Real Property Acquisitions and Development

9 Months Ended

Sep. 30, 2021

Real Property Acquisitions and Development

The total purchase price for all properties acquired has been allocated to the tangible and identifiable intangible assets and liabilities at cost on a relative fair value basis. Liabilities assumed and any associated noncontrolling interests are reflected at fair value. 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 acquisitions, including due diligence costs, fees for legal and valuation services, termination of pre-existing relationships computed based on the fair value of the assets acquired, lease termination fees and other acquisition-related costs. Transaction costs related to asset acquisitions are capitalized as a component of purchase price and all other non-capitalizable costs are reflected in other expenses on our Consolidated Statements of Comprehensive Income.

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


	Nine Months Ended
	September 30, 2021								September 30, 2020
	Seniors Housing Operating		Triple-net		Outpatient Medical		Totals		Seniors Housing Operating		Triple-net		Outpatient Medical		Totals
Land and land improvements	$	264,706	$	48,099	$	45,350	$	358,155	$	15,758	$	—	$	43,252	$	59,010
Buildings and improvements	1,655,067		436,828		227,390		2,319,285		132,481		765		171,630		304,876
Acquired lease intangibles	142,439		—		17,333		159,772		10,810		—		23,823		34,633


Right of use assets, net	77,455		—		—		77,455		—		—		—		—
Total net real estate assets	2,139,667		484,927		290,073		2,914,667		159,049		765		238,705		398,519
Receivables and other assets	6,041		—		3,534		9,575		257		—		139		396
Total assets acquired (1)	2,145,708		484,927		293,607		2,924,242		159,306		765		238,844		398,915

Lease liabilities	(138,126)		—		—		(138,126)		—		—		—		—
Accrued expenses and other liabilities	(20,748)		(8,703)		(266)		(29,717)		(671)		—		(2,043)		(2,714)
Total liabilities acquired	(158,874)		(8,703)		(266)		(167,843)		(671)		—		(2,043)		(2,714)
Noncontrolling interests (2)	(2,597)		(2,056)		(16,540)		(21,193)		(2,827)		—		—		(2,827)

Cash disbursed for acquisitions	1,984,237		474,168		276,801		2,735,206		155,808		765		236,801		393,374
Construction in progress additions	190,672		60,251		29,448		280,371		75,617		33,021		33,593		142,231
Less: Capitalized interest	(9,658)		(2,092)		(2,277)		(14,027)		(7,760)		(2,569)		(2,905)		(13,234)
Accruals (3)	38		—		(3,057)		(3,019)		(1,376)		—		(922)		(2,298)
Cash disbursed for construction in progress	181,052		58,159		24,114		263,325		66,481		30,452		29,766		126,699
Capital improvements to existing properties	115,115		26,496		24,080		165,691		130,465		5,971		46,888		183,324
Total cash invested in real property, net of cash acquired	$	2,280,404	$	558,823	$	324,995	$	3,164,222	$	352,754	$	37,188	$	313,455	$	703,397

(1) Excludes $301,000 and $580,000 of unrestricted and restricted cash acquired during the nine months ended September 30, 2021 and September 30, 2020, respectively.

(2) Includes amounts attributable to both redeemable noncontrolling interests and noncontrolling interests.

(3) Represents non-cash accruals for amounts to be paid in future periods for properties that converted, off-set by amounts paid in the current period.

On July 30, 2021, we acquired a portfolio of 85 seniors housing properties owned by Holiday Retirement for $1,576,600,000, which are included in our Seniors Housing Operating segment. Atria Senior Living assumed operations of the portfolio following its acquisition of the Holiday Retirement management company pursuant to an incentive-based management agreement. As part of this transaction, a wholly owned subsidiary assumed the leasehold interest in a 26 property portfolio and subsequently purchased eight of the leased properties from the landlord. The lease, identified as an operating lease, expires in 2035 and was recognized as a right of use asset, net of above market lease intangibles, and lease liability. No rent will be paid in excess of net cash flow related to the remaining leasehold properties.

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):


	Nine Months Ended
	September 30, 2021		September 30, 2020
Development projects:
Seniors Housing Operating	$	58,844	$	93,188
Triple-net	22,990		59,201
Outpatient Medical	116,612		43,493
Total development projects	198,446		195,882
Expansion projects	—		48,600
Total construction in progress conversions	$	198,446	$	244,482