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 second
quarter ended June 30, 2020.
Net income available to common stockholders was $1.8 million, or
$0.05 per diluted share, for the 2020 second quarter, compared with
$20.4 million, or $0.51 per diluted share, for the same period in
2019. The decrease in net income was primarily due to a
non-recurring $17.7 million write-off of straight-line rent
receivable and lease incentive balances related to an affiliate of
Senior Lifestyle Corporation (“Senior Lifestyle”) and a $0.6
million loss on the liquidation of an unconsolidated joint venture
with another affiliate of Senior Lifestyle, partially offset by
higher rental and interest income from acquisitions and mortgage
funding in 2020. The write-off of Senior Lifestyle straight-line
rent receivable and lease incentive balances was due to a shortfall
in payments of May and June 2020 rent obligations.
Funds from Operations (“FFO”) was $12.0 million for the 2020
second quarter, compared with $29.7 million for the comparable 2019
period. FFO per diluted common share was $0.31 and $0.75 for the
quarters ended June 30, 2020 and 2019, respectively. The decrease
in FFO and FFO per diluted common share was primarily due to the
$17.7 million non-recurring write-off discussed above. Excluding
the $17.7 million non-recurring write-off, FFO per diluted common
share for the quarters ended June 30, 2020 and 2019 was $0.76 and
$0.75, respectively.
During the second quarter of 2020, LTC funded additional loan
proceeds of $2.0 million under an existing mortgage loan. The
incremental funding bears interest at 8.89% escalating annually by
2.25%.
Subsequent to June 30, 2020, LTC completed the following:
- Consolidated its four leases with Brookdale Senior Living
Communities, Inc. into one master lease and extended the term by
one year to December 31, 2021. The master lease provides three
renewal options consisting of a four-year renewal option, a
five-year renewal option and a 10-year renewal option. The notice
period for the first renewal option is January 1, 2021 to April 30,
2021. The economic terms of rent remain the same as the
consolidated rent terms under the previous four separate lease
agreements.
Conference Call
Information
LTC will conduct a conference call on Friday, July 31, 2020, 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, 2020. The call also will include special guest Lynne
Katzmann, Founder and Chief Executive Officer of Juniper
Communities. Both LTC's earnings release and supplemental
information package for the current period and Ms. Katzmann's slide
presentation will be available at:
http://ir.ltcreit.com/Presentations.
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 August 14, 2020 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
10145214
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 29 operating partners.
The 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
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
(unaudited)
(unaudited)
Revenues:
Rental income
$
20,275
(1)
$
38,277
$
58,310
(1)
$
75,901
Interest income from mortgage loans
7,820
7,351
15,597
14,662
Interest and other income
386
638
984
1,159
Total revenues
28,481
46,266
74,891
91,722
Expenses:
Interest expense
7,546
7,710
15,256
15,177
Depreciation and amortization
9,797
9,860
19,466
19,467
Provision for doubtful accounts
—
84
1
167
Transaction costs
64
200
134
200
Property tax expense
4,111
3,910
8,334
8,296
General and administrative expenses
4,580
4,596
9,680
9,167
Total expenses
26,098
26,360
52,871
52,474
Other operating income:
Gain on sale of real estate, net
189
500
44,043
500
Operating income
2,572
20,406
66,063
39,748
Loss on unconsolidated joint ventures
(620)
—
(620)
—
Income from unconsolidated joint
ventures
—
128
231
1,213
Net income
1,952
20,534
65,674
40,961
Income allocated to non-controlling
interests
(82)
(88)
(171)
(169)
Net income attributable to LTC Properties,
Inc.
1,870
20,446
65,503
40,792
Income allocated to participating
securities
(97)
(94)
(278)
(186)
Net income available to common
stockholders
$
1,773
$
20,352
$
65,225
$
40,606
Earnings per common share:
Basic
$
0.05
$
0.51
$
1.66
$
1.03
Diluted
$
0.05
$
0.51
$
1.66
$
1.02
Weighted average shares used to
calculate earnings per
common share:
Basic
39,055
39,577
39,298
39,555
Diluted
39,137
39,769
39,380
39,747
Dividends declared and paid per common
share
$
0.57
$
0.57
$
1.14
$
1.14
(1)
Decreased primarily due to a $17,742
adjustment for collectibility of rental income and lease incentives
during the second quarter of 2020 and reduction in rent related to
the sale of the Preferred Care portfolio, partially offset by
increased rent from acquisitions and lease transitions.
Supplemental Reporting
Measures
FFO and Funds Available for Distribution (“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,
2020
2019
2020
2019
GAAP net income available to common
stockholders
$
1,773
(1)
$
20,352
$
65,225
(1)
$
40,606
Add: Depreciation and amortization
9,797
9,860
19,466
19,467
Add: Loss on unconsolidated joint
ventures
620
—
620
—
Less: Gain on sale of real estate, net
(189)
(500)
(44,043)
(500)
NAREIT FFO attributable to common
stockholders
12,001
29,712
41,268
59,573
Add: Non-recurring items
17,742
(2) (3)
—
17,742
(2)(3)
576
(4) (5)
FFO attributable to common stockholders,
excluding non-recurring items
$
29,743
$
29,712
$
59,010
$
60,149
NAREIT FFO attributable to common
stockholders
$
12,001
$
29,712
$
41,268
$
59,573
Non-cash income:
Less: straight-line rental income
(634)
(1,275)
(1,473)
(2,513)
Add: amortization of lease costs
293
(3)
94
394
(3)
181
Add: Other non-cash expense
17,557
(2)
—
17,557
(2)
1,926
(4)
Less: Effective interest income from
mortgage loans
(1,555)
(1,418)
(3,078)
(2,833)
Less: Deferred income from unconsolidated
joint ventures
—
(6)
—
(13)
Net non-cash income
15,661
(2,605)
13,400
(3,252)
Non-cash expense:
Add: Non-cash compensation charges
1,762
1,623
3,539
3,312
Less: Capitalized interest
(86)
(73)
(277)
(333)
Net non-cash expense
1,676
1,550
3,262
2,979
Funds available for distribution (FAD)
29,338
28,657
$57,930
$59,300
Less: Non-recurring income
—
—
—
(1,350)
(5)
Funds available for distribution (FAD),
excluding non-recurring items
$
29,338
$
28,657
$
57,930
$
57,950
(1) Decreased primarily due to a $17,742
adjustment for collectibility of rental income and lease incentives
during the second quarter of 2020 and reduction in rent
related to the sale of the Preferred Care
portfolio, partially offset by increased rent from acquisitions and
lease transitions.
(2) Represents the write-off of Senior
Lifestyle straight-line rent.
(3) Includes the write-off of Senior
Lifestyle lease incentives.
(4) Represents the write-off of
straight-line rent due to a lease termination and transition of two
seniors housing communities to a new operator.
(5) Represents deferred rent repayment
from an operator.
NAREIT Basic FFO attributable to common
stockholders per share
$
0.31
$
0.75
$
1.05
$
1.51
NAREIT Diluted FFO attributable to common
stockholders per share
$
0.31
$
0.75
$
1.05
$
1.50
NAREIT Diluted FFO attributable to common
stockholders
$
12,001
$
29,806
$
41,268
$
59,759
Weighted average shares used to calculate
NAREIT diluted FFO per share
attributable to common stockholders
39,137
39,934
39,380
39,908
Diluted FFO attributable to common
stockholders, excluding non-recurring items
$
29,840
$
29,806
$
59,010
$
60,335
Weighted average shares used to calculate
diluted FFO, excluding
non-recurring items, per share
attributable to common stockholders
39,309
39,934
39,380
39,908
Diluted FAD, excluding non-recurring
items
$
29,435
$
28,751
$
57,930
$
58,136
Weighted average shares used to calculate
diluted FAD, excluding
non-recurring items, per share
39,309
39,934
39,380
39,908
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE
SHEETS
(amounts in thousands, except per
share)
June 30, 2020
December 31, 2019
ASSETS
(unaudited)
(audited)
Investments:
Land
$
127,774
$
126,703
Buildings and improvements
1,317,917
1,295,899
Accumulated depreciation and
amortization
(330,098)
(312,642)
Operating real estate property, net
1,115,593
1,109,960
Properties held-for-sale, net of
accumulated depreciation: 2020—$0; 2019—$35,113
—
26,856
Real property investments, net
1,115,593
1,136,816
Mortgage loans receivable, net of loan
loss reserve: 2020—$2,580; 2019—$2,560
256,069
254,099
Real estate investments, net
1,371,662
1,390,915
Notes receivable, net of loan loss
reserve: 2020—$163; 2019—$181
16,093
17,927
Investments in unconsolidated joint
ventures
1,023
19,003
Investments, net
1,388,778
1,427,845
Other assets:
Cash and cash equivalents
50,370
4,244
Debt issue costs related to bank
borrowings
1,766
2,164
Interest receivable
29,701
26,586
Straight-line rent receivable
29,619
45,703
Lease incentives
2,471
2,552
Prepaid expenses and other assets
7,467
5,115
Total assets
$
1,510,172
$
1,514,209
LIABILITIES
Bank borrowings
$
89,900
$
93,900
Senior unsecured notes, net of debt issue
costs: 2020—$735; 2019—$812
599,565
599,488
Accrued interest
4,587
4,983
Accrued expenses and other liabilities
28,815
30,412
Total liabilities
722,867
728,783
EQUITY
Stockholders’ equity:
Common stock: $0.01 par value; 60,000
shares authorized; shares issued and outstanding: 2020—39,243;
2019—39,752
392
398
Capital in excess of par value
849,326
867,346
Cumulative net income
1,358,985
1,293,482
Cumulative distributions
(1,429,809)
(1,384,283)
Total LTC Properties, Inc. stockholders’
equity
778,894
776,943
Non-controlling interests
8,411
8,483
Total equity
787,305
785,426
Total liabilities and equity
$
1,510,172
$
1,514,209
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200730005960/en/
Wendy Simpson Pam Kessler (805) 981-8655
LTC Properties (NYSE:LTC)
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