Drive Shack Inc. Current report filing

Current report filing

INVESTMENTS IN REAL ESTATE (Tables)

INVESTMENTS IN REAL ESTATE (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Acquisition of Senior Living Assets

In connection with the acquisitions of the senior living assets described above, the assets acquired and the liabilities assumed were recorded at fair value. A summary of the initial recording of each of the above acquisitions is as follows:

	At Acquisition
	BPM			Utah			Courtyards			Total
Investment in real estate	$	126,201		$	18,466		$	19,400		$	164,067
Resident lease intangibles		17,099			3,512			2,100			22,711
Other intangibles		—			600			—			600
Prepaid expenses and other assets		110			122			56			288
Accounts payable, accrued expenses and other payables		(1,834	)		(11	)		(136	)		(1,981	)
		141,576			22,689			21,420			185,685
Mortgage notes payable		(88,400	)		(16,000	)		(16,125	)		(120,525	)
Net cash paid for acquisition	$	53,176		$	6,689		$	5,295		$	65,160
Acquisition related costs (A)	$	3,625		$	869		$	395		$	4,889

(A) Acquisition related costs are included within General and Administrative Expense on the income statement.

Schedule of Specific Information of Acquired Real Estate

The following table sets forth certain information regarding the investments in real estate at December 31, 2012:

		Initial Cost											Gross Carrying Amount (B) (F)
											Costs
								Furniture,			Capitalized								Furniture,				Accumulated
Property Type						Building		Fixtures and			Subsequent to						Building		Fixtures and				Depreciation
(A)	City, State	Land		Building		Improvements		Equipment			Acquisition		Land		Building		Improvements		Equipment		Total		(B)(C)
AL/MC	Scottsdale, AZ	$	2,307	$	16,845	$	146	$	101		$	30	$	2,307	$	16,845	$	176	$	101	$	19,429	$	(217	)
AL/MC	Citrus Heights, CA		831		3,097		87		59			4		831		3,097		105		45		4,078		(51	)
AL/MC	Santa Cruz, CA		2,255		20,971		225		58			38		2,255		20,971		278		41		23,545		(273	)
AL/MC	Clovis, CA		1,133		16,835		159		45			7		1,133		16,835		165		45		18,178		(209	)
IL/AL/MC	Boise, ID		1,465		13,229		405		58			44		1,465		13,229		468		40		15,202		(186	)
MC	Corvallis, OR		1,060		4,915		135		8			15		1,060		4,915		148		10		6,133		(64	)
AL/MC	Eugene, OR		935		20,431		364		91			54		935		20,431		450		58		21,874		(267	)
AL/MC	Cottonwood Heights, UT		1,496		16,201		197		58			26		1,496		16,201		207		74		17,978		(206	)
AL/MC	Bountiful, UT		570		9,505		53		50			39		570		9,505		57		85		10,217		(46	)
AL	Taylorsville, UT		1,111		3,042		84		39			18		1,111		3,042		86		55		4,294		(18	)
IL/AL/MC	Salt Lake City, UT		700		3,262		35		15			21		700		3,262		39		31		4,032		(15	)
IL/AL	Fort Worth, TX		2,130		16,343		254		672			—		2,130		16,343		254		672		19,399		(6	)
Subtotal Senior Living Facilities		$	15,993	$	144,676	$	2,144	$	1,254		$	296	$	15,993	$	144,676	$	2,433	$	1,257	$	164,359	$	(1,558	)

Other Operating Real Estate (E) (G)
Office Building	Beavercreek, OH	$	386	$	2,287	$	—	$	—		$	394	$	364	$	2,170	$	370	$	—	$	2,904	$	(701	)
Office Building	Beavercreek, OH		401		2,326		—		—			175		381		2,268		97		—		2,746		(476	)
Office Building	Beavercreek, OH		382		2,242		—		—			458		361		2,150		359		—		2,870		(671	)
Subtotal Other Operating Real Estate		$	1,169	$	6,855	$	—	$	—		$	1,027	$	1,106	$	6,588	$	826	$	—	$	8,520	$	(1,848	)

Total		$	17,162	$	151,531	$	2,144	$	1,254		$	1,323	$	17,099	$	151,264	$	3,259	$	1,257	$	172,879	$	(3,406	)

				Year		No. of Beds/
		Year		Constructed/		Net Rentable		Ending
Property Type		Acquired		Renovated		Sq. Ft.		Occupancy
(A)	City, State	(D)		(D)		(D)		(D)			Encumbrances

Senior Living Facilities:
AL/MC	Scottsdale, AZ		2012	1999/2005		107			75.7	%	$	12,600
AL/MC	Citrus Heights, CA		2012	1997/2011		78			93.6	%		2,940
AL/MC	Santa Cruz, CA		2012	1990/NA		125			95.2	%		17,220
AL/MC	Clovis, CA		2012	1998/2007		122			92.6	%		11,700
IL/AL/MC	Boise, ID		2012	1997/2011		121			95.0	%		12,960
MC	Corvallis, OR		2012	1999/NA		48			89.6	%		3,020
AL/MC	Eugene, OR		2012	1998/NA		115			91.3	%		15,480
AL/MC	Cottonwood Heights, UT		2012	2001/NA		115			89.6	%		12,480
AL/MC	Bountiful, UT		2012	1978/2000		147			83.0	%		10,024
AL	Taylorsville, UT		2012	1976/1994		105			88.6	%		3,341
IL/AL/MC	Salt Lake City, UT		2012	1984/2007		106			72.6	%		2,635
IL/AL	Fort Worth, TX		2012	1986/NA		221			90.0	%		16,125
Subtotal Senior Living Facilities											$	120,525

Other Operating Real Estate (E) (G)
Office Building	Beavercreek, OH		2006	1984/2006		55,024 Sq. Ft.			82.8	%	$	—
Office Building	Beavercreek, OH		2006	1985/2006		29,916 Sq. Ft.			100.0	%		—
Office Building	Beavercreek, OH		2006	1987/2006		45,500 Sq. Ft.			100.0	%		—
Subtotal Other Operating Real Estate											$	—

Total											$	120,525

See notes on next page.

(A)

AL represents assisted living; MC represents memory care; IL represents independent living.

(B)

The following is a rollforward of the gross carrying amount and accumulated depreciation of real estate for the years ended December 31, 2012, 2011 and 2010.

	Year ended December 31,
	2012			2011		2010
Gross Carrying Amount
Balance at beginning of year	$	—		$	—	$	—
Additions:
Acquisitions of real estate		164,067			—		—
Improvements		296			—		—
Transferred from operating real estate held for sale		8,520			—		—
Disposals:
Disposal of long-lived assets		(4	)		—		—
Balance at end of year	$	172,879		$	—	$	—


Accumulated Depreciation
Balance at beginning of year	$	—		$	—	$	—
Additions:
Depreciation expense		(2,750	)		—		—
Transferred from assets held for sale		(657	)		—		—
Disposals:
Disposal of long-lived assets		1			—		—
Balance at end of year	$	(3,406	)	$	—	$	—

(C)

Depreciation is calculated on a straight line basis using the following estimated useful lives:

		Estimated
		Useful Lives
Land		N/A
Buildings		40 years
Building Improvements		3-10 years
Furniture, Fixtures and Equipment		3-5 years

(D)

Unaudited.

(E)

During the year ended December 31, 2012, Newcastle reclassified the above properties as held for use based on the decision not to proceed with the planned disposition. The decision to withdraw the Beavercreek, Ohio properties from held for sale was made as management believes that the best value can now be obtained through a hold strategy. As a result, the operating results relating to the properties in Beavercreek, Ohio has been reclassified as part of income from continuing operations for the year ended December 31, 2012 and the accompanying comparative income statements for the years ended December 31, 2011 and December 31, 2010.

The following table summarizes the financial information for the Beavercreek properties reclassified as held for use:

	Year Ended December 31,
	2012			2011		2010
Rental income	$	2,049		$	1,899	$	1,708

Property operating expense	$	1,404		$	1,110	$	1,283
Depreciation and amortization		1,191			12		79
Other operating expense		11			27		11
Total expense	$	2,606		$	1,149	$	1,373

Impairment		—			433		—
Net income (loss)	$	(557	)	$	317	$	335

(F)

The aggregate United States federal income tax basis for Newcastle’s operating real estate at December 31, 2012 was approximately $190.1 million.

(G)

The other operating real estate was pledged as collateral in one of Newcastle’s non-recourse financing structures at December 31, 2012.

Rollforward of Investments in Real Estate

(B)

The following is a rollforward of the gross carrying amount and accumulated depreciation of real estate for the years ended December 31, 2012, 2011 and 2010.

	Year ended December 31,
	2012			2011		2010
Gross Carrying Amount
Balance at beginning of year	$	—		$	—	$	—
Additions:
Acquisitions of real estate		164,067			—		—
Improvements		296			—		—
Transferred from operating real estate held for sale		8,520			—		—
Disposals:
Disposal of long-lived assets		(4	)		—		—
Balance at end of year	$	172,879		$	—	$	—


Accumulated Depreciation
Balance at beginning of year	$	—		$	—	$	—
Additions:
Depreciation expense		(2,750	)		—		—
Transferred from assets held for sale		(657	)		—		—
Disposals:
Disposal of long-lived assets		1			—		—
Balance at end of year	$	(3,406	)	$	—	$	—

Schedule of Useful Lives

(C)

Depreciation is calculated on a straight line basis using the following estimated useful lives:

		Estimated
		Useful Lives
Land		N/A
Buildings		40 years
Building Improvements		3-10 years
Furniture, Fixtures and Equipment		3-5 years

Schedule of Operating Real Estate reclassified as Held For Use

The following table summarizes the financial information for the Beavercreek properties reclassified as held for use:

	Year Ended December 31,
	2012			2011		2010
Rental income	$	2,049		$	1,899	$	1,708

Property operating expense	$	1,404		$	1,110	$	1,283
Depreciation and amortization		1,191			12		79
Other operating expense		11			27		11
Total expense	$	2,606		$	1,149	$	1,373

Impairment		—			433		—
Net income (loss)	$	(557	)	$	317	$	335

Schedule of Operating Real Estate Held for Sale

The following is a reconciliation of operating real estate held for sale:

	Year Ended December 31,
	2012			2011			2010
Operating real estate held for sale
Balance at beginning of year	$	7,741		$	8,776		$	9,966
Impairment		—			(433	)		(260	)
Leasing commission capitalized		122			—			—
Amortization of leasing commissions		—			(13	)		(90	)
Proceeds from sale of real estate held for sale		—			(650	)		(840	)
Gain on sale		—			61			—
Transferred to investments in real estate (held for use)		(7,863	)		—			—
Balance at end of year	$	—		$	7,741		$	8,776

Schedule of future minimum rental payments

The following is a schedule of the future minimum rental payments to be received under non-cancelable operating leases for the office buildings in Beavercreek, Ohio:

2013	$	1,414
2014		1,328
2015		882
2016		819
2017		819
Thereafter		—
Total	$	5,262

Schedule of Discontinued Operations

The following table summarizes the financial information for the discontinued operations relating to properties sold:

	Year Ended December 31,
	2012			2011			2010

Rental income	$	—		$	136		$	427
Expenses		66			208			537
Impairment		—			—			260
Net gain on sale		—			61			—
Other income		(2	)		—			27
Net income (loss)	$	(68	)	$	(11	)	$	(343	)

- Definition

Tabular disclosure of disposal groups, which may include the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the classification and carrying value of the assets and liabilities comprising the disposal group, and the segment in which the disposal group was reported. Also may include the amount of adjustments to amounts previously reported in discontinued operations such as resolution of contingencies arising from the disposal transaction or the operations of the component prior to disposal.

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