LTC Announces Third Quarter Operating Results
WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)-- LTC Properties, Inc. (NYSE:LTC) released results of operations for the three and nine months ended September 30, 2010 and announced that net income allocable to common stockholders for the third quarter was $5.6 million or $0.22 per diluted share which included a $2.4 million charge related to the Company's redemption of all of its 8.5% Series E Cumulative Convertible Preferred Stock ("Series E Preferred Stock") and 40% of its 8.0% Series F Cumulative Preferred Stock ("Series F Preferred Stock"). For the same period in 2009, net income allocable to common stockholders was $7.4 million or $0.32 per diluted share. Revenues for the three months ended September 30, 2010, were $18.5 million versus $17.2 million for the same period last year.
The Company announced that during the third quarter it invested $1.6 million, before closing fees of $0.1 million, in a mortgage loan secured by a skilled nursing property located in Missouri to finance an expansion of the property and extend the loan maturity for an additional five years to January 2018. The current interest rate is 10.9%, increasing 0.13% annually. Also, the Company invested $1.3 million in the third quarter of 2010 under agreements to expand and renovate six properties operated by four different operators. These investments are at an average yield of 9.4%.
For the nine months ended September 30, 2010, net income allocable to common stockholders was $20.0 million or $0.83 per diluted share. Included in these results was a $2.4 million charge related to the Company's redemption of all of its Series E Preferred Stock and 40% of its Series F Preferred Stock and $0.9 million of provision for doubtful accounts recorded in the first quarter related to a mortgage loan secured by a private school property in Minnesota. The borrower of the private school property ceased operations and filed for Chapter 7 bankruptcy. During the three months ended September 30, 2010, LTC acquired this private school property via deed in lieu of foreclosure and has classified it as held-for-sale. The Company is actively marketing to sell this property. For the same period in 2009, net income allocable to common stockholders was $22.2 million or $0.96 per diluted share which included $0.6 million of allocated income from the repurchase of 109,484 shares of its Series F Preferred Stock. Revenues for the nine months ended September 30, 2010, were $54.3 million versus $52.0 million for the same period last year.
The Company will conduct a conference call on Tuesday, October 26, 2010, at 10:00 a.m. Pacific time, in order to comment on the Company's performance and operating results for the quarter ended September 30, 2010. The conference call is accessible by dialing 877-317-6789. The international number is 412-317-6789. The earnings release will be available on our website. An audio replay of the conference call will be available from October 26, 2010 through November 10, 2010. Callers can access the replay by dialing 877-344-7529 or 412-317-0088 and entering conference number 445148.
At September 30, 2010, LTC had investments in 95 skilled nursing properties, 99 assisted living properties, 12 other properties and two schools. These properties are located in 29 states. Other properties consist of independent living properties and properties providing any combination of skilled nursing, assisted living and/or independent living services. The Company is a self-administered real estate investment trust that primarily invests in senior housing and long-term care facilities through mortgage loans, facility lease transactions and other investments. For more information on LTC Properties, Inc., visit the Company's website at www.LTCProperties.com.
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. All forward looking statements included in this press release are based on information available to the Company on the date hereof, and the Company 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) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2010 2009 2010 2009 Revenues: Rental income $ 16,384 $ 14,832 $ 47,798 $ 44,554 Interest income from 1,868 2,061 5,683 6,538 mortgage loans Interest and other income 265 306 842 949 Total revenues 18,517 17,199 54,323 52,041 Expenses: Interest expense 852 340 1,672 2,046 Depreciation and 4,073 3,621 11,801 10,870 amortization Provisions for doubtful 217 202 1,472 573 accounts Operating and other 1,914 1,766 5,817 5,417 expenses Total expenses 7,056 5,929 20,762 18,906 Income from continuing 11,461 11,270 33,561 33,135 operations Discontinued operations: Income from discontinued 101 56 201 169 operations Gain on sale of assets, -- -- -- -- net Net income from 101 56 201 169 discontinued operations Net income 11,562 11,326 33,762 33,304 Income allocated to (48 ) (76 ) (144 ) (229 ) non-controlling interests Net income attributable to 11,514 11,250 33,618 33,075 LTC Properties, Inc. Income allocated to (54 ) (34 ) (155 ) (105 ) participating securities Income allocated to (5,889 ) (3,785 ) (13,459 ) (10,730 ) preferred stockholders Net income allocable to $ 5,571 $ 7,431 $ 20,004 $ 22,240 common stockholders Basic earnings per common share: Continuing operations $ 0.22 $ 0.32 $ 0.83 $ 0.96 Discontinued operations $ 0.00 $ 0.00 $ 0.01 $ 0.01 Net income allocable to $ 0.22 $ 0.32 $ 0.83 $ 0.96 common stockholders Diluted earnings per common share: Continuing operations $ 0.22 $ 0.32 $ 0.82 $ 0.96 Discontinued operations $ 0.00 $ 0.00 $ 0.01 $ 0.01 Net income allocable to $ 0.22 $ 0.32 $ 0.83 $ 0.96 common stockholders Weighted average shares used to calculate earnings per common share: Basic 24,930 23,108 23,959 23,083 Diluted 24,945 23,193 24,055 23,165
NOTE: Computations of per share amounts from continuing operations, discontinued operations and net income are made independently. Therefore, the sum of per share amounts from continuing operations and discontinued operations may not agree with the per share amounts from net income allocable to common stockholders. Quarterly and year-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts for the quarters may not agree with the per share amounts for the year.
Reconciliation of Funds from Operations ("FFO")
FFO is a supplemental measure of a real estate investment trust's ("REIT") financial performance that is not defined by U.S. generally accepted accounting principles ("GAAP"). The Company uses FFO as a supplemental measure of our operating performance and we believe FFO is 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 U.S. GAAP assumes that the value of real estate assets diminishes predictably over time. We believe that by excluding the effect of historical costs, which may be of limited relevance in evaluating current performance, FFO and FFO per share facilitate comparisons of operating performance between periods.
FFO is defined as net income allocable to common stockholders (computed in accordance with U.S. GAAP) excluding gains or losses on the sale of assets plus real estate depreciation and amortization, with adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. 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 National Association of Real Estate Investment Trusts' ("NAREIT") definition or that have a different interpretation of the current NAREIT definition from the Company; therefore, caution should be exercised when comparing our company's FFO to that of other REITs.
The Company uses FFO excluding non-cash rental income and FFO excluding non-cash rental income and non-cash compensation charges as a supplemental performance measure of our cash flow generated by operations and cash available for distribution to stockholders. FFO, FFO excluding non-cash rental income and FFO excluding non-cash rental income and non-cash compensation charges do not represent cash generated from operating activities in accordance with U.S. GAAP, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income allocable to common stockholders.
The following table reconciles net income allocable to common stockholders to FFO allocable to common stockholders, FFO allocable to common stockholders excluding non-cash rental income and FFO allocable to common stockholders excluding non-cash rental income and non-cash compensation charges (unaudited, amounts in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2010 2009 2010 2009 Net income allocable to $ 5,571 $ 7,431 $ 20,004 $ 22,240 common stockholders Add: Depreciation and amortization (continuing and 4,073 3,694 11,947 11,089 discontinued operations) FFO allocable to common 9,644 11,125 31,951 33,329 stockholders Less: Non-cash rental income (788 ) (872 ) (2,315 ) (2,755 ) FFO excluding non-cash 8,856 10,253 29,636 30,574 rental income Add: Non-cash compensation 261 360 982 1,025 charges FFO excluding non-cash rental income and non-cash $ 9,117 $ 10,613 $ 30,618 $ 31,599 compensation charges Basic FFO allocable to common stockholders per $ 0.39 $ 0.48 $ 1.33 $ 1.44 share Diluted FFO allocable to common stockholders per $ 0.39 $ 0.47 $ 1.32 $ 1.42 share Diluted FFO $ 9,698 $ 12,073 $ 34,744 $ 36,177 Weighted average shares used to calculate diluted FFO per 25,090 25,460 26,304 25,436 share allocable to common stockholders Basic FFO excluding non-cash $ 0.36 $ 0.44 $ 1.24 $ 1.32 rental income per share Diluted FFO excluding non-cash rental income per $ 0.36 $ 0.44 $ 1.23 $ 1.31 share Diluted FFO excluding $ 8,856 $ 11,201 $ 32,285 $ 33,422 non-cash rental income Weighted average shares used to calculate diluted FFO excluding non-cash rental 24,945 25,460 26,191 25,436 income per share allocable to common stockholders Basic FFO excluding non-cash rental income and non-cash $ 0.37 $ 0.46 $ 1.28 $ 1.37 compensation charges per share Diluted FFO excluding non-cash rental income and $ 0.37 $ 0.45 $ 1.27 $ 1.35 non-cash compensation charges per share Diluted FFO excluding non-cash rental income and $ 9,117 $ 11,561 $ 33,411 $ 34,447 non-cash compensation charges Weighted average shares used to calculate diluted FFO excluding non-cash rental income and non-cash 24,945 25,460 26,304 25,436 compensation charges per share allocable to common stockholders
Three Months Ended Nine Months Ended September 30, September 30, Reconciliation of 2010 2009 2010 2009 Normalized FFO: FFO allocable to common $ 9,644 $ 11,125 $ 31,951 $ 33,329 stockholders Add: Preferred stock 2,383 -- 2,383 -- redemption charge Less: Allocation of income from preferred stock -- -- -- (626 ) buyback Add (Less): Non-recurring -- -- 852 (1) (198 ) (2) one time items Normalized FFO allocable $ 12,027 $ 11,125 $ 35,186 $ 32,505 to common stockholders Basic Normalized FFO allocable to common $ 0.48 $ 0.48 $ 1.47 $ 1.41 stockholders per share Diluted Normalized FFO allocable to common $ 0.48 $ 0.47 $ 1.44 $ 1.39 stockholders per share Diluted Normalized FFO $ 12,947 $ 12,073 $ 37,979 $ 35,353 Weighted average shares used to calculate diluted normalized FFO per share 27,203 25,460 26,304 25,436 allocable to common stockholders
Provision for doubtful accounts related to closure of a private school property located in Minnesota securing a mortgage loan. The borrower (1) ceased operations and filed for Chapter 7 bankruptcy. We acquired the property via deed in lieu of foreclosure and have classified it as held-for-sale. We are actively marketing to sell this property. (2) Income received in conjunction with a mortgage loan prepayment.
LTC PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (Amounts in thousands) September 30, 2010 December 31, 2009 (unaudited) (audited) ASSETS Real Estate Investments: Buildings and improvements, net of accumulated depreciation and $ 361,592 $ 333,530 amortization: 2010 -- $154,566; 2009 -- $142,839 Land 38,595 36,205 Properties held-for-sale, net of accumulated depreciation and 7,299 4,545 amortization: 2010 -- $2,487; 2009 -- $2,341 Mortgage loans receivable, net of allowance for doubtful accounts: 2010 64,801 69,883 -- $654; 2009 -- $704 Real estate investments, net 472,287 444,163 Other Assets: Cash and cash equivalents 12,493 8,856 Debt issue costs, net 882 476 Interest receivable 1,444 1,964 Straight-line rent receivable, net of allowance for doubtful accounts: 2010 19,294 17,124 -- $1,262; 2009 -- $629 Prepaid expenses and other assets 8,534 8,663 Other assets related to properties 211 185 held-for-sale Notes receivable 1,429 2,689 Marketable securities 6,477 6,473 Total Assets $ 523,051 $ 490,593 LIABILITIES Bank borrowings $ -- $ 13,500 Senior unsecured notes 50,000 -- Mortgage loan payable -- 7,685 Bonds payable 3,730 4,225 Accrued interest 608 102 Accrued expenses and other liabilities 9,045 7,786 Accrued expenses and other liabilities 35 15 related to properties held-for-sale Distributions payable 1,768 2,967 Total Liabilities 65,186 36,280 EQUITY Stockholders' equity: Preferred stock $0.01 par value; 15,000 shares authorized; shares issued and outstanding: 2010 -- 126,913 186,801 5,537; 2009 -- 7,932 Common stock: $0.01 par value; 45,000 shares authorized; shares issued and 262 233 outstanding: 2010 -- 26,227; 2009 -- 23,312 Capital in excess of par value 397,788 326,163 Cumulative net income 611,247 577,629 Other 307 390 Cumulative distributions (680,614 ) (638,884 ) Total LTC Properties, Inc. 455,903 452,332 Stockholders' Equity Non-controlling interests 1,962 1,981 Total Equity 457,865 454,313 Total Liabilities and Equity $ 523,051 $ 490,593
LTC PROPERTIES, INC. SUPPLEMENTAL INFORMATION (Unaudited, amounts in thousands) Non-Cash Revenue Components 3Q10 4Q10(1) 1Q11(1) 2Q11(1) 3Q11(1) Straight-line rent $ 955 $ 897 $ 469 $ 426 $ 379 Amort. Lease break (167 ) (167 ) (167 ) (167 ) (167 ) fee Net $ 788 $ 730 $ 302 $ 259 $ 212
__________________________ (1) Projections based on current in-place leases and do not assume any increase in straight-line rent from additional acquisitions.
Maturities 2010 2011 2012 2013 2014 Lease 1 lease on 3 leases on 2 leases on 4 leases on Maturities -- 1 property 3 properties 2 properties 41 properties Mortgage Loan Receivable $ -- $ 6,646 $ 2,221 $ 15,306 $ 6,996 Maturities (1) Debt Maturities $ -- $ -- $ -- $ -- $ -- (2)
___________________________________________ (1) Represents principal amount due at maturity. (2) Excludes the Company's unsecured revolving line of credit and amortization of bonds and senior unsecured notes payable. At September 30, 2010, the Company had a floating rate debt balance of $3,730 at an all-in floating rate of 2.03%. This debt amortizes to $720 which is due in 2015 and is redeemable at anytime. In Note: addition, at September 30, 2010, the Company had a 5.26% senior unsecured term note of $25,000 due in 2015. The Company also had a 5.74% senior unsecured term note of $25,000 which will be fully amortized by 2019.
Portfolio Snapshot Nine Months Ended Number Number Number Investment September 30, 2010 Gross % of Rental Interest % of Number of of SNF of ALF of ALF per Type of Property Investments Investments Income Income Revenues Properties Beds Units Units Bed/Unit (6) (2) (3) (1) (1) (1) Assisted Living $ 281,912 44.8 % 22,408 $ 2,107 45.5 % 99 -- 4,289 -- $ 65.73 Properties Skilled Nursing 280,452 44.5 % 21,192 3,205 45.3 % 95 10,919 -- -- $ 25.68 Properties Other Properties 55,460 8.8 % 3,661 294 7.4 % 12 795 290 370 $ 38.12 (4) Schools(5) 12,170 1.9 % 901 77 1.8 % 2 N/A N/A N/A N/A Totals $ 629,994 100.0 % $ 48,162 $ 5,683 100.0 % 208 11,714 4,579 370
______________________________________________________________________________________________________________________________________________________ (1) See the Company's Annual Report on Form 10-K for the year ended December 31, 2009, Item 1. Business General - Owned Properties for discussion of bed/unit count. (2) Includes interest income from mortgage loans. (3) Includes rental income and interest income from mortgage loans. (4) Includes independent living properties and properties providing any combination of skilled nursing, assisted living and/or independent living services. The borrower of a private school property located in Minnesota ceased operations and filed for Chapter 7 bankruptcy in the second quarter of (5) 2010. This private school property was acquired during the third quarter of 2010 via deed in lieu of foreclosure and has been classified as held-for-sale. The Company is actively marketing to sell this private school property. (6) Includes rental income from properties classified as held-for-sale.
LTC PROPERTIES, INC. SUPPLEMENTAL INFORMATION (Unaudited, amounts in thousands) Balance Sheet Metrics Year to Quarter Ended Date 9/30/10 9/30/10 6/30/10 3/31/10 12/31/09 9/30/09 Debt to book capitalization 10.5 % 10.5 % (1) 8.9 % (4) 7.9 % (4) 5.3 % (7) 2.6 % ratio Debt & Preferred Stock to book 35.3 % 35.3 % (2) 45.8 % (4) 45.2 % (4) 44.2 % (7) 42.6 % capitalization ratio Debt to market capitalization 6.3 % 6.3 % (1) 5.5 % (4) 4.6 % (4) 3.0 % (7) 1.6 % ratio Debt & Preferred Stock to 21.4 % 21.4 % (2) 28.6 % (4) 26.1 % (5) 25.1 % (7) 25.3 % market capitalization ratio Interest coverage ratio 28.3 x 19.4 x (3) 38.3 x (5) 37.0 x (6) 40.8 x (8) 45.2 x (9) Fixed charge coverage ratio 3.7 x 3.8 x 3.8 x (5) 3.5 x (6) 3.6 x (8) 3.7 x (9)
__________________________ (1) Increase primarily due to the sale to Prudential of $50.0 million aggregate principal amount of the senior unsecured term notes. (2) Decrease primarily due to the Company's redemption of all of its Series E Preferred Stock and 40% of its Series F Preferred Stock outstanding. (3) Decrease primarily due to the increase in interest expense related to the $50.0 million senior unsecured term notes. (4) Increase primarily due to the increase in bank borrowing. (5) Increase primarily due to additional net income generated from acquisitions in 2009 and 2010. Decrease primarily due to the increase of $0.9 million in provision for doubtful accounts related to a mortgage loan secured by a private school property located in Minnesota. The borrower ceased operations and filed (6) for Chapter bankruptcy in the second quarter of 2010. This private school property was acquired during the third quarter of 2010 via deed in lieu of foreclosure and has been classified as held-for-sale. The Company is actively marketing to sell this property. (7) Decrease primarily due to the increase in market capitalization partially offset by the increase in bank borrowing. Decrease primarily due to the increase in operating and other expenses (8) relating to transaction costs incurred for the acquisition of three assisted living properties in November of 2009. In calculating our interest coverage and fixed charge coverage ratios above, we use EBITDA, which is a financial measure not derived in accordance with U.S. generally accepted accounting principles (non-GAAP financial measure). Our coverage ratios indicate our ability to service interest expense and fixed charges (interest plus preferred dividends). Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, rating and investment (9) recommendations of companies. EBITDA is not an alternative to net income, operating income, income from continuing operations or cash flows from operating activities as calculated and presented in accordance with U.S. GAAP. You should not rely on EBITDA as a substitute for any such U.S. GAAP financial measures or consider it in isolation, for the purpose of analyzing our financial performance, financial position or cash flows. Net income is the most directly comparable GAAP measure to EBITDA. Below are a reconciliation of net income to EBITDA and the calculation of the interest coverage and fixed charge coverage ratios disclosed above.
Year to Quarter Ended Date 9/30/10 9/30/10 6/30/10 3/31/10 12/31/09 9/30/09 Net income $ 33,762 $ 11,562 $ 11,630 $ 10,570 $ 11,056 $ 11,326 Add: Interest 1,672 852 419 401 372 340 Expense Add: Depreciation and amortization 11,801 4,073 3,941 3,787 3,660 3,621 -- continuing operations Add: Depreciation and amortization 146 -- 73 73 73 73 -- discontinued operations Total EBITDA $ 47,381 $ 16,487 $ 16,063 $ 14,831 $ 15,161 $ 15,360 Interest $ 1,672 $ 852 $ 419 $ 401 $ 372 $ 340 expense Interest coverage 28.3x 19.4x 38.3x 37.0x 40.8x 45.2x ratio Interest $ 1,672 $ 852 $ 419 $ 401 $ 372 $ 340 expense Preferred stock dividends (excludes 11,076 3,506 3,785 3,785 3,785 3,785 preferred stock redemption charge) Total fixed $ 12,748 $ 4,358 $ 4,204 $ 4,186 $ 4,157 $ 4,125 charges Fixed charge coverage 3.7 x 3.8 x 3.8 x 3.5 x 3.6 x 3.7 x ratio
Source: LTC Properties, Inc.
Released October 25, 2010