Real Estate Investments, Net

3 Months Ended

Mar. 31, 2017

Real Estate [Abstract]

Real Estate Investments, Net

REAL ESTATE INVESTMENTS, NET

The following tables summarize the Company's investment in owned properties as of March 31, 2017, and December 31, 2016 (dollars in thousands):

	March 31, 2017			December 31, 2016
Land	$	114,392		$	110,648
Buildings and improvements	925,362			875,567
Integral equipment, furniture and fixtures	66,098			64,120
Identified intangible assets	1,914			1,914
Real estate investments	1,107,766			1,052,249
Accumulated depreciation and amortization	(167,411		)	(158,331		)
Real estate investments, net	$	940,355		$	893,918

As of March 31, 2017, 93 of the Company’s 161 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. As of March 31, 2017, annualized revenues from the Ensign Master Leases were $56.5 million and are 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, 2017, 65 of the Company's 161 facilities were leased to various other operators under triple-net leases. All of these leases contain annual escalators based on CPI, some of which are subject to a cap, or fixed rent escalators.

The Company's three remaining properties as of March 31, 2017 are the independent living facilities that the Company owns and operates.

The Company has only two identified intangible assets which relate to a below-market ground lease and three acquired operating leases. The ground lease has a remaining term of 81 years.

As of March 31, 2017, the Company's total future minimum rental revenues for all of its tenants were (dollars in thousands):

Year	Amount
Remaining 2017	$	83,984
2018	112,100
2019	110,195
2020	108,869
2021	108,869
Thereafter	941,040
	$	1,465,057

Recent Real Estate Acquisitions

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

Premier Senior Living, LLC

In February 2017, the Company acquired two assisted living and memory care facilities with 88 units in the Milwaukee metropolitan area for $26.1 million, which includes capitalized acquisition costs. In connection with the acquisition, the Company amended its triple-net master lease with subsidiaries of Premier Senior Living, LLC. The amended lease has a remaining initial term of approximately 14 years, with twofive-year renewal options and CPI-based rent escalators. Annual cash rent under the amended lease increased by $2.2 million.

WLC Management Firm, LLC

In March 2017, the Company acquired a five facility 455-bed skilled nursing portfolio in Illinois for $29.2 million, which includes capitalized acquisition costs. In connection with the acquisition, the Company entered into a triple-net master lease with affiliates of WLC Management Firm, LLC. The lease carries an initial term of 15 years with twofive-year renewal options and CPI-based rent escalators. Initial annual cash rent is $2.9 million under the lease.