Real Property Acquisitions and Development

3 Months Ended

Mar. 31, 2023

Real Property Acquisitions and Development

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):


	Three Months Ended
	March 31, 2023								March 31, 2022
	Seniors Housing Operating		Triple-net		Outpatient Medical		Totals		Seniors Housing Operating		Triple-net		Outpatient Medical		Totals
Land and land improvements	$	2,517	$	7,370	$	60,527	$	70,414	$	43,897	$	—	$	240	$	44,137
Buildings and improvements	16,434		74,289		255,706		346,429		402,342		171		131,412		533,925
Acquired lease intangibles	865		—		39,090		39,955		31,366		—		16,978		48,344


Right of use assets, net	—		—		927		927		—		—		3,852		3,852
Total net real estate assets	19,816		81,659		356,250		457,725		477,605		171		152,482		630,258
Receivables and other assets	234		—		358		592		1,630		—		—		1,630
Total assets acquired	20,050		81,659		356,608		458,317		479,235		171		152,482		631,888
Secured debt	(5,501)		—		(40,953)		(46,454)		—		—		—		—
Lease liabilities	—		—		(953)		(953)		—		—		(3,852)		(3,852)
Accrued expenses and other liabilities	(120)		—		(8,071)		(8,191)		(4,154)		—		—		(4,154)
Total liabilities acquired	(5,621)		—		(49,977)		(55,598)		(4,154)		—		(3,852)		(8,006)
Noncontrolling interests (1)	—		—		—		—		(20,348)		(4)		—		(20,352)
Non-cash acquisition related activity(2)	—		—		—		—		(2,120)		—		—		(2,120)
Cash disbursed for acquisitions	14,429		81,659		306,631		402,719		452,613		167		148,630		601,410
Construction in progress additions	131,944		4,995		101,609		238,548		113,407		20,756		9,642		143,805
Less: Capitalized interest	(7,950)		(1,248)		(1,137)		(10,335)		(4,179)		(1,089)		(211)		(5,479)
Accruals (3)	2,303		—		(4,290)		(1,987)		(1,963)		—		1,778		(185)
Cash disbursed for construction in progress	126,297		3,747		96,182		226,226		107,265		19,667		11,209		138,141
Capital improvements to existing properties	69,783		4,427		17,129		91,339		68,612		8,294		13,323		90,229
Total cash invested in real property, net of cash acquired	$	210,509	$	89,833	$	419,942	$	720,284	$	628,490	$	28,128	$	173,162	$	829,780

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

(2) Relates to the acquisition of assets recognized as investments in unconsolidated entities.

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

Effective on April 1, 2022, our leasehold interest relating to the master lease with National Health Investors, Inc. ("NHI") for 17 properties assumed in conjunction with the Holiday Retirement acquisition was terminated as a result of the transition or sale of the properties by NHI. The lease termination was part of an agreement to resolve outstanding litigation with NHI. In conjunction with the agreement, a wholly owned subsidiary and the lessee on the master lease agreed to release $6,883,000 of cash to the landlord, which represents the net cash flow generated from the properties since we assumed the leasehold interest. Additionally, in connection with the lease termination, during the three months ended June 30, 2022, we recognized $58,621,000 in other income on our Consolidated Statements of Comprehensive Income from the derecognition of the right of use asset and related lease liability.

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):


	Three Months Ended
	March 31, 2023		March 31, 2022
Development projects:
Seniors Housing Operating	$	26,712	$	73,458

Outpatient Medical	9,351		—
Total development projects	36,063		73,458
Expansion projects	17,245		—
Total construction in progress conversions	$	53,308	$	73,458