Commitments and Contingencies

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Construction Mortgage Loans

As of December 31, 2013, the Company had a remaining funding commitment totaling $14.9 million on one mortgage construction loan affiliated with Mercy Health that the Company expects will be funded during 2014.

Other Construction

As of December 31, 2013, the Company had remaining funding commitments of tenant improvement allowances related to first generation tenant improvements ranging between $26.5 million and $31.7 millionon properties that were acquired in 2013 or developed by the Company.

The Company may provide a tenant improvement allowance in new or renewal leases for the purpose of refurbishing or renovating tenant space. As of December 31, 2013, the Company had approximately $5.5 million that is expected to be spent on tenant improvements related second generation space throughout the portfolio.

Operating Leases

As of December 31, 2013, the Company was obligated under operating lease agreements consisting primarily of the Company’s corporate office lease and ground leases related to 44 real estate investments with expiration dates through 2101. The Company’s corporate office lease currently covers approximately 30,934 square feet of rented space and expires on October 31, 2020. An amendment to this lease for expansion space consisting of approximately 5,719 square feet will commence on April 1, 2014 and will expire on October 31, 2020. Annual base rent on the corporate office lease increases approximately 3.25% annually. The Company’s ground leases generally increase annually based on increases in the consumer price index. Rental expense relating to the operating leases for the years ended December 31, 2013, 2012 and 2011 was $4.4 million, $4.3 million and $4.3 million, respectively. The Company prepaid certain of its ground leases which represented approximately $0.5 million, $0.5 million and $0.4 million of the Company’s rental expense for the years ended December 31, 2013, 2012, and 2011, respectively. The Company’s future minimum lease payments for its operating leases, excluding leases that the Company has prepaid and leases in which an operator pays or fully reimburses the Company, as of December 31, 2013 were as follows (in thousands):

2014	$	4,719
2015	4,834
2016	4,894
2017	4,941
2018	4,963
2019 and thereafter	250,789
	$	275,140

Legal Proceedings

The Company paid $950,000 in 2013, which was accrued in general and administrative expenses at the end of 2012, in connection with the settlement of one litigation matter. The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company's consolidated financial position, results of operations, or cash flows.