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 first quarter
ended March 31, 2021.
Net income available to common stockholders was $13.6 million,
or $0.35 per diluted share, for the 2021 first quarter, compared
with $63.4 million, or $1.60 per diluted share, for the same period
in 2020. Funds from Operations (“FFO”) was $24.3 million for the
2021 first quarter, compared with $29.2 million for the comparable
2020 period. FFO per diluted common share was $0.62 and $0.74 for
the quarters ended March 31, 2021 and 2020, respectively. Excluding
non-recurring items, FFO was $25.1 million and $29.2 million for
the quarters ended March 31, 2021 and 2020, respectively. Funds
available for distribution (“FAD”) was $24.6 million for the 2021
first quarter compared with $28.5 million for the 2020 first
quarter.
First quarter 2021 results were impacted by the following:
- Net loss on sale of $773,000 compared with a net gain on sale
of $43.9 million during the first quarter of 2020;
- A $758,000 non-recurring, non-cash write-off of straight-line
rent as a result of transitioning an operator’s lease to cash-basis
accounting;
- Decreased rental income as a result of Senior Lifestyle
Corporation’s (“Senior Lifestyle”) nonpayment of lease obligations
during the quarter, partially offset by the re-leasing of 11
properties in the portfolio;
- Decreased rental income from abated and deferred rent, net of
repayment, a one-time 50% reduction of 2021 rent and interest
escalations in recognition of operators’ increased costs due to
COVID-19, and lower property tax revenue associated with certain
operators’ non-payment of rent and escrows, partially offset by
higher rental income from acquisitions, completed developments and
Anthem Memory Care; and
During the first quarter of 2021, LTC completed the
following:
- Transitioned 11 assisted living communities previously leased
to Senior Lifestyle to two operators. These communities are located
in Wisconsin, Ohio and Illinois. Total cash rent expected under
these master lease agreements is $5.2 million for the first lease
year, $7.1 million for the second lease year, and $7.3 million for
the third lease year, escalating by 2% annually thereafter;
- Applied Senior Care Centers, LLC’s (“Senior Care”) and Abri
Health Services, LLC’s (collectively, the “Lessee”) security
deposits under the master lease to rent. Also, LTC sent a notice of
default to the Lessee followed by a notice of termination of the
master lease to be effective April 17, 2021. 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;
- Reduced 2021 rent and interest escalations by 50% to support
eligible operators during the continuing COVID-19 crisis. The rent
and interest escalation reduction were given in the form of a rent
and interest credit. During the first quarter of 2021, LTC
recognized a decrease of $292,000 in GAAP revenue and a $1.2
million decrease in funds available for distribution and expects
the escalation reductions to reduce GAAP revenue by approximately
$170,000, $34,000 and $32,000 during the second, third and fourth
quarters of 2021, respectively, and to reduce funds available for
distribution by approximately $133,000 in the second quarter of
2021;
- Through the end of the 2021 first quarter, rent deferrals were
$1.1 million, net of $21,000 of deferred rent repayments. Excluding
the rent credit related to the rent escalation reduction discussed
above, abated rent was $600,000;
- Sold a closed previously impaired assisted living community in
Florida and recognized a net loss on sale of $861,000;
- Funded $1.0 million in capital improvement projects at a
weighted average rate of 6.1%;
- Funded its remaining preferred equity investment commitment of
$8.0 million to develop a 267‑unit independent and assisted living
community in Washington state, which was entered into during the
third quarter of 2020;
- Received $1.6 million related to the payoff of a mezzanine
loan;
- Received $936,000 related to the payoff of a note
receivable;
- Paid $7.0 million in regular scheduled principal payments under
its 4.5% senior unsecured notes; and
- Borrowed $17.0 million under its unsecured revolving line of
credit at 1.3%.
Subsequent to March 31, 2021, LTC completed the following:
- Provided $367,000 of deferred rent, net of repayment and
$319,000 of rent abatement in April 2021 and agreed to provide rent
deferrals and abatements up to $800,000 for each of May and June
2021;
- Paid down $5.0 million under its unsecured revolving line of
credit; and
- Transitioned a memory care community in Colorado previously
operated by Senior Lifestyle to an operator new to us. The new
master lease has a 5-year term with $150,000 of cash rent starting
in the second year and $300,000 in the third lease year and
escalating by 2% annually thereafter.
Conference Call
Information
LTC will conduct a conference call on Friday, April 30, 2021, 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 March 31, 2021. 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 May 14,
2021 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
10153311
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 180 investments in 27 states with 30 operating partners.
The portfolio is comprised of approximately 60% seniors housing and
40% 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.
(financial tables follow)
LTC PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(amounts in thousands, except per
share amounts)
Three Months Ended
March 31,
2021
2020
(unaudited)
Revenues:
Rental income
$
31,973
$
38,035
Interest income from mortgage loans
7,922
7,777
Interest and other income
385
598
Total revenues
40,280
46,410
Expenses:
Interest expense
6,972
7,710
Depreciation and amortization
9,877
9,669
(Recovery) provision for credit losses
(9
)
1
Transaction costs
92
70
Property tax expense
3,981
4,223
General and administrative expenses
5,033
5,100
Total expenses
25,946
26,773
Other operating income:
(Loss) gain on sale of real estate,
net
(773
)
43,854
Operating income
13,561
63,491
Income from unconsolidated joint
ventures
289
231
Net income
13,850
63,722
Income allocated to non-controlling
interests
(88
)
(89
)
Net income attributable to LTC Properties,
Inc.
13,762
63,633
Income allocated to participating
securities
(120
)
(263
)
Net income available to common
stockholders
$
13,642
$
63,370
Earnings per common share:
Basic
$
0.35
$
1.60
Diluted
$
0.35
$
1.60
Weighted average shares used to
calculate earnings per
common share:
Basic
39,100
39,539
Diluted
39,179
39,541
Dividends declared and paid per common
share
$
0.57
$
0.57
Supplemental Reporting
Measures
FFO and 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
March 31,
2021
2020
GAAP net income available to common
stockholders
$
13,642
$
63,370
Add: Depreciation and amortization
9,877
9,669
Add/(Less): Loss (gain) on sale of real
estate, net
773
(43,854
)
NAREIT FFO attributable to common
stockholders
24,292
29,185
Add: Non-recurring items
758
(1)
—
FFO attributable to common stockholders,
excluding non-recurring items
$
25,050
$
29,185
NAREIT FFO attributable to common
stockholders
$
24,292
$
29,185
Non-cash income:
Less: straight-line rental income
(682
)
(839
)
Add: amortization of lease costs
112
101
Add: Other non-cash contra revenue
758
(1)
—
Less: Effective interest income from
mortgage loans
(1,744
)
(1,523
)
Net non-cash income
(1,556
)
(2,261
)
Non-cash expense:
Add: Non-cash compensation charges
1,852
1,777
Less: Capitalized interest
—
(191
)
Net non-cash expense
1,852
1,586
Funds available for distribution (FAD)
$
24,588
$
28,510
(1) Represents a straight-line rent
receivable write-off.
NAREIT Basic FFO attributable to common
stockholders per share
$
0.62
$
0.74
NAREIT Diluted FFO attributable to common
stockholders per share
$
0.62
$
0.74
NAREIT Diluted FFO attributable to common
stockholders
$
24,412
$
29,185
Weighted average shares used to calculate
NAREIT diluted FFO per share
attributable to common stockholders
39,374
39,541
Diluted FFO attributable to common
stockholders, excluding non-recurring items
$
25,170
$
29,185
Weighted average shares used to calculate
diluted FFO, excluding
non-recurring items, per share
attributable to common stockholders
39,374
39,541
Diluted FAD
$
24,708
$
28,510
Weighted average shares used to calculate
diluted FAD per share
39,374
39,541
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE
SHEETS
(amounts in thousands, except per
share)
March 31, 2021
December 31, 2020
ASSETS
(unaudited)
(audited)
Investments:
Land
$
126,331
$
127,774
Buildings and improvements
1,314,707
1,324,227
Accumulated depreciation and
amortization
(354,623
)
(349,643
)
Operating real estate property, net
1,086,415
1,102,358
Properties held-for-sale, net of
accumulated depreciation: 2021—$3,512; 2020—$0
4,512
—
Real property investments, net
1,090,927
1,102,358
Mortgage loans receivable, net of loan
loss reserve: 2021—$2,592; 2020—$2,592
257,282
257,251
Real estate investments, net
1,348,209
1,359,609
Notes receivable, net of loan loss
reserve: 2021—$137; 2020—$146
13,577
14,465
Investments in unconsolidated joint
ventures
19,340
11,340
Investments, net
1,381,126
1,385,414
Other assets:
Cash and cash equivalents
8,201
7,772
Debt issue costs related to bank
borrowings
1,104
1,324
Interest receivable
34,491
32,746
Straight-line rent receivable
24,377
24,452
Lease incentives
2,349
2,462
Prepaid expenses and other assets
3,655
5,316
Total assets
$
1,455,303
$
1,459,486
LIABILITIES
Bank borrowings
$
106,900
$
89,900
Senior unsecured notes, net of debt issue
costs: 2021—$619; 2020—$658
552,521
559,482
Accrued interest
3,347
4,216
Accrued expenses and other liabilities
27,764
30,082
Total liabilities
690,532
683,680
EQUITY
Stockholders’ equity:
Common stock: $0.01 par value; 60,000
shares authorized; shares issued and outstanding: 2021—39,362;
2020—39,242
394
392
Capital in excess of par value
851,150
852,780
Cumulative net income
1,402,537
1,388,775
Cumulative distributions
(1,497,714
)
(1,474,545
)
Total LTC Properties, Inc. stockholders’
equity
756,367
767,402
Non-controlling interests
8,404
8,404
Total equity
764,771
775,806
Total liabilities and equity
$
1,455,303
$
1,459,486
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version on businesswire.com: https://www.businesswire.com/news/home/20210429005957/en/
Wendy L. Simpson Pam Kessler (805) 981-8655
LTC Properties (NYSE:LTC)
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