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EX-99.2 - EX-99.2 - LTC PROPERTIES INCa16-20841_1ex99d2.htm
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Exhibit 99.1

 

GRAPHIC

 

 

FOR IMMEDIATE RELEASE

 

For more information contact:

Wendy Simpson

Pam Kessler

(805) 981-8655

 

LTC REPORTS 2016 THIRD QUARTER RESULTS

AND ANNOUNCES NEW INVESTMENTS

 

WESTLAKE VILLAGE, CALIFORNIA, November 2, 2016 — 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 third quarter ended September 30, 2016 and recent investment activity.

 

Net income available to common stockholders was $22.3 million, or $0.57 per diluted share, for the 2016 third quarter, compared with $18.7 million, or $0.52 per diluted share, for the same period in 2015. Funds from Operations (“FFO”) increased 13.9% to $29.7 million for the 2016 third quarter, up from $26.1 million for the comparable 2015 period. FFO per diluted common share was $0.76 and $0.72 for the quarters ended September 30, 2016 and 2015, respectively, which represents a 5.6% per share increase. Normalized FFO increased 11.6% to $29.7 million for the 2016 third quarter, up from $26.6 million for the same period in 2015. The increase in net income, FFO and normalized FFO was primarily due to higher revenues from recent acquisitions, mortgage loan originations and completed development projects, partially offset by higher interest expense resulting from the sale of senior unsecured notes and increased utilization of LTC’s line of credit, as well as additional general and administrative expenditures related to increased investment activity.

 

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

 

·                  Purchased a parcel of land and improvements in Kentucky for $5.4 million and entered into a development commitment to construct a 143-bed skilled nursing center. The commitment totals $24.3 million, including the land and improvements purchase. The property was added to an existing master lease agreement. Rent on the property will commence upon completion of construction at an initial lease rate of 8.5%;

 

·                  Completed construction of a 66-unit memory care community in California, a 66-unit memory care community in Illinois and an 89-unit combination assisted living and memory care community in South Carolina;

 

·                  Originated a $1.4 million mezzanine loan, funding $1.2 million at closing, with a commitment to fund an additional $0.2 million. This mezzanine loan has a five-year term and a rate of 15%;

 

·                  Sold an assisted living community in Florida for $5.1, million resulting in a net gain on sale of $2.0 million;

 

·                  Sold a school in New Jersey for $3.9 million, resulting in a net loss of $0.2 million;

 

·                  Sold $40.0 million of 3.99% senior unsecured notes due July 20, 2031 to an insurance company; and

 

·                  Sold 152,623 shares of its common stock for $7.7 million in net proceeds under its equity distribution agreement.

 

1



 

Subsequent to September 30, 2016, LTC completed the following:

 

·                  Increased its monthly cash dividend for the fourth quarter of 2016 by 5.6% from $0.18 per share to $0.19 per share, as previously announced; and

 

·                  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.

 

Conference Call Information

 

LTC will conduct a conference call on Thursday, November 3, 2016, 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 September 30, 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 November 3 through November 17, 2016, and may be accessed by dialing 877-344-7529 (domestically) or 412-317-0088 (internationally) and entering conference number 10092617. 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 September 30, 2016, LTC had 223 investments located in 30 states comprising 111 assisted living communities, 97 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.

 

2



 

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.

 

(financial tables follow)

 

3



 

LTC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands, except per share amounts)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

2016

 

2015

 

2016

 

2015

 

Revenues:

 

 

 

 

 

 

 

 

 

Rental income

 

$

33,753

 

$

28,531

 

$

98,705

 

$

82,325

 

Interest income from mortgage loans

 

6,958

 

6,117

 

20,347

 

15,777

 

Interest and other income

 

131

 

295

 

390

 

708

 

Total revenues

 

40,842

 

34,943

 

119,442

 

98,810

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Interest expense

 

6,836

 

4,296

 

19,586

 

11,916

 

Depreciation and amortization

 

9,155

 

7,365

 

26,623

 

21,121

 

Provision for doubtful accounts

 

43

 

31

 

245

 

463

 

Transaction costs

 

2

 

570

 

96

 

632

 

General and administrative expenses

 

4,464

 

3,708

 

12,864

 

11,094

 

Total expenses

 

20,500

 

15,970

 

59,414

 

45,226

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

20,342

 

18,973

 

60,028

 

53,584

 

Income from unconsolidated joint ventures

 

289

 

674

 

839

 

1,543

 

Gain on sale of real estate, net

 

1,780

 

 

3,582

 

 

Net income

 

22,411

 

19,647

 

64,449

 

55,127

 

Income allocated to participating securities

 

(90

)

(121

)

(296

)

(370

)

Income allocated to preferred stockholders

 

 

(818

)

 

(2,454

)

Net income available to common stockholders

 

$

22,321

 

$

18,708

 

$

64,153

 

$

52,303

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.57

 

$

0.53

 

$

1.68

 

$

1.48

 

Diluted

 

$

0.57

 

$

0.52

 

$

1.68

 

$

1.47

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used to calculate earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

39,057

 

35,341

 

38,161

 

35,306

 

Diluted

 

39,335

 

37,352

 

38,455

 

37,319

 

 

 

 

 

 

 

 

 

 

 

Dividends declared and paid per common share

 

$

0.54

 

$

0.51

 

$

1.62

 

$

1.53

 

 

4



 

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.

 

5



 

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

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2016

 

2015

 

2016

 

2015

 

 

 

 

 

 

 

 

 

 

 

GAAP net income available to common stockholders

 

$

22,321

 

$

18,708

 

$

64,153

 

$

52,303

 

Add: Depreciation and amortization

 

9,155

 

7,365

 

26,623

 

21,121

 

Less: Gain on sale of real estate, net

 

(1,780

)

 

(3,582

)

 

NAREIT FFO attributable to common stockholders

 

29,696

 

26,073

 

87,194

 

73,424

 

 

 

 

 

 

 

 

 

 

 

Add: Non-recurring one-time items

 

 

537

(1)

 

937

(2)

Normalized FFO attributable to common stockholders

 

29,696

 

26,610

 

87,194

 

74,361

 

 

 

 

 

 

 

 

 

 

 

Less: Non-cash rental income

 

(2,278

)

(2,179

)

(6,755

)

(5,897

)

Less: Effective interest income from mortgage loans

 

(1,352

)

(1,195

)

(3,907

)

(2,680

)

Less: Deferred income from unconsolidated joint ventures

 

 

(421

)

 

(1,000

)

Normalized adjusted FFO (AFFO)

 

26,066

 

22,815

 

76,532

 

64,784

 

 

 

 

 

 

 

 

 

 

 

Add: Non-cash compensation charges

 

1,130

 

1,012

 

3,149

 

3,093

 

Add: Non-cash interest related to earn-out liabilities

 

223

 

96

 

538

 

205

 

Less: Capitalized interest

 

(251

)

(184

)

(1,193

)

(481

)

Normalized funds available for distribution (FAD)

 

$

27,168

 

$

23,739

 

$

79,026

 

$

67,601

 


(1)         Represents acquisition costs related to the 10-property senior housing portfolio acquired during the quarter.

 

(2)         Represents a $400 provision for loan loss reserve related to additional loan proceeds funded under an existing mortgage loan and item (1) above.

 

NAREIT Basic FFO attributable to common stockholders per share

 

$

0.76

 

$

0.74

 

$

2.28

 

$

2.08

 

NAREIT Diluted FFO attributable to common stockholders per share

 

$

0.76

 

$

0.72

 

$

2.28

 

$

2.03

 

 

 

 

 

 

 

 

 

 

 

NAREIT Diluted FFO attributable to common stockholders

 

$

29,786

 

$

27,012

 

$

87,490

 

$

76,248

 

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

 

39,335

 

37,581

 

38,455

 

37,558

 

 

 

 

 

 

 

 

 

 

 

Diluted normalized FFO attributable to common stockholders

 

$

29,786

 

$

27,549

 

$

87,490

 

$

77,185

 

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

 

39,335

 

37,581

 

38,455

 

37,558

 

 

 

 

 

 

 

 

 

 

 

Diluted normalized AFFO

 

$

26,156

 

$

23,754

 

$

76,828

 

$

67,608

 

Weighted average shares used to calculate diluted normalized AFFO per share

 

39,335

 

37,581

 

38,455

 

37,558

 

 

 

 

 

 

 

 

 

 

 

Diluted normalized FAD

 

$

27,258

 

$

24,678

 

$

79,322

 

$

70,425

 

Weighted average shares used to calculate diluted normalized FAD per share

 

39,335

 

37,581

 

38,455

 

37,558

 

 

6



 

LTC PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except per share)

 

 

 

September 30, 2016

 

December 31, 2015

 

ASSETS

 

 

 

 

 

Investments:

 

 

 

 

 

Land

 

$

114,630

 

$

106,841

 

Buildings and improvements

 

1,177,829

 

1,091,845

 

Accumulated depreciation and amortization

 

(266,581

)

(251,265

)

Real property investments, net

 

1,025,878

 

947,421

 

Mortgage loans receivable, net of loan loss reserve: 2016—$2,360; 2015—$2,190

 

234,347

 

217,529

 

Real estate investments, net

 

1,260,225

 

1,164,950

 

Investments in unconsolidated joint ventures

 

23,932

 

24,042

 

Investments, net

 

1,284,157

 

1,188,992

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

Cash and cash equivalents

 

3,613

 

12,942

 

Debt issue costs related to bank borrowings

 

2,112

 

2,865

 

Interest receivable

 

8,434

 

4,536

 

Straight-line rent receivable, net of allowance for doubtful accounts: 2016—$907; 2015—$833

 

50,092

 

42,685

 

Prepaid expenses and other assets

 

20,779

 

21,443

 

Notes receivable

 

4,199

 

1,961

 

Total assets

 

$

1,373,386

 

$

1,275,424

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Bank borrowings

 

$

77,000

 

$

120,500

 

Senior unsecured notes, net of debt issue costs: 2016—$1,038; 2015—$1,095

 

512,262

 

451,372

 

Accrued interest

 

3,616

 

3,974

 

Accrued incentives and earn-outs

 

12,514

 

12,722

 

Accrued expenses and other liabilities

 

27,363

 

27,654

 

Total liabilities

 

632,755

 

616,222

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2016—39,222; 2015—37,548

 

392

 

375

 

Capital in excess of par value

 

837,889

 

758,676

 

Cumulative net income

 

992,777

 

928,328

 

Accumulated other comprehensive income

 

8

 

47

 

Cumulative distributions

 

(1,090,435

)

(1,028,224

)

Total equity

 

740,631

 

659,202

 

Total liabilities and equity

 

$

1,373,386

 

$

1,275,424

 

 

7