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 second quarter ended June 30, 2022.
Three Months Ended
June 30,
2022
2021
(unaudited)
Net income available to common stockholders
$
54,065
$
18,126
Diluted earnings per common share
$
1.36
$
0.46
NAREIT funds from operations (“FFO”) attributable to common stockholders
$
25,350
$
22,171
NAREIT diluted FFO per common share
$
0.64
$
0.57
FFO attributable to common stockholders, excluding non-recurring items
$
24,491
$
22,304
Funds available for distribution (“FAD”)
$
26,779
$
22,781
FAD, excluding non-recurring items
$
25,598
$
22,914
Second quarter 2022 results were impacted by:
During the second quarter of 2022, LTC completed the following:
Subsequent to June 30, 2022, LTC completed the following:
Conference Call Information
LTC will conduct a conference call on Friday, July 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 June 30, 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
898490
Additionally, an audio replay of the call will be available one hour after the live call and through August 12, 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
214260
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 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
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Revenues:
Rental income
$
31,628
$
29,804
$
61,952
$
61,777
Interest income from mortgage loans
10,097
7,933
19,733
15,855
Interest and other income
1,299
392
2,126
777
Total revenues
43,024
38,129
83,811
78,409
Expenses:
Interest expense
7,523
6,860
14,666
13,832
Depreciation and amortization
9,379
9,508
18,817
19,385
Provision (recovery) for credit losses
305
—
659
(9)
Transaction costs
67
133
99
225
Property tax expense
4,019
3,800
8,001
7,781
General and administrative expenses
5,711
5,337
11,519
10,370
Total expenses
27,004
25,638
53,761
51,584
Other operating income:
Gain on sale of real estate, net
38,094
5,463
38,196
4,690
Operating income
54,114
17,954
68,246
31,515
Income from unconsolidated joint ventures
376
376
751
665
Net income
54,490
18,330
68,997
32,180
Income allocated to non-controlling interests
(107)
(91)
(202)
(179)
Net income attributable to LTC Properties, Inc.
54,383
18,239
68,795
32,001
Income allocated to participating securities
(318)
(113)
(407)
(233)
Net income available to common stockholders
$
54,065
$
18,126
$
68,388
$
31,768
Earnings per common share:
Basic
$
1.37
$
0.46
$
1.74
$
0.81
Diluted
$
1.36
$
0.46
$
1.73
$
0.81
Weighted average shares used to calculate earnings per
common share:
Basic
39,492
39,169
39,347
39,135
Diluted
39,665
39,170
39,520
39,136
Dividends declared and paid per common share
$
0.57
$
0.57
$
1.14
$
1.14
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
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
GAAP net income available to common stockholders
$
54,065
$
18,126
$
68,388
$
31,768
Add: Depreciation and amortization
9,379
9,508
18,817
19,385
Less: Gain on sale of real estate, net
(38,094)
(5,463)
(38,196)
(4,690)
NAREIT FFO attributable to common stockholders
25,350
22,171
49,009
46,463
Add: Non-recurring items
(859)
(1)
133
(3)
(436)
(4)
1,183
(6)
FFO attributable to common stockholders, excluding non-recurring items
$
24,491
$
22,304
$
48,573
$
47,646
NAREIT FFO attributable to common stockholders
$
25,350
$
22,171
$
49,009
$
46,463
Non-cash income:
Less: straight-line rental adjustment (income)
293
19
527
(663)
(7)
Add: amortization of lease incentives
206
116
602
(5)
228
Add: Other non-cash expense
—
—
—
758
(8)
Less: Effective interest income from mortgage loans
(1,387)
(1,483)
(2,789)
(3,227)
(7)
Net non-cash income
(888)
(1,348)
(1,660)
(2,904)
Non-cash expense:
Add: Non-cash compensation charges
2,012
1,958
3,937
3,810
Less: Provision (recovery) for credit losses
305
—
659
(9)
Net non-cash expense
2,317
1,958
4,596
3,801
Funds available for distribution (FAD)
$
26,779
$
22,781
$
51,945
$
47,360
Add: Non-recurring items
(1,181)
(2)
133
(3)
(1,181)
(2)
1,337
(9)
FAD, excluding non-recurring items
$
25,598
$
22,914
$
50,764
$
48,697
(1) Represents (2) below partially offset by the provision for credit losses related to the origination of two mortgage loans during 2022 second quarter ($322).
(2) Represents the lease termination fee received in connection with the sale of a 74-unit assisted living community ($1,181).
(3) Represents the GAAP and cash impact of the 50% reduction of 2021 rent escalation.
(4) Represents (2) from above partially offset by the provision for credit losses related to the origination of two mortgage loans during the second quarter of 2022 and a $25,000 mezzanine loan during the first quarter of 2022 ($572) and (5) below.
(5) Includes a lease incentive balance write-off of $173 related to a closed property and subsequent lease termination.
(6) Represents the GAAP impact of the 50% reduction of 2021 rent and interest escalation.
(7) Includes the impact of the 50% reduction of 2021 rent and interest escalation on straight-line rent and effective interest.
(8) Represents a straight-line rent receivable write-off due to transitioning rental revenue to cash basis.
(9) Represents the cash impact of the 50% reduction of 2021 rent and interest escalation.
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
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
NAREIT Basic FFO attributable to common stockholders per share
$
0.64
$
0.57
$
1.25
$
1.19
NAREIT Diluted FFO attributable to common stockholders per share
$
0.64
$
0.57
$
1.24
$
1.19
NAREIT Diluted FFO attributable to common stockholders
$
25,350
$
22,171
$
49,009
$
46,696
Weighted average shares used to calculate NAREIT diluted FFO per share
attributable to common stockholders
39,665
39,170
39,520
39,333
Diluted FFO attributable to common stockholders, excluding non-recurring items
$
24,491
$
22,417
$
48,573
$
47,879
Weighted average shares used to calculate diluted FFO, excluding
non-recurring items, per share attributable to common stockholders
39,665
39,369
39,520
39,333
Diluted FAD
$
26,779
$
22,894
$
51,945
$
47,593
Weighted average shares used to calculate diluted FAD per share
39,665
39,369
39,520
39,333
Diluted FAD, excluding non-recurring items
$
25,598
$
23,027
$
50,764
$
48,930
Weighted average shares used to calculate diluted FAD, excluding non-recurring items, per share
39,665
39,369
39,520
39,333
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except per share)
June 30, 2022
December 31, 2021
ASSETS
(unaudited)
(audited)
Investments:
Land
$
125,786
$
123,239
Buildings and improvements
1,284,151
1,285,318
Accumulated depreciation and amortization
(374,170)
(374,606)
Real property investments, net
1,035,767
1,033,951
Mortgage loans receivable, net of loan loss reserve: 2022—$3,830; 2021—$3,473
379,817
344,442
Real estate investments, net
1,415,584
1,378,393
Notes receivable, net of loan loss reserve: 2022—$588; 2021—$286
58,206
28,337
Investments in unconsolidated joint ventures
19,340
19,340
Investments, net
1,493,130
1,426,070
Other assets:
Cash and cash equivalents
6,401
5,161
Debt issue costs related to revolving line of credit
2,681
3,057
Interest receivable
42,713
39,522
Straight-line rent receivable
22,689
24,146
Lease incentives
1,910
2,678
Prepaid expenses and other assets
8,703
4,191
Total assets
$
1,578,227
$
1,504,825
LIABILITIES
Revolving line of credit
$
56,000
$
110,900
Term loans, net of debt issue costs: 2022—$563; 2021—$637
99,437
99,363
Senior unsecured notes, net of debt issue costs: 2022—$1,549; 2021—$524
579,431
512,456
Accrued interest
3,946
3,745
Accrued expenses and other liabilities
28,917
33,234
Total liabilities
767,731
759,698
EQUITY
Stockholders’ equity:
Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2022—40,380; 2021—39,374
404
394
Capital in excess of par value
893,155
856,895
Cumulative net income
1,513,431
1,444,636
Accumulated other comprehensive income (loss)
6,139
(172)
Cumulative distributions
(1,610,155)
(1,565,039)
Total LTC Properties, Inc. stockholders’ equity
802,974
736,714
Non-controlling interests
7,522
8,413
Total equity
810,496
745,127
Total liabilities and equity
$
1,578,227
$
1,504,825
Mandi Hogan
(805) 981-8655
Mandi Hogan
(805) 981-8655
About Author
