Attached files
Exhibit 99.2
INDEX TO THE FINANCIAL STATEMENTS
AVIV REIT, INC.
AVIV HEALTHCARE PROPERTIES LIMITED PARTNERSHIP
| Report of Independent Registered Public Accounting Firm with respect to Aviv REIT, Inc. | F-2 | |||
| Report of Independent Registered Public Accounting Firm with respect to Aviv REIT, Inc. | F-3 | |||
| Report of Independent Registered Public Accounting Firm with respect to Aviv Healthcare Properties Limited Partnership | F-4 | |||
| Report of Independent Registered Public Accounting Firm with respect to Aviv Healthcare Properties Limited Partnership | F-5 | |||
| Consolidated Balance Sheets as of December 31, 2014 and 2013 of Aviv REIT, Inc. | F-6 | |||
| Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2014, 2013 and 2012 of Aviv REIT, Inc. | F-7 | |||
| Consolidated Statements of Changes in Equity for the Years Ended December 31, 2014, 2013 and 2012 of Aviv REIT, Inc. | F-8 | |||
| Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012 of Aviv REIT, Inc. | F-9 | |||
| Consolidated Balance Sheets as of December 31, 2014 and 2013 of Aviv Healthcare Properties Limited Partnership | F-11 | |||
| Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2014, 2013 and 2012 of Aviv Healthcare Properties Limited Partnership | F-12 | |||
| Consolidated Statements of Changes in Partners’ Capital for the Years Ended December 31, 2014, 2013 and 2012 of Aviv Healthcare Properties Limited Partnership | F-13 | |||
| Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012 of Aviv Healthcare Properties Limited Partnership | F-14 | |||
| Notes to Consolidated Financial Statements | F-16 | |||
| FINANCIAL STATEMENT SCHEDULES | ||||
| Schedule II—Valuation and Qualifying Accounts | F-47 | |||
| Schedule III—Real Estate and Investments | F-48 | |||
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable or have been omitted because sufficient information has been included in the notes to the Consolidated Financial Statements.
| F-1 |
AVIV REIT, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and the Stockholders
Aviv REIT, Inc.
We have audited the accompanying consolidated balance sheets of Aviv REIT, Inc. (the Company) as of December 31, 2014 and 2013, and the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2014. Our audits also included the financial statement schedules listed in the accompanying index to the financial statements. These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 26, 2015 expressed an unqualified opinion thereon.
| /s/ Ernst & Young LLP |
| Chicago, Illinois |
| February 26, 2015 |
| F-2 |
Report of Independent Registered Public Accounting Firm
The Board of Directors and the Stockholders
Aviv REIT, Inc.
We have audited Aviv REIT, Inc.’s (the Company) internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of December 31, 2014 and 2013 and the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2014, and our report dated February 26, 2015 expressed an unqualified opinion thereon.
| /s/ Ernst & Young LLP |
| Chicago, Illinois |
| February 26, 2015 |
| F-3 |
Report of Independent Registered Public Accounting Firm
The Board of Directors and the Partners
Aviv Healthcare Properties Limited Partnership
We have audited the accompanying consolidated balance sheets of Aviv Healthcare Properties Limited Partnership (the Partnership) as of December 31, 2014 and 2013, and the related consolidated statements of operations and comprehensive income, changes in partners’ capital, and cash flows for each of the three years in the period ended December 31, 2014. Our audits also included the financial statement schedules listed in the accompanying index to the financial statements. These financial statements and schedules are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Partnership at December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Partnership’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 26, 2015 expressed an unqualified opinion thereon.
| /s/ Ernst & Young LLP |
| Chicago, Illinois |
| February 26, 2015 |
| F-4 |
Report of Independent Registered Public Accounting Firm
The Board of Directors and the Partners
Aviv Healthcare Properties Limited Partnership
We have audited Aviv Healthcare Properties Limited Partnership’s (the Partnership) internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). The Partnership’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Partnership as of December 31, 2014 and 2013 and the related consolidated statements of operations and comprehensive income, changes in partners’ capital, and cash flows for each of the three years in the period ended December 31, 2014, and our report dated February 26, 2015 expressed an unqualified opinion thereon.
| /s/ Ernst & Young LLP |
| Chicago, Illinois |
| February 26, 2015 |
| F-5 |
AVIV REIT, INC.
Consolidated Balance Sheets
(in thousands except share data)
| December 31, 2014 | December 31, 2013 | |||||||
| Assets | ||||||||
| Income producing property | ||||||||
| Land | $ | 190,300 | $ | 138,150 | ||||
| Buildings and improvements | 1,845,992 | 1,138,173 | ||||||
| Assets under direct financing leases | 11,291 | 11,175 | ||||||
| 2,047,583 | 1,287,498 | |||||||
| Less accumulated depreciation | (188,286 | ) | (147,302 | ) | ||||
| Construction in progress and land held for development | 23,150 | 23,292 | ||||||
| Net real estate | 1,882,447 | 1,163,488 | ||||||
| Cash and cash equivalents | 10,036 | 50,764 | ||||||
| Straight-line rent receivable, net | 45,368 | 40,580 | ||||||
| Tenant receivables, net | 4,095 | 1,647 | ||||||
| Deferred finance costs, net | 19,024 | 16,643 | ||||||
| Loan receivables, net | 42,697 | 41,686 | ||||||
| Other assets | 16,763 | 15,625 | ||||||
| Total assets | $ | 2,020,430 | $ | 1,330,433 | ||||
| Liabilities and equity | ||||||||
| Secured loans | $ | 193,418 | $ | 13,654 | ||||
| Unsecured notes payable | 652,292 | 652,752 | ||||||
| Line of credit | 355,000 | 20,000 | ||||||
| Accrued interest payable | 15,126 | 15,284 | ||||||
| Dividends and distributions payable | — | 17,694 | ||||||
| Accounts payable and accrued expenses | 18,582 | 10,555 | ||||||
| Tenant security and escrow deposits | 26,259 | 21,586 | ||||||
| Other liabilities | 9,805 | 10,463 | ||||||
| Total liabilities | 1,270,482 | 761,988 | ||||||
| Equity: | ||||||||
| Stockholders’ equity | ||||||||
| Common stock (par value $0.01; 48,425,224 and 37,593,910 shares issued and outstanding, respectively) | 484 | 376 | ||||||
| Additional paid-in capital | 737,262 | 523,658 | ||||||
| Accumulated deficit | (119,039 | ) | (89,742 | ) | ||||
| Total stockholders’ equity | 618,707 | 434,292 | ||||||
| Noncontrolling interests—operating partnership | 131,241 | 134,153 | ||||||
| Total equity | 749,948 | 568,445 | ||||||
| Total liabilities and equity | $ | 2,020,430 | $ | 1,330,433 | ||||
See accompanying notes.
| F-6 |
AVIV REIT, INC.
Consolidated Statements of Operations and Comprehensive Income
(in thousands except share and per share data)
| Year Ended December 31 | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Revenues | ||||||||||||
| Rental income | $ | 177,947 | $ | 136,513 | $ | 121,210 | ||||||
| Interest on loans and financing lease | 4,483 | 4,400 | 4,633 | |||||||||
| Interest and other income | 1,612 | 154 | 1,129 | |||||||||
| Total revenues | 184,042 | 141,067 | 126,972 | |||||||||
| Expenses | ||||||||||||
| Interest expense incurred | 49,680 | 40,785 | 47,440 | |||||||||
| Amortization of deferred financing costs | 3,942 | 3,459 | 3,543 | |||||||||
| Depreciation and amortization | 44,023 | 33,226 | 26,892 | |||||||||
| General and administrative | 24,039 | 26,886 | 15,955 | |||||||||
| Transaction costs | 8,601 | 3,114 | 7,259 | |||||||||
| Loss on impairment | 2,341 | 500 | 11,117 | |||||||||
| Reserve for uncollectible loans and other receivables | 3,523 | 68 | 10,331 | |||||||||
| Loss (gain) on sale of assets, net | 2,518 | (1,016 | ) | — | ||||||||
| Loss on extinguishment of debt | 501 | 10,974 | 28 | |||||||||
| Other expenses | — | — | 400 | |||||||||
| Total expenses | 139,168 | 117,996 | 122,965 | |||||||||
| Income from continuing operations | 44,874 | 23,071 | 4,007 | |||||||||
| Discontinued operations | — | — | 4,586 | |||||||||
| Net income | 44,874 | 23,071 | 8,593 | |||||||||
| Net income allocable to noncontrolling interests—operating partnership | (9,082 | ) | (6,010 | ) | (3,455 | ) | ||||||
| Net income allocable to common stockholders | $ | 35,792 | $ | 17,061 | $ | 5,138 | ||||||
| Net income | $ | 44,874 | $ | 23,071 | $ | 8,593 | ||||||
| Unrealized loss on derivative instruments | — | — | (476 | ) | ||||||||
| Total comprehensive income | $ | 44,874 | $ | 23,071 | $ | 8,117 | ||||||
| Net income allocable to common stockholders | $ | 35,792 | $ | 17,061 | $ | 5,138 | ||||||
| Unrealized loss on derivative instruments, net of noncontrolling interest—operating partnership portion of $0, $0, and $192, respectively | — | — | (284 | ) | ||||||||
| Total comprehensive income allocable to common stockholders | $ | 35,792 | $ | 17,061 | $ | 4,854 | ||||||
| Earnings per common share: | ||||||||||||
| Basic: | ||||||||||||
| Income from continuing operations allocable to common stockholders | $ | 0.80 | $ | 0.51 | $ | 0.12 | ||||||
| Discontinued operations, net of noncontrolling interests—operating partnership | — | — | 0.14 | |||||||||
| Net income allocable to common stockholders | $ | 0.80 | $ | 0.51 | $ | 0.26 | ||||||
| Diluted: | ||||||||||||
| Income from continuing operations allocable to common stockholders | $ | 0.77 | $ | 0.49 | $ | 0.12 | ||||||
| Discontinued operations, net of noncontrolling interests—operating partnership | — | — | 0.14 | |||||||||
| Net income allocable to common stockholders | $ | 0.77 | $ | 0.49 | $ | 0.26 | ||||||
| Weighted average common shares outstanding: | ||||||||||||
| Basic | 44,629,901 | 33,700,834 | 20,006,538 | |||||||||
| Diluted | 58,166,924 | 44,324,189 | 20,135,689 | |||||||||
| Dividends declared per common share | $ | 1.44 | $ | 1.40 | $ | 1.25 | ||||||
See accompanying notes.
| F-7 |
AVIV REIT, INC.
Consolidated Statements of Changes in Equity
(in thousands except share data)
| Stockholders’ Equity | Noncontrolling | |||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In- | Accumulated | Accumulated Other Comprehensive Income | Total
Stockholders’ | Interests— Operating | Total | ||||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | (Loss) | Equity | Partnership | Equity | |||||||||||||||||||||||||
| Balance at January 1, 2012 | 15,831,368 | $ | 159 | $ | 264,804 | $ | (21,383 | ) | $ | (1,868 | ) | $ | 241,712 | $ | 5,546 | $ | 247,258 | |||||||||||||||
| Non-cash stock (unit)-based compensation | — | — | 1,284 | — | — | 1,284 | 406 | 1,690 | ||||||||||||||||||||||||
| Distributions to partners | — | — | — | — | — | — | (15,638 | ) | (15,638 | ) | ||||||||||||||||||||||
| Capital contributions | 5,822,445 | 58 | 108,942 | — | — | 109,000 | 358 | 109,358 | ||||||||||||||||||||||||
| Unrealized loss on derivative instruments | — | — | — | — | (284 | ) | (284 | ) | (192 | ) | (476 | ) | ||||||||||||||||||||
| Dividends to stockholders | — | — | — | (30,282 | ) | — | (30,282 | ) | — | (30,282 | ) | |||||||||||||||||||||
| Net income | — | — | — | 5,138 | — | 5,138 | 3,455 | 8,593 | ||||||||||||||||||||||||
| Balance at December 31, 2012 | 21,653,813 | 217 | 375,030 | (46,527 | ) | (2,152 | ) | 326,568 | (6,065 | ) | 320,503 | |||||||||||||||||||||
| Non-cash stock (unit)-based compensation | 23,250 | — | 10,864 | — | — | 10,864 | 888 | 11,752 | ||||||||||||||||||||||||
| Shares issued for settlement of management vested stock | 414,710 | 4 | 8,290 | — | — | 8,294 | — | 8,294 | ||||||||||||||||||||||||
| Distributions to partners | — | — | — | — | — | — | (16,658 | ) | (16,658 | ) | ||||||||||||||||||||||
| Capital contributions | — | — | — | — | — | — | 214 | 214 | ||||||||||||||||||||||||
| Initial public offering proceeds | 15,180,000 | 152 | 303,448 | — | — | 303,600 | — | 303,600 | ||||||||||||||||||||||||
| Cost of raising capital | — | — | (25,829 | ) | — | — | (25,829 | ) | — | (25,829 | ) | |||||||||||||||||||||
| Retirement of derivative instrument | — | — | — | — | 2,152 | 2,152 | 1,622 | 3,774 | ||||||||||||||||||||||||
| Dividends to stockholders | — | — | — | (60,276 | ) | — | (60,276 | ) | — | (60,276 | ) | |||||||||||||||||||||
| Reclassification of equity at IPO date | — | — | (153,751 | ) | — | — | (153,751 | ) | 153,751 | — | ||||||||||||||||||||||
| Conversion of OP Units/Adjustment of noncontrolling interests—operating partnership ownership of operating partnership | 322,137 | 3 | 5,606 | — | — | 5,609 | (5,609 | ) | — | |||||||||||||||||||||||
| Net income | — | — | — | 17,061 | — | 17,061 | 6,010 | 23,071 | ||||||||||||||||||||||||
| Balance at December 31, 2013 | 37,593,910 | 376 | 523,658 | (89,742 | ) | — | 434,292 | 134,153 | 568,445 | |||||||||||||||||||||||
| Non-cash stock-based compensation | — | — | 4,861 | — | — | 4,861 | — | 4,861 | ||||||||||||||||||||||||
| Shares issued for settlement of management vested stock and exercised options, net | 287,406 | 3 | 1,704 | — | — | 1,707 | — | 1,707 | ||||||||||||||||||||||||
| Distributions to partners | — | — | — | — | — | — | (16,072 | ) | (16,072 | ) | ||||||||||||||||||||||
| Capital contributions | — | — | — | — | — | — | 60 | 60 | ||||||||||||||||||||||||
| Proceeds from issuance of common stock | 9,200,000 | 92 | 221,628 | — | — | 221,720 | — | 221,720 | ||||||||||||||||||||||||
| Cost of raising capital | — | — | (10,558 | ) | — | — | (10,558 | ) | — | (10,558 | ) | |||||||||||||||||||||
| Dividends to stockholders | — | — | — | (65,089 | ) | — | (65,089 | ) | — | (65,089 | ) | |||||||||||||||||||||
| Conversion of OP Units | 1,343,908 | 13 | 17,146 | — | — | 17,159 | (17,159 | ) | — | |||||||||||||||||||||||
| Adjustment of noncontrolling interest-operating partnership ownership of operating partnership | — | — | (21,177 | ) | — | — | (21,177 | ) | 21,177 | — | ||||||||||||||||||||||
| Net income | — | — | — | 35,792 | — | 35,792 | 9,082 | 44,874 | ||||||||||||||||||||||||
| Balance at December 31,2014 | 48,425,224 | $ | 484 | $ | 737,262 | $ | (119,039 | ) | $ | — | $ | 618,707 | $ | 131,241 | $ | 749,948 | ||||||||||||||||
See accompanying notes.
| F-8 |
AVIV REIT, INC.
Consolidated Statements of Cash Flows
(in thousands)
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Operating activities | ||||||||||||
| Net income | $ | 44,874 | $ | 23,071 | $ | 8,593 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 44,023 | 33,226 | 26,935 | |||||||||
| Amortization of deferred financing costs | 3,942 | 3,459 | 3,543 | |||||||||
| Accretion of debt premium | (539 | ) | (507 | ) | (414 | ) | ||||||
| Straight-line rental income, net | (4,788 | ) | (4,478 | ) | (7,656 | ) | ||||||
| Rental income from intangible amortization, net | (666 | ) | (1,369 | ) | (1,486 | ) | ||||||
| Non-cash stock-based compensation | 4,861 | 11,752 | 1,689 | |||||||||
| Loss (gain) on sale of assets, net | 2,518 | (1,016 | ) | (4,425 | ) | |||||||
| Non-cash loss on extinguishment of debt | 494 | 5,161 | 42 | |||||||||
| Loss on impairment | 2,341 | 500 | 11,117 | |||||||||
| Reserve for uncollectible loan and other receivables | 3,523 | 68 | 10,331 | |||||||||
| Accretion of earn-out provision for previously acquired real estate investments | — | — | 400 | |||||||||
| Changes in assets and liabilities: | ||||||||||||
| Tenant receivables | (2,577 | ) | (3,511 | ) | (4,572 | ) | ||||||
| Other assets | (1,123 | ) | (5,229 | ) | (5,873 | ) | ||||||
| Accounts payable and accrued expenses | 2,880 | 3,949 | 5,021 | |||||||||
| Tenant security deposits and other liabilities | 5,079 | 2,277 | 1,230 | |||||||||
| Net cash provided by operating activities | 104,842 | 67,353 | 44,475 | |||||||||
| Investing activities | ||||||||||||
| Purchase of real estate | (706,970 | ) | (197,388 | ) | (172,773 | ) | ||||||
| Proceeds from sales of real estate, net | 2,277 | 15,549 | 31,933 | |||||||||
| Capital improvements | (14,997 | ) | (12,003 | ) | (13,558 | ) | ||||||
| Development projects | (43,083 | ) | (18,738 | ) | (28,067 | ) | ||||||
| Loan receivables received from others | 19,642 | 4,086 | 14,632 | |||||||||
| Loan receivables funded to others | (24,376 | ) | (10,407 | ) | (16,857 | ) | ||||||
| Net cash used in investing activities | (767,507 | ) | (218,901 | ) | (184,690 | ) | ||||||
See accompanying notes.
| F-9 |
AVIV REIT, INC.
Consolidated Statements of Cash Flows (continued)
(in thousands)
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Financing activities | ||||||||||||
| Borrowings of debt | $ | 668,000 | $ | 470,000 | $ | 267,761 | ||||||
| Repayment of debt | (153,157 | ) | (488,241 | ) | (174,127 | ) | ||||||
| Payment of financing costs | (6,980 | ) | (10,448 | ) | (5,143 | ) | ||||||
| Capital contributions | 60 | 575 | 109,000 | |||||||||
| Deferred contribution | — | — | (35,000 | ) | ||||||||
| Proceeds from issuance of common stock | 221,720 | 303,600 | — | |||||||||
| Cost of raising capital | (10,558 | ) | (25,829 | ) | — | |||||||
| Shares issued from settlement of vested stock and exercised stock options, net | 1,707 | — | — | |||||||||
| Cash distributions to partners | (20,215 | ) | (16,314 | ) | (16,484 | ) | ||||||
| Cash dividends to stockholders | (78,640 | ) | (48,907 | ) | (28,778 | ) | ||||||
| Net cash provided by financing activities | 621,937 | 184,436 | 117,229 | |||||||||
| Net (decrease) increase in cash and cash equivalents | (40,728 | ) | 32,888 | (22,986 | ) | |||||||
| Cash and cash equivalents: | ||||||||||||
| Beginning of year | 50,764 | 17,876 | 40,862 | |||||||||
| End of year | $ | 10,036 | $ | 50,764 | $ | 17,876 | ||||||
| Supplemental cash flow information | ||||||||||||
| Cash paid for interest | $ | 50,972 | $ | 40,008 | $ | 46,711 | ||||||
| Supplemental disclosure of noncash activity | ||||||||||||
| Accrued dividends payable to stockholders | $ | — | $ | 13,551 | $ | 9,888 | ||||||
| Accrued distributions payable to partners | $ | — | $ | 4,143 | $ | 3,799 | ||||||
| Write-off of straight-line rent receivable, net | $ | 1,549 | $ | 2,887 | $ | 1,552 | ||||||
| Write-off of in-place lease intangibles, net | $ | — | $ | — | $ | 19 | ||||||
| Write-off of deferred financing costs, net | $ | 501 | $ | 5,161 | $ | 42 | ||||||
| Assumed debt | $ | — | $ | — | $ | 11,460 | ||||||
See accompanying notes.
| F-10 |
AVIV HEALTHCARE PROPERTIES LIMITED PARTNERSHIP
Consolidated Balance Sheets
(in thousands)
| December 31, | ||||||||
| 2014 | 2013 | |||||||
| Assets | ||||||||
| Income producing property | ||||||||
| Land | $ | 190,300 | $ | 138,150 | ||||
| Buildings and improvements | 1,845,992 | 1,138,173 | ||||||
| Assets under direct financing leases | 11,291 | 11,175 | ||||||
| 2,047,583 | 1,287,498 | |||||||
| Less accumulated depreciation | (188,286 | ) | (147,302 | ) | ||||
| Construction in progress and land held for development | 23,150 | 23,292 | ||||||
| Net real estate | 1,882,447 | 1,163,488 | ||||||
| Cash and cash equivalents | 10,036 | 50,764 | ||||||
| Straight-line rent receivable, net | 45,368 | 40,580 | ||||||
| Tenant receivables, net | 4,095 | 1,647 | ||||||
| Deferred finance costs, net | 19,024 | 16,643 | ||||||
| Loan receivables, net | 42,697 | 41,686 | ||||||
| Other assets | 16,763 | 15,625 | ||||||
| Total assets | $ | 2,020,430 | $ | 1,330,433 | ||||
| Liabilities and partners’ capital | ||||||||
| Secured loans | $ | 193,418 | $ | 13,654 | ||||
| Unsecured notes payable | 652,292 | 652,752 | ||||||
| Line of credit | 355,000 | 20,000 | ||||||
| Accrued interest payable | 15,126 | 15,284 | ||||||
| Distributions payable | — | 17,694 | ||||||
| Accounts payable and accrued expenses | 18,582 | 10,555 | ||||||
| Tenant security and escrow deposits | 26,259 | 21,586 | ||||||
| Other liabilities | 9,805 | 10,463 | ||||||
| Total liabilities | 1,270,482 | 761,988 | ||||||
| Partners’ capital: | ||||||||
| Partners’ capital | 749,948 | 568,445 | ||||||
| Total liabilities and partners’ capital | $ | 2,020,430 | $ | 1,330,433 | ||||
See accompanying notes.
| F-11 |
AVIV HEALTHCARE PROPERTIES LIMITED PARTNERSHIP
Consolidated Statements of Operations and Comprehensive Income
(in thousands except unit and per unit data)
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Revenues | ||||||||||||
| Rental income | $ | 177,947 | $ | 136,513 | $ | 121,210 | ||||||
| Interest on loans and financing lease | 4,483 | 4,400 | 4,633 | |||||||||
| Interest and other income | 1,612 | 154 | 1,129 | |||||||||
| Total revenues | 184,042 | 141,067 | 126,972 | |||||||||
| Expenses | ||||||||||||
| Interest expense incurred | 49,680 | 40,785 | 47,440 | |||||||||
| Amortization of deferred financing costs | 3,942 | 3,459 | 3,543 | |||||||||
| Depreciation and amortization | 44,023 | 33,226 | 26,892 | |||||||||
| General and administrative | 24,039 | 26,886 | 15,955 | |||||||||
| Transaction costs | 8,601 | 3,114 | 7,259 | |||||||||
| Loss on impairment | 2,341 | 500 | 11,117 | |||||||||
| Reserve for uncollectible loans and other receivables | 3,523 | 68 | 10,331 | |||||||||
| Loss (gain )on sale of assets, net | 2,518 | (1,016 | ) | — | ||||||||
| Loss on extinguishment of debt | 501 | 10,974 | 28 | |||||||||
| Other expenses | — | — | 400 | |||||||||
| Total expenses | 139,168 | 117,996 | 122,965 | |||||||||
| Income from continuing operations | 44,874 | 23,071 | 4,007 | |||||||||
| Discontinued operations | — | — | 4,586 | |||||||||
| Net income allocable to units | $ | 44,874 | $ | 23,071 | $ | 8,593 | ||||||
| Net income allocable to units | $ | 44,874 | $ | 23,071 | $ | 8,593 | ||||||
| Unrealized loss on derivative instruments | — | — | (476 | ) | ||||||||
| Total comprehensive income allocable to units | $ | 44,874 | $ | 23,071 | $ | 8,117 | ||||||
| Earnings per unit: | ||||||||||||
| Basic: | ||||||||||||
| Income from continuing operations allocable to units | $ | 0.80 | $ | 0.51 | $ | 0.12 | ||||||
| Discontinued operations | — | — | 0.14 | |||||||||
| Net income allocable to units | $ | 0.80 | $ | 0.51 | $ | 0.26 | ||||||
| Diluted: | ||||||||||||
| Income from continuing operations allocable to units | $ | 0.77 | $ | 0.49 | $ | 0.12 | ||||||
| Discontinued operations | — | — | 0.14 | |||||||||
| Net income allocable to units | $ | 0.77 | $ | 0.49 | $ | 0.26 | ||||||
| Weighted average units outstanding: | ||||||||||||
| Basic | 55,957,950 | 42,792,808 | 20,006,538 | |||||||||
| Diluted | 58,166,924 | 44,324,189 | 20,135,689 | |||||||||
| Distributions declared per unit | $ | 1.44 | $ | 1.40 | $ | 1.25 | ||||||
See accompanying notes.
| F-12 |
AVIV HEALTHCARE PROPERTIES LIMITED PARTNERSHIP
Consolidated Statements of Changes in Partners’ Capital
(in thousands)
| Accumulated Other | ||||||||||||
| Partners’ Capital | Comprehensive Income (Loss) | Total | ||||||||||
| Balance at January 1, 2012 | $ | 250,555 | $ | (3,298 | ) | $ | 247,257 | |||||
| Non-cash stock (unit)-based compensation | 1,690 | — | 1,690 | |||||||||
| Distributions to partners | (45,920 | ) | — | (45,920 | ) | |||||||
| Capital contributions | 109,358 | — | 109,358 | |||||||||
| Unrealized loss on derivative instruments | — | (476 | ) | (476 | ) | |||||||
| Net income | 8,593 | — | 8,593 | |||||||||
| Balance at December 31, 2012 | 324,276 | (3,774 | ) | 320,502 | ||||||||
| Non-cash stock (unit)-based compensation | 11,752 | — | 11,752 | |||||||||
| Units issued for settlement of management vested stock | 8,294 | — | 8,294 | |||||||||
| Distributions to partners | (76,934 | ) | — | (76,934 | ) | |||||||
| Capital contributions | 215 | — | 215 | |||||||||
| Initial public offering proceeds | 303,600 | — | 303,600 | |||||||||
| Cost of raising capital | (25,829 | ) | — | (25,829 | ) | |||||||
| Retirement of derivative instruments | — | 3,774 | 3,774 | |||||||||
| Net income | 23,071 | — | 23,071 | |||||||||
| Balance at December 31, 2013 | 568,445 | — | 568,445 | |||||||||
| Non-cash stock (unit)-based compensation | 4,861 | — | 4,861 | |||||||||
| Units issued for settlement of management vested stock and exercised unit options, net | 1,707 | — | 1,707 | |||||||||
| Distributions to partners | (81,161 | ) | — | (81,161 | ) | |||||||
| Capital contributions | 60 | — | 60 | |||||||||
| Proceeds from issuance of common stock | 221,720 | — | 221,720 | |||||||||
| Cost of raising capital | (10,558 | ) | — | (10,558 | ) | |||||||
| Net income | 44,874 | — | 44,874 | |||||||||
| Balance at December 31, 2014 | $ | 749,948 | $ | — | $ | 749,948 | ||||||
See accompanying notes.
| F-13 |
AVIV HEALTHCARE PROPERTIES LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows
(in thousands)
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Operating activities | ||||||||||||
| Net income | $ | 44,874 | $ | 23,071 | $ | 8,593 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 44,023 | 33,226 | 26,935 | |||||||||
| Amortization of deferred financing costs | 3,942 | 3,459 | 3,543 | |||||||||
| Accretion of debt premium | (539 | ) | (507 | ) | (414 | ) | ||||||
| Straight-line rental income, net | (4,788 | ) | (4,478 | ) | (7,656 | ) | ||||||
| Rental income from intangible amortization, net | (666 | ) | (1,369 | ) | (1,486 | ) | ||||||
| Non-cash stock-based compensation | 4,861 | 11,752 | 1,689 | |||||||||
| Loss (gain) on sale of assets, net | 2,518 | (1,016 | ) | (4,425 | ) | |||||||
| Non-cash loss on extinguishment of debt | 494 | 5,161 | 42 | |||||||||
| Loss on impairment | 2,341 | 500 | 11,117 | |||||||||
| Reserve for uncollectible loans and other receivables | 3,523 | 68 | 10,331 | |||||||||
| Accretion of earn-out provision for previously acquired real estate investments | — | — | 400 | |||||||||
| Changes in assets and liabilities: | ||||||||||||
| Tenant receivables | (2,577 | ) | (3,511 | ) | (4,572 | ) | ||||||
| Other assets | (1,123 | ) | (5,229 | ) | (5,873 | ) | ||||||
| Accounts payable and accrued expenses | 2,880 | 3,949 | 5,021 | |||||||||
| Tenant security deposits and other liabilities | 5,079 | 4,619 | 546 | |||||||||
| Net cash provided by operating activities | 104,842 | 69,695 | 43,791 | |||||||||
| Investing activities | ||||||||||||
| Purchase of real estate | (706,970 | ) | (197,388 | ) | (172,773 | ) | ||||||
| Proceeds from sales of real estate, net | 2,277 | 15,549 | 31,933 | |||||||||
| Capital improvements | (14,997 | ) | (12,003 | ) | (13,558 | ) | ||||||
| Development projects | (43,083 | ) | (18,738 | ) | (28,067 | ) | ||||||
| Loan receivables received from others | 19,642 | 4,086 | 14,632 | |||||||||
| Loan receivables funded to others | (24,376 | ) | (10,407 | ) | (16,857 | ) | ||||||
| Net cash used in investing activities | (767,507 | ) | (218,901 | ) | (184,690 | ) | ||||||
See accompanying notes.
| F-14 |
AVIV HEALTHCARE PROPERTIES LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows (continued)
(in thousands)
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Financing activities | ||||||||||||
| Borrowings of debt | $ | 668,000 | $ | 470,000 | $ | 267,761 | ||||||
| Repayment of debt | (153,157 | ) | (488,241 | ) | (174,127 | ) | ||||||
| Payment of financing costs | (6,980 | ) | (10,448 | ) | (5,143 | ) | ||||||
| Capital contributions | 60 | 575 | 109,000 | |||||||||
| Deferred contribution | — | — | (35,000 | ) | ||||||||
| Proceeds from issuance of common stock | 221,720 | 303,600 | — | |||||||||
| Cost of raising capital | (10,558 | ) | (25,829 | ) | — | |||||||
| Shares issued for settlement of vested stock and exercised unit options, net | 1,707 | — | — | |||||||||
| Cash distributions to partners | (98,855 | ) | (65,221 | ) | (45,262 | ) | ||||||
| Net cash provided by financing activities | 621,937 | 184,436 | 117,229 | |||||||||
| Net (decrease) increase in cash and cash equivalents | (40,728 | ) | 35,230 | (23,670 | ) | |||||||
| Cash and cash equivalents: | ||||||||||||
| Beginning of year | 50,764 | 15,534 | 39,204 | |||||||||
| End of year | $ | 10,036 | $ | 50,764 | $ | 15,534 | ||||||
| Supplemental cash flow information | ||||||||||||
| Cash paid for interest | $ | 50,972 | $ | 40,008 | $ | 46,711 | ||||||
| Supplemental disclosure of noncash activity | ||||||||||||
| Accrued distributions payable to partners | $ | — | $ | 17,694 | $ | 13,687 | ||||||
| Write-off of straight-line rent receivable, net | $ | 1,549 | $ | 2,887 | $ | 1,552 | ||||||
| Write-off of in-place lease intangibles, net | $ | — | $ | — | $ | 19 | ||||||
| Write-off of deferred financing costs, net | $ | 501 | $ | 5,161 | $ | 42 | ||||||
| Assumed debt | $ | — | $ | — | $ | 11,460 | ||||||
See accompanying notes.
| F-15 |
AVIV REIT, INC.
AVIV HEALTHCARE PROPERTIES LIMITED PARTNERSHIP
Notes to Consolidated Financial Statements
December 31, 2014
1. Description of Operations and Formation
Aviv REIT, Inc. (AVIV or the REIT), a Maryland corporation, is the sole general partner of Aviv Healthcare Properties Limited Partnership, a Delaware limited partnership, and its subsidiaries (the Partnership). The Partnership is a majority owned subsidiary that owns all of the real estate properties. In these footnotes, the Company refers generically to AVIV, the Partnership, and their subsidiaries. The Partnership was formed in 2010 and directly or indirectly owned or leased 346 properties, principally skilled nursing facilities, across the United States at December 31, 2014. The Company is a fully integrated self-administered company that owns, acquires, develops and generates the majority of its revenues by entering into long-term triple-net leases with qualified local, regional, and national operators. In addition to the base rent, leases provide for operators to pay the Company an ongoing escrow for real estate taxes. Furthermore, all operating and maintenance costs of the buildings are the responsibility of the operators. Substantially all depreciation expense reflected in the consolidated statements of operations and comprehensive income relates to the ownership of real estate properties.
The Partnership is the general partner of Aviv Healthcare Properties Operating Partnership I, L.P. (the Operating Partnership), a Delaware limited partnership, and Aviv Healthcare Capital Corporation, a Delaware company. The Operating Partnership has six wholly owned subsidiaries: Aviv Financing I, L.L.C. (Aviv Financing I), a Delaware limited liability company; Aviv Financing II, L.L.C. (Aviv Financing II), a Delaware limited liability company; Aviv Financing III, L.L.C. (Aviv Financing III), a Delaware limited liability company; Aviv Financing IV, L.L.C. (Aviv Financing IV), a Delaware limited liability company; Aviv Financing V, L.L.C. (Aviv Financing V), a Delaware limited liability company; and Aviv Financing VI, L.L.C. (Aviv Financing VI) , a Delaware limited liability company.
All of the business, assets and operations are held by the Partnership and its subsidiaries. The REIT’s equity interest in the Partnership is linked to future investments in the REIT, such that future equity issuances by the REIT (pursuant to the Partnership’s partnership agreement) will result in a corresponding increase in the REIT’s equity interest in the Partnership. The REIT is authorized to issue 300 million shares of common stock (par value $0.01) and 25 million shares of preferred stock (par value $0.01). The REIT was funded in September 2010 with 13.2 million shares and approximately $235 million from one of the REIT’s stockholders, and approximately 8.5 million additional shares of common stock were issued by the REIT in connection with $159 million equity contributions by one of the REIT’s stockholders. The Partnership’s capital consists of partnership units, which are referred to as OP units, that are owned by AVIV and other investors.
On March 7, 2013, the Board of Directors and stockholders of the REIT approved an increase in the number of authorized shares of common stock to 300,000,000 shares of common stock and a 60.37-for-one split of issued and outstanding common stock. The increase in the authorized shares and the stock split became effective on March 8, 2013 when the REIT’s charter was amended for such increase in the number of authorized REIT shares and the stock split. The common share and per common share amounts in these consolidated financial statements and notes to consolidated financial statements have been retrospectively restated to reflect the 60.37-for-one split.
On March 26, 2013, the REIT completed an initial public offering (IPO) of its common stock pursuant to a registration statement filed with the SEC, which became effective on March 20, 2013. The Company received net proceeds after underwriting discounts and commissions, of $282.3 million, exclusive of other costs of raising capital in consideration for the issuance and sale of approximately 15.2 million shares of common stock (which included approximately 2.0 million shares sold to the underwriters upon exercise of their option to purchase additional shares to cover over-allotments) at a price to the public of $20.00 per share. In connection with the IPO, the Partnership’s Class A, B, C, D, F and G Units were converted into a single class of OP units.
Immediately prior to the completion of the IPO, there were outstanding approximately 21.7 million shares of common stock of the REIT, limited partnership units of the Partnership which were converted into approximately 11.9 million OP units in connection with the IPO, and 125 shares of preferred stock of the REIT. On April 15, 2013, the 125 shares of preferred stock outstanding were redeemed.
On April 9, 2014, the Company issued 9.2 million shares of common stock and received net proceeds of $221.7 million in a secondary underwritten public offering. At December 31, 2014, there were approximately 48.4 million shares of common stock outstanding and 10.3 million OP units outstanding which are redeemable for cash or, at the REIT’s election, for shares of common stock of the REIT. The operating results of the Partnership are allocated based upon the REIT’s and the limited partners’ respective economic interests therein. The REIT’s ownership of the Partnership was 82.5% as of December 31, 2014. The REIT’s weighted average economic ownership of the Partnership for the years ended December 31, 2014, 2013, and 2012 were 79.8%, 74.0%, and 62.5%, respectively.
| F-16 |
2. Summary of Significant Accounting Policies
Basis of Presentation
This report combines the Annual Reports on Form 10-K for the year ended December 31, 2014 of AVIV and the Partnership. AVIV is a real estate investment trust and the general partner of the Partnership. Unless the context requires otherwise or except as otherwise noted, as used herein the words “we,” the “Company,” “us” and “our” refer to AVIV and AVIV’s controlled subsidiaries and the Partnership and the Partnership’s controlled subsidiaries collectively, as the operations of the two aforementioned entities are materially comparable for the periods presented.
AVIV is a real estate investment trust, or REIT, and the general partner of the Partnership. The Partnership’s capital is comprised of units of beneficial interest, or OP units. As of December 31, 2014, AVIV owned 82.5% of the economic interest in the Partnership, with the remaining interest being owned by investors. Investors may redeem their OP units for cash or, at the election of AVIV, for shares of AVIV’s common stock, on a one-for-one basis. As the sole general partner of the Partnership, AVIV has exclusive control of the Partnership’s day-to-day management.
The Company believes combining the Annual Reports on Form 10-K of AVIV and the Partnership into this single report provides the following benefits:
| • | enhances investors’ understanding of AVIV and the Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; |
| • | eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure in this report applies to both AVIV and the Partnership; and |
| • | creates time and cost efficiencies through the preparation of one combined report instead of two separate reports. |
Management operates AVIV and the Partnership as one business. The management of AVIV consists of the same employees as the management of the Partnership.
The Company believes it is important for investors to understand the few differences between AVIV and the Partnership in the context of how AVIV and the Partnership operate as a consolidated company. AVIV is a REIT, whose only material asset is its ownership of OP units of the Partnership. As a result, AVIV does not conduct business itself, other than acting as the sole general partner of the Partnership, issuing public equity from time to time and guaranteeing unsecured debt of the Partnership. AVIV has not issued any indebtedness, but has guaranteed all of the unsecured debt of the Partnership. The Partnership indirectly holds all the real estate assets of the Company. Except for net proceeds from public equity issuances by AVIV, which are contributed to the Partnership in exchange for OP units, the Partnership generates all remaining capital required by the Company’s business. These sources include the Partnership’s operations, its direct or indirect incurrence of indebtedness, and the issuance of OP units.
As general partner with control of the Partnership, AVIV consolidates the Partnership for financial reporting purposes. The presentation of stockholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of AVIV and those of the Partnership. AVIV’s stockholders’ equity is comprised of common stock, additional paid in capital and retained earnings (accumulated deficit). The Partnership’s capital is comprised of OP units that are owned by AVIV and the other partners. The OP units held by the limited partners (other than AVIV) in the Partnership are presented as part of partners’ capital in the Partnership’s consolidated financial statements and as “noncontrolling interests-operating partnership” in AVIV’s consolidated financial statements. There is no difference between the assets and liabilities of AVIV and the Partnership as of December 31, 2014. Net income is the same for AVIV and the Partnership.
In order to highlight the few differences between AVIV and the Partnership, there are sections in this report that discuss AVIV and the Partnership separately, including separate financial statements and controls and procedures sections. In the sections that combine disclosure for AVIV and the Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Partnership is generally the entity that enters into contracts, holds assets and issues debt, we believe that reference to the Company in this context is appropriate because the business is one enterprise and the Company operates the business through the Partnership.
The accompanying consolidated financial statements have been prepared by management in accordance with U.S. generally accepted accounting principles, or GAAP. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. Certain prior period amounts have been reclassified with no effect on the Company’s consolidated financial position or results of operations.
The Company manages its business as a single business segment as defined in Accounting Standards Codification (ASC) 280, Segment Reporting. The Company has one reportable segment consisting of investments in healthcare properties, consisting primarily
| F-17 |
of skilled nursing facilities, or SNFs, assisted living facilities, or ALFs, and other healthcare properties located in the United States. All of the Company’s properties generate similar types of revenues and expenses related to tenant rent and reimbursements and operating expenses.
Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid short-term investments with original maturities of three months or less. The Company maintains cash and cash equivalents in United States banking institutions that exceed amounts insured by the Federal Deposit Insurance Corporation. The Company believes the risk of loss from exceeding this insured level is minimal.
Real Estate Investments
The Company periodically assesses the carrying value of real estate investments and related intangible assets in accordance with ASC 360, Property, Plant, and Equipment (ASC 360), to determine if facts and circumstances exist that would suggest that assets might be impaired or that the useful lives should be modified. In the event impairment in value occurs and a portion of the carrying amount of the real estate investments will not be recovered in part or in whole, a provision will be recorded to reduce the carrying basis of the real estate investments and related intangibles to their estimated fair value. The estimated fair value of the Company’s rental properties is determined by using customary industry standard methods that include discounted cash flow and/or direct capitalization analysis (Level 3) or estimated cash proceeds received upon the anticipated disposition of the asset from market comparables (Level 2). As part of the impairment evaluation, the buildings in the following locations were impaired to reflect the estimated fair values (Level 2).
| For the Years Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| (in thousands) | ||||||||||||
| Medford, MA (1) | $ | — | $ | — | $ | — | ||||||
| Zion, IL | — | — | 1,000 | |||||||||
| Bremerton, WA | — | — | 150 | |||||||||
| Youngtown, AZ | — | — | 1,635 | |||||||||
| Fall River, MA | — | — | 141 | |||||||||
| Cincinnati, OH | — | — | 90 | |||||||||
| West Chester, OH | — | — | 3,414 | |||||||||
| Columbus, TX | — | — | 1,422 | |||||||||
| Benton Harbor, MI | — | — | 491 | |||||||||
| Omaha, NE | — | — | 742 | |||||||||
| Searcy, AR | — | 500 | 1,898 | |||||||||
| Cathlamet, WA | — | — | 93 | |||||||||
| Methuen, MA | — | — | 41 | |||||||||
| Willmar, MN | 862 | — | — | |||||||||
| Jasper, TX | 1,479 | — | — | |||||||||
| $ | 2,341 | $ | 500 | $ | 11,117 | |||||||
| (1) | Included in discontinued operations and other expenses |
Buildings and building improvements are recorded at cost and have been assigned useful lives up to 40-years and are depreciated on the straight-line method. Personal property, furniture, and equipment have been assigned estimated useful lives up to 10 years and are depreciated on the straight-line method.
The Company may advance monies to its lessees for the purchase, generally, of furniture, fixtures, or equipment or other purposes. Required minimum lease payments due from the lessee increase to provide for the repayment of such amounts over a stated term. These advances in the instance where the depreciable life of the newly purchased asset is less than the remaining lease term are reflected as loan receivables on the consolidated balance sheets, and the incremental lease payments are bifurcated between principal and interest over the stated term. In the instance where the depreciable life of the newly purchased assets is longer than the remaining
| F-18 |
lease term, the purchase is recorded as property when such assets are deemed to be owned by the Company. In other instances, explicit secured loans are made to lessees for working capital and other funding needs and provide for monthly principal and interest payments generally ranging from five to 10 years.
Purchase Accounting
The Company allocates the purchase price of facilities between net tangible and identified intangible assets acquired and liabilities assumed as a result of the Company purchasing the business and subsequently leasing the business to unrelated third party operators. The Company makes estimates of the fair value of the tangible and intangible assets and acquired liabilities using information obtained from multiple sources as a result of preacquisition due diligence, marketing, leasing activities of the Company’s operator base, industry surveys of critical valuation metrics such as capitalization rates, discount rates and leasing rates and appraisals (Level 3). The Company allocates the purchase price of facilities to net tangible and identified intangible assets and liabilities acquired based on their fair values in accordance with the provisions of ASC 805, Business Combinations (ASC 805). The determination of fair value involves the use of significant judgment and estimation.
The Company determines fair values as follows:
| • | Real estate investments are valued using discounted cash flow projections that assume certain future revenue and costs and consider capitalization and discount rates using current market conditions. |
| • | The Company allocates the purchase price of facilities to net tangible and identified intangible assets acquired and liabilities assumed based on their fair values. |
| • | Other assets acquired and other liabilities assumed are valued at stated amounts, which approximate fair value. |
| • | Assumed debt balances are valued at fair value, with the computed discount/premium amortized over the remaining term of the obligation. |
The Company determines the value of land based on third party appraisals. The fair value of in-place leases, if any, reflects: (i) above and below-market leases, if any, determined by discounting the difference between the estimated current market rent and the in-place rentals, the resulting intangible asset or liability of which is amortized to rental revenue over the remaining life of the associated lease plus any fixed rate renewal periods if applicable; (ii) the estimated value of the cost to obtain operators, including operator allowances, operator improvements, and leasing commissions, which is amortized over the remaining life of the associated lease; and (iii) an estimated value of the absorption period to reflect the value of the rents and recovery costs foregone during a reasonable lease-up period as if the acquired space was vacant, which is amortized over the remaining life of the associated lease. The Company also estimates the value of operator or other customer relationships acquired by considering the nature and extent of existing business relationships with the operator, growth prospects for developing new business with such operator, such operator’s credit quality, expectations of lease renewals with such operator, and the potential for significant, additional future leasing arrangements with such operator. The Company amortizes such value, if any, over the expected term of the associated arrangements or leases, which would include the remaining lives of the related leases. The amortization is included in the consolidated statements of operations and comprehensive income in rental income (above/below-market leases) or depreciation and amortization expense (in-place lease assets). Generally, the Company’s purchase price allocation of the purchased business and subsequent leasing of the business to unrelated third party operators does not include an allocation to any intangible assets or intangible liabilities, as they are either immaterial or do not exist.
Revenue Recognition
Rental income is recognized on a straight-line basis over the term of the lease when collectability is reasonably assured. Differences between rental income earned and amounts due under the lease are charged or credited, as applicable, to straight-line rent receivable, net. Income recognized from this policy is titled straight-line rental income. Additional rents from expense reimbursements for insurance, real estate taxes and certain other expenses are recognized in the period in which the related expenses are incurred and the net impact is reflected in rental income on the consolidated statements of operations and comprehensive income.
Below is a summary of the components of rental income for the years ended December 31, 2014, 2013 and 2012 (in thousands):
| 2014 | 2013 | 2012 | ||||||||||
| Cash rental income | $ | 172,493 | $ | 130,666 | $ | 112,068 | ||||||
| Straight-line rental income, net | 4,788 | 4,478 | 7,656 | |||||||||
| Rental income from intangible amortization , net | 666 | 1,369 | 1,486 | |||||||||
| Total rental income | $ | 177,947 | $ | 136,513 | $ | 121,210 | ||||||
During the years ended December 31, 2014, 2013, and 2012 straight-line rental income (loss) includes a write-off (expense) of straight-line rent receivable, net of approximately $1.5 million, $2.9 million, and $1.5 million, respectively, due to the early termination of leases and replacement of operators.
| F-19 |
The Company’s reserve for uncollectible operator receivables is included as a component of reserve for uncollectible loan and other receivables in the consolidated statements of operations and comprehensive income. The amount incurred during the years ended December 31, 2014, 2013, and 2012 was $0.1 million, $0.1 million, and $10.3 million, respectively.
Lease Accounting
The Company, as lessor, makes a determination with respect to each of its leases whether they should be accounted for as operating leases or direct financing leases. The classification criteria is based on estimates regarding the fair value of the leased facilities, minimum lease payments, effective cost of funds, the economic life of the facilities, the existence of a bargain purchase option, and certain other terms in the lease agreements. Payments received under operating leases are accounted for in the statements of operations and comprehensive income as rental income for actual rent collected plus or minus a straight-line adjustment for minimum lease escalators. Assets subject to operating leases are reported as real estate investments in the consolidated balance sheets. For facilities leased as direct financing arrangements, an asset equal to the Company’s net initial investment is established on the balance sheet titled assets under direct financing leases. Payments received under the financing lease are bifurcated between interest income and principal amortization to achieve a consistent yield over the stated lease term using the interest method. Principal amortization (accretion) is reflected as an adjustment to the asset subject to a financing lease.
All of the Company’s leases contain fixed or formula-based rent escalators. To the extent that the escalator increases are tied to a fixed index or rate, lease payments are accounted for on a straight-line basis over the life of the lease.
Deferred Finance Costs
Deferred finance costs are being amortized using the straight-line method, which approximates the interest method, over the term of the respective underlying debt agreement.
Loan Receivables
Loan receivables consist of mortgage loans, capital improvement loans and working capital loans to operators. Mortgage loans represent the financing provided by the Company to operators or owners that are secured by mortgages on real property. Capital improvement loans represent the financing provided by the Company to perform certain capital improvements and/or to acquire furniture, fixtures, and equipment while the operator is operating the facility. Working capital loans to operators represent financing provided by the Company to operators for working capital needs that are secured with non-mortgage collateral or that are unsecured. Loan receivables are carried at their principal amount outstanding. Management periodically evaluates outstanding loans and notes receivable for collectability on a loan-by-loan basis. When management identifies potential loan impairment indicators, such as nonpayment under the loan documents, impairment of the underlying collateral, financial difficulty of the operator, or other circumstances that may impair full execution of the loan documents, and management believes it is probable that all amounts will not be collected under the contractual terms of the loan, the loan is written down to the present value of the expected future cash flows. Loan impairment is monitored via a quantitative and qualitative analysis including credit quality indicators and it is reasonably possible that a change in estimate could occur in the near term. As of December 31, 2014 and 2013, respectively, loan receivable reserves amounted to approximately $3.4 million and $0 million, respectively. No other circumstances exist that would suggest that additional reserves are necessary at the balance sheet dates other than as disclosed in Footnote 5.
Stock-Based Compensation
The Company follows ASC 718—Stock Compensation (“ASC 718”) in accounting for its share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee’s requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred. Additionally, the Company must make estimates regarding employee forfeitures in determining compensation expense. Subsequent changes in actual experience are monitored and estimates are updated as information is available. The non-cash stock-based compensation expense incurred by the Company through December 31, 2014 is summarized in Footnote 15.
Fair Value of Financial Instruments
ASC 820, Fair Value Measurements and Disclosures (ASC 820), establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:
| • | Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets; |
| F-20 |
| • | Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and |
| • | Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
The Company’s interest rate swaps were valued using models developed by the respective counterparty that use as their basis readily observable market parameters and are classified within Level 2 of the valuation hierarchy. As of December 31, 2014, the Company has no outstanding swaps.
Cash and cash equivalents and derivative financial instruments are reflected in the accompanying consolidated balance sheets at amounts considered by management to reasonably approximate fair value. Management estimates the fair value of its long-term debt using a discounted cash flow analysis based upon the Company’s current borrowing rate for debt with similar maturities and collateral securing the indebtedness. The Company had outstanding secured loans, unsecured notes payable, and a line of credit with a carrying value of approximately $1.2 billion and $686.4 million as of December 31, 2014 and 2013, respectively. The fair values of debt as of December 31, 2014 and 2013 were $1.2 billion and $705.8 million, respectively, based upon interest rates available to the Company on similar borrowings (Level 3). Management estimates the fair value of its loan receivables using a discounted cash flow analysis based upon the Company’s current interest rates for loan receivables with similar maturities and collateral securing the indebtedness. The Company had outstanding loan receivables with a carrying value of approximately $42.7 million and $41.7 million as of December 31, 2014 and 2013, respectively. The fair values of loan receivables as of December 31, 2014 and 2013 approximate their carrying value based upon interest rates available to the Company on similar borrowings.
Derivative Instruments
In the normal course of business, a variety of financial instrument are used to manage or hedge interest rate risk. The Company has implemented ASC 815, Derivatives and Hedging (ASC 815), which establishes accounting and reporting standards requiring that all derivatives, including certain derivative instruments embedded in other contracts, be recorded as either an asset or liability measured at their fair value unless they qualify for a normal purchase or normal sales exception. When specific hedge accounting criteria are not met, ASC 815 requires that changes in a derivative’s fair value be recognized currently in earnings. Changes in the fair market values of the Company’s derivative instruments are recorded in the consolidated statements of operations and comprehensive income if the derivative does not qualify for or the Company does not elect to apply hedge accounting. If the derivative is deemed to be eligible for hedge accounting, such changes are reported in accumulated other comprehensive income within the consolidated statement of changes in equity, exclusive of ineffectiveness amounts, which are recognized as adjustments to net income. All of the changes in the fair market values of our derivative instruments are recorded in the consolidated statements of operations and comprehensive income for our interest rate swaps that were terminated in September 2010. In November 2010, the Company entered into two interest rate swaps (which were settled at the IPO) and account for changes in fair value of such hedges through accumulated other comprehensive (loss) income in equity in our financial statements via hedge accounting. Derivative contracts are not entered into for trading or speculative purposes. Furthermore, the Company has a policy of only entering into contracts with major financial institutions based upon their credit rating and other factors. Under certain circumstances, the Company may be required to replace a counterparty in the event that the counterparty does not maintain a specified credit rating. As of December 31, 2014 and 2013, the Company has no outstanding derivative instruments.
Income Taxes
For federal income tax purposes, the Company elected, with the filing of its initial Form 1120 REIT, U.S. Income Tax Return for U.S. Real Estate Investment Trusts, to be taxed as a Real Estate Investment Trust (REIT) effective as of September 2010. To qualify as a REIT, the Company must meet certain organizational, income, asset and distribution tests. The Company currently is in compliance with these requirements and intends to maintain REIT status. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not elect REIT status for four subsequent years. However, the Company may still be subject to federal excise tax. In addition, the Company may be subject to certain state and local income and franchise taxes. Historically, the Company and its predecessor have generally only incurred certain state and local income and franchise taxes, but these amounts were immaterial in each of the periods presented. Prior to September 2010, the Partnership was a limited partnership and the consolidated operating results were included in the income tax returns of the individual partners. No uncertain income tax positions exist as of December 31, 2014 and 2013, respectively.
Noncontrolling Interests—Operating Partnership / Partnership Units
Noncontrolling interests—operating partnership, as presented on AVIV’s consolidated balance sheets, represent OP units held by individuals and entities other than AVIV.
| F-21 |
Noncontrolling interests—operating partnership, which can be settled by issuance of unregistered shares, are reported in the equity section of the consolidated balance sheets of AVIV. They are adjusted for income, losses and distributions allocated to OP units not held by AVIV. Adjustments to noncontrolling interests – operating partnership are recorded to reflect increases or decreases in the ownership of the Partnership by holders of OP units as a result of the redemptions of OP units for cash or in exchange for shares of AVIV’s common stock.
Prior to the IPO, the capital structure of our operating partnership consisted of six classes of partnership units, each of which had different capital accounts and each of which was entitled to different distributions. In connection with the IPO, each class of units of the Partnership was converted into an aggregate of 11,938,420 OP units held by limited partners of the Partnership. As of December 31, 2014, there were 10,272,374 of OP units outstanding.
Earnings Per Share of the REIT
Basic earnings per share is calculated by dividing the net income allocable to common shares for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing the net income for the period by the weighted average number of common and dilutive securities outstanding during the period.
Earnings Per Unit of the Partnership
Basic earnings per unit is calculated by dividing the net income allocable to units for the period by the weighted average number of OP units outstanding during the period. Diluted earnings per unit is calculated by dividing the net income allocable to OP units for the period by the weighted average number of units and dilutive securities outstanding during the period.
Risks and Uncertainties
The Company is subject to certain risks and uncertainties affecting the healthcare industry as a result of healthcare legislation and continuing regulation by federal, state, and local governments. Additionally, the Company is subject to risks and uncertainties as a result of changes affecting operators of nursing home facilities due to the actions of governmental agencies and insurers to limit the growth in cost of healthcare services.
Discontinued Operations
In accordance with ASC 205-20, Presentation of Financial Statements-Discontinued Operations (ASC 205-20), the results of operations related to the actual or planned disposition of rental properties are reflected in the consolidated statements of operations and comprehensive income as discontinued operations for all periods presented prior to the Company’s adoption of ASU No. 2014-08 on January 1, 2014.
Recent Accounting Pronouncements
In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU No. 2014-08). ASU No. 2014-08 changes the definition of a discontinued operation to include only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. ASU No. 2014-08 is effective prospectively for fiscal years beginning after December 15, 2014 and is available for early adoption as of January 1, 2014. The Company adopted the provisions of ASU No. 2014-08 as of January 1, 2014 and incorporated the provisions of this update to its consolidated financial statements upon adoption. The adoption of ASU No. 2014-08 did not have a material impact on the Company’s financial condition or results of operations.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which creates a new topic, Accounting Standards Codification Topic 606 (Topic 606). The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This standard is effective for interim or annual periods beginning after December 15, 2016 and allows for either full retrospective or modified retrospective adoption. Early adoption of this standard is not allowed. The Company is currently evaluating the impact the adoption of Topic 606 will have on its consolidated financial statements.
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern. This update provide guidance about management’s responsibilities to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. An entity’s management, in connection with the preparation of financial statements, to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management’s evaluation should be based on relevant conditions and events that are known or reasonably knowable at the date the financial statements are issued. When management identifies conditions or events that raise
| F-22 |
substantial doubt about an entity’s ability to continue as a going concern, the entity should disclose information that enables users of the financial statements to understand all of the following: (1) principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans); (2) management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations; and (3) management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern or management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. ASU No. 2014-15 is effective for interim and annual reporting periods after December 15, 2016 and early application is permitted. The Company is currently assessing this guidance for future implementation.
3. Omega Merger
On October 31, 2014, AVIV announced that our Board of Directors had unanimously approved a definitive merger agreement with Omega Healthcare Investors, Inc. (NYSE: OHI) (Omega) pursuant to which Omega will acquire all of the outstanding shares of AVIV in a stock-for-stock merger. Under the terms of the agreement, AVIV shareholders will receive a fixed exchange ratio of 0.90 Omega shares for each share of AVIV common stock they own.
Completion of the transaction is subject to satisfaction of customary closing conditions, including the approval of stockholders of both companies. The transaction is currently expected to close in the first half of 2015.
On February 2, 2015, AVIV announced that it has set the date of its special meeting of stockholders to consider and vote on, among other things, a proposal to approve its previously announced merger with Omega. The special meeting will be held on Friday, March 27, 2015. AVIV stockholders of record as of the close of business on February 12, 2015 will be entitled to receive notice of and to participate at the special meeting.
Additional information about the proposed merger transaction and the special meeting of stockholders to consider and vote on, among other things, a proposal to approve the proposed merger transaction, is included in the preliminary joint proxy statement/prospectus filed by Omega with the Securities and Exchange Commission (the SEC) on January 5, 2015, as amended on February 17, 2015 and the definitive joint proxy statement/prospectus which was mailed to stockholders of record after the related registration statement was declared effective by the SEC.
4. Real Estate Assets
The Company had the following acquisitions during the years ended December 31, 2014, 2013 and 2012 as described below:
2014 Acquisitions
Month Acquired | Property Type | Location | Purchase Price (in thousands) | |||||
| January | SNF/ALF/ILF | MN | $ | 40,000 | ||||
| January | SNF | TX | 15,920 | |||||
| March | SNF | IA | 13,500 | |||||
| March | SNF | KY | 35,000 | |||||
| April | SNF | FL | 6,000 | |||||
| April | SNF | TX | 53,700 | |||||
| May | SNF | TX | 3,600 | |||||
| May | SNF | CA | 13,350 | |||||
| June | SNF | KY | 6,000 | |||||
| July | SNF | MO | 16,200 | |||||
| July | SNF | MA | 32,000 | |||||
| July | SNF/ALF | MA | 50,000 | |||||
| September | SNF/ALF | WA/ID | 83,600 | |||||
| October | SNF | KY | 4,600 | |||||
| October | SNF | TX | 28,500 | |||||
| December | SNF/ALF/ILF/MOB | OH/MI/NC/IN/VA | 305,000 | |||||
| 706,970 | ||||||||
| February | Land Held for Development | TX | 2,110 | |||||
| July | Land Held for Development | MA | 12,288 | |||||
| October | Land Held for Development | OH | 1,250 | |||||
| December | Land Held for Development | OH | 750 | |||||
| $ | 723,368 | |||||||
| F-23 |
2013 Acquisitions
Month Acquired | Property Type | Location | Purchase Price (in thousands) | |||||
| April | Traumatic Brain Injury | CA | $ | 779 | ||||
| April | Traumatic Brain Injury | CA | 697 | |||||
| April | SNF | TX | 2,400 | |||||
| April | Medical Office Building | IN | 1,200 | |||||
| May | SNF | OH | 14,350 | |||||
| June | SNF | OK | 6,200 | |||||
| August | SNF | KY | 9,000 | |||||
| September | SNF | TX | 3,450 | |||||
| October | ALF | FL | 13,000 | |||||
| October | SNF | OH/IN | 35,900 | |||||
| November | SNF | OH | 41,000 | |||||
| November | SNF | AR | 1,162 | |||||
| December | Hospital | IN | 9,300 | |||||
| December | SNF/ALF/Long-Term Acute Care | OH | 35,600 | |||||
| December | SNF | TX | 13,000 | |||||
| December | SNF | IL | 7,000 | |||||
| December | SNF | TX | 3,350 | |||||
| 197,388 | ||||||||
| May | Land Parcel in Development | CT | 2,400 | |||||
| $ | 199,788 | |||||||
2012 Acquisitions
Month Acquired | Property Type | Location | Purchase Price (in thousands) | |||||
| January | Land Parcel | OH | $ | 275 | ||||
| March | SNF | NV | 4,800 | |||||
| March | SNF | OH | 2,500 | |||||
| March | SNF/ALF | IA/NE | 16,200 | |||||
| April | SNF | TX | 72,700 | |||||
| April | ALF | FL | 4,936 | |||||
| May | Land Parcel | TX | 60 | |||||
| May | ALF | WI | 2,500 | |||||
| June | ALF | CT | 16,000 | |||||
| July | LTAC | IN | 8,400 | |||||
| August | SNF | ID | 6,000 | |||||
| September | Traumatic Brain Injury | CA | 1,162 | |||||
| September | SNF | KY | 9,925 | |||||
| October | SNF | WI | 7,600 | |||||
| November | SNF | TX | 5,000 | |||||
| November | ALF | FL | 14,100 | |||||
| December | Traumatic Brain Injury | CA | 975 | |||||
| December | SNF | OH | 7,600 | |||||
| December | SNF/ALF | OK | 3,500 | |||||
| 184,233 | ||||||||
| December | Land Parcel in Development | TX | 93 | |||||
| $ | 184,326 | |||||||
| F-24 |
On July 10, 2014, the Company acquired three properties and two land parcels in Massachusetts for a purchase price of $94.3 million. Sidney and Evelyn Insoft, the parents of Steven Insoft, the Company’s President and Chief Operating Officer, jointly hold a 50% equity interest in the sellers of the properties, representing a gross economic interest in the sale of approximately $47.1 million. The Company believes that the terms of the acquisition were fair and reasonable and reflect terms that the Company would expect to obtain in an arm’s length transaction for comparable properties.
The following table illustrates the effect on total revenues and net income as if the Company had consummated the acquisitions as of January 1, 2013 (in thousands, unaudited):
| For the Year Ended December 31, | ||||||||
| 2014 | 2013 | |||||||
| Total revenues | $ | 231,166 | $ | 212,541 | ||||
| Net income | 77,881 | 68,362 | ||||||
For the year ended December 31, 2014, revenues attributable to the acquired assets were approximately $24.4 million and net income attributable to the acquired assets was approximately $12.6 million recognized in the consolidated statements of operations and comprehensive income.
Transaction-related costs are not expected to have a continuing significant impact on our financial results and therefore have been excluded from these pro forma results. Related to the above business combinations, the Company incurred $4.8 million and $1.2 million of transaction costs for the year ended December 31, 2014 and 2013, respectively.
In accordance with ASC 805, the Company allocated the approximate net purchase price paid for these properties acquired as follows:
| 2014 | 2013 | 2012 | ||||||||||
| (in thousands) | ||||||||||||
| Land | $ | 50,231 | $ | 21,066 | $ | 20,831 | ||||||
| Buildings and improvements | 614,193 | 163,634 | 148,307 | |||||||||
| Furniture, fixtures and equipment | 42,039 | 12,688 | 15,188 | |||||||||
| Construction in progress and land held for development | 16,398 | 2,400 | — | |||||||||
| Above market leases | 122 | — | — | |||||||||
| Lease intangibles | 385 | — | — | |||||||||
| Mortgages and other notes payable assumed | — | — | (11,460 | ) | ||||||||
| Borrowings and available cash | $ | 723,368 | $ | 199,788 | $ | 172,866 | ||||||
For the business combinations in 2014, 2013 and 2012, other than the acquisition in December 2014 for a purchase price of $305.0 million, the Company’s purchase price allocation of the purchased business and subsequent leasing of the business to unrelated third party operators does not include an allocation to any intangible assets or intangible liabilities, as these amounts are either immaterial or do not exist.
The Company considers renewals on above- or below-market leases when ascribing value to the in-place lease intangible liabilities at the date of a property acquisition. In those instances where the renewal lease rate pursuant to the terms of the lease does not adjust to a current market rent, the Company evaluates whether the stated renewal rate is above or below current market rates and considers the past and current operations of the property, the current rent coverage ratio of the operator, and the number of years until potential renewal option exercise. If renewal is considered probable based on these factors, an additional lease intangible liability is recorded at acquisition and amortized over the renewal period.
Dispositions
For the year ended December 31, 2014, the Company disposed of eight properties for a total sales price of $2.4 million, and the Company recognized a net loss on sale of approximately $2.5 million. The total sales price and net gain are net of transaction costs incurred in relation to the closings at the time of disposition.
| F-25 |
For the year ended December 31, 2013, the Company disposed of six properties, one vacant land parcel and certain other assets for a total sales price of $16.3 million, and the Company recognized a net gain on sale of approximately $1.0 million. The total sales price and net gain are net of transaction costs incurred in relation to the closings at the time of disposition.
For the year ended December 31, 2012, the Company disposed of seven properties and one vacant land parcel for a total sales price of $36.2 million and the Company recognized a net gain on sale of approximately $4.4 million (included in discontinued operations). The total sales price and net gain are net of transaction costs incurred in relation to the closings at the time of disposition.
The following summarizes the Company’s construction in progress and land held for development at December 31 (in thousands):
| 2014 | 2013 | 2012 | ||||||||||
| Beginning Balance, January 1 | $ | 23,292 | $ | 4,576 | $ | 28,293 | ||||||
| Additions | 41,555 | 20,467 | 25,428 | |||||||||
| Sold | — | — | (8,038 | ) | ||||||||
| Placed in service | (41,697 | ) | (1,751 | ) | (41,107 | ) | ||||||
| $ | 23,150 | $ | 23,292 | $ | 4,576 | |||||||
During 2014, 2013 and 2012 the Company capitalized expenditures for improvements related to various construction and reinvestment projects. In 2014, the Company placed into service eight completed investment projects at eight properties located in California, Connecticut, Pennsylvania, Texas and Indiana. In 2013, the Company placed into service one completed investment project at one property located in California. In 2012, the Company placed into service three additions and two remodels to three properties located in Washington and two development properties located in Connecticut. In accordance with ASC 835 Capitalization of Interest (ASC 835), the Company capitalizes interest based on the average cash balance of construction in progress for the period using the weighted-average interest rate on all outstanding debt, which approximated 5.1% for the year ended December 31, 2014. The balance of capitalized interest within construction in progress at December 31, 2014, 2013 and 2012 was $16,000, $0.8 million, and $0.1 million, respectively. The amount capitalized during the year ended December 31, 2014, 2013 and 2012, relative to interest incurred was $0.7 million, $0.8 million, and $1.1 million, respectively.
5. Loan Receivables
The following summarizes the Company’s loan receivables, net activity during the years ended December 31, 2014 and 2013 (in thousands):
| 2014 | 2013 | |||||||||||||||||||||||||||||||
| Mortgage Loans | Capital Improvement Loans | Working Capital Loans | Total Loans | Mortgage Loans | Capital Improvement Loans | Working Capital Loans | Total Loans | |||||||||||||||||||||||||
| Beginning balance | $ | 28,316 | $ | 4,580 | $ | 8,790 | $ | 41,686 | $ | 16,690 | $ | 6,250 | $ | 9,699 | $ | 32,639 | ||||||||||||||||
| New loans issued | — | — | 11,893 | 11,893 | 9,520 | — | 1,069 | 10,589 | ||||||||||||||||||||||||
| Existing loans funded | 5,908 | — | 6,575 | 12,483 | 3,234 | (83 | ) | — | 3,151 | |||||||||||||||||||||||
| Reserve for uncollectible loans | — | — | (3,406 | ) | (3,406 | ) | — | — | — | — | ||||||||||||||||||||||
| Loan write offs | — | — | — | — | — | — | (11 | ) | (11 | ) | ||||||||||||||||||||||
| Loan amortization and repayments | (9,846 | ) | (1,282 | ) | (8,831 | ) | (19,959 | ) | (1,128 | ) | (1,587 | ) | (1,967 | ) | (4,682 | ) | ||||||||||||||||
| $ | 24,378 | $ | 3,298 | $ | 15,021 | $ | 42,697 | $ | 28,316 | $ | 4,580 | $ | 8,790 | $ | 41,686 | |||||||||||||||||
| F-26 |
Interest income on loans and financing leases for the years ended December 31, 2014, 2013 and 2012 (in thousands):
| 2014 | 2013 | 2012 | ||||||||||
| Mortgage loans | $ | 1,816 | $ | 1,692 | $ | 1,104 | ||||||
| Capital improvement loans | 465 | 691 | 1,386 | |||||||||
| Working capital loans | 730 | 561 | 704 | |||||||||
| Direct financing lease | 1,472 | 1,456 | 1,439 | |||||||||
| $ | 4,483 | $ | 4,400 | $ | 4,633 | |||||||
The Company’s reserve on a loan-by-loan basis for uncollectible loan receivables balances at December 31, 2014 and 2013 was approximately $3.4 million and $0 million, respectively and any movement in the reserve is reflected in reserve for uncollectible loan and other receivables in the consolidated statements of operations and comprehensive income. The gross balance of loan receivables for which a reserve on a loan-by-loan basis for uncollectible loan receivables has been applied was approximately $3.4 million and $0 million, at December 31, 2014 and 2013, respectively.
During 2014 and 2013, the Company funded loans for both working capital and capital improvement purposes to various operators. All loans held by the Company accrue interest and are recorded as interest income unless the loan is deemed impaired in accordance with Company policy. The payments received from the operator cover both interest accrued as well as amortization of the principal balance due. Any payments received from the operator made outside of the normal loan amortization schedule are considered principal prepayments and reduce the outstanding loan receivables balance.
6. Deferred Finance Costs
The following summarizes the Company’s deferred finance costs at December 31, 2014 and 2013 (in thousands):
| 2014 | 2013 | |||||||
| Gross amount | $ | 27,902 | $ | 21,881 | ||||
| Accumulated amortization | (8,878 | ) | (5,238 | ) | ||||
| Net | $ | 19,024 | $ | 16,643 | ||||
The estimated annual amortization of the deferred finance costs for each of the five succeeding years is as follows (in thousands):
| 2015 | $ | 4,412 | ||
| 2016 | 4,412 | |||
| 2017 | 4,412 | |||
| 2018 | 3,281 | |||
| 2019 | 1,301 | |||
| Thereafter | 1,206 | |||
| Total | $ | 19,024 |
During the year ended December 31, 2014, the Company wrote-off deferred financing costs of approximately $0.8 million with approximately $0.3 million of accumulated amortization associated with the pay downs of previous credit facilities for a net recognition as loss on extinguishment of debt of approximately $0.5 million.
During the year ended December 31, 2013, the Company wrote-off deferred financing costs of approximately $9.7 million with approximately $4.6 million of accumulated amortization associated with the pay downs of previous credit facilities for a net recognition as loss on extinguishment of debt of approximately $5.1 million.
| F-27 |
7. Intangible Assets and Liabilities
The following summarizes the Company’s intangible assets and liabilities classified as part of other assets or other liabilities at December 31, 2014 and 2013, respectively (in thousands):
| Assets | ||||||||||||||||||||||||
| 2014 | 2013 | |||||||||||||||||||||||
| Gross Amount | Accumulated Amortization | Net | Gross Amount | Accumulated Amortization | Net | |||||||||||||||||||
| Above market leases | $ | 5,634 | $ | (2,926 | ) | $ | 2,708 | $ | 6,437 | $ | (3,452 | ) | $ | 2,985 | ||||||||||
| In-place lease assets | 1,037 | (208 | ) | 829 | 652 | (130 | ) | 522 | ||||||||||||||||
| Operator relationship | 212 | (51 | ) | 161 | 212 | (34 | ) | 178 | ||||||||||||||||
| $ | 6,883 | $ | (3,185 | ) | $ | 3,698 | $ | 7,301 | $ | (3,616 | ) | $ | 3,685 | |||||||||||
| Liabilities | ||||||||||||||||||||||||
| 2014 | 2013 | |||||||||||||||||||||||
| Gross Amount | Accumulated Amortization | Net | Gross Amount | Accumulated Amortization | Net | |||||||||||||||||||
| Below market leases | $ | 12,933 | $ | (6,435 | ) | $ | 6,498 | $ | 17,623 | $ | (10,059 | ) | $ | 7,564 | ||||||||||
Amortization expense for in-place lease assets and operator relationship was $0.1 million, $0.1 million, and $0.1 million for the years ended December 31, 2014, 2013, and 2012 and is included as a component of depreciation and amortization in the consolidated statements of operations and comprehensive income. Amortization expense for the above market leases intangible asset for the years ended December 31, 2014, 2013, and 2012 was approximately $0.4 million, $0.5 million, $0.6 million, respectively, and is included as a component of rental income in the consolidated statements of operations and comprehensive income. Accretion for the below market leases intangible liability for the years ended December 31, 2014, 2013, and 2012 was approximately $1.1 million, $1.9 million, $2.0 million, respectively, and is included as a component of rental income in the consolidated statements of operations and comprehensive income.
For the year ended December 31, 2014, the Company wrote-off above market leases intangible assets of approximately $0.9 million with accumulated amortization of approximately $0.9 million, and below market leases intangible liabilities of approximately $4.7 million with accumulated accretion of approximately $4.7 million, for a net recognition of $0 in rental income from intangible amortization. These write-offs were the result of fully amortized assets and fully accreted liabilities.
For the year ended December 31, 2013, the Company wrote-off above market leases intangible assets of approximately $0.2 million with accumulated amortization of approximately $0.2 million, and below market leases intangible liabilities of approximately $8.0 million with accumulated accretion of approximately $8.0 million, for a net recognition of $0 in rental income from intangible amortization. These write-offs were the result of fully amortized assets and fully accreted liabilities.
For the year ended December 31, 2012, the Company wrote-off above market leases intangible assets of approximately $0.9 million with accumulated amortization of approximately $0.7 million, and below market leases intangible liabilities of approximately $0.8 million with accumulated accretion of approximately $0.7 million, for a net recognition of approximately $19,000 gain in rental income from intangible amortization, respectively.
The estimated annual amortization expense of the identified intangibles for each of the five succeeding years and thereafter is as follows:
Year ending December 31, | Assets | Liabilities | ||||||
| 2015 | $ | 695 | $ | 891 | ||||
| 2016 | 407 | 868 | ||||||
| 2017 | 341 | 726 | ||||||
| 2018 | 341 | 721 | ||||||
| 2019 | 341 | 721 | ||||||
| Thereafter | 1,573 | 2,571 | ||||||
| $ | 3,698 | $ | 6,498 | |||||
| F-28 |
8. Leases
As of December 31, 2014, the Company’s portfolio of investments consisted of 346 healthcare facilities, located in 30 states and operated by 37 third party operators. At December 31, 2014, approximately 53.8% (measured as a percentage of total assets) were leased by five private operators: Laurel (15.6%), Maplewood (11.5%), Saber (9.3%), EmpRes (9.1%), and Fundamental (8.3%). No other operator represents more than 7.7% of our total assets. The five states in which the Company had its highest concentration of total assets were Ohio (15.5%), Texas (15.2%), California (8.8%), Michigan (6.3%), and Connecticut (5.8%), at December 31, 2014.
For the year ended December 31, 2014, the Company’s rental income from operations totaled approximately $177.9 million, of which approximately $22.7 million was from Daybreak Healthcare (12.8%), $21.8 million from Saber Health Group (12.3%), and $14.9 million from EmpRes (8.4%). No other operator generated more than 8.0% of the Company’s rental income from operations for the year ended December 31, 2014.
The Company’s real estate investments are leased under noncancelable triple-net operating leases. Under the provisions of the leases, the Company receives fixed minimum monthly rentals, generally with annual increases, and the operators are responsible for the payment of all operating expenses, including repairs and maintenance, insurance, and real estate taxes of the property throughout the term of the leases.
At December 31, 2014, future minimum annual rentals to be received under the noncancelable lease terms are as follows (in thousands):
| 2015 | $ | 220,134 | ||
| 2016 | 222,386 | |||
| 2017 | 222,473 | |||
| 2018 | 215,592 | |||
| 2019 | 204,341 | |||
| Thereafter | 976,513 | |||
| $ | 2,061,439 |
9. Debt
The Company’s secured loans, unsecured notes payable and line of credit consisted of the following (in thousands):
| December 31, 2014 | December 31, 2013 | |||||||
| HUD loan (interest rate of 5.00% on December 31, 2014 and 2013), inclusive of a $2.3 and $2.4 million premium balance at December 31, 2014 and 2013, respectively) | $ | 13,418 | $ | 13,654 | ||||
| 2019 Notes (interest rate of 7.75% on December 31, 2014 and 2013), inclusive of $2.3 and $2.8 million net premium balance, respectively | 402,292 | 402,752 | ||||||
| 2021 Notes (interest rate of 6.00% on December 31, 2014 and 2013) | 250,000 | 250,000 | ||||||
| Credit Facility (interest rate of 1.96% on December 31, 2014) | 355,000 | — | ||||||
| Revolving Credit Facility (interest rate of 2.52% on December 31, 2013) | — | 20,000 | ||||||
| Term Loan (interest rate of 4.00% on December 31, 2014) | 180,000 | — | ||||||
| Total | $ | 1,200,710 | $ | 686,406 | ||||
| F-29 |
In conjunction with the IPO on March 26, 2013, the Company under Aviv Financing I repaid the outstanding balance of a term loan and an acquisition credit line and under Aviv Financing V repaid the outstanding balance of a 2016 revolver in the amounts of $191.2 million, $18.9 million, and $94.4 million, respectively. The Company paid $2.2 million in prepayment penalties which is included in loss on extinguishment of debt on the consolidated statements of operations and comprehensive income for the year ended December 31, 2013.
2019 Notes
On February 4, 2011, April 5, 2011, and March 28, 2012 Aviv Healthcare Properties Limited Partnership and Aviv Healthcare Capital Corporation (the Issuers) issued $200 million, $100 million and $100 million of 7 3/4% Senior Notes due in 2019 (the 2019 Notes), respectively. The REIT is a guarantor of the Issuers’ 2019 Notes. The 2019 Notes are unsecured senior obligations of the Issuers and will mature on February 15, 2019, and bear interest at a rate of 7.75% per annum, payable semiannually to holders of record at the close of business on the February 1 or the August 1 immediately preceding the interest payment date on February 15 and August 15 of each year, commencing August 15, 2011. A premium of approximately $2.75 million and $1.0 million was associated with the offering of the $100 million of 2019 Notes on April 5, 2011 and the $100 million of 2019 Notes on March 28, 2012, respectively. The premium will be amortized as an adjustment to the yield on the 2019 Notes over their term. The Company used the proceeds, amongst other things, to pay down the outstanding balance of previous credit facilities during 2012.
2021 Notes
On October 16, 2013, the Issuers issued $250 million of 6% Senior Notes due in 2021 (2021 Notes). The REIT is a guarantor of the Issuers’ 2021 Notes. The 2021 Notes are unsecured senior obligations of the Issuers and will mature on October 16, 2021, and bear interest at a rate of 6.00% per annum, payable semiannually to holders of record at the close of business on the April 1 or the October 1 immediately preceding the interest payment date on April 15 and October 15 of each year, commencing April 15, 2014. The Company used the net proceeds, amongst other things, to pay down approximately $135.0 million of the outstanding indebtedness under the Revolving Credit Facility during 2013.
Credit Facility
On March 26, 2013, the Company, through Aviv Financing IV, entered into a $300 million secured revolving credit facility and $100 million term loan with Bank of America, N.A. (collectively, the Revolving Credit Facility). On April 16, 2013, the Company converted the entire $100 million term loan into a secured revolving credit facility, thereby terminating the term loan and any availability thereunder and increasing the amount available under the secured revolving credit facility from $300 million to $400 million. On each payment date, the Company paid interest only in arrears on any outstanding principal balance. The interest rate was based on LIBOR plus a margin of 235 basis points to 300 basis points depending on the Company’s leverage ratio. Additionally, an unused fee equal to 50 basis points per annum of the daily unused balance on the Revolving Credit Facility was payable quarterly in arrears.
On May 14, 2014, the Company terminated the Revolving Credit Facility and, through the Partnership, entered into a new $600 million unsecured revolving credit facility (the Credit Facility). The Credit Facility has an interest rate that ranges from 170 to 225 basis points over LIBOR depending on the Company’s consolidated leverage and a maturity date of May 14, 2018. The Credit Facility can be extended for an additional year at the Company’s option, subject to the satisfaction of certain conditions, and contains an accordion feature increasing the borrowing capacity to $800 million. As of December 31, 2014, the Credit Facility had a balance of $355.0 million.
Term Loan
On December 17, 2014, the Company, through Aviv Financing VI, entered into a $180 million secured term loan (Term Loan) with General Electric Capital Corporation. On each payment date, the Company pays interest only in arrears on any outstanding principal balance until February 1, 2017 when principal and interest will be paid in arrears based on a thirty year amortization schedule. The interest rate is based on LIBOR, with a floor of 50 basis points, plus a margin of 350 basis points. The interest rate at December 31, 2014 was 4.00%. The initial term expires in December 2019 with the full balance of the loan due at that time.
Other Loans
On June 15, 2012, a subsidiary of Aviv Financing III assumed a HUD loan with a balance of approximately $11.5 million. Interest is at a fixed rate of 5.00%. The loan originated in November 2009 with a maturity date of October 1, 2044, and is based on a 35-year amortization schedule. The Company is obligated to pay the remaining principal and interest payments of the loan. A premium of $2.5 million was associated with the assumption of debt and will be amortized as an adjustment to interest expense on the HUD loan over its term.
| F-30 |
Future annual maturities of all debt obligations for five fiscal years subsequent to December 31, 2014 and thereafter, are as follows (in thousands):
| 2015 | $ | 165 | ||
| 2016 | 174 | |||
| 2017 | 2,204 | |||
| 2018 | 357,527 | |||
| 2019 | 575,846 | |||
| Thereafter | 260,165 | |||
| 1,196,081 | ||||
| Debt premiums | 4,629 | |||
| $ | 1,200,710 |
10. Related Party Receivables and Payables
Related party receivables and payables represent amounts due from/to various affiliates of the Company. An officer of the Company funded approximately $2.0 million at December 31, 2012 in connection with the distribution settlement (see Footnote 12). There are no related party receivables or payables as of December 31, 2014 and 2013.
11. Derivatives
During the periods presented, the Company was party to two interest rate swaps, with identical terms of $100.0 million each, which were purchased to fix the variable interest rate on the denoted notional amount under the Term Loan. On March 26, 2013, in connection with the pay down of the Term Loan, the Company settled all interest rate swaps at a fair value of $3.6 million and such amount previously recorded in accumulated other comprehensive income (loss) was recorded within loss on extinguishment of debt in the consolidated statements of operations and comprehensive income. The interest rate swaps qualified for hedge accounting and as such the amounts previously recorded in accumulated other comprehensive income in the consolidated statement of changes in equity were reversed. For presentational purposes they are shown as one derivative due to the identical nature of their economic terms.
The derivative positions were valued using models developed by the respective counterparty that used as their basis readily observable market parameters (such as forward yield curves) and were classified within Level 2 of the valuation hierarchy. The Company considered its own credit risk as well as the credit risk of its counterparties when evaluating the fair value of its derivatives. As of December 31, 2014 and 2013, there are no derivative instruments outstanding.
12. Commitments and Contingencies
The Company has contractual arrangements with three operators in six of its facilities to reimburse any liabilities, obligations or claims of any kind or nature resulting from the actions of the former operators in such facilities. The Company is obligated to reimburse the fees to the operator if and when the operator incurs such expenses associated with certain Indemnified Events, as defined therein. The total possible obligation for these fees is estimated to be $2.7 million, of which approximately $2.2 million has been paid to date. The remaining $0.5 million is accrued as of December 31, 2014 as a component of other liabilities in the consolidated balance sheets.
The Company has purchase options with one of its tenants that are not exercisable by the tenant until January 1, 2017 for five properties, January 1, 2019 for four properties, and January 1, 2022 for five properties. If the 2017 option is not exercised, the tenant loses the right to exercise the 2019 option and the 2022 option. If the 2017 option is exercised, but the 2019 option is not exercised, the tenant loses the right to exercise the 2022 option. The purchase options call for the purchase price, as defined, to be determined at a future date. In addition, the Company has purchase options with four tenants on five properties that are exercisable by the applicable tenant at various times during the terms of the respective leases. Two of these options are exercisable at a predetermined purchase price and the remaining three call for a purchase price to be determined at a future date.
As of the date of this filing, four putative class actions have been filed by purported stockholders of AVIV against AVIV, its directors, Omega and Omega’s merger sub challenging the merger of AVIV and Omega in the Circuit Court of Maryland, Baltimore County. The class actions were filed on November 10, 2014, November 17, 2014, November 24, 2014, and December 2, 2014. Each plaintiff filed an amended complaint on January 22, 2015. The lawsuits seek injunctive relief preventing the parties from consummating the merger, rescission of the transactions contemplated by the merger agreement, imposition of a constructive trust in favor of the class upon any benefits improperly received by the defendants, compensatory damages, and litigation costs including attorneys’ fees. The four lawsuits were consolidated on January 28, 2015 under the title In Re Aviv REIT Inc. Stockholder Litigation, Case No. 24-C-14-006352.
| F-31 |
In addition, AVIV’s Board of Directors has received a stockholder litigation demand letter dated November 17, 2014, from a law firm representing Gary Danley, who is the named plaintiff in the putative class action filed on November 24, 2014 in Circuit Court of Maryland, Baltimore County. The letter alleges that the directors of AVIV violated fiduciary duties to AVIV, and demands that the AVIV Board of Directors take action to ensure that the consideration provided in the merger is fair to AVIV and its stockholders and otherwise seek appropriate remedies for AVIV.
The Company’s management believes that these actions have no merit and intends to defend vigorously against them.
The Company is involved in various unresolved legal actions and proceedings, which arise in the normal course of our business. Although the outcome of a particular proceeding can never be predicted, we do not believe that the result of any of these other matters will have a material adverse effect on our business, operating results, liquidity or financial position.
13. Noncontrolling Interests – Operating Partnership / Partnership Units
Noncontrolling interests – operating partnership, as presented on AVIV’s consolidated balance sheets, represent the OP units held by individuals and entities other than AVIV. Accordingly, the following discussion related to noncontrolling interests – operating partnership of the REIT refers equally to OP units of the Partnership.
Holders of OP units are entitled to receive distributions in a per unit amount equal to the per share dividends made with respect to each share of AVIV’s common stock, if and when AVIV’s Board of Directors declares such a dividend. Holders of OP units have the right to tender their units for redemption, in an amount equal to the fair market value of AVIV’s common stock. AVIV may elect to redeem tendered OP units for cash or for shares of AVIV’s common stock. During the year ended December 31, 2014, OP unitholders redeemed a total of 1,343,908 OP units in exchange for an equal number of shares of common stock of AVIV.
14. Stockholders’ Equity of the REIT and Partners’ Capital of the Partnership
Distributions accrued are summarized as follows for the years ended December 31 (in thousands):
| Class A | Class B | Class C | Class D | Class F | Limited Partner OP Units | REIT Shares | ||||||||||||||||||||||
| 2014 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 16,072 | $ | 65,089 | ||||||||||||||
| 2013 | $ | 2,797 | $ | 97 | $ | 146 | $ | — | $ | 554 | $ | 13,064 | $ | 60,276 | ||||||||||||||
| 2012 | $ | 9,002 | $ | 1,879 | $ | 2,541 | $ | — | $ | 2,215 | $ | — | $ | 27,955 | ||||||||||||||
In connection with the IPO, Class A through F Units were converted into OP units and are no longer outstanding as of December 31, 2014. The weighted-average Units outstanding are summarized as follows for the years ended December 31:
| Class A | Class B | Class C | Class D | Class F | Limited Partner OP Units | REIT Shares | ||||||||||||||||||||||
| 2014 | — | — | — | — | — | 11,328,049 | 44,629,901 | |||||||||||||||||||||
| 2013 | 3,136,203 | 1,053,335 | — | 1,875 | 625,251 | 9,091,974 | 33,700,834 | |||||||||||||||||||||
| 2012 | 13,467,223 | 4,523,145 | 2 | 8,050 | 2,684,900 | — | 20,006,538 | |||||||||||||||||||||
In connection with the IPO each class of limited partnership units of the Partnership were converted into an aggregate of 21,653,813 OP units held by the REIT and 11,938,420 OP units held by limited partners of the Partnership. As a result, the Partnership has a single class of OP units as of March 26, 2013. As noted above, the OP units held by limited partners of the Partnership are redeemable for cash or, at the REIT’s election, unregistered shares of the REIT’s common stock on a one-for-one basis.
During the years ended December 31, 2014, 2013 and 2012:
| • | AVIV issued an aggregate of 16,618, 70,500, and 0 shares of common stock in connection with the Company’s annual grant of unrestricted and restricted stock to its Board of Directors, respectively; |
| • | AVIV reserved for issuance an aggregate of 164,973, 226,585, and 0 shares of common stock in connection with the Company’s annual grant of restricted stock to employees, the hiring of new employees and grants and retainers for its Board of Directors, respectively. During the year ended December 31, 2014, 143,388 shares reserved for restricted stock |
| F-32 |
| were vested. This includes a vesting of 200% of the performance based awards and 9,947 dividend equivalents earned on these awards along with 26,724 (including dividend equivalents earned on the awards) shares reserved for restricted stock were forfeited; |
| • | AVIV issued 15,180,000 shares in connection with the IPO on March 26, 2013 that resulted in proceeds to the Company, net of underwriting discounts, commissions, advisory fees and other offering costs of $282.3 million; |
| • | AVIV also issued 9,200,000 shares in connection with a public offering on April 10, 2014 that resulted in proceeds to the Company, net of underwriting discounts, commissions, advisory fees and other offering costs of $211.3 million; |
| • | OP unitholders redeemed a total of 1,343,908, 322,137, and 0 OP units in exchange for an equal number of shares of AVIV’s common stock, respectively; and. |
| • | AVIV issued 174,467, 0 and 0 shares of common stock in connection with an option exercise, respectively. |
For the year ended December 31, 2014, AVIV declared and paid the following cash dividends totaling $1.44 per share on its common stock, of which the Partnership paid equivalent distributions on OP units:
Record | Payment Date | Cash Dividend | Ordinary Taxable Dividend (unaudited) | Nontaxable Return of Capital Distributions (unaudited) | ||||||||||||
| 3/28/2014 | 4/11/2014 | $ | 0.36 | $ | 0.235 | $ | 0.125 | |||||||||
| 6/27/2014 | 7/11/2014 | 0.36 | 0.235 | 0.125 | ||||||||||||
| 9/26/2014 | 10/10/2014 | 0.36 | 0.235 | 0.125 | ||||||||||||
| 12/12/2014 | 12/19/2014 | 0.36 | 0.235 | 0.125 | ||||||||||||
| $ | 1.44 | $ | 0.94 | $ | 0.50 | |||||||||||
15. Equity Compensation Plan
Prior to September 2010, the Partnership had established an officer incentive program linked to its future value. Awards vest annually over a five-year period assuming continuing employment by the recipient. The awards settled on December 31, 2012 in Class C Units or, at the Company’s discretion, cash. For accounting purposes, expense recognition under the program commenced in 2008, and the related expense for the years ended December 31, 2014, 2013 and 2012 was $0, $0 and $0.4 million, respectively.
Class D units were periodically granted to employees of Aviv Asset Management (AAM), a subsidiary of the Operating Partnership. Part of the Class D Units are defined as performance-based awards under ASC 718 and require employment of the recipient on the date of sale, disposition, or refinancing (Liquidity Event). If the employee is no longer employed on such date, the award is forfeited. The remainder of the Class D Units were time-based awards under ASC 718 and such fair value determined on the grant date was recognized over the vesting period. On March 26, 2013, the performance component Class D Units were converted to OP units in connection with the IPO, and $0.9 million of expense was recognized.
Restricted Stock Grants
On March 26, 2013 the Company adopted the Aviv REIT, Inc. 2013 Long-Term Incentive Plan (the LTIP). The purpose of the LTIP is to attract and retain qualified persons upon who, in large measure, the Company’s sustained progress, growth and profitability depend, to motivate the participants to achieve long-term Company goals and to align the participants’ interests with those of other stockholders by providing them with a proprietary interest in the Company’s growth and performance. The Company’s executive officers, employees, consultants and non-employee directors are eligible to participate in the LTIP. Under the plan, 2,000,000 shares of the Company’s common stock are available for issuance. The shares can be issued as restricted stock awards (RSAs) or as restricted stock units (RSUs).
Some of these RSUs are subject to time vesting and some are subject to performance vesting. The time-based equity RSUs vest over a period of three years, subject to the employee’s continued employment with the Company. The performance-based RSUs vest on the basis of Total Shareholder Return (TSR) on the Company’s stock compared to the TSR of its peer companies, as defined. The performance based RSUs are based on the companies comprising the NAREIT Equity Index and the companies comprising the Bloomberg Healthcare REIT Index for the performance periods, as defined. The RSUs carry dividend equivalent rights and are subject to the same vesting terms as the underlying RSUs.
| F-33 |
During 2014, the Company issued 16,618 common shares all of which were issued, vested, and are unrestricted. Additionally, the Company granted 164,973 RSUs. In addition, 143,388 shares vested and 26,724 were subsequently forfeited prior to the year ended December 31, 2014. The restricted shares that vested satisfied the performance metric stated and were vested at 200% of the targeted award granted in 2013. Both vested restricted stock and forfeited restricted stock included dividend equivalents earned on these awards.
During 2013, the Company issued 70,500 RSAs, of which 23,250 shares were issued, vested, and are unrestricted and 47,250 shares were issued and are subject to a vesting period. Additionally, the Company issued 226,585 RSUs, of which 17,470 were subsequently forfeited prior to the year ended December 31, 2013. Some of these RSUs are subject to time vesting and some are subject to performance vesting.
For the years ended December 31, 2014 and 2013, the Company recognized total non-cash stock-based compensation expense related to the LTIP of $4.9 million and $1.9 million, respectively.
Restricted stock awards vest over specified periods of time as long as the employee remains with the Company. The following table sets forth the number of unvested shares of restricted stock and the weighted average fair value of these shares at the date of grant:
| 2014 | 2013 | |||||||||||||||
| Shares of Restricted Stock | Weighted Average Fair Value at Date of Grant (2) | Shares of Restricted Stock | Weighted Average Fair Value at Date of Grant (2) | |||||||||||||
| Unvested balance at January 1 | 256,092 | $ | 29.93 | — | $ | — | ||||||||||
| Granted | 221,583 | $ | 28.00 | 273,923 | $ | 30.47 | ||||||||||
| Vested (1) | (143,388 | ) | $ | 35.67 | — | $ | — | |||||||||
| Forfeited | (26,724 | ) | $ | 30.53 | (17,831 | ) | $ | 39.14 | ||||||||
| Unvested balance at December 31 | 307,563 | $ | 25.73 | 256,092 | $ | 29.93 | ||||||||||
| (1) | Includes 47,068 shares which were used to settle minimum employee withholding tax obligations for multiple employees of approximately $1.5 million in 2014. A net of 96,320 shares of common stock were delivered in the year ended December 31, 2014. |
| (2) | The grant date fair value for the time-based awards was based on the market price of the Company’s common stock on the date of grant. The grant date fair value for the performance-based awards was based on a Monte Carlo simulation model. |
As of December 31, 2014, total unearned compensation on restricted stock was $5.6 million, and the weighted average vesting period was 1.66 years.
Option Awards
On September 17, 2010, the Company adopted the 2010 Management Incentive Plan (the MIP), which provides for the grant of option awards. Two thirds of the options granted under the MIP were performance based awards whose criteria for vesting is tied to a future liquidity event (as defined) and also contingent upon meeting certain return thresholds (as defined). The grant date fair value associated with all performance-based award options of the Company aggregated to approximately $7.4 million at the time of the IPO. One third of the options granted under the MIP were time based awards and the service period for these options is four years with shares vesting at a rate of 25% ratably from the grant date.
In connection with the IPO, all options outstanding under the MIP, representing options to purchase 5,870,138 shares with a weighted average exercise price of $17.47 per share, became fully-vested. In addition, recipients were entitled to receive dividend equivalents on their options awarded under the MIP. Dividend equivalents were paid on time-based options on (i) the date of vesting, with respect to any portion of a time-based option that was unvested on the date the dividend equivalent was accrued, and (ii) the last day of the calendar quarter in which such dividends were paid to stockholders, with respect to any portion of a time-based option vested as of the date the dividend equivalent was accrued. Dividend equivalents accrued and unpaid prior to the consummation of the IPO in the approximate amount of $14.8 million were paid in shares of common stock, net of applicable withholding of approximately $6.8 million, in an amount based on the IPO price of common stock. No dividend equivalents will be paid for any MIP options with respect to periods after the date of the IPO by the Company.
In connection with the IPO, the holders of option awards under the MIP received a new class of units of LG Aviv L.P., the legal entity through which Lindsay Goldberg holds its interest in the REIT, equal to the number of options held by such persons immediately prior to the consummation of the IPO. Under the limited partnership agreement of LG Aviv L.P., the units are entitled to
| F-34 |
receive an aggregate distribution amount equal to 14.9% of the dividend distributions declared and received by LG Aviv L.P. after the consummation of the IPO in respect of its shares of common stock. The distribution amount will be paid by LG Aviv L.P. ratably to each holder of such units on the distribution date in the proportion that the total number of units held by such holder bears to the total outstanding units of the same class. Any unit payments will be paid, if at all, on the earlier of (i) the last day of the calendar quarter in which dividends were paid to the Company stockholders and (ii) three business days following the holder’s termination of employment with the Company. For the year ended December 31, 2014, $5.6 million was paid by LG Aviv L.P. to the holders of such units.
The following table represents the time and performance-based option awards activity for the years ended December 31, 2014, 2013 and 2012:
| 2014 | 2013 | 2012 | ||||||||||
| Outstanding at January 1 | 5,870,138 | 1,956,805 | 1,417,228 | |||||||||
| Granted | — | — | 701,550 | |||||||||
| Awards vested at IPO | — | 3,913,333 | — | |||||||||
| Exercised | (174,467 | ) | — | — | ||||||||
| Cancelled/Forfeited | — | — | (161,973 | ) | ||||||||
| Outstanding at December 31 | 5,695,671 | 5,870,138 | 1,956,805 | |||||||||
| Options exercisable at end of period | 5,695,671 | — | — | |||||||||
| Weighted average fair value of options granted | $ | 2.20 | $ | 2.20 | $ | 2.20 | ||||||
The following table represents the time and performance based option awards outstanding cumulatively life-to-date for the years ended December 31, 2014, 2013, and 2012 as well as other MIP data:
| 2014 | 2013 | 2012 | ||||||||||
| Range of exercise prices | $ | 16.56 - $18.87 | $ | 16.56 - $18.87 | $ | 16.56 - $18.87 | ||||||
| Outstanding | 5,695,671 | 5,870,138 | 1,956,805 | |||||||||
| Remaining contractual life (years) | 6.27 | 7.06 | 8.06 | |||||||||
| Weighted average exercise price | $ | 17.44 | $ | 17.47 | $ | 17.42 | ||||||
The Company has used the Black-Scholes option pricing model to estimate the grant date fair value of the options. In connection with the IPO, all options outstanding under the MIP became fully-vested and the plan was retired. There were no options awarded in 2013 or 2014. The following table includes the assumptions that were made in estimating the grant date fair value for options awarded in 2012.
| 2012 Grants | ||||
| Weighted average dividend yield | 7.54 | % | ||
| Weighted average risk-free interest rate | 1.31 | % | ||
| Weighted average expected life | 7 years | |||
| Weighted average estimated volatility | 38.24 | % | ||
| Weighted average exercise price | $ | 18.78 | ||
| Weighted average fair value of options granted (per option) | $ | 2.88 | ||
The Company recorded non-cash compensation expenses of approximately $0, $9.0 million, and $1.3 million for the years ended December 31, 2014, 2013 and 2012, related to the time and performance based stock options accounted for as equity awards, as a component of general and administrative expenses in the consolidated statements of operations and comprehensive income, respectively.
At December 31, 2014, the total compensation cost related to outstanding, non-vested time based equity option awards that are expected to be recognized as compensation cost in the future aggregates to $0.
Dividend equivalent rights associated with the Plan that became payable upon vesting amounted to $0, $15.4 million and $2.3 million for the years ended December 31, 2014, 2013, and 2012, respectively.
| F-35 |
16. Earnings Per Common Share of the REIT
The following table shows the amounts used in computing the basic and diluted earnings per common share (in thousands except for share and per share amounts).
| For the Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Numerator for earnings per share—basic: | ||||||||||||
| Income from continuing operations | $ | 44,874 | $ | 23,071 | $ | 4,007 | ||||||
| Income from continuing operations allocable to noncontrolling interests | (9,082 | ) | (6,010 | ) | (1,611 | ) | ||||||
| Income from continuing operations allocable to common stockholders, net of noncontrolling interests | 35,792 | 17,061 | 2,396 | |||||||||
| Discontinued operations, net of noncontrolling interests | — | — | 2,742 | |||||||||
| Numerator for earnings per share—basic | $ | 35,792 | $ | 17,061 | $ | 5,138 | ||||||
| Numerator for earnings per share—diluted: | ||||||||||||
| Numerator for earnings per share—basic | $ | 35,792 | $ | 17,061 | $ | 2,396 | ||||||
| Income from continuing operations allocable to noncontrolling interests—OP Units | 9,082 | 4,610 | — | |||||||||
| Subtotal | 44,874 | 21,671 | 2,396 | |||||||||
| Discontinued operations, net of noncontrolling interests | — | — | 2,742 | |||||||||
| Numerator for earnings per share—diluted | $ | 44,874 | $ | 21,671 | $ | 5,138 | ||||||
| Denominator for earnings per share—basic and diluted: | ||||||||||||
| Denominator for earnings per share—basic | 44,629,901 | 33,700,834 | 20,006,538 | |||||||||
| Effect of dilutive securities: | ||||||||||||
| Noncontrolling interests—OP Units | 11,328,049 | 9,091,974 | — | |||||||||
| Stock options | 2,136,040 | 1,518,813 | 129,151 | |||||||||
| Restricted stock units | 72,934 | 12,568 | — | |||||||||
| Denominator for earnings per share—diluted | 58,166,924 | 44,324,189 | 20,135,689 | |||||||||
| Basic earnings per share | ||||||||||||
| Income from continuing operations allocable to common stockholders | $ | 0.80 | $ | 0.51 | $ | 0.12 | ||||||
| Discontinued operations, net of noncontrolling interests | — | — | 0.14 | |||||||||
| Net income allocable to common stockholders | $ | 0.80 | $ | 0.51 | $ | 0.26 | ||||||
| Diluted earnings per share | ||||||||||||
| Income from continuing operations allocable to common stockholders | $ | 0.77 | $ | 0.49 | $ | 0.12 | ||||||
| Discontinued operations, net of noncontrolling interests | — | — | 0.14 | |||||||||
| Net income allocable to common stockholders | $ | 0.77 | $ | 0.49 | $ | 0.26 | ||||||
| F-36 |
17. Earnings Per Unit of the Partnership
The following table shows the amounts used in computing the basic and diluted earnings per unit (in thousands except for unit and per unit amounts).
| For the Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Numerator for earnings per unit—basic: | ||||||||||||
| Income from continuing operations | $ | 44,874 | $ | 23,071 | $ | 4,007 | ||||||
| Income from continuing operations allocable to limited partners | — | (1,400 | ) | (1,611 | ) | |||||||
| Income from continuing operations allocable to units | 44,874 | 21,671 | 2,396 | |||||||||
| Discontinued operations | — | — | 2,742 | |||||||||
| Numerator for earnings per unit—basic: | $ | 44,874 | $ | 21,671 | $ | 5,138 | ||||||
| Numerator for earnings per unit—diluted: | ||||||||||||
| Income from continuing operations allocable to units | $ | 44,874 | $ | 21,671 | $ | 2,396 | ||||||
| Discontinued operations | — | — | 2,742 | |||||||||
| Numerator for earnings per unit—diluted | $ | 44,874 | $ | 21,671 | $ | 5,138 | ||||||
| Denominator for earnings per unit—basic and diluted: | ||||||||||||
| Denominator for basic earnings per unit—basic | 55,957,950 | 42,792,808 | 20,006,538 | |||||||||
| Effective dilutive securities: | ||||||||||||
| Stock options | 2,136,040 | 1,518,813 | 129,151 | |||||||||
| Restricted stock units | 72,934 | 12,568 | — | |||||||||
| Denominator for earnings per unit—diluted | 58,166,924 | 44,324,189 | 20,135,689 | |||||||||
| Basic earnings per unit: | ||||||||||||
| Income from continuing operations allocable to units | $ | 0.80 | $ | 0.51 | $ | 0.12 | ||||||
| Discontinued operations | — | — | 0.14 | |||||||||
| Net income allocable to units | $ | 0.80 | $ | 0.51 | $ | 0.26 | ||||||
| Diluted earnings per unit: | ||||||||||||
| Income from continuing operations allocable to units | $ | 0.77 | $ | 0.49 | $ | 0.12 | ||||||
| Discontinued operations | — | — | 0.14 | |||||||||
| Net income allocable to units | $ | 0.77 | $ | 0.49 | $ | 0.26 | ||||||
| F-37 |
18. Discontinued Operations
Prior to the Company adopting ASU No. 2014-08, ASC 205-20, required that the operations and associated gains and/or losses from the sale or planned disposition of components of an entity, as defined, be reclassified and presented as discontinued operations in the Company’s consolidated financial statements for all periods presented. In April 2012, the Company sold three properties in Arkansas and one property in Massachusetts to unrelated third parties. All other sales were immaterial to the consolidated financial statements. Below is a summary of the components of the discontinued operations for the respective periods:
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| (in thousands) | ||||||||||||
| Total revenues | $ | — | $ | — | $ | 270 | ||||||
| Expenses: | ||||||||||||
| Interest expense incurred | — | — | (27 | ) | ||||||||
| Amortization of deferred financing costs | — | — | (2 | ) | ||||||||
| Depreciation and amortization | — | — | (34 | ) | ||||||||
| Gain on sale of assets, net | — | — | 4,425 | |||||||||
| Loss on extinguishment of debt | — | — | (13 | ) | ||||||||
| Other expenses | — | — | (33 | ) | ||||||||
| Total gains (expenses) | — | — | 4,316 | |||||||||
| Discontinued operations | — | — | 4,586 | |||||||||
| Discontinued operations allocation to noncontrolling interests | — | — | 1,844 | |||||||||
| Discontinued operations allocation to controlling interests | $ | — | $ | — | $ | 2,742 | ||||||
19. Quarterly Results of Operations (Unaudited)
The following is a summary of the Company’s unaudited quarterly results of operations for the years ended December 31, 2014 and 2013 (in thousands) including the effects of discontinued operations. The sum of individual quarterly amounts may not agree to the annual amounts included in the consolidated statements of income due to rounding and weighted-average of noncontrolling interest allocation.
| Year Ended December 31, 2014 | ||||||||||||||||
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |||||||||||||
| Total revenues | $ | 41,876 | $ | 43,190 | $ | 47,371 | $ | 51,605 | ||||||||
| Net income | $ | 11,457 | $ | 8,460 | $ | 12,035 | $ | 12,922 | ||||||||
| Net income allocable to stockholders | $ | 8,773 | $ | 6,761 | $ | 9,691 | $ | 10,524 | ||||||||
| Earnings per common share allocable to stockholders | ||||||||||||||||
| Basic | $ | 0.23 | $ | 0.15 | $ | 0.21 | $ | 0.22 | ||||||||
| Diluted | $ | 0.22 | $ | 0.14 | $ | 0.20 | $ | 0.21 | ||||||||
| Year Ended December 31, 2013 | ||||||||||||||||
| 1st Quarter(1) | 2nd Quarter | 3rd Quarter(2) | 4th Quarter | |||||||||||||
| Total revenues | $ | 34,700 | $ | 35,033 | $ | 32,873 | $ | 38,461 | ||||||||
| Net income | $ | (11,440 | ) | $ | 13,405 | $ | 10,067 | $ | 11,039 | |||||||
| Net income allocable to stockholders | $ | (7,477 | ) | $ | 10,147 | $ | 7,621 | $ | 6,770 | |||||||
| Earnings per common share allocable to stockholders | ||||||||||||||||
| Basic | $ | (0.33 | ) | $ | 0.27 | $ | 0.20 | $ | 0.22 | |||||||
| Diluted | $ | (0.33 | ) | $ | 0.26 | $ | 0.20 | $ | 0.22 | |||||||
| (1) | The results include $11.0 million loss on extinguishment of debt and $9.9 million of non-cash stock-based compensation as a result of the IPO in the first quarter. |
| (2) | The results include $2.9 million of straight-line rent receivable write-offs due to early termination of leases and replacement of operators in the third quarter. |
| F-38 |
20. Subsequent Events
On January 30, 2015, the Company paid in full the HUD loan, as described in Footnote 9.
On February 1, 2015, the Company acquired one property in Washington for a purchase price of $4.3 million from an unrelated third party.
21. Condensed Consolidating Information
AVIV and certain of the Partnership’s direct and indirect wholly owned subsidiaries (the Subsidiary Guarantors) fully and unconditionally guaranteed, on a joint and several basis, the obligation to pay principal and interest with respect to the Issuer’s 2019 Notes and 2021 Notes issued in February 2011, April 2011, March 2012 and October 2013. The 2019 Notes and 2021 Notes were issued by the Partnership and Aviv Healthcare Capital Corporation. Separate financial statements of the guarantors are not provided as the consolidating financial information contained herein provides a more meaningful disclosure to allow investors to determine the nature of the assets held by and the operations of the respective guarantor and non-guarantor subsidiaries. Other wholly owned subsidiaries (Non-Guarantor Subsidiaries) that were not included among the Subsidiary Guarantors were not obligated with respect to the 2019 Notes and 2021 Notes. The properties held by the Non-Guarantor Subsidiaries are subject to mortgages. The following summarizes the Partnership’s condensed consolidating information as of December 31, 2014, and 2013 and for the years ended December 31, 2014, 2013, and 2012.
CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2014
(in thousands)
| Issuers | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Net rental properties | $ | 47 | $ | 1,559,950 | $ | 322,450 | $ | — | $ | 1,882,447 | ||||||||||
| Cash and cash equivalents | 6,678 | 2,132 | 1,226 | — | 10,036 | |||||||||||||||
| Deferred financing costs, net | 16,664 | — | 2,360 | — | 19,024 | |||||||||||||||
| Other | 23,823 | 77,394 | 7,706 | — | 108,923 | |||||||||||||||
| Investment in and due from related parties, net | 1,728,309 | — | — | (1,728,309 | ) | — | ||||||||||||||
| Total assets | $ | 1,775,521 | $ | 1,639,476 | $ | 333,742 | $ | (1,728,309 | ) | $ | 2,020,430 | |||||||||
| Liabilities and partners’ capital | ||||||||||||||||||||
| Secured loan | $ | — | $ | — | $ | 193,418 | $ | — | $ | 193,418 | ||||||||||
| Unsecured notes payable | 652,292 | — | — | — | 652,292 | |||||||||||||||
| Line of credit | 355,000 | — | — | — | 355,000 | |||||||||||||||
| Accrued Interest Payable | 15,080 | — | 46 | — | 15,126 | |||||||||||||||
| Dividends | — | — | — | — | — | |||||||||||||||
| Accounts payable and accrued expenses | 1,790 | 16,505 | 287 | — | 18,582 | |||||||||||||||
| Tenant security and escrow deposits | 55 | 25,839 | 365 | — | 26,259 | |||||||||||||||
| Other liabilities | 1,356 | 8,449 | — | — | 9,805 | |||||||||||||||
| Total liabilities | 1,025,573 | 50,793 | 194,116 | — | 1,270,482 | |||||||||||||||
| Total partners’ capital | 749,948 | 1,588,683 | 139,626 | (1,728,309 | ) | 749,948 | ||||||||||||||
| Total liabilities and partners’ capital | $ | 1,775,521 | $ | 1,639,476 | $ | 333,742 | $ | (1,728,309 | ) | $ | 2,020,430 | |||||||||
| F-39 |
CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2013
(in thousands)
| Issuers | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Net rental properties | $ | 55 | $ | 1,148,057 | $ | 15,376 | $ | — | $ | 1,163,488 | ||||||||||
| Cash and cash equivalents | 50,709 | (714 | ) | 769 | — | 50,764 | ||||||||||||||
| Deferred financing costs, net | 12,681 | 3,948 | 14 | — | 16,643 | |||||||||||||||
| Other | 25,260 | 71,372 | 2,906 | — | 99,538 | |||||||||||||||
| Investment in and due from related parties, net | 1,168,729 | — | — | (1,168,729 | ) | — | ||||||||||||||
| Total assets | $ | 1,257,434 | $ | 1,222,663 | $ | 19,065 | $ | (1,168,729 | ) | $ | 1,330,433 | |||||||||
| Liabilities and partners’ capital | ||||||||||||||||||||
| Secured loan | $ | — | $ | — | $ | 13,654 | $ | — | $ | 13,654 | ||||||||||
| Unsecured notes payable | 652,752 | — | — | — | 652,752 | |||||||||||||||
| Line of credit | — | 20,000 | — | — | 20,000 | |||||||||||||||
| Accrued Interest Payable | 14,750 | 487 | 47 | — | 15,284 | |||||||||||||||
| Dividends | 17,694 | — | — | — | 17,694 | |||||||||||||||
| Accounts payable and accrued expenses | 2,082 | 8,473 | — | 10,555 | ||||||||||||||||
| Tenant security and escrow deposits | 765 | 20,572 | 249 | — | 21,586 | |||||||||||||||
| Other liabilities | 946 | 9,517 | — | — | 10,463 | |||||||||||||||
| Total liabilities | 688,989 | 59,049 | 13,950 | — | 761,988 | |||||||||||||||
| Total partners’ capital | 568,445 | 1,163,614 | 5,115 | (1,168,729 | ) | 568,445 | ||||||||||||||
| Total liabilities and partners’ capital | $ | 1,257,434 | $ | 1,222,663 | $ | 19,065 | $ | (1,168,729 | ) | $ | 1,330,433 | |||||||||
| F-40 |
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2014
(in thousands)
| Issuers | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| Revenues | ||||||||||||||||||||
| Rental income | $ | — | $ | 175,286 | $ | 2,661 | $ | — | $ | 177,947 | ||||||||||
| Interest on loans and financing lease | 1,095 | 3,376 | 12 | — | 4,483 | |||||||||||||||
| Interest and other income | 483 | 1,127 | 2 | — | 1,612 | |||||||||||||||
| Total revenues | 1,578 | 179,789 | 2,675 | — | 184,042 | |||||||||||||||
| Expenses | ||||||||||||||||||||
| Interest Expense | 47,655 | 1,167 | 858 | — | 49,680 | |||||||||||||||
| Amortization of deferred financing costs | 3,266 | 656 | 20 | — | 3,942 | |||||||||||||||
| Depreciation and amortization | 8 | 43,587 | 428 | — | 44,023 | |||||||||||||||
| General and administrative | 8,840 | 15,102 | 97 | — | 24,039 | |||||||||||||||
| Transaction costs | 1,919 | 4,055 | 2,627 | — | 8,601 | |||||||||||||||
| Loss on impairment | — | 2,341 | — | — | 2,341 | |||||||||||||||
| Reserve for uncollectible loan receivables and other receivables | 3,406 | 117 | — | — | 3,523 | |||||||||||||||
| Loss on sale of assets, net | — | 2,518 | — | — | 2,518 | |||||||||||||||
| Loss on extinguishment of debt | — | 501 | — | — | 501 | |||||||||||||||
| Total expenses | 65,094 | 70,044 | 4,030 | — | 139,168 | |||||||||||||||
| Net (loss) income | (63,516 | ) | 109,745 | (1,355 | ) | — | 44,874 | |||||||||||||
| Equity in income (loss) of subsidiaries | 108,390 | — | — | (108,390 | ) | — | ||||||||||||||
| Net income (loss) allocable to units | $ | 44,874 | $ | 109,745 | $ | (1,355 | ) | $ | (108,390 | ) | $ | 44,874 | ||||||||
| F-41 |
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2013
(in thousands)
| Issuers | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| Revenues | ||||||||||||||||||||
| Rental income | $ | — | $ | 133,395 | $ | 3,118 | $ | — | $ | 136,513 | ||||||||||
| Interest on loans and financing lease | 1,104 | 3,296 | — | — | 4,400 | |||||||||||||||
| Interest and other income | 5 | 149 | — | — | 154 | |||||||||||||||
| Total revenues | 1,109 | 136,840 | 3,118 | — | 141,067 | |||||||||||||||
| Expenses | ||||||||||||||||||||
| Interest Expense | 33,390 | 6,787 | 608 | — | 40,785 | |||||||||||||||
| Amortization of deferred financing costs | 1,592 | 1,867 | — | — | 3,459 | |||||||||||||||
| Depreciation and amortization | 6 | 32,607 | 613 | — | 33,226 | |||||||||||||||
| General and administrative | 15,662 | 11,138 | 86 | — | 26,886 | |||||||||||||||
| Transaction costs | 832 | 2,266 | 16 | — | 3,114 | |||||||||||||||
| Loss on impairment | — | 500 | — | — | 500 | |||||||||||||||
| Reserve for uncollectible loan receivables and other receivables | (10 | ) | 89 | (11 | ) | — | 68 | |||||||||||||
| Loss (gain)on sale of assets, net | — | 375 | (1,391 | ) | — | (1,016 | ) | |||||||||||||
| Loss on extinguishment of debt | — | 10,974 | — | — | 10,974 | |||||||||||||||
| Other expenses | — | — | — | — | — | |||||||||||||||
| Total expenses | 51,472 | 66,603 | (79 | ) | — | 117,996 | ||||||||||||||
| Net (loss) income | (50,363 | ) | 70,237 | 3,197 | — | 23,071 | ||||||||||||||
| Equity in income (loss) of subsidiaries | 73,434 | — | — | (73,434 | ) | — | ||||||||||||||
| Net income (loss) allocable to units | $ | 23,071 | $ | 70,237 | $ | 3,197 | $ | (73,434 | ) | $ | 23,071 | |||||||||
| F-42 |
AVIV HEALTHCARE PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2012
(in thousands)
| Issuers | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| Revenues | ||||||||||||||||||||
| Rental income | $ | — | $ | 118,111 | $ | 3,099 | $ | — | $ | 121,210 | ||||||||||
| Interest on loans and financing lease | 1,490 | 3,143 | — | — | 4,633 | |||||||||||||||
| Interest and other income | 4 | 1,125 | — | — | 1,129 | |||||||||||||||
| Total revenues | 1,494 | 122,379 | 3,099 | — | 126,972 | |||||||||||||||
| Expenses | ||||||||||||||||||||
| Interest expense incurred | 28,734 | 18,439 | 267 | — | 47,440 | |||||||||||||||
| Amortization of deferred financing costs | 1,375 | 2,168 | — | — | 3,543 | |||||||||||||||
| Depreciation and amortization | — | 26,099 | 793 | — | 26,892 | |||||||||||||||
| General and administrative | 6,434 | 9,475 | 46 | — | 15,955 | |||||||||||||||
| Transaction costs | 4,171 | 2,970 | 118 | — | 7,259 | |||||||||||||||
| Loss on impairment | — | 7,156 | 3,961 | — | 11,117 | |||||||||||||||
| Reserve for uncollectible loan receivables and other receivables | 6,532 | 3,407 | 392 | — | 10,331 | |||||||||||||||
| Loss on extinguishment of debt | — | 28 | — | — | 28 | |||||||||||||||
| Other expenses | — | 400 | — | — | 400 | |||||||||||||||
| Total expenses | 47,246 | 70,142 | 5,577 | — | 122,965 | |||||||||||||||
| (Loss) income from continuing operations | (45,752 | ) | 52,237 | (2,478 | ) | — | 4,007 | |||||||||||||
| Discontinued operations | — | (392 | ) | 4,978 | — | 4,586 | ||||||||||||||
| Net (loss) income | (45,752 | ) | 51,845 | 2,500 | — | 8,593 | ||||||||||||||
| Equity in income (loss) of subsidiaries | 54,345 | — | — | (54,345 | ) | — | ||||||||||||||
| Net income (loss) allocable to units | $ | 8,593 | $ | 51,845 | $ | 2,500 | $ | (54,345 | ) | $ | 8,593 | |||||||||
| Unrealized loss on derivative instruments | — | (476 | ) | — | — | (476 | ) | |||||||||||||
| Total comprehensive income allocable to units | $ | 8,593 | $ | 51,369 | $ | 2,500 | $ | (54,345 | ) | $ | 8,117 | |||||||||
| F-43 |
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2014
(in thousands)
| Issuers | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| Net cash (used in) provided by operating activities | $ | (375,474 | ) | $ | 345,533 | $ | 134,783 | $ | — | $ | 104,842 | |||||||||
| Investing activities | — | |||||||||||||||||||
| Purchase of real estate investments | — | (401,970 | ) | (305,000 | ) | — | (706,970 | ) | ||||||||||||
| Sale of real estate investments | — | 2,277 | — | — | 2,277 | |||||||||||||||
| Capital improvements | — | (14,311 | ) | (686 | ) | — | (14,997 | ) | ||||||||||||
| Development Projects | — | (40,771 | ) | (2,312 | ) | — | (43,083 | ) | ||||||||||||
| Loan receivables received from others | 5,700 | 6,914 | 7,028 | — | 19,642 | |||||||||||||||
| Loan receivables funded to others | (7,636 | ) | (5,907 | ) | (10,833 | ) | — | (24,376 | ) | |||||||||||
| Net used in investing activities | (1,936 | ) | (453,768 | ) | (311,803 | ) | — | (767,507 | ) | |||||||||||
| Financing activities | ||||||||||||||||||||
| Borrowings of debt | 390,000 | 98,000 | 180,000 | — | 668,000 | |||||||||||||||
| Repayment of debt | (35,000 | ) | (118,000 | ) | (157 | ) | — | (153,157 | ) | |||||||||||
| Payment of financing costs | (9,121 | ) | 4,507 | (2,366 | ) | — | (6,980 | ) | ||||||||||||
| Capital contributions | 60 | — | — | — | 60 | |||||||||||||||
| Proceeds of issuance of common stock | 221,720 | — | — | — | 221,720 | |||||||||||||||
| Cost of raising capital | (137,132 | ) | 126,574 | — | — | (10,558 | ) | |||||||||||||
| Shares issued for settlement of vested stock and exercised unit options, net | 1,707 | — | — | — | 1,707 | |||||||||||||||
| Cash distributions to partners | (98,855 | ) | — | — | — | (98,855 | ) | |||||||||||||
| Net cash provided by (used in) financing activities | 333,379 | 111,081 | 177,477 | — | 621,937 | |||||||||||||||
| Net (decrease) increase in cash and cash equivalents | (44,031 | ) | 2,846 | 457 | — | (40,728 | ) | |||||||||||||
| Cash and cash equivalents: | ||||||||||||||||||||
| Beginning of period | 50,709 | (714 | ) | 769 | — | 50,764 | ||||||||||||||
| End of period | $ | 6,678 | $ | 2,132 | $ | 1,226 | $ | — | $ | 10,036 | ||||||||||
| F-44 |
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2013
(in thousands)
| Issuers | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| Net cash (used in) provided by operating activities | $ | (59,358 | ) | $ | 142,398 | $ | (13,345 | ) | $ | — | $ | 69,695 | ||||||||
| Investing activities | ||||||||||||||||||||
| Purchase of real estate investments | — | (197,388 | ) | — | — | (197,389 | ) | |||||||||||||
| Sale of real estate investments | — | 1,772 | 13,777 | — | 15,549 | |||||||||||||||
| Capital improvements | (8 | ) | (11,957 | ) | (38 | ) | — | (12,003 | ) | |||||||||||
| Development Projects | — | (18,738 | ) | — | — | (18,738 | ) | |||||||||||||
| Loan receivables received from others | 2,446 | 1,640 | — | 4,087 | ||||||||||||||||
| Loan receivables funded to others | (7,739 | ) | (2,668 | ) | — | (10,407 | ) | |||||||||||||
| Net used in investing activities | (5,301 | ) | (227,339 | ) | 13,739 | — | (218,901 | ) | ||||||||||||
| Financing activities | ||||||||||||||||||||
| Borrowings of debt | 250,000 | 220,000 | — | — | 470,000 | |||||||||||||||
| Repayment of debt | — | (488,091 | ) | (150 | ) | — | (488,241 | ) | ||||||||||||
| Payment of financing costs | (5,145 | ) | (5,302 | ) | (1 | ) | — | (10,448 | ) | |||||||||||
| Capital contributions | 575 | — | — | — | 575 | |||||||||||||||
| Proceeds of issuance of common stock | 303,600 | — | — | — | 303,600 | |||||||||||||||
| Cost of raising capital | (385,310 | ) | 359,481 | — | — | (25,829 | ) | |||||||||||||
| Cash distributions to partners | (65,221 | ) | — | — | — | (65,221 | ) | |||||||||||||
| Net cash provided by (used in) financing activities | 98,499 | 86,088 | (151 | ) | — | 184,436 | ||||||||||||||
| Net (decrease) increase in cash and cash equivalents | 33,840 | 1,147 | 243 | — | 35,230 | |||||||||||||||
| Cash and cash equivalents: | ||||||||||||||||||||
| Beginning of period | 16,869 | (1,861 | ) | 526 | — | 15,534 | ||||||||||||||
| End of period | $ | 50,709 | $ | (714 | ) | $ | 769 | $ | — | $ | 50,764 | |||||||||
| F-45 |
AVIV HEALTHCARE PROPERTIES LIMITED PARTNERSHIP AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2012
(in thousands)
| Issuers | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
| Net cash (used in) provided by operating activities | $ | (152,298 | ) | $ | 209,394 | $ | (13,305 | ) | $ | — | $ | 43,791 | ||||||||
| Investing activities | ||||||||||||||||||||
| Purchase of real estate | — | (168,233 | ) | (4,540 | ) | — | (172,773 | ) | ||||||||||||
| Proceeds from sales of real estate | — | 8,556 | 23,377 | — | 31,933 | |||||||||||||||
| Capital improvements | (54 | ) | (13,358 | ) | (146 | ) | — | (13,558 | ) | |||||||||||
| Development Projects | — | (26,982 | ) | (1,085 | ) | — | (28,067 | ) | ||||||||||||
| Loan receivables received from others | 12,754 | 1,571 | 307 | — | 14,632 | |||||||||||||||
| Loan receivables funded to others | (13,065 | ) | (3,792 | ) | — | — | (16,857 | ) | ||||||||||||
| Net cash used in investing activities | (365 | ) | (202,238 | ) | 17,913 | — | (184,690 | ) | ||||||||||||
| Financing activities | ||||||||||||||||||||
| Borrowings of debt | 101,000 | 164,224 | 2,537 | — | 267,761 | |||||||||||||||
| Repayment of debt | — | (167,981 | ) | (6,146 | ) | — | (174,127 | ) | ||||||||||||
| Payment of financing costs | (2,562 | ) | (2,581 | ) | — | — | (5,143 | ) | ||||||||||||
| Proceeds of issuance of common stock | — | — | — | — | — | |||||||||||||||
| Capital contributions | 109,000 | — | — | — | 109,000 | |||||||||||||||
| Deferred contributions | (35,000 | ) | — | — | — | (35,000 | ) | |||||||||||||
| Cash distributions to partners | (45,262 | ) | — | — | — | (45,262 | ) | |||||||||||||
| Net cash provided by (used in) financing activities | 127,176 | (6,338 | ) | (3,609 | ) | — | 117,229 | |||||||||||||
| Net decrease in cash and cash equivalents | (25,487 | ) | 818 | 999 | — | (23,670 | ) | |||||||||||||
| Cash and cash equivalents: | ||||||||||||||||||||
| Beginning of period | 42,356 | (2,679 | ) | (473 | ) | — | 39,204 | |||||||||||||
| End of period | $ | 16,869 | $ | (1,861 | ) | $ | 526 | $ | — | $ | 15,534 | |||||||||
| F-46 |
AVIV REIT, INC.
AVIV HEALTHCARE PROPERTIES LIMITED PARTNERSHIP
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
Accounts Receivable and Loans Receivable Allowance for Doubtful Accounts (in thousands)
| Balance at Beginning of Year | Charged to (Recovered from) Costs and Expenses | Deductions and Write-offs | Balance at End of Year | |||||||||||||
| Allowance for uncollectible accounts receivable | ||||||||||||||||
| Year ended December 31, 2014 | $ | 326 | $ | 117 | $ | — | $ | 443 | ||||||||
| Year ended December 31, 2013 | 803 | 57 | (534 | ) | 326 | |||||||||||
| Year ended December 31, 2012 | 80 | 3,948 | (3,225 | ) | 803 | |||||||||||
| Allowance for uncollectible loan receivable | ||||||||||||||||
| Year ended December 31, 2014 | $ | — | $ | 3,406 | $ | — | $ | 3,406 | ||||||||
| Year ended December 31, 2013 | 317 | 11 | (328 | ) | — | |||||||||||
| Year ended December 31, 2012 | 2,176 | 6,532 | (8,391 | ) | 317 | |||||||||||
| F-47 |
AVIV REIT, INC.
AVIV HEALTHCARE PROPERTIES LIMITED PARTNERSHIP
SCHEDULE III
Real Estate and Investments (in thousands)
| Initial Cost to Company | Costs Capitalized Subsequent to Acquisition | Amount Carried at December 31, 2014 (c) | ||||||||||||||||||||||||||||||||||||||||||||
Description | Type of Asset | Encumbrances | City | State | Land | Buildings & Improvements | Improvements / Adjustments | Impairment / Dispositions | Land | Buildings & Improvements | Accumulated Depreciation | Net | Year of Construction | Date Acquired | Life on Which Depreciation in Statement of Operations Computed | |||||||||||||||||||||||||||||||
| Aviv Healthcare Properties LP | (1) | Chicago | IL | — | — | 61 | — | — | 61 | (14 | ) | 47 | ||||||||||||||||||||||||||||||||||
| Issuer subtotal | — | — | 61 | — | — | 61 | (14 | ) | 47 | |||||||||||||||||||||||||||||||||||||
| SunBridge Care/Rehab-Broadway | (a) | (2) | Methuen | MA | 31 | 496 | — | (527 | ) | — | — | — | — | 1910 | 1993 | 40 years | ||||||||||||||||||||||||||||||
| SunBridge - Colonial Heights | (a) | (2) | Lawrence | MA | 63 | 959 | 91 | (225 | ) | 63 | 825 | (393 | ) | 495 | 1963 | 1993 | 40 years | |||||||||||||||||||||||||||||
| SunBridge - Fall River | (c) | (2) | Fall River | MA | 91 | 1,309 | (1 | ) | (1,399 | ) | — | — | — | — | 1993 | 40 years | ||||||||||||||||||||||||||||||
| SunBridge Care Center- Glenwood | (a) | (2) | Lowell | MA | 82 | 1,211 | — | (1,293 | ) | — | — | — | — | 1964 | 1993 | 40 years | ||||||||||||||||||||||||||||||
| SunBridge - Hammond House | (a) | (2) | Worchester | MA | 42 | 664 | 490 | (1,196 | ) | — | — | — | — | 1965 | 1993 | 40 years | ||||||||||||||||||||||||||||||
| SunBridge for North Reading | (a) | (2) | North Reading | MA | 113 | 1,567 | 496 | (253 | ) | 113 | 1,810 | (713 | ) | 1,210 | 1966 | 1993 | 40 years | |||||||||||||||||||||||||||||
| Robbin House Nursing and Rehab | (c) | (2) | Quincy | MA | 66 | 1,052 | — | (1,118 | ) | — | — | — | — | 1993 | 40 years | |||||||||||||||||||||||||||||||
| SunBridge Care Center - Rosewood | (a) | (2) | Fall River | MA | 32 | 513 | — | (545 | ) | — | — | — | — | 1882 | 1993 | 40 years | ||||||||||||||||||||||||||||||
| SunBridge Care/Rehab-Sandalwood | (a) | (2) | Oxford | MA | 64 | 941 | 596 | (193 | ) | 64 | 1,344 | (506 | ) | 902 | 1966 | 1993 | 40 years | |||||||||||||||||||||||||||||
| SunBridge - Spring Valley | (a) | (2) | Worchester | MA | 71 | 1,031 | 100 | (205 | ) | 71 | 926 | (441 | ) | 556 | 1960 | 1993 | 40 years | |||||||||||||||||||||||||||||
| SunBridge Care/Rehab-Town Manor | (c) | (2) | Lawrence | MA | 90 | 1,306 | (1 | ) | (1,395 | ) | — | — | — | — | 1993 | 40 years | ||||||||||||||||||||||||||||||
| SunBridge Care/Rehab-Woodmill | (a) | (2) | Lawrence | MA | 61 | 946 | 91 | (235 | ) | 61 | 802 | (381 | ) | 482 | 1965 | 1993 | 40 years | |||||||||||||||||||||||||||||
| SunBridge Care/Rehab-Worcester | (c) | (2) | Worchester | MA | 93 | 1,375 | (1 | ) | (1,467 | ) | — | — | — | — | 1993 | 40 years | ||||||||||||||||||||||||||||||
| Countryside Community | (a) | (2) | South Haven | MI | 221 | 4,239 | 13 | — | 221 | 4,252 | (1,205 | ) | 3,268 | 1975 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Pepin Manor | (a) | (2) | Pepin | WI | 318 | 1,570 | 333 | — | 318 | 1,903 | (481 | ) | 1,740 | 1978 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Highland Health Care Center | (a) | (2) | Highland | IL | 190 | 1,724 | — | — | 190 | 1,724 | (530 | ) | 1,384 | 1963 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Nebraska Skilled Nursing/Rehab | (a) | (2) | Omaha | NE | 211 | 6,695 | — | (2 | ) | 209 | 6,695 | (2,136 | ) | 4,768 | 1971 | 2005 | 40 years | |||||||||||||||||||||||||||||
| Casa Real | (a) | (2) | Santa Fe | NM | 1,030 | 2,692 | 772 | — | 1,030 | 3,464 | (1,071 | ) | 3,423 | 1985 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Clayton Nursing and Rehab | (a) | (2) | Clayton | NM | 41 | 790 | 35 | — | 41 | 825 | (334 | ) | 532 | 1960 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Country Cottage Care/Rehab Center | (a) | (2) | Hobbs | NM | 9 | 672 | — | — | 9 | 672 | (326 | ) | 355 | 1963 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Bloomfield Nursing/Rehab Center | (a) | (2) | Bloomfield | NM | 344 | 4,736 | 19 | — | 344 | 4,755 | (1,399 | ) | 3,700 | 1985 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Espanola Valley Center | (a) | (2) | Espanola | NM | 216 | 4,143 | 17 | — | 216 | 4,160 | (1,342 | ) | 3,034 | 1984 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Sunshine Haven Lordsburg | (a) | (2) | Lordsburg | NM | 57 | 1,882 | — | — | 57 | 1,882 | (513 | ) | 1,426 | 1972 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Silver City Care Center | (a) | (2) | Silver City | NM | 305 | 5,844 | — | — | 305 | 5,844 | (1,673 | ) | 4,476 | 1984 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Seven Oaks Nursing and Rehab | (a) | (2) | Bonham | TX | 63 | 2,583 | — | — | 63 | 2,583 | (784 | ) | 1,862 | 1970 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Birchwood Nursing and Rehab | (a) | (2) | Cooper | TX | 96 | 2,727 | 8 | — | 96 | 2,735 | (813 | ) | 2,018 | 1966 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Smith Nursing and Rehab | (a) | (2) | Wolfe City | TX | 49 | 1,010 | (8 | ) | (1,051 | ) | — | — | — | — | 1946 | 2005 | 40 years | |||||||||||||||||||||||||||||
| Clifton Nursing and Rehab | (a) | (2) | Clifton | TX | 125 | 2,975 | — | — | 125 | 2,975 | (964 | ) | 2,136 | 1995 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Stanton Nursing and Rehab | (a) | (2) | Stanton | TX | 261 | 1,018 | 11 | — | 261 | 1,029 | (336 | ) | 954 | 1972 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Valley Mills Nursing and Rehab | (a) | (2) | Valley Mills | TX | 34 | 1,091 | (9 | ) | — | 34 | 1,082 | (340 | ) | 776 | 1971 | 2005 | 40 years | |||||||||||||||||||||||||||||
| Hometown Care Center | (a) | (2) | Moody | TX | 13 | 328 | — | (341 | ) | — | — | — | — | 2005 | 40 years | |||||||||||||||||||||||||||||||
| Shuksan Healthcare Center | (a) | (2) | Bellingham | WA | 61 | 491 | 1,984 | — | 61 | 2,475 | (491 | ) | 2,045 | 1965 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Orange Villa Nursing and Rehab | (a) | (2) | Orange | TX | 98 | 1,948 | 18 | — | 98 | 1,966 | (613 | ) | 1,451 | 1973 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Pinehurst Nursing and Rehab | (a) | (2) | Orange | TX | 99 | 2,072 | 23 | — | 99 | 2,095 | (674 | ) | 1,520 | 1955 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Wheeler Nursing and Rehab | (a) | (2) | Wheeler | TX | 17 | 1,369 | — | — | 17 | 1,369 | (454 | ) | 932 | 1982 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| ABC Health Center | (a) | (2) | Harrisonville | MO | 144 | 1,922 | 328 | — | 144 | 2,250 | (576 | ) | 1,818 | 1970 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Camden Health Center | (a) | (2) | Harrisonville | MO | 189 | 2,532 | 232 | — | 189 | 2,764 | (721 | ) | 2,232 | 1977 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Cedar Valley Health Center | (a) | (2) | Rayton | MO | 252 | 3,376 | 314 | — | 252 | 3,690 | (1,051 | ) | 2,891 | 1978 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Monett Healthcare Center | (a) | (2) | Monett | MO | 259 | 3,470 | 85 | — | 259 | 3,555 | (1,004 | ) | 2,810 | 1976 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| White Ridge Health Center | (a) | (2) | Lee’s Summit | MO | 292 | 3,915 | 66 | — | 292 | 3,981 | (1,125 | ) | 3,148 | 1986 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| The Orchards Rehab/Care Center | (a) | (2) | Lewiston | ID | 201 | 4,319 | 507 | — | 201 | 4,826 | (1,586 | ) | 3,441 | 1958 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| SunBridge for Payette | (a) | (2) | Payette | ID | 179 | 3,166 | (27 | ) | — | 179 | 3,139 | (814 | ) | 2,504 | 1964 | 2005 | 40 years | |||||||||||||||||||||||||||||
| Magic Valley Manor-Assisted Living | (b) | (2) | Wendell | ID | 177 | 405 | 1,021 | — | 177 | 1,426 | (285 | ) | 1,318 | 1911 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| McCall Rehab and Living Center | (a) | (2) | McCall | ID | 213 | 676 | (6 | ) | (883 | ) | — | — | — | — | 1965 | 2005 | 40 years | |||||||||||||||||||||||||||||
| Menlo Park Health Care | (a) | (2) | Portland | OR | 112 | 2,205 | 221 | — | 112 | 2,426 | (861 | ) | 1,677 | 1959 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Burton Care Center | (a) | (2) | Burlington | WA | 115 | 1,170 | 86 | — | 115 | 1,256 | (359 | ) | 1,012 | 1930 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Columbia View Care Center | (a) | (2) | Cathlamet | WA | 49 | 505 | — | (554 | ) | — | — | — | — | 1965 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Grandview Healthcare Center | (a) | (2) | Grandview | WA | 19 | 1,155 | 15 | — | 19 | 1,170 | (596 | ) | 593 | 1964 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Hillcrest Manor | (a) | (2) | Sunnyside | WA | 102 | 1,639 | 6,895 | — | 102 | 8,534 | (1,292 | ) | 7,344 | 1970 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen Hot Springs Center | (a) | (2) | Hot Springs | MT | 104 | 1,943 | 230 | — | 104 | 2,173 | (564 | ) | 1,713 | 1963 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen Polson Center | (a) | (2) | Polson | MT | 121 | 2,358 | 575 | — | 121 | 2,933 | (722 | ) | 2,332 | 1971 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen The Dalles Center | (a) | (2) | The Dalles | OR | 200 | 3,832 | 92 | — | 200 | 3,924 | (1,061 | ) | 3,063 | 1964 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen Vista Health Center | (a) | (2) | LaGrande | OR | 281 | 4,784 | 248 | — | 281 | 5,032 | (1,414 | ) | 3,899 | 1961 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Whitman Health and Rehab Center | (a) | (2) | Colfax | WA | 231 | 6,271 | 38 | — | 231 | 6,309 | (1,622 | ) | 4,918 | 1985 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Fountain Retirement Hotel | (b) | (2) | Youngtown | AZ | 101 | 1,940 | 170 | (2,211 | ) | — | — | — | — | 1971 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Gilmer Care Center | (a) | (2) | Gilmer | TX | 257 | 2,993 | 372 | — | 257 | 3,365 | (927 | ) | 2,695 | 1967 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Columbus Nursing and Rehab Center | (a) | (2) | Columbus | WI | 352 | 3,477 | 345 | — | 352 | 3,822 | (976 | ) | 3,198 | 1950 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Infinia at Faribault | (a) | (2) | Faribault | MN | 70 | 1,485 | 102 | — | 70 | 1,587 | (523 | ) | 1,134 | 1958 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Infinia at Owatonna | (a) | (2) | Owatonna | MN | 125 | 2,321 | (19 | ) | — | 125 | 2,302 | (686 | ) | 1,741 | 1963 | 2005 | 40 years | |||||||||||||||||||||||||||||
| Infinia at Willmar | (a) | (2) | Wilmar | MN | 70 | 1,341 | 20 | (1,431 | ) | — | — | — | — | 1998 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Infinia at Florence Heights | (a) | (2) | Omaha | NE | 413 | 3,516 | 4 | (3,933 | ) | — | — | — | — | 1999 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Infinia at Ogden | (a) | (2) | Ogden | UT | 234 | 4,478 | 601 | — | 234 | 5,079 | (1,304 | ) | 4,009 | 1977 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Prescott Manor Nursing Center | (a) | (2) | Prescott | AR | 44 | 1,462 | 209 | — | 44 | 1,671 | (626 | ) | 1,089 | 1965 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Star City Nursing Center | (a) | (2) | Star City | AR | 28 | 1,069 | 80 | — | 28 | 1,149 | (342 | ) | 835 | 1969 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Westview Manor of Peabody | (a) | (2) | Peabody | KS | 22 | 502 | 140 | — | 22 | 642 | (159 | ) | 505 | 1963 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Orchard Grove Extended Care Center | (a) | (2) | Benton Harbor | MI | 166 | 3,185 | 457 | (3,808 | ) | — | — | — | — | 1971 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Marysville Care Center | (a) | (2) | Marysville | CA | 281 | 1,320 | — | (1,601 | ) | — | — | — | — | 2005 | 40 years | |||||||||||||||||||||||||||||||
| Yuba City Care Center | (a) | (2) | Yuba City | CA | 177 | 2,130 | — | (2,307 | ) | — | — | — | — | 2005 | 40 years | |||||||||||||||||||||||||||||||
| Lexington Care Center | (a) | (2) | Lexington | MO | 151 | 2,943 | 491 | — | 151 | 3,434 | (1,001 | ) | 2,584 | 1970 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Twin Falls Care Center | (a) | (2) | Twin Falls | ID | 448 | 5,145 | — | — | 448 | 5,145 | (1,464 | ) | 4,129 | 1961 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Gordon Lane Care Center | (a) | (2) | Fullerton | CA | 2,982 | 3,648 | — | — | 2,982 | 3,648 | (1,021 | ) | 5,609 | 1966 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Sierra View Care Center | (a) | (2) | Baldwin Park | CA | 868 | 1,748 | 7 | — | 868 | 1,755 | (571 | ) | 2,052 | 1938 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Villa Maria Care Center | (a) | (2) | Long Beach | CA | 140 | 767 | (1 | ) | (906 | ) | — | — | — | — | 2005 | 40 years | ||||||||||||||||||||||||||||||
| High Street Care Center | (a) | (2) | Oakland | CA | 246 | 685 | 14 | — | 246 | 699 | (204 | ) | 741 | 1961 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| MacArthur Care Center | (a) | (2) | Oakland | CA | 246 | 1,416 | 85 | — | 246 | 1,501 | (558 | ) | 1,189 | 1960 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Country Oaks Nursing Center | (a) | (2) | Ponoma | CA | 1,393 | 2,426 | — | — | 1,393 | 2,426 | (699 | ) | 3,120 | 1964 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Deseret at Hutchinson | (a) | (2) | Hutchinson | KS | 180 | 2,547 | 92 | — | 180 | 2,639 | (798 | ) | 2,021 | 1963 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Woodland Hills Health/Rehab | (a) | (2) | Little Rock | AR | 270 | 4,006 | — | (4,276 | ) | — | — | — | — | 1979 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Chenal Heights | (a) | (2) | Little Rock | AR | 1,411 | — | 7,330 | (8,741 | ) | — | — | — | — | 2008 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Blanchette Place Care Center | (a) | (2) | St. Charles | MO | 1,300 | 10,777 | 194 | — | 1,300 | 10,971 | (2,453 | ) | 9,818 | 1994 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Cathedral Gardens Care Center | (a) | (2) | St. Louis | MO | 1,600 | 9,525 | 68 | — | 1,600 | 9,593 | (2,245 | ) | 8,948 | 1979 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Heritage Park Skilled Care | (a) | (2) | Rolla | MO | 1,200 | 7,841 | 2,538 | — | 1,200 | 10,379 | (1,949 | ) | 9,630 | 1993 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Oak Forest Skilled Care | (a) | (2) | Ballwin | MO | 550 | 3,995 | 116 | — | 550 | 4,111 | (955 | ) | 3,706 | 2004 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Richland Care and Rehab | (a) | (2) | Olney | IL | 350 | 2,484 | — | — | 350 | 2,484 | (659 | ) | 2,175 | 2004 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Bonham Nursing and Rehab | (a) | (2) | Bonham | TX | 76 | 1,130 | — | — | 76 | 1,130 | (264 | ) | 942 | 1969 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Columbus Nursing and Rehab | (a) | (2) | Columbus | TX | 150 | 1,809 | — | (1,959 | ) | — | — | — | — | 1974 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Denison Nursing and Rehab | (a) | (2) | Denison | TX | 178 | 1,945 | — | — | 178 | 1,945 | (457 | ) | 1,666 | 1958 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Falfurrias Nursing and Rehab | (a) | (2) | Falfurias | TX | 92 | 1,065 | — | — | 92 | 1,065 | (273 | ) | 884 | 1974 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Kleburg County Nursing/Rehab | (a) | (2) | Kingsville | TX | 315 | 3,689 | 2,699 | — | 315 | 6,388 | (1,041 | ) | 5,662 | 1947 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Terry Haven Nursing and Rehab | (a) | (2) | Mount Vernon | TX | 180 | 1,971 | — | (2,151 | ) | — | — | — | — | 2004 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Clarkston Care Center | (a) | (2) | Clarkston | WA | 162 | 7,038 | 5,518 | — | 162 | 12,556 | (2,482 | ) | 10,236 | 1970 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Highland Terrace Nursing Center | (a) | (2) | Camas | WA | 593 | 3,921 | 6,277 | — | 593 | 10,198 | (1,957 | ) | 8,834 | 1970 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Richland Rehabilitation Center | (a) | (2) | Richland | WA | 693 | 9,307 | 813 | — | 693 | 10,120 | (2,102 | ) | 8,711 | 2004 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen Milton-Freewater Center | (a) | (2) | Milton Freewater | OR | 700 | 5,404 | — | — | 700 | 5,404 | (1,287 | ) | 4,817 | 1965 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| F-48 |
| Initial Cost to Company | Costs Capitalized Subsequent to Acquisition | Amount Carried at December 31, 2014 (c) | ||||||||||||||||||||||||||||||||||||||||||||
Description | Type of Asset | Encumbrances | City | State | Land | Buildings & Improvements | Improvements / Adjustments | Impairment / Dispositions | Land | Buildings & Improvements | Accumulated Depreciation | Net | Year of Construction | Date Acquired | Life on Which Depreciation in Statement of Operations Computed | |||||||||||||||||||||||||||||||
| Hillside Living Center | (a) | (2) | Yorkville | IL | 560 | 3,074 | (1 | ) | (3 | ) | 560 | 3,070 | (797 | ) | 2,833 | 1963 | 2006 | 40 years | ||||||||||||||||||||||||||||
| Arbor View Nursing / Rehab Center | (a) | (2) | Zion | IL | 147 | 5,235 | 131 | (5,513 | ) | — | — | — | — | 1970 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Ashford Hall | (a) | (2) | Irving | TX | 1,746 | 11,419 | 114 | (143 | ) | 1,746 | 11,390 | (2,595 | ) | 10,541 | 1964 | 2006 | 40 years | |||||||||||||||||||||||||||||
| Belmont Nursing and Rehab Center | (a) | (2) | Madison | WI | 480 | 1,861 | 336 | — | 480 | 2,197 | (532 | ) | 2,145 | 1974 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Blue Ash Nursing and Rehab Center | (a) | (2) | Cincinnati | OH | 125 | 6,278 | 448 | (340 | ) | 123 | 6,388 | (1,767 | ) | 4,744 | 1969 | 2006 | 40 years | |||||||||||||||||||||||||||||
| West Chester Nursing/Rehab Center | (a) | (2) | West Chester | OH | 375 | 5,663 | 369 | (6,407 | ) | — | — | — | — | 1965 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Wilmington Nursing/Rehab Center | (a) | (2) | Willmington | OH | 125 | 6,078 | 673 | — | 125 | 6,751 | (1,792 | ) | 5,084 | 1951 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Extended Care Hospital of Riverside | (a) | (2) | Riverside | CA | 1,091 | 5,647 | (1 | ) | (26 | ) | 1,091 | 5,620 | (1,953 | ) | 4,758 | 1967 | 2006 | 40 years | ||||||||||||||||||||||||||||
| Heritage Manor | (a) | (2) | Monterey Park | CA | 1,586 | 9,274 | — | (23 | ) | 1,586 | 9,251 | (2,848 | ) | 7,989 | 1965 | 2006 | 40 years | |||||||||||||||||||||||||||||
| French Park Care Center | (a) | (2) | Santa Ana | CA | 1,076 | 5,984 | 596 | — | 1,076 | 6,580 | (1,517 | ) | 6,139 | 1967 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| North Valley Nursing Center | (a) | (2) | Tujunga | CA | 614 | 5,031 | — | (25 | ) | 614 | 5,006 | (1,377 | ) | 4,243 | 1967 | 2006 | 40 years | |||||||||||||||||||||||||||||
| Brighten at Medford | (a) | (2) | Medford | MA | 2,366 | 6,613 | 291 | (9,270 | ) | — | — | — | — | 1978 | 2007 | 40 years | ||||||||||||||||||||||||||||||
| Brighten at Ambler | (a) | (2) | Ambler | PA | 370 | 5,112 | (653 | ) | — | 370 | 4,459 | (955 | ) | 3,874 | 1963 | 2007 | 40 years | |||||||||||||||||||||||||||||
| Brighten at Broomall | (a) | (2) | Broomall | PA | 608 | 3,930 | 591 | — | 608 | 4,521 | (1,068 | ) | 4,061 | 1955 | 2007 | 40 years | ||||||||||||||||||||||||||||||
| Brighten at Bryn Mawr | (a) | (2) | Bryn Mawr | PA | 708 | 6,352 | 1,469 | — | 708 | 7,821 | (1,683 | ) | 6,846 | 1972 | 2007 | 40 years | ||||||||||||||||||||||||||||||
| Brighten at Julia Ribaudo | (a) | (2) | Lake Ariel | PA | 369 | 7,560 | 730 | — | 369 | 8,290 | (1,830 | ) | 6,829 | 1980 | 2007 | 40 years | ||||||||||||||||||||||||||||||
| Good Samaritan Nursing Home | (a) | (2) | Avon | OH | 394 | 8,856 | 1,177 | — | 394 | 10,033 | (2,156 | ) | 8,271 | 1964 | 2007 | 40 years | ||||||||||||||||||||||||||||||
| Belleville Illinois | (a) | (2) | Belleville | IL | 670 | 3,431 | — | — | 670 | 3,431 | (727 | ) | 3,374 | 1978 | 2007 | 40 years | ||||||||||||||||||||||||||||||
| Homestead Various Leases (b) | (a) | (2) | TX | 345 | 4,353 | 229 | — | 345 | 4,582 | (922 | ) | 4,005 | 2007 | 40 years | ||||||||||||||||||||||||||||||||
| Byrd Haven Nursing Home | (a) | (2) | Searcy | AR | 773 | 2,413 | 132 | (3,318 | ) | — | — | — | — | 1961 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen Arvin Healthcare | (a) | (2) | Arvin | CA | 900 | 4,765 | 784 | — | 1,029 | 5,420 | (1,028 | ) | 5,421 | 1984 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen Bakersfield Healthcare | (a) | (2) | Bakersfield | CA | 1,000 | 12,154 | 1,839 | — | 1,153 | 13,840 | (2,366 | ) | 12,627 | 1987 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen Lakeport Healthcare | (a) | (2) | Lakeport | CA | 1,100 | 5,237 | 877 | — | 1,257 | 5,957 | (1,155 | ) | 6,059 | 1987 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| New Hope Care Center | (a) | (2) | Tracy | CA | 1,900 | 10,294 | 1,687 | — | 2,172 | 11,709 | (2,039 | ) | 11,842 | 1987 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Olive Ridge Care Center | (a) | (2) | Oroville | CA | 800 | 8,609 | 2,298 | — | 922 | 10,785 | (1,913 | ) | 9,794 | 1987 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Twin Oaks Health & Rehab | (a) | (2) | Chico | CA | 1,300 | 8,398 | 1,394 | — | 1,488 | 9,604 | (1,822 | ) | 9,270 | 1988 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen Health & Rehab | (a) | (2) | LaGrande | OR | 1,400 | 808 | 307 | — | 1,591 | 924 | (222 | ) | 2,293 | 1975 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen Bremerton Health & Rehab | (a) | (2) | Bremerton | WA | 650 | 1,366 | — | (2,016 | ) | — | — | — | — | 1969 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Four Fountains | (a) | (2) | Belleville | IL | 989 | 5,007 | — | — | 989 | 5,007 | (850 | ) | 5,146 | 1972 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Brookside Health & Rehab | (a) | (2) | Little Rock | AR | 751 | 4,421 | 1,614 | — | 751 | 6,035 | (1,127 | ) | 5,659 | 1969 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Skilcare Nursing Center | (a) | (2) | Jonesboro | AR | 417 | 7,007 | 374 | — | 417 | 7,381 | (1,340 | ) | 6,458 | 1973 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Stoneybrook Health & Rehab Center | (a) | (2) | Benton | AR | 250 | 3,170 | 313 | — | 250 | 3,483 | (1,484 | ) | 2,249 | 1968 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Trumann Health & Rehab | (a) | (2) | Trumann | AR | 167 | 3,587 | 346 | — | 167 | 3,933 | (680 | ) | 3,420 | 1971 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Deseret at McPherson | (a) | (2) | McPherson | KS | 92 | 1,875 | 148 | — | 92 | 2,023 | (344 | ) | 1,771 | 1970 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Mission Nursing Center | (a) | (2) | Riverside | CA | 230 | 1,210 | 69 | — | 230 | 1,279 | (225 | ) | 1,284 | 1957 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| New Byrd Haven Nursing Home | (a) | (2) | Searcy | AR | — | 10,213 | 630 | — | 630 | 10,213 | (1,888 | ) | 8,955 | 2009 | 2009 | 40 years | ||||||||||||||||||||||||||||||
| Hidden Acres Health Care | (a) | (2) | Mount Pleasant | TN | 67 | 3,313 | — | — | 67 | 3,313 | (403 | ) | 2,977 | 1979 | 2010 | 40 years | ||||||||||||||||||||||||||||||
| Heritage Gardens of Portageville | (a) | (2) | Portageville | MO | 224 | 3,089 | — | — | 224 | 3,089 | (369 | ) | 2,944 | 1995 | 2010 | 40 years | ||||||||||||||||||||||||||||||
| Heritage Gardens of Greenville | (a) | (2) | Greenville | MO | 119 | 2,219 | — | — | 119 | 2,219 | (271 | ) | 2,067 | 1990 | 2010 | 40 years | ||||||||||||||||||||||||||||||
| Heritage Gardens of Senath | (a) | (2) | Senath | MO | 109 | 2,773 | 266 | — | 109 | 3,039 | (372 | ) | 2,776 | 1980 | 2010 | 40 years | ||||||||||||||||||||||||||||||
| Heritage Gardens of Senath South | (a) | (2) | Senath | MO | 73 | 1,855 | — | — | 73 | 1,855 | (231 | ) | 1,697 | 1980 | 2010 | 40 years | ||||||||||||||||||||||||||||||
| The Carrington | (a) | (2) | Lynchburg | VA | 706 | 4,294 | — | — | 706 | 4,294 | (469 | ) | 4,531 | 1994 | 2010 | 40 years | ||||||||||||||||||||||||||||||
| Arma Care Center | (a) | (2) | Arma | KS | 57 | 2,898 | — | — | 57 | 2,898 | (344 | ) | 2,611 | 1970 | 2010 | 40 years | ||||||||||||||||||||||||||||||
| Yates Center Nursing and Rehab | (a) | (2) | Yates | KS | 54 | 2,990 | — | — | 54 | 2,990 | (353 | ) | 2,691 | 1967 | 2010 | 40 years | ||||||||||||||||||||||||||||||
| Great Bend Health & Rehab Center | (a) | (2) | Great Bend | KS | 111 | 4,589 | 299 | — | 111 | 4,888 | (705 | ) | 4,294 | 1965 | 2010 | 40 years | ||||||||||||||||||||||||||||||
| Maplewood at Norwalk | (b) | (2) | Norwalk | CT | 1,590 | 1,010 | 15,789 | — | 1,590 | 16,799 | (1,001 | ) | 17,388 | 1983 | 2010 | 40 years | ||||||||||||||||||||||||||||||
| Carrizo Springs Nursing & Rehab | (a) | (2) | Carrizo Springs | TX | 45 | 1,955 | — | — | 45 | 1,955 | (253 | ) | 1,747 | 1965 | 2010 | 40 years | ||||||||||||||||||||||||||||||
| Wellington Leasehold | (a) | (2) | Wellington | KS | — | — | 2,000 | — | — | 2,000 | (352 | ) | 1,648 | 1957 | 2010 | 21 years | ||||||||||||||||||||||||||||||
| St. James Nursing & Rehab | (a) | (2) | Carrabelle | FL | 1,144 | 8,856 | — | — | 1,144 | 8,856 | (1,075 | ) | 8,925 | 2009 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| University Manor | (a) | (2) | Cleveland | OH | 886 | 8,695 | — | — | 886 | 8,695 | (919 | ) | 8,662 | 1982 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Grand Rapids Care Center | (a) | (2) | Grand Rapids | OH | 288 | 1,517 | — | — | 288 | 1,517 | (170 | ) | 1,635 | 1993 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Bellevue Care Center | (a) | (2) | Bellevue | OH | 282 | 3,440 | — | — | 282 | 3,440 | (346 | ) | 3,376 | 1988 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Orchard Grove Assisted Living | (b) | (2) | Bellevue | OH | 282 | 3,440 | — | — | 282 | 3,440 | (346 | ) | 3,376 | 1998 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Woodland Manor Nursing and Rehabilitation | (a) | (2) | Conroe | TX | 577 | 2,091 | 280 | — | 577 | 2,371 | (299 | ) | 2,649 | 1975 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Fredericksburg Nursing and Rehabilitation | (a) | (2) | Fredericksburg | TX | 327 | 3,046 | 30 | — | 327 | 3,076 | (328 | ) | 3,075 | 1970 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Jasper Nursing and Rehabilitation | (a) | (2) | Jasper | TX | 113 | 2,554 | 29 | (2,696 | ) | — | — | — | — | 1972 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Legacy Park Community Living Center | (a) | (2) | Peabody | KS | 33 | 1,267 | 440 | — | 33 | 1,707 | (156 | ) | 1,584 | 1963 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Oak Manor Nursing and Rehabilitation | (a) | (2) | Commerce | TX | 225 | 1,868 | 444 | — | 225 | 2,312 | (257 | ) | 2,280 | 1963 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Loma Linda Healthcare | (a) | (2) | Moberly | MO | 913 | 4,557 | 6 | — | 913 | 4,563 | (490 | ) | 4,986 | 1987 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Transitions Healthcare Gettysburg | (a) | (2) | Gettysburg | PA | 242 | 5,858 | 347 | — | 242 | 6,205 | (608 | ) | 5,839 | 1950 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Maplewood at Darien | (b) | (2) | Darien | CT | 2,430 | 3,070 | 12,263 | — | 2,430 | 15,333 | (1,038 | ) | 16,725 | 2012 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Scranton Healthcare Center | (a) | (2) | Scranton | PA | 1,120 | 5,537 | — | — | 1,120 | 5,537 | (459 | ) | 6,198 | 2002 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Burford Manor | (a) | (2) | Davis | OK | 80 | 3,220 | — | — | 80 | 3,220 | (272 | ) | 3,028 | 1969 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Care Meridian Cowan Heights | (h) | (2) | Santa Ana | CA | 220 | 1,129 | — | — | 220 | 1,129 | (112 | ) | 1,237 | 1989 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Care Meridian La Habra Heights | (h) | (2) | La Habra | CA | 200 | 1,339 | — | — | 200 | 1,339 | (130 | ) | 1,409 | 1990 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Care Meridian Oxnard | (h) | (2) | Oxnard | CA | 100 | 1,219 | — | — | 100 | 1,219 | (121 | ) | 1,198 | 1994 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Care Meridian Marin | (h) | (2) | Fairfax | CA | 320 | 2,149 | — | — | 320 | 2,149 | (197 | ) | 2,272 | 2000 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Care Meridian Artesia | (h) | (2) | Artesia | CA | 180 | 1,389 | — | — | 180 | 1,389 | (133 | ) | 1,436 | 2002 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Care Meridian Las Vegas | (a) | (2) | Las Vegas | NV | 760 | 7,776 | 324 | — | 760 | 8,100 | (707 | ) | 8,153 | 2004 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Bath Creek | (2) | Cuyahoga Falls | OH | — | — | — | — | — | — | — | — | 2013 | 2012 | 40 years | ||||||||||||||||||||||||||||||||
| Astoria Health and Rehab | (a) | (2) | Germantown | OH | 330 | 2,170 | 278 | — | 330 | 2,448 | (216 | ) | 2,562 | 1996 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| North Platte Care Centre | (a)/(b) | (2) | North Platte | NE | 237 | 2,129 | 77 | — | 237 | 2,206 | (246 | ) | 2,197 | 1983 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Fair Oaks Care Centre | (b) | (2) | Shenandoah | IA | 68 | 402 | — | — | 68 | 402 | (33 | ) | 437 | 1997 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Crest Haven Care Centre | (a) | (2) | Creston | IA | 72 | 1,467 | 117 | — | 72 | 1,584 | (131 | ) | 1,525 | 1964 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Premier Estates Rock Rapids | (b) | (2) | Rock Rapids | IA | 83 | 2,282 | — | — | 83 | 2,282 | (183 | ) | 2,182 | 1998 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Rock Rapids Care Centre | (a) | (2) | Rock Rapids | IA | 113 | 2,349 | 151 | — | 113 | 2,500 | (197 | ) | 2,416 | 1976 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Elmwood Care Centre | (a)/(b) | (2) | Onawa | IA | 227 | 1,733 | 190 | — | 227 | 1,923 | (179 | ) | 1,971 | 1961 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Sunny Knoll Care Centre | (a) | (2) | Rockwell City | IA | 62 | 2,092 | — | — | 62 | 2,092 | (170 | ) | 1,984 | 1966 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| New Hampton Care Centre | (a) | (2) | New Hampton | IA | 144 | 2,739 | 31 | — | 144 | 2,770 | (239 | ) | 2,675 | 1967 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Monte Siesta | (a) | (2) | Austin | TX | 770 | 5,230 | — | — | 770 | 5,230 | (428 | ) | 5,572 | 1964 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Silver Pines | (a) | (2) | Bastrop | TX | 480 | 3,120 | — | — | 480 | 3,120 | (321 | ) | 3,279 | 1987 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Spring Creek | (a) | (2) | Beaumont | TX | 300 | 700 | — | — | 300 | 700 | (72 | ) | 928 | 1969 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Riverview | (a) | (2) | Boerne | TX | 480 | 3,470 | 300 | — | 780 | 3,470 | (335 | ) | 3,915 | 1994 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Bluebonnet | (a) | (2) | Karnes City | TX | 420 | 3,130 | — | — | 420 | 3,130 | (320 | ) | 3,230 | 1994 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Cottonwood | (a) | (2) | Denton | TX | 240 | 2,060 | — | — | 240 | 2,060 | (189 | ) | 2,111 | 1969 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Regency Manor | (a) | (2) | Floresville | TX | 780 | 6,120 | — | — | 780 | 6,120 | (571 | ) | 6,329 | 1995 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| DeLeon | (a) | (2) | DeLeon | TX | 200 | 2,800 | — | — | 200 | 2,800 | (240 | ) | 2,760 | 1974 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Spring Oaks | (a) | (2) | Lampasas | TX | 360 | 4,640 | — | — | 360 | 4,640 | (420 | ) | 4,580 | 1990 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Lynwood | (a) | (2) | Levelland | TX | 300 | 3,800 | — | — | 300 | 3,800 | (380 | ) | 3,720 | 1990 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Sienna | (a) | (2) | Odessa | TX | 350 | 8,050 | — | — | 350 | 8,050 | (664 | ) | 7,736 | 1974 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Deerings | (a) | (2) | Odessa | TX | 280 | 8,420 | 140 | — | 280 | 8,560 | (711 | ) | 8,129 | 1975 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Terrace West | (a) | (2) | Midland | TX | 440 | 5,860 | — | — | 440 | 5,860 | (525 | ) | 5,775 | 1975 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Lake Lodge | (a) | (2) | Lake Worth | TX | 650 | 4,610 | — | — | 650 | 4,610 | (420 | ) | 4,840 | 1977 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Nolan | (a) | (2) | Sweetwater | TX | 190 | 4,210 | — | — | 190 | 4,210 | (429 | ) | 3,971 | 2010 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Langdon Hall | (b) | (2) | Bradenton | FL | 390 | 4,546 | 180 | — | 390 | 4,726 | (369 | ) | 4,747 | 1985 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Mount Washington Residence | (b) | (2) | Eau Claire | WI | 1,040 | 1,460 | 352 | — | 1,040 | 1,812 | (153 | ) | 2,699 | 1930 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Highlands Nursing and Rehabilitation Center | (a) | (2) | Louisville | KY | 441 | 9,484 | 127 | — | 441 | 9,611 | (688 | ) | 9,364 | 1977 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Seven Oaks Nursing & Rehabilitation | (a) | (2) | Glendale | WI | 1,620 | 5,980 | — | — | 1,620 | 5,980 | (374 | ) | 7,226 | 1994 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| F-49 |
| Initial Cost to Company | Costs Capitalized Subsequent to Acquisition | Amount Carried at December 31, 2014 (c) | ||||||||||||||||||||||||||||||||||||||||||||
Description | Type of Asset | Encumbrances | City | State | Land | Buildings & Improvements | Improvements / Adjustments | Impairment / Dispositions | Land | Buildings & Improvements | Accumulated Depreciation | Net | Year of Construction | Date Acquired | Life on Which Depreciation in Statement of Operations Computed | |||||||||||||||||||||||||||||||
| Nesbit Living and Recovery Center | (a) | (2) | Seguin | TX | 600 | 4,400 | — | — | 600 | 4,400 | (323 | ) | 4,677 | 1958 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| The Harbor House of Ocala | (b) | (2) | Dunnellon, FL | FL | 690 | 3,510 | 285 | — | 690 | 3,795 | (246 | ) | 4,239 | 1993 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| The Harmony House at Ocala | (b) | (2) | Ocala, FL | FL | 500 | 2,800 | 37 | — | 500 | 2,837 | (179 | ) | 3,158 | 1984 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| The Haven House at Ocala | (b) | (2) | Dunnellon, FL | FL | 490 | 2,610 | 98 | — | 490 | 2,708 | (170 | ) | 3,028 | 1991 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Seaside Manor Ormond Beach | (b) | (2) | Ormond Beach, FL | FL | 630 | 2,870 | 80 | — | 630 | 2,950 | (206 | ) | 3,374 | 1996 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Fountain Lake | (a) | (2) | Hot Springs | AR | — | — | 181 | — | — | 181 | (13 | ) | 168 | 2007 | 2008 | 40 years | ||||||||||||||||||||||||||||||
| Northridge Healthcare/Rehab | (a) | (2) | Little Rock | AR | 465 | 3,012 | 55 | (3,532 | ) | — | — | — | — | 1969 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Eagle Lake Nursing and Rehabilitation | (e) | (2) | Eagle Lake | TX | 93 | — | 6,446 | — | 93 | 6,446 | (172 | ) | 6,367 | 2013 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Chatham Acres Nursing Home | (a) | (2) | Chatham | PA | 203 | 1,997 | 9,871 | — | 203 | 11,868 | (2,246 | ) | 9,825 | 1873 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Houston Nursing and Rehab | (a) | (2) | Houston | TX | 228 | 2,452 | — | — | 228 | 2,452 | (892 | ) | 1,788 | 1976 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Raton Nursing and Rehab Center | (a) | (2) | Raton | NM | 128 | 1,509 | 47 | — | 128 | 1,556 | (610 | ) | 1,074 | 1985 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Red Rocks Care Center | (a) | (2) | Gallup | NM | 329 | 3,953 | 17 | — | 329 | 3,970 | (1,233 | ) | 3,066 | 1978 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Heritage Villa Nursing/Rehab | (a) | (2) | Dayton | TX | 18 | 436 | 9 | — | 18 | 445 | (156 | ) | 307 | 1964 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Wellington Oaks Nursing/Rehab | (a) | (2) | Ft. Worth | TX | 137 | 1,147 | (9 | ) | — | 137 | 1,138 | (416 | ) | 859 | 1963 | 2005 | 40 years | |||||||||||||||||||||||||||||
| Blanco Villa Nursing and Rehab | (a) | (2) | San Antonio | TX | 342 | 1,931 | 971 | — | 342 | 2,902 | (869 | ) | 2,375 | 1969 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Forest Hill Nursing Center | (a) | (2) | Ft. Worth | TX | 88 | 1,764 | — | (1,852 | ) | — | — | — | — | 2005 | 40 years | |||||||||||||||||||||||||||||||
| Garland Nursing and Rehab | (a) | (2) | Garland | TX | 57 | 1,058 | 1,358 | — | 57 | 2,416 | (530 | ) | 1,943 | 1964 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Hillcrest Nursing and Rehab | (a) | (2) | Wylie | TX | 210 | 2,684 | 528 | — | 210 | 3,212 | (848 | ) | 2,574 | 1975 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Mansfield Nursing and Rehab | (a) | (2) | Mansfield | TX | 487 | 2,143 | (18 | ) | — | 487 | 2,125 | (686 | ) | 1,926 | 1964 | 2005 | 40 years | |||||||||||||||||||||||||||||
| Westridge Nursing and Rehab | (a) | (2) | Lancaster | TX | 626 | 1,848 | (16 | ) | — | 626 | 1,832 | (610 | ) | 1,848 | 1973 | 2005 | 40 years | |||||||||||||||||||||||||||||
| Brownwood Nursing and Rehab | (a) | (2) | Brownwood | TX | 140 | 3,464 | 1,502 | — | 140 | 4,966 | (1,152 | ) | 3,954 | 1968 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Irving Nursing and Rehab | (a) | (2) | Irving | TX | 137 | 1,248 | (10 | ) | — | 137 | 1,238 | (419 | ) | 956 | 1972 | 2005 | 40 years | |||||||||||||||||||||||||||||
| North Pointe Nursing and Rehab | (a) | (2) | Watauga | TX | 1,061 | 3,846 | — | — | 1,061 | 3,846 | (1,110 | ) | 3,797 | 1999 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen Foothills Center | (a) | (2) | Phoenix | AZ | 500 | 4,538 | — | — | 500 | 4,538 | (1,689 | ) | 3,349 | 1997 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen Sun City Center | (a) | (2) | Sun City | AZ | 476 | 5,698 | 60 | — | 476 | 5,758 | (1,746 | ) | 4,488 | 1985 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Sunset Gardens at Mesa | (b) | (2) | Mesa | AZ | 123 | 1,641 | (14 | ) | — | 123 | 1,627 | (472 | ) | 1,278 | 1974 | 2005 | 40 years | |||||||||||||||||||||||||||||
| Evergreen Mesa Christian Center | (a) | (2) | Mesa | AZ | 466 | 6,231 | (47 | ) | (615 | ) | 466 | 5,569 | (1,921 | ) | 4,114 | 1973 | 2005 | 40 years | ||||||||||||||||||||||||||||
| San Juan Rehab and Care Center | (a) | (2) | Anacortes | WA | 625 | 1,185 | 2,041 | — | 625 | 3,226 | (993 | ) | 2,858 | 1965 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Pomona Vista Alzheimer’s Center | (a) | (2) | Ponoma | CA | 403 | 955 | — | — | 403 | 955 | (311 | ) | 1,047 | 1959 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Rose Convalescent Hospital | (a) | (2) | Baldwin Park | CA | 1,308 | 486 | — | — | 1,308 | 486 | (184 | ) | 1,610 | 1963 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen Nursing/Rehab Center | (a) | (2) | Effingham | IL | 317 | 3,462 | — | — | 317 | 3,462 | (1,018 | ) | 2,761 | 1974 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Doctors Nursing and Rehab Center | (a) | (2) | Salem | IL | 125 | 4,664 | 900 | — | 125 | 5,564 | (1,446 | ) | 4,243 | 1972 | 2005 | 40 years | ||||||||||||||||||||||||||||||
| Willis Nursing and Rehab | (a) | (2) | Willis | TX | 212 | 2,407 | — | — | 212 | 2,407 | (596 | ) | 2,023 | 1975 | 2006 | 40 years | ||||||||||||||||||||||||||||||
| Douglas Rehab and Care Center | (a) | (2) | Matoon | IL | 250 | 2,391 | 1,404 | (13 | ) | 250 | 3,782 | (681 | ) | 3,351 | 1963 | 2006 | 40 years | |||||||||||||||||||||||||||||
| Villa Rancho Bernardo Care Center | (a) | (2) | San Diego | CA | 1,425 | 9,653 | 65 | (57 | ) | 1,425 | 9,661 | (2,301 | ) | 8,785 | 1994 | 2006 | 40 years | |||||||||||||||||||||||||||||
| Austin Nursing Center | (a) | (2) | Austin | TX | 1,501 | 4,505 | 2,293 | — | 1,501 | 6,798 | (1,182 | ) | 7,117 | 2007 | 2007 | 40 years | ||||||||||||||||||||||||||||||
| Dove Hill Care Center and Villas | (a) | (2) | Hamilton | TX | 58 | 5,781 | — | — | 58 | 5,781 | (1,186 | ) | 4,653 | 1998 | 2007 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen Health & Rehab of Petaluma | (a) | (2) | Petaluma | CA | 749 | 2,460 | — | — | 749 | 2,460 | (562 | ) | 2,647 | 1969 | 2009 | 40 years | ||||||||||||||||||||||||||||||
| Evergreen Mountain View Health & Rehab | (a) | (2) | Carson City | NV | 3,455 | 5,942 | — | — | 3,455 | 5,942 | (976 | ) | 8,421 | 1977 | 2009 | 40 years | ||||||||||||||||||||||||||||||
| Maplewood at Orange | (b) | (2) | Orange | CT | 1,134 | 11,155 | 2,543 | — | 1,134 | 13,698 | (1,494 | ) | 13,338 | 1999 | 2010 | 40 years | ||||||||||||||||||||||||||||||
| Lakewood Senior Living of Pratt | (a) | (2) | Pratt | KS | 19 | 503 | 312 | — | 19 | 815 | (83 | ) | 751 | 1964 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Lakewood Senior Living of Seville | (a) | (2) | Wichita | KS | 94 | 897 | 151 | — | 94 | 1,048 | (139 | ) | 1,003 | 1977 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Lakewood Senior Living of Haviland | (a) | (2) | Haviland | KS | 112 | 649 | 16 | — | 112 | 665 | (86 | ) | 691 | 1971 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Maplewood at Newtown | (b) | (2) | Newtown | CT | 4,942 | 7,058 | 3,952 | — | 6,314 | 9,638 | (976 | ) | 14,976 | 2000 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Crawford Manor | (a) | (2) | Cleveland | OH | 120 | 3,080 | — | — | 120 | 3,080 | (274 | ) | 2,926 | 1994 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Amberwood Manor Nursing Home Rehabilitation | (a) | (2) | New Philadelphia | PA | 451 | 3,264 | — | — | 451 | 3,264 | (274 | ) | 3,441 | 1962 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Caring Heights Community Care & Rehabilitation Center | (a) | (2) | Coroapolis | PA | 1,546 | 10,018 | — | — | 1,546 | 10,018 | (845 | ) | 10,719 | 1983 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Dunmore Healthcare Group | (a) | (2) | Dunmore | PA | 398 | 6,813 | — | — | 398 | 6,813 | (580 | ) | 6,631 | 2002 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Eagle Creek Healthcare Group | (a) | (2) | West Union | OH | 1,056 | 5,774 | 163 | — | 1,056 | 5,937 | (491 | ) | 6,502 | 1981 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Edison Manor Nursing & Rehabilitation | (a) | (2) | New Castle | PA | 393 | 8,246 | — | — | 393 | 8,246 | (705 | ) | 7,934 | 1982 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Indian Hills Health & Rehabilitation Center | (a) | (2) | Euclid | OH | 853 | 8,425 | — | — | 853 | 8,425 | (710 | ) | 8,568 | 1989 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Milcrest Nursing Center | (a) | (2) | Marysville | OH | 736 | 2,169 | — | — | 736 | 2,169 | (188 | ) | 2,717 | 1968 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Deseret Nursing & Rehabilitation at Colby | (a) | (2) | Colby | KS | 569 | 2,799 | — | — | 569 | 2,799 | (231 | ) | 3,137 | 1974 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Deseret Nursing & Rehabilitation at Kensington | (a) | (2) | Kensington | KS | 280 | 1,419 | — | — | 280 | 1,419 | (124 | ) | 1,575 | 1967 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Deseret Nursing & Rehabilitation at Onaga | (a) | (2) | Onaga | KS | 87 | 2,866 | — | — | 87 | 2,866 | (236 | ) | 2,717 | 1959 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Deseret Nursing & Rehabilitation at Oswego | (a) | (2) | Oswego | KS | 183 | 840 | — | — | 183 | 840 | (76 | ) | 947 | 1960 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Deseret Nursing & Rehabilitation at Smith Center | (a) | (2) | Smith Center | KS | 106 | 1,650 | — | — | 106 | 1,650 | (140 | ) | 1,616 | 1960 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Sandalwood Healthcare | (a) | (2) | Little Rock | AR | 1,040 | 3,710 | 866 | — | 1,040 | 4,576 | (463 | ) | 5,153 | 1996 | 2011 | 40 years | ||||||||||||||||||||||||||||||
| Gardnerville Health and Rehab | (a) | (2) | Gardnerville | NV | 1,238 | 3,562 | — | — | 1,238 | 3,562 | (295 | ) | 4,505 | 2000 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Aviv Asset Management | (d) | (2) | Chicago | IL | — | — | 1,294 | — | — | 1,294 | (601 | ) | 693 | |||||||||||||||||||||||||||||||||
| Community Care and Rehab | (a) | (2) | Riverside | CA | 1,648 | 9,852 | — | — | 1,648 | 9,852 | (1,367 | ) | 10,133 | 1965 | 2010 | 40 years | ||||||||||||||||||||||||||||||
| Rivercrest Specialty Hospital | (i) | (2) | Mishawaka | IN | 328 | 8,072 | 1,691 | — | 328 | 9,763 | (641 | ) | 9,450 | 1991 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Safe Haven Hospital and Care Center | (a) | (2) | Pocatello | ID | 470 | 5,530 | 3,577 | — | 470 | 9,107 | (522 | ) | 9,055 | 1970 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Care Meridian Pleasanton | (h) | (2) | Pleasanton | CA | 411 | 751 | 1,475 | — | 411 | 2,226 | (127 | ) | 2,510 | 2012 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Inola Health Care Center | (a) | (2) | Inola | OK | 520 | 2,480 | — | — | 520 | 2,480 | (175 | ) | 2,825 | 1990 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Avondale Cottage of Pryor | (b) | (2) | Pryor | OK | 100 | 400 | — | — | 100 | 400 | (23 | ) | 477 | 2000 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| The Woodlands at Robinson | (a) | (2) | Ravenna | OH | 660 | 6,940 | — | — | 660 | 6,940 | (434 | ) | 7,166 | 2000 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Texan Nursing & Rehab of Gonzales | (a) | (2) | Gonzales | TX | 560 | 1,840 | 233 | — | 560 | 2,073 | (108 | ) | 2,525 | 1963 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Knox and Winamac Community Health Center | (j) | (2) | Knox | IN | 137 | 1,063 | — | — | 137 | 1,063 | (45 | ) | 1,155 | 2008 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Diplomate Healthcare | (a) | (2) | North Royalton | OH | 1,330 | 13,020 | — | — | 1,330 | 13,020 | (658 | ) | 13,692 | 1979 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Warr Acres Nursing Center | (a) | (2) | Oklahoma City | OK | 580 | 2,420 | — | — | 580 | 2,420 | (135 | ) | 2,865 | 1971 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Windsor Hills Nursing Center | (a) | (2) | Oklahoma City | OK | 370 | 2,830 | — | — | 370 | 2,830 | (167 | ) | 3,033 | 1967 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Oakcreek Nursing and Rehab | (a) | (2) | Luling | TX | 272 | 3,178 | — | — | 272 | 3,178 | (150 | ) | 3,300 | 1972 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Heart of Florida | (b) | (2) | Haines City | FL | 510 | 2,990 | — | — | 510 | 2,990 | (111 | ) | 3,389 | 1954 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Tender Loving Care | (b) | (2) | Lakeland | FL | 330 | 2,270 | — | — | 330 | 2,270 | (83 | ) | 2,517 | 1980 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Tangerine Cove | (b) | (2) | Brooksville | FL | 702 | 6,198 | — | — | 702 | 6,198 | (227 | ) | 6,673 | 1925 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Mercy Franciscan at Schroder | (a) | (2) | Hamilton | OH | 1,066 | 8,862 | 13 | — | 1,066 | 8,875 | (340 | ) | 9,601 | 1971 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Mercy Providence Retirement | (a) | (2) | New Albany | IN | 1,152 | 15,578 | — | — | 1,152 | 15,578 | (564 | ) | 16,166 | 1999 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Mercy Siena Retirement | (a) | (2) | Dayton | OH | 1,158 | 3,455 | — | — | 1,158 | 3,455 | (139 | ) | 4,474 | 1966 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Mercy St. Theresa | (a) | (2) | Cincinnati | OH | 1,287 | 3,341 | 96 | — | 1,287 | 3,437 | (135 | ) | 4,589 | 1929 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Echo Manor | (a) | (2) | Pickerington | OH | 550 | 9,810 | — | — | 550 | 9,810 | (344 | ) | 10,016 | 1978 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Oak Pavillion Nursing Home | (a) | (2) | Cincinnati | OH | 530 | 12,260 | — | — | 530 | 12,260 | (439 | ) | 12,351 | 1967 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Park View Nursing Center | (a) | (2) | Edgerton | OH | 390 | 5,050 | — | — | 390 | 5,050 | (184 | ) | 5,256 | 1920 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Summit’s Trace Nursing Home | (a) | (2) | Columbus | OH | 2,070 | 10,340 | — | — | 2,070 | 10,340 | (388 | ) | 12,022 | 1964 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Yell County Nursing Home | (a) | (2) | Ola | AR | 78 | 1,085 | 141 | — | 78 | 1,226 | (40 | ) | 1,264 | 1965 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Heather Hill | (a) | (2) | Chardon | OH | 1,650 | 13,865 | — | — | 1,650 | 13,865 | (441 | ) | 15,074 | 1955 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Liberty Assisted Living | (b) | (2) | Chardon | OH | 630 | 9,585 | 1,230 | — | 630 | 10,815 | (308 | ) | 11,137 | 1999 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Heather Hill LTACH | (i) | (2) | Chardon | OH | 1,100 | 8,770 | — | — | 1,100 | 8,770 | (247 | ) | 9,623 | 1955 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| The Village at Richardson | (a) | (2) | Richardson | TX | 1,470 | 11,530 | 30 | — | 1,470 | 11,560 | (369 | ) | 12,661 | 1980 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Helia Healthcare of Champaign | (a) | (2) | Champaign | IL | 350 | 2,450 | 73 | — | 350 | 2,523 | (79 | ) | 2,794 | 1961 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Helia Healthcare of Energy | (a) | (2) | Energy | IL | 100 | 3,300 | — | — | 100 | 3,300 | (106 | ) | 3,294 | 1971 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Helia Healthcare of W. Franklin | (a) | (2) | West Frankfort | IL | 50 | 750 | — | — | 50 | 750 | (25 | ) | 775 | 1973 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Fort Stockton Nursing Center | (a) | (2) | Fort Stockton | TX | 480 | 2,870 | 637 | — | 480 | 3,507 | (113 | ) | 3,874 | 1992 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| North Ridge Care Center | (a) | (2) | New Hope | MN | 5,268 | 18,930 | 319 | — | 5,268 | 19,249 | (607 | ) | 23,910 | 1966 | 2014 | 41 years | ||||||||||||||||||||||||||||||
| North Ridge Apartments | (a) | (2) | New Hope | MN | 2,175 | 7,555 | 682 | — | 2,175 | 8,237 | (241 | ) | 10,171 | 1983 | 2014 | 42 years | ||||||||||||||||||||||||||||||
| North Ridge ALF | (b) | (2) | New Hope | MN | 1,278 | 4,795 | — | — | 1,278 | 4,795 | (147 | ) | 5,926 | 1983 | 2014 | 43 years | ||||||||||||||||||||||||||||||
| Bridgecrest Rehab Suites | (a) | (2) | Houston | TX | 1,280 | 14,640 | — | — | 1,280 | 14,640 | (397 | ) | 15,523 | 2014 | 2014 | 44 years | ||||||||||||||||||||||||||||||
| Carrington Place at Muscatine | (a) | (2) | Muscatine | IA | 320 | 8,080 | — | — | 320 | 8,080 | (220 | ) | 8,180 | 1961 | 2014 | 45 years | ||||||||||||||||||||||||||||||
| F-50 |
| Initial Cost to Company | Costs Capitalized Subsequent to Acquisition | Amount Carried at December 31, 2014 (c) | ||||||||||||||||||||||||||||||||||||||||||||
Description | Type of Asset | Encumbrances | City | State | Land | Buildings & Improvements | Improvements / Adjustments | Impairment / Dispositions | Land | Buildings & Improvements | Accumulated Depreciation | Net | Year of Construction | Date Acquired | Life on Which Depreciation in Statement of Operations Computed | |||||||||||||||||||||||||||||||
| Carrington Place of Toledo | (a) | (2) | Toledo | IA | 340 | 4,760 | — | — | 340 | 4,760 | (129 | ) | 4,971 | 1975 | 2014 | 46 years | ||||||||||||||||||||||||||||||
| Gallatin Health Care | (a) | (2) | Warsaw | KY | 550 | 7,410 | — | — | 550 | 7,410 | (204 | ) | 7,756 | 1989 | 2014 | 47 years | ||||||||||||||||||||||||||||||
| Homestead Lexington | (a) | (2) | Lexington | KY | 760 | 6,280 | — | — | 760 | 6,280 | (173 | ) | 6,867 | 1969 | 2014 | 48 years | ||||||||||||||||||||||||||||||
| Homestead New Castle | (a) | (2) | New Castle | KY | 290 | 3,110 | — | — | 290 | 3,110 | (80 | ) | 3,320 | 1971 | 2014 | 49 years | ||||||||||||||||||||||||||||||
| The Oaks | (b) | (2) | LaGrange | KY | 240 | 1,110 | — | — | 240 | 1,110 | (30 | ) | 1,320 | 1990 | 2014 | 50 years | ||||||||||||||||||||||||||||||
| Pine Meadows Health Care | (a) | (2) | Lexington | KY | 660 | 6,620 | — | — | 660 | 6,620 | (182 | ) | 7,098 | 1990 | 2014 | 51 years | ||||||||||||||||||||||||||||||
| The Richwood | (a) | (2) | LaGrange | KY | 660 | 5,560 | — | — | 660 | 5,560 | (156 | ) | 6,064 | 1997 | 2014 | 52 years | ||||||||||||||||||||||||||||||
| Twin Oaks Assisted Living | (b) | (2) | New Castle | KY | 280 | 1,470 | — | — | 280 | 1,470 | (41 | ) | 1,709 | 2002 | 2014 | 53 years | ||||||||||||||||||||||||||||||
| Care Meridian Northridge | (h) | (2) | Northridge | CA | 469 | 310 | 623 | — | 469 | 933 | (33 | ) | 1,369 | 2013 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Pensacola Health Care | (a) | (2) | Pensacola | FL | 160 | 5,840 | — | — | 160 | 5,840 | (160 | ) | 5,840 | 1984 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Edgewood Rehab | (a) | (2) | Mesquite | TX | 1,070 | 12,170 | — | — | 1,070 | 12,170 | (258 | ) | 12,982 | 2012 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Estrella Oaks Rehab | (a) | (2) | Georgetown | TX | 1,420 | 12,660 | — | — | 1,420 | 12,660 | (267 | ) | 13,813 | 2011 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Sandy Lake Rehab | (a) | (2) | Coppell | TX | 920 | 12,030 | — | — | 920 | 12,030 | (251 | ) | 12,700 | 2009 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| San Gabriel Rehab | (a) | (2) | Round Rock | TX | 1,460 | 11,970 | — | — | 1,460 | 11,970 | (263 | ) | 13,168 | 2011 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Mulberry Manor | (a) | (2) | Stephenville | TX | 580 | 3,020 | — | — | 580 | 3,020 | (67 | ) | 3,533 | 1965 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Lindsay Gardens | (a) | (2) | Lindsay | CA | 480 | 5,770 | — | — | 480 | 5,770 | (129 | ) | 6,121 | 1996 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Sun Villa | (a) | (2) | Porterville | CA | 500 | 4,100 | — | — | 500 | 4,100 | (85 | ) | 4,515 | 1958 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Valley Care Center | (a) | (2) | Porterville | CA | 120 | 2,380 | — | — | 120 | 2,380 | (50 | ) | 2,450 | 1947 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Royal Manor | (a) | (2) | Nicholasville | KY | 280 | 5,720 | — | — | 280 | 5,720 | (109 | ) | 5,891 | 1974 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Chateau Care Center | (a) | (2) | St. Joseph | MO | 40 | 2,860 | — | — | 40 | 2,860 | (50 | ) | 2,850 | 1955 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| The Inn | (a) | (2) | St. Joseph | MO | 270 | 6,330 | — | — | 270 | 6,330 | (105 | ) | 6,495 | 1980 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Riverside Care Center | (a) | (2) | St. Joseph | MO | 160 | 6,540 | — | — | 160 | 6,540 | (98 | ) | 6,602 | 1980 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Maplewood at Mayflower Nursing | (a) | (2) | West Yarmouth | MA | 800 | 13,200 | 35 | — | 800 | 13,235 | (182 | ) | 13,853 | 1988 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Royal Park Care Center | (a) | (2) | Spokane | WA | 810 | 21,990 | — | — | 810 | 21,990 | (226 | ) | 22,574 | 1990 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Alderwood Park Center | (a) | (2) | Bellingham | WA | 980 | 11,400 | — | — | 980 | 11,400 | (119 | ) | 12,261 | 1996 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Merry Haven Care Center | (a) | (2) | Snohomish | WA | 750 | 9,970 | — | — | 750 | 9,970 | (104 | ) | 10,616 | 1986 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Royal Plaza Retirement Center | (b) | (2) | Lewiston | ID | 1,480 | 18,240 | — | — | 1,480 | 18,240 | (181 | ) | 19,539 | 2008 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Royal Plaza Spokane | (b) | (2) | Spokane | WA | 770 | 11,890 | — | — | 770 | 11,890 | (122 | ) | 12,538 | 1996 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Highland Care Center | (a) | (2) | Bellingham | WA | 240 | 5,080 | — | — | 240 | 5,080 | (53 | ) | 5,267 | 1951 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Belle Meade Home | (a) | (2) | Greenville | KY | 380 | 4,220 | — | — | 380 | 4,220 | (35 | ) | 4,565 | 1980 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Premier Care of Dallas | (a) | (2) | Dallas | TX | 960 | 14,140 | — | — | 960 | 14,140 | (76 | ) | 15,024 | 2012 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Premier Care on Hillcrest | (a) | (2) | Dallas | TX | 870 | 12,530 | — | — | 870 | 12,530 | (67 | ) | 13,333 | 2011 | 2014 | 40 years | ||||||||||||||||||||||||||||||
| Care Meridian Granite Bay | (h) | (2) | Granite Bay | CA | 540 | 435 | 2,683 | — | 540 | 3,118 | (57 | ) | 3,601 | 1978 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Bethel | (c) | (2) | Bethel | CT | 2,400 | — | 23,442 | — | 2,400 | 23,442 | (41 | ) | 25,801 | 2014 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Care Meridian Chatsworth | (h) | (2) | Chatsworth | CA | 416 | 281 | 766 | — | 416 | 1,047 | (30 | ) | 1,433 | 2013 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Doctors Neuro Hospital | (k) | (2) | Bremen | IN | 400 | 8,900 | 2,796 | — | 400 | 11,696 | (279 | ) | 11,817 | 1988 | 2013 | 40 years | ||||||||||||||||||||||||||||||
| Unencumbered Guarantors subtotal | 170,103 | 1,361,012 | 176,463 | (82,056 | ) | 164,426 | 1,461,097 | (184,732 | ) | 1,440,791 | ||||||||||||||||||||||||||||||||||||
| Little Rock Health and Rehab | (a) | (4) | Little Rock | AR | 471 | 4,779 | 7,613 | (12,863 | ) | — | — | — | — | 1971 | 2009 | 40 years | ||||||||||||||||||||||||||||||
| Pinehurst Park Terrace | (a) | (4) | Seattle | WA | — | 360 | — | (360 | ) | — | — | — | — | 2005 | 40 years | |||||||||||||||||||||||||||||||
| North Richland Hills | (a) | (4) | North Richland Hills | TX | 980 | — | 5,068 | (6,048 | ) | — | — | — | — | 2005 | 40 years | |||||||||||||||||||||||||||||||
| Skagit Aviv | (4) | Mt. Vernon | WA | — | — | 422 | (422 | ) | — | — | — | — | 2014 | 40 years | ||||||||||||||||||||||||||||||||
| The Laurels of Defiance | (a) | (4) | Defiance | OH | 145 | 10,736 | — | — | 145 | 10,736 | — | 10,881 | 1979 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Hillsboro | (a) | (4) | Hillsboro | OH | 346 | 8,087 | — | — | 346 | 8,087 | — | 8,433 | 1976 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Massillon | (a) | (4) | Massillon | OH | 1,492 | 23,848 | — | — | 1,492 | 23,848 | — | 25,340 | 1995 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Mt. Vernon | (a) | (4) | Mt. Vernon | OH | 225 | 10,881 | — | — | 225 | 10,881 | — | 11,106 | 1977 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Norworth | (a) | (4) | Worthington | OH | 1,203 | 15,029 | — | — | 1,203 | 15,029 | — | 16,232 | 1969 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Shane Hill | (a) | (4) | Rockford | OH | 214 | 13,595 | — | — | 214 | 13,595 | — | 13,809 | 1971 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| Maplewood of Shane’s Village | (b) | (4) | Rockford | OH | 47 | 3,021 | — | — | 47 | 3,021 | — | 3,068 | 1971 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Worthington | (a) | (4) | Worthington | OH | 1,194 | 9,675 | — | — | 1,194 | 9,675 | — | 10,869 | 1960 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Bedford | (a) | (4) | Battle Creek | OH | 768 | 11,725 | — | — | 768 | 11,725 | — | 12,493 | 1974 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Coldwater | (a) | (4) | Coldwater | MI | 258 | 18,705 | — | — | 258 | 18,705 | — | 18,963 | 1970 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Fulton | (a) | (4) | Perrinton | MI | 381 | 8,057 | — | — | 381 | 8,057 | — | 8,438 | 1972 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Galesburg | (a) | (4) | Galesburg | MI | 326 | 8,786 | — | — | 326 | 8,786 | — | 9,112 | 1973 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Hudsonville | (a) | (4) | Hudsonville | MI | 178 | 12,455 | — | — | 178 | 12,455 | — | 12,633 | 1964 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Kent | (a) | (4) | Lowell | MI | 208 | 15,295 | — | — | 208 | 15,295 | — | 15,503 | 1972 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Mt. Pleasant | (a) | (4) | Mt. Pleasant | MI | 444 | 10,574 | — | — | 444 | 10,574 | — | 11,018 | 1964 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Sandy Creek | (a) | (4) | Wayland | MI | 995 | 10,560 | — | — | 995 | 10,560 | — | 11,555 | 1974 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| Maplewood of Sandy Creek | (b) | (4) | Wayland | MI | 201 | 2,133 | — | — | 201 | 2,133 | — | 2,334 | 1974 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| Maplewood of Marshall | (b) | (4) | Marshall | MI | 160 | 10,002 | — | — | 160 | 10,002 | — | 10,162 | 1997 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| Maplewood of Mt. Pleasant | (b) | (4) | Mt. Pleasant | MI | 168 | 7,255 | — | — | 168 | 7,255 | — | 7,423 | 1989 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| Ashewood Manor | (a) | (4) | Asheville | NC | 233 | 4,752 | — | — | 233 | 4,752 | — | 4,985 | 1990 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Chatham | (a) | (4) | Pittsboro | NC | 915 | 12,656 | — | — | 915 | 12,656 | — | 13,571 | 1991 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Forest Glenn | (a) | (4) | Garner | NC | 1,103 | 11,763 | — | — | 1,103 | 11,763 | — | 12,866 | 1991 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Green Tree Ridge | (a) | (4) | Asheville | NC | 440 | 12,110 | — | — | 440 | 12,110 | — | 12,550 | 1990 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Salisbury | (a) | (4) | Salisbury | NC | 447 | 6,411 | — | — | 447 | 6,411 | — | 6,858 | 1992 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Summit Ridge | (a) | (4) | Asheville | NC | 1,192 | 17,336 | — | — | 1,192 | 17,336 | — | 18,528 | 1927 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of DeKalb | (a) | (4) | Butler | IN | 321 | 7,703 | — | — | 321 | 7,703 | — | 8,024 | 1973 | 2014 | 40 years | |||||||||||||||||||||||||||||||
| The Laurels of Hendersonville | (a) | (4) | Hendersonville | NC | — | — | — | — | — | — | — | — | 2014 | 40 years | ||||||||||||||||||||||||||||||||
| The Laurels of Willow Creek | (a) | (4) | Midlothian | VA | — | — | — | — | — | — | — | — | 2014 | 40 years | ||||||||||||||||||||||||||||||||
| Westerville Office Building | (j) | (4) | Westerville | OH | 1,026 | 6,712 | — | — | 1,026 | 6,712 | — | 7,738 | 2014 | 40 years | ||||||||||||||||||||||||||||||||
| Non-Guarantors subtotal | 16,081 | 295,001 | 13,103 | (19,693 | ) | 14,630 | 289,862 | — | 304,492 | |||||||||||||||||||||||||||||||||||||
| Maplewood at Danbury | (b) | (5) | Danbury | CT | 1,919 | 14,081 | 687 | — | 1,919 | 14,768 | (1,041 | ) | 15,646 | 1968 | 2012 | 40 years | ||||||||||||||||||||||||||||||
| Non-Guarantors, HUD Loan subtotal | 1,919 | 14,081 | 687 | — | 1,919 | 14,768 | (1,041 | ) | 15,646 | |||||||||||||||||||||||||||||||||||||
| 188,103 | 1,670,094 | 190,314 | (101,749 | ) | 180,975 | 1,765,788 | (185,788 | ) | 1,760,976 | |||||||||||||||||||||||||||||||||||||
| F-51 |
Assets under direct financing leases
| Description | Type of Asset | Encum- brances | City | State | Initial Cost to Company | Accretion/ Amortization | Impairment/ Dispositions | Assets Under Direct Financing Leases | Net | Year of Construction | Date Acquired | |||||||||||||||||||||
| Fountain Lake | (a) | (2) | Hot Springs | AR | 10,419 | 872 | — | $ | 11,291 | 11,291 | 2007 | 2008 | ||||||||||||||||||||
| $ | 10,419 | $ | 872 | $ | — | $ | 11,291 | $ | 11,291 | |||||||||||||||||||||||
Development Properties
| Description | Type of Asset | Encumbrances | City | State | Land | Buildings & Improvements | Improvements / Adjustments | Construction in Progress | Land | Buildings & Improvements | Accumulated Depreciation | Construction in Progress and Land Held for Development | Net | Year of Construction | Date Acquired | Life on Which Depreciation in Statement of Operations Computed |
||||||||||||||||||||||||||||||||||||||||||
| Deseret at Mansfield | (b) | (2) | Mansfield | OH | 146 | 2,686 | 20 | 293 | 146 | 2,706 | (597 | ) | 293 | 2,548 | 1980 | 2006 | 40 years | |||||||||||||||||||||||||||||||||||||||||
| Care Meridian Escondido | (h) | (2) | Escondido | CA | 170 | 1,139 | — | 87 | 170 | 1,139 | (115 | ) | 87 | 1,281 | 1990 | 2011 | 40 years | |||||||||||||||||||||||||||||||||||||||||
| Care Meridian Fresno-Marks | (h) | (2) | Fresno | CA | 270 | 1,709 | — | 197 | 270 | 1,709 | (164 | ) | 197 | 2,012 | 1990 | 2011 | 40 years | |||||||||||||||||||||||||||||||||||||||||
| Care Meridian Sacramento | (h) | (2) | Elk Grove | CA | 220 | 1,649 | — | 247 | 220 | 1,649 | (160 | ) | 247 | 1,956 | 1992 | 2011 | 40 years | |||||||||||||||||||||||||||||||||||||||||
| Care Meridian Santiago Canyon | (h) | (2) | Silverado | CA | 550 | 1,039 | — | 110 | 550 | 1,040 | (114 | ) | 109 | 1,585 | 1999 | 2011 | 40 years | |||||||||||||||||||||||||||||||||||||||||
| Care Meridian Gilroy | (h) | (2) | Gilroy | CA | 1,089 | 1,759 | — | 169 | 1,089 | 1,761 | (168 | ) | 167 | 2,849 | 2000 | 2011 | 40 years | |||||||||||||||||||||||||||||||||||||||||
| Twinbrook Nursing & Rehab | (a) | (2) | Louisville | KY | 880 | 8,120 | — | 661 | 880 | 8,120 | (353 | ) | 661 | 9,308 | 1960 | 2013 | 40 years | |||||||||||||||||||||||||||||||||||||||||
| Houston Nursing and Rehab | (c) | (2) | Webster | TX | 2,110 | — | — | 256 | — | — | — | 2,366 | 2,366 | 2014 | 40 years | |||||||||||||||||||||||||||||||||||||||||||
| Maplewood at Brewster | (c) | (2) | Brewster | MA | 6,288 | — | — | 3,798 | — | — | — | 10,086 | 10,086 | 2014 | 40 years | |||||||||||||||||||||||||||||||||||||||||||
| Maplewood at Mayflower Place | (b) | (2) | West Yarmouth | MA | 3,200 | 32,800 | — | 2,714 | 3,200 | 32,800 | (440 | ) | 2,714 | 38,274 | 1988 | 2014 | 40 years | |||||||||||||||||||||||||||||||||||||||||
| Maplewood at Yarmouth ALZ | (c) | (2) | West Yarmouth | MA | 3,784 | — | 40 | 80 | — | 40 | — | 3,864 | 3,904 | 2014 | 40 years | |||||||||||||||||||||||||||||||||||||||||||
| Maplewood at Cuyahoga Falls | (c) | (4) | Cuyahoga Falls | OH | 1,250 | — | — | 242 | — | — | — | 1,492 | 1,492 | 2014 | 40 years | |||||||||||||||||||||||||||||||||||||||||||
| Maplewood at Twinsburg | (c) | (4) | Twinsburg | OH | 750 | — | — | 70 | — | — | — | 820 | 820 | 2014 | 40 years | |||||||||||||||||||||||||||||||||||||||||||
| Maplewood at Norumbega Point | (b) | (2) | Weston | MA | 2,800 | 29,200 | — | 87 | 2,800 | 29,240 | (388 | ) | 47 | 31,699 | 1994 | 2014 | 40 years | |||||||||||||||||||||||||||||||||||||||||
| $ | 23,507 | $ | 80,102 | $ | — | $ | 60 | $ | 9,011 | $ | 9,325 | $ | 80,204 | $ | (2,498 | ) | $ | 23,150 | $110,181 | |||||||||||||||||||||||||||||||||||||||
| $ | 190,300 | $ | 1,845,992 | $ | 11,291 | $ | (188,286 | ) | $ | 23,150 | $1,882,447 | |||||||||||||||||||||||||||||||||||||||||||||||
| (a) | Skilled Nursing Facilities (SNFs) |
| (b) | Assisted Living Facilities (ALFs) |
| (c) | Vacant Land |
| (d) | Assets relating to corporate office space |
| (e) | Developmental asset |
| (f) | Includes six properties all located in Texas |
| (g) | The aggregate cost for federal income tax purposes of the real estate as of December 31, 2014 is $1.8 billion (unaudited). |
| (h) | Traumatic Brain Injury Center (TBIs) |
| (i) | Long Term Acute Care |
| (j) | Medical Office Building |
| (k) | Hospital |
| Encumbrances: | (1) | Issuer | |||
| (2) | Unencumbered guarantors | ||||
| (3) | Encumbered guarantors | ||||
| (4) | Non guarantors | ||||
| (5) | Non guarantor, HUD loan |
| F-52 |
AVIV REIT, INC.
AVIV HEALTHCARE PROPERTIES LIMITED PARTNERSHIP
| For the Years Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Reconciliation of real estate: | ||||||||||||
| Carrying cost: | ||||||||||||
| Balance at beginning of period | $ | 1,310,790 | $ | 1,102,832 | $ | 919,383 | ||||||
| Additions during the period: | ||||||||||||
| Acquisitions | 706,970 | 199,789 | 184,326 | |||||||||
| Development of rental properties and capital expenditures | 60,535 | 28,415 | 42,448 | |||||||||
| Dispositions: | ||||||||||||
| Sale of assets | (5,221 | ) | (19,746 | ) | (32,208 | ) | ||||||
| Impairment (i) | (2,341 | ) | (500 | ) | (11,117 | ) | ||||||
| Balance at end of period | $ | 2,070,733 | $ | 1,310,790 | $ | 1,102,832 | ||||||
| Accumulated depreciation: | ||||||||||||
| Balance at beginning of period | $ | 147,302 | $ | 119,371 | $ | 96,796 | ||||||
| Additions during the period: | ||||||||||||
| Depreciation expense | 43,928 | 33,144 | 26,810 | |||||||||
| Dispositions: | ||||||||||||
| Sale of assets | (2,944 | ) | (5,213 | ) | (4,235 | ) | ||||||
| Balance at end of period | $ | 188,286 | $ | 147,302 | $ | 119,371 | ||||||
| (i) | Represents the write-down of carrying cost and accumulated depreciation on assets where impairment charges were taken. |