LTC LTC Properties Inc

LTC Properties, Inc. (NYSE: LTC) released results of operations for the three and nine months ended September 30, 2011 and announced that net income available to common stockholders for the third quarter was $11.5 million or $0.38 per diluted share. For the same period in 2010, net income available to common stockholders was $5.6 million or $0.22 per diluted share. The Company reported total revenues for the three months ended September 30, 2011, were $21.4 million versus $18.4 million for the same period last year.

For the nine months ended September 30, 2011, net income available to common stockholders was $28.2 million or $0.97 per diluted share which included a $3.6 million charge related to the Company’s redemption of all remaining shares of its 8.0% Series F Cumulative Preferred Stock (“Series F preferred stock”). For the same period in 2010, net income available to common stockholders was $20.0 million or $0.83 per diluted share which included a $2.4 million charge related to the Company’s redemption of all of its Series E Preferred Stock and 40% of its Series F Preferred Stock and $0.9 million provision for doubtful accounts related to a mortgage loan secured by a school property. Revenues for the nine months ended September 30, 2011, were $62.9 million versus $53.9 million for the same period last year.

The Company will conduct a conference call on Thursday, November 3, 2011, at 10:00 a.m. Pacific Time, in order to comment on the Company’s performance and operating results for the quarter ended September 30, 2011. The conference call is accessible by dialing 877-317-6789. The international number is 412-317-6789. An audio replay of the conference call will be available from November 3, 2011 through November 25, 2011. Callers can access the replay by dialing 877-344-7529 or 412-317-0088 and entering conference number 10005732. The earnings release will be available on our website. The Company’s supplemental information package for the current period will also be available on the Company’s website at www.LTCProperties.com in the “Presentations” section of the “Investor Information” tab.

At September 30, 2011, LTC had investments in 89 skilled nursing properties, 102 assisted living properties, 14 other senior housing properties and two schools. These properties are located in 30 states. Other senior housing properties consist of independent living properties and properties providing any combination of skilled nursing, assisted living and/or independent living services. The Company is a self-administered real estate investment trust that primarily invests in senior housing and long-term care facilities through mortgage loans, facility lease transactions and other investments. For more information on LTC Properties, Inc., visit the Company’s website at www.LTCProperties.com.

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 our most recent Annual Report on Form 10-K, our subsequent Quarterly Reports on Form 10-Q, and in our 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 the Company 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 EndedSeptember 30, Nine Months EndedSeptember 30, 2011     2010   2011     2010   Revenues: Rental income $19,620 $16,227 $57,139 $47,355 Interest income from mortgage loans 1,582 1,868 4,851 5,683 Interest and other income 227   264   872   838   Total revenues 21,429   18,359   62,862   53,876     Expenses: Interest expense 1,794 852 4,441 1,672 Depreciation and amortization 4,974 4,010 14,374 11,618 (Recovery) provisions for doubtful accounts (1 ) 60 (15 ) 1,029 Acquisition costs 60 4 225 117 Operating and other expenses 2,149   1,896   6,800   5,615   Total expenses 8,976   6,822   25,825   20,051     Income from continuing operations 12,453 11,537 37,037 33,825   Discontinued operations: (Loss) income from discontinued operations (30 ) 25   (198 ) (63 ) Net (loss) income from discontinued operations (30 ) 25   (198 ) (63 ) Net income 12,423 11,562 36,839 33,762 Income allocated to non-controlling interests (48 ) (48 ) (144 ) (144 ) Net income attributable to LTC Properties, Inc. 12,375   11,514   36,695   33,618     Income allocated to participating securities (85 ) (54 ) (259 ) (155 ) Income allocated to preferred stockholders (818 ) (5,889 ) (8,260 ) (13,459 ) Net income available to common stockholders $11,472   $ 5,571   $28,176   $20,004     Basic earnings per common share: Continuing operations $0.38 $0.22 $0.98 $0.84 Discontinued operations ($0.00 ) $0.00   ($0.01 ) ($0.00 ) Net income available to common stockholders $0.38   $0.22   $0.98   $0.83     Diluted earnings per common share: Continuing operations $0.38 $0.22 $0.98 $0.84 Discontinued operations ($0.00 ) $0.00   ($0.01 ) ($0.00 ) Net income available to common stockholders $0.38   $0.22   $0.97   $0.83     Weighted average shares used to calculate earnings per common share: Basic 30,137   24,930   28,874   23,959   Diluted 30,156   24,945   28,902   24,055  

NOTE: Computations of per share amounts from continuing operations, discontinued operations and net income are made independently. Therefore, the sum of per share amounts from continuing operations and discontinued operations may not agree with the per share amounts from net income allocable to common stockholders. Quarterly and year-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts for the quarters may not agree with the per share amounts for the year.

Reconciliation of Funds From Operations (“FFO”)

FFO is a supplemental measure of a real estate investment trust’s (“REIT”) financial performance that is not defined by U.S. generally accepted accounting principles (“GAAP”). The Company uses FFO as a supplemental measure of our operating performance and we believe FFO is 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 U.S. 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 and modified FFO facilitate comparisons of operating performance between periods.

FFO is defined as net income available to common stockholders (computed in accordance with U.S. GAAP) excluding gains or losses on the sale of assets plus real estate depreciation and amortization, with adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. Modified 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 National Association of Real Estate Investment Trusts’ (“NAREIT”) definition or that have a different interpretation of the current NAREIT definition from the Company; therefore, caution should be exercised when comparing our company’s FFO to that of other REITs.

The Company uses FFO, modified FFO, modified FFO excluding non-cash rental income and modified FFO excluding non-cash rental income and non-cash compensation charges as supplemental performance measures of our cash flow generated by operations and cash available for distribution to stockholders. FFO, modified FFO, modified FFO excluding non-cash rental income and modified FFO excluding non-cash rental income and non-cash compensation charges do not represent cash generated from operating activities in accordance with U.S. 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.

The following table reconciles net income available to common stockholders to FFO available to common stockholders, modified FFO available to common stockholders, modified FFO available to common stockholders excluding non-cash rental income and modified FFO available to common stockholders excluding non-cash rental income and non-cash compensation charges (unaudited, amounts in thousands, except per share amounts):

Three Months EndedSeptember 30,   Nine Months EndedSeptember 30, 2011     2010   2011   2010   Net income available to common stockholders $11,472 $ 5,571 $28,176 $20,004 Add: Depreciation and amortization (continuing and discontinued operations) 4,974   4,073   14,482   11,947   FFO available to common stockholders 16,446 9,644 42,658 31,951 Add: Preferred stock redemption charge — 2,383 3,566

(1)

2,383

(3)

Add: Preferred stock redemption dividend — — 472

(2)

— Add: Non-cash interest related to earn-out liabilities 177 — 354 — Add: Non-recurring one-time items —   —   —   852  

(4)

Modified FFO available to common stockholders 16,623 12,027 47,050 35,186 Less: Non-cash rental income (912 ) (788 ) (2,268 ) (2,315 ) Modified FFO excluding non-cash rental income 15,711 11,239 44,782 32,871 Add: Non-cash compensation charges 374   261   1,095   982   Modified FFO excluding non-cash rental income and non-cash compensation charges $16,085   $11,500   $45,877   $33,853  

(1) Represents the original issue costs related to the redemption of the remaining Series F preferred stock.

(2) Represents the dividends on the Series F preferred stock up to the redemption date.

(3) Represents the original issue costs related to the redemption of all of the Series E and 40% of the Series F preferred stock.

(4) Includes a $0.9 million provision for doubtful accounts charge related to a mortgage loan secured by a school property located in Minnesota.

                Basic FFO available to common stockholders per share $0.55   $0.39   $1.48   $1.33   Diluted FFO available to common stockholders per share $0.54   $0.39   $1.46   $1.32   Diluted FFO $17,397   $9,698   $45,515   $34,744   Weighted average shares used to calculate diluted FFO per share available to common stockholders 32,473   25,090   31,221   26,304                   Basic modified FFO available to common stockholders per share $0.55   $0.48   $1.63   $1.47   Diluted modified FFO available to common stockholders per share $0.54   $0.48   $1.60   $1.44   Diluted modified FFO $17,574   $12,947   $49,907   $37,979   Weighted average shares used to calculate diluted modified FFO per share available to common stockholders 32,473   27,203   31,221   26,304                   Basic modified FFO excluding non-cash rental income per share $0.52   $0.45   $1.55   $1.37   Diluted modified FFO excluding non-cash rental income per share $0.51   $0.45   $1.53   $1.36   Diluted modified FFO excluding non-cash rental income $16,662   $12,159   $47,639   $35,664   Weighted average shares used to calculate diluted modified FFO excluding non-cash rental income per share available to common stockholders 32,473   27,203   31,221   26,304                   Basic modified FFO excluding non-cash rental income and non-cash compensation charges per share $0.53   $0.46   $1.59   $1.41   Diluted modified FFO excluding non-cash rental income and non-cash compensation charges per share $0.52   $0.46   $1.56   $1.39   Diluted modified FFO excluding non-cash rental income and non-cash compensation charges $17,036   $12,420   $48,734   $36,646     Weighted average shares used to calculate diluted modified FFO excluding non-cash rental income and non-cash compensation charges per share available to common stockholders 32,473   27,204   31,221   26,304                   LTC PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (Amounts in thousands)   September 30, 2011 December 31, 2010 ASSETS (unaudited) (audited) Real estate investments: Land $ 50,409 $ 43,031 Buildings and improvements 634,418 567,017 Accumulated depreciation and amortization (172,480 ) (158,204 ) Net operating real estate property 512,347 451,844 Properties held-for-sale, net of accumulated depreciation and amortization: 2011 — $613; 2010 — $505 5,018   5,113   Net real estate property 517,365 456,957 Mortgage loans receivable, net of allowance for doubtfulaccounts: 2011 — $931; 2010 — $981 54,056   59,026   Real estate investments, net 571,421 515,983 Other assets: Cash and cash equivalents 5,214 6,903 Debt issue costs, net 2,377 743 Interest receivable 1,339 1,571 Straight-line rent receivable, net of allowance for doubtfulaccounts: 2011 — $668; 2010 — $634 22,822 20,090 Prepaid expenses and other assets 8,541 8,162 Other assets related to properties held-for-sale, net of allowance for doubtfulaccounts: 2011 — $839; 2010 — $839 51 51 Notes receivable 768 1,283 Marketable securities 6,483   6,478   Total assets $619,016   $561,264     LIABILITIES Bank borrowings $ 28,400 $ 37,700 Senior unsecured notes 100,000 50,000 Bonds payable 3,200 3,730 Accrued interest 1,014 675 Earn-out liabilities 6,195 — Accrued expenses and other liabilities 10,872 9,737 Accrued expenses and other liabilities related to properties held-for-sale 93 132 Distributions payable —   1,768   Total Liabilities 149,774 103,742   EQUITY Stockholders' equity: Preferred stock $0.01 par value; 15,000 shares authorized; shares issued and outstanding: 2011 — 2,000; 2010 — 5,536 38,500 126,913 Common stock: $0.01 par value; 45,000 shares authorized;shares issued and outstanding: 2011 — 30,341; 2010 — 26,345 303 263 Capital in excess of par value 506,851 398,599 Cumulative net income 660,186 623,491 Other 219 264 Cumulative distributions (738,779 ) (693,970 ) Total LTC Properties, Inc. stockholders' equity 467,280 455,560   Non-controlling interests 1,962   1,962   Total equity 469,242   457,522   Total liabilities and equity $619,016   $561,264