XML 20 R10.htm IDEA: XBRL DOCUMENT v3.22.1
Real Estate Investments, Net
 3 Months Ended
Mar. 31, 2022
Real Estate Investments, Net [Abstract]  
Real Estate Investments, Net Real Estate Investments, Net
Property Acquisitions
The Company invests in healthcare-related facilities, primarily MOBs and seniors housing properties which expand and diversify its portfolio and revenue base. The Company owned 198 properties as of March 31, 2022. During the three months ended March 31, 2022, the Company did not acquire any properties. All acquisitions in the three months ended March 31, 2021 were considered asset acquisitions for accounting purposes.
The following table presents the allocation of real estate assets acquired and liabilities assumed during the three months ended March 31, 2021:
Three Months Ended March 31,
(In thousands)2021
Real estate investments, at cost:
Land$1,522 
Buildings, fixtures and improvements4,120 
Total tangible assets5,642 
Acquired intangibles:
In-place leases and other intangible assets1,152 
Market lease and other intangible assets12 
Market lease liabilities(112)
Total intangible assets and liabilities1,052 
Cash paid for real estate investments, including acquisitions$6,694 
Number of properties purchased1 

Significant Tenants
As of March 31, 2022 and 2021, the Company did not have any tenants (including for this purpose, all affiliates of such tenants) whose annualized rental income on a straight-line basis represented 10% or greater of total annualized rental income for the portfolio on a straight-line basis. The following table lists the states where the Company had concentrations of properties where annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income on a straight-line basis for all properties as of March 31, 2022 and 2021:
March 31,
State20222021
Florida (1)
18.2%20.5%
Iowa*10.2%
Pennsylvania*10.6%
_________
* State’s annualized rental income on a straight-line basis was not greater than 10% of total annualized rental income for all portfolio properties as of the date specified.
(1) In May 2021, the Company’s skilled nursing facility in Wellington, Florida, and the Company’s development property in Jupiter, Florida were sold.
Intangible Assets and Liabilities
The following table discloses amounts recognized within the consolidated statements of operations and comprehensive loss related to amortization of in-place leases and other intangible assets, amortization and accretion of above-and below-market lease assets and liabilities, net and the amortization and accretion of above-and below-market ground leases, for the periods presented:
Three Months Ended March 31,
(In thousands)20222021
Amortization of in-place leases and other intangible assets (1)
$3,866 $3,766 
Accretion of above-and below-market leases, net (2)
$(164)$(88)
Amortization of above-and below-market ground leases, net (3)
$40 $55 
________
(1)     Reflected within depreciation and amortization expense.
(2)     Reflected within rental income.
(3)     Reflected within property operating and maintenance expense.
The following table provides the projected amortization expense and adjustments to revenues for the next five years:
(In thousands)2022 (remainder)2023202420252026
In-place lease assets$10,993 $12,762 $10,842 $9,254 $8,009 
Other intangible assets8 10 10 10 10 
Total to be added to amortization expense$11,001 $12,772 $10,852 $9,264 $8,019 
Above-market lease assets$(570)$(468)$(389)$(336)$(302)
Below-market lease liabilities1,218 1,512 1,294 1,103 941 
Total to be added to revenue from tenants
$648 $1,044 $905 $767 $639 
Dispositions
Three Months Ended March 31, 2022
On July 1, 2020, the Company transitioned four triple-net leased properties in Texas (collectively, the “LaSalle Properties”)
from the former triple-net leased healthcare facilities segment to the SHOP segment, and the LaSalle Properties were leased to the Company’s TRS and operated and managed on the Company’s behalf by a third-party operator. During the third quarter of 2021, the Company began to actively market the LaSalle Properties for sale, and a non-binding letter of intent was signed in the fourth quarter of 2021 for an aggregate contract sales price of $12.4 million. The Company had previously recorded $34.0 million of impairment charges on the LaSalle Properties in the year ended December 31, 2021. The Company completed the sale of the LaSalle Properties in the first quarter of 2022 and recorded a loss on sale of $0.3 million.
Three Months Ended March 31, 2021
During the first quarter of 2021, the Company transferred four SHOP properties located in Michigan to the buyer at a second closing, and $0.8 million held in escrow was released to the buyer. This amount had been placed in escrow at the first closing of the transaction during the year ended December 31, 2020 when the purchase price for all 11 properties sold in the transaction was received from the buyer. The Company recorded a loss on sale of $0.2 million related to this transaction in the three months ended March 31, 2021.
Impairments
The following table presents impairments recorded during the three months ended March 31, 2022 and 2021.
Three Months Ended March 31,
(In thousands)20222021
Assets held for use10,644 878 
Total$10,644 $878 
For additional information on impairments related to assets held for sale and assets held for use, see the “Assets Held for Sale and Related Impairments” and “Assets Held for Use and Related Impairments” sections below.
Assets Held for Sale and Related Impairments
When assets are identified by management as held for sale, the Company reflects them separately on its balance sheet and stops recognizing depreciation and amortization expense on the identified assets and estimates the sales price, net of costs to sell, of those assets. If the carrying amount of the assets classified as held for sale exceeds the estimated net sales price, the Company records an impairment charge equal to the amount by which the carrying amount of the assets exceeds the Company’s estimate of the net sales price of the assets. For held-for-sale properties, the Company predominately uses the contract sale price as fair market value.
There were no assets held for sale as of March 31, 2022 and December 31, 2021.
Assets Held for Use and Related Impairments
When circumstances indicate the carrying value of a property classified as held for use may not be recoverable, the Company reviews the property for impairment. For the Company, the most common triggering events are (i) concerns regarding the tenant (i.e., credit or expirations) in the Company’s single tenant properties or significant vacancy in the Company’s multi-tenant properties and (ii) changes to the Company’s expected holding period as a result of business decisions or non-recourse debt maturities. If a triggering event is identified, the Company considers the projected cash flows due to various performance indicators, and where appropriate, the Company evaluates the impact on its ability to recover the carrying value of the properties based on the expected cash flows on an undiscounted basis over its intended holding period. The Company makes certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessments of terminal values. Where more than one possible scenario exists, the Company uses a probability weighted approach in estimating cash flows. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analysis may not be achieved, and actual losses for impairment may be realized in the future. If the undiscounted cash flows over the expected hold period are less than the carrying value, the Company reflects an impairment charge to write the asset down to its fair value.
The Company owns held for use properties for which the Company may from time to time reconsider the projected cash flows due to various performance indicators, and where appropriate, the Company evaluates the impact on its ability to recover the carrying value of such properties based on the expected cash flows over its intended holding period. The Company makes certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessments of terminal values. Where more than one possible scenario exists, the Company uses a probability weighted approach. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analysis may not be achieved, and actual losses for impairment may be realized in the future.
Held For Use Impairments - 2022
In April 2022, a tenant who operates seven of the Company’s MOB skilled nursing facilities in Illinois offered to purchase the properties for $50.5 million, which caused the Company to reassess its expected holding period for these properties. After considering the tenant’s offer, the terms of the existing leases, longer term prospects for these properties and potential sales prices to third parties, the Company determined that the probability weighted scenarios of projected cash flows, on an undiscounted basis over potential holding periods, may not recover the current carrying value of the properties. Accordingly, the Company concluded that the properties were impaired and recorded $10.6 million of impairment charges in the three months ended March 31, 2022 to reduce the carrying value of the properties to their estimated fair value of $50.5 million.
Held For Use Impairments - 2021
On April 30, 2021, the parties to a purchase and sale agreement for a skilled nursing facility in Wellington, Florida agreed to amend the agreement to reduce the sales price of the facility to $30.7 million. In connection with this amendment, the Company determined that the fair value had declined as of March 31, 2021 and the Company recognized an impairment charge of $0.9 million during the first quarter of 2021, which is included in the consolidated statement of operations and comprehensive loss for the three months ended March 31, 2021.