Note 8 - Long-term Leases

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Lessee, Operating and Finance Leases [Text Block]

Note 8 – Long-Term Leases

Operating Leases

At September 30, 2023, we lease from NHI the real property of 28 skilled nursing facilities, five assisted living centers and three independent living centers under one lease agreement. As part of the lease agreement, we sublease four Florida skilled nursing facilities to a third-party operator. The lease includes base rent plus a percentage rent. The annual base rent is $34,075,000 in 2023, $32,625,000 in 2024, $32,225,000 in 2025, and $31,975,000 in 2026 with the lease term expiring in 2026. The percentage rent is based on a quarterly calculation of revenue increases and is payable on a quarterly basis. Total facility rent expense to NHI was $9,300,000 and $9,478,000 for the three months ended September 30, 2023 and 2022, respectively. Total facility rent expense to NHI was $27,719,000 and $28,293,000 for the nine months ended September 30, 2023 and 2022, respectively.

Finance Leases

At September 30, 2023, we leased and operated three senior healthcare facilities in the state of Missouri under three separate lease agreements. Two of the healthcare facilities are skilled nursing facilities that also include assisted living facilities and the third healthcare facility is a memory care facility. Each of the leases is a ten-year lease with two five–year renewal options with the original lease expiring in 2024. Under the terms of the leases, base rent totals $5,200,000 annually with rent thereafter escalating by 4% of the increase in facility revenue over the 2014 base year.

Minimum Lease Payments

The following table summarizes the maturity of our finance and operating lease liabilities as of September 30, 2023 (in thousands):

	Finance Leases			Operating Leases
2024	$	2,166		$	34,765
2025		-			33,699
2026		-			32,991
2027		-			8,510
2028		-			184
Thereafter		-			4
Total minimum lease payments		2,166			110,153
Less: amounts representing interest		(32	)		(10,731	)
Present value of future minimum lease payments		2,134			99,422
Less: current portion		(2,134	)		(29,222	)
Noncurrent lease liabilities	$	-		$	70,200