REAL ESTATE PROPERTIES HELD FOR INVESTMENT

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

As of June 30, 2018



Property Type	Number of Properties	Number of Beds/Units	Total Real Estate at Cost		Accumulated Depreciation			Total Real Estate Investments, Net
Skilled Nursing/Transitional Care	352	40,077	$	4,242,748	$	(223,777	)	$	4,018,971
Senior Housing - Leased	89	7,156	1,200,923		(113,020		)	1,087,903
Senior Housing - Managed	24	1,712	308,221		(15,961		)	292,260
Specialty Hospitals and Other	22	1,085	618,316		(24,109		)	594,207
	487	50,030	6,370,208		(376,867		)	5,993,341
Corporate Level			633		(292		)	341
			$	6,370,841	$	(377,159	)	$	5,993,682

As of December 31, 2017



Property Type	Number of Properties	Number of Beds/Units	Total Real Estate at Cost		Accumulated Depreciation			Total Real Estate Investments, Net
Skilled Nursing/Transitional Care	384	43,223	$	4,364,387	$	(209,039	)	$	4,155,348
Senior Housing - Leased	88	8,137	1,166,687		(102,370		)	1,064,317
Senior Housing - Managed	13	1,113	189,120		(12,125		)	176,995
Specialty Hospitals and Other	22	1,085	614,068		(16,620		)	597,448
	507	53,558	6,334,262		(340,154		)	5,994,108
Corporate Level			593		(269		)	324
			$	6,334,855	$	(340,423	)	$	5,994,432



	June 30, 2018			December 31, 2017
Building and improvements	$	5,489,087		$	5,449,415
Furniture and equipment	236,838			232,889
Land improvements	1,971			3,456
Land	642,945			649,095
	6,370,841			6,334,855
Accumulated depreciation	(377,159		)	(340,423		)
	$	5,993,682		$	5,994,432

Operating Leases

As of June 30, 2018, the substantial majority of the Company’s real estate properties (excluding 24 Senior Housing - Managed communities) were leased under triple-net operating leases with expirations ranging from less than one year to 15 years. As of June 30, 2018, the leases had a weighted-average remaining term of nine 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. The Company may receive additional security under these operating leases in the form of letters of credit and 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 on the accompanying condensed consolidated balance sheets and totaled $17.9 million and $20.3 million as of June 30, 2018 and December 31, 2017, respectively, and letters of credit deposited with the Company totaled approximately $90 million and $96 million as of June 30, 2018 and December 31, 2017, respectively. In addition, our tenants have deposited with the Company $28.0 million and $28.3 million as of June 30, 2018 and December 31, 2017, respectively, for future real estate taxes, insurance expenditures and tenant improvements related to our properties and their operations.

As of June 30, 2018, the Company had a $1.1 million reserve for unpaid cash rental income and a $3.2 million reserve associated with accumulated straight-line rental income. As of December 31, 2017, the Company had a $3.2 million reserve for unpaid cash rental income and a $12.4 million reserve associated with accumulated straight-line rental income.

The Company has entered into memoranda of understanding with Genesis to market for sale up to all of its remaining Genesis facilities and to restructure its lease agreements with Genesis to increase the marketability of these facilities to potential buyers. Effective January 1, 2018, the annual base rent payable under the Genesis leases was reduced by $19.0 million pursuant to a lease restructuring agreement. During the six months ended June 30, 2018, the Company completed the sale of 27 facilities leased to Genesis and expects to complete the sale of 19 of its remaining 27 Genesis facilities during the remainder of 2018 and to retain eight facilities, although it cannot provide assurance that the sales will be completed in that timeframe, if at all.

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 (or the guarantees of other related parties) of tenant lease obligations. As 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 tenant’s ability to pay their rent obligations to the Company) is the tenant’s lease coverage ratio or the parent’s fixed charge coverage ratio for those entities with a parent guarantee. These coverage ratios include earnings before interest, taxes, depreciation, amortization and rent (“EBITDAR”) to rent and earnings before interest, taxes, depreciation, amortization, rent and management fees (“EBITDARM”) to rent at the lease level and consolidated EBITDAR to total fixed charges at the parent guarantor level when such a guarantee exists. 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 identify financial and operational trends, evaluate the impact of the industry’s operational and financial environment (including the impact of government reimbursement), and evaluate 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 tenant’s ability to generate sufficient liquidity to meet its obligations, including its obligation to continue to pay the rent due to the Company.

For both the three and six months ended June 30, 2018, no tenant relationship represented 10% or more of the Company’s total revenues.

As of June 30, 2018, the future minimum rental payments from the Company’s properties held for investment under non-cancelable operating leases were as follows (in thousands):



July 1 through December 31, 2018	$	260,307
2019	529,844
2020	522,304
2021	520,553
2022	512,680
Thereafter	3,083,776
	$	5,429,464