LTC Reports 2021 First Quarter Results and Discusses Recent Activities

Rhea-AI Summary

LTC Properties, a real estate investment trust, reported its Q1 2021 results, showing a net income of $13.6 million ($0.35 per share), down from $63.4 million in Q1 2020. Funds from Operations (FFO) fell to $24.3 million, with FFO per diluted share at $0.62. The company faced challenges including a $773,000 net loss on property sales and decreased rental income due to nonpayments from Senior Lifestyle Corporation. LTC initiated rent reductions to support operators affected by COVID-19. Noteworthy transitions included 11 properties to new operators, with a total anticipated cash rent of $5.2 million for the first lease year.

Positive

• Transitioned 11 assisted living communities to new operators, increasing cash rent to $5.2 million in the first year.
• Received $1.6 million from the payoff of a mezzanine loan.
• Completed a preferred equity investment of $8.0 million for a new development.

Negative

• Net income dropped to $13.6 million from $63.4 million year-over-year.
• Funds from Operations decreased to $24.3 million, down from $29.2 million in Q1 2020.
• Decreased rental income due to nonpayments, contributing to financial losses in the quarter.

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, 2021.

Net income available to common stockholders was $13.6 million, or $0.35 per diluted share, for the 2021 first quarter, compared with $63.4 million, or $1.60 per diluted share, for the same period in 2020. Funds from Operations (“FFO”) was $24.3 million for the 2021 first quarter, compared with $29.2 million for the comparable 2020 period. FFO per diluted common share was $0.62 and $0.74 for the quarters ended March 31, 2021 and 2020, respectively. Excluding non-recurring items, FFO was $25.1 million and $29.2 million for the quarters ended March 31, 2021 and 2020, respectively. Funds available for distribution (“FAD”) was $24.6 million for the 2021 first quarter compared with $28.5 million for the 2020 first quarter.

First quarter 2021 results were impacted by the following:

• Net loss on sale of $773,000 compared with a net gain on sale of $43.9 million during the first quarter of 2020;

• A $758,000 non-recurring, non-cash write-off of straight-line rent as a result of transitioning an operator’s lease to cash-basis accounting;

• Decreased rental income as a result of Senior Lifestyle Corporation’s (“Senior Lifestyle”) nonpayment of lease obligations during the quarter, partially offset by the re-leasing of 11 properties in the portfolio;

• Decreased rental income from abated and deferred rent, net of repayment, a one-time 50% reduction of 2021 rent and interest escalations in recognition of operators’ increased costs due to COVID-19, and lower property tax revenue associated with certain operators’ non-payment of rent and escrows, partially offset by higher rental income from acquisitions, completed developments and Anthem Memory Care; and

• Lower interest.

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

• Transitioned 11 assisted living communities previously leased to Senior Lifestyle to two operators. These communities are located in Wisconsin, Ohio and Illinois. Total cash rent expected under these master lease agreements is $5.2 million for the first lease year, $7.1 million for the second lease year, and $7.3 million for the third lease year, escalating by 2% annually thereafter;

• Applied Senior Care Centers, LLC’s (“Senior Care”) and Abri Health Services, LLC’s (collectively, the “Lessee”) security deposits under the master lease to rent. Also, LTC sent a notice of default to the Lessee followed by a notice of termination of the master lease to be effective April 17, 2021. At the time of the April 16, 2021 bankruptcy filings by the Lessee, LTC was in the process of transitioning the portfolio to Texas-based HMG Healthcare, LLC (“HMG”) pursuant to a master lease, subject to various conditions precedent, including Lessee’s (and its sublessee affiliates’) compliance with the transition obligations under LTC’s existing master lease, with a goal to complete the transition by the end of the second quarter of 2021;

• Reduced 2021 rent and interest escalations by 50% to support eligible operators during the continuing COVID-19 crisis. The rent and interest escalation reduction were given in the form of a rent and interest credit. During the first quarter of 2021, LTC recognized a decrease of $292,000 in GAAP revenue and a $1.2 million decrease in funds available for distribution and expects the escalation reductions to reduce GAAP revenue by approximately $170,000, $34,000 and $32,000 during the second, third and fourth quarters of 2021, respectively, and to reduce funds available for distribution by approximately $133,000 in the second quarter of 2021;

• Through the end of the 2021 first quarter, rent deferrals were $1.1 million, net of $21,000 of deferred rent repayments. Excluding the rent credit related to the rent escalation reduction discussed above, abated rent was $600,000;

• Sold a closed previously impaired assisted living community in Florida and recognized a net loss on sale of $861,000;

• Funded $1.0 million in capital improvement projects at a weighted average rate of 6.1%;

• Funded its remaining preferred equity investment commitment of $8.0 million to develop a 267‑unit independent and assisted living community in Washington state, which was entered into during the third quarter of 2020;

• Received $1.6 million related to the payoff of a mezzanine loan;

• Received $936,000 related to the payoff of a note receivable;

• Paid $7.0 million in regular scheduled principal payments under its 4.5% senior unsecured notes; and

• Borrowed $17.0 million under its unsecured revolving line of credit at 1.3%.

Subsequent to March 31, 2021, LTC completed the following:

• Provided $367,000 of deferred rent, net of repayment and $319,000 of rent abatement in April 2021 and agreed to provide rent deferrals and abatements up to $800,000 for each of May and June 2021;

• Paid down $5.0 million under its unsecured revolving line of credit

FAQ

What were LTC Properties' Q1 2021 earnings results?

LTC reported a net income of $13.6 million, or $0.35 per share, for Q1 2021.

How did COVID-19 impact LTC Properties' revenue?

LTC experienced decreased rental income due to nonpayment of leases and implemented a 50% reduction in rent escalations.

What is LTC Properties' symbol?

The stock symbol for LTC Properties is LTC.

What was LTC's Funds from Operations for Q1 2021?

Funds from Operations for Q1 2021 was $24.3 million.

How did LTC Properties manage operator transitions in Q1 2021?

LTC transitioned 11 communities to new operators, expecting cash rent of $5.2 million for the first year.