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MORTGAGE NOTES RECEIVABLE

3 Months Ended

Mar. 31, 2017

Mortgage Notes Receivable Investments [Abstract]

NOTE 4 – MORTGAGE NOTES RECEIVABLE

As of March 31, 2017, mortgage notes receivable relate to 27 fixed rate mortgages on 49 long-term care facilities. The mortgage notes are secured by first mortgage liens on the borrowers’ underlying real estate and personal property. The mortgage notes receivable relate to facilities located in ten states that are operated by eight independent healthcare operating companies. We monitor compliance with mortgages and when necessary have initiated collection, foreclosure and other proceedings with respect to certain outstanding mortgage notes.

Mortgage interest income is recognized as earned over the terms of the related mortgage notes, using the effective yield method. Allowances are provided against earned revenues from mortgage interest when collection of amounts due becomes questionable or when negotiations for restructurings of troubled operators lead to lower expectations regarding ultimate collection. When collection is uncertain, mortgage interest income on impaired mortgage loans is recognized as received after taking into account the application of security deposits.

The outstanding principal amounts of mortgage notes receivable, net of allowances, were as follows:

	March 31,			December 31,
	2017			2016
	(in thousands)

Mortgage note due 2024; interest at 9.98%	$	112,500		$	112,500
Mortgage note due 2029; interest at 9.45%		411,807			412,140
Other mortgage notes outstanding ⁽¹⁾		124,323			118,637
Mortgage notes receivable, gross		648,630			643,277
Allowance for loss on mortgage notes receivable		(3,934	)		(3,934	)
Total mortgages — net	$	644,696		$	639,343

⁽¹⁾

Other mortgage notes outstanding have stated interest rates ranging from 8.35% to 12.0% and maturity dates through 2029.