WESTLAKE VILLAGE, Calif.–(BUSINESS WIRE)–lt;a href=”https://twitter.com/hashtag/earnings?src=hash” target=”_blank”gt;#earningslt;/agt;–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 first quarter ended March 31, 2019.
Net income available to common stockholders was $20.3 million, or $0.51
per diluted share, for both quarters ended March 31, 2019 and 2018.
Funds from Operations (“FFO”) was $29.9 million for the 2019 first
quarter, compared with $29.7 million for the comparable 2018 period. FFO
per diluted common share was $0.75 for both quarters ended March 31,
2019 and 2018.
During the quarter we received $1.4 million of deferred rent from Thrive
and wrote off $1.9 million of straight-line rent related to the
termination of a lease and transition of two seniors housing communities
to a new operator. Excluding these two non-recurring items in the first
quarter of 2019, FFO increased $0.7 million compared with the first
quarter of 2018, due to higher rental and interest income resulting from
acquisitions, mortgage loan originations, development and capital
improvement projects, net increased rent from Anthem, Preferred Care and
Senior Care, higher income from unconsolidated joint ventures, and lower
interest expense, partially offset by a reduction in rental income
related to properties sold in 2018 and Thrive’s failure to pay first
quarter 2019 rent.
LTC completed the following transactions during the first quarter of
2019:
-
Under a partnership agreement, acquired an operational 74-unit
assisted living and memory care community in Virginia, with a
stabilized occupancy of 90% as of closing. LTC contributed
$16.0 million in cash and the non-controlling partner contributed
$919,487 of equity. LTC’s economic interest in the JV is approximately
95%. -
Completed construction of and opened a 143-bed skilled nursing center
in Kentucky. -
Funded a $6.8 million mezzanine loan commitment, that was originated
in the fourth quarter of 2018, for the development of a 204-unit
independent living, assisted living and memory care community in
Georgia. The mezzanine loan has a five-year term and a 12% return, a
portion of which is paid in cash, and the remaining portion of which
is deferred during the first 46 months. -
Entered into an agreement to transition two seniors housing
communities in Clovis, California to a new operator. The new master
lease has a 10-year term with an annual initial cash rent of
$2.9 million, fixed for five years.
Conference Call Information
LTC will conduct a conference call on Friday, May 10, 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 March 31, 2019.
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 any necessary software.
An audio replay of the conference call will be available from May 10
through May 24, 2019 and may be accessed by dialing 877-344-7529
(domestically) or 412-317-0088 (internationally) and entering conference
number 10130181. 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 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.
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LTC PROPERTIES, INC. |
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CONSOLIDATED STATEMENTS OF INCOME |
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(amounts in thousands, except per share amounts) |
|||||||||
| Three Months Ended | |||||||||
| March 31, | |||||||||
| 2019 | 2018 | ||||||||
| (unaudited) | |||||||||
| Revenues: | |||||||||
| Rental income | $ | 28,024 | (1) | $ | 34,505 | ||||
| Interest income from mortgage loans | 7,311 | 6,816 | |||||||
| Interest and other income | 521 | 489 | |||||||
| Total revenues | 35,856 | 41,810 | |||||||
| Expenses: | |||||||||
| Recovery of written-off straight-line rent receivable | (9,600) | (1) | — | ||||||
| Interest expense | 7,467 | 7,829 | |||||||
| Depreciation and amortization | 9,607 | 9,444 | |||||||
| Provision for doubtful accounts | 83 | 8 | |||||||
| Transaction costs | — | 4 | |||||||
| Property tax expense | 4,386 | (1) | — | ||||||
| General and administrative expenses | 4,571 | 4,797 | |||||||
| Total expenses | 16,514 | 22,082 | |||||||
| Operating income | 19,342 | 19,728 | |||||||
| Income from unconsolidated joint ventures | 1,085 | 631 | |||||||
| Net income | 20,427 | 20,359 | |||||||
| Income allocated to non-controlling interests | (81) | — | |||||||
| Net income attributable to LTC Properties, Inc. | 20,346 | 20,359 | |||||||
| Income allocated to participating securities | (92) | (88) | |||||||
| Net income available to common stockholders | $ | 20,254 | $ | 20,271 | |||||
| Earnings per common share: | |||||||||
| Basic | $ | 0.51 | $ | 0.51 | |||||
| Diluted | $ | 0.51 | $ | 0.51 | |||||
|
Weighted average shares used to calculate earnings per common share: |
|||||||||
| Basic | 39,532 | 39,451 | |||||||
| Diluted | 39,874 | 39,454 | |||||||
| Dividends declared and paid per common share | $ | 0.57 | $ | 0.57 | |||||
| (1) |
The decrease in rental income and the new income statement line items “recovery of written-off straight-line rent receivable” and “property tax expense” are due to the impact of newly adopted Accounting Standard Codification 842, Leases (“ASC 842”). See Footnote 1 in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 for further discussion. |
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 | ||||||||||
| March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| GAAP net income available to common stockholders | $ | 20,254 | $ | 20,271 | ||||||
| Add: Depreciation and amortization | 9,607 | 9,444 | ||||||||
| NAREIT FFO attributable to common stockholders | 29,861 | 29,715 | ||||||||
| Less: Non-recurring items(1)(2) | 576 | — | ||||||||
|
FFO attributable to common stockholders, excluding non-recurring items |
$ | 30,437 | $ | 29,715 | ||||||
| NAREIT FFO attributable to common stockholders | $ | 29,861 | $ | 29,715 | ||||||
| Non-cash income: | ||||||||||
| Less: Straight-line rental income | (1,238 | ) | (3,440 | ) | ||||||
| Add: Amortization of lease costs | 87 | 540 | ||||||||
| Add: Other non-cash contra-revenue(1) | 1,926 | — | ||||||||
| Less: Effective interest income from mortgage loans | (1,415 | ) | (1,404 | ) | ||||||
| Less: Deferred income from unconsolidated joint ventures | (7 | ) | (31 | ) | ||||||
| Net non-cash income | (647 | ) | (4,335 | ) | ||||||
| Non-cash expense: | ||||||||||
| Add: Non-cash compensation charges | 1,689 | 1,376 | ||||||||
| Add: Non-cash interest related to earn-out liabilities | — | 126 | ||||||||
| Less: Capitalized interest | (260 | ) | (259 | ) | ||||||
| Net non-cash expense | 1,429 | 1,243 | ||||||||
| Funds available for distribution (FAD) | 30,643 | 26,623 | ||||||||
| Less: Non-recurring income(2) | (1,350 | ) | — | |||||||
| Funds available for distribution (FAD), excluding non-recurring items | $ | 29,293 | $ | 26,623 | ||||||
|
(1) Represents the write-off of straight-line rent due to a lease termination and transition of two seniors housing communities to a new operator. |
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| (2) Represents deferred rent repayment from an operator. | ||||||||||
| NAREIT Basic FFO attributable to common stockholders per share | $ | 0.76 | $ | 0.75 | ||||||
| NAREIT Diluted FFO attributable to common stockholders per share | $ | 0.75 | $ | 0.75 | ||||||
| NAREIT Diluted FFO attributable to common stockholders | $ | 29,953 | $ | 29,803 | ||||||
|
Weighted average shares used to calculate NAREIT diluted FFO per share |
||||||||||
| attributable to common stockholders | 39,874 | 39,603 | ||||||||
|
Diluted FFO attributable to common stockholders, excluding non-recurring items |
$ | 30,529 | $ | 29,803 | ||||||
|
Weighted average shares used to calculate diluted FFO, excluding non-recurring items, |
||||||||||
| per share attributable to common stockholders | 39,874 | 39,603 | ||||||||
| Diluted FAD, excluding non-recurring items | $ | 29,385 | $ | 26,711 | ||||||
|
Weighted average shares used to calculate diluted FAD, excluding non-recurring items, per share |
39,874 | 39,603 | ||||||||
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LTC PROPERTIES, INC. |
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CONSOLIDATED BALANCE SHEETS |
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(amounts in thousands, except per share) |
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March 31, 2019 |
December 31, 2018 |
|||||||||||
| ASSETS | (unaudited) | (audited) | ||||||||||
| Investments: | ||||||||||||
| Land |
$ |
125,898 |
$ |
125,358 |
||||||||
| Buildings and improvements | 1,313,952 | 1,290,352 | ||||||||||
| Accumulated depreciation and amortization | (322,535 | ) | (312,959 | ) | ||||||||
| Operating real estate property, net | 1,117,315 | 1,102,751 | ||||||||||
|
Properties held-for-sale, net of accumulated depreciation: 2019—$1,916; 2018—$1,916 |
3,830 | 3,830 | ||||||||||
| Real property investments, net | 1,121,145 | 1,106,581 | ||||||||||
|
Mortgage loans receivable, net of loan loss reserve: 2019—$2,461; 2018—$2,447 |
244,314 | 242,939 | ||||||||||
| Real estate investments, net | 1,365,459 | 1,349,520 | ||||||||||
| Notes receivable, net of loan loss reserve: 2019—$198; 2018—$128 | 19,558 | 12,715 | ||||||||||
| Investments in unconsolidated joint ventures | 27,515 | 30,615 | ||||||||||
| Investments, net | 1,412,532 | 1,392,850 | ||||||||||
| Other assets: | ||||||||||||
| Cash and cash equivalents | 6,715 | 2,656 | ||||||||||
| Restricted cash | 2,108 | 2,108 | ||||||||||
| Debt issue costs related to bank borrowings | 2,775 | 2,989 | ||||||||||
| Interest receivable | 22,176 | 20,732 | ||||||||||
|
Straight-line rent receivable, net of allowance for doubtful accounts: 2019—$0; 2018—$746 |
42,455 | ((1 | )) | 73,857 | ||||||||
| Lease incentives | 2,263 | ((1 | )) | 14,443 | ||||||||
| Prepaid expenses and other assets | 5,342 | ((2 | )) | 3,985 | ||||||||
| Total assets |
$ |
1,496,366 |
$ |
1,513,620 |
||||||||
| LIABILITIES | ||||||||||||
| Bank borrowings |
$ |
146,900 |
$ |
112,000 |
||||||||
| Senior unsecured notes, net of debt issue costs: 2019—$900; 2018—$938 | 528,900 | 533,029 | ||||||||||
| Accrued interest | 4,193 | 4,180 | ||||||||||
| Accrued expenses and other liabilities | 28,220 | ((2 | )) | 31,440 | ||||||||
| Total liabilities | 708,213 | 680,649 | ||||||||||
| EQUITY | ||||||||||||
| Stockholders’ equity: | ||||||||||||
|
Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2019—39,739; 2018—39,657 |
397 | 397 | ||||||||||
| Capital in excess of par value | 862,376 | 862,712 | ||||||||||
| Cumulative net income | 1,233,302 | 1,255,764 | ||||||||||
| Cumulative distributions | (1,316,314 | ) | (1,293,383 | ) | ||||||||
| Total LTC Properties, Inc. stockholders’ equity | 779,761 | 825,490 | ||||||||||
| Non-controlling interests | 8,392 | 7,481 | ||||||||||
| Total equity | 788,153 | 832,971 | ||||||||||
| Total liabilities and equity |
$ |
1,496,366 |
$ |
1,513,620 |
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| (1) |
Decrease due to impact of newly adopted ASC 842. See Footnote 1 in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 for further discussion. |
|
| (2) |
Includes $1,445 right of use asset/lease liability due to the impact of newly adopted ASC 842. See Footnote 1 in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 for further discussion. |
Contacts
Wendy L. Simpson
Pam Kessler
(805) 981-8655
