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What changed in Sabra Health Care REIT, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Sabra Health Care REIT, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+217 added−261 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-21)

Top changes in Sabra Health Care REIT, Inc.'s 2023 10-K

217 paragraphs added · 261 removed · 193 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeGeographic and Property Type Diversification The following tables display the geographic concentration by property type and by investment and the distribution of beds/units for our real estate held for investment as of December 31, 2022 and exclude our unconsolidated joint ventures which consist of 172 facilities and 8,694 units (dollars in thousands): Geographic Concentration — Property Type Location Skilled Nursing / Transitional Care Senior Housing - Leased Senior Housing - Managed Consolidated Behavioral Health Specialty Hospitals and Other Total % of Total Texas 36 5 6 — 13 60 14.9 % California 24 — 2 3 1 30 7.5 Kentucky 25 1 — 1 1 28 7.0 Oregon 15 1 3 — — 19 4.7 Indiana 12 4 1 2 — 19 4.7 Washington 15 — 2 — — 17 4.2 North Carolina 13 — 2 — — 15 3.7 Missouri 12 — 1 1 — 14 3.5 Massachusetts 12 — — — — 12 3.0 Michigan 1 6 4 — — 11 2.8 Other (31 states & Canada) 99 30 38 10 — 177 44.0 Total 264 47 59 17 15 402 100.0 % % of Total 65.7 % 11.7 % 14.7 % 4.2 % 3.7 % 100.0 % Distribution of Beds/Units Property Type Location Total Number of Properties Skilled Nursing / Transitional Care Senior Housing - Leased Senior Housing - Managed Consolidated Behavioral Health Specialty Hospitals and Other Total % of Total Texas 60 4,419 470 856 — 325 6,070 15.2 % Kentucky 28 2,598 142 — 60 40 2,840 7.1 California 30 2,058 — 160 313 27 2,558 6.4 Indiana 19 1,411 545 169 138 — 2,263 5.7 Oregon 19 1,520 215 162 — — 1,897 4.7 Washington 17 1,591 — 165 — — 1,756 4.4 North Carolina 15 1,454 — 237 — — 1,691 4.2 New York 10 1,566 — 107 — — 1,673 4.2 Massachusetts 12 1,469 — — — — 1,469 3.7 Virginia 10 894 128 118 — — 1,140 2.8 Other (31 states & Canada) 182 10,156 2,050 3,968 454 — 16,628 41.6 Total 402 29,136 3,550 5,942 965 392 39,985 100.0 % % of Total 72.9 % 8.9 % 14.8 % 2.4 % 1.0 % 100.0 % 7 Geographic Concentration — Investment (1) Property Type Location Total Number of Properties Skilled Nursing / Transitional Care Senior Housing - Leased Senior Housing - Managed Consolidated Behavioral Health Specialty Hospitals and Other Total % of Total Texas 60 $ 355,577 $ 55,818 $ 185,251 $ — $ 187,387 $ 784,033 13.4 % California 30 435,612 — 57,995 217,764 7,743 719,114 12.3 Oregon 19 261,316 33,002 53,887 — — 348,205 5.9 Indiana 19 158,666 119,208 37,624 12,155 — 327,653 5.6 New York 10 297,637 — 20,417 — — 318,054 5.4 Kentucky 28 245,797 23,668 — 9,374 30,313 309,152 5.3 Washington 17 189,251 — 38,681 — — 227,932 3.9 Maryland 8 195,787 — — — — 195,787 3.3 North Carolina 15 124,448 — 70,969 — — 195,417 3.3 Arizona 5 — 10,348 39,180 121,757 — 171,285 2.9 Other (31 states & Canada) (2) 191 1,121,130 348,650 701,279 104,093 — 2,275,152 38.7 Total 402 $ 3,385,221 $ 590,694 $ 1,205,283 $ 465,143 $ 225,443 $ 5,871,784 100.0 % % of Total 57.7 % 10.1 % 20.5 % 7.9 % 3.8 % 100.0 % (1) Represents the undepreciated book value of our real estate held for investment as of December 31, 2022.
Biggest changeGeographic and Property Type Diversification The following tables display the geographic concentration by property type and by investment and the distribution of beds/units for our real estate held for investment as of December 31, 2023 and exclude our unconsolidated joint ventures which consist of 16 facilities and 1,256 units (pro rata) (dollars in thousands): Geographic Concentration — Property Type Location Skilled Nursing / Transitional Care Senior Housing - Leased Senior Housing - Managed Consolidated Behavioral Health Specialty Hospitals and Other Total % of Total Texas 34 5 5 — 13 57 15.1 % California 24 — 2 3 1 30 7.9 Kentucky 24 1 — 2 1 28 7.4 Indiana 14 4 1 2 — 21 5.6 Oregon 15 1 3 — — 19 5.0 North Carolina 13 — 2 — — 15 4.0 Missouri 12 — 1 1 — 14 3.7 Washington 12 — 2 — — 14 3.7 Massachusetts 12 — — — — 12 3.2 New York 9 — 1 — — 10 2.6 Other (29 states & Canada) 72 32 44 10 — 158 41.8 Total 241 43 61 18 15 378 100.0 % % of Total 63.7 % 11.4 % 16.1 % 4.8 % 4.0 % 100.0 % Distribution of Beds/Units Property Type Location Total Number of Properties Skilled Nursing / Transitional Care Senior Housing - Leased Senior Housing - Managed Consolidated Behavioral Health Specialty Hospitals and Other Total % of Total Texas 57 4,325 470 736 — 325 5,856 15.5 % Kentucky 28 2,486 142 — 172 40 2,840 7.5 California 30 2,058 — 160 313 27 2,558 6.8 Indiana 21 1,651 545 169 138 — 2,503 6.6 Oregon 19 1,520 215 162 — — 1,897 5.0 North Carolina 15 1,454 — 237 — — 1,691 4.5 New York 10 1,566 — 107 — — 1,673 4.4 Washington 14 1,309 — 165 — — 1,474 3.9 Massachusetts 12 1,469 — — — — 1,469 3.9 Virginia 10 894 60 186 — — 1,140 3.0 Other (29 states & Canada) 162 8,037 2,041 4,119 536 — 14,733 38.9 Total 378 26,769 3,473 6,041 1,159 392 37,834 100.0 % % of Total 70.7 % 9.2 % 16.0 % 3.1 % 1.0 % 100.0 % 7 Geographic Concentration — Investment (1) Property Type Location Total Number of Properties Skilled Nursing / Transitional Care Senior Housing - Leased Senior Housing - Managed Consolidated Behavioral Health Specialty Hospitals and Other Total % of Total Texas 57 $ 347,245 $ 55,818 $ 173,043 $ — $ 187,387 $ 763,493 13.5 % California 30 435,612 — 59,434 217,764 7,743 720,553 12.8 Indiana 21 196,544 120,197 47,861 12,155 — 376,757 6.7 Oregon 19 261,316 33,002 54,214 — — 348,532 6.2 New York 10 298,004 — 20,688 — — 318,692 5.8 Kentucky 28 244,385 23,668 — 15,165 30,313 313,531 5.6 Washington 14 158,674 — 41,142 — — 199,816 3.5 North Carolina 15 124,449 — 75,251 — — 199,700 3.5 Arizona 5 — 10,348 39,656 121,757 — 171,761 3.0 Canada (2) 9 — — 159,550 — — 159,550 2.8 Other (30 states) 170 984,632 330,241 618,646 129,896 — 2,063,415 36.6 Total 378 $ 3,050,861 $ 573,274 $ 1,289,485 $ 496,737 $ 225,443 $ 5,635,800 100.0 % % of Total 54.1 % 10.2 % 22.9 % 8.8 % 4.0 % 100.0 % (1) Represents the undepreciated book value of our real estate held for investment as of December 31, 2023.
We also intend to achieve our objective of diversifying our portfolio by tenant and facility type through select asset sales and other arrangements with our tenants.
We also intend to achieve our objective of diversifying our portfolio by tenant and facility type through select asset sales and other arrangements with our tenants.
Various healthcare reform measures became law upon the enactment of the Patient Protection and Affordable Care Act of 2010 (the “Affordable Care Act”) and the Tax Cuts and Jobs Act (the “2017 Tax Act”), which amends certain provisions of the Affordable Care Act. The recent Presidential and Congressional elections in the U.S. could result in further changes.
Various healthcare reform measures became law upon the enactment of the Patient Protection and Affordable Care Act of 2010 (the “Affordable Care Act”) and the Tax Cuts and Jobs Act (the “2017 Tax Act”), which amends certain provisions of the Affordable Care Act. Future Presidential and Congressional elections in the U.S. could result in further changes.
Our properties in any one state or province did not account for more than 16% of our total beds/units as of December 31, 2022. Our geographic diversification will limit the effect of a decline in any one regional market on our overall performance.
Our properties in any one state or province did not account for more than 16% of our total beds/units as of December 31, 2023. Our geographic diversification will limit the effect of a decline in any one regional market on our overall performance.
The primary growth drivers of the nursing home and senior housing industries – an aging population and longer life expectancies – present attractive investment opportunities for us. According to the 2017 National Population Projections published by the U.S.
The primary growth drivers of the nursing home and senior housing industries – an aging population and longer life expectancies – present attractive investment opportunities for us. According to the 2023 National Population Projections published by the U.S.
Richard K. Matros, Chief Executive Officer, President and Chair of Sabra, has more than 30 years of experience in the acquisition, development and disposition of healthcare assets, including nine years at Sun Healthcare Group, Inc.
Richard K. Matros, Chief Executive Officer, President and Chair of Sabra, has more than 40 years of experience in the acquisition, development and disposition of healthcare assets, including nine years at Sun Healthcare Group, Inc.
As of December 31, 2022, our subsidiaries owned eight healthcare facilities (five senior housing communities and three skilled nursing/transitional care facilities) with mortgage loans that are guaranteed by HUD.
As of December 31, 2023, our subsidiaries owned eight healthcare facilities (five senior housing communities and three skilled nursing/transitional care facilities) with mortgage loans that are guaranteed by HUD.
Significant Credit Concentrations For the year ended December 31, 2022, no tenant relationship represented 10% or more of our total revenues.
Significant Credit Concentrations For the year ended December 31, 2023, no tenant relationship represented 10% or more of our total revenues.
As of December 31, 2022, the leases had a weighted-average remaining term of seven years. The leases generally include provisions to extend the lease terms and other negotiated terms and conditions. We, through our subsidiaries, retain substantially all of the risks and benefits of ownership of the real estate assets leased to tenants.
As of December 31, 2023, the leases had a weighted-average remaining term of eight years. The leases generally include provisions to extend the lease terms and other negotiated terms and conditions. We, through our subsidiaries, retain substantially all of the risks and benefits of ownership of the real estate assets leased to tenants.
Develop New Investment Relationships We seek to cultivate our relationships with tenants and healthcare providers in order to expand the mix of tenants operating our properties and, in doing so, to reduce our dependence on any single tenant or operator. As of December 31, 2022, we had 73 relationships.
Develop New Investment Relationships We seek to cultivate our relationships with tenants and healthcare providers in order to expand the mix of tenants operating our properties and, in doing so, to reduce our dependence on any single tenant or operator. As of December 31, 2023, we had 63 relationships.
Long-Term, Triple-Net Lease Structure As of December 31, 2022, the substantial majority of our real estate properties held for investment (excluding 59 Senior Housing - Managed communities) were leased under triple-net operating leases with expirations ranging from less than one year to 20 years, pursuant to which the tenants are responsible for all facility maintenance, code compliance, insurance required in connection with the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leased properties and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.
Long-Term, Triple-Net Lease Structure As of December 31, 2023, the substantial majority of our real estate properties held for investment (excluding 61 Senior Housing - Managed communities) were leased under triple-net operating leases with expirations ranging from one year to 19 years, pursuant to which the tenants are responsible for all facility maintenance, code compliance, insurance required in connection with the leased properties and the business conducted on the leased properties, taxes levied on or with respect to the leased properties and all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.
Competitive Strengths We believe the following competitive strengths contribute significantly to our success: Diverse Property Portfolio Our portfolio of 402 properties held for investment as of December 31, 2022 is broadly diversified by location across the U.S. and Canada.
Competitive Strengths We believe the following competitive strengths contribute significantly to our success: Diverse Property Portfolio Our portfolio of 378 properties held for investment as of December 31, 2023 is broadly diversified by location across the U.S. and Canada.
Senior Housing - Managed Structure As of December 31, 2022, our real estate properties held for investment included 59 Senior Housing - Managed communities operated by 12 third-party property managers pursuant to property management agreements. The Senior Housing - Managed structure gives us direct exposure to the risks and benefits of the operations of the communities.
Senior Housing - Managed Structure As of December 31, 2023, our real estate properties held for investment included 61 Senior Housing - Managed communities operated by 11 third-party property managers pursuant to property management agreements. The Senior Housing - Managed structure gives us direct exposure to the risks and benefits of the operations of the communities.
(2) Investment balance in Canada is based on the exchange rate as of December 31, 2022 of 0.7383 per 1 CAD.
(2) Investment balance in Canada is based on the exchange rate as of December 31, 2023 of 0.7546 per 1 CAD.
According to the 2021 National Survey on Drug Use and Health, addiction and mental illness are ongoing public health crises in the U.S. with approximately 44 million people classified as needing substance abuse treatment but less than 10% receiving such treatment and approximately 14 million people identified with serious mental illness but less than 50% receiving treatment, including inpatient or outpatient mental health services, prescription medication for a mental health issue or virtual (i.e., telehealth) services.
According to the 2022 National Survey on Drug Use and Health, addiction and mental illness are ongoing public health crises in the U.S. with approximately 55 million people classified as needing substance abuse treatment but more than 75% not receiving such treatment and approximately 15 million people identified with serious mental illness but more than 30% not receiving treatment, including inpatient or outpatient mental health services, prescription medication for a mental health issue or virtual (i.e., telehealth) services.
According to the CMS National Health Expenditure Projections for 2021-2030, hospital care expenditures are projected to grow from approximately $1.3 trillion in 2021 to approximately $2.2 trillion in 2030, representing a compounded annual growth rate of 5.7%.
According to the CMS National Health Expenditure Projections for 2022-2031, hospital care expenditures are projected to grow from approximately $1.3 trillion in 2022 to approximately $2.3 trillion in 2031, representing a compounded annual growth rate of 6.4%.
While the factors described above indicate projected growth for our industry, increases in interest rates, labor shortages, supply chain disruptions, high inflation and increased volatility in public equity and fixed income markets have led to increased costs and limited the availability of capital. In addition, COVID-19 has negatively impacted operators and generally resulted in decreased occupancy and increased labor costs.
While the factors described above indicate projected growth for our industry, increases in interest rates, labor shortages, supply chain disruptions, high inflation and increased volatility in public equity and fixed income markets have led to increased costs and limited the availability of capital.
According to the National Health Expenditure Projections for 2021-2030 published by the Centers for Medicare & Medicaid 4 Services (“CMS”), nursing home expenditures are projected to grow from approximately $182 billion in 2021 to approximately $273 billion in 2030, representing a compounded annual growth rate of 4.6%.
According to the National Health Expenditure Projections for 2022-2031 published by the Centers for Medicare & Medicaid Services (“CMS”), nursing home expenditures are projected to grow from approximately $194 billion in 2022 to approximately 4 $283 billion in 2031, representing a compounded annual growth rate of 4.3%.
Independent living communities typically offer several services covered under a regular monthly fee. Assisted living communities. Assisted living communities provide services that include assistance for activities in daily living and permit residents to maintain some of their privacy and independence as they do not require constant supervision and assistance.
Assisted living communities provide services that include assistance for activities in daily living and permit residents to maintain some of their privacy and independence as they do not require constant supervision and assistance.
The Credit Agreement (as defined below) also contains an accordion feature that can increase the total available borrowings to $2.75 billion, subject to terms and conditions.
The Credit Agreement (as defined below) also contains an accordion feature that can increase the total available borrowings to $2.75 billion (from U.S. $1.4 billion plus CAD $150.0 million), subject to terms and conditions.
As of December 31, 2022, we had approximately $852.3 million in liquidity, consisting of unrestricted cash and cash equivalents of $49.3 million and available borrowings under our Prior Revolving Credit Facility (as defined below) of $803.0 million.
As of December 31, 2023, we had approximately $946.9 million in liquidity, consisting of unrestricted cash and cash equivalents of $41.3 million and available borrowings under our Revolving Credit Facility (as defined below) of $905.6 million.
Loans Receivable and Other Investments As of December 31, 2022 and 2021, our loans receivable and other investments consisted of the following (dollars in thousands): December 31, 2022 Investment Quantity as of December 31, 2022 Property Type Principal Balance as of December 31, 2022 (1) Book Value as of December 31, 2022 Book Value as of December 31, 2021 Weighted Average Contractual Interest Rate / Rate of Return Weighted Average Annualized Effective Interest Rate / Rate of Return Maturity Date as of December 31, 2022 Loans Receivable: Mortgage 2 Behavioral Health $ 319,000 $ 319,000 $ 309,000 7.6 % 7.6 % 11/01/26 - 01/31/27 Construction — — — — 3,347 — % — % — Other 10 Multiple 51,364 47,936 36,028 7.1 % 6.6 % 02/03/23 - 08/31/28 12 370,364 366,936 348,375 7.6 % 7.5 % Allowance for loan losses — (6,611) (6,344) $ 370,364 $ 360,325 $ 342,031 Other Investments: Preferred Equity 7 Skilled Nursing / Senior Housing 50,902 51,071 57,055 10.8 % 10.8 % N/A Total 19 $ 421,266 $ 411,396 $ 399,086 8.0 % 7.9 % (1) Principal balance includes amounts funded and accrued unpaid interest / preferred return and excludes capitalizable fees.
Loans Receivable and Other Investments As of December 31, 2023 and 2022, our loans receivable and other investments consisted of the following (dollars in thousands): December 31, 2023 Investment Quantity as of December 31, 2023 Property Type Principal Balance as of December 31, 2023 (1) Book Value as of December 31, 2023 Book Value as of December 31, 2022 Weighted Average Contractual Interest Rate / Rate of Return Weighted Average Annualized Effective Interest Rate / Rate of Return Maturity Date as of December 31, 2023 Loans Receivable: Mortgage 2 Behavioral Health $ 319,000 $ 319,000 $ 319,000 7.6 % 7.6 % 11/01/26 - 01/31/27 Other 12 Multiple 53,873 50,440 47,936 7.7 % 7.4 % 10/01/23 - 05/01/29 14 372,873 369,440 366,936 7.7 % 7.6 % Allowance for loan losses — (6,665) (6,611) $ 372,873 $ 362,775 $ 360,325 Other Investments: Preferred Equity 5 Skilled Nursing / Senior Housing 57,681 57,849 51,071 11.0 % 11.0 % N/A Total 19 $ 430,554 $ 420,624 $ 411,396 8.1 % 8.1 % (1) Principal balance includes amounts funded and accrued unpaid interest / preferred return and excludes capitalizable fees.
Our ability to compete is also impacted by national and local economic trends, availability of investment alternatives, availability and cost of capital, construction and renovation costs, existing laws and regulations, new legislation and population trends.
Increased competition makes it more challenging to identify and successfully capitalize on acquisition opportunities that meet our investment objectives. Our ability to compete is also impacted by national and local economic trends, availability of investment alternatives, availability and cost of capital, construction and renovation costs, existing laws and regulations, new legislation and population trends.
As of December 31, 2022, 33% of our team members self-identified as being members of one or more ethnic minorities. We believe our ethnic diversity is higher than this reported percentage as another 17% of our team members chose not to self-identify.
As of December 31, 2023, women comprised 54% of our workforce and 67% of our management level/leadership roles. As of December 31, 2023, 31% of our teammates self-identified as being members of one or more ethnic minorities. We believe our ethnic diversity is higher than this reported percentage as another 15% of our teammates chose not to self-identify.
We recognize that attracting and retaining talent at all levels is vital to continuing our success and, in many ways, is our most critical asset. We ensure our team members receive competitive salaries and benefits, and we aim to attract professionals who will uphold our values of social and environmental stewardship.
And we have established a culture that promotes engagement, inclusion, equity and diversity for all teammates. We recognize that attracting and retaining talent at all levels is vital to our continued success. We ensure that all teammates receive competitive salaries and benefits, and we aim to attract professionals who will uphold our values of social and environmental stewardship.
In order to support engagement and team building, various company events, including life event celebrations, dinners and other social outings, are held regularly throughout the year, as well as an annual all team member retreat.
Various company events, including life event celebrations, dinners and other social outings, are held regularly throughout the year, as well as an annual all-teammate retreat. We believe that all of these activities increase job satisfaction and support collaboration and team bonding.
Census Bureau, the number of Americans age 75 and older is projected to grow at a compounded annual growth rate of 3.7% between 2016 and 2025. Further, life expectancy is expected to increase to 81.7 years in 2030 from 79.7 years in 2017.
Census Bureau, the number of Americans age 75 and older is projected to grow at a compounded annual growth rate of 10.1% between 2022 and 2035. Further, life expectancy is expected to increase to 85.6 years in 2060 from 79.7 years in 2017. In addition, the highly-fragmented nature of the skilled nursing and senior housing industries presents additional investment opportunities.
Through years of public company experience, our management team also has extensive experience accessing both debt and equity capital markets to fund growth and maintain a flexible capital structure.
Through years of public company experience, our management team also has extensive experience accessing both debt and equity capital markets to fund growth and maintain a flexible capital structure. Teammates and Equal Opportunity As of December 31, 2023, we employed 48 full-time employees (our teammates), including our executive officers, none of whom is subject to a collective bargaining agreement.
Skilled nursing facilities provide services that include daily nursing, therapeutic rehabilitation, social services, activities, housekeeping, nutrition, medication management and administrative services for individuals requiring certain assistance for activities in daily living. A typical skilled nursing facility includes mostly one and two bed units, each equipped with a private or shared bathroom and community dining facilities. 5 Transitional care facilities/units.
A typical skilled nursing facility includes mostly one and two bed units, each equipped with a private or shared bathroom and community dining facilities. 5 Transitional care facilities/units. Transitional care facilities/units are licensed nursing facilities or distinct units within a licensed nursing facility that provide short term, intensive, high acuity nursing and medical services.
We also seek to ensure that our team members have opportunities to interact with our accomplished board of directors and accordingly invite all of our team members to our quarterly board of directors dinner events. We support volunteerism, organizing opportunities for our team members as a group to volunteer within the community.
Our teammates’ development efforts are focused on aligning our talent strategy with our business strategy. We also connect our teammates with our accomplished board of directors through quarterly board of directors dinner events. We support volunteerism and organize opportunities for our teammates as a group to volunteer within the community.
As of December 31, 2022, our investment portfolio consisted of 402 real estate properties held for investment, one investment in a sales-type lease, 12 investments in loans receivable, seven preferred equity investments and three investments in unconsolidated joint ventures.
As of December 31, 2023, our investment portfolio consisted of 378 real estate properties held for investment, 14 investments in loans receivable, five preferred equity investments and two investments in unconsolidated joint ventures. Of our 378 properties held for investment as of December 31, 2023, we owned fee title to 373 properties and title under ground leases for five properties.
Independent living communities are age-restricted multi-family properties with central dining facilities that provide services that include security, housekeeping, activities, nutrition and limited laundry services. Our independent living communities are designed specifically for independent seniors who are able to live on their own, but desire the security and conveniences of community living.
Our independent living communities are designed specifically for independent seniors who are able to live on their own, but desire the security and conveniences of community living. Independent living communities typically offer several services covered under a regular monthly fee. Assisted living communities.
Length of service is typically 30 days or less with the majority of patients returning to prior living arrangements and functional abilities. Generally, transitional care facilities/units provide services to Medicare, managed care and commercial insurance patients. • Senior Housing Communities Independent living communities.
These facilities tend to focus on delivering specialized treatment to patients with cardiac, neurological, pulmonary, orthopedic, and renal conditions. Length of service is typically 30 days or less with the majority of patients returning to prior living arrangements and functional abilities.
It is difficult to predict the duration of the effects of these economic and market conditions and of COVID-19 on the industry. We compete for real property investments with other REITs, investment companies, private equity and hedge fund investors, sovereign funds, healthcare operators, lenders and other investors.
We compete for real property investments with other REITs, investment companies, private equity and hedge fund investors, sovereign funds, healthcare operators, lenders and other investors. Some of our competitors are significantly larger and have greater financial resources and lower costs of capital than we do.
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In addition, the National Investment Center for Seniors Housing and Care, a leading industry data provider, estimates that as of the fourth quarter of 2019, only 10.3% of nursing home and senior housing properties were owned by publicly traded REITs. The highly-fragmented nature of the skilled nursing and senior housing industries presents additional investment opportunities.
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In addition, these factors, together with the impact of COVID-19, have resulted in decreased occupancy and increased operating costs for our tenants and borrowers, which have negatively impacted their operating results. It is difficult to predict the duration of the effects of these economic and market conditions and of COVID-19 on the industry.
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Some of our competitors are significantly larger and have greater financial resources and lower costs of capital than we do. Increased competition makes it more challenging to identify and successfully capitalize on acquisition opportunities that meet our investment objectives.
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Our portfolio consisted of the following types of healthcare facilities as of December 31, 2023: • Skilled Nursing/Transitional Care Facilities Skilled nursing facilities. Skilled nursing facilities provide services that include daily nursing, therapeutic rehabilitation, social services, activities, housekeeping, nutrition, medication management and administrative services for individuals requiring certain assistance for activities in daily living.
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Of our 402 properties held for investment as of December 31, 2022, we owned fee title to 397 properties and title under ground leases for five properties. Our portfolio consisted of the following types of healthcare facilities as of December 31, 2022: • Skilled Nursing/Transitional Care Facilities Skilled nursing facilities.
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Generally, transitional care facilities/units provide services to Medicare, managed care and commercial insurance patients. • Senior Housing Communities Independent living communities. Independent living communities are age-restricted multi-family properties with central dining facilities that provide services that include security, housekeeping, activities, nutrition and limited laundry services.
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Transitional care facilities/units are licensed nursing facilities or distinct units within a licensed nursing facility that provide short term, intensive, high acuity nursing and medical services. These facilities tend to focus on delivering specialized treatment to patients with cardiac, neurological, pulmonary, orthopedic, and renal conditions.
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We believe that a diverse workforce is essential to our continued success and gives us a competitive advantage. We take pride in having a diverse workforce in the real estate sector where women and minorities remain underrepresented. We sustain diversity by maintaining a fair, healthy and safe work environment.
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Team Members and Equal Opportunity As of December 31, 2022, we employed 42 full-time employees (our team members), including our executive officers, none of whom is subject to a collective bargaining agreement. As of December 31, 2022, women comprised 55% of our workforce and 64% of our management level/leadership roles.
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We promote a sustainable work-life balance and invest in our teammates’ well-being through high-quality benefits. We offer a hybrid work model and have strong IT support to enable our flexible working arrangements. We have fostered a collaborative culture and workplace that motivate and drive engagement. It is important that teammates feel valued and are committed to achieving goals.
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We believe that a diverse workforce is essential to our continued success, and we strive to maintain a fair, healthy and safe workplace, while creating a work environment that promotes diversity, equality and inclusion for our team members. Our workforce reflects diverse gender, ethnicity, age and cultural backgrounds.
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We create value by providing the tools and support each teammate needs to be successful in their roles. We also encourage team activities that create a sense of belonging and emotional well-being, which we know positively impact retention and engagement. To evaluate an individual teammates’ level of engagement, our management team and human resources department conduct periodic check-in meetings.
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We promote the work-life balance of our team members, we invest in our team members through high-quality benefits and meaningful health and wellness initiatives, and we have created a healthy work environment in our office to incentivize and engage our team members.
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In addition, company-wide subject-driven surveys are used to gauge levels of engagement and satisfaction. Based on feedback and suggestions received, we thoughtfully implement changes that will have the highest impact on engagement. To plan for the future, our performance management program proactively reviews our teammates’ evolving roles to address the current and future needs of our business.
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The health and safety of our team members is an important consideration for us, and in light of COVID-19, we have accommodated flexible work from home arrangements, extended hardship benefits and provided assistance for dependent care costs to preserve the health and well-being of our team members and their families.
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We invest in their development so that we have the right people with the right skills at the right time. The program provides leadership coaching for select management-level teammates with an external group of professionals and employs annual performance reviews that include self-assessments and 360-degree feedback.
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We believe that when we create a workplace where our team members are engaged, committed and empowered for the long-term, we are better positioned to create value for our company, as well as for our stockholders.
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We gauge our team members’ level of engagement and satisfaction through general surveys as well as subject-driven focus surveys regarding topics including company culture and the impact of COVID-19 and working from home. Based on feedback received, we identify areas for improvement and action items to be implemented.
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Our performance management initiative helps us proactively plan for our team members’ evolving roles and address the current and future needs of our business. The initiative employs 360-degree assessments and focuses on aligning our talent strategy with our business strategy and identifies skills that may be required to meet our future business needs.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

49 edited+6 added−27 removed180 unchanged
Biggest changeRisks Related to Our Organization and Structure Provisions of the Maryland General Corporation Law (the “ MGCL ” ) and of our charter and bylaws could inhibit a change of control of Sabra or reduce the value of our stock. Certain provisions of Maryland law, our charter and our bylaws may have an anti-takeover effect.
Biggest changeWe cannot predict with certainty whether, when, in what forms, or with what effective dates, the tax laws applicable to us or our stockholders may be changed. 26 Risks Related to Our Organization and Structure Provisions of the Maryland General Corporation Law (the “ MGCL ” ) and of our charter and bylaws could inhibit a change of control of Sabra or reduce the value of our stock.
In addition, with certain exceptions, rents received by us from a lessee will not be treated as qualifying rent for purposes of these requirements if we are treated, either directly or under the applicable attribution rules, as owning 10% or more of the lessee’s stock, capital or profits.
In addition, with certain exceptions, rents received by us from a lessee will not be treated as qualifying rent for purposes of these requirements if we are treated, either directly or under the applicable attribution rules, as owning 10% or more of a lessee’s stock, capital or profits.
In the event that such an insufficiency occurs, in order to meet the 90% distribution requirement and maintain our status as a REIT, we may have to sell assets at unfavorable prices, borrow at unfavorable terms, make taxable stock dividends, or pursue other strategies. This may require us to raise additional capital to meet our obligations.
In the event that such an insufficiency occurs, in order to meet the REIT distribution requirement and maintain our status as a REIT, we may have to sell assets at unfavorable prices, borrow at unfavorable terms, make taxable stock dividends, or pursue other strategies. This may require us to raise additional capital to meet our obligations.
Accordingly, given the complex nature of the rules governing REITs, the ongoing importance of factual determinations, including the potential tax treatment of investments we make, and the possibility of future changes in our circumstances, no assurance can be given that our actual results of operations for any particular taxable year will satisfy such requirements.
Accordingly, given the complex nature of the rules governing REITs, the ongoing importance of factual determinations, including the potential tax treatment of 24 investments we make, and the possibility of future changes in our circumstances, no assurance can be given that our actual results of operations for any particular taxable year will satisfy such requirements.
Unless our failure to qualify as a REIT was subject to relief under U.S. federal tax laws, we could not re-elect to qualify as a REIT until the fifth calendar year following the year in which we failed to qualify. The 90% distribution requirement will decrease our liquidity and may limit our ability to engage in otherwise beneficial transactions.
Unless our failure to qualify as a REIT was subject to relief under U.S. federal tax laws, we could not re-elect to qualify as a REIT until the fifth calendar year following the year in which we failed to qualify. The REIT distribution requirement will decrease our liquidity and may limit our ability to engage in otherwise beneficial transactions.
The indentures governing our 2026 Notes, our 2029 Notes and our 2031 Notes require us to comply with an unencumbered asset ratio, and the agreement governing our 2027 Notes requires us to comply with specified financial covenants, which include a maximum leverage ratio, a maximum secured debt leverage ratio, a maximum unsecured debt leverage ratio, a minimum fixed charge coverage ratio, a minimum net worth, a minimum unsecured interest coverage ratio and a minimum unencumbered debt yield ratio.
The indentures governing our 2026 Notes, our 2029 Notes and our 2031 Notes require us to comply with an unencumbered asset ratio, and the agreement governing our 2027 Notes requires us to comply with specified financial covenants, which include a maximum leverage ratio, a maximum secured debt leverage ratio, a maximum unsecured debt leverage ratio, a minimum fixed charge coverage ratio, a minimum net worth, a minimum unsecured interest coverage ratio 22 and a minimum unencumbered debt yield ratio.
If a court were to find the exclusive forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we might incur additional costs associated with resolving such action in other jurisdictions. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
If a court were to find the exclusive forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we might incur additional costs associated with resolving such action in other jurisdictions. 27 ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
Our charter contains transfer and ownership restrictions on the percentage by number and value of outstanding shares of our stock that may be owned or acquired by any stockholder. 27 Our bylaws require advance notice of stockholder proposals and director nominations.
Our charter contains transfer and ownership restrictions on the percentage by number and value of outstanding shares of our stock that may be owned or acquired by any stockholder. Our bylaws require advance notice of stockholder proposals and director nominations.
Furthermore, if we fail to maintain our qualification as a 24 REIT, we no longer would be required under U.S. federal tax laws to distribute substantially all of our REIT taxable income to our stockholders.
Furthermore, if we fail to maintain our qualification as a REIT, we no longer would be required under U.S. federal tax laws to distribute substantially all of our REIT taxable income to our stockholders.
Although we anticipate that we generally will have sufficient cash or liquid assets to enable us to satisfy the REIT distribution requirement, it is possible that, from time to time, we may not have sufficient cash or other liquid assets to meet the 90% distribution requirement.
Although we anticipate that we generally will have sufficient cash or liquid assets to enable us to satisfy the REIT distribution requirement, it is possible that, from time to time, we may not have sufficient cash or other liquid assets to meet the REIT distribution requirement.
An increase in market interest rates could increase our interest costs on borrowings on our Revolving Credit Facility and future debt and could adversely affect our stock price. Interest rates rose substantially in 2022 and may continue to rise.
An increase in market interest rates could increase our interest costs on borrowings on our Revolving Credit Facility and future debt and could adversely affect our stock price. Interest rates rose substantially in 2022 and 2023 and may continue to rise.
Our tenants, borrowers and operators are subject to HIPAA and various other state and federal laws that relate to privacy and data security, including the reporting of data breaches involving personal information.
The majority of our tenants, borrowers and operators are subject to HIPAA and various other state and federal laws that relate to privacy and data security, including the reporting of data breaches involving personal information.
In the event that some or all of our debt is 22 accelerated and becomes immediately due and payable, we may not have the funds to repay, or the ability to refinance, such debt.
In the event that some or all of our debt is accelerated and becomes immediately due and payable, we may not have the funds to repay, or the ability to refinance, such debt.
Rents received or accrued by us will not be treated as qualifying rent for purposes of these requirements if the lease agreements we have entered into or assumed (as well as any other leases we enter into or assume) are not respected as true leases for U.S. federal income tax purposes and are instead treated as service contracts, joint ventures, loans or some other type of arrangement.
Rents received or accrued by us may not be treated as qualifying rent for purposes of these requirements if the lease agreements we have entered into or assumed (as well as any other leases we enter into or assume) are not respected as true leases for U.S. federal income tax purposes and are instead treated as service contracts, joint ventures, loans or some other type of arrangement.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of our company, (ii) any action asserting a claim of breach of any duty owed by any director or officer or other team member of our company to our company or to the stockholders of our company, (iii) any action asserting a claim against our company or any director or officer or other team member of our company arising pursuant to any provision of Maryland law, our charter or our bylaws, or (iv) any action asserting a claim against our company or any director or officer or other team member of our company that is governed by the internal affairs doctrine.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of our company, (ii) any action asserting a claim of breach of any duty owed by any director or officer or other teammate of our company to our company or to the stockholders of our company, (iii) any action asserting a claim against our company or any director or officer or other teammate of our company arising pursuant to any provision of Maryland law, our charter or our bylaws, or (iv) any action asserting a claim against our company or any director or officer or other teammate of our company that is governed by the internal affairs doctrine.
COVID-19, or a future pandemic or epidemic, may also subject our investments and operations in Canada to different or greater risks than those faced in the U.S., which may depend on factors including the duration and severity of outbreaks in Canada, the impact of new variants, the distribution of vaccines and boosters, and governmental or private actions taken in response to the pandemic or epidemic.
A future pandemic or epidemic, may also subject our investments and operations in Canada to different or greater risks than those faced in the U.S., which may depend on factors including the duration and severity of outbreaks in Canada, the impact of new variants, the distribution of vaccines and boosters, and governmental or private actions taken in response to the pandemic or epidemic.
Security breaches (including physical or electronic break-ins, computer viruses, phishing attacks, computer denial-of-service attacks, worms, covert introduction of malware to computers and networks, impersonation of authorized users, and efforts to discover and exploit any design flaws, bugs, security vulnerabilities or security weaknesses, as well as intentional or unintentional acts by our team members or other insiders with access privileges, intentional acts of vandalism by third parties and sabotage) can create system disruptions, shutdowns or unauthorized disclosure of confidential information.
Security breaches (including physical or electronic break-ins, computer viruses, phishing attacks, computer denial-of-service attacks, worms, covert introduction of malware to computers and networks, impersonation of authorized users, and efforts to discover and exploit any design flaws, bugs, security vulnerabilities or security weaknesses, as well as intentional or unintentional acts by our teammates or other insiders with access privileges, intentional acts of vandalism by third parties and sabotage) can create system disruptions, shutdowns or unauthorized disclosure of confidential information.
Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, unless a sale or disposition qualifies under certain statutory safe harbors, such characterization is a factual determination and no guarantee can be given that the Internal Revenue Service (“IRS”) would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors.
Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, unless a sale or disposition qualifies under certain statutory safe harbors, such characterization is a factual determination and no guarantee can be given that the Internal Revenue Service (“IRS”) would agree with our characterization of our properties or that we will always be able to satisfy the available safe harbors.
We are required under the Internal Revenue Code of 1986, as amended (the “Code”), to distribute at least 90% of our taxable income, determined without regard to the dividends-paid deduction and excluding any net capital gain, and the Operating Partnership (as defined below) is required to make distributions to us to allow us to satisfy these REIT distribution requirements.
We are required under the Internal Revenue Code of 1986, as amended (the “Code”), to distribute at least 90% of our taxable income, determined without regard to the dividends-paid deduction and excluding any net capital gain, and the Operating Partnership (as defined below) is required to make distributions to us to allow us to satisfy the REIT distribution requirement.
Our bylaws provide that the Circuit Court for Baltimore City, Maryland or the United States District Court for the District of Maryland, Baltimore Division will be the sole and exclusive forum for substantially all disputes between our company and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with our company or our directors, officers or other team members.
Our bylaws provide that the Circuit Court for Baltimore City, Maryland or the United States District Court for the District of Maryland, Baltimore Division will be the sole and exclusive forum for substantially all disputes between our company and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with our company or our directors, officers or other teammates.
Concerns over economic recession, the COVID-19 pandemic, interest rate increases, policy priorities of the U.S. presidential administration, trade wars, labor shortages or inflation may contribute to increased volatility and diminished expectations for the economy and markets. Additionally, concern over geopolitical issues may also contribute to prolonged market volatility and instability.
Concerns over economic recession, interest rate increases, policy priorities of the U.S. presidential administration, trade wars, labor shortages or inflation may contribute to increased volatility and diminished expectations for the economy and markets. Additionally, concern over geopolitical issues may also contribute to prolonged market volatility and instability.
Cash available for distribution to stockholders may be insufficient to make dividend distributions at expected levels and are made at the discretion of our board of directors. If cash available for distribution generated by our assets decreases due to dispositions, the COVID-19 pandemic, or otherwise, we may be unable to make dividend distributions at expected levels.
Cash available for distribution to stockholders may be insufficient to make dividend distributions at expected levels and are made at the discretion of our board of directors. If cash available for distribution generated by our assets decreases due to dispositions or otherwise, we may be unable to make dividend distributions at expected levels.
Our high level of indebtedness may have the following important consequences to us: • It may increase our cost of borrowing; • It may limit our ability to obtain additional financing to fund future acquisitions, working capital, capital expenditures or other general corporate requirements; • It may expose us to the risk of increased interest rates under debt instruments subject to variable rates of interest, such as our Revolving Credit Facility; • It may adversely impact our credit ratings; • It may limit our ability to adjust rapidly to changing market conditions and we may be vulnerable in the event of a downturn in general economic conditions or in the real estate and/or healthcare sectors; • It may place us at a competitive disadvantage against less leveraged competitors; • It may restrict the way in which we conduct our business because of financial and operating covenants in the agreements governing our existing and future indebtedness; • It may become more difficult for us to satisfy our obligations (including ongoing interest payments and, where applicable, scheduled amortization payments) with respect to the Senior Notes and our other debt; and • It may require us to sell assets and properties at an inopportune time. 21 In addition, the Senior Notes Indentures (as defined below) permit us to incur substantial additional debt, including secured debt (to which the Senior Notes will be effectively subordinated).
Our high level of indebtedness may have the following important consequences to us: • It may increase our cost of borrowing; • It may limit our ability to obtain additional financing to fund future acquisitions, working capital, capital expenditures or other general corporate requirements; • It may expose us to the risk of increased interest rates under debt instruments subject to variable rates of interest, such as our Revolving Credit Facility; • It may adversely impact our credit ratings; • It may limit our ability to adjust rapidly to changing market conditions and we may be vulnerable in the event of a downturn in general economic conditions or in the real estate and/or healthcare sectors; 21 • It may place us at a competitive disadvantage against less leveraged competitors; • It may restrict the way in which we conduct our business because of financial and operating covenants in the agreements governing our existing and future indebtedness; • It may become more difficult for us to satisfy our obligations (including ongoing interest payments and, where applicable, scheduled amortization payments) with respect to the Senior Notes and our other debt; and • It may require us to sell assets and properties at an inopportune time.
This exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with our company or our directors, officers or other team members, which may discourage lawsuits against our company and our directors, officers and other team members.
This exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with our company or our directors, officers or other teammates, which may discourage lawsuits against our company and our directors, officers and other teammates.
In some cases, we may have to restructure our tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place.
In some cases, we have had, and may in the future have, to restructure our tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place.
To comply with the 90% taxable income distribution requirement applicable to REITs and to avoid the nondeductible excise tax, we must make distributions to our stockholders.
To comply with the 90% taxable income distribution requirement applicable to REITs and to avoid the non-deductible excise tax, we must make distributions to our stockholders.
In order for us to maintain our qualification as a REIT, no more than 50% of the value of our outstanding stock may be owned, directly or constructively, by five or fewer individuals, as defined in the Code.
Our charter restricts the transfer and ownership of our stock. In order for us to maintain our qualification as a REIT, no more than 50% of the value of our outstanding stock may be owned, directly or constructively, by five or fewer individuals, as defined in the Code.
For example, the conflict between Russia and Ukraine has led to disruption, instability and volatility in global markets and industries. Such conditions could impact real estate fundamentals and result in lower 23 occupancy, lower rental rates, and declining values in our real estate portfolio and in the real estate collateral securing any indebtedness.
For example, the conflicts between Russia and Ukraine and in the Middle East have led to disruption, instability and volatility in global markets and industries. Such conditions could impact real estate fundamentals and result in lower occupancy, lower rental rates, and declining values in our real estate portfolio and in the real estate collateral securing any indebtedness.
We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential tenant, borrower and operator information, some of which may include individually identifiable information, including information relating to financial accounts.
Furthermore, we purchase some of our information technology from vendors, on whom our systems depend. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential tenant, borrower and operator information, some of which may include individually identifiable information, including information relating to financial accounts.
While we and our tenants, borrowers and operators maintain various physical, cyber and data security controls, there is a risk of incidents or breaches resulting from technical failures, natural hazards, theft and unintentional or deliberate acts by third parties or insiders attempting to obtain unauthorized access to information, destroy or manipulate data, or disrupt or sabotage information systems.
While we and our tenants, borrowers and operators maintain various physical, cyber and data security controls, incidents or breaches resulting from technical failures, natural hazards, theft and unintentional or deliberate acts by third parties or insiders attempting to obtain 20 unauthorized access to information, destroy or manipulate data, or disrupt or sabotage information systems do occur and they may have a material impact on our business.
The risk of security incidents has generally increased as the number, intensity and sophistication of attacks and intrusions have increased, and we have seen a significant increase in cyber phishing attacks since the onset of the COVID-19 pandemic.
The risk of security incidents has generally increased as the number, intensity and sophistication of attacks and intrusions have increased, and we have seen a significant increase in cyber phishing attacks over the past few years.
As of December 31, 2022, we had outstanding indebtedness of $2.5 billion, which consisted of $1.8 billion of Senior Notes (as defined below), $528.5 million in Prior Term Loans (as defined below), $197.0 million outstanding under our Prior Revolving Credit Facility and aggregate secured indebtedness to third parties of $50.1 million on certain of our properties, and we had $803.0 million available for borrowing under our Prior Revolving Credit Facility.
As of December 31, 2023, we had outstanding indebtedness of $2.4 billion, which consisted of $1.8 billion of Senior Notes (as defined below), $543.2 million in Term Loans (as defined below), $94.4 million outstanding under our Revolving Credit Facility and aggregate secured indebtedness to third parties of $48.1 million on certain of our properties, and we had $905.6 million available for borrowing under our Revolving Credit Facility.
Sabra is subject to the Maryland business combination statute, which, subject to certain limitations, impose a moratorium on business combinations with “interested stockholders” or affiliates thereof for five years and thereafter impose additional requirements on such business combinations.
Certain provisions of Maryland law, our charter and our bylaws may have an anti-takeover effect. Sabra is subject to the Maryland business combination statute, which, subject to certain limitations, impose a moratorium on business combinations with “interested stockholders” or affiliates thereof for five years and thereafter impose additional requirements on such business combinations.
In addition, an increase in interest rates could negatively impact the access to and cost of financing available to third parties interested in purchasing assets we may make available for sale, thereby decreasing the amount they are willing to pay for those assets, and consequently limit our ability to reposition our portfolio promptly in response to changes in economic or other conditions. 14 Inflation could adversely impact our operating expenses, as well as the operating expenses of our tenants, borrowers and Senior Housing - Managed communities, and could rise at rates that outpace increases in rental income.
In addition, an increase in interest rates could negatively impact the access to and cost of financing available to third parties interested in purchasing assets we may make available for sale, thereby decreasing the amount they are willing to pay for those assets, and consequently limit our ability to reposition our portfolio promptly in response to changes in economic or other conditions.
A data security incident or breach occurring at or involving a tenant, borrower or operator could jeopardize the tenant’s or operators ’ ability to fulfill its obligations to us and could adversely impact our financial position and results of operations. Furthermore, we purchase some of our information technology from vendors, on whom our systems depend.
A data security incident or breach occurring at or involving us could have a material adverse impact on our company. A data security incident or breach occurring at or involving a tenant, borrower or operator could jeopardize the tenant’s or operators ’ ability to fulfill its obligations to us and could adversely impact our financial position and results of operations.
The constructive ownership rules are complex and may cause shares of stock owned directly or constructively by a group of related individuals to be constructively owned by one individual or entity.
The constructive ownership rules are complex and may cause shares of stock owned directly or constructively by a group of related individuals to be constructively owned by one individual or entity. Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
In either event, a holder of our common stock will be required to report dividend income as a result of such distributions even though we distributed no cash or only nominal amounts of cash to such stockholder.
Additionally, in the event that we have to declare dividends in-kind in order to satisfy the REIT annual distribution requirement, a holder of our common stock will be required to report dividend income as a result of such distributions even though we distributed no cash or only nominal amounts of cash to such stockholder.
Prolonged deterioration in the operating results for these investments could result in the determination that the full amounts of our investments are not recoverable, which could result in an impairment charge. We may experience these or other negative effects as the result of future pandemics or epidemics as well.
Prolonged deterioration in the operating results for these investments could result in the determination that the full amounts of our investments are not recoverable, which could result in an impairment charge.
This may be due to the timing differences between the actual receipt of income and actual payment of deductible expenses, on the one hand, and the inclusion of that income and deduction of those expenses in arriving at our taxable income, on the other hand.
This may be due to the timing differences between the actual receipt of income and actual payment of deductible expenses, on the one hand, and the inclusion of that income and deduction of those expenses in arriving at our taxable income, on the other hand, which may cause us to fail to have sufficient cash or liquid assets to enable us to satisfy the REIT distribution requirement.
The impact of any of these potential adverse consequences could have a material adverse effect on our results of operations, financial condition, and liquidity. We may be unable to service our indebtedness.
Furthermore, the Senior Notes Indentures do not impose any limitation on our ability to incur liabilities that are not considered indebtedness under the Senior Notes Indentures. The impact of any of these potential adverse consequences could have a material adverse effect on our results of operations, financial condition, and liquidity. We may be unable to service our indebtedness.
If we fail to meet the market’s expectation with regard to future earnings and cash distributions, the market price of our common stock could decline, and our ability to raise capital through equity financings could be materially adversely affected.
If we fail to meet the market’s expectation with regard to future earnings and cash distributions, the market price of our common stock could decline, and our ability to raise capital through equity financings could be materially adversely affected. 23 Changes and uncertainty in macroeconomic conditions and disruptions in the financial markets could adversely affect the value of our real estate investments and our business, results of operations, cash flows and financial condition.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also harm our business. Risks Related to Our Business/Operations Pandemics or epidemics, including COVID-19, may have a material adverse effect on our business, results of operations, cash flows and financial condition.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also harm our business. Risks Related to Our Business/Operations Increased labor costs and historically low unemployment may adversely affect our business, results of operations, cash flows and financial condition.
The presence of contamination or the failure to remediate contamination may adversely affect our ability to sell or lease the real estate or to borrow using the real estate as collateral.
The presence of contamination or the failure to remediate contamination may adversely affect our ability to sell or lease the real estate or to borrow using the real estate as collateral. A failure by our tenants, borrowers or operators to adhere to applicable privacy and data security laws could harm our business.
In addition, if there are significant disruptions to our business due to COVID-19 or a future pandemic or epidemic, our credit ratings may be adversely impacted and we may breach covenants in our debt agreements and be unable to service our debt. Further, significant disruption could cause us to reduce or suspend our dividend.
We may experience these or other negative effects as the result of future pandemics or epidemics as well. 14 In addition, if there are significant disruptions to our business due to a future pandemic or epidemic, our credit ratings may be adversely impacted and we may breach covenants in our debt agreements and be unable to service our debt.
A failure by our tenants, borrowers or operators to adhere to applicable privacy and data security laws, or a material failure or breach of our or our tenants’, borrowers’ or operators’ information technology, could harm our business.
A material failure or breach of our or our tenants’, borrowers’ or operators’ information technology, could harm our business.
The duration and extent of the effects of the COVID-19 pandemic, or a future pandemic or epidemic, on our operational and financial performance are uncertain and difficult to predict.
Further, significant disruption could cause us to reduce or suspend our dividend. The duration and extent of the effects of the COVID-19 pandemic, or a future pandemic or epidemic, on our operational and financial performance are uncertain and difficult to predict and we may experience adverse impacts to our business, financial condition, results of operations and prospects.
This provision may limit the ability of our TRSs to deduct interest, which could increase their taxable income. The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s length basis.
The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s length basis. We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our common stock.
Overall, no more than 20% of the value of a REIT’s total assets may consist of stock or securities of one or more TRSs.
Overall, no more than 20% of the value of a REIT’s total assets may consist of stock or securities of one or more TRSs. A domestic TRS will pay U.S. federal, state and local income tax at regular corporate rates on any income that it earns.
Even after the COVID-19 pandemic has subsided, we may experience adverse impacts to our business, financial condition, results of operations and prospects as a result of any continuation of operational mandates on our tenants and operators caused by the COVID-19 pandemic.
Pandemics or epidemics, including COVID-19, may have a material adverse effect on our business, results of operations, cash flows and financial condition. The COVID-19 pandemic has negatively impacted us and our operations.
Removed
The ongoing effects of the COVID-19 pandemic have negatively impacted us and our operations and are expected to continue to impact us and our operations in 2023 and potentially beyond.
Added
Inflation could adversely impact our operating expenses, as well as the operating expenses of our tenants, borrowers and Senior Housing - Managed communities, and could rise at rates that outpace increases in rental income.
Removed
Increased labor costs and historically low unemployment may adversely affect our business, results of operations, cash flows and financial condition.
Added
Additionally, cyber threats and the techniques used in cyberattacks change, develop and evolve rapidly, including from emerging technologies, such as advanced forms of artificial intelligence and quantum computing.
Removed
The 20 risk of security incidents has also increased with our increased dependence on the Internet while our employees work remotely due to our health and safety policies.
Added
We have engaged a third-party cybersecurity firm who serves as our dedicated information technology (“IT”) team and helps us oversee, implement and manage our processes and controls to assess, identify and manage risks from cybersecurity threats. It is possible that our processes and controls will not detect or protect against all cybersecurity threats or incidents.
Removed
For our tenants, borrowers and operators, the trend toward increased remote work and rapid implementation of telehealth within the healthcare industry in response to the pandemic may have created new or increased cyber risks. A data security incident or breach occurring at or involving us could have a material adverse impact on our company.
Added
In addition, any failure on the part of our outsourced IT team to effectively monitor and protect our information systems could make us more vulnerable to cybersecurity incidents.
Removed
If we incur additional debt, the related risks described above could intensify. Furthermore, the Senior Notes Indentures do not impose any limitation on our ability to incur liabilities that are not considered indebtedness under the Senior Notes Indentures.
Added
Although, to our knowledge, no cybersecurity incident has been material to our business to date, we have been, and expect to continue to be, subject to cybersecurity threats and attacks of varying degrees, and there can be no assurance that we will not experience a material incident.
Removed
Changes and uncertainty in macroeconomic conditions and disruptions in the financial markets could adversely affect the value of our real estate investments and our business, results of operations, cash flows and financial condition.
Added
In addition, the Senior Notes Indentures (as defined below) permit us to incur substantial additional debt, including secured debt (to which the Senior Notes will be effectively subordinated). If we incur additional debt, the related risks described above could intensify.
Removed
Moreover, the 2017 Tax Act amended the Code such that income must be accrued for U.S. federal income tax purposes no later than when such income is taken into account as revenue in our financial statements, subject to certain exceptions, which could also create timing differences between net taxable income and the receipt of cash attributable to such income.
Removed
In addition, non-deductible expenses such as principal amortization or repayments or capital expenditures in excess of non-cash deductions also may cause us to fail to have sufficient cash or liquid assets to enable us to satisfy the 90% distribution requirement.
Removed
We will be treated as owning, under the applicable attribution rules, 10% or more of a lessee’s stock, capital or profits at any time that a stockholder owns, directly or under the applicable attribution rules, (a) 10% or more of our common stock and (b) 10% or more of the lessee’s stock, capital or profits.
Removed
The provisions of our charter restrict the transfer and ownership of our common stock that would cause the rents received or accrued by us from a tenant of ours to be treated as non-qualifying rent for purposes of the REIT gross income requirements.
Removed
Nevertheless, there can be no assurance that such restrictions will be effective in ensuring that we will not be treated as related to a tenant of ours.
Removed
If we have significant amounts of non-cash taxable income, we may have to declare taxable stock dividends or make other non-cash distributions, which could cause our stockholders to incur tax liabilities in excess of cash received. We currently intend to pay dividends in cash only, and not in-kind.
Removed
However, if for any taxable year, we have significant amounts of taxable income in excess of available cash flow, we may have to declare dividends in-kind in order to satisfy the REIT annual distribution requirements. We may distribute a portion of our dividends in the form of our stock or our debt instruments.
Removed
The IRS issued a Revenue Procedure treating certain distributions that are paid by an SEC-registered REIT partly in cash and partly in shares as dividends that would satisfy the REIT annual distribution requirement and qualify for the dividends paid deduction for U.S. federal income tax purposes so long as at least 20% (10% for (i) distributions declared on or after April 1, 2020 and on or before December 31, 2020 and (ii) distributions declared on or after November 1, 2021 and on or before June 30, 2022) of the total dividend is available in cash.
Removed
However, if we make such a distribution, U.S. holders would be required to include the full amount of the dividend (i.e., the cash and stock portion) as ordinary income to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes.
Removed
As a result, a U.S. holder may be required to pay income taxes with respect to such dividends in excess of the cash received.
Removed
If a U.S. holder sells our stock that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of the stock at the time of the sale.
Removed
Furthermore, with respect to non-U.S. holders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock.
Removed
In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, these sales may put downward pressure on the trading price of our stock.
Removed
No assurance can be given that the IRS will not impose additional requirements in the future with respect to taxable dividends payable in cash and/or stock, including on a retroactive basis, or assert that the requirements for such taxable dividends have not been met.
Removed
Our charter restricts the transfer and ownership of our stock, which may restrict change of control or business combination opportunities in which our stockholders might receive a premium for their shares.
Removed
The ownership limits may have the effect of discouraging an acquisition of control of us without the approval of our board of directors, which might involve a premium price for our common stock. We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our common stock.
Removed
We cannot predict with 26 certainty whether, when, in what forms, or with what effective dates, the tax laws applicable to us or our stockholders may be changed. Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
Removed
For taxable years beginning before January 1, 2026, the 2017 Tax Act temporarily reduces the maximum individual U.S. federal income tax rate from 39.6% to 37% and the effective tax rate on ordinary REIT dividends (i.e., dividends other than capital gain dividends and dividends attributable to certain qualified dividend income received by us) for U.S. holders of our common shares that are individuals, estates or trusts by permitting such holders to claim a deduction in determining their taxable income equal to 20% of any such dividends they receive.
Removed
A domestic TRS will pay U.S. federal, state and local income tax at regular corporate rates on any income that it earns, but net operating loss (“NOL”) carryforwards of TRS losses may be deducted only to the extent of 80% of TRS taxable income in the carryforward year (computed without regard to the NOL deduction).

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2022, the substantial majority of our real estate properties (excluding 59 Senior Housing - Managed communities) were leased under triple-net operating leases with expirations ranging from less than one year to 20 years. 28 The following table displays the expiration of annualized contractual rental revenues under our lease agreements as of December 31, 2022, adjusted to (i) reflect actual payments received related to the twelve months ended December 31, 2022 for leases no longer accounted for on an accrual basis, (ii) exclude residual rents due to us from prior asset sales under our 2017 memorandum of understanding with Genesis Healthcare, Inc., (iii) reflect the reduction in Avamere’s annual base rent effective February 1, 2022 and (iv) assume the pending transition of our North American Health Care portfolio to Ensign Group and Avamere Family of Companies was completed as of December 31, 2022, by year and property type (dollars in thousands) and, in each case, without giving effect to any renewal options: Skilled Nursing / Transitional Care Senior Housing - Leased Behavioral Health Specialty Hospitals and Other Total Annualized Revenues % of Total 2023 $ 9,775 $ — $ — $ — $ 9,775 2.7 % 2024 9,000 — — — 9,000 2.5 % 2025 6,625 3,289 — 1,442 11,356 3.1 % 2026 17,055 1,380 — — 18,435 5.1 % 2027 28,445 4,217 — — 32,662 9.0 % 2028 20,171 7,117 — 3,370 30,658 8.5 % 2029 45,456 4,765 — 5,988 56,209 15.5 % 2030 713 — — 3,095 3,808 1.1 % 2031 79,114 5,966 1,114 — 86,194 23.8 % 2032 6,045 1,618 31,996 3,657 43,316 12.0 % Thereafter 41,934 14,236 3,683 726 60,579 16.7 % Total Annualized Revenues $ 264,333 $ 42,588 $ 36,793 $ 18,278 $ 361,992 100.0 % We believe that all of our properties are adequately covered by insurance and are suitable for their intended uses as described in “Business—Portfolio of Healthcare Investments” in Part I, Item 1.
Biggest changeThe following table displays the expiration of annualized contractual rental revenues under our lease agreements as of December 31, 2023, adjusted to reflect actual payments received related to the twelve months ended December 31, 2023 for leases no longer accounted for on an accrual basis, by year and property type (dollars in thousands) and, in each case, without giving effect to any renewal options: Skilled Nursing / Transitional Care Senior Housing - Leased Behavioral Health Specialty Hospitals and Other Total Annualized Revenues % of Total 2024 $ 6,276 $ — $ — $ — $ 6,276 1.8 % 2025 6,311 2,515 — 1,495 10,321 2.9 % 2026 16,834 1,242 — — 18,076 5.1 % 2027 24,308 4,237 — — 28,545 8.1 % 2028 20,964 6,205 — 3,490 30,659 8.7 % 2029 47,705 4,907 — 6,138 58,750 16.7 % 2030 — — — 3,158 3,158 0.9 % 2031 68,811 5,601 1,558 — 75,970 21.5 % 2032 5,785 1,667 32,821 3,749 44,022 12.5 % 2033 — 3,015 5,311 — 8,326 2.4 % Thereafter 52,121 12,472 3,071 746 68,410 19.4 % Total Annualized Revenues $ 249,115 $ 41,861 $ 42,761 $ 18,776 $ 352,513 100.0 % We believe that all of our properties are adequately covered by insurance and are suitable for their intended uses as described in “Business—Portfolio of Healthcare Investments” in Part I, Item 1. 29 Occupancy Trends The following table sets forth the occupancy percentages for our properties for the periods indicated: Occupancy Percentage (1) 2023 2022 2021 2020 2019 (2) Skilled Nursing/Transitional Care 76.4 % 73.5 % 71.4 % 77.3 % 82.1 % Senior Housing - Leased 90.0 % 84.4 % 78.1 % 83.1 % 87.0 % Behavioral Health 81.1 % 84.0 % 84.2 % 83.5 % 83.5 % Specialty Hospitals and Other 79.4 % 77.4 % 80.6 % 76.5 % 71.5 % Senior Housing - Managed 81.6 % 82.1 % 79.4 % 80.0 % 87.7 % (1) Occupancy percentage represents the facilities’ average operating occupancy for the period indicated and is calculated by dividing the actual census from the period presented by the available beds/units for the same period.
(2) Weighted average effective interest rate includes private mortgage insurance. Corporate Office We are headquartered and have our corporate office in Irvine, California. We lease our corporate office from an unaffiliated third party.
(2) Weighted average effective interest rate includes private mortgage insurance. Corporate Office We are headquartered and have our corporate office in Tustin, California. We lease our corporate office from an unaffiliated third party.
See “Business—Portfolio of Healthcare Investments” in Part I, Item 1 for further discussion regarding the ownership of our properties and the types of healthcare facilities that comprise our properties. 29 Secured Indebtedness As of December 31, 2022 and 2021, eight and 11 of our properties held for investment were subject to secured indebtedness to third parties, respectively.
See “Business—Portfolio of Healthcare Investments” in Part I, Item 1 for further discussion regarding the ownership of our properties and the types of healthcare facilities that comprise our properties. Secured Indebtedness As of each of December 31, 2023 and 2022, eight of our properties held for investment were subject to secured indebtedness to third parties.
As of December 31, 2022 and 2021, our secured debt consisted of the following (dollars in thousands): Principal Balance as of December 31, (1) Weighted Average Effective Interest Rate at December 31, (2) Interest Rate Type 2022 2021 2022 2021 Maturity Date Fixed Rate $ 50,123 $ 67,602 3.33 % 3.42 % May 2031 - August 2051 (1) Principal balance does not include deferred financing costs, net of $0.9 million as of each of December 31, 2022 and 2021.
As of December 31, 2023 and 2022, our secured debt consisted of the following (dollars in thousands): Principal Balance as of December 31, (1) Weighted Average Effective Interest Rate at December 31, (2) Interest Rate Type 2023 2022 2023 2022 Maturity Date Fixed Rate $ 48,143 $ 50,123 3.34 % 3.33 % May 2031 - August 2051 (1) Principal balance does not include deferred financing costs, net of $0.8 million and $0.9 million as of December 31, 2023 and 2022, respectively.
PROPERTIES As of December 31, 2022, our investment portfolio consisted of 402 real estate properties held for investment (consisting of (i) 264 skilled nursing/transitional care facilities, (ii) 47 Senior Housing - Leased communities, (iii) 59 Senior Housing - Managed communities, (iv) 17 behavioral health facilities and 15 specialty hospitals and other facilities), one investment in a sales-type lease, 12 investments in loans receivable (consisting of two mortgage loans and 10 other loans), seven preferred equity investments and three investments in unconsolidated joint ventures.
PROPERTIES As of December 31, 2023, our investment portfolio consisted of 378 real estate properties held for investment (consisting of (i) 241 skilled nursing/transitional care facilities, (ii) 43 Senior Housing - Leased communities, (iii) 61 Senior Housing - Managed communities, (iv) 18 behavioral health facilities and (v) 15 specialty hospitals and other facilities), 14 investments in loans receivable (consisting of two mortgage loans and 12 other loans), five preferred equity investments and two investments in unconsolidated joint ventures.
As of December 31, 2022, our real estate properties held for investment included 39,985 beds/units, spread across the U.S. and Canada.
As of December 31, 2023, our real estate properties held for investment included 37,834 beds/units, spread across the U.S. and Canada. As of December 31, 2023, the substantial majority of our real estate properties (excluding 61 Senior Housing - Managed communities) were leased under triple-net operating leases with expirations ranging from one year to 19 years.
Removed
Occupancy Trends The following table sets forth the occupancy percentages for our properties for the periods indicated: Occupancy Percentage (1) 2022 2021 2020 2019 (2) Skilled Nursing/Transitional Care 73.5 % 71.4 % 77.3 % 82.1 % Senior Housing - Leased 84.4 % 78.1 % 83.1 % 87.0 % Behavioral Health 84.0 % 84.2 % 83.5 % 83.5 % Specialty Hospitals and Other 77.4 % 80.6 % 76.5 % 71.5 % Senior Housing - Managed 82.1 % 79.4 % 80.0 % 87.7 % (1) Occupancy percentage represents the facilities’ average operating occupancy for the period indicated and is calculated by dividing the actual census from the period presented by the available beds/units for the same period.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFollowing is the characterization of our annual cash dividends on common stock per share: Year Ended December 31, Common Stock 2022 2021 2020 Non-qualified ordinary dividends $ 0.8742 $ 0.6250 $ 1.0247 Qualified ordinary dividends — — 0.0155 Non-dividend distributions 0.3258 0.5750 0.3098 $ 1.2000 $ 1.2000 $ 1.3500 31 Stock Price Performance Graph The following graph compares the cumulative total stockholder return of our common stock for the five-year period ending December 31, 2022.
Biggest changeFollowing is the characterization of our annual cash dividends on common stock per share: Year Ended December 31, Common Stock 2023 2022 2021 Non-qualified ordinary dividends $ 0.6837 $ 0.8742 $ 0.6250 Non-dividend distributions 0.5163 0.3258 0.5750 $ 1.2000 $ 1.2000 $ 1.2000 31 Stock Price Performance Graph The following graph compares the cumulative total stockholder return of our common stock for the five-year period ending December 31, 2023.
We did not repurchase any shares of our common stock during the quarter ended December 31, 2022 or issue any shares of our common stock in a transaction that was not registered under the Securities Act of 1933.
We did not repurchase any shares of our common stock during the quarter ended December 31, 2023 or issue any shares of our common stock in a transaction that was not registered under the Securities Act of 1933.
The graph below assumes that $100 was invested at the close of market on December 29, 2017 in (i) our common stock, (ii) the Nasdaq Composite Index and (iii) the Nareit Health Care Property Sector Total Return Index and assumes the reinvestment of all dividends. Stock price performances shown in the graph are not necessarily indicative of future price performances.
The graph below assumes that $100 was invested at the close of market on December 31, 2018 in (i) our common stock, (ii) the Nasdaq Composite Index and (iii) the Nareit Health Care Property Sector Total Return Index and assumes the reinvestment of all dividends. Stock price performances shown in the graph are not necessarily indicative of future price performances.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Stockholder Information Our common stock is listed on The Nasdaq Stock Market LLC and trades on the Nasdaq Global Select Market under the symbol “SBRA.” At February 14, 2023, we had approximately 4,304 stockholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Stockholder Information Our common stock is listed on The Nasdaq Stock Market LLC and trades on the Nasdaq Global Select Market under the symbol “SBRA.” At February 20, 2024, we had approximately 4,044 stockholders of record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changePlease refer to “—Results of Operations” above for additional information regarding these items (in millions): Year Ended December 31, 2022 2021 2020 2022 2021 2020 2022 2021 2020 Net Income (Loss) FFO AFFO Rental and related revenues: Non-cash rental and related revenue write-offs / lease intangible amortization acceleration $ 16.7 $ 44.0 $ 20.8 $ 16.7 $ 44.0 $ 20.8 $ — $ — $ — Resident fees and services: Grant income under government programs (1) 0.1 0.5 1.8 0.1 0.5 1.8 0.1 0.5 1.8 Interest and other income: Lease termination income 2.5 — 0.3 2.5 — 0.3 2.5 — 0.3 Provision for loan losses and other reserves 0.1 3.9 1.9 0.1 3.9 1.9 — — — Loss on extinguishment of debt 0.4 34.6 0.5 0.4 34.6 0.5 — 30.2 — Other (expense) income (1.1) 0.4 2.2 (1.1) 0.4 2.2 1.2 0.4 2.3 Loss from unconsolidated joint ventures: Grant income under government programs (1) 3.6 — 3.5 3.6 — 3.5 3.6 — 3.5 Deferred income tax (benefit) expense (2.4) (6.0) 0.5 (2.4) (6.0) 0.5 — — — Deferred tax valuation allowance 19.6 — — 19.6 — — — — — Support payments paid to joint venture manager (2) 12.3 9.8 — 12.3 9.8 — 12.3 9.8 — Impairment of real estate — 4.5 — — — — — — — Other-than-temporary impairment of unconsolidated joint ventures 57.8 164.1 — — — — — — — (1) Consists of funds specifically paid to communities in our Senior Housing - Managed portfolio from state or federal governments related to the pandemic and were incremental to the amounts that would have otherwise been received for providing care to residents.
Biggest changePlease refer to “—Results of Operations” above for additional information regarding these items (in millions): Year Ended December 31, 2023 2022 2021 2023 2022 2021 2023 2022 2021 Net Income (Loss) FFO AFFO Rental and related revenues: Non-cash rental and related revenue write-offs / lease intangible amortization acceleration $ 2.5 $ 16.7 $ 44.0 $ 2.5 $ 16.7 $ 44.0 $ — $ — $ — Interest and other income: Lease termination income — 2.5 — — 2.5 — — 2.5 — Provision for loan losses and other reserves 0.2 0.1 3.9 0.2 0.1 3.9 — — — Loss on extinguishment of debt 1.5 0.4 34.6 1.5 0.4 34.6 — — 30.2 Other income (expense): Insurance income 4.2 — — 4.2 — — 4.2 — — Other (expense) income (1.6) (1.1) 0.4 (1.6) (1.1) 0.4 (1.6) 1.2 0.4 44 Liquidity and Capital Resources As of December 31, 2023, we had approximately $946.9 million in liquidity, consisting of unrestricted cash and cash equivalents of $41.3 million and available borrowings under our Revolving Credit Facility of $905.6 million.
Investment in Unconsolidated Joint Ventures We report investments in unconsolidated entities over whose operating and financial policies we have the ability to exercise significant influence under the equity method of accounting. Under this method of accounting, our share of the investee’s earnings or losses is included in our consolidated statements of (loss) income.
Investment in Unconsolidated Joint Ventures We report investments in unconsolidated entities over whose operating and financial policies we have the ability to exercise significant influence under the equity method of accounting. Under this method of accounting, our share of the investee’s earnings or losses is included in our consolidated statements of income (loss).
The assumptions are generally based on management’s experience in its local real estate markets, and the effects of current market conditions, which are subject to economic and market uncertainties.
The assumptions are generally based on management’s experience in its local real estate markets, and the effects of current market conditions, which are subject to economic and market uncertainties.
The allowance for credit losses is a valuation allowance that reflects management’s estimate of losses inherent in the loan portfolio as of the balance sheet date. The reserve is adjusted through provision for loan losses and other reserves on our consolidated statements of (loss) income and is decreased by charge-offs to specific loans.
The allowance for credit losses is a valuation allowance that reflects management’s estimate of losses inherent in the loan portfolio as of the balance sheet date. The reserve is adjusted through provision for loan losses and other reserves on our consolidated statements of income (loss) and is decreased by charge-offs to specific loans.
If at any time we cannot determine that it is probable that substantially all rents over the life of a lease are collectible, rental revenue will be recognized only to the extent of payments received and all receivables associated with the lease will be written off, irrespective of amounts expected to be collectible.
If at any time we cannot determine that it is probable that substantially all rents over the life of a lease are collectible, rental revenue will be recognized only to the extent of payments received and all receivables associated with the lease will be written off, irrespective of amounts expected to be collectible.
In addition, we do not believe that the restrictions under our Senior Notes Indentures (as defined below) or Credit Agreement significantly limit our ability to use our available liquidity for these purposes. 45 Our long-term liquidity requirements consist primarily of future investments in properties, including any improvements or renovations of current or newly-acquired properties, as well as scheduled debt maturities.
In addition, we do not believe that the restrictions under our Senior Notes Indentures (as defined below) or Credit Agreement significantly limit our ability to use our available liquidity for these purposes. Our long-term liquidity requirements consist primarily of future investments in properties, including any improvements or renovations of current or newly-acquired properties, as well as scheduled debt maturities.
Any unamortized balances are immediately recognized in income if the loan is repaid before its contractual maturity. Interest income on our loans receivable is recognized on an accrual basis over the life of the investment using the interest method. Direct loan origination costs are amortized over the term of the loan as an adjustment to interest income.
Any unamortized balances are immediately recognized in income if the loan is repaid before its contractual maturity. 36 Interest income on our loans receivable is recognized on an accrual basis over the life of the investment using the interest method. Direct loan origination costs are amortized over the term of the loan as an adjustment to interest income.
As it relates to investments in loans, in addition to our assessment of VIEs and whether we are the primary beneficiary of those VIEs, we evaluate the loan terms and other pertinent facts to determine whether the loan investment should be accounted 34 for as a loan or as a real estate joint venture.
As it relates to investments in loans, in addition to our assessment of VIEs and whether we are the primary beneficiary of those VIEs, we evaluate the loan terms and other pertinent facts to determine whether the loan investment should be accounted for as a loan or as a real estate joint venture.
Dividends. To maintain REIT status, we are required each year to distribute to stockholders at least 90% of our annual REIT taxable income after certain adjustments.
To maintain REIT status, we are required each year to distribute to stockholders at least 90% of our annual REIT taxable income after certain adjustments.
However, there can be no assurances regarding the timing and amount of these revenues. Amounts due under the terms of all of our lease agreements are subject to contractual increases, and contingent rental income may be derived from certain lease agreements. No material contingent rental income was derived during the years ended December 31, 2022 and 2021.
However, there can be no assurances regarding the timing and amount of these revenues. Amounts due under the terms of all of our lease agreements are subject to contractual increases, and contingent rental income may be derived from certain lease agreements. No material contingent rental income was derived during the years ended December 31, 2023 and 2022.
See Note 8, “Debt,” in the Notes to Consolidated Financial Statements for additional information concerning the Credit Agreement, including information regarding covenants contained in the Credit Agreement. As of December 31, 2022, we were in compliance with all applicable covenants under the Credit Agreement. Secured Indebtedness.
See Note 8, “Debt,” in the Notes to Consolidated Financial Statements for additional information concerning the Credit Agreement, including information regarding covenants contained in the Credit Agreement. As of December 31, 2023, we were in compliance with all applicable covenants under the Credit Agreement. Secured Indebtedness.
Results of Operations As of December 31, 2022, our investment portfolio consisted of 402 real estate properties held for investment, one investment in a sales-type lease, 12 investments in loans receivable, seven preferred equity investments and three investments in unconsolidated joint ventures.
As of December 31, 2022, our investment portfolio consisted of 402 real estate properties held for investment, one investment in a sales-type lease, 12 investments in loans receivable, seven preferred equity investments and three investments in unconsolidated joint ventures.
Our Senior Housing - Managed portfolio has been similarly impacted, and we expect that decreased occupancy and increased operating costs will continue to negatively impact the operating results of these investments. While our tenants, borrowers and Senior Housing - Managed portfolio have experienced some recent increases in occupancy, those occupancy rates are still below pre-pandemic levels.
Our Senior Housing - Managed portfolio has been similarly impacted, and we expect that decreased occupancy and increased operating costs will continue to negatively impact the operating results of these investments. While our tenants, borrowers and Senior Housing - Managed portfolio have experienced increases in occupancy, certain of those occupancy rates are still below pre-pandemic levels.
(2) Represents the dollar amount increase (decrease) for the year ended December 31, 2022 compared to the year ended December 31, 2021 that is not a direct result of investments/dispositions made after January 1, 2021.
(2) Represents the dollar amount increase (decrease) for the year ended December 31, 2023 compared to the year ended December 31, 2022 that is not a direct result of investments/dispositions made after January 1, 2022.
Credit Losses On a quarterly basis, we evaluate the collectability of our loan portfolio and sales-type lease, including the portion of unfunded loan commitments expected to be funded, and establish an allowance for credit losses. The allowance for credit losses is calculated using the related amortization schedules, payment histories and loan-to-value ratios.
Credit Losses On a quarterly basis, we evaluate the collectability of our loan portfolio, including the portion of unfunded loan commitments expected to be funded, and establish an allowance for credit losses. The allowance for credit losses is calculated using the related amortization schedules, payment histories and loan-to-value ratios.
Other (Expense) Income During the year ended December 31, 2022, we recognized $1.1 million of other expense primarily related to a $2.2 million foreign currency transaction loss related to our Canadian borrowings, partially offset by $1.1 million of other income related to settlement payments received related to legacy Care Capital Properties (“CCP”) investments.
During the year ended December 31, 2022, we recognized $1.1 million of other expense consisting of a $2.2 million foreign currency transaction loss related to our Canadian borrowings, partially offset by $1.1 million of other income related to settlement payments received related to legacy Care Capital Properties investments.
The new payment rates became effective on October 1, 2021. 48 On July 29, 2022, CMS issued a final rule regarding fiscal year 2023 Medicare rates for skilled nursing facilities providing an estimated net increase of 2.7% compared to fiscal year 2022 comprised of an increase as a result of an update to the payment rates of 5.1% (which is based on (i) a market basket increase of 3.9% plus (ii) a market basket forecast error adjustment of 1.5% and less (iii) a productivity adjustment of 0.3%), partially offset by the recalibrated PDPM parity adjustment of 2.3% (the total PDPM parity adjustment is 4.6%, and it is being phased in over a two-year period).
On July 29, 2022, CMS issued a final rule regarding fiscal year 2023 Medicare rates for skilled nursing facilities providing an estimated net increase of 2.7% compared to fiscal year 2022 comprised of an increase as a result of an update to the payment rates of 5.1% (which is based on (i) a market basket increase of 3.9% plus (ii) a market basket forecast error adjustment of 1.5% and less (iii) a productivity adjustment of 0.3%), partially offset by the recalibrated PDPM parity adjustment of 2.3% (the total PDPM parity adjustment is 4.6%, and it is being phased in over a two-year period).
Certain of our lease agreements provide for an annual rent escalator based on the percentage change in the Consumer Price Index (but not less than zero), subject to minimum or maximum fixed percentages that range from 1.0% to 5.0%. 40 Resident Fees and Services During the year ended December 31, 2022, we recognized $186.7 million of resident fees and services compared to $155.5 million for the year ended December 31, 2021.
Certain of our lease agreements provide for an annual rent escalator based on the percentage change in the Consumer Price Index (but not less than zero), subject to minimum or maximum fixed percentages that range from 1.0% to 5.0%. 40 Resident Fees and Services During the year ended December 31, 2023, we recognized $236.2 million of resident fees and services compared to $186.7 million for the year ended December 31, 2022.
Our senior unsecured notes consisted of the following (collectively, the “Senior Notes”) as of December 31, 2022 (dollars in thousands): Title Maturity Date Principal Balance (1) 5.125% senior unsecured notes due 2026 (the “2026 Notes”) August 15, 2026 $ 500,000 5.88% senior unsecured notes due 2027 (the “2027 Notes”) May 17, 2027 100,000 3.90% senior unsecured notes due 2029 (the “2029 Notes”) October 15, 2029 350,000 3.20% senior unsecured notes due 2031 (the “2031 Notes”) December 1, 2031 800,000 $ 1,750,000 (1) Principal balance does not include discount, net of $3.5 million and deferred financing costs, net of $12.0 million as of December 31, 2022.
Our senior unsecured notes consisted of the following (collectively, the “Senior Notes”) as of December 31, 2023 (dollars in thousands): Title Maturity Date Principal Balance (1) 5.125% senior unsecured notes due 2026 (the “2026 Notes”) August 15, 2026 $ 500,000 5.88% senior unsecured notes due 2027 (the “2027 Notes”) May 17, 2027 100,000 3.90% senior unsecured notes due 2029 (the “2029 Notes”) October 15, 2029 350,000 3.20% senior unsecured notes due 2031 (the “2031 Notes”) December 1, 2031 800,000 $ 1,750,000 (1) Principal balance does not include discount, net of $4.3 million and deferred financing costs, net of $10.5 million as of December 31, 2023.
In general, we expect that income and expenses related to our portfolio will fluctuate in future periods in comparison to the corresponding prior periods as a result of investment and disposition activity and anticipated future changes in our portfolio. The results of operations presented are not directly comparable due to ongoing acquisition and disposition activity.
In general, we expect that income and expenses related to our portfolio will fluctuate in future periods in comparison to the corresponding prior periods as a result of investment and disposition activity and anticipated future changes in our portfolio. The results of operations presented are not directly comparable due to ongoing acquisition and disposition activity, including our capital recycling initiative.
We regularly monitor the effects of economic and market conditions and COVID-19 on our operations and financial position, as well as on the operations and financial position of our tenants and borrowers, in order to respond and adapt to the 33 ongoing changes in our operating environment.
We regularly monitor the effects of economic and market conditions on our operations and financial position, as well as on the operations and financial position of our tenants and borrowers, in order to respond and adapt to the ongoing changes in our operating environment.
On August 6, 2021, we established an at-the-market equity offering program (the “ATM Program”) pursuant to which shares of our common stock having an aggregate gross sales price of up to $500.0 million may be sold from time to time (i) by us through a consortium of banks acting as sales agents or directly to the banks acting as principals or (ii) by a consortium of banks acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement.
On February 23, 2023, we established an at-the-market equity offering program (the “ATM Program”) pursuant to which shares of our common stock having an aggregate gross sales price of up to $500.0 million may be sold from time to time (i) by us through a consortium of banks acting as sales agents or directly to the banks acting as principals or (ii) by a consortium of banks acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement.
See “—Liquidity and Capital Resources—Material Cash Requirements—Credit Agreement.” Critical Accounting Policies and Estimates Below is a discussion of the accounting policies that management considers critical in that they involve significant management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results.
See “—Liquidity and Capital Resources.” Critical Accounting Policies and Estimates Below is a discussion of the accounting policies that management considers critical in that they involve significant management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results.
Market Trends and Uncertainties Our operations have been and are expected to continue to be impacted by economic and market conditions. Together with the ongoing impact of COVID-19, increases in interest rates, labor shortages, supply chain disruptions, high inflation and increased volatility in public equity and fixed income markets have led to increased costs and limited the availability of capital.
Market Trends and Uncertainties Our operations have been and are expected to continue to be impacted by economic and market conditions. Increases in interest rates, labor shortages, supply chain disruptions, high inflation and increased volatility in public equity and fixed income markets have led to increased costs and limited the availability of capital.
The above factors have resulted in decreased occupancy and increased operating costs for our tenants and borrowers, which have negatively impacted their operating results and may adversely impact their ability to make full and timely rental payments and debt service payments, respectively, to us.
The above factors, together with the impact of COVID-19, have resulted in decreased occupancy and increased operating costs for our tenants and borrowers, which have negatively impacted their operating results and may adversely impact their ability to make full and timely rental payments and debt service payments, respectively, to us.
In addition, we may seek financing from U.S. government agencies, including through Fannie Mae, Freddie Mac and HUD, in appropriate circumstances in connection with acquisitions. Cash Flows from Operating Activities Net cash provided by operating activities was $315.7 million for the year ended December 31, 2022.
In addition, we may seek financing from U.S. government agencies, including through Fannie Mae, Freddie Mac and HUD, in appropriate circumstances in connection with acquisitions. Cash Flows from Operating Activities Net cash provided by operating activities was $300.6 million for the year ended December 31, 2023.
We paid dividends of $277.2 million on our common stock during the year ended December 31, 2022. On February 1, 2023, our board of directors declared a quarterly cash dividend of $0.30 per share of common stock. The dividend will be paid on February 28, 2023 to common stockholders of record as of February 13, 2023.
We paid dividends of $277.4 million on our common stock during the year ended December 31, 2023. On February 1, 2024, our board of directors declared a quarterly cash dividend of $0.30 per share of common stock. The dividend will be paid on February 29, 2024 to common stockholders of record as of February 13, 2024.
As of December 31, 2022, eight of our properties held for investment were subject to secured indebtedness to third parties, and our secured debt consisted of the following (dollars in thousands): Interest Rate Type Principal Balance (1) Weighted Average Interest Rate Maturity Date Fixed Rate $ 50,123 2.84 % May 2031 - August 2051 (1) Principal balance does not include deferred financing costs, net of $0.9 million as of December 31, 2022.
As of December 31, 2023, eight of our properties held for investment were subject to secured indebtedness to third parties, and our secured debt consisted of the following (dollars in thousands): Interest Rate Type Principal Balance (1) Weighted Average Interest Rate Maturity Date Fixed Rate $ 48,143 2.85 % May 2031 - August 2051 (1) Principal balance does not include deferred financing costs, net of $0.8 million as of December 31, 2023.
As of December 31, 2022, our aggregate commitment for future capital and other expenditures related to facilities leased under triple-net operating leases was approximately $73 million, of which $65 million will directly result in incremental rental income, and approximately $55 million will be spent over the next 12 months.
As of December 31, 2023, our aggregate commitment for future capital and other expenditures related to facilities leased under triple-net operating leases was approximately $27 million, of which $20 million will directly result in incremental rental income, and approximately $16 million will be spent over the next 12 months.
Loss on Extinguishment of Debt During the year ended December 31, 2022, we recognized a $0.4 million loss on extinguishment of debt related to write-offs of deferred financing costs in connection with the partial pay down of the U.S. dollar Prior Term Loan.
During the year ended December 31, 2022, we recognized a $0.4 million loss on extinguishment of debt related to write-offs of deferred financing costs in connection with the partial pay downs of the U.S. dollar term loan (“Prior Term Loan”) under our Prior Credit Agreement.
Senior Housing - Managed Portfolio Operating Expenses During the year ended December 31, 2022, we recognized $143.0 million of operating expenses compared to $121.0 million for the year ended December 31, 2021.
Senior Housing - Managed Portfolio Operating Expenses During the year ended December 31, 2023, we recognized $177.3 million of Senior Housing - Managed portfolio operating expenses compared to $143.0 million for the year ended December 31, 2022.
The net carrying value of the assets and liabilities of these facilities was $99.3 million, which resulted in an aggregate $12.0 million net loss on sale. We continue to evaluate additional assets for sale as part of our initiative to recycle capital and further improve our portfolio.
The net carrying value of the assets and liabilities of these facilities was $357.8 million, which resulted in an aggregate $76.6 million net loss on sale. We continue to evaluate additional assets for sale as part of our initiative to recycle capital and further improve our portfolio.
The aggregate summarized balance sheet information as of December 31, 2022 and 2021 and aggregate summarized statement of loss information for the year ended December 31, 2022 is as follows (in thousands): As of December 31, 2022 2021 Total assets $ 74,063 $ 117,755 Total liabilities 2,275,511 2,287,485 Year Ended December 31, 2022 Total revenues $ 2,423 Total expenses 125,532 Net loss (124,391) Concentration of Credit Risk Concentrations of credit risk arise when a number of tenants or obligors related to our investments are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to us, to be similarly affected by changes in economic conditions.
The aggregate summarized balance sheet information as of December 31, 2023 and 2022 and aggregate summarized statement of loss information for the year ended December 31, 2023 is as follows (in thousands): As of December 31, 2023 2022 Total assets $ 72,730 $ 74,063 Total liabilities 2,272,119 2,275,511 Year Ended December 31, 2023 Total revenues $ 730 Total expenses 137,422 Net loss (139,639) Concentration of Credit Risk Concentrations of credit risk arise when a number of tenants or obligors related to our investments are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to us, to be similarly affected by changes in economic conditions.
Net (Loss) Gain on Sales of Real Estate During the year ended December 31, 2022, we recognized an aggregate net loss on the sales of real estate of $12.0 million related to the disposition of 13 skilled nursing/transitional care facilities and five senior housing communities.
During the year ended December 31, 2022, we recognized an aggregate net loss of $12.0 million related to the disposition of 13 skilled nursing/transition care facilities and five Senior Housing - Leased communities.
Further, our computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define AFFO differently than we do. 43 The following table reconciles our calculations of FFO and AFFO for the years ended December 31, 2022, 2021 and 2020, to net income, the most directly comparable GAAP financial measure, for the same periods (in thousands, except share and per share amounts): Year Ended December 31, 2022 2021 2020 Net (loss) income $ (77,605) $ (113,256) $ 138,417 Depreciation and amortization of real estate assets 187,782 178,991 176,737 Depreciation, amortization and impairment of real estate assets related to unconsolidated joint ventures 22,095 26,129 26,949 Net loss (gain) on sales of real estate 12,011 (12,301) (2,861) Net (gain) loss on sales of real estate related to unconsolidated joint ventures (220) 33 3,281 Impairment of real estate 94,042 9,499 4,003 Other-than-temporary impairment of unconsolidated joint ventures 57,778 164,126 — FFO 295,883 253,221 346,526 Stock-based compensation expense 7,453 7,914 7,907 Non-cash rental and related revenues 2,183 25,823 (4,458) Non-cash interest income (2,285) (1,988) (2,351) Non-cash interest expense 11,094 8,368 8,418 Non-cash portion of loss on extinguishment of debt 411 4,426 531 Provision for loan losses and other reserves 141 3,935 1,855 Deferred tax valuation allowance related to unconsolidated joint ventures 19,613 — — Other adjustments related to unconsolidated joint ventures (5,155) (5,051) 1,913 Other non-cash adjustments 2,474 492 825 AFFO $ 331,812 $ 297,140 $ 361,166 FFO per diluted common share $ 1.28 $ 1.15 $ 1.67 AFFO per diluted common share $ 1.43 $ 1.35 $ 1.74 Weighted average number of common shares outstanding, diluted: FFO 231,851,542 220,102,563 207,252,830 AFFO 232,784,543 220,526,512 208,039,530 44 The following table sets forth additional information related to certain other items included in net income (loss) above, and the portions of each that are included in FFO and AFFO, which may be helpful in assessing our operating results.
Further, our computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define AFFO differently than we do. 43 The following table reconciles our calculations of FFO and AFFO for the years ended December 31, 2023, 2022 and 2021, to net income (loss), the most directly comparable GAAP financial measure, for the same periods (in thousands, except share and per share amounts): Year Ended December 31, 2023 2022 2021 Net income (loss) $ 13,756 $ (77,605) $ (113,256) Depreciation and amortization of real estate assets 183,087 187,782 178,991 Depreciation, amortization and impairment of real estate assets related to unconsolidated joint ventures 8,697 22,095 26,129 Net loss (gain) on sales of real estate 76,625 12,011 (12,301) Net (gain) loss on sales of real estate related to unconsolidated joint ventures — (220) 33 Impairment of real estate 14,332 94,042 9,499 Other-than-temporary impairment of unconsolidated joint ventures — 57,778 164,126 FFO 296,497 295,883 253,221 Stock-based compensation expense 7,917 7,453 7,914 Non-cash rental and related revenues (8,699) 2,183 25,823 Non-cash interest income (372) (2,285) (1,988) Non-cash interest expense 12,265 11,094 8,368 Non-cash portion of loss on extinguishment of debt 1,541 411 4,426 Provision for loan losses and other reserves 191 141 3,935 Deferred tax valuation allowance related to unconsolidated joint ventures — 19,613 — Other adjustments related to unconsolidated joint ventures 502 (5,155) (5,051) Other non-cash adjustments 365 2,474 492 AFFO $ 310,207 $ 331,812 $ 297,140 FFO per diluted common share $ 1.27 $ 1.28 $ 1.15 AFFO per diluted common share $ 1.33 $ 1.43 $ 1.35 Weighted average number of common shares outstanding, diluted: FFO 232,792,778 231,851,542 220,102,563 AFFO 233,883,279 232,784,543 220,526,512 The following table sets forth additional information related to certain other items included in net income (loss) above, and the portions of each that are included in FFO and AFFO, which may be helpful in assessing our operating results.
Rental and Related Revenues During the year ended December 31, 2022, we recognized $400.6 million of rental income compared to $396.7 million for the year ended December 31, 2021.
Rental and Related Revenues During the year ended December 31, 2023, we recognized $376.3 million of rental income compared to $400.6 million for the year ended December 31, 2022.
Interest and Other Income Interest and other income primarily consists of income earned on our loans receivable investments, preferred returns earned on our preferred equity investments and income on the sales-type lease. During the year ended December 31, 2022, we recognized $37.6 million of interest and other income compared to $17.3 million for the year ended December 31, 2021.
Interest and Other Income Interest and other income primarily consists of income earned on our loans receivable investments and preferred returns earned on our preferred equity investments. During the year ended December 31, 2023, we recognized $35.1 million of interest and other income compared to $37.6 million for the year ended December 31, 2022.
The Term Loans have a maturity date of January 4, 2028. The obligations of the Borrowers under the Credit Agreement are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by us and one of our non-operating subsidiaries, subject to release under certain customary circumstances.
The obligations of the Borrowers under the Credit Agreement are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by us and one of our non-operating subsidiaries, subject to release under certain customary circumstances.
Depreciation and Amortization During the year ended December 31, 2022, we incurred $187.8 million of depreciation and amortization expense compared to $179.0 million for the year ended December 31, 2021.
Depreciation and Amortization During the year ended December 31, 2023, we incurred $183.1 million of depreciation and amortization expense compared to $187.8 million for the year ended December 31, 2022.
Such revenue is recognized when actual results reported by the tenant, or estimates of tenant results, exceed the applicable base amount or other threshold. 35 We assess the collectability of rents on a lease-by-lease basis, and in doing so, consider such things as historical bad debts, tenant creditworthiness, current economic trends, facility operating performance, lease structure, credit enhancements (including guarantees), current developments relevant to a tenant’s business specifically and to its business category generally, and changes in tenants’ payment patterns.
We assess the collectability of rents on a lease-by-lease basis, and in doing so, consider such things as historical bad debts, tenant creditworthiness, current economic trends, facility operating performance, lease structure, credit enhancements (including guarantees), current developments relevant to a tenant’s business specifically and to its business category generally, and changes in tenants’ payment patterns.
Subsidiary Issuer and Guarantor Financial Information. In connection with the Operating Partnership’s assumption of the 2026 Notes, we have fully and unconditionally guaranteed the 2026 Notes.
Subsidiary Issuer and Guarantor Financial Information. In connection with the Operating Partnership’s assumption of the 2026 Notes, we have fully and unconditionally guaranteed the 2026 Notes. The 2029 Notes and 2031 Notes are issued by the Operating Partnership and guaranteed, fully and unconditionally, by us.
Impairment of Real Estate During the year ended December 31, 2022, we recognized $94.0 million of impairment of real estate related to 10 skilled nursing/transitional care facilities that have either sold or are under contract to sell.
Impairment of Real Estate During the year ended December 31, 2023, we recognized $14.3 million of impairment of real estate related to three skilled nursing/transitional care facilities that have either sold or are closed. During the year ended December 31, 2022, we recognized $94.0 million of impairment of real estate related to ten skilled nursing/transitional care facilities that have sold.
In instances where borrowers are in default under the terms of their loans, we may continue recognizing interest income provided that all amounts owed under the contractual terms of the loan, including accrued and unpaid interest, do not exceed the estimated fair value of the collateral, less costs to sell. 36 On a quarterly basis, we evaluate the collectability of our interest income receivable and establish a reserve for amounts not expected to be collected.
In instances where borrowers are in default under the terms of their loans, we may continue recognizing interest income provided that all amounts owed under the contractual terms of the loan, including accrued and unpaid interest, do not exceed the estimated fair value of the collateral, less costs to sell.
Cash Flows from Financing Activities During the year ended December 31, 2022, net cash used in financing activities was $161.7 million and included $277.2 million of dividends paid to stockholders, $63.8 million of principal repayments on Prior Term Loans, $17.5 million of principal repayments on secured debt, $4.8 million of net costs primarily related to payroll tax payments related to the issuance of common stock pursuant to equity compensation arrangements and our ATM Program, and a $2.5 million payment of contingent consideration, partially offset by $204.0 million of net borrowings from our Prior Revolving Credit Facility.
Cash Flows from Financing Activities During the year ended December 31, 2023, net cash used in financing activities was $410.3 million and included $277.4 million of dividends paid to stockholders, $104.3 million of net repayments of our Revolving Credit Facility, $18.1 million of payments of deferred financing costs related to the Credit Agreement, $17.9 million of payments of contingent consideration, 45 $2.7 million of net costs related to payroll tax payments related to the issuance of common stock pursuant to equity compensation arrangements and our ATM Program and $2.0 million of principal repayments on secured debt, partially offset by $12.2 million of proceeds from Term Loans.
See Note 8, “Debt,” in the Notes to Consolidated Financial Statements and “Subsidiary Issuer and Guarantor Financial Information” below for additional information concerning the Senior Notes, including information regarding the indentures and agreements governing the Senior Notes (the “Senior Notes Indentures”).
See Note 8, “Debt,” in the Notes to Consolidated Financial Statements and “Subsidiary Issuer and Guarantor Financial Information” below for additional information concerning the Senior Notes, including information regarding the indentures and agreements governing the Senior Notes (the “Senior Notes Indentures”). As of December 31, 2023, we were in compliance with all applicable covenants under the Senior Notes Indentures.
Further, up to $350.0 million of the Revolving Credit Facility may be used for borrowings in certain foreign currencies. The Credit Agreement also contains an accordion feature that can increase the total available borrowings to $2.75 billion, subject to terms and conditions The Revolving Credit Facility has a maturity date of January 4, 2027, and includes two six-month extension options.
The Credit Agreement also contains an accordion feature that can increase the total available borrowings to $2.75 billion, subject to terms and conditions The Revolving Credit Facility has a maturity date of January 4, 2027, and includes two six-month extension options. The Term Loans have a maturity date of January 4, 2028.
Funds from Operations and Adjusted Funds from Operations We believe that net income as defined by GAAP is the most appropriate earnings measure.
The $0.8 million increase is due to higher taxable income. 42 Funds from Operations and Adjusted Funds from Operations We believe that net income as defined by GAAP is the most appropriate earnings measure.
Capital Expenditures and Other Expenditures and Funding Commitments. For the years ended December 31, 2022 and 2021 and 2020, our aggregate capital expenditures were $54.5 million, $42.7 million and $47.4 million, respectively.
For the years ended December 31, 2023 and 2022 and 2021, our aggregate capital expenditures were $84.9 million, $54.5 million and $42.7 million, respectively.
The Credit Agreement also contains an accordion feature that can increase the total available borrowings to $2.75 billion, subject to terms and conditions.
The Credit Agreement also contains an accordion feature that can increase the total available borrowings to $2.75 billion (from U.S. $1.4 billion plus CAD $150.0 million), subject to terms and conditions.
The 2029 Notes and 2031 Notes are issued by the Operating Partnership and guaranteed, fully and unconditionally, by us. 47 These guarantees are subordinated to all existing and future senior debt and senior guarantees of us, as guarantor, and are unsecured. We conduct all of our business through and derive virtually all of our income from our subsidiaries.
These guarantees are subordinated to all existing and future senior debt and senior guarantees of us, as guarantor, and are unsecured. We conduct all of our business through and derive virtually all of our income from our subsidiaries.
If we believe that there is an other-than-temporary decline in the value of an equity method investment, we would record an impairment loss to the extent that the carrying value exceeds the estimated fair value of such equity method investment.
If we believe that there is an other-than-temporary decline in the value of an equity method investment, we would record an impairment loss to the extent that the carrying value exceeds the estimated fair value of such equity method investment. Loans Receivable and Credit Losses Loans Receivable Loans receivable are reflected at amortized cost on our consolidated balance sheets.
See Note 3, “Recent Real Estate Acquisitions,” in the Notes to Consolidated Financial Statements for additional information regarding these acquisitions. Dispositions During the year ended December 31, 2022, we completed the sale of 13 skilled nursing/transitional care facilities and five senior housing communities for aggregate consideration, net of closing costs, of $87.3 million.
Acquisitions During the year ended December 31, 2023, we acquired two skilled nursing/transitional care facilities, one Senior Housing - Leased community and one Senior Housing - Managed community for aggregate consideration of $90.4 million, including acquisition costs. See Note 3, “Recent Real Estate Acquisitions,” in the Notes to Consolidated Financial Statements for additional information regarding these acquisitions.
A valuation allowance is not established at the acquisition date, as the amount of estimated future cash flows reflects our judgment regarding their uncertainty. The difference between the acquisition date fair value and the total expected cash flows is recognized as interest income using the effective interest method over the life of the applicable loan.
The difference between the acquisition date fair value and the total expected cash flows is recognized as interest income using the effective interest method over the life of the applicable loan.
Certain of our leases provide for contingent rents equal to a percentage of the facility’s revenue in excess of specified base amounts or other thresholds.
Certain of our leases provide for contingent rents equal to a percentage of the facility’s revenue in excess of specified base amounts or other thresholds. Such revenue is recognized when actual results reported by the tenant, or estimates of tenant results, exceed the applicable base amount or other threshold.
Cash Flows from Investing Activities During the year ended December 31, 2022, net cash used in investing activities was $216.2 million and included $142.9 million used for the investment in two unconsolidated joint ventures, $92.2 million used for the acquisition of four facilities, $54.5 million used for additions to real estate, $23.8 million used to provide funding for loans receivable, $8.0 million used to provide funding for preferred equity investments and $0.8 million used for escrow deposits for potential investments, partially offset by $87.3 million of net proceeds from the sales of real estate, $8.0 million of escrow deposits for potential sale of real estate, $5.4 million in repayments of preferred equity investments and $5.3 million in repayments of loans receivable.
Cash Flows from Investing Activities During the year ended December 31, 2023, net cash provided by investing activities was $103.1 million and included $247.6 million of net proceeds from the sales of real estate, $25.5 million of net proceeds from the sale of a facility under a sales-type lease, $9.3 million in repayments of loans receivable, $5.8 million in insurance proceeds, $5.5 million in repayments of preferred equity investments and $0.5 million of distributions in excess of earnings from an unconsolidated joint venture, partially offset by $84.9 million used for additions to real estate, $78.5 million used for the acquisition of four facilities, $11.4 million used to provide funding for loans receivable, $11.0 million used to provide funding for preferred equity investments and $5.2 million used for the investment in an unconsolidated joint venture.
We may change our original assessment of a VIE due to events such as modifications of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposal of all or a portion of an interest held by the primary beneficiary.
We may change our original assessment of a VIE due to events such as modifications of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposal of all or a portion of an interest held by the primary beneficiary. 34 We identify the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity.
Our portfolio of 402 real estate properties held for investment as of December 31, 2022 is diversified by location across the U.S. and Canada. For the year ended December 31, 2022, no tenant relationship represented 10% or more of our total revenues.
Our portfolio of 378 real estate properties held for investment as of December 31, 2023 is diversified by location across the U.S. and Canada.
Our estimated interest and facility fee payments based on principal amounts of debt outstanding as of December 31, 2022, applicable interest rates in effect as of December 31, 2022, and including the impact of interest rate swaps and collars are $102.3 million in 2023, $86.7 million in 2024, $72.0 million in 2025, $72.0 million in 2026, $43.4 million in 2027 and $141.3 million thereafter.
Our estimated interest and facility fee payments based on principal amounts of debt outstanding as of December 31, 2023, applicable interest rates in effect as of December 31, 2023, and including the impact of interest rate swaps and collars are $102.2 million in 2024, $103.5 million in 2025, $103.5 million in 2026, $66.1 million in 2027, $40.6 million in 2028 and $100.9 million thereafter. 46 Capital Expenditures and Other Expenditures and Funding Commitments.
If our tenants and borrowers default on these obligations, such defaults could materially and adversely affect our results of operations and liquidity, in addition to resulting in potential impairment charges.
Reduced or modified rental and debt service amounts could result in the determination that the full amounts of our investments are not recoverable, which could result in an impairment charge. If our tenants and borrowers default on these obligations, such defaults could materially and adversely affect our results of operations and liquidity, in addition to resulting in potential impairment charges.
Income Tax Expense During the year ended December 31, 2022, we recognized $1.2 million of income tax expense compared to $1.8 million for the year ended December 31, 2021 . The $0.6 million decrease is due to lower taxable income from our Senior Housing - Managed portfolio.
Income Tax Expense During the year ended December 31, 2023, we recognized $2.0 million of income tax expense compared to $1.2 million for the year ended December 31, 2022 .
Skilled Nursing Facility Reimbursement Rates For the year ended December 31, 2022 (excluding lease termination income of $2.5 million), 47.5% of our revenues was derived directly or indirectly from skilled nursing/transitional care facilities.
For the year ended December 31, 2023, no tenant relationship represented 10% or more of our total revenues. 47 Skilled Nursing Facility Reimbursement Rates For the year ended December 31, 2023, 42.0% of our revenues was derived directly or indirectly from skilled nursing/transitional care facilities.
We determine estimated fair value based primarily upon (i) estimated sale prices from signed contracts or letters of intent from third-party offers, (ii) discounted cash flow models of the investment over its remaining hold period, (iii) third-party appraisals and (iv) recent sales data for comparable properties.
We determine estimated fair value based primarily upon (i) estimated sale prices from signed contracts or letters of intent from third-party offers, (ii) discounted cash flow models of the investment over its remaining hold period, (iii) third-party appraisals and (iv) recent sales data for comparable properties. 35 Revenue Recognition We recognize rental revenue from tenants, including rental abatements, lease incentives and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related leases when it is probable that substantially all rents over the life of a lease are collectible.
Loans Receivable, Sales-Type Lease and Credit Losses Loans Receivable Loans receivable are reflected at amortized cost on our consolidated balance sheets. The amortized cost of a loan receivable is the outstanding unpaid principal balance, net of unamortized discounts, costs and fees directly associated with the origination of the loan.
The amortized cost of a loan receivable is the outstanding unpaid principal balance, net of unamortized discounts, costs and fees directly associated with the origination of the loan. Loans acquired in connection with a business combination are recorded at their acquisition date fair value.
Loans acquired in connection with a business combination are recorded at their acquisition date fair value. We determine the fair value of loans receivable based on estimates of expected discounted cash flows, collateral, credit risk and other factors.
We determine the fair value of loans receivable based on estimates of expected discounted cash flows, collateral, credit risk and other factors. A valuation allowance is not established at the acquisition date, as the amount of estimated future cash flows reflects our judgment regarding their uncertainty.
As of December 31, 2021, our investment portfolio consisted of 416 real estate properties held for investment, one investment in a sales-type lease, 18 investments in loans receivable, eight preferred equity investments and one investment in an unconsolidated joint venture.
Results of Operations As of December 31, 2023, our investment portfolio consisted of 378 real estate properties held for investment, 14 investments in loans receivable, five preferred equity investments and two investments in unconsolidated joint ventures.
The net increase of $20.2 million is primarily due to (i) an $18.6 million increase in income from investments made after January 1, 2021, primarily related to the initial funding of the $290.0 million mortgage loan receivable to Recovery Centers of America Holdings, LLC in October 2021, (ii) a $2.5 million lease termination payment primarily related to one skilled nursing/transitional care facility during the year ended December 31, 2022 and (iii) $0.5 million in late fee income, partially offset by a $1.3 million decrease in income from investments repaid after January 1, 2021.
The net decrease of $2.5 million is due to a $4.0 million decrease in income from investments repaid after January 1, 2022 and $2.5 million lease termination payments primarily related to one skilled nursing/transitional care facility that sold in 2022, partially offset by (i) a $2.8 million increase from investments made after January 1, 2022, (ii) a $0.6 million increase due to increased fundings for existing investments and (iii) a $0.6 million increase in bank interest income.
Our evaluation includes reviewing credit quality indicators such as payment status, changes affecting the operations of the facilities securing the loans, and national and regional economic factors. The reserve is a valuation allowance that reflects management’s estimate of losses inherent in the interest income receivable balance as of the balance sheet date.
On a quarterly basis, we evaluate the collectability of our interest income receivable and establish a reserve for amounts not expected to be collected. Our evaluation includes reviewing credit quality indicators such as payment status, changes affecting the operations of the facilities securing the loans, and national and regional economic factors.
During the year ended December 31, 2022, we incurred $105.5 million of interest expense compared to $98.6 million for the year ended December 31, 2021.
Interest Expense We incur interest expense comprised of costs of borrowings plus the amortization of deferred financing costs related to our indebtedness. During the year ended December 31, 2023, we incurred $113.0 million of interest expense compared to $105.5 million for the year ended December 31, 2022.
These figures do not incorporate any of the estimated value-based purchasing reductions for skilled nursing facilities. The new payment rates became effective on October 1, 2022. In response to the COVID-19 pandemic, several federal relief packages were approved that have benefited and may continue to benefit our tenants, especially our tenants that operate skilled nursing/transitional care facilities.
These figures do not incorporate any of the estimated value-based purchasing reductions for skilled nursing facilities. The new payment rates became effective on October 1, 2022.
A discussion of our results of operations for the year ended December 31, 2020 is included in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Comparison of results of operations for the years ended December 31, 2021 and 2020” section in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021. 39 Comparison of results of operations for the years ended December 31, 2022 and 2021 (dollars in thousands): For the Year Ended December 31, Increase / (Decrease) Percentage Difference Variance due to Acquisitions, Originations and Dispositions (1) Remaining Variance (2) 2022 2021 Revenues: Rental and related revenues $ 400,586 $ 396,716 $ 3,870 1 % $ (11,246) $ 15,116 Resident fees and services 186,672 155,512 31,160 20 % 13,503 17,657 Interest and other income 37,553 17,317 20,236 117 % 17,327 2,909 Expenses: Depreciation and amortization 187,782 178,991 8,791 5 % 984 7,807 Interest 105,471 98,632 6,839 7 % (242) 7,081 Triple-net portfolio operating expenses 19,623 20,221 (598) (3) % (857) 259 Senior housing - managed portfolio operating expenses 142,990 120,980 22,010 18 % 11,224 10,786 General and administrative 39,574 34,669 4,905 14 % — 4,905 Provision for loan losses and other reserves 141 3,935 (3,794) (96) % (1,578) (2,216) Impairment of real estate 94,042 9,499 84,543 890 % 5,306 79,237 Other (expense) income: Loss on extinguishment of debt (411) (34,622) 34,211 (99) % (150) 34,361 Other (expense) income (1,097) 373 (1,470) (394) % — (1,470) Net (loss) gain on sales of real estate (12,011) 12,301 (24,312) (198) % (24,312) — Loss from unconsolidated joint ventures (98,032) (192,081) 94,049 (49) % (948) 94,997 Income tax expense (1,242) (1,845) 603 (33) % — 603 (1) Represents the dollar amount increase (decrease) for the year ended December 31, 2022 compared to the year ended December 31, 2021 as a result of investments/dispositions made after January 1, 2021.
A discussion of our results of operations for the year ended December 31, 2021 is included in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Comparison of results of operations for the years ended December 31, 2022 and 2021” section in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022. 39 Comparison of results of operations for the years ended December 31, 2023 and 2022 (dollars in thousands): For the Year Ended December 31, Increase / (Decrease) Percentage Difference Variance due to Acquisitions, Originations and Dispositions (1) Remaining Variance (2) 2023 2022 Revenues: Rental and related revenues $ 376,266 $ 400,586 $ (24,320) (6) % $ (17,315) $ (7,005) Resident fees and services 236,153 186,672 49,481 27 % 19,352 30,129 Interest and other income 35,095 37,553 (2,458) (7) % (3,508) 1,050 Expenses: Depreciation and amortization 183,087 187,782 (4,695) (3) % (6,647) 1,952 Interest 112,964 105,471 7,493 7 % — 7,493 Triple-net portfolio operating expenses 17,932 19,623 (1,691) (9) % (1,220) (471) Senior housing - managed portfolio operating expenses 177,313 142,990 34,323 24 % 11,266 23,057 General and administrative 47,472 39,574 7,898 20 % — 7,898 Provision for loan losses and other reserves 191 141 50 35 % 232 (182) Impairment of real estate 14,332 94,042 (79,710) (85) % (86,978) 7,268 Other (expense) income: Loss on extinguishment of debt (1,541) (411) (1,130) 275 % — (1,130) Other income (expense) 2,598 (1,097) 3,695 (337) % — 3,695 Net loss on sales of real estate (76,625) (12,011) (64,614) 538 % (64,614) — Loss from unconsolidated joint ventures (2,897) (98,032) 95,135 (97) % 95,135 — Income tax expense (2,002) (1,242) (760) 61 % — (760) (1) Represents the dollar amount increase (decrease) for the year ended December 31, 2023 compared to the year ended December 31, 2022 as a result of investments/dispositions made after January 1, 2022.
The $31.2 million net increase is primarily due to (i) a $14.8 million increase related to increased occupancy and an increase in rates, (ii) a $13.5 million increase from five Senior Housing - Managed communities acquired after January 1, 2021 and (iii) a $3.3 million increase related to seven previously-leased communities that were transitioned to our Senior Housing - Managed portfolio after January 1, 2021 , partially offset by a $0.4 million decrease in government grant income.
The $49.5 million increase is due to (i) a $23.6 million increase related to nine facilities that were transitioned to Senior Housing - Managed communities after January 1, 2022 , (ii) a $20.9 million increase from four Senior Housing - Managed communities acquired after January 1, 2022 and (iii) a $10.3 million increase related to increased occupancy and an increase in rates.
The reserve is adjusted through provision for loan losses and other reserves on our consolidated statements of (loss) income and is decreased by charge-offs to specific receivables. Sales-Type Lease Our investment in sales-type leases is reflected on the accompanying consolidated balance sheets as the present value of total rental payments, plus estimated purchase price, less unearned lease income.
The reserve is a valuation allowance that reflects management’s estimate of losses inherent in the interest income receivable balance as of the balance sheet date. The reserve is adjusted through provision for loan losses and other reserves on our consolidated statements of income (loss) and is decreased by charge-offs to specific receivables.
Effective January 4, 2023, the Borrowers, and the other parties thereto entered into a sixth amended and restated credit agreement (the “Credit Agreement”) that includes a $1.0 billion revolving credit facility (the “Revolving Credit Facility”), a $430.0 million U.S. dollar term loan and a CAD $150.0 million Canadian dollar term loan (collectively, the “Term Loans”).
The Credit Agreement includes a $1.0 billion revolving credit facility (the “Revolving Credit Facility”), a $430.0 million U.S. dollar term loan and a CAD $150.0 million Canadian dollar term loan (collectively, the “Term Loans”). Further, up to $350.0 million of the Revolving Credit Facility may be used for borrowings in certain foreign currencies.
These figures do not incorporate any of the estimated value-based purchasing reductions for skilled nursing facilities. No adjustments were made to the PDPM rate methodology in the final rule.
These figures do not incorporate any of the estimated value-based purchasing reductions for skilled nursing facilities. The new payment rates became effective on October 1, 2023.
The $94.0 million net decrease in the loss is related to a $95.4 million decrease in loss from the Enlivant Joint Venture, partially offset by $1.4 million of net loss, including $3.6 42 million of depreciation expense and $0.3 million of transaction costs, from 15 senior housing communities acquired by two joint ventures entered into during the year ended December 31, 2022.
Loss from Unconsolidated Joint Ventures During the year ended December 31, 2023, we recognized $2.9 million of loss, including $8.7 million of depreciation expense and $3.9 million of interest expense, related to 16 senior housing communities acquired by two joint ventures after January 1, 2022.
The $95.4 million decrease in loss from the Enlivant Joint Venture is due to (i) a $164.1 million other-than-temporary impairment recorded during the year ended December 31, 2021 compared to a $57.8 million other-than-temporary impairment recorded during the year ended December 31, 2022 (see Note 4, “Investment in Real Estate Properties” in the Notes to Consolidated Financial Statements for additional information regarding the impairment), (ii) a $19.9 million increase in revenue from the facilities owned by the Enlivant Joint Venture as of December 31, 2022, primarily due to increased occupancy and an increase in rates, (iii) a $4.5 million decrease in impairment of real estate, including basis difference, recorded during the year ended December 31, 2021 related to four senior housing communities and (iv) $3.6 million of government grant income recognized during the year ended December 31, 2022.
During the year ended December 31, 2022, we recognized $98.0 million of loss primarily from our joint venture with affiliates of TPG Real Estate, the real estate platform of TPG (the “Enlivant Joint Venture”), including a $57.8 million other-than-temporary impairment recorded during the year ended December 31, 2022 (see Note 4, “Investment in Real Estate Properties” in the Notes to Consolidated Financial Statements for additional information regarding the impairment) .
On November 9, 2022, we terminated the ATM Program. During the period from January 1, 2022 to November 9, 2022, no shares were sold under the ATM Program and we did not utilize the forward feature of the ATM Program.
During the year ended December 31, 2023, no shares were sold under the ATM Program and we did not utilize the forward feature of the ATM Program. As of December 31, 2023, we had $500.0 million available under the ATM Program.
Additionally, as of December 31, 2022, anticipated capital expenditures related to our Senior Housing - Managed communities was approximately $45 million, of which we expect to spend approximately $27 million over the next 12 months. In addition, as of December 31, 2022, we have committed to provide up to $33.6 million of future funding related to two preferred equity investments.
We also expect to fund capital expenditures related to our Senior Housing - Managed communities. In addition, as of December 31, 2023, we have committed to provide up to $0.5 million of future funding related to one loan receivable investment. Dividends.
On July 29, 2021, CMS released a final rule updating fiscal year 2022 Medicare rates for skilled nursing facilities providing an estimated net increase of 1.2% over fiscal year 2021 (comprised of a market basket increase of 2.7% less a forecast error adjustment of 0.8% and a productivity adjustment of 0.7%).
On July 31, 2023, CMS issued a final rule regarding fiscal year 2024 Medicare rates for skilled nursing facilities providing an estimated net increase of 4.0% compared to fiscal year 2023 comprised of an increase as a result of an update to the payment rates of 6.4% (which is based on (i) a market basket increase of 3.0% plus (ii) a market basket forecast error adjustment of 3.6% and less (iii) a productivity adjustment of 0.2%), partially offset by the second phase of the recalibrated PDPM parity adjustment of 2.3%.
Triple-Net Portfolio Operating Expenses During the year ended December 31, 2022, we recognized $19.6 million of triple-net portfolio operating expenses compared to $20.2 million for the year ended December 31, 2021. The $0.6 million net decrease is primarily due to properties d isposed of after January 1, 2021 .
The $7.5 million net increase is primarily related to borrowings outstanding under the Credit Agreement and an increase in interest rates. Triple-Net Portfolio Operating Expenses During the year ended December 31, 2023, we recognized $17.9 million of triple-net portfolio operating expenses compared to $19.6 million for the year ended December 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2022, we had interest rate swaps that fix and interest rate collars that set a cap and floor for the London Interbank Offered Rate (“LIBOR”) portion of the interest rate for $436.3 million of LIBOR-based borrowings under the U.S. dollar Term Loan at a weighted average rate of 1.14% and interest rate swaps that fix the Canadian Dollar Offered Rate 49 (“CDOR”) portion of the interest rate for CAD $125.0 million of CDOR-based borrowings under the Canadian dollar Term Loan at 1.10%.
Biggest changeAs of December 31, 2023, we had interest rate swaps that fix and interest rate collars that set a cap and floor for the Secured Overnight Financing Rate (“SOFR”) portion of the interest rate for $430.0 million of SOFR-based borrowings under the U.S. dollar Term Loan at a weighted average rate of 2.69% and interest rate swaps that fix the Canadian Dollar Offered Rate (“CDOR”) portion of the interest rate for CAD $150.0 million of CDOR-based borrowings under the Canadian dollar Term Loan at 1.63%.
An increase in interest rates could make the financing of any investment by us more costly. Rising interest rates could also limit our ability to refinance our debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness.
An increase in interest rates could make the financing of any investment by us more costly. Rising interest rates could also limit 48 our ability to refinance our debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness.
Because borrowings under the Revolving Credit Facility, as amended and restated effective January 4, 2023, bear interest on the outstanding principal amount at a rate equal to a ratings-based applicable interest margin plus, CDOR for Canadian dollar borrowings, or at the Operating Partnership’s option for U.S. dollar borrowings, either (a) Daily Simple SOFR, as defined in the Credit Agreement, or (b) a base rate determined as the greater of (i) the federal funds rate plus 0.5%, (ii) the prime rate, (iii) Term SOFR, as defined in the Credit Agreement, plus 1.0%, and (iv) 1.00%, the interest rate we will be required to pay on any such borrowings will depend on then applicable rates and may vary.
Because borrowings under the Revolving Credit Facility bear interest on the outstanding principal amount at a rate equal to a ratings-based applicable interest margin plus, CDOR for Canadian dollar borrowings, or at the Operating Partnership’s option for U.S. dollar borrowings, either (a) Daily Simple SOFR, as defined in the Credit Agreement, or (b) a base rate determined as the greater of (i) the federal funds rate plus 0.5%, (ii) the prime rate, (iii) Term SOFR, as defined in the Credit Agreement, plus 1.0%, and (iv) 1.00%, the interest rate we will be required to pay on any such borrowings will depend on then applicable rates and may vary.
Assuming a 100 basis point increase or decrease in the index underlying our variable rate debt, and after giving effect to the impact of interest rate derivative instruments, interest expense would increase or decrease by $1.9 million, for the twelve months following December 31, 2022.
Assuming a 100 basis point increase or decrease in the index underlying our variable rate debt, and after giving effect to the impact of interest rate derivative instruments, interest expense would increase or decrease by $0.9 million, for the twelve months following December 31, 2023.
Based on our operating results for the three months ended December 31, 2022, if the value of the Canadian dollar relative to the U.S. dollar were to increase or decrease by 10% compared to the average exchange rate during the three months ended December 31, 2022, our cash flows would have decreased or increased, as applicable, by less than $0.1 million.
Based on our operating results for the three months ended December 31, 2023, if the value of the Canadian dollar relative to the U.S. dollar were to increase or decrease by 10% compared to the average exchange rate during the three months ended December 31, 2023, our cash flows would have decreased or increased, as applicable, by $0.2 million.
Our foreign currency exposure is partially mitigated through the use of Canadian dollar denominated debt totaling CAD $329.5 million as of December 31, 2022 and cross currency swap instruments.
Our foreign currency exposure is partially mitigated through the use of Canadian dollar denominated debt totaling CAD $194.3 million as of December 31, 2023 and cross currency swap instruments.
As of December 31, 2022, we had $725.5 million of outstanding variable rate indebtedness and $803.0 million available for borrowing under our Prior Revolving Credit Facility. We expect to manage our exposure to interest rate risk by maintaining a mix of fixed and variable rates for our indebtedness.
As of December 31, 2023, we had $637.6 million of outstanding variable rate indebtedness and $905.6 million available for borrowing under our Revolving Credit Facility. We expect to manage our exposure to interest rate risk by maintaining a mix of fixed and variable rates for our indebtedness.
As of December 31, 2022, our indebtedness included $1.8 billion aggregate principal amount of Senior Notes outstanding, $528.5 million in Prior Term Loans, $197.0 million outstanding under the Prior Revolving Credit Facility and $50.1 million of secured indebtedness to third parties on certain of the properties that our subsidiaries own.
As of December 31, 2023, our indebtedness included $1.8 billion aggregate principal amount of Senior Notes outstanding, $543.2 million in Term Loans, $94.4 million outstanding under the Revolving Credit Facility and $48.1 million of secured indebtedness to third parties on certain of the properties that our subsidiaries own.

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