172,000 | 31,238,000 |
Balance at the ending (in shares) at Mar. 31, 2022 | 23,027,978 | |||||
Balance at the beginning at Dec. 31, 2021 | $ 23,000 | 116,401,000 | (85,041,000) | 31,383,000 | 171,000 | 31,554,000 |
Balance at the beginning (in shares) at Dec. 31, 2021 | 23,027,978 | |||||
Net (loss) income | (4,458,000) | |||||
Balance at the ending at Sep. 30, 2022 | $ 23,000 | 116,424,000 | (89,548,000) | 26,899,000 | 171,000 | 27,070,000 |
Balance at the ending (in shares) at Sep. 30, 2022 | 23,027,978 | |||||
Balance at the beginning at Mar. 31, 2022 | $ 23,000 | 116,409,000 | (85,366,000) | 31,066,000 | 172,000 | 31,238,000 |
Balance at the beginning (in shares) at Mar. 31, 2022 | 23,027,978 | |||||
Stock-based compensation | $ 0 | 6,000 | 0 | 6,000 | 0 | 6,000 |
Distributions paid to noncontrolling interests | 0 | 0 | 0 | 0 | (18,000) | (18,000) |
Net (loss) income | 0 | 0 | (2,194,000) | (2,194,000) | 18,000 | (2,176,000) |
Balance at the ending at Jun. 30, 2022 | $ 23,000 | 116,415,000 | (87,560,000) | 28,878,000 | 172,000 | 29,050,000 |
Balance at the ending (in shares) at Jun. 30, 2022 | 23,027,978 | |||||
Stock-based compensation | $ 0 | 9,000 | 0 | 9,000 | 0 | 9,000 |
Distributions paid to noncontrolling interests | 0 | 0 | 0 | 0 | (13,000) | (13,000) |
Net (loss) income | 0 | 0 | (1,988,000) | (1,988,000) | 12,000 | (1,976,000) |
Balance at the ending at Sep. 30, 2022 | $ 23,000 | 116,424,000 | (89,548,000) | 26,899,000 | 171,000 | 27,070,000 |
Balance at the ending (in shares) at Sep. 30, 2022 | 23,027,978 | |||||
Balance at the beginning at Dec. 31, 2022 | $ 23,000 | 116,432,000 | (93,734,000) | 22,721,000 | 177,000 | 22,898,000 |
Balance at the beginning (in shares) at Dec. 31, 2022 | 23,027,978 | |||||
Stock-based compensation | $ 0 | 7,000 | 0 | 7,000 | 0 | 7,000 |
Distributions paid to noncontrolling interests | 0 | 0 | 0 | 0 | (17,000) | (17,000) |
Net (loss) income | 0 | 0 | (1,976,000) | (1,976,000) | 17,000 | (1,959,000) |
Balance at the ending at Mar. 31, 2023 | $ 23,000 | 116,439,000 | (95,710,000) | 20,752,000 | 177,000 | 20,929,000 |
Balance at the ending (in shares) at Mar. 31, 2023 | 23,027,978 | |||||
Balance at the beginning at Dec. 31, 2022 | $ 23,000 | 116,432,000 | (93,734,000) | 22,721,000 | 177,000 | 22,898,000 |
Balance at the beginning (in shares) at Dec. 31, 2022 | 23,027,978 | |||||
Net (loss) income | (19,768,000) | |||||
Balance at the ending at Sep. 30, 2023 | $ 23,000 | 116,461,000 | (113,500,000) | 2,984,000 | 119,000 | 3,103,000 |
Balance at the ending (in shares) at Sep. 30, 2023 | 23,027,978 | |||||
Balance at the beginning at Mar. 31, 2023 | $ 23,000 | 116,439,000 | (95,710,000) | 20,752,000 | 177,000 | 20,929,000 |
Balance at the beginning (in shares) at Mar. 31, 2023 | 23,027,978 | |||||
Stock-based compensation | $ 0 | 10,000 | 0 | 10,000 | 0 | 10,000 |
Distributions paid to noncontrolling interests | 0 | 0 | 0 | 0 | (19,000) | (19,000) |
Net (loss) income | 0 | 0 | (1,681,000) | (1,681,000) | 19,000 | (1,662,000) |
Balance at the ending at Jun. 30, 2023 | $ 23,000 | 116,449,000 | (97,391,000) | 19,081,000 | 177,000 | 19,258,000 |
Balance at the ending (in shares) at Jun. 30, 2023 | 23,027,978 | |||||
Stock-based compensation | $ 0 | 12,000 | 0 | 12,000 | 0 | 12,000 |
Distributions paid to noncontrolling interests | 0 | 0 | 0 | 0 | (20,000) | (20,000) |
Net (loss) income | 0 | 0 | (16,109,000) | (16,109,000) | (38,000) | (16,147,000) |
Balance at the ending at Sep. 30, 2023 | $ 23,000 | $ 116,461,000 | $ (113,500,000) | $ 2,984,000 | $ 119,000 | $ 3,103,000 |
Balance at the ending (in shares) at Sep. 30, 2023 | 23,027,978 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (19,768,000) | $ (4,458,000) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Amortization of debt issuance costs | 685,000 | 684,000 |
Depreciation and amortization | 5,430,000 | 5,498,000 |
Amortization of above-market lease intangible | 48,000 | 47,000 |
Straight-line rents | (920,000) | (1,108,000) |
Write off of straight-line rent receivables | 1,300,000 | |
Stock-based compensation expense | 29,000 | 23,000 |
Write-off of leasing commissions | 255,000 | |
Impairment of real estate properties | 11,387,000 | |
Gain on consolidation of interest in unconsolidated equity-method investment | (1,066,000) | |
Loss from equity-method investees | 1,429,000 | 496,000 |
Change in operating assets and liabilities: | ||
Tenant and other receivables, net | 45,000 | 274,000 |
Other assets, net | 232,000 | (98,000) |
Accounts payable and accrued liabilities | 1,148,000 | 2,620,000 |
Security deposits | (420,000) | |
Net cash (used in)provided by operating activities | (186,000) | 3,978,000 |
Cash flows from investing activities: | ||
Proceeds from sale of real estate properties assigned | 3,839,000 | |
Cash assumed in assignment of interest in unconsolidated equity-method investment | 770,000 | |
Additions to real estate and other assets | (243,000) | (483,000) |
Investment in equity-method investees | (230,000) | (1,111,000) |
Distributions received from equity-method investees | 550,000 | 422,000 |
Net cash provided by (used in) investing activities | 4,686,000 | (1,172,000) |
Cash flows from financing activities: | ||
Payments of loans payable | (862,000) | (831,000) |
Repayment of loan payable assigned | (3,171,000) | |
Distributions paid to noncontrolling interests | (56,000) | (49,000) |
Deferred financing costs | (86,000) | (173,000) |
Net cash used in financing activities | (4,175,000) | (1,053,000) |
Net increase in cash, cash equivalents and restricted cash | 325,000 | 1,753,000 |
Cash, cash equivalents and restricted cash - beginning of period | 14,163,000 | 13,161,000 |
Cash, cash equivalents and restricted cash - end of period | 14,488,000 | 14,914,000 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 12,007,000 | $ 7,864,000 |
Supplemental disclosure of non-cash financing and investing activities: | ||
Consolidation of assets, net, in connection with our acquisition of partner's interest in unconsolidated equity-method investment | $ 313,000 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2023 | |
Organization | |
Organization | 1. Organization Summit Healthcare REIT, Inc. (“Summit”) is a real estate investment trust that owns 100% of 14 properties, 95.3% of four properties, a 10% equity interest in an unconsolidated equity-method investment that holds 17 properties, a 20% equity interest in an unconsolidated equity-method investment that holds two properties, a 10% equity interest in an unconsolidated equity-method investment that holds eight properties, and a 10% equity interest in an unconsolidated equity-method investment that holds six properties. As used in these notes, the “Company”, “we”, “us” and “our” refer to Summit and its consolidated subsidiaries, including but not limited to Summit Healthcare Operating Partnership, L.P. (the “Operating Partnership”), except where the context otherwise requires. We conduct substantially all of our operations through the Operating Partnership, which is a Delaware limited partnership. We own a 99.88% general partner interest in the Operating Partnership, and Cornerstone Realty Advisors, LLC (“CRA”), a former affiliate, owns a 0.12% limited partnership interest. Summit and the Operating Partnership are managed and operated as one entity, and Summit has no significant assets other than its investment in the Operating Partnership. Summit, as the general partner of the Operating Partnership, controls the Operating Partnership and consolidates the assets, liabilities, and results of operations of the Operating Partnership. Cornerstone Healthcare Partners LLC – Consolidated Joint Venture We own 95% of Cornerstone Healthcare Partners LLC (“CHP LLC”), which was formed in 2012, and the remaining 5% noncontrolling interest is owned by Cornerstone Healthcare Real Estate Fund, Inc. (“CHREF”), an affiliate of CRA. CHP LLC is consolidated within our condensed consolidated financial statements and owns four properties (the “JV Properties”) with another partially owned subsidiary. As of September 30, 2023 and December 31, 2022, we own a 95.3% interest in the four JV Properties, and CHREF owns a 4.7% interest. Summit Union Life Holdings, LLC – Equity-Method Investment In April 2015, through our Operating Partnership, we entered into a limited liability company agreement with Best Years, LLC (“Best Years”), an unrelated entity and a U.S.-based affiliate of Union Life Insurance Co, Ltd. (a Chinese corporation), and formed Summit Union Life Holdings, LLC (the “SUL JV”). The SUL JV is not consolidated in our condensed consolidated financial statements and is accounted for under the equity-method in our condensed consolidated financial statements. As of September 30, 2023 and December 31, 2022, we have a 10% interest in the SUL JV which owns 17 properties. Summit Fantasia Holdings, LLC – Equity-Method Investment In September 2016, through our Operating Partnership, we entered into a limited liability company agreement with Fantasia Investment III LLC (“Fantasia”), an unrelated entity and a U.S.-based affiliate of Fantasia Holdings Group Co., Limited (a Chinese corporation listed on the Stock Exchange of Hong Kong (HKEX)), and formed Summit Fantasia Holdings, LLC (the “Fantasia I JV”), in which we had a 35% interest. As of June 30,2023, the Fantasia I JV was not consolidated in our condensed consolidated financial statements and was accounted for under the equity-method in our condensed consolidated financial statements. On July 3, 2023, the majority member in the Fantasia I JV assigned its 65% interest, for no consideration, to Summit. As such, as of July 2023, Summit owned 100% of Fantasia I JV. See Note 3 under Fantasia I JV Transfer of Interest and Sale for further information. Summit Fantasia Holdings II, LLC – Equity-Method Investment In December 2016, through our Operating Partnership, we entered into a limited liability company agreement with Fantasia, and formed Summit Fantasia Holdings II, LLC (the “Fantasia II JV”). The Fantasia II JV is not consolidated in our condensed consolidated financial statements and is accounted for under the equity-method in our condensed consolidated financial statements. As of September 30, 2023 and December 31, 2022, we have a 20% interest in the Fantasia II JV which owns two properties. Summit Fantasia Holdings III, LLC– Equity-Method Investment In July 2017, through our Operating Partnership, we entered into a limited liability company agreement with Fantasia and formed Summit Fantasia Holdings III, LLC (the “Fantasia III JV”). The Fantasia III JV is not consolidated in our condensed consolidated financial statements and is accounted for under the equity-method in our condensed consolidated financial statements. As of September 30, 2023 and December 31, 2022, we have a 10% interest in the Fantasia III JV. The Fantasia III JV owned eight properties as of September 30, 2023 and owned nine properties as of December 31, 2022. Summit Fantasy Pearl Holdings, LLC– Equity-Method Investment In October 2017, through our Operating Partnership, we entered into a limited liability company agreement with Fantasia, Atlantis Senior Living 9, LLC, a Delaware limited liability company (“Atlantis”), and Fantasy Pearl LLC, a Delaware limited liability company (“Fantasy”), and formed Summit Fantasy Pearl Holdings, LLC (the “FPH JV”). The FPH JV is not consolidated in our condensed consolidated financial statements and is accounted for under the equity-method in our condensed consolidated financial statements. As of September 30, 2023 and December 31, 2022, we have a 10% interest in the FPH JV which owns six properties. Taxable REIT Subsidiaries Summit Healthcare Asset Management, LLC Summit Healthcare Asset Management, LLC (“SAM TRS”) is our wholly-owned taxable REIT subsidiary (“TRS”). We serve as the manager of the SUL JV, Fantasia I JV (through July 2, 2023), Fantasia II JV, Fantasia III JV, and FPH JV (collectively, our “Equity-Method Investments”), and provide management services in exchange for fees and reimbursements. All asset management fees earned by us are paid to SAM TRS and expenses incurred by us, as the manager, are reimbursed from SAM TRS. See Notes 5 and 7 for further information. SHOP TRS LLC SHOP TRS LLC (“SHOP TRS”) is our wholly-owned taxable REIT subsidiary that is the sole member for two of our 100% owned real estate properties that are leased to an affiliated subsidiary (see Note 3 under Pennington Gardens Operations LLC (“Pennington Gardens”) and Sundial Operations LLC (“Sundial Assisted Living”), collectively, the “Operated Properties”) and the operations are consolidated in our condensed consolidated financial statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies For more information regarding our significant accounting policies and estimates, please refer to “Summary of Significant Accounting Policies” contained in the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on March 31, 2023. The accompanying condensed consolidated balance sheet at December 31, 2022 has been derived from the audited consolidated financial statements at that date. We assume that users of these condensed consolidated financial statements have read or have access to the audited December 31, 2022 consolidated financial statements and contained in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 31, 2023 and that the adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies, may be determined in that context. Accordingly, footnotes and other disclosures which would substantially duplicate those contained in our most recent Annual Report on Form 10-K for the year ended December 31, 2022 have been omitted in this report. Principles of Consolidation and Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, the Operating Partnership and its consolidated companies and are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. The accompanying financial information reflects all adjustments, which are, in the opinion of management, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods. Interim results of operations are not necessarily indicative of the results to be expected for the full year. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown on the condensed consolidated statements of cash flows. September 30, December 31, 2023 2022 Cash and cash equivalents $ 11,289,000 $ 11,572,000 Restricted cash 3,199,000 2,591,000 Total cash, cash equivalents, and restricted cash shown on the condensed consolidated statements of cash flows $ 14,488,000 $ 14,163,000 |
Investments in Real Estate Prop
Investments in Real Estate Properties | 9 Months Ended |
Sep. 30, 2023 | |
Investments in Real Estate Properties | |
Investments in Real Estate Properties | 3. Investments in Real Estate Properties As of September 30, 2023 and December 31, 2022, our investments in real estate properties, including those held by our consolidated subsidiaries (excluding the 33 properties owned by our unconsolidated Equity-Method Investments), are set forth below: September 30, December 31, 2023 2022 Land $ 14,905,000 $ 15,565,000 Buildings and improvements 157,833,000 166,989,000 Less: accumulated depreciation (19,403,000) (15,985,000) Buildings and improvements, net 138,430,000 151,004,000 Furniture and fixtures 12,121,000 12,440,000 Less: accumulated depreciation (7,113,000) (5,882,000) Furniture and fixtures, net 5,008,000 6,558,000 Real estate properties, net $ 158,343,000 $ 173,127,000 For the three months ended September 30, 2023 and 2022, depreciation expense (excluding lease intangibles amortization and leasing commission amortization) was approximately $1.6 million and $1.6 million, respectively. For the nine months ended September 30, 2023 and 2022, depreciation expense (excluding intangible lease amortization and leasing commission amortization) was approximately $4.7 million and $4.8 million, respectively. As of September 30, 2023, our portfolio consisted of 18 real estate properties, 16 of which were 100% leased to the tenants of the related facilities. The other two properties are each 100% leased to an affiliated subsidiary (see below under Pennington Gardens Operations LLC and Sundial Operations LLC). Fantasia I JV Transfer of Interest and Sale On July 3, 2023, the majority member in the Fantasia I JV assigned its 65% interest, for no consideration, to Summit. As such, as of July 2023, Summit owned 100% of Fantasia I JV. The Fantasia I JV consists of the real estate of Summit Citrus Heights, LLC, our wholly-owned subsidiary (“Summit Citrus Heights”) as of July 3, 2023, and the operating assets and liabilities of its associated senior housing facility, Sun Oak Assisted Living (“Sun Oak" or "CH TRS”).The following summarizes the fair value of the assets and liabilities consolidated in our condensed consolidated financial statements beginning in July 2023: cash of $0.8 million, real estate of $3.8 million, other assets of $0.1 million, loan payable of $3.2 million and other liabilities of $0.4 million. The Fantasia I JV was considered a variable interest entity and the consolidation of the entity resulted in a gain of approximately $1.1 million, which is recorded in gain on consolidation of interest in unconsolidated equity-method investment in the condensed consolidated statements of operations. Additionally, on September 29, 2023, we sold the real estate of Summit Citrus Heights, including the Sun Oak facility for net cash of approximately $0.6 million (which consists of the $3.8 million sale price and the payoff of the loan payable of approximately $3.2 million) and recorded a loss of approximately $0.01 million, which is recorded in gain on consolidation of interest in unconsolidated equity-method investment in the condensed consolidated statements of operations. See below under CH TRS LLC for additional information regarding the operations of Sun Oak. CH TRS LLC (Sun Oak Assisted Living) In July 2023, as noted above under Fantasia I JV Transfer of Interest and Sale, we acquired the Fantasia I JV. Summit Citrus Heights was the sole member of CH TRS LLC, the operating company for Sun Oak. As such, the operations of Sun Oak are consolidated in our financial statements beginning July 3, 2023, through September 29, 2023 (date of the sale), and all intercompany transactions have been eliminated. For the three months ended September 30, 2023, revenues from Sun Oak are recorded under resident fees and services and costs are recorded under resident costs in the condensed consolidated statements of operations. Pennington Gardens Operations LLC In February 2022, our former tenant’s lease was terminated and we received approximately $0.2 million under a settlement agreement which is recorded in total rental revenues in the condensed consolidated statements of operations. Concurrently, we entered into a management agreement with a new operator that began operating the facility, Pennington Gardens and we entered into a new lease agreement with Pennington Gardens Operations LLC, the newly formed operating company for Pennington Gardens, which is a wholly owned subsidiary of SHOP TRS. As such, the operations of Pennington Gardens are consolidated in our financial statements beginning February 11, 2022, and all intercompany transactions have been eliminated. For the three and nine months ended September 30, 2023 and for the period from February 11, 2022 through September 30, 2022, revenues from Pennington Gardens Operations are recorded under resident fees and services and costs are recorded under resident costs in the condensed consolidated statements of operations. Sundial Operations LLC In June 2022, our former tenant’s lease was terminated and we entered into a management agreement with a new operator that began operating the facility, Sundial Assisted Living. Concurrently, we entered into a new lease agreement with Sundial Operations LLC, the newly formed operating company for Sundial Assisted Living, which is a wholly owned subsidiary of SHOP TRS. As such, for the three and nine months ended September 30, 2023 and for the period from June 7, 2022 through September 30, 2022, the operations of Sundial Assisted Living are consolidated in our financial statements and revenues from Sundial Assisted Living are recorded under resident fees and services and costs are recorded under resident costs in the condensed consolidated statements of operations. The following table provides summary information regarding our portfolio (excluding the 33 properties owned by our unconsolidated Equity-Method Investments and the $12.75 million loan from Oxford Finance, LLC (“Oxford”) (see Note 4) with Summit Georgia Holdings LLC, our wholly-owned subsidiary) as of September 30, 2023: Loans Payable, Excluding Debt Purchase Issuance Property Location Date Purchased Type (1) Price Costs Rivers Edge Rehabilitation and Care (f/k/a) Sheridan Care Center)) Sheridan, OR August 3, 2012 SNF $ 4,100,000 $ 3,873,000 Fernhill Care Center Portland, OR August 3, 2012 SNF 4,500,000 3,397,000 Friendship Haven Healthcare and Rehabilitation Center Galveston County, TX September 14, 2012 SNF 15,000,000 11,164,000 Pacific Health and Rehabilitation Center Tigard, OR December 24, 2012 SNF 8,140,000 5,664,000 Brookstone of Aledo Aledo, IL July 2, 2013 AL 8,625,000 6,496,000 Sundial Assisted Living Redding, CA December 18, 2013 AL 3,500,000 3,641,000 Pennington Gardens Chandler, AZ July 17, 2017 AL/MC 13,400,000 9,918,000 Yucaipa Hill Post Acute Yucaipa, CA July 2, 2021 SNF 10,715,000 8,014,000 Creekside Post Acute Yucaipa, CA July 2, 2021 SNF 4,780,000 3,575,000 University Post Acute Mentone, CA July 2, 2021 SNF 4,560,000 3,411,000 Calhoun Health Center Calhoun, GA December 30, 2021 SNF 7,670,000 6,549,000 Maple Ridge Health Care Center Cartersville, GA December 30, 2021 SNF 13,548,000 11,568,000 Chatsworth Health Care Center Chatsworth, GA December 30, 2021 SNF 29,785,000 25,432,000 East Lake Arbor Decatur, GA December 30, 2021 SNF 15,640,000 13,354,000 Fairburn Health Care Center Fairburn, GA December 30, 2021 SNF 14,644,000 12,503,000 Grandview Health Care Center Jasper, GA December 30, 2021 SNF 10,061,000 8,591,000 Rosemont at Stone Mountain Stone Mountain, GA December 30, 2021 SNF 23,908,000 20,414,000 Willowwood Nursing Center & Rehab Flowery Branch, GA December 30, 2021 SNF 14,744,000 12,589,000 Total: $ 207,320,000 $ 170,153,000 (1) SNF is an abbreviation for skilled nursing facility. AL is an abbreviation for assisted living facility. MC is an abbreviation for memory care facility. Tenant/Operator Changes In September 2023, three of our wholly-owned properties and their related facilities, Rivers Edge Rehabilitation and Care, Fernhill Care Center, and Pacific Health and Rehabilitation Center, replaced the tenant/operator. The previous tenant requested the lease be terminated and on September 1, 2023, HUD approved the change. As a result of the lease termination, we wrote off the straight-line rent receivable of approximately $1.3 million, which is included in rental revenues in our condensed consolidated statements of operations, wrote off leasing commissions of approximately $0.3 million, which is included in depreciation and amortization in our condensed consolidated statements of operations, and recorded income from security deposits of approximately $0.4 million, which is included in total rental revenue in our condensed consolidated statements of operations. The new tenant leases are structured under a master lease at the same lease rates for a 10-year term through August 2033, with two five Future Minimum Lease Payments The future minimum lease payments to be received under our existing tenant operating leases (excluding the 33 properties owned by our unconsolidated Equity-Method Investments and the intercompany lease between our wholly-owned subsidiaries: Summit Chandler LLC and Pennington Gardens, and HP Redding LLC and Sundial) as of September 30, 2023, for the period from October 1, 2023 to December 31, 2023 and for each of the four following years and thereafter ending December 31 are as follows: Years ending October 1, 2023 to December 31, 2023 $ 4,504,000 2024 18,272,000 2025 18,566,000 2026 18,865,000 2027 19,168,000 Thereafter 155,908,000 $ 235,283,000 2023 Acquisitions None . 2022 Acquisitions None. Impairment of Real Estate Properties As a result of our ongoing analysis for potential impairment of our investments in real estate, we may be required to adjust the carrying value of certain assets to their estimated fair values, or estimated fair value less selling costs, under certain circumstances. During the three and nine months ended September 30, 2023, we recorded an impairment of $11.4 million related to eight real estate properties, which is included in impairment of real estate properties in the condensed consolidated statements of operations. The impairment was recorded due to the tenants experiencing issues affecting their ability to continue to pay their lease obligations. We utilized a market approach for the fair value estimate of the real estate properties and based our impairment on an estimated yield of 10.8%. We considered these inputs as Level 3 measurements within the fair value hierarchy. No impairments were recorded during the nine months ended September 30, 2022. |
Loans Payable
Loans Payable | 9 Months Ended |
Sep. 30, 2023 | |
Loans Payable | |
Loans Payable | 4. Loans Payable As of September 30, 2023 and December 31, 2022, our loans payable consisted of the following: September 30, 2023 December 31, 2022 Loans payable to Lument (formerly ORIX Real Estate Capital, LLC) (insured by HUD) in monthly installments of approximately $183,000, including interest, ranging from a fixed rate of 2.79% to 4.2%, due in September 2039 through April 2055, and as of September 30, 2023 and December 31, 2022, collateralized by Sheridan, Fernhill, Pacific Health, Aledo, Sundial and Friendship Haven. $ 34,235,000 $ 34,976,000 Loan payable to Capital One Multifamily Finance, LLC (insured by HUD) in monthly installments of approximately $49,000, including interest at a fixed rate of 4.23%, due in September 2053, and collateralized by Pennington Gardens. 9,918,000 10,039,000 Loan payable to CIBC Bank, USA in monthly installments of approximately of $133,000 including cash collateral fund payments, variable interest rate (9.4% and 8.2% at September 30, 2023 and December 31, 2022, respectively), due in July 2024, and as of December 31, 2022, collateralized by Yucaipa Hill Post Acute, Creekside Post Acute and University Post Acute (“CA3 Properties”). 15,000,000 15,000,000 Loan payable to CIBC Bank, USA in monthly installments of approximately $600,000 (interest only through December 2023) variable interest rate (8.8% and 7.7% at September 30, 2023 and December 31, 2022, respectively), due in December 2024, and collateralized by Calhoun Health Center, Maple Ridge Health Care Center, Chatsworth Health Care Center, East Lake Arbor, Fairburn Health Care Center, Grandview Health Care Center, Rosemont at Stone Mountain, and Willowwood Nursing Center & Rehab (“GA8 Properties”). 91,000,000 91,000,000 Loan payable to Oxford Finance, LLC in monthly installments of approximately $260,000 (interest only through maturity), variable interest rate (16.4% and 15.1% at September 30, 2023 and December 31, 2022, respectively) due in March 2025, collateralized in second position by the GA8 Properties. 20,000,000 20,000,000 Mezzanine Loan payable to Oxford Finance, LLC in monthly installments of approximately $168,000 (interest only through maturity), variable interest rate (16.4% and 15.1% at September 30, 2023 and December 31, 2022, respectively) due in December 2026, secured by the equity interests of our wholly-owned subsidiary, Summit Georgia Holdings LLC, the parent holding company for the GA8 Properties. 12,750,000 12,750,000 182,903,000 183,765,000 Less debt issuance costs (2,911,000) (3,596,000) Total loans payable $ 179,992,000 $ 180,169,000 As of September 30, 2023, we have total debt obligations of approximately $182.9 million that will mature between 2024 and 2055. See Note 3 for loans payable balance for each property. All of the loans payable have certain financial and non-financial covenants, including ratios and financial statement considerations. As of September 30, 2023, we were in compliance with all of our debt covenants except for our GA8 Properties which were out of compliance with their consolidated minimum EBITDAR covenant. We have requested a waiver. Additionally, in October 2023 and November 2023, Oxford agreed to defer a portion of our interest payments on the mezzanine loan payable (see table above) until we can confirm a plan of action. We have not received any notice of default for this deferral, however, we are including it in the current period in the principal payments due on the loans payable table below. During the three months ended September 30, 2023 and 2022, we incurred approximately $4.3 million and $3.2 million of interest expense, respectively, excluding debt issuance costs, amortization and interest expense related to the Oxford mezzanine loan as noted below (“Oxford Monthly Fee”), related to our loans payable. During the nine months ended September 30, 2023 and 2022, we incurred approximately $12.3 million and $8.4 million, respectively, of interest expense (excluding debt issuance costs, amortization and interest expense related to the Oxford Monthly Fee) related to our loans payable. In connection with our loans payable, we incurred debt issuance costs. As of September 30, 2023 and December 31, 2022, the unamortized balance of the debt issuance costs was approximately $2.9 million and $3.6 million, respectively. These debt issuance costs are being amortized over the life of their respective financing agreements using the straight-line basis which approximates the effective interest rate method. For each of the three months ended September 30, 2023 and 2022, $0.2 million of debt issuance costs were amortized and included in interest expense in our condensed consolidated statements of operations. For each of the nine months ended September 30, 2023 and 2022, $0.7 million of debt issuance costs were amortized and included in interest expense in our condensed consolidated statements of operations. During the three months ended September 30, 2023 and 2022, we incurred approximately $0 million and $0.1 million, respectively, of interest expense related to the Oxford Monthly Fee which is included in interest expense in our condensed consolidated statements of operations. During the nine months ended September 30, 2023 and 2022, we incurred approximately $0 million and $0.5 million, respectively of interest expense related to the Oxford Monthly Fee and is included in interest expense in our condensed consolidated statements of operations. The principal payments due on the loans payable (excluding debt issuance costs) for the period from October 1, 2023 to December 31, 2023 and for each of the four following years and thereafter ending December 31 are as follows: Principal Years Ending Amount October 1, 2023 to December 31, 2023 $ 13,044,000 2024 107,201,000 2025 21,246,000 2026 1,292,000 2027 1,341,000 Thereafter 38,779,000 $ 182,903,000 The following information notes our loan activity: CA3 Properties In 2021, we entered into a first priority $15.0 million mortgage loan collateralized by the CA3 Properties with CIBC Bank, USA (“CIBC”). See table above listing loans payable for further information. GA8 Properties In 2021, we acquired our interest in the GA8 Properties subject to a $91.0 million first priority mortgage loan with CIBC collateralized by those properties, a $20.0 million subordinated term loan with Oxford Financing LLC (“Oxford”) collateralized by those properties and a $12.75 million mezzanine loan with Oxford secured by the equity interests of the wholly-owned subsidiary, Summit Georgia Holdings LLC, the parent holding company for the GA8 Properties. See table above listing loans payable for further information. HUD-insured loans We have six properties with HUD-insured loans from Lument Capital (formerly ORIX Real Estate Capital, LLC) and one property with a HUD-insured loan from Capital One Multifamily Finance, LLC. See table above listing loans payable for further information. All of the HUD-insured loans are subject to customary representations, warranties and ongoing covenants and agreements with respect to the operation of the facilities, including the provision for certain maintenance and other reserve accounts for property tax, insurance, and capital expenditures, with respect to the facilities all as described in the HUD agreements. These reserves are included in restricted cash in our condensed consolidated balance sheets. Master Letter of Credit Agreement In June 2023, we entered into $1.0 million Master Letter of Credit Agreement with CIBC. As of September 30, 2023, there are no outstanding letters of credit under this agreement. |
Equity-Method Investments
Equity-Method Investments | 9 Months Ended |
Sep. 30, 2023 | |
Equity-Method Investments | |
Equity-Method Investments | 5. Equity-Method Investments As of September 30, 2023 and December 31, 2022, the balances of our Equity-Method Investments were approximately $3.4 million and $5.2 million, respectively, and are as follows: Summit Union Life Holdings, LLC The SUL JV will exist until an event of dissolution occurs, as defined in the limited liability company agreement of the SUL JV (the “SUL LLC Agreement”). Under the SUL LLC Agreement, net operating cash flow of the SUL JV is distributed monthly, first to the Operating Partnership and Best Years pari passu pari passu For the nine months ended September 30, 2023 and 2022, we invested approximately $230,000 and $821,000, respectively, related to capital calls for the SUL JV. During the three months ended September 30, 2023, the SUL JV recorded an impairment of approximately $1.1 million on one property in this JV and we recorded our 10% share of the impairment of approximately $0.1 million in loss from equity-method investees in the condensed consolidated statements of operations. As of September 30, 2023 and December 31, 2022, the balance of our equity-method investment related to the SUL JV was approximately $2.2 million and $2.4 million, respectively. Summit Fantasia Holdings, LLC On July 3, 2023, the majority member in the Fantasia I JV assigned its 65% interest, for no consideration, to Summit. As such, as of July 2023, Summit owned 100% of Fantasia I JV. See Note 3 under Fantasia I JV Transfer of Interest and Sale for further information. For the period ended July 2, 2023 and the nine months ended September 30, 2022, we invested approximately $0 and $290,000, respectively, related to capital calls for the Fantasia I JV. In September 2022, we determined the fair value of our investment in the Fantasia I JV to be impaired and recorded a $0.1 million impairment charge which is recorded in the loss from equity-method investees in the condensed consolidated statements of operations for the three and nine months ended September 30, 2022. As of July 2, 2023 and December 31, 2022, our equity-method investment related to the Fantasia I JV was $0 due to the transfer and impairment noted above, respectively. Summit Fantasia Holdings II, LLC The Fantasia II JV will exist until an event of dissolution occurs, as defined in the limited liability company agreement of the Fantasia II JV (the “Fantasia II LLC Agreement”). Under the Fantasia II LLC Agreement, net operating cash flow of the Fantasia II JV is distributed quarterly, first to the Operating Partnership and Fantasia pari passu pari passu In June 2023, the tenant for the two properties in the Fantasia II JV filed for receivership. The two properties are currently being operated by the receivership estate in conjunction with a third-party manager under a one-year management agreement. As of September 30, 2023, there has been no termination of the tenant leases and the Fantasia II JV is currently communicating with the receiver regarding ongoing lease terms and payments. The Fantasia II JV has not received any rent payments since May 2023. During the three months ended September 30, 2023, the Fantasia II JV recorded an impairment of approximately $1.6 million on the two properties and we recorded our 20% share of the impairment of approximately $0.3 million in loss from equity-method investees in the condensed consolidated statements of operations. Additionally, in September 2023, due to the ongoing issues with the receivership, we determined the fair value of our investment in the Fantasia II JV to be impaired and recorded a $0.5 million impairment charge which is recorded in the loss from equity-method investees in the condensed consolidated statements of operations. As of September 30, 2023 and December 31, 2022, the balance of our equity-method investment related to the Fantasia II JV was approximately $0 million and $1.2 million, respectively. Summit Fantasia Holdings III, LLC The Fantasia III JV will continue until an event of dissolution occurs, as defined in the limited liability company agreement of the Fantasia III JV (the “Fantasia III LLC Agreement”). Under the Fantasia III LLC Agreement, net operating cash flow of the Fantasia III JV is distributed quarterly, first to the Operating Partnership and Fantasia pari passu pari passu During the three months ended September 30, 2023, the Fantasia III JV deeded the ownership in a transfer of one of the properties in the Fantasia III JV to the tenant for no contractual consideration, however as part of the settlement agreement, the Fantasia III JV will receive a monthly payment of the base rent of the transferred property that was in place at the time of the transfer, through the end of the lease term, August 2032, from one of the other tenants in the JV. The Fantasia III JV recorded a loss of approximately $3.9 million on the transaction and we recorded our 10% share of the loss of approximately $0.4 million in loss from equity-method investees in the condensed consolidated statements of operations. As of September 30, 2023 and December 31, 2022, the balance of our equity-method investment related to the Fantasia III JV was approximately $1.2 million and $1.6 million, respectively. Summit Fantasy Pearl Holdings, LLC The FPH JV will continue until an event of dissolution occurs, as defined in the limited liability company agreement of the FPH JV (the “FPH LLC Agreement”). Under the FPH LLC Agreement, net operating cash flow of the FPH JV is distributed quarterly, first to the members pari passu pari passu In December 2022, Summit recorded an impairment of approximately $0.2 million of our equity-method investment balance in the FPH JV due to issues related to tenant operations, and consequently, reduced our equity-method investment balance to $0. As of September 30, 2023 and December 31, 2022, the balance of our equity-method investment related to the FPH JV was $0. Distributions from Equity-Method Investments As of September 30, 2023 and December 31, 2022, we have distributions receivable, which are included in tenant and other receivables in our condensed consolidated balance sheets, as follows: September 30, December 31, 2023 2022 SUL JV $ 269,000 $ 259,000 Fantasia II JV 30,000 55,000 Fantasia III JV 69,000 22,000 FPH JV 64,000 64,000 Total $ 432,000 $ 400,000 For the nine months ended September 30, 2023 and 2022, we have received cash distributions, which are included in our cash flows from operating activities in tenant and other receivables, and cash flows from investing activities, as follows: Nine months Ended September 30, 2023 Nine months Ended September 30, 2022 Cash Flow Cash Flow Cash Flow Cash Flow Total Cash from from Total Cash from from Distributions Operating Investing Distributions Operating Investing Received Activities Activities Received Activities Activities SUL JV $ 408,000 $ 6,000 $ 402,000 $ 434,000 $ 91,000 $ 343,000 Fantasia II JV 136,000 — 136,000 237,000 158,000 79,000 Fantasia III JV 12,000 — 12,000 95,000 95,000 — FPH JV — — — 56,000 56,000 — Total $ 556,000 $ 6,000 $ 550,000 $ 822,000 $ 400,000 $ 422,000 Asset Management Fees We serve as the manager of our Equity-Method Investments and provide management services in exchange for fees and reimbursements. As the manager, we are paid an annual asset management fee for managing the properties held by our Equity-Method Investments, as defined in those agreements. For the three months ended September 30, 2023 and 2022, we recorded approximately $0.1 million and $0.2 million, respectively, in asset management fees from our Equity-Method Investments. For each of the nine months ended September 30, 2023 and 2022, we recorded approximately $0.4 million and $0.5 million, respectively, in asset management fees from our Equity-Method Investments (see Note 7). |
Receivables
Receivables | 9 Months Ended |
Sep. 30, 2023 | |
Receivables | |
Receivables | 6. Receivables Tenant and Other Receivables, Net Tenant and other receivables, net consists of: September 30, December 31, 2023 2022 Straight-line rent receivables $ 3,482,000 $ 3,862,000 Distribution receivables from Equity-Method Investments 432,000 400,000 Asset management fees 290,000 375,000 Other receivables 429,000 383,000 Total $ 4,633,000 $ 5,020,000 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions | |
Related Party Transactions | 7. Related Party Transactions Equity-Method Investments See Notes 5 and 6 for further discussion of distributions and asset management fees related to our Equity-Method Investments. |
Intangible Lease Assets
Intangible Lease Assets | 9 Months Ended |
Sep. 30, 2023 | |
Intangible Lease Assets | |
Intangible Lease Assets | 8. Intangible Lease Assets Intangible lease assets are as follows: September 30, December 31, 2023 2022 In-place leases $ 12,680,000 $ 13,778,000 Less: accumulated amortization (1,625,000) (937,000) In-place leases, net 11,055,000 12,841,000 Above-market leases 959,000 959,000 Less: accumulated amortization (144,000) (96,000) Above-market leases, net 815,000 863,000 Total intangible lease assets, net $ 11,870,000 $ 13,704,000 For each of the three months ended September 30, 2023 and 2022, amortization expense for intangible lease assets was approximately $0.2 million of which approximately $16,000 relates to the amortization of above market leases which is included within rental revenues in the accompanying condensed consolidated statements of operations. For each of the nine months ended September 30, 2023 and 2022, amortization expense for intangible lease assets was approximately $0.7 million of which approximately $48,000 relates to the amortization of above-market leases which is included within rental revenues in the accompanying condensed consolidated statements of operations. Expected future amortization of the intangible lease assets as of September 30, 2023, for the period from October 1, 2023 to December 31, 2023 and for each of the four following years and thereafter ending December 31 are as follows: Years ending December 31, October 1, 2023 to December 31, 2023 $ 224,000 2024 896,000 2025 896,000 2026 896,000 2027 896,000 Thereafter 8,062,000 $ 11,870,000 |
Right of Use (ROU) Asset - Oper
Right of Use (ROU) Asset - Operating | 9 Months Ended |
Sep. 30, 2023 | |
Right of Use (ROU) Asset - Operating | |
Right of Use (ROU) Asset - Operating | 9. Right of Use (ROU) Asset - Operating In November 2022, we entered into an operating lease for office space (“Office Lease”) for a period of sixty-six The Office Lease is classified as an operating lease. A “right to use” or “ROU asset” represents the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Office Lease did not provide an explicit rate of interest; therefore we used an estimated incremental borrowing rate of 5% based on a fully collateralized and fully amortizing loan with a maturity date of the same length as the lease that is based on information available at the commencement date in determining the present value of lease payments. The Office Lease does not contain material residual value guarantees or material restrictive covenants. Supplemental balance sheet information related to the Office Lease are as follows: Component Consolidated Balance Sheet Caption September 30, 2023 December 31, 2022 Right of use asset - operating Other assets, net $ 732,000 $ 833,000 Lease liability - operating Accounts payable and accrued liabilities $ 918,000 $ 933,000 Lease expense is presented as part of continuing operations within general and administrative expenses in the condensed consolidated statements of operations. For the three months ended September 30, 2023, we recognized approximately $45,000 in lease expense and for the nine months ended September 30, 2023, we recognized approximately $135,000 in lease expense. The lease payments will be classified within operating activities in the consolidated statements of cash flows. As of September 30, 2023, we had not made any lease payments and the weighted average remaining lease term is 4.4 years. Lease payments on the Office Lease for the period from October 1, 2023 to December 31, 2023 and for each of the four following years and thereafter ending December 31 are as follows: Year Lease payments October 1, 2023 to December 31, 2023 $ 52,000 2024 211,000 2025 217,000 2026 224,000 2027 231,000 Thereafter 99,000 Total lease payments $ 1,034,000 Less imputed interest (116,000) Total lease liability $ 918,000 |
Concentration of Risk
Concentration of Risk | 9 Months Ended |
Sep. 30, 2023 | |
Concentration of Risk | |
Concentration of Risk | 10. Concentration of Risk Our cash is generally invested in short-term money market instruments. As of September 30, 2023, we had cash accounts in excess of FDIC-insured limits. During March 2023, in response to the banking crisis, we transferred cash balances in excess of FDIC-insured limits from a smaller regional bank to a multi-national bank. To date, we have not experienced losses or lack of access to cash in our cash and cash equivalent accounts. As of September 30, 2023, we owned eight properties in Georgia, four properties in California, three properties in Oregon, one property in Texas, one property in Illinois, and one property in Arizona (excluding the 33 properties held by our Equity-Method Investments). Accordingly, there is a geographic concentration of risk subject to economic conditions in certain states. Additionally, for the three months ended September 30, 2023, we leased our 16 real estate properties to 14 different tenants under long-term triple net leases, and three of the 14 tenants each represented more than 10% of our rental revenue. For the three months ended September 30, 2022, 16 of our real estate properties were leased to 14 different tenants under long-term triple net leases, and three of the 14 tenants each represented more than 10% of our rental revenue. For the nine months ended September 30, 2023, 16 of our real estate properties were leased to 14 different tenants under long-term triple net leases, and three of the 14 tenants each represented more than 10% of our rental revenue. For the nine months ended September 30, 2022, 16 of our real estate properties were leased to 14 different tenants under long-term triple net leases, and three of the 14 tenants each represented more than 10% of our rental revenue. As of September 30, 2023, our GA8 Properties are considered to be a significant asset concentration as the aggregate net assets of the GA8 Properties were greater than 20% of our total assets due to cross-default provisions in the leases. |
Fair Value Measurements of Fina
Fair Value Measurements of Financial Instruments | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Measurements of Financial Instruments | |
Fair Value Measurements of Financial Instruments | 11. Fair Value Measurements of Financial Instruments Our condensed consolidated balance sheets include the following financial instruments: cash and cash equivalents, restricted cash, tenant and other receivables, certain other assets, accounts payable and accrued liabilities, security deposits and loans payable. With the exception of the loans payable discussed below, we consider the carrying values to approximate fair value (categorized within Level 1 of the fair value hierarchy) for such financial instruments because of the short period of time between origination of the instruments and their expected payment. As of September 30, 2023 and December 31, 2022, the fair value of our HUD-insured loans payable was $36.6 million and $38.9 million, compared to the principal balance (excluding debt discount) of $44.1 million and $45.0 million, respectively. The fair value of loans payable was estimated using lending rates available to us for financial instruments with similar terms and maturities. The fair value of our fixed rate debt was estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. As the inputs to our valuation estimate are neither observable in nor supported by market activity, our loans payable are classified as Level 3 liability within the fair value hierarchy. As of September 30, 2023 and December 31, 2022, we believe the carrying amounts of our variable rate debt are reasonably estimated at their notional amounts as there have been minimal changes to the fixed spread portion of interest rates for similar loans observed in the market, and as the variable portion of our interest rates fluctuate with the associated market indices. As the inputs to our valuation estimate are neither observable in nor supported by market activity, our loans payable are classified as Level 3 liability within the fair value hierarchy. See Note 3 for disclosure regarding fair value of impaired real estate properties. As of September 30, 2023 and December 31, 2022, we do not have any significant financial assets or financial liabilities that are measured at fair value on a recurring basis in our condensed consolidated financial statements. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. Commitments and Contingencies We inspect our properties under a Phase I assessment for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist, we are not currently aware of any environmental liability with respect to the properties that would have a material effect on our consolidated financial condition, results of operations and cash flows. Further, we are not aware of any environmental liability or any unasserted claim or assessment with respect to an environmental liability that we believe would require additional disclosure or the recording of a loss contingency. Our commitments and contingencies include the usual obligations of real estate owners and licensed operators in the normal course of business. In the opinion of management, these matters are not expected to have a material impact on our consolidated financial condition, results of operations and cash flows. We are also subject to contingent losses resulting from litigation against the Company. Legal Proceedings HCRE In September 2015, a bankruptcy petition was filed against Healthcare Real Estate Partners, LLC (“HCRE”) by the investors in Healthcare Real Estate Fund, LLC and Healthcare Real Estate Qualified Purchasers Fund, LLC (collectively, the “Funds”). HCRE did not timely respond to the involuntary petition and the Bankruptcy Court entered an Order of Relief making HCRE a debtor in bankruptcy. As a result, HCRE was removed as manager under the Funds’ operating agreement. Thereafter the Company became the manager of the Funds and purchased the investors’ interests in the Funds for approximately $0.9 million. Following the subsequent dismissal of the involuntary bankruptcy petition filed against it, HCRE filed a motion for attorneys’ fees and damages and a separate complaint for violation of the automatic stay against the petitioning creditors and the Company in the United States Bankruptcy Court of the District of Delaware. The Bankruptcy Court granted a motion to dismiss the complaint for violation of the automatic stay filed jointly by the petitioning creditors and us, and dismissed the complaint with prejudice. HCRE appealed the Bankruptcy Court’s decision to the United States District Court for the District of Delaware which affirmed the Bankruptcy Court’s dismissal of the complaint in a decision dated September 9, 2018. On October 11, 2018, HCRE appealed the District Court’s decision affirming the Bankruptcy Court’s dismissal of the complaint to the United States Court of Appeals for the Third Circuit. On October 22, 2019, the Third Circuit granted HCRE’s appeal, reversing the District Court and holding that HCRE could assert the adversary complaint seeking damages for violation of the automatic stay. The Company filed a Petition for Rehearing on November 5, 2019 asserting that HCRE is not entitled to assert a claim for damages for violation of the automatic stay. This Petition was denied and the mandate was issued sending the matter back to the Bankruptcy Court. The Bankruptcy Court held a status conference on February 4, 2021, and subsequently entered scheduling orders to govern discovery and pretrial matters. The parties filed dispositive motions, including a motion filed by the Company and the petitioning creditors for judgment on the pleadings. On February 4, 2022, the Bankruptcy Court entered an order denying the motion for judgment on the pleadings on the basis that the Bankruptcy Court would consider the points raised therein after trial. The Bankruptcy Court also entered an order denying HCRE’s motion to dismiss certain counterclaims and severing certain other counterclaims asserted by the petitioning creditors and the Company against HCRE on jurisdictional grounds, with the effect that such counterclaims may be pursued in the United States District Court. Trial in the Bankruptcy Court was conducted on January 9 and 10, 2023, with final concluding arguments presented on January 19, 2023. On May 12, 2023, the Court issued an opinion to award the plaintiffs $75,000 for reimbursement of legal fees related to the filing of the involuntary bankruptcy petition plus $517,000 for reimbursement of attorney’s fees related to the stay violation. Several additional motions have been filed and were heard in September 2023. The Bankruptcy Court has not yet ruled on the motions and has not indicated when a decision will be issued. Based on the assessment by management, as of September 30, 2023, the Company has accrued $75,000 for the reimbursement of legal fees and $0 for the $517,000 in attorney’s fees as we believe that a loss is currently not probable under Accounting Standards Codification 450, “Contingencies.” Eikanas Dispute On May 15, 2023, the Board of Directors of the Company sent Kent Eikanas, the then-Chief Executive Officer, written notice of various deficiencies in his performance , thereby initiating the 60-day cure period required by Mr. Eikanas’ Amended and Restated Employment Agreement, dated October 19, 2021. On July 14, 2023 (the “Termination Date”), the Board of Directors (the “Board”) of the Company terminated, for cause, Mr. Eikanas from his position as Chief Executive Officer and Secretary of the Company, after Mr. Eikanas was given written notice of and failed to cure various deficiencies in his performance following the expiration of a 60-day cure period. Per the terms of his employment agreement, upon Mr. Eikanas’ termination for cause, Mr. Eikanas is also deemed to have resigned, as of the Termination Date, from all positions with the Company and its subsidiaries, the Board and any boards of directors or managers of any of Company’s subsidiaries and affiliates. On June 5, 2023, Mr. Eikanas filed a lawsuit against the Company in the Superior Court of California for, among other things, wrongful termination and breach of contract, and seeking unspecified monetary damages. The parties are currently engaged in written discovery and related motion practice. The parties have also started depositions. Based on the assessment by management, the Company believes that a loss is currently not probable or estimable under ASC 450, “Contingencies”, and as of September 30, 2023, no accrual has been made with regard to the claim. Indemnification and Employment Agreements We have entered into indemnification agreements with certain of our executive officers and directors which indemnify them against all judgments, penalties, fines and amounts paid in settlement and all expenses actually and reasonably incurred by him or her in connection with any proceeding. Effective October 19, 2021, we entered into a new employment agreement with Elizabeth Pagliarini (Chief Financial Officer at the time and current Chief Executive Officer), for a term of three years. The employment agreement includes customary terms relating to salary, bonus, position, duties and benefits (including eligibility for equity compensation), as well as a cash payment following a change in control of the Company, as defined in such agreement. We previously had entered into an employment agreement, dated October 19, 2021, with Mr. Eikanas, which was terminated on July 14, 2023 in connection with his removal as Chief Executive Officer. Management of our Equity-Method Investments As the manager of our Equity-Method Investments, we are responsible for day-to-day management. Additionally, we could be subject to a capital call from our Equity-Method Investments (see Note 5 for capital call activity). |
Equity
Equity | 9 Months Ended |
Sep. 30, 2023 | |
Equity | |
Equity | 13. Equity Share-Based Compensation Plans Upon the grant of stock options, we determine the exercise price by using our estimated per-share value, which is calculated by aggregating the estimated fair value of our investments in real estate and the estimated fair value of our other assets, subtracting the book value of our liabilities, utilizing a discount for the fact that the shares are not currently traded on a national securities exchange and a lack of a control premium, and divided by the total by the number of our common shares outstanding at the time the options were granted. The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model. Assumptions required by the model include the risk-free interest rate, the expected life of the options, the expected stock price volatility over the expected life of the options, and the expected distribution yield. Compensation expense for employee stock options is recognized ratably over the vesting term. The expected life of the options was based on the simplified method as we do not have sufficient historical exercise data. The risk-free interest rate was based on the U.S. Treasury yield curve at the date of grant with maturity dates approximating the expected term of the options at the date of grant. Volatility was based on historical volatility of the stock prices for a sample of publicly traded companies with risk profiles similar to ours. The valuation model applied in this calculation utilizes highly subjective assumptions that could potentially change over time, including the expected stock price volatility and the expected life of an option. On April 1, 2023, we granted 80,000 stock options to our non-executive employees under our Summit Healthcare REIT, Inc. 2015 Omnibus Incentive Plan (“Incentive Plan”). The stock options vest monthly beginning on May 1, 2023 and continuing over a three-year period through April 1, 2026. The options expire 10 years from the grant date. The weighted-average fair value per share of the stock options granted was $0.91. The estimated fair value using the Black-Scholes option-pricing model with the following weighted average assumptions: 2023 Stock options granted 80,000 Expected volatility 37.3 % Expected term 5.75 years Risk-free interest rate 3.65 % Dividend yield — % Fair value per share $ 0.91 The following table summarizes our stock options as of September 30, 2023: Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Price Term Value Options outstanding at January 1, 2023 1,948,908 $ 2.10 Granted 80,000 $ 2.18 Exercised — Cancelled/forfeited — Options outstanding at September 30, 2023 2,028,908 $ 2.10 4.45 $ 1,279,000 Options exercisable at September 30, 2023 1,917,268 $ 2.09 4.18 $ 1,225,000 For our outstanding non-vested options as of September 30, 2023, the weighted average grant date fair value per share was $0.91. As of September 30, 2023, we have unrecognized stock-based compensation expense related to unvested stock options which is expected to be recognized as follows: Years Ending December 31, 2023 $ 12,000 2024 49,000 2025 32,000 2026 8,000 $ 101,000 The stock-based compensation expense reported for the three months ended September 30, 2023 and 2022 was approximately $12,000 and $9,000, respectively, and is included in general and administrative expense in the condensed consolidated statements of operations. The stock-based compensation expense reported for the nine months ended September 30, 2023 and 2022 was approximately $29,000 and $23,000, respectively, and is included in general and administrative expense in the condensed consolidated statements of operations. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events | |
Subsequent Events | 14. Subsequent Events None. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, the Operating Partnership and its consolidated companies and are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. The accompanying financial information reflects all adjustments, which are, in the opinion of management, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods. Interim results of operations are not necessarily indicative of the results to be expected for the full year. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. |
Restricted Cash | Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown on the condensed consolidated statements of cash flows. September 30, December 31, 2023 2022 Cash and cash equivalents $ 11,289,000 $ 11,572,000 Restricted cash 3,199,000 2,591,000 Total cash, cash equivalents, and restricted cash shown on the condensed consolidated statements of cash flows $ 14,488,000 $ 14,163,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Schedule of reconciliation of cash, cash equivalents, and restricted cash | September 30, December 31, 2023 2022 Cash and cash equivalents $ 11,289,000 $ 11,572,000 Restricted cash 3,199,000 2,591,000 Total cash, cash equivalents, and restricted cash shown on the condensed consolidated statements of cash flows $ 14,488,000 $ 14,163,000 |
Investments in Real Estate Pr_2
Investments in Real Estate Properties (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Investments in Real Estate Properties | |
Schedule of investments in real estate properties | September 30, December 31, 2023 2022 Land $ 14,905,000 $ 15,565,000 Buildings and improvements 157,833,000 166,989,000 Less: accumulated depreciation (19,403,000) (15,985,000) Buildings and improvements, net 138,430,000 151,004,000 Furniture and fixtures 12,121,000 12,440,000 Less: accumulated depreciation (7,113,000) (5,882,000) Furniture and fixtures, net 5,008,000 6,558,000 Real estate properties, net $ 158,343,000 $ 173,127,000 |
Schedule of real estate properties | The following table provides summary information regarding our portfolio (excluding the 33 properties owned by our unconsolidated Equity-Method Investments and the $12.75 million loan from Oxford Finance, LLC (“Oxford”) (see Note 4) with Summit Georgia Holdings LLC, our wholly-owned subsidiary) as of September 30, 2023: Loans Payable, Excluding Debt Purchase Issuance Property Location Date Purchased Type (1) Price Costs Rivers Edge Rehabilitation and Care (f/k/a) Sheridan Care Center)) Sheridan, OR August 3, 2012 SNF $ 4,100,000 $ 3,873,000 Fernhill Care Center Portland, OR August 3, 2012 SNF 4,500,000 3,397,000 Friendship Haven Healthcare and Rehabilitation Center Galveston County, TX September 14, 2012 SNF 15,000,000 11,164,000 Pacific Health and Rehabilitation Center Tigard, OR December 24, 2012 SNF 8,140,000 5,664,000 Brookstone of Aledo Aledo, IL July 2, 2013 AL 8,625,000 6,496,000 Sundial Assisted Living Redding, CA December 18, 2013 AL 3,500,000 3,641,000 Pennington Gardens Chandler, AZ July 17, 2017 AL/MC 13,400,000 9,918,000 Yucaipa Hill Post Acute Yucaipa, CA July 2, 2021 SNF 10,715,000 8,014,000 Creekside Post Acute Yucaipa, CA July 2, 2021 SNF 4,780,000 3,575,000 University Post Acute Mentone, CA July 2, 2021 SNF 4,560,000 3,411,000 Calhoun Health Center Calhoun, GA December 30, 2021 SNF 7,670,000 6,549,000 Maple Ridge Health Care Center Cartersville, GA December 30, 2021 SNF 13,548,000 11,568,000 Chatsworth Health Care Center Chatsworth, GA December 30, 2021 SNF 29,785,000 25,432,000 East Lake Arbor Decatur, GA December 30, 2021 SNF 15,640,000 13,354,000 Fairburn Health Care Center Fairburn, GA December 30, 2021 SNF 14,644,000 12,503,000 Grandview Health Care Center Jasper, GA December 30, 2021 SNF 10,061,000 8,591,000 Rosemont at Stone Mountain Stone Mountain, GA December 30, 2021 SNF 23,908,000 20,414,000 Willowwood Nursing Center & Rehab Flowery Branch, GA December 30, 2021 SNF 14,744,000 12,589,000 Total: $ 207,320,000 $ 170,153,000 (1) SNF is an abbreviation for skilled nursing facility. AL is an abbreviation for assisted living facility. MC is an abbreviation for memory care facility. |
Schedule of future minimum lease payments | Years ending October 1, 2023 to December 31, 2023 $ 4,504,000 2024 18,272,000 2025 18,566,000 2026 18,865,000 2027 19,168,000 Thereafter 155,908,000 $ 235,283,000 |
Loans Payable (Tables)
Loans Payable (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Loans Payable | |
Schedule of loans payable | September 30, 2023 December 31, 2022 Loans payable to Lument (formerly ORIX Real Estate Capital, LLC) (insured by HUD) in monthly installments of approximately $183,000, including interest, ranging from a fixed rate of 2.79% to 4.2%, due in September 2039 through April 2055, and as of September 30, 2023 and December 31, 2022, collateralized by Sheridan, Fernhill, Pacific Health, Aledo, Sundial and Friendship Haven. $ 34,235,000 $ 34,976,000 Loan payable to Capital One Multifamily Finance, LLC (insured by HUD) in monthly installments of approximately $49,000, including interest at a fixed rate of 4.23%, due in September 2053, and collateralized by Pennington Gardens. 9,918,000 10,039,000 Loan payable to CIBC Bank, USA in monthly installments of approximately of $133,000 including cash collateral fund payments, variable interest rate (9.4% and 8.2% at September 30, 2023 and December 31, 2022, respectively), due in July 2024, and as of December 31, 2022, collateralized by Yucaipa Hill Post Acute, Creekside Post Acute and University Post Acute (“CA3 Properties”). 15,000,000 15,000,000 Loan payable to CIBC Bank, USA in monthly installments of approximately $600,000 (interest only through December 2023) variable interest rate (8.8% and 7.7% at September 30, 2023 and December 31, 2022, respectively), due in December 2024, and collateralized by Calhoun Health Center, Maple Ridge Health Care Center, Chatsworth Health Care Center, East Lake Arbor, Fairburn Health Care Center, Grandview Health Care Center, Rosemont at Stone Mountain, and Willowwood Nursing Center & Rehab (“GA8 Properties”). 91,000,000 91,000,000 Loan payable to Oxford Finance, LLC in monthly installments of approximately $260,000 (interest only through maturity), variable interest rate (16.4% and 15.1% at September 30, 2023 and December 31, 2022, respectively) due in March 2025, collateralized in second position by the GA8 Properties. 20,000,000 20,000,000 Mezzanine Loan payable to Oxford Finance, LLC in monthly installments of approximately $168,000 (interest only through maturity), variable interest rate (16.4% and 15.1% at September 30, 2023 and December 31, 2022, respectively) due in December 2026, secured by the equity interests of our wholly-owned subsidiary, Summit Georgia Holdings LLC, the parent holding company for the GA8 Properties. 12,750,000 12,750,000 182,903,000 183,765,000 Less debt issuance costs (2,911,000) (3,596,000) Total loans payable $ 179,992,000 $ 180,169,000 |
Schedule of principal payments due on the loans payable (excluding debt issuance costs) | Principal Years Ending Amount October 1, 2023 to December 31, 2023 $ 13,044,000 2024 107,201,000 2025 21,246,000 2026 1,292,000 2027 1,341,000 Thereafter 38,779,000 $ 182,903,000 |
Equity-Method Investments (Tabl
Equity-Method Investments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity-Method Investments | |
Schedule of distributions receivable | September 30, December 31, 2023 2022 SUL JV $ 269,000 $ 259,000 Fantasia II JV 30,000 55,000 Fantasia III JV 69,000 22,000 FPH JV 64,000 64,000 Total $ 432,000 $ 400,000 |
Schedule of cash distributions | Nine months Ended September 30, 2023 Nine months Ended September 30, 2022 Cash Flow Cash Flow Cash Flow Cash Flow Total Cash from from Total Cash from from Distributions Operating Investing Distributions Operating Investing Received Activities Activities Received Activities Activities SUL JV $ 408,000 $ 6,000 $ 402,000 $ 434,000 $ 91,000 $ 343,000 Fantasia II JV 136,000 — 136,000 237,000 158,000 79,000 Fantasia III JV 12,000 — 12,000 95,000 95,000 — FPH JV — — — 56,000 56,000 — Total $ 556,000 $ 6,000 $ 550,000 $ 822,000 $ 400,000 $ 422,000 |
Receivables (Tables)
Receivables (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Receivables | |
Schedule of tenant and other receivables | September 30, December 31, 2023 2022 Straight-line rent receivables $ 3,482,000 $ 3,862,000 Distribution receivables from Equity-Method Investments 432,000 400,000 Asset management fees 290,000 375,000 Other receivables 429,000 383,000 Total $ 4,633,000 $ 5,020,000 |
Intangible Lease Assets (Tables
Intangible Lease Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Intangible Lease Assets | |
Schedule of intangible lease assets | September 30, December 31, 2023 2022 In-place leases $ 12,680,000 $ 13,778,000 Less: accumulated amortization (1,625,000) (937,000) In-place leases, net 11,055,000 12,841,000 Above-market leases 959,000 959,000 Less: accumulated amortization (144,000) (96,000) Above-market leases, net 815,000 863,000 Total intangible lease assets, net $ 11,870,000 $ 13,704,000 |
Schedule of expected future amortization of the intangible lease assets | Expected future amortization of the intangible lease assets as of September 30, 2023, for the period from October 1, 2023 to December 31, 2023 and for each of the four following years and thereafter ending December 31 are as follows: Years ending December 31, October 1, 2023 to December 31, 2023 $ 224,000 2024 896,000 2025 896,000 2026 896,000 2027 896,000 Thereafter 8,062,000 $ 11,870,000 |
Right of Use (ROU) Asset - Op_2
Right of Use (ROU) Asset - Operating (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Right of Use (ROU) Asset - Operating | |
Schedule of supplemental balance sheet information related to the office lease | Component Consolidated Balance Sheet Caption September 30, 2023 December 31, 2022 Right of use asset - operating Other assets, net $ 732,000 $ 833,000 Lease liability - operating Accounts payable and accrued liabilities $ 918,000 $ 933,000 |
Schedule of lease payments on the office lease | Year Lease payments October 1, 2023 to December 31, 2023 $ 52,000 2024 211,000 2025 217,000 2026 224,000 2027 231,000 Thereafter 99,000 Total lease payments $ 1,034,000 Less imputed interest (116,000) Total lease liability $ 918,000 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity | |
Schedule of estimated fair value using assumptions | 2023 Stock options granted 80,000 Expected volatility 37.3 % Expected term 5.75 years Risk-free interest rate 3.65 % Dividend yield — % Fair value per share $ 0.91 |
Schedule of stock options | Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Price Term Value Options outstanding at January 1, 2023 1,948,908 $ 2.10 Granted 80,000 $ 2.18 Exercised — Cancelled/forfeited — Options outstanding at September 30, 2023 2,028,908 $ 2.10 4.45 $ 1,279,000 Options exercisable at September 30, 2023 1,917,268 $ 2.09 4.18 $ 1,225,000 |
Schedule of unrecognized stock-based compensation expense | Years Ending December 31, 2023 $ 12,000 2024 49,000 2025 32,000 2026 8,000 $ 101,000 |
Organization (Details)
Organization (Details) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jul. 03, 2023 USD ($) | Sep. 30, 2016 | Sep. 30, 2023 USD ($) property | Dec. 31, 2022 USD ($) property | Jul. 31, 2023 | |
Organization | |||||
Equity-method investments | $ | $ 3,394,000 | $ 5,182,000 | |||
Unconsolidated | |||||
Organization | |||||
Equity method investment ownership percentage | 10% | ||||
Number of owned properties | 17 | ||||
Summit Healthcare Operating Partnership, L.P | |||||
Organization | |||||
Limited partnership interest | 99.88% | ||||
Summit Healthcare Operating Partnership, L.P | Consolidated | |||||
Organization | |||||
Equity method investment ownership percentage | 100% | ||||
Number of owned properties | 14 | ||||
Summit Healthcare Operating Partnership, L.P | Cornerstone Realty Advisors, LLC | |||||
Organization | |||||
Limited partnership interest | 0.12% | ||||
Cornerstone Healthcare Partners LLC | |||||
Organization | |||||
Limited partnership interest | 95% | ||||
Cornerstone Healthcare Real Estate Fund | |||||
Organization | |||||
Limited liability company (LLC) or limited partnership (LP), members or limited partners, ownership interest by affiliates | 5% | ||||
JV Properties | |||||
Organization | |||||
Number of owned properties | 4 | 4 | |||
Noncontrolling interest, ownership percentage by noncontrolling owners | 4.70% | 4.70% | |||
Summit Union Life Holdings, LLC | |||||
Organization | |||||
Number of owned properties | 17 | 17 | |||
Limited liability company (LLC) or limited partnership (LP), members or limited partners, ownership interest by affiliates | 10% | 10% | |||
Real estate investment trust own percentage | 10% | ||||
Four Jv Properties | |||||
Organization | |||||
Limited liability company (LLC) or limited partnership (LP), members or limited partners, ownership interest by affiliates | 95.30% | 95.30% | |||
Limited partnership interest | 95.30% | ||||
Summit Fantasia Holdings III, LLC | |||||
Organization | |||||
Number of owned properties | 8 | 9 | |||
Fantasia III JV | |||||
Organization | |||||
Number of owned properties | 8 | ||||
Limited liability company (LLC) or limited partnership (LP), members or limited partners, ownership interest by affiliates | 10% | 10% | |||
Summit Fantasy Pearl Holdings, LLC | |||||
Organization | |||||
Number of owned properties | 6 | 6 | |||
Limited partnership interest | 10% | 10% | |||
Fantasia II JV | |||||
Organization | |||||
Number of owned properties | 2 | 2 | |||
Limited liability company (LLC) or limited partnership (LP), members or limited partners, ownership interest by affiliates | 20% | ||||
Fantasia II JV | Unconsolidated | |||||
Organization | |||||
Equity method investment ownership percentage | 20% | 20% | |||
Fantasia I JV | |||||
Organization | |||||
Percentage of ownership interest assigned | 65% | ||||
Consideration for interest assigned | $ | $ 0 | ||||
Fantasia I JV | Summit Healthcare REIT, Inc | |||||
Organization | |||||
Equity method investment ownership percentage | 100% | ||||
Summit Fantasia Holdings, LLC | |||||
Organization | |||||
Limited liability company (LLC) or limited partnership (LP), members or limited partners, ownership interest by affiliates | 35% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Summary of Significant Accounting Policies | ||||
Cash and cash equivalents | $ 11,289,000 | $ 11,572,000 | ||
Restricted cash | 3,199,000 | 2,591,000 | ||
Total cash, cash equivalents, and restricted cash shown on the consolidated statements of cash flows | $ 14,488,000 | $ 14,163,000 | $ 14,914,000 | $ 13,161,000 |
Investments in Real Estate Pr_3
Investments in Real Estate Properties - Investments in real estate properties (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Investments in Real Estate Properties | ||
Real estate properties, net | $ 158,343,000 | $ 173,127,000 |
Land | ||
Investments in Real Estate Properties | ||
Real estate properties, net | 14,905,000 | 15,565,000 |
Buildings and improvements | ||
Investments in Real Estate Properties | ||
Real estate properties, gross | 157,833,000 | 166,989,000 |
Less: accumulated depreciation | (19,403,000) | (15,985,000) |
Real estate properties, net | 138,430,000 | 151,004,000 |
Furniture and fixtures | ||
Investments in Real Estate Properties | ||
Real estate properties, gross | 12,121,000 | 12,440,000 |
Less: accumulated depreciation | (7,113,000) | (5,882,000) |
Real estate properties, net | $ 5,008,000 | $ 6,558,000 |
Investments in Real Estate Pr_4
Investments in Real Estate Properties - Summary information regarding portfolio (Details) | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Investments in Real Estate Properties | |
Purchase Price | $ 207,320,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 170,153,000 |
Rivers Edge Rehabilitation and Care (f/k/a) Sheridan Care Center)) | |
Investments in Real Estate Properties | |
Location | Sheridan, OR |
Date Purchased | Aug. 03, 2012 |
Type | SNF |
Purchase Price | $ 4,100,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 3,873,000 |
Fernhill Care Center | |
Investments in Real Estate Properties | |
Location | Portland, OR |
Date Purchased | Aug. 03, 2012 |
Type | SNF |
Purchase Price | $ 4,500,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 3,397,000 |
Friendship Haven Healthcare and Rehabilitation Center | |
Investments in Real Estate Properties | |
Location | Galveston County, TX |
Date Purchased | Sep. 14, 2012 |
Type | SNF |
Purchase Price | $ 15,000,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 11,164,000 |
Pacific Health and Rehabilitation Center | |
Investments in Real Estate Properties | |
Location | Tigard, OR |
Date Purchased | Dec. 24, 2012 |
Type | SNF |
Purchase Price | $ 8,140,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 5,664,000 |
Brookstone of Aledo | |
Investments in Real Estate Properties | |
Location | Aledo, IL |
Date Purchased | Jul. 02, 2013 |
Type | AL |
Purchase Price | $ 8,625,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 6,496,000 |
Sundial Assisted Living | |
Investments in Real Estate Properties | |
Location | Redding, CA |
Date Purchased | Dec. 18, 2013 |
Type | AL |
Purchase Price | $ 3,500,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 3,641,000 |
Pennington Gardens | |
Investments in Real Estate Properties | |
Location | Chandler, AZ |
Date Purchased | Jul. 17, 2017 |
Type | AL/MC |
Purchase Price | $ 13,400,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 9,918,000 |
Yucaipa Hill Post Acute | |
Investments in Real Estate Properties | |
Location | Yucaipa, CA |
Date Purchased | Jul. 02, 2021 |
Type | SNF |
Purchase Price | $ 10,715,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 8,014,000 |
Creekside Post Acute | |
Investments in Real Estate Properties | |
Location | Yucaipa, CA |
Date Purchased | Jul. 02, 2021 |
Type | SNF |
Purchase Price | $ 4,780,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 3,575,000 |
University Post Acute | |
Investments in Real Estate Properties | |
Location | Mentone, CA |
Date Purchased | Jul. 02, 2021 |
Type | SNF |
Purchase Price | $ 4,560,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 3,411,000 |
Calhoun Health Center | |
Investments in Real Estate Properties | |
Location | Calhoun, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 7,670,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 6,549,000 |
Maple Ridge Health Care Center | |
Investments in Real Estate Properties | |
Location | Cartersville, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 13,548,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 11,568,000 |
Chatsworth Health Care Center | |
Investments in Real Estate Properties | |
Location | Chatsworth, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 29,785,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 25,432,000 |
East Lake Arbor | |
Investments in Real Estate Properties | |
Location | Decatur, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 15,640,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 13,354,000 |
Fairburn Health Care Center | |
Investments in Real Estate Properties | |
Location | Fairburn, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 14,644,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 12,503,000 |
Grandview Health Care Center | |
Investments in Real Estate Properties | |
Location | Jasper, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 10,061,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 8,591,000 |
Rosemont at Stone Mountain | |
Investments in Real Estate Properties | |
Location | Stone Mountain, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 23,908,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 20,414,000 |
Willowwood Nursing Center & Rehab | |
Investments in Real Estate Properties | |
Location | Flowery Branch, GA |
Date Purchased | Dec. 30, 2021 |
Type | SNF |
Purchase Price | $ 14,744,000 |
Loans Payable, Excluding Debt Issuance Costs | $ 12,589,000 |
Investments in Real Estate Pr_5
Investments in Real Estate Properties - Future Minimum Lease Payments (Details) | Sep. 30, 2023 USD ($) |
Investments in Real Estate Properties | |
October 1, 2023 to December 31, 2023 | $ 4,504,000 |
2024 | 18,272,000 |
2025 | 18,566,000 |
2026 | 18,865,000 |
2027 | 19,168,000 |
Thereafter | 155,908,000 |
Future minimum lease payments | $ 235,283,000 |
Investments in Real Estate Pr_6
Investments in Real Estate Properties - Additional information (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Sep. 29, 2023 USD ($) | Jul. 03, 2023 USD ($) | Sep. 30, 2023 USD ($) item property | Feb. 28, 2022 USD ($) | Sep. 30, 2023 USD ($) item property | Sep. 30, 2022 USD ($) property | Sep. 30, 2023 USD ($) item property | Sep. 30, 2022 USD ($) property | Jul. 31, 2023 USD ($) | |
Investments in Real Estate Properties | |||||||||
Number of properties owned by our unconsolidated Equity-Method Investments | property | 33 | 33 | 33 | ||||||
Depreciation | $ 1,600,000 | $ 1,600,000 | $ 4,700,000 | $ 4,800,000 | |||||
Number of real estate properties | property | 18 | 18 | 18 | ||||||
Number of real estate properties leased to related facilities | property | 16 | 16 | 16 | 16 | 16 | ||||
Percentage of leased to the tenants of the related facilities | 100% | ||||||||
Number of real estate properties leased to affiliated subsidiary | property | 2 | 2 | 2 | ||||||
Percentage of leased to affiliated subsidiary | 100% | ||||||||
Impairment of real estate properties | $ 11,387,000 | $ 11,387,000 | |||||||
Proceeds from sale of real estate | $ 3,839,000 | ||||||||
Number of wholly-owned properties replaced tenant/ operator | property | 3 | ||||||||
Amount of write off of rent receivable | $ 1,300,000 | ||||||||
Amount of write off of leasing commissions | 300,000 | ||||||||
Amount of write off of income from security deposits | $ 400,000 | ||||||||
Term of contract (in years) | 10 years | 10 years | 10 years | ||||||
Number of renewal options | item | 2 | ||||||||
Renewal term (in years) | 5 years | 5 years | 5 years | ||||||
Impairments | $ 0 | ||||||||
Estimated yield rate | Level 3 | |||||||||
Investments in Real Estate Properties | |||||||||
Real estate properties, measurement input | item | 10.8 | 10.8 | 10.8 | ||||||
Fantasia I JV | |||||||||
Investments in Real Estate Properties | |||||||||
Percentage of ownership interest assigned | 65% | ||||||||
Consideration for interest assigned | $ 0 | ||||||||
Cash | $ 800,000 | ||||||||
Real Estate | 3,800,000 | ||||||||
Other assets | 100,000 | ||||||||
Loans payable | 3,200,000 | ||||||||
Other liabilities | $ 400,000 | ||||||||
Gain on consolidation | $ 1,100,000 | ||||||||
Fantasia I JV | Summit Healthcare REIT, Inc | |||||||||
Investments in Real Estate Properties | |||||||||
Equity method investment, ownership percentage | 100% | ||||||||
Eight real estate properties | |||||||||
Investments in Real Estate Properties | |||||||||
Impairment of real estate properties | $ 11,400,000 | $ 11,400,000 | |||||||
Pennington Gardens facility in Chandler, Arizona | |||||||||
Investments in Real Estate Properties | |||||||||
Lease termination revenues received | $ 200,000 | ||||||||
Summit Georgia Holdings LLC | |||||||||
Investments in Real Estate Properties | |||||||||
Number of properties owned by our unconsolidated Equity-Method Investments | property | 33 | 33 | 33 | ||||||
Principal amount of loan | $ 12,750,000 | $ 12,750,000 | $ 12,750,000 | ||||||
Summit Citrus Heights | Fantasia I JV | |||||||||
Investments in Real Estate Properties | |||||||||
Proceeds from sale of real estate | $ 600,000 | ||||||||
Loans held for sale price | 3,800,000 | ||||||||
Payoff of the loan payable | 3,200,000 | ||||||||
Loss on sale of real estate | $ 10,000 |
Loans Payable - Debt (Details)
Loans Payable - Debt (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Loans Payable | ||
Total debt obligations | $ 182,903,000 | $ 183,765,000 |
Less debt issuance costs | (2,911,000) | (3,596,000) |
Total loans payable | 179,992,000 | 180,169,000 |
Loans payable to Lument (formerly ORIX Real Estate Capital, LLC) due in September 2039 through April 2055 | ||
Loans Payable | ||
Total debt obligations | 34,235,000 | 34,976,000 |
Loans payable to Capital One Multifamily Finance, LLC due in September 2053 | ||
Loans Payable | ||
Total debt obligations | 9,918,000 | 10,039,000 |
Loans payable to CIBC Bank, USA due in July 2024 | ||
Loans Payable | ||
Total debt obligations | 15,000,000 | 15,000,000 |
Loans payable to CIBC Bank, USA due in December 2024 | ||
Loans Payable | ||
Total debt obligations | 91,000,000 | 91,000,000 |
Loans payable to Oxford Finance, LLC due in March 2025 | ||
Loans Payable | ||
Total debt obligations | 20,000,000 | 20,000,000 |
Loans payable to Oxford Finance, LLC due in December 2026 | ||
Loans Payable | ||
Total debt obligations | $ 12,750,000 | $ 12,750,000 |
Loans Payable - (Parenthetical)
Loans Payable - (Parenthetical) (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Loans payable to Lument (formerly ORIX Real Estate Capital, LLC) due in September 2039 through April 2055 | ||
Loans Payable | ||
Monthly installments | $ 183,000 | $ 183,000 |
Loans payable to Lument (formerly ORIX Real Estate Capital, LLC) due in September 2039 through April 2055 | Minimum | ||
Loans Payable | ||
Fixed rate of interest (in percent) | 2.79% | 2.79% |
Loans payable to Lument (formerly ORIX Real Estate Capital, LLC) due in September 2039 through April 2055 | Maximum | ||
Loans Payable | ||
Fixed rate of interest (in percent) | 4.20% | 4.20% |
Loans payable to Capital One Multifamily Finance, LLC due in September 2053 | ||
Loans Payable | ||
Monthly installments | $ 49,000 | $ 49,000 |
Fixed rate of interest (in percent) | 4.23% | 4.23% |
Loans payable to CIBC Bank, USA due in July 2024 | ||
Loans Payable | ||
Monthly installments | $ 133,000 | |
Variable interest rate (in percent) | 9.40% | 8.20% |
Loans payable to CIBC Bank, USA due in December 2024 | ||
Loans Payable | ||
Monthly installments | $ 600,000 | |
Variable interest rate (in percent) | 8.80% | 7.70% |
Loans payable to Oxford Finance, LLC due in March 2025 | ||
Loans Payable | ||
Monthly installments | $ 260,000 | |
Variable interest rate (in percent) | 16.40% | 15.10% |
Loans payable to Oxford Finance, LLC due in December 2026 | ||
Loans Payable | ||
Monthly installments | $ 168,000 | |
Variable interest rate (in percent) | 16.40% | 15.10% |
Loans Payable - Maturities of l
Loans Payable - Maturities of long term debt (Details) | Sep. 30, 2023 USD ($) |
Loans Payable | |
October 1, 2023 to December 31, 2023 | $ 13,044,000 |
2024 | 107,201,000 |
2025 | 21,246,000 |
2026 | 1,292,000 |
2027 | 1,341,000 |
Thereafter | 38,779,000 |
Total | $ 182,903,000 |
Loans Payable - Additional info
Loans Payable - Additional information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Loans Payable | |||||||
Total debt obligations | $ 182,903,000 | $ 182,903,000 | $ 183,765,000 | ||||
Interest expense (excluding debt issuance costs, amortization and interest expense related to the Oxford mezzanine loan) | 4,300,000 | $ 3,200,000 | 12,300,000 | $ 8,400,000 | |||
Unamortized balance of the debt issuance costs | 2,911,000 | 2,911,000 | $ 3,596,000 | ||||
Amortization of debt issuance costs | 200,000 | 200,000 | 700,000 | 700,000 | |||
Interest expense related to Oxford monthly fee | 0 | $ 100,000 | 0 | $ 500,000 | |||
Master Letter of Credit Agreement | |||||||
Loans Payable | |||||||
Aggregate amount | $ 1,000,000 | ||||||
Amount outstanding | $ 0 | $ 0 | |||||
GA8 Properties | Summit Georgia Holdings LLC | |||||||
Loans Payable | |||||||
Aggregate amount | $ 12,750,000 | ||||||
CIBC Bank | CA3 Properties | |||||||
Loans Payable | |||||||
Aggregate amount | 15,000,000 | ||||||
First priority mortgage loan | GA8 Properties | |||||||
Loans Payable | |||||||
Aggregate amount | 91,000,000 | ||||||
Subordinated term loan | GA8 Properties | |||||||
Loans Payable | |||||||
Aggregate amount | $ 20,000,000 |
Equity-Method Investments - Dis
Equity-Method Investments - Distributions receivable (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Equity-Method Investments | ||
Distributions receivable | $ 432,000 | $ 400,000 |
SUL JV | ||
Equity-Method Investments | ||
Distributions receivable | 269,000 | 259,000 |
Fantasia II JV | ||
Equity-Method Investments | ||
Distributions receivable | 30,000 | 55,000 |
Fantasia III JV | ||
Equity-Method Investments | ||
Distributions receivable | 69,000 | 22,000 |
FPH JV | ||
Equity-Method Investments | ||
Distributions receivable | $ 64,000 | $ 64,000 |
Equity-Method Investments - Cas
Equity-Method Investments - Cash Distributions (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Equity-Method Investments | ||
Total Cash Distributions Received | $ 556,000 | $ 822,000 |
Cash Flow from Operating Activities | 6,000 | 400,000 |
Cash Flow from Investing Activities | 550,000 | 422,000 |
SUL JV | ||
Equity-Method Investments | ||
Total Cash Distributions Received | 408,000 | 434,000 |
Cash Flow from Operating Activities | 6,000 | 91,000 |
Cash Flow from Investing Activities | 402,000 | 343,000 |
Fantasia II JV | ||
Equity-Method Investments | ||
Total Cash Distributions Received | 136,000 | 237,000 |
Cash Flow from Operating Activities | 158,000 | |
Cash Flow from Investing Activities | 136,000 | 79,000 |
Fantasia III JV | ||
Equity-Method Investments | ||
Total Cash Distributions Received | 12,000 | 95,000 |
Cash Flow from Operating Activities | 95,000 | |
Cash Flow from Investing Activities | $ 12,000 | |
FPH JV | ||
Equity-Method Investments | ||
Total Cash Distributions Received | 56,000 | |
Cash Flow from Operating Activities | $ 56,000 |
Equity-Method Investments - Add
Equity-Method Investments - Additional information (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||||
Jul. 03, 2023 USD ($) | Dec. 31, 2022 USD ($) | Sep. 30, 2023 USD ($) property | Sep. 30, 2022 USD ($) | Jul. 02, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Jul. 31, 2023 | Jun. 30, 2023 USD ($) | |
Equity-Method Investments | |||||||||
Equity-method investment | $ 5,182,000 | $ 3,394,000 | $ 3,394,000 | ||||||
Loss from equity-method investees | $ 1,671,000 | $ 7,000 | 1,429,000 | $ 496,000 | |||||
SUL JV | |||||||||
Equity-Method Investments | |||||||||
Invested to capital calls | $ 230,000 | ||||||||
Fantasia JV | Summit Healthcare Operating Partnership, L.P | |||||||||
Equity-Method Investments | |||||||||
Invested to capital calls | $ 0 | ||||||||
Summit Fantasia Holdings III, LLC | |||||||||
Equity-Method Investments | |||||||||
Equity method investment ownership percentage | 10% | 10% | |||||||
Loss from equity-method investees | $ 400,000 | ||||||||
Summit Union Life Holdings, LLC | |||||||||
Equity-Method Investments | |||||||||
Equity method investment ownership percentage | 10% | 10% | |||||||
Impairment loss of related to equity-method investments | $ 100,000 | ||||||||
Summit Fantasia Holdings II, LLC | |||||||||
Equity-Method Investments | |||||||||
Equity method investment ownership percentage | 20% | 20% | 100% | ||||||
Impairment loss of related to equity-method investments | $ 500,000 | ||||||||
Loss from equity-method investees | $ 300,000 | ||||||||
Equity Method Investments | |||||||||
Equity-Method Investments | |||||||||
Asset management fees | 100,000 | 200,000 | 400,000 | 500,000 | |||||
Summit Union Life Holdings, LLC | |||||||||
Equity-Method Investments | |||||||||
Equity-method investment | 2,400,000 | 2,200,000 | $ 2,200,000 | ||||||
Minimum percentage of interest in annual return | 9% | ||||||||
Percentage of interest in annual return | 10% | ||||||||
Impairment charge | $ 1,100,000 | ||||||||
Number of properties impaired | property | 1 | ||||||||
Summit Union Life Holdings, LLC | Operating Partnership | |||||||||
Equity-Method Investments | |||||||||
Percentage of interest | 25% | ||||||||
Percentage of interest in capital proceeds from the sale of properties held | 25% | ||||||||
Summit Union Life Holdings, LLC | Best Years Llc | |||||||||
Equity-Method Investments | |||||||||
Percentage of interest | 75% | ||||||||
Percentage of interest in capital proceeds from the sale of properties held | 75% | ||||||||
SUL JV | |||||||||
Equity-Method Investments | |||||||||
Invested to capital calls | 821,000 | ||||||||
Summit Fantasia Holdings Llc | |||||||||
Equity-Method Investments | |||||||||
Equity-method investment | 0 | $ 0 | $ 0 | ||||||
Impairment charge | $ 1,600,000 | ||||||||
Number of properties impaired | property | 2 | ||||||||
Summit Fantasia Holdings Llc | Summit Healthcare Operating Partnership, L.P | |||||||||
Equity-Method Investments | |||||||||
Percentage of ownership interest assigned | 65% | ||||||||
Consideration for interest assigned | $ 0 | ||||||||
Summit Fantasia Holdings Llc | Fantasia JV | |||||||||
Equity-Method Investments | |||||||||
Invested to capital calls | 290,000 | ||||||||
Summit Fantasia Holdings II, LLC | |||||||||
Equity-Method Investments | |||||||||
Equity-method investment | 1,200,000 | $ 0 | $ 0 | ||||||
Percentage of interest in annual return | 8% | ||||||||
Summit Fantasia Holdings II, LLC | Operating Partnership | |||||||||
Equity-Method Investments | |||||||||
Percentage of interest | 30% | ||||||||
Percentage of interest in capital proceeds from the sale of properties held | 30% | ||||||||
Summit Fantasia Holdings II, LLC | Fantasia Investment III LLC | |||||||||
Equity-Method Investments | |||||||||
Percentage of interest | 70% | ||||||||
Percentage of interest in capital proceeds from the sale of properties held | 70% | ||||||||
Summit Fantasia Holdings III, LLC | |||||||||
Equity-Method Investments | |||||||||
Equity-method investment | 1,600,000 | 1,200,000 | $ 1,200,000 | ||||||
Percentage of interest in annual return | 9% | ||||||||
Loss on transaction | 3,900,000 | ||||||||
Summit Fantasia Holdings III, LLC | Operating Partnership | |||||||||
Equity-Method Investments | |||||||||
Percentage of interest | 25% | ||||||||
Percentage of interest in capital proceeds from the sale of properties held | 25% | ||||||||
Summit Fantasia Holdings III, LLC | Fantasia Investment III LLC | |||||||||
Equity-Method Investments | |||||||||
Percentage of interest | 75% | ||||||||
Percentage of interest in capital proceeds from the sale of properties held | 75% | ||||||||
Summit Fantasy Pearl Holdings, LLC | |||||||||
Equity-Method Investments | |||||||||
Equity-method investment | 0 | $ 0 | $ 0 | ||||||
Percentage of interest in annual return | 9% | ||||||||
Impairment charge | $ 200,000 | ||||||||
Summit Fantasy Pearl Holdings, LLC | Operating Partnership | |||||||||
Equity-Method Investments | |||||||||
Percentage of interest | 20% | ||||||||
Percentage of interest in capital proceeds from the sale of properties held | 20% | ||||||||
Summit Fantasy Pearl Holdings, LLC | Fantasia Investment III LLC | |||||||||
Equity-Method Investments | |||||||||
Percentage of interest | 7.25% | ||||||||
Percentage of interest in capital proceeds from the sale of properties held | 7.25% | ||||||||
Summit Fantasy Pearl Holdings, LLC | Summit Fantasy Pearl Holdings, LLC- Equity-Method Investment | |||||||||
Equity-Method Investments | |||||||||
Percentage of interest | 65.25% | ||||||||
Percentage of interest in capital proceeds from the sale of properties held | 65.25% | ||||||||
Summit Fantasy Pearl Holdings, LLC | Atlantis | |||||||||
Equity-Method Investments | |||||||||
Percentage of interest | 7.50% | ||||||||
Percentage of interest in capital proceeds from the sale of properties held | 7.50% | ||||||||
Fantasia I JV | |||||||||
Equity-Method Investments | |||||||||
Impairment loss of related to equity-method investments | $ 100,000 | $ 100,000 |
Receivables (Details)
Receivables (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Receivables | ||
Straight-line rent receivables | $ 3,482,000 | $ 3,862,000 |
Distribution receivables from Equity-Method Investments | 432,000 | 400,000 |
Asset management fees | 290,000 | 375,000 |
Other receivables | 429,000 | 383,000 |
Total | $ 4,633,000 | $ 5,020,000 |
Intangible Lease Assets (Detail
Intangible Lease Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Intangible Lease Assets | |||||
Total intangible lease assets, net | $ 11,870,000 | $ 11,870,000 | $ 13,704,000 | ||
Amortization expense for intangible lease assets | 200,000 | $ 200,000 | 700,000 | $ 700,000 | |
Amortization of above market leases | 16,000 | $ 16,000 | 48,000 | $ 48,000 | |
In-place leases | |||||
Intangible Lease Assets | |||||
Intangible lease assets, gross | 12,680,000 | 12,680,000 | 13,778,000 | ||
Less: accumulated amortization | (1,625,000) | (1,625,000) | (937,000) | ||
Total intangible lease assets, net | 11,055,000 | 11,055,000 | 12,841,000 | ||
Above-market leases | |||||
Intangible Lease Assets | |||||
Intangible lease assets, gross | 959,000 | 959,000 | 959,000 | ||
Less: accumulated amortization | (144,000) | (144,000) | (96,000) | ||
Total intangible lease assets, net | $ 815,000 | $ 815,000 | $ 863,000 |
Intangible Lease Assets - Expec
Intangible Lease Assets - Expected future amortization (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Intangible Lease Assets | ||
October 1, 2023 to December 31, 2023 | $ 224,000 | |
2024 | 896,000 | |
2025 | 896,000 | |
2026 | 896,000 | |
2027 | 896,000 | |
Thereafter | 8,062,000 | |
Total intangible lease assets, net | $ 11,870,000 | $ 13,704,000 |
Right of Use (ROU) Asset - Op_3
Right of Use (ROU) Asset - Operating (Details) | 1 Months Ended |
Nov. 30, 2022 USD ($) | |
Right of Use (ROU) Asset - Operating | |
Estimated incremental borrowing rate | 5% |
Temporary License | |
Right of Use (ROU) Asset - Operating | |
Termination term of lease after substantial completion of certain tenant improvements in office space | 5 years |
Standard Office Lease | |
Right of Use (ROU) Asset - Operating | |
Lease term under three separate triple net leases | 66 months |
Initial annual base rent | $ 204,399 |
Increase in initial annual base rent (as a percent) | 3% |
Right of Use (ROU) Asset - Op_4
Right of Use (ROU) Asset - Operating - Supplemental balance sheet information related to the Office Lease (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Right of Use (ROU) Asset - Operating | |||
Right of use asset - operating | $ 732,000 | $ 732,000 | $ 833,000 |
Right of use asset - operating, Location | Other Assets | Other Assets | Other Assets |
Lease liability - operating | $ 918,000 | $ 918,000 | $ 933,000 |
Lease liability, location | Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities |
Operating lease expense | $ 45,000 | $ 135,000 | |
Weighted average remaining lease term | 4 years 4 months 24 days | 4 years 4 months 24 days |
Right of Use (ROU) Asset - Op_5
Right of Use (ROU) Asset - Operating - Lease payments (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Maturity of lease payments | ||
October 1, 2023 to December 31, 2023 | $ 52,000 | |
2024 | 211,000 | |
2025 | 217,000 | |
2026 | 224,000 | |
2027 | 231,000 | |
Thereafter | 99,000 | |
Total lease payments | 1,034,000 | |
Less imputed interest | (116,000) | |
Total lease liability | $ 918,000 | $ 933,000 |
Concentration of Risk (Details)
Concentration of Risk (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 tenant property | Sep. 30, 2022 tenant property | Sep. 30, 2023 tenant property | Sep. 30, 2022 tenant property | |
Concentration of Risk | ||||
Number of owned properties held by equity method investment | 33 | 33 | ||
Number of real estate properties leased to related facilities | 16 | 16 | 16 | 16 |
Number of tenants under long-term triple net leases | tenant | 14 | 14 | 14 | 14 |
Number of tenants represents more than 10% of our rental revenue | tenant | 3 | 3 | 3 | 3 |
Customer concentration risk | Tenant | Assets, Total | ||||
Concentration of Risk | ||||
Concentration risk, percentage | 20% | |||
Customer concentration risk | Tenant One | Tenant One, Concentration Risk | ||||
Concentration of Risk | ||||
Concentration risk, percentage | 10% | 10% | 10% | 10% |
Georgia | ||||
Concentration of Risk | ||||
Number of owned properties | 8 | 8 | ||
California | ||||
Concentration of Risk | ||||
Number of owned properties | 4 | 4 | ||
Oregon | ||||
Concentration of Risk | ||||
Number of owned properties | 3 | 3 | ||
Texas | ||||
Concentration of Risk | ||||
Number of owned properties | 1 | 1 | ||
Illinois | ||||
Concentration of Risk | ||||
Number of owned properties | 1 | 1 | ||
Arizona | ||||
Concentration of Risk | ||||
Number of owned properties | 1 | 1 |
Fair Value Measurements of Fi_2
Fair Value Measurements of Financial Instruments (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value Measurements of Financial Instruments | ||
Principal balance excluding debt discount | $ 182,903,000 | $ 183,765,000 |
HUD | ||
Fair Value Measurements of Financial Instruments | ||
Fair value of loans payable | 36,600,000 | 38,900,000 |
Principal balance excluding debt discount | $ 44,100,000 | $ 45,000,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 9 Months Ended | |||
Jul. 14, 2023 | May 15, 2023 | May 12, 2023 | Sep. 30, 2023 | |
Commitments and Contingencies | ||||
Purchased the investors' interests | $ 900,000 | |||
Cure period of Kent Eikanas | 60 days | 60 days | ||
Legal fees | ||||
Commitments and Contingencies | ||||
Amount awarded to the plaintiffs | $ 75,000 | |||
Accrued contingencies | 75,000 | |||
Attorney's fees | ||||
Commitments and Contingencies | ||||
Amount awarded to the plaintiffs | $ 517,000 | 517,000 | ||
Accrued contingencies | $ 0 |
Equity - Black-Scholes option-p
Equity - Black-Scholes option-pricing model (Details) | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Equity | |
Stock options granted | shares | 80,000 |
Expected volatility | 0.373% |
Expected term | 5 years 9 months |
Risk-free interest rate | 0.0365% |
Fair value per share | $ / shares | $ 0.91 |
Equity - Stock options (Details
Equity - Stock options (Details) | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Equity | |
Options outstanding, Beginning Balance | 1,948,908 |
Options outstanding, Granted | 80,000 |
Options outstanding, Exercised | 0 |
Options outstanding, Ending Balance | 2,028,908 |
Options exercisable, Ending Balance | 1,917,268 |
Weighted Average Exercise Price, Outstanding at Beginning Balance | $ / shares | $ 2.10 |
Weighted Average Exercise Price, Granted | $ / shares | 2.18 |
Weighted Average Exercise Price, Outstanding at Ending Balance | $ / shares | 2.10 |
Weighted Average Exercise Price, Exercisable at Ending Balance | $ / shares | $ 2.09 |
Options outstanding, Weighted Average Remaining Contractual Term | 4 years 5 months 12 days |
Options exercisable, Weighted Average Remaining Contractual Term | 4 years 2 months 4 days |
Options outstanding, Aggregate Intrinsic Value | $ | $ 1,279,000 |
Options exercisable, Aggregate Intrinsic Value | $ | $ 1,225,000 |
Equity - Unrecognized stock-bas
Equity - Unrecognized stock-based compensation expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Equity | ||||
Unrecognized stock-based compensation expense related to unvested stock options, net of forfeitures | $ 101,000 | $ 101,000 | ||
General and administrative expense | ||||
Equity | ||||
Stock-based compensation expense | 12,000 | $ 9,000 | 29,000 | $ 23,000 |
2023 | ||||
Equity | ||||
Unrecognized stock-based compensation expense related to unvested stock options, net of forfeitures | 12,000 | 12,000 | ||
2024 | ||||
Equity | ||||
Unrecognized stock-based compensation expense related to unvested stock options, net of forfeitures | 49,000 | 49,000 | ||
2025 | ||||
Equity | ||||
Unrecognized stock-based compensation expense related to unvested stock options, net of forfeitures | 32,000 | 32,000 | ||
2026 | ||||
Equity | ||||
Unrecognized stock-based compensation expense related to unvested stock options, net of forfeitures | $ 8,000 | $ 8,000 |
Equity - Additional Information
Equity - Additional Information (Details) - $ / shares | 9 Months Ended | |
Apr. 01, 2023 | Sep. 30, 2023 | |
Equity | ||
Stock options granted | 80,000 | |
Weighted average grant date fair value (per share) | $ 0.91 | $ 0.91 |
Omnibus Incentive Plan | Non-executive employee | ||
Equity | ||
Stock options granted | 80,000 | |
Vesting period | 3 years | |
Expiration period | 10 years |