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, 2015.
Funds from Operations (“FFO”) increased 4.5% to
$23.4 million for the 2015 first quarter, up from
$22.4 million for the comparable 2014 period. FFO per diluted
common share was $0.65 and $0.63, respectively, for the quarters
ended March 31, 2015 and 2014. Net income available to common
stockholders increased to $16.6 million, or $0.47 per diluted
share, for the 2015 first quarter, up from $16.1 million, or
$0.46 per diluted share, for the same period in 2014. The increase
in FFO and net income available to common stockholders was
primarily due to higher revenues from mortgage loan originations
and completed development projects, partially offset by higher
interest expense resulting from the sale of senior unsecured notes
and utilization of our line of credit as well as additional general
and administrative expenditures related to investment activity and
vesting of restricted stock.
During the 2015 first quarter, LTC made a preferred equity
investment in an unconsolidated joint venture that owns a 29-acre,
436-unit, three-building campus in Peoria, Arizona providing
independent, assisted living and memory care services, and a
149-unit property in Yuma, Arizona providing assisted living and
memory care services. At closing, the Company funded an initial
capital contribution of $20.1 million, and has committed to
contributing an additional $5.5 million, for a total potential
preferred equity investment of $25.6 million. LTC is entitled to
receive a 15% preferred return, a portion of which is required to
be paid in cash as a preferred, priority distribution with the
balance being deferred if the cash flow of the joint venture is
insufficient to pay the accrued preferred return in its entirety.
In addition, LTC has been granted a fair-market value purchase
option to acquire the properties owned by the joint venture
beginning in 2018.
Subsequent to the end of the quarter, LTC reached an agreement
with Prudential to amend and increase its existing private shelf
facility to $200.0 million, affording immediate access up to $102.0
million. The senior unsecured notes issued under the facility will
bear fixed interest at a spread over applicable U.S. Treasury rates
with maturities of up to 15 years from the date of issuance.
“The first quarter reflected continued progress as we executed
on our strategic initiatives,” said Wendy Simpson, LTC’s Chairman
and Chief Executive Officer. “We are successfully developing new
communities, expanding relationships with existing partners and
diversifying our asset base by property type and geography. Our new
shelf agreement will provide LTC with even greater financial
flexibility to achieve our long-term goals.”
Conference Call
Information
LTC will conduct a conference call on Friday, May 1, 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 March 31, 2015. 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 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 1 through May 16, 2015 and may be accessed by dialing
877-344-7529 (domestically) or 412-317-0088 (internationally) and
entering conference number 10064303. 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 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
through lease transactions, mortgage loans and other investments.
At March 31, 2015, LTC had 199 investments located in 29 states
comprising 98 skilled nursing properties, 93 assisted living
properties, 7 range of care properties, 1 school, 3 parcels of land
under development and 5 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 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 EndedMarch 31,
2015 2014 (unaudited) Revenues: Rental income
$ 26,678 $ 25,252 Interest income from mortgage loans 4,607 4,093
Interest and other income 195 93 Total
revenues 31,480 29,438 Expenses:
Interest expense 3,766 3,187 Depreciation and amortization 6,779
6,298 General and administrative expenses 3,499
2,949 Total expenses 14,044
12,434 Operating income 17,436 17,004 Income
from unconsolidated joint ventures 116 —
Net income 17,552 17,004 Income allocated to
participating securities (123 ) (103 ) Income allocated to
preferred stockholders (818 ) (818 ) Net income
available to common stockholders $ 16,611 $ 16,083
Earnings per common share:
Basic $ 0.47 $ 0.47 Diluted $ 0.47 $ 0.46
Weighted average shares used to
calculate earnings per common share:
Basic 35,277 34,586 Diluted
37,292 36,611 Dividends declared and
paid per common share $ 0.51 $ 0.51
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.
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. 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 and effects of effective
interest income. 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. Effective interest
method, as required by U.S. 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
straight-line rental revenue, amortization of lease inducement and
non-cash portion of effective interest income, investors, analysts
and our management can compare AFFO between periods.
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.
While the Company uses FFO, AFFO and 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, AFFO and
FAD
The following table reconciles each of net income, FFO available
to common stockholders, as well as AFFO and FAD (unaudited, amounts
in thousands, except per share amounts):
Three Months EndedMarch 31,
2015 2014 Net income available to common
stockholders $ 16,611 $ 16,083 Add: Depreciation and amortization
6,779 6,298 FFO available to common
stockholders 23,390 22,381 Less: Non-cash rental income, net
(1,923 ) (474 ) (Less) add: Non-cash effective interest income (551
) 20 Less: Non-cash deferred investment from unconsolidated joint
venture (77 ) — Adjusted FFO (AFFO) 20,839
21,927 Add: Non-cash compensation charges 982 666 Add:
Non-cash interest related to earn-out liabilities 54 — Less:
Capitalized interest (147 ) (307 ) Funds available
for distribution (FAD) $ 21,728 $ 22,286
Basic FFO
available to common stockholders per share $ 0.66 $ 0.65
Diluted FFO available to common stockholders per share $
0.65 $ 0.63 Diluted FFO available to common
stockholders $ 24,331 $ 23,302 Weighted average
shares used to calculate diluted FFO per share available to common
stockholders 37,529 36,806
Basic AFFO per share $
0.59 $ 0.63 Diluted AFFO per share $ 0.58 $
0.62 Diluted AFFO $ 21,780 $ 22,848
Weighted average shares used to calculate diluted AFFO per share
37,529 36,806
Basic FAD per share $ 0.62 $
0.64 Diluted FAD per share $ 0.60 $ 0.63
Diluted FAD $ 22,669 $ 23,207 Weighted average
shares used to calculate diluted FAD per share 37,529
36,806
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except per
share)
March 31, 2015
December 31, 2014
ASSETS (unaudited) (audited)
Investments: Land $ 83,858 $ 80,024 Buildings and improvements
899,727 869,814 Accumulated depreciation and amortization
(230,071 ) (223,315 ) Real estate properties, net 753,514
726,523
Mortgage loans receivable, net of loan
loss reserves:2015 — $1,653; 2014 — $1,673
163,647 165,656 Real estate
investments, net 917,161 892,179 Investment in unconsolidated joint
ventures 20,220 — Investments, net
937,381 892,179 Other assets: Cash and cash equivalents
3,417 25,237 Debt issue costs, net 3,561 3,782 Interest receivable
1,167 597 Straight-line rent receivable, net of allowance for
doubtfulaccounts: 2015 — $754; 2014 — $731 34,903 32,651 Prepaid
expenses and other assets 12,657 9,931 Notes receivable
2,334 1,442 Total assets $ 995,420 $
965,819
LIABILITIES Bank borrowings $ 36,500 $
— Senior unsecured notes 277,467 281,633 Accrued interest 2,472
3,556 Earn-out liabilities 3,313 3,258 Accrued expenses and other
liabilities 16,284 17,251 Total
liabilities 336,036 305,698
EQUITY Stockholders'
equity:
Preferred stock $0.01 par value; 15,000
shares authorized; shares issued andoutstanding: 2015 — 2,000; 2014
— 2,000
38,500 38,500
Common stock: $0.01 par value; 60,000
shares authorized;shares issued and outstanding: 2015 — 35,541;
2014 — 35,480
355 355 Capital in excess of par value 718,050 717,396 Cumulative
net income 872,799 855,247 Accumulated other comprehensive income
73 82 Cumulative distributions (970,393 ) (951,459 )
Total equity 659,384 660,121 Total liabilities and
equity $ 995,420 $ 965,819
LTC Properties, Inc.Wendy L. SimpsonPam Kessler805-981-8655
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