LTC Announces First Quarter Operating Results and Recent Transactions
WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)-- LTC Properties, Inc. (NYSE:LTC) released results of operations for the three months ended March 31, 2010 and announced that net income allocable to common stockholders for the first quarter was $6.7 million or $0.29 per diluted share which includes a $0.9 million provision for doubtful accounts related to a mortgage loan secured by a private school property. In a prior press release, the Company announced that on April 20, 2010, the Company received notice from a borrower that the borrower ceased operations at a private school property in Minnesota. The Company stated that prior to the notice the borrower was current with all loan payments. For the three months ended March 31, 2009, net income allocable to common stockholders was $8.0 million or $0.35 per diluted share which includes $0.6 million related to the repurchase of 109,484 shares of preferred stock. Revenues for the three months ended March 31, 2010, were $17.9 million versus $17.7 million for the same period last year.
During the three months ended March 31, 2010, the Company purchased a 120-bed skilled nursing property in Florida for a purchase price of $9.0 million. This property was leased to a third party operator under a 12-year triple net lease with two 10-year renewal options. The Company also purchased a 166-bed skilled nursing property in Texas for a purchase price of $7.9 million plus a capital improvement commitment and lease inducement payment totaling $0.3 million. This property was leased to a third party operator under a 10-year triple net lease with two five-year renewal options. Additionally, during the first quarter of 2010 the Company sold 365,000 shares of common stock under an equity distribution agreement to issue and sell, from time to time, up to $75.0 million in aggregated offering price of its common stock. The weighted average price for the 365,000 shares, including fees, was $26.45 per share, resulting in net proceeds of $9.7 million after $0.2 million of fees.
LTC also announced that, subsequent to March 31, 2010, construction began on an approximate 18,000 square foot addition to a skilled nursing property the Company owns in Kansas. The $4.0 million project will be funded under a pre-existing capital improvement commitment by the Company over the next nine months at a yield of 11%.
The Company also announced that it has entered into an agreement to purchase two properties in Virginia with a total of 227 skilled nursing beds, 46 assisted living units, and 47 independent living units for a total purchase price of $22.0 million and will enter into a 12-year triple net lease with a third party operator. The terms of the seller's current financing required a 30-day prepayment notice which was given by the seller concurrently upon execution of the purchase agreement. This transaction is scheduled to close on or about June 1, 2010.
Subsequent to March 31, 2010, the Company 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 March 31, 2010, including letter of credit fees, was 2.1%.
The Company will conduct a conference call on Tuesday, May 4, 2010, at 10:00 a.m. Pacific time, in order to comment on the Company's performance and operating results for the quarter ended March 31, 2010. The conference call is accessible by dialing 877-485-3104. The international number is 201-689-8579. The earnings release will be available on our website. An audio replay of the conference call will be available from May 4, 2010 through May 17, 2010. Callers can access the replay by dialing 877-660-6853 or 201-612-7415 and entering account number 356 and encore pass code number 349615.
At March 31, 2010, LTC had investments in 100 skilled nursing properties, 104 assisted living properties and two schools in 29 states. The Company is a self-administered real estate investment trust that primarily invests in long-term care and other health care related 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)
Three Months Ended
March 31,
2010 2009
(unaudited)
Revenues:
Rental income $ 15,610 $ 15,030
Interest income from mortgage loans 1,979 2,371
Interest and other income 276 315
Total revenues 17,865 17,716
Expenses:
Interest expense 401 892
Depreciation and amortization 3,860 3,701
Provisions for doubtful accounts 1,061 152
Operating and other expenses 1,973 1,733
Total expenses 7,295 6,478
Net income 10,570 11,238
Income allocated to non-controlling interests (48 ) (77 )
Net income attributable to LTC Properties, 10,522 11,161
Inc.
Income allocated to participating securities (43 ) (36 )
Income allocated to preferred stockholders (3,785 ) (3,159 )
Net income allocable to common stockholders $ 6,694 $ 7,966
Net income allocable to common stockholders:
Basic earnings per common share $ 0.29 $ 0.35
Diluted earnings per common share $ 0.29 $ 0.35
Weighted average shares used to calculate
earnings per common share:
Basic 23,283 23,059
Diluted 23,384 23,141
Reconciliation of Funds from Operations ("FFO")
FFO is a supplemental measure of a real estate investment trust's financial performance that is not defined by U.S. generally accepted accounting principles (or "GAAP"). Our management uses FFO as a supplemental measure of our operating performance and we believe FFO is helpful in evaluating the operating performance of real estate investment trusts. 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 real estate investment trusts that do not define the term in accordance with the current National Association of Real Estate Investment Trusts' (or "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 real estate investment trusts. FFO does 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 (unaudited, amounts in thousands, except per share amounts):
Three Months Ended
March 31,
2010 2009
Net income allocable to common stockholders $ 6,694 $ 7,966
Add: Real estate depreciation 3,860 3,701
FFO allocable to common stockholders 10,554 11,667
Less: Non-cash rental income (764 ) (990 )
FFO excluding non-cash rental income 9,790 10,677
Add: Non-cash compensation charges 366 314
FFO excluding non-cash rental income and $ 10,156 $ 10,991
non-cash compensation charges
Basic FFO allocable to common stockholders per $ 0.45 $ 0.51
share
Diluted FFO allocable to common stockholders per $ 0.45 $ 0.50
share
Diluted FFO $ 11,483 $ 12,618
Weighted average shares used to calculate
diluted FFO per share allocable to common 25,608 25,413
stockholders
Basic FFO excluding non-cash rental income per $ 0.42 $ 0.46
share
Diluted FFO excluding non-cash rental income per $ 0.42 $ 0.46
share
Diluted FFO excluding non-cash rental income $ 10,671 $ 11,628
Weighted average shares used to calculate
diluted FFO excluding non-cash rental income per 25,495 25,413
share allocable to common stockholders
Basic FFO excluding non-cash rental income and $ 0.44 $ 0.48
non-cash compensation charges per share
Diluted FFO excluding non-cash rental income and $ 0.43 $ 0.47
non-cash compensation charges per share
Diluted FFO excluding non-cash rental income and $ 11,085 $ 11,942
non-cash compensation charges
Weighted average shares used to calculate
diluted FFO excluding non-cash rental income and 25,608 25,413
non-cash compensation charges per share
allocable to common stockholders
LTC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
March 31, 2010 December 31, 2009
(unaudited) (audited)
ASSETS
Real Estate Investments:
Buildings and improvements, net of
accumulated depreciation and $ 349,923 $ 337,719
amortization: 2010 -- $149,014; 2009 --
$145,180
Land 38,026 36,561
Mortgage loans receivable, net of
allowance for doubtful accounts: 2010 -- 68,155 69,883
$1,508; 2009 -- $704
Real estate investments, net 456,104 444,163
Other Assets:
Cash and cash equivalents 19,210 8,856
Debt issue costs, net 484 476
Interest receivable 1,470 1,964
Straight-line rent receivable, net of
allowance for doubtful accounts: 2010 -- 18,021 17,309
$849; 2009 -- $631
Prepaid expenses and other assets 8,422 8,663
Notes receivable 1,857 2,689
Marketable securities 6,474 6,473
Total Assets $ 512,042 $ 490,593
LIABILITIES
Bank borrowings $ 28,500 $ 13,500
Mortgage loans payable 7,641 7,685
Bonds payable 3,730 4,225
Accrued interest 110 102
Accrued expenses and other liabilities 7,047 7,801
Distributions payable 2,967 2,967
Total Liabilities 49,995 36,280
EQUITY
Stockholders' equity:
Preferred stock $0.01 par value; 15,000
shares authorized; shares issued and 186,801 186,801
outstanding: 2010 -- 7,932; 2009 -- 7,932
Common stock: $0.01 par value; 45,000
shares authorized; shares issued and 238 233
outstanding: 2010 -- 23,794; 2009 --
23,312
Capital in excess of par value 336,337 326,163
Cumulative net income 588,151 577,629
Other 362 390
Cumulative distributions (651,804 ) (638,884 )
Total LTC Properties, Inc. Stockholders' 460,085 452,332
Equity
Non-controlling interests 1,962 1,981
Total Equity 462,047 454,313
Total Liabilities and Equity $ 512,042 $ 490,593
LTC PROPERTIES, INC.
SUPPLEMENTAL INFORMATION
(Unaudited,
amounts in thousands)
Non-Cash Revenue Components
1Q10 2Q10(1) 3Q10(1) 4Q10(1) 1Q11(1)
Straight-line rent $ 930 $ 916 $ 827 $ 534 $ 384
Amort. Lease break fee (166 ) (167 ) (167 ) (167 ) (167 )
Net $ 764 $ 749 $ 660 $ 367 $ 217
(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 4 leases
Lease -- 1 lease on on on on
Maturities 1 property 3 2 41
properties properties properties
Mortgage
Loan
Receivable $ -- $ 7,301 $ 2,221 $ 16,214 $ 6,996
Maturities
(1)
Debt
Maturities $ 7,626 (2) $ -- $ -- $ -- $ --
(2)
(1) Represents principal amount due at maturity.
(2) Subsequent to March 31, 2010, the Company paid off this 8.7% fixed
interest rate mortgage loan. Represents principal amount paid at payoff.
At March 31, 2010, the Company had a floating rate debt balance of
Note: $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
Three months ended
March 31, 2010 Number
% of of Investment
Revenues Number of Beds/ per
Type of Gross % of Rental Interest (3) Properties Units Bed/Unit
Property Investments Investments Income Income (1)
(2)
Assisted
Living $ 295,420 48.7 % $ 7,865 $ 760 49.0 % 104 4,790 $ 61.67
Properties
Skilled
Nursing 298,186 49.2 % 7,445 1,142 48.8 % 100 11,605 $ 25.69
Properties
Schools 13,020 2.1 % 300 77 2.2 % 2 N/A N/A
Totals $ 606,626 100.0 % $ 15,610 $ 1,979 100.0 % 206 16,395
See the Company's Annual Report on Form 10-K for the year ended December
(1) 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.
LTC PROPERTIES, INC.
SUPPLEMENTAL INFORMATION
(Unaudited,
amounts in thousands)
Balance Sheet Metrics
Quarter Ended
3/31/10 12/31/09 9/30/09 6/30/09 3/31/09
Debt to book
capitalization 7.9% (1) 5.3% (1) 2.6% (5) 5.3% (7) 7.3%
ratio
Debt &
Preferred
Stock to book 45.2% (1) 44.2% (1) 42.6% (5) 44.1% (7) 45.2%
capitalization
ratio
Debt to market
capitalization 4.6% (1) 3.0% (1) 1.6% (5) 3.8% (7) 5.9%
ratio
Debt &
Preferred
Stock to 26.1% (1) 25.1% (3) 25.3% (5) 29.5% (7) 32.8%
market
capitalization
ratio
Interest
coverage ratio 37.0x (2) 40.8x (4) 45.2x (6) 18.7x (6) 17.7x
(8)
Fixed charge
coverage ratio 3.5x (2) 3.6x (4) 3.7x (6) 3.3x 3.4x
(8)
(1) Increase primarily due to the increase in bank borrowing.
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
(2) 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.
(3) 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
(4) relating to transaction costs incurred on the acquisition of three
assisted living properties in November of 2009.
(5) Decrease primarily due to the repayment of $23.9 million of mortgage debt
in June and July of 2009.
(6) Increase primarily due to the decrease in interest expense relating to the
repayment of debt.
(7) Decrease primarily due to the repayment of $15.8 million on two mortgage
loans secured by 10 assisted living properties located in various states.
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
(8) 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:
Quarter Ended
3/31/10 12/31/09 9/30/09 6/30/09 3/31/09
Net income $ 10,570 $ 11,056 $ 11,326 $ 10,740 $ 11,238
Add: Interest 401 372 340 814 892
Expense
Add: Depreciation 3,860 3,733 3,694 3,694 3,701
and amortization
Total EBITDA $ 14,831 $ 15,161 $ 15,360 $ 15,248 $ 15,831
Interest expense $ 401 $ 372 $ 340 $ 814 $ 892
Interest coverage 37.0x 40.8x 45.2x 18.7x 17.7x
ratio
Interest expense $ 401 $ 372 $ 340 $ 814 $ 892
Preferred stock 3,785 3,785 3,785 3,786 3,785
dividends
Total fixed $ 4,186 $ 4,157 $ 4,125 $ 4,600 $ 4,677
charges
Fixed charge 3.5x 3.6x 3.7x 3.3x 3.4x
coverage ratio
Source: LTC Properties, Inc.
Released May 3, 2010