Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 01, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | LTC PROPERTIES INC | |
Entity Central Index Key | 887,905 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 39,656,737 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Investments: | ||
Land | $ 125,533 | $ 124,041 |
Buildings and improvements | 1,280,491 | 1,262,335 |
Accumulated depreciation and amortization | (304,337) | (304,117) |
Operating real estate property, net | 1,101,687 | 1,082,259 |
Properties held-for-sale, net of accumulated depreciation: 2018—$2,887; 2017—$1,916 | 5,356 | 3,830 |
Real property investments, net | 1,107,043 | 1,086,089 |
Mortgage loans receivable, net of loan loss reserve: 2018—$2,444; 2017—$2,255 | 242,609 | 223,907 |
Real estate investments, net | 1,349,652 | 1,309,996 |
Notes receivable, net of loan loss reserve: 2018—$128; 2017—$166 | 12,642 | 16,402 |
Investments in unconsolidated joint ventures | 30,511 | 29,898 |
Investments, net | 1,392,805 | 1,356,296 |
Other assets: | ||
Cash and cash equivalents | 20,408 | 5,213 |
Restricted cash | 2,163 | |
Debt issue costs related to bank borrowings | 3,202 | 810 |
Interest receivable | 19,290 | 15,050 |
Straight-line rent receivable, net of allowance for doubtful accounts: 2018—$739; 2017—$814 | 73,114 | 64,490 |
Lease incentives | 21,102 | 21,481 |
Prepaid expenses and other assets | 3,767 | 2,230 |
Total assets | 1,535,851 | 1,465,570 |
LIABILITIES | ||
Bank borrowings | 120,000 | 96,500 |
Senior unsecured notes, net of debt issue costs: 2018—$981; 2017—$1,131 | 550,986 | 571,002 |
Accrued interest | 3,468 | 5,276 |
Accrued incentives and earn-outs | 9,292 | 8,916 |
Accrued expenses and other liabilities | 28,812 | 25,228 |
Total liabilities | 712,558 | 706,922 |
Stockholders’ equity: | ||
Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2018—39,657; 2017—39,570 | 397 | 396 |
Capital in excess of par value | 861,226 | 856,992 |
Cumulative net income | 1,224,998 | 1,100,783 |
Cumulative distributions | (1,270,779) | (1,203,011) |
Total LTC Properties, Inc. stockholders’ equity | 815,842 | 755,160 |
Non-controlling interests | 7,451 | 3,488 |
Total equity | 823,293 | 758,648 |
Total liabilities and equity | $ 1,535,851 | $ 1,465,570 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Properties held-for-sale, accumulated depreciation | $ 2,887 | $ 1,916 |
Mortgage loans receivable, loan loss reserve | 2,444 | 2,255 |
Notes receivable, loan loss reserve | 128 | 166 |
Straight-line rent receivable, allowance for doubtful accounts | $ 739 | $ 814 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000 | 60,000 |
Common stock, shares issued | 39,657 | 39,570 |
Common stock, shares outstanding | 39,657 | 39,570 |
Senior Unsecured Notes | ||
Debt issue costs, net | $ 981 | $ 1,131 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Rental income | $ 34,211 | $ 33,233 | $ 102,646 | $ 103,533 |
Interest income from mortgage loans | 7,087 | 6,677 | 20,910 | 20,050 |
Interest and other income | 478 | 1,336 | 1,502 | 2,753 |
Total revenues | 41,776 | 41,246 | 125,058 | 126,336 |
Expenses: | ||||
Interest expense | 7,497 | 7,644 | 22,981 | 22,266 |
Depreciation and amortization | 9,447 | 9,519 | 28,159 | 28,186 |
Impairment charges | 1,880 | |||
Provision (recovery) for doubtful accounts | 106 | (96) | 76 | (139) |
Transaction costs | 9 | 34 | 19 | 56 |
General and administrative expenses | 4,879 | 4,144 | 14,392 | 13,270 |
Total expenses | 21,938 | 21,245 | 65,627 | 65,519 |
Operating income | 19,838 | 20,001 | 59,431 | 60,817 |
Income from unconsolidated joint ventures | 746 | 615 | 2,103 | 1,635 |
Gain on sale of real estate, net | 14,353 | 62,698 | 5,054 | |
Net income | 34,937 | 20,616 | 124,232 | 67,506 |
Income allocated to non-controlling interests | (17) | (17) | ||
Net income attributable to LTC Properties, Inc. | 34,920 | 20,616 | 124,215 | 67,506 |
Income allocated to participating securities | (138) | (80) | (504) | (281) |
Net income available to common stockholders | $ 34,782 | $ 20,536 | $ 123,711 | $ 67,225 |
Earnings per common share: | ||||
Basic (in dollars per share) | $ 0.88 | $ 0.52 | $ 3.13 | $ 1.71 |
Diluted (in dollars per share) | $ 0.88 | $ 0.52 | $ 3.12 | $ 1.70 |
Weighted average shares used to calculate earnings per common share: | ||||
Basic (in shares) | 39,487 | 39,428 | 39,470 | 39,403 |
Diluted (in shares) | 39,865 | 39,748 | 39,845 | 39,738 |
Dividends declared and paid per common share (in dollars per share) | $ 0.57 | $ 0.57 | $ 1.71 | $ 1.71 |
Comprehensive Income: | ||||
Net income | $ 34,937 | $ 20,616 | $ 124,232 | $ 67,506 |
Comprehensive income | $ 34,937 | $ 20,616 | $ 124,232 | $ 67,506 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Parent | Common Stock | Capital in Excess of Par Value | Cumulative Net Income | Cumulative Distributions | Non-controlling Interests | Total |
Balance at beginning of period at Dec. 31, 2016 | $ 740,048 | $ 392 | $ 839,005 | $ 1,013,443 | $ (1,112,792) | $ 740,048 | |
Balance (in shares) at Dec. 31, 2016 | 39,221,000 | ||||||
Equity activity | |||||||
Common Stock cash distributions | (22,552) | (22,552) | (22,552) | ||||
Proceeds from common stock issued, net of issuance costs | 14,529 | $ 3 | 14,526 | 14,529 | |||
Proceeds from common stock issued, net of issuance costs (in shares) | 313,000 | ||||||
Issuance of restricted stock | (6) | $ 1 | (7) | (6) | |||
Issuance of restricted stock (in shares) | 75,000 | ||||||
Stock-based compensation expense | 1,259 | 1,259 | 1,259 | ||||
Net income | 21,513 | 21,513 | 21,513 | ||||
Other | (1,651) | (1,651) | (1,651) | ||||
Other (in shares) | (36,000) | ||||||
Balance at end of period at Mar. 31, 2017 | 753,140 | $ 396 | 853,132 | 1,034,956 | (1,135,344) | 753,140 | |
Balance (in shares) at Mar. 31, 2017 | 39,573,000 | ||||||
Balance at beginning of period at Dec. 31, 2016 | 740,048 | $ 392 | 839,005 | 1,013,443 | (1,112,792) | $ 740,048 | |
Balance (in shares) at Dec. 31, 2016 | 39,221,000 | ||||||
Equity activity | |||||||
Stock option exercises (in shares) | 8,334 | ||||||
Net income | $ 67,506 | ||||||
Balance at end of period at Sep. 30, 2017 | 756,635 | $ 396 | 855,746 | 1,080,949 | (1,180,456) | 756,635 | |
Balance (in shares) at Sep. 30, 2017 | 39,571,000 | ||||||
Balance at beginning of period at Mar. 31, 2017 | 753,140 | $ 396 | 853,132 | 1,034,956 | (1,135,344) | 753,140 | |
Balance (in shares) at Mar. 31, 2017 | 39,573,000 | ||||||
Equity activity | |||||||
Common Stock cash distributions | (22,558) | (22,558) | (22,558) | ||||
Issuance of restricted stock (in shares) | 8,000 | ||||||
Cancelation of restricted stock (in shares) | (14,000) | ||||||
Stock option exercises | 79 | 79 | 79 | ||||
Stock option exercises (in shares) | 3,000 | ||||||
Stock-based compensation expense | 1,425 | 1,425 | 1,425 | ||||
Net income | 25,377 | 25,377 | 25,377 | ||||
Other | (296) | (296) | (296) | ||||
Other (in shares) | (6,000) | ||||||
Balance at end of period at Jun. 30, 2017 | 757,167 | $ 396 | 854,340 | 1,060,333 | (1,157,902) | 757,167 | |
Balance (in shares) at Jun. 30, 2017 | 39,564,000 | ||||||
Equity activity | |||||||
Common Stock cash distributions | (22,554) | (22,554) | (22,554) | ||||
Issuance of restricted stock (in shares) | 3,000 | ||||||
Cancelation of restricted stock (in shares) | (1,000) | ||||||
Stock option exercises | 123 | 123 | 123 | ||||
Stock option exercises (in shares) | 5,000 | ||||||
Stock-based compensation expense | 1,283 | 1,283 | 1,283 | ||||
Net income | 20,616 | 20,616 | 20,616 | ||||
Balance at end of period at Sep. 30, 2017 | 756,635 | $ 396 | 855,746 | 1,080,949 | (1,180,456) | 756,635 | |
Balance (in shares) at Sep. 30, 2017 | 39,571,000 | ||||||
Equity activity | |||||||
Common Stock cash distributions | (22,555) | (22,555) | (22,555) | ||||
Issuance of restricted stock | (14) | (14) | (14) | ||||
Stock-based compensation expense | 1,282 | 1,282 | 1,282 | ||||
Net income | 19,834 | 19,834 | 19,834 | ||||
Non-controlling interests contribution | $ 3,488 | 3,488 | |||||
Other | (22) | (22) | (22) | ||||
Other (in shares) | (1,000) | ||||||
Balance at end of period at Dec. 31, 2017 | 755,160 | $ 396 | 856,992 | 1,100,783 | (1,203,011) | 3,488 | 758,648 |
Balance (in shares) at Dec. 31, 2017 | 39,570,000 | ||||||
Equity activity | |||||||
Common Stock cash distributions | (22,578) | (22,578) | (22,578) | ||||
Issuance of restricted stock (in shares) | 82,000 | ||||||
Stock option exercises | 123 | 123 | 123 | ||||
Stock option exercises (in shares) | 5,000 | ||||||
Stock-based compensation expense | 1,376 | 1,376 | 1,376 | ||||
Net income | 20,359 | 20,359 | 20,359 | ||||
Other | (1,065) | (1,065) | (1,065) | ||||
Other (in shares) | (28,000) | ||||||
Balance at end of period at Mar. 31, 2018 | 753,375 | $ 396 | 857,426 | 1,121,142 | (1,225,589) | 3,488 | 756,863 |
Balance (in shares) at Mar. 31, 2018 | 39,629,000 | ||||||
Balance at beginning of period at Dec. 31, 2017 | 755,160 | $ 396 | 856,992 | 1,100,783 | (1,203,011) | 3,488 | $ 758,648 |
Balance (in shares) at Dec. 31, 2017 | 39,570,000 | ||||||
Equity activity | |||||||
Stock option exercises (in shares) | 5,000 | ||||||
Net income | $ 124,232 | ||||||
Balance at end of period at Sep. 30, 2018 | 815,842 | $ 397 | 861,226 | 1,224,998 | (1,270,779) | 7,451 | 823,293 |
Balance (in shares) at Sep. 30, 2018 | 39,657,000 | ||||||
Balance at beginning of period at Mar. 31, 2018 | 753,375 | $ 396 | 857,426 | 1,121,142 | (1,225,589) | 3,488 | 756,863 |
Balance (in shares) at Mar. 31, 2018 | 39,629,000 | ||||||
Equity activity | |||||||
Common Stock cash distributions | (22,590) | (22,590) | (22,590) | ||||
Issuance of restricted stock | (8) | (8) | (8) | ||||
Issuance of restricted stock (in shares) | 9,000 | ||||||
Stock-based compensation expense | 1,521 | 1,521 | 1,521 | ||||
Net income | 68,936 | 68,936 | 68,936 | ||||
Non-controlling interests contribution | 1,081 | 1,081 | |||||
Other | (107) | (107) | (107) | ||||
Other (in shares) | (3,000) | ||||||
Balance at end of period at Jun. 30, 2018 | 801,127 | $ 396 | 858,832 | 1,190,078 | (1,248,179) | 4,569 | 805,696 |
Balance (in shares) at Jun. 30, 2018 | 39,635,000 | ||||||
Equity activity | |||||||
Common Stock cash distributions | (22,600) | (22,600) | (22,600) | ||||
Proceeds from common stock issued, net of issuance costs | 929 | $ 1 | 928 | 929 | |||
Proceeds from common stock issued, net of issuance costs (in shares) | 22,000 | ||||||
Stock-based compensation expense | 1,487 | 1,487 | 1,487 | ||||
Net income | 34,920 | 34,920 | 17 | 34,937 | |||
Non-controlling interests contribution | 2,882 | 2,882 | |||||
Non-controlling interest distributions | 17 | 17 | |||||
Other | (21) | (21) | (21) | ||||
Balance at end of period at Sep. 30, 2018 | $ 815,842 | $ 397 | $ 861,226 | $ 1,224,998 | $ (1,270,779) | $ 7,451 | $ 823,293 |
Balance (in shares) at Sep. 30, 2018 | 39,657,000 |
CONSOLIDATED STATEMENTS OF EQ_2
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares | 1 Months Ended | 3 Months Ended | |||||||||||||||||||||||
Sep. 30, 2018 | Aug. 31, 2018 | Jul. 31, 2018 | Jun. 30, 2018 | May 31, 2018 | Apr. 30, 2018 | Mar. 31, 2018 | Feb. 28, 2018 | Jan. 31, 2018 | Sep. 30, 2017 | Aug. 31, 2017 | Jul. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Apr. 30, 2017 | Mar. 31, 2017 | Feb. 28, 2017 | Jan. 31, 2017 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | |
CONSOLIDATED STATEMENTS OF EQUITY | |||||||||||||||||||||||||
Dividends paid per common share (in dollars per share) | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
OPERATING ACTIVITIES: | ||||||||
Net income | $ 34,937,000 | $ 20,359,000 | $ 19,834,000 | $ 20,616,000 | $ 21,513,000 | $ 124,232,000 | $ 67,506,000 | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 28,159,000 | 28,186,000 | ||||||
Stock-based compensation expense | 4,384,000 | 3,967,000 | ||||||
Impairment charges | 1,880,000 | |||||||
Gain on sale of real estate, net | (14,353,000) | (62,698,000) | (5,054,000) | |||||
Income from unconsolidated joint ventures | (746,000) | (615,000) | (2,103,000) | (1,635,000) | ||||
Income distributions from unconsolidated joint ventures | 1,727,000 | 1,236,000 | ||||||
Insurance proceeds for damaged property | 2,619,000 | |||||||
Payment for remediation of damaged property | (455,000) | |||||||
Straight-line rental income | (8,629,000) | (7,362,000) | ||||||
Lease incentives funded | (1,272,000) | (5,713,000) | ||||||
Amortization of lease incentives | 1,651,000 | 1,681,000 | ||||||
Provision for doubtful accounts | 106,000 | (96,000) | 76,000 | (139,000) | ||||
Non-cash interest related to contingent liabilities | 377,000 | 476,000 | ||||||
Non-cash income related to earn-out and related lease inducement write-off | (842,000) | |||||||
Other non-cash items, net | 923,000 | 958,000 | ||||||
Increase in interest receivable | (4,240,000) | (3,967,000) | ||||||
Decrease in accrued interest payable | (1,808,000) | (567,000) | ||||||
Net change in other assets and liabilities | 495,000 | (4,477,000) | ||||||
Net cash provided by operating activities | 83,438,000 | 76,134,000 | ||||||
INVESTING ACTIVITIES: | ||||||||
Investment in real estate properties | (40,408,000) | (54,804,000) | ||||||
Investment in real estate developments | (25,717,000) | (13,939,000) | ||||||
Investment in real estate capital improvements | (2,063,000) | (2,308,000) | ||||||
Capitalized interest | (850,000) | (627,000) | ||||||
Proceeds from sale of real estate, net | 82,340,000 | 14,106,000 | ||||||
Investment in real estate mortgage loans receivable | (20,530,000) | (9,333,000) | ||||||
Principal payments received on mortgage loans receivable | 1,636,000 | 17,351,000 | ||||||
Investments in unconsolidated joint ventures | (580,000) | (3,847,000) | ||||||
Payment of working capital reserve | (439,000) | |||||||
Advances and originations under notes receivable | (50,000) | |||||||
Principal payments received on notes receivable | 3,848,000 | 25,000 | ||||||
Net cash used in investing activities | (2,374,000) | (53,815,000) | ||||||
FINANCING ACTIVITIES: | ||||||||
Bank borrowings | 96,500,000 | 64,500,000 | ||||||
Repayment of bank borrowings | (73,000,000) | (116,600,000) | ||||||
Proceeds from issuance of senior unsecured notes | 100,000,000 | |||||||
Principal payments on senior unsecured notes | (20,166,000) | (19,167,000) | ||||||
Proceeds from common stock issued | 1,005,000 | 14,578,000 | ||||||
Stock option exercises | 123,000 | 202,000 | ||||||
Distributions paid to stockholders | (67,768,000) | (67,664,000) | ||||||
Contribution from non-controlling interests | 3,963,000 | |||||||
Financing costs paid | (3,162,000) | (363,000) | ||||||
Other | (1,201,000) | (1,954,000) | ||||||
Net cash used in financing activities | (63,706,000) | (26,468,000) | ||||||
Increase (decrease) in cash, cash equivalents and restricted cash | 17,358,000 | (4,149,000) | ||||||
Cash, cash equivalents and restricted cash, beginning of period | $ 5,213,000 | 3,842,000 | $ 7,991,000 | 5,213,000 | 7,991,000 | $ 7,991,000 | ||
Cash, cash equivalents and restricted cash, end of period | $ 22,571,000 | $ 5,213,000 | $ 3,842,000 | 22,571,000 | 3,842,000 | $ 5,213,000 | ||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid | $ 23,869,000 | $ 21,877,000 |
General
General | 9 Months Ended |
Sep. 30, 2018 | |
General | |
General | 1. LTC Properties, Inc., a health care real estate investment trust (“REIT”), was incorporated on May 12, 1992 in the State of Maryland and commenced operations on August 25, 1992. We invest primarily in seniors housing and health care properties primarily through sale-leaseback transactions, mortgage financing and structured finance solutions including mezzanine lending. We conduct and manage our business as one operating segment, rather than multiple operating segments, for internal reporting and internal decision making purposes. Our primary objectives are to create, sustain and enhance stockholder equity value and provide current income for distribution to stockholders through real estate investments in seniors housing and health care properties managed by experienced operators. Our primary seniors housing and health care property classifications include skilled nursing centers (“SNF”), assisted living communities (“ALF”), independent living communities (“ILF”), memory care communities (“MC”) and combinations thereof. To meet these objectives, we attempt to invest in properties that provide opportunity for additional value and current returns to our stockholders and diversify our investment portfolio by geographic location, operator, property classification and form of investment. We have prepared consolidated financial statements included herein without audit and in the opinion of management have included all adjustments necessary for a fair presentation of the consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to rules and regulations governing the presentation of interim financial statements. The accompanying consolidated financial statements include the accounts of our company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2018 and 2017 are not necessarily indicative of the results for a full year. No provision has been made for federal or state income taxes. Our company qualifies as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As such, we generally are not taxed on income that is distributed to our stockholders. Restricted Cash During the third quarter of 2017, a 170-bed skilled nursing center in our portfolio was evacuated due to damages caused by Hurricane Harvey. This property is located in Texas and operated under a triple net master lease agreement. We periodically evaluate properties for impairment when events or changes in circumstances indicate that the asset may be impaired or the carrying amount of the asset may not be recoverable through future undiscounted cash flows. Based upon a quarterly assessment of this property using the recoverability test, we concluded the property has not been impaired. As of September 30, 2018, the gross value and the carrying value of the property were $2,021,000 and $1,146,000, respectively. The provisions of our triple net lease agreements impose certain obligations on our operators including: · Acquire property insurance, subject to certain criteria; · Continue paying rent in the event of any property damage or destruction; and · Return the leased property back to us at the end of the lease term, in the same condition originally received. During the second quarter of 2018, our operator provided us with insurance proceeds of $2,619,000 to be used for remediation of the property as noted in the provisions of our master lease agreement. Accordingly, we have classified the insurance proceeds as restricted cash on our consolidated financial statements. New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “ an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While this ASU specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate. Additionally, the FASB has issued targeted updates to clarify specific implementation issues of ASU 2014-09. These updates include ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Identifying Performance Obligations and Licensing, and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients. The new standard and its amendments were effective on January 1, 2018 and permitted reporting entities to apply the standard using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or full retrospective approach . We assessed our revenue streams to identify any differences in the timing, measurement or presentation of revenue recognition. We evaluated the provisions of ASU 2014-09 and its related additional guidance to determine the potential impact of the new standard. We concluded that adoption of this standard did not have an impact on our results of operations or financial condition, as our revenue consists of rental income from leasing arrangements and interest income from loan arrangements, both of which are specifically excluded from ASU 2014-09. We adopted this standard using the modified retrospective adoption method on January 1, 2018. In February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases (Topic 842) . The objective of this ASU is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. ASU 2016-02 modifies existing guidance by requiring lessees to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance of operating leases. ASU 2016-02 requires the lessors to identify lease and non-lease components of a lease agreement. ASU 2016-02 will govern the recognition of revenue for lease components. Revenue related to non-lease components under lease agreements will be subject to the revenue recognition standard, upon adoption of this ASU. Entities are required to use a modified retrospective approach for leases that exist or are entered into after January 1, 2017, the beginning of the earliest comparative period presented in the 2019 consolidated financial statements with a cumulative adjustment to the opening balance of retained earnings. Additionally, in July 2018, the FASB issued ASU No. 2018-11, Leases - Targeted Improvements (“ASU 2018-11”), which provides lessors with the option to elect a practical expedient allowing them to not separate lease and non-lease components and instead, to account for those components as a single lease component. This practical expedient is limited to circumstances in which: (i) the timing and pattern of transfer are the same for the non-lease component and the related lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. This practical expedient causes an entity to assess whether a contract is predominantly lease-based or service-based and recognize the entire contract under the relevant accounting guidance (i.e., predominantly lease-based would be accounted for under ASU 2016-02 and predominantly service-based would be accounted for under the Revenue ASUs). This practical expedient option is available as a single election that must be consistently applied to all existing leases at the date of adoption. ASU 2018-11 also provides a practical expedient that allows companies to use an optional transition method. Under the optional transition method, a cumulative adjustment to retained earnings during the period of adoption is recorded and prior periods would not require restatement. Consequently, entities that elect both the practical expedient and the optional transitional method will apply the new lease ASU prospectively to leases commencing or modified after January 1, 2019, and will not be required to apply the disclosures under the new lease ASU to comparative periods. Consistent with present standards, we will continue to account for lease revenue on a straight-line basis when applicable. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements from both the lessee and lessor perspective. As a result of the adoption of this guidance, we may be required to increase our revenue and expense for lessor costs paid directly by lessees under triple-net leases, if the amount paid is readily determinable (i.e. real estate taxes). Additionally, we have begun our process for implementing this guidance, including identifying any non-lease components in our lease arrangements. We plan to finalize our assessment during the fourth quarter of 2018. In August 2016, FASB issued ASU No. 2016-15 (“ASU 2016-15”), Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (A Consensus of the Emerging Issues Task Force) . ASU 2016-15 provides guidance that reduces the diversity in practice of the classification of certain cash receipts and cash payments within the statement of cash flows. This guidance is effective for fiscal periods beginning after December 15, 2017. We adopted this standard on January 1, 2018. The adoption of this guidance did not have a material impact on our financial statements. In January 2017, the FASB issued ASU No. 2017-01(“ASU 2017-01”), Business Combinations (Topic 805): Clarifying Definition of a Business . ASU 2017-01 clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. This update is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted for transactions that have not been reported in previously issued (or available to be issued) financial statements. We adopted ASU 2017-01 during the second quarter of 2017. Historically, our acquisitions qualified as either a business combination or asset acquisition. The adoption of this ASU did not have a material impact on the company’s results of operations or financial condition as most of our acquisitions of investment properties will continue to qualify as asset acquisitions. In February 2017, the FASB issued ASU No. 2017-05 (“ASU 2017-05”), Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets. ASU 2017-05 defines an in-substance nonfinancial asset and clarifies guidance related to partial sales of nonfinancial assets. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The adoption of this ASU did not have a material impact on the consolidated financial statements and related notes. In 2016, the FASB issued ASU No. 2016-13 , Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard requires a new forward looking “expected loss” model to be used for receivables, held-to-maturity debt, loans, and other instruments. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early adoption is permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact that the standard will have on our consolidated financial statements. . |
Real Estate Investments
Real Estate Investments | 9 Months Ended |
Sep. 30, 2018 | |
Real Estate Investments | |
Real Estate Investments | 2. Real Estate Investments Assisted living communities, independent living communities, memory care communities and combinations thereof are included in the assisted living property classification (or collectively ALF). Any reference to the number of properties or facilities, number of units, number of beds, number of operators and yield on investments in real estate are unaudited and outside the scope of our independent registered public accounting firm’s review of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board. Owned Properties. The following table summarizes our investments in owned properties at September 30, 2018 (dollar amounts in thousands) : Average Percentage Number Number of Investment Gross of of SNF ALF per Type of Property Investment Investment Properties (1) Beds Units Bed/Unit Assisted Living $ 802,484 56.8 % 103 — 5,885 $ 136.36 Skilled Nursing 569,141 40.2 % 73 8,919 261 $ 62.00 Under Development (2) 31,602 2.2 % — — — — Other (3) 11,040 0.8 % 1 118 — — Total $ 1,414,267 100.0 % 177 9,037 6,146 (1) We own properties in 28 states that are leased to 29 different operators. (2) Represents three development projects, consisting of a 143-bed SNF in Kentucky, a 78-unit ALF/MC located in Oregon and a 110-unit ILF/ALF/MC in Wisconsin. (3) Includes three parcels of land held-for-use, and one behavioral health care hospital. Owned properties are leased pursuant to non-cancelable operating leases generally with an initial term of 10 to 15 years. Each lease is a triple net lease which requires the lessee to pay all taxes, insurance, maintenance and repairs, capital and non-capital expenditures and other costs necessary in the operations of the facilities. Many of the leases contain renewal options. The leases provide for fixed minimum base rent during the initial and renewal periods. The majority of our leases contain provisions for specified annual increases over the rents of the prior year that are generally computed in one of four ways depending on specific provisions of each lease: (i) a specified percentage increase over the prior year’s rent, generally between 2.0% and 3.0%; (ii) a calculation based on the Consumer Price Index; (iii) as a percentage of facility net patient revenues in excess of base amounts; or (iv) specific dollar increases. Acquisitions and Developments: The following table summarizes our acquisitions for the nine months ended September 30, 2018 and 2017 (dollar amounts in thousands): Total Number Number Purchase Transaction Acquisition of of Year Type of Property Price Costs (1) Costs Properties Beds/Units 2018 Assisted Living (2) (3) $ 39,600 $ 65 $ 39,665 3 177 Land (3) 695 48 743 — — Total $ 40,295 $ 113 $ 40,408 3 177 2017 Assisted Living (4) $ 54,463 $ 341 $ 54,804 3 240 Total $ 54,463 $ $ 54,804 3 240 (1) Represents cost associated with our acquisitions; however, upon adoption of ASU 2017-01, our acquisitions meet the definition of an asset acquisition resulting in capitalization of transaction costs to the properties’ basis. For our land purchases with forward development commitments, transaction costs are capitalized as part of construction in progress. Transaction costs per our consolidated statements of income and comprehensive income represents current and prior year transaction costs due to timing and terminated transactions. (2) We acquired two MC in Texas. (3) We entered into a joint venture (“JV”) to develop, purchase and own senior housing properties. During the second quarter of 2018, the JV purchased land for the development of a 78-unit ALF/MC in Oregon for a total anticipated project cost of $18,108. The non-controlling partner contributed $1,081 of cash and we committed to fund the remaining $17,027 project cost. During the third quarter of 2018, in a sale-leaseback transaction, the JV purchased an existing operational 89-unit ILF adjacent to the 78-unit ALF/MC we are developing for $14,400. The non-controlling partner contributed $2,857 of equity and we contributed $11,543 in cash. Upon completion of the development project, our combined economic interest in the JV will be approximately 88%. We account for the JV on a consolidated basis. See Note 7. Equity for further discussion related to our partnerships and non-controlling interests. (4) We acquired an ALF and a MC in California. Additionally, we acquired a MC in Ohio. During the nine months ended September 30, 2018 and 2017, we invested the following in development and improvement projects (in thousands) : Nine months ended September 30, 2018 Nine months ended September 30, 2017 Type of Property Developments Improvements Developments Improvements Assisted Living Communities $ 19,251 $ 1,131 $ 10,366 $ 951 Skilled Nursing Centers 6,466 500 3,573 1,357 Other — 432 — — Total $ 25,717 $ 2,063 $ 13,939 $ 2,308 Completed Developments. The following table summarizes our completed developments during the nine months ended September 30, 2018 (dollar amounts in thousands): Number Type Number of of of Total Type of Project Properties Property Beds/Units State Investment Development 1 MC 66 Illinois $ 13,974 Properties held-for-sale . The following table summarizes our properties held-for-sale as of September 30, 2018 (dollar amounts in thousands): Type Number Number of of Gross Accumulated of State Property Properties Investment Depreciation Beds/units Florida (1) SNF 1 $ 2,497 $ 971 60 Texas ILF 1 5,746 1,916 140 Totals 2 $ 8,243 $ 2,887 200 (1) Subsequent to September 30, 2018, we sold this 60-bed SNF for $5,000 and will recognize a gain of approximately $3,400. Properties sold. The following table summarizes property sales during the nine months ended September 30, 2018 and 2017 (dollar amounts in thousands): Type Number Number of of of Sales Carrying Net Year State Properties Properties Beds Price Value Gain 2018 Alabama SNF $ 17,525 $ 3,272 $ 14,253 Kansas ALF (1) — — 350 346 — Ohio and Pennsylvania ALF 67,500 16,352 48,445 Total 2018 8 605 $ 85,375 $ 19,970 $ 62,698 2017 Indiana and Iowa ALF $ 14,250 $ 8,726 $ 5,054 Total 2017 $ 14,250 $ 8,726 $ 5,054 (1) We sold land adjacent to an existing ALF community in Kansas. Mortgage Loans. The following table summarizes our investments in mortgage loans secured by first mortgages at September 30, 2018 (dollar amounts in thousands) : Type Percentage Number of Investment Gross of of SNF per Interest Rate (1) Maturity Investment Property Investment Loans (2) Properties (3) Beds Bed/Unit 9.5% 2043 $ 186,495 SNF 76.1 % 1 15 2,029 $ 91.91 9.2% 2045 33,028 SNF 13.5 % 1 4 501 $ 65.92 9.4% 2045 14,797 SNF 6.0 % 1 1 157 $ 94.25 9.5% 2020 10,733 SNF 4.4 % 1 2 205 $ 52.36 Total $ 245,053 100.0 % 4 22 2,892 $ 84.73 (1) The majority of the mortgage loans provide for annual increases in the interest rate based upon a specified increase of 2.25%. (2) Some loans contain certain guarantees, provide for certain facility fees and the majority of the mortgage loans have a 30-year term. (3) We have investments in properties located in one state that includes mortgages to one operator. The following table summarizes our mortgage loan activity for the nine months ended September 30, 2018 and 2017 (in thousands): Nine months ended September 30, 2018 2017 Originations and funding under mortgage loans receivable $ 20,530 (1) $ 9,333 Pay-offs received (1,086) (16,665) Scheduled principal payments received (550) (686) Net increase (decrease) in mortgage loans receivable $ 18,894 $ (8,018) (1) During 2018, we funded an additional $7,400 under an existing mortgage loan for the purchase of a 112-bed skilled nursing center in Michigan. The incremental funding bears interest at 8.7%, fixed for five years, and escalating by 2.25% thereafter. Also, we funded additional loan proceeds of $7,125 under an existing mortgage loan for the purchase of a 126-bed skilled nursing center in Michigan. This incremental funding bears interest at 9.41%, fixed for five years, and escalating by 2.25% thereafter. |
Investment in Unconsolidated Jo
Investment in Unconsolidated Joint Ventures | 9 Months Ended |
Sep. 30, 2018 | |
Investment in Unconsolidated Joint Ventures | |
Investment in Unconsolidated Joint Ventures | 3. Our investment in unconsolidated joint ventures consists of a preferred equity investment and two mezzanine loans which are accounted for as unconsolidated joint ventures in accordance with GAAP. The following table summarizes our investment in unconsolidated joint ventures (dollar amounts in thousands): Type Type Total Currently Number of of Preferred Paid in of Investment Carrying State Properties Investment Return Cash Beds/ Units Commitment Value Arizona ALF/MC/ILF Preferred Equity (1) % % $ 25,650 $ 23,942 Florida ALF/IL/MC Mezzanine (2) % % 2,900 (3) 3,169 (3) Florida UDP-ALF/MC Mezzanine (2) % % 3,400 3,400 Total $ 31,950 $ 30,511 (1) We have concluded that the JV is a variable interest entity (“VIE”) in accordance with GAAP. However, because we do not control the entity, nor do we have any role in the day-to-day management, we are not the primary beneficiary of the JV. Therefore, we account for the JV investment using the equity method. (2) We evaluated these acquisition, development and construction (“ADC”) arrangements and determined that the characteristics are similar to jointly-owned investments or partnerships, and accordingly, these investments are accounted for as unconsolidated joint ventures under the equity method of accounting instead of loan accounting. (3) Since interest payments were deferred and no interest was recorded for the first twelve months of the loan, we used the effective interest method in accordance with GAAP to recognize interest income and recorded the difference between the effective interest income and cash interest income to the loan principal balance. The following table summarizes our capital contributions, income recognized, and cash interest received related to our investments in unconsolidated joint ventures (in thousands): Nine Months Ended September 30, Type 2018 2017 of Capital Income Cash Interest Capital Income Cash Interest Properties Contribution Recognized Received Contribution Recognized Received ALF/MC/ILF $ 580 $ 1,490 $ 1,436 $ 1,100 $ 1,134 $ 1,020 ALF/IL/MC — 383 291 — 383 216 UDP-ALF/MC — 230 — (1) 2,747 118 — (1) Total $ $ 2,103 $ 1,727 $ 3,847 $ 1,635 $ (1) We withheld $653 at the time of loan origination which is being applied to interest. As of September 30, 2018, we still hold $257 which will be applied to future interest. |
Notes Receivable
Notes Receivable | 9 Months Ended |
Sep. 30, 2018 | |
Notes Receivable. | |
Notes Receivable | 4. Notes Receivable Notes receivable consists of mezzanine loans and other loan arrangements. The following table is a summary of our notes receivable components as of September 30, 2018 and December 31, 2017 (in thousands): At September 30, 2018 At December 31, 2017 Mezzanine loans $ 9,869 $ 13,700 Other loans 2,901 2,868 Notes receivable reserve (128) (166) Total $ 12,642 $ 16,402 The following tables summarizes our notes receivable activity for the nine months ended September 30, 2018 and 2017 ( dollar amounts in thousands ): Nine months ended September 30, 2018 2017 Advances under notes receivable $ 50 $ — Principal payments received under notes receivable (3,848) (25) Total $ (3,798) $ (25) |
Lease Incentives
Lease Incentives | 9 Months Ended |
Sep. 30, 2018 | |
Lease Incentives | |
Lease Incentives | 5. The following summarizes lease incentives by component as of September 30, 2018 and December 31, 2017 (in thousands): At September 30, 2018 At December 31, 2017 Non-contingent lease incentives $ 14,883 $ 14,904 Contingent lease incentives 6,219 6,577 Total $ 21,102 $ 21,481 The following table summarizes our lease incentive activity for the nine months ended September 30, 2018 and 2017 (in thousands) : Nine months ended September 30, 2018 2017 Funding Amortization Funding Amortization Write off Non-contingent lease incentives $ 1,272 $ (1,292) $ 5,713 $ (1,181) $ (1,205) (1) Contingent lease incentives (3) — (359) — (500) (2,634) (2) Total $ 1,272 $ (1,651) $ 5,713 $ (1,681) $ (3,839) (1) Represents the write-off of lease incentives related to two MC communities due to negotiations to transition these properties to another operator in our portfolio. (2) Represents the write-off of lease incentive related to an ALF community due to change to the business model at the property that resulted in lower net operating income and the improbability of paying the earn-out. (3) Subsequent to September 30, 2018, we entered into an amended master lease agreement with Senior Lifestyle Management, LLC (“Senior Lifestyle”). Among the provisions of the amendment, the contingent lease incentive payable to Senior Lifestyle was removed. Therefore, subsequent to September 30, 2018, we will write-off the Senior Lifestyle contingent lease incentive of $6,219 and the related earn-out liability of $9,292 which will result in income of approximately $3,000. Non-contingent lease incentives represent payments made to our lessees for various reasons including entering into a new lease or lease amendments and extensions. Contingent lease incentives represent potential contingent earn-out payments that may be made to our lessees in the future, as part of our lease agreements. From time to time, we may commit to provide contingent payments to our lessees, upon our properties achieving certain rent coverage ratios. Once the contingent payment becomes probable and estimable, the contingent payment is recorded as a lease incentive. Lease incentives are amortized as a yield adjustment to rental income over the remaining life of the lease. |
Debt Obligations
Debt Obligations | 9 Months Ended |
Sep. 30, 2018 | |
Debt Obligations | |
Debt Obligations | 6. Debt Obligations Bank Borrowings. During 2018, we amended and restated our unsecured credit agreement to replace the previous unsecured credit agreement, prior to its expiration on October 14, 2018. The amended credit agreement maintains the $600,000,000 aggregate commitment of the lenders under the prior agreement and provides for the opportunity to increase the commitment size of the credit agreement up to a total of $1,000,000,000. The amended credit agreement extends the maturity of the credit agreement to June 27, 2022 and provides for a one-year extension option at our discretion, subject to customary conditions. Additionally, the amended credit agreement decreases the interest rate margins and converts from the payment of unused commitment fees to a facility fee. Based on our leverage at September 30, 2018, the facility provides for interest annually at LIBOR plus 115 basis points and a facility fee of 20 basis points. At September 30, 2018, we were in compliance with all covenants. Senior Unsecured Notes. During 2017, we amended our shelf agreement with affiliates and managed accounts of Prudential Investment Management, Inc. (“Prudential”) to increase our shelf commitment to $337,500,000. The debt obligations by component as of September 30, 2018 and December 31, 2017 are as follows ( dollar amounts in thousands): At September 30, 2018 At December 31, 2017 Applicable Available Available Interest Outstanding for Outstanding for Debt Obligations Rate (1) Balance Borrowing Balance Borrowing Bank borrowings (2) 3.38% $ 120,000 $ 480,000 $ 96,500 $ 503,500 Senior unsecured notes, net of debt issue costs 4.49% 550,986 79,833 571,002 63,667 Total 4.29% $ 670,986 $ 559,833 $ 667,502 $ 567,167 (1) Represents weighted average of interest rate as of September 30, 2018. (2) Subsequent to September 30, 2018, we paid down $20,000 under our unsecured revolving line of credit. Accordingly, we have $100,000 outstanding under our unsecured revolving line of credit with $500,000 available for borrowing. Our borrowings and repayments are as follows (in thousands): Nine months ended September 30, 2018 2017 Debt Obligations Borrowings Repayments Borrowings Repayments Bank borrowings $ 96,500 $ (73,000) $ 64,500 $ (116,600) Senior unsecured notes — (20,166) 100,000 (1) (19,167) Total $ 96,500 $ (93,166) $ 164,500 $ (135,767) (1) During 2017, we sold 15-year senior unsecured notes in the aggregate amount of $100,000 to a group of investors, which included Prudential, in a private placement transaction. The notes bear interest at an annual rate of 4.5%, have scheduled principal payments and mature on February 16, 2032. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity | |
Equity | 7. Common Stock. We have an equity distribution agreement to issue and sell, from time to time, up to $200,000,000 in aggregate offering price of our company common shares. During the nine months ended September 30, 2018 and 2017, under our equity distribution agreement, we sold 22,244 shares of common stock for $1,005,000 in net proceeds and 312,881 shares of common stock for $14,578,000 in net proceeds, respectively. In conjunction with the sale of common stock, during the nine months ended September 30, 2018 and 2017, we paid $18,000 and $260,000, respectively, as compensation to our sales agents and we reclassified $76,000 and $49,000, respectively, of accumulated costs associated with this agreement to capital in excess of par value. At September 30, 2018, and 2017, we had $184,139,000 and $185,162,000, respectively, available under our equity distribution agreement. During the nine months ended September 30, 2018 and 2017, we acquired 31,326 shares and 41,592 shares, respectively, of common stock held by employees who tendered owned shares to satisfy tax withholding obligations. Non-controlling Interests. During 2018 and 2017, we entered into partnerships to develop and/or own real estate. Given that our limited members do not have the substantive kick-out rights, liquidation rights, or participation rights, we have concluded that the partnerships are VIEs. And since we exercise power over and receive benefits from the VIEs, we are considered the primary beneficiary. Accordingly, we consolidate the VIEs and record the non-controlling interests at cost. As of September 30, 2018, we have the following consolidated VIEs (dollar amounts in thousands): Gross Investment Property Consolidated Non-Controlling Year Purpose Type State Assets Interests 2018 Owned real estate ILF OR $ 14,400 (1) $ 2,857 (1) 2018 Owned real estate and development UDP OR 2,881 (1) 1,081 (1) 2017 Owned real estate and development UDP WI 10,316 (2) 2,272 (2) 2017 Owned real estate ALF SC 10,571 1,241 Total $ 38,168 $ 7,451 (1) We entered into a joint venture (“JV”) to develop, purchase and own senior housing properties. During the second quarter of 2018, the JV purchased land for the development of a 78-unit ALF/MC for a total anticipated project cost of $18,108. The non-controlling partner contributed $1,081 of cash and we committed to fund the remaining $17,027 project cost. During the third quarter of 2018, in a sale-leaseback transaction, the JV purchased an existing operational 89-unit ILF adjacent to the 78-unit ALF/MC we are developing for $14,400. The non-controlling partner contributed $2,857 of equity and we contributed $11,543 in cash. Upon completion of the development project, our combined economic interest in the JV will be approximately 88%. We account for the JV on a consolidated basis. (2) We entered into a partnership to own the real estate and develop a 110-unit ILF/ALF/MC community in Wisconsin. The commitment totals approximately $22,471. Available Shelf Registrations. We have an automatic shelf registration statement on file with the SEC, and currently have the ability to file additional automatic shelf registration statements, to provide us with capacity to publicly offer an indeterminate amount of common stock, preferred stock, warrants, debt, depositary shares, or units. We may from time to time raise capital under our automatic shelf registration statement in amounts, at prices, and on terms to be announced when and if the securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of the offering. Distributions. We declared and paid the following cash dividends (in thousands) : Nine Months Ended September 30, 2018 2017 Declared Paid Declared Paid Common Stock $ 67,768 (1) $ 67,768 (1) $ 67,664 (1) $ 67,664 (1) (1) Represents $0.19 per share per month for the nine months ended September 30, 2018 and 2017. In October 2018, we declared a monthly cash dividend of $0.19 per share on our common stock for the months of October, November and December 2018, payable on October 31, November 30, and December 31, 2018, respectively, to stockholders of record on October 23, November 21, and December 21, 2018, respectively. Stock-Based Compensation . Under our 2015 Equity Participation Plan (“the 2015 Plan”), 1,400,000 shares of common stock have been reserved for awards, including nonqualified stock option grants and restricted stock grants to officers, employees, non-employee directors and consultants. The terms of the awards granted under the 2015 Plan are set by our compensation committee at its discretion. During the nine months ended September 30, 2018 and 2017, no stock options were granted. The stock options exercised during the nine months ended September 30, 2018 and 2017 were as follows: Weighted Average Options Exercise Option Market Exercised Price Value Value (1) 2018 5,000 $ 24.65 $ 123,000 $ 205,000 2017 8,334 $ 24.31 $ 202,566 $ 410,797 (1) As of exercise date. At September 30, 2018, we had 20,000 stock options outstanding and exercisable. Compensation expense related to the vesting of stock options was $ 0 and $2,000 for the nine months ended September 30, 2018 and 2017, respectively. The following table summarizes our restricted stock and performance-based stock units activity for the nine months ended September 30, 2018 and 2017: Nine months ended September 30, 2018 2017 Outstanding, January 1 244,181 210,573 Granted 156,718 143,057 Vested (75,149) (84,363) Cancelled — (24,106) Outstanding, September 30 325,750 245,161 During the nine months ended September 30, 2018 and 2017, we granted restricted stock and performance-based stock units under the 2015 Plan as follows: No. of Price per Year Shares/Units Share Vesting Period 2018 $ ratably over 3 years 66,171 $ 38.18 TSR targets (1) 8,728 $ 41.25 ratably over 1 year 2017 $ 45.76 ratably over 3 years 57,881 $ 45.76 TSR targets (1) 7,416 $ 48.55 ratably over 1 year 3,000 $ 50.55 ratably over 3 years (1) Vesting is based on achieving certain total shareholder return (“TSR”) targets in 4 years with acceleration opportunity in 3 years. Compensation expense recognized related to the vesting of restricted common stock and performance-based stock units for the nine months ended September 30, 2018 and 2017 were $4,384,000 and $3,965,000, respectively. At September 30, 2018, the remaining compensation expense to be recognized related to the future service period of unvested outstanding restricted common stock and performance-based stock units are as follows: Remaining Compensation Vesting Date Expense 2018 $ 1,486,000 2019 4,250,000 2020 2,210,000 2021 238,000 Total $ 8,184,000 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments and Contingencies At September 30, 2018, we had commitments as follows (in thousands): Total Investment 2018 Commitment Remaining Commitment Funding Funded Commitment Real estate properties ( Note 2. Real Estate Investments ) $ 77,882 (1) $ 17,973 $ 35,417 $ 42,465 Accrued incentives and earn-out liabilities 23,000 (3) — — 23,000 Mortgage loans ( Note 2. Real Estate Investments ) 65,700 (2) 6,005 23,256 42,444 Joint venture investments ( Note 3. Investments in Unconsolidated Joint Ventures ) 25,650 580 23,594 2,056 Notes receivable ( Note 4. Notes Receivable ) 700 50 50 650 Total $ 192,932 $ 24,608 $ 82,317 $ 110,615 (1) Represents commitments to purchase land and improvements, if applicable, and to develop, re-develop, renovate or expand seniors housing and health care properties. (2) $39,700 represents commitments to expand and renovate the seniors housing and health care properties securing the mortgage loans and $26,000 represents contingent funding upon the borrower achieving certain coverage ratios. (3) Subsequent to September 30, 2018, we entered into an amended master lease agreement with Senior Lifestyle. Among the provisions of the amendment, the contingent lease incentive payable to Senior Lifestyle was removed. Therefore, subsequent to September 30, 2018, we wrote-off the Senior Lifestyle contingent lease incentive of $6,219 and the related earn-out liability of $9,292 which will result in income of approximately $3,000. We are a party from time to time to various general and professional liability claims and lawsuits asserted against the lessees or borrowers of our properties, which in our opinion are not singularly or in the aggregate material to our results of operations or financial condition. These types of claims and lawsuits may include matters involving general or professional liability, which we believe under applicable legal principles are not our responsibility as a non-possessory landlord or mortgage holder. We believe that these matters are the responsibility of our lessees and borrowers pursuant to general legal principles and pursuant to insurance and indemnification provisions in the applicable leases or mortgages. We intend to continue to vigorously defend such claims. |
Major Operators
Major Operators | 9 Months Ended |
Sep. 30, 2018 | |
Major Operators | |
Major Operators | 9. Major Operators We have four operators from each of which we derive approximately 10% or more of our combined rental revenue and interest income from mortgage loans. The following table sets forth information regarding our major operators as of September 30, 2018: Number of Number of Percentage of SNF ALF Total Total Operator SNF ALF Beds Units Revenue (1) Assets Prestige Healthcare 24 — 3,010 93 18.0 % 16.4 % Senior Lifestyle Corporation — 23 — 1,457 11.9 % 10.4 % Brookdale Senior Living — 37 — 1,702 10.1 % 4.6 % Senior Care Centers 11 — 1,444 — 9.8 % 7.1 % Total 35 60 4,454 3,252 % % (1) Includes rental income and interest income from mortgage loans and excludes income from properties sold and mortgage loans paid off during 2018. Our financial position and ability to make distributions may be adversely affected if Prestige Healthcare, Senior Lifestyle Corporation, Brookdale Senior Living, Senior Care Centers, or any of our lessees and borrowers face financial difficulties, including any bankruptcies, inability to emerge from bankruptcy, insolvency or general downturn in business of any such operator, or in the event any such operator does not renew and/or extend its relationship with us. |
Earnings per share
Earnings per share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings per share | |
Earnings per share | 10. Earnings per Share The following table sets forth the computation of basic and diluted net income per share ( in thousands, except per share amounts ): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Net income $ 34,937 $ 20,616 $ 124,232 $ 67,506 Less net income allocated to non-controlling interests (17) — (17) — Less net income allocated to participating securities: Non-forfeitable dividends on participating securities (89) (80) (268) (269) Income allocated to participating securities (49) — (236) (12) Total net income allocated to participating securities (138) (80) (504) (281) Net income available to common stockholders 34,782 20,536 123,711 67,225 Effect of dilutive securities: Participating securities 138 80 504 281 Net income for diluted net income per share $ 34,920 $ 20,616 $ 124,215 $ 67,506 Shares for basic net income per share 39,487 39,428 39,470 39,403 Effect of dilutive securities: Stock options 4 9 3 11 Performance-based stock units 217 170 217 170 Participating securities 157 141 155 154 Total effect of dilutive securities 378 320 375 335 Shares for diluted net income per share 39,865 39,748 39,845 39,738 Basic net income per share $ 0.88 $ 0.52 $ 3.13 $ 1.71 Diluted net income per share $ 0.88 $ 0.52 $ 3.12 $ 1.70 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | 11. Fair Value Measurements In accordance with the accounting guidance regarding the fair value option for financial assets and financial liabilities, entities are permitted to choose to measure certain financial assets and liabilities at fair value, with the change in unrealized gains and losses reported in earnings. We did not elect the fair value option for any of our financial assets and financial liabilities. The carrying amount of cash and cash equivalents approximates fair value because of the short-term maturity of these instruments. We do not invest our cash in auction rate securities. The carrying value and fair value of our financial instruments as of September 30, 2018 and December 31, 2017 assuming election of fair value for our financial assets and financial liabilities were as follows ( in thousands ): At September 30, 2018 At December 31, 2017 Carrying Fair Carrying Fair Value Value Value Value Mortgage loans receivable $ 242,609 $ 274,698 (1) $ 223,907 $ 278,224 Bank borrowings 120,000 120,000 (2) 96,500 96,500 Senior unsecured notes, net of debt issue costs 550,986 529,805 (3) 571,002 577,126 Accrued incentives and earn-outs 9,292 9,292 (4) 8,916 8,916 (1) Our investment in mortgage loans receivable is classified as Level 3. The fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is determined using our assumption on market conditions adjusted for market and credit risk and current returns on our investments. The discount rate used to value our future cash inflows of the mortgage loans receivable at September 30, 2018 and December 31, 2017 was 9.7% and 8.7%, respectively. (2) Our bank borrowings bear interest at a variable interest rate. The estimated fair value of our bank borrowings approximated their carrying values at September 30, 2018 and December 31, 2017 based upon prevailing market interest rates for similar debt arrangements. (3) Our obligation under our senior unsecured notes is classified as Level 3 and thus the fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is measured based upon management’s estimates of rates currently prevailing for comparable loans available to us, and instruments of comparable maturities. At September 30, 2018, the discount rate used to value our future cash outflow of our senior unsecured notes was 5.00% for those maturing before year 2026 and 5.25% for those maturing at or beyond year 2026. At December 31, 2017, the discount rate used to value our future cash outflow of our senior unsecured notes was 4.10% for those maturing before year 2026 and 4.30% for those maturing at or beyond year 2026. (4) Our accrued incentives and earn-outs are classified as Level 3. We estimated the fair value of the accrued incentives and earn‑out payments using a discounted cash flow analysis. The discount rate that we use consists of a risk‑free U.S. Treasury rate plus a company specific credit spread which we believe is acceptable by willing market participants. The discount rate used to value our accrued incentives and earn-outs was 6.0% at September 30, 2018 and 6.2% at December 31, 2017. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events | |
Subsequent Events | 12. Subsequent to September 30, 2018 the following events occurred: Real Estate: We sold a 60-bed SNF in Florida for $5,000,000 with a net book value of $1,526,000 and will recognize a gain of approximately $3,400,000 in the fourth quarter. Lease Incentives: We entered into an amended master lease agreement with Senior Lifestyle. Among the provisions of the amendment, the contingent lease incentive payable to Senior Lifestyle was removed. Therefore, subsequent to September 30, 2018, we will write-off the Senior Lifestyle contingent lease incentive of $6,219,000 and the related earn-out liability of $9,292,000 which will result in income of approximately $3,000,000. Debt: We paid down $20,000,000 under our unsecured revolving line of credit. Accordingly, we have $100,000,000 outstanding under our unsecured revolving line of credit with $500,000,000 available for borrowing. Equity: We declared a monthly cash dividend of $0.19 per share on our common stock for the months of October, November and December 2018, payable on October 31, November 30, and December 31, 2018, respectively to stockholders of record on October 23, November 21, and December 21, 2018, respectively. |
General (Policies)
General (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
General | |
Basis of Presentation | We have prepared consolidated financial statements included herein without audit and in the opinion of management have included all adjustments necessary for a fair presentation of the consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to rules and regulations governing the presentation of interim financial statements. The accompanying consolidated financial statements include the accounts of our company and its wholly-owned subsidiaries. |
Reclassifications | All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2018 and 2017 are not necessarily indicative of the results for a full year. |
Income taxes | No provision has been made for federal or state income taxes. Our company qualifies as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As such, we generally are not taxed on income that is distributed to our stockholders. |
Restricted Cash | Restricted Cash During the third quarter of 2017, a 170-bed skilled nursing center in our portfolio was evacuated due to damages caused by Hurricane Harvey. This property is located in Texas and operated under a triple net master lease agreement. We periodically evaluate properties for impairment when events or changes in circumstances indicate that the asset may be impaired or the carrying amount of the asset may not be recoverable through future undiscounted cash flows. Based upon a quarterly assessment of this property using the recoverability test, we concluded the property has not been impaired. As of September 30, 2018, the gross value and the carrying value of the property were $2,021,000 and $1,146,000, respectively. The provisions of our triple net lease agreements impose certain obligations on our operators including: · Acquire property insurance, subject to certain criteria; · Continue paying rent in the event of any property damage or destruction; and · Return the leased property back to us at the end of the lease term, in the same condition originally received. During the second quarter of 2018, our operator provided us with insurance proceeds of $2,619,000 to be used for remediation of the property as noted in the provisions of our master lease agreement. Accordingly, we have classified the insurance proceeds as restricted cash on our consolidated financial statements. |
New Accounting Pronouncement | New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “ an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While this ASU specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate. Additionally, the FASB has issued targeted updates to clarify specific implementation issues of ASU 2014-09. These updates include ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Identifying Performance Obligations and Licensing, and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients. The new standard and its amendments were effective on January 1, 2018 and permitted reporting entities to apply the standard using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or full retrospective approach . We assessed our revenue streams to identify any differences in the timing, measurement or presentation of revenue recognition. We evaluated the provisions of ASU 2014-09 and its related additional guidance to determine the potential impact of the new standard. We concluded that adoption of this standard did not have an impact on our results of operations or financial condition, as our revenue consists of rental income from leasing arrangements and interest income from loan arrangements, both of which are specifically excluded from ASU 2014-09. We adopted this standard using the modified retrospective adoption method on January 1, 2018. In February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases (Topic 842) . The objective of this ASU is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. ASU 2016-02 modifies existing guidance by requiring lessees to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance of operating leases. ASU 2016-02 requires the lessors to identify lease and non-lease components of a lease agreement. ASU 2016-02 will govern the recognition of revenue for lease components. Revenue related to non-lease components under lease agreements will be subject to the revenue recognition standard, upon adoption of this ASU. Entities are required to use a modified retrospective approach for leases that exist or are entered into after January 1, 2017, the beginning of the earliest comparative period presented in the 2019 consolidated financial statements with a cumulative adjustment to the opening balance of retained earnings. Additionally, in July 2018, the FASB issued ASU No. 2018-11, Leases - Targeted Improvements (“ASU 2018-11”), which provides lessors with the option to elect a practical expedient allowing them to not separate lease and non-lease components and instead, to account for those components as a single lease component. This practical expedient is limited to circumstances in which: (i) the timing and pattern of transfer are the same for the non-lease component and the related lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. This practical expedient causes an entity to assess whether a contract is predominantly lease-based or service-based and recognize the entire contract under the relevant accounting guidance (i.e., predominantly lease-based would be accounted for under ASU 2016-02 and predominantly service-based would be accounted for under the Revenue ASUs). This practical expedient option is available as a single election that must be consistently applied to all existing leases at the date of adoption. ASU 2018-11 also provides a practical expedient that allows companies to use an optional transition method. Under the optional transition method, a cumulative adjustment to retained earnings during the period of adoption is recorded and prior periods would not require restatement. Consequently, entities that elect both the practical expedient and the optional transitional method will apply the new lease ASU prospectively to leases commencing or modified after January 1, 2019, and will not be required to apply the disclosures under the new lease ASU to comparative periods. Consistent with present standards, we will continue to account for lease revenue on a straight-line basis when applicable. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements from both the lessee and lessor perspective. As a result of the adoption of this guidance, we may be required to increase our revenue and expense for lessor costs paid directly by lessees under triple-net leases, if the amount paid is readily determinable (i.e. real estate taxes). Additionally, we have begun our process for implementing this guidance, including identifying any non-lease components in our lease arrangements. We plan to finalize our assessment during the fourth quarter of 2018. In August 2016, FASB issued ASU No. 2016-15 (“ASU 2016-15”), Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (A Consensus of the Emerging Issues Task Force) . ASU 2016-15 provides guidance that reduces the diversity in practice of the classification of certain cash receipts and cash payments within the statement of cash flows. This guidance is effective for fiscal periods beginning after December 15, 2017. We adopted this standard on January 1, 2018. The adoption of this guidance did not have a material impact on our financial statements. In January 2017, the FASB issued ASU No. 2017-01(“ASU 2017-01”), Business Combinations (Topic 805): Clarifying Definition of a Business . ASU 2017-01 clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. This update is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted for transactions that have not been reported in previously issued (or available to be issued) financial statements. We adopted ASU 2017-01 during the second quarter of 2017. Historically, our acquisitions qualified as either a business combination or asset acquisition. The adoption of this ASU did not have a material impact on the company’s results of operations or financial condition as most of our acquisitions of investment properties will continue to qualify as asset acquisitions. In February 2017, the FASB issued ASU No. 2017-05 (“ASU 2017-05”), Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets. ASU 2017-05 defines an in-substance nonfinancial asset and clarifies guidance related to partial sales of nonfinancial assets. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The adoption of this ASU did not have a material impact on the consolidated financial statements and related notes. In 2016, the FASB issued ASU No. 2016-13 , Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard requires a new forward looking “expected loss” model to be used for receivables, held-to-maturity debt, loans, and other instruments. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early adoption is permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact that the standard will have on our consolidated financial statements. . |
Real Estate Investments (Tables
Real Estate Investments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Real Estate Investments | |
Summary of investments in owned properties | Owned Properties. The following table summarizes our investments in owned properties at September 30, 2018 (dollar amounts in thousands) : Average Percentage Number Number of Investment Gross of of SNF ALF per Type of Property Investment Investment Properties (1) Beds Units Bed/Unit Assisted Living $ 802,484 56.8 % 103 — 5,885 $ 136.36 Skilled Nursing 569,141 40.2 % 73 8,919 261 $ 62.00 Under Development (2) 31,602 2.2 % — — — — Other (3) 11,040 0.8 % 1 118 — — Total $ 1,414,267 100.0 % 177 9,037 6,146 (1) We own properties in 28 states that are leased to 29 different operators. (2) Represents three development projects, consisting of a 143-bed SNF in Kentucky, a 78-unit ALF/MC located in Oregon and a 110-unit ILF/ALF/MC in Wisconsin. (3) Includes three parcels of land held-for-use, and one behavioral health care hospital. |
Summary of investments acquired | Acquisitions and Developments: The following table summarizes our acquisitions for the nine months ended September 30, 2018 and 2017 (dollar amounts in thousands): Total Number Number Purchase Transaction Acquisition of of Year Type of Property Price Costs (1) Costs Properties Beds/Units 2018 Assisted Living (2) (3) $ 39,600 $ 65 $ 39,665 3 177 Land (3) 695 48 743 — — Total $ 40,295 $ 113 $ 40,408 3 177 2017 Assisted Living (4) $ 54,463 $ 341 $ 54,804 3 240 Total $ 54,463 $ $ 54,804 3 240 (1) Represents cost associated with our acquisitions; however, upon adoption of ASU 2017-01, our acquisitions meet the definition of an asset acquisition resulting in capitalization of transaction costs to the properties’ basis. For our land purchases with forward development commitments, transaction costs are capitalized as part of construction in progress. Transaction costs per our consolidated statements of income and comprehensive income represents current and prior year transaction costs due to timing and terminated transactions. (2) We acquired two MC in Texas. (3) We entered into a joint venture (“JV”) to develop, purchase and own senior housing properties. During the second quarter of 2018, the JV purchased land for the development of a 78-unit ALF/MC in Oregon for a total anticipated project cost of $18,108. The non-controlling partner contributed $1,081 of cash and we committed to fund the remaining $17,027 project cost. During the third quarter of 2018, in a sale-leaseback transaction, the JV purchased an existing operational 89-unit ILF adjacent to the 78-unit ALF/MC we are developing for $14,400. The non-controlling partner contributed $2,857 of equity and we contributed $11,543 in cash. Upon completion of the development project, our combined economic interest in the JV will be approximately 88%. We account for the JV on a consolidated basis. See Note 7. Equity for further discussion related to our partnerships and non-controlling interests. (4) We acquired an ALF and a MC in California. Additionally, we acquired a MC in Ohio. |
Schedule of investment in development and improvement projects | During the nine months ended September 30, 2018 and 2017, we invested the following in development and improvement projects (in thousands) : Nine months ended September 30, 2018 Nine months ended September 30, 2017 Type of Property Developments Improvements Developments Improvements Assisted Living Communities $ 19,251 $ 1,131 $ 10,366 $ 951 Skilled Nursing Centers 6,466 500 3,573 1,357 Other — 432 — — Total $ 25,717 $ 2,063 $ 13,939 $ 2,308 |
Schedule of completed projects | Completed Developments. The following table summarizes our completed developments during the nine months ended September 30, 2018 (dollar amounts in thousands): Number Type Number of of of Total Type of Project Properties Property Beds/Units State Investment Development 1 MC 66 Illinois $ 13,974 |
Summary of properties held-for-sale | Properties held-for-sale . The following table summarizes our properties held-for-sale as of September 30, 2018 (dollar amounts in thousands): Type Number Number of of Gross Accumulated of State Property Properties Investment Depreciation Beds/units Florida (1) SNF 1 $ 2,497 $ 971 60 Texas ILF 1 5,746 1,916 140 Totals 2 $ 8,243 $ 2,887 200 (1) Subsequent to September 30, 2018, we sold this 60-bed SNF for $5,000 and will recognize a gain of approximately $3,400. |
Schedule of real estate investment property sold | Properties sold. The following table summarizes property sales during the nine months ended September 30, 2018 and 2017 (dollar amounts in thousands): Type Number Number of of of Sales Carrying Net Year State Properties Properties Beds Price Value Gain 2018 Alabama SNF $ 17,525 $ 3,272 $ 14,253 Kansas ALF (1) — — 350 346 — Ohio and Pennsylvania ALF 67,500 16,352 48,445 Total 2018 8 605 $ 85,375 $ 19,970 $ 62,698 2017 Indiana and Iowa ALF $ 14,250 $ 8,726 $ 5,054 Total 2017 $ 14,250 $ 8,726 $ 5,054 (1) We sold land adjacent to an existing ALF community in Kansas. |
Schedule of mortgage loans secured by first mortgage | The following table summarizes our investments in mortgage loans secured by first mortgages at September 30, 2018 (dollar amounts in thousands) : Type Percentage Number of Investment Gross of of SNF per Interest Rate (1) Maturity Investment Property Investment Loans (2) Properties (3) Beds Bed/Unit 9.5% 2043 $ 186,495 SNF 76.1 % 1 15 2,029 $ 91.91 9.2% 2045 33,028 SNF 13.5 % 1 4 501 $ 65.92 9.4% 2045 14,797 SNF 6.0 % 1 1 157 $ 94.25 9.5% 2020 10,733 SNF 4.4 % 1 2 205 $ 52.36 Total $ 245,053 100.0 % 4 22 2,892 $ 84.73 (1) The majority of the mortgage loans provide for annual increases in the interest rate based upon a specified increase of 2.25%. (2) Some loans contain certain guarantees, provide for certain facility fees and the majority of the mortgage loans have a 30-year term. (3) We have investments in properties located in one state that includes mortgages to one operator. |
Schedule of mortgage loan activity | The following table summarizes our mortgage loan activity for the nine months ended September 30, 2018 and 2017 (in thousands): Nine months ended September 30, 2018 2017 Originations and funding under mortgage loans receivable $ 20,530 (1) $ 9,333 Pay-offs received (1,086) (16,665) Scheduled principal payments received (550) (686) Net increase (decrease) in mortgage loans receivable $ 18,894 $ (8,018) During 2018, we funded an additional $7,400 under an existing mortgage loan for the purchase of a 112-bed skilled nursing center in Michigan. The incremental funding bears interest at 8.7%, fixed for five years, and escalating by 2.25% thereafter. Also, we funded additional loan proceeds of $7,125 under an existing mortgage loan for the purchase of a 126-bed skilled nursing center in Michigan. This incremental funding bears interest at 9.41%, fixed for five years, and escalating by 2.25% thereafter. |
Investment in Unconsolidated _2
Investment in Unconsolidated Joint Ventures (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investment in Unconsolidated Joint Ventures | |
Summary of investments in unconsolidated joint ventures | The following table summarizes our investment in unconsolidated joint ventures (dollar amounts in thousands): Type Type Total Currently Number of of Preferred Paid in of Investment Carrying State Properties Investment Return Cash Beds/ Units Commitment Value Arizona ALF/MC/ILF Preferred Equity (1) % % $ 25,650 $ 23,942 Florida ALF/IL/MC Mezzanine (2) % % 2,900 (3) 3,169 (3) Florida UDP-ALF/MC Mezzanine (2) % % 3,400 3,400 Total $ 31,950 $ 30,511 (1) We have concluded that the JV is a variable interest entity (“VIE”) in accordance with GAAP. However, because we do not control the entity, nor do we have any role in the day-to-day management, we are not the primary beneficiary of the JV. Therefore, we account for the JV investment using the equity method. (2) We evaluated these acquisition, development and construction (“ADC”) arrangements and determined that the characteristics are similar to jointly-owned investments or partnerships, and accordingly, these investments are accounted for as unconsolidated joint ventures under the equity method of accounting instead of loan accounting. (3) Since interest payments were deferred and no interest was recorded for the first twelve months of the loan, we used the effective interest method in accordance with GAAP to recognize interest income and recorded the difference between the effective interest income and cash interest income to the loan principal balance. |
Summary of capital contributions, income recognized and cash interest received from investments in unconsolidated joint ventures | The following table summarizes our capital contributions, income recognized, and cash interest received related to our investments in unconsolidated joint ventures (in thousands): Nine Months Ended September 30, Type 2018 2017 of Capital Income Cash Interest Capital Income Cash Interest Properties Contribution Recognized Received Contribution Recognized Received ALF/MC/ILF $ 580 $ 1,490 $ 1,436 $ 1,100 $ 1,134 $ 1,020 ALF/IL/MC — 383 291 — 383 216 UDP-ALF/MC — 230 — (1) 2,747 118 — (1) Total $ $ 2,103 $ 1,727 $ 3,847 $ 1,635 $ (1) We withheld $653 at the time of loan origination which is being applied to interest. As of September 30, 2018, we still hold $257 which will be applied to future interest. |
Notes Receivable (Tables)
Notes Receivable (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Notes Receivable. | |
Summary of mezzanine loans and other loan arrangements | The following table is a summary of our notes receivable components as of September 30, 2018 and December 31, 2017 (in thousands): At September 30, 2018 At December 31, 2017 Mezzanine loans $ 9,869 $ 13,700 Other loans 2,901 2,868 Notes receivable reserve (128) (166) Total $ 12,642 $ 16,402 |
Summary of notes receivable activity | The following tables summarizes our notes receivable activity for the nine months ended September 30, 2018 and 2017 ( dollar amounts in thousands ): Nine months ended September 30, 2018 2017 Advances under notes receivable $ 50 $ — Principal payments received under notes receivable (3,848) (25) Total $ (3,798) $ (25) |
Lease Incentives (Tables)
Lease Incentives (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Lease Incentives | |
Summary of lease incentives by component | The following summarizes lease incentives by component as of September 30, 2018 and December 31, 2017 (in thousands): At September 30, 2018 At December 31, 2017 Non-contingent lease incentives $ 14,883 $ 14,904 Contingent lease incentives 6,219 6,577 Total $ 21,102 $ 21,481 |
Summary of lease incentive activity | Nine months ended September 30, 2018 2017 Funding Amortization Funding Amortization Write off Non-contingent lease incentives $ 1,272 $ (1,292) $ 5,713 $ (1,181) $ (1,205) (1) Contingent lease incentives (3) — (359) — (500) (2,634) (2) Total $ 1,272 $ (1,651) $ 5,713 $ (1,681) $ (3,839) (1) Represents the write-off of lease incentives related to two MC communities due to negotiations to transition these properties to another operator in our portfolio. (2) Represents the write-off of lease incentive related to an ALF community due to change to the business model at the property that resulted in lower net operating income and the improbability of paying the earn-out. (3) Subsequent to September 30, 2018, we entered into an amended master lease agreement with Senior Lifestyle Management, LLC (“Senior Lifestyle”). Among the provisions of the amendment, the contingent lease incentive payable to Senior Lifestyle was removed. Therefore, subsequent to September 30, 2018, we will write-off the Senior Lifestyle contingent lease incentive of $6,219 and the related earn-out liability of $9,292 which will result in income of approximately $3,000. |
Debt Obligations (Tables)
Debt Obligations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Obligations | |
Schedule of Debt Obligations | The debt obligations by component as of September 30, 2018 and December 31, 2017 are as follows ( dollar amounts in thousands): At September 30, 2018 At December 31, 2017 Applicable Available Available Interest Outstanding for Outstanding for Debt Obligations Rate (1) Balance Borrowing Balance Borrowing Bank borrowings (2) 3.38% $ 120,000 $ 480,000 $ 96,500 $ 503,500 Senior unsecured notes, net of debt issue costs 4.49% 550,986 79,833 571,002 63,667 Total 4.29% $ 670,986 $ 559,833 $ 667,502 $ 567,167 (1) Represents weighted average of interest rate as of September 30, 2018. (2) Subsequent to September 30, 2018, we paid down $20,000 under our unsecured revolving line of credit. Accordingly, we have $100,000 outstanding under our unsecured revolving line of credit with $500,000 available for borrowing. |
Schedule of borrowings and repayments | Our borrowings and repayments are as follows (in thousands): Nine months ended September 30, 2018 2017 Debt Obligations Borrowings Repayments Borrowings Repayments Bank borrowings $ 96,500 $ (73,000) $ 64,500 $ (116,600) Senior unsecured notes — (20,166) 100,000 (1) (19,167) Total $ 96,500 $ (93,166) $ 164,500 $ (135,767) (1) During 2017, we sold 15-year senior unsecured notes in the aggregate amount of $100,000 to a group of investors, which included Prudential, in a private placement transaction. The notes bear interest at an annual rate of 4.5%, have scheduled principal payments and mature on February 16, 2032. |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity | |
Schedule of consolidated VIEs | As of September 30, 2018, we have the following consolidated VIEs (dollar amounts in thousands): Gross Investment Property Consolidated Non-Controlling Year Purpose Type State Assets Interests 2018 Owned real estate ILF OR $ 14,400 (1) $ 2,857 (1) 2018 Owned real estate and development UDP OR 2,881 (1) 1,081 (1) 2017 Owned real estate and development UDP WI 10,316 (2) 2,272 (2) 2017 Owned real estate ALF SC 10,571 1,241 Total $ 38,168 $ 7,451 (1) We entered into a joint venture (“JV”) to develop, purchase and own senior housing properties. During the second quarter of 2018, the JV purchased land for the development of a 78-unit ALF/MC for a total anticipated project cost of $18,108. The non-controlling partner contributed $1,081 of cash and we committed to fund the remaining $17,027 project cost. During the third quarter of 2018, in a sale-leaseback transaction, the JV purchased an existing operational 89-unit ILF adjacent to the 78-unit ALF/MC we are developing for $14,400. The non-controlling partner contributed $2,857 of equity and we contributed $11,543 in cash. Upon completion of the development project, our combined economic interest in the JV will be approximately 88%. We account for the JV on a consolidated basis. (2) We entered into a partnership to own the real estate and develop a 110-unit ILF/ALF/MC community in Wisconsin. The commitment totals approximately $22,471. |
Schedule of cash dividends declared and paid | We declared and paid the following cash dividends (in thousands) : Nine Months Ended September 30, 2018 2017 Declared Paid Declared Paid Common Stock $ 67,768 (1) $ 67,768 (1) $ 67,664 (1) $ 67,664 (1) (1) Represents $0.19 per share per month for the nine months ended September 30, 2018 and 2017. |
Schedule of options exercised | During the nine months ended September 30, 2018 and 2017, no stock options were granted. The stock options exercised during the nine months ended September 30, 2018 and 2017 were as follows: Weighted Average Options Exercise Option Market Exercised Price Value Value (1) 2018 5,000 $ 24.65 $ 123,000 $ 205,000 2017 8,334 $ 24.31 $ 202,566 $ 410,797 (1) As of exercise date. |
Schedule of restricted common stock and performance-based stock unit scheduled to vest and remaining compensation expense | The following table summarizes our restricted stock and performance-based stock units activity for the nine months ended September 30, 2018 and 2017: Nine months ended September 30, 2018 2017 Outstanding, January 1 244,181 210,573 Granted 156,718 143,057 Vested (75,149) (84,363) Cancelled — (24,106) Outstanding, September 30 325,750 245,161 |
Schedule of restricted stock activity | During the nine months ended September 30, 2018 and 2017, we granted restricted stock and performance-based stock units under the 2015 Plan as follows: No. of Price per Year Shares/Units Share Vesting Period 2018 $ ratably over 3 years 66,171 $ 38.18 TSR targets (1) 8,728 $ 41.25 ratably over 1 year 2017 $ 45.76 ratably over 3 years 57,881 $ 45.76 TSR targets (1) 7,416 $ 48.55 ratably over 1 year 3,000 $ 50.55 ratably over 3 years (1) Vesting is based on achieving certain total shareholder return (“TSR”) targets in 4 years with acceleration opportunity in 3 years. |
Schedule of unrecognized compensation | Remaining Compensation Vesting Date Expense 2018 $ 1,486,000 2019 4,250,000 2020 2,210,000 2021 238,000 Total $ 8,184,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies | |
Schedule of commitments | At September 30, 2018, we had commitments as follows (in thousands): Total Investment 2018 Commitment Remaining Commitment Funding Funded Commitment Real estate properties ( Note 2. Real Estate Investments ) $ 77,882 (1) $ 17,973 $ 35,417 $ 42,465 Accrued incentives and earn-out liabilities 23,000 (3) — — 23,000 Mortgage loans ( Note 2. Real Estate Investments ) 65,700 (2) 6,005 23,256 42,444 Joint venture investments ( Note 3. Investments in Unconsolidated Joint Ventures ) 25,650 580 23,594 2,056 Notes receivable ( Note 4. Notes Receivable ) 700 50 50 650 Total $ 192,932 $ 24,608 $ 82,317 $ 110,615 (1) Represents commitments to purchase land and improvements, if applicable, and to develop, re-develop, renovate or expand seniors housing and health care properties. (2) $39,700 represents commitments to expand and renovate the seniors housing and health care properties securing the mortgage loans and $26,000 represents contingent funding upon the borrower achieving certain coverage ratios. (3) Subsequent to September 30, 2018, we entered into an amended master lease agreement with Senior Lifestyle. Among the provisions of the amendment, the contingent lease incentive payable to Senior Lifestyle was removed. Therefore, subsequent to September 30, 2018, we wrote-off the Senior Lifestyle contingent lease incentive of $6,219 and the related earn-out liability of $9,292 which will result in income of approximately $3,000. |
Major Operators (Tables)
Major Operators (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Major Operators | |
Schedule of concentration of risk by major operators | Number of Number of Percentage of SNF ALF Total Total Operator SNF ALF Beds Units Revenue (1) Assets Prestige Healthcare 24 — 3,010 93 18.0 % 16.4 % Senior Lifestyle Corporation — 23 — 1,457 11.9 % 10.4 % Brookdale Senior Living — 37 — 1,702 10.1 % 4.6 % Senior Care Centers 11 — 1,444 — 9.8 % 7.1 % Total 35 60 4,454 3,252 % % (1) Includes rental income and interest income from mortgage loans and excludes income from properties sold and mortgage loans paid off during 2018. |
Earnings per share (Tables)
Earnings per share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings per share | |
Schedule of basic and diluted net income per share | The following table sets forth the computation of basic and diluted net income per share ( in thousands, except per share amounts ): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Net income $ 34,937 $ 20,616 $ 124,232 $ 67,506 Less net income allocated to non-controlling interests (17) — (17) — Less net income allocated to participating securities: Non-forfeitable dividends on participating securities (89) (80) (268) (269) Income allocated to participating securities (49) — (236) (12) Total net income allocated to participating securities (138) (80) (504) (281) Net income available to common stockholders 34,782 20,536 123,711 67,225 Effect of dilutive securities: Participating securities 138 80 504 281 Net income for diluted net income per share $ 34,920 $ 20,616 $ 124,215 $ 67,506 Shares for basic net income per share 39,487 39,428 39,470 39,403 Effect of dilutive securities: Stock options 4 9 3 11 Performance-based stock units 217 170 217 170 Participating securities 157 141 155 154 Total effect of dilutive securities 378 320 375 335 Shares for diluted net income per share 39,865 39,748 39,845 39,738 Basic net income per share $ 0.88 $ 0.52 $ 3.13 $ 1.71 Diluted net income per share $ 0.88 $ 0.52 $ 3.12 $ 1.70 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements | |
Schedule of carrying value and fair value of the entity's financial instruments | The carrying value and fair value of our financial instruments as of September 30, 2018 and December 31, 2017 assuming election of fair value for our financial assets and financial liabilities were as follows ( in thousands ): At September 30, 2018 At December 31, 2017 Carrying Fair Carrying Fair Value Value Value Value Mortgage loans receivable $ 242,609 $ 274,698 (1) $ 223,907 $ 278,224 Bank borrowings 120,000 120,000 (2) 96,500 96,500 Senior unsecured notes, net of debt issue costs 550,986 529,805 (3) 571,002 577,126 Accrued incentives and earn-outs 9,292 9,292 (4) 8,916 8,916 (1) Our investment in mortgage loans receivable is classified as Level 3. The fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is determined using our assumption on market conditions adjusted for market and credit risk and current returns on our investments. The discount rate used to value our future cash inflows of the mortgage loans receivable at September 30, 2018 and December 31, 2017 was 9.7% and 8.7%, respectively. (2) Our bank borrowings bear interest at a variable interest rate. The estimated fair value of our bank borrowings approximated their carrying values at September 30, 2018 and December 31, 2017 based upon prevailing market interest rates for similar debt arrangements. (3) Our obligation under our senior unsecured notes is classified as Level 3 and thus the fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is measured based upon management’s estimates of rates currently prevailing for comparable loans available to us, and instruments of comparable maturities. At September 30, 2018, the discount rate used to value our future cash outflow of our senior unsecured notes was 5.00% for those maturing before year 2026 and 5.25% for those maturing at or beyond year 2026. At December 31, 2017, the discount rate used to value our future cash outflow of our senior unsecured notes was 4.10% for those maturing before year 2026 and 4.30% for those maturing at or beyond year 2026. (4) Our accrued incentives and earn-outs are classified as Level 3. We estimated the fair value of the accrued incentives and earn‑out payments using a discounted cash flow analysis. The discount rate that we use consists of a risk‑free U.S. Treasury rate plus a company specific credit spread which we believe is acceptable by willing market participants. The discount rate used to value our accrued incentives and earn-outs was 6.0% at September 30, 2018 and 6.2% at December 31, 2017. |
General (Details)
General (Details) | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2018USD ($) | Sep. 30, 2018USD ($)segment | Sep. 30, 2017item | |
General | |||
Number of operating segments | segment | 1 | ||
Provision for federal or state income taxes | $ 0 | ||
Number of beds damaged | item | 170 | ||
Gross value of damaged property | 2,021,000 | ||
Carrying value of damaged property | 1,146,000 | ||
Insurance proceeds | $ 2,619,000 | $ 2,619,000 |
Real Estate Investments - Owned
Real Estate Investments - Owned Properties (Details) - Real Estate Investment $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($)stateitemproperty$ / item | |
Real Estate Investments | |
Gross Investment | $ | $ 1,414,267 |
Percentage of Investment | 100.00% |
Number of properties | property | 177 |
Number of states | state | 28 |
Number of operators | 29 |
Operating leases | |
Number of ways to compute annual rent increases | 4 |
Minimum | |
Operating leases | |
Initial lease term | 10 years |
Specified annual increase over the prior year's rent (as a percent) | 2.00% |
Maximum | |
Operating leases | |
Initial lease term | 15 years |
Specified annual increase over the prior year's rent (as a percent) | 3.00% |
SNF Beds | |
Real Estate Investments | |
Number of beds/units | 9,037 |
ALF Units | |
Real Estate Investments | |
Number of beds/units | 6,146 |
ALF | |
Real Estate Investments | |
Gross Investment | $ | $ 802,484 |
Percentage of Investment | 56.80% |
Number of properties | property | 103 |
Investment per Bed/Unit | $ / item | 136.36 |
ALF | ALF Units | |
Real Estate Investments | |
Number of beds/units | 5,885 |
SNF | |
Real Estate Investments | |
Gross Investment | $ | $ 569,141 |
Percentage of Investment | 40.20% |
Number of properties | property | 73 |
Investment per Bed/Unit | $ / item | 62 |
SNF | SNF Beds | |
Real Estate Investments | |
Number of beds/units | 8,919 |
SNF | ALF Units | |
Real Estate Investments | |
Number of beds/units | 261 |
Properties under Development | |
Real Estate Investments | |
Gross Investment | $ | $ 31,602 |
Percentage of Investment | 2.20% |
Properties under Development | Developments | |
Real Estate Investments | |
Number of developments | 3 |
Properties under Development | SNF Beds | Developments | |
Real Estate Investments | |
Number of beds/units under development | 143 |
Properties under Development | Combination ALF and MC community | Developments | |
Real Estate Investments | |
Number of beds/units under development | 78 |
Properties under Development | Combination ALF, MC and ILF community | Developments | |
Real Estate Investments | |
Number of beds/units under development | 110 |
Other | |
Real Estate Investments | |
Gross Investment | $ | $ 11,040 |
Percentage of Investment | 0.80% |
Number of properties | property | 1 |
Number of parcels of land | 3 |
Other | SNF Beds | |
Real Estate Investments | |
Number of beds/units | 118 |
Hospital | |
Real Estate Investments | |
Number of properties | property | 1 |
Real Estate Investments - Acqui
Real Estate Investments - Acquisitions (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($)item | Jun. 30, 2018USD ($)item | Sep. 30, 2018USD ($)itemproperty | Sep. 30, 2017USD ($)itemproperty | Dec. 31, 2017USD ($) | |
Real estate investments | |||||
Investment Commitment | $ 192,932 | $ 192,932 | |||
Non-controlling interests | 7,451 | 7,451 | $ 3,488 | ||
2018 Acquisitions | |||||
Real estate investments | |||||
Purchase Price | 40,295 | ||||
Transaction Costs | 113 | ||||
Total Acquisition Costs | $ 40,408 | ||||
Number of properties acquired | property | 3 | ||||
Number of beds/units acquired | item | 177 | ||||
Economic interest in joint venture | 88.00% | ||||
2018 Acquisitions | ALF | |||||
Real estate investments | |||||
Purchase Price | $ 39,600 | ||||
Transaction Costs | 65 | ||||
Total Acquisition Costs | $ 39,665 | ||||
Number of properties acquired | property | 3 | ||||
Number of beds/units acquired | item | 177 | ||||
2018 Acquisitions | ILF | 89-unit ILF | |||||
Real estate investments | |||||
Purchase Price | $ 14,400 | ||||
Number of units under development | item | 89 | ||||
Investment Commitment | $ 11,543 | $ 11,543 | |||
Non-controlling interests | $ 2,857 | $ 2,857 | |||
2018 Acquisitions | MC | |||||
Real estate investments | |||||
Number of properties acquired | property | 2 | ||||
2018 Acquisitions | ALF and MC | 78-unit ALF/MC | |||||
Real estate investments | |||||
Purchase Price | $ 18,108 | ||||
Number of units under development | item | 78 | ||||
Investment Commitment | $ 17,027 | ||||
Non-controlling interests | $ 1,081 | ||||
2018 Acquisitions | Land | |||||
Real estate investments | |||||
Purchase Price | $ 695 | ||||
Transaction Costs | 48 | ||||
Total Acquisition Costs | $ 743 | ||||
2017 Acquisitions | |||||
Real estate investments | |||||
Purchase Price | $ 54,463 | ||||
Transaction Costs | 341 | ||||
Total Acquisition Costs | $ 54,804 | ||||
Number of properties acquired | property | 3 | ||||
Number of beds/units acquired | item | 240 | ||||
2017 Acquisitions | ALF | |||||
Real estate investments | |||||
Purchase Price | $ 54,463 | ||||
Transaction Costs | 341 | ||||
Total Acquisition Costs | $ 54,804 | ||||
Number of properties acquired | property | 3 | ||||
Number of beds/units acquired | item | 240 |
Real Estate Investments - Devel
Real Estate Investments - Development and Improvement Projects (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Real estate investments | ||
Invested in projects | $ 24,608,000 | |
Developments | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 25,717,000 | $ 13,939,000 |
Improvements | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 2,063,000 | 2,308,000 |
ALF | Developments | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 19,251,000 | 10,366,000 |
ALF | Improvements | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 1,131,000 | 951,000 |
SNF | Developments | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 6,466,000 | 3,573,000 |
SNF | Improvements | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | 500,000 | $ 1,357,000 |
Other | Improvements | Development and Improvement Commitments | ||
Real estate investments | ||
Invested in projects | $ 432,000 |
Real Estate Investments - Dev_2
Real Estate Investments - Development and Improvement Projects (Details) - MC Units - Developments - Real Estate Development Commitments - Real Estate Investment Completed Projects - Illinois $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($)itemproperty | |
Completed development and improvement projects | |
Number of Properties | property | 1 |
Number of Beds/Units | item | 66 |
Total Investment | $ | $ 13,974 |
Real Estate Investments - Prope
Real Estate Investments - Properties held-for-sale (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2018USD ($)item | Sep. 30, 2018USD ($)$ / itemproperty | Sep. 30, 2018USD ($)$ / itemproperty | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Real estate investments | |||||
Accumulated depreciation | $ 304,337,000 | $ 304,337,000 | $ 304,117,000 | ||
Gain on sale of real estate, net | $ 14,353,000 | $ 62,698,000 | $ 5,054,000 | ||
Properties held-for-sale | |||||
Real estate investments | |||||
Number of properties | property | 2 | 2 | |||
Gross Investment | $ 8,243,000 | $ 8,243,000 | |||
Accumulated depreciation | $ 2,887,000 | $ 2,887,000 | |||
Number of beds/units | $ / item | 200 | 200 | |||
SNF | Florida | Subsequent Event | |||||
Real estate investments | |||||
Number of beds or units in property sold | item | 60 | ||||
Sales price | $ 5,000,000 | ||||
Gain on sale of real estate, net | $ 3,400,000 | ||||
SNF | Properties held-for-sale | Florida | |||||
Real estate investments | |||||
Number of properties | property | 1 | 1 | |||
Gross Investment | $ 2,497,000 | $ 2,497,000 | |||
Accumulated depreciation | $ 971,000 | $ 971,000 | |||
Number of beds/units | $ / item | 60 | 60 | |||
ILF | Properties held-for-sale | Texas | |||||
Real estate investments | |||||
Number of properties | property | 1 | 1 | |||
Gross Investment | $ 5,746,000 | $ 5,746,000 | |||
Accumulated depreciation | $ 1,916,000 | $ 1,916,000 | |||
Number of beds/units | $ / item | 140 | 140 |
Real Estate Investments - Pro_2
Real Estate Investments - Properties sold (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($)itemproperty | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)itemproperty | |
Disposals and other | ||||
Carrying value | $ 1,107,043 | $ 1,107,043 | $ 1,086,089 | |
Net gain | 14,353 | $ 62,698 | $ 5,054 | |
Properties sold | ||||
Disposals and other | ||||
Number of properties sold | property | 8 | 4 | ||
Number of beds or units in property sold | item | 605 | 175 | ||
Sales price | $ 85,375 | $ 14,250 | ||
Carrying value | 19,970 | 19,970 | 8,726 | |
Net gain | $ 62,698 | $ 5,054 | ||
ALF | Ohio and Pennsylvania | Properties sold | ||||
Disposals and other | ||||
Number of properties sold | property | 6 | |||
Number of beds or units in property sold | item | 320 | |||
Sales price | $ 67,500 | |||
Carrying value | 16,352 | 16,352 | ||
Net gain | 48,445 | |||
ALF | Kansas | Properties sold | ||||
Disposals and other | ||||
Sales price | 350 | |||
Carrying value | 346 | $ 346 | ||
ALF | Indiana and Iowa | Properties sold | ||||
Disposals and other | ||||
Number of properties sold | property | 4 | |||
Number of beds or units in property sold | item | 175 | |||
Sales price | $ 14,250 | |||
Carrying value | 8,726 | |||
Net gain | $ 5,054 | |||
SNF | Alabama | Properties sold | ||||
Disposals and other | ||||
Number of properties sold | property | 2 | |||
Number of beds or units in property sold | item | 285 | |||
Sales price | $ 17,525 | |||
Carrying value | $ 3,272 | 3,272 | ||
Net gain | $ 14,253 |
Real Estate Investments - Mortg
Real Estate Investments - Mortgage Loan Activity (Details) - Mortgage Loans $ in Thousands | 9 Months Ended | |
Sep. 30, 2018USD ($)loanstateitemproperty$ / item | Sep. 30, 2017USD ($) | |
Mortgage Loans | ||
Gross Investment | $ 245,053 | |
Percentage of Investment | 100.00% | |
Number of Loans | loan | 4 | |
Number of properties | property | 22 | |
Investment per Bed/Unit | $ / item | 84.73 | |
Specified basis points for annual increase in interest rate (as a percent) | 2.25% | |
General amortization schedule of mortgage loans | 30 years | |
Originations and fundings under mortgage loans receivable | $ 20,530 | $ 9,333 |
Pay-offs received | (1,086) | (16,665) |
Scheduled principal payments received | (550) | (686) |
Net (decrease) increase in mortgage loans receivable | $ 18,894 | $ (8,018) |
SNF | ||
Mortgage Loans | ||
Number of states | state | 1 | |
Number of operators | state | 1 | |
Mortgage loans with 9.50% Interest Maturing 2043 | SNF | ||
Mortgage Loans | ||
Interest rate for mortgage loan (as a percent) | 9.50% | |
Gross Investment | $ 186,495 | |
Percentage of Investment | 76.10% | |
Number of Loans | loan | 1 | |
Number of properties | property | 15 | |
Investment per Bed/Unit | $ / item | 91.91 | |
Mortgage loans with 9.20% Interest Maturing 2045 | SNF | ||
Mortgage Loans | ||
Interest rate for mortgage loan (as a percent) | 9.20% | |
Gross Investment | $ 33,028 | |
Percentage of Investment | 13.50% | |
Number of Loans | loan | 1 | |
Number of properties | property | 4 | |
Investment per Bed/Unit | $ / item | 65.92 | |
Mortgage loans with 9.40% Interest Maturing 2045 | SNF | ||
Mortgage Loans | ||
Interest rate for mortgage loan (as a percent) | 9.40% | |
Gross Investment | $ 14,797 | |
Percentage of Investment | 6.00% | |
Number of Loans | loan | 1 | |
Number of properties | property | 1 | |
Investment per Bed/Unit | $ / item | 94.25 | |
Mortgages With 9.50 Percent Interest Maturing 2020 | SNF | ||
Mortgage Loans | ||
Interest rate for mortgage loan (as a percent) | 9.50% | |
Gross Investment | $ 10,733 | |
Percentage of Investment | 4.40% | |
Number of Loans | loan | 1 | |
Number of properties | property | 2 | |
Investment per Bed/Unit | $ / item | 52.36 | |
SNF Beds | ||
Mortgage Loans | ||
Number of beds/units | item | 2,892 | |
SNF Beds | Mortgage loans with 9.50% Interest Maturing 2043 | SNF | ||
Mortgage Loans | ||
Number of beds/units | item | 2,029 | |
SNF Beds | Mortgage loans with 9.20% Interest Maturing 2045 | SNF | ||
Mortgage Loans | ||
Number of beds/units | item | 501 | |
SNF Beds | Mortgage loans with 9.40% Interest Maturing 2045 | SNF | ||
Mortgage Loans | ||
Number of beds/units | item | 157 | |
SNF Beds | Mortgages With 9.50 Percent Interest Maturing 2020 | SNF | ||
Mortgage Loans | ||
Number of beds/units | item | 205 | |
Michigan | Mortgages with 8.7% Interest, fixed for five years, and escalating by 2.25% thereafter | SNF | ||
Mortgage Loans | ||
Interest rate for mortgage loan (as a percent) | 8.70% | |
Specified basis points for annual increase in interest rate (as a percent) | 2.25% | |
General amortization schedule of mortgage loans | 5 years | |
Additions to mortgage loans | $ 7,400 | |
Michigan | Mortgages with 9.41% Interest, fixed for five years, and escalating by 2.25% thereafter | SNF | ||
Mortgage Loans | ||
Interest rate for mortgage loan (as a percent) | 9.41% | |
Specified basis points for annual increase in interest rate (as a percent) | 2.25% | |
General amortization schedule of mortgage loans | 5 years | |
Additions to mortgage loans | $ 7,125 | |
Michigan | SNF Beds | Mortgages with 8.7% Interest, fixed for five years, and escalating by 2.25% thereafter | SNF | ||
Mortgage Loans | ||
Number of beds/units | item | 112 | |
Michigan | SNF Beds | Mortgages with 9.41% Interest, fixed for five years, and escalating by 2.25% thereafter | SNF | ||
Mortgage Loans | ||
Number of beds/units | item | 126 |
Investment in Unconsolidated _3
Investment in Unconsolidated Joint Ventures - Investment (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)loanitem | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Investment in Unconsolidated Joint Ventures | |||||
Carrying Value | $ 30,511 | $ 30,511 | $ 29,898 | ||
Capital Contribution | 24,608 | ||||
Income Recognized | $ 746 | $ 615 | 2,103 | $ 1,635 | |
Cash Interest Received | $ 1,727 | 1,236 | |||
Joint Venture | |||||
Investment in Unconsolidated Joint Ventures | |||||
Number of Loans | loan | 2 | ||||
Number of beds/units | item | 811 | 811 | |||
Investment commitment | $ 31,950 | ||||
Carrying Value | $ 30,511 | 30,511 | |||
Joint Venture | Not primary beneficiary | |||||
Investment in Unconsolidated Joint Ventures | |||||
Capital Contributions | 580 | 3,847 | |||
Income Recognized | 2,103 | 1,635 | |||
Cash Interest Received | $ 1,727 | 1,236 | |||
Combination ALF, MC and ILF community | Preferred Equity Investment | Joint Venture | Not primary beneficiary | |||||
Investment in Unconsolidated Joint Ventures | |||||
Preferred return percentage | 15.00% | ||||
Currently paid in cash as a percentage | 7.00% | ||||
Number of beds/units | item | 585 | 585 | |||
Investment commitment | $ 25,650 | ||||
Carrying Value | $ 23,942 | 23,942 | |||
Capital Contributions | 580 | 1,100 | |||
Income Recognized | 1,490 | 1,134 | |||
Cash Interest Received | 1,436 | 1,020 | |||
Combination ALF/IL/MC | Mezzanine Loans | Joint Venture | Not primary beneficiary | |||||
Investment in Unconsolidated Joint Ventures | |||||
Income Recognized | 383 | 383 | |||
Cash Interest Received | $ 291 | 216 | |||
Combination ALF/IL/MC | Mezzanine Loans | ADC Arrangement | |||||
Investment in Unconsolidated Joint Ventures | |||||
Preferred return percentage | 15.00% | ||||
Currently paid in cash as a percentage | 12.00% | ||||
Number of beds/units | item | 99 | 99 | |||
Investment commitment | $ 2,900 | ||||
Carrying Value | $ 3,169 | 3,169 | |||
Combination UDP-ALF/MC | Mezzanine Loans | Joint Venture | Not primary beneficiary | |||||
Investment in Unconsolidated Joint Ventures | |||||
Capital Contributions | 2,747 | ||||
Income Recognized | 230 | $ 118 | |||
Amount withheld for interest | $ 257 | $ 653 | |||
Combination UDP-ALF/MC | Mezzanine Loans | ADC Arrangement | |||||
Investment in Unconsolidated Joint Ventures | |||||
Preferred return percentage | 15.00% | ||||
Currently paid in cash as a percentage | 10.00% | ||||
Number of beds/units | item | 127 | 127 | |||
Investment commitment | $ 3,400 | ||||
Carrying Value | $ 3,400 | $ 3,400 |
Notes Receivable - Components (
Notes Receivable - Components (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Notes Receivable | ||
Notes receivable reserve | $ (128) | $ (166) |
Total | 12,642 | 16,402 |
Mezzanine loans | ||
Notes Receivable | ||
Notes receivable, gross | 9,869 | 13,700 |
Other loans | ||
Notes Receivable | ||
Notes receivable, gross | $ 2,901 | $ 2,868 |
Notes Receivable - Notes Receiv
Notes Receivable - Notes Receivable Activity (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Notes receivable activities | ||
Advances under notes receivable | $ 50 | |
Principal payments received under notes receivable | (3,848) | $ (25) |
Total | $ (3,798) | $ (25) |
Lease Incentives (Details)
Lease Incentives (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($)property | Dec. 31, 2017USD ($) | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||
Non-contingent lease incentives | $ 14,883,000 | $ 14,883,000 | $ 14,904,000 | |||
Contingent lease incentives | 6,219,000 | 6,219,000 | 6,577,000 | |||
Total | 21,102,000 | 21,102,000 | 21,481,000 | |||
Non-contingent lease incentives, funding | 1,272,000 | $ 5,713,000 | ||||
Total funding | 1,272,000 | 5,713,000 | ||||
Non-contingent lease incentives, Amortization | (1,292,000) | (1,181,000) | ||||
Contingent lease incentives, Amortization | (359,000) | (500,000) | ||||
Total amortization | (1,651,000) | (1,681,000) | ||||
Non-contingent lease incentives, Write off | (1,205,000) | |||||
Contingent lease incentives, Write off | (2,634,000) | |||||
Total Write off | $ (3,839,000) | |||||
Number of properties with lease incentives write-offs | property | 2 | |||||
Fair value of earn-out liability | 9,292,000 | 9,292,000 | $ 8,916,000 | |||
Operating Leases, Income Statement, Lease Revenue | $ 34,211,000 | $ 33,233,000 | $ 102,646,000 | $ 103,533,000 | ||
Master lease agreement | Subsequent Event | Senior Lifestyle | ||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||
Contingent lease incentives, Write off | $ (6,219,000) | |||||
Earn-out liability, Write off | 9,292,000 | |||||
Operating Leases, Income Statement, Lease Revenue | $ 3,000,000 |
Debt Obligations - Bank Borrowi
Debt Obligations - Bank Borrowings Terms (Details) - Bank Borrowings - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Debt Obligations | ||
Maximum available under facility | $ 1,000,000,000 | $ 600,000,000 |
Additional extension period option | 1 year | |
Unused commitment fee (as a percent) | 0.20% | |
LIBOR | ||
Debt Obligations | ||
Basis spread over base rate (as a percent) | 1.15% |
Debt Obligations - Senior Unsec
Debt Obligations - Senior Unsecured Notes, Net (Details) | Dec. 31, 2017USD ($) |
Private Shelf Agreement Prudential | Senior Unsecured Notes | |
Debt Obligations | |
Maximum available under facility | $ 337,500,000 |
Debt Obligations - By Component
Debt Obligations - By Component (Details) - USD ($) | 1 Months Ended | 9 Months Ended | ||
Oct. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Debt Obligations | ||||
Outstanding Balance | $ 670,986,000 | $ 667,502,000 | ||
Available for borrowing | 559,833,000 | 567,167,000 | ||
Proceeds from debt | $ 100,000,000 | |||
Payments on debt | $ 93,166,000 | $ 135,767,000 | ||
Weighted Average | ||||
Debt Obligations | ||||
Applicable Interest Rate (as a percent) | 4.29% | |||
Bank Borrowings | ||||
Debt Obligations | ||||
Outstanding Balance | $ 120,000,000 | 96,500,000 | ||
Available for borrowing | $ 480,000,000 | 503,500,000 | ||
Bank Borrowings | Weighted Average | ||||
Debt Obligations | ||||
Applicable Interest Rate (as a percent) | 3.38% | |||
Senior Unsecured Notes | ||||
Debt Obligations | ||||
Outstanding Balance | $ 550,986,000 | 571,002,000 | ||
Available for borrowing | $ 79,833,000 | $ 63,667,000 | ||
Senior Unsecured Notes | Weighted Average | ||||
Debt Obligations | ||||
Applicable Interest Rate (as a percent) | 4.49% | |||
Subsequent Event | Bank Borrowings | ||||
Debt Obligations | ||||
Outstanding Balance | $ 100,000,000 | |||
Available for borrowing | 500,000,000 | |||
Payments on debt | $ 20,000,000 |
Debt Obligations - Borrowings a
Debt Obligations - Borrowings and Repayments (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Borrowings | |||
Bank borrowings | $ 96,500 | $ 64,500 | |
Proceeds from issuance of senior unsecured notes | 100,000 | ||
Total | 96,500 | 164,500 | |
Repayments | |||
Repayment of bank borrowings | (73,000) | (116,600) | |
Principal payments on senior unsecured notes | (20,166) | (19,167) | |
Total | $ (93,166) | $ (135,767) | |
Private Shelf Agreement Prudential | Senior Unsecured Notes | |||
Repayments | |||
Debt instrument term | 15 years | ||
Face amount of debt | $ 100,000 | ||
Fixed interest rate (as a percent) | 4.50% |
Equity - Rollforward (Details)
Equity - Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Equity activity | |||||||||
Balance at beginning of period | $ 805,696 | $ 756,863 | $ 758,648 | $ 756,635 | $ 757,167 | $ 753,140 | $ 740,048 | $ 758,648 | $ 740,048 |
Common Stock cash distributions | (22,600) | (22,590) | (22,578) | (22,555) | (22,554) | (22,558) | (22,552) | ||
Proceeds from common stock issued, net of issuance costs | 929 | 14,529 | |||||||
Stock-based compensation expense | 1,487 | 1,521 | 1,376 | 1,282 | 1,283 | 1,425 | 1,259 | ||
Net income | 34,937 | 68,936 | 20,359 | 19,834 | 20,616 | 25,377 | 21,513 | 124,232 | 67,506 |
Non-controlling interests contribution | 2,882 | 1,081 | 3,488 | ||||||
Non-controlling interest distributions | (17) | ||||||||
Other | (21) | (107) | (1,065) | (22) | (296) | (1,651) | |||
Balance at end of period | 823,293 | 805,696 | 756,863 | 758,648 | 756,635 | 757,167 | 753,140 | 823,293 | 756,635 |
Parent | |||||||||
Equity activity | |||||||||
Balance at beginning of period | 801,127 | 753,375 | 755,160 | 756,635 | 757,167 | 753,140 | 740,048 | 755,160 | 740,048 |
Common Stock cash distributions | (22,600) | (22,590) | (22,578) | (22,555) | (22,554) | (22,558) | (22,552) | ||
Proceeds from common stock issued, net of issuance costs | 929 | 14,529 | |||||||
Stock-based compensation expense | 1,487 | 1,521 | 1,376 | 1,282 | 1,283 | 1,425 | 1,259 | ||
Net income | 34,920 | 68,936 | 20,359 | 19,834 | 20,616 | 25,377 | 21,513 | ||
Other | (21) | (107) | (1,065) | (22) | (296) | (1,651) | |||
Balance at end of period | 815,842 | 801,127 | 753,375 | 755,160 | 756,635 | 757,167 | 753,140 | 815,842 | 756,635 |
Common Stock | |||||||||
Equity activity | |||||||||
Balance at beginning of period | 396 | 396 | 396 | 396 | 396 | 396 | 392 | 396 | 392 |
Proceeds from common stock issued, net of issuance costs | 1 | 3 | |||||||
Balance at end of period | 397 | 396 | 396 | 396 | 396 | 396 | 396 | 397 | 396 |
Capital in Excess of Par Value | |||||||||
Equity activity | |||||||||
Balance at beginning of period | 858,832 | 857,426 | 856,992 | 855,746 | 854,340 | 853,132 | 839,005 | 856,992 | 839,005 |
Proceeds from common stock issued, net of issuance costs | 928 | 14,526 | |||||||
Stock-based compensation expense | 1,487 | 1,521 | 1,376 | 1,282 | 1,283 | 1,425 | 1,259 | ||
Other | (21) | (107) | (1,065) | (22) | (296) | (1,651) | |||
Balance at end of period | 861,226 | 858,832 | 857,426 | 856,992 | 855,746 | 854,340 | 853,132 | 861,226 | 855,746 |
Cumulative Net Income | |||||||||
Equity activity | |||||||||
Balance at beginning of period | 1,190,078 | 1,121,142 | 1,100,783 | 1,080,949 | 1,060,333 | 1,034,956 | 1,013,443 | 1,100,783 | 1,013,443 |
Net income | 34,920 | 68,936 | 20,359 | 19,834 | 20,616 | 25,377 | 21,513 | ||
Balance at end of period | 1,224,998 | 1,190,078 | 1,121,142 | 1,100,783 | 1,080,949 | 1,060,333 | 1,034,956 | 1,224,998 | 1,080,949 |
Cumulative Distributions | |||||||||
Equity activity | |||||||||
Balance at beginning of period | (1,248,179) | (1,225,589) | (1,203,011) | (1,180,456) | (1,157,902) | (1,135,344) | (1,112,792) | (1,203,011) | (1,112,792) |
Common Stock cash distributions | (22,600) | (22,590) | (22,578) | (22,555) | (22,554) | (22,558) | (22,552) | ||
Balance at end of period | (1,270,779) | (1,248,179) | (1,225,589) | (1,203,011) | $ (1,180,456) | $ (1,157,902) | $ (1,135,344) | (1,270,779) | $ (1,180,456) |
Non-controlling Interests | |||||||||
Equity activity | |||||||||
Balance at beginning of period | 4,569 | 3,488 | 3,488 | 3,488 | |||||
Net income | 17 | ||||||||
Non-controlling interests contribution | 2,882 | 1,081 | 3,488 | ||||||
Non-controlling interest distributions | (17) | ||||||||
Balance at end of period | $ 7,451 | $ 4,569 | $ 3,488 | $ 3,488 | $ 7,451 |
Equity - Class of Stock Disclos
Equity - Class of Stock Disclosures - Common Stock and Shelf Registrations (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Equity | ||
Proceeds from common stock issued, net of issuance costs | $ 1,005,000 | $ 14,578,000 |
Common Stock | ||
Equity | ||
Number of shares repurchased | 31,326 | 41,592 |
Common Stock | Equity Distribution Agreements | ||
Equity | ||
Maximum offering capacity under shelf registration statement | $ 200,000,000 | |
Shares common stock sold | 22,244 | 312,881 |
Proceeds from common stock issued, net of issuance costs | $ 1,005,000 | $ 14,578,000 |
Compensation paid to sales agents | 18,000 | 260,000 |
Reclassification of accumulated costs to additional paid in capital | 76,000 | 49,000 |
Amount available under effective shelf registration statement | $ 184,139,000 | $ 185,162,000 |
Equity - Noncontrolling Interes
Equity - Noncontrolling Interest (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018USD ($)item | Jun. 30, 2018USD ($)item | Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($)item | Dec. 31, 2017USD ($)item | |
Noncontrolling interest | |||||
Non-controlling interests | $ 7,451,000 | $ 7,451,000 | $ 3,488,000 | ||
Investment Commitment | 192,932,000 | 192,932,000 | |||
Non-controlling interests | 7,451,000 | 7,451,000 | 3,488,000 | ||
Partnership | |||||
Noncontrolling interest | |||||
Gross Consolidated Assets | 38,168,000 | 38,168,000 | |||
Non-controlling interests | 7,451,000 | 7,451,000 | |||
Non-controlling interests | 7,451,000 | $ 7,451,000 | |||
2017 Acquisitions | |||||
Noncontrolling interest | |||||
Number of beds/units acquired | item | 240 | ||||
Purchase Price | $ 54,463,000 | ||||
2017 Acquisitions | ALF | |||||
Noncontrolling interest | |||||
Number of beds/units acquired | item | 240 | ||||
Purchase Price | $ 54,463,000 | ||||
2018 Acquisitions | |||||
Noncontrolling interest | |||||
Number of beds/units acquired | item | 177 | ||||
Purchase Price | $ 40,295,000 | ||||
Economic interest in joint venture | 88.00% | ||||
2018 Acquisitions | ALF | |||||
Noncontrolling interest | |||||
Number of beds/units acquired | item | 177 | ||||
Purchase Price | $ 39,600,000 | ||||
Oregon | 2018 Acquisitions | Partnership | Properties under Development | |||||
Noncontrolling interest | |||||
Gross Consolidated Assets | 2,881,000 | 2,881,000 | |||
Non-controlling interests | 1,081,000 | 1,081,000 | |||
Non-controlling interests | 1,081,000 | 1,081,000 | |||
Oregon | 2018 Acquisitions | Partnership | ILF | |||||
Noncontrolling interest | |||||
Gross Consolidated Assets | 14,400,000 | 14,400,000 | |||
Non-controlling interests | 2,857,000 | 2,857,000 | |||
Non-controlling interests | 2,857,000 | 2,857,000 | |||
Wisconsin | 2017 Acquisitions | Partnership | Properties under Development | |||||
Noncontrolling interest | |||||
Gross Consolidated Assets | 10,316,000 | 10,316,000 | |||
Non-controlling interests | 2,272,000 | 2,272,000 | |||
Non-controlling interests | 2,272,000 | 2,272,000 | |||
South Carolina | 2017 Acquisitions | Partnership | ALF | |||||
Noncontrolling interest | |||||
Gross Consolidated Assets | 10,571,000 | 10,571,000 | |||
Non-controlling interests | 1,241,000 | 1,241,000 | |||
Non-controlling interests | 1,241,000 | 1,241,000 | |||
110-unit ILF/ALF/MC | Wisconsin | 2017 Acquisitions | ALF/ILF/MC | |||||
Noncontrolling interest | |||||
Investment Commitment | $ 22,471 | ||||
Number of beds/units under development | item | 110 | ||||
89-unit ILF | 2018 Acquisitions | ILF | |||||
Noncontrolling interest | |||||
Non-controlling interests | 2,857,000 | 2,857,000 | |||
Purchase Price | 14,400,000 | ||||
Investment Commitment | $ 11,543,000 | 11,543,000 | |||
Number of beds/units under development | item | 89 | ||||
Non-controlling interests | $ 2,857,000 | $ 2,857,000 | |||
78-unit ALF/MC | 2018 Acquisitions | ALF and MC | |||||
Noncontrolling interest | |||||
Non-controlling interests | $ 1,081,000 | ||||
Purchase Price | 18,108,000 | ||||
Investment Commitment | $ 17,027,000 | ||||
Number of beds/units under development | item | 78 | ||||
Non-controlling interests | $ 1,081,000 |
Equity - Class of Stock Discl_2
Equity - Class of Stock Disclosures - Dividends and AOCI (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||||||||||||||||
Oct. 31, 2018 | Sep. 30, 2018 | Aug. 31, 2018 | Jul. 31, 2018 | Jun. 30, 2018 | May 31, 2018 | Apr. 30, 2018 | Mar. 31, 2018 | Feb. 28, 2018 | Jan. 31, 2018 | Sep. 30, 2017 | Aug. 31, 2017 | Jul. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Apr. 30, 2017 | Mar. 31, 2017 | Feb. 28, 2017 | Jan. 31, 2017 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Dividend Distributions | ||||||||||||||||||||||||||||
Paid | $ 67,768 | $ 67,664 | ||||||||||||||||||||||||||
Dividends declared and paid per common share (in dollars per share) | $ 0.57 | $ 0.57 | $ 1.71 | $ 1.71 | ||||||||||||||||||||||||
Dividends paid per common share (in dollars per share) | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.19 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | $ 0.57 | |||
Common Stock | ||||||||||||||||||||||||||||
Dividend Distributions | ||||||||||||||||||||||||||||
Declared | $ 67,768 | $ 67,664 | $ 67,768 | $ 67,664 | $ 67,768 | $ 67,664 | ||||||||||||||||||||||
Paid | $ 67,768 | $ 67,664 | ||||||||||||||||||||||||||
Common Stock | Subsequent Event | Dividend Payable, October 2018 | ||||||||||||||||||||||||||||
Dividend Distributions | ||||||||||||||||||||||||||||
Dividends declared and paid per common share (in dollars per share) | $ 0.19 | |||||||||||||||||||||||||||
Common Stock | Subsequent Event | Dividend Payable, November 2018 | ||||||||||||||||||||||||||||
Dividend Distributions | ||||||||||||||||||||||||||||
Dividends declared and paid per common share (in dollars per share) | 0.19 | |||||||||||||||||||||||||||
Common Stock | Subsequent Event | Dividend Payable, December 2018 28, 2018 | ||||||||||||||||||||||||||||
Dividend Distributions | ||||||||||||||||||||||||||||
Dividends declared and paid per common share (in dollars per share) | $ 0.19 |
Equity - Options (Details)
Equity - Options (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Stock Based Compensation Plans | ||
Options exercised (in shares) | 5,000 | 8,334 |
Weighted Average Exercise Price (in dollars per share) | $ 24.65 | $ 24.31 |
Value of options exercised | $ 123,000 | $ 202,566 |
Market value of options on the date of exercise | $ 205,000 | $ 410,797 |
Options outstanding at end of the period (in shares) | 20,000 | |
Options exercisable at end of the period (in shares) | 20,000 | |
2015 Plan | ||
Stock Based Compensation Plans | ||
Total shares reserved for issuance of common stock related to the conversion of preferred stock | 1,400,000 | |
Stock options granted (in shares) | 0 | 0 |
Stock options | ||
Stock Based Compensation Plans | ||
Compensation expense related to share-based award | $ 0 | $ 2,000 |
Equity - Restricted Stock and p
Equity - Restricted Stock and performance-based stock units (Details) - Restricted stock and performance-based stock units - shares | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Restricted stock and performance based stock units activity | ||
Outstanding at the beginning of the year (in shares) | 244,181 | 210,573 |
Granted (in shares) | 156,718 | 143,057 |
Vested (in shares) | (75,149) | (84,363) |
Canceled (in shares) | (24,106) | |
Outstanding at the end of the year (in shares) | 325,750 | 245,161 |
Equity - Restricted Stock (Deta
Equity - Restricted Stock (Details) - Restricted stock and performance-based stock units - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Restricted stock awards | ||
Number of shares granted | 156,718 | 143,057 |
Compensation expense related to share-based award | $ 4,384,000 | $ 3,965,000 |
Nonvested awards | ||
Remaining compensation expense | 8,184,000 | |
2,018 | ||
Nonvested awards | ||
Remaining compensation expense | 1,486,000 | |
2,019 | ||
Nonvested awards | ||
Remaining compensation expense | 4,250,000 | |
2,020 | ||
Nonvested awards | ||
Remaining compensation expense | 2,210,000 | |
2,021 | ||
Nonvested awards | ||
Remaining compensation expense | $ 238,000 | |
Grant Date Price $38.18 | Three year vesting | ||
Restricted stock awards | ||
Number of shares granted | 81,819 | |
Granted (in dollars per share) | $ 38.18 | |
Vesting period | 3 years | |
Grant Date Price $38.18 | TSR Targets | ||
Restricted stock awards | ||
Number of shares granted | 66,171 | |
Granted (in dollars per share) | $ 38.18 | |
Grant Date Price $41.25 | One year Vesting | ||
Restricted stock awards | ||
Number of shares granted | 8,728 | |
Granted (in dollars per share) | $ 41.25 | |
Vesting period | 1 year | |
Grant Date Price $45.76 | Three year vesting | ||
Restricted stock awards | ||
Number of shares granted | 74,760 | |
Granted (in dollars per share) | $ 45.76 | |
Vesting period | 3 years | |
Grant Date Price $45.76 | TSR Targets | ||
Restricted stock awards | ||
Number of shares granted | 57,881 | |
Granted (in dollars per share) | $ 45.76 | |
Vesting period | 4 years | |
Grant Date Price $45.76 | Accelerated TSR Targets | ||
Restricted stock awards | ||
Vesting period | 3 years | |
Grant Date Price $48.55 | One year Vesting | ||
Restricted stock awards | ||
Number of shares granted | 7,416 | |
Granted (in dollars per share) | $ 48.55 | |
Vesting period | 1 year | |
Grant Date Price $50.55 [ Member] | Three year vesting | ||
Restricted stock awards | ||
Number of shares granted | 3,000 | |
Granted (in dollars per share) | $ 50.55 | |
Vesting period | 3 years |
Commitments and Contingencies -
Commitments and Contingencies - Summary of Commitments (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Commitments and Contingencies | ||||||
Investment Commitment | $ 192,932,000 | $ 192,932,000 | ||||
2018 Funding | 24,608,000 | |||||
Commitments funded | 82,317,000 | 82,317,000 | ||||
Remaining commitment | 110,615,000 | 110,615,000 | ||||
Contingent lease incentives, Write off | $ (2,634,000) | |||||
Fair value of earn-out liability | 9,292,000 | 9,292,000 | $ 8,916,000 | |||
Operating Leases, Income Statement, Lease Revenue | 34,211,000 | $ 33,233,000 | 102,646,000 | $ 103,533,000 | ||
Subsequent Event | Master lease agreement | Senior Lifestyle | ||||||
Commitments and Contingencies | ||||||
Contingent lease incentives, Write off | $ (6,219,000) | |||||
Earn-out liability, Write off | 9,292,000 | |||||
Operating Leases, Income Statement, Lease Revenue | $ 3,000,000 | |||||
Real estate properties | ||||||
Commitments and Contingencies | ||||||
Investment Commitment | 77,882,000 | 77,882,000 | ||||
2018 Funding | 17,973,000 | |||||
Commitments funded | 35,417,000 | 35,417,000 | ||||
Remaining commitment | 42,465,000 | 42,465,000 | ||||
Accrued incentives and earn-out liabilities | ||||||
Commitments and Contingencies | ||||||
Investment Commitment | 23,000,000 | 23,000,000 | ||||
Remaining commitment | 23,000,000 | 23,000,000 | ||||
Mortgage loans | ||||||
Commitments and Contingencies | ||||||
Investment Commitment | 65,700,000 | 65,700,000 | ||||
2018 Funding | 6,005,000 | |||||
Commitments funded | 23,256,000 | 23,256,000 | ||||
Remaining commitment | 42,444,000 | 42,444,000 | ||||
Commitments To Expand and Renovate Properties | ||||||
Commitments and Contingencies | ||||||
Investment Commitment | 39,700,000 | 39,700,000 | ||||
Contingent Funding Commitments | ||||||
Commitments and Contingencies | ||||||
Investment Commitment | 26,000,000 | 26,000,000 | ||||
Joint venture investments | ||||||
Commitments and Contingencies | ||||||
Investment Commitment | 25,650,000 | 25,650,000 | ||||
2018 Funding | 580,000 | |||||
Commitments funded | 23,594,000 | 23,594,000 | ||||
Remaining commitment | 2,056,000 | 2,056,000 | ||||
Notes receivable | ||||||
Commitments and Contingencies | ||||||
Investment Commitment | 700,000 | 700,000 | ||||
2018 Funding | 50,000 | |||||
Commitments funded | 50,000 | 50,000 | ||||
Remaining commitment | $ 650,000 | $ 650,000 |
Major Operators (Details)
Major Operators (Details) | 9 Months Ended |
Sep. 30, 2018propertyitem | |
Major Operators | |
Number of major operators | 4 |
Prestige Healthcare | SNF | |
Major Operators | |
Number of beds | property | 24 |
Number of beds/units | 3,010 |
Prestige Healthcare | ALF | |
Major Operators | |
Number of beds/units | 93 |
Senior Lifestyle Corporation | ALF | |
Major Operators | |
Number of beds | property | 23 |
Number of beds/units | 1,457 |
Brookdale Senior Living | ALF | |
Major Operators | |
Number of beds | property | 37 |
Number of beds/units | 1,702 |
Senior Care Centers | SNF | |
Major Operators | |
Number of beds | property | 11 |
Number of beds/units | 1,444 |
Operator Concentration Risk | SNF | |
Major Operators | |
Number of beds | property | 35 |
Number of beds/units | 4,454 |
Operator Concentration Risk | ALF | |
Major Operators | |
Number of beds | property | 60 |
Number of beds/units | 3,252 |
Total Revenue | Operator Concentration Risk | |
Major Operators | |
Concentration risk (as a percent) | 49.80% |
Total Revenue | Operator Concentration Risk | Prestige Healthcare | |
Major Operators | |
Concentration risk (as a percent) | 18.00% |
Total Revenue | Operator Concentration Risk | Senior Lifestyle Corporation | |
Major Operators | |
Concentration risk (as a percent) | 11.90% |
Total Revenue | Operator Concentration Risk | Brookdale Senior Living | |
Major Operators | |
Concentration risk (as a percent) | 10.10% |
Total Revenue | Operator Concentration Risk | Senior Care Centers | |
Major Operators | |
Concentration risk (as a percent) | 9.80% |
Total Assets | Operator Concentration Risk | |
Major Operators | |
Concentration risk (as a percent) | 38.50% |
Total Assets | Credit Concentration Risk | Prestige Healthcare | |
Major Operators | |
Concentration risk (as a percent) | 16.40% |
Total Assets | Credit Concentration Risk | Senior Lifestyle Corporation | |
Major Operators | |
Concentration risk (as a percent) | 10.40% |
Total Assets | Credit Concentration Risk | Brookdale Senior Living | |
Major Operators | |
Concentration risk (as a percent) | 4.60% |
Total Assets | Credit Concentration Risk | Senior Care Centers | |
Major Operators | |
Concentration risk (as a percent) | 7.10% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Net income | $ 34,937 | $ 68,936 | $ 20,359 | $ 19,834 | $ 20,616 | $ 25,377 | $ 21,513 | $ 124,232 | $ 67,506 |
Less net income allocated to non-controlling interests | (17) | (17) | |||||||
Less net income allocated to participating securities: | |||||||||
Nonforfeitable dividends on participating securities | (89) | (80) | (268) | (269) | |||||
Income allocated to participating securities | (49) | (236) | (12) | ||||||
Total net income allocated to participating securities | (138) | (80) | (504) | (281) | |||||
Net income available to common stockholders | 34,782 | 20,536 | 123,711 | 67,225 | |||||
Effect of dilutive securities: | |||||||||
Participating securities | 138 | 80 | 504 | 281 | |||||
Net income for diluted net income per share | $ 34,920 | $ 20,616 | $ 124,215 | $ 67,506 | |||||
Reconciliation of shares | |||||||||
Shares for basic net income per share | 39,487 | 39,428 | 39,470 | 39,403 | |||||
Effect of dilutive securities: (Shares) | |||||||||
Total effect of dilutive securities (in shares) | 378 | 320 | 375 | 335 | |||||
Shares for diluted net income per share | 39,865 | 39,748 | 39,845 | 39,738 | |||||
Basic (in dollars per share) | $ 0.88 | $ 0.52 | $ 3.13 | $ 1.71 | |||||
Diluted (in dollars per share) | $ 0.88 | $ 0.52 | $ 3.12 | $ 1.70 | |||||
Stock options | |||||||||
Effect of dilutive securities: (Shares) | |||||||||
Stock options and performance-based stock units (in shares) | 4 | 9 | 3 | 11 | |||||
Performance-based stock units | |||||||||
Effect of dilutive securities: (Shares) | |||||||||
Stock options and performance-based stock units (in shares) | 217 | 170 | 217 | 170 | |||||
Participating Securities | |||||||||
Effect of dilutive securities: (Shares) | |||||||||
Participating securities | 157 | 141 | 155 | 154 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Thousands | Sep. 30, 2018USD ($)item | Dec. 31, 2017USD ($)item |
Fair value measurements | ||
Mortgage loans receivable | $ 242,609 | $ 223,907 |
Senior unsecured notes, net of debt issue costs | 550,986 | 571,002 |
Accrued incentives and earn-outs | $ 9,292 | $ 8,916 |
Level 3 | Senior Unsecured Notes maturing before 2026 | Discount Rate | ||
Fair value measurements | ||
Future cash outflows discount rate (as a percent) | item | 0.05 | 4.10 |
Level 3 | Senior Unsecured Notes maturing 2026 and after | Discount Rate | ||
Fair value measurements | ||
Future cash outflows discount rate (as a percent) | item | 5.25 | 4.30 |
Level 3 | Accrued incentives and earn-out liabilities | Discount Rate | ||
Fair value measurements | ||
Future cash outflows discount rate (as a percent) | item | 0.06 | 6.2 |
Level 3 | Mortgage Loans Receivable | Discount Rate | ||
Fair value measurements | ||
Future cash inflows discount rate (as a percent) | item | 9.7 | 8.70 |
Carrying Value | ||
Fair value measurements | ||
Mortgage loans receivable | $ 242,609 | $ 223,907 |
Bank borrowings | 120,000 | 96,500 |
Senior unsecured notes, net of debt issue costs | 550,986 | 571,002 |
Accrued incentives and earn-outs | 9,292 | 8,916 |
Fair Value | ||
Fair value measurements | ||
Bank borrowings | 120,000 | 96,500 |
Fair Value | Level 3 | ||
Fair value measurements | ||
Mortgage loans receivable | 274,698 | 278,224 |
Senior unsecured notes, net of debt issue costs | 529,805 | 577,126 |
Accrued incentives and earn-outs | $ 9,292 | $ 8,916 |
Subsequent Events - Real Estate
Subsequent Events - Real Estate (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2018USD ($)item$ / shares | Sep. 30, 2018USD ($)$ / shares | Sep. 30, 2017USD ($)$ / shares | Sep. 30, 2018USD ($)$ / shares | Sep. 30, 2017USD ($)$ / shares | Dec. 31, 2017USD ($) | |
Real Estate Investments | ||||||
Net gain | $ 14,353,000 | $ 62,698,000 | $ 5,054,000 | |||
Real property investments, net | 1,107,043,000 | 1,107,043,000 | $ 1,086,089,000 | |||
Contingent lease incentives, Write off | 2,634,000 | |||||
Operating Leases, Income Statement, Lease Revenue | 34,211,000 | $ 33,233,000 | 102,646,000 | 103,533,000 | ||
Payments on debt | 20,166,000 | $ 19,167,000 | ||||
Outstanding Balance | 670,986,000 | 670,986,000 | 667,502,000 | |||
Available for borrowing | $ 559,833,000 | $ 559,833,000 | 567,167,000 | |||
Dividends declared and paid per common share (in dollars per share) | $ / shares | $ 0.57 | $ 0.57 | $ 1.71 | $ 1.71 | ||
Florida | Subsequent Event | SNF | ||||||
Real Estate Investments | ||||||
Number of beds or units in property sold | item | 60 | |||||
Sales price | $ 5,000,000 | |||||
Net gain | 3,400,000 | |||||
Real property investments, net | 1,526,000 | |||||
Bank Borrowings | ||||||
Real Estate Investments | ||||||
Outstanding Balance | $ 120,000,000 | $ 120,000,000 | 96,500,000 | |||
Available for borrowing | $ 480,000,000 | $ 480,000,000 | $ 503,500,000 | |||
Bank Borrowings | Subsequent Event | ||||||
Real Estate Investments | ||||||
Payments on debt | 20,000,000 | |||||
Outstanding Balance | 100,000,000 | |||||
Available for borrowing | $ 500,000,000 | |||||
Common Stock | Dividend Payable, October 2018 | Subsequent Event | ||||||
Real Estate Investments | ||||||
Dividends declared and paid per common share (in dollars per share) | $ / shares | $ 0.19 | |||||
Common Stock | Dividend Payable, November 2018 | Subsequent Event | ||||||
Real Estate Investments | ||||||
Dividends declared and paid per common share (in dollars per share) | $ / shares | 0.19 | |||||
Common Stock | Dividend Payable, December 2018 28, 2018 | Subsequent Event | ||||||
Real Estate Investments | ||||||
Dividends declared and paid per common share (in dollars per share) | $ / shares | $ 0.19 | |||||
Senior Lifestyle | Master lease agreement | Subsequent Event | ||||||
Real Estate Investments | ||||||
Contingent lease incentives, Write off | $ 6,219,000 | |||||
Earn-out liability, Write off | 9,292,000 | |||||
Operating Leases, Income Statement, Lease Revenue | $ 3,000,000 |