Item 7.01. Regulation
FD Disclosure.
LTC Properties, Inc. (the “Company”
or “LTC”) is providing an update on two of its operators and also providing information on cash rent deferrals and abatements
for the 2021 first and second quarters to date.
On April 16, 2021, Abri Health Services, LLC (“Abri”)
and Senior Care Centers, LLC (“Senior Care”) (collectively, the “Lessee”) filed for Chapter 11 bankruptcy.
Senior Care and certain of its affiliates and
subsidiaries (collectively, “Senior Care Debtors”), previously filed for Chapter 11 bankruptcy protection in December 2018.
During 2019, while in bankruptcy, Senior Care Debtors assumed LTC’s master lease. In March 2020, Senior Care Debtors emerged from
bankruptcy. Concurrently with their emergence from bankruptcy, in accordance with the order confirming Senior Care Debtors’ plan
of reorganization, Abri was formed as the parent company of reorganized Senior Care Debtors and became co-tenant and co-obligor with reorganized
Senior Care under LTC’s master lease.
As of April 16, 2021, the Lessee leases and subleases
to affiliates 11 skilled nursing centers in Texas, including approximately 1,400 beds, under a master lease with LTC. Annualized rental
revenue from the Lessee is approximately $15.0 million, representing 9.2% and 9.6% of LTC’s annualized GAAP and cash revenue, respectively,
as of December 31, 2020. LTC has not received rent from the Lessee since February 2021.
As previously disclosed, LTC sent a notice of
default to the Lessee for non-payment of March 2021 rent and additional charges owed under the master lease, followed by a notice of termination
of master lease to be effective April 17, 2021. The current minimum monthly rent owed to LTC by the Lessee is $1.2 million. At the time
of the April 16, 2021 bankruptcy filings by the Lessee, LTC was in the process of transitioning the portfolio to Texas-based HMG Healthcare,
LLC (“HMG”) pursuant to a master lease, subject to various conditions precedent, including Lessee’s (and its sublessee
affiliates’) compliance with the transition obligations under LTC’s existing master lease, with a goal to complete the transition
by the end of the second quarter of 2021.
Additionally, LTC’s operator, Senior Lifestyle
Corporation (“Senior Lifestyle”), has not paid rent in 2021. As previously disclosed, LTC is in the process of transitioning
the portfolio. To date, 11 of the 23 properties already have been transitioned. Four additional properties are expected to be transferred
by the end of the second quarter of 2021. Of the remaining eight properties, three are expected to be sold by the end of the second quarter,
subject to timely completion of due diligence, one is expected to be transferred by the end of July, one has been closed and will be sold
for an alternative use, and options are currently being evaluated for the last three. The current minimum monthly rent due to LTC from
Senior Lifestyle less amounts received from the re-leased properties is $1.1 million.
2021 Rent deferrals, net of repayments, and abatements ($ in thousands):
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January/ February*
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March
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April
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Rent deferrals, net of repayments
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$
|
689
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$
|
433
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$
|
367
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Rent abatements
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360
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240
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240
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50% reduction of 2021 rent & interest escalations
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1,204
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0
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133
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*
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$
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2,253
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$
|
673
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$
|
740
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*As previously disclosed
We have agreed to provide rent deferrals and abatements up to $721,000
for each of May and June 2021.
Disclaimer
The information contained in this report is being
furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), or otherwise subject to the liabilities under Section 18 and shall not be deemed to be incorporated
by reference into the filings of the Registrant under the Securities Act of 1933, as amended, or the Exchange Act.
Forward Looking Statements
This report 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 impact of the Lessee bankruptcy,
future rent payments, and other statements regarding the Company’s expectations, beliefs, intentions or strategies regarding the
future. All statements other than historical facts contained in this report are forward looking statements. These forward looking statements
involve a number of risks and uncertainties. All forward looking statements included in this report are based on information available
to the Company on the date hereof, and the Company 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.