Segment Reporting

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Segment Reporting

6. Segment Reporting

As of June 30, 2013, we operated in three reportable business segments: senior living operations, triple-net leased properties, and medical office building (“MOB”) properties. Our senior living operations segment primarily consists of investments in senior housing communities located in the United States for which we engage independent third-party managers. Our triple-net leased properties segment consists of investments in skilled nursing and hospital facilities in the United States. These facilities are leased to healthcare operating companies under long-term “triple-net” or “absolute-net” leases, which require the tenants to pay all property-related expenses. Our medical office building operations segment primarily consists of investing in medical office buildings and leasing those properties to healthcare providers under long-term leases, which may require tenants to pay property-related expenses.

We evaluate performance of the combined properties in each segment based on net operating income. Net operating income is defined as total revenue less property operating and maintenance expenses. There are no intersegment sales or transfers. We use net operating income to evaluate the operating performance of our real estate investments and to make decisions concerning the operation of the property. We believe that net operating income is useful to investors in understanding the value of income-producing real estate. Net income is the GAAP measure that is most directly comparable to net operating income; however, net operating income should not be considered as an alternative to net income as the primary indicator of operating performance as it excludes certain items such as depreciation and amortization, asset management fees and expenses, real estate acquisition costs, interest expense and corporate general and administrative expenses. Additionally, net operating income as we define it may not be comparable to net operating income as defined by other REITs or companies.

The following tables reconcile the segment activity to consolidated net income for the three months ended June 30, 2013 and 2012:

	Three Months Ended June 30, 2013								Three Months Ended June 30, 2012
	Senior living operations		Triple-net  leased properties		Medical office building		Consolidated		Senior living operations		Triple-net leased properties		Medical office building		Consolidated
Rental revenue	$	6,879,000	$	1,309,000	$	214,000	$	8,402,000	$	6,715,000	$	1,325,000	$	209,000	$	8,249,000
Resident services and     fee income		5,967,000		—		—		5,967,000		2,311,000		—		—		2,311,000
Tenant reimbursements     and other income		108,000		219,000		75,000		402,000		137,000		222,000		88,000		447,000
	$	12,954,000	$	1,528,000	$	289,000	$	14,771,000	$	9,163,000	$	1,547,000	$	297,000	$	11,007,000
Property operating and     maintenance		8,578,000		227,000		75,000		8,880,000		6,614,000		228,000		79,000		6,921,000
Net operating income	$	4,376,000	$	1,301,000	$	214,000	$	5,891,000	$	2,549,000	$	1,319,000	$	218,000	$	4,086,000
General and     administrative expenses								220,000								370,000
Asset management fees     and expenses								746,000								503,000
Real estate acquisition     costs and contingent consideration								—								190,000
Depreciation and     amortization								2,398,000								1,530,000
Interest expense, net								2,059,000								1,596,000
Loss on debt     extinguishment and other expense								—								146,000
Equity in (income) loss     from unconsolidated entities								(51,000)								442,000
Gain in remeasurement     of investment in unconsolidated entity								—								(1,282,000)
Net income							$	519,000							$	591,000

	Six Months Ended June 30, 2013								Six Months Ended June 30, 2012
	Senior living  operations		Triple-net leased properties		Medical office building		Consolidated		Senior living operations		Triple-net leased properties		Medical office building		Consolidated
Rental revenue	$	13,828,000	$	2,619,000	$	427,000	$	16,874,000	$	13,540,000	$	2,134,000	$	420,000	$	16,094,000
Resident services and     fee income		11,921,000		—		—		11,921,000		4,589,000		—		—		4,589,000
Tenant reimbursements     and other income		226,000		437,000		147,000		810,000		279,000		371,000		159,000		809,000
	$	25,975,000	$	3,056,000	$	574,000	$	29,605,000	$	18,408,000	$	2,505,000	$	579,000	$	21,492,000
Property operating and     maintenance		17,115,000		453,000		150,000		17,718,000		12,918,000		377,000		152,000		13,447,000
Net operating income	$	8,860,000	$	2,603,000	$	424,000	$	11,887,000	$	5,490,000	$	2,128,000	$	427,000	$	8,045,000
General and     administrative expenses								663,000								1,204,000
Asset management fees     and expenses								1,394,000								984,000
Real estate acquisition     costs and contingent consideration								—								206,000
Depreciation and     amortization								4,789,000								2,963,000
Interest expense, net								4,091,000								3,023,000
Loss on debt     extinguishment and other expense								—								152,000
Equity in (income) loss     from unconsolidated entities								(80,000)								376,000
Gain in remeasurement     in unconsolidated     entity								—								(1,282,000)
Net income							$	1,030,000							$	419,000

The following table reconciles the segment activity to consolidated financial position as of June 30, 2013 and December 31, 2012.

	June 30, 2013		December 31, 2012
Assets
Investment in real estate:
Senior living operations	$	134,222,000	$	137,784,000
Triple-net leased properties		42,906,000		43,781,000
Medical office building		8,013,000		8,171,000
Total reportable segments	$	185,141,000	$	189,736,000
Reconciliation to consolidated assets:
Cash and cash equivalents		17,039,000		21,507,000
Deferred financing costs, net		1,504,000		1,697,000
Investment in unconsolidated entities		3,331,000		3,529,000
Tenant and other receivables, net		2,546,000		1,988,000
Deferred costs and other assets		6,912,000		2,987,000
Restricted cash		3,607,000		3,821,000
Goodwill		5,965,000		5,965,000
Total assets	$	226,045,000	$	231,230,000

As of June 30, 2013 and December 31, 2012, goodwill had a balance of approximately $6.0 million, all of which related to the senior living operations segment. The Company historically has not recorded any impairment charges for goodwill.