Real Property Acquisitions and Development

3 Months Ended

Jun. 30, 2013

Real Property Acquisitions and Development [Abstract]

Real Property Acquisitions and Development

3. Real Property Acquisitions and Development

The total purchase price for all properties acquired has been allocated to the tangible and identifiable intangible assets, liabilities and noncontrolling interests based upon their respective fair values in accordance with our accounting policies. The results of operations for these acquisitions have been included in our consolidated results of operations since the date of acquisition and are a component of the appropriate segments. Transaction costs primarily represent costs incurred with property acquisitions, including due diligence costs, fees for legal and valuation services and termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees and other acquisition-related costs.

Seniors Housing Triple-net Activity

		Six Months Ended
(In thousands)		June 30, 2013(1)			June 30, 2012
Land and land improvements			$	8,533		$	29,320
Buildings and improvements				47,993			394,508
	Total assets acquired			56,526			423,828
Secured debt				-			(56,337)
Accrued expenses and other liabilities				-			(1,568)
	Total liabilities assumed			-			(57,905)
Capital in excess of par				-			1,024
Noncontrolling interests				-			(15,820)
Non-cash acquisition related activity				-			(310)
	Cash disbursed for acquisitions			56,526			350,817
Construction in progress additions				58,799			81,419
Less:	Capitalized interest			(2,208)			(2,629)
Cash disbursed for construction in progress				56,591			78,790
Capital improvements to existing properties				18,302			36,421
	Total cash invested in real property, net of cash acquired		$	131,419		$	466,028
(1) Includes acquisitions with an aggregate purchase price of $56,526,000 for which the allocation of the purchase price consideration is preliminary and subject to change.

Seniors Housing Operating Activity

Acquisitions of seniors housing operating properties are structured under RIDEA, which is described in Note 18. This structure results in the inclusion of all resident revenues and related property operating expenses from the operation of these qualified health care properties in our consolidated statements of comprehensive income. Certain of our subsidiaries' functional currencies are the local currencies of their respective countries. See Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012, as updated by our Current Report on Form 8-K filed on May 7, 2013,for information regarding our foreign currency policies.

		Six Months Ended
(In thousands)		June 30, 2013(1)			June 30, 2012
Land and land improvements			$	337,066		$	27,647
Building and improvements				3,069,192			241,287
Acquired lease intangibles				263,740			24,052
Restricted cash				22,863			-
Receivables and other assets				76,286			1,182
	Total assets acquired(2)			3,769,147			294,168
Secured debt				(556,413)			(8,684)
Accrued expenses and other liabilities				(51,356)			(1,665)
	Total liabilities assumed			(607,769)			(10,349)
Noncontrolling interests				(229,966)			(2,054)
Non-cash acquisition related activity(3)				(555,562)			-
	Cash disbursed for acquisitions			2,375,850			281,765
Construction in progress additions				472			-
Less:	Capitalized interest			(6)			-
Cash disbursed for construction in progress				466			-
Capital improvements to existing properties				21,474			8,553
	Total cash invested in real property, net of cash acquired		$	2,397,790		$	290,318
(1) Includes acquisitions with an aggregate purchase price of $3,769,147,000 for which the allocation of the purchase price consideration is preliminary and subject to change.
(2) Excludes $60,590,000 and $1,619,000 of cash acquired during the six months ended June 30, 2013 and 2012, respectively.
(3) Represents Sunrise loan and noncontrolling interests acquisitions.

Sunrise Merger

In August 2012, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Sunrise Senior Living, Inc. (“Sunrise”), pursuant to which we agreed to acquire Sunrise in an all-cash merger (the “Merger”) in which Sunrise stockholders would receive $14.50 in cash for each share of Sunrise common stock. On January 9, 2013, we completed our acquisition of the Sunrise property portfolio. The Sunrise Merger advances our strategic vision to own higher-end, private pay properties located in major metropolitan markets. As of June 30, 2013, 71 properties are wholly owned and 54 properties are held in unconsolidated entities (see Note 7 for additional information). As previously announced, on July 1, 2013, we acquired the remaining interests in 49 of the unconsolidated properties. The total estimated purchase price of approximately $2,763,336,000, including approximately $2,041,893,000 of cash consideration, has been allocated on a preliminary basis to the tangible and identifiable intangible assets and liabilities in the table above based on respective fair values in accordance with our accounting policies. We funded the cash consideration and other associated costs of the acquisition from cash on-hand as well as draws on our primary unsecured line of credit and unsecured term loan (see Notes 9 and 10 for additional information).

Subsequent to January 9, 2013, we recognized $129,187,000 and $241,280,000 of revenues and $42,421,000 and $79,322,000 of net operating income from continuing operations related to the Sunrise portfolio during the three and six month periods ended June 30, 2013, respectively. In addition, we incurred $65,344,000 of transaction costs, which include advisory fees, due diligence costs, severances, and fees for legal and valuation services during the six month period ended June 30, 2013. These amounts are included in the seniors housing operating results reflected in Note 17.

The following unaudited pro forma consolidated results of operation have been prepared as if the Sunrise Merger had occurred as of January 1, 2012 based on the preliminary purchase price allocations discussed above. Amounts are in thousands, except per share data:

		Six Months Ended
		June 30,		June 30,
		2013		2012
Revenues		$	1,328,847	$	1,083,555
Income (loss) from continuing operations attributable to common stockholders		$	(7,081)	$	36,559
Income (loss) from continuing operations attributable to common stockholders per share:
	Basic	$	(0.03)	$	0.18
	Diluted	$	(0.03)	$	0.18

Medical Facilities Activity

		Six Months Ended
(In thousands)		June 30, 2013			June 30, 2012
Land and land improvements			$	-	$	30,160
Buildings and improvements				-		489,659
Acquired lease intangibles				-		58,998
Restricted cash				-		975
Receivables and other assets				-		4,250
	Total assets acquired			-		584,042
Secured debt				-		(238,589)
Accrued expenses and other liabilities				-		(12,775)
	Total liabilities assumed			0		(251,364)
Non-cash acquisition activity				-		(880)
	Cash disbursed for acquisitions			0		331,798
Construction in progress additions				60,925		64,937
Less:	Capitalized interest			(778)		(1,929)
	Accruals(1)			2,129		(10,911)
Cash disbursed for construction in progress				62,276		52,097
Capital improvements to existing properties				8,704		18,025
	Total cash invested in real property		$	70,980	$	401,920
(1) Represents non-cash accruals for amounts to be paid in future periods relating to properties that converted in the periods noted above.

Construction Activity

The following is a summary of the construction projects that were placed into service and began generating revenues during the periods presented (in thousands):

			Six Months Ended
			June 30, 2013			June 30, 2012
	Development projects:
		Seniors housing triple-net		$	67,317		$	59,167
		Medical facilities			70,227			105,666
		Total development projects			137,544			164,833
	Expansion projects				8,155			240
Total construction in progress conversions				$	145,699		$	165,073