(Mark One) | |||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended | |||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from | _____________ | to | _____________ |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||
(Zip Code) | |||
(Address of principal executive offices) |
(Registrant’s telephone number, including area code) |
Title of each Class | Trading Symbol(s) | Name of each exchange on which registered |
☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | |||
Emerging growth company |
Page | |
June 30, 2019 | December 31, 2018 | ||||||
(unaudited) | |||||||
Assets: | |||||||
Real estate properties: | |||||||
Land | $ | $ | |||||
Buildings and improvements | |||||||
Construction in progress | |||||||
Less accumulated depreciation | ( | ) | ( | ) | |||
Real estate properties, net | |||||||
Mortgage and other notes receivable, net | |||||||
Cash and cash equivalents | |||||||
Straight-line rent receivable | |||||||
Assets held for sale, net | |||||||
Other assets | |||||||
Total Assets | $ | $ | |||||
Liabilities and Stockholders’ Equity: | |||||||
Debt | $ | $ | |||||
Accounts payable and accrued expenses | |||||||
Dividends payable | |||||||
Lease deposit liabilities | |||||||
Deferred income | |||||||
Total Liabilities | |||||||
Commitments and Contingencies | |||||||
National Health Investors, Inc. Stockholders' Equity: | |||||||
Common stock, $.01 par value; 60,000,000 shares authorized; | |||||||
43,357,018 and 42,700,411 shares issued and outstanding | |||||||
Capital in excess of par value | |||||||
Cumulative net income in excess of dividends | |||||||
Accumulated other comprehensive income (loss) | ( | ) | |||||
Total National Health Investors, Inc. Stockholders' Equity | |||||||
Noncontrolling interest | |||||||
Total Equity | |||||||
Total Liabilities and Stockholders’ Equity | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Revenues: | |||||||||||||||
Rental income | $ | $ | $ | $ | |||||||||||
Interest income and other | |||||||||||||||
Expenses: | |||||||||||||||
Depreciation | |||||||||||||||
Interest | |||||||||||||||
Legal | |||||||||||||||
Franchise, excise and other taxes | |||||||||||||||
General and administrative | |||||||||||||||
Property taxes and insurance on leased properties | |||||||||||||||
Loan and realty losses | |||||||||||||||
Income before loss on convertible note retirement | |||||||||||||||
Loss on convertible note retirement | ( | ) | |||||||||||||
Net income | |||||||||||||||
Less: net loss attributable to noncontrolling interest | |||||||||||||||
Net income attributable to common stockholders | $ | $ | $ | $ | |||||||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | |||||||||||||||
Diluted | |||||||||||||||
Earnings per common share: | |||||||||||||||
Net income attributable to common stockholders - basic | $ | $ | $ | $ | |||||||||||
Net income attributable to common stockholders - diluted | $ | $ | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Other comprehensive income (loss): | |||||||||||||||
Increase (decrease) in fair value of cash flow hedges | ( | ) | ( | ) | |||||||||||
Reclassification for amounts recognized as interest expense | ( | ) | ( | ) | |||||||||||
Total other comprehensive income (loss) | ( | ) | ( | ) | |||||||||||
Comprehensive income | |||||||||||||||
Less: comprehensive loss attributable to noncontrolling interest | |||||||||||||||
Comprehensive income attributable to common stockholders | $ | $ | $ | $ |
Six Months Ended | |||||||
June 30, | |||||||
2019 | 2018 | ||||||
(unaudited) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | |||||||
Amortization of debt issuance costs and debt discounts | |||||||
Amortization of commitment fees and note receivable discounts | ( | ) | ( | ) | |||
Amortization of lease incentives | |||||||
Straight-line rent income | ( | ) | ( | ) | |||
Non-cash interest income on construction loans | ( | ) | ( | ) | |||
Loss on convertible note retirement | |||||||
Loan and realty losses | |||||||
Payment of lease incentives | ( | ) | |||||
Non-cash stock-based compensation | |||||||
Changes in operating assets and liabilities: | |||||||
Other assets | ( | ) | |||||
Accounts payable and accrued expenses | |||||||
Deferred income | |||||||
Net cash provided by operating activities | |||||||
Cash flows from investing activities: | |||||||
Investments in mortgage and other notes receivable | ( | ) | ( | ) | |||
Collections of mortgage and other notes receivable | |||||||
Investments in real estate | ( | ) | ( | ) | |||
Investments in renovations of existing real estate | ( | ) | ( | ) | |||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from revolving credit facility | |||||||
Payments on revolving credit facility | ( | ) | ( | ) | |||
Payments on term loans | ( | ) | ( | ) | |||
Debt issuance costs | ( | ) | |||||
Proceeds from noncontrolling interest | |||||||
Taxes remitted on employee stock awards | ( | ) | ( | ) | |||
Proceeds from issuance of common shares, net | |||||||
Convertible note redemption | ( | ) | |||||
Dividends paid to stockholders | ( | ) | ( | ) | |||
Net provided by financing activities | |||||||
Increase in cash and cash equivalents and restricted cash | |||||||
Cash and cash equivalents and restricted cash, beginning of period | |||||||
Cash and cash equivalents and restricted cash, end of period | $ | $ |
Six Months Ended | |||||||
June 30, | |||||||
2019 | 2018 | ||||||
(unaudited) | |||||||
Supplemental disclosure of cash flow information: | |||||||
Interest paid, net of amounts capitalized | $ | $ | |||||
Supplemental disclosure of non-cash investing and financing activities: | |||||||
Change in accounts payable related to investments in real estate construction | $ | ( | ) | $ | |||
Change in accounts payable related to investments in real estate acquisition | $ | $ | |||||
Change in straight-line rent receivable related to investments in real estate | $ | $ | |||||
Change in other assets related to investments in real estate | $ | $ | |||||
Tenant investment in leased asset | $ | $ |
Common Stock | Capital in Excess of Par Value | Cumulative Net Income in Excess of Dividends | Accumulated Other Comprehensive Income (Loss) | Total National Health Investors Stockholders’ Equity | Noncontrolling Interest | Total Equity | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||
Balances at December 31, 2018 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Total comprehensive income | — | — | — | ( | ) | |||||||||||||||||||||||||
Issuance of common stock, net | — | — | ||||||||||||||||||||||||||||
Taxes paid on employee stock awards | — | — | ( | ) | — | — | ( | ) | ( | ) | ||||||||||||||||||||
Shares issued on stock options exercised | — | ( | ) | — | — | ( | ) | ( | ) | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||
Dividends declared, $1.05 per common share | — | — | — | ( | ) | — | ( | ) | ( | ) | ||||||||||||||||||||
Activity for the three months ended March 31, 2019 | 498,907 | 5 | 36,902 | (9,680 | ) | (957 | ) | 26,270 | — | 26,270 | ||||||||||||||||||||
Noncontrolling interest conveyed in acquisition | — | — | — | — | — | |||||||||||||||||||||||||
Total comprehensive income | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||
Issuance of common stock, net | — | — | ||||||||||||||||||||||||||||
Taxes paid on employee stock awards | — | — | ( | ) | — | — | ( | ) | ( | ) | ||||||||||||||||||||
Shares issued on stock options exercised | — | — | — | — | ||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||
Dividends declared, $1.05 per common share | — | — | — | ( | ) | — | ( | ) | ( | ) | ||||||||||||||||||||
Activity for the three months ended June 30, 2019 | 157,700 | 2 | 12,407 | (5,546 | ) | (3,801 | ) | 3,062 | 641 | 3,703 | ||||||||||||||||||||
Balances at June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | $ | $ |
Common Stock | Capital in Excess of Par Value | Cumulative Net Income in Excess of Dividends | Accumulated Other Comprehensive Income (Loss) | Total National Health Investors Stockholders’ Equity | Noncontrolling Interest | Total Equity | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||
Balances at December 31, 2017 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||
Cumulative effect of change in accounting principle | — | — | — | ( | ) | — | — | — | ||||||||||||||||||||||
Total comprehensive income | — | — | — | |||||||||||||||||||||||||||
Equity component in redemption of convertible notes | — | — | ( | ) | — | — | ( | ) | ( | ) | ||||||||||||||||||||
Equity offerring costs | — | — | ( | ) | — | — | ( | ) | ( | ) | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||
Dividends declared, $1.00 per common share | — | — | — | ( | ) | — | ( | ) | ( | ) | ||||||||||||||||||||
Activity for the three months ended March 31, 2018 | — | — | (1,058 | ) | (3,335 | ) | 2,157 | (2,236 | ) | — | (2,236 | ) | ||||||||||||||||||
Total comprehensive income | — | — | — | |||||||||||||||||||||||||||
Issuance of common stock, net | — | — | ||||||||||||||||||||||||||||
Taxes paid on employee stock awards | — | — | ( | ) | — | — | ( | ) | ( | ) | ||||||||||||||||||||
Shares issued on stock options exercised | — | — | — | — | — | — | — | |||||||||||||||||||||||
Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||
Dividends declared, $1.00 per common share | — | — | — | ( | ) | — | ( | ) | ( | ) | ||||||||||||||||||||
Activity for the three months ended June 30, 2018 | 639,712 | 7 | 45,013 | (4,332 | ) | 803 | 41,491 | — | 41,491 | |||||||||||||||||||||
Balances at June 30, 2018 | $ | $ | $ | $ | $ | $ | $ |
Date | Name | Source of Exposure | Carrying Amount | Maximum Exposure to Loss | Note Reference | ||||
2012 | Bickford Senior Living | Various1 | $ | $ | Notes 2, 3 | ||||
2014 | Senior Living Communities | Notes and straight-line receivable | $ | $ | Notes 2, 3 | ||||
2015 | Timber Ridge, LCS affiliate | Notes receivable | $ | $ | Note 3 | ||||
2016 | Senior Living Management | Notes and straight-line receivable | $ | $ | Note 3 | ||||
2017 | Evolve Senior Living | Note receivable | $ | $ | — | ||||
2018 | Sagewood, LCS affiliate | Notes receivable | $ | $ | Note 3 | ||||
2019 | 41 Management, LLC | Notes receivable | $ | $ | Note 3 |
June 30, 2019 | June 30, 2018 | ||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash | |||||||
$ | $ |
Operator | Date | Properties | Asset Class | Amount | ||||||
Wingate Healthcare | January 2019 | SHO | $ | |||||||
Holiday Retirement | January 2019 | SHO | ||||||||
Comfort Care Senior Living | April 2019 | SHO | ||||||||
Comfort Care Senior Living | May 2019 | SHO | ||||||||
Discovery Senior Living (PropCo Joint Venture) | May 2019 | SHO | ||||||||
$ |
Lease Expiration | |||||||||||||||
June 2023 | September 2027 | May 2031 | April 2033 | Total | |||||||||||
Number of Properties | |||||||||||||||
2019 Contractual Rent | $ | $ | $ | $ | $ | ||||||||||
2019 Straight Line Rent | |||||||||||||||
$ | $ | $ | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Current year | $ | $ | $ | $ | |||||||||||
Prior year final certification1 | |||||||||||||||
Total percentage rent income | $ | $ | $ | $ |
Asset | Number of | Lease | 1st Option | Option | Contractual | ||
Type | Properties | Expiration | Open Year | Basis | Rent | ||
MOB | February 2025 | Open | i | $ | |||
SHO | September 2027 | Open | iv | $ | |||
HOSP | September 2027 | 2020 | ii | $ | |||
SHO | December 2024 | 2020 | ii | $ | |||
HOSP | March 2025 | 2020 | iv | $ | |||
SHO | May 2031 | 2021 | iv | $ | |||
HOSP | June 2022 | 2022 | i | $ | |||
SNF | August 2028 | 2025 | iii | $ | |||
SNF | September 2028 | 2028 | iii | $ |
Twelve months ended June 30, 2019 | |||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
$ |
Commencement | Rate | Maturity | Commitment | Drawn | Location | |||||||||
July 2016 | $ | $ | ( | ) | Illinois | |||||||||
January 2017 | ( | ) | Michigan | |||||||||||
January 2018 | ( | ) | Virginia | |||||||||||
July 2018 | ( | ) | Michigan | |||||||||||
$ | $ | ( | ) |
June 30, 2019 | December 31, 2018 | ||||||
Accounts receivable and other assets | $ | $ | |||||
Regulatory escrows | |||||||
Unamortized lease incentive payments | |||||||
Restricted cash | |||||||
$ | $ |
June 30, 2019 | December 31, 2018 | ||||||
Revolving credit facility - unsecured | $ | $ | |||||
Bank term loans - unsecured | |||||||
Private placement term loans - unsecured | |||||||
HUD mortgage loans (net of discount of $1,278 and $1,320) | |||||||
Fannie Mae term loans - secured, non-recourse | |||||||
Convertible senior notes - unsecured (net of discount of $1,004 and $1,391) | |||||||
Unamortized loan costs | ( | ) | ( | ) | |||
$ | $ |
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Less: discount | ( | ) | |
Less: unamortized loan costs | ( | ) | |
$ |
Amount | Inception | Maturity | Fixed Rate | |||||
$ | January 2015 | January 2023 | ||||||
November 2015 | November 2023 | |||||||
September 2016 | September 2024 | |||||||
November 2015 | November 2025 | |||||||
January 2015 | January 2027 | |||||||
$ |
Date Entered | Maturity Date | Fixed Rate | Rate Index | Notional Amount | Fair Value | |||||||||
June 2013 | June 2020 | $ | $ | ( | ) | |||||||||
March 2014 | June 2020 | $ | $ | ( | ) | |||||||||
March 2019 | December 2021 | $ | $ | ( | ) | |||||||||
March 2019 | December 2021 | $ | $ | ( | ) | |||||||||
June 2019 | December 2021 | $ | $ | |||||||||||
June 2019 | December 2021 | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Interest expense on debt at contractual rates | $ | $ | $ | $ | |||||||||||
Losses reclassified from accumulated other | |||||||||||||||
comprehensive income (loss) into interest expense | ( | ) | ( | ) | |||||||||||
Capitalized interest | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of debt issuance costs and debt discount | |||||||||||||||
Total interest expense | $ | $ | $ | $ |
Asset Class | Type | Total | Funded | Remaining | |||||||||||
Loan Commitments: | |||||||||||||||
LCS Sagewood Note A | SHO | Construction | $ | $ | ( | ) | $ | ||||||||
LCS Sagewood Note B | SHO | Construction | ( | ) | |||||||||||
LCS Timber Ridge Note A | SHO | Construction | ( | ) | |||||||||||
Bickford Senior Living | SHO | Construction | ( | ) | |||||||||||
Senior Living Communities | SHO | Revolving Credit | ( | ) | |||||||||||
41 Management | SHO | Construction | ( | ) | |||||||||||
$ | $ | ( | ) | $ |
Asset Class | Type | Total | Funded | Remaining | |||||||||||
Development Commitments: | |||||||||||||||
Ignite Medical Resorts | SNF | Construction | $ | $ | ( | ) | $ | ||||||||
Woodland Village | SHO | Renovation | ( | ) | |||||||||||
Senior Living Communities | SHO | Renovation | ( | ) | |||||||||||
Senior Living Communities | SHO | Renovation | |||||||||||||
Wingate Healthcare | SHO | Renovation | 1,900,000 | (60,000 | ) | 1,840,000 | |||||||||
Bickford Senior Living | SHO | Renovation | ( | ) | |||||||||||
Navion Senior Solutions | SHO | Construction | |||||||||||||
Discovery Senior Living | SHO | Renovation | |||||||||||||
$ | $ | ( | ) | $ |
Asset Class | Type | Total | Funded | Remaining | |||||||||||
Contingencies: | |||||||||||||||
Bickford Senior Living | SHO | Lease Inducement | $ | $ | ( | ) | $ | ||||||||
Bickford Senior Living | SHO | Incentive Loan Draws | ( | ) | |||||||||||
Comfort Care Senior Living | SHO | Lease Inducement | |||||||||||||
Wingate Healthcare | SHO | Lease Inducement | |||||||||||||
Navion Senior Solutions | SHO | Lease Inducement | |||||||||||||
Discovery Senior Living | SHO | Lease Inducement | |||||||||||||
Ignite Medical Resorts | SNF | Lease Inducement | |||||||||||||
$ | $ | ( | ) | $ |
2019 | 2018 | ||
Dividend yield | |||
Expected volatility | |||
Expected lives | |||
Risk-free interest rate |
Six Months Ended | |||||
June 30, | |||||
2019 | 2018 | ||||
Options outstanding January 1, | |||||
Options granted under 2012 Plan | |||||
Options exercised under 2012 Plan | ( | ) | ( | ) | |
Options forfeited under 2012 Plan | ( | ) | |||
Options outstanding, June 30, | |||||
Exercisable at June 30, |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income attributable to common stockholders | $ | $ | $ | $ | |||||||||||
BASIC: | |||||||||||||||
Weighted average common shares outstanding | |||||||||||||||
DILUTED: | |||||||||||||||
Weighted average common shares outstanding | |||||||||||||||
Stock options | |||||||||||||||
Convertible subordinated debentures | |||||||||||||||
Weighted average dilutive common shares outstanding | |||||||||||||||
Net income attributable to common stockholders - basic | $ | $ | $ | $ | |||||||||||
Net income attributable to common stockholders - diluted | $ | $ | $ | $ | |||||||||||
Incremental anti-dilutive shares excluded: | |||||||||||||||
Net share effect of stock options with an exercise price in excess of the average market price for our common shares | |||||||||||||||
Regular dividends declared per common share | $ | $ | $ | $ |
Fair Value Measurement | |||||||||
Balance Sheet Classification | June 30, 2019 | December 31, 2018 | |||||||
Level 2 | |||||||||
Interest rate swap asset | Other assets | $ | $ | ||||||
Interest rate swap liability | Accounts payable and accrued expenses | $ | ( | ) | $ |
Carrying Amount | Fair Value Measurement | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Level 2 | |||||||||||||||
Variable rate debt | $ | $ | $ | $ | |||||||||||
Fixed rate debt | $ | $ | $ | $ | |||||||||||
Level 3 | |||||||||||||||
Mortgage and other notes receivable | $ | $ | $ | $ |
* | We depend on the operating success of our tenants and borrowers for collection of our lease and note payments; |
* | We depend on the success of property development and construction activities, which may fail to achieve the operating results we expect; |
* | We are exposed to the risk that our tenants and borrowers may become subject to bankruptcy or insolvency proceedings; |
* | Certain tenants in our portfolio account for a significant percentage of the rent we expect to generate from our portfolio, and the failure of any of these tenants to meet their obligations to us could materially and adversely affect our business, financial condition and results of operations and our ability to make distributions to our stockholders. |
* | We are exposed to the risk that the illiquidity of real estate investments could impede our ability to respond to adverse changes in the performance of our properties; |
* | We are exposed to risks related to governmental regulations and payors, principally Medicare and Medicaid, and the effect that lower reimbursement rates would have on our tenants’ and borrowers’ business; |
* | Legislative, regulatory, or administrative changes could adversely affect us or our security holders. |
* | We are exposed to the risk that the cash flows of our tenants and borrowers would be adversely affected by increased liability claims and liability insurance costs; |
* | We are exposed to risks related to environmental laws and the costs associated with liabilities related to hazardous substances; |
* | We are exposed to the risk that we may not be fully indemnified by our lessees and borrowers against future litigation; |
* | We depend on the success of our future acquisitions and investments; |
* | We depend on our ability to reinvest cash in real estate investments in a timely manner and on acceptable terms; |
* | We may need to refinance existing debt or incur additional debt in the future, which may not be available on terms acceptable to us; |
* | We have covenants related to our indebtedness which impose certain operational limitations and a breach of those covenants could materially adversely affect our financial condition and results of operations; |
* | When interest rates increase, our common stock may decline in price; |
* | We depend on revenues derived mainly from fixed rate investments in real estate assets, while a portion of our debt capital used to finance those investments bears interest at variable rates; |
* | We are exposed to the risk that our assets may be subject to impairment charges; |
* | We depend on the ability to continue to qualify for taxation as a Real Estate Investment Trust; |
* | Complying with REIT requirements may cause us to forego otherwise attractive acquisition opportunities or liquidate otherwise attractive investments, which could materially hinder our performance; |
* | We have ownership limits in our charter with respect to our common stock and other classes of capital stock which may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or might otherwise be in the best interests of our stockholders; |
* | We are subject to certain provisions of Maryland law and our charter and bylaws that could hinder, delay or prevent a change in control transaction, even if the transaction involves a premium price for our common stock or our stockholders believe such transaction to be otherwise in their best interests. |
* | If our efforts to maintain the privacy and security of Company information are not successful, we could incur substantial costs and reputational damage, and could become subject to litigation and enforcement actions. |
Properties | Beds/Sq. Ft.* | Revenue | % | Investment | ||||||||||||||
Real Estate Properties | ||||||||||||||||||
Senior Housing - Need-Driven | ||||||||||||||||||
Assisted Living | 95 | 5,117 | $ | 39,274 | 25.5 | % | $ | 901,696 | ||||||||||
Senior Living Campus | 14 | 1,976 | 8,843 | 5.7 | % | 303,695 | ||||||||||||
Total Senior Housing - Need-Driven | 109 | 7,093 | 48,117 | 31.2 | % | 1,205,391 | ||||||||||||
Senior Housing - Discretionary | ||||||||||||||||||
Independent Living | 32 | 3,703 | 23,039 | 15.0 | % | 599,220 | ||||||||||||
Entrance-Fee Communities | 10 | 2,306 | 25,577 | 16.6 | % | 604,330 | ||||||||||||
Total Senior Housing - Discretionary | 42 | 6,009 | 48,616 | 31.6 | % | 1,203,550 | ||||||||||||
Total Senior Housing | 151 | 13,102 | 96,733 | 62.8 | % | 2,408,941 | ||||||||||||
Medical Facilities | ||||||||||||||||||
Skilled Nursing Facilities | 72 | 9,433 | 39,844 | 25.8 | % | 580,816 | ||||||||||||
Hospitals | 3 | 207 | 3,996 | 2.6 | % | 55,972 | ||||||||||||
Medical Office Buildings | 2 | 88,517 | * | 334 | 0.2 | % | 10,486 | |||||||||||
Total Medical Facilities | 77 | 44,174 | 28.6 | % | 647,274 | |||||||||||||
Total Real Estate Properties | 228 | $ | 140,907 | 91.4 | % | $ | 3,056,215 | |||||||||||
Current Year Disposals and Held for Sale | 27 | |||||||||||||||||
Escrow Funds Received From Tenants | 2,597 | |||||||||||||||||
Total Rental Income | $ | 143,531 | ||||||||||||||||
Mortgage and Other Notes Receivable | ||||||||||||||||||
Senior Housing - Need-Driven | 7 | 425 | $ | 2,526 | 1.6 | % | $ | 63,718 | ||||||||||
Senior Housing - Discretionary | 3 | 1,105 | 5,648 | 3.7 | % | 189,795 | ||||||||||||
Medical Facilities | 4 | 270 | 334 | 0.2 | % | 7,352 | ||||||||||||
Other Notes Receivable | — | — | 2,098 | 1.4 | % | 45,589 | ||||||||||||
Total Mortgage and Other Notes Receivable | 14 | 1,800 | $ | 10,606 | 6.9 | % | $ | 306,454 | ||||||||||
Other Income | 67 | |||||||||||||||||
Total Revenue | $ | 154,204 |
Portfolio Summary | Properties | Revenue | % | Investment | |||||||||||||
Real Estate Properties | 228 | $ | 140,907 | 93.0 | % | $ | 3,056,215 | ||||||||||
Mortgage and Other Notes Receivable | 14 | 10,606 | 7.0 | % | 306,454 | ||||||||||||
Total Portfolio | 242 | $ | 151,513 | 100.0 | % | $ | 3,362,669 | ||||||||||
Portfolio by Operator Type | |||||||||||||||||
Public | 74 | $ | 37,396 | 24.7 | % | $ | 538,428 | ||||||||||
National Chain (Privately-Owned) | 29 | 25,723 | 17.0 | % | 689,862 | ||||||||||||
Regional | 133 | 86,342 | 57.0 | % | 2,057,690 | ||||||||||||
Small | 6 | 2,052 | 1.3 | % | 76,689 | ||||||||||||
Total Portfolio | 242 | $ | 151,513 | 100.0 | % | $ | 3,362,669 |
2018 | 2017 | |||||
$ | 4.00 | $ | 3.80 |
Consolidated Total Debt | $ | 1,471,787 | |
Less: cash and cash equivalents | (5,635 | ) | |
Consolidated Net Debt | $ | 1,466,152 | |
Adjusted EBITDA | $ | 73,519 | |
Annualizing Adjustment | 220,557 | ||
Annualized impact of recent investments | 10,184 | ||
$ | 304,260 | ||
Consolidated Net Debt to Annualized Adjusted EBITDA | 4.8 | x |
Rental Income | |||||||||||||||||
Investment | Six Months Ended June 30, | Lease | |||||||||||||||
Asset Class | Amount | 2019 | 2018 | Renewal | |||||||||||||
Senior Living Communities | EFC | $ | 597,061 | $ | 23,077 | 16% | $ | 22,905 | 16% | 2029 | |||||||
Holiday Retirement | ILF | 531,378 | 20,106 | 14% | 21,908 | 16% | 2035 | ||||||||||
Bickford Senior Living | ALF | 525,576 | 26,511 | 19% | 23,856 | 17% | Various | ||||||||||
National HealthCare Corporation | SNF | 171,297 | 19,209 | 14% | 19,064 | 14% | 2026 | ||||||||||
All others | Various | 1,230,903 | 52,031 | 37% | 51,389 | 37% | Various | ||||||||||
$ | 3,056,215 | $ | 140,934 | $ | 139,122 |
Q2 2018 | Q3 2018 | Q4 2018 | Q1 2019 | Q2 2019 | June 2019 | |
Bickford | 85.6% | 85.8% | 84.3% | 83.0% | 84.2% | 85.1% |
Bickford (SS) | 86.5% | 87.3% | 85.7% | 84.1% | 85.9% | 87.2% |
Total Portfolio | |||||||
SHO | SNF | HOSP | MOB | TOTAL | |||
Properties | 135 | 73 | 3 | 2 | 213 | ||
1Q18 | 1.24x | 2.51x | 1.88x | 6.57x | 1.65x | ||
1Q19 | 1.15x | 2.76x | 2.02x | 2.28x | 1.65x | ||
Need Driven | Need Driven excl. Bickford | Need Driven excl. Bickford & BKD | Discretionary | Discretionary excl. SLC & Holiday | Medical | Medical excl. NHC | |
Properties | 97 | 49 | 40 | 38 | 3 | 78 | 36 |
1Q18 | 1.18x | 1.17x | 1.20x | 1.30x | 2.41x | 2.50x | 1.66x |
1Q19 | 1.08x | 1.10x | 1.14x | 1.22x | 1.97x | 2.69x | 1.75x |
NHC | SLC | Bickford | Holiday | ||||
Properties | 42 | 9 | 48 | 26 | |||
1Q18 | 3.59x | 1.28x | 1.19x | 1.17x | |||
1Q19 | 3.91x | 1.14x | 1.07x | 1.20x | |||
Same-Store Portfolio | |||||||
SHO | SNF | HOSP | MOB | Total | |||
Properties | 119 | 73 | 2 | 2 | 196 | ||
1Q18 | 1.26x | 2.51x | 1.51x | 6.57x | 1.68x | ||
1Q19 | 1.19x | 2.76x | 1.75x | 2.28x | 1.69x | ||
Need Driven | Need Driven excl. Bickford | Need Driven excl. Bickford & BKD2 | Discretionary | Discretionary excl. SLC & Holiday | Medical | Medical excl. NHC | |
Properties | 82 | 43 | 34 | 37 | 2 | 78 | 36 |
1Q18 | 1.22x | 1.21x | 1.25x | 1.30x | 2.56x | 2.50x | 1.66x |
1Q19 | 1.15x | 1.17x | 1.24x | 1.22x | 2.08x | 2.69x | 1.75x |
NHC | SLC | Bickford | Holiday | ||||
Properties | 42 | 9 | 39 | 26 | |||
1Q18 | 3.59x | 1.28x | 1.22x | 1.17x | |||
1Q19 | 3.91x | 1.14x | 1.13x | 1.20x |
Date | Properties | Asset Class | Amount | |||||||
Lease Investments | ||||||||||
Wingate Healthcare | January 2019 | 1 | SHO | $ | 52,200 | |||||
Holiday Retirement | January 2019 | 1 | SHO | 38,000 | ||||||
Comfort Care Senior Living | April 2019 | 1 | SHO | 10,800 | ||||||
Comfort Care Senior Living | May 2019 | 1 | SHO | 13,500 | ||||||
Discovery Senior Living | May 2019 | 6 | SHO | 128,350 | ||||||
Cappella Living Solutions | July 2019 | 1 | SHO | 7,600 | ||||||
Note Investments | ||||||||||
Senior Living Communities | June 2019 | 1 | SHO | 32,700 | ||||||
41 Management | June 2019 | 1 | SHO | 10,800 | ||||||
Discovery Senior Living | July 2019 | 1 | SHO | 750 | ||||||
$ | 294,700 |
Former Tenant / Facility Name (New Tenant) | Units | Location | Q1 Occupancy1 | Q2 Occupancy2 |
SH-Regency Leasing, LLC | ||||
The Cypress of College Park (Discovery) | 148 | IN | 19.6% | 18.9% |
The Charlotte (SLC) | 98 | NC | —% | —% |
Maybelle Carter (Vitality) | 135 | TN | 73.3% | 77.6% |
LaSalle Autumn Leaves (Chancellor) | 196 | IL/TX | 74.7% | 70.7% |
Landmark Senior Living (BAKA) | 120 | WI | 67.6% | 72.2% |
697 | 51.0% | 51.4% |
Three Months Ended | |||||||||||||||
June 30, | Period Change | ||||||||||||||
2019 | 2018 | $ | % | ||||||||||||
Revenues: | |||||||||||||||
Rental income | |||||||||||||||
SLC leased to Wingate Healthcare | $ | 944 | $ | — | $ | 944 | NM | ||||||||
ALFs leased to Bickford Senior Living | 12,017 | 11,208 | 809 | 7.2 | % | ||||||||||
SHOs leased to Discovery Senior Living | 1,569 | 859 | 710 | 82.7 | % | ||||||||||
ALFs leased to Comfort Care Senior Living | 548 | 41 | 507 | NM | |||||||||||
SNFs leased to Fundamental Senior Living | 722 | 231 | 491 | NM | |||||||||||
SNFs leased to Ensign Group | 5,926 | 5,560 | 366 | 6.6 | % | ||||||||||
ILFs leased to an affiliate of Holiday Retirement | 8,512 | 9,424 | (912 | ) | (9.7 | )% | |||||||||
SHOs leased to Chancellor Health Care | 2,277 | 3,051 | (774 | ) | (25.4 | )% | |||||||||
SHOs leased to Senior Living Communities | 10,488 | 10,935 | (447 | ) | (4.1 | )% | |||||||||
SLC leased to Vitality Senior Living | 69 | 425 | (356 | ) | (83.8 | )% | |||||||||
ALF leased to BAKA Enterprises | 150 | 305 | (155 | ) | (50.8 | )% | |||||||||
Other new and existing leases | 22,543 | 21,995 | 548 | 2.5 | % | ||||||||||
65,765 | 64,034 | 1,731 | 2.7 | % | |||||||||||
Straight-line rent adjustments, new and existing leases | 5,307 | 5,835 | (528 | ) | (9.0 | )% | |||||||||
Escrow funds received from tenants | 1,506 | — | 1,506 | NM | |||||||||||
Total Rental Income | 72,578 | 69,869 | 2,709 | 3.9 | % | ||||||||||
Interest income and other | |||||||||||||||
Life Care Services mortgages and construction loans | 2,896 | 961 | 1,935 | NM | |||||||||||
Bickford construction loans | 911 | 488 | 423 | 86.7 | % | ||||||||||
Other existing mortgages and notes | 1,681 | 1,607 | 74 | 4.6 | % | ||||||||||
Total Interest Income from Mortgage and Other Notes | 5,488 | 3,056 | 2,432 | 79.6 | % | ||||||||||
Other income | 30 | 31 | (1 | ) | (3.2 | )% | |||||||||
Total Revenues | 78,096 | 72,956 | 5,140 | 7.0 | % | ||||||||||
Expenses: | |||||||||||||||
Depreciation | |||||||||||||||
SLC leased to Wingate Healthcare | 349 | — | 349 | NM | |||||||||||
ALFs leased to Bickford Senior Living | 3,746 | 3,435 | 311 | 9.1 | % | ||||||||||
ILFs leased to an affiliate of Holiday Retirement | 3,493 | 3,229 | 264 | 8.2 | % | ||||||||||
SNFs leased to Ensign Group | 1,833 | 1,716 | 117 | 6.8 | % | ||||||||||
Other new and existing assets | 9,599 | 9,414 | 185 | 2 | 2.0 | % | |||||||||
Total Depreciation | 19,020 | 17,794 | 1,226 | 3 | 6.9 | % | |||||||||
Interest | 13,746 | 12,220 | 1,526 | 12.5 | % | ||||||||||
Payroll and related compensation expenses | 1,396 | 1,561 | (165 | ) | (10.6 | )% | |||||||||
Non-cash stock-based compensation expense | 477 | 369 | 108 | 29.3 | % | ||||||||||
Loan and realty losses | — | 1,849 | (1,849 | ) | NM | ||||||||||
Property taxes and insurance on leased properties | 1,506 | — | 1,506 | NM | |||||||||||
Other expenses | 1,974 | 1,324 | 650 | 49.1 | % | ||||||||||
Total Expenses | 38,119 | 35,117 | 3,002 | 8.5 | % | ||||||||||
Net income | 39,977 | 37,839 | 2,138 | 5.7 | % | ||||||||||
Less: net loss attributable to noncontrolling interest | 1 | — | 1 | NM | |||||||||||
Net income attributable to common stockholders | $ | 39,978 | $ | 37,839 | $ | 2,139 | — | % | |||||||
NM - not meaningful |
• | The rental income received from our tenants increased by $1,731,000 primarily due to the impact of $155,644,000 of new investments in 2018 and $242,850,000 so far in 2019. This impact was partially offset by a decline in rental income received from Holiday as a result of the lease amendment described in Note 2. Rental income was also offset by lease defaults which resulted in transitions to new tenants described herein under the heading Tenant Transitioning. |
• | The increase in rental income included a $528,000 decrease in straight-line rent adjustments. Generally accepted accounting principles require rental income to be recognized on a straight-line basis over the term of the lease to give effect to scheduled rent escalators that are determinable at lease inception. Future increases in rental income depend on our ability to make new investments which meet our underwriting criteria. |
• | Interest income from mortgage and other notes increased $2,432,000 primarily due to interest income received on loans to Bickford Senior Living and Life Care Services. |
• | Depreciation expense increased $1,226,000 primarily due to new real estate investments completed in 2018 and 2019. |
• | Interest expense, including amortization of debt discount and issuance costs, increased $1,526,000 primarily as a result of the September 2018 conversion of $300,000,000 of debt initially drawn on our revolving facility into a five-year term loan and the impact of additional borrowings on our revolving credit facility. |
• | Payroll and related compensation expenses decreased $165,000 due primarily to the timing and amount of incentive compensation related to achieving certain company goals. |
• | Non-cash stock-based compensation expense increased due primarily to fluctuations in the valuation assumptions used in the Black-Scholes pricing model. |
• | Escrow funds received from tenants totaling $1,506,000 were used to pay property taxes and insurance, which is typical of triple net leases. Narrow-Scope Improvements for Lessors under ASU 2018-20 requires these items to be included as revenue and expense in our condensed consolidated financial statements. |
• | The following table summarizes our transitioning tenants (in thousands): |
Three Months Ended | |||||||||||
June 30, | Period Change | ||||||||||
2019 | 2018 | $ | % | ||||||||
Revenues: | |||||||||||
Rental income | |||||||||||
SHOs leased to Chancellor Health Care | 287 | 1,119 | (832 | ) | (74.4 | )% | |||||
SHOs leased to Senior Living Communities | — | 837 | (837 | ) | (100.0 | )% | |||||
SLC leased to Vitality Senior Living | 69 | 425 | (356 | ) | (83.8 | )% | |||||
ALF leased to BAKA Enterprises | 150 | 305 | (155 | ) | (50.8 | )% | |||||
Total Rental income | 506 | 2,686 | (2,180 | ) | (81.2 | )% | |||||
Expenses: | |||||||||||
Depreciation | |||||||||||
SHOs leased to Chancellor Health Care | 406 | 406 | — | — | % | ||||||
SHOs leased to Senior Living Communities | 292 | 296 | (4 | ) | (1.4 | )% | |||||
SLC leased to Vitality Senior Living | 154 | 156 | (2 | ) | (1.3 | )% | |||||
ALF leased to BAKA Enterprises | 145 | 145 | — | — | % | ||||||
Total Depreciation | 997 | 1,003 | (6 | ) | (0.6 | )% | |||||
Legal | 99 | — | 99 | NM | |||||||
Franchise, excise and other taxes | 528 | — | 528 | NM | |||||||
1,624 | 1,003 | 621 | 61.9 | % | |||||||
Net income | (1,118 | ) | 1,683 | (2,801 | ) | NM |
Six Months Ended | ||||||||||||||
June 30, | Period Change | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
Revenues: | ||||||||||||||
Rental income | ||||||||||||||
ALFs leased to Bickford Senior Living | $ | 23,964 | $ | 21,483 | $ | 2,481 | 11.5 | % | ||||||
SLC leased to Wingate Healthcare | 1,748 | — | 1,748 | NM | ||||||||||
SNFs leased to Ensign Group | 11,768 | 10,663 | 1,105 | 10.4 | % | |||||||||
ALFs leased to Comfort Care Senior Living | 858 | 41 | 817 | NM | ||||||||||
SHOs leased to Discovery Senior Living | 2,442 | 1,718 | 724 | 42.1 | % | |||||||||
SNFs leased to Fundamental Senior Living | 1,432 | 924 | 508 | 55.0 | % | |||||||||
ILFs leased to an affiliate of Holiday Retirement | 16,812 | 18,848 | (2,036 | ) | (10.8 | )% | ||||||||
SHOs leased to Chancellor Health Care | 4,264 | 6,072 | (1,808 | ) | (29.8 | )% | ||||||||
SHOs leased to Senior Living Communities | 20,962 | 21,862 | (900 | ) | (4.1 | )% | ||||||||
SLC leased to Vitality Senior Living | 145 | 850 | (705 | ) | (82.9 | )% | ||||||||
Other new and existing leases | 46,004 | 44,864 | 1,140 | 2.5 | % | |||||||||
130,399 | 127,325 | 3,074 | 2.4 | % | ||||||||||
Straight-line rent adjustments, new and existing leases | 10,535 | 11,797 | (1,262 | ) | (10.7 | )% | ||||||||
Escrow funds received from tenants | 2,597 | — | 2,597 | NM | ||||||||||
Total Rental Income | 143,531 | 139,122 | 4,409 | 3.2 | % | |||||||||
Interest income and other | ||||||||||||||
Life Care Services mortgages and construction loans | 5,609 | 2,399 | 3,210 | 133.8 | % | |||||||||
Bickford construction loans | 1,696 | 913 | 783 | 85.8 | % | |||||||||
Other existing mortgages and notes | 3,301 | 3,204 | 97 | 3.0 | % | |||||||||
Total Interest income from mortgage and other notes | 10,606 | 6,516 | 4,090 | 62.8 | % | |||||||||
Other income | 67 | 64 | 3 | 4.7 | % | |||||||||
Total Revenues | 154,204 | 145,702 | 8,502 | 5.8 | % | |||||||||
Expenses: | ||||||||||||||
Depreciation | ||||||||||||||
SLC leased to Wingate Healthcare | 698 | — | 698 | NM | ||||||||||
ALFs leased to Bickford Senior Living | 7,410 | 6,542 | 868 | 13.3 | % | |||||||||
ILFs leased to an affiliate of Holiday Retirement | 6,898 | 6,459 | 439 | 6.8 | % | |||||||||
SNFs leased to Ensign Group | 3,684 | 3,271 | 413 | 12.6 | % | |||||||||
Other new and existing assets | 18,821 | 18,857 | (36 | ) | (0.2 | )% | ||||||||
Total Depreciation | 37,511 | 35,129 | 2,382 | 6.8 | % | |||||||||
Interest | 27,264 | 23,834 | 3,430 | 14.4 | % | |||||||||
Payroll and related compensation expenses | 2,599 | 3,359 | (760 | ) | (22.6 | )% | ||||||||
Non-cash stock-based compensation expense | 2,478 | 1,794 | 684 | 38.1 | % | |||||||||
Loan and realty losses | 2,500 | 1,849 | 651 | 35.2 | % | |||||||||
Property taxes and insurance on leased properties | 2,597 | — | 2,597 | NM | ||||||||||
Other expenses | 3,598 | 2,728 | 870 | 31.9 | % | |||||||||
Total Expenses | 78,547 | 68,693 | 9,854 | 14.3 | % | |||||||||
Income before loss on convertible note retirement | 75,657 | 77,009 | (1,352 | ) | (1.8 | )% | ||||||||
Loss on convertible note retirement | — | (738 | ) | 738 | NM | |||||||||
Net income | 75,657 | 76,271 | (614 | ) | (0.8 | )% | ||||||||
Less: net loss attributable to noncontrolling interest | 1 | — | 1 | NM | ||||||||||
Net income attributable to common stockholders | $ | 75,658 | $ | 76,271 | $ | (613 | ) | (0.8 | )% | |||||
NM - not meaningful |
• | Rental income received from our tenants increased $3,074,000, or 2.4%, primarily as a result of new investments funded since June 2018. |
• | The increase in rental income was partially offset by a $1,262,000 decrease in straight-line rent adjustments. Generally accepted accounting principles require rental income to be recognized on a straight-line basis over the term of the lease to give effect to scheduled rent escalators that are determinable at lease inception. Generally, future increases in rental income depend on our ability to make new investments which meet our underwriting criteria. |
• | Interest income from mortgage and other notes increased $4,090,000, primarily due to interest income received on loans to Bickford Senior Living and Life Care Services. |
• | Depreciation expense increased $2,382,000 primarily due to new real estate investments completed since June 2018. |
• | Interest expense, including amortization of debt discount and issuance costs, increased $3,430,000 primarily as a result of the September 2018 conversion of $300,000,000 of debt initially drawn on our revolving facility into a five-year term loan and the impact of additional borrowings on our revolving credit facility. |
• | Payroll and related compensation expenses decreased $760,000 due primarily to the timing and amount of incentive compensation related to achieving certain company goals. |
• | Non-cash stock-based compensation expense increased due primarily to fluctuations in the valuation assumptions used in the Black-Scholes pricing model. |
• | Loan and realty losses of $2,500,000 represent a writedown related to two facilities classified as held for sale with an estimated net realizable value of $3,745,000 at June 30, 2019. |
• | Escrow funds received from tenants totaling $2,597,000 were used to pay property taxes and insurance, which is typical of triple net leases. Narrow-Scope Improvements for Lessors under ASU 2018-20 requires these items to be included as revenue and expense in our condensed consolidated financial statements. |
• | The following table summarizes our transitioning tenants (in thousands): |
Six Months Ended | |||||||||||
June 30, | Period Change | ||||||||||
2019 | 2018 | $ | % | ||||||||
Revenues: | |||||||||||
Rental income | |||||||||||
SHOs leased to Chancellor Health Care | 287 | 2,213 | (1,926 | ) | (87.0 | )% | |||||
SHOs leased to Senior Living Communities | — | 1,674 | (1,674 | ) | (100.0 | )% | |||||
SLC leased to Vitality Senior Living | 145 | 850 | (705 | ) | (82.9 | )% | |||||
ALF leased to BAKA Enterprises1 | 775 | 762 | 13 | 1.7 | % | ||||||
Total Revenues | 1,207 | 5,499 | (4,292 | ) | (78.1 | )% | |||||
Expenses: | |||||||||||
Depreciation | |||||||||||
SHOs leased to Chancellor Health Care | 811 | 811 | — | — | % | ||||||
SHOs leased to Senior Living Communities | 585 | 592 | (7 | ) | (1.2 | )% | |||||
SLC leased to Vitality Senior Living | 308 | 312 | (4 | ) | (1.3 | )% | |||||
ALF leased to BAKA Enterprises | 291 | 291 | — | — | % | ||||||
Total Depreciation | 1,995 | 2,006 | (11 | ) | (0.5 | )% | |||||
Legal | 133 | — | 133 | NM | |||||||
Franchise, excise and other taxes | 828 | — | 828 | NM | |||||||
2,956 | 2,006 | 950 | 47.4 | % | |||||||
Net income | (1,749 | ) | 3,493 | (5,242 | ) | NM | |||||
1 includes $625,000 received during 2019 as a settlement payment |
Six Months Ended June 30, | One Year Change | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
Cash and cash equivalents and restricted cash, January 1 | $ | 9,912 | $ | 8,075 | $ | 1,837 | 22.7 | % | ||||||
Net cash provided by operating activities | 126,914 | 102,217 | 24,697 | 24.2 | % | |||||||||
Net cash used in investing activities | (268,029 | ) | (140,897 | ) | (127,132 | ) | 90.2 | % | ||||||
Net provided by financing activities | 147,741 | 39,054 | 108,687 | 278.3 | % | |||||||||
Cash and cash equivalents and restricted cash, December 31 | $ | 16,538 | $ | 8,449 | $ | 8,089 | 95.7 | % |
LIBOR Margin | |||||
Level | Leverage Ratio | Revolver | $300m Term Loan | $250m Term Loan | Facility Fee |
1 | < 0.35 | 1.10% | 1.20% | 1.25% | 0.15% |
2 | ≥ 0.35 & < 0.40 | 1.15% | 1.25% | 1.30% | 0.20% |
3 | ≥ 0.40 & < 0.45 | 1.20% | 1.30% | 1.35% | 0.20% |
4 | ≥ 0.45 & < 0.50 | 1.25% | 1.40% | 1.45% | 0.25% |
Shares | Weighted Average Share Price | Net Proceeds | ||||||
2015 | 830,506 | $ | 60.33 | $ | 49,389,000 | |||
2016 | 1,395,642 | $ | 75.79 | 104,190,000 | ||||
2017 | 1,661,161 | $ | 74.87 | 122,500,000 | ||||
2018 | 1,112,363 | $ | 74.84 | 82,001,000 | ||||
2019 | 618,654 | $ | 78.77 | 47,999,000 | ||||
5,618,326 | $ | 406,079,000 |
Date Entered | Maturity Date | Fixed Rate | Rate Index | Notional Amount | Fair Value | |||||||||
June 2013 | June 2020 | 3.41% | 1-month LIBOR | $ | 80,000,000 | $ | (208 | ) | ||||||
March 2014 | June 2020 | 3.46% | 1-month LIBOR | $ | 130,000,000 | $ | (398 | ) | ||||||
March 2019 | December 2021 | 3.46% | 1-month LIBOR | $ | 100,000,000 | $ | (1,436 | ) | ||||||
March 2019 | December 2021 | 3.47% | 1-month LIBOR | $ | 100,000,000 | $ | (1,468 | ) | ||||||
June 2019 | December 2021 | 2.84% | 1-month LIBOR | $ | 150,000,000 | $ | 48 | |||||||
June 2019 | December 2021 | 2.88% | 1-month LIBOR | $ | 50,000,000 | $ | 1 |
Asset Class | Type | Total | Funded | Remaining | |||||||||||
Loan Commitments: | |||||||||||||||
LCS Sagewood Note A | SHO | Construction | $ | 118,800,000 | $ | (77,118,000 | ) | $ | 41,682,000 | ||||||
LCS Sagewood Note B | SHO | Construction | 61,200,000 | (22,464,000 | ) | 38,736,000 | |||||||||
LCS Timber Ridge Note A | SHO | Construction | 60,000,000 | (59,349,000 | ) | 651,000 | |||||||||
Bickford Senior Living | SHO | Construction | 56,700,000 | (42,391,000 | ) | 14,309,000 | |||||||||
Senior Living Communities | SHO | Revolving Credit | 15,000,000 | (4,578,000 | ) | 10,422,000 | |||||||||
41 Management | SHO | Construction | 10,800,000 | (1,495,000 | ) | 9,305,000 | |||||||||
$ | 322,500,000 | $ | (207,395,000 | ) | $ | 115,105,000 |
Asset Class | Type | Total | Funded | Remaining | |||||||||||
Development Commitments: | |||||||||||||||
Ignite Medical Resorts | SNF | Construction | $ | 25,350,000 | $ | (9,598,000 | ) | $ | 15,752,000 | ||||||
Woodland Village | SHO | Renovation | 7,450,000 | (7,323,000 | ) | 127,000 | |||||||||
Senior Living Communities | SHO | Renovation | 6,830,000 | (5,869,000 | ) | 961,000 | |||||||||
Senior Living Communities | SHO | Renovation | 3,100,000 | — | 3,100,000 | ||||||||||
Wingate Healthcare | SHO | Renovation | 1,900,000 | (60,000 | ) | 1,840,000 | |||||||||
Bickford Senior Living | SHO | Renovation | 1,750,000 | (1,750,000 | ) | — | |||||||||
Navion Senior Solutions | SHO | Construction | 650,000 | — | 650,000 | ||||||||||
Discovery Senior Living | SHO | Renovation | 500,000 | — | 500,000 | ||||||||||
$ | 47,530,000 | $ | (24,600,000 | ) | $ | 22,930,000 |
Asset Class | Type | Total | Funded | Remaining | |||||||||||
Contingencies: | |||||||||||||||
Bickford Senior Living | SHO | Lease Inducement | $ | 10,000,000 | $ | (10,000,000 | ) | $ | — | ||||||
Bickford Senior Living | SHO | Incentive Loan Draws | 8,000,000 | (250,000 | ) | 7,750,000 | |||||||||
Comfort Care Senior Living | SHO | Lease Inducement | 6,000,000 | — | 6,000,000 | ||||||||||
Wingate Healthcare | SHO | Lease Inducement | 5,000,000 | — | 5,000,000 | ||||||||||
Navion Senior Solutions | SHO | Lease Inducement | 4,850,000 | — | 4,850,000 | ||||||||||
Discovery Senior Living | SHO | Lease Inducement | 4,000,000 | — | 4,000,000 | ||||||||||
Ignite Medical Resorts | SNF | Lease Inducement | 2,000,000 | — | 2,000,000 | ||||||||||
$ | 39,850,000 | $ | (10,250,000 | ) | $ | 29,600,000 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income attributable to common stockholders | $ | 39,979 | $ | 37,839 | $ | 75,658 | $ | 76,271 | |||||||
Elimination of certain non-cash items in net income: | |||||||||||||||
Depreciation | 19,020 | 17,794 | 37,511 | 35,129 | |||||||||||
Depreciation related to noncontrolling interest | (7 | ) | — | (7 | ) | — | |||||||||
Impairment of real estate | — | — | 2,500 | — | |||||||||||
NAREIT FFO attributable to common stockholders | 58,992 | 55,633 | 115,662 | 111,400 | |||||||||||
Loss on convertible note retirement | — | — | — | 738 | |||||||||||
Non-cash write-off of straight-line rent receivable | — | 1,436 | — | 1,436 | |||||||||||
Note receivable impairment | — | 413 | — | 413 | |||||||||||
Recognition of unamortized note receivable commitment fees | — | — | — | (515 | ) | ||||||||||
Normalized FFO attributable to common stockholders | 58,992 | 57,482 | 115,662 | 113,472 | |||||||||||
Straight-line rent revenue, net | (5,307 | ) | (5,835 | ) | (10,535 | ) | (11,797 | ) | |||||||
Straight-line lease revenue, net, related to noncontrolling interest | 2 | — | 2 | — | |||||||||||
Amortization of lease incentives | 215 | 69 | 383 | 132 | |||||||||||
Amortization of original issue discount | 195 | 187 | 388 | 408 | |||||||||||
Amortization of debt issuance costs | 704 | 590 | 1,404 | 1,203 | |||||||||||
Normalized AFFO attributable to common stockholders | 54,801 | 52,493 | 107,304 | 103,418 | |||||||||||
Non-cash share-based compensation | 477 | 368 | 2,478 | 1,794 | |||||||||||
Normalized FAD attributable to common stockholders | $ | 55,278 | $ | 52,861 | $ | 109,782 | $ | 105,212 | |||||||
BASIC | |||||||||||||||
Weighted average common shares outstanding | 43,232,384 | 41,704,819 | 43,029,104 | 41,618,487 | |||||||||||
NAREIT FFO attributable to common stockholders per share | $ | 1.36 | $ | 1.33 | $ | 2.69 | $ | 2.68 | |||||||
Normalized FFO attributable to common stockholders per share | $ | 1.36 | $ | 1.38 | $ | 2.69 | $ | 2.73 | |||||||
Normalized AFFO attributable to common stockholders per share | $ | 1.27 | $ | 1.26 | $ | 2.49 | $ | 2.48 | |||||||
DILUTED | |||||||||||||||
Weighted average common shares outstanding | 43,498,021 | 41,786,829 | 43,311,527 | 41,681,854 | |||||||||||
NAREIT FFO attributable to common stockholders per share | $ | 1.36 | $ | 1.33 | $ | 2.67 | $ | 2.67 | |||||||
Normalized FFO attributable to common stockholders per share | $ | 1.36 | $ | 1.38 | $ | 2.67 | $ | 2.72 | |||||||
Normalized AFFO attributable to common stockholders per share | $ | 1.26 | $ | 1.26 | $ | 2.48 | $ | 2.48 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income | $ | 39,978 | $ | 37,839 | $ | 75,657 | $ | 76,271 | |||||||
Interest expense | 13,746 | 12,220 | 27,264 | 23,834 | |||||||||||
Franchise, excise and other taxes | 775 | 266 | 1,320 | 612 | |||||||||||
Depreciation | 19,020 | 17,794 | 37,511 | 35,129 | |||||||||||
Loss on convertible note retirement | — | — | — | 738 | |||||||||||
Non-cash write-off of straight-line rent receivable | — | 1,436 | — | 1,436 | |||||||||||
Note receivable impairment | — | 413 | — | 413 | |||||||||||
Recognition of unamortized note receivable commitment fees | — | — | — | (515 | ) | ||||||||||
Adjusted EBITDA | $ | 73,519 | $ | 69,968 | $ | 141,752 | $ | 137,918 | |||||||
Interest expense at contractual rates | $ | 13,355 | $ | 11,414 | $ | 26,429 | $ | 21,941 | |||||||
Principal payments | 294 | 283 | 589 | 568 | |||||||||||
Fixed Charges | $ | 13,649 | $ | 11,697 | $ | 27,018 | $ | 22,509 | |||||||
Fixed Charge Coverage | 5.4x | 6.0x | 5.2x | 6.1x |
June 30, 2019 | December 31, 2018 | ||||||||||||||||||
Balance1 | % of total | Rate3 | Balance1 | % of total | Rate3 | ||||||||||||||
Fixed rate: | |||||||||||||||||||
Convertible senior notes | $ | 120,000 | 8.1 | % | 3.25 | % | $ | 120,000 | 9.3 | % | 3.25 | % | |||||||
Unsecured term loans | 950,000 | 64.1 | % | 3.66 | % | 650,000 | 50.2 | % | 3.99 | % | |||||||||
HUD mortgage loans2 | 43,804 | 3.0 | % | 4.04 | % | 44,226 | 3.4 | % | 4.04 | % | |||||||||
Fannie Mae loans | 95,876 | 6.5 | % | 3.94 | % | 96,044 | 7.4 | % | 3.94 | % | |||||||||
Unsecured revolving credit facility | 60,000 | 4.0 | % | 2.76 | % | — | — | % | — | % | |||||||||
Variable rate: | |||||||||||||||||||
Unsecured term loan | — | — | % | — | % | 300,000 | 23.2 | % | 3.77 | % | |||||||||
Unsecured revolving credit facility | 213,000 | 14.4 | % | 3.55 | % | 84,000 | 6.5 | % | 3.92 | % | |||||||||
$ | 1,482,680 | 100.1 | % | 3.61 | % | $ | 1,294,270 | 100.0 | % | 3.88 | % | ||||||||
1 Differs from carrying amount due to unamortized discounts and loan costs. | |||||||||||||||||||
2 Includes 10 HUD mortgages; rate is a weighted average inclusive of a mortgage insurance premium | |||||||||||||||||||
3 Total is weighted average rate |
Balance | Fair Value1 | FV reflecting change in interest rates | |||||||||||||
Fixed rate: | -50 bps | +50 bps | |||||||||||||
Private placement term loans - unsecured | $ | 400,000 | $ | 400,768 | $ | 410,408 | $ | 391,394 | |||||||
Convertible senior notes | 120,000 | 124,557 | 125,660 | 123,465 | |||||||||||
Fannie Mae loans | 95,876 | 94,133 | 96,601 | 91,734 | |||||||||||
HUD mortgage loans | 43,804 | 46,373 | 49,592 | 43,438 | |||||||||||
1 The change in fair value of our fixed rate debt was due primarily to the overall change in interest rates. |
Exhibit No. | Description |
3.1 | Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Form S-11 Registration Statement No. 33-41863, filed in paper - hyperlink is not required pursuant to Rule 105 of Regulation S-T) |
3.2 | Amendment to Articles of Incorporation (incorporated by reference to Exhibit A to the Company’s Definitive Proxy Statement filed March 21, 2009) |
3.3 | Amendment to Articles of Incorporation approved by shareholders on May 2, 2014 (incorporated by reference to Exhibit 3.3 to the Company’s Form 10-Q filed August 4, 2014) |
3.4 | Restated Bylaws (incorporated by reference to Exhibit 3.3 to the Company’s Form 10-K filed February 15, 2013) |
3.5 | Amendment No. 1 to Restated Bylaws dated February 14, 2014 (incorporated by reference to Exhibit 3.3 to the Company’s Form 10-K filed February 14, 2014) |
4.1 | Form of Common Stock Certificate (incorporated by reference to Exhibit 39 to Form S-11 Registration Statement No. 33-41863, filed in paper - hyperlink is not required pursuant to Rule 105 of Regulation S-T) |
4.2 | Indenture, dated as of March 25, 2014, between National Health Investors, Inc. and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed March 31, 2014) |
4.3 | First Supplemental Indenture, dated as of March 25, 2014, to the Indenture, dated as of March 25, 2014, between National Health Investors, Inc. and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed March 31, 20143) |
10.1 | 2019 Stock Incentive Plan (Incorporated by reference to Appendix A to the Company’s Proxy Statement filed March 19, 2019) |
31.1 | |
31.2 | |
32 | |
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
101.SCH | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
NATIONAL HEALTH INVESTORS, INC. | ||
(Registrant) | ||
Date: | August 7, 2019 | /s/ D. Eric Mendelsohn |
D. Eric Mendelsohn | ||
President and Chief Executive Officer | ||
(duly authorized officer) | ||
Date: | August 7, 2019 | /s/ Roger R. Hopkins |
Roger R. Hopkins | ||
Chief Accounting Officer | ||
(Principal Financial Officer and Principal Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of the registrant, National Health Investors, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 7, 2019 | /s/ D. Eric Mendelsohn |
D. Eric Mendelsohn | ||
President and Chief Executive Officer | ||
1. | I have reviewed this quarterly report on Form 10-Q of the registrant, National Health Investors, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions) : |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 7, 2019 | /s/ Roger R. Hopkins |
Roger R. Hopkins | ||
Chief Accounting Officer | ||
(Principal Financial Officer and Principal Accounting Officer) |
(a) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(b) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. |
Date: | August 7, 2019 | /s/ D. Eric Mendelsohn |
D. Eric Mendelsohn | ||
President and Chief Executive Officer, | ||
Date: | August 7, 2019 | /s/ Roger R. Hopkins |
Roger R. Hopkins | ||
Chief Accounting Officer | ||
(Principal Financial Officer and Principal Accounting Officer) |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 43,357,018 | 42,700,411 |
Common stock, shares outstanding | 43,357,018 | 42,700,411 |
Consolidated Statements Of Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Revenues: | ||||
Rental income | $ 72,578 | $ 69,869 | $ 143,531 | $ 139,122 |
Interest income and other | 5,518 | 3,087 | 10,673 | 6,580 |
Revenues | 78,096 | 72,956 | 154,204 | 145,702 |
Expenses: | ||||
Depreciation | 19,020 | 17,794 | 37,511 | 35,129 |
Interest | 13,746 | 12,220 | 27,264 | 23,834 |
Legal | 99 | 223 | 369 | 334 |
Franchise, excise and other taxes | 775 | 266 | 1,320 | 612 |
General and administrative | 2,972 | 2,765 | 6,986 | 6,935 |
Property taxes and insurance on leased properties | 1,506 | 0 | 2,597 | 0 |
Loan and realty losses | 0 | 1,849 | 2,500 | 1,849 |
Total operating expenses | 38,118 | 35,117 | 78,547 | 68,693 |
Income before loss on convertible note retirement | 39,978 | 37,839 | 75,657 | 77,009 |
Loss on convertible note retirement | 0 | 0 | 0 | (738) |
Net income | 39,978 | 37,839 | 75,657 | 76,271 |
Net income | ||||
Less: net loss attributable to noncontrolling interest | 1 | 0 | 1 | 0 |
Net income | $ 39,979 | $ 37,839 | $ 75,658 | $ 76,271 |
Weighted average common shares outstanding: | ||||
Basic | 43,232,384 | 41,704,819 | 43,029,104 | 41,618,487 |
Diluted | 43,498,021 | 41,786,829 | 43,311,527 | 41,681,854 |
Basic: | ||||
Net income attributable to common stockholders - basic | $ 0.92 | $ 0.91 | $ 1.76 | $ 1.83 |
Diluted: | ||||
Net income attributable to common stockholders - diluted | $ 0.92 | $ 0.91 | $ 1.75 | $ 1.83 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 39,978 | $ 37,839 | $ 75,657 | $ 76,271 |
Net income (loss) attributable to common stockholders | 39,979 | 37,839 | 75,658 | 76,271 |
Other comprehensive income (loss): | ||||
Increase (decrease) in fair value of cash flow hedge | 3,451 | (727) | 4,117 | (2,373) |
Less: reclassification adjustment for amounts recognized in net income | (350) | 76 | (641) | 352 |
Total other comprehensive income (loss) | (3,801) | 803 | (4,758) | 2,725 |
Comprehensive income | 36,177 | 38,642 | 70,899 | 78,996 |
Less: comprehensive loss attributable to noncontrolling interest | 1 | 0 | 1 | 0 |
Comprehensive income | $ 36,178 | $ 38,642 | $ 70,900 | $ 78,996 |
Consolidated Statement Of Equity Consolidated Statement of Equity (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Statement of Stockholders' Equity [Abstract] | ||||||
Common Stock, Dividends, Per Share, Declared | $ 1.05 | $ 1.05 | $ 1.00 | $ 1.00 | $ 2.10 | $ 2.00 |
Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies | SIGNIFICANT ACCOUNTING POLICIES We, the management of National Health Investors, Inc., (“NHI” or the “Company”) believe that the unaudited condensed consolidated financial statements of which these notes are an integral part include all normal, recurring adjustments that are necessary to fairly present the condensed consolidated financial position, results of operations and cash flows of NHI in all material respects. The Condensed Consolidated Balance Sheet at December 31, 2018 has been derived from the audited consolidated financial statements at that date. We assume that users of these condensed consolidated financial statements have read or have access to the audited December 31, 2018 consolidated financial statements and that the adequacy of additional disclosure needed for a fair presentation, except regarding material contingencies, may be determined in that context. Accordingly, notes and other disclosures which would substantially duplicate those contained in our most recent Annual Report on Form 10-K for the year ended December 31, 2018 have been omitted. This condensed consolidated financial information is not necessarily indicative of the results that may be expected for a full year for a variety of reasons including, but not limited to, acquisitions and dispositions, changes in interest rates, rents and the timing of debt and equity financings. For a better understanding of NHI and its condensed consolidated financial statements, we recommend reading these condensed consolidated financial statements in conjunction with the audited consolidated financial statements for the year ended December 31, 2018, which are included in our 2018 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”), a copy of which is available at our web site: www.nhireit.com. Principles of Consolidation - The accompanying condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries, joint ventures, partnerships and consolidated variable interest entities (“VIE”), if any. All intercompany transactions and balances have been eliminated in consolidation. A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. We apply Financial Accounting Standards Board (“FASB”) guidance for our arrangements with VIEs which requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of the VIE. In accordance with FASB guidance, management must evaluate each of the Company’s contractual relationships which creates a variable interest in other entities. If the Company has a variable interest and the entity is a VIE, then management must determine whether the Company is the primary beneficiary of the VIE. If it is determined that the Company is the primary beneficiary, NHI would consolidate the VIE. We identify the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. We perform this analysis on an ongoing basis. If the Company has determined that an entity is not a VIE, the Company assesses the need for consolidation under all other provisions of Accounting Standards Codification (“ASC”) Topic 810 Consolidation. These provisions provide for consolidation of majority-owned entities where a majority voting interest held by the Company demonstrates control of such entities in the absence of any legal constraints. At June 30, 2019, we held an interest in seven unconsolidated VIEs, and, because we generally lack either directly or through related parties any material input in the activities that most significantly impact their economic performance, we have concluded that NHI is not the primary beneficiary. Accordingly, we account for our transactions with these entities and their subsidiaries at amortized cost. Our VIEs are summarized below by date of initial involvement. For further discussion of the nature of the relationships, including the sources of our exposure to these VIEs, see the notes to our condensed consolidated financial statements cross-referenced below.
1 Notes, straight-line rent receivables, and unamortized lease incentives We are not obligated to provide support beyond our stated commitments to these tenants and borrowers whom we classify as VIEs, and accordingly, our maximum exposure to loss as a result of these relationships is limited to the amount of our commitments, as shown above and discussed in the notes. When the above relationships involve leases, some additional exposure to economic loss is present. Generally, additional economic loss on a lease, if any, would be limited to that resulting from a short period of arrearage and non-payment of monthly rent before we are able to take effective remedial action, as well as costs incurred in transitioning the lease to a new tenant. The potential extent of such loss will be dependent upon individual facts and circumstances, cannot be quantified, and is therefore not included in the tabulation above. Typically, the only carrying amounts involving our leases are accumulated straight-line receivables and unamortized lease incentives. For VIE relationships listed above without a note reference, refer to our financial statements included in our most recent Annual Report on Form 10-K for the year ended December 31, 2018. Cash and Cash Equivalents and Restricted Cash - Cash equivalents consist of all highly liquid investments with an original maturity of three months or less. Restricted cash includes amounts required to be held on deposit in accordance with agency agreements governing our Fannie Mae and HUD mortgages. The following table sets forth our cash, cash equivalents and restricted cash reported within the Company’s Condensed Consolidated Statements of Cash Flows (in thousands):
Leases - For operating leases entered into during 2019, we record under the guidance of ASC Topic 842, Leases. Our leases generally have an initial leasehold term of 10 to 15 years followed by one or more 5-year tenant renewal options. The leases are “triple net leases” under which the tenant is responsible for the payment of all taxes, utilities, insurance premiums, repairs and other charges relating to the operation of the properties, including required levels of capital expenditures each year. The tenant is obligated at its expense to keep all improvements, fixtures and other components of the properties covered by “all risk” insurance in an amount equal to at least the full replacement cost thereof, and to maintain specified minimal personal injury and property damage insurance, protecting us as well as the tenant. The leases also require the tenant to indemnify and hold us harmless from all claims resulting from the use, occupancy and related activities of each property by the tenant, and to indemnify us against all costs related to any release, discovery, clean-up and removal of hazardous substances or materials, or other environmental responsibility with respect to each facility. These provisions, along with a growing senior demographic and the historical propensity for real estate to hold its value, collectively constitute much of the means by which the risk associated with the residual value of our properties is mitigated. Additionally, in monitoring the performance of our properties, we are positioned to respond appropriately to declines in physical plant or tenant performance. While we do not incorporate residual value guarantees, the above lease provisions and considerations inform our expectation of realizable value from our properties upon the expiration of their lease terms. The residual value of our real estate under lease is still subject to various market, asset, and tenant-specific risks and characteristics. As the classification of our leases is dependent on the fair value of estimated cash flows at lease commencement, residual values represent significant assumptions in our accounting for operating leases. Similarly, the exercise of options is also subject to these same risks, making a tenant’s lease term another significant variable in a lease’s cash flows. Most of our existing leases contain annual fixed escalators in rent payments, and, for financial statement purposes, rental income is recognized on a straight-line basis over the term of the lease. Other operators lease from us under leases that provide for variable escalation in lease payments based on contingent factors not determinable in advance. Principally, two operators with leases based on variable escalators constitute 20% of our total revenue and are derived from either an index applied to the measured level of operations or the consumer price index. Additionally, we derive variable payments from those operators discussed under the sub-heading “Tenant Transition” for which variable payments are determined as a percentage of the tenant’s net operating income. Our variable revenue from these operators is recognized when received. A summary of future minimum lease payments as of June 30, 2019, can be found in Note 2. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Earnings Per Share - The weighted average number of common shares outstanding during the reporting period is used to calculate basic earnings per common share. Diluted earnings per common share assumes the exercise of stock options using the treasury stock method, to the extent dilutive. Diluted earnings per share also incorporate the potential dilutive impact of our convertible senior notes. We apply the treasury stock method to our convertible debt instruments, the effect of which is that conversion will not be assumed for purposes of computing diluted earnings per share unless the average share price for the period exceeds the conversion price per share. Reclassifications - We have reclassified certain balances where necessary to conform the presentation of prior periods to the current period. These reclassifications had no effect on previously reported net income. New Accounting Pronouncements - For a review of recent accounting pronouncements pertinent to our operations and management’s judgment as to the impact that the eventual adoption of these pronouncements will have on our financial position and results of operations, see Note 10.
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Real Estate Disclosure [Text Block] | REAL ESTATE As of June 30, 2019, we owned 228 health care real estate properties located in 33 states and consisting of 151 senior housing communities (“SHO”), 72 skilled nursing facilities (“SNF”), 3 hospitals and 2 medical office buildings. Our senior housing communities include assisted living facilities, senior living campuses, independent living facilities, and entrance-fee communities. These investments (excluding our corporate office of $2,505,000) consisted of properties with an original cost of approximately $3,056,215,000 rented under triple-net leases to 30 lessees. During the six months ended June 30, 2019, we made the following real estate investments and commitments as described below ($ in thousands):
Wingate On January 15, 2019, we acquired a 267-unit senior living campus in Massachusetts for a purchase price of $50,300,000, including closing costs of $300,000. The facility is being leased to Wingate Healthcare, Inc. (“Wingate”) for a term of 10 years, with three renewal options of five years each, at an initial lease rate of 7.5% plus annual fixed escalators. We have committed to the additional funding of up to $1,900,000 in capital improvements, and the lease provides for incentive payments up to $5,000,000 to become available beginning in 2020 upon the attainment of certain operating metrics. NHI has a right of first offer on two additional Wingate-operated facilities. We accounted for the transaction as an asset purchase. Comfort Care On April 30, 2019, we acquired a newly-constructed 60-unit assisted living facility in Shelby, Michigan which has 14 memory care units under construction. The total commitment of $10,800,000 includes $9,282,000 funded at closing with the remaining amount to be funded as construction progresses. On May 20, 2019, we acquired a property in Brighton, Michigan, consisting of 73 assisted living/memory care units. The purchase price for the Brighton acquisition was $13,500,000, inclusive of closing costs. We leased the properties to Comfort Care Senior Living (“Comfort Care”), under leases which provide for initial lease rate of 7.75%, with annual fixed escalators beginning in year three over the term of ten years plus two renewal options of five years each. The leases each include a $3,000,000 earnout incentive which will be added to the respective lease base if funded. We accounted for the acquisitions as asset purchases. Discovery On May 31, 2019, we invested $25,028,000 in cash for a 97.5% equity interest in a consolidated subsidiary ("PropCo"), which simultaneously acquired from a third party six senior housing facilities comprising 145 independent-living units, 356 assisted-living units and 95 memory-care units, for a total of 596 units. Discovery Senior Housing Investor XXIV, LLC, (“Discovery”) contributed $642,000 for its non-controlling 2.5% equity interest. We invested an additional $102,680,000 as a preferred equity contribution, for a total NHI investment of $127,708,000. The additional equity contribution of $102,680,000 carries a preference in liquidation as well as in the distribution of operating cash flow. Total cash of $128,350,000 invested in PropCo included approximately $1,067,000 in closing costs and $433,000 reserved for working capital needs. The facilities were leased by PropCo to Discovery for a term of ten years with two renewal periods of five years each at an initial lease rate of 6.5% with fixed annual escalators through the fifth year of the initial lease term followed by CPI-based escalators, subject to floor and ceiling, thereafter. Discovery is eligible, beginning in 2023, for up to $4,000,000 of lease inducement payments upon meeting specified performance metrics. Inducement payments funded under the agreement will be added to the lease base. Additionally, PropCo has committed to Discovery for funding up to $2,000,000 toward the purchase of condominium units located at one of the facilities. The total purchase price for the properties acquired, as discussed above, was allocated to the tangible assets based upon their relative fair values consisting of $6,301,000 to the land and $121,616,000 to the buildings and improvements. NHI as the managing member manages Propco, subject to certain consent rights of Discovery for certain significant business decisions. Because of our control of PropCo, we include its assets, liabilities, noncontrolling interest and operations in our condensed consolidated financial statements in accordance with FASB ASC Topic 810, Consolidation, and ASC Topic 970, Real Estate - General. Major Tenants Holiday In November 2018, we entered into a lease amendment and guaranty release (“the Agreement”) with an affiliate of Holiday Retirement (“Holiday”). Among other provisions, the Agreement decreased base rent beginning in 2019 from $39,000,000 to $31,500,000, extended the term of the original lease through 2035, and increased required minimum capital expenditure per unit. As consideration for amending provisions included in the original 2013 lease, Holiday agreed to pay NHI $55,125,000 in cash or real estate and forfeit $10,637,000 of their original $21,275,000 security deposit. On January 31, 2019, we acquired a senior housing facility in Vero Beach, Florida from Holiday consisting of 157 independent living and 71 assisted living units in exchange for $38,000,000 toward the $55,125,000 receivable arising from the lease amendment, discussed above. The property was added to the master lease at a 6.71% lease rate. Under the restructured master lease, annual lease escalators ranging from 2% to 3%, based on portfolio revenue growth, will go into effect on November 1, 2020. Holiday settled the remaining commitment to NHI with a cash payment of $17,125,000 at closing. Acquisition of the property and collection of residual cash flowed through our accounts as adjustments to lease receivables and resulted in the change of our straight-line receivable from Holiday at the beginning of the year into a straight-line payable, which is included in the accompanying Condensed Consolidated Balance Sheets as “deferred income” at June 30, 2019. As of June 30, 2019, we leased 26 independent living facilities to Holiday. Of our total revenues, $10,176,000 (13%) and $10,954,000 (15%) were derived from Holiday for the three months ended June 30, 2019 and 2018, including $1,664,000 and $1,530,000 in straight-line rent income, respectively. Of our total revenues, $20,106,000 (13%) and $21,908,000 (15%) were derived from Holiday for the six months ended June 30, 2019 and 2018, including $3,294,000 and $3,061,000 in straight-line rent income, respectively. Our tenant operates the facilities pursuant to a management agreement with a Holiday-affiliated manager. Bickford As of June 30, 2019, our Bickford Senior Living (“Bickford”) lease portfolio consists of the following ($ in thousands):
Of our total revenues, $13,267,000 (17%) and $12,411,000 (17%) were recognized as rental income from Bickford for the three months ended June 30, 2019 and 2018, including $1,324,000 and $1,203,000 in straight-line rent income, respectively. Of our total revenues, $26,511,000 (17%) and $23,856,000 (16%) were recognized as rental income from Bickford for the six months ended June 30, 2019 and 2018, including $2,695,000 and $2,372,000 in straight-line rent income, respectively. Senior Living Communities As of June 30, 2019, we leased 11 retirement communities totaling 2,216 units to Senior Living Communities, LLC (“Senior Living”). The 15-year master lease, which began in December 2014, contains two renewal options of five years each and provides for an annual escalator of 3% effective January 1, 2019. Of our total revenues, $11,545,000 (15%) and $11,457,000 (16%) in rental income were derived from Senior Living for the three months ended June 30, 2019 and 2018, including $1,058,000 and $1,359,000 in straight-line rent income, respectively. Of our total revenues, $23,077,000 (15%) and $22,905,000 (16%) in rental income were derived from Senior Living for the six months ended June 30, 2019 and 2018, including $2,115,000 and $2,717,000 in straight-line rent income, respectively. NHC As of June 30, 2019, we leased 42 facilities under two master leases to National HealthCare Corporation (“NHC”), a publicly-held company. The facilities leased to NHC consist of three independent living facilities and 39 skilled nursing facilities (4 of which are subleased to other parties for whom the lease payments are guaranteed to us by NHC). These facilities are leased to NHC under the terms of an amended master lease agreement originally dated October 17, 1991 (“the 1991 lease”) that includes our 35 legacy properties and a master lease agreement dated August 30, 2013 (“the 2013 lease”) that includes 7 skilled nursing facilities acquired in 2013. The 1991 lease expiration is December 31, 2026. There are two additional renewal options of five years, each at fair rental value as negotiated between the parties and determined without including the value attributable to any improvements to the leased property voluntarily made by NHC at its expense. Under the terms of the 1991 lease, the base annual rental is $30,750,000 and rent escalates by 4% of the increase, if any, in each facility’s revenue over a 2007 base year. The 2013 lease provides for a base annual rental of $3,450,000 and has a lease expiration of August 2028. Under the terms of the 2013 lease, rent escalates 4% of the increase, if any, in each facility’s revenue over the 2014 base year. For both the 1991 lease and the 2013 lease, we refer to this additional rent component as “percentage rent.” During the last three years of the 2013 lease, NHC will have the option to purchase the facilities for $49,000,000. The following table summarizes the percentage rent income from NHC (in thousands):
1 For purposes of the percentage rent calculation described in the master lease agreement, NHC’s annual revenue by facility for a given year is certified to NHI by March 31st of the following year. Of our total revenues, $9,461,000 (12%) and $9,389,000 (13%) in rental income were derived from NHC for the three months ended June 30, 2019 and 2018, respectively. Of our total revenues, $19,209,000 (12%) and $19,064,000 (13%) in rental income were derived from NHC for the six months ended June 30, 2019 and 2018, respectively. The chairman of our board of directors is also a director on NHC’s board of directors. As of June 30, 2019, NHC owned 1,630,462 shares of our common stock. Purchase Options Certain of our operators hold purchase options allowing them to acquire properties they currently lease from NHI. For options open or coming open in the near future, we are engaged in preliminary negotiations to continue as lessor or in some other capacity. A summary of these tenant options is presented below ($ in thousands):
Tenant purchase options generally give the lessee an option to purchase the underlying property for consideration determined by i) greater of fixed base price or fair market value; ii) a fixed base price plus a specified share in any appreciation; iii) fixed base price; or iv) a fixed capitalization rate on lease revenue. Other Portfolio Activity Tenant Transitioning As of June 30, 2019, we have completed the contractual transition of three lease portfolios to new tenants following a period of non-compliance by the former operators, background for which is provided in the financial statements included in our Form 10-K for the year ended December 31, 2018. The portfolios consist of three former Regency buildings, five former LaSalle Group buildings and one facility formerly leased to Landmark. To expedite stabilization of the facilities, we committed to specified income-generating capital expenditures for the re-branding and refurbishment of certain of these properties. The new leases each specify initial periods during which rental income to NHI shall be based on net operating income (“NOI”), after deduction of management fees. Following the initial periods, each lease converts to a structured payment based on a fair-value calculation. The former Regency buildings have been leased to three operators, Senior Living, Discovery, and Vitality MC TN, LLC (“Vitality”). Of our total revenues, $69,000 and $1,262,000 (2%) in rental income were derived from the three former Regency buildings for the three months ended June 30, 2019 and 2018, respectively. Of our total revenues, $145,000 and $2,523,000 (2%) in rental income were derived from the three former Regency buildings for the six months ended June 30, 2019 and 2018, respectively. On April 16, 2019, Chancellor Health Care leased the five former LaSalle Group (“LaSalle”) buildings. Our lease agreement with Chancellor provides for NHI to receive 100% of net operating cash flow generated by the facilities, after management fees, pending stabilization of the operations of the facility. During the first quarter of 2019, we also commenced litigation for the recovery of certain funds owed by LaSalle under the lease and against the principal executive personally under the guaranty agreement. Of our total revenues, $287,000 and $1,119,000 (2%) in rental income were derived from the five former LaSalle buildings for the three months ended June 30, 2019 and 2018, respectively. Of our total revenues, $287,000 and $2,213,000 (2%) in rental income were derived from the five former LaSalle buildings for the six months ended June 30, 2019 and 2018, respectively. At December 31, 2018, we had a single-property lease in Wisconsin with Landmark Senior Living that was non-performing. In February 2019, we transitioned the lease to BAKA Enterprises, temporarily acting under a management agreement with Landmark. Under terms of the new lease, NHI receives 95% of net operating cash flow, after management fees, as generated by the facilities. Upon the establishment of an operational baseline, beginning in year two, the agreement calls for a rent reset to fair value. The agreement provides for a term of 8 years, with renewal options. Of our total revenues, $150,000 and $305,000 were derived from the former Landmark property for the three months ended June 30, 2019 and 2018, respectively. Of our total revenues, $775,000 (1%) and $762,000 (1%) were derived from the former Landmark property for the six months ended June 30, 2019 and 2018, respectively, including $625,000 received during 2019 as a settlement payment. As we seek to stabilize the operations of these facilities, if our resulting tenants or operating partners do not have adequate liquidity to accept the risks and rewards of a tenant-lessee, NHI might be deemed the primary beneficiary of the operations and might be required to consolidate those statements of financial position and results of operations of the managers or operating partners into our consolidated financial statements. Assets Held For Sale We have identified two assisted living properties for disposal and have begun active marketing of the properties. The buildings are smaller than are typical of our portfolio and are no longer considered to be an appropriate investment for NHI. In January 2019 we ceased recording depreciation on the properties, and we booked an adjustment to lease revenues to write off the associated $124,000 in straight-line receivables. We recognized an impairment loss of $2,500,000 to write down the properties to their estimated net realizable value of $3,745,000 and have classified the assets as available for sale on the Condensed Consolidated Balance Sheet at June 30, 2019. Future Minimum Lease Payments With the adoption of Accounting Standards Codification (“ASC”) Topic 842, Leases, as discussed in Note 10, our minimum lease payments are now determined under guidance different from that required as of December 31, 2018, when we were subject to ASC Topic 840 Leases. Presented in the following table are future minimum lease payments, as of June 30, 2019, to be received by us under our operating leases, as determined under ASC 842 (in thousands):
We assess the collectibility of our lease receivables, consisting of straight-line rents receivable, based on several factors, including payment history, the financial strength of the tenant and any guarantors, historical operations and operating trends of the property, and current economic conditions. If our evaluation of these factors indicates it is not probable that we will be able to collect substantially all of the receivable, we de-recognize all rent receivable assets, including the straight-line rent receivable asset and record as a reduction in rental revenue.
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Mortgage Notes Receivable | MORTGAGE AND OTHER NOTES RECEIVABLE At June 30, 2019, we had net investments in mortgage notes receivable with a carrying value of $260,865,000, secured by real estate and UCC liens on the personal property of 14 facilities, and other notes receivable with a carrying value of $45,589,000, guaranteed by significant parties to the notes or by cross-collateralization of properties with the same owner. All our notes receivable were on full accrual basis and no allowance for doubtful accounts was considered necessary at June 30, 2019 or December 31, 2018. 41 Management On June 14, 2019 we committed to providing first mortgage financing to 41 Management, LLC (d/b/a as Matthews Senior Living) for up to $10,800,000 to fund the construction of a 51-unit assisted living facility in Wisconsin. The loan carries an interest rate of 8.50% for its term of five years, subject to two renewals of one year each. The agreement provides for a 1% commitment fee as well as an exit fee of 1.0% that is subject to waiver should we exercise our purchase option, which is to open upon stabilization of the facility. Additional security on the loan includes personal and corporate guarantees and the funding of a $2,400,000 working capital escrow. The total amount funded on the note was $1,495,000 as of June 30, 2019. Our loan to 41 Management represents a variable interest. 41 Management is structured to limit liability for potential claims for damages, is capitalized to achieve that purpose and is considered a VIE within the definition set forth in Note 1. Senior Living Communities On June 25, 2019, we provided a mortgage loan of $32,700,000 to Senior Living for the acquisition of a 248-unit continuing care retirement community in Columbia, South Carolina. The financing is for a term of five years with two one year extensions and carries an interest rate of 7.25%. Additionally, the loan conveys to NHI a purchase option at a stated minimum price of $38,250,000, subject to adjustment for market conditions. In connection with the acquisition in December 2014 of properties leased to Senior Living, we provided a $15,000,000 revolving line of credit, the maturity of which mirrors the 15-year term of the master lease. Borrowings are used to finance construction projects within the Senior Living portfolio, including building additional units. Up to $5,000,000 of the facility may be used to meet general working capital needs. Amounts outstanding under the facility, $4,578,000 at June 30, 2019, bear interest at an annual rate equal to the prevailing 10-year U.S. Treasury rate, 2.00% at June 30, 2019, plus 6%. NHI has two mezzanine loans of up to $12,000,000 and $2,000,000, respectively, to affiliates of Senior Living, whose purpose was to partially fund construction of a 186-unit senior living campus on Daniel Island in South Carolina, which opened in April 2018. The loans bear interest payable monthly at a 10% annual rate and mature in March 2021. The loans were fully drawn at June 30, 2019, and provided NHI with a fixed capitalization rate purchase option on the development upon its meeting certain operational metrics. The option is to remain open during the term of the loans, plus any extensions. Our loans to Senior Living and its subsidiaries represent a variable interest. Senior Living is structured to limit liability for potential claims for damages, is appropriately capitalized for that purpose and is considered a VIE. Bickford At June 30, 2019, our construction loans to Bickford are summarized as follows:
The construction loans are secured by first mortgage liens on substantially all real and personal property as well as a pledge of any and all leases or agreements which may grant a right of use to the property. Usual and customary covenants extend to the agreements, including the borrower’s obligation for payment of insurance and taxes. NHI has a fair market value purchase option on the properties at stabilization of the underlying operations. On these development projects, Bickford as borrower is entitled to up to $2,000,000 per project in incentive loan draws based on the achievement of predetermined operational milestones and, if funded, will increase the principal amount and NHI's future purchase price and eventual NHI lease payment. Our loans to Bickford represent a variable interest. Bickford is structured to limit liability for potential claims for damages, is capitalized to achieve that purpose and is considered a VIE within the definition set forth in Note 1. Life Care Services - Sagewood On December 21, 2018 we entered into an agreement to lend LCS-Westminster Partnership IV LLP (“LCS-WP IV”), an affiliate of Life Care Services (“LCS”), the manager of the facility, up to $180,000,000. The loan agreement conveys a mortgage interest and will facilitate the construction of Phase II of Sagewood, a Type-A Continuing Care Retirement Community in Scottsdale, AZ. As an affiliate of a larger company, LCS-WP IV is structured to limit liability for potential damage claims, is capitalized to achieve that purpose and is considered a VIE within the definition set forth in Note 1. The loan takes the form of two notes under a master credit agreement. The senior note (“Note A”) totals $118,800,000 at a 7.25% interest rate with 10 basis-point annual escalators after three years and has a term of 10 years. We have funded $77,118,000 of Note A as of June 30, 2019. Note A is interest-only and is locked to prepayment until January 2021. After 2020, the prepayment penalty starts at 2% and declines to 1% in 2022. The second note (“Note B”) is a construction loan for up to $61,200,000 at an annual interest rate of 8.5% and carries a maturity of five years. The total amount funded on Note B was $22,464,000 as of June 30, 2019. Life Care Services - Timber Ridge In February 2015, we entered into an agreement with LCS-Westminster Partnership III LLP (“LCS-WP III”), an affiliate of LCS, the manager of the facility, to lend up to $154,500,000. The loan agreement conveys a mortgage interest and facilitated the construction of Phase II of Timber Ridge at Talus (“Timber Ridge”), a Type-A continuing care retirement community in Issaquah, Washington. Our loan to LCS-WP III represents a variable interest. As an affiliate of a larger company, LCS-WP III is structured to limit liability for potential damage claims, is capitalized to achieve that purpose and is considered a VIE within the definition set forth in Note 1. The loan took the form of two notes under a master credit agreement. The senior note (“Note A”) totals $60,000,000 at an initial rate of 6.75% (currently 6.95%) with 10 basis-point escalators after three years and has a term of 10 years. We have funded $59,349,000 of Note A as of June 30, 2019. Note A is interest-only and is locked to prepayment for three years. Beginning in February 2018, the prepayment penalty started at 5% and will decline 1% annually for five years. Note B was a construction loan for up to $94,500,000, with the remaining outstanding balance being fully repaid during the first quarter of 2018. NHI has an option to purchase the entire Timber Ridge property for the greater of a mutually agreed-upon fair market value or $115,000,000 during an option window that opened in February 2019 . Senior Living Management In August 2016, we entered into an agreement to furnish to our current tenant, Senior Living Management, Inc. (“SLM”), through its affiliates, loans of up to $24,500,000 to facilitate SLM’s acquisition of five senior housing facilities that it currently operates. The loans consist of two notes under a master credit agreement, include both a mortgage and a corporate loan, and bear interest at 8.25% with terms of five years, plus optional extensions of one year and two years. NHI has a right of first refusal if SLM elects to sell the facilities. The loans were fully funded as of June 30, 2019. Our loans to SLM represent a variable interest. SLM is structured to limit liability for potential damage claims, is capitalized for that purpose and is considered a VIE.
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Other Assets |
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Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets Disclosure [Text Block] | OTHER ASSETS Other assets consist of the following (in thousands):
Restricted cash consists of reserves for replacement, insurance and tax escrows required to be held on deposit in accordance with regulatory agreements governing our Fannie Mae and HUD mortgages.
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Debt |
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Debt Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure | DEBT Debt consists of the following (in thousands):
Aggregate principal maturities of debt as of June 30, 2019, and for each of the next five years and thereafter are as follows (in thousands):
Revolving credit facility and bank term loans - unsecured Our unsecured bank credit facility consists of $250,000,000 and $300,000,000 term loans and a $550,000,000 revolving credit facility. The $250,000,000 term loan and $550,000,000 revolving facility mature in August 2022, and the $300,000,000 term loan matures in September 2023. On March 22, 2019 and June 28, 2019, we entered into swap agreements to fix the interest rates through December 2021 on $340,000,000 of term loans and $60,000,000 of our revolving credit facility, when LIBOR is scheduled to cease automatic recalculation. The revolving facility fee is currently 20 basis points per annum, and based on our current leverage ratios, the facility presently provides for floating interest on the revolver and the term loans at 30-day LIBOR plus a blended 126 bps. At June 30, 2019 and December 2018, 30-day LIBOR was 240 and 250 bps, respectively. Within the facility, the employment of interest rate swaps for a portion of our fixed term debt leaves only $213,000,000 of our revolving credit facility exposed to interest rate risk through June 2020, when our $80,000,000 and $130,000,000 swaps expire. Our swaps and the financial instruments to which they relate are described in the table below, under the caption “Interest Rate Swap Agreements.” At June 30, 2019, we had $277,000,000 available to draw on the revolving portion of our credit facility, subject to usual and customary covenants. Among other stipulations, the unsecured credit facility agreement requires that we maintain certain financial ratios within limits set by our creditors. At June 30, 2019, we were in compliance with these ratios. Pinnacle Bank is a participating member of our banking group. A member of NHI’s board of directors and chairman of our audit committee is also the chairman of Pinnacle Financial Partners, Inc., the holding company for Pinnacle Bank. NHI’s local banking transactions are conducted primarily through Pinnacle Bank. Private placement term loans - unsecured Our unsecured private placement term loans, payable interest-only, are summarized below (in thousands):
Except for specific debt-coverage ratios, covenants pertaining to the private placement term loans are generally conformed with those governing our credit facility. HUD mortgage loans Our HUD mortgage loans are secured by ten properties leased to Bickford and having a net book value of $50,007,000 at June 30, 2019. Nine mortgage notes require monthly payments of principal and interest from 4.3% to 4.4% (inclusive of mortgage insurance premium) and mature in August and October 2049. One additional HUD mortgage loan assumed in 2014, at a discount, requires monthly payments of principal and interest of 2.9% (inclusive of mortgage insurance premium) and matures in October 2047. The loan has an outstanding principal balance of $8,599,000 and a carrying value of $7,321,000, which approximates fair value. Fannie Mae term loans - secured, non-recourse In March 2015 we obtained $78,084,000 in Fannie Mae financing. The term debt financing consists of interest-only payments at an annual rate of 3.79% and a 10-year maturity. The mortgages are non-recourse and secured by thirteen properties leased to Bickford. In a December 2017 acquisition, we assumed additional Fannie Mae debt that amortizes through 2025 when a balloon payment will be due, is subject to prepayment penalties until 2024, bears interest at a nominal rate of 4.60%, and has remaining balance of $17,792,000 at June 30, 2019. All together, these notes are secured by facilities having a net book value of $136,342,000 at June 30, 2019. Convertible senior notes - unsecured In March 2014 we issued $200,000,000 of 3.25% senior unsecured convertible notes due April 2021 (the “Notes”) with interest payable April 1st and October 1st of each year. The Notes were convertible at an initial rate of 13.93 shares of common stock per $1,000 principal amount, representing a conversion price of approximately $71.81 per share for a total of approximately 2,785,200 underlying shares. The conversion rate is subsequently adjusted upon each occurrence of certain events, as defined in the indenture governing the Notes, including the payment of dividends at a rate exceeding that prevailing in 2014. The conversion option was accounted for as an “optional net-share settlement conversion feature,” meaning that upon conversion, NHI’s conversion obligation may be satisfied, at our option, in cash, shares of common stock or a combination of cash and shares of common stock. Because we have the ability and intent to settle the convertible securities in cash upon exercise, we use the treasury stock method to account for potential dilution. As of June 30, 2019, our senior unsecured convertible notes were convertible at a rate of 14.52 shares of common stock per $1,000 principal amount, representing a conversion price of approximately $68.86 per share for a total of 1,742,736 remaining underlying shares. For the three months ended June 30, 2019, dilution resulting from the conversion option within our convertible debt is 199,492 shares. If NHI’s current share price increases above the adjusted $68.86 conversion price, further dilution will be attributable to the conversion feature. On June 30, 2019, the value of the convertible debt, computed as if the debt were immediately eligible for conversion, exceeded its face amount by $15,986,000. Interest Rate Swap Agreements Our existing interest rate swap agreements will collectively continue through December 2021 to hedge against fluctuations in variable interest rates applicable to $610,000,000 ($400,000,000 after June 2020) of our bank loans. During the next year, approximately $883,000 of gains, which are included in accumulated other comprehensive income (loss), are projected to be reclassified into earnings. As of June 30, 2019, we employ the following interest rate swap contracts to mitigate our interest rate risk on our bank term and revolver loans described above (dollars in thousands):
If the fair value of the hedge is an asset, we include it in our Condensed Consolidated Balance Sheets among other assets, and, if a liability, as a component of accrued expenses. See Note 9 for fair value disclosures about our interest rate swap agreements. Net asset (liability) balances for our hedges included as components of consolidated other comprehensive income on June 30, 2019 and December 31, 2018 were $(3,461,000) and $1,297,000, respectively. The following table summarizes interest expense (in thousands):
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Commitments And Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments And Contingencies | COMMITMENTS AND CONTINGENCIES In the normal course of business, we enter into a variety of commitments, typically funding of revolving credit arrangements, construction and mezzanine loans to our operators to conduct expansions and acquisitions for their own account, and commitments for the funding of construction for expansion or renovation to our existing properties under lease. In our leasing operations, we offer to our tenants and to sellers of newly-acquired properties a variety of inducements which originate contractually as contingencies but which may become commitments upon the satisfaction of the contingent event. Contingent payments earned will be included in the respective lease bases when funded. The tables below summarize our existing, known commitments and contingencies as of June 30, 2019 according to the nature of their impact on our leasehold or loan portfolios.
See Note 3 to our condensed consolidated financial statements for full details of our loan commitments. As provided above, loans funded do not include the effects of discounts or commitment fees.
In addition to the commitments listed above, PropCo has committed to Discovery for funding up to $2,000,000 toward the purchase of condominium units located at one of the facilities.
Contingent lease inducement payments of $10,000,000 related to the five Bickford development properties constructed in 2016 and 2017 include a licensure incentive of $250,000 per property and a three-tiered operator incentive schedule paying up to an additional $1,750,000, based on the attainment of certain performance metrics. Upon funding, these payments are added to the lease base and amortized against rental income. Litigation Our facilities are subject to claims and suits in the ordinary course of business. Our lessees and borrowers have indemnified, and are obligated to continue to indemnify us, against all liabilities arising from the operation of the facilities, and are further obligated to indemnify us against environmental or title problems affecting the real estate underlying such facilities. While there may be lawsuits pending against certain of the owners and/or lessees of the facilities, management believes that the ultimate resolution of all such pending proceedings will have no material adverse effect on our financial condition, results of operations or cash flows. In June 2018, East Lake Capital Management LLC and certain related entities, including Regency (for three assisted living facilities in Tennessee, Indiana and North Carolina), filed suit against NHI in Texas seeking injunctive and declaratory relief and unspecified monetary damages. We countered with motions calling for the immediate appointment of a receiver and for pre-judgment possession. Resulting from these claims and counterclaims, on December 6, 2018, the plaintiff parties entered into an agreement resulting in Regency vacating the facilities in December 2018. Litigation is ongoing. The LaSalle Group defaulted on its rent payment in November 2018. We transitioned the properties to a new operator and on April 16, 2019, we placed the five buildings with a new tenant under similar arrangements to those in place over the former Regency buildings, with NHI to receive operating cash flow, after management fees, generated by the facilities pending stabilization. We also commenced litigation for the recovery of certain funds owed under the lease and against the principal executive personally under a guaranty agreement. In the meantime, Autumn Leaves, the manager, has declared bankruptcy under Chapter 11. The litigation is ongoing.
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Stock-Based Compensation |
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Deferred Compensation Arrangements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | -BASED COMPENSATION We recognize stock-based compensation for all stock options granted over the requisite service period using the fair value of these grants as estimated at the date of grant using the Black-Scholes pricing model. All restricted stock granted (if any) is recognized over the requisite service period using the market value of our publicly-traded common stock on the date of grant. Stock-Based Compensation Plans The Compensation Committee of the Board of Directors (“the Committee”) has the authority to select the participants to be granted options; to designate whether the option granted is an incentive stock option (“ISO”), a non-qualified option, or a stock appreciation right; to establish the number of shares of common stock that may be issued upon exercise of the option; to establish the vesting provision for any award; and to establish the term any award may be outstanding. The exercise price of any ISO’s granted will not be less than 100% of the fair market value of the shares of common stock on the date granted, and the term of an ISO may not be more than ten years. The exercise price of any non-qualified options granted will not be less than 100% of the fair market value of the shares of common stock on the date granted unless so determined by the Committee. In May 2012, our stockholders approved the 2012 Stock Incentive Plan (“the 2012 Plan”) pursuant to which 1,500,000 shares of our common stock were made available to grant as stock-based payments to employees, officers, directors or consultants. Through a vote of our shareholders on May 7, 2015, we increased the maximum number of shares under the plan from 1,500,000 shares to 3,000,000 shares; increased the automatic annual grant to non-employee directors from 15,000 shares to 20,000 shares; and limited the Company’s ability to re-issue shares under the Plan. Through a second amendment approved on May 4, 2018, our shareholders voted to increase the maximum number of shares under the plan to 3,500,000 and to increase the automatic annual grant to non-employee directors to 25,000. The individual restricted stock and option grant awards may vest over periods up to five years. The term of the options under the 2012 Plan is up to ten years from the date of grant. As of June 30, 2019, there were 319,669 shares available for future grants under the 2012 Plan. On May 3, 2019, our stockholders approved the 2019 Stock Incentive Plan (“the 2019 Plan”) pursuant to which 3,000,000 shares of our common stock were made available to grant as stock-based payments to employees, officers, directors or consultants. The individual option grant awards may vest over periods up to five years. The term of the options under the 2019 Plan is up to ten years from the date of grant. Compensation expense is only recognized for the awards that ultimately vest. Accordingly, pre-vesting forfeitures that were not expected will result in the reversal of previously recorded compensation expense. Non-cash compensation expense reported for the three months ended June 30, 2019 and 2018 was $477,000 and $368,000, respectively and is included in general and administrative expense in the Condensed Consolidated Statements of Income. Non-cash compensation expense reported for the six months ended June 30, 2019 and 2018 was $2,478,000 and $1,794,000, respectively and is included in general and administrative expense in the Condensed Consolidated Statements of Income. At June 30, 2019, we had, net of expected forfeitures, $1,821,000 of unrecognized compensation cost related to unvested stock options which is expected to be expensed over the following periods: 2019 - $953,000, 2020 - $776,000 and 2021 - $92,000. The weighted average fair value per share of options granted during the six months ended June 30, 2019 and 2018 was $6.17 and $4.49, respectively. The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:
The following table summarizes our outstanding stock options:
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Earnings and Dividends Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS AND DIVIDENDS PER COMMON SHARE The weighted average number of common shares outstanding during the reporting period is used to calculate basic earnings per common share. Diluted earnings per common share assume the exercise of stock options and the conversion of our convertible debt using the treasury stock method, to the extent dilutive. If our average stock price for the period increases over the conversion price of our convertible debt, the conversion feature will be considered dilutive. The following table summarizes the average number of common shares and the net income used in the calculation of basic and diluted earnings per common share (in thousands, except share and per share amounts):
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Fair Value Of Financial Instruments |
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Fair Value Of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Text Block] | FAIR VALUE OF FINANCIAL INSTRUMENTS Our financial assets and liabilities measured at fair value (based on the hierarchy of the three levels of inputs described in Note 1 to the consolidated financial statements contained in our most recent Annual Report on Form 10-K) on a recurring basis have included marketable securities, derivative financial instruments and contingent consideration arrangements. Derivative financial instruments include our interest rate swap agreements. Contingent consideration arrangements relate to certain provisions of recent real estate purchase agreements involving asset acquisitions. Derivative financial instruments. Derivative financial instruments are valued in the market using discounted cash flow techniques. These techniques incorporate Level 1 and Level 2 inputs. The market inputs are utilized in the discounted cash flow calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation model for interest rate swaps are observable in active markets and are classified as Level 2 in the hierarchy. Assets and liabilities measured at fair value on a recurring basis are as follows (in thousands):
Carrying amounts and fair values of financial instruments that are not carried at fair value at June 30, 2019 and December 31, 2018 in the Condensed Consolidated Balance Sheets are as follows (in thousands):
Fixed rate debt. Fixed rate debt is classified as Level 2 and its value is based on quoted prices for similar instruments or calculated utilizing model derived valuations in which significant inputs are observable in active markets. Mortgage and other notes receivable. The fair value of mortgage and other notes receivable is based on credit risk and discount rates that are not observable in the marketplace and therefore represents a Level 3 measurement. Carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term nature. The fair value of our borrowings under our revolving credit facility and other variable rate debt are reasonably estimated at their notional amounts at June 30, 2019 and December 31, 2018, due to the predominance of floating interest rates, which generally reflect market conditions.
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Recent Accounting Pronouncements Recent Accounting Pronouncements |
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Jun. 30, 2019 | |
Recent Accounting Pronouncements [Abstract] | |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | RECENT ACCOUNTING PRONOUNCEMENTS In February 2016 the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases, which has been codified under ASC Topic 842. In July and December 2018 the FASB updated the pending Topic 842 with ASU 2018-11, Leases - Targeted Improvements, and ASU 2018-20, Narrow-Scope Improvements for Lessors, respectively. ASU 2018-11 provides a simplified transition method under which we applied the new leases standard as of the adoption date and recognized a cumulative-effect adjustment, as appropriate, to the opening balance of retained earnings in the period of adoption. Consequently, our reporting for the comparative periods presented in the financial statements in which we adopted the new leases standard will continue to be in accordance with prior GAAP (Topic 840, Leases). ASU 2018-20 was issued to address implementation issues related to Topic 842. We adopted Topic 842 on January 1, 2019 (the “application date”), and, effective with our adoption, we elected the package of practical expedients allowing, among other provisions, for transition with no reassessment of the lease classification for any expired or existing leases. Further, we elected the available practical expedient under ASU 2018-11 that allows us to make an accounting policy election and assess whether a contract is predominantly lease or service-based and recognize the entire contract under the relevant accounting guidance. No cumulative effect adjustment to retained earnings was necessary, based on our analysis. The Narrow-Scope Improvements for Lessors under ASU 2018-20 requires NHI to exclude from variable payments, and therefore revenue, our costs paid by our tenants directly to third parties. Some of our leases require property tax and insurance costs be covered by our tenants through escrow reimbursement. We serve as the administrative agent for these escrow transactions and ASU 2018-20 requires the associated revenue and expense to be included in our consolidated financial statements. We have included $1,506,000 and $2,597,000 of reimbursements within revenue and in expenses in our Condensed Consolidated Statements of Income for the three and six months ended June 30, 2019, respectively, under the captions “Rental income“ and “Property taxes and insurance on leased properties,” respectively. The principal difference between Topic 842 and previous guidance is that, for lessees, lease assets and lease liabilities arising from operating leases will be recognized in the balance sheet. While the accounting applied by a lessor is largely unchanged from that applied under previous GAAP, changes have been made to align i) certain lessor and lessee accounting guidance, and ii) key aspects of the lessor accounting model with the revenue recognition guidance in Topic 606, Revenue from Contracts with Customers, which we adopted January 1, 2018. Under Topic 842 and unlike prior GAAP, a buyer-lessor in a sale-leaseback transaction will be required to apply the sale and leaseback guidance to determine whether the transaction qualifies as a sale. Topic 842 includes provisions which generally conform with Topic 606, and the presence of a seller-lessee repurchase option on real estate in a sale and leaseback transaction will result in recording the transaction as a financing that would otherwise meet the lease accounting requirements for buyer-lessors under previous guidance. Going forward under Topic 842, for us as lessor, existing sale-leaseback or other leases that undergo modifications may trigger reconsideration of continued accounting for the lease. NHI has largely ceased inclusion of purchase options in new sale-leaseback transactions, and there were no material effects from the change in sale-leaseback guidance as it relates to repurchase options. In April 2018, we entered into a ground lease as lessee in connection with our acquisition of certain real estate assets. In accordance with transition elections allowed under Topic 842, discussed above, we have continued to account for the lease as an operating lease. Upon adoption of the standard, as lessee we recognized a right-of-use asset and a lease liability at the adoption date. No cumulative effect adjustment to retained earnings was required to effect a net balance sheet adjustment resulting in an additional operating lease liability and right-of-use asset approximating $1,176,000, as a result of our adoption of Topic 842, which were included in the accompanying Condensed Consolidated Balance Sheet as of June 30, 2019 among “Accounts payable and accrued expenses” and “Real estate properties, net,” respectively. Consistent with present standards, upon the adoption of Topic 842, NHI continues to account for lease revenue on a straight-line basis for most leases. Under Topic 842 only initial direct costs that are incremental to the lessor are capitalized, a standard consistent with NHI’s current practice. Under provisions of ASU 2018-20, discussed above, we continue to exclude from variable payments lessor costs paid by our lessees directly to third parties, as consistent with our prior practice. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 will require more timely recognition of credit losses associated with financial assets. While current GAAP includes multiple credit impairment objectives for instruments, the previous objectives generally delayed recognition of the full amount of credit losses until the loss was probable of occurring. The amendments in ASU 2016-13, whose scope is asset-based and not restricted to financial institutions, eliminate the probable initial recognition threshold in current GAAP and, instead, reflect an entity’s current estimate of all expected credit losses. Currently, when credit losses were measured under GAAP, we generally only considered past events and current conditions in measuring the incurred loss. The amendments in ASU 2016-13 broaden the information that we must consider in developing our expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss that will be more useful to users of the financial statements. ASU 2016-13 is effective for public entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, aligns the transition requirements and clarifies that operating lease receivables are excluded from the scope of ASU 2016-13. Instead, impairment of operating lease receivables is to be accounted for under ASC 842. Because we are likely to continue to invest in loans and generate related notes receivable, adoption of ASU 2016-13 in 2020 will have an effect on our accounting for our loan investments, though the nature of those effects will depend on the composition of our loan portfolio at that time; accordingly, we are in the initial stages of evaluating the extent of the effects that adopting the provisions of ASU 2016-13 in 2020 will have on NHI.
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Subsequent Events Subsequent Events |
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Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | NOTE 11. SUBSEQUENT EVENTS Cappella Living Solutions On July 23, 2019, we acquired a 51-unit assisted living facility in Pueblo, Colorado for $7,600,000 including $100,000 of closing costs. We leased the facility to Christian Living Services, Inc., d/b/a Cappella Living Solutions, for a term of 15 years at an initial lease rate of 7.25%, with CPI escalators subject to a floor and ceiling. Discovery Effective July 1, 2019, we transitioned an Indiana, independent living/assisted living facility to Discovery, as discussed in Note 2, in conjunction with our other properties in transition. By its terms, the triple-net lease matures in June 2024 with two extension options of five years. Rent is initially based on net operating income. Beginning in 2022, rent is to reset to the greater of $1,400,000 or current market as provided by formula. For the duration of the lease, the rent, as reset, is subject to a 2.5% escalator. Concurrent with Discovery’s entrance into the lease, NHI provided a working capital loan for amounts up to $750,000 at an interest rate of 6.50%. The loan extends during the term of the lease.
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Significant Accounting Policies (Policy) |
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Consolidation, Policy | Principles of Consolidation - The accompanying condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries, joint ventures, partnerships and consolidated variable interest entities (“VIE”), if any. All intercompany transactions and balances have been eliminated in consolidation. A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. We apply Financial Accounting Standards Board (“FASB”) guidance for our arrangements with VIEs which requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of the VIE. In accordance with FASB guidance, management must evaluate each of the Company’s contractual relationships which creates a variable interest in other entities. If the Company has a variable interest and the entity is a VIE, then management must determine whether the Company is the primary beneficiary of the VIE. If it is determined that the Company is the primary beneficiary, NHI would consolidate the VIE. We identify the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. We perform this analysis on an ongoing basis. If the Company has determined that an entity is not a VIE, the Company assesses the need for consolidation under all other provisions of Accounting Standards Codification (“ASC”) Topic 810 Consolidation. These provisions provide for consolidation of majority-owned entities where a majority voting interest held by the Company demonstrates control of such entities in the absence of any legal constraints. At June 30, 2019, we held an interest in seven unconsolidated VIEs, and, because we generally lack either directly or through related parties any material input in the activities that most significantly impact their economic performance, we have concluded that NHI is not the primary beneficiary. Accordingly, we account for our transactions with these entities and their subsidiaries at amortized cost. Our VIEs are summarized below by date of initial involvement. For further discussion of the nature of the relationships, including the sources of our exposure to these VIEs, see the notes to our condensed consolidated financial statements cross-referenced below.
1 Notes, straight-line rent receivables, and unamortized lease incentives We are not obligated to provide support beyond our stated commitments to these tenants and borrowers whom we classify as VIEs, and accordingly, our maximum exposure to loss as a result of these relationships is limited to the amount of our commitments, as shown above and discussed in the notes. When the above relationships involve leases, some additional exposure to economic loss is present. Generally, additional economic loss on a lease, if any, would be limited to that resulting from a short period of arrearage and non-payment of monthly rent before we are able to take effective remedial action, as well as costs incurred in transitioning the lease to a new tenant. The potential extent of such loss will be dependent upon individual facts and circumstances, cannot be quantified, and is therefore not included in the tabulation above. Typically, the only carrying amounts involving our leases are accumulated straight-line receivables and unamortized lease incentives. For VIE relationships listed above without a note reference, refer to our financial statements included in our most recent Annual Report on Form 10-K for the year ended December 31, 2018.
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Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents and Restricted Cash - Cash equivalents consist of all highly liquid investments with an original maturity of three months or less. Restricted cash includes amounts required to be held on deposit in accordance with agency agreements governing our Fannie Mae and HUD mortgages. The following table sets forth our cash, cash equivalents and restricted cash reported within the Company’s Condensed Consolidated Statements of Cash Flows (in thousands):
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Lessor, Leases [Policy Text Block] | Leases - For operating leases entered into during 2019, we record under the guidance of ASC Topic 842, Leases. Our leases generally have an initial leasehold term of 10 to 15 years followed by one or more 5-year tenant renewal options. The leases are “triple net leases” under which the tenant is responsible for the payment of all taxes, utilities, insurance premiums, repairs and other charges relating to the operation of the properties, including required levels of capital expenditures each year. The tenant is obligated at its expense to keep all improvements, fixtures and other components of the properties covered by “all risk” insurance in an amount equal to at least the full replacement cost thereof, and to maintain specified minimal personal injury and property damage insurance, protecting us as well as the tenant. The leases also require the tenant to indemnify and hold us harmless from all claims resulting from the use, occupancy and related activities of each property by the tenant, and to indemnify us against all costs related to any release, discovery, clean-up and removal of hazardous substances or materials, or other environmental responsibility with respect to each facility. These provisions, along with a growing senior demographic and the historical propensity for real estate to hold its value, collectively constitute much of the means by which the risk associated with the residual value of our properties is mitigated. Additionally, in monitoring the performance of our properties, we are positioned to respond appropriately to declines in physical plant or tenant performance. While we do not incorporate residual value guarantees, the above lease provisions and considerations inform our expectation of realizable value from our properties upon the expiration of their lease terms. The residual value of our real estate under lease is still subject to various market, asset, and tenant-specific risks and characteristics. As the classification of our leases is dependent on the fair value of estimated cash flows at lease commencement, residual values represent significant assumptions in our accounting for operating leases. Similarly, the exercise of options is also subject to these same risks, making a tenant’s lease term another significant variable in a lease’s cash flows. Most of our existing leases contain annual fixed escalators in rent payments, and, for financial statement purposes, rental income is recognized on a straight-line basis over the term of the lease. Other operators lease from us under leases that provide for variable escalation in lease payments based on contingent factors not determinable in advance. Principally, two operators with leases based on variable escalators constitute 20% of our total revenue and are derived from either an index applied to the measured level of operations or the consumer price index. Additionally, we derive variable payments from those operators discussed under the sub-heading “Tenant Transition” for which variable payments are determined as a percentage of the tenant’s net operating income. Our variable revenue from these operators is recognized when received. A summary of future minimum lease payments as of June 30, 2019, can be found in Note 2.
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Use of Estimates, Policy | Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Reclassification, Policy | Reclassifications - We have reclassified certain balances where necessary to conform the presentation of prior periods to the current period. These reclassifications had no effect on previously reported net income.
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New Accounting Pronouncements, Policy | New Accounting Pronouncements - For a review of recent accounting pronouncements pertinent to our operations and management’s judgment as to the impact that the eventual adoption of these pronouncements will have on our financial position and results of operations, see Note 10.
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Significant Accounting Policies Significant Accounting Policies (Schedule of Variable Interest Entities) (Tables) |
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Variable Interest Entity, Not Primary Beneficiary, Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities [Table Text Block] | Our VIEs are summarized below by date of initial involvement. For further discussion of the nature of the relationships, including the sources of our exposure to these VIEs, see the notes to our condensed consolidated financial statements cross-referenced below.
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Significant Accounting Policies Schedule of Cash (Tables) |
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Schedule of Cash, Cash Equivalents and Restricted Cash [Table Text Block] | The following table sets forth our cash, cash equivalents and restricted cash reported within the Company’s Condensed Consolidated Statements of Cash Flows (in thousands):
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Real Estate (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | Presented in the following table are future minimum lease payments, as of June 30, 2019, to be received by us under our operating leases, as determined under ASC 842 (in thousands):
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New Real Estate Investments [Table Text Block] | During the six months ended June 30, 2019, we made the following real estate investments and commitments as described below ($ in thousands):
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Schedule of Bickford Leases [Table Text Block] | As of June 30, 2019, our Bickford Senior Living (“Bickford”) lease portfolio consists of the following ($ in thousands):
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Summary of NHC Percentage Rent [Table Text Block] | The following table summarizes the percentage rent income from NHC (in thousands):
1 For purposes of the percentage rent calculation described in the master lease agreement, NHC’s annual revenue by facility for a given year is certified to NHI by March 31st of the following year.
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Schedule of Tenant Purchase Options [Table Text Block] | A summary of these tenant options is presented below ($ in thousands):
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Mortgage And Other Notes Receivable Mortgage and Other Notes Receivable (Schedule of Bickford Construction Loans) (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bickford Senior Living [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | At June 30, 2019, our construction loans to Bickford are summarized as follows:
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Other Assets (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets [Table Text Block] | Other assets consist of the following (in thousands):
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Debt (Tables) |
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Debt Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Debt consists of the following (in thousands):
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Schedule of Maturities of Long-term Debt | Aggregate principal maturities of debt as of June 30, 2019, and for each of the next five years and thereafter are as follows (in thousands):
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Schedule of Unsecured Term Loans | Our unsecured private placement term loans, payable interest-only, are summarized below (in thousands):
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Schedule of Interest Expense | The following table summarizes interest expense (in thousands):
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Schedule of Interest Rate Derivatives | As of June 30, 2019, we employ the following interest rate swap contracts to mitigate our interest rate risk on our bank term and revolver loans described above (dollars in thousands):
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Commitments And Contingencies Commitments and Contingencies (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loan Commitments [Table Text Block] |
See Note 3 to our condensed consolidated financial statements for full details of our loan commitments. As provided above, loans funded do not include the effects of discounts or commitment fees. |
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Schedule of Lease Commitments [Table Text Block] |
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Schedule of Loss Contingencies [Table Text Block] |
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Stock-Based Compensation (Tables) |
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Deferred Compensation Arrangements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:
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Schedule of Stock Option Activity | The following table summarizes our outstanding stock options:
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Earnings and Dividends Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table summarizes the average number of common shares and the net income used in the calculation of basic and diluted earnings per common share (in thousands, except share and per share amounts):
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Fair Value Of Financial Instruments Fair Value Of Financial Instruments (Tables) |
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Fair Value Of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured on Recurring Basis | Assets and liabilities measured at fair value on a recurring basis are as follows (in thousands):
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Fair Value Measurements, Nonrecurring [Table Text Block] | Carrying amounts and fair values of financial instruments that are not carried at fair value at June 30, 2019 and December 31, 2018 in the Condensed Consolidated Balance Sheets are as follows (in thousands):
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Significant Accounting Policies Significant Accounting Policies (Details) |
6 Months Ended |
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Jun. 30, 2019
properties
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Lessor, Lease, Description [Line Items] | |
Lessor, Operating Lease, Renewal Term | 5 years |
Variable Interest Entity Number Of Entities Not Primary Beneficiary | 7 |
Minimum [Member] | |
Lessor, Lease, Description [Line Items] | |
Lessor, Operating Lease, Term of Contract | 10 years |
Maximum [Member] | |
Lessor, Lease, Description [Line Items] | |
Lessor, Operating Lease, Term of Contract | 15 years |
Variable Lease Escalation [Member] | |
Lessor, Lease, Description [Line Items] | |
Percentage of Continuing Revenue | 20.00% |
Significant Accounting Policies Schedule of Cash (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
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Schedule of Cash [Abstract] | ||||
Cash and cash equivalents | $ 5,635 | $ 3,045 | ||
Restricted cash | 10,903 | $ 5,253 | 5,404 | |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 16,538 | $ 9,912 | $ 8,449 | $ 8,075 |
Real Estate Schedule of New Real Estate Investments (Details) |
6 Months Ended |
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Jun. 30, 2019
USD ($)
properties
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Real Estate Investments During The Period | $ 242,850,000 |
Wingate Healthcare [Member] | |
Number Of Real Estate Properties Acquired | properties | 1 |
Real Estate Investments During The Period | $ 52,200,000 |
Holiday Lease Amendment [Member] | |
Number Of Real Estate Properties Acquired | properties | 1 |
Real Estate Investments During The Period | $ 38,000,000 |
Comfort Care Senior Living [Member] | April 2019 [Member] | |
Number Of Real Estate Properties Acquired | properties | 1 |
Real Estate Investments During The Period | $ 10,800,000 |
Comfort Care Senior Living [Member] | May 2019 [Member] | |
Number Of Real Estate Properties Acquired | properties | 1 |
Real Estate Investments During The Period | $ 13,500,000 |
Discovery Senior Living [Member] | |
Number Of Real Estate Properties Acquired | properties | 6 |
Real Estate Investments During The Period | $ 128,350,000 |
Real Estate (Summary of NHC Percentage Rent) (Details) - National Healthcare Corporation [Member] - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Total percentage rent income | $ 924 | $ 853 | $ 2,135 | $ 1,991 |
Current year [Member] | ||||
Total percentage rent income | 924 | 853 | 1,801 | 1,706 |
Prior year final certification [Member] | ||||
Total percentage rent income | $ 0 | $ 0 | $ 334 | $ 285 |
Real Estate Real Estate (Schedule of Future Minimum Lease Payments) (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
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Schedule of Future Minimum Lease Payments [Abstract] | |
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 268,472 |
Operating Leases, Future Minimum Payments, Due in Two Years | 267,735 |
Operating Leases, Future Minimum Payments, Due in Three Years | 269,959 |
Operating Leases, Future Minimum Payments, Due in Four Years | 270,658 |
Operating Leases, Future Minimum Payments, Due in Five Years | 259,637 |
Operating Leases, Future Minimum Payments, Due Thereafter | 1,655,040 |
Operating Leases, Future Minimum Payments Due | $ 2,991,501 |
Other Assets (Schedule of Other Assets) (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
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Equity Method Investments And Other Assets [Abstract] | |||
Accounts receivable and other assets | $ 2,962 | $ 6,381 | |
Regulatory escrows | 8,208 | 8,208 | |
Unamortized lease incentive payments | 9,673 | 7,456 | |
Restricted cash | 10,903 | 5,253 | $ 5,404 |
Other Assets | $ 31,746 | $ 27,298 |
Debt (Schedule of Debt) (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Revolving credit facility - unsecured | $ 273,000 | $ 84,000 |
Bank term loans - unsecured | 400,000 | |
Convertible senior notes - unsecured | 118,996 | 118,609 |
Unamortized loan costs | (8,611) | (9,884) |
Debt, Long-term and Short-term, Combined Amount | 1,471,787 | 1,281,675 |
Bank Term Loans [Member] | ||
Debt Instrument [Line Items] | ||
Bank term loans - unsecured | 550,000 | 550,000 |
Private Placement Term Loans [Member] | ||
Debt Instrument [Line Items] | ||
Bank term loans - unsecured | 400,000 | 400,000 |
Debt Instrument, Name, HUD Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Secured Debt | 42,526 | 42,906 |
Debt Instrument, Name, Fannie Mae Term Loans [Member] | ||
Debt Instrument [Line Items] | ||
Secured Debt | $ 95,876 | $ 96,044 |
Debt Debt (Schedule of Debt) (Captions) (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Debt Instrument, Unamortized Discount | $ (2,282) | |
Debt Instrument, Name, Q3 2014 HUD Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Unamortized Discount | (1,278) | $ (1,320) |
Debt Instrument, Name, Convertible Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Unamortized Discount | $ (1,004) | $ (1,391) |
Debt Debt (Schedule of Maturities of Long-term Debt) (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Schedule of Maturities of Long-term Debt [Abstract] | ||
Long-term Debt, Maturities, Repayments of Principal in Next Rolling Twelve Months | $ 1,208 | |
Long-term Debt, Maturities, Repayments of Principal in Rolling Year Two | 121,256 | |
Long-term Debt, Maturities, Repayments of Principal in Next Rolling Year Three | 1,303 | |
Long-term Debt, Maturities, Repayments of Principal in Rolling Year Four | 649,353 | |
Long-term Debt, Maturities, Repayments of Principal in Rolling Year Five | 351,402 | |
Long-term Debt, Maturities, Repayments of Principal in Rolling after Year Five | 358,158 | |
Long-term Debt, Gross | 1,482,680 | |
Debt Instrument, Unamortized Discount | (2,282) | |
Unamortized loan costs | (8,611) | $ (9,884) |
Debt, Long-term and Short-term, Combined Amount | $ 1,471,787 | $ 1,281,675 |
Debt Debt (Schedule of Unsecured Term Loans) (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Unsecured Debt | $ 400,000 | |
Private Placement [Member] | ||
Unsecured Debt | 400,000 | $ 400,000 |
January 2023 [Member] | ||
Unsecured Debt | $ 125,000 | |
Debt Instrument, Interest Rate, Stated Percentage | 3.99% | |
November 2023 [Member] | ||
Unsecured Debt | $ 50,000 | |
Debt Instrument, Interest Rate, Stated Percentage | 3.99% | |
September 2024 [Member] | ||
Unsecured Debt | $ 75,000 | |
Debt Instrument, Interest Rate, Stated Percentage | 3.93% | |
November 2025 [Member] | ||
Unsecured Debt | $ 50,000 | |
Debt Instrument, Interest Rate, Stated Percentage | 4.33% | |
January 2027 [Member] | ||
Unsecured Debt | $ 100,000 | |
Debt Instrument, Interest Rate, Stated Percentage | 4.51% |
Debt (Schedule of Interest Expense) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Schedule of Interest Expense [Abstract] | ||||
Interest expense on debt at contractual rates | $ 13,355 | $ 11,414 | $ 26,429 | $ 21,941 |
Losses reclassified from accumulated other comprehensive income (loss) into interest expense | 349 | 76 | 641 | 352 |
Capitalized interest | (158) | (47) | (315) | (71) |
Amortization of debt issuance costs and debt discount | 898 | 777 | 1,791 | 1,612 |
Total Interest Expense | $ 13,746 | $ 12,220 | $ 27,264 | $ 23,834 |
Commitments And Contingencies (Details) |
6 Months Ended | |
---|---|---|
Jun. 30, 2019
USD ($)
properties
|
Dec. 31, 2018
USD ($)
|
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Document Period End Date | Jun. 30, 2019 | |
Unamortized lease incentive payments | $ 9,673,000 | $ 7,456,000 |
Bickford Development Properties [Member] | ||
Number Of Development Projects Active | properties | 5 | |
Developer Incentive Payments | $ 250,000 | |
Unamortized lease incentive payments | $ 1,750,000 |
Stock-Based Compensation Stock-Based Compensation (Schedule of Stock Option Valuation Assumptions) (Details) |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
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Schedule of Stock Option Valuation Assumptions [Abstract] | ||
Dividend yield | 5.50% | 6.50% |
Expected volatility | 18.60% | 19.40% |
Expected lives | 2 years 10 months 24 days | 2 years 10 months 24 days |
Risk-free interest rate | 2.50% | 2.39% |
Stock-Based Compensation (Schedule Of Stock Option Activity) (Details) - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Options outstanding January 1, | 920,346 | 859,182 |
Options outstanding, June 30, | 1,154,516 | 1,310,012 |
Exercisable at June 30, | 663,997 | 854,990 |
2012 Plan [Member] | ||
Options granted under 2012 Plan | 602,000 | 560,000 |
Options exercised under 2012 Plan | (367,830) | (94,170) |
Options forfeited under 2012 Plan | 0 | (15,000) |
Earnings and Dividends Per Share (Summary Of Calculation Of Basic And Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Earnings Per Share [Abstract] | ||||||
Net income (loss) attributable to common stockholders | $ 39,979 | $ 37,839 | $ 75,658 | $ 76,271 | ||
Net income | $ 39,978 | $ 37,839 | $ 75,657 | $ 76,271 | ||
BASIC: | ||||||
Weighted average common shares outstanding | 43,232,384 | 41,704,819 | 43,029,104 | 41,618,487 | ||
Net income per common share - basic | $ 0.92 | $ 0.91 | $ 1.76 | $ 1.83 | ||
DILUTED: | ||||||
Weighted average common shares outstanding | 43,232,384 | 41,704,819 | 43,029,104 | 41,618,487 | ||
Stock options | 66,145 | 57,759 | 70,920 | 51,241 | ||
Convertible subordinated debentures | 199,492 | 24,251 | 211,503 | 12,126 | ||
Weighed average dilutive common shares outstanding | 43,498,021 | 41,786,829 | 43,311,527 | 41,681,854 | ||
Net income per common share - diluted | $ 0.92 | $ 0.91 | $ 1.75 | $ 1.83 | ||
Incremental shares excluded since anti-dilutive: | ||||||
Net share effect of stock options with an exercise price in excess of the average market price for our common shares | 40,173 | 33,554 | 21,227 | 50,952 | ||
Regular dividends declared per common share | $ 1.05 | $ 1.05 | $ 1.00 | $ 1.00 | $ 2.10 | $ 2.00 |
Fair Value Of Financial Instruments (Schedule Of Assets And Liabilities Measured On A Recurring Basis) (Details) - Fair Value, Inputs, Level 2 [Member] - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Interest rate swap asset | $ 49 | $ 1,297 |
Interest rate swap liability | $ (3,510) | $ 0 |
Recent Accounting Pronouncements Recent Accounting Pronouncements (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Recent Accounting Pronouncements [Abstract] | ||||
Lessor Property Costs Paid From Tenant Escrow | $ 1,506,000 | $ 0 | $ 2,597,000 | $ 0 |
Operating Lease, Right-of-Use Asset | $ 1,176,000 | $ 1,176,000 |
Label | Element | Value |
---|---|---|
Stock Issued During Period, Value, Stock Options Exercised | us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised | $ 1,000 |
Stock Issued During Period, Value, Stock Options Exercised | us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised | 0 |
Noncontrolling Interest, Increase from Subsidiary Equity Issuance | us-gaap_NoncontrollingInterestIncreaseFromSubsidiaryEquityIssuance | 642,000 |
Dividends, Common Stock, Cash | us-gaap_DividendsCommonStockCash | 45,525,000 |
Dividends, Common Stock, Cash | us-gaap_DividendsCommonStockCash | 45,359,000 |
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation | us-gaap_AdjustmentsRelatedToTaxWithholdingForShareBasedCompensation | 10,000 |
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation | us-gaap_AdjustmentsRelatedToTaxWithholdingForShareBasedCompensation | $ 1,006,000 |
Stock Issued During Period, Shares, New Issues | us-gaap_StockIssuedDuringPeriodSharesNewIssues | 155,729 |
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture | us-gaap_StockIssuedDuringPeriodSharesShareBasedCompensation | 35,982 |
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture | us-gaap_StockIssuedDuringPeriodSharesShareBasedCompensation | 1,971 |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | $ 35,913,000 |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | 11,942,000 |
Share-based Payment Arrangement, Noncash Expense | us-gaap_ShareBasedCompensation | 2,001,000 |
Share-based Payment Arrangement, Noncash Expense | us-gaap_ShareBasedCompensation | 477,000 |
Parent [Member] | ||
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | 36,178,000 |
Stock Issued During Period, Value, Stock Options Exercised | us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised | 1,000 |
Stock Issued During Period, Value, Stock Options Exercised | us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised | 0 |
Noncontrolling Interest, Increase from Subsidiary Equity Issuance | us-gaap_NoncontrollingInterestIncreaseFromSubsidiaryEquityIssuance | 0 |
Dividends, Common Stock, Cash | us-gaap_DividendsCommonStockCash | 45,525,000 |
Dividends, Common Stock, Cash | us-gaap_DividendsCommonStockCash | 45,359,000 |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | us-gaap_ComprehensiveIncomeNetOfTax | 34,722,000 |
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation | us-gaap_AdjustmentsRelatedToTaxWithholdingForShareBasedCompensation | (1,006,000) |
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation | us-gaap_AdjustmentsRelatedToTaxWithholdingForShareBasedCompensation | (10,000) |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | 35,913,000 |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | 11,942,000 |
Share-based Payment Arrangement, Noncash Expense | us-gaap_ShareBasedCompensation | 2,001,000 |
Share-based Payment Arrangement, Noncash Expense | us-gaap_ShareBasedCompensation | $ 477,000 |
Common Stock [Member] | ||
Stock Issued During Period, Shares, New Issues | us-gaap_StockIssuedDuringPeriodSharesNewIssues | 462,925 |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | $ 5,000 |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | 2,000 |
AOCI Attributable to Parent [Member] | ||
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | (3,801,000) |
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | (957,000) |
Noncontrolling Interest [Member] | ||
Stock Issued During Period, Value, Stock Options Exercised | us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised | 0 |
Stock Issued During Period, Value, Stock Options Exercised | us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised | 0 |
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | us-gaap_ComprehensiveIncomeNetOfTaxAttributableToNoncontrollingInterest | 0 |
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | us-gaap_ComprehensiveIncomeNetOfTaxAttributableToNoncontrollingInterest | (1,000) |
Noncontrolling Interest, Increase from Subsidiary Equity Issuance | us-gaap_NoncontrollingInterestIncreaseFromSubsidiaryEquityIssuance | 642,000 |
Dividends, Common Stock, Cash | us-gaap_DividendsCommonStockCash | 0 |
Dividends, Common Stock, Cash | us-gaap_DividendsCommonStockCash | 0 |
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation | us-gaap_AdjustmentsRelatedToTaxWithholdingForShareBasedCompensation | 0 |
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation | us-gaap_AdjustmentsRelatedToTaxWithholdingForShareBasedCompensation | 0 |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | 0 |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | 0 |
Share-based Payment Arrangement, Noncash Expense | us-gaap_ShareBasedCompensation | 0 |
Share-based Payment Arrangement, Noncash Expense | us-gaap_ShareBasedCompensation | 0 |
Retained Earnings, Appropriated [Member] | ||
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | 35,679,000 |
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | 39,979,000 |
Dividends, Common Stock, Cash | us-gaap_DividendsCommonStockCash | 45,525,000 |
Dividends, Common Stock, Cash | us-gaap_DividendsCommonStockCash | 45,359,000 |
Additional Paid-in Capital [Member] | ||
Stock Issued During Period, Value, Stock Options Exercised | us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised | 1,000 |
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation | us-gaap_AdjustmentsRelatedToTaxWithholdingForShareBasedCompensation | (10,000) |
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation | us-gaap_AdjustmentsRelatedToTaxWithholdingForShareBasedCompensation | (1,006,000) |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | 11,940,000 |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | 35,908,000 |
Share-based Payment Arrangement, Noncash Expense | us-gaap_ShareBasedCompensation | 477,000 |
Share-based Payment Arrangement, Noncash Expense | us-gaap_ShareBasedCompensation | $ 2,001,000 |
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