Business Wire | Feb 18, 2021 04:15PM EST

LTC Reports 2020 Fourth Quarter Results and Discusses Recent Activities

Feb. 18, 2021

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Feb. 18, 2021--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, 2020.

Net income available to common stockholders was $17.5 million, or $0.45 per diluted share, for the 2020 fourth quarter, compared with $12.4 million, or $0.31 per diluted share, for the same period in 2019. Funds from Operations ("FFO") was $30.4 million, or $0.78 per share, for the 2020 fourth quarter, compared with $32.4 million, or $0.81 per share, for the comparable 2019 period. Excluding the prior year's $2.1 million gain from property insurance proceeds related to a previously sold property, FFO was $30.3 million for the quarter ended December 31, 2019. Funds available for distribution ("FAD") was $30.7 million for the 2020 fourth quarter, compared with $29.5 million for the 2019 fourth quarter.

Fourth quarter 2020 results were impacted by the following:

* Collected 98% of contractual rent and mortgage interest, which includes the application of Senior Lifestyle's letter of credit and deposit discussed below; * Lower interest and property tax expense; * A $3.0 million impairment loss related to a memory care community located in Colorado leased to Senior Lifestyle; * Decreased rental income from abated and deferred rent, net of repayment, and decreased rent from properties sold in 2020, partially offset by higher rental income from acquisitions, completed development projects and lease escalations; and * Senior Lifestyle Update Rent: paid LTC $3.9 million (83%) of its $4.7 million contractual rent due during the 2020 fourth quarter; Letter of Credit: LTC applied Senior Lifestyle's letter of credit and deposits totaling $3.7 million to accrued 2020 second quarter rent receivable of $2.5 million and notes receivable of $125,000, and the remaining $1.1 million to third and fourth quarter rent. As of December 31, 2020, Senior Lifestyle's unaccrued delinquent rent balance was $1.0 million.

During the fourth quarter of 2020, LTC completed the following:

* Funded $5.0 million of a $13.0 million preferred equity commitment to develop a 267-unit independent and assisted living community in Washington. This commitment was finalized in the third quarter 2020; and * Funded $6.4 million in development and capital improvement projects at a weighted average rate of 8.0%.

Subsequent to December 31, 2020, LTC completed the following:

* Transitioned 11 assisted living communities previously leased to Senior Lifestyle to two operators. These communities are located in Wisconsin, Ohio, and Illinois. Total cash rent expected under these master lease agreements is $5.2 million for the first lease year, $7.1 million for the second lease year, and $7.3 million for the third lease year, escalating by 2% annually thereafter; * As previously announced, reduced 2021 rent escalations by 50% to support eligible operators during the continuing COVID-19 crisis. The rent escalation reduction was given in the form of a rent credit and is expected to have an approximate $530,000 impact on LTC's 2021 GAAP revenue, and an approximate $1.3 million impact on 2021 funds available for distribution; * To date in 2021, rent deferrals were $689,000, net of $14,000 of deferred rent repayments. Excluding the rent credit related to the rent escalation reduction discussed above, abated rent to date in 2021 is $360,000. Senior Lifestyle did not pay any of their monthly contractual rent of $1.6 million in January or February 2021. LTC received $545,000 under the new master leases related to the transitioned assisted living communities discussed above; * Received $936,000 related to the payoff of a note receivable; * Paid $7.0 million in regular scheduled principal payments under its 4.5% senior unsecured notes; and * Borrowed $9.0 million under its unsecured revolving line of credit at 1.3%.

Conference Call Information

LTC will conduct a conference call on Friday, February 19, 2021, 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, 2020. 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 March 5, 2021 via the following:

Additionally, an audio replay of the call will be available one hour after thelive call and through March 5, 2021 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

10151170

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 181 properties 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.

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 10151170

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 181 properties 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 Twelve Months Ended

December 31, December 31,

2020 2019 2020 2019

(unaudited) (audited)

Revenues:

Rental income $ 37,774 $ 38,189 $ 126,094 $ 152,755

Interest income from 7,909 7,683 31,396 29,991 mortgage loans

Interest and other income 590 591 1,847 2,558

Total revenues 46,273 46,463 159,337 185,304



Expenses:

Interest expense 7,088 7,578 29,705 30,582

Depreciation and 9,839 9,817 39,071 39,216 amortization

Impairment loss from real 3,036 - 3,977 - estate investments

(Recovery) provision for (2 ) 13 (3 ) 166 doubtful accounts

Transaction costs 102 90 299 365

Property tax expense 3,380 4,189 15,065 16,755

General and 5,216 4,541 19,710 18,453 administrative expenses

Total expenses 28,659 26,228 107,824 105,537



Other operating income:

Gain (loss) on sale of 44 (4,630 ) 44,117 2,106 real estate, net

Operating income 17,658 15,605 95,630 81,873

Gain from property - 2,111 373 2,111 insurance proceeds

Loss on unconsolidated (138 ) - (758 ) - joint ventures

Impairment loss frominvestments in - (5,500 ) - (5,500 )unconsolidated jointventures

Income fromunconsolidated joint 145 415 432 2,388 ventures

Net income 17,665 12,631 95,677 80,872

Income allocated to (92 ) (89 ) (384 ) (346 )non-controlling interests

Net income attributable 17,573 12,542 95,293 80,526 to LTC Properties, Inc.

Income allocated to (103 ) (93 ) (422 ) (391 )participating securities

Net income available to $ 17,470 $ 12,449 $ 94,871 $ 80,135 common stockholders



Earnings per common share:

Basic $ 0.45 $ 0.31 $ 2.42 $ 2.03

Diluted $ 0.45 $ 0.31 $ 2.42 $ 2.02



Weighted average sharesused to calculate earnings per

common share:

Basic 39,062 39,588 39,179 39,571

Diluted 39,147 39,775 39,264 39,759



Dividends declared and $ 0.57 $ 0.57 $ 2.28 $ 2.28 paid per common share



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 Twelve Months Ended

December 31, December 31,

2020 2019 2020 2019



GAAP net incomeavailable to $ 17,470 $ 12,449 $ 94,871 $ 80,135 common stockholders

Add: Impairmentloss from 3,036 5,500 3,977 5,500 investments

Add: Depreciation 9,839 9,817 39,071 39,216 and amortization

Add: Loss onunconsolidated 138 - 758 - joint ventures

(Less)/Add:(Gain) loss on (44 ) 4,630 (44,117 ) (2,106 )sale of real estate, net

NAREIT FFOattributable to 30,439 32,396 94,560 122,745 common stockholders



Add: )^ ^ )^Non-recurring - (2,111 (1) 22,841 (1) (1,535 (3)items (2) (4)

FFO attributableto commonstockholders, $ 30,439 $ 30,285 $ 117,401 $ 121,210 excluding non-recurringitems





NAREIT FFOattributable to $ 30,439 $ 32,396 $ 94,560 $ 122,745 common stockholders

Non-cash income:

Less:straight-line (77 ) (889 ) (1,778 ) (4,487 )rental income

Add: amortization 109 104 611 385 of lease costs

Add: Other - - 23,029 ^ 1,926 ^non-cash expense^ (2) (3)

Less: Effectiveinterest income (1,506 ) (1,481 ) (6,154 ) (5,842 )from mortgage loans

Less: Deferredincome from - - - (18 )unconsolidated joint ventures

Net non-cash (1,474 ) (2,266 ) 15,708 (8,036 )income



Non-cash expense:

Add: Non-cashcompensation 1,781 1,627 7,012 6,565 charges

Less: Capitalized - (167 ) (354 ) (608 )interest

Net non-cash 1,781 1,460 6,658 5,957 expense



Funds availablefor distribution 30,746 31,590 $ 116,926 $ 120,666 (FAD)



Less: )^ )^ )^Non-recurring - (2,111 (1) (373 (1) (3,461 (4)income

Funds availablefor distribution(FAD), excluding $ 30,746 $ 29,479 $ 116,553 $ 117,205 non-recurringitems



(1) Represents the gain from insuranceproceeds related to previously sold properties.

(2) Represents the write-off ofstraight-line rent related to Senior Lifestyle, Genesis Healthcare, Inc. and another operator.

(3) Represents the write-off of straight-line rent due to a lease terminationand transition of two senior housing communities to a new operator.

(4) Representsdeferred rentrepayment from an operator and (1)above





NAREIT Basic FFOattributable tocommon $ 0.78 $ 0.82 $ 2.41 $ 3.10 stockholders pershare

NAREIT DilutedFFO attributableto common $ 0.78 $ 0.81 $ 2.41 $ 3.08 stockholders pershare



NAREIT DilutedFFO attributable $ 30,542 $ 32,489 $ 94,560 $ 123,136 to common stockholders

Weighted averageshares used tocalculate NAREIT diluted FFO pershare

attributable tocommon 39,327 39,939 39,269 39,921 stockholders





Diluted FFOattributable tocommonstockholders, $ 30,542 $ 30,378 $ 117,823 $ 121,601 excludingnon-recurringitems

Weighted averageshares used to calculate diluted FFO, excluding

non-recurringitems, per shareattributable to 39,327 39,939 39,438 39,921 commonstockholders





Diluted FAD $ 30,849 $ 31,683 $ 117,348 $ 121,057



Weighted averageshares used to 39,327 39,939 39,438 39,921 calculate diluted FAD per share





Diluted FAD,excluding $ 30,849 $ 29,572 $ 116,975 $ 117,596 non-recurring items

Weighted averageshares used to calculate diluted FAD, excluding

non-recurring 39,327 39,939 39,438 39,921 items, per share



LTC PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(audited, amounts in thousands, except per share)

December 31, 2020

December 31, 2019

ASSETS

Investments:

Land

$

127,774

$

126,703

Buildings and improvements

1,324,227

1,295,899

Accumulated depreciation and amortization

(349,643

)

(312,642

)

Operating real estate property, net

1,102,358

1,109,960

Properties held-for-sale, net of accumulated depreciation: 2020-$0; 2019-$35,113

-

26,856

Real property investments, net

1,102,358

1,136,816

Mortgage loans receivable, net of loan loss reserve: 2020-$2,592; 2019-$2,560

257,251

254,099

Real estate investments, net

1,359,609

1,390,915

Notes receivable, net of loan loss reserve: 2020-$146; 2019-$181

14,465

17,927

Investments in unconsolidated joint ventures

11,340

19,003

Investments, net

1,385,414

1,427,845

Other assets:

Cash and cash equivalents

7,772

4,244

Debt issue costs related to bank borrowings

1,324

2,164

Interest receivable

32,746

26,586

Straight-line rent receivable

24,452

45,703

Lease incentives

2,462

2,552

Prepaid expenses and other assets

5,316

5,115

Total assets

$

1,459,486

$

1,514,209

LIABILITIES

Bank borrowings

$

89,900

$

93,900

Senior unsecured notes, net of debt issue costs: 2020-$658; 2019-$812

559,482

599,488

Accrued interest

4,216

4,983

Accrued expenses and other liabilities

30,082

30,412

Total liabilities

683,680

728,783

EQUITY

Stockholders' equity:

Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2020-39,242; 2019-39,752

392

398

Capital in excess of par value

852,780

867,346

Cumulative net income

1,388,775

1,293,482

Cumulative distributions

(1,474,545

)

(1,384,283

)

Total LTC Properties, Inc. stockholders' equity

767,402

776,943

Non-controlling interests

8,404

8,483

Total equity

775,806

785,426

Total liabilities and equity

$

1,459,486

$

1,514,209

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