LOANS RECEIVABLE AND INVESTMENTS

12 Months Ended

Dec. 31, 2022

Loans Receivable And Investments [Abstract]

NOTE 6 – LOANS RECEIVABLE AND INVESTMENTS

As of December 31, 2022 and 2021, we held $561.4 million and $549.2 million, respectively, of loans receivable and investments, net of allowance, relating to senior housing and healthcare operators or properties. The following is a summary of our loans receivable and investments, net, including amortized cost, fair value and unrealized gains or losses on available for sale investments (dollars in thousands):


	Amortized Cost		Allowance		Unrealized Gain		Carrying Amount		Fair Value
As of December 31, 2022:
Secured/mortgage loans and other, net (1)	$	513,669	$	(20,000)	$	—	$	493,669	$	493,627
Government-sponsored pooled loan investments, net (2)	43,406		—		—		43,406		43,406
Total investments reported as secured loans receivable and investments, net	557,075		(20,000)		—		537,075		537,033
Non-mortgage loans receivable, net (3)	28,959		(4,621)		—		24,338		23,416

Total loans receivable and investments, net	$	586,034	$	(24,621)	$	—	$	561,413	$	560,449

As of December 31, 2021:
Secured/mortgage loans and other, net (1)	$	488,913	$	—	$	—	$	488,913	$	478,931
Government-sponsored pooled loan investments, net (2)	39,376		—		1,836		41,213		41,213
Total investments reported as secured loans receivable and investments, net	528,289		—		1,836		530,126		520,144
Non-mortgage loans receivable, net (3)	24,418		(5,394)		—		19,024		19,039

Total loans receivable and investments, net	$	552,707	$	(5,394)	$	1,836	$	549,150	$	539,183

______________________________

(1)Includes the $486.1 million principal amount, cash-pay Santerre Mezzanine Loan, which is priced at LIBOR + 6.42% and secured by a pledge of equity interests in entities that hold a diverse pool of medical office, senior housing, skilled nursing and other healthcare assets. The Santerre Mezzanine loan has a current maturity date of June 9, 2023, subject to the borrower’s right to extend for one year,subject to satisfaction of certain conditions. The Santerre Mezzanine Loan is currently prepayable in whole or in part subject to satisfaction of certain financial and non-financial terms and conditions. Other included investments have contractual maturities in 2024 and 2027.

(2)Repaid at par in February 2023.

(3)Included in other assets on our Consolidated Balance Sheets.

2022 Activity

In 2022, we provided secured debt financing in the aggregate amount of $29.1 million with terms ranging from two to five years and interest rates ranging from Term SOFR plus 3.75% to 5.00%.

As of December 31, 2022, we recognized a $20.0 million allowance on the Santerre Mezzanine Loan. The allowance for the Santerre Mezzanine Loan was calculated using the “current expected credit loss”, or “CECL”, model, which considers relevant information about past events, current conditions and reasonable and supportable forecasts to estimate expected losses as of the most recent balance sheet date. See “Note 2 – Accounting Policies - Fair Values of Financial Instruments” of the Consolidated Financial Statements.

The Santerre Mezzanine Loan has a current principal balance of $486.1 million, is priced at LIBOR + 6.42% and is freely prepayable in whole or in part subject to satisfaction of certain financial and non-financial terms and conditions. The Santerre Mezzanine Loan generated $40.0 million in loan interest income to Ventas in 2022. The Santerre Mezzanine Loan was entered into on June 7, 2019 for a five-year term, inclusive of three one-year extensions at the borrower’s option. The borrower has exercised two of its three extension options, with the final extension option exercisable between 30 to 60 days prior to the current maturity date of June 9, 2023, subject to satisfaction of certain conditions.

The Santerre Mezzanine Loan is subordinate to the rights of a $1.0 billion principal amount senior loan (the “Santerre Senior Loan”) priced at LIBOR + 1.84%. The Santerre Senior Loan is secured by a diverse pool of medical office, senior housing, skilled nursing and other healthcare assets and the Santerre Mezzanine Loan is secured by equity interests in entities that own those assets. Both loans are otherwise non-recourse to the borrower, subject to certain exceptions. The borrower has

acquired an interest rate cap for the benefit of the Santerre Mezzanine Loan and the Santerre Senior Loan in the notional amount of $1.5 billion, which sets LIBOR at 3.36% and expires on June 9, 2023.

The borrower remained current on all financial obligations to Ventas through January 2023 and is expected to remain current through February 2023. However, the current post-Covid under-performance of certain of the collateral, coupled with the rise in interest rates in the third quarter and accelerating into the fourth quarter of 2022, has caused the ratio of net operating income of the collateral to interest due on the Santerre Mezzanine Loan to decline significantly.

While we believe that the borrower has taken and is taking targeted actions to attempt to improve the performance of or sell certain of the collateral, future cash flows from the collateral may be insufficient to fully pay interest expense on the Santerre Mezzanine Loan. If the borrower is unable to or does not meet its obligations under the Santerre Mezzanine Loan, there are a variety of remedies available to us, including the ability to foreclose on the collateral and assume and extend the Santerre Senior Loan for an additional year.

See also “Risk Factors – We face potential adverse consequences from the bankruptcy, insolvency or financial deterioration of our tenants, managers, borrowers and other obligors” and “Risk Factors – If a borrower defaults, we may be unable to obtain payment, successfully foreclose on collateral or realize the value of any collateral, which could adversely affect our ability to recover our investment.”

2021 Activity

In October 2021, we received proceeds of $45.0 million in full repayment of a note (which was included above in Non-mortgage loans receivable, net) from Brookdale Senior Living. The note was issued to us in connection with the modification of our lease with Brookdale Senior Living in the third quarter of 2020.

In July 2021, we received $66.0 million from Holiday Retirement as repayment in full of secured notes which Holiday Retirement previously issued to us as part of a lease termination transaction entered into in April 2020.

In July 2021, we received aggregate proceeds of $224 million from the redemption of Ardent’s outstanding 9.75% Senior Notes due 2026 (which was included above in Marketable debt securities) at a price equal to 107.313% of the principal amount of the notes, plus accrued and unpaid interest. The redemption resulted in a gain of $16.6 million, which is recorded in income from loans and investments in our Consolidated Statements of Income. As of December 31, 2021, $23.0 million of unrealized gain related to these securities was included in accumulated other comprehensive income on our Consolidated Balance Sheet.

In April 2021, we received $19.2 million in full repayment of certain government-sponsored pooled loan investments. In the first quarter of 2021, prior to such repayment, we reversed an $8.8 million allowance we had previously recorded in 2020 on this investment with a corresponding adjustment to allowance on loans receivable and investments in our Consolidated Statements of Income. There was no impact to our Consolidated Statements of Income from the loan repayment.

During the first quarter of 2021, we received aggregate proceeds of $16.5 million for the redemption and sale of marketable debt securities, resulting in total gains of $1.0 million, which is recorded in income from loans and investments in our Consolidated Statements of Income. As of December 31, 2021, $1.2 million of unrealized gain was presented within accumulated other comprehensive income on our Consolidated Balance Sheet related to these securities. These securities had a weighted average interest rate of 8.3% and were due to mature between 2024 and 2026.

In March 2021, $11.9 million of previously reserved non-mortgage loans were forgiven. We derecognized both the amortized cost bases and allowances for these loans during the quarter ended March 31, 2021. There was no impact to our Consolidated Statements of Income from the loan forgiveness.