Present value of minimum lease payments receivable

[Table of Contents](#ifa3dff468a15495db7b57c65ada0de74_7)Net investment in DFLs consists of the following (in thousands):

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|   | March 31,2022 |  | December 31,2021 |
| Present value of minimum lease payments receivable | $ | —  |  |  | $ | 1,220  |  |
| Present value of estimated residual value | —  |  |  | 44,706  |  |
| Less deferred selling profits | —  |  |  | (1,220) |  |
|  |  |  |  |
|  |  |  |  |
| Net investment in direct financing leases | $ | —  |  |  | $ | 44,706  |  |
|  |  |  |  |

Direct Financing Lease Internal RatingsAt March 31, 2022, the Company had no properties classified as a DFL. At December 31, 2021, the Company had one hospital classified as a DFL with a carrying amount of $45 million and an internal rating of “performing”. NOTE 6.  Loans Receivable

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| --- | --- | --- |
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The following table summarizes the Company’s loans receivable (in thousands):

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|   | March 31,2022 |  | December 31, 2021 |
| Secured loans(1) | $ | 388,746  |  |  | $ | 396,281  |  |
| Mezzanine and other | 26,252  |  |  | 25,529  |  |
| Unamortized discounts, fees, and costs | (3,301) |  |  | (4,186) |  |
| Reserve for loan losses | (1,944) |  |  | (1,813) |  |
| Loans receivable, net | $ | 409,753  |  |  | $ | 415,811  |  |

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)At March 31, 2022, the Company had $49 million remaining of commitments to fund additional loans for senior housing redevelopment and capital expenditure projects. At December 31, 2021, the Company had $58 million remaining of commitments to fund additional loans for senior housing redevelopment and capital expenditure projects. SHOP Seller FinancingIn conjunction with the sale of 32 SHOP facilities in the Sunrise Senior Housing Portfolio for $664 million in January 2021 (see Note 4), the Company provided the buyer with initial financing of $410 million. The remainder of the sales price was received in cash at the time of sale. Additionally, the Company agreed to provide up to $92 million of additional financing for capital expenditures (up to 65% of the estimated cost of capital expenditures). The additional financing was subsequently reduced to $56 million in June 2021 and $47 million in February 2022 in conjunction with the principal repayments discussed below. Through March 31, 2022, $0.4 million of the additional financing had been funded. The initial and additional financing is secured by the buyer's equity ownership in each property.In June 2021, the Company received principal repayments of $246 million on the initial financing provided in conjunction with the sale of the Sunrise Senior Housing Portfolio. Additionally, in February 2022, the Company received principal repayments of $8 million in conjunction with the disposition of the underlying collateral. As of March 31, 2022 and December 31, 2021, this secured loan had an outstanding balance of $157 million and $165 million, respectively. In conjunction with the sale of 16 additional SHOP facilities for $230 million in January 2021 (see Note 4), the Company provided the buyer with financing of $150 million. The remainder of the sales price was received in cash at the time of sale. The financing is secured by the buyer's equity ownership in each property.During the first quarter of 2021, the Company reduced the consideration and reported gain on sales of real estate and recognized a mark-to-market discount of $16 million for certain transactions with seller financing. The Company’s discount is based on the difference between the stated interest rates (ranging from 3.50% to 4.50%) and corresponding prevailing market rates of approximately 5.25% as of the transaction dates. The discount is recognized as interest income over the term of the discounted loans (ranging from one to three years) using the effective interest rate method. During the three months ended March 31, 2022 and 2021, the Company recognized $1 million and $2 million, respectively, of non-cash interest income related to the amortization of its mark-to-market discounts.14
