--Portfolio diversification via $142 million
investment in 10 Senior Living Communities--
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 second
quarter ended June 30, 2015 and recent investment activity.
Funds from Operations (“FFO”) increased 6.5% to
$24.0 million for the 2015 second quarter, up from
$22.5 million for the comparable 2014 period. FFO per diluted
common share was $0.66 and $0.64, respectively, for the quarters
ended June 30, 2015 and 2014. Normalized FFO increased 8.3%, from
$22.5 million for the 2014 second quarter, to $24.4 million for the
2015 second quarter, which excludes a $400,000 one-time, non-cash
loan loss reserve related to $40.0 million of additional loan
proceeds funded during the quarter as discussed below. Normalized
FFO per diluted common share was $0.67 and $0.64 for the quarters
ended June 30, 2015 and 2014, respectively. The increase in FFO and
normalized FFO was primarily due to higher revenues from mortgage
loan originations, completed development projects and income from
an unconsolidated joint venture, 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 and vesting of restricted stock.
Net income available to common stockholders was
$17.0 million, or $0.48 per diluted share, for the 2015 second
quarter, compared with $17.3 million, or $0.50 per diluted
share, for the same period in 2014. The decrease was primarily due
to a gain on sale recognized in the 2014 period.
During the three months ended June 30, 2015, LTC funded $40.0
million of additional loan proceeds at an initial cash yield of
9.4% under an existing mortgage loan secured by 15 skilled nursing
properties in Michigan.
Additionally, LTC entered into an agreement to purchase a
10-property portfolio providing independent, assisted living and
memory care services totaling 891 units for an aggregate purchase
price of $142.0 million. Nine of the properties to be acquired are
located in Wisconsin and one is located in Illinois. Simultaneously
upon closing, a triple-net master lease agreement entered into
between LTC and an affiliate of Senior Lifestyle Corporation will
become effective for a term of 15 years at an initial cash yield of
6.5%; escalating by 25 basis points upon each of the first and
second anniversaries and annually thereafter by 2.75%. While
execution on the transaction remains subject to certain contractual
conditions, LTC anticipates a closing to occur during the third
quarter of 2015 and expects to fund the acquisition utilizing its
revolving credit facility as well as proceeds derived from the
issuance of senior unsecured notes as described below.
Subsequent to June 30, 2015, LTC locked rate under its note
purchase and private shelf agreement with Prudential Investment
Management Inc. on $100.0 million senior unsecured notes with an
annual fixed rate of 4.5%. These notes have periodic scheduled
principal repayments with a 15-year final maturity. The anticipated
closing date for the transaction is on or around August 31, 2015.
Additionally, LTC entered into a $100.0 million note purchase and
private shelf agreement with another insurance company for a
three-year term. Interest rates on any issuance under the shelf
agreement will be set at a spread over applicable Treasury rates.
Maturities of each issuance are at LTC’s election for up to 15
years from the date of issuance with a maximum average life of 12
years from the date of original issuance.
“LTC’s recent investment activity demonstrates the strong
performance of our 2013 Michigan investment, further diversifies
our portfolio through the pending acquisition of highly desirable
private-pay senior housing communities and expands our relationship
with Senior Lifestyles, one of the country’s premier senior living
operators,” said Wendy Simpson, LTC’s Chairman and Chief Executive
Officer. “Additionally, our anticipated sale of 15-year senior
unsecured notes to Prudential at an attractive 4.5% fixed rate
together with our new shelf agreement, provide ample liquidity for
continued growth. Our significant financial flexibility will allow
us to continue making strategic investments that strengthen LTC’s
business for the long-term.”
Conference Call
Information
LTC will conduct a conference call on Thursday, August 6, 2015
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 June 30, 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, 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
August 6 through August 20, 2015 and may be accessed by dialing
877-344-7529 (domestically) or 412-317-0088 (internationally) and
entering conference number 10069844. Additionally, an audio archive
will be available 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
through lease transactions, mortgage loans and other investments.
At June 30, 2015, LTC had 208 investments located in 29 states
comprising 97 skilled nursing properties, 93 assisted living
properties, 7 range of care properties, 1 school, 5 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 Ended
Six Months Ended June 30, June 30, 2015 2014
2015 2014 Revenues: Rental income $ 27,116 $
25,025 $ 53,794 $ 50,277 Interest income from mortgage loans 5,053
4,139 9,660 8,232 Interest and other income 218
63 413 156 Total revenues
32,387 29,227 63,867
58,665 Expenses: Interest expense 3,854 3,088
7,620 6,275 Depreciation and amortization 6,977 6,302 13,756 12,600
Provisions for doubtful accounts and notes 429 11 432 38 General
and administrative expenses 3,952 2,693
7,448 5,615 Total expenses
15,212 12,094 29,256
24,528 Operating income 17,175 17,133 34,611 34,137
Income from unconsolidated joint ventures 753 — 869 — Gain
on sale of real estate assets, net — 1,140
— 1,140 Net income 17,928
18,273 35,480 35,277 Income allocated to participating securities
(126 ) (117 ) (249 ) (220 ) Income allocated to preferred
stockholders (818 ) (818 ) (1,636 )
(1,636 ) Net income available to common stockholders $ 16,984
$ 17,338 $ 33,595 $ 33,421
Earnings per common share: Basic $ 0.48 $ 0.50
$ 0.95 $ 0.97 Diluted $ 0.48 $ 0.50 $
0.94 $ 0.96
Weighted average shares
used to calculate earnings per common share: Basic
35,299 34,597 35,288
34,592 Diluted 37,311 36,621
37,302 36,617 Dividends
declared and paid per common share $ 0.51 $ 0.51 $
1.02 $ 1.02
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, effects of 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 available to common
stockholders 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 Ended
Six Months Ended June 30, June 30, 2015 2014 2015
2014
GAAP net income available to common
stockholders
$
16,984
$
17,338
$ 33,595 $ 33,421 Add: Depreciation and amortization 6,977 6,302
13,756 12,600 Less: Gain on sale of real estate, net —
(1,140 ) — (1,140 ) NAREIT FFO
available to common stockholders 23,961 22,500 47,351 44,881 Add:
Non-recurring one-time items 400
(1)
— 400
(1)
— Normalized FFO available to common stockholders
24,361 22,500 47,751 44,881 Less: Non-cash rental income (1,795 )
(443 ) (3,718 ) (917 ) (Less) add: Effective interest income from
mortgage loans (934 ) 20 (1,485 ) 40 Less: Deferred income from
unconsolidated joint ventures (502 ) —
(579 ) — Normalized adjusted FFO (AFFO) 21,130 22,077
41,969 44,004 Add: Non-cash compensation charges 1,099 783 2,081
1,449 Add: Non-cash interest related to earn-out liabilities 55 —
109 — Less: Capitalized interest (150 ) (435 )
(297 ) (742 ) Normalized funds available for distribution
(FAD) $ 22,134 $ 22,425 $ 43,862 $ 44,711
(1) Represents a $400 provision for loan
loss reserve related to additional loan proceeds funded under an
existing mortgage loan.
NAREIT Basic FFO
available to common stockholders per share $ 0.68 $ 0.65
$ 1.34 $ 1.30 NAREIT Diluted FFO available to
common stockholders per share $ 0.66 $ 0.64 $ 1.31
$ 1.27 NAREIT Diluted FFO available to common
stockholders $ 24,905 $ 23,435 $ 49,236 $
46,737 Weighted average shares used to calculate NAREIT
diluted FFO per share available to common stockholders
37,563 36,848 37,546
36,828
Basic
normalized FFO available to common stockholders per share $ 0.69
$ 0.65 $ 1.35 $ 1.30 Diluted normalized
FFO available to common stockholders per share $ 0.67 $ 0.64
$ 1.32 $ 1.27 Diluted normalized FFO
available to common stockholders $ 25,305 $ 23,435 $
49,636 $ 46,737 Weighted average shares used to
calculate diluted normalized FFO per share available to common
stockholders 37,563 36,848
37,546 36,828
Basic normalized AFFO per share $ 0.60 $ 0.64
$ 1.19 $ 1.27 Diluted normalized AFFO per
share $ 0.59 $ 0.62 $ 1.17 $ 1.25
Diluted normalized AFFO $ 22,074 $ 23,012 $
43,854 $ 45,860 Weighted average shares used to
calculate diluted normalized AFFO per share 37,563
36,848 37,546 36,828
Basic normalized FAD per
share $ 0.63 $ 0.65 $ 1.24 $ 1.29
Diluted normalized FAD per share $ 0.61 $ 0.63 $ 1.22
$ 1.26 Diluted normalized FAD $ 23,078
$ 23,360 $ 45,747 $ 46,567 Weighted average
shares used to calculate diluted normalized FAD per share
37,563 36,848 37,546
36,828
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except per
share)
June 30, 2015
December 31, 2014
ASSETS (unaudited) (audited) Investments:
Land $ 85,184 $ 80,024 Buildings and improvements 903,979 869,814
Accumulated depreciation and amortization (237,024 )
(223,315 ) Real estate properties, net 752,139 726,523
Mortgage loans receivable, net of loan
loss reserves: 2015 — $2,061; 2014 — $1,673
204,031 165,656 Real estate
investments, net 956,170 892,179 Investment in unconsolidated joint
ventures 20,722 — Investments, net
976,892 892,179 Other assets: Cash and cash equivalents
8,051 25,237 Debt issue costs, net 3,490 3,782 Interest receivable
2,129 597
Straight-line rent receivable, net of
allowance for doubtful accounts: 2015 — $775; 2014 — $731
37,060 32,651 Prepaid expenses and other assets 13,048 9,931 Notes
receivable 2,380 1,442 Total assets $
1,043,050 $ 965,819
LIABILITIES Bank
borrowings $ 80,500 $ — Senior unsecured notes 277,467 281,633
Accrued interest 3,574 3,556 Earn-out liabilities 3,367 3,258
Accrued expenses and other liabilities 18,620
17,251 Total liabilities 383,528 305,698
EQUITY Stockholders' equity: Preferred stock $0.01 par
value; 15,000 shares authorized; shares issued and outstanding:
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 — 35,570;
2014 — 35,480
356 355 Capital in excess of par value 719,216 717,396 Cumulative
net income 890,727 855,247 Accumulated other comprehensive income
65 82 Cumulative distributions (989,342 ) (951,459 )
Total equity 659,522 660,121 Total liabilities and
equity $ 1,043,050 $ 965,819
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LTC Properties, Inc.Wendy L. SimpsonPam Kessler805-981-8655
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