Related Party Transactions

12 Months Ended

Dec. 31, 2016

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 17—RELATED PARTY TRANSACTIONS

As disclosed in “NOTE 3—CONCENTRATION OF CREDIT RISK,” Atria provides comprehensive property management and accounting services with respect to our seniors housing communities that Atria operates, for which we pay annual management fees pursuant to long-term management agreements.  Most of our management agreements with Atria have initial terms expiring either July 31, 2024, or December 31, 2027, with successive automatic ten-year renewal periods. The management fees payable to Atria under most of the Atria management agreements range from 4.5% to 5% of revenues generated by the applicable properties, and Atria can earn up to an additional 1% of revenues based on the achievement of specified performance targets. Atria also provides certain construction and development management services relating to various development and redevelopment projects within our seniors housing portfolio. For the years ended December 31, 2016, 2015 and 2014, we incurred fees to Atria of $58.7 million, $58.0 million, and $52.7 million respectively, the majority of which are recorded within property-level operating expenses in our Consolidated Statements of Income.

As disclosed in “NOTE 4—ACQUISITIONS OF REAL ESTATE PROPERTY,” we leased ten hospital campuses to Ardent pursuant to a single, triple-net master lease agreement. Pursuant to our master lease agreement, Ardent is obligated to pay base rent, which escalates annually by the lesser of four times the increase in the consumer price index for the relevant period and 2.5%.  The initial term of the master lease expires on August 31, 2035 and Ardent has oneten-year renewal option. For the year ended December 31, 2016 and period from the closing of the Ardent Transaction through December 31, 2015, we recognized rental income from Ardent of $106.9 million and $42.9 million, respectively. In 2015, as part of the closing, we also paid certain transaction-related fees to Ardent of $40.0 million, which are recorded within merger-related expenses and deal costs in our Consolidated Statements of Income.

These transactions are considered to be arm’s length in nature and on terms consistent with transactions with unaffiliated third parties.