15. Subsequent Events

Dispositions and Restructuring of Leased Communities

On November 1, 2016, the Company announced that it had entered into agreements to, among other things, terminate triple-net leases with respect to 97 communities, four of which would be contributed to an existing unconsolidated venture in which the Company holds an equity interest and 64 of which would be owned by a venture in which the Company expects to acquire a non-controlling interest. The transactions include the following components:

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HCP and affiliates of Blackstone Real Estate Advisors VIII L.P. (collectively, "Blackstone") entered into an agreement pursuant to which HCP has agreed to sell 64 communities—which are currently leased to the Company at above market rates and have a remaining average lease term of approximately 12 years—to Blackstone for a purchase price of $1.125 billion. Separately, the Company entered into an agreement with Blackstone pursuant to which the Company and Blackstone have agreed to form a venture (the "Blackstone Venture") into which Blackstone will contribute the 64 communities and into which the Company expects to contribute a total of approximately $170.0 million to purchase a 15% equity interest, terminate the underwater leases and fund its share of anticipated closing costs and working capital. Following closing, the Company will manage the communities on behalf of the venture. The Company expects the Blackstone Venture transactions to close during the three months ended March 31, 2017.

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The Company and HCP agreed to terminate triple-net leases with respect to eight communities. HCP has agreed to immediately thereafter contribute four of such communities to an existing unconsolidated venture with HCP in which the Company has a 10% equity interest. We expect these transactions to close during the three months ended December 31, 2016.

•	The Company and HCP agreed to terminate triple-net leases with respect to 25 communities, which is expected to occur in stages through the end of fiscal 2017.

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The Company and HCP agreed to cause the CCRC Venture to obtain non-recourse mortgage financing on certain communities, and, upon completion of the transactions, the Company expects to receive distributions of more than $200.0 million of net proceeds from the venture. The Company expects the CCRC Venture to close this financing during the three months ended December 31, 2016.

The results of operations of the 68 communities to be acquired by the Blackstone Venture or converted into the existing unconsolidated venture with HCP are reported in the following segments within the condensed consolidated financial statements: Assisted Living (50 communities), Retirement Centers (10 communities), CCRCs-Rental (eight communities). The 68 communities had resident fee revenue of $222.3 million, facility operating expenses of $153.5 million, and cash lease payments of $71.7 million for the nine months ended September 30, 2016.

The results of operations of the 29 communities for which the other triple-net leases will be terminated are reported in the following segments within the condensed consolidated financial statements: Assisted Living (27 communities) and CCRCs-Rental (two communities). The 29 communities had resident fee revenue of $64.7 million, facility operating expenses of $52.0 million, and cash lease payments of $18.3 million for the nine months ended September 30, 2016.

The closings of the various transactions with HCP and Blackstone (including the CCRC Venture financing) are subject to the satisfaction of various closing conditions including (where applicable) the receipt of regulatory approvals; however, there can be no assurance that the transactions will close or, if they do, when the actual closings will occur.

It is expected that these transactions will require the Company to record significant charges, primarily related to the lease transactions, for the carrying value of the assets under capital and financing leases in excess of their estimated fair value, which are currently being evaluated by the Company. Additionally, it is expected that these transactions will require the Company to record a significant increase to the Company's existing tax valuation allowance, after considering the change in the Company's future reversal of estimated timing differences resulting from these transactions, mainly caused by removing the deferred positions related to the terminated leases. The amount and timing of charges related to the lease transactions and the increase to the valuation allowance have not yet been determined.

Share Repurchase

On November 1, 2016, the Company announced that its Board of Directors had approved a new share repurchase program that authorizes the Company to purchase up to $100.0 million in the aggregate of its common stock, which replaced and terminated the prior repurchase authorization approved by the Board in 2011. The share repurchase program is intended to be implemented through purchases made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or by any combination of such methods, in accordance with applicable insider trading and other securities laws and regulations. The size, scope and timing of any purchases will be based on business, market and other conditions and factors, including price, regulatory and contractual requirements, and capital availability. The repurchase program does not obligate the Company to acquire any particular amount of common stock and the program may be suspended, modified or discontinued at any time at the Company's discretion without prior notice. Shares of stock repurchased under the program will be held as treasury shares.