EX-99.1 2 a19-9072_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

 

FOR IMMEDIATE RELEASE

 

For more information contact:

Wendy L. Simpson

Pam Kessler

(805) 981-8655

 

LTC REPORTS 2019 FIRST QUARTER RESULTS

AND DISCUSSES RECENT INVESTMENT ACTIVITY

 

WESTLAKE VILLAGE, CALIFORNIA, May 9, 2019 — 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 first quarter ended March 31, 2019.

 

Net income available to common stockholders was $20.3 million, or $0.51 per diluted share, for both quarters ended March 31, 2019 and 2018.  Funds from Operations (“FFO”) was $29.9 million for the 2019 first quarter, compared with $29.7 million for the comparable 2018 period. FFO per diluted common share was $0.75 for both quarters ended March 31, 2019 and 2018.

 

During the quarter we received $1.4 million of deferred rent from Thrive and wrote off $1.9 million of straight-line rent related to the termination of a lease and transition of two seniors housing communities to a new operator. Excluding these two non-recurring items in the first quarter of 2019, FFO increased $0.7 million compared with the first quarter of 2018, due to higher rental and interest income resulting from acquisitions, mortgage loan originations, development and capital improvement projects, net increased rent from Anthem, Preferred Care and Senior Care, higher income from unconsolidated joint ventures, and lower interest expense, partially offset by a reduction in rental income related to properties sold in 2018 and Thrive’s failure to pay first quarter 2019 rent.

 

LTC completed the following transactions during the first quarter of 2019:

 

·                  Under a partnership agreement, acquired an operational 74-unit assisted living and memory care community in Virginia, with a stabilized occupancy of 90% as of closing. LTC contributed $16.0 million in cash and the non-controlling partner contributed $919,487 of equity. LTC’s economic interest in the JV is approximately 95%.

 

·                  Completed construction of and opened a 143-bed skilled nursing center in Kentucky.

 

·                  Funded a $6.8 million mezzanine loan commitment, that was originated in the fourth quarter of 2018, for the development of a 204-unit independent living, assisted living and memory care community in Georgia. The mezzanine loan has a five-year term and a 12% return, a portion of which is paid in cash, and the remaining portion of which is deferred during the first 46 months.

 

·                  Entered into an agreement to transition two seniors housing communities in Clovis, California to a new operator. The new master lease has a 10-year term with an annual initial cash rent of $2.9 million, fixed for five years.

 

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Conference Call Information

 

LTC will conduct a conference call on Friday, May 10, 2019, 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, 2019. The conference call is accessible by telephone and the internet. Telephone access will be available by dialing 877-510-2862 (domestically) or 412-902-4134 (internationally). To participate in the webcast, go to LTC’s website at www.LTCreit.com 15 minutes before the call to download any necessary software.

 

An audio replay of the conference call will be available from May 10 through May 24, 2019 and may be accessed by dialing 877-344-7529 (domestically) or 412-317-0088 (internationally) and entering conference number 10130181. Additionally, an audio archive will be available on LTC’s website on the “Presentations” page of the “Investor Information” section, which is under the “Investors” tab. LTC’s earnings release and supplemental information package for the current period will be available on its website on the “Press Releases” and “Presentations” pages, respectively, of the “Investor Information” section which is under the “Investors” tab.

 

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 more than 200 investments in 28 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.

 

(financial tables follow)

 

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LTC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

 

March 31, 

 

 

 

2019

 

2018

 

 

 

(unaudited)

 

Revenues:

 

 

 

 

 

Rental income

 

$

28,024

(1)

$

34,505

 

Interest income from mortgage loans

 

7,311

 

6,816

 

Interest and other income

 

521

 

489

 

Total revenues

 

35,856

 

41,810

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

Recovery of written-off straight-line rent receivable

 

(9,600

)(1)

—

 

Interest expense

 

7,467

 

7,829

 

Depreciation and amortization

 

9,607

 

9,444

 

Provision for doubtful accounts

 

83

 

8

 

Transaction costs

 

—

 

4

 

Property tax expense

 

4,386

(1)

—

 

General and administrative expenses

 

4,571

 

4,797

 

Total expenses

 

16,514

 

22,082

 

 

 

 

 

 

 

Operating income

 

19,342

 

19,728

 

Income from unconsolidated joint ventures

 

1,085

 

631

 

Net income

 

20,427

 

20,359

 

Income allocated to non-controlling interests

 

(81

)

—

 

Net income attributable to LTC Properties, Inc.

 

20,346

 

20,359

 

Income allocated to participating securities

 

(92

)

(88

)

Net income available to common stockholders

 

$

20,254

 

$

20,271

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

Basic

 

$

0.51

 

$

0.51

 

Diluted

 

$

0.51

 

$

0.51

 

 

 

 

 

 

 

Weighted average shares used to calculate earnings per common share:

 

 

 

 

 

Basic

 

39,532

 

39,451

 

Diluted

 

39,874

 

39,454

 

 

 

 

 

 

 

Dividends declared and paid per common share

 

$

0.57

 

$

0.57

 

 

(1)         The decrease in rental income and the new income statement line items “recovery of written-off straight-line rent receivable” and “property tax expense” are due to the impact of newly adopted Accounting Standard Codification 842, Leases (“ASC 842”). See Footnote 1 in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 for further discussion.

 

3

 

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.

 

4

 

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,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

GAAP net income available to common stockholders

 

$

20,254

 

$

20,271

 

Add: Depreciation and amortization

 

9,607

 

9,444

 

NAREIT FFO attributable to common stockholders

 

29,861

 

29,715

 

 

 

 

 

 

 

Less: Non-recurring items(1)(2)

 

576

 

—

 

FFO attributable to common stockholders, excluding non-recurring items

 

$

30,437

 

$

29,715

 

 

 

 

 

 

 

NAREIT FFO attributable to common stockholders

 

$

29,861

 

$

29,715

 

Non-cash income:

 

 

 

 

 

Less: Straight-line rental income

 

(1,238

)

(3,440

)

Add: Amortization of lease costs

 

87

 

540

 

Add: Other non-cash contra-revenue(1)

 

1,926

 

—

 

Less: Effective interest income from mortgage loans

 

(1,415

)

(1,404

)

Less: Deferred income from unconsolidated joint ventures

 

(7

)

(31

)

Net non-cash income

 

(647

)

(4,335

)

 

 

 

 

 

 

Non-cash expense:

 

 

 

 

 

Add: Non-cash compensation charges

 

1,689

 

1,376

 

Add: Non-cash interest related to earn-out liabilities

 

—

 

126

 

Less: Capitalized interest

 

(260

)

(259

)

Net non-cash expense

 

1,429

 

1,243

 

 

 

 

 

 

 

Funds available for distribution (FAD)

 

30,643

 

26,623

 

 

 

 

 

 

 

Less: Non-recurring income(2)

 

(1,350

)

—

 

Funds available for distribution (FAD), excluding non-recurring items

 

$

29,293

 

$

26,623

 

 

(1)         Represents the write-off of straight-line rent due to a lease termination and transition of two seniors housing communities to a new operator.

 

(2)         Represents deferred rent repayment from an operator.

 

NAREIT Basic FFO attributable to common stockholders per share

 

$

0.76

 

$

0.75

 

NAREIT Diluted FFO attributable to common stockholders per share

 

$

0.75

 

$

0.75

 

 

 

 

 

 

 

NAREIT Diluted FFO attributable to common stockholders

 

$

29,953

 

$

29,803

 

Weighted average shares used to calculate NAREIT diluted FFO per share attributable to common stockholders

 

39,874

 

39,603

 

 

 

 

 

 

 

Diluted FFO attributable to common stockholders, excluding non-recurring items

 

$

30,529

 

$

29,803

 

Weighted average shares used to calculate diluted FFO, excluding non-recurring items, per share attributable to common stockholders

 

39,874

 

39,603

 

 

 

 

 

 

 

Diluted FAD, excluding non-recurring items

 

$

29,385

 

$

26,711

 

 

 

 

 

 

 

Weighted average shares used to calculate diluted FAD, excluding non-recurring items, per share

 

39,874

 

39,603

 

 

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LTC PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except per share)

 

 

 

March 31, 2019

 

December 31, 2018

 

 

 

(unaudited)

 

(audited)

 

ASSETS

 

 

 

 

 

Investments:

 

 

 

 

 

Land

 

$

125,898

 

$

125,358

 

Buildings and improvements

 

1,313,952

 

1,290,352

 

Accumulated depreciation and amortization

 

(322,535

)

(312,959

)

Operating real estate property, net

 

1,117,315

 

1,102,751

 

Properties held-for-sale, net of accumulated depreciation: 2019—$1,916; 2018—$1,916

 

3,830

 

3,830

 

Real property investments, net

 

1,121,145

 

1,106,581

 

Mortgage loans receivable, net of loan loss reserve: 2019—$2,461; 2018—$2,447

 

244,314

 

242,939

 

Real estate investments, net

 

1,365,459

 

1,349,520

 

Notes receivable, net of loan loss reserve: 2019—$198; 2018—$128

 

19,558

 

12,715

 

Investments in unconsolidated joint ventures

 

27,515

 

30,615

 

Investments, net

 

1,412,532

 

1,392,850

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

Cash and cash equivalents

 

6,715

 

2,656

 

Restricted cash

 

2,108

 

2,108

 

Debt issue costs related to bank borrowings

 

2,775

 

2,989

 

Interest receivable

 

22,176

 

20,732

 

Straight-line rent receivable, net of allowance for doubtful accounts: 2019—$0; 2018—$746

 

42,455

(1)

73,857

 

Lease incentives

 

2,263

(1)

14,443

 

Prepaid expenses and other assets

 

5,342

(2)

3,985

 

Total assets

 

$

1,496,366

 

$

1,513,620

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Bank borrowings

 

$

146,900

 

$

112,000

 

Senior unsecured notes, net of debt issue costs: 2019—$900; 2018—$938

 

528,900

 

533,029

 

Accrued interest

 

4,193

 

4,180

 

Accrued expenses and other liabilities

 

28,220

(2)

31,440

 

Total liabilities

 

708,213

 

680,649

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2019—39,739; 2018—39,657

 

397

 

397

 

Capital in excess of par value

 

862,376

 

862,712

 

Cumulative net income

 

1,233,302

 

1,255,764

 

Cumulative distributions

 

(1,316,314

)

(1,293,383

)

Total LTC Properties, Inc. stockholders’ equity

 

779,761

 

825,490

 

Non-controlling interests

 

8,392

 

7,481

 

Total equity

 

788,153

 

832,971

 

Total liabilities and equity

 

$

1,496,366

 

$

1,513,620

 

 

(1)         Decrease due to impact of newly adopted ASC 842. See Footnote 1 in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 for further discussion.

 

(2)         Includes $1,445 right of use asset/lease liability due to the impact of newly adopted ASC 842. See Footnote 1 in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 for further discussion.

 

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