Investments in Unconsolidated Entities

12 Months Ended

Dec. 31, 2018

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Entities

NOTE 7—INVESTMENTS IN UNCONSOLIDATED ENTITIES

We report investments in unconsolidated entities over whose operating and financial policies we have the ability to exercise significant influence under the equity method of accounting. We are not required to consolidate these entities because our joint venture partners have significant participating rights, nor are these entities considered VIEs, as they are controlled by equity holders with sufficient capital. At December 31, 2018, we had 25% ownership interests in joint ventures that owned five properties, excluding properties under development. We account for our interests in real estate joint ventures, as well as our 34% interest in Atria, 34% interest in ESL and 9.8% interest in Ardent, which are included within other assets on our Consolidated Balance Sheets, under the equity method of accounting. See “NOTE 17—RELATED PARTY TRANSACTIONS” for additional information.

With the exception of our interests in Atria, ESL and Ardent, we provide various services to each unconsolidated entity in exchange for fees and reimbursements. Total management fees earned in connection with these entities were $5.8 million, $6.3 million and $6.7 million for the years ended December 31, 2018, 2017 and 2016, respectively, which is included in office building and other services revenue in our Consolidated Statements of Income.

In July 2018, we sold our 25% interest in an unconsolidated real estate joint venture consisting principally of SNFs to our joint venture partner and received $57.5 million at closing. We recognized a loss of $0.9 million, which is recorded in (loss) income from unconsolidated entities in our Consolidated Statements of Income. We had previously recognized an impairment charge of $35.7 million in March 2018, which was recorded in (loss) income from unconsolidated entities in our Consolidated Statements of Income. In addition, our portion of debt related to investments in unconsolidated entities decreased by $23.3 million. Before the sale, we were the managing member of the real estate joint venture and received approximately $4.6 million in annual management fees which were discontinued upon the sale.

In February 2017, we acquired the controlling interests in six triple-net leased seniors housing communities for a purchase price of $100.0 million. In connection with this acquisition, we re-measured the fair value of our previously held equity interest, resulting in a gain on re-measurement of $3.0 million, which is included in loss from unconsolidated entities in our Consolidated Statements of Income. Since the above acquisition, operations relating to these properties have been consolidated in our Consolidated Statements of Income.