LOANS RECEIVABLE AND OTHER INVESTMENTS

As of December 31, 2013, 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, 2013		Book Value as of December 31, 2013		Weighted Average Contractual Interest Rate		Weighted Average Annualized Effective Interest Rate		Maturity Date
Mortgage	4	Skilled Nursing / Senior Housing / Acute Care Hospital	$	148,925	$	149,450	8.2	%	8.1	%	10/31/16 - 1/31/18
Construction	3	Acute Care Hospital / Memory Care	13,945		14,283		7.7	%	7.6	%	9/30/16 - 10/31/18
Mezzanine	1	Skilled Nursing	12,350		12,410		12.0	%	11.5	%	12/27/14
Pre-development	2	Senior Housing	1,338		1,366		9.0	%	8.4	%	8/16/15 - 9/13/16
	10		$	176,558	$	177,509	8.4	%	8.3	%

Recent Loan Originations

On November 7, 2013, the Company originated a $14.7 million mortgage loan with an affiliate of the First Phoenix Group (the “Weston Loan”) secured by a 50-unit assisted living facility with a 35-bed skilled nursing rehabilitation unit built in 2013 and located in Weston, Wisconsin (the “Weston Facility”), of which $14.4 million was funded at closing and remains outstanding as of December 31, 2013. The Weston Facility is operated by the First Phoenix Group under the Stoney River brand. The Company has an option to acquire the Weston Facility from the borrower (“Sabra Purchase Option”) and the borrower has the option to require the Company to purchase the Weston Facility (“Borrower's Put Option”). Both the Sabra Purchase Option and the Borrower's Put Option become exercisable upon stabilization of the facility through May 6, 2015. The Weston Loan bears interest at a rate of 9.0% per annum and matures upon the earlier to occur of (i) the exercise of the Sabra Purchase Option, (ii) the exercise of the Borrower's Put Option, (iii) in the event the Sabra Purchase Option and the Borrower's Put Option are not exercised, six months after the facility is stabilized, or (iv) November 7, 2016. The purchase price under the Sabra Purchase Option and Borrower's Put Option is formula-based and is expected to approximate market value at the time of exercise. Should the Company acquire the ownership of the facility, the Company expects to enter into a long-term triple net lease with the First Phoenix Group, which is dependent on the performance of the Weston Facility.

On October 31, 2013, the Company made two construction mortgage loan commitments with affiliates of New Dawn Holding Company (“New Dawn”) totaling $17.1 million for the construction of two memory care facilities in Virginia (collectively, the “New Dawn Virginia Loans”), of which $2.0 million was funded at closing. The two memory care facilities, located in Henrico, Virginia, and Williamsburg, Virginia, will each have 48 units and will be operated by New Dawn. The Company has an option to acquire the facility securing each of the New Dawn Virginia Loans upon stabilization of that facility. Each of the New Dawn Virginia Loans bears interest at a rate of 10.0% per annum and matures upon the earlier to occur of (i) Sabra exercising its purchase option on the facility securing that New Dawn Virginia Loan or (ii) October 31, 2018. The purchase price under the Company's purchase option agreement is formula-based and is expected to approximate market value at the time of exercise. If the Company were to exercise its option to purchase these facilities, the Company expects to enter into a long-term triple net lease with New Dawn. As of December 31, 2013, the Company had funded $2.1 million under the New Dawn Virginia Loans.

On October 22, 2013, the Company entered into a $110.0 million mortgage loan secured by Forest Park Medical Center - Dallas, an 84-bed acute care hospital located in Dallas, Texas (the “Forest Park - Dallas Mortgage Loan”). This acute care hospital contains 22 operating rooms and 84 patient rooms. The Forest Park - Dallas Mortgage Loan has a three-year term, bears interest at a fixed rate of 8.0% per annum and cannot be prepaid until the final six months of the loan term. The Forest Park - Dallas Mortgage Loan is secured by the Forest Park Medical Center - Dallas facility. In addition, the Company has an option at any time during the term of the loan to purchase the facility securing the Forest Park - Dallas Mortgage Loan for up to $168.0 million. The borrowers under the Forest Park - Dallas Mortgage Loan have the right, if Forest Park Medical Center - Dallas is able to achieve certain EBITDAR coverage levels, to require the Company to purchase the facility for up to $168.0 million. As of December 31, 2013, this option was not exercisable as the facility had not achieved those certain EBITDAR coverage levels. If either option on the facility were exercised, the Company would expect to assume the existing long-term triple net lease on the facility.

On September 30, 2013, the Company entered into an agreement to provide up to $66.8 million of construction financing to FPMC Fort Worth Realty Partners, LP (“Forest Park - Fort Worth”) for the construction of a 54-bed acute care hospital with 12 operating rooms, a medical office building and associated parking structure located in Fort Worth, Texas (the “Forest Park - Fort Worth Construction Mortgage Loan”). Also on September 30, 2013, the Company funded $0.5 million of this loan with available cash. Construction of the facility is expected to be completed by mid-2014. The Forest Park - Fort Worth Construction Mortgage Loan has a three-year term and bears interest at a fixed rate of 7.25% per annum, with an option to extend the term for a fourth year with a fixed rate increasing to 8% per annum. The Forest Park - Fort Worth Construction Mortgage Loan will be secured by the facility when built and is partially guaranteed by two founding members of the Forest Park Medical Center system. In addition, the Company has an option to purchase the acute care hospital and associated parking structure starting 12 months after the facility receives a certificate of occupancy through and until the maturity date of the loan, subject to certain limited rights of the borrower. The purchase price under the purchase option agreement will be calculated by dividing the contractual rent due under the existing lease for the facility over the twelve months following closing by the greater of (i) 8.75% and (ii) the sum of (x) the then current 10-year Treasury rate and (y) 525 basis points. If the purchase option on the facility were exercised, the Company would expect to assume the existing long-term triple net lease on the facility. As of December 31, 2013, the Company had funded $11.9 million under the Forest Park - Fort Worth Construction Loan.

On June 28, 2013, the Company originated a $12.4 million mezzanine loan (the "Chai Mezzanine Loan") with an affiliate of Chai Facilities Acquisition Company, LLC, the indirect owner of twelve skilled nursing facilities having 1,689 licensed beds in seven states (the "Chai Portfolio"). The Chai Mezzanine Loan has an 18-month term with an option to extend the maturity an additional six months and bears interest at a fixed rate of 12.0% per annum. The Chai Mezzanine Loan is secured by the borrower's equity interests in the entities that own the Chai Portfolio. In addition, the Company has an option to purchase up to $50.0 million of properties within the Chai Portfolio. The option, which commenced three months after the origination date and ends on the maturity date of the Chai Mezzanine Loan, can be exercised on any facility within the portfolio as long as the EBITDAR margin for such facility has reached 15% for at least one month. The purchase price for each facility will be determined by taking the annualized EBITDAR of the facility for the trailing three months prior to option exercise, divided by an EBITDAR coverage ratio of 1.50 and further divided by 9.5%. Should the Company exercise its option to purchase any properties in the Chai Portfolio, the Company would expect to enter into a new 15 year master lease with two five-year renewal options with annual rent increases equal to the greater of the change in the Consumer Price Index and 3.0%.

On January 31, 2013, the Company entered into a $12.8 million mortgage loan agreement with New Dawn secured by a first trust deed on a 48-unit memory care facility located in Sun City West, Arizona ("Sun City West Mortgage Loan"). The Sun City West Mortgage Loan has a five-year term, bears interest at a fixed rate of 9.0% per annum and cannot be prepaid during the first 3 years of the loan term. In addition, beginning April 2014, the Company has an option to purchase the facility securing the Sun City West Mortgage Loan for a price equal to the greater of (a) the annualized EBITDAR of the facility for the trailing three months prior to option exercise, divided by an EBITDAR coverage ratio of 1.30 and further divided by an implied lease rate of 8.25% (subject to adjustment up to 9.00%), and (b) $15.0 million. In the event the Company exercises the purchase option, the Company would expect to enter into a long-term lease with affiliates of New Dawn. The facility was built in 2012 and is operated by affiliates of New Dawn.

Other Investments

On March 5, 2013, the Company entered into an agreement to provide up to $7.2 million of preferred equity funding to an affiliate of Meridian Realty Advisors, L.P. (“Meridian”) for the construction of a 141-bed skilled nursing facility and a 52-unit memory care facility in Austin, Texas (collectively, the “Bee Cave Preferred Equity Investments”), of which $4.3 million was funded on March 5, 2013. In addition, the Company received an option to purchase the skilled nursing facility on or after the earlier to occur of the facility achieving and maintaining 90% occupancy for three consecutive months, or 36 months after receiving the certificate of occupancy for the facility. The Company also received an option to purchase the memory care facility that is not expected to be exercised as it is subordinate to a purchase option given to the manager of the memory care facility. In the event the Company were to exercise the purchase option on the skilled nursing facility, the Company would expect to lease the facility to Meridian under a long-term, triple net lease. The Company's preferred equity investment with respect to the skilled nursing facility provides for an annual 15% preferred rate of return, which accrues on a quarterly compounding basis with payment of the preferred return deferred until the earlier of the closing under the purchase option, or 18 months after receiving a certificate of occupancy for the facility. The Company's preferred equity investment with respect to the memory care facility provides for an annual 15% preferred rate of return, which accrues on a quarterly compounding basis with payment of the preferred return deferred until the earlier of the closing under the purchase option (whether by the manager of the facility or by the Company), or 30 months after receiving a certificate of occupancy for the facility. In the event the applicable purchase option is not exercised, the Company has the right to require Meridian to redeem the Company's investment, including the accrued preferred returns associated with such investment, within 180 days. As of December 31, 2013, the Company had funded $6.9 million under the Bee Cave Preferred Equity Investments.