Real Estate Investments, Net

6 Months Ended

Jun. 30, 2015

Real Estate [Abstract]

Real Estate Investments, Net

REAL ESTATE INVESTMENTS, NET

The following tables summarize our investment in owned properties at June 30, 2015, and December 31, 2014 (dollars in thousands):

	June 30, 2015			December 31, 2014
Land	$	79,804		$	75,072
Buildings and improvements	445,391			417,414
Integral equipment, furniture and fixtures	49,003			47,134
Real estate investments	574,198			539,620
Accumulated depreciation	(114,683		)	(103,405		)
Real estate investments, net	$	459,515		$	436,215

As of June 30, 2015, all but 11 of the Company’s facilities were leased to subsidiaries of Ensign under the Ensign Master Leases which began on June 1, 2014. The obligations under the Ensign Master Leases are guaranteed by Ensign. A default by any subsidiary of Ensign with regard to any facility leased pursuant to an Ensign Master Lease will result in a default under all of the Ensign Master Leases. The annual revenues from the Ensign Master Leases are $56.0 million during each of the first two years of the Ensign Master Leases. Commencing in the third year under the Ensign Master Leases, the annual revenues from the Ensign Master Leases will be escalated annually by an amount equal to the product of (1) the lesser of the percentage change in the Consumer Price Index (“CPI”) (but not less than zero) or 2.5%, and (2) the prior year’s rent. In addition to rent, the subsidiaries of Ensign that are tenants under the Ensign Master Leases are solely responsible for the costs related to the leased properties (including property taxes, insurance, and maintenance and repair costs).

As of June 30, 2015, our total future minimum rental revenues for all of our tenants were (dollars in thousands):

Year	Amount
Remaining 2015	$	30,721
2016	61,442
2017	61,442
2018	61,442
2019	61,442
Thereafter	630,333
	$	906,822

Recent Real Estate Acquisitions

The following recent real estate acquisitions were accounted for as asset acquisitions:

Bethany Rehabilitation Center

In January 2015, the Company acquired the Bethany Rehabilitation Center, a skilled nursing facility located in Lakewood, Colorado, for $18.1 million, which includes acquisition costs capitalized of $0.1 million.

In connection with the acquisition, the Company entered into a triple-net master lease with Eduro Healthcare LLC. The lease carries an initial term of 15 years with twofive-year renewal options and CPI-based rent escalators. The Company anticipates initial annual lease revenues of $1.7 million.

Mira Vista Care Center

In April 2015, the Company acquired the Mira Vista Care Center, a skilled nursing facility located in Mount Vernon, Washington, for $9.3 million, which includes acquisition costs capitalized of $0.2 million.

In connection with the acquisition, the Company entered into a triple-net master lease with Five Oaks Healthcare, LLC. The lease carries an initial term of 15 years with twofive-year renewal options and CPI-based rent escalators. The Company anticipates initial annual lease revenues of $0.9 million.

Shoreline Health & Rehabilitation Center

In June 2015, the Company acquired the Shoreline Health & Rehabilitation Center, a skilled nursing facility located in Shoreline, Washington, for $6.8 million, which includes acquisition costs capitalized of $0.2 million.

In connection with the acquisition, the Company entered into a triple-net master lease with Five Oaks Healthcare, LLC. The lease carries an initial term of 15 years with twofive-year renewal options and CPI-based rent escalators. The Company anticipates initial annual lease revenues of $0.7 million.