3. Real Estate Assets

2014 Acquisitions

The Company had the following acquisitions during the nine months ended September 30, 2014 as described below:


Month Acquired	Property Type	Location	Purchase Price (in thousands)
January	SNF/ALF/ILF	MN	$	40,000
January	SNF	TX		15,920
March	SNF	IA		13,500
March	SNF	KY		35,000
April	SNF	FL		6,000
April	SNF	TX		53,700
May	SNF	TX		3,600
May	SNF	CA		13,350
June	SNF	KY		6,000
July	SNF	MO		16,200
July	ALF	MA		32,000
July	SNF/ALF	MA		50,000
September	SNF/ALF	WA/ID		83,600

				368,870
February	Land Held for Development	TX		2,110
July	Land Held for Development	MA		12,288

			$	383,268

On July 10, 2014, the Company acquired three properties and two land parcels in Massachusetts for a purchase price of $94.3 million. Sidney and Evelyn Insoft, the parents of Steven Insoft, the Company’s President and Chief Operating Officer, jointly hold a 50% equity interest in the sellers of the properties, representing a gross economic interest in the sale of approximately $47.1 million. The Company believes that the terms of the acquisition were fair and reasonable and reflect terms that the Company would expect to obtain in an arm’s length transaction for comparable properties.

The following table illustrates the effect on total revenues and net income as if the Company had consummated the acquisitions as of January 1, 2013 (in thousands, unaudited):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2014		2013		2014		2013
Total revenues	$	48,795	$	41,831	$	145,811	$	129,480
Net income		13,874		16,442		43,838		31,173

For the three and nine months ended September 30, 2014, revenues attributable to the acquired assets in 2014 were approximately $7.5 million and $13.5 million, respectively, and net income attributable to the acquired assets was approximately $4.5 million and $7.2 million, respectively, recognized in the consolidated statements of operations.

Transaction-related costs are not expected to have a continuing significant impact on our financial results and therefore have been excluded from these pro forma results. Related to the above acquisitions, the Company incurred $0.7 million and $2.4 million of transaction costs for the three and nine months ended September 30, 2014, respectively.

In accordance with ASC 805, the Company allocated the approximate net purchase price paid for these properties acquired in 2014 as follows (in thousands):


Land	$	33,390
Buildings and improvements		310,390
Furniture, fixtures and equipment		25,090
Construction in progress and land held for development		14,398

Borrowings and available cash	$	383,268

The Company’s purchase price allocation for the 2014 acquisitions and subsequent leasing of assets does not include an allocation to any intangible assets or intangible liabilities, as these amounts are either immaterial or do not exist.

The Company considers renewals on above- or below-market leases when ascribing value to the in-place lease intangible liabilities at the date of a property acquisition. In those instances where the renewal lease rate pursuant to the terms of the lease does not adjust to a current market rent, the Company evaluates whether the stated renewal rate is above or below current market rates and considers the past and current operations of the property, the current rent coverage ratio of the operator, and the number of years until potential renewal option exercise. If renewal is considered probable based on these factors, an additional lease intangible liability is recorded at acquisition and amortized over the renewal period.

2014 Dispositions

For the three months ended September 30, 2014, the Company disposed of five properties for a total sales price of $0.8 million, and the Company recognized a net loss on sale of approximately $2.4 million. The total sales price and net loss are net of transaction costs incurred in relation to the closings at the time of disposition.

For the nine months ended September 30, 2014, the Company disposed of seven properties for a total sales price of $1.4 million, and the Company recognized a net loss on sale of approximately $2.5 million. The total sales price and net loss are net of transaction costs incurred in relation to the closings at the time of disposition.

Construction in Process

The following summarizes the Company’s construction in progress and land held for development during the nine months ended September 30, 2014 (in thousands):


	September 30, 2014
Beginning balance, January 1	$	23,292
Additions		31,170
Placed in service		(20,041	)

	$	34,421

During 2014 and 2013, the Company capitalized expenditures for improvements related to various construction and reinvestment projects. In 2014, the Company placed into service six completed investment projects at six properties located in California, Pennsylvania, Texas and Indiana. In 2013, the Company placed into service one completed investment project at one property located in California. In accordance with ASC 835, Capitalization of Interest (ASC 835), the Company capitalizes interest based on the average cash balance of construction in progress for the period using the weighted-average interest rate on all outstanding debt, which approximated 6.0% for the three and nine months ended September 30, 2014. The balance of capitalized interest within construction in progress at September 30, 2014 and December 31, 2013 was $0.7 million and $0.8 million, respectively. The amount capitalized during the three and nine months ended September 30, 2014 and 2013, relative to interest incurred, was $0.2 million, $0.5 million, $0.2 million and $0.4 million, respectively.