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 fourth quarter ended December 31,
2021.
Three Months Ended
December 31,
2021
2020
(unaudited)
Net income available to common
stockholders
$
12,726
$
17,470
Diluted earnings per common share
$
0.32
$
0.45
NAREIT funds from operations (“FFO”)
attributable to common stockholders
$
22,105
$
30,439
NAREIT diluted FFO per common share
$
0.56
$
0.78
FFO attributable to common stockholders,
excluding non-recurring items
$
22,974
$
30,439
Funds available for distribution
(“FAD”)
$
24,023
$
30,744
Fourth quarter 2021 results compared to the same quarter in 2020
were impacted by the following:
- Lower rental income related to the transition of 11 properties
previously leased to Senior Care Centers, LLC (“Senior Care”) and
Senior Care’s parent company, Abri Health Services, LLC (“Abri
Health”), to HMG Healthcare, LLC (“HMG”), lower rental income
related to the re-leasing of the 18 properties previously leased to
Senior Lifestyle Corporation (“Senior Lifestyle”), and abated and
deferred rent, partially offset by annual rent escalations and
capital improvement fundings. Both transitions are expected to
generate additional rental income in 2022;
- Higher interest income from mortgage loans resulting from
mortgage loan originations;
- Higher income from unconsolidated joint ventures due to
mezzanine loan funding;
- An impairment loss of $3.0 million in the 2020 fourth quarter
related to a memory care community in Colorado that was operated by
Senior Lifestyle;
- Higher provisions for credit losses due to mortgage loan and
working capital originations during the 2021 fourth quarter;
and
- Higher general and administrative expenses due to higher
incentive compensation and higher non-cash compensation
charges.
As previously announced, during the fourth quarter of 2021, LTC
completed the following:
- Originated a $52.5 million mortgage loan secured by 13 assisted
living communities with an aggregate of 523 units. In addition to
our initial investment of $52.5 million, the loan includes a
commitment of $6.7 million for capital improvements and working
capital to be used for the communities securing the loan. The 13
communities are located in North and South Carolina and are
operated by an existing LTC operator. The loan bears interest at
7.25% with an IRR of 8%, and matures in 4 years;
- Originated a $27.0 million mortgage loan secured by a 189-bed
skilled nursing center in Louisiana with a regional operator new to
LTC. The term is three years, with one 12-month extension option.
The loan bears interest at 7.5%;
- Originated a $16.7 mortgage loan secured by a 68-unit assisted
living and memory care community in Florida with a regional
operator new to LTC at a yield of 7.75%. The term is approximately
4 years, and in addition to our initial investment of $12.5
million, the loan includes a $4.2 million loan commitment to be
funded at a later date subject to satisfaction of various
conditions for the construction of a memory care addition to the
property;
- Transitioned 11 properties previously 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
$25.0 million secured working capital loan at a yield of 4.0%
maturing in September 2022. During the 2021 fourth quarter, LTC
funded $9.9 million under the working capital loan;
- Amended its Unsecured Credit Agreement to extend the maturity
to November 19, 2025 and reduce the aggregate commitment from
$600.0 million to $500.0 million. The $500.0 million aggregate
commitment is comprised of a $400.0 million revolving credit
facility and two $50.0 million term loans with maturities of
November 19, 2025 and 2026, respectively. The one-year extension
option and the ability to increase the aggregate loan commitment up
to a total of $1.0 billion remains unchanged; and
- In connection with entering into the two term loans as
discussed above, LTC entered into interest rate swap agreements to
effectively fix the interest rate on the two term loans at 2.56%
and 2.69% per annum, respectively.
Subsequent to December 31, 2021, LTC completed the
following:
- Entered into an agreement with the current operator to sell a
74-unit assisted living community in Virginia for $16.9 million.
The community has a gross book value of $16.9 million and a net
book value of $15.7 million. LTC anticipates recognizing
approximately $1.3 million of gain on sale in the second quarter of
2022. In connection with the sale, the current operator will pay a
$1.2 million lease termination fee;
- An operator of two assisted living communities in California
with a total of 232 units exercised the purchase option under their
lease for $43.7 million. The communities have a gross book value of
$31.8 million and a net book value of $17.0 million. LTC
anticipates recognizing approximately $26.0 million of gain on sale
in the second quarter of 2022;
- Funded $5.8 million under HMG’s working capital loan.
Accordingly, the outstanding balance under HMG’s working capital
loan is $15.7 million with a remaining availability of up to $9.3
million; and
- Provided a total of $867,000 of deferred rent and $480,000 of
rent abatement in January and February 2022. LTC has agreed to
provide rent deferrals of up to $452,000, and abatements of up to
$240,000 for March 2022.
Conference Call
Information
LTC will conduct a conference call on Friday, February 18, 2022,
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, 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
441550
Additionally, an audio replay of the call will be available one
hour after the live call and through March 4, 2022 via the
following:
USA Toll-Free Number
1-866-813-9403
Canada Local Number
1-226-828-7578
Conference Number
188544
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’s investment portfolio includes 193 properties in 28
states with 35 operating partners consisting of real property
investments, first mortgages, mezzanine loans, working capital
notes and unconsolidated joint ventures. Based on its gross
investments, LTC’s investment 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,
2021
2020
2021
2020
(unaudited)
(audited)
Revenues:
Rental income
$
30,028
$
37,774
$
121,125
$
126,094
Interest income from mortgage loans
9,032
7,909
32,811
31,396
Interest and other income
381
590
1,386
1,847
Total revenues
39,441
46,273
155,322
159,337
Expenses:
Interest expense
6,933
7,088
27,375
29,705
Depreciation and amortization
9,449
9,839
38,296
39,071
Impairment charges
—
3,036
—
3,977
Provision (recovery) for credit losses
962
(2
)
1,021
(3
)
Transaction costs
162
102
4,433
299
Property tax expense
3,679
3,380
15,392
15,065
General and administrative expenses
5,772
5,216
21,460
19,710
Total expenses
26,957
28,659
107,977
107,824
Other operating income:
Gain on sale of real estate, net
70
44
7,462
44,117
Operating income
12,554
17,658
54,807
95,630
Gain from property insurance proceeds
—
—
—
373
Loss on unconsolidated joint ventures
—
(138
)
—
(758
)
Income from unconsolidated joint
ventures
376
145
1,417
432
Net income
12,930
17,665
56,224
95,677
Income allocated to non-controlling
interests
(92
)
(92
)
(363
)
(384
)
Net income attributable to LTC Properties,
Inc.
12,838
17,573
55,861
95,293
Income allocated to participating
securities
(112
)
(103
)
(458
)
(422
)
Net income available to common
stockholders
$
12,726
$
17,470
$
55,403
$
94,871
Earnings per common share:
Basic
$
0.32
$
0.45
$
1.41
$
2.42
Diluted
$
0.32
$
0.45
$
1.41
$
2.42
Weighted average shares used to
calculate earnings per
common share:
Basic
39,177
39,062
39,156
39,179
Diluted
39,177
39,147
39,156
39,264
Dividends declared and paid per common
share
$
0.57
$
0.57
$
2.28
$
2.28
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
Twelve Months Ended
December 31,
December 31,
2021
2020
2021
2020
GAAP net income available to common
stockholders
$
12,726
$
17,470
$
55,403
$
94,871
Add: Impairment charge
—
3,036
—
3,977
Add: Depreciation and amortization
9,449
9,839
38,296
39,071
Add: Loss on unconsolidated joint
ventures
—
138
—
758
Less: Gain on sale of real estate, net
(70
)
(44
)
(7,462
)
(44,117
)
NAREIT FFO attributable to common
stockholders
22,105
30,439
86,237
94,560
Add: Non-recurring items
869
(1
)
—
5,947
(2
)
22,841
(8
)
FFO attributable to common stockholders,
excluding non-recurring items
$
22,974
$
30,439
$
92,184
$
117,401
NAREIT FFO attributable to common
stockholders
$
22,105
$
30,439
$
86,237
$
94,560
Non-cash income:
Less: straight-line rental (adjustment)
income
152
(77
)
(467
)
(1,778
)
Add: amortization of lease costs
222
109
608
611
(5
)
Add: Other non-cash expense
—
—
758
(3
)
23,029
(6
)
Less: Effective interest income from
mortgage loans
(1,393
)
(1,506
)
(6,093
)
(6,154
)
Net non-cash income
(1,019
)
(1,474
)
(5,194
)
15,708
Non-cash expense:
Add: Non-cash compensation charges
1,975
1,781
7,760
7,012
Add: Provisions for doubtful accounts and
notes
962
(2
)
1,021
(3
)
Less: Capitalized interest
—
—
—
(354
)
Net non-cash expense
2,937
1,779
8,781
6,655
Funds available for distribution (FAD)
$
24,023
$
30,744
$
89,824
$
116,923
Less: Non-recurring income
—
—
5,232
(4
)
(373
)
(7
)
Funds available for distribution (FAD),
excluding non-recurring items
$
24,023
$
30,744
$
95,056
$
116,550
(1) Represents provision for credit losses
related to the origination of $86.9 million of mortgage loans
during 2021 fourth quarter.
(2) Represents the Senior Care and Abri
Health settlement payment ($3,895), the straight-line rent
receivable write-off ($758), the provision for credit losses
($869), and the 50% reduction of rent and interest escalation
($425).
(3) Represents a straight-line rent
receivable write-off due to transitioning rental revenue
recognition to cash basis.
(4) Represents the Senior Care and Abri
Health settlement payment ($3,895) and the cash impact of the 50%
reduction of rent and interest escalation ($1,337).
(5) Includes the Senior Lifestyle lease
incentives write-off of $185.
(6) Represents the write-off of
straight-line rent receivable related to Senior Lifestyle, Genesis
Healthcare and another operator.
(7) Represents the gain from insurance
proceeds related to previously sold property.
(8) Represents sum of (5) and (6) from
above offset by (7) from above.
Reconciliation of FFO and FAD
(continued)
The following table continues the reconciliation between GAAP
net income available to common stockholders and 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,
2021
2020
2021
2020
NAREIT Basic FFO attributable to common
stockholders per share
$
0.56
$
0.78
$
2.20
$
2.41
NAREIT Diluted FFO attributable to common
stockholders per share
$
0.56
$
0.78
$
2.20
$
2.41
NAREIT Diluted FFO attributable to common
stockholders
$
22,105
$
30,542
$
86,237
$
94,560
Weighted average shares used to calculate
NAREIT diluted FFO per share
attributable to common stockholders
39,177
39,327
39,156
39,264
Diluted FFO attributable to common
stockholders, excluding non-recurring items
$
23,086
$
30,542
$
92,642
$
117,823
Weighted average shares used to calculate
diluted FFO, excluding
non-recurring items, per share
attributable to common stockholders
39,374
39,327
39,353
39,438
Diluted FAD
$
24,135
$
30,847
$
89,824
$
117,345
Weighted average shares used to calculate
diluted FAD per share
39,374
39,327
39,156
39,438
Diluted FAD, excluding non-recurring
items
$
24,135
$
30,847
$
95,514
$
116,972
Weighted average shares used to calculate
diluted FAD, excluding non-recurring items, per share
39,374
39,327
39,353
39,438
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE
SHEETS
(audited, amounts in thousands,
except per share)
December 31,
2021
2020
ASSETS
Investments:
Land
$
123,239
$
127,774
Buildings and improvements
1,285,318
1,324,227
Accumulated depreciation and
amortization
(374,606
)
(349,643
)
Real property investments, net
1,033,951
1,102,358
Mortgage loans receivable, net of loan
loss reserve: 2021—$3,473; 2020—$2,592
344,442
257,251
Real estate investments, net
1,378,393
1,359,609
Notes receivable, net of loan loss
reserve: 2021—$286; 2020—$146
28,337
14,465
Investments in unconsolidated joint
ventures
19,340
11,340
Investments, net
1,426,070
1,385,414
Other assets:
Cash and cash equivalents
5,161
7,772
Debt issue costs related to revolving line
of credit
3,057
1,324
Interest receivable
39,522
32,746
Straight-line rent receivable
24,146
24,452
Lease incentives
2,678
2,462
Prepaid expenses and other assets
4,191
5,316
Total assets
$
1,504,825
$
1,459,486
LIABILITIES
Revolving line of credit
$
110,900
$
89,900
Term loans, net of debt issue costs:
2021—$637; 2020—$0
99,363
—
Senior unsecured notes, net of debt issue
costs: 2021—$524; 2020—$658
512,456
559,482
Accrued interest
3,745
4,216
Accrued expenses and other liabilities
33,234
30,082
Total liabilities
759,698
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
856,895
852,780
Cumulative net income
1,444,636
1,388,775
Comprehensive expense
(172
)
—
Cumulative distributions
(1,565,039
)
(1,474,545
)
Total LTC Properties, Inc. stockholders’
equity
736,714
767,402
Non-controlling interests
8,413
8,404
Total equity
745,127
775,806
Total liabilities and equity
$
1,504,825
$
1,459,486
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220217005170/en/
Wendy L. Simpson Pam Kessler (805) 981-8655
LTC Properties (NYSE:LTC)
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