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 first quarter ended March 31, 2022.
Three Months Ended
March 31,
2022
2021
(unaudited)
Net income available to common
stockholders
$
14,275
$
13,642
Diluted earnings per common share
$
0.36
$
0.35
NAREIT funds from operations ("FFO”)
attributable to common stockholders
$
23,611
$
24,292
NAREIT diluted FFO per common share
$
0.60
$
0.62
FFO attributable to common stockholders,
excluding non-recurring items
$
24,034
$
25,342
Funds available for distribution
("FAD")
$
25,118
$
24,579
FAD, excluding non-recurring items
$
25,118
$
25,783
First quarter 2022 results were impacted by the following:
- Lower rental income due to the following:
- the Senior Care Centers, LLC (“Senior Care”) and Senior Care’s
parent company, Abri Health Services, LLC portfolio
transition;
- abated and deferred rent;
- the sale of a skilled nursing center in Washington; and
- a lease incentive balance write-off related to a terminated
lease;
- The decrease in rental income was partially offset by the
following:
- increases from properties transitioned from Senior Lifestyle
Corporation (“Senior Lifestyle”);
- increases in property tax revenue from properties formerly
leased to Senior Lifestyle;
- rental income from completed development projects and annual
rent escalations; and
- the following prior year non-recurring items:
- a straight-line rent receivable write-off; and
- the one-time 50% reduction of 2021 rent escalations provided to
the majority of LTC’s operating partners;
- Higher interest income from mortgage loans due to mortgage loan
originations in 2021;
- Higher interest and other income due to a mezzanine loan
origination and additional funding under working capital loans
partially offset by loan payoffs;
- Higher provision for credit losses due to a mezzanine loan
origination and additional funding under working capital loans;
and
- Higher general and administrative expenses due to higher
incentive compensation as well as higher non-cash compensation
charges and increases in overall costs due to inflationary
pressures.
During the first quarter of 2022, LTC completed the
following:
- Originated a $25 million mezzanine loan for the
recapitalization of a five-property seniors housing portfolio. The
mezzanine loan has a term of approximately five years, with two
one-year extension options. It bears interest at 8%, with an IRR of
11%. The five communities are located in Oregon and Montana, have a
total of 621 units, and include independent living, assisted‑living
and memory care. The communities are being managed by The Springs
Living, LLC, an operator new to LTC;
- Transitioned two memory care communities totaling 88 units in
Texas to an existing LTC operator. The new master lease has a
two-year term. Cash rent will start in month five, based on
mutually agreed fair market rent. LTC recognized $282,000 of rent
from these transitioned communities during the first quarter of
2022 and anticipates recognizing approximately $370,000 of rent
from these transitioned communities during the second half of
2022;
- Funded $9.5 million under a working capital loan for HMG
Healthcare, LLC (“HMG Healthcare”) and HMG Healthcare repaid
$799,000. The current outstanding balance under the working capital
loan is $18.6 million, with a remaining availability of up to $6.4
million;
- 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 $16.8 million. LTC
anticipates recognizing a gain on sale of approximately $26.0
million in the second quarter of 2022;
- Entered into an agreement with a third party to sell a 121-bed
skilled nursing center in California for $13.3 million. The
property has a gross book value of $4.6 million and a net book
value of $1.8 million. LTC anticipates recognizing a gain on sale
of approximately $10.5 million in the second quarter of 2022;
- Borrowed $47.0 million under the Company’s revolving line of
credit;
- Paid $7.0 million in scheduled principal paydowns under LTC’s
senior unsecured notes; and
- Provided $1.3 million of deferred rent and $720,000 of abated
rent.
Subsequent to March 31, 2022, LTC completed the following:
- Acquired four newer transitional care centers for $51.5
million, located in Texas and have a combined total of 339 beds
primarily in private rooms. These centers will be operated by
Ignite Medical Resorts (“Ignite”), a current LTC operating partner.
The lease term is 10 years, with two 5‑year renewal options, and
contains a purchase option beginning in the sixth lease year
through the end of the seventh lease year. The Company expects to
receive rent of approximately $1.0 million in each of the third and
fourth quarters of 2022 and approximately $4.3 million during 2023.
Rent will increase annually beginning on the third anniversary of
the lease by 2.0% to 4.0% based on the change in the Medicare
Market Basket Rate. Additionally, LTC provided Ignite a 10-year
working capital loan for up to $2.0 million, of which $1.9 million
has been funded, at 8% for first year, increasing to 8.25% for the
second year, then increasing annually with the lease rate. The
Company initially funded this acquisition using its unsecured
revolving line of credit and intends to use proceeds from
previously announced asset sales, anticipated to close in the
second quarter of 2022, to pay down its unsecured revolving line of
credit;
- Sold 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 $15.5 million. LTC anticipates recognizing a
gain on sale of approximately $1.3 million in the second quarter of
2022. In connection with the sale, the current operator paid LTC a
$1.2 million lease termination fee. The proceeds from this sale
were used to paydown LTC’s unsecured revolving line of credit;
- Borrowed a net of $34.0 million under its unsecured revolving
line of credit;
- Provided $376,000 of deferred rent and $240,000 of abated rent
in April 2022. LTC has agreed to provide rent abatements up to
$240,000 for each of May and June of 2022; and
- Reduced the estimated second quarter 2022 rent of $2.7 million
from Anthem Memory Care (“Anthem”) to $2.1 million as Anthem is
addressing some new challenges that may make it difficult for them
to pay the full 2022 second quarter rent. However, LTC anticipates
receiving total cash rent from Anthem in 2022 of approximately
$10.8 million as LTC believes occupancy at the properties under
Anthem’s master lease will recover and Anthem is expecting receipt
of additional stimulus funds. Anthem has paid their agreed upon
rent through April 2022.
Conference Call
Information
LTC will conduct a conference call on Friday, April 29, 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 March 31, 2022. 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
398152
Additionally, an audio replay of the call will be available one
hour after the live call and through May 13, 2022 via the
following:
USA Toll-Free Number
1-866-813-9403
Canada Local Number
1-226-828-7578
International Toll-Free Number
+44 204 525 0658
Conference Number
809164
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 202 properties in 29 states
with 35 operating partners. Based on its gross real estate
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
(unaudited, amounts in thousands,
except per share amounts)
Three Months Ended
March 31,
2022
2021
Revenues:
Rental income
$
30,324
$
31,973
Interest income from mortgage loans
9,636
7,922
Interest and other income
827
385
Total revenues
40,787
40,280
Expenses:
Interest expense
7,143
6,972
Depreciation and amortization
9,438
9,877
Provision (recovery) for credit losses
354
(9
)
Transaction costs
32
92
Property tax expense
3,982
3,981
General and administrative expenses
5,808
5,033
Total expenses
26,757
25,946
Other operating income:
Gain (loss) on sale of real estate,
net
102
(773
)
Operating income
14,132
13,561
Income from unconsolidated joint
ventures
375
289
Net income
14,507
13,850
Income allocated to non-controlling
interests
(95
)
(88
)
Net income attributable to LTC Properties,
Inc.
14,412
13,762
Income allocated to participating
securities
(137
)
(120
)
Net income available to common
stockholders
$
14,275
$
13,642
Earnings per common share:
Basic
$
0.36
$
0.35
Diluted
$
0.36
$
0.35
Weighted average shares used to
calculate earnings per
common share:
Basic
39,199
39,100
Diluted
39,349
39,179
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,
2022
2021
GAAP net income available to common
stockholders
$
14,275
$
13,642
Add: Depreciation and amortization
9,438
9,877
(Less)/Add: (Gain) loss on sale of real
estate, net
(102
)
773
NAREIT FFO attributable to common
stockholders
23,611
24,292
Add: Non-recurring items
423
(1)
1,050
(6)
FFO attributable to common stockholders,
excluding non-recurring items
$
24,034
$
25,342
NAREIT FFO attributable to common
stockholders
$
23,611
$
24,292
Non-cash income:
Less: straight-line rental adjustment
(income)
234
(682
)
(3)
Add: amortization of lease costs
396
(2)
112
Add: Other non-cash expense
—
758
(4)
Less: Effective interest income from
mortgage loans
(1,402
)
(1,744
)
(3)
Net non-cash income
(772
)
(1,556
)
Non-cash expense:
Add: Non-cash compensation charges
1,925
1,852
Add: Provision (recovery) for credit
losses
354
(9
)
Net non-cash expense
2,279
1,843
Funds available for distribution (FAD)
$
25,118
$
24,579
Less: Non-recurring income
—
1,204
(5)
Funds available for distribution (FAD),
excluding non-recurring items
$
25,118
$
25,783
(1) Represents provision for
credit losses related to the origination of a $25,000 mezzanine
loan during 2022 first quarter and (2) below.
(2) Includes a lease incentive
balance write-off of $173 related to a closed property and
subsequent lease termination.
(3) Includes the impact of the
50% reduction of 2021 rent and interest escalation on straight-line
rent and effective interest.
(4) Represents a straight-line
rent receivable write-off due to transitioning rental revenue
recognition to cash basis.
(5) Includes the cash impact of
the 50% reduction of 2021 rent and interest escalation.
(6) Includes the GAAP impact of
the 50% reduction of 2021 rent and interest escalation ($292) and
(4) 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
March 31,
2022
2021
NAREIT Basic FFO attributable to common
stockholders per share
$
0.60
$
0.62
NAREIT Diluted FFO attributable to common
stockholders per share
$
0.60
$
0.62
NAREIT Diluted FFO attributable to common
stockholders
$
23,611
$
24,412
Weighted average shares used to calculate
NAREIT diluted FFO per share attributable to common
stockholders
39,349
39,374
Diluted FFO attributable to common
stockholders, excluding non-recurring items
$
24,171
$
25,462
Weighted average shares used to calculate
diluted FFO, excluding non-recurring items, per share attributable
to common stockholders
39,575
39,374
Diluted FAD
$
25,255
$
24,699
Weighted average shares used to calculate
diluted FAD per share
39,575
39,374
Diluted FAD, excluding non-recurring
items
$
25,255
$
25,903
Weighted average shares used to calculate
diluted FAD, excluding non-recurring items, per share
39,575
39,374
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE
SHEETS
(amounts in thousands, except per
share)
March 31, 2022
December 31, 2021
ASSETS
(unaudited)
(audited)
Investments:
Land
$
120,203
$
123,239
Buildings and improvements
1,240,713
1,285,318
Accumulated depreciation and
amortization
(367,623
)
(374,606
)
Operating real estate property, net
993,293
1,033,951
Properties held-for-sale, net of
accumulated depreciation: 2022—$16,396; 2021—$0
32,313
—
Real property investments, net
1,025,606
1,033,951
Mortgage loans receivable, net of loan
loss reserve: 2022—$3,494; 2021—$3,473
346,543
344,442
Real estate investments, net
1,372,149
1,378,393
Notes receivable, net of loan loss
reserve: 2022—$619; 2021—$286
61,508
28,337
Investments in unconsolidated joint
ventures
19,340
19,340
Investments, net
1,452,997
1,426,070
Other assets:
Cash and cash equivalents
4,393
5,161
Debt issue costs related to revolving line
of credit
2,883
3,057
Interest receivable
41,165
39,522
Straight-line rent receivable
23,912
24,146
Lease incentives
2,277
2,678
Prepaid expenses and other assets
8,470
4,191
Total assets
$
1,536,097
$
1,504,825
LIABILITIES
Revolving line of credit
$
157,900
$
110,900
Term loans, net of debt issue costs:
2022—$600; 2021—$637
99,400
99,363
Senior unsecured notes, net of debt issue
costs: 2022—$498; 2021—$524
505,482
512,456
Accrued interest
3,090
3,745
Accrued expenses and other liabilities
27,626
33,234
Total liabilities
793,498
759,698
EQUITY
Stockholders’ equity:
Common stock: $0.01 par value; 60,000
shares authorized; shares issued and outstanding: 2022—39,460;
2021—39,374
395
394
Capital in excess of par value
857,558
856,895
Cumulative net income
1,459,048
1,444,636
Accumulated other comprehensive income
(loss)
4,704
(172
)
Cumulative distributions
(1,587,519
)
(1,565,039
)
Total LTC Properties, Inc. stockholders’
equity
734,186
736,714
Non-controlling interests
8,413
8,413
Total equity
742,599
745,127
Total liabilities and equity
$
1,536,097
$
1,504,825
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220428005396/en/
Mandi Hogan (805) 981-8655
LTC Properties (NYSE:LTC)
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