Real Property Acquisitions and Development

12 Months Ended

Dec. 31, 2016

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, 2016, 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,
			2016(1)		2015		2014
Land and land improvements		$	104,754	$	95,835	$	141,387
Buildings and improvements			418,633		1,061,431		1,365,638
Acquired lease intangibles			2,876		4,408		19,196
Restricted cash			-		6		-
Receivables and other assets			551		194		4,895
	Total assets acquired(2)		526,814		1,161,874		1,531,116
Secured debt			-		(47,741)		(130,638)
Senior unsecured notes			-		-		(48,567)
Accrued expenses and other liabilities			(3,384)		(2,905)		(9,067)
	Total liabilities assumed		(3,384)		(50,646)		(188,272)
Noncontrolling interests			(26,771)		(13,465)		-
Non-cash acquisition related activity(3)			(51,733)		(38,355)		(3,453)
	Cash disbursed for acquisitions		444,926		1,059,408		1,339,391
Construction in progress additions			181,084		143,140		135,349
Less: Capitalized interest			(8,729)		(5,699)		(4,582)
Accruals	Foreign currency translation		(3,665)		(167)		421
	Non-cash related activity		-		-		(14,459)
Cash disbursed for construction in progress			168,690		137,274		116,729
Capital improvements to existing properties			32,603		45,293		18,901
	Total cash invested in real property, net of cash acquired	$	646,219	$	1,241,975	$	1,475,021
	(1) Includes acquisitions with an aggregate purchase price of $67,847,000 for which the allocation of the purchase price consideration is preliminary and subject to change.
	(2) Excludes $682,000, $16,572,000 and $1,382,000 of cash acquired during the years ended December 31, 2016, 2015 and 2014, respectively.
	(3) For the year ended December 31, 2016, primarily relates to $45,044,000 for the acquisition of assets previously financed as real estate loans receivable and $6,630,000 previously financed as an equity investment. For the year ended December 31, 2015, primarily relates to $23,288,000 for the acquisition of assets previously financed as real estate loans receivable and $6,743,000 previously financed as equity investments.

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,
			2016(1)		2015		2014
Land and land improvements		$	164,653	$	218,581	$	57,534
Buildings and improvements			1,518,472		2,367,486		297,314
Acquired lease intangibles			115,643		187,512		12,983
Construction in progress			-		-		27,957
Restricted cash			216		11,798		804
Receivables and other assets			2,462		29,501		9,327
	Total assets acquired(2)		1,801,446		2,814,878		405,919
Secured debt			(63,732)		(871,471)		(19,834)
Senior unsecured notes			-		(24,621)		-
Accrued expenses and other liabilities			(23,681)		(81,778)		(17,802)
	Total liabilities assumed		(87,413)		(977,870)		(37,636)
Noncontrolling interests			(6,007)		(183,854)		(482)
Non-cash acquisition related activity(3)			(47,065)		-		-
Cash disbursed for acquisitions			1,660,961		1,653,154		367,801
Construction in progress additions			157,845		44,173		12,291
Less: Capitalized interest			(5,793)		(1,740)		(714)
Less: Foreign currency translation			(8,500)		(2,499)		(2,012)
Cash disbursed for construction in progress			143,552		39,934		9,565
Capital improvements to existing properties			138,673		104,308		86,803
	Total cash invested in real property, net of cash acquired	$	1,943,186	$	1,797,396	$	464,169
	(1) Includes an aggregate purchase price of $1,672,961,000 relating to acquisitions for which the allocation of the purchase price consideration is preliminary and subject to change.
	(2) Excludes $135,000, $30,930,000 and $9,060,000 of cash acquired during the years ended December 31, 2016, 2015 and 2014, respectively.
	(3) Primarily relates to the acquisition of assets previously financed as an equity investment.

Outpatient Medical Activity

Accrued contingent consideration related to certain outpatient medical acquisitions was $0, $0 and $27,374,000 as of December 31, 2016, 2015 and 2014, respectively. The following is a summary of our outpatient medical real property investment activity for the periods presented (in thousands):

		Year Ended December 31,
			2016(1)		2015		2014
Land and land improvements		$	5,738	$	223,708	$	63,129
Buildings and improvements			46,056		614,770		567,847
Acquired lease intangibles			4,592		45,226		46,661
Receivables and other assets			-		939		-
	Total assets acquired(2)		56,386		884,643		677,637
Secured debt			-		(120,977)		(66,113)
Accrued expenses and other liabilities			(1,670)		(7,777)		(22,293)
	Total liabilities assumed		(1,670)		(128,754)		(88,406)
Noncontrolling interests			-		(76,535)		(39,987)
Non-cash acquisition related activity			(15,013)(3)		(27,025)(4)		(45,836)(3)
Cash disbursed for acquisitions			39,703		652,329		503,408
Construction in progress additions			113,933		70,560		99,878
Less: Capitalized interest			(3,723)		(1,286)		(1,854)
Accruals(5)			(19,321)		(1,921)		(26,437)
Cash disbursed for construction in progress			90,889		67,353		71,587
Capital improvements to existing properties			47,870		38,151		27,076
	Total cash invested in real property, net of cash acquired	$	178,462	$	757,833	$	602,071
	(1) Includes acquisitions with an aggregate purchase price of $18,784,000 for which the allocation of the purchase price consideration is preliminary and subject to change.
	(2) Excludes $0, $5,522,000 and $0 of cash acquired during the years ended December 31, 2016, 2015 and 2014, respectively.
	(3) The non-cash activity relates to the acquisition of assets previously financed as real estate loans. Please refer to Note 6 for additional information.
	(4) The 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.
	(5) 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, 2016		December 31, 2015		December 31, 2014
	Development projects:
		Triple-net	$	46,094	$	104,844	$	71,569
		Seniors housing operating		18,979		19,869		-
		Outpatient medical		108,001		16,592		127,290
		Total development projects		173,074		141,305		198,859
	Expansion projects			11,363		38,808		24,804
Total construction in progress conversions			$	184,437	$	180,113	$	223,663

At December 31, 2016, 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):

2017	$	1,258,565
2018		1,243,041
2019		1,196,065
2020		1,178,410
2021		1,126,074
Thereafter		8,459,291
Totals	$	14,461,446