LTC Reports 2016 Fourth Quarter Results and Announces New Investments

Guía de Regalos

WESTLAKE VILLAGE, Calif.–(BUSINESS WIRE)–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, 2016.

Net income available to common stockholders was $20.6 million, or $0.53
per diluted share, for the 2016 fourth quarter, compared with $17.8
million, or $0.48 per diluted share, for the same period in 2015. The
increase in net income available to common stockholders was primarily
due to higher revenues from investing activities, and the net reduction
in impairment charges, partially offset by higher interest expense
resulting from the sale of senior unsecured notes in 2016, gain on sale
recognized in 2015, as well as additional general and administrative
expenditures related to increased investment activities.

Funds from Operations (“FFO”) increased 10.2% to $30.7 million for the
2016 fourth quarter, up from $27.8 million for the comparable 2015
period. FFO per diluted common share was $0.78 and $0.74 for the
quarters ended December 31, 2016 and 2015, respectively, which
represents a 5.4% per share increase. The increase in FFO was primarily
due to higher investing activities, partially offset by higher interest
expense resulting from the sale of senior unsecured notes in 2016, as
well as additional general and administrative expenditures related to
increased investment activities.

LTC completed the following transactions during the fourth quarter of
2016:

  • Purchased a parcel of land in Illinois for $1.6 million and entered
    into a development commitment to construct a 66-unit memory care
    community. The commitment totals $14.5 million, including the land
    purchase;
  • Completed construction and opened a 108-unit independent living
    community in Kansas;
  • Purchased a $12.5 million mezzanine loan on a portfolio of 64 skilled
    nursing centers. The mezzanine loan has a five-year term and a rate of
    LIBOR plus 11.75%; and
  • Entered into a $3.4 million mezzanine loan commitment for the
    development of a 127-unit senior living community in Florida, which
    will provide a combination of independent, assisted and memory care
    services. The mezzanine loan has a seven-year term and a 15% return, a
    portion of which is paid in cash, subject to minimum payment
    requirements, and the remaining unpaid portion is deferred and
    subsequently paid to us at times set forth in the loan agreement.

Subsequent to December 31, 2016, LTC completed the following:

  • Amended its shelf agreement with Prudential Investment Management,
    Inc. (“Prudential”) to increase the shelf commitments to $337.5
    million, of which $36.7 million is currently available;
  • Sold 15-year senior unsecured notes in the aggregate amount of $100.0
    million to a group of institutional investors, which included
    Prudential, in a private placement transaction. The notes bear
    interest at an annual fixed rate of 4.5%, have scheduled principal
    payments and mature on February 16, 2032. The proceeds were used to
    repay the outstanding balance of the unsecured line of credit;
  • Sold 312,881 shares of its common stock for $14.6 million in net
    proceeds under its equity distribution agreement; and
  • Entered into a contingent agreement to sell a property in Texas, and
    as a result, recorded a $0.8 million impairment charge during the
    fourth quarter of 2016. The property’s net book value, after recording
    the impairment, is $1.2 million and it generated revenue of
    approximately $0.2 million in 2016.

Conference Call Information

LTC will conduct a conference call on Thursday, February 23, 2017, 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, 2016. 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 the necessary software.

An audio replay of the conference call will be available from February
23 through March 9, 2017 and may be accessed by dialing 877-344-7529
(domestically) or 412-317-0088 (internationally) and entering conference
number 10099552. 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 self-administered real estate investment trust that primarily
invests in seniors housing and health care properties primarily through
sale-leaseback transactions, mortgage financing and structured finance
solutions including mezzanine lending. At December 31, 2016, LTC had 219
investments located in 30 states comprising 112 assisted living
communities, 92 skilled nursing centers, 7 range of care communities, 1
behavioral health care hospital, 3 parcels of land under development and
4 parcels of land held-for-use. Assisted living communities, independent
living communities, memory care communities and combinations thereof are
included in the assisted living property type. Range of care communities
consist of properties providing skilled nursing and any combination of
assisted living, independent living and/or memory care services. For
more information on LTC Properties, Inc., visit the Company’s website 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,
2016 2015 2016 2015
(unaudited) (audited)
Revenues:
Rental income $ 34,822 $ 30,755 $ 133,527 $ 113,080
Interest income from mortgage loans 6,974 6,342 27,321 22,119
Interest and other income   345     296     735     1,004  
Total revenues   42,141     37,393     161,583     136,203  
 
Expenses:
Interest expense 6,856 5,581 26,442 17,497
Depreciation and amortization 9,309 8,310 35,932 29,431
Impairment on real estate for sale 766 2,250 766 2,250
Provision for doubtful accounts 212 156 457 619
Transaction costs 83 112 179 744
General and administrative expenses   4,548     3,892     17,412     14,986  
Total expenses   21,774     20,301     81,188     65,527  
 
Operating income 20,367 17,092 80,395 70,676
Income from unconsolidated joint ventures 299 276 1,138 1,819
Gain on sale of real estate, net       586     3,582     586  
Net income 20,666 17,954 85,115 73,081
Income allocated to participating securities (89 ) (114 ) (385 ) (484 )
Income allocated to preferred stockholders               (2,454 )
Net income available to common stockholders $ 20,577   $ 17,840   $ 84,730   $ 70,143  
 
Earnings per common share:
Basic $ 0.53   $ 0.49   $ 2.21   $ 1.97  
Diluted $ 0.53   $ 0.48   $ 2.21   $ 1.94  
 
Weighted average shares used to calculate earnings per
common share:
Basic   39,065     36,433     38,388     35,590  
Diluted   39,260     37,358     38,597     37,329  
 
Dividends declared and paid per common share $ 0.57   $ 0.54   $ 2.19   $ 2.07  
 

Supplemental Reporting Measures

FFO, adjusted FFO (“AFFO”), 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, AFFO and FAD as supplemental measures of operating performance. The
Company believes FFO, AFFO 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, AFFO and FAD
facilitate like comparisons of operating performance between periods.
Additionally the Company believes that normalized FFO, normalized AFFO
and normalized FAD provide useful information because they 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. Normalized FFO
represents FFO adjusted for certain items detailed in the
reconciliations. 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 AFFO as FFO excluding the effects of straight-line rent,
amortization of lease inducement, effective interest income and deferred
income from unconsolidated joint ventures. 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. By
excluding the non-cash portion of rental income, interest income from
mortgage loans and income from unconsolidated joint ventures, investors,
analysts and our management can compare AFFO between periods. Normalized
AFFO represents AFFO adjusted for certain items detailed in the
reconciliations.

We define FAD as AFFO excluding the effects of non-cash compensation
charges, capitalized interest and non-cash interest charges. 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. Normalized FAD represents FAD adjusted for
certain items detailed in the reconciliations.

While the Company uses FFO, Normalized FFO, AFFO, Normalized AFFO, FAD
and Normalized 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, AFFO and FAD

The following table reconciles GAAP net income available to common
stockholders to each of NAREIT FFO attributable to common stockholders
and normalized FFO attributable to common stockholders, as well as
normalized AFFO and normalized FAD (unaudited, amounts in thousands,
except per share amounts)
:

 
    Three Months Ended     Twelve Months Ended
December 31, December 31,
2016     2015 2016     2015
 
GAAP net income available to common stockholders $ 20,577 $ 17,840 $ 84,730 $ 70,143
Add: Depreciation and amortization 9,309 8,310 35,932 29,431
Add: Impairment on real estate for sale 766 2,250 766 2,250
Less: Gain on sale of real estate, net       (586 )   (3,582 )   (586 )
NAREIT FFO attributable to common stockholders 30,652 27,814 117,846 101,238
 
Add: Non-recurring one-time items               937((1 ))
Normalized FFO attributable to common stockholders 30,652 27,814 117,846 102,175
 
Less: Non-cash rental income (4,777 ) (2,559 ) (11,532 ) (8,456 )
Less: Effective interest income from mortgage loans (1,349 ) (1,232 ) (5,256 ) (3,912 )
Less: Deferred income from unconsolidated joint ventures               (1,000 )
Normalized adjusted FFO (AFFO) 24,526 24,023 101,058 88,807
 
Add: Non-cash compensation charges 1,131 913 4,280 4,006
Add: Non-cash interest related to earn-out liabilities 146 204 684 409
Less: Capitalized interest   (215 )   (346 )   (1,408 )   (827 )
Normalized funds available for distribution (FAD) $ 25,588   $ 24,794   $ 104,614   $ 92,395  
 

(1) Represents $537 of acquisition costs related to the
10-property senior housing portfolio acquired and a $400 provision
for loan loss reserve related to additional loan proceeds funded
under an existing mortgage loan.

NAREIT Basic FFO attributable to common stockholders per share $ 0.78   $ 0.76   $ 3.07   $ 2.84  
NAREIT Diluted FFO attributable to common stockholders per share $ 0.78   $ 0.74   $ 3.06   $ 2.77  
 
NAREIT Diluted FFO attributable to common stockholders $ 30,741   $ 27,928   $ 118,231   $ 104,176  

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

  39,260     37,577     38,597     37,563  
 
 
Diluted normalized FFO attributable to common stockholders $ 30,741   $ 27,928   $ 118,231   $ 105,113  

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

  39,260     37,577     38,597     37,563  
                         
 
Diluted normalized AFFO $ 24,615   $ 24,137   $ 101,443   $ 91,745  

Weighted average shares used to calculate diluted normalized AFFO
per share

  39,260     37,577     38,597     37,563  
                         
 
Diluted normalized FAD $ 25,667   $ 24,908   $ 104,999   $ 95,333  

Weighted average shares used to calculate diluted normalized FAD
per share

  39,260     37,577     38,597     37,563  
                                         
       
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except per share)

 
December 31, 2016 December 31, 2015
ASSETS
Investments:
Land $ 116,096 $ 106,841
Buildings and improvements 1,185,467 1,091,845
Accumulated depreciation and amortization   (275,861 )   (251,265 )
Real property investments, net 1,025,702 947,421
Mortgage loans receivable, net of loan loss reserve: 2016—$2,315;
2015—$2,190
  229,801     217,529  
Real estate investments, net 1,255,503 1,164,950
Notes receivable, net of loan loss reserve: 2016—$166; 2015—$0 16,427 1,961
Investments in unconsolidated joint ventures   25,221     24,042  
Investments, net 1,297,151 1,190,953
 
Other assets:
Cash and cash equivalents 7,991 12,942
Debt issue costs related to bank borrowings 1,847 2,865
Interest receivable 9,683 4,536
Straight-line rent receivable, net of allowance for doubtful
accounts: 2016—$960; 2015—$833
55,276 42,685
Prepaid expenses and other assets   22,948     21,443  
Total assets $ 1,394,896   $ 1,275,424  
 
LIABILITIES
Bank borrowings $ 107,100 $ 120,500
Senior unsecured notes, net of debt issue costs: 2016—$1,009;
2015—$1,095
502,291 451,372
Accrued interest 4,675 3,974
Accrued incentives and earn-outs 12,229 12,722
Accrued expenses and other liabilities   28,553     27,654  
Total liabilities 654,848 616,222
 
EQUITY
Stockholders’ equity:
Common stock: $0.01 par value; 60,000 shares authorized; shares
issued and outstanding: 2016—39,221; 2015—37,548
392 375
Capital in excess of par value 839,005 758,676
Cumulative net income 1,013,443 928,328
Accumulated other comprehensive income 47
Cumulative distributions   (1,112,792 )   (1,028,224 )
Total equity   740,048     659,202  
Total liabilities and equity $ 1,394,896   $ 1,275,424  
 

Contacts

LTC Properties, Inc.
Wendy L. Simpson
Pam Kessler
805-981-8655