Real Property Acquisitions and Development

6 Months Ended

Jun. 30, 2024

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 directly 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. Our acquisition of properties are at times subject to earn out provisions based on the future operating performance of the acquired properties, which could result in incremental payments in the future. Our policy is to recognize such contingent consideration when the contingency is resolved and the consideration becomes payable.

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


	Six Months Ended
	June 30, 2024								June 30, 2023
	Seniors Housing Operating		Triple-net		Outpatient Medical		Totals		Seniors Housing Operating		Triple-net		Outpatient Medical		Totals
Land and land improvements	$	68,662	$	14,193	$	10,160	$	93,015	$	4,426	$	7,370	$	60,527	$	72,323
Buildings and improvements	422,488		61,914		33,064		517,466		50,172		74,289		256,190		380,651
Acquired lease intangibles	34,827		—		2,193		37,020		970		—		39,090		40,060
Construction in progress	19,397		—		—		19,397		—		—		—		—

Right of use assets, net	—		—		—		—		—		—		927		927
Total net real estate assets	545,374		76,107		45,417		666,898		55,568		81,659		356,734		493,961
Receivables and other assets	1,403		34		112		1,549		2,089		—		358		2,447
Total assets acquired	546,777		76,141		45,529		668,447		57,657		81,659		357,092		496,408
Secured debt	—		—		—		—		(21,767)		—		(40,953)		(62,720)
Lease liabilities	—		—		—		—		—		—		(953)		(953)
Accrued expenses and other liabilities	(11,905)		—		(182)		(12,087)		(570)		—		(8,071)		(8,641)
Total liabilities acquired	(11,905)		—		(182)		(12,087)		(22,337)		—		(49,977)		(72,314)
Noncontrolling interests	(1,149)		—		—		(1,149)		—		—		—		—
Non-cash acquisition related activity(1)	(46,974)		(710)		—		(47,684)		—		—		—		—
Cash disbursed for acquisitions	486,749		75,431		45,347		607,527		35,320		81,659		307,115		424,094
Construction in progress additions	317,468		28		182,290		499,786		295,120		25,646		190,164		510,930
Less: Capitalized interest	(23,712)		—		(4,575)		(28,287)		(16,761)		(2,416)		(3,028)		(22,205)
Accruals (2)	474		126		(12,977)		(12,377)		746		(9,384)		(5,972)		(14,610)
Cash disbursed for construction in progress	294,230		154		164,738		459,122		279,105		13,846		181,164		474,115
Capital improvements to existing properties	239,484		11,706		46,412		297,602		165,187		11,784		28,007		204,978
Total cash invested in real property, net of cash acquired	$	1,020,463	$	87,291	$	256,497	$	1,364,251	$	479,612	$	107,289	$	516,286	$	1,103,187

(1) Primarily relates to the acquisition of assets previously financed as real estate loans receivable and the acquisition of assets previously recognized as investments in unconsolidated entities.

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

Announced Acquisitions

In February 2024, we entered into a definitive agreement to acquire 25 Seniors Housing Operating properties for a total purchase price of $969 million, which will be managed under the Affinity brand. The transaction is expected to close in the second half of 2024 and will be funded through a combination of cash and the expected assumption of approximately $521 million of secured debt, subject to customary closing conditions and lender consents.

In July 2024, we entered into a definitive agreement to acquire a seniors housing portfolio for approximately $0.9 billion. The transaction is expected to close later in the year, subject to customary closing conditions.

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, 2024		June 30, 2023
Development projects:
Seniors Housing Operating	$	194,012	$	140,865
Triple-net	—		141,142
Outpatient Medical	106,596		21,173
Total development projects	300,608		303,180
Expansion projects	20,229		26,125
Total construction in progress conversions	$	320,837	$	329,305