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OTHER INVESTMENTS
12 Months Ended
Dec. 31, 2018
Other Investments [Abstract]  
OTHER INVESTMENTS

NOTE 6 - OTHER INVESTMENTS

A summary of our other investments is as follows:

 

 

 

 

 

 

 

 

 

 

December 31, 

 

 

2018

    

2017

 

 

(in thousands)

Other investment notes due 2018-2022; interest at 9.91% (1)

 

$

40,242

 

$

15,115

Other investment note due 2019; interest at 9.35%

 

 

131,452

 

 

 —

Other investment notes due 2020; interest at 13.06% (1)

 

 

71,036

  

 

49,490

Other investment notes due 2023; interest at 7.32% (1)

 

 

65,000

  

 

64,050

Other investment note due 2023; interest at 12.00%

 

 

59,454

  

 

49,708

Other investment notes due 2024-2025; interest at 8.38% (1)

 

 

46,287

  

 

31,987

Other investment notes outstanding (2)

 

 

91,155

  

 

66,365

Other investments, gross

 

 

504,626

  

 

276,715

Allowance for loss on other investments (3)

 

 

 —

  

 

(373)

Total other investments

 

$

504,626

 

$

276,342


(1)

Approximate weighted average interest rate as of December 31, 2018.

(2)

Other investment notes have a weighted average interest rate of 8.06% and maturity dates through 2028.

(3)

The allowance for loss on other investments relates to one loan with an operator that has been fully reserved at December 31, 2017 and written off during 2018.

 

Other investment notes due 2018 - 2022

 

In March 2018, we agreed to provide senior secured superpriority DIP financing to Orianna consisting of a $14.2 million term loan and a $15.8 million revolving credit facility.  The DIP financing has been approved by the Bankruptcy Court.  The DIP financing is secured by a security interest in and liens on substantially all of Orianna’s existing and future real and personal property.  The $14.2 million term loan bears interest at 1-month LIBOR plus 5.5% per annum and matured on September 30, 2018. The $15.8 million revolving credit facility bears interest at 1-month LIBOR plus 9.0% per annum and matured on September 30, 2018.  The borrowings under the revolving credit facility were used for general business expenses and other uses permitted under the loan documents. 

 

On July 23, 2018, Omega notified Orianna that it was in default under the DIP financing and, as a result of such default, Omega (a) declared the amounts owing under the DIP financing to be immediately due and payable, (b) terminated the DIP financing and any further commitment of Omega to extend credit to Orianna under the DIP financing, and (c) restricted Orianna’s use of cash collateral solely to payment of those amounts contained in a budget approved by Omega.  Omega also informed Orianna that while Omega did not (as of such date) intend to immediately collect amounts owing under the DIP financing, Omega may at any time in the future exercise further rights and remedies under the DIP financing.  As of December 31, 2018, approximately $14.2 million was outstanding on this term loan and $10.8 million was outstanding on this revolving credit facility.  In January 2019, Orianna repaid the DIP financing and permanently terminated our commitment under the DIP.  See Note 4 – Direct Financing Leases.

In May 2017, we provided Orianna an $18.8 million maximum borrowing secured revolving working capital loan that  bears interest at 9% per annum (with one-half (1/2) of all accrued interest to be paid-in-kind and added to the loan balance) and matures on April 30, 2022.  This revolving working capital loan has a default rate of 5% per annum.    As of December 31, 2018, approximately $15.2 million is outstanding on this revolving working capital loan.  Pursuant to the Bankruptcy Court’s interim order approving the DIP financing, Orianna is obligated to pay one-half (1/2) of all accrued post-bankruptcy interest payable on this revolving working capital loan at the default rate.  See Note 4 – Direct Financing Leases.  As of December 31, 2018, our total other investments outstanding with Orianna was approximately $40.2 million.

Other investment note due 2019

On September 28, 2018, we provided a $131.3 million secured term loan to an unrelated third party.  The loan is secured by a collateral assignment of mortgages covering seven SNFs, three independent living facilities and one ALF.  The loan bears interest at 9.35% per annum and matures on February 28, 2019, subject to a one-time 90-day extension.  In February 2019, the loan was extended to May 31, 2019.  The loan requires monthly interest payments with the principal balance due at maturity.  The borrower used the proceeds to repay existing indebtedness and pay a one-time distribution to its equity holders.  In connection with this loan we incurred approximately $0.4 million of origination costs which are deferred and recognized over the term of the loan.  The outstanding balance on this loan was $131.5 million including origination costs at December 31, 2018.          

Other investment notes due 2020

On July 29, 2016, we provided Genesis HealthCare, Inc. (“Genesis”) a $48.0 million secured term loan bearing interest at LIBOR with a floor of 1% plus 13% maturing on July 29, 2020.  The $48.0 million term loan (and the $16.0 million term loan discussed below) is secured by a perfected first priority lien on and security interest in certain collateral of Genesis.  The term loan required monthly principal payments of $0.25 million through July 2019, and $0.5 million from August 2019 through maturity.  In addition, a portion of the monthly interest accrued to the outstanding principal balance of the loan.  In November 2017, we provided Genesis forbearance through February 2018.  The forbearance allowed for the deferral of principal payments and permitted Genesis to accrue all interest due to the outstanding principal balance of the loan. 

 

On March 6, 2018, we amended certain terms of the $48.0 million secured term loan.  As of February 22, 2018, the $48.0 million term loan bears interest at a fixed rate of 14% per annum, of which 9% per annum will be paid-in-kind.  Additionally, the amended term loan does not require monthly payments of principal.  All principal and accrued and unpaid interest will be due at maturity on July 29, 2020.  As of December 31, 2018, approximately $54.4 million is outstanding on this term loan.   

 

Also on March 6, 2018, we provided Genesis an additional $16.0 million secured term loan bearing interest at a fixed rate of 10% per annum, of which 5% per annum will be paid-in-kind and matures on July 29, 2020.  As of December 31, 2018, approximately $16.6 million is outstanding on this term loan.  As of December 31, 2018, our total other investments outstanding with Genesis was approximately $71.0 million. 

 

Other investment note due 2023

 

On June 30, 2015, we entered into a $50.0 million secured revolving credit facility with subsidiaries of an existing operator. The note bears interest at approximately 6.66% per annum and matures in 2023.   As of December 31, 2018, $50.0 million has been drawn and remains outstanding.

 

On May 17, 2017, we entered into a separate secured $15.0 million revolving credit facility with subsidiaries of an existing operator. The note bears interest at 9.5% per annum and matures in 2023.   As of December 31, 2018, $15.0 million has been drawn and remains outstanding.

Other investment note due 2023

 

On February 26, 2016, we acquired and funded a $50.0 million mezzanine loan at a discount of approximately $0.75 million.  In May 2018, the Company amended the mezzanine loan with the borrower which is secured by an equity interest in subsidiaries of the borrower.  As part of the refinancing, the Company increased the mezzanine loan by $10.0 million, extended the maturity date to May 31, 2023 and fixed the interest rate at 12% per annum.  The mezzanine loan requires semi-annual principal payments of $2.5 million commencing December 31, 2018.  As of December 31, 2018, our total other investments outstanding with this borrower was approximately $59.5 million.  In connection with the amendment, the Company recognized fees of approximately $1.1 million of which $0.5 million was paid at closing with the remainder due at maturity.  The discount and loan fees are deferred and are being recognized on an effective basis over the term of the loan.

 

Other investment note due 2024-2025

 

On September 30, 2016, we acquired and amended a term loan with a fair value of approximately $37.0 million with Agemo Holdings LLC (“Agemo” an entity formed in May 2018 to silo the leases and loans formerly held by Signature Healthcare).  A $5.0 million tranche of the term loan that bore interest at 13% per annum was repaid in August 2017.  The remaining $32.0 million tranche of the term loan bears interest at 9% per annum and currently matures on December 31, 2024.  The $32.0 million term loan (and the $25.0 million working capital loan discussed below) is secured by a security interest in the collateral of Agemo.   

 

On May 7, 2018, the Company provided Agemo a $25.0 million secured working capital loan bearing interest at 7% per annum that matures on April 30, 2025.  The proceeds of the working capital loan were used to pay operating expenses, settlement payments, fees, taxes and other costs approved by the Company.  As of December 31, 2018, approximately $14.3 million is outstanding on this working capital loan.  Our total loans outstanding with Agemo at December 31, 2018 approximate $46.3 million.  On May 7, 2018, the Company also provided principals of Agemo a one year unsecured $2.8 million loan.  The proceeds were used to pay down the Company’s contractual receivables outstanding.