Real Estate Investments, Net

3 Months Ended

Mar. 31, 2016

Real Estate [Abstract]

Real Estate Investments, Net

REAL ESTATE INVESTMENTS, NET

The following tables summarize our investment in owned properties at March 31, 2016, and December 31, 2015 (dollars in thousands):

	March 31, 2016			December 31, 2015
Land	$	95,247		$	91,311
Buildings and improvements	687,500			627,453
Integral equipment, furniture and fixtures	58,424			54,388
Identified intangible assets	1,397			—
Escrowed cash for April 1, 2016 acquisition (Note 14)	14,480			—
Real estate investments	857,048			773,152
Accumulated depreciation and amortization	(134,831		)	(127,538		)
Real estate investments, net	$	722,217		$	645,614

As of March 31, 2016, 94 of the Company’s 137 facilities were leased to subsidiaries of Ensign under eight master leases (the "Ensign Master Leases") which commenced 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 on June 1, 2016, 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 March 31, 2016, 40 of the Company's 137 facilities were leased to various other operators under triple-net leases. All of these leases contain annual escalators based on CPI.

The Company's three remaining properties are the independent living facilities that the Company owns and operates.

Escrowed cash represents cash in escrow for an asset acquisition that closed on April 1, 2016. See further discussion in Note 14, Subsequent Events.

The Company has only one identified intangible asset which relates to a below market ground lease resulting from a recent acquisition. This ground lease has a remaining term of 81 years.

As of March 31, 2016, our total future minimum rental revenues for all of our tenants were (dollars in thousands):

Year	Amount
Remaining 2016	$	64,737
2017	86,327
2018	86,328
2019	86,328
2020	86,328
Thereafter	812,275
	$	1,222,323

Recent Real Estate Acquisitions

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

New Haven Assisted Living, LLC

In February 2016, the Company acquired New Haven of San Angelo, an assisted living and memory care facility located in San Angelo, Texas, for $4.9 million, which includes capitalized acquisition costs. In connection with the acquisition, the Company entered into a triple-net master lease with New Haven Assisted Living, LLC. The lease carries an initial term of 12.5 years with twofive-year renewal options and CPI-based rent escalators. The Company anticipates initial annual lease revenues of $0.4 million following this acquisition.

Trillium Healthcare Group, LLC

In February 2016, the Company acquired a portfolio of nine skilled nursing facilities in Iowa which includes 518 skilled nursing beds for $32.7 million, which includes capitalized acquisition costs. In connection with the acquisition, the Company amended its triple-net master lease with Trillium Healthcare Group, LLC. The amended lease carries a remaining term of 15 years with twofive-year renewal options and CPI-based rent escalators. The base rent under the amended master lease increased by $3.2 million per year following this acquisition. In March 2016, the Company acquired Cedar Falls Health Care Center, an 82-bed skilled nursing facility located in Cedar Falls, Iowa, for approximately $5.0 million, which includes capitalized acquisition costs. In connection with the acquisition, the Company further amended its triple-net master lease with Trillium Healthcare Group, LLC. The Company anticipates additional initial annual lease revenues of approximately $0.5 million following this acquisition.

Priority Life Care, LLC

In March 2016, the Company acquired three assisted living facilities located in Baltimore, Maryland, Fort Wayne, Indiana and West Allis, Wisconsin, for $21.1 million, which includes capitalized acquisition costs. In connection with the acquisition, the Company entered into a triple-net master lease with Priority Life Care, 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 $1.8 million following this acquisition.

Better Senior Living Consulting, LLC

In March 2016, the Company acquired a 74-unit assisted living facility located in Fort Myers, Florida, for $5.7 million, which includes capitalized acquisition costs. In connection with the acquisition, the Company amended its triple-net master lease with Better Senior Living Consulting, LLC (the "BSLC Master Lease"). The BSLC Master Lease carries a remaining term of 14 years with twofive-year renewal options and CPI-based rent escalators. The base rent under the amended master lease increased by $0.5 million per year.