Cautionary Statement Regarding Forward-Looking Statements
Executive Overview
Business and Investment Strategy
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The following graph summarizes our gross investments as of
defaulted and cross-collateralized with other loans, operating leases or agreements between us and the operator and its affiliates.
COVID-19
Real Estate Portfolio Overview
(1) We have investments in owned properties, mortgage loans, notes receivable and
unconsolidated joint ventures in 29 states to 32 operators.
(2) Includes three parcels of land held-for-use and one behavioral health care
hospital.
Includes one parcel of land in
land in
of a seniors housing community.
(4) Excludes variable rental income from lessee reimbursement of
capital loans with interest rates between 5% and 7.5% and maturities between
2023 and 2031.
(6) Includes three working capital loans with interest rates between 4% and 8%
and maturities between 2022 and 2032.
Includes a preferred equity investment in an entity that developed and owns a
95-unit ALF and MC in
of 7% increasing to 9% in year four until the internal rate of return (“IRR”)
Represents a preferred equity investment in an entity that will develop and (8) own a 267-unit ILF/ALF in
estimated total investment. The preferred equity investment earns an initial
Update on Certain Operators and Former Operators
2022 Activities Overview
The following tables summarize our transactions during the six months ended
Investment in
provides for either an earn-out payment or purchase option but not both. If
neither option is elected within the timeframe defined in the lease, both
elections are terminated. The earn-out payment is available, contingent on
achieving certain thresholds per the lease, beginning at the end of the
second lease year through the end of the fifth lease year. The purchase (1) option is available beginning at the end of the fifth lease year through the
end of the seventh lease year. The initial cash yield is 8% for the first
year, increasing to 8.25% for the second year, then increases annually by
2.0% to 4.0% based on the change in the Medicare Market Basket Rate. In
connection with the transition, we provided the lease a 10-year working
capital loan for up to
Investment in Improvement projects
(1) Calculation of net gain includes cost of sales.
(2) In connection with this sale, the former operator paid us a lease termination
fee of
We recognized additional gain due to the reassessment adjustment of the (3) holdbacks related to properties sold during 2019 and 2020, under the expected
value model per Accounting Standard Codification (“ASC”) Topic 606, Contracts
with Customers (“ASC 606”).
Investment in Mortgage Loans
Originations and funding under mortgage loans receivable
We originated two senior mortgage loans, secured by four ALFs operated by an
existing operator, as well as a land parcel in
communities have a combined total of 217 units, with an average age of less (1) than four years. The land parcel is approximately 7.6 acres adjacent to one
of the ALFs and is being held for the future development of a seniors housing
Investment in
Represents a preferred equity in an entity that developed and owns a 95-unit
ALF and MC in
investment. The preferred equity investment earns an initial cash rate of 7%
increasing to 9% in year four until the internal rate of return (“IRR”) is (1) 8%. After achieving an 8% IRR, the cash rate drops to 8% until achieving an
IRR ranging between 12% to 14%, depending upon timing of redemption. During
the fourth quarter of 2021, the entity completed the development project and
received its certificate of occupancy. We have the option to require the JV
partner to purchase our preferred equity interest at any time between August
267-unit ILF and ALF in
estimated total investment. The preferred equity investment earns an initial
cash rate of 8% with an IRR of 12%. The JV partner has the option to buy out (2) our investment at any time after
have the option to require the JV partner to purchase our preferred equity
interest at any time between
Principal payments received under notes receivable (6,618) Provision for credit losses
Includes the origination of a
of five assisted living communities located in
total of 621 units. The mezzanine loan has a term of approximately five years (1) with two one-year extension options. It bears interest at 8% with IRR of 11%.
Also includes origination of a working capital loan for a commitment of up to
capital loan to HMG.
Health Care Regulatory Climate
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On
Key Performance Indicators, Trends and Uncertainties
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The following table reflects our recent historical trends of concentration risk (gross investment, in thousands):
(1) Includes three parcels of land located adjacent to properties securing the
transactions, ALG Senior is a top five operator under our operator mix and (2) replaces
properties were reclassified from “Remaining operators” and our “Carespring
transactions,
properties were reclassified from “Remaining states” and our “California”
properties were reclassified back to “Remaining States” for all periods
presented.
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