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 third quarter
ended September 30, 2017.
Net income available to common stockholders was
$20.5 million, or $0.52 per diluted share, for the 2017 third
quarter, compared with $22.3 million, or $0.57 per diluted share,
for the same period in 2016. Funds from Operations (“FFO”)
increased to $30.1 million for the 2017 third quarter, up from
$29.7 million for the comparable 2016 period. FFO per diluted
common share was $0.76 for the quarters ended
September 30, 2017 and 2016.
The decrease in net income available to common stockholders was
primarily due to higher interest expense resulting from the sale of
$100.0 million of senior unsecured notes in 2017, a decrease in
revenue primarily related to a master lease that was placed on cash
basis and the reduction of rent related to properties sold in the
second quarter of 2017, and a net gain on sale of $1.8 million in
the 2016 third quarter, partially offset by higher income from
unconsolidated joint ventures in 2017.
Subsequent to September 31, 2017, LTC acquired a newly
constructed 73-unit assisted living and memory care community in
Missouri for $16.6 million. The property was added to an existing
master lease agreement at an initial cash yield of 7%.
Conference Call
InformationLTC will conduct a conference call on
Thursday, November 9, 2017, 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, 2017. The conference call is accessible by
telephone and the internet. Telephone access will be available by
dialing 877-510-2862 (domestically) or 412-902-4134
(internationally). To participate in the webcast, go to LTC’s
website at www.LTCreit.com 15 minutes before the call to download
the necessary software.
An audio replay of the conference call will be available from
November 9 through November 23, 2017 and may be accessed by dialing
877-344-7529 (domestically) or 412-317-0088 (internationally) and
entering conference number 10113608. Additionally, an audio archive
will be available on LTC’s website on the “Presentations” page of
the “Investor Information” section, which is under the “Investors”
tab. LTC’s earnings release and supplemental information package
for the current period will be available on its website on the
“Press Releases” and “Presentations” pages, respectively, of the
“Investor Information” section which is under the “Investors”
tab.
About LTCLTC is a
self-administered real estate investment trust that primarily
invests in seniors housing and health care properties primarily
through sale-leaseback transactions, mortgage financing and
structured finance solutions including mezzanine lending. At
September 30, 2017, LTC had 201 investments located in 28
states comprising 103 assisted living communities, 97 skilled
nursing centers and 1 behavioral health care hospital. Assisted
living communities, independent living communities, memory care
communities and combinations thereof are included in the assisted
living property type. For more information on LTC Properties, Inc.,
visit the Company’s website at www.LTCreit.com, or connect with us
on Twitter @LTCreit and LinkedIn.
Forward Looking
StatementsThis 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 Nine Months
Ended September 30, September 30, 2017 2016
2017 2016 (unaudited) (unaudited) Revenues:
Rental income $ 33,233 $ 33,753 $ 103,533 $ 98,705 Interest income
from mortgage loans 6,677 6,958 20,050 20,347 Interest and other
income 1,336 131 2,753
390 Total revenues 41,246 40,842
126,336 119,442 Expenses:
Interest expense 7,644 6,836 22,266 19,586 Depreciation and
amortization 9,519 9,155 28,186 26,623 Impairment charges — — 1,880
— (Recovery) provision for doubtful accounts (96 ) 43 (139 ) 245
Transaction costs 34 2 56 96 General and administrative expenses
4,144 4,464 13,270
12,864 Total expenses 21,245 20,500
65,519 59,414 Operating
income 20,001 20,342 60,817 60,028 Income from unconsolidated joint
ventures 615 289 1,635 839 Gain on sale of real estate, net
— 1,780 5,054 3,582 Net
income 20,616 22,411 67,506 64,449 Income allocated to
participating securities (80 ) (90 ) (281 )
(296 ) Net income available to common stockholders $ 20,536
$ 22,321 $ 67,225 $ 64,153
Earnings per common share: Basic $ 0.52 $ 0.57
$ 1.71 $ 1.68 Diluted $ 0.52 $ 0.57 $
1.70 $ 1.68
Weighted average shares used to
calculate earnings per common share: Basic 39,428
39,057 39,403 38,161
Diluted 39,748 39,335
39,738 38,455 Dividends declared and
paid per common share $ 0.57 $ 0.54 $ 1.71 $
1.62
Supplemental Reporting
MeasuresFFO, adjusted FFO (“AFFO”), 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, AFFO and FAD as
supplemental measures of operating performance. The Company
believes FFO, AFFO 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, AFFO
and FAD facilitate like comparisons of operating performance
between periods. Additionally the Company believes that normalized
FFO, normalized AFFO and normalized FAD provide useful information
because they 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. Normalized FFO represents FFO adjusted for
certain items detailed in the reconciliations. 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 AFFO as FFO excluding the effects of straight-line
rent, amortization of lease inducement, effective interest income
and deferred income from unconsolidated joint ventures. 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. By excluding the non-cash
portion of rental income, interest income from mortgage loans and
income from unconsolidated joint ventures, investors, analysts and
our management can compare AFFO between periods. Normalized AFFO
represents AFFO adjusted for certain items detailed in the
reconciliations.
We define FAD as AFFO excluding the effects of non-cash
compensation charges, capitalized interest and non-cash interest
charges. 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.
Normalized FAD represents FAD adjusted for certain items detailed
in the reconciliations.
While the Company uses FFO, Normalized FFO, AFFO, Normalized
AFFO, FAD and Normalized 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, AFFO and
FADThe following table reconciles GAAP net income
available to common stockholders to each of NAREIT FFO attributable
to common stockholders and normalized FFO attributable to common
stockholders, as well as normalized AFFO and normalized FAD
(unaudited, amounts in thousands, except per share amounts):
Three Months Ended Nine Months
Ended September 30, September 30, 2017
2016 2017 2016
GAAP net income available to common stockholders $ 20,536 $ 22,321
$ 67,225 $ 64,153 Add: Depreciation and amortization 9,519 9,155
28,186 26,623 Add: Impairment charges — — 1,880 — Less: Gain on
sale of real estate, net — (1,780 )
(5,054 ) (3,582 ) NAREIT FFO attributable to common
stockholders 30,055 29,696 92,237 87,194 Less: Non-cash
rental income (1,485 ) (2,278 ) (5,681 ) (6,755 ) Less: Non-cash
other income (842 ) — (842 ) — Less: Effective interest income from
mortgage loans (1,394 ) (1,352 ) (4,102 ) (3,907 ) Less: Deferred
income from unconsolidated joint ventures (47 ) —
(141 ) — Adjusted FFO (AFFO) 26,287
26,066 81,471 76,532 Add: Non-cash compensation charges
1,283 1,130 3,967 3,149 Add: Non-cash interest related to earn-out
liabilities 125 223 476 538 Less: Capitalized interest (256
) (251 ) (627 ) (1,193 ) Funds available for
distribution (FAD) $ 27,439 $ 27,168 $ 85,287
$ 79,026
NAREIT Basic FFO attributable to
common stockholders per share $ 0.76 $ 0.76 $ 2.34
$ 2.28 NAREIT Diluted FFO attributable to common
stockholders per share $ 0.76 $ 0.76 $ 2.33 $
2.28 NAREIT Diluted FFO attributable to common
stockholders $ 30,135 $ 29,786 $ 92,518 $
87,490 Weighted average shares used to calculate NAREIT
diluted FFO per share attributable to common stockholders
39,748 39,335 39,738
38,455
Diluted AFFO $ 26,367 $
26,156 $ 81,752 $ 76,828 Weighted average
shares used to calculate diluted AFFO per share 39,748
39,335 39,738 38,455
Diluted FAD $ 27,519 $ 27,258
$ 85,568 $ 79,322 Weighted average shares used
to calculate diluted FAD per share 39,748
39,335 39,738 38,455
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except per
share)
September 30, 2017 December 31, 2016
(unaudited) (audited)
ASSETS Investments: Land $ 121,897 $
116,096 Buildings and improvements 1,227,044 1,185,467 Accumulated
depreciation and amortization (294,725 ) (275,861 )
Operating real estate property, net 1,054,216 1,025,702 Properties
held-for-sale, net of accumulated depreciation: 2017—$4,264;
2016—$0 6,381 — Real property
investments, net 1,060,597 1,025,702 Mortgage loans receivable, net
of loan loss reserve: 2017—$2,234; 2016—$2,315 221,861
229,801 Real estate investments, net 1,282,458
1,255,503 Notes receivable, net of loan loss reserve: 2017—$166;
2016—$166 16,402 16,427 Investments in unconsolidated joint
ventures 29,862 25,221 Investments, net
1,328,722 1,297,151 Other assets: Cash and cash equivalents
3,842 7,991 Debt issue costs related to bank borrowings 1,080 1,847
Interest receivable 13,650 9,683 Straight-line rent receivable, net
of allowance for doubtful accounts: 2017—$901; 2016—$960 61,070
55,276 Prepaid expenses and other assets 22,829
22,948 Total assets $ 1,431,193 $ 1,394,896
LIABILITIES Bank borrowings $ 55,000 $ 107,100
Senior unsecured notes, net of debt issue costs: 2017—$1,183;
2016—$1,009 582,950 502,291 Accrued interest 4,108 4,675 Accrued
incentives and earn-outs 8,790 12,229 Accrued expenses and other
liabilities 23,710 28,553 Total
liabilities 674,558 654,848
EQUITY Stockholders’
equity: Common stock: $0.01 par value; 60,000 shares authorized;
shares issued and outstanding: 2017—39,571; 2016—39,221 396 392
Capital in excess of par value 855,746 839,005 Cumulative net
income 1,080,949 1,013,443 Cumulative distributions
(1,180,456 ) (1,112,792 ) Total equity 756,635
740,048 Total liabilities and equity $ 1,431,193
$ 1,394,896
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LTC Properties, Inc.Wendy L. SimpsonPam Kessler805-981-8655
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