REAL ESTATE LOANS RECEIVABLE

12 Months Ended

Dec. 31, 2012

REAL ESTATE LOANS RECEIVABLE [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

LOANS RECEIVABLE

As of December 31, 2012, the Company’s loans receivable consisted of the following (dollars in thousands):

Loan Type	Number of Loans	Facility Type	Principal Balance as of December 31, 2012	Book Value as of December 31, 2012	Contractual Interest Rate		Annualized Effective Interest Rate		Maturity Date
Mortgage	2	Skilled Nursing / Assisted Living	11,965	12,017	8.5	%	8.4	%	Various

Loan Originations

On March 15, 2012, a wholly owned subsidiary of the Company entered into a $10.0 million mezzanine loan (the “Mezzanine Loan”) secured by the borrowers’ equity interests in three skilled nursing facilities and one assisted living facility located in Texas. The Company had an option to purchase these loan assets before March 31, 2013. On November 30, 2012, the Mezzanine Loan was repaid in full and the Company exercised its purchase option for $43.0 million. Upon exercise of the purchase option, the Company entered into a triple-net master lease agreement with affiliates of Meridian Senior Properties Fund I, L.P. The lease has an initial term of 15 years with twofive-year renewal options.

On June 22, 2012, a wholly owned subsidiary of the Company entered into an $11.0 million mortgage loan agreement secured by a first trust deed on a 125-bed skilled nursing facility in Texas that was built in 2010 (the “Onion Creek Mortgage Loan”) with affiliates of Meridian Equity Investors, L.P. as borrowers. The Onion Creek Mortgage Loan has a five year term, bears interest at a fixed rate of 8.5% per annum and cannot be prepaid during the first three years of the loan term. In addition, the Company has an option to purchase and the borrowers have an option to sell the facility securing the Onion Creek Mortgage Loan from July 1, 2013 through the time the loan is repaid for between $12.5 million and $14.5 million, depending on the annualized EBITDAR of the facility for the three month period preceding the option exercise date; however, in no event can the borrowers require the Company to purchase the property if the three month annualized EBITDAR is below $1.7 million. The loan was funded with available cash and proceeds from the Amended Secured Revolving Credit Facility.

On August 16, 2012, the Company, through certain subsidiaries, entered into a forward purchase program (the “Pipeline Agreement”) to acquire newly constructed senior housing properties to be developed by First Phoenix Group, LLC (“First Phoenix”). The Pipeline Agreement provides for the acquisition of, as well as certain interim funding arrangements for, up to ten assisted living and memory care facilities to be identified by First Phoenix and approved by the Company before the end of 2014. Under the Pipeline Agreement, First Phoenix will identify and develop the properties, affiliates of the Company will have the option to purchase the properties once stabilized and a 50%/50% RIDEA-compliant joint venture between affiliates of the Company and First Phoenix will operate the facilities, subject to certain terms and conditions. Upon acquisition, the Company will own 100% of the real estate and lease it to the joint venture under a triple-net lease structure with an initial annual yield on cash rent of 8%. Pursuant to the Pipeline Agreement, the Company would be obligated to purchase a property only after satisfactory completion of customary due diligence and agreed upon closing conditions. First Phoenix currently operates one facility under the Stoney River Assisted Living brand located in Marshfield, Wisconsin which was acquired by the Company in December 2012 in a triple-net sale leaseback transaction and, upon the completion of the license transfer on the facility, will be operated by the joint venture. The license transfer is expected to occur in 2013.

Concurrently with its execution of the Pipeline Agreement, the Company entered into a $1.0 million pre-development loan agreement with First Phoenix to fund the acquisition of land and certain other costs associated with the first development project under the Pipeline Agreement, a 72-unit assisted living/memory care facility located in Ramsey, Minnesota. This loan will be funded over the course of the pre-development activities and bears interest at a fixed rate of 9.0% per annum. The Company funded $1.0 million under the pre-development loan agreement in 2012. Repayment of the loan is expected to occur in connection with the acquisition of the stabilized property by Sabra, or earlier in certain circumstances.