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 first quarter
ended March 31, 2018.
Net income available to common stockholders was
$20.3 million, or $0.51 per diluted share, for the 2018 first
quarter, compared with $21.4 million, or $0.54 per diluted share,
for the same period in 2017. Funds from Operations (“FFO”) was
$29.7 million for the 2018 first quarter, compared with
$30.8 million for the comparable 2017 period. FFO per diluted
common share was $0.75 and $0.78 for the quarters ended March 31,
2018 and 2017, respectively.
The decrease in net income available to common stockholders, FFO
and FFO per diluted common share was primarily due to a reduction
in rental income related to properties sold in 2017 and a
previously disclosed defaulted master lease that was placed on a
cash basis, as well as higher interest expense resulting from an
increase in net borrowings, partially offset by higher income from
unconsolidated joint ventures and mezzanine loans.
During the first quarter of 2018, LTC funded $7.4 million under
an existing mortgage loan for the purchase of a 112-bed skilled
nursing center in Michigan. The incremental funding bears interest
at 8.7%, fixed for five years, and escalating by 2.25%
thereafter.
Subsequent to March 31, 2018, LTC sold a portfolio of six
assisted living and memory care communities for $67.5 million.
Known as the Sunrise Portfolio, the six communities, five assisted
living and one memory care, span 320 units and five locations in
Ohio and Pennsylvania. As a result of the transaction, LTC expects
to recognize a net gain on sale of approximately $48.0 million
in the second quarter. The transaction was structured to close
concurrent with the April 30 lease expiration. Rental revenue under
this lease for the four months ended April 30, 2018 was
approximately $1.5 million.
Conference Call
Information
LTC will conduct a conference call on Thursday, May 10, 2018, 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 March 31, 2018. 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
May 10 through May 24, 2018 and may be accessed by dialing
877-344-7529 (domestically) or 412-317-0088 (internationally) and
entering conference number 10118453. 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
March 31, 2018, LTC had 203 investments located in 29
states comprising 105 assisted living communities, 97 skilled
nursing centers and a behavioral health care hospital. Assisted
living communities, independent living communities, memory care
communities and combinations thereof are included in the assisted
living property type. For more information on LTC Properties, Inc.,
visit the Company’s website at www.LTCreit.com, or connect with us
on Twitter @LTCreit and LinkedIn.
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 unaudited)
Three Months Ended March 31, 2018
2017 Revenues: Rental income $ 34,505 $ 35,035
Interest income from mortgage loans 6,816 6,748 Interest and other
income 489 839 Total revenues
41,810 42,622 Expenses: Interest
expense 7,829 7,471 Depreciation and amortization 9,444 9,359
Provision (recovery) for doubtful accounts 8 (38 ) Transaction
costs 4 22 General and administrative expenses 4,797
4,740 Total expenses 22,082
21,554 Operating income 19,728 21,068 Income from
unconsolidated joint ventures 631 445
Net income 20,359 21,513 Income allocated to participating
securities (88 ) (97 ) Net income available to common
stockholders $ 20,271 $ 21,416
Earnings per
common share: Basic $ 0.51 $ 0.54 Diluted $ 0.51
$ 0.54
Weighted average shares used to
calculate earnings per common share:
Basic 39,451 39,366 Diluted
39,454 39,612 Dividends declared and
paid per common share $ 0.57 $ 0.57
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 March 31, 2018 2017
GAAP net income available to common stockholders $20,271 $21,416
Add: Depreciation and amortization 9,444 9,359 NAREIT
FFO attributable to common stockholders 29,715 30,775 Less:
Non-cash rental income (2,900 ) (2,340 ) Less: Effective interest
income from mortgage loans (1,404 ) (1,307 ) Less: Deferred income
from unconsolidated joint ventures (31 ) (47 ) Adjusted FFO (AFFO)
25,380 27,081 Add: Non-cash compensation charges 1,376 1,259
Add: Non-cash interest related to earn-out liabilities 126 226
Less: Capitalized interest (259 ) (170 ) Funds available for
distribution (FAD) $26,623 $28,396
NAREIT Basic FFO attributable to common stockholders per share
$0.75 $0.78 NAREIT Diluted FFO attributable to common
stockholders per share $0.75 $0.78 NAREIT
Diluted FFO attributable to common stockholders $29,803
$30,872
Weighted average shares used to calculate
NAREIT diluted FFO per share attributable to common
stockholders
39,603 39,612 Diluted AFFO $25,468
$27,178 Weighted average shares used to calculate
diluted AFFO per share 39,603 39,612
Diluted FAD $26,711 $28,493 Weighted average shares
used to calculate diluted FAD per share 39,603 39,612
LTC PROPERTIES, INC. CONSOLIDATED BALANCE
SHEETS
(amounts in thousands, except per
share)
March 31, 2018 December 31, 2017
ASSETS
(unaudited) (audited) Investments: Land $ 121,496 $ 124,041
Buildings and improvements 1,236,605 1,262,335 Accumulated
depreciation and amortization (292,222 ) (304,117 )
Operating real estate property, net 1,065,879 1,082,259 Properties
held-for-sale, net of accumulated depreciation: 2018—$23,223;
2017—$1,916 20,182 3,830 Real property
investments, net 1,086,061 1,086,089 Mortgage loans receivable, net
of loan loss reserve: 2018—$2,351; 2017—$2,255 233,383
223,907 Real estate investments, net 1,319,444
1,309,996 Notes receivable, net of loan loss reserve: 2018—$166;
2017—$166 16,402 16,402 Investments in unconsolidated joint
ventures 30,289 29,898 Investments, net
1,366,135 1,356,296 Other assets: Cash and cash equivalents
3,784 5,213 Debt issue costs related to bank borrowings 540 810
Interest receivable 16,456 15,050 Straight-line rent receivable,
net of allowance for doubtful accounts: 2018—$726; 2017—$814 68,017
64,490 Lease incentives 21,321 21,481 Prepaid expenses and other
assets 2,877 2,230 Total assets $
1,479,130 $ 1,465,570
LIABILITIES Bank
borrowings $ 120,500 $ 96,500 Senior unsecured notes, net of debt
issue costs: 2018—$1,079; 2017—$1,131 566,888 571,002 Accrued
interest 4,114 5,276 Accrued incentives and earn-outs 9,041 8,916
Accrued expenses and other liabilities 21,724
25,228 Total liabilities 722,267 706,922
EQUITY Stockholders’ equity: Common stock: $0.01 par value;
60,000 shares authorized; shares issued and outstanding:
2018—39,629; 2017—39,570 396 396 Capital in excess of par value
857,426 856,992 Cumulative net income 1,121,142 1,100,783
Cumulative distributions (1,225,589 ) (1,203,011 )
Total LTC Properties, Inc. stockholders’ equity 753,375 755,160
Non-controlling interests 3,488 3,488
Total equity 756,863 758,648 Total
liabilities and equity $ 1,479,130 $ 1,465,570
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version on businesswire.com: https://www.businesswire.com/news/home/20180509005325/en/
LTC Properties, Inc.Wendy L. SimpsonPam Kessler(805)
981-8655
LTC Properties (NYSE:LTC)
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