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, 2019.
Net income available to common stockholders was $12.4 million,
or $0.31 per diluted share, for the 2019 fourth quarter, compared
with $30.6 million, or $0.77 per diluted share, for the same period
in 2018. The decrease in net income available to common
stockholders was primarily due to a net loss on sale during the
2019 fourth quarter, compared with a net gain on sale during the
same period in 2018, an impairment loss from investment in
unconsolidated joint ventures during the 2019 fourth quarter, and
one-time non-recurring other income related to the write-off of a
contingent lease incentive and related earn-out liability in the
prior year, partially offset by higher rental income from
acquisitions and completed developments.
Funds from Operations (“FFO”) was $32.4 million for the 2019
fourth quarter, compared with $32.1 million for the comparable 2018
period. FFO per diluted common share was $0.81 for the quarters
ended December 31, 2019 and 2018. Excluding non-recurring items,
FFO per diluted common share was $0.76 and $0.73 for the quarters
ended December 31, 2019 and 2018, respectively. The improvement in
FFO per diluted common share excluding non-recurring items, was
primarily due to higher rental income during the 2019 fourth
quarter as discussed above.
LTC completed the following transactions during the fourth
quarter of 2019:
- Acquired a 76-unit assisted living/memory care community in
Auburn Hills, Michigan and an 80-unit memory care community in
Sterling Heights, Michigan for an aggregate purchase price of $19.0
million, and entered into a 10-year master lease with an operator
new to LTC’s portfolio at an initial cash yield of 7.4%, escalating
2% annually with four, five-year renewal options;
- Sold a hurricane damaged property in Texas and recognized a
$2.1 million net gain on property insurance proceeds. Additionally,
as a result of this transaction, LTC recognized a net loss on sale
of $0.8 million, resulting in a net gain of $1.3 million when
combined with insurance proceeds;
- Sold two non-revenue producing properties, a 160-bed skilled
nursing center in Arizona and a 140‑unit independent living
community in Texas, for an aggregate sales price of $7.3 million,
recognizing a cumulative loss of $3.8 million; and
- Issued senior unsecured notes in the aggregate amount of $100.0
million to affiliates and managed accounts of PGIM, Inc. The notes
bear interest at 3.85%, have scheduled principal payments and
mature on October 20, 2031.The proceeds were used to paydown the
Company’s unsecured line of credit.
Subsequent to December 31, 2019, LTC completed the
following:
- Acquired a 140-bed skilled nursing center in Texas for
approximately $13.5 million, and entered into a 10-year master
lease with an operator new to LTC’s portfolio with an initial cash
yield of 8.5%, escalating 2% annually with two, five-year renewal
options.
Conference Call
Information
LTC will conduct a conference call on Friday, February 21, 2020,
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, 2019. 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
any necessary software.
An audio replay of the conference call will be available from
February 21 through March 6, 2020, and may be accessed by dialing
877-344-7529 (domestically) or 412-317-0088 (internationally) and
entering conference number 10138686. 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,
2019
2018
2019
2018
(unaudited)
(audited)
Revenues:
Rental income
$
38,189
$
32,759
$
152,755
$
135,405
Interest income from mortgage loans
7,683
7,290
29,991
28,200
Interest and other income
591
3,538
2,558
5,040
Total revenues
46,463
43,587
185,304
168,645
Expenses:
Interest expense
7,578
7,215
30,582
30,196
Depreciation and amortization
9,817
9,396
39,216
37,555
Provision for doubtful accounts
13
11
166
87
Transaction costs
90
65
365
84
Property tax expense
4,189
(1)
—
16,755
—
General and administrative expenses
4,541
4,801
18,453
19,193
Total expenses
26,228
21,488
105,537
87,115
Other operating income:
(Loss) gain on sale of real estate,
net
(4,630)
7,984
2,106
70,682
Operating income
15,605
30,083
81,873
152,212
Gain from property insurance proceeds
2,111
(2)
—
2,111
(2)
—
Impairment loss from investments in
unconsolidated joint ventures
(5,500)
—
(5,500)
—
Income from unconsolidated joint
ventures
415
761
2,388
2,864
Net income
12,631
30,844
80,872
155,076
Income allocated to non-controlling
interests
(89)
(78)
(346)
(95)
Net income attributable to LTC Properties,
Inc.
12,542
30,766
80,526
154,981
Income allocated to participating
securities
(93)
(121)
(391)
(625)
Net income available to common
stockholders
$
12,449
$
30,645
$
80,135
$
154,356
Earnings per common share:
Basic
$
0.31
$
0.78
$
2.03
$
3.91
Diluted
$
0.31
$
0.77
$
2.02
$
3.89
Weighted average shares used to
calculate earnings per
common share:
Basic
39,588
39,501
39,571
39,477
Diluted
39,775
39,864
39,759
39,839
Dividends declared and paid per common
share
$
0.57
$
0.57
$
2.28
$
2.28
(1)
The new income statement line item
“property tax expense” is due to the impact of newly adopted
Accounting Standard Codification 842, Leases (“ASC 842”). See Item
8. FINANCIAL STATEMENTS—Note 2. Summary of Significant Accounting
Policies. in our Annual Report on Form 10-K for the year ended
December 31, 2019 for further discussion.
(2)
Represents a net gain from property
insurance proceeds related to a property that was sold during the
fourth quarter of 2019.
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 straight-line
rent, amortization of lease inducement, effective interest income,
deferred income from unconsolidated joint ventures, non-cash
compensation charges, capitalized interest and non-cash interest
charges. 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. 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 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,
2019
2018
2019
2018
GAAP net income available to common
stockholders
$
12,449
$
30,645
$
80,135
$
154,356
Add: Depreciation and amortization
9,817
9,396
39,216
37,555
Add: Impairment loss from investments in
unconsolidated joint ventures
5,500
—
5,500
—
Less: Gain on sale of real estate, net
4,630
(7,984)
(2,106)
(70,682)
NAREIT FFO attributable to common
stockholders
32,396
32,057
122,745
121,229
Add: Non-recurring items
(2,111)
(1)
(3,074)
(2)
(1,535)
(5)
(3,074)
FFO attributable to common stockholders,
excluding non-recurring items
$
30,285
$
28,983
$
121,210
$
118,155
NAREIT FFO attributable to common
stockholders
$
32,396
$
32,057
$
122,745
$
121,229
Non-cash income:
Less: straight-line rental income
(889)
(921)
(4,487)
(9,550)
Add: amortization of lease costs
104
441
385
2,092
(Less)/Add: Other non-cash
(income)/expense
—
(3,074)
(2)
1,926
(3)
(3,074)
(2)
Less: Effective interest income from
mortgage loans
(1,481)
(1,438)
(5,842)
(5,703)
Less: Deferred income from unconsolidated
joint ventures
—
(15)
(18)
(108)
Net non-cash income
(2,266)
(5,007)
(8,036)
(16,343)
Non-cash expense:
Add: Non-cash compensation charges
1,627
1,486
6,565
5,870
Add: Non-cash interest related to earn-out
liabilities
—
—
—
377
Less: Capitalized interest
(167)
(398)
(608)
(1,248)
Net non-cash expense
1,460
1,088
5,957
4,999
Funds available for distribution (FAD)
31,590
28,138
$120,666
$109,885
Less: Non-recurring income
(2,111)
(1)
—
(3,461)
(4)
—
Funds available for distribution (FAD),
excluding non-recurring items
$
29,479
$
28,138
$
117,205
$
109,885
(1) Represents a net gain from property
insurance proceeds related to a property that was sold during the
fourth quarter of 2019.
(2) Represents net write-off of a
contingent lease incentive and related earn-out liability.
(3) Represents the write-off of
straight-line rent due to a lease termination and transition of two
senior housing communities to a new operator.
(4) Represents deferred rent repayment
from an operator and (1) above.
(5) Represents (3) and (4) above.
NAREIT Basic FFO attributable to common
stockholders per share
$
0.82
$
0.81
$
3.10
$
3.07
NAREIT Diluted FFO attributable to common
stockholders per share
$
0.81
$
0.81
$
3.08
$
3.06
NAREIT Diluted FFO attributable to common
stockholders
$
32,489
$
32,178
$
123,136
$
121,854
Weighted average shares used to calculate
NAREIT diluted FFO per share
attributable to common stockholders
39,939
39,864
39,921
39,839
Diluted FFO attributable to common
stockholders, excluding non-recurring items
$
30,378
$
29,104
$
121,601
$
118,780
Weighted average shares used to calculate
diluted FFO, excluding non-recurring
items, per share attributable to common
stockholders
39,939
39,864
39,921
39,839
Diluted FAD, excluding non-recurring
items
$
29,572
$
28,259
$
117,596
$
110,510
Weighted average shares used to calculate
diluted FAD, excluding non-recurring
items, per share
39,939
39,864
39,921
39,839
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE
SHEETS
(amounts in thousands, except per
share)
December 31, 2019
December 31, 2018
ASSETS
(audited)
(audited)
Investments:
Land
$
126,703
$
125,358
Buildings and improvements
1,295,899
1,290,352
Accumulated depreciation and
amortization
(312,642)
(312,959)
Operating real estate property, net
1,109,960
1,102,751
Properties held-for-sale, net of
accumulated depreciation: 2019—$35,113;
2018—$1,916
26,856
3,830
Real property investments, net
1,136,816
1,106,581
Mortgage loans receivable, net of loan
loss reserve: 2019—$2,560; 2018—$2,447
254,099
242,939
Real estate investments, net
1,390,915
1,349,520
Notes receivable, net of loan loss
reserve: 2019—$181; 2018—$128
17,927
12,715
Investments in unconsolidated joint
ventures
19,003
30,615
Investments, net
1,427,845
1,392,850
Other assets:
Cash and cash equivalents
4,244
2,656
Restricted cash
—
2,108
Debt issue costs related to bank
borrowings
2,164
2,989
Interest receivable
26,586
20,732
Straight-line rent receivable, net of
allowance for doubtful accounts: 2019—$0; 2018—$746
45,703
(1)
73,857
Lease incentives
2,552
(1)
14,443
Prepaid expenses and other assets
5,115
(2)
3,985
Total assets
$
1,514,209
$
1,513,620
LIABILITIES
Bank borrowings
$
93,900
$
112,000
Senior unsecured notes, net of debt issue
costs: 2019—$812; 2018—$938
599,488
533,029
Accrued interest
4,983
4,180
Accrued expenses and other liabilities
30,412
(2)
31,440
Total liabilities
728,783
680,649
EQUITY
Stockholders’ equity:
Common stock: $0.01 par value; 60,000
shares authorized; shares issued and outstanding: 2019—39,752;
2018—39,657
398
397
Capital in excess of par value
867,346
862,712
Cumulative net income
1,293,482
1,255,764
Cumulative distributions
(1,384,283)
(1,293,383)
Total LTC Properties, Inc. stockholders’
equity
776,943
825,490
Non-controlling interests
8,483
7,481
Total equity
785,426
832,971
Total liabilities and equity
$
1,514,209
$
1,513,620
(1)
Decrease due to impact of newly adopted ASC 842. See Item 8.
FINANCIAL STATEMENTS—Note 2. Summary of Significant Accounting
Policies. in our Annual Report on Form 10-K for the year ended
December 31, 2019 for further discussion.
(2)
Includes $1,287 right of use asset/lease liability due to the
impact of newly adopted ASC 842. See Item 8. FINANCIAL
STATEMENTS—Note 2. Summary of Significant Accounting Policies. in
our Annual Report on Form 10-K for the year ended December 31, 2019
for further discussion.
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For more information contact: Wendy L. Simpson Pam Kessler (805)
981-8655
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