-- $74 Million of Investments and New
Development Commitments Signal Continued Diversification and Focus
on Growth --
LTC Properties, Inc. (NYSE: LTC) announced today operating
results for its fourth quarter ended December 31, 2014.
Funds from Operations (“FFO”) increased 14.3% to
$22.8 million for the fourth quarter of 2014, from
$20.0 million for the comparable 2013 period. FFO per diluted
common share was $0.64 and $0.57 for the quarters ended December
31, 2014 and 2013, respectively. The increase in FFO was primarily
due to higher revenues from mortgage loan originations,
acquisitions and completed development projects. Additionally, the
2013 period included a one-time non-cash provision for loan loss
reserve related to a mortgage loan origination and write-off of
straight-line rent, partially offset by higher interest expense
related to the sale of senior unsecured notes.
Normalized FFO increased by 4.0% to $22.8 million for the
fourth quarter of 2014, from $21.9 million for the fourth
quarter of 2013. Normalized FFO per diluted common share was $0.64
and $0.62 for the quarters ended December 31, 2014 and 2013,
respectively. The increase in normalized FFO was due to higher
revenues from mortgage loan originations, acquisitions and
completed development projects, partially offset by higher interest
expense related to the sale of senior unsecured notes.
Net income available to common stockholders increased to
$20.0 million, or $0.57 per diluted share, for the fourth
quarter of 2014, from $13.7 million, or $0.40 per diluted
share, for the same period in 2013. The increase in net income
available to common stockholders was primarily due to a gain on
sale of 16 assisted living properties, as previously announced, an
increase in revenues from mortgage loan originations, acquisitions
and completed development projects. Additionally, the 2013 period
included the one-time non-cash provision as detailed above.
“2014 reflected continued growth and excellent progress on a
number of fronts, and this progress continued into 2015,” said
Wendy Simpson, LTC’s Chairman and Chief Executive Officer.
“Recently, we completed a number of transactions and further
expanded relationships with key partners. Our strategic development
objectives for 2015 and beyond call for attracting select new
operators and working closely with our existing partners, who are
familiar with our lease structure and appreciate our eagerness to
help them grow, while continuing to diversify our portfolio. LTC
has a long history of making accretive investments, and we expect
to use our considerable financial flexibility to support our
ongoing growth objectives.”
Subsequent to December 31, 2014, the Company completed the
following transactions:
- Committed $12.2 million to purchase and
complete the development of a 56-unit memory care property
currently under construction in Texas. In conjunction with this
commitment, LTC purchased the land and existing improvements for
$7.2 million, and entered into a master lease for an initial term
of 15 years with an affiliate of Thrive Senior Living (“Thrive”)
which includes an 8.75% initial cash yield escalating at
approximately 2.25% annually thereafter. The master lease provides
for the payment of a lease inducement fee of up to $1.6 million to
be amortized as a yield adjustment over the lease term. The master
lease also provides LTC a right to provide similar financing for
certain future development opportunities, the right of which the
Company has already exercised, adding to the master lease a parcel
of land purchased in South Carolina for $2.5 million, coupled with
the Company’s commitment to provide Thrive with up to
$16.5 million, including the land purchase, for the
development of an 89-unit combination assisted living and memory
care property. In conjunction with this new development, LTC
provided Thrive an additional lease inducement fee of up to $2.4
million to be amortized as a yield adjustment over the lease
term.
- Purchased and equipped a 106-bed
skilled nursing property in Wisconsin for a total of
$13.9 million by exercising its right under a $10.6 million
mortgage loan. The property was leased to an affiliate of
Fundamental as part of a master lease for an initial term of 10
years at a 10.3% initial cash yield escalating 2.5% annually
thereafter. Additionally, the Company provided a lease inducement
in the amount of $1.1 million, which will be amortized as a yield
adjustment over the lease term, to Fundamental.
- Amended a mortgage loan with an
affiliate of Prestige Healthcare securing 15 skilled nursing
properties located in Michigan to provide $20.0 million in loan
proceeds for the redevelopment of two of the properties securing
the loan, and agreed to convey to the borrower two parcels of land
held-for-use adjacent to these properties to facilitate the
projects. As consideration for the commitment and associated
conveyance, the borrower forfeited its option to prepay up to 50%
of the then outstanding loan balance. As a result of the forfeiture
of the prepayment option, the Company expects to record $1.3
million of effective interest income related to this loan during
2015.
- Originated an $11.0 million mortgage
loan with an affiliate of Prestige Healthcare, initially funding
$9.5 million with a commitment to fund the balance for approved
capital improvement projects. The loan which embodies many elements
of a triple-net lease is secured by a 157-bed skilled nursing
property in Michigan and bears interest at 9.41% for five years,
escalating annually thereafter by 2.5%. The term is 30 years with
interest-only payments, and affords LTC the option to purchase the
property under certain circumstances, including a change in
regulatory environment.
Conference Call
Information
LTC will conduct a conference call on Friday, February 27, 2015,
at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time), to provide
commentary on the Company’s performance and operating results for
the quarter ended December 31, 2014. 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, log on to the
Company’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
February 27 through March 13, 2015 and may be accessed by dialing
877-344-7529 (domestically) or 412-317-0088 (internationally) and
entering conference number 10059704. Additionally, an audio archive
will be available on the Company’s website on the “Presentations”
page of the “Investor Information” section, which is under the
“Investors” tab. The Company’s earnings release and supplemental
information package for the current period will be available on the
Company’s website on the “Press Releases” and “Presentations”
pages, respectively, of the “Investor Information” section which is
under the “Investors” tab.
About LTC
The Company is a self-administered real estate investment trust
that primarily invests in senior housing and long-term care
facilities through facility lease transactions, mortgage loans and
other investments. At December 31, 2014, LTC had 205 investments
located in 29 states comprising 97 skilled nursing properties, 92
assisted living properties, eight range of care properties, one
school, two parcels of land under development and five parcels of
land held-for-use. Assisted living properties, independent living
properties, memory care properties and combinations thereof are
included in the assisted living property type. Range of care
properties 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 our most recent
Annual Report on Form 10-K, our subsequent Quarterly Reports on
Form 10-Q, and 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)
Three Months EndedDecember 31, Twelve Months EndedDecember
31, 2014 2013 2014 2013
(unaudited) (audited) Revenues: Rental income $ 26,474 $ 25,259 $
101,849 $ 98,166 Interest income from mortgage loans 4,108 3,103
16,553 6,298 Interest and other income 173 231
559 510 Total revenues
30,755 28,593 118,961
104,974 Expenses: Interest expense 3,683 2,852 13,128
11,364 Depreciation and amortization 6,594 6,237 25,529 24,389
(Recovery) provisions for doubtful accounts (46 ) 2,139 32 2,180
General and administrative expenses 3,343
2,715 11,832 11,636 Total
expenses 13,574 13,943 50,521
49,569 Operating income 17,181 14,650
68,440 55,405 Gain on sale of real estate, net 3,819
— 4,959 — Income from
continuing operations 21,000 14,650 73,399 55,405 Discontinued
operations: Income from discontinued operations — — — 805 Gain on
sale of real estate, net — — —
1,605 Net income from discontinued operations
— — — 2,410 Net income 21,000 14,650 73,399 57,815
Income allocated to participating securities (138 ) (99 ) (481 )
(383 ) Income allocated to preferred stockholders (819 )
(819 ) (3,273 ) (3,273 ) Net income available
to common stockholders $ 20,043 $ 13,732 $ 69,645
$ 54,159
Basic earnings per common
share: Continuing operations $ 0.58 $ 0.40 $ 2.01 $ 1.56
Discontinued operations $ 0.00 $ 0.00 $ 0.00 $
0.07 Net income available to common stockholders $ 0.58
$ 0.40 $ 2.01 $ 1.64
Diluted
earnings per common share: Continuing operations $ 0.57 $ 0.40
$ 1.99 $ 1.56 Discontinued operations $ 0.00 $ 0.00 $
0.00 $ 0.07 Net income available to common
stockholders $ 0.57 $ 0.40 $ 1.99 $ 1.63
Weighted average shares used to calculate earnings
per common share: Basic 34,678 34,555
34,617
33,111 Diluted 36,698
34,582 36,640 33,142
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 available to common
stockholders.
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 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, 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 U.S. 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 and amortization of lease inducement. U.S. 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. By excluding the non-cash portion of straight-line rental
revenue and amortization of lease inducement, 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, normalized AFFO 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 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.
Reconciliation of FFO, Normalized FFO,
Normalized AFFO and Normalized FAD
The following table reconciles each of net income, FFO and
normalized FFO available to common stockholders, as well as
normalized AFFO and normalized FAD (unaudited, amounts in
thousands, except per share amounts):
Three Months
EndedDecember 31, Twelve Months EndedDecember 31, 2014
2013 2014 2013
Net income available to common
stockholders
$
20,043
$ 13,732 $ 69,645 $ 54,159 Add: Depreciation and amortization
(continuing and discontinued operations) 6,594 6,237 25,529 24,706
Less: Gain on sale of real estate, net (3,819 ) —
(4,959 ) (1,605 ) FFO available to common
stockholders 22,818 19,969 90,215 77,260 Add: Non-recurring
one-time items — 1,980
(1)
— 2,687
(2)
Normalized FFO available to common stockholders 22,818 21,949
90,215 79,947 Less: Non-cash rental income (792 )
(790 ) (2,161 ) (3,295 ) Normalized adjusted
FFO (AFFO) 22,026 21,159 88,054 76,652 Add: Non-cash
compensation charges 927 541 3,253 2,134 Add: Non-cash interest
related to earn-out liabilities 18 — 18 256 Less: Capitalized
interest (290 ) (214 ) (1,506 ) (932 )
Normalized funds available for distribution (FAD) $ 22,681 $
21,486 $ 89,819 $ 78,110
(1) Comprised of a $1,244 provision for
loan loss reserve on a $124,387 mortgage loan origination and an
$869 non-cash write-off of straight-line rent offset by revenue
from the Sunwest bankruptcy settlement distribution of $133.
(2) Represents a one-time severance and
accelerated restricted stock vesting charge of $707 related to the
retirement of the Company’s former Senior Vice President, Marketing
and Strategic Planning and (1) above.
Basic FFO available to common stockholders per share $ 0.66
$ 0.58 $ 2.61 $ 2.33 Diluted FFO
available to common stockholders per share $ 0.64 $ 0.57
$ 2.55 $ 2.29 Diluted FFO available to
common stockholders $ 23,775 $ 20,887 $ 93,969
$ 80,916 Weighted average shares used to calculate diluted
FFO per share available to common stockholders 36,940
36,778 36,866 35,342
Basic normalized FFO available to common stockholders per
share $ 0.66 $ 0.64 $ 2.61 $ 2.41
Diluted normalized FFO available to common stockholders per share $
0.64 $ 0.62 $ 2.55 $ 2.37
Diluted normalized FFO available to common stockholders $ 23,775
$ 22,867 $ 93,969 $ 83,603 Weighted
average shares used to calculate diluted normalized FFO per share
available to common stockholders 36,940 36,778
36,866 35,342 Basic
normalized AFFO per share $ 0.64 $ 0.61 $ 2.54
$ 2.32 Diluted normalized AFFO per share $ 0.62 $
0.60 $ 2.49 $ 2.27 Diluted normalized
AFFO $ 22,983 $ 22,077 $ 91,808 $ 80,308
Weighted average shares used to calculate diluted normalized
AFFO per share 36,940 36,778
36,866 35,342 Basic normalized FAD per
share $ 0.65 $ 0.62 $ 2.59 $ 2.36
Diluted normalized FAD per share $ 0.64 $ 0.61 $ 2.54
$ 2.31 Diluted normalized FAD $ 23,638
$ 22,404 $ 93,573 $ 81,766 Weighted average
shares used to calculate diluted normalized FAD per share
36,940 36,778 36,866
35,342
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(audited, amounts in thousands)
December 31, 2014 December 31, 2013
ASSETS Real
estate investments: Land $ 80,024 $ 80,993 Buildings and
improvements 869,814 856,624 Accumulated depreciation and
amortization (223,315 ) (218,700 ) Net real estate
properties 726,523 718,917
Mortgage loans receivable, net of loan
loss reserves: 2014 — $1,673; 2013 — $1,671
165,656 165,444 Real estate
investments, net 892,179 884,361 Other assets: Cash and cash
equivalents 25,237 6,778 Debt issue costs, net 3,782 2,458 Interest
receivable 597 702
Straight-line rent receivable, net of
allowance for doubtful accounts: 2014 — $731; 2013 — $1,541
32,651 29,760 Prepaid expenses and other assets 9,931 6,756 Notes
receivable 1,442 595 Total assets $
965,819 $ 931,410
LIABILITIES Bank
borrowings $ — $ 21,000 Senior unsecured notes 281,633 255,800
Bonds payable — 2,035 Accrued interest 3,556 3,424 Earn-out
liabilities 3,258 — Accrued expenses and other liabilities
17,251 16,713 Total liabilities 305,698
298,972
EQUITY Stockholders' equity:
Preferred stock $0.01 par value; 15,000
shares authorized; shares issued and outstanding: 2014 — 2,000;
2013 — 2,000
38,500 38,500
Common stock: $0.01 par value; 60,000
shares authorized; shares issued and outstanding: 2014 — 35,480;
2013 — 34,746
355 347 Capital in excess of par value 717,396 688,654 Cumulative
net income 855,247 781,848 Accumulated other comprehensive income
82 117 Cumulative distributions (951,459 ) (877,028 )
Total equity 660,121 632,438 Total liabilities and
equity $ 965,819 $ 931,410
LTC Properties, Inc.Wendy L. SimpsonPam Kessler805-981-8655
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