LTC Properties, Inc. (NYSE: LTC), a real estate investment trust
that primarily invests in seniors housing and health care
properties, today announced operating results for its third quarter
ended September 30, 2016 and recent investment
activity.
Net income available to common stockholders was
$22.3 million, or $0.57 per diluted share, for the 2016 third
quarter, compared with $18.7 million, or $0.52 per diluted share,
for the same period in 2015. Funds from Operations (“FFO”)
increased 13.9% to $29.7 million for the 2016 third quarter,
up from $26.1 million for the comparable 2015 period. FFO per
diluted common share was $0.76 and $0.72 for the quarters ended
September 30, 2016 and 2015, respectively, which
represents a 5.6% per share increase. Normalized FFO increased
11.6% to $29.7 million for the 2016 third quarter, up from
$26.6 million for the same period in 2015. The increase in net
income, FFO and normalized FFO was primarily due to higher revenues
from recent acquisitions, mortgage loan originations and completed
development projects, partially offset by higher interest expense
resulting from the sale of senior unsecured notes and increased
utilization of LTC’s line of credit, as well as additional general
and administrative expenditures related to increased investment
activity.
LTC completed the following transactions during the third
quarter of 2016:
- Purchased a parcel of land and
improvements in Kentucky for $5.4 million and entered into a
development commitment to construct a 143-bed skilled nursing
center. The commitment totals $24.3 million, including the
land and improvements purchase. The property was added to an
existing master lease agreement. Rent on the property will commence
upon completion of construction at an initial lease rate of
8.5%;
- Completed construction of a 66-unit
memory care community in California, a 66-unit memory care
community in Illinois and an 89-unit combination assisted living
and memory care community in South Carolina;
- Originated a $1.4 million mezzanine
loan, funding $1.2 million at closing, with a commitment to fund an
additional $0.2 million. This mezzanine loan has a five-year term
and a rate of 15%;
- Sold an assisted living community in
Florida for $5.1 million, resulting in a net gain on sale of $2.0
million;
- Sold a school in New Jersey for $3.9
million, resulting in a net loss of $0.2 million;
- Sold $40.0 million of 3.99% senior
unsecured notes due July 20, 2031 to an insurance company; and
- Sold 152,623 shares of its common stock
for $7.7 million in net proceeds under its equity distribution
agreement.
Subsequent to September 30, 2016, LTC completed the
following:
- Increased its monthly cash dividend for
the fourth quarter of 2016 by 5.6% from $0.18 per share to $0.19
per share, as previously announced; and
- Purchased a parcel of land in Illinois
for $1.6 million and entered into a development commitment to
construct a 66-unit memory care community. The commitment totals
$14.5 million, including the land purchase.
Conference Call
Information
LTC will conduct a conference call on Thursday, November 3,
2016, at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time), to
provide commentary on its performance and operating results for the
quarter ended September 30, 2016. The conference call is
accessible by telephone and the internet. Telephone access will be
available by dialing 877-510-2862 (domestically) or 412-902-4134
(internationally). To participate in the webcast, go to LTC’s
website at www.LTCreit.com 15 minutes before the call to download
the necessary software.
An audio replay of the conference call will be available from
November 3 through November 17, 2016, and may be accessed by
dialing 877-344-7529 (domestically) or 412-317-0088
(internationally) and entering conference number 10092617.
Additionally, an audio archive will be available on LTC’s website
on the “Presentations” page of the “Investor Information” section,
which is under the “Investors” tab. LTC’s earnings release and
supplemental information package for the current period will be
available on its website on the “Press Releases” and
“Presentations” pages, respectively, of the “Investor Information”
section which is under the “Investors” tab.
About LTC
LTC is a self-administered real estate investment trust that
primarily invests in seniors housing and health care properties
primarily through sale-leaseback transactions, mortgage financing
and structured finance solutions including mezzanine lending. At
September 30, 2016, LTC had 223 investments located in 30
states comprising 111 assisted living communities, 97 skilled
nursing centers, 7 range of care communities, 1 behavioral health
care hospital, 3 parcels of land under development and 4 parcels of
land held-for-use. Assisted living communities, independent living
communities, memory care communities and combinations thereof are
included in the assisted living property type. Range of care
communities consist of properties providing skilled nursing and any
combination of assisted living, independent living and/or memory
care services. For more information on LTC Properties, Inc., visit
the Company’s website at www.LTCreit.com.
Forward Looking
Statements
This press release includes statements that are not purely
historical and are “forward looking statements” within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,
including statements regarding the Company’s expectations, beliefs,
intentions or strategies regarding the future. All statements other
than historical facts contained in this press release are forward
looking statements. These forward looking statements involve a
number of risks and uncertainties. Please see LTC’s most recent
Annual Report on Form 10-K, its subsequent Quarterly Reports on
Form 10-Q, and its other publicly available filings with the
Securities and Exchange Commission for a discussion of these and
other risks and uncertainties. All forward looking statements
included in this press release are based on information available
to the Company on the date hereof, and LTC assumes no obligation to
update such forward looking statements. Although the Company’s
management believes that the assumptions and expectations reflected
in such forward looking statements are reasonable, no assurance can
be given that such expectations will prove to have been correct.
The actual results achieved by the Company may differ materially
from any forward looking statements due to the risks and
uncertainties of such statements.
LTC PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(amounts in thousands, except per share
amounts)
Three Months Ended Nine Months Ended September 30, September
30, 2016 2015 2016 2015 Revenues: Rental income $ 33,753 $ 28,531 $
98,705 $ 82,325 Interest income from mortgage loans 6,958 6,117
20,347 15,777 Interest and other income 131
295 390 708 Total revenues
40,842 34,943 119,442
98,810 Expenses: Interest expense 6,836 4,296
19,586 11,916 Depreciation and amortization 9,155 7,365 26,623
21,121 Provision for doubtful accounts 43 31 245 463 Transaction
costs 2 570 96 632 General and administrative expenses 4,464
3,708 12,864 11,094
Total expenses 20,500 15,970
59,414 45,226 Operating income
20,342 18,973 60,028 53,584 Income from unconsolidated joint
ventures 289 674 839 1,543 Gain on sale of real estate, net
1,780 — 3,582 — Net
income 22,411 19,647 64,449 55,127 Income allocated to
participating securities (90 ) (121 ) (296 ) (370 ) Income
allocated to preferred stockholders — (818 )
— (2,454 ) Net income available to common
stockholders $ 22,321 $ 18,708 $ 64,153 $
52,303
Earnings per common share: Basic $ 0.57
$ 0.53 $ 1.68 $ 1.48 Diluted $ 0.57
$ 0.52 $ 1.68 $ 1.47
Weighted average shares used to
calculate earnings per common share:
Basic 39,057 35,341 38,161
35,306 Diluted 39,335
37,352 38,455 37,319
Dividends declared and paid per common share $ 0.54 $ 0.51
$ 1.62 $ 1.53
Supplemental Reporting
Measures
FFO, adjusted FFO (“AFFO”) and Funds Available for Distribution
(“FAD”) are supplemental measures of a real estate investment
trust’s (“REIT”) financial performance that are not defined by U.S.
generally accepted accounting principles (“GAAP”). Investors,
analysts and the Company use FFO, AFFO and FAD as supplemental
measures of operating performance. The Company believes FFO, AFFO
and FAD are helpful in evaluating the operating performance of a
REIT. Real estate values historically rise and fall with market
conditions, but cost accounting for real estate assets in
accordance with GAAP assumes that the value of real estate assets
diminishes predictably over time. We believe that by excluding the
effect of historical cost depreciation, which may be of limited
relevance in evaluating current performance, FFO, AFFO and FAD
facilitate like comparisons of operating performance between
periods. Additionally the Company believes that normalized FFO,
normalized AFFO and normalized FAD provide useful information
because they allow investors, analysts and our management to
compare the Company’s operating performance on a consistent basis
without having to account for differences caused by unanticipated
items.
FFO, as defined by the National Association of Real Estate
Investment Trusts (“NAREIT”), means net income available to common
stockholders (computed in accordance with GAAP) excluding gains or
losses on the sale of real estate and impairment write-downs of
depreciable real estate, plus real estate depreciation and
amortization, and after adjustments for unconsolidated partnerships
and joint ventures. Normalized FFO represents FFO adjusted for
certain items detailed in the reconciliations. The Company’s
computation of FFO may not be comparable to FFO reported by other
REITs that do not define the term in accordance with the current
NAREIT definition or have a different interpretation of the current
NAREIT definition from that of the Company; therefore, caution
should be exercised when comparing our Company’s FFO to that of
other REITs.
We define AFFO as FFO excluding the effects of straight-line
rent, amortization of lease inducement, effective interest income
and deferred income from unconsolidated joint ventures. GAAP
requires rental revenues related to non-contingent leases that
contain specified rental increases over the life of the lease to be
recognized evenly over the life of the lease. This method results
in rental income in the early years of a lease that is higher than
actual cash received, creating a straight-line rent receivable
asset included in our consolidated balance sheet. At some point
during the lease, depending on its terms, cash rent payments exceed
the straight-line rent which results in the straight-line rent
receivable asset decreasing to zero over the remainder of the lease
term. Effective interest method, as required by GAAP, is a
technique for calculating the actual interest rate for the term of
a mortgage loan based on the initial origination value. Similar to
the accounting methodology of straight-line rent, the actual
interest rate is higher than the stated interest rate in the early
years of the mortgage loan thus creating an effective interest
receivable asset included in the interest receivable line item in
our consolidated balance sheet and reduces down to zero when, at
some point during the mortgage loan, the stated interest rate is
higher than the actual interest rate. By excluding the non-cash
portion of rental income, interest income from mortgage loans and
income from unconsolidated joint ventures, investors, analysts and
our management can compare AFFO between periods. Normalized AFFO
represents AFFO adjusted for certain items detailed in the
reconciliations.
We define FAD as AFFO excluding the effects of non-cash
compensation charges, capitalized interest and non-cash interest
charges. FAD is useful in analyzing the portion of cash flow that
is available for distribution to stockholders. Investors, analysts
and the Company utilize FAD as an indicator of common dividend
potential. The FAD payout ratio, which represents annual
distributions to common shareholders expressed as a percentage of
FAD, facilitates the comparison of dividend coverage between REITs.
Normalized FAD represents FAD adjusted for certain items detailed
in the reconciliations.
While the Company uses FFO, Normalized FFO, AFFO, Normalized
AFFO, FAD and Normalized FAD as supplemental performance measures
of our cash flow generated by operations and cash available for
distribution to stockholders, such measures are not representative
of cash generated from operating activities in accordance with
GAAP, and are not necessarily indicative of cash available to fund
cash needs and should not be considered an alternative to net
income available to common stockholders.
Reconciliation of FFO, AFFO and
FAD
The following table reconciles GAAP net income available to
common stockholders to each of NAREIT FFO attributable to common
stockholders and normalized FFO attributable to common
stockholders, as well as normalized AFFO and normalized FAD
(unaudited, amounts in thousands, except per share amounts):
Three Months Ended
Nine Months Ended September 30, September 30, 2016
2015 2016 2015 GAAP net income
available to common stockholders $ 22,321 $ 18,708 $ 64,153 $
52,303 Add: Depreciation and amortization 9,155 7,365 26,623 21,121
Less: Gain on sale of real estate, net (1,780 ) —
(3,582 ) — NAREIT FFO attributable to
common stockholders 29,696 26,073 87,194 73,424 Add:
Non-recurring one-time items — 537
(1)
— 937
(2)
Normalized FFO attributable to common stockholders 29,696 26,610
87,194 74,361 Less: Non-cash rental income (2,278 ) (2,179 )
(6,755 ) (5,897 ) Less: Effective interest income from mortgage
loans (1,352 ) (1,195 ) (3,907 ) (2,680 ) Less: Deferred income
from unconsolidated joint ventures — (421 )
— (1,000 ) Normalized adjusted FFO (AFFO)
26,066 22,815 76,532 64,784 Add: Non-cash compensation
charges 1,130 1,012 3,149 3,093 Add: Non-cash interest related to
earn-out liabilities 223 96 538 205 Less: Capitalized interest
(251 ) (184 ) (1,193 ) (481 )
Normalized funds available for distribution (FAD) $ 27,168 $
23,739 $ 79,026 $ 67,601
(1)
Represents acquisition costs related to
the 10-property senior housing portfolio acquired during the
quarter.
(2)
Represents a $400 provision for loan loss
reserve related to additional loan proceeds funded under an
existing mortgage loan and item (1) above.
NAREIT Basic FFO attributable to common stockholders per share $
0.76 $ 0.74 $ 2.28 $ 2.08 NAREIT
Diluted FFO attributable to common stockholders per share $ 0.76
$ 0.72 $ 2.28 $ 2.03 NAREIT
Diluted FFO attributable to common stockholders $ 29,786 $
27,012 $ 87,490 $ 76,248
Weighted average shares used to calculate
NAREIT diluted FFO per share attributable to common
stockholders
39,335 37,581 38,455
37,558
Diluted normalized FFO attributable to common
stockholders $ 29,786 $ 27,549 $ 87,490 $
77,185
Weighted average shares used to calculate
diluted normalized FFO per share attributable to common
stockholders
39,335 37,581 38,455
37,558
Diluted normalized AFFO $ 26,156 $
23,754 $ 76,828 $ 67,608
Weighted average shares used to calculate
diluted normalized AFFO per share
39,335 37,581 38,455
37,558
Diluted normalized FAD $ 27,258 $
24,678 $ 79,322 $ 70,425
Weighted average shares used to calculate
diluted normalized FAD per share
39,335 37,581 38,455
37,558
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except per
share)
September 30, 2016 December 31, 2015
ASSETS
Investments: Land $ 114,630 $ 106,841 Buildings and improvements
1,177,829 1,091,845 Accumulated depreciation and amortization
(266,581 ) (251,265 ) Real property investments, net
1,025,878 947,421 Mortgage loans receivable, net of loan loss
reserve:2016—$2,360; 2015—$2,190 234,347
217,529 Real estate investments, net 1,260,225 1,164,950
Investments in unconsolidated joint ventures 23,932
24,042 Investments, net 1,284,157 1,188,992
Other assets: Cash and cash equivalents 3,613 12,942 Debt issue
costs related to bank borrowings 2,112 2,865 Interest receivable
8,434 4,536
Straight-line rent receivable, net of
allowance for doubtful accounts: 2016—$907; 2015—$833
50,092 42,685 Prepaid expenses and other assets 20,779 21,443 Notes
receivable 4,199 1,961 Total assets $
1,373,386 $ 1,275,424
LIABILITIES Bank
borrowings $ 77,000 $ 120,500
Senior unsecured notes, net of debt issue
costs: 2016—$1,038; 2015—$1,095
512,262 451,372 Accrued interest 3,616 3,974 Accrued incentives and
earn-outs 12,514 12,722 Accrued expenses and other liabilities
27,363 27,654 Total liabilities 632,755
616,222
EQUITY Stockholders’ equity: Common stock:
$0.01 par value; 60,000 shares authorized; shares issued and
outstanding: 2016—39,222; 2015—37,548 392 375 Capital in excess of
par value 837,889 758,676 Cumulative net income 992,777 928,328
Accumulated other comprehensive income 8 47 Cumulative
distributions (1,090,435 ) (1,028,224 ) Total equity
740,631 659,202 Total liabilities and
equity $ 1,373,386 $ 1,275,424
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version on businesswire.com: http://www.businesswire.com/news/home/20161102006156/en/
LTC Properties, Inc.Wendy SimpsonPam Kessler805-981-8655
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