LTC Properties (LTC) 1 Nov 192019 Q3 Earnings call transcript

Company Profile

Participants

Wendy Simpson	Chairman, President and Chief Executive Officer
Pam Kessler	Executive Vice President, Chief Financial Officer and Secretary
Clint Malin	Executive Vice President and Chief Investment Officer
Chad Vanacore	Stifel, Nicolaus & Company, Inc.
Michael Carroll	RBC Capital Markets Corporation
Omotayo Okusanya	Mizuho Securities USA LLC
John Kim	BMO Capital Markets Corp.
Jordan Sadler	KeyBanc Capital Markets, Inc.
Connor Siversky	Berenberg Capital Markets
Todd Stender	Wells Fargo Securities, LLC
Daniel Bernstein	Capital One Securities, Inc.

Call transcript

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Operator

Good day, and welcome to the LTC Properties Third Quarter 2019 Analyst and Investor Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]

Before management begins its presentation, please note that today’s comments, including the question-and-answer session, may include forward-looking statements, subject to risks and uncertainties that may cause actual results and events to differ materially. dated are Exchange LTC time, Commission company’s recent uncertainties the filings including and most and XXXX. Securities from XX-K risks detailed Properties�� in with the These XX, December time to undertakes reflect or presentation. to obligation forward-looking of the events revise update circumstances or LTC these no statements date after this to that note being is Please recorded. event this

over Simpson. Please Wendy would like I Ms. now to to turn ahead. the conference go

Wendy Simpson

quarter good morning. Welcome to conference Thank call. third you, and operator, LTC’s everyone XXXX

Kessler, Pam our are Joining Chief Financial Malin, today me Clint and our Chief Officer; Officer. Investment

concentration. for is positioning take progress. our success LTC and our and partner recent Today, challenges, pipeline partner removing of creative itself identifying to we future solutions will by by that strengthen assets portfolio overcoming discuss financing dispositions opportunities providing non-strategic advantage diversifying

report that of most resolved. challenges the being are we’ve happy I’m to discussed portfolio

XXX% continues Our and Thrive improve transitioned portfolio performance. is Anthem to

the LTC-owned continue Senior judge allowing to As remains have proceedings are through discuss the successfully over which they limited in we the Care. process. bankruptcy the order, Preferred work of in entered by we assume most the Senior Clint control, later, their Care lease. one LTC an operated issue as process transitioning to Care the will The Centers properties

payment reorganization, either is XXXX Care’s first. or Senior as our of payment date effective This rent, order the of fees The requires consists approximately the whichever December which due million $X.X December of the date comes late cure plan legal of unpaid claim, totaling fees and upon of XX, of order.

weeks approve that securing it reorganization their subject financing, to bankruptcy. hearing effective a for emergence disclosure the of to Senior four from approximately reorganization. On become anticipate for on From judge statement point, October approved plan the December we take to to X, Care’s scheduled two and confirmation Senior will exit Care and XX,

capital with remains an pipeline. we prospects, This as capital, deals in the including future providers current other that issue are aside, opportunities environment our we smaller focused. strategic saturated are optimistic In see which not yet our about on

by approached them the for do of operational want not offer only are closely that financial with grow an us. but often to We’re who structures so, array them and their regional and also working businesses, to operators we have resources to for work

us give of more out we with credit, line liquidities us Pam flexibility, To for will investments. future additional details recently additional some termed providing provide a our moment. in of

opportunities flexibility providing add and portfolio. Our allow with solid to new our competitive, us creativity remain LTC to and communities to partners

we our where time, for same evaluate continue capital investments. opportunities, the we we divestiture the portfolio into to more At believe can better, redeploy strategic

Care perfect Preferred portfolio is example. Our the

be return cash to makes with as yields gains significant immediate X.X%. the at may immediately a there on cash will under to work proceeds achieve older immediately approximately we Anticipating challenge but earned the However, In us redeploy our today’s be the an reduce outstanding which helps to reinvesting not costs it capital the same interim, line, proceeds. result assets. reinvested, the amounts

Regarding XXXX guidance.

$X.XX for and year. estimating We the $X.XX are will FFO currently between be

we range not of We timing payment some range, fairly there guidance related likely of claim at moving the be range estimate a the any provided most full reflects our while payment cure among claim, Senior things. year-end, there uncertainty will top cure bottom of our in have the to as of entire FFO the however, the remains quarter. generally other by of are Care. parts Currently, tight receive given in a Should lot not

replace our dividend the we investments, Preferred Projected will well continue X.X% of sale Thrive than to on with credit debt the at combined from Although higher are XXXX Anthem offset our covered line. interest the down I’m that to provide from prepared savings Care not Care we XXXX. increases be former guidance these and Preferred less in formal the very returns on comfortable our for and to to assets, next proceeds rent. revenue having year, assets to of expect should our the pay from deployed And potential the line after have prior proceeds reinvesting partially

over I’ll Now turn call the to Pam.

Pam Kessler

guidance Wendy. in you, due escrows million we revenue a record quarter for collect us the the accordance Revenues Thank increase ago. as property that our tax with expense. with $X.X million was a third corresponding increased the to lease revenue recorded property $X.X the new year to from XXXX accounting from tenants tax requires of

includes not. XXXX from revenues rent revenue and and $X.X by partially million XXXX revenue sold projects, expansion property renovation additional from completed in rent and originations to transition. does properties increase Accordingly, and projects while tax for The Anthem, acquisitions, from offset in loan to remaining increased development XXXX due rental lower income, XXXX relates lease funding

and XXXX and on partially ago was the from a year compared available common per FFO by year higher revenues. decreased this share to NAREIT income the increase last sale Net quarter. prior $X.XX third an shareholders $X.X offset for million with $X.XX gain third lower the quarter to due for expenses, of year diluted in year

of sale in $X.X this During center million in received the the sold million We third a proceeds, This result was down a our for $X.X net and sale. of lease not $X.X reduced was master property lease under we credit. million to rent a a quarter used skilled of the line gain of recognized Georgia. the were the year, on pay nursing as part master which and asset of

was higher development due CapEx lower interest acquisitions, principal in line in offset G&A partially notes in by the last $X.X G&A from fourth anticipate to with million from funding, increased resulted and expense unsecured on year’s to from million quarter. pay our prior senior We $X.X scheduled that debt the expense quarter the Interest about to year. third mainly downs. be expense range resulting balances, $XXX,XXX

Kansas we skilled announced, as City land to approximately area $XX center of invested pay develop million another metro from mezzanine on the new as with the for accounted parcel parcel one that Clint received and operator. in one the unconsolidated loan additional same third loan previously center XXXX was skilled a nursing million During in mezzanine million $X.X quarter, the down joint provide will of payoff an $X.X venture. a a We and details. nursing

During dividend. $X.X million. capital the LTC’s as the share third as own mortgage on quarter, third we loans, another $X.X under also funded quarter payments projects in properties and totaled existing per well during improvement $X.XX monthly Dividend development million $XX.X and we million

At commitments commitment renovation, million, property under million. and September two $XX.X one remaining $X.X under with development, XX, the totaling remaining we owned of properties with

remaining $XX.X $X.X related in commitment. million and million expansions of renovations loan a on seven We mortgage under to commitments equity properties remaining also preferred have Michigan and

of acquisitions during line million made quarter notes. credit of We borrowed million $XX.X unsecured $XX.X the scheduled principal payments and senior under for third under our our

proceeds our recently of senior credit As out the to using from some of million termed line $XXX of X.XX% of we Wendy mentioned, sale unsecured notes Prudential.

additional find X-K about October can on in transaction filed XX. details we the the You

our million under $XXX.X under providing with Prudential, of account We credit, liquidity under of we long-term LTC shop flexibility of $XXX just Taking million. ATM balance our to provide growth agreement sheet maintaining a sale to strong remain $X.X available and million sufficient focused million on into Prudential, total initiatives. to have line with and $XXX current over capacity us the and fund program notes the with our

remains helping maturity to risk. projected debt moderate well refinancing matched long-term profile future free Our our cash flow,

REIT estate XX%. value the We five remained healthcare credit times our times long-term well debt enterprise and next debt end of charge annualized significant to X.X ratio metrics the X.X maturities debt have the of the matched no real with annualized adjusted to of industry fixed coverage for over a At adjusted years. third EBITDA and of to quarter, average

turn to Clint. call the I’ll over Now

Clint Malin

Thanks, our the Preferred completion Pam. properties. with currently of for buyers remainder of majority re-leasing some a first nursing completed in of skilled properties XXXX. them, initiative with these the I’ll of sale in start All evaluation After should portfolio due processes of And the my occur Care the of December process sale under contract the are the and XXXX quarter in thorough across multiple the diligence. are conducting the be and currently could discussion closings successfully, transactions.

satisfy we rent obligation Care us. to have of of majority their applied to Preferred outstanding Also security deposits note, a

of this However, obligation, there a shortfall so rent third was full the for quarter. cover $XXX,XXX their not did

Preferred For guidance. in the rent which fourth equals receiving, quarter, from amount we Care, including the the we in are currently anticipate receiving per $XX,XXX are month we amount

a On transaction. last owned which for affiliate of quarter’s on decided not sale. to two non-accrual investment proceed ultimately organization, not-for-profit by the a buyer, locations equity of call, preferred Lifestyle letter I an basis with a under Senior hold were we intent The mentioned in that

the refinancing is advantage million, sales another LTC loss range of under sales preferred a letter the the in pursuing in of consent, and our rates equity transaction interest alternatives Lifestyle $X.X for-profit entered With to letter into Concurrently, entity. $X.X consummated. its on take of buyer, anticipates with event a Senior Based the is intent, of intent today’s on a million. investment Lifestyle the market in price purchase lower not Senior

approximately additional year through net of on that operating of the the I noted also income forecast remainder in $XXX,XXX we as anticipated Lifestyle. by this Senior of provided receiving income based XXXX

was the guidance. included XXXX XQ in $XXX,XXX As not discussed, our

range for in is Since anticipated our XXXX our of in not the included now remaining in receive received date guidance to FFO first of $XXX,XXX anticipated The of is and the QX. quarter $XXX,XXX to Of is included in QX $XXX,XXX $XXX,XXX, high-end we $XX,XXX remaining XXXX. last call, income the guidance. additional in XXXX, which

partner, construction, of commenced began the occupancy construction metro completed investment our the area. anticipate operating fourth in XX-bed announcement City the October certificate and X, on Since center original Ignite of nursing have a Construction on we of Kansas licensure we and be Medical Resorts, quarter new a in XXXX. to in skilled

$XX built including includes purchase area, post-acute metro Kansas in which also in investment, City XX-bed a development nursing commitment. is XXXX approximately center Total the the million, skilled the of

Preferred As months a I and our has to X.XX times using X.XX Care nursing numbers times, assisted which fee trailing portfolio and from our been of QX respectively, the the portfolio. removed, and respectively, EBITDAR and living for status X.XX XX asset skilled sale management times was portfolio coverage X.XX for times, discussed, EBITDARM X% pending given

on finish our with some pipeline. comments I’ll

we of spans care and several acquisitions, growth-oriented pipeline $XX transactions our portfolio’s with a We assisted our quality The now These and in between memory operators add to high north current age. strategic skilled and both opportunities would joint of January. to end the to improve close further mezzanine real to investments nursing. and have in portfolio. likelihood There’s the living, ventures new portfolio loans, that estate average million operators can identified be

turn remarks. I’ll back things Now for to closing Wendy

Wendy Simpson

and you, Clint. Pam Thank

optimistic. be remainder our this to and the XXXX, positive is of more through move year about a we much begin As into transition there which

executing disciplined are a our majority a and operator portfolio diversified have challenges more We on strategy and to successfully asset our of base, been building the approach of addressed.

them our of value to partners continue maintaining We best very support RIDEA zero much operations our our or into do to good times of in entering and we’ll intentions bad, each while agreements. and controlling

PDPM, provide its is such for which our partners. now going upside Additionally, as changes, in forward anticipated some are industry-wide to infancy, SNF

Over new and this to seeing look months, to adjust the the forward we coming how payment weeks model. SNF industry

to I joining may believe look real and next that updating creative, our for LTC others to forward to quarter. Thank numerous open make We demonstrated appreciate. closing, not again as and progress interesting challenges has cycles by estate In ability always remaining us. you you through consistently flexible opportunities

take to Operator, we ready now are questions.

Operator

will Chad begin Vanacore come And now of ahead. Instructions] question-and-answer We [Operator question Please the from go Stifel. will first our session.

Chad Vanacore

Hi Thanks. there.

does guidance, and then assumed on And into your Care FFO closes? Preferred what’s So quarter the in sale XQ the XXXX? fourth assume then guidance the XQ in impact to of

Pam Kessler

impact quarter Care this Well, end of is we’ve assumed is – the quarter. the to the on Pam. previous this year $X.XX sale guidance, the end in Chad, from our the The fourth at about and Preferred of

So we’ve assumed November, that October, in XX,XXX month December. per

Chad Vanacore

right. All

– that terms you back of in of in get of value, you do So rent? that $X.XX sale that assume post X how much

Pam Kessler

from reinvesting? mean You

Chad Vanacore

Yes.

Pam Kessler

we newer obviously, so we Preferred assumed in the we’re same haven’t past have not – yield be giving as we XXXX what in not on we the whether getting We reinvesting or the not anything. living. in assisted is haven’t were skilled guidance yet, they properties, But Care nursing would – the get

Chad Vanacore

that versus preference on is care thoughts assisted skilled your Any spectrum? living nursing memory Okay. in and where

Pam Kessler

types both opportunistic, which type really to investments. still itself agnostic It’s whichever us. We’re – presents of to

Chad Vanacore

to question. another being to gains deferred FAD today? between then All secure compared right. assets, we And expect mentioned by, where dividend looking rent, losses, Wendy, be and FFO mid-XXXX you should payout selling say, and ratios

Wendy Simpson

FAD. XX% still It’s remain payout to about going to

comfortable as be to as going it’s it’s always So been.

Chad Vanacore

Have then between redeploying there you to that thought about gets from you’re and capital? how – here tight today one

Wendy Simpson

it will get don’t tighter, looser. get It

Chad Vanacore

the for All me. hop That’s queue. in I’ll back Okay. right. it

Wendy Simpson

Thanks, Chad.

Operator

question Capital And RBC come the Please of Carroll will ahead. from next Markets. go Michael

Michael Carroll

little to into million? wanted decided month I I the versus $X lost did Care the to Preferred thanks. a any of that dive bit tenants that why Yes, stop rent you previous future? start chance there paying the situation more. guess, or the a regain is And in could $XX,XXX rate

Clint Malin

a Good Clint. is now, in Care shy has years question, Right be This which Preferred X, shortly. been for now. the Chapter here should been has And two just – Michael. of converted to they bankruptcy concluded case

of as going and During Preferred on. the downsized period, distraction had an duration has Care of that substantially a two-year organization lot they’ve

pretty of expense the It’s stayed much issues, So, control expense a we’re seeing lot of and what have the side. in consistent. lot lot a a occupancy control revenue is of portfolio

some with – NOI performance. that, So in and they’ve challenges their had

So that’s is lot and to number this appreciative forward a transitioning and a part obviously of able moving a the to definitely And is properties our newer of recycling possible. obviously, into they pay LTC. selling capital they’re these strategic to quickly but assets legacy we’re as This sense And portfolio. pay, decision can us. the for we’re of what as makes

Michael Carroll

right that contract with Okay. remaining that what’s can little under the with talk bit here sell months? And not to – Clint, on about how staying the assets you, what’s many And now? selling several next you’re then, plan a over planning assets the are you

Clint Malin

now now Preferred for the with Care, contract. properties right XX we are have them, properties of under XX So

one So the the remaining under contract the negotiating the due of with properties. majority is of being on two And right conducted. portfolio we’re diligence now PSA

lot a front. making that of So progress on

Beyond look opportunistic be that going sales. at into opportunistic XXXX, and we’ll

the at Care. recycling we we’re see in obviously, as capital significance we with will on past have non-strategic non-core, look and Preferred But don’t what been to selectively is the sales, I of assets. continue doing strategically

Michael Carroll

then, into Okay, assets Thrive be a How legacy fully question. as the assuming I’m record basis? a Pam, the during quarter? stabilized going model just the a we great. stabilized rate? last on rent next LTC GAAP GAAP did quick go that’s what’s good And much And run to under quarter

Pam Kessler

I the year legacy million two one don’t have that million million Thrive three. assets but it in last year from the year we to gave would quarter going number, $X.X projections in quarterly $X.X in be $X.X and

Clint Malin

assets million But in on also forward. on one the two two-year ability going year lease in benefit buildings, $X.X also with – rent have the on we one on the three, with master reset buildings South percentage those do that to are in of and one rents of Carolina, Georgia, two the a

million So in grow hopefully, that would number outer $X.X years. of

Michael Carroll

the I lined? number? what and tick So up between – that we is number, fully to GAAP guess, these number related should what’s properties? third So right, quarter, GAAP cash those in was a on Pam? of guess, or XQ GAAP basis that a a are stabilized there I’m XQ rents straight though, expect I was assuming the the And kind

Pam Kessler

properties being analysis. due for No, a gave I’ll because you still cash and I collectability the right those the fund a transition to and the nature GAAP, basis are you lease-up cash accounted of on on refresher give Remember, them. now,

will the rent. lease, you if it your meet straight You that life record collect yes, that flows you likely years. than threshold, so doesn’t has have over more be it to – projected been XX future won’t XX cash over the line of XX% And of

enough yet, So good that. because crystal threshold ball met we my haven’t that for isn’t

till a flow cash So right on now, history basis properties. some we get these and on cash we’re

Michael Carroll

you. Thank Okay.

Pam Kessler

in But that some exist we at certainty. future, right that have the us. with now, will perhaps doesn’t point certainly So

Michael Carroll

Okay, great. Thanks.

Operator

will go And our next Okusanya ahead. Please question come Tayo from Mizuho. with

Omotayo Okusanya

mean, some you point, with kind have morning, hesitation the Care I’m emerging how of it’s going look against Medicaid? an entity always sense again, wanted of good in kind you could think you just because about relationship a about it’s on you just Care, a of that’s Medicaid specific, how said. realizing have emerging process, everyone. deal entity that Senior But little you curious I Senior any company whether at have guys just And Yes, the like? Texas control I kind very what guys again, just of Texas? is everything expressed against with I reason this continued asked whether to – tough about the talk you second, that as the and for backdrop back with in do the that over

Clint Malin

statement now, is their LTC’s by portfolio. comprise this XX to the be Right Tayo, operation, proposed per properties that. entity emerge half question. all was you will would Thank that’s the disclosure the leased, XX portfolio have Clint. that for which that approved building of and court, would Hi, Good under

So part LTC that. has filed the to an and Obviously, organization. prevail did on lease we objection would of make material not assumption. had up a We we concerns the emerged

to one So the to try forward have entity. Obviously, made mean, just the ongoing unsecured an structure. will is to transition capital operator. the going creditors these a effort in the position I we another concerns of

team of look what The that’s have effectively. unsecured a will creditors portion ownership So remainder and would structure management the the be like. the will

think, we going So And going that’s be concern, to the of some forward. future. recapitalization there’s in will potentially type something I exit monitor always of a or

Wendy Simpson

– replacing have they lender. their we But are

receivables confidence entity. new we’ll be not of the doing them profitable deep lender on it’ll so line credit and a a diligence without some those that is provide And with due having

We to yet. the out bankruptcy haven’t come last of budget seen

are still well. doing assets Our

the have a in few another revenue They to profitability them approve we the future. them. for to hope, they we point, facilities our beds us to maximize – and of of asked So at this movement wish well are

that have future strategic business some are we planning. to looking so evidence And and the they doing

So…

Clint Malin

material I also, to And of as be said, going we’re organization. part a the

about out our and Senior of the within XXX-plus obviously buildings portfolio, our Care are they’ve I So the think survived. leases XX been assuming adamant that

the does good position. and like Senior Care think a as we we assets. well, So in we’re Obviously,

Omotayo Okusanya

of any or there really such down entity capital just you line? this having the mentioned, issue, risk, it’s is But ends structure as whether into the up XX you a kind months poor could that of XX survives, again, that run

Clint Malin

It’s always enhancements potential, but we credit lease. have under

incremental financial covenants enhancements. that credit have We would trigger

about worked have have opportunity. we if talked we that on take calls, to operator an the these have to prepared with, buildings over as we We be previous

So closely do it’s I likely on something we’ll paying lot of forward going this. emerges to to, we we’re credit go enhancements be as We something as monitor. have, and And company mentioned, a from bankruptcy. it’s the attention

Omotayo Okusanya

Gotcha. for you Thank right. All that. very much

Clint Malin

you. Thank

Operator

next John Capital Our Please from BMO Markets. of Kim question will come go ahead.

John Kim

Good morning. you. Thank

cap the think, rate you the on sell Care, based on performance just million, to is preference portfolio? the going the I I $XX last rent of it’s correctly, annualized On if a Preferred we the heard double-digit Should be your assume to of assets.

Clint Malin

This Clint. is

double I older an an think I number. mean, part accurate digits that’s a nursing – this portfolio, our confounded building. I is skilled legacy is of mean, probably

I think So that it’s our now along – Right we will intent. be lines. have priced the do

of contract. the XX have We buildings under

with there regarding of more intent to provide in conducted the So price visibility the with a future is we diligence be is able point. to due being get these sale. diligence period through the properties move in our If due buyers, we’d and forward sale

John Kim

expect earnings close Okay. of of the to by to And more rather and investment the the million potentially focused than the gap? on January. acquisitions loans Clint, end it $XX going you Is because be developments and on pipeline

Clint Malin

These would be acquisitions.

John Kim

down? I your environments, you cost is debt? to mezz improved, of on Are mezz discuss accept of mean, rates capital has debt lower the you okay. willing can loan given coming Acquisitions, cost

Clint Malin

option operating it’s with that I in a – for and us companies. forming selling an we and think tool something it’s it’s a – relationships

that, have working relationships. we So if And component we I of to take with that. not cost that as that type we can to us It’s provide companies situations but opportunistic be – financing. and to something develop be will absolutely that arise that are structure obviously one that ability continue capital. an we capital, flexible a with there to our advantage at able it’s to that exclusive for deploy where strategic it’s do of look strategically in of the do, investment And think we’ll to is

John Kim

final a then And on Okay. question living. assisted

for sequentially several had You’ve quarters. the an occupancy past increase

the third you seasonal with supply a the to can for just discuss operators the expect You the quarter pickup, your increase increase to in similar ability despite just headwinds? and occupancy

Clint Malin

hopefully you in that some I think been “seasonal would go think that mean, as occupancy. we hope into, number. a I aspect,” wouldn’t their that what continued expect jumps, in grow stronger expecting. guess, large continued has but continue would see And performing I I mean, bit. see little increase occupancy Anthem improvement occupancy is I we we’re would I to to

John Kim

Is from it not much your REITs? supply as markets seeing other that pressures are

Clint Malin

Yes. still I mean, there’s are still building openings. starts, not starts. – there many as There’s not

So in not our as we’re markets. seeing much

we’re right now. what seeing that’s So

John Kim

Okay. you. Thank

Clint Malin

Thank you.

Operator

come ahead. will Capital of question Please Jordan next Markets. Our from Sadler KeyBanc go

Jordan Sadler

you. Thank

what – Another these assets of Care. was of The could Preferred the trailing sort to? you point EBITDAR that coverage in one occupancy on

Clint Malin

or a as we’ve don’t at at EBITDAR mentioned of and to my I in given with earlier deterioration Jordan. regard that’s we we’re in function we’re for where I But, trailing trailing comments, have this portfolio, seen in coverage think occupancy that rent.

definitely has it that it in declined So portfolio. –

population – think the the bottom what much line. looking that the necessarily really is Again, so not – we at buyer

and revenues We’re and the implement in place. in operating efficiencies the their at continue long because have on to as more looking ability occupancy come cost and as and revenue, their they procedures occupancy

Jordan Sadler

So how point? gotten low at occupancies this have to

Clint Malin

again? Say that

Jordan Sadler

do they at Where occupancies like? this they are look are opportunistically? level at what that that looking So

Clint Malin

get just that right the should second. XX% mark, It be for around me a believe. I I – think number portfolio, the it’s across let you,

Wendy Simpson

people of an to – be have I’m to in asset fairly costs, that’s is The going challenges of labor sold. are the sure, And portfolio their stayed a high. a cost It’s that, lot positive agency. using part permanent part of because hire they’re in the revenues hard Preferred probably

really attention things. paying – sort controls and nobody to that is of cost So and

assets hold. coming Clint the the clearly, of part that revenue as the good very the continues So preferred And said up. are to costs are

Jordan Sadler

question I don’t bit a when for know, is year is to was way of in a surprise in two this we ago – – you mean, picture of feel kind Preferred have years, my Care. well, bigger on a coming us it you I into I the bankruptcy. I a little would say no, that, like

So it keeps bankruptcy going. sometime. in been quite for It’s

said, status the that your bankruptcy, that And to sense Immediately been you to made guys whether of in if you that going necessarily we’re right, kind of properties we then it it wasn’t sell all of quo. look sure I’m assets. understood recently, It’s were the kind makes to exposed to – some more mistaken. we’re going not to or these evaluate not

$XX,XXX you’re rent of month instead – a a of all sudden, million. of of $X getting instead Now per

and some rent? I I is was the I bankruptcy? you mean, not surprised? been so languished. little of the I mean, are your receiving like – And And kind – thought Clint, this? of am part went there’s a are not bit what What that did can’t catalyst why think, And properties struggling this like but are I missing? – for you through we why

Clint Malin

portion they were hold the Jordan, not bankruptcy, bankruptcy on Care they only lessee entire Clint. their When Preferred licenses, companies, organization. The part good question. a of part their but was tenants a is filed the some of that of this not It’s numbers. master the filed,

bankruptcy. aspect the the that’s regarding So

Wendy Simpson

to that operate include this intended be When were these decided was properties and very time, and company and going earlier smaller much lease, told and from affirm changed, of year. company to us this at transparent they that And that part be bankruptcy. not our has they we their emergence that they’re and the is to Preferred assets going smaller said Care will that a

Clint Malin

Speakers] [Multiple Yes.

Jordan Sadler

Was bankruptcy bankruptcy purview lease court? under under the of of sort that the affirmed the

Wendy Simpson

They they It not get remember, we call, not go. this And intend that first said would did it did been. that lease year-end yes, year, told call, affirm was probably we us it different deadline. have But something to or by quarter earlier was they than affirmed. said our the had remember

Clint Malin

told continue after they – us even to to it, so because operate wanted they Well, they that, they affirm didn’t there.

the process they time it changed think So looking their organization. – think how were their I in Jordan, downsize as their I and they organization, evolved decision over at

assumed. us the So obviously, bankruptcy that told the told the they they deadline be it when to assumed After building. in still in wanted they fact would passed, us be it wasn’t

And then to the their to geographies, decision that our which process, through to made to they exit mind then changed happened wanted mind further which – or buildings their of into, want they fall changed certain our stay they couple the then focus want buildings, this, in during caused of the to a get and out control the cash potentially of flow. a our in of deterioration building. operations duration And on expense

remaining forward. they rather combination at a it’s happened going have quickly So have were whatever they’ll of looking a organization number that rightsizing things of as

organization entire when X being Again, Chapter much going specific Chapter a expected, before back a going it’s think, very originally converted not different think to be they And – entities, I company intended organization. a than I that it’s that even to be out. the they smaller X. were case on this they to

Jordan Sadler

feel in? can one, But could I mean, and that an jumped in I look, operator So, two like operator you like, least bit out. stew play the haven’t of appreciate why you’ve curious, to this. I’m at replace on just of years, all the guess, looked watch sort last one, I number time to find had a this I this quite

because to property legacy some sounds seems And it rent, the at close people at point, I’m would this but – correct a to wrong. or like they not at it as some I’m if properties the level, me, be were performing. rent interested at me

reimbursement are I What two gotten last at been least missing? low. a extraordinarily way, for positive. better worse feel the environment the years, or has the SNFs to than right? rates evaluation, like I Over Interest in benign environment has am

Clint Malin

Those are the good questions.

So back these them before we Care back filed to try approach they to sell – to we Preferred strategically bankruptcy. assets said

over these at with looking were bankruptcy. period strategically then filed we working sell a to Preferred them, actually So to of they time Care

So And of the to with in we them, sell the case, as them do strategically to bankruptcy is able an that. operator process, the change course through that we’ve weren’t to ability seen Care discussion not easy. Senior

so to And two in change a not in operator timeframe that control the years, given of the we’re it’s since that bankruptcy, that. been ability

Wendy Simpson

a today. intended And to not long-term. hold these said in that of for a at properties we we capital it were to I intend just And maturity out was coming recycle of the XXXX, properties that with timing. buying matter mean, are them, we these not type we up were always the it least that had while

Jordan Sadler

that Okay. is – had value I have up Speakers] but a been alternative lined I would I to preserve greater to extent my am maybe operator able missing? you an guess, [Multiple sense you

Clint Malin

Yes, to line to we before we Care them, could could bankruptcy, assets leaseholds. only they filed buildings another with in existing before our operator discussion have really up Preferred about Jordan, suddenly the the were the We sold don’t Preferred have filed them. Care or it we putting buildings the as made they with lot bankruptcy. sense ability of to to to to discussing sell And a sell operator to another before selling

Jordan Sadler

Okay.

terms right? is would in of the for would didn’t it the the you quarter third million question as as transition that this Pam, then in now paid $X they that XQ, of that of have quarter, – you you shortfall was revenue. in in a get you, to million ordinarily third stands, the sorry, And XXX,XXX So the XQ. So

going in okay? or be $XXX $X.X is you that, like the something only had $XXX, to Now that million XQ

Clint Malin

Yes.

Jordan Sadler

that’s what’s really And happening.

you negative you of offset of of helping upside So what So to what this obviously driving, guidance? of guidance, support sort the the I guess, offsetting what’s deterioration, sort sequentially? that because low-end the had

Wendy Simpson

it’s… upside, the On

Jordan Sadler

Yes.

Wendy Simpson

potential Care Senior payment. …the

So you have Preferred $X.XX you and then a [Multiple deterioration then from from from coming have $X.XX counterbalance Yes. Speakers] kind have $X.XX Care deterioration a you of things. and of Senior a miscellaneous of another of Care

Jordan Sadler

think, if said Okay. zero, Care, Senior I correct I low-end? me I’m at the But have Wendy thought wrong. you

Wendy Simpson

million. have the at low-end, No, don’t we $X.X

don’t another high-end $X.XX, that’s like is rent of $X.XX the guidance payment the and So and model. a guidance get that guidance payment, that there’s million do things miscellaneous then assumed get that of not year. this we things just of that the which percentage bunch $X.XX, And typically we of assumes, we low-end –

Jordan Sadler

then sort or item run in rate so XQ like to a is that to as through so. But look to trying XXXX, we’re we anyway, $X.X only a – that get $X.XX and if one-time of million

at So forward? sort that’s difference almost number of better rate, of run rate million, your going really the $X.XX sort or better run that’s between it’s a low-end year-to-date XXXX the least and a the

Wendy Simpson

That correct. is Yes.

Jordan Sadler

on Lifestyle. terms basis. And a there clarification on of The you’re like that. in only cash income just It’s similar – Senior on nothing a recording then Okay.

FFO the high you said What in be XQ, Where the happens so $X.XX end that to of XQ and in You $XX,XXX million of will far booked? has all will I up. that loss? that at received the in all? $XXX,XXX. caught And range be

Wendy Simpson

not No. in be It will FFO.

Jordan Sadler

Or is those that ultimately just it’s – an okay, ultimate properties? then realized a on loss

Wendy Simpson

get will XX% we selling chance that we’ve Right end pegged it kind get it. Right. it’ll now, XX% sold chance If up refinanced. of and it

Jordan Sadler

Okay.

Wendy Simpson

but refinance. And the cash, We underlying looking is that bought underlying not with a us at are properties property refinancing. the refinancing,

Jordan Sadler

Okay.

helps. Okay, Thank that you.

Clint Malin

you. Thank

Operator

Siversky Berenberg. our from ahead. go Connor will And come Please of question next

Connor Siversky

everyone. morning, Good

Just a little changing bit. gears

what With kind the kind just implementation wondering from X, then operators? what of And gotten stabilize the will nursing feedback October under environment do you timeframe business think of your skilled you’ve kind PDPM, of of PDPM?

Clint Malin

of The part first Billing for on the – implemented being our October PDPM, conversations operators are until parties X. a obviously, number with just October the quoting We’ve now of wouldn’t and November. regarding through process. right going had occur

that operators that we’ve this been to concerns that, have spoken for been really, they’ve about identified and and glitches or us. the with no planning implementation, So with training

have of this really So I a we’ll on point, concerns any But prepared hasn’t go that. visibility next because at we more into trained been lot companies this. quarter, employees as think for the really have and

so to rates the made payments and to then start see takes where those PPS compared in being And of we November, place able once the billing middle before. are structure are

assess group to it’s as well. But right about little able at. I to and think optimistic plus I that’s implementation be the with therapies that, where feel overall, concurrent of operators think a So premature now

Connor Siversky

still early Thanks opportunities you moving degree, maybe result place for mom one some some to maybe put – of in and too for in some goalpost may in that. portfolio, pop tell? PDPM, too represented And operators think is your to do aren’t your it to or of that acquire then smaller properties the and operators,

Clint Malin

Absolutely.

business with more to focus migration I complex see PDPM under think you’re this more on the going a the gets. Especially complex care.

I think to people to my smaller you’re wanting exit would see going operators, and guess. mom wanting pops be

Connor Siversky

any maybe question acquisition maybe then mentioned in particular to pertains yield pipeline, assisted or Are whether Great, movement target skilled same for you then living properties, it seeing you markets? be your that an And into the a going great. nursing? as any of XXXX. extended And bit

Clint Malin

the X% rates, from in past. looking on we’re is yields, at. X.X% at probably Between private they’ve a as on X.X% far X% have what to lot what yield changed Overall, our to I of same As skilled looking cap much we’re pretty on investments. been type pay, the transaction think, the

capital tremendous As Wendy the in in pay prepared amount on remarks, our attractive on side private as the definitely mentioned both well side. as a there of that’s skilled the is marketplace

time. I still price lot transactions second side. we’ve going haven’t come back or a back discovery for third just have think sold around the the that investment around There on that there’s are on seen coming of

we’re On the maybe we opposite of are a deals. getting price or XX% valuation that some where have assets at of tremendous side, brokered some more premiums looking disconnect seeing in

the still board, all there’s over is price point, and the some So think, going discovery little on. bit price definitely a I

Connor Siversky

Gotcha.

what the do and think competitive remained XXXX? So is think into you has you the environment outlook do for stable relatively going that

Clint Malin

at buildings. of a I lot looking think still capital there’s

competitive. think the opportunity going transactions. is see Where one-off I most remain to it’s we in So

activity coming can not the points, to one-off upon larger deals. acquisitions, see so price tuck we’re We’re more given in. we look at probably But looking existing inclined build relationships. new at marketed or We relationships into

Connor Siversky

That’s lot. for a all me. That’s great. helps right, All

Clint Malin

you. Thank

Operator

go will Our with Stender ahead. from Fargo. Todd question Please Wells next come

Todd Stender

just Thanks. to probably And stick with you. Clint,

I you new deals, count. at above a construction They’re difference? bed the good a interesting, same because acquisition simplistic. wonder snapshot was the look and construction, quarter. you the cost. new get the looking too you announced the made guess, pretty maybe versus Missouri in expand same if I make could cost Just if you that’s operator, of but of at an with just The acquisition replacement

Clint Malin

mean, [indiscernible] occupancy. it still was – Well, so strong I we

So I buildings you’re mean, of with that a the with lease-up. function not that’s taking associated that the risk

Todd Stender

the higher So get – you sure.

the in that? with location, upfront, get You the like right, higher new construction. anything or mix Any yield differences

Clint Malin

near No. existing to the look It would property

Todd Stender

Georgia you spoke lease. think then, down. sold the SNF you it know there? And price I about don’t rent if the expand Pam, been you within then about talked quarter. the It was that seem the master you I And Any right. that size, could in the color, good All pretty but low, written had

Pam Kessler

I an imply contributing think didn’t lease. flow change fact and building, older lot of master to a the price rent not sales that that that cash would that, was that

So if you read numbers that you want can. into to the

Todd Stender

That’s Okay. me. it Thanks. for

Pam Kessler

welcome. You’re

Operator

Our of come will next go question Capital from Bernstein Please Daniel One. ahead.

Daniel Bernstein

good morning. Hi,

[sic] guess, on Pristine quick obviously that on Medicaid, I been to Michigan there’s and obviously came a Medicaid have thoughts some, potentially in But the Michigan larger could [Prestige] impacts late. there operator. on already payments exposure And or asked proposal some Medicaid any I I it. hope question. you a portfolio? wasn’t Just your you addressed Michigan. affect I

Clint Malin

We’ve from a it Prestige, the portfolio pretty change had the affects cost XX% the at variable conversation are Healthcare takes side, the much reduces and Prestige with limit our that With if it that in that and regarding they proposed Dan. really on range. operating XX% us Medicaid to XX% Sure, effect. it

on So to the you it exceed you really only extent that costs variable it. impacts

have structure that. from time. they acquiring reduce if been cost But that over not-for-profit, has properties of exceed strategic which cost sort a they and some do that’s So from that structure buildings a higher

might of of large, are they take couple there hit going by could buildings. a impact little potential bit be like effect. from But on tremendous to that have and a that So seems change

Daniel Bernstein

I able Yes, mostly weather the mean it. the to ACO regionals should be larger had indicated

to surprised the a platform? single question verify that’s wanted Are to by So I’m multiple, is not it. those buying party sales as care. or was I just on had it Preferred other a those your assets And comments, then

Clint Malin

in by state. buildings. the at looking are that most so parties I they’re different mean multiple it states, is It’s targeted of

Daniel Bernstein

Yep. I all Okay. That’s Thanks. had.

Clint Malin

Thank you.

Operator

our back Please concludes I for session. to ma’am. any Simpson go turn question-and-answer like closing the conference Wendy over This ahead, to remarks. would

Wendy Simpson

updating Thank questions and all your and for you to for future. a weekend. look forward your Have in attendance thank great you you, the today. We

Operator

attending presentation. for The conference has now you concluded. today’s Thank

now may disconnect. You

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