Real Estate Leases and Mortgage Notes Receivable

Real Estate Leases

The Company’s properties are generally leased pursuant to non-cancelable, fixed-term operating leases or are supported through other financial support arrangements with expiration dates through 2032. Some leases and financial arrangements provide for fixed rent renewal terms of five years, or multiples thereof, in addition to market rent renewal terms. Some leases provide the lessee, during the term of the lease and for a short period thereafter, with an option or a right of first refusal to purchase the leased property. The Company’s portfolio of single-tenant net leases generally requires the lessee to pay minimum rent, additional rent based upon fixed percentage increases or increases in the Consumer Price Index and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property.

Future minimum lease payments under the non-cancelable operating leases and guaranteed amounts due to the Company under property operating agreements as of December 31, 2012 are as follows (in thousands):



2013	$	244,962
2014	209,284
2015	173,317
2016	145,453
2017	118,106
2018 and thereafter	446,027
	$	1,337,149

Customer Concentrations

The Company’s real estate portfolio is leased to a diverse tenant base. The Company did not have any customers that accounted for 10% or more of the Company's revenues, including discontinued operations for the years ended December 31, 2012 or 2010. The Company had only one customer, Baylor Health System, that accounted for 10% of the Company’s revenues, including revenues from discontinued operations, for the year ended December 31, 2011.

As of December 31, 2012, 73.0% or $118.4 million, of the Company's outstanding construction mortgage notes were due from affiliates of the United Trust Fund, which is developing two build-to-suit facilities in Oklahoma and Missouri that are fully leased to Mercy Health. Also, one mortgage note receivable totaling approximately $40.0 million, or 24.7% of the Company’s mortgage notes receivable, was due from LB Properties X, LLC and is secured by an office building in Iowa. A detailed mortgage notes receivable table is included in the Mortgage Notes Receivable section below.

Mortgage Notes Receivable

All of the Company’s mortgage notes receivable are classified as held-for-investment based on management’s intent and ability to hold the loans until maturity. As such, the loans are carried at amortized cost. Also, all of the Company’s mortgage notes receivable are secured by existing buildings or buildings under construction. Approximately $78.3 million and $19.2 million respectively, were funded on existing construction mortgage loans during the years ended December 31, 2012 and 2011. A summary of the Company’s mortgage notes receivable is shown in the table below:



								Balance at
	State	Property Type (1)	Face Amount		Interest Rate		Maturity Date	December 31, 2012		December 31, 2011
(Dollars in thousands)
	Construction mortgage notes:
	Missouri	Inpatient	$	111,400	6.75	%	12/31/13	$	61,599	$	20,559
	Oklahoma	MOB	91,179		6.75	%	12/31/13	56,842		19,896
	Texas	MOB	12,444		8.10	%	—	—		9,547
	Iowa	MOB	2,136		11.00	%	—	—		1,469
	Total construction mortgage notes							118,441		51,471

	Other mortgage notes:
	Iowa	Other	$	40,000	7.70	%	01/10/14	40,000		40,000
	Florida	MOB	3,750		7.50	%	04/10/15	3,750		—
	Iowa	MOB	3,700		8.00	%	—	—		3,230
	Florida	MOB	2,700		7.00	%	—	—		2,680
	Total other mortgage notes							43,750		45,910

	Total Mortgage notes receivable							$	162,191	$	97,381

(1) MOB - Medical office building.

Purchase Option Provisions

Certain of the Company’s leases include purchase option provisions. The provisions vary from lease to lease but generally allow the lessee to purchase the property covered by the lease at the greater of fair market value or an amount equal to the Company’s gross investment. The Company had approximately $206.3 million in real estate properties as of December 31, 2012 that were subject to exercisable purchase options or that become exercisable during 2013. In January 2013, the Company received notice of purchase option exercises on two inpatient rehabilitation facilities. See Potential Dispositions in Note 4 for more details.