REAL ESTATE INVESTMENTS

12 Months Ended

Dec. 31, 2012

Real Estate Investments, Net [Abstract]

Real Estate Investments

REAL ESTATE PROPERTIES HELD FOR INVESTMENT

The Company’s real estate properties held for investment consisted of the following (dollars in thousands):

As of December 31, 2012

Property Type	Number of Properties	Number of Beds/Units	Total Real Estate at Cost		Accumulated Depreciation			Total Real Estate Investments, Net
Skilled Nursing/Post-Acute	96	10,826	$	746,510	$	(116,426	)	$	630,084
Senior Housing	22	1,486	148,210		(9,949		)	138,261
Acute Care Hospital	1	70	61,640		(3,001		)	58,639
	119	12,382	956,360		(129,376		)	826,984
Corporate Level			254		(103		)	151
			$	956,614	$	(129,479	)	$	827,135

As of December 31, 2011

Property Type	Number of Properties	Number of Beds/Units	Total Real Estate at Cost		Accumulated Depreciation			Total Real Estate Investments, Net
Skilled Nursing/Post-Acute	86	9,858	$	651,637	$	(97,985	)	$	553,652
Senior Housing	9	773	47,192		(8,140		)	39,052
Acute Care Hospital	1	70	61,640		(1,154		)	60,486
	96	10,701	760,469		(107,279		)	653,190
Corporate Level			239		(52		)	187
			$	760,708	$	(107,331	)	$	653,377

	December 31, 2012			December 31, 2011
Building and improvements	$	782,221		$	622,222
Furniture and equipment	43,810			43,131
Land improvements	4,535			4,635
Land	126,048			90,720
	956,614			760,708
Accumulated depreciation	(129,479		)	(107,331		)
	$	827,135		$	653,377

Operating Leases

As of December 31, 2012, all of the Company’s real estate properties were leased under triple-net operating leases with expirations ranging from eight to 22 years. As of December 31, 2012, the leases had a weighted-average remaining term of 11 years. The leases include provisions to extend the lease terms and other negotiated terms and conditions. The Company, through its subsidiaries, retains substantially all of the risks and benefits of ownership of the real estate assets leased to the tenants. In addition, the Company may receive additional security under these operating leases in the form of security deposits from the lessee or guarantees from the parent of the lessee. Security deposits received in cash related to tenant leases are included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets and totaled $1.1 million and $0.7 million as of December 31, 2012 and 2011, respectively. As of December 31, 2012, 85 of the Company’s 119 real estate properties held for investment and its one asset held for sale were leased to subsidiaries of Genesis.

The Company monitors the creditworthiness of its tenants by reviewing credit ratings (if available) and evaluating the ability of the tenants to meet their lease obligations to the Company based on the tenants’ financial performance, including the evaluation of any parent guarantees of tenant lease obligations. Because formal credit ratings may not be available for most of the Company’s tenants, the primary basis for the Company’s evaluation of the credit quality of its tenants (and more specifically the tenants’ ability to pay their rent obligations to the Company) is the tenants’ lease coverage ratios. These coverage ratios include earnings before interest, taxes, depreciation, amortization and rent (“EBITDAR”) to rent coverage and earnings before interest, taxes, depreciation, amortization, rent and management fees (“EBITDARM”) to rent coverage at the facility level and consolidated EBITDAR to total rent coverage at the parent guarantor level when such a guarantee exists (currently the Genesis lease portfolio). The Company obtains various financial and operational information from its tenants each month and reviews this information in conjunction with the above-described coverage metrics to determine trends and the operational and financial impact of the environment in the industry (including the impact of government reimbursement) and the management of the tenant’s operations. These metrics help the Company identify potential areas of concern relative to its tenants’ credit quality and ultimately the tenants’ ability to generate sufficient liquidity to meet its obligations, including its obligation to continue to pay the rent due to the Company.

As of December 31, 2012, the future minimum rental income from the Company’s properties under non-cancelable operating leases was as follows (in thousands):

2013	$	125,943
2014	125,943
2015	125,943
2016	125,943
2017	125,943
Thereafter	751,896
	$	1,381,611