Real Property Acquisitions and Development

12 Months Ended

Dec. 31, 2015

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. Certain of our subsidiaries’ functional currencies are the local currencies of their respective countries. See Note 2 for information regarding our foreign currency policies. During the year ended December 31, 2015, we finalized our purchase price allocation of certain previously reported acquisitions and there were no material changes from those previously disclosed.

Triple-Net Activity

The following provides our purchase price allocations and other triple-net real property investment activity for the periods presented (in thousands):


		Year Ended December 31,
			2015⁽¹⁾		2014		2013
Land and land improvements		$	142,854	$	141,387	$	54,596
Buildings and improvements			1,358,717		1,365,638		360,594
Acquired lease intangibles			4,408		19,196		-
Restricted cash			6		-		189
Receivables and other assets			194		4,895		1,020
	Total assets acquired⁽²⁾		1,506,179		1,531,116		416,399
Secured debt			(47,741)		(130,638)		(9,810)
Senior unsecured notes			-		(48,567)		-
Accrued expenses and other liabilities			(2,905)		(9,067)		(540)
	Total liabilities assumed		(50,646)		(188,272)		(10,350)
Noncontrolling interests			(13,465)		-		-
Non-cash acquisition related activity⁽³⁾			(38,355)		(3,453)		(12,207)
	Cash disbursed for acquisitions		1,403,713		1,339,391		393,842
Construction in progress additions			143,140		135,349		145,624
Less: Capitalized interest			(5,699)		(4,582)		(4,828)
Accruals	Foreign currency translation		(167)		421		-
	Non-cash related activity		-		(14,459)		-
Cash disbursed for construction in progress			137,274		116,729		140,796
Capital improvements to existing properties			45,293		18,901		35,912
	Total cash invested in real property, net of cash acquired	$	1,586,280	$	1,475,021	$	570,550

	(1) Includes acquisitions with an aggregate purchase price of $910,433,000 for which the allocation of the purchase price consideration is preliminary and subject to change.
	(2) Excludes $16,572,000, $1,382,000, and $0 of cash acquired during the year ended December 31, 2015, 2014 and 2013, respectively.
	(3) For the year ended December 31, 2015, $23,288,000 relates to the acquisition of assets previously financed as real estate loans receivable and $6,743,000 previously financed as equity investments. For the year ended December 31, 2013, $12,204,000 relates to an asset swap transaction. Please refer to Notes 5 and 6.

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.

The following is a summary of our seniors housing operating real property investment activity for the periods presented (in thousands):


		Year Ended December 31,
			2015⁽¹⁾		2014		2013
Land and land improvements		$	218,581	$	57,534	$	445,152
Buildings and improvements			2,367,486		297,314		4,275,046
Acquired lease intangibles			187,512		12,983		396,444
Construction in progress			-		27,957		-
Restricted cash			11,798		804		44,427
Receivables and other assets			29,501		9,327		79,564
	Total assets acquired⁽²⁾		2,814,878		405,919		5,240,633
Secured debt			(871,471)		(19,834)		(1,275,245)
Senior unsecured notes			(24,621)		-		-
Accrued expenses and other liabilities			(81,778)		(17,802)		(96,709)
	Total liabilities assumed		(977,870)		(37,636)		(1,371,954)
Noncontrolling interests			(183,854)		(482)		(232,575)
Non-cash acquisition related activity⁽³⁾			-		-		(555,563)
Cash disbursed for acquisitions			1,653,154		367,801		3,080,541
Construction in progress additions			44,173		12,291		3,894
Less: Capitalized interest			(1,740)		(714)		(57)
Less: Foreign currency translation			(2,499)		(2,012)		-
Cash disbursed for construction in progress			39,934		9,565		3,837
Capital improvements to existing properties			104,308		86,803		72,258
	Total cash invested in real property, net of cash acquired	$	1,797,396	$	464,169	$	3,156,636

	(1) Includes an aggregate purchase price of $2,002,698,000 relating to acquisitions for which the allocation of the purchase price consideration is preliminary and subject to change.
	(2) Excludes $30,930,000, $9,060,000 and $92,148,000 of cash acquired during the years ended December 31, 2015, 2014 and 2013, respectively.
	(3) Represents Sunrise Senior Living loan and noncontrolling interest acquisitions during the first quarter of 2013.

Outpatient Medical Activity

Accrued contingent consideration related to certain outpatient medical acquisitions was $0, $27,374,000 and $26,187,000 as of December 31, 2015, 2014 and 2013, respectively. The following is a summary of our outpatient medical real property investment activity for the periods presented (in thousands):


		Year Ended December 31,
			2015⁽¹⁾		2014		2013
Land and land improvements		$	176,689	$	63,129	$	14,515
Buildings and improvements			317,484		567,847		156,087
Acquired lease intangibles			45,226		46,661		9,432
Restricted cash			-		-		505
Receivables and other assets			939		-		344
	Total assets acquired⁽²⁾		540,338		677,637		180,883
Secured debt			(120,977)		(66,113)		(55,884)
Accrued expenses and other liabilities			(7,777)		(22,293)		(1,041)
	Total liabilities assumed		(128,754)		(88,406)		(56,925)
Noncontrolling interests			(76,535)		(39,987)		(386)
Non-cash acquisition related activity⁽³⁾			(27,025)		(45,836)		-
Cash disbursed for acquisitions			308,024		503,408		123,572
Construction in progress additions			70,560		99,878		123,494
Less: Capitalized interest			(1,286)		(1,854)		(1,815)
Accruals⁽⁴⁾			(1,921)		(26,437)		(18,752)
Cash disbursed for construction in progress			67,353		71,587		102,927
Capital improvements to existing properties			38,151		27,076		27,662
	Total cash invested in real property, net of cash acquired	$	413,528	$	602,071	$	254,161

	(1) Includes acquisitions with an aggregate purchase price of $91,829,000 for which the allocation of the purchase price consideration is preliminary and subject to change.
	(2) Excludes $5,522,000, $0 and $0 of cash acquired during the years ended December 31, 2015, 2014 and 2013, respectively.
	(3) Non-cash activity relates to the acquisition of a controlling interest in a portfolio of properties that was historically reported as an unconsolidated property investment for the year ended December 31, 2015. For the year ended December 31, 2014, the non-cash activity relates to an acquisition of assets previously financed as real estate loans. Please refer to Note 6 for additional information.
	(4) Represents non-cash consideration 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:


			Year Ended
			December 31, 2015		December 31, 2014		December 31, 2013
	Development projects:
		Triple-net	$	104,844	$	71,569	$	133,181
		Seniors housing operating		19,869		-		-
		Outpatient medical		16,592		127,290		127,363
		Total development projects		141,305		198,859		260,544
	Expansion projects			38,808		24,804		26,395
Total construction in progress conversions			$	180,113	$	223,663	$	286,939

At December 31, 2015, future minimum lease payments receivable under operating leases (excluding properties in our seniors housing operating partnerships and excluding any operating expense reimbursements) are as follows (in thousands):


2016	$	1,403,745
2017		1,402,087
2018		1,392,188
2019		1,350,736
2020		1,338,549
Thereafter		11,353,245
Totals	$	18,240,550