Business Wire | Jul 29, 2021 04:16PM EDT

LTC Reports 2021 Second Quarter Results and Discusses Recent Activities

Jul. 29, 2021

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Jul. 29, 2021--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 second quarter ended June 30, 2021.

Net income available to common stockholders was $18.1 million, or $0.46 per diluted share, for the 2021 second quarter, compared with $1.8 million, or $0.05 per diluted share, for the same period in 2020. Funds from Operations ("FFO") was $22.2 million for the 2021 second quarter, compared with $12.0 million for the comparable 2020 period. FFO per diluted common share was $0.57 and $0.31 for the quarters ended June 30, 2021 and 2020, respectively. Excluding non-recurring items, FFO was $22.2 million and $29.7 million for the quarters ended June 30, 2021 and 2020, respectively. Funds available for distribution ("FAD") was $22.8 million for the 2021 second quarter compared with $29.3 million for the 2020 second quarter.

Second quarter 2021 results were impacted by the following:

* Higher rental income due to a $17.7 million write-off in the 2020 second quarter related to Senior Lifestyle Corporation's ("Senior Lifestyle") straight-line and lease incentive balances partially offset by the following: Decreased rental income as a result of Senior Lifestyle's non-payment of lease obligations during the 2021 second quarter, partially offset by the re-leasing of 11 properties in the portfolio; Decreased rental income as a result of Senior Care Centers, LLC's and Abri Health Services, LLC unpaid lease obligations; and Decreased rental income from abated and deferred rent partially offset by higher rental income from completed developments. * Higher income from unconsolidated joint ventures; and * Net gain on sale of $5.5 million compared with a net gain on sale of $189,000 during the second quarter of 2020;

During the second quarter of 2021, LTC completed the following:

* Sold three Wisconsin communities and a closed community in Nebraska for a total sale price of $35.9 million. These communities were previously leased to Senior Lifestyle. LTC received total combined proceeds of $34.8 million and recorded a net gain on sale of $5.4 million; * Transitioned a memory care community in Colorado previously operated by Senior Lifestyle to an operator new to LTC. The lease has a 5-year term and provides a purchase option for $5.5 million which is exercisable after the first year of the lease. Cash rent starting in the second lease year will be $150,000, increasing to $300,000 in the third lease year and escalating by 2% annually thereafter; and * Paid down $41.0 million under its unsecured revolving line of credit.

Subsequent to June 30, 2021, LTC completed the following:

* Transitioned an assisted living community in Wisconsin previously operated by Senior Lifestyle to a regionally based operator new to LTC. The lease has a 10-year term with three 5-year renewal terms. Cash rent under the new lease is $920,000 in the first lease year, $1.2 million in the second lease year, $1.3 million in the third lease year, escalating 2% annually thereafter; * Entered into a lease agreement with an existing operator covering three assisted living communities in the Senior Lifestyle portfolio. Two properties are located in Pennsylvania, and one in New Jersey. The lease has a 2-year term with zero cash rent for the first three months then cash rent will be based on mutually agreed fair market rent; * Entered into a lease agreement with an existing operator covering three assisted living communities in Nebraska in the Senior Lifestyle portfolio. The lease has a 2-year term with zero cash rent for the first three months then cash rent will be based on mutually agreed fair market rent; * Sold a skilled nursing center in Washington for $7.7 million. LTC received proceeds of $7.2 million and expects to recognize a gain on sale of approximately $2.6 million; * Paid $25.2 million in regular scheduled principal payments under its senior unsecured notes; * Borrowed $19.0 million under its unsecured revolving line of credit at 1.2%; and * Provided $366,000 of deferred rent and $323,000 of rent abatement in July 2021. LTC has agreed to provide rent deferrals up to $493,000 and abatements up to $319,000 for each of August and September 2021.

Conference Call Information

LTC will conduct a conference call on Friday, July 30, 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 June 30, 2021. 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 thelive call and through August 13, 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 10158029

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 owns or holds first mortgages on 176 investments in 27 states with 31 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

(unaudited, amounts in thousands, except per share amounts)



Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Revenues:

Rental income $ 29,804 $ 20,275 $ 61,777 $ 58,310

Interest income from 7,933 7,820 15,855 15,597 mortgage loans

Interest and other income 392 386 777 984

Total revenues 38,129 28,481 78,409 74,891



Expenses:

Interest expense 6,860 7,546 13,832 15,256

Depreciation and 9,508 9,797 19,385 19,466 amortization

(Recovery) provision for - - (9 ) 1 credit losses

Transaction costs 133 64 225 134

Property tax expense 3,800 4,111 7,781 8,334

General and administrative 5,337 4,580 10,370 9,680 expenses

Total expenses 25,638 26,098 51,584 52,871



Other operating income:

Gain on sale of real 5,463 189 4,690 44,043 estate, net

Operating income 17,954 2,572 31,515 66,063

Loss on unconsolidated - (620 ) - (620 )joint ventures

Income from unconsolidated 376 - 665 231 joint ventures

Net income 18,330 1,952 32,180 65,674

Income allocated to (91 ) (82 ) (179 ) (171 )non-controlling interests

Net income attributable to 18,239 1,870 32,001 65,503 LTC Properties, Inc.

Income allocated to (113 ) (97 ) (233 ) (278 )participating securities

Net income available to $ 18,126 $ 1,773 $ 31,768 $ 65,225 common stockholders



Earnings per common share:

Basic $ 0.46 $ 0.05 $ 0.81 $ 1.66

Diluted $ 0.46 $ 0.05 $ 0.81 $ 1.66



Weighted average sharesused to calculate earnings per

common share:

Basic 39,169 39,055 39,135 39,298

Diluted 39,170 39,137 39,136 39,380



Dividends declared and paid $ 0.57 $ 0.57 $ 1.14 $ 1.14 per common share



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. The Company believes 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 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 the Company's FFO to that of other REITs.

The Company defines 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 the Company's 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 the Company's 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 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 Six Months Ended

June 30, June 30,

2021 2020 2021 2020



GAAP net incomeavailable to $ 18,126 $ 1,773 $ 31,768 $ 65,225 commonstockholders

Add: Depreciation 9,508 9,797 19,385 19,466 and amortization

Add: Loss onunconsolidated - 620 - 620 joint ventures

Less: Gain onsale of real (5,463 ) (189 ) (4,690 ) (44,043 ) estate, net

NAREIT FFOattributable to 22,171 12,001 46,463 41,268 commonstockholders



Add: ^ ^ ^Non-recurring - 17,742 (1) 758 (3) 17,742 (1)items (2) (2)

FFO attributableto commonstockholders, $ 22,171 $ 29,743 $ 47,221 $ 59,010 excludingnon-recurringitems





NAREIT FFOattributable to $ 22,171 $ 12,001 $ 46,463 $ 41,268 commonstockholders

Non-cash income:

Less:straight-line 19 (634 ) (663 ) (1,473 ) rental income

Add: amortization 116 293 ^ 228 394 ^of lease costs (1) (1)

Add: Other - 17,557 ^ 758 ^ 17,557 ^non-cash expense^ (2) (3) (2)

Less: Effectiveinterest income (1,483 ) (1,555 ) (3,227 ) (3,078 ) from mortgageloans

Net non-cash (1,348 ) 15,661 (2,904 ) 13,400 income



Non-cash expense:

Add: Non-cashcompensation 1,958 1,762 3,810 3,539 charges

Less: Capitalized - (86 ) - (277 ) interest

Net non-cash 1,958 1,676 3,810 3,262 expense



Funds availablefor distribution $ 22,781 $ 29,338 $ $47,369 $ $57,930 (FAD)



^(1) Includes the write-off of Senior Lifestyle lease incentives.

^(2) Represents the write-off of Senior Lifestyle straight-line rent.

^(3) Represents a straight-line rent receivable write-off.





NAREIT Basic FFOattributable tocommon $ 0.57 $ 0.31 $ 1.19 $ 1.05 stockholders pershare

NAREIT DilutedFFO attributableto common $ 0.57 $ 0.31 $ 1.19 $ 1.05 stockholders pershare



NAREIT DilutedFFO attributable $ 22,171 $ 12,001 $ 46,696 $ 41,268 to commonstockholders

Weighted averageshares used tocalculate NAREIT diluted FFO pershare

attributable tocommon 39,170 39,137 39,333 39,380 stockholders





Diluted FFOattributable tocommonstockholders, $ 22,171 $ 29,840 $ 47,454 $ 59,010 excludingnon-recurringitems

Weighted averageshares used to calculate dilutedFFO, excluding

non-recurringitems, per shareattributable to 39,170 39,309 39,333 39,380 commonstockholders





Diluted FAD $ 22,894 $ 29,435 $ 47,602 $ 57,930



Weighted averageshares used to 39,369 39,309 39,333 39,380 calculate dilutedFAD per share







LTC PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except per share)



June 30, 2021 December 31, 2020

ASSETS (unaudited) (audited)

Investments:

Land $ 123,239 $ 127,774

Buildings and improvements 1,281,066 1,324,227

Accumulated depreciation and amortization (355,745 ) (349,643 )

Operating real estate property, net 1,048,560 1,102,358

Properties held-for-sale, net ofaccumulated depreciation: 2021-$3,512; 4,512 - 2020-$0

Real property investments, net 1,053,072 1,102,358

Mortgage loans receivable, net of loan loss 257,051 257,251 reserve: 2021-$2,590; 2020-$2,592

Real estate investments, net 1,310,123 1,359,609

Notes receivable, net of loan loss reserve: 13,730 14,465 2021-$139; 2020-$146

Investments in unconsolidated joint 19,340 11,340 ventures

Investments, net 1,343,193 1,385,414



Other assets:

Cash and cash equivalents 5,714 7,772

Debt issue costs related to bank borrowings 918 1,324

Interest receivable 35,977 32,746

Straight-line rent receivable 24,357 24,452

Lease incentives 2,414 2,462

Prepaid expenses and other assets 3,899 5,316

Total assets $ 1,416,472 $ 1,459,486



LIABILITIES

Bank borrowings $ 65,900 $ 89,900

Senior unsecured notes, net of debt issue 552,559 559,482 costs: 2021-$581; 2020-$658

Accrued interest 4,093 4,216

Accrued expenses and other liabilities 31,540 30,082

Total liabilities 654,092 683,680



EQUITY

Stockholders' equity:

Common stock: $0.01 par value; 60,000shares authorized; shares issued and 394 392 outstanding: 2021-39,374; 2020-39,242

Capital in excess of par value 852,959 852,780

Cumulative net income 1,420,776 1,388,775

Cumulative distributions (1,520,153 ) (1,474,545 )

Total LTC Properties, Inc. stockholders' 753,976 767,402 equity

Non-controlling interests 8,404 8,404

Total equity 762,380 775,806

Total liabilities and equity $ 1,416,472 $ 1,459,486

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