3.	Acquisitions

Real Estate Investment Properties — During the year ended December 31, 2016, the Company acquired the following post-acute care facility:

		Date	Purchase Price
Name and Location	Structure	Acquired	(in thousands)
Post-Acute Care
Cobalt Rehabilitation Hospital New Orleans	Triple-net Lease	10/19/2016	$	28,588
New Orleans, LA
			$	28,588

3.	Acquisitions (continued)

During the year ended December 31, 2015, the Company acquired the following 39 properties, which were comprised of 15 senior housing communities, 22 MOBs, one post-acute care facility and one acute care hospital as follows:

		Date	Purchase Price
Name and Location	Structure	Acquired	(in thousands)
Acute care
Triangle Orthopaedic
North Carolina Specialty Hospital	Modified Lease	6/29/2015	$	31,830
Durham, NC
Medical Office
Novi Orthopaedic Center	Modified Lease	2/13/2015		30,500	⁽¹⁾
Novi, MI
Southeast Medical Office Properties
UT Cancer Institute Building	Modified Lease	2/20/2015		33,660
Knoxville, TN
Bend Memorial Clinic MOB	Modified Lease	5/11/2015		36,000	⁽¹⁾
Bend, OR
Stoneterra Medical Plaza	Modified Lease	5/29/2015		15,050	⁽¹⁾
San Antonio, TX
Triangle Orthopaedic
Triangle Orthopaedic Durham	Modified Lease	6/29/2015		21,275
Durham, NC
Triangle Orthopaedic Oxford	Modified Lease	6/29/2015		4,728
Oxford, NC
Triangle Orthopaedic Chapel Hill	Modified Lease	6/29/2015		3,258
Chapel Hill, NC
Triangle Orthopaedic Roxboro	Modified Lease	6/29/2015		2,067
Roxboro, NC
Doctor's Park
Doctor's Park Building B	Modified Lease	6/30/2015		5,000	⁽¹⁾
Chula Vista, CA ("San Diego")
Doctor's Park Building C	Modified Lease	6/30/2015		10,000	⁽¹⁾
Chula Vista, CA ("San Diego")
540 New Waverly Place	Modified Lease	7/20/2015		15,000	⁽¹⁾
Cary, NC ("Raleigh")
MedHelp	Modified Lease	7/31/2015		15,000	⁽¹⁾
Birmingham, AL

3.	Acquisitions (continued)

		Date	Purchase Price
Name and Location	Structure	Acquired	(in thousands)
Maryland MOBs
Patriot Professional Center	Modified Lease	7/31/2015		16,950	⁽¹⁾
Frederick, MD ("Baltimore")
Liberty Professional Center	Modified Lease	7/31/2015		7,300	⁽¹⁾
Frederick, MD ("Baltimore")
Columbia MOBs
Broadway Medical Plaza 1	Modified Lease	8/21/2015		10,700	⁽¹⁾
Columbia, MO
Broadway Medical Plaza 2	Modified Lease	8/21/2015		13,100	⁽¹⁾
Columbia, MO
Broadway Medical Plaza 4	Modified Lease	8/21/2015		14,200	⁽¹⁾
Columbia, MO
Center One	Modified Lease	11/30/2015		34,362	⁽¹⁾
Jacksonville, FL
Red Bank Professional Office Building	Modified Lease	12/14/2015		10,610	⁽¹⁾
Cincinnati, OH
Henderson NV MOBs
Siena Pavilion IV	Modified Lease	12/18/2015		6,990
Henderson, NV ("Las Vegas")
Siena Pavilion V	Modified Lease	12/18/2015		27,859
Henderson, NV ("Las Vegas")
Siena Pavilion VI	Modified Lease	12/18/2015		19,474
Henderson, NV ("Las Vegas")
Post-Acute Care
Cobalt Rehabilitation Hospital Surprise	Triple-net Lease	12/30/2015		23,660	⁽¹⁾
Surprise, AZ ("Phoenix")
Seniors Housing
Fieldstone Memory Care	Managed	3/31/2015		12,400	⁽¹⁾
Yakima, WA
Primrose III Communities
Primrose Retirement Community of Anderson	Triple-net Lease	5/29/2015		21,086
Anderson, IN ("Muncie")
Primrose Retirement Community of Lancaster	Triple-net Lease	5/29/2015		25,657
Lancaster, OH ("Columbus")
Primrose Retirement Community of Wausau	Triple-net Lease	5/29/2015		20,307
Wausau, WI ("Green Bay")
Superior Residences of Panama City	Managed	7/15/2015		20,000	⁽¹⁾
Panama City Beach, FL
Southeast Seniors Housing Communities
Parc at Duluth	Triple-net Lease	7/31/2015		52,800
Duluth, GA ("Atlanta")
Parc at Piedmont	Triple-net Lease	7/31/2015		50,800
Marietta, GA ("Atlanta")
The Pavilion at Great Hills	Managed	7/31/2015		35,000
Austin, TX
The Hampton at Meadows Place	Managed	7/31/2015		28,400
Meadows Place, TX ("Houston")
The Beacon at Gulf Breeze	Managed	7/31/2015		28,000
Gulf Breeze, FL ("Pensacola")

3.	Acquisitions (continued)

		Date	Purchase Price
Name and Location	Structure	Acquired	(in thousands)
Palmilla Senior Living	Managed	9/30/2015		47,600
Albuquerque, NM
Cedar Lake Assisted Living and Memory Care	Managed	9/30/2015		30,000
Lake Zurich, IL ("Chicago")
The Shores of Lake Phalen	Managed	11/10/2015		29,250	⁽¹⁾
Maplewood, MN ("St. Paul")
Park Place Senior Living at WingHaven	Managed	12/17/2015		54,000
O'Fallon, MO ("St. Louis")
Hearthside Senior Living of Collierville	Managed	12/29/2015		17,000	⁽¹⁾
Collierville, TN ("Memphis")
			$	880,873

FOOTNOTE:

⁽¹⁾

This represents a single property or portfolio acquisition that is not considered material to the Company and as such no pro forma financial information has been included related to this property.

The following summarizes the purchase price allocation for the above properties, and the estimated fair values of the assets acquired and liabilities assumed (in thousands):

	December 31,
	2016		2015
Land and land improvements	$	3,283	$	91,419
Buildings and building improvements		20,142		702,611
Furniture, fixtures and equipment		—		11,746
Intangibles ⁽¹⁾		5,163		86,601
Other liabilities		—		(5,175	)
Liabilities assumed		—		(6,905	)
Assumed mortgage note payable ⁽²⁾		—		(6,976	)
Net assets acquired		28,588		873,321
Contingent purchase price consideration		—		(6,481	)
Total purchase price consideration	$	28,588	$	866,840

FOOTNOTES:

⁽¹⁾

At the acquisition date, the weighted-average amortization period on the acquired lease intangibles for the years ended December 31, 2016 and 2015 were approximately 20.0 and 7.7 years, respectively. The acquired lease intangibles during the year ended December 31, 2016 were comprised of approximately $5.1 million and $0.1 million of in-place lease intangibles and other lease intangibles, respectively, and the acquired lease intangibles during the year ended December 31, 2015 were comprised of approximately $81.8 million and $4.8 million of in-place lease intangibles and other lease intangibles, respectively.

⁽²⁾

During the year ended December 31, 2015, the Company assumed a discount on a below-market mortgage note payable assumed of approximately $0.2 million at the acquisition date.

The revenues and net loss (including deductions for acquisition fees and expenses and depreciation and amortization expense) attributable to the Company’s material acquisitions were approximately $0.6 million and $0.4 million, respectively, for the year ended December 31, 2016; and approximately $18.0 million and $8.8 million, respectively, for the year ended December 31, 2015.

3.	Acquisitions (continued)

The following table presents the unaudited pro forma results of operations for the Company as if the 2016 acquisition noted above was acquired as of January 1, 2015 and the unaudited pro forma results of operations for the Company as if each of the 2015 material acquisitions noted above were acquired as of January 1, 2014 (in thousands except per share data):

	Years ended December 31,
	(Unaudited)			(Unaudited)			(Unaudited)
	2016			2015			2014
Total revenues	$	379,145		$	348,684		$	307,552
Net loss ⁽¹⁾	$	(31,708	)	$	(70,864	)	$	(62,071	)
Loss per share of common stock (basic and diluted)	$	(0.18	)	$	(0.42	)	$	(0.42	)
Weighted average number of shares of common stock outstanding (basic and diluted) ⁽²⁾		175,121			170,735			148,443

FOOTNOTES:

⁽¹⁾

Net loss for the years ended December 31, 2016 and 2015 was adjusted to exclude approximately $0.7 million and $11.3 million, respectively, of acquisition related expenses directly attributable to the properties acquired during the years ended December 31, 2016 and 2015. The unaudited pro forma results for the years ended December 31, 2015 and 2014 were adjusted to include these charges as if the properties were acquired on January 1, 2015 and 2014, respectively.

⁽²⁾

As a result of the properties acquired in 2015 being treated as operational since January 1, 2014, the Company assumed approximately 31.6 million additional shares were issued as of January 1, 2014. Consequently, the weighted average number of shares outstanding was adjusted to reflect this amount of shares being issued as of January 1, 2014, instead of actual dates on which the shares were issued, and such shares were treated as outstanding as of the beginning of the period presented. The property acquired in 2016 was assumed to be funded with cash on hand as of December 31, 2014.

Real Estate Under Development — There were no acquisitions of real estate for development made by the Company during the year ended December 31, 2016.

In August 2015, the Company acquired a tract of land in Greenville, South Carolina for $2.3 million (“Waterstone on Augusta”). In connection with the acquisition, the Company entered into a development agreement with a third-party developer for the construction and development of an assisted living and memory care community with a maximum development budget of approximately $27.0 million, including the allocated purchase price of the land. The Company determined that Waterstone on Augusta is a VIE because it believes there is insufficient equity at risk due to the development nature of the property. The Company is the primary beneficiary while the developer or its affiliates manage the development, construction and certain day-to-day operations of the property subject to the Company’s oversight. Under a promoted interest agreement with the developer, certain net operating income targets have been established which, upon meeting such targets, result in the developer being entitled to additional payments based on enumerated percentages of the assumed net proceeds of a deemed sale, subject to achievement of an established internal rate of return on the Company’s investment in the development.

In September 2015, the Company acquired a tract of land in Grand Junction, Colorado for $1.1 million (“Welbrook Senior Living Grand Junction”). In connection with the acquisition, the Company entered into a development agreement with a third-party developer for the construction and development of a transitional rehabilitation facility with a maximum development budget of approximately $13.1 million, including the allocated purchase price of the land. The Company determined that Welbrook Senior Living Grand Junction is not a VIE because the Company’s equity investment is sufficient to finance the activities of the entity without a construction loan and the Company will receive substantially all expected residual returns.

In September 2015, the Company acquired a tract of land in Lexington, South Carolina for $2.3 million (“Wellmore of Lexington”), which is a suburb of Columbia, South Carolina. In connection with the acquisition, the Company entered into a development agreement with a third-party developer for the construction and development of a continuing care retirement facility with a maximum development budget of approximately $53.9 million, including the allocated purchase price of the land. The Company determined that Wellmore of Lexington is a VIE because it believes there is insufficient equity at risk due to the development nature of the property. The Company is the primary beneficiary while the developer or its affiliates manage the development, construction and certain day-to-day operations of the property subject to the Company’s oversight. Under a promoted interest agreement with the developer, certain net operating income targets have been established which, upon meeting such targets, result in the developer being entitled to additional payments based on enumerated percentages of the assumed net proceeds of a deemed sale, subject to achievement of an established internal rate of return on the Company’s investment in the development.

3.	Acquisitions (continued)

In October 2015, the Company entered into a joint venture agreement with a third-party and acquired a 75% membership interest a tract of land in Yakima, Washington for $1.0 million (“Fieldstone at Pear Orchard”). The joint venture plans to construct and develop an independent and assisted living facility with a maximum development budget of approximately $15.3 million, including the allocated purchase price of the land. The Company determined that Fieldstone at Pear Orchard is a VIE because it believes there is insufficient equity at risk due to the development nature of the joint venture. The Company is the primary beneficiary and managing member while the joint venture partner or its affiliates manage the development, construction and certain day-to-day operations of the property subject to the Company’s oversight. The Company’s joint venture partner acquired a 25% noncontrolling interest. Pursuant to the joint venture agreement, distributions of operating cash flow will be distributed pro rata based on each member’s ownership interest.

In November 2015, the Company acquired a tract of land in Grayson, Georgia for $1.8 million (“Dogwood Forest of Grayson”), which is approximately 35 miles from downtown Atlanta, Georgia. In connection with the acquisition, the Company entered into a development agreement with a third-party developer for the construction and development of an assisted living and memory care facility with a maximum development budget of approximately $26.0 million, including the allocated purchase price of the land. The Company determined that Dogwood Forest of Grayson is a VIE because it believes there is insufficient equity at risk due to the development nature of the property. The Company is the primary beneficiary while the developer or its affiliates manage the development, construction and certain day-to-day operations of the property subject to the Company’s oversight. Under a promoted interest agreement with the developer, certain net operating income targets have been established which, upon meeting such targets, result in the developer being entitled to additional payments based on enumerated percentages of the assumed net proceeds of a deemed sale, subject to achievement of an established internal rate of return on the Company’s investment in the development.

Purchase of Controlling Interest in Montecito Joint Venture — In January 2013, the Company acquired a 90% membership interest in a two-story MOB in Claremont, California for approximately $7.0 million in equity through a joint venture (“Montecito Joint Venture”) formed by the Company and its co-venture partner, an unrelated party, that initially held the remaining 10% interest. The Montecito Joint Venture was previously recorded under the equity method of accounting because the decisions that significantly impacted the entity were shared between the Company and its co-venture partner, but it was not determined to be a VIE.

In August 2014, the Company acquired its co-venture partner’s 10% interest in the Montecito Joint Venture for approximately $1.6 million. As a result of this transaction, the Company owns 100% of the Montecito Joint Venture, and began consolidating all of the assets, liabilities and results of operations in the Company’s consolidated financial statements upon acquisition. Accordingly, the Company recorded a step up from its carrying value of the investment in the Montecito Joint Venture to the estimated fair value of the net assets acquired and liabilities assumed. The following summarizes the allocation of the purchase price, and the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date (in thousands):

Land and land improvements	$	6,324
Buildings and building improvements		13,533
Intangibles ⁽¹⁾		2,691
Working capital, net		87
Other liabilities		(175	)
Mortgage note payable assumed ⁽²⁾		(12,331	)
Net assets acquired	$	10,129

FOOTNOTES:

⁽¹⁾

At the acquisition date, the weighted-average amortization period on the acquired lease intangibles was approximately 5.1 years and was comprised of approximately $1.9 million and $0.8 million of in-place lease intangibles and other lease intangibles, respectively.

⁽²⁾

At the acquisition date, the fair value of the mortgage note payable assumed reflects an approximate $0.6 million discount on the below-market mortgage note payable assumed.

3.	Acquisitions (continued)

The fair value of the Company’s equity interest in the Montecito Joint Venture immediately before the acquisition date was approximately $5.7 million. The Company recorded a gain of approximately $2.8 million based on the acquisition date fair value of its equity interest in the Montecito Joint Venture. The following summarizes the gain that resulted from the change of control in the equity method investment for the year ended December 31, 2014 (in thousands):

Fair value of net assets acquired	$	10,129
Less: Previous investment in Montecito Joint Venture		(5,747	)
Less: Cash paid to acquire co-venture partner's interest		(1,584	)
Gain on purchase of controlling interest of investment in unconsolidated entity	$	2,798