WESTLAKE VILLAGE, Calif.–(BUSINESS WIRE)–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 first quarter ended March 31, 2022.
Three Months Ended
March 31,
2022
2021
(unaudited)
Net income available to common stockholders
$
14,275
$
13,642
Diluted earnings per common share
$
0.36
$
0.35
NAREIT funds from operations (“FFO”) attributable to common stockholders
$
23,611
$
24,292
NAREIT diluted FFO per common share
$
0.60
$
0.62
FFO attributable to common stockholders, excluding non-recurring items
$
24,034
$
25,342
Funds available for distribution (“FAD”)
$
25,118
$
24,579
FAD, excluding non-recurring items
$
25,118
$
25,783
First quarter 2022 results were impacted by the following:
During the first quarter of 2022, LTC completed the following:
Subsequent to March 31, 2022, LTC completed the following:
Conference Call Information
LTC will conduct a conference call on Friday, April 29, 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 March 31, 2022. 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
1-844-200-6205
Canada Toll-Free Number
1-833-950-0062
Conference Access Code
398152
Additionally, an audio replay of the call will be available one hour after the live call and through May 13, 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
809164
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 202 properties in 29 states with 35 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
March 31,
2022
2021
Revenues:
Rental income
$
30,324
$
31,973
Interest income from mortgage loans
9,636
7,922
Interest and other income
827
385
Total revenues
40,787
40,280
Expenses:
Interest expense
7,143
6,972
Depreciation and amortization
9,438
9,877
Provision (recovery) for credit losses
354
(9
)
Transaction costs
32
92
Property tax expense
3,982
3,981
General and administrative expenses
5,808
5,033
Total expenses
26,757
25,946
Other operating income:
Gain (loss) on sale of real estate, net
102
(773
)
Operating income
14,132
13,561
Income from unconsolidated joint ventures
375
289
Net income
14,507
13,850
Income allocated to non-controlling interests
(95
)
(88
)
Net income attributable to LTC Properties, Inc.
14,412
13,762
Income allocated to participating securities
(137
)
(120
)
Net income available to common stockholders
$
14,275
$
13,642
Earnings per common share:
Basic
$
0.36
$
0.35
Diluted
$
0.36
$
0.35
Weighted average shares used to calculate earnings per
common share:
Basic
39,199
39,100
Diluted
39,349
39,179
Dividends declared and paid per common share
$
0.57
$
0.57
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
March 31,
2022
2021
GAAP net income available to common stockholders
$
14,275
$
13,642
Add: Depreciation and amortization
9,438
9,877
(Less)/Add: (Gain) loss on sale of real estate, net
(102
)
773
NAREIT FFO attributable to common stockholders
23,611
24,292
Add: Non-recurring items
423
(1)
1,050
(6)
FFO attributable to common stockholders, excluding non-recurring items
$
24,034
$
25,342
NAREIT FFO attributable to common stockholders
$
23,611
$
24,292
Non-cash income:
Less: straight-line rental adjustment (income)
234
(682
)
(3)
Add: amortization of lease costs
396
(2)
112
Add: Other non-cash expense
—
758
(4)
Less: Effective interest income from mortgage loans
(1,402
)
(1,744
)
(3)
Net non-cash income
(772
)
(1,556
)
Non-cash expense:
Add: Non-cash compensation charges
1,925
1,852
Add: Provision (recovery) for credit losses
354
(9
)
Net non-cash expense
2,279
1,843
Funds available for distribution (FAD)
$
25,118
$
24,579
Less: Non-recurring income
—
1,204
(5)
Funds available for distribution (FAD), excluding non-recurring items
$
25,118
$
25,783
(1) Represents provision for credit losses related to the origination of a $25,000 mezzanine loan during 2022 first quarter and (2) below.
(2) Includes a lease incentive balance write-off of $173 related to a closed property and subsequent lease termination.
(3) Includes the impact of the 50% reduction of 2021 rent and interest escalation on straight-line rent and effective interest.
(4) Represents a straight-line rent receivable write-off due to transitioning rental revenue recognition to cash basis.
(5) Includes the cash impact of the 50% reduction of 2021 rent and interest escalation.
(6) Includes the GAAP impact of the 50% reduction of 2021 rent and interest escalation ($292) and (4) from above.
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
March 31,
2022
2021
NAREIT Basic FFO attributable to common stockholders per share
$
0.60
$
0.62
NAREIT Diluted FFO attributable to common stockholders per share
$
0.60
$
0.62
NAREIT Diluted FFO attributable to common stockholders
$
23,611
$
24,412
Weighted average shares used to calculate NAREIT diluted FFO per share attributable to common stockholders
39,349
39,374
Diluted FFO attributable to common stockholders, excluding non-recurring items
$
24,171
$
25,462
Weighted average shares used to calculate diluted FFO, excluding non-recurring items, per share attributable to common stockholders
39,575
39,374
Diluted FAD
$
25,255
$
24,699
Weighted average shares used to calculate diluted FAD per share
39,575
39,374
Diluted FAD, excluding non-recurring items
$
25,255
$
25,903
Weighted average shares used to calculate diluted FAD, excluding non-recurring items, per share
39,575
39,374
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except per share)
March 31, 2022
December 31, 2021
ASSETS
(unaudited)
(audited)
Investments:
Land
$
120,203
$
123,239
Buildings and improvements
1,240,713
1,285,318
Accumulated depreciation and amortization
(367,623
)
(374,606
)
Operating real estate property, net
993,293
1,033,951
Properties held-for-sale, net of accumulated depreciation: 2022—$16,396; 2021—$0
32,313
—
Real property investments, net
1,025,606
1,033,951
Mortgage loans receivable, net of loan loss reserve: 2022—$3,494; 2021—$3,473
346,543
344,442
Real estate investments, net
1,372,149
1,378,393
Notes receivable, net of loan loss reserve: 2022—$619; 2021—$286
61,508
28,337
Investments in unconsolidated joint ventures
19,340
19,340
Investments, net
1,452,997
1,426,070
Other assets:
Cash and cash equivalents
4,393
5,161
Debt issue costs related to revolving line of credit
2,883
3,057
Interest receivable
41,165
39,522
Straight-line rent receivable
23,912
24,146
Lease incentives
2,277
2,678
Prepaid expenses and other assets
8,470
4,191
Total assets
$
1,536,097
$
1,504,825
LIABILITIES
Revolving line of credit
$
157,900
$
110,900
Term loans, net of debt issue costs: 2022—$600; 2021—$637
99,400
99,363
Senior unsecured notes, net of debt issue costs: 2022—$498; 2021—$524
505,482
512,456
Accrued interest
3,090
3,745
Accrued expenses and other liabilities
27,626
33,234
Total liabilities
793,498
759,698
EQUITY
Stockholders’ equity:
Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2022—39,460; 2021—39,374
395
394
Capital in excess of par value
857,558
856,895
Cumulative net income
1,459,048
1,444,636
Accumulated other comprehensive income (loss)
4,704
(172
)
Cumulative distributions
(1,587,519
)
(1,565,039
)
Total LTC Properties, Inc. stockholders’ equity
734,186
736,714
Non-controlling interests
8,413
8,413
Total equity
742,599
745,127
Total liabilities and equity
$
1,536,097
$
1,504,825
Mandi Hogan
(805) 981-8655
Mandi Hogan
(805) 981-8655
About Author
