LTC Properties, Inc. (NYSE: LTC) (“LTC” or the
“Company”), a real estate investment trust that primarily invests
in seniors housing and health care properties, today announced
operating results for the third quarter ended September 30, 2021,
as follows:
Three Months Ended
September 30,
2021
2020
(unaudited)
Net income available to common
stockholders
$
10,909
$
12,114
Diluted earnings per common share
$
0.28
$
0.31
NAREIT funds from operations (“FFO”)
attributable to common stockholders
$
17,669
$
22,791
NAREIT diluted FFO per common share
$
0.45
$
0.58
FFO attributable to common stockholders,
excluding non-recurring items
$
21,564
$
27,890
Fund available for distribution
(“FAD”)
$
18,373
$
28,188
FAD, excluding non-recurring items
$
22,268
$
27,815
Third quarter 2021 results were impacted by:
- Lower rental income due to unpaid lease obligation from Senior
Care Centers, LLC (“Senior Care”) and Senior Care’s parent company,
Abri Health Services, LLC (“Abri Health”), Senior Lifestyle
Corporation’s (“Senior Lifestyle”) non-payment of rent, abated and
deferred rent, and the sale of a skilled nursing center in
Washington, as discussed below. The decrease was partially offset
by:
- Increased rental income due to a $5.5 million write-off of
straight-line rent receivable balances in the third quarter of
2020;
- Increased rental income as a result of re-leasing 18 properties
previously leased to Senior Lifestyle; and
- Increased rental income from completed developments projects,
an increase in property tax revenue, annual rent escalations,
capital improvement funding and higher rent from Anthem Memory
Care.
- Lower interest expense primarily due to scheduled principal
paydowns and lower interest rates;
- Higher transaction costs due to the previously announced Senior
Care and Abri Health settlement and related fees, as described
below;
- Net gain on sale of $2.7 million resulting from the sale of a
skilled nursing center in Washington and quarterly evaluation of
prior years’ sale holdbacks; and
- An impairment loss of $941,000 in the 2020 third quarter
related to a closed assisted living community in Florida which was
sold in the first quarter of 2021, and $373,000 in insurance
proceeds received for damage related to a property sold in the
first quarter of 2020.
As previously announced, during the third quarter of 2021, LTC
completed the following:
- Originated a $1.8 million mortgage loan secured by a parcel of
land for the future development of a post-acute skilled nursing
center in Missouri, to be operated by an affiliate of Ignite. The
mortgage loan term is one year;
- Originated a $4.4 million mezzanine loan for the refinance of
an independent living community in Oregon with a regional operator
new to LTC. The mezzanine loan term is three years, with two
12-month extension options;
- Transitioned six assisted living communities previously
operated by Senior Lifestyle as follows:
- An assisted living community in Wisconsin to an operator new to
LTC under a 10-year lease with three five-year renewal terms. Cash
rent under the new master lease is $920,000 in the first lease
year, $1.2 million in the second lease year, and $1.3 million in
the third lease year, escalating 2% annually thereafter;
- Two assisted living communities in Pennsylvania to an existing
LTC operator under a two-year lease with zero cash rent for the
first three months, after which cash rent will be based on mutually
agreed upon fair market rent; and
- Three assisted living communities in Nebraska to an existing
LTC operator under a two-year lease with zero cash rent for the
first three months, after which cash rent will be based on mutually
agreed upon fair market rent.
- Sold a skilled nursing center in Washington for $7.7 million.
LTC received proceeds of $7.1 million and recognized a gain on sale
of $2.6 million; and
- Entered into a settlement agreement with Senior Care and Abri
Health, (collectively, the “Lessee”) which was approved by the
United States Bankruptcy Court. The settlement provides for a
one-time payment of $3.25 million from LTC to the affiliates of the
Lessee in exchange for cooperation and assistance in facilitating
an orderly transition of 11 skilled nursing centers from the Lessee
to affiliates of HMG Healthcare, LLC (“HMG”). The settlement
payment and transition occurred subsequent to September 30, 2021.
See below for additional information regarding to the
transition.
Subsequent to September 30, 2021, LTC completed the
following:
- As previously announced, funded a $27.0 million mortgage loan
secured by a skilled nursing center in Louisiana with a regional
operator new to LTC. The mortgage loan has a three-year term, with
one 12-month extension option;
- As previously announced, funded a $12.5 million mortgage loan
secured by an assisted living and memory care community in Florida
operated by a regional operator new to LTC. The mortgage loan term
is approximately four years and includes an additional $4.2 million
loan commitment for the construction of a memory care addition to
the property to be funded at a later date subject to satisfaction
of various conditions;
- As previously announced, transitioned 11 properties formerly
leased to Senior Care and Abri Health to HMG under a one-year
master lease with rent based on cash flows, and payment subject to
a deferral of up to six months. LTC and HMG intend to add these 11
properties to a master lease currently existing between them after
establishing a stabilized rent rate during the first lease year.
LTC also provided HMG a $25 million secured working capital loan
maturing in September 2022; and
- Provided $438,000 of deferred rent and $240,000 of abated rent
in October 2021. LTC has agreed to provide rent deferrals up to
$441,000 and abatements up to $240,000 for each of November and
December 2021.
Conference Call
Information
LTC will conduct a conference call on Friday, October 29, 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 September 30, 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
1-844-200-6205
Canada Toll-Free Number
1-833-950-0062
Conference Access Code
404243
Additionally, an audio replay of the call will be available one
hour after the live call and through November 12, 2021 via the
following:
USA Toll-Free Number
1-866-813-9430
International Toll-Free Number
+44 204 525 0658
Conference Number
031280
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 owns or holds first mortgages on 177 properties in 27 states
with 33 operating partners. Based on its gross real estate
investments, LTC’s 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
(unaudited, amounts in thousands,
except per share amounts)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Revenues:
Rental income
$
29,320
$
30,010
$
91,097
$
88,320
Interest income from mortgage loans
7,924
7,890
23,779
23,487
Interest and other income
228
273
1,005
1,257
Total revenues
37,472
38,173
115,881
113,064
Expenses:
Interest expense
6,610
7,361
20,442
22,617
Depreciation and amortization
9,462
9,766
28,847
29,232
Impairment charges
—
941
—
941
Provision (recovery) for credit losses
68
(2
)
59
(1
)
Transaction costs
4,046
63
4,271
197
Property tax expense
3,932
3,351
11,713
11,685
General and administrative expenses
5,318
4,814
15,688
14,494
Total expenses
29,436
26,294
81,020
79,165
Other operating income:
Gain on sale of real estate, net
2,702
30
7,392
44,073
Operating income
10,738
11,909
42,253
77,972
Gain from property insurance proceeds
—
373
—
373
Loss on unconsolidated joint ventures
—
—
—
(620
)
Income from unconsolidated joint
ventures
376
56
1,041
287
Net income
11,114
12,338
43,294
78,012
Income allocated to non-controlling
interests
(92
)
(121
)
(271
)
(292
)
Net income attributable to LTC Properties,
Inc.
11,022
12,217
43,023
77,720
Income allocated to participating
securities
(113
)
(103
)
(346
)
(339
)
Net income available to common
stockholders
$
10,909
$
12,114
$
42,677
$
77,381
Earnings per common share:
Basic
$
0.28
$
0.31
$
1.09
$
1.97
Diluted
$
0.28
$
0.31
$
1.09
$
1.97
Weighted average shares used to
calculate earnings per
common share:
Basic
39,177
39,061
39,149
39,218
Diluted
39,177
39,112
39,149
39,269
Dividends declared and paid per common
share
$
0.57
$
0.57
$
1.71
$
1.71
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
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
GAAP net income available to common
stockholders
$
10,909
$
12,114
$
42,677
$
77,381
Add: Impairment charge
—
941
—
941
Add: Depreciation and amortization
9,462
9,766
28,847
29,232
Add: Loss on unconsolidated joint
ventures
—
—
—
620
Less: Gain on sale of real estate, net
(2,702
)
(30
)
(7,392
)
(44,073
)
NAREIT FFO attributable to common
stockholders
17,669
22,791
64,132
64,101
Add: Non-recurring items
3,895
(1)
5,099
(4)
4,653
(6)
22,841
(9)
FFO attributable to common stockholders,
excluding non-recurring items
$
21,564
$
27,890
$
68,785
$
86,942
NAREIT FFO attributable to common
stockholders
$
17,669
$
22,791
$
64,132
$
64,101
Non-cash income:
Add/(Less): Straight-line rental
income
44
(228
)
(619
)
(1,701
)
Add: Amortization of lease costs
158
108
386
502
(7)
Add: Other non-cash expense
—
5,472
(2)
758
(5)
23,029
(8)
Less: Effective interest income from
mortgage loans
(1,473
)
(1,570
)
(4,700
)
(4,648
)
Net non-cash income
(1,271
)
3,782
(4,175
)
17,182
Non-cash expense:
Add: Non-cash compensation charges
1,975
1,692
5,785
5,231
Less: Capitalized interest
—
(77
)
—
(354
)
Net non-cash expense
1,975
1,615
5,785
4,877
Funds available for distribution (FAD)
$
18,373
$
28,188
$
$65,742
$
$86,160
Less: Non-recurring income
3,895
(1)
(373
)
(3)
3,895
(1)
(373
)
(3)
Funds available for distribution (FAD),
excluding non-recurring items
$
22,268
$
27,815
$
69,637
$
85,787
(1) Represents the Senior Care and Abri
Health settlement and related fees ($3,895).
(2) Represents the write-off of
straight-line rent receivable related to Genesis and another
operator ($5,472).
(3) Represents the gain from insurance
proceeds related to a previously sold property ($373).
(4) Represents the net of (2) and (3) from
above.
(5) Represents a straight-line rent
receivable write-off ($758).
(6) Represents the sum of (1) and (5) from
above.
(7) Includes the Senior Lifestyle lease
incentives receivable write-off of $185.
(8) Represents the Senior Lifestyle
straight-line rent receivable write-off ($17,557) and (2) from
above.
(9) Represents the sum of (7) and (8)
offset by (3) from above.
NAREIT Basic FFO attributable to common
stockholders per share
$
0.45
$
0.58
$
1.64
$
1.63
NAREIT Diluted FFO attributable to common
stockholders per share
$
0.45
$
0.58
$
1.64
$
1.63
NAREIT Diluted FFO attributable to common
stockholders
$
17,669
$
22,894
$
64,132
$
64,101
Weighted average shares used to calculate
NAREIT diluted FFO per share
attributable to common stockholders
39,177
39,293
39,149
39,269
Diluted FFO attributable to common
stockholders, excluding non-recurring items
$
21,564
$
27,993
$
69,131
$
87,281
Weighted average shares used to calculate
diluted FFO, excluding
non-recurring items, per share
attributable to common stockholders
39,177
39,293
39,346
39,441
Diluted FAD, excluding non-recurring
items
$
22,268
$
27,918
$
69,983
$
86,126
Weighted average shares used to calculate
diluted FAD per share
39,177
39,293
39,346
39,441
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE
SHEETS
(amounts in thousands, except per
share)
September 30, 2021
December 31, 2020
ASSETS
(unaudited)
(audited)
Investments:
Land
$
123,239
$
127,774
Buildings and improvements
1,283,859
1,324,227
Accumulated depreciation and
amortization
(365,182
)
(349,643
)
Real property investments, net
1,041,916
1,102,358
Mortgage loans receivable, net of loan
loss reserve: 2021—$2,608; 2020—$2,592
258,829
257,251
Real estate investments, net
1,300,745
1,359,609
Notes receivable, net of loan loss
reserve: 2021—$189; 2020—$146
18,675
14,465
Investments in unconsolidated joint
ventures
19,340
11,340
Investments, net
1,338,760
1,385,414
Other assets:
Cash and cash equivalents
45,459
7,772
Debt issue costs related to bank
borrowings
688
1,324
Interest receivable
37,476
32,746
Straight-line rent receivable
24,298
24,452
Lease incentives
2,726
2,462
Prepaid expenses and other assets
3,681
5,316
Total assets
$
1,453,088
$
1,459,486
LIABILITIES
Bank borrowings
$
134,400
$
89,900
Senior unsecured notes, net of debt issue
costs: 2021—$551; 2020—$658
527,429
559,482
Accrued interest
3,172
4,216
Accrued expenses and other liabilities
35,157
30,082
Total liabilities
700,158
683,680
EQUITY
Stockholders’ equity:
Common stock: $0.01 par value; 60,000
shares authorized; shares issued and outstanding: 2021—39,374;
2020—39,242
394
392
Capital in excess of par value
854,921
852,780
Cumulative net income
1,431,798
1,388,775
Cumulative distributions
(1,542,596
)
(1,474,545
)
Total LTC Properties, Inc. stockholders’
equity
744,517
767,402
Non-controlling interests
8,413
8,404
Total equity
752,930
775,806
Total liabilities and equity
$
1,453,088
$
1,459,486
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211028006083/en/
Wendy L. Simpson Pam Kessler (805) 981-8655
LTC Properties (NYSE:LTC)
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