During the year ended December 31, 2018, the Company originated four healthcare-related real estate debt investments, funded additional principal under an existing mortgage note receivable and completed two real estate acquisitions for a total additional investment of $64.5 million. Additional details regarding these investments are described in more detail below.

On June 27, 2018, the Company acquired Southern Indiana Rehabilitation Hospital, a 60-bed inpatient rehabilitation facility located in New Albany, Indiana, a suburb of Louisville, Kentucky, for an aggregate purchase price of $23.4 million in cash. The property is 100% leased to an affiliate of Vibra Healthcare, LLC pursuant to a 15-year initial term triple-net lease with two five-year renewal options at an initial lease rate of 9.0% with annual escalators. This transaction was accounted for as an asset acquisition and less than $0.1 million of transaction costs were capitalized.

On September 21, 2018, the Company acquired the newly constructed Norris Academy, a psychiatric residential treatment facility for children and youth with neurodevelopmental disorders located in northeast Tennessee, which previously served as collateral for a construction mortgage loan. The purchase price of approximately $6.4 million was satisfied by applying the aggregate principal amount outstanding on the mortgage loan provided by the Company. The property is 100% leased to a wholly owned subsidiary of Sequel Youth and Family Services, LLC (“Sequel”) pursuant to a 15-year triple-net lease with two 10-year renewal options at an initial yield of 9.0% with annual rent escalators. This transaction was accounted for as an asset acquisition and less than $0.1 million of transaction costs were capitalized.

On January 5, 2018, the Company closed on a construction mortgage note receivable with a maximum principal amount of up to $19.0 million to Haven Behavioral Healthcare, Inc. to fund the purchase and conversion of an existing long-term acute care hospital to a 72-bed inpatient psychiatric hospital in Meridian, Idaho. The loan has a three-year term and an annual interest rate of 10.0%. Interest accrues monthly and is added to the outstanding balance of the mortgage note receivable. Upon completion of the planned renovation, the Company has the exclusive right to purchase the property, for a purchase price equal to the outstanding loan balance, in a sale-leaseback transaction with a 15-year triple-net lease with an initial yield of 9.3%. The balance outstanding under this loan was approximately $16.2 million as of December 31, 2018.

On January 31, 2018, the Company originated a $5.4 million mortgage note receivable to Louisville Rehab LP to partially fund the construction of a 42-bed inpatient rehabilitation facility in Clarksville, Indiana. The note is secured by a second lien on the facility. The three-year loan has an annual interest rate of 9.5%, which has a claw-back feature that would equate to a 15.0% rate from inception of the loan should the Company elect not to exercise its purchase option. The Company has the exclusive option to purchase the new facility upon completion for approximately $26.0 million that would be leased pursuant to a 20-year triple-net lease guaranteed by Cobalt Medical Partners and Cobalt Rehabilitation Hospitals at an initial lease rate of 9.0%.

On February 16, 2018, the Company funded an additional $3.0 million under an existing mortgage note receivable with a subsidiary of Medistar Corporation, which is secured by land and an existing building in Webster, Texas that increased the total balance of the loan to $9.7 million. Effective with this additional funding, the interest rate under the loan increased from an annual interest rate of 10.0% to an annual interest rate of 12.0% and is payable upon maturity of the loan on February 28, 2019.

On March 29, 2018, the Company originated a $5.0 million mortgage note receivable with a subsidiary real estate entity of GruenePointe Holdings, LLC, which is secured by a second lien on a skilled nursing and assisted living facility (“Adora Midtown”) and a first lien on an additional parcel of land in Dallas, Texas. The loan has a two-year term and accrues interest at an annual rate of 10.0% that is payable on the maturity date of March 29, 2020. The Company has an existing purchase option on Adora Midtown for a gross purchase price not to exceed approximately $28.0 million, plus an earnout based on the facility’s earnings before interest, taxes, depreciation, amortization and rent expense during the three years following the closing date of the acquisition.

On April 6, 2018, the Company originated a $7.0 million pre-development note receivable with Medistar Stockton Rehab, LLC. The note accrues interest at an annual rate of 10.0% that is payable on the maturity date of February 28, 2019. The note is secured by a leasehold mortgage on the development of a future healthcare facility in Stockton, California.

On June 27, 2018, the Company entered into a loan modification agreement for the $10.0 million mortgage note with Vibra Healthcare, LLC and Vibra Healthcare II, LLC (the “Vibra Mortgage Loan”) that converted the loan to a 10-year amortizing loan requiring monthly principal and interest payments with a balloon payment on the maturity date of June 30, 2023. As part of the modification, the borrowers repaid $1.0 million of principal. The interest rate on the loan remains unchanged at 9.0%. The balance outstanding under this loan was approximately $8.7 million as of December 31, 2018.

On June 30, 2017, the Company acquired Woodlake at Tolland Nursing & Rehabilitation Center, a 130-bed skilled nursing facility located in Woodlake, Connecticut, from a wholly owned subsidiary of Prospect Medical Holdings, Inc. for an aggregate purchase price of $10.0 million in cash. The property is 100% leased pursuant to a 12-year initial term triple-net lease with two ten-year renewal options at an initial lease rate of 9.0% with annual escalators. This transaction was accounted for as an asset acquisition and approximately $0.1 million of transaction costs were capitalized.

On July 31, 2017, the Company acquired two skilled nursing facilities, totaling 160 licensed beds, located in Indiana from Magnolia Health Systems, Inc. (the “Magnolia Portfolio”) for an aggregate purchase price of $15.0 million in cash. The facilities are 100% leased to Magnolia Health Systems, Inc. pursuant to a 15-year initial term triple-net master lease with two ten-year renewal options at an initial lease rate of 9.0% with annual escalators. This transaction was accounted for as an asset acquisition and less than $0.1 million of transaction costs were capitalized.

On August 9, 2017, the Company acquired four behavioral health and substance abuse treatment facilities from subsidiaries of AAC Holdings, Inc. (the “AAC Portfolio”) for an aggregate purchase price of $25.0 million in cash. The facilities are comprised of two standalone intensive outpatient treatment facilities in Las Vegas, Nevada and Arlington, Texas, a 159-bed sober living facility in Las Vegas and a 133-bed sober living facility in Arlington. The properties are 100% leased to AAC Holdings, Inc. pursuant to a 15-year initial term triple-net master lease with two five-year renewal options at an initial lease rate of 8.75% with annual escalators. This transaction was accounted for as an asset acquisition and less than $0.1 million of transaction costs were capitalized.

On November 10, 2017, the Company exercised its option to acquire Advanced Diagnostics Hospital East in Houston, Texas for $17.5 million, which was satisfied by applying the $12.5 million aggregate principal amount outstanding on the mortgage note (see discussion below) to the purchase price and $5.0 million in cash consideration. The property is 100% leased pursuant to a 15-year triple net lease with two ten-year renewal options at an initial yield of 9.6% with annual rent escalators. This transaction was accounted for as an asset acquisition and less than $0.1 million of transaction costs were capitalized.

On January 30, 2017, the Company invested $12.5 million through a newly originated interest-only loan at an interest rate of 9.6% and secured by a first mortgage on a licensed general acute care surgical hospital that consists of 23,300 square feet with four operating rooms, two special procedure rooms, four inpatient rooms and four full-size extended recovery rooms. This mortgage note was satisfied on November 10, 2017 when the Company exercised its option to purchase the property as described above under “2017 Real Estate Acquisitions.”

On August 1, 2017, the Company funded a $6.7 million mortgage note receivable to a subsidiary of Medistar Corporation, which is secured by land and an existing building in Webster, Texas. Interest accrues at a rate of 12% per annum and is payable upon the maturity date of the loan on February 28, 2019.

On October 10, 2017, the Company closed on a construction mortgage note receivable with a maximum principal amount of up to $6.0 million to a wholly owned subsidiary of Sequel to fund the construction and development of a replacement psychiatric residential treatment facility for children and youth with neurodevelopmental disorders located in northeast Tennessee. Amounts funded through the construction mortgage note receivable bear interest at a rate of 8.25%, which is funded as additional borrowings under the loan. As described above under the heading “-2018 Real Estate Acquisitions”, in September 2018 the company acquired the facility for a purchase price of approximately $6.4 million which was satisfied by applying the aggregate principal amount outstanding on the mortgage loan.

In November 2018, the Company signed a new, 15-year triple net master lease with certain affiliates of Creative Solutions in Healthcare, Inc. (“Creative Solutions”) for its portfolio of ten skilled nursing facilities located throughout Texas (the “Texas Ten Portfolio”) previously leased to affiliates of OnPointe (the “Prior Texas Ten Tenant”). The lease with the Prior Texas Ten Tenant was terminated on December 31, 2018 and the new lease with Creative Solutions commenced on January 1, 2019. The initial annual base rent under the lease is approximately $7.7 million with annual lease escalators of 2.0% and two, five-year tenant renewal options. The Texas Ten Portfolio accounted for approximately 24.2% of the Company’s total real estate properties, net as of December 31, 2018.

The lease with the Prior Texas Ten Tenant was a triple-net master lease with the tenant responsible for all costs of the facilities, including taxes, utilities, insurance, maintenance and capital improvements. Monthly base rent due under the master lease was approximately $1.1 million during 2017 and 2018. Beginning in May 2018, the Prior Texas Ten Tenant stopped paying the monthly contractual rent due under the master lease because of ongoing operational difficulties that began in the second half of 2017 that adversely impacted its liquidity position.

As a result of the operational issues and related non-payment of full contractual rent due, effective July 1, 2018, the Company began recognizing revenue under the master lease as cash was received from the tenant. Total base rent due under the Prior Texas Ten Tenant’s lease for the year ended December 31, 2018 was approximately $12.9 million, of which the Company collected and recognized as revenue approximately $6.9 million, which included the application of security deposits held by the Company equal to two months of base rent. During the quarter ended September 30, 2018, we reserved approximately $4.8 million for the balance of non-cash straight-line rent outstanding as of June 30, 2018 that has been previously recorded in rental income. Additionally, the Company’s net income for the year ended December 31, 2018 was adversely impacted by approximately $1.5 million in property-related expenses for the Texas Ten Portfolio comprised primarily of property taxes for 2017 and 2018 which were the responsibility of the Prior Texas Ten Tenant under its triple-net master lease.

The Company leases a portfolio of four properties to subsidiaries of Fundamental Healthcare (“Fundamental”) pursuant to a triple-net master lease with base rent of approximately $8.8 million for 2018. Effective October 6, 2018, the Company amended the master lease to defer approximately $2.4 million in base rent for the period May 2018 through March 2019 associated with Mountain’s Edge Hospital, which is currently undergoing an expansion that is expected to be completed by the end of the first quarter of 2019. Beginning in April 2019, the deferred rent amount will be due in equal monthly installments over the remainder of 2019. Interest on the outstanding deferred rent accrues interest at 9.0% during the deferral and repayment periods. As of December 31, 2018, the deferred rent balance was $1.7 million, which is recorded in other assets on the Company’s consolidated balance sheet.

Minimum cash rental payments due to the Company in future periods under executed non-cancelable operating leases in place for the Company’s properties as of December 31, 2018 are as follows (dollars in thousands):

For the year ending December 31 ⁽¹⁾:
2019	$	55,860
2020		56,500
2021		57,194
2022		58,117
2023		59,084
Thereafter		526,114
Total	$	812,869

⁽¹⁾

Includes cash rental payments due to the Company under the 15-year triple-net master lease with certain affiliates of Creative Solutions for the Texas Ten Portfolio, which commenced on January 1, 2019 and provides initial annual base rent of approximately $7.7 million. Additionally, the table includes cash rental payments under a 10-year lease agreement for approximately 29.1% of the Company’s one medical office building with commenced on January 1, 2019 and provides for initial annual base rent of approximately $0.4 million.

The following table contains information regarding tenant concentration in the Company’s portfolio, based on the percentage of revenues (rental income and interest on mortgage notes receivable and note receivable) for the years ended December 31, 2018, 2017 and 2016, related to tenants, or affiliated tenants, that exceed 10% of revenues.

	% of revenue for the year ended December 31,
	2018	2017	2016
Baylor Scott & White Health	25.6%	24.1%	N/A ⁽¹⁾
Fundamental Healthcare	17.2%	15.1%	16.7%
Vibra Healthcare	15.8%	12.9%	15.5%
Life Generations Healthcare	15.0%	14.1%	17.5%
Prior Texas Ten Tenant	⁽²⁾	23.5%	28.9%

⁽¹⁾

Percentage of revenue is less than 10%.

⁽²⁾

The Company began recognizing revenue under the master lease as cash is received from the Prior Texas Ten Tenant effective July 1, 2018. As a result, the percentage of revenue for the year ended December 31, 2018 is less than 10%. On December 31, 2018, the lease with the Prior Texas Ten Tenant was terminated. The Company entered into a 15-year triple-net master lease agreement with certain affiliates of Creative Solutions for the Texas Ten Portfolio, which commenced on January 1, 2019. See “Texas Ten Portfolio Master Lease Update” above.

The following table contains information regarding the geographic concentration of the properties in the Company’s portfolio as of December 31, 2018 and 2017, which includes percentage of rental income for the years ended December 31, 2018 and 2017 (dollars in thousands).

	Number of Properties at December 31,		Gross Investment at December 31,				% of Total Real Estate Property Investments at December 31,		% of Rental Income
State	2018	2017	2018		2017		2018	2017	For the year ended December 31, 2018	For the year ended December 31, 2017
Texas	17	17	$	300,259	$	300,206	50.2%	53.3%	48.0%	60.5%
California	7	7		154,726		154,726	25.9%	27.4%	26.5%	23.8%
Nevada	4	4		68,134		63,624	11.4%	11.3%	14.3%	10.5%
Indiana	3	2		38,415		15,039	6.4%	2.7%	5.3%	1.1%
South Carolina	1	1		20,000		20,000	3.3%	3.5%	3.7%	3.3%
Connecticut	1	1		10,133		10,133	1.7%	1.8%	1.9%	0.8%
Tennessee	1	-		6,385		-	1.1%	-	0.3%	-
	34	32	$	598,052	$	563,728	100.0%	100.0%	100.0%	100.0%