Acquisitions of Real Estate Property

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Acquisitions of Real Estate Property

Acquisitions of Real Estate Property

In December 2016, we completed the acquisition of four SNFs, one seniors housing community and one campus (consisting of one SNF and one seniors housing community) for $36.0 million in a sale-leaseback transaction with an existing operator. The properties are currently being held in a Code Section 1031 exchange escrow account with a qualified intermediary.

In December 2015, we completed the acquisition of the 6.82% noncontrolling interest in a former joint venture for $3.1 million.

In September 2015, we completed the acquisition of eight properties (seven SNFs and one campus with both skilled nursing and assisted living facilities) and simultaneously entered into a long-term master lease with Senior Care Centers, LLC (together with its subsidiaries, “SCC”) to operate the acquired portfolio. We purchased the assets for approximately $190 million in cash and made a $20 millionfive-year, fully amortizing loan to SCC, resulting in a total transaction value of approximately $210 million. We funded this transaction through cash on hand and borrowings under our unsecured revolving credit facility and term loans (see “Note 9—Borrowing Arrangements”).

In January 2015, Ventas completed the acquisition of American Realty Capital Healthcare Trust, Inc. (“HCT”) in a stock and cash transaction, which included 14 SNFs, two specialty hospitals and four seniors housing properties that were transferred to us in connection with the separation. Also in January 2015, Ventas completed the acquisition of 12 SNFs for an aggregate purchase price of $234.9 million, all of which were transferred to us in connection with the separation and are currently operated by SCC.

Estimated Fair Value

We are accounting for our 2016 and 2015 acquisitions under the acquisition method in accordance with ASC 805.

The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed during 2016 (in thousands):

Land and improvements	$	2,240
Buildings and improvements	31,640
Acquired lease intangibles	2,120
Total assets acquired	36,000
Tenant deposits	765
Total liabilities assumed	765
Net assets acquired	$	35,235

The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed during 2015 (in thousands):

Land and improvements	$	38,361
Buildings and improvements	515,620
Acquired lease intangibles	14,138
Goodwill (1)	56,275
Other assets	8,034
Total assets acquired	632,428
Tenant deposits	8,801
Lease intangible liabilities	3,729
Accounts payable and other liabilities	1,343
Total liabilities assumed	13,873
Net assets acquired	$	618,555

__________

(1) As it relates to the HCT acquisition, goodwill was allocated to us on a relative fair value basis from total goodwill recognized by Ventas. A $1.8 million reduction of the original amount of goodwill due to HCT was recognized in 2015.

Aggregate Revenue and NOI

For the year ended December 31, 2016, aggregate revenues and NOI derived from our 2016 real estate acquisitions during our period of ownership were both $0.2 million.

For the year ended December 31, 2015, aggregate revenues and NOI derived from our 2015 real estate acquisitions during our period of ownership were both $34.8 million. During 2015, we restructured the lease terms and reduced the rent on 12 HCT properties, including those sold or classified as held for sale, in an aggregate amount of $5.7 million after the application of security deposits.

Unaudited Pro Forma

The following table illustrates the effect on revenues and net income attributable to CCP as if we had consummated the acquisitions completed during the year ended December 31, 2016 as of January 1, 2015:

	For the Years Ended December 31,
	2016		2015
	(Unaudited)
	(In thousands, except per share amounts)
Revenues	$	350,774	$	331,001
Net income attributable to CCP	123,781		144,393
Net income attributable to CCP, per basic share	$	1.48	$	1.73
Net income attributable to CCP, per diluted share	1.48		1.73

The following table illustrates the effect on revenues and net income attributable to CCP as if we had consummated the acquisitions completed during the year ended December 31, 2015 as of January 1, 2014:

	For the Years Ended December 31,
	2015		2014
	(Unaudited)
	(In thousands, except per share amounts)
Revenues	$	345,015	$	348,906
Net income attributable to CCP	148,392		180,152
Net income attributable to CCP, per basic share	$	1.78	$	2.16
Net income attributable to CCP, per diluted share	1.77		2.15

Deal Costs

Deal costs consist of expenses primarily related to transactions, whether consummated or not, and operator transitions. These costs are expensed as incurred in the applicable periods. Deal costs for the years ended December 31, 2016 and 2015 were $3.1 million and $6.4 million, respectively. For acquisitions completed during the year ended December 31, 2016, $0.1 million of deal costs were expensed in 2016. For acquisitions completed during the year ended December 31, 2015, $0.3 million and $5.9 million of deal costs were expensed in the years ended December 31, 2016 and 2015, respectively. Deal costs for the year ended December 31, 2015 include an allocation of expenses incurred by Ventas related to the HCT acquisition based on relative property net operating income (“NOI”).

Acquisition of Specialty Valuation Firm

On August 14, 2015, we completed the acquisition of a specialty healthcare and seniors housing valuation firm in exchange for the issuance of 339,602 shares of our common stock. This specialty valuation firm subsidiary represents our TRS. Pursuant to the purchase agreement, we agreed to issue additional shares to the sellers to the extent that the value of the common stock originally issued to the sellers based on the volume-weighted average price (“VWAP”) of the common stock over the 30 days immediately prior to the six-month anniversary of the closing of the acquisition was less than approximately $11.5 million. In February 2016, we issued 56,377 shares of our common stock, valued at $1.4 million, to the sellers as additional consideration pursuant to the purchase agreement. For the year ended December 31, 2015, aggregate revenues related to the specialty valuation firm were $2.2 million. Net loss for the year ended December 31, 2015 was $(0.1) million. For the year ended December 31, 2015, the above aggregate revenues and net loss are only for the period of ownership (from August 2015).