LTC Reports 2018 Fourth Quarter Results and Discusses Recent Investment Activity

WESTLAKE VILLAGE, Calif.–(BUSINESS WIRE)–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 fourth quarter ended
December 31, 2018.

Net income available to common stockholders was $30.6 million, or $0.77
per diluted share, for the 2018 fourth quarter, compared with
$19.8 million, or $0.50 per diluted share, for the same period in 2017.
The improvement was primarily due to a net gain on sale of $8.0 million
in 2018, compared with a net loss of $1.2 million in 2017, one-time
non-recurring income of $3.1 million related to the write-off of a
contingent lease incentive and related earn-out liability, higher rental
and interest income resulting from acquisitions, mortgage loan
originations, and higher income from unconsolidated joint ventures and
mezzanine loans, partially offset by a reduction in rental income
resulting from properties sold in 2018 and the non-payment of December
rent by Senior Care Centers, LLC (“Senior Care”) as a result of their
bankruptcy filing.

Funds from Operations (“FFO”) was $32.1 million for the 2018 fourth
quarter, compared with $30.4 million for the comparable 2017 period. FFO
per diluted common share was $0.81 and $0.77 for the quarters ended
December 31, 2018 and 2017, respectively. Excluding the $3.1 million
non-recurring income in the fourth quarter of 2018, FFO decreased
$1.4 million compared with the fourth quarter of 2017 due to the
non-payment of December rent by Senior Care.

During the fourth quarter of 2018, LTC sold two skilled nursing centers
with a total of 169 beds in Florida and Georgia for an aggregate of
$10.5 million.

Subsequent to December 31, 2018, and as announced in January, LTC
entered into a real estate joint venture which acquired an operational
74-unit assisted living and memory care community for approximately
$17.0 million. LTC’s economic interest in the real estate joint venture
is approximately 95%. The initial cash lease rate is 7.4% with a 10-year
lease term.

Conference Call Information

LTC will conduct a conference call on Friday, March 1, 2019, 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, 2018. 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 March 1
through March 15, 2019 and may be accessed by dialing 877-344-7529
(domestically) or 412-317-0088 (internationally) and entering conference
number 10128164. 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 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 more than
200 investments in 28 states with 30 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   Twelve Months Ended
December 31, December 31,
2018   2017 2018   2017
(unaudited) (audited)
Revenues:
Rental income $ 32,759 $ 34,124 $ 135,405 $ 137,657
Interest income from mortgage loans 7,290 6,719 28,200 26,769
Interest and other income   3,538     886     5,040     3,639  
Total revenues   43,587     41,729     168,645     168,065  
 
Expenses:
Interest expense 7,215 7,683 30,196 29,949
Depreciation and amortization 9,396 9,424 37,555 37,610
Impairment charges 1,880
Provision (recovery) for doubtful accounts 11 (67 ) 87 (206 )
Transaction costs 65 84 56
General and administrative expenses   4,801     4,243     19,193     17,513  
Total expenses 21,488 21,283 87,115 86,802
 
Other operating income:
Gain (loss) on sale of real estate, net   7,984     (1,240 )   70,682     3,814  
Operating income 30,083 19,206 152,212 85,077
Income from unconsolidated joint ventures   761     628     2,864     2,263  
Net income 30,844 19,834 155,076 87,340
Income allocated to non-controlling interests   (78 )           (95 )      
Net income attributable to LTC Properties, Inc. 30,766 19,834 154,981 87,340
Income allocated to participating securities   (121 )   (81 )   (625 )   (362 )
Net income available to common stockholders $ 30,645   $ 19,753   $ 154,356   $ 86,978  
 
Earnings per common share:
Basic $ 0.78   $ 0.50   $ 3.91   $ 2.21  
Diluted $ 0.77   $ 0.50   $ 3.89   $ 2.20  
 

Weighted average shares used to calculate earnings per common
share:

Basic   39,501     39,429     39,477     39,409  
Diluted   39,864     39,645     39,839     39,637  
 
Dividends declared and paid per common share $ 0.57   $ 0.57   $ 2.28   $ 2.28  
 

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 non-cash income, such as
straight-line rent, amortization of lease inducement, effective interest
income, and deferred income from unconsolidated joint ventures, and
non-cash expense, such as 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.

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, AFFO 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,
  2018     2017     2018     2017  
 
GAAP net income available to common stockholders $ 30,645 $ 19,753 $ 154,356 $ 86,978
Add: Depreciation and amortization 9,396 9,424 37,555 37,610
Add: Impairment charges 1,880
Less: (Gain) loss on sale of real estate, net   (7,984 )   1,240     (70,682 )   (3,814 )
NAREIT FFO attributable to common stockholders 32,057 30,417 121,229 122,654
 
Less: Non-recurring income   (3,074 )

(1)

      (3,074 )

(1)

  (842 )

(1)

FFO attributable to common stockholders excluding non-recurring
income (1)
28,983 30,417 118,155 121,812
 
Less: Non-cash rental income (480 ) (2,804 ) (7,458 ) (8,485 )
Less: Effective interest income from mortgage loans (1,438 ) (1,398 ) (5,703 ) (5,500 )
Less: Deferred income from unconsolidated joint ventures (15 ) (36 ) (108 ) (177 )
Add: Non-cash compensation charges 1,486 1,282 5,870 5,249
Add: Non-cash interest related to earn-out liabilities 126 377 602
Less: Capitalized interest   (398 )   (281 )   (1,248 )   (908 )
Funds available for distribution (FAD) $ 28,138   $ 27,306   $ 109,885   $ 112,593  
 

(1) Represents net write-off of a contingent lease incentive
and related earn-out liability.

                 
 
NAREIT Basic FFO attributable to common stockholders per share $ 0.81   $ 0.77   $ 3.07   $ 3.11  
NAREIT Diluted FFO attributable to common stockholders per share $ 0.81   $ 0.77   $ 3.06   $ 3.10  
 
NAREIT Diluted FFO attributable to common stockholders $ 32,178   $ 30,498   $ 121,854   $ 123,016  
Weighted average shares used to calculate NAREIT diluted FFO per
share
attributable to common stockholders   39,864     39,645     39,839     39,637  

 

               
 
Diluted FFO attributable to common stockholders, excluding
non-recurring income
$ 29,104   $ 30,498   $ 118,780   $ 122,174  
Weighted average shares used to calculate diluted
FFO per share attributable to common stockholders, excluding
non-recurring income
  39,864     39,645     39,839     39,637  
                 
 
Diluted FAD $ 28,259   $ 27,387   $ 110,510   $ 112,113  
Weighted average shares used to calculate diluted FAD per share   39,864     39,645     39,839     39,637  
                                 
 
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except per share)

   
December 31, 2018 December 31, 2017
ASSETS (audited) (audited)
Investments:
Land $ 125,358 $ 124,041
Buildings and improvements 1,290,352 1,262,335
Accumulated depreciation and amortization   (312,959 )   (304,117 )
Operating real estate property, net 1,102,751 1,082,259
Properties held-for-sale, net of accumulated depreciation:
2018—$1,916; 2017—$1,916
  3,830     3,830  
Real property investments, net 1,106,581 1,086,089
Mortgage loans receivable, net of loan loss reserve: 2018—$2,447;
2017—$2,255
  242,939     223,907  
Real estate investments, net 1,349,520 1,309,996
Notes receivable, net of loan loss reserve: 2018—$128; 2017—$166 12,715 16,402
Investments in unconsolidated joint ventures   30,615     29,898  
Investments, net 1,392,850 1,356,296
 
Other assets:
Cash and cash equivalents 2,656 5,213
Restricted cash 2,108
Debt issue costs related to bank borrowings 2,989 810
Interest receivable 20,732 15,050
Straight-line rent receivable, net of allowance for doubtful
accounts: 2018—$746; 2017—$814
73,857 64,490
Lease incentives 14,443 21,481
Prepaid expenses and other assets   3,985     2,230  
Total assets $ 1,513,620   $ 1,465,570  
 
LIABILITIES
Bank borrowings $ 112,000 $ 96,500
Senior unsecured notes, net of debt issue costs: 2018—$938;
2017—$1,131
533,029 571,002
Accrued interest 4,180 5,276
Accrued incentives and earn-outs 8,916
Accrued expenses and other liabilities   31,440     25,228  
Total liabilities 680,649 706,922
 
EQUITY
Stockholders’ equity:
Common stock: $0.01 par value; 60,000 shares authorized; shares
issued and outstanding: 2018—39,657; 2017—39,570
397 396
Capital in excess of par value 862,712 856,992
Cumulative net income 1,255,764 1,100,783
Cumulative distributions   (1,293,383 )   (1,203,011 )
Total LTC Properties, Inc. stockholders’ equity 825,490 755,160
Non-controlling interests   7,481     3,488  
Total equity   832,971     758,648  
Total liabilities and equity $ 1,513,620   $ 1,465,570  
 

Contacts

Wendy L. Simpson
Pam Kessler
(805) 981-8655

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