LTC LTC Properties Inc

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 fourth quarter ended December 31, 2018.

Net income available to common stockholders was $30.6 million, or $0.77 per diluted share, for the 2018 fourth quarter, compared with $19.8 million, or $0.50 per diluted share, for the same period in 2017. The improvement was primarily due to a net gain on sale of $8.0 million in 2018, compared with a net loss of $1.2 million in 2017, one-time non-recurring income of $3.1 million related to the write-off of a contingent lease incentive and related earn-out liability, higher rental and interest income resulting from acquisitions, mortgage loan originations, and higher income from unconsolidated joint ventures and mezzanine loans, partially offset by a reduction in rental income resulting from properties sold in 2018 and the non-payment of December rent by Senior Care Centers, LLC (“Senior Care”) as a result of their bankruptcy filing.

Funds from Operations (“FFO”) was $32.1 million for the 2018 fourth quarter, compared with $30.4 million for the comparable 2017 period. FFO per diluted common share was $0.81 and $0.77 for the quarters ended December 31, 2018 and 2017, respectively. Excluding the $3.1 million non-recurring income in the fourth quarter of 2018, FFO decreased $1.4 million compared with the fourth quarter of 2017 due to the non-payment of December rent by Senior Care.

During the fourth quarter of 2018, LTC sold two skilled nursing centers with a total of 169 beds in Florida and Georgia for an aggregate of $10.5 million.

Subsequent to December 31, 2018, and as announced in January, LTC entered into a real estate joint venture which acquired an operational 74-unit assisted living and memory care community for approximately $17.0 million. LTC’s economic interest in the real estate joint venture is approximately 95%. The initial cash lease rate is 7.4% with a 10-year lease term.

Conference Call Information

LTC will conduct a conference call on Friday, March 1, 2019, 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 December 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 March 1 through March 15, 2019 and may be accessed by dialing 877-344-7529 (domestically) or 412-317-0088 (internationally) and entering conference number 10128164. 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 real estate investment trust (REIT) investing in seniors housing and health care properties primarily through sale-leasebacks, mortgage financing, joint-ventures and structured finance solutions including preferred equity and mezzanine lending. LTC holds more than 200 investments in 28 states with 30 operating partners. The portfolio is comprised of approximately 50% seniors housing and 50% skilled nursing properties. Learn more 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   Twelve Months Ended December 31, December 31, 2018   2017 2018   2017 (unaudited) (audited) Revenues: Rental income $ 32,759 $ 34,124 $ 135,405 $ 137,657 Interest income from mortgage loans 7,290 6,719 28,200 26,769 Interest and other income   3,538     886     5,040     3,639   Total revenues   43,587     41,729     168,645     168,065     Expenses: Interest expense 7,215 7,683 30,196 29,949 Depreciation and amortization 9,396 9,424 37,555 37,610 Impairment charges — — — 1,880 Provision (recovery) for doubtful accounts 11 (67 ) 87 (206 ) Transaction costs 65 — 84 56 General and administrative expenses   4,801     4,243     19,193     17,513   Total expenses 21,488 21,283 87,115 86,802   Other operating income: Gain (loss) on sale of real estate, net   7,984     (1,240 )   70,682     3,814   Operating income 30,083 19,206 152,212 85,077 Income from unconsolidated joint ventures   761     628     2,864     2,263   Net income 30,844 19,834 155,076 87,340 Income allocated to non-controlling interests   (78 )     —       (95 )     —   Net income attributable to LTC Properties, Inc. 30,766 19,834 154,981 87,340 Income allocated to participating securities   (121 )   (81 )   (625 )   (362 ) Net income available to common stockholders $ 30,645   $ 19,753   $ 154,356   $ 86,978     Earnings per common share: Basic $ 0.78   $ 0.50   $ 3.91   $ 2.21   Diluted $ 0.77   $ 0.50   $ 3.89   $ 2.20    

Weighted average shares used to calculate earnings per common share:

Basic   39,501     39,429     39,477     39,409   Diluted   39,864     39,645     39,839     39,637     Dividends declared and paid per common share $ 0.57   $ 0.57   $ 2.28   $ 2.28    

Supplemental Reporting Measures

FFO 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 and FAD as supplemental measures of operating performance. The Company believes FFO 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 and FAD facilitate like comparisons of operating performance between periods. Occasionally, the Company may exclude non-recurring items from FFO and FAD in order to 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. 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 FAD as FFO excluding the effects of non-cash income, such as straight-line rent, amortization of lease inducement, effective interest income, and deferred income from unconsolidated joint ventures, and non-cash expense, such as 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 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 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 FAD (unaudited, amounts in thousands, except per share amounts):

    Three Months Ended Twelve Months Ended December 31, December 31,   2018     2017     2018     2017     GAAP net income available to common stockholders $ 30,645 $ 19,753 $ 154,356 $ 86,978 Add: Depreciation and amortization 9,396 9,424 37,555 37,610 Add: Impairment charges — — — 1,880 Less: (Gain) loss on sale of real estate, net   (7,984 )   1,240     (70,682 )   (3,814 ) NAREIT FFO attributable to common stockholders 32,057 30,417 121,229 122,654   Less: Non-recurring income   (3,074 )

(1)

  —     (3,074 )

(1)

  (842 )

(1)

FFO attributable to common stockholders excluding non-recurring income (1) 28,983 30,417 118,155 121,812   Less: Non-cash rental income (480 ) (2,804 ) (7,458 ) (8,485 ) Less: Effective interest income from mortgage loans (1,438 ) (1,398 ) (5,703 ) (5,500 ) Less: Deferred income from unconsolidated joint ventures (15 ) (36 ) (108 ) (177 ) Add: Non-cash compensation charges 1,486 1,282 5,870 5,249 Add: Non-cash interest related to earn-out liabilities — 126 377 602 Less: Capitalized interest   (398 )   (281 )   (1,248 )   (908 ) Funds available for distribution (FAD) $ 28,138   $ 27,306   $ 109,885   $ 112,593    

(1) Represents net write-off of a contingent lease incentive and related earn-out liability.

                    NAREIT Basic FFO attributable to common stockholders per share $ 0.81   $ 0.77   $ 3.07   $ 3.11   NAREIT Diluted FFO attributable to common stockholders per share $ 0.81   $ 0.77   $ 3.06   $ 3.10     NAREIT Diluted FFO attributable to common stockholders $ 32,178   $ 30,498   $ 121,854   $ 123,016   Weighted average shares used to calculate NAREIT diluted FFO per share attributable to common stockholders   39,864     39,645     39,839     39,637  

 

                  Diluted FFO attributable to common stockholders, excluding non-recurring income $ 29,104   $ 30,498   $ 118,780   $ 122,174   Weighted average shares used to calculate diluted FFO per share attributable to common stockholders, excluding non-recurring income   39,864     39,645     39,839     39,637                       Diluted FAD $ 28,259   $ 27,387   $ 110,510   $ 112,113   Weighted average shares used to calculate diluted FAD per share   39,864     39,645     39,839     39,637                                       LTC PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except per share)

    December 31, 2018 December 31, 2017 ASSETS (audited) (audited) Investments: Land $ 125,358 $ 124,041 Buildings and improvements 1,290,352 1,262,335 Accumulated depreciation and amortization   (312,959 )   (304,117 ) Operating real estate property, net 1,102,751 1,082,259 Properties held-for-sale, net of accumulated depreciation: 2018—$1,916; 2017—$1,916   3,830     3,830   Real property investments, net 1,106,581 1,086,089 Mortgage loans receivable, net of loan loss reserve: 2018—$2,447; 2017—$2,255   242,939     223,907   Real estate investments, net 1,349,520 1,309,996 Notes receivable, net of loan loss reserve: 2018—$128; 2017—$166 12,715 16,402 Investments in unconsolidated joint ventures   30,615     29,898   Investments, net 1,392,850 1,356,296   Other assets: Cash and cash equivalents 2,656 5,213 Restricted cash 2,108 — Debt issue costs related to bank borrowings 2,989 810 Interest receivable 20,732 15,050 Straight-line rent receivable, net of allowance for doubtful accounts: 2018—$746; 2017—$814 73,857 64,490 Lease incentives 14,443 21,481 Prepaid expenses and other assets   3,985     2,230   Total assets $ 1,513,620   $ 1,465,570     LIABILITIES Bank borrowings $ 112,000 $ 96,500 Senior unsecured notes, net of debt issue costs: 2018—$938; 2017—$1,131 533,029 571,002 Accrued interest 4,180 5,276 Accrued incentives and earn-outs — 8,916 Accrued expenses and other liabilities   31,440     25,228   Total liabilities 680,649 706,922   EQUITY Stockholders’ equity: Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2018—39,657; 2017—39,570 397 396 Capital in excess of par value 862,712 856,992 Cumulative net income 1,255,764 1,100,783 Cumulative distributions   (1,293,383 )   (1,203,011 ) Total LTC Properties, Inc. stockholders’ equity 825,490 755,160 Non-controlling interests   7,481     3,488   Total equity   832,971     758,648   Total liabilities and equity $ 1,513,620   $ 1,465,570    

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Wendy L. SimpsonPam Kessler(805) 981-8655