LTC Reports 2022 Third Quarter Results and Discusses Recent Activities
TC 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 third quarter ended September 30, 2022
WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Oct 27, 2022--
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 third quarter ended September 30, 2022.
Three Months Ended
September 30,
2022
2021
(unaudited)
Net income available to common stockholders
$
13,159
$
10,909
Diluted earnings per common share
$
0.32
$
0.28
NAREIT funds from operations ("FFO”) attributable to common stockholders
$
24,217
$
17,669
NAREIT diluted FFO per common share
$
0.60
$
0.45
FFO attributable to common stockholders, excluding non-recurring items
$
25,477
$
21,564
Funds available for distribution ("FAD")
$
26,019
$
18,441
FAD, excluding non-recurring items
$
26,519
$
22,336
Third quarter 2022 results were impacted by:
During the third quarter of 2022, LTC completed the following:
Subsequent to September 30, 2022, LTC completed the following:
Conference Call Information
LTC will conduct a conference call on Friday, October 28, 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 September 30, 2022. The conference call is accessible by telephone and the internet. Interested parties may access the live conference call via the following:
Webcast
USA Toll-Free Number
1-844-200-6205
Canada Toll-Free Number
1-833-950-0062
Conference Access Code
741477
Additionally, an audio replay of the call will be available one hour after the live call and through November 11, 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
284664
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 204 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
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Revenues:
Rental income
$
31,585
$
29,320
$
93,537
$
91,097
Interest income from financing receivable (1)
357
—
357
—
Interest income from mortgage loans
10,379
7,924
30,112
23,779
Interest and other income
1,182
228
3,308
1,005
Total revenues
43,503
37,472
127,314
115,881
Expenses:
Interest expense
7,941
6,610
22,607
20,442
Depreciation and amortization
9,385
9,462
28,202
28,847
Impairment loss
1,286
—
1,286
—
Provision for credit losses
795
68
1,454
59
Transaction costs
629
4,046
728
4,271
Property tax expense
4,179
3,932
12,180
11,713
General and administrative expenses
5,888
5,318
17,407
15,688
Total expenses
30,103
29,436
83,864
81,020
Other operating income:
(Loss) gain on sale of real estate, net
(387
)
2,702
37,809
7,392
Operating income
13,013
10,738
81,259
42,253
Income from unconsolidated joint ventures
376
376
1,127
1,041
Net income
13,389
11,114
82,386
43,294
Income allocated to non-controlling interests
(99
)
(92
)
(301
)
(271
)
Net income attributable to LTC Properties, Inc.
13,290
11,022
82,085
43,023
Income allocated to participating securities
(131
)
(113
)
(481
)
(346
)
Net income available to common stockholders
$
13,159
$
10,909
$
81,604
$
42,677
Earnings per common share:
Basic
$
0.33
$
0.28
$
2.06
$
1.09
Diluted
$
0.32
$
0.28
$
2.04
$
1.09
Weighted average shares used to calculate earnings per common share:
Basic
40,270
39,177
39,658
39,149
Diluted
40,552
39,177
39,939
39,149
Dividends declared and paid per common share
$
0.57
$
0.57
$
1.71
$
1.71
_______________
(1)
Represents rental income from three skilled nursing centers acquired through a sale-leaseback transaction, subject to a lease which contains a purchase option. In accordance with GAAP, the properties are required to be presented as a financing receivable on our Consolidated Balance Sheets and the rental income to be presented as Interest income from financing receivable on our Consolidated Statements of Income.
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
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
GAAP net income available to common stockholders
$
13,159
$
10,909
$
81,604
$
42,677
Add: Depreciation and amortization
9,385
9,462
28,202
28,847
Add: Impairment loss
1,286
—
1,286
—
Add (Less): Loss (gain) on sale of real estate, net
387
(2,702
)
(37,809
)
(7,392
)
NAREIT FFO attributable to common stockholders
24,217
17,669
73,283
64,132
Add: Non-recurring items
1,260
(1)
3,895
(5)
824
(6)
5,078
(9)FFO attributable to common stockholders, excluding non-recurring items
$
25,477
$
21,564
$
74,107
$
69,210
NAREIT FFO attributable to common stockholders
$
24,217
$
17,669
$
73,283
$
64,132
Non-cash income:
Less: straight-line rental adjustment (income)
436
44
963
(619
)
(10)Add: amortization of lease incentives
319
158
921
(7)
386
Add: Other non-cash expense
—
—
—
758
(11)Less: Effective interest income from mortgage loans
(1,762
)
(2)
(1,473
)
(4,551
)
(2)
(4,700
)
(10)Net non-cash income
(1,007
)
(1,271
)
(2,667
)
(4,175
)
Non-cash expense:
Add: Non-cash compensation charges
2,014
1,975
5,951
5,785
Less: Provision for credit losses
795
(3)
68
1,454
59
Net non-cash expense
2,809
2,043
7,405
5,844
Funds available for distribution (FAD)
26,019
18,441
78,021
65,801
Add: Non-recurring items
500
(4)
3,895
(5)
(681
)
(8)
5,232
(12)FAD, excluding non-recurring items
$
26,519
$
22,336
$
77,340
$
71,033
(1)
Represents (3) and (4) below.
(2)
Includes $357 of effective interest from three skilled nursing centers acquired through a sale-leaseback transaction, subject to a lease which contains a purchase option. In accordance with GAAP, the properties are required to be presented as a financing receivable on our Consolidated Balance Sheets and the rental income to be presented as Interest income from financing receivable on our Consolidated Statements of Income.
(3)
Includes $760 of provision for credit loss reserve related to the acquisition of the three skilled nursing centers accounted for as a financing receivable.
(4)
Represents the lease termination fee of $500 paid to a former operator of 12 assisted living communities in exchange for cooperation and assistance in facilitating an orderly transition of the communities to another operator.
(5)
Represents the Senior Care and Abri Health settlement payment ($3,895) in accordance with a settlement agreement approved by the United States Bankruptcy Court.
(6)
Represents (1) from above and (7) from below and the provision for credit losses related to the origination of two mortgage loans during 2022 second quarter and a $25,000 mezzanine loan during the first quarter of 2022 ($572) offset by the lease termination fee received in connection with the sale of a 74-unit assisted living community ($1,181).
(7)
Includes a lease incentive balance write-off of $173 related to a closed property and subsequent lease termination.
(8)
Represents the lease termination fee received in connection with the sale of a 74-unit assisted living community ($1,181) offset by (4) from above.
(9)
Represents (5) from above, (11) from below, and the GAAP impact of the 50% reduction of 2021 rent and interest escalation ($425).
(10)
Includes the straight-line rent ($649) and effective interest ($263) impact of the 50% reduction of 2021 rent and interest escalation.
(11)
Represents a straight-line rent receivable write-off ($758) due to transitioning rental revenue to cash basis.
(12)
Represents (5) from above and the cash impact of the 50% reduction of 2021 rent and interest escalation ($1,337).
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
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
NAREIT Basic FFO attributable to common stockholders per share
$
0.60
$
0.45
$
1.85
$
1.64
NAREIT Diluted FFO attributable to common stockholders per share
$
0.60
$
0.45
$
1.83
$
1.64
NAREIT Diluted FFO attributable to common stockholders
$
24,348
$
17,669
$
73,283
$
64,132
Weighted average shares used to calculate NAREIT diluted FFO per share attributable to common stockholders
40,781
39,177
39,939
39,149
Diluted FFO attributable to common stockholders, excluding non-recurring items
$
25,608
$
21,564
$
74,107
$
69,556
Weighted average shares used to calculate diluted FFO, excluding non-recurring items, per share attributable to common stockholders
40,781
39,177
39,939
39,346
Diluted FAD
$
26,150
$
18,441
$
78,021
$
65,801
Weighted average shares used to calculate diluted FAD per share
40,781
39,177
39,939
39,149
Diluted FAD, excluding non-recurring items
$
26,650
$
22,336
$
77,340
$
71,379
Weighted average shares used to calculate diluted FAD, excluding non-recurring items, per share
40,781
39,177
39,939
39,346
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except per share)
September 30, 2022
December 31, 2021
ASSETS
(unaudited)
(audited)
Investments:
Land
$
124,665
$
123,239
Buildings and improvements
1,270,722
1,285,318
Accumulated depreciation and amortization
(379,915
)
(374,606
)
Operating real property investments, net
1,015,472
1,033,951
Properties held-for-sale, net of accumulated depreciation: 2022—$2,305; 2021—$0
10,710
—
Real property investments, net
1,026,182
1,033,951
Financing Receivable, (1) net of loan loss reserve: 2022—$760; 2021—$0
75,507
—
Mortgage loans receivable, net of loan loss reserve: 2022—$3,862; 2021—$3,473
383,006
344,442
Real estate investments, net
1,484,695
1,378,393
Notes receivable, net of loan loss reserve: 2022—$590; 2021—$286
58,424
28,337
Investments in unconsolidated joint ventures
19,340
19,340
Investments, net
1,562,459
1,426,070
Other assets:
Cash and cash equivalents
6,478
5,161
Debt issue costs related to revolving line of credit
2,480
3,057
Interest receivable
44,290
39,522
Straight-line rent receivable
22,253
24,146
Lease incentives
2,001
2,678
Prepaid expenses and other assets
12,004
4,191
Total assets
$
1,651,965
$
1,504,825
LIABILITIES
Revolving line of credit
$
151,000
$
110,900
Term loans, net of debt issue costs: 2022—$526; 2021—$637
99,474
99,363
Senior unsecured notes, net of debt issue costs: 2022—$1,533; 2021—$524
543,287
512,456
Accrued interest
3,120
3,745
Accrued expenses and other liabilities
29,915
33,234
Total liabilities
826,796
759,698
EQUITY
Stockholders’ equity:
Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2022—40,505; 2021—39,374
404
394
Capital in excess of par value
899,921
856,895
Cumulative net income
1,526,721
1,444,636
Accumulated other comprehensive income (loss)
9,445
(172
)
Cumulative distributions
(1,633,241
)
(1,565,039
)
Total LTC Properties, Inc. stockholders’ equity
803,250
736,714
Non-controlling interests
21,919
8,413
Total equity
825,169
745,127
Total liabilities and equity
$
1,651,965
$
1,504,825
_______________
(1)
Represents three skilled nursing centers acquired through a sale-leaseback transaction, subject to a lease which contains a purchase option. In accordance with GAAP, the properties are required to be presented as a financing receivable on our Consolidated Balance Sheets.
View source version on businesswire.com:https://www.businesswire.com/news/home/20221027006018/en/
CONTACT: Mandi Hogan
(805) 981-8655
KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA
INDUSTRY KEYWORD: SENIORS CONSTRUCTION & PROPERTY NURSING GENERAL HEALTH HEALTH REIT CONSUMER RESIDENTIAL BUILDING & REAL ESTATE
SOURCE: LTC Properties, Inc.
Copyright Business Wire 2022.
PUB: 10/27/2022 04:15 PM/DISC: 10/27/2022 04:16 PM
http://www.businesswire.com/news/home/20221027006018/en
