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
third quarter ended September 30, 2020.
Net income available to common stockholders was $12.1 million,
or $0.31 per diluted share, for the 2020 third quarter, compared
with $27.1 million, or $0.68 per diluted share, for the same period
in 2019. Funds from Operations (“FFO”) was $22.8 million, or $0.58
per diluted common share, for the 2020 third quarter, compared with
$30.8 million, or $0.77 per diluted common share, for the
comparable 2019 period. Excluding $5.1 million in non-recurring
items detailed below, offset by a gain from insurance proceeds
related to a previously sold property, FFO was $27.9 million and
$30.8 million for the quarters ended September 30, 2020 and 2019,
respectively. Funds available for distribution (“FAD”) was $28.2
million for the 2020 third quarter, compared with $29.8 million for
the 2019 third quarter.
Third quarter 2020 results were impacted by the following:
- A $5.5 million non-recurring, non-cash write-off of
straight-line rent receivable balances related to Genesis
Healthcare, Inc. (“Genesis”) and another operator as a result of
transitioning these leases to cash-basis accounting as of September
30, 2020. Genesis disclosed in its Quarterly Report on Form 10-Q
for the quarter ended June 30, 2020 that there was substantial
doubt about its ability to continue as a going concern. LTC
continues to collect all contractual rent due from Genesis. The
other operator did not pay its full contractual rent for the third
quarter of 2020 due to COVID-19. During the 2020 third quarter, LTC
provided the operator with rent support in the form of deferrals
and abatements totaling $756,000. The level of certainty regarding
collectability of future rent from Genesis and the other operator
through lease maturity does not meet the threshold required to
maintain either on an accrual-basis;
- Decreased rent from sold properties and from an affiliate of
Senior Lifestyle Corporation (“Senior Lifestyle”);
- Deferred rent for leases accounted for on a cash-basis;
- Lower income related to the repayment of a mezzanine loan
accounted for as a joint venture and the dissolution of our
preferred equity investment in a joint venture;
- An impairment loss on a closed assisted living community in
Florida;
- Higher rents from acquisitions, completed development projects
and lease escalations;
- Lower interest expense; and
- Gain from insurance proceeds.
“The world is reeling from the impacts of COVID-19, and LTC and
our operators are not immune,” said Wendy Simpson, LTC’s Chairman
and CEO. “Against this backdrop, LTC has maintained fairly
comparable FAD for the periods reported, with the decline partially
related to lower rents received from Senior Lifestyle. Despite
previously reported challenges related to our Senior Lifestyle
portfolio, we are pleased to see that they have been paying higher
rents in recent months compared with second quarter payments. We
are also pleased to see continued government support in recognition
of the significant contribution private-pay operators make in
caring for our nation’s most vulnerable population.”
“LTC is a conservatively levered REIT that maintains a
comfortable dividend payout, which is paid from cash flows and not
EPS,” Simpson continued. “As the pandemic plays out, LTC will
continue to support our operators, and strive to do so in a way
that will provide ongoing positive returns to our
shareholders.”
During the third quarter of 2020, LTC completed the
following:
- Invested $6.3 million of preferred equity in an entity that
will develop and own a 95-unit assisted living and memory care
community in Washington. LTC’s investment, which represents 15.5%
of the total estimated project cost, earns an initial cash rate of
7%, increasing to 9% in year four until the internal rate of return
(“IRR”) reaches 8%. After achieving an 8% IRR, the cash rate drops
to 8% with an IRR ranging between 12% and 14% depending on time of
redemption;
- Entered into a preferred equity agreement with an entity that
will develop and own a 267-unit independent and assisted living
community in Washington. Upon the satisfaction of certain
conditions which are projected to be met by December 1, LTC will
invest $13.0 million into the entity, representing 11.6% of the
total estimated project cost. The preferred equity investment will
earn an initial cash rate of 8% and a 12% IRR; and
- Completed the construction of a 90-bed skilled nursing center
in Missouri.
Conference Call
Information
LTC will conduct a conference call on Friday, October 30, 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 September 30, 2020. The call also will include special guest
Mark Parkinson, President and Chief Executive Officer of the
American Health Care Association. LTC's earnings release and
supplemental information package for the current period will be
available at: http://ir.ltcreit.com/Presentations.
The conference call is accessible by telephone and the internet.
Interested parties may access the live conference call via the
following:
Webcast
www.LTCreit.com
USA Toll-Free Number
1-877-510-2862
International Toll-Free
Number
1-412-902-4134
Canada Toll-Free Number
1-855-669-9657
Additionally, an audio replay of the call will be available one
hour after the live call and through November 13, 2020 via the
following:
USA Toll-Free Number
1-877-344-7529
International Toll-Free
Number
1-412-317-0088
Canada Toll-Free Number
1-855-669-9658
Conference Number
10147578
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 181 investments in 27 states with 29 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
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
(unaudited)
(unaudited)
Revenues:
Rental income
$
30,010
$
38,665
$
88,320
$
114,566
Interest income from mortgage loans
7,890
7,646
23,487
22,308
Interest and other income
273
808
1,257
1,967
Total revenues
38,173
47,119
113,064
138,841
Expenses:
Interest expense
7,361
7,827
22,617
23,004
Depreciation and amortization
9,766
9,932
29,232
29,399
Impairment charges
941
—
941
—
(Recovery) provision for doubtful
accounts
(2
)
(14
)
(1
)
153
Transaction costs
63
75
197
275
Property tax expense
3,351
4,270
11,685
12,566
General and administrative expenses
4,814
4,745
14,494
13,912
Total expenses
26,294
26,835
79,165
79,309
Other operating income:
Gain on sale of real estate, net
30
6,236
44,073
6,736
Operating income
11,909
26,520
77,972
66,268
Gain from property insurance proceeds
373
—
373
—
Loss on unconsolidated joint ventures
—
—
(620
)
—
Income from unconsolidated joint
ventures
56
760
287
1,973
Net income
12,338
27,280
78,012
68,241
Income allocated to non-controlling
interests
(121
)
(88
)
(292
)
(257
)
Net income attributable to LTC Properties,
Inc.
12,217
27,192
77,720
67,984
Income allocated to participating
securities
(103
)
(112
)
(339
)
(298
)
Net income available to common
stockholders
$
12,114
$
27,080
$
77,381
$
67,686
Earnings per common share:
Basic
$
0.31
$
0.68
$
1.97
$
1.71
Diluted
$
0.31
$
0.68
$
1.97
$
1.69
Weighted average shares used to
calculate earnings per
common share:
Basic
39,061
39,586
39,218
39,565
Diluted
39,112
39,965
39,269
39,944
Dividends declared and paid per common
share
$
0.57
$
0.57
$
1.71
$
1.71
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
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
GAAP net income available to common
stockholders
$
12,114
$
27,080
$
77,381
$
67,686
Add: Impairment charge
941
—
941
—
Add: Depreciation and amortization
9,766
9,932
29,232
29,399
Add: Loss on unconsolidated joint
ventures
—
—
620
—
Less: Gain on sale of real estate, net
(30
)
(6,236
)
(44,073
)
(6,736
)
NAREIT FFO attributable to common
stockholders
22,791
30,776
64,101
90,349
Add: Non-recurring items
5,099
(1)(2)
—
22,841
(2)(3)
576
(4)(5)
FFO attributable to common stockholders,
excluding non-recurring items
$
27,890
$
30,776
$
86,942
$
90,925
NAREIT FFO attributable to common
stockholders
$
22,791
$
30,776
$
64,101
$
90,349
Non-cash income:
Less: straight-line rental income
(228
)
(1,085
)
(1,701
)
(3,598
)
Add: amortization of lease costs
108
100
502
281
Add: Other non-cash expense
5,472
(1)
—
23,029
(3)
1,926
(4)
Less: Effective interest income from
mortgage loans
(1,570
)
(1,528
)
(4,648
)
(4,361
)
Less: Deferred income from unconsolidated
joint ventures
—
(5
)
—
(18
)
Net non-cash income
3,782
(2,518
)
17,182
(5,770
)
Non-cash expense:
Add: Non-cash compensation charges
1,692
1,626
5,231
4,938
Less: Capitalized interest
(77
)
(108
)
(354
)
(441
)
Net non-cash expense
1,615
1,518
4,877
4,497
Funds available for distribution (FAD)
28,188
29,776
$86,160
$89,076
Less: Non-recurring income
(373
)
(2)
—
(373
)
(2)
(1,350
)
(5)
Funds available for distribution (FAD),
excluding non-recurring items
$
27,815
$
29,776
$
85,787
$
87,726
(1) Represents the write-off of
straight-line rent receivable related to Genesis and another
operator.
(2) Represents the gain from insurance
proceeds related to a previously sold property.
(3) Represents the write-off of Senior
Lifestyle straight-line rent receivable and (1) above.
(4) Represents the write-off of
straight-line rent receivable due to a lease termination.
(5) Represents deferred rent repayment
from an operator.
NAREIT Basic FFO attributable to common
stockholders per share
$
0.58
$
0.78
$
1.63
$
2.28
NAREIT Diluted FFO attributable to common
stockholders per share
$
0.58
$
0.77
$
1.63
$
2.26
NAREIT Diluted FFO attributable to common
stockholders
$
22,894
$
30,888
$
64,101
$
90,647
Weighted average shares used to calculate
NAREIT diluted FFO per share
attributable to common stockholders
39,293
40,129
39,269
40,106
Diluted FFO attributable to common
stockholders, excluding non-recurring items
$
27,993
$
30,888
$
87,281
$
91,223
Weighted average shares used to calculate
diluted FFO, excluding
non-recurring items, per share
attributable to common stockholders
39,293
40,129
39,441
40,106
Diluted FAD, excluding non-recurring
items
$
27,918
$
29,888
$
86,126
$
88,024
Weighted average shares used to calculate
diluted FAD, excluding
non-recurring items, per share
39,293
40,129
39,441
40,106
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE
SHEETS
(amounts in thousands, except per
share)
September 30, 2020
December 31, 2019
ASSETS
(unaudited)
(audited)
Investments:
Land
$
127,774
$
126,703
Buildings and improvements
1,320,990
1,295,899
Accumulated depreciation and
amortization
(339,833
)
(312,642
)
Operating real estate property, net
1,108,931
1,109,960
Properties held-for-sale, net of
accumulated depreciation: 2020—$0; 2019—$35,113
—
26,856
Real property investments, net
1,108,931
1,136,816
Mortgage loans receivable, net of loan
loss reserve: 2020—$2,596; 2019—$2,560
257,671
254,099
Real estate investments, net
1,366,602
1,390,915
Notes receivable, net of loan loss
reserve: 2020—$144; 2019—$181
14,297
17,927
Investments in unconsolidated joint
ventures
7,069
19,003
Investments, net
1,387,968
1,427,845
Other assets:
Cash and cash equivalents
22,811
4,244
Debt issue costs related to bank
borrowings
1,546
2,164
Interest receivable
31,248
26,586
Straight-line rent receivable
24,374
45,703
Lease incentives
2,401
2,552
Prepaid expenses and other assets
6,896
5,115
Total assets
$
1,477,244
$
1,514,209
LIABILITIES
Bank borrowings
$
89,900
$
93,900
Senior unsecured notes, net of debt issue
costs: 2020—$696; 2019—$812
574,444
599,488
Accrued interest
3,300
4,983
Accrued expenses and other liabilities
30,779
30,412
Total liabilities
698,423
728,783
EQUITY
Stockholders’ equity:
Common stock: $0.01 par value; 60,000
shares authorized; shares issued and outstanding: 2020—39,242;
2019—39,752
392
398
Capital in excess of par value
851,000
867,346
Cumulative net income
1,371,202
1,293,482
Cumulative distributions
(1,452,177
)
(1,384,283
)
Total LTC Properties, Inc. stockholders’
equity
770,417
776,943
Non-controlling interests
8,404
8,483
Total equity
778,821
785,426
Total liabilities and equity
$
1,477,244
$
1,514,209
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201029006079/en/
For more information contact: Wendy L. Simpson Pam Kessler (805)
981-8655
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