XML 22 R12.htm IDEA: XBRL DOCUMENT v3.24.2.u1
OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS
 6 Months Ended
Jun. 30, 2024
Investments, All Other Investments [Abstract]  
OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS
As of June 30, 2024 and December 31, 2023, the Company’s other real estate related investments consisted of the following (dollar amounts in thousands):
Facility Count and Type
As of June 30, 2024
Loans Receivable, at Fair Value:SNFCampusALFILF
Principal Balance as of June 30, 2024
Fair Value as of June 30, 2024
Fair Value as of December 31, 2023
Weighted Average Contractual Interest Rate(1), (2)
Maturity Date
Mortgage secured loans receivable38441$357,872 $348,552 $156,769 9.1 %5/31/2025 - 6/29/2033
Mezzanine loans receivable4032— 77,165 74,099 21,799 12.8 %7/25/2027 - 6/30/2032
$435,037 $422,651 $178,568 
(1) Rates are net of subservicing fee, if applicable.
(2) Three mortgage secured loans receivable and two mezzanine loans receivable use term secured overnight financing rate (“SOFR”), which are subject to a floor for certain of the loans. Term SOFR used as of June 30, 2024 was 5.34%.
Facility Count and Type
As of June 30, 2024
Other Investments:SNFCampusALFILF
Principal Balance as of June 30, 2024
Book Value as of June 30, 2024
Book Value as of December 31, 2023
Weighted Average Contractual Interest RateMaturity Date
Preferred equity83 — — 10,782 10,881 1,801 11.7 %N/A
Total$10,782 $10,881 $1,801 
The following table summarizes the Company’s other real estate related investments activity for the six months ended June 30, 2024 and 2023 (dollars in thousands):
Six Months Ended June 30,
2024
2023
Origination of other real estate related investments$253,840 $28,243 
Accrued interest, net1,813 (184)
Unrealized loss on other real estate related investments, net(2,489)(2,605)
Prepayments of other real estate related investments— (15,000)
Net change in other real estate related investments$253,164 $10,454 
2024 Other Real Estate Related Investment Transactions
On January 1, 2024, the Company closed on the sale of one ALF. In connection with the sale, the Company provided affiliates of the purchaser of the property with a $1.0 million mortgage loan which bears interest at a rate of 9.0%. The mortgage loan is secured by the ALF and is set to mature on January 1, 2027. The mortgage loan may be prepaid in whole before the maturity date. The Company elected the fair value option for the mortgage loan.
On January 25, 2024, the Company extended a $9.8 million mezzanine loan for a portfolio of ten SNFs located in Missouri secured by a pledge of membership interests in an up-tier holding company of the borrower group. The Company participated in the loan alongside a co-lender pursuant to a participation agreement entered into between the Company and the co-lender. Pursuant to such agreement, the Company provided $9.8 million in mezzanine loan proceeds and the co-lender provided the remaining $10.2 million of loan proceeds. As a participant in the loan, and subject to limited exceptions, the Company is entitled to receive its proportionate share of loan payments made by the borrower with each co-lender’s proportionate share being given equal weight. The loan bears interest at term SOFR plus 8.75%, with a term SOFR floor of 6%, payable monthly and net of a 0.75% subservicing fee. Commencing on February 1, 2026, monthly principal payments shall be due. The mezzanine loan is set to mature on July 25, 2027, with two six-month extension options and may (subject to certain restrictions) be prepaid in whole before the maturity date for an exit fee ranging from 1% to 2% of the loan plus unpaid interest payments equal to 24 months (less the amount of monthly interest payments made by the borrower through the date of prepayment). The Company elected the fair value option for the mezzanine loan.
On February 1, 2024, the Company extended a $7.4 million mezzanine loan for one SNF located in California secured by a pledge of membership interests in an up-tier holding company of the borrower group. The loan bears interest at 11.5%, payable monthly. The mezzanine loan is set to mature on January 31, 2029, and may not (subject to certain limited exceptions) be prepaid prior to the date that is 18 months following the loan closing. The Company elected the fair value option for the mezzanine loan.
On February 2, 2024, the Company extended a $35.0 million mezzanine loan for a portfolio of 15 SNFs located in Virginia secured by a pledge of membership interests in an up-tier holding company of the borrower group. The Company participated in the loan alongside a co-lender pursuant to a participation agreement entered into between the Company and the co-lender. Pursuant to such agreement, the Company provided $35.0 million in mezzanine loan proceeds and the co-lender provided the remaining $50.0 million of loan proceeds. As a participant in the loan, and subject to limited exceptions, the Company is entitled to receive its proportionate share of loan payments made by the borrower with each co-lender’s proportionate share being given equal weight. The loan bears interest at term SOFR plus 8.75%, with a term SOFR floor of 6%, payable monthly and net of a 0.75% subservicing fee. Commencing on February 2, 2026, monthly principal payments shall be due. The mezzanine loan is set to mature on August 1, 2027, with two six-month extension options and may (subject to certain restrictions) be prepaid in whole before the maturity date for an exit fee ranging from 1% to 2% of the loan plus unpaid interest payments equal to 18 months (less the amount of monthly interest payments made by the borrower through the date of prepayment). The Company elected the fair value option for the mezzanine loan.
On May 1, 2024, the Company extended a $26.7 million mortgage loan to a skilled nursing real estate owner. The mortgage loan is secured by two SNFs and bears interest at a rate of 9.1%, payable monthly. The mortgage loan is set to mature on May 1, 2031 and includes a one year extension option. The mortgage loan may not be prepaid prior to July 31, 2029, subject to certain limited exceptions. The mortgage loan includes a purchase option with an exercise window that opens during the initial 90-day period of each of the 4th, 5th and 6th loan years, with the purchase option price for the facilities being calculated by dividing the amount of the then annual base rent by an agreed upon lease yield. The Company elected the fair value option for the mortgage loan.
On June 3, 2024, the Company extended a $165.0 million mortgage loan to a regional health care real estate owner. The mortgage loan is secured by eight SNFs located in North Carolina and bears interest at a rate of SOFR plus 4.25%, with a term SOFR floor of 5.15%, payable monthly and net of a 0.25% subservicing fee. Commencing on June 1, 2027, monthly principal payments will be due. The mortgage loan is set to mature on June 1, 2029, and includes two six-month extension options. The mortgage loan may not be prepaid prior to June 1, 2026, subject to certain limited exceptions. The Company elected the fair value option for the mortgage loan. Concurrently with closing, KeyBank National Association purchased a $75.0 million participation in the mortgage loan from the Company. See Note 7, Debt, for additional information.
In addition, on June 3, 2024, the Company funded a $9.0 million preferred equity investment in an uptier parent entity of the borrower under the $165.0 million mortgage loan described above. The Company's initial contractual yield on its preferred equity investment is 11%. Prepayment of the preferred equity investment is restricted, subject to certain carveouts, prior to the senior mortgage loan being paid off in full.
Other Loans Receivables
As of June 30, 2024 and December 31, 2023, the Company’s other loans receivable, included in prepaid expenses and other assets, net on the Company’s condensed consolidated balance sheets, consisted of the following (dollars in thousands):
As of June 30, 2024
Investment
Principal Balance as of June 30, 2024
Book Value as of June 30, 2024
Book Value as of December 31, 2023
Weighted Average Contractual Interest RateMaturity Date
Other loans receivable$18,079 $18,145 $17,156 8.8 %6/30/2024 - 4/26/2027
Expected credit loss— (2,094)(2,094)
Total$18,079 $16,051 $15,062 
The following table summarizes the Company’s other loans receivable activity for the six months ended June 30, 2024 and 2023 (dollars in thousands):
Six Months Ended June 30,
2024
2023
Origination of loans receivable$985 $1,019 
Principal payments— (287)
Accrued interest, net4 1 
Net change in other loans receivable$989 $733 
Expected credit losses and recoveries are recorded in provision for loan losses, net in the condensed consolidated statements of operations. During both the six months ended June 30, 2024 and 2023, the Company had no additional expected credit loss and did not consider any loan receivable investments to be impaired.
The following table summarizes the interest and other income recognized from the Company’s loans receivable and other investments during the three and six months ended June 30, 2024 and 2023 (dollars in thousands):
For the Three Months Ended June 30,
For the Six Months Ended June 30,
Investment2024202320242023
Mortgage secured loans receivable$5,544 $2,762 $9,316 $5,466 
Mezzanine loans receivable2,494 695 4,389 2,278 
Preferred equity investment144 — 212 — 
Other loans receivable338 160 669 316 
Other(1)
4,964 191 8,466 191 
Total$13,484 $3,808 $23,052 $8,251 
(1) Other income is comprised of interest income on money market funds.