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Subsequent Events
9 Months Ended
Sep. 30, 2017
Subsequent Events [Abstract]  
Subsequent Events
SUBSEQUENT EVENTS
The Company evaluates subsequent events in accordance with ASC Topic 855, Subsequent Events. The Company evaluates subsequent events up until the date the condensed consolidated financial statements are issued.

Investments
In October 2017, the Company acquired 13 properties in three different transactions, comprising three assisted living facilities and ten skilled nursing facilities for approximately $135.0 million, which includes estimated capitalized acquisition costs. These acquisitions will generate initial annual cash rents of approximately $12.0 million. Additionally, the Company provided a mortgage loan secured by a skilled nursing facility for approximately $12.5 million inclusive of transaction costs, at an annual interest rate of 9%.

Lease Amendments

Pristine Amendment. On November 2, 2017 (the “Pristine Amendment Date”), the Company entered into the Pristine Amendment with affiliates of Pristine. Under the Pristine Amendment, the Company agreed that seven Transitioned Facilities selected by the Company would be transferred to a new operator or operators designated by the Company in its sole and absolute discretion. Pursuant to the Pristine Amendment, the operational transfers of the Transitioned Facilities are required to occur within nine months of the Pristine Amendment Date. The Company and Pristine have agreed to make commercially reasonable efforts to facilitate such transfers. As described below under “Trillium Amendment,” the Company concurrently entered into a third amendment to the master lease (the “Trillium Amendment”) with affiliates of Trillium Healthcare Group, LLC (“Trillium”) to lease the Transitioned Facilities to affiliates of Trillium. The Trillium Amendment and the operational transfers of the Transitioned Facilities are currently expected to become effective on December 1, 2017 (such date, the “Transition Effective Date”).

Until the Transition Effective Date, Pristine will continue to operate all of the Transitioned Facilities, as well as the facilities it is retaining under the amended Pristine master lease, and will pay an adjusted base rent and additional rent thereon. Commencing on October 1, 2017, initial base rent under the amended Pristine master lease is $15.6 million per annum, payable in equal monthly installments; provided, however, that effective as of the Transition Date, annual base rent will be reduced by $6.5 million. Commencing on March 1, 2018, annual base rent will increase to $16.0 million (or $9.5 million if the Transitioned Facilities have been previously transferred), and commencing on July 1, 2018, and assuming the Transitioned Facilities have been transferred, annual base rent will be $9.8 million.  Beginning on July 1, 2019 and increasing annually thereafter, annual base rent will increase by the greater of (i) 2% or (ii) the adjusted CPI increase not to exceed 3%.

  Under a prior lease amendment, Pristine is required to make scheduled deposits as additional rent into a landlord-managed impound account from which the Company pays certain property taxes and franchise permit fees related to the properties Pristine net leases from the Company. Under the Pristine Amendment, Pristine is scheduled to pay the Company an additional $0.3 million on November 15, 2017 and an additional $0.2 million on December 11, 2017. On or about December 15, 2017, the Company would then make an additional advance to the impound account bringing the total outstanding balance to approximately $6.0 million in deferred rent, and pay therefrom all property taxes and franchise permit fees due with respect to all of the properties Pristine net leases from the Company through September 30, 2017. In addition, on or before February 10, 2018 Pristine will deposit into the impound account its full prorata share of the incurred but unpaid property taxes and franchise permit fees for the Transitioned Facilities attributable to the period from October 1, 2017 to the Transition Effective Date, and assuming that the operational transfers of the Transitioned Facilities become effective on December 1, 2017 as expected, Trillium will deposit into the impound account its prorata share thereof for the period from the Transition Effective Date through December 31, 2017, and the Company will forward the same to the taxing authorities. Thereafter, both Pristine and Trillium will be responsible for paying property taxes and franchise permit fees related to the properties they respectively net lease from the Company directly to the applicable taxing authorities.

Under the Pristine Amendment, Pristine has agreed to repay the total outstanding balance of the deferred rent in the impound account, plus the portion of the September 2017 base rent the Company allowed Pristine to defer, totaling $0.8 million, over time with interest. Beginning on October 15, 2018 and continuing monthly thereafter, Pristine will pay as additional rent $0.1 million per month, with any outstanding balance due in full on January 15, 2023. The outstanding balance on the rent deferral will incur interest charges at a rate of 6.25% per annum.


Trillium Amendment.  On November 2, 2017, the Company entered into the Trillium Amendment with Trillium to lease the Transitioned Facilities to affiliates of Trillium.  Under the Trillium Amendment, on the Transition Effective Date, annual base rent will increase by approximately $6.9 million, from $4.5 million to $11.5 million.  On February 1, 2018, annual base rent will increase to $11.6 million. Following the first anniversary of the Transition Date, annual base rent will increase to $12.1 million. On February 1, 2019, annual base rent will increase to $12.2 million. Following the second anniversary of the Transition Effective Date, annual base rent will increase by the lesser of (i) the CPI increase or (ii) 3%.