LTC Announces Second Quarter Operating Results
WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)-- LTC Properties, Inc. (NYSE:LTC) released results of operations for the three and six months ended June 30, 2010 and announced that net income allocable to common stockholders for the second quarter was $7.7 million or $0.33 per diluted share. For the same period in 2009, net income allocable to common stockholders was $6.8 million or $0.30 per diluted share. Revenues for the three months ended June 30, 2010, were $18.2 million versus $17.4 million for the same period last year.
The Company announced that during the second quarter it purchased two properties in Virginia, a 90-bed skilled nursing property and a property with 137 skilled nursing beds, 47 assisted living units and 46 independent living units, for a total purchase price of $22.0 million. These properties were leased to a third party operator under a 12-year triple net master lease with two 10-year renewal options.
The Company also announced that during the second quarter it paid off a $7.6 million mortgage loan secured by an assisted living property located in California. The retired debt had an interest rate of 8.7%. After this payoff, the Company has $3.7 million of secured debt outstanding which was funded with multifamily tax-exempt revenue bonds secured by five assisted living properties located in Washington. These bonds bear interest at a variable interest rate and mature in 2015. The weighted average interest rate as of June 30, 2010, including letter of credit fees, was 2.1%.
Additionally, the Company announced that subsequent to June 30, 2010 it paid off $41 million outstanding under its unsecured revolving line of credit out of proceeds received from the previously announced sale of senior unsecured term notes. On July 14, 2010, the Company announced that it completed the sale to affiliates and managed accounts of Prudential Investment Management, Inc. (individually and collectively "Prudential") of $25 million aggregate principal amount of 5.26% senior unsecured term notes due 2015 and $25 million aggregate principal amount of 5.74% senior unsecured term notes due 2019. The Company also announced that it entered into an uncommitted private shelf agreement with Prudential which provides for the possible issuance of up to an additional $50 million of senior unsecured fixed-rate term notes during the three-year issuance period.
For the six months ended June 30, 2010, net income allocable to common stockholders was $14.4 million or $0.61 per diluted share which includes $0.9 million of provision for doubtful accounts recorded in the first quarter related to a mortgage loan secured by a private school property. On April 20, 2010, the Company received notice from this borrower that they had ceased operations at the private school property in Minnesota. Prior to that notice, the borrower was current with all loan payments. For the same period in 2009, net income allocable to common stockholders was $14.8 million or $0.64 per diluted share which includes $0.6 million of allocated income from the repurchase of 109,484 shares of preferred stock. Revenues for the six months ended June 30, 2010, were $36.1 million versus $35.1 million for the same period last year.
The Company will conduct a conference call on Tuesday, August 3, 2010, at 10:00 a.m. Pacific time, in order to comment on the Company's performance and operating results for the quarter ended June 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 August 3, 2010 through August 23, 2010. Callers can access the replay by dialing 877-344-7529 or 412-317-0088 and entering conference number 443128.
At June 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 Six Months Ended
June 30, June 30,
2010 2009 2010 2009
Revenues:
Rental income $ 16,050 $ 14,951 $ 31,660 $ 29,981
Interest income from 1,836 2,106 3,815 4,477
mortgage loans
Interest and other 301 328 577 643
income
Total revenues 18,187 17,385 36,052 35,101
Expenses:
Interest expense 419 814 820 1,706
Depreciation and 4,014 3,694 7,874 7,395
amortization
Provisions for 194 219 1,255 371
doubtful accounts
Operating and other 1,930 1,918 3,903 3,651
expenses
Total expenses 6,557 6,645 13,852 13,123
Net income 11,630 10,740 22,200 21,978
Income allocated to
non-controlling (48 ) (76 ) (96 ) (153 )
interests
Net income
attributable to LTC 11,582 10,664 22,104 21,825
Properties, Inc.
Income allocated to
participating (58 ) (35 ) (101 ) (71 )
securities
Income allocated to
preferred (3,785 ) (3,786 ) (7,570 ) (6,945 )
stockholders
Net income allocable
to common $ 7,739 $ 6,843 $ 14,433 $ 14,809
stockholders
Net income allocable
to common
stockholders:
Basic earnings per $ 0.33 $ 0.30 $ 0.62 $ 0.64
common share
Diluted earnings per $ 0.33 $ 0.30 $ 0.61 $ 0.64
common share
Weighted average
shares used to
calculate earnings
per common share:
Basic 23,643 23,081 23,464 23,070
Diluted 23,743 23,163 23,563 23,151
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 Six Months Ended
June 30, June 30,
2010 2009 2010 2009
Net income allocable
to common $ 7,739 $ 6,843 $ 14,433 $ 14,809
stockholders
Add: Depreciation and 4,014 3,694 7,874 7,395
amortization
FFO allocable to 11,753 10,537 22,307 22,204
common stockholders
Less: Non-cash rental (763 ) (893 ) (1,527 ) (1,883 )
income
FFO excluding
non-cash rental 10,990 9,644 20,780 20,321
income
Add: Non-cash 355 351 721 665
compensation charges
FFO excluding
non-cash rental $ 11,345 $ 9,995 $ 21,501 $ 20,986
income and non-cash
compensation charges
Basic FFO allocable
to common $ 0.50 $ 0.46 $ 0.95 $ 0.96
stockholders per
share
Diluted FFO allocable
to common $ 0.49 $ 0.45 $ 0.94 $ 0.95
stockholders per
share
Diluted FFO $ 12,697 $ 11,486 $ 24,180 $ 24,104
Weighted average
shares used to
calculate diluted FFO 26,009 25,437 25,808 25,424
per share allocable
to common
stockholders
Basic FFO excluding
non-cash rental $ 0.46 $ 0.42 $ 0.89 $ 0.88
income per share
Diluted FFO excluding
non-cash rental $ 0.46 $ 0.42 $ 0.88 $ 0.87
income per share
Diluted FFO excluding
non-cash rental $ 11,934 $ 10,517 $ 22,653 $ 22,221
income
Weighted average
shares used to
calculate diluted FFO
excluding non-cash 26,009 25,257 25,808 25,424
rental income per
share allocable to
common stockholders
Basic FFO excluding
non-cash rental
income and non-cash $ 0.48 $ 0.43 $ 0.92 $ 0.91
compensation charges
per share
Diluted FFO excluding
non-cash rental
income and non-cash $ 0.47 $ 0.43 $ 0.91 $ 0.90
compensation charges
per share
Diluted FFO excluding
non-cash rental $ 12,289 $ 10,944 $ 23,374 $ 22,886
income and non-cash
compensation charges
Weighted average
shares used to
calculate diluted FFO
excluding non-cash
rental income and 26,009 25,437 25,808 25,424
non-cash compensation
charges per share
allocable to common
stockholders
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
June 30, 2010 December 31, 2009
(unaudited) (audited)
ASSETS
Real Estate Investments:
Buildings and improvements, net of
accumulated depreciation and $ 368,300 $ 337,719
amortization: 2010 -- $153,003; 2009 --
$145,180
Land 38,951 36,561
Mortgage loans receivable, net of
allowance for doubtful 67,146 69,883
accounts: 2010 -- $1,498; 2009 -- $704
Real estate investments, net 474,397 444,163
Other Assets:
Cash and cash equivalents 5,498 8,856
Debt issue costs, net 387 476
Interest receivable 1,609 1,964
Straight-line rent receivable, net of
allowance for doubtful 18,747 17,309
accounts: 2010 -- $1,053; 2009 -- $631
Prepaid expenses and other assets 8,260 8,663
Notes receivable 1,720 2,689
Marketable securities 6,476 6,473
Total Assets $ 517,094 $ 490,593
LIABILITIES
Bank borrowings $ 41,000 $ 13,500
Mortgage loan payable -- 7,685
Bonds payable 3,730 4,225
Accrued interest 100 102
Accrued expenses and other liabilities 8,407 7,801
Distributions payable 2,967 2,967
Total Liabilities 56,204 36,280
EQUITY
Stockholders' equity:
Preferred stock $0.01 par value; 15,000
shares authorized;
shares issued and outstanding: 2010 -- 186,801 186,801
7,932; 2009 -- 7,932
Common stock: $0.01 par value; 45,000
shares authorized; 238 233
shares issued and outstanding: 2010 --
23,799; 2009 -- 23,312
Capital in excess of par value 336,692 326,163
Cumulative net income 599,733 577,629
Other 334 390
Cumulative distributions (664,870 ) (638,884 )
Total LTC Properties, Inc. 458,928 452,332
Stockholders' Equity
Non-controlling interests 1,962 1,981
Total Equity 460,890 454,313
Total Liabilities and Equity $ 517,094 $ 490,593
LTC PROPERTIES, INC.
SUPPLEMENTAL INFORMATION
(Unaudited, amounts in thousands)
Non-Cash Revenue Components
2Q10 3Q10(1) 4Q10(1) 1Q11(1) 2Q11(1)
Straight-line $ 930 $ 891 $ 832 $ 460 $ 417
rent
Amort. Lease (167 ) (167 ) (167 ) (167 ) (167 )
break fee
Net $ 763 $ 724 $ 665 $ 293 $ 250
(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
3 leases 2 leases on 4 leases on
Lease -- 1 lease on on 2 41
Maturities 1 property 3 properties properties
properties
Mortgage
Loan
Receivable $ -- $ 6,646 $ 2,221 $ 16,723 $ 6,996
Maturities
(1)
Mortgage
Loan
Payable $ -- $ -- $ -- $ -- $ --
Maturities
(2)
(1) Represents principal amount due at maturity.
(2) Excludes the Company's unsecured revolving line of credit and bonds payable.
Note: At June 30, 2010, the Company had a floating rate debt balance of $3,730
at an all-in floating rate of 2.1%. This debt amortizes to $720 which is due in
2015 and is redeemable at anytime.
Portfolio Snapshot
Six Months Ended
June 30, 2010
Interest % of Number Number Number Investment
Type of Gross % of Rental Income Revenues Number of of SNF of ALF of ILF per
Property Investments Investments Income (2) (3) Properties Beds Units Units Bed/Unit
(1) (1) (1)
Assisted
Living $ 281,575 44.8 % $ 14,935 $ 1,407 46.1 % 99 -- 4,289 -- $ 65.65
Properties
Skilled
Nursing 279,098 44.4 % 14,043 2,134 45.6 % 95 10,919 -- -- $ 25.56
Properties
Other
Properties 55,205 8.8 % 2,081 197 6.4 % 12 795 290 370 $ 37.94
(4)
Schools(5) 13,020 2.0 % 601 77 1.9 % 2 N/A N/A N/A N/A
Totals $ 628,898 100.0 % $ 31,660 $ 3,815 100.0 % 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.
(5) A private school property located in Minnesota is non-performing. On April 20, 2010, the borrower notified us that they ceased
operations. Prior to that notice, the borrower was current with all loan payments.
LTC PROPERTIES, INC.
SUPPLEMENTAL INFORMATION
(Unaudited, amounts in thousands)
Balance Sheet Metrics
Year to Quarter Ended
Date
6/30/10 6/30/10 3/31/10 12/31/09 9/30/09 6/30/09
Debt to book
capitalization 8.9 % 8.9 % (1) 7.9 % (1) 5.3 % (1) 2.6 % (6) 5.3 %
ratio
Debt &
Preferred
Stock to book 45.8 % 45.8 % (1) 45.2 % (1) 44.2 % (1) 42.6 % (6) 44.1 %
capitalization
ratio
Debt to market
capitalization 5.5 % 5.5 % (1) 4.6 % (1) 3.0 % (1) 1.6 % (6) 3.8 %
ratio
Debt &
Preferred
Stock to 28.6 % 28.6 % (1) 26.1 % (1) 25.1 % (4) 25.3 % (6) 29.5 %
market
capitalization
ratio
Interest
coverage ratio 37.7x 38.3x (2) 37.0x (3) 40.8x (5) 45.2x (7) 18.7x
(8)
Fixed charge
coverage ratio 3.7x 3.8x (2) 3.5x (3) 3.6x (5) 3.7x (7) 3.3x
(8)
(1) Increase primarily due to the increase in bank borrowing.
(2) Increase primarily due to additional net income generated from acquisitions in 2009 and 2010.
(3) 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. On April 20, 2010, the borrower notified
us that they ceased operations. Prior to that notice, the borrower was current with all loan payments.
(4) Decrease primarily due to the increase in market capitalization partially offset by the increase in bank
borrowing.
(5) Decrease primarily due to the increase in operating and other expenses relating to transaction costs incurred
for the acquisition of three assisted living properties in November of 2009.
(6) Decrease primarily due to the repayment of $23.9 million of mortgage debt in June and July of 2009.
(7) Increase primarily due to the decrease in interest expense relating to the repayment of mortgage debt.
(8) 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 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
6/30/10 6/30/10 3/31/10 12/31/09 9/30/09 6/30/09
Net income $ 22,200 $ 11,630 $ 10,570 $ 11,056 $ 11,326 $ 10,740
Add:
Interest 820 419 401 372 340 814
Expense
Add:
Depreciation 7,874 4,014 3,860 3,733 3,694 3,694
and
amortization
Total EBITDA $ 30,894 $ 16,063 $ 14,831 $ 15,161 $ 15,360 $ 15,248
Interest $ 820 $ 419 $ 401 $ 372 $ 340 $ 814
expense
Interest
coverage 37.7x 38.3x 37.0x 40.8x 45.2x 18.7x
ratio
Interest $ 820 $ 419 $ 401 $ 372 $ 340 $ 814
expense
Preferred
stock 7,570 3,785 3,785 3,785 3,785 3,786
dividends
Total fixed $ 8,390 $ 4,204 $ 4,186 $ 4,157 $ 4,125 $ 4,600
charges
Fixed charge
coverage 3.7x 3.8x 3.5x 3.6x 3.7x 3.3x
ratio
Source: LTC Properties, Inc.
Released August 2, 2010