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 second quarter ended June 30, 2022.
Three Months Ended
June 30,
2022
2021
(unaudited)
Net income available to common
stockholders
$
54,065
$
18,126
Diluted earnings per common share
$
1.36
$
0.46
NAREIT funds from operations ("FFO”)
attributable to common stockholders
$
25,350
$
22,171
NAREIT diluted FFO per common share
$
0.64
$
0.57
FFO attributable to common stockholders,
excluding non-recurring items
$
24,491
$
22,304
Funds available for distribution
("FAD")
$
26,779
$
22,781
FAD, excluding non-recurring items
$
25,598
$
22,914
Second quarter 2022 results were impacted by:
- Higher rental income due to:
- a $1.2 million lease termination fee received in connection
with the sale of a 74-unit assisted living community;
- rent received from properties transitioned from the former
Senior Lifestyle and Senior Care portfolios;
- increases in property tax revenue from properties formerly
leased to Senior Care and the acquisition of four skilled nursing
centers during the 2022 second quarter; and
- rental income from completed development projects and annual
rent escalations.
- The increase in rental income was partially offset by:
- the sale of three assisted living communities and a skilled
nursing center during the 2022 second quarter, and a skilled
nursing center during 2021; and,
- temporary rent deferrals.
- Higher interest income from mortgage loans due to mortgage loan
originations in 2022 and 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 interest expense due to 2021 term loan originations, the
issuance of $75.0 million senior unsecured notes during the quarter
and higher interest rates on LTC’s revolving line of credit,
partially offset by a lower outstanding balance, and scheduled
principal paydowns on its senior unsecured notes.
- Higher provision for credit losses due to 2022 second quarter
mortgage loan originations, partially offset by principal
paydowns.
- Higher general and administrative expenses due to increased
costs related to conference sponsorships and travel, as well as
higher non-cash compensation charges, and increases in overall
costs due to inflationary pressures.
During the second quarter of 2022, LTC completed the
following:
- Acquired four newer skilled nursing centers located in Texas
with a combined total of 339 beds for $51.5 million and leased
these centers to an affiliate of Ignite Medical Resorts (“Ignite”),
a current LTC operating partner. The lease term is 10 years, with
two five‑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.
- Originated two mortgage loans for $35.9 million secured by four
newer assisted living communities and a land parcel. The four
assisted living communities located in North Carolina, have a
combined total of 217 units, and are operated by an existing LTC
partner. The communities are newly constructed with an average age
of under four years. The land parcel includes approximately 7.6
acres adjacent to one of the assisted living communities and is
being held for the future development of a seniors housing
community. The loans are cross-defaulted, have a four-year term, an
interest rate of 7.25% and an IRR of 8%.
- Sold three assisted living communities and a skilled nursing
center as follows:
- Two assisted living communities in California with a total of
232 units to the operator pursuant to the purchase option under
their lease for $43.7 million, and recognized a gain on sale of
$25.9 million. The communities had a gross book value of $31.8
million and a net book value of $16.8 million;
- A 121-bed skilled nursing center in California for $13.3
million, and recognized a gain on sale of $10.8 million. The
property had a gross book value of $4.6 million and a net book
value of $1.8 million; and,
- A 74-unit assisted living community in Virginia for $16.9
million, and recognized a gain on sale of $1.3 million. The
community had a gross book value of $16.9 million and a net book
value of $15.5 million. In connection with the sale, the current
operator paid LTC a $1.2 million lease termination fee.
- Received $5.3 million of principal paydown on a working capital
loan with HMG Healthcare. The current outstanding balance under the
working capital loan is $13.3 million, with a remaining
availability of up to $11.7 million;
- Provided a temporary reduction of rent totaling $600,000 in the
second quarter 2022 to Anthem and provided a $900,000 temporary
reduction of rent for third quarter 2022 to $1.8 million. However,
LTC anticipates receiving total annual 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
expects to receive additional stimulus funds from the Employee
Retention Tax Credit program that will be used to pay the deferred
rent. Anthem has paid its agreed upon rent of $600,000 for the
month of July 2022.
- Provided $702,000 of net deferred rent, which excludes the
deferred rent provided to Anthem discussed above, and $1.2 million
of abated rent.
- Sold $75.0 million aggregate principal amount of 3.66% senior
unsecured notes. The notes have an average 10-year life, scheduled
principal payments and will mature on May 17, 2033.
- Repaid $101.9 million under the Company’s revolving line of
credit.
- Sold 909,800 shares of common stock for $34.2 million in net
proceeds under the Company’s equity distribution agreement. The
proceeds from the sale were used to paydown LTC’s unsecured
revolving line of credit which was used to fund investments and for
general corporate purposes.
Subsequent to June 30, 2022, LTC completed the following:
- Terminated a master lease covering 12 assisted living
communities with a total of 625 units, and transitioned the
communities to an existing LTC operator. The former operator was
one of the few for whom we had provided assistance in form of rent
deferrals and abatements. LTC is evaluating options for this
portfolio.
- In connection with the lease termination, LTC abated rent for
June 2022 and has forgiven the former operator’s outstanding
deferred rent balance of $7.1 million. Also, LTC paid the former
operator a $500,000 lease termination fee in exchange for
cooperation and assistance in facilitating an orderly transition;
and,
- The new master lease has a two-year term, with zero rent for
the first four months. Thereafter, cash rent will be based on
mutually agreed upon fair market rent. In connection with the new
master lease, LTC paid the new operator a $410,000 lease incentive
payment which will be amortized as a yield adjustment to rental
income over the two-year lease term.
- Provided $240,000 of abated rent in July 2022 and agreed to
provide rent abatements up to $240,000 for each of August and
September of 2022 to an operator pursuant to a master lease
covering two assisted living communities. LTC is evaluating options
for these communities.
- Agreed to defer $150,000 of the $445,000 monthly contractual
rent for August and September of 2022 from a lessee that operates
eight assisted living communities under a master lease. The
operator requested rent assistance due to protracted lease-up of
their portfolio during COVID. LTC anticipates they will be able to
repay the total $300,000 of deferred rent in 2023, upon receipt of
additional stimulus funds from the Employee Retention Credit
program. This operator is current on rent through July 2022.
- Borrowed a net of $20.5 million under its unsecured revolving
line of credit.
- Paid $20.2 million in regular scheduled principal paydowns
under LTC’s senior unsecured notes; and,
- Sold 125,200 shares of common stock for $4.8 million in net
proceeds under its equity distribution agreement. The proceeds from
the sale were used to paydown LTC’s unsecured revolving line of
credit and for general corporate purposes.
Conference Call
Information
LTC will conduct a conference call on Friday, July 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 June 30, 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
898490
Additionally, an audio replay of the call will be available one
hour after the live call and through August 12, 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
214260
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 32 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
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Revenues:
Rental income
$
31,628
$
29,804
$
61,952
$
61,777
Interest income from mortgage loans
10,097
7,933
19,733
15,855
Interest and other income
1,299
392
2,126
777
Total revenues
43,024
38,129
83,811
78,409
Expenses:
Interest expense
7,523
6,860
14,666
13,832
Depreciation and amortization
9,379
9,508
18,817
19,385
Provision (recovery) for credit losses
305
—
659
(9)
Transaction costs
67
133
99
225
Property tax expense
4,019
3,800
8,001
7,781
General and administrative expenses
5,711
5,337
11,519
10,370
Total expenses
27,004
25,638
53,761
51,584
Other operating income:
Gain on sale of real estate, net
38,094
5,463
38,196
4,690
Operating income
54,114
17,954
68,246
31,515
Income from unconsolidated joint
ventures
376
376
751
665
Net income
54,490
18,330
68,997
32,180
Income allocated to non-controlling
interests
(107)
(91)
(202)
(179)
Net income attributable to LTC Properties,
Inc.
54,383
18,239
68,795
32,001
Income allocated to participating
securities
(318)
(113)
(407)
(233)
Net income available to common
stockholders
$
54,065
$
18,126
$
68,388
$
31,768
Earnings per common share:
Basic
$
1.37
$
0.46
$
1.74
$
0.81
Diluted
$
1.36
$
0.46
$
1.73
$
0.81
Weighted average shares used to
calculate earnings per
common share:
Basic
39,492
39,169
39,347
39,135
Diluted
39,665
39,170
39,520
39,136
Dividends declared and paid per common
share
$
0.57
$
0.57
$
1.14
$
1.14
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
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
GAAP net income available to common
stockholders
$
54,065
$
18,126
$
68,388
$
31,768
Add: Depreciation and amortization
9,379
9,508
18,817
19,385
Less: Gain on sale of real estate, net
(38,094)
(5,463)
(38,196)
(4,690)
NAREIT FFO attributable to common
stockholders
25,350
22,171
49,009
46,463
Add: Non-recurring items
(859)
(1)
133
(3)
(436)
(4)
1,183
(6)
FFO attributable to common stockholders,
excluding non-recurring items
$
24,491
$
22,304
$
48,573
$
47,646
NAREIT FFO attributable to common
stockholders
$
25,350
$
22,171
$
49,009
$
46,463
Non-cash income:
Less: straight-line rental adjustment
(income)
293
19
527
(663)
(7)
Add: amortization of lease incentives
206
116
602
(5)
228
Add: Other non-cash expense
—
—
—
758
(8)
Less: Effective interest income from
mortgage loans
(1,387)
(1,483)
(2,789)
(3,227)
(7)
Net non-cash income
(888)
(1,348)
(1,660)
(2,904)
Non-cash expense:
Add: Non-cash compensation charges
2,012
1,958
3,937
3,810
Less: Provision (recovery) for credit
losses
305
—
659
(9)
Net non-cash expense
2,317
1,958
4,596
3,801
Funds available for distribution (FAD)
$
26,779
$
22,781
$
51,945
$
47,360
Add: Non-recurring items
(1,181)
(2)
133
(3)
(1,181)
(2)
1,337
(9)
FAD, excluding non-recurring items
$
25,598
$
22,914
$
50,764
$
48,697
(1) Represents (2) below partially offset
by the provision for credit losses related to the origination of
two mortgage loans during 2022 second quarter ($322).
(2) Represents the lease termination fee
received in connection with the sale of a 74-unit assisted living
community ($1,181).
(3) Represents the GAAP and cash impact of
the 50% reduction of 2021 rent escalation.
(4) Represents (2) from above partially
offset by the provision for credit losses related to the
origination of two mortgage loans during the second quarter of 2022
and a $25,000 mezzanine loan during the first quarter of 2022
($572) and (5) below.
(5) Includes a lease incentive balance
write-off of $173 related to a closed property and subsequent lease
termination.
(6) Represents the GAAP impact of the 50%
reduction of 2021 rent and interest escalation.
(7) Includes the impact of the 50%
reduction of 2021 rent and interest escalation on straight-line
rent and effective interest.
(8) Represents a straight-line rent
receivable write-off due to transitioning rental revenue to cash
basis.
(9) Represents the cash impact of the 50%
reduction of 2021 rent and interest escalation.
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
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
NAREIT Basic FFO attributable to common
stockholders per share
$
0.64
$
0.57
$
1.25
$
1.19
NAREIT Diluted FFO attributable to common
stockholders per share
$
0.64
$
0.57
$
1.24
$
1.19
NAREIT Diluted FFO attributable to common
stockholders
$
25,350
$
22,171
$
49,009
$
46,696
Weighted average shares used to calculate
NAREIT diluted FFO per share
attributable to common stockholders
39,665
39,170
39,520
39,333
Diluted FFO attributable to common
stockholders, excluding non-recurring items
$
24,491
$
22,417
$
48,573
$
47,879
Weighted average shares used to calculate
diluted FFO, excluding
non-recurring items, per share
attributable to common stockholders
39,665
39,369
39,520
39,333
Diluted FAD
$
26,779
$
22,894
$
51,945
$
47,593
Weighted average shares used to calculate
diluted FAD per share
39,665
39,369
39,520
39,333
Diluted FAD, excluding non-recurring
items
$
25,598
$
23,027
$
50,764
$
48,930
Weighted average shares used to calculate
diluted FAD, excluding non-recurring items, per share
39,665
39,369
39,520
39,333
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE
SHEETS
(amounts in thousands, except per
share)
June 30, 2022
December 31, 2021
ASSETS
(unaudited)
(audited)
Investments:
Land
$
125,786
$
123,239
Buildings and improvements
1,284,151
1,285,318
Accumulated depreciation and
amortization
(374,170)
(374,606)
Real property investments, net
1,035,767
1,033,951
Mortgage loans receivable, net of loan
loss reserve: 2022—$3,830; 2021—$3,473
379,817
344,442
Real estate investments, net
1,415,584
1,378,393
Notes receivable, net of loan loss
reserve: 2022—$588; 2021—$286
58,206
28,337
Investments in unconsolidated joint
ventures
19,340
19,340
Investments, net
1,493,130
1,426,070
Other assets:
Cash and cash equivalents
6,401
5,161
Debt issue costs related to revolving line
of credit
2,681
3,057
Interest receivable
42,713
39,522
Straight-line rent receivable
22,689
24,146
Lease incentives
1,910
2,678
Prepaid expenses and other assets
8,703
4,191
Total assets
$
1,578,227
$
1,504,825
LIABILITIES
Revolving line of credit
$
56,000
$
110,900
Term loans, net of debt issue costs:
2022—$563; 2021—$637
99,437
99,363
Senior unsecured notes, net of debt issue
costs: 2022—$1,549; 2021—$524
579,431
512,456
Accrued interest
3,946
3,745
Accrued expenses and other liabilities
28,917
33,234
Total liabilities
767,731
759,698
EQUITY
Stockholders’ equity:
Common stock: $0.01 par value; 60,000
shares authorized; shares issued and outstanding: 2022—40,380;
2021—39,374
404
394
Capital in excess of par value
893,155
856,895
Cumulative net income
1,513,431
1,444,636
Accumulated other comprehensive income
(loss)
6,139
(172)
Cumulative distributions
(1,610,155)
(1,565,039)
Total LTC Properties, Inc. stockholders’
equity
802,974
736,714
Non-controlling interests
7,522
8,413
Total equity
810,496
745,127
Total liabilities and equity
$
1,578,227
$
1,504,825
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220728005865/en/
Mandi Hogan (805) 981-8655
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