LTC - Earnings call 3 2023 | LTC Properties, Inc.

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Operator

Greetings. Welcome to the LTC Properties, Inc.

Third Quarter 2023 Earnings Conference Call. [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. These risks and uncertainties are detailed in LTC Properties' filings with the Securities and Exchange Commission from time to time, including the company's most recent 10-K dated December 31, 2022. to or update of circumstances obligation to forward-looking this no events reflect after undertakes revise these or statements presentation. LTC the date like over this turn note, event being would Please is the Wendy to now conference Simpson. recorded. I to

Wendy L. Simpson

of our to Clint Thank XXXX Conference Chief Malin, today Pam Co-President Third joined Chief and Officer. On mission LTC's progress porfolios. spoke regarding as focus goals, of Kessler, you, XXXX. about remainder and strategy, am made And and result welcome, Co-President the have I last Financial including Quarter primary and by operator, towards that call, everyone I of Call. Prestige LTC's Officer; the Brookdale results Investment and a for identified very we positive those

and remaining that over in in funding originated proceeds year, [indiscernible] transactions with in nearly sales million million recap, was this year. in date, approximately next net proceeds the the transaction $XX gains early received sales talk the in to pipeline resulting third of more $XX generated million. the quarter. will about we've $XXX the totaling million since transactions later. To the $XX also Of We in of expected beginning $XX million closed

proceeds sales portfolio. to $XX of XXXX, additional portion Brookdale the the a receive of the throughout primarily expected to the expect $XX million to related in range We million remainder sales of

payoffs, generating rate of long-term XXXX, in average far remains LTC's million we have mezzanine received $X.X so mandate loan million IRR Additionally, a XX%. $XX income almost exit of weighted at focused. in

maintaining creating and reduce the additional have of private nursing. its while pay age to a on working portfolio we further where portfolio, focus balanced First, operator diversity and skilled average been

skilled focus sure leverage industry latest pre-pandemic a levels shown industry-wide quarter, current down like NIC that have both Recent positioning trends nursing. I'm news. The in sales spend of to occupancy positive some are now to with and to MAP end that indicators of the on reducing a to third, by shows the LTC levels few our of third by on further in some minutes reports return pay grew housing using debt; future for occupancy I'd starting top historical mind, XXXX. and to focus growth. Second, a data portion point proceeds more that on seniors

we cannot While goal. timing, that that making towards agree predict specific industry the we progress is

Medicare agency certain in net operators areas. slightly is rate t trending strengthening cases, the These particularly additional many Additionally, increases of the a SNF to usage combined in than down rate on final margins. market in for went at level, a labor factors, and increase effect the but expected October is which X, into is position operators begin increase better state before improving operators, and X%, the higher with

skilled which was The pending third XX%. metrics. requirements, FAD LTC-specific payout at several for staffing remaining with up rule historical will some the the years also to nursing operators SNF gains are to some challenges that insurance and seniors and both will litigation positive We see for face in including minimum cognizant has the industry made, are but the housing the inflation, long-term of goal quarter take with implement. Finishing premiums, happy the ratio release the final XX%,

for ratio XXXX, fiscal fiscal are in from projecting FAD XX% a of We XX% down currently payout XXXX.

payout monthly share. maintain of We also a $X.XX per dividend

range be For to in per quarter, nonrecurring share. excluding of the items, fourth will we FFO, anticipate the $X.XX $X.XX that

us strong needs-based for the to demand, As focus I'll call positioning demographic care, coupled that, we last of growth. With into over XXXX, enter move the and future quarter turn Pam. on into with XXXX remains

Pamela Shelley-Kessler

Wendy. you, Thank

of by related $X.X million XXXX. $X.X quarter more and for For XXXX, primarily third receivables $X.X of financing income loan third interest more to revenue increased interest accounted from quarter The income as of compared acquisitions improvement the of total the from million originations. million mortgage with XXXX

and credit, to related ventures joint were origination. Rental last $X.X notes. principal increased from revenue interest recent from loan by due on $XXX,XXX a Additionally, the expense third senior to unsecured on revolving million year's interest and rates year income income primarily mezzanine a line by scheduled balance quarter our by higher comparable paydowns primarily other and higher prior our Interest outstanding increased offset of unconsolidated partially to period.

additional in recognized During the million on $X.X we related assisted I'll property gain provide details sales XXXX Xrd shortly. sale Pennsylvania. communities a quarter, X living on to

receivable the for $XXX,XXX, by as the provision of skilled of financing I origination mentioned the for earlier. X a loan decreased centers partially credit mezzanine XXXX approximately offset Our to losses primarily nursing by acquisition accounted due

available XXXX, charge and higher reported sale Fully diluted million a $X.X the for from expense. $X.XX gain equal offset share This an real we XXXX. interest the paid in balance. is of $X.XX to loan higher investments, to in increased X% quarter of shareholders reminder, quarter, As a the interest in improved origination, by new record million on to upon partially reserve loss as reserve loan primarily income prior the income $X.X of increase estimate third the third of by loan quarter impairment up estate common year is to FFO principle third from due down. Net the amortized of per

interest items, quarter with in FFO nonrecurring year. $X.XX the increase partially last Xrd higher compared investments, The share nonrecurring per income $X.XX excluding by from Excluding new items, due to was FFO, XXXX was for higher expense. offset

detail recent our divestitures. discuss Next, Clint investment will activity later. I'll

a XXXX, on total for million with with assisted third living $XX.X Pennsylvania X we of sale a the of sold combined million. in $X.X gain units XXX communities quarter of During

XXX and million. value Nebraska $XX.X XXXX $XX.X also a assisted $X net units notes unsecured We to also million Xrd X in of principal in sold for quarter. repaid at living scheduled dividends communities under a payments our paid the in senior book regular combined equal We total million with common

we approximately under available unsecured quarter, Currently, million million This $XXX cash our have under million. $XXX and credit our line our of credit. available of third we $XXX million the on almost borrowed of ATM. $XX.X us gives $XX outstanding line $XX.X with about million total of roughly million revolving liquidity During under hand,

we portfolio, as sales describe Clint Additionally, fewer our decision assumption mentioned, the line on credit. proceeds this to to million, anticipate proceeds later. lower sales which will used based is pay be This later million Wendy than $XX previous amount which our the Brookdale properties receiving $XX of to year of from down sell our in will range

related a X.Xx. to mortgage loan payoff quarter skilled bed ratio the was a Additionally, of we charge secured Xrd to the anticipate real receiving EBITDA was by nursing $XX the center first adjusted XXXX coverage for Xx, quarter, Louisiana. At million in our annualized fixed debt estate of the and annualized XXXX our end of XXX adjusted in

quarter to regarding $XXX,XXX of to million the for third of we amended during we per $XXX,XXX to May interest previously Healthcare, the up XXXX, our to quarter, through in or Additionally, payments $X.X under the end the loan. Prestige September agreement Subsequent month third up deferred defer disclosed XXXX.

October Prestige has approximate $X to drawn part the through the XXXX. down from letter interest of million outstanding million credit of repay As amendment, all deferred $X.X of LTC

in approximately loan the down of at draw on December $XXX,XXX and will due be to that XXXX November applied point. interest each We toward

The Prestige XXXX. Beginning balance. mortgage funds on due all interest pay X.X% interest January XXXX, and the contractual XXXX, payment contractual based we the XX.XX% contractual our interest expect outstanding of $XX.X in of on rate XXXX remains due to LTC the result, XXXX. letter on prestige, million receive as on a retroactive loan due to expect able we pay X, all will during interest an XXXX, January Prestige of annual As to current and be will of replenished credit From be loan from minimum X, Medicaid will be of unchanged. to in rate

Clint. I'll turn over to the Now call

Clint B. Malin

with update Pam. whose you, our on lease property expires on start XX. XX Brookdale portfolio, Thank December an I'll

and X lease will has properties will million annually of rate escalating by $X.X million outcome happy our options been a the of commitment these the we approximately for initial be Recently, announced, XX new the be we property on X% all have through to under back $X.X additional the reached Brookdale will previously an on first communities partner commencing the property great Kansas years, X% are years rent X parties. released X expenditure X have add by capital to in initial annually, amended including lease master on master the XX in January The in living lease new the master new X X Colorado from As approximately thereafter. Brookdale XX that an Ohio and assisted XXXX. to properties, in in and at XXXX. X%, X, benefits portfolio, lease Brookdale we a X-year escalating Texas. of and purchase XX

million Additionally, of to be sell properties proceeds, in are a on leasing for The will the plan of remaining as million million. and receiving by X Carolina More these being net to price operators. which we track sold, properties We X are approximately the seller in while we sales. $XX $XX.X and of X South sales financing XX to anticipate Florida transaction different X are result to X which of transition XX $XX in specifically, year-end. cost

for to licensure million the current is and period. third lease second Rent under assisted to with leasing in master one operator. X-year operators. XXX first $XXX,XXX to $XXX,XXX, subject We of properties remaining the year. in by be is will we X, of to a are X in new The Six the increasing commence will LTC new term operator year a extension with anticipate in on which operated Oklahoma set lease the X at issuance the years total XX the a year units living $X.X November

extension lease exercised XXXX, November the exercises lessee starting includes October in can that through Additionally, master its purchase be option. XXXX if X-year of option the a

living in on currently are remaining of working properties assisted units. North total expected to with for on X, lease Carolina is new a X new XXXX. XXX the commence located We lease finalizing January This a

I in we and will should used by which by operated decline remain outstanding we a leases. reduce was original XXXX new Brookdale investments not between prefund some confident this exposure XX% Brookdale As using FFO the our expected rental decrease see made that concentration, mentioned, number Wendy our last of with to we we older reducing will call, selling reducing the credit to detailed the Brookdale buildings accretive this buildings the year. related and and of Through sales XX%. Brookdale quarter's process, sales by nonrenewal proceeds, leases anticipated earlier just our the are of line Further,

Moving activity. investment now to our

$XX loan Mezzanine the assisted was operator, Living. During as with of units. used the affiliate The an years well care and we initial Gallery recapitalize living, as an disclosed, at current XX XX%. of as existing mezzanine construction independent million loan campus of a memory to quarter, is XXX-unit living previously and IRR originated third an X X.XX% in Georgia yield long term additional an and of

a been fund living to which we our has expected our in which X.XX% equity be on is of extensions, committed approximately completing of of $XX.X $XX.X million contingent will XXXX is at the certain commitment, coverage long begin rate also and to of used borrower's in drawn, equity The contributed with each to mortgage assisted transaction achievement We the fund The X-year includes community memory million which care pipeline. two XXXX. be is X XX-unit borrower and the of in funding construction. years the thresholds. loan all term the will a last early of Michigan, an initially construction Once

portfolios. Moving our to on transition

relates As and rent first in the million X rent HMG expect from we bringing HMG XXXX for quarters continue to the $XXX,XXX the in million. fourth quarter which third to year, million quarter of to $X.XX $X in received expected, total from $X.XX of the

earlier. XXXX is with of expected the and rent sale the X of rent is discussed the to $XX,XXX prior with projection of to Nebraska year. this of be Pam This $XXX,XXX the fourth Regarding all projected Pennsylvania $XXX,XXX due lower of market-based than resets, X quarter transition that buildings year in the for properties fiscal our

We equal $XXX,XXX year's from transition properties to first quarter. the for expect rent next

as some numbers, properties assisted was January portfolio reported provide our X, management XXXX. respectively, I'll into X% exclude insight portfolio. trailing living on for a coverage and QX XX-month using X.XXx, fee or Next, X.XXx our transitioned EBITDAR EBITDARM after which and

not funds respectively. rate metrics Excluding upside given recent include this received X.XXx, are occupancy in does future and pay X.XXx operators, related was private stimulus coverage our Because coverage arrears, and these by increases. to potential

For and nursing our as skilled X.XXx portfolio, respectively. was EBITDAR EBITDARM and reported coverage X.XXx,

basket Pro respectively. would operators, coverage. and Medicare X.XXx, Excluding increase, stimulus rate the coverage market funds X% been funds received was by excluding stimulus forma Skilled X.XXx for coverage, our X.Xx have EBITDAR

approximately for include XX% September as some of XX. same-store June of XX% Private XX occupancy trends, general occupancy same-store pay of XX, numbers at and XXXX, our and private and our our are which portfolio. These our total September beds. XX, nursing skilled was pay XX% for recent XX% Now approximately units March at same-store at XX%

For our portfolio, June skilled September, in monthly was in occupancy in and March. XX% nursing average XX% XX%

our private XXXX was what the was skilled approximately pipeline purposes, occupancy XX% discussion marketplace. our brief a and occupancy comparative For our in M&A finish pay nursing approximately pre-pandemic in and XX%. I'll with of we're seeing average

earlier, discussed our in the completed I we the quarter. XXXX transaction As third during remaining pipeline

beyond, planning stages we now XXXX are a patient pipeline investor. for and remain the but a building We in of new

speaking, don't to resources Broadly opportunities about are and potentially to hearing skilled being current have owners investments respect nursing pricing to that come are and banks more We selective with happens housing LTC. watching seniors more due for refinance. as the loans we to see are leading what

turn Wendy for back call I'll Now her the remarks. to closing

Wendy L. Simpson

Thank you, Pam and Clint.

the quarter we third continued previously into We're some for year set challenges the to and we for of productive some progress positive a our of was signs expectations recovery. with the going The end very note and shareholders. most identified on industry worked through made pointing on ourselves as

again REITs, lending strategy pace, in think maturities and conservative environment like investment a maintain due causing and We a Clint is for are anxiety. provide those rate brisk LTC increases said, operators geared we're this solutions bank now are interest who next We'll As coming flux, at support. future. needs especially favors questions. your are you, you of to for for the operators. believe I growth year ready Thank for and well we into next towards customized the positioned take everyone, talk quarter. Operator, continued to

Operator

first Juan Your is question with BMO. Instructions] from coming today [Operator for Sanabria

Juan Sanabria

regards was are expected be How a a thinking we of to to 'XX? weight the perspective, tax should and or Curious you difference to how kind modeling 'XX? the that wanted FAD think pay on in just a know that how modeling ask with effective question a FAD I we for loan rate. between we GAAP I on redone? be Prestige should cash. we what about they perspective. FFO set about on Or from the floor about think Should there's that from should

Pamela Shelley-Kessler

this Yes. Sure. Pam. is Juan,

at going and getting You should model the effective be for timing It's issue the just we're FFO fab the the same the of rate replenishing to because cash. letter credit.

credit drawing they they to be difference then we'll month So each replenish down on the Medicaid letter -- when credit. letter of get retroactive of fund they'll the will and their the funds,

cash from been the it's So has and as a same GAAP standpoint, previously. it

in already probably you as same have So model. your

Juan Sanabria

to and will to So confirm letter difference just drawing 'XX on the that the credit any down of down, the the continue in cash rate? between make drawing up effective

Pamela Shelley-Kessler

Yes.

Juan Sanabria

Okay. Great. then Brookdale. on And

the just any the repaying sort of the those as from those of we Should way? your into pipeline? to line, that are of a dispositions or line the you've dilution sales from the just those of the offset should asset that reinvesting the we Is 'XX anticipated kind given Or of proceeds So higher at be the of proceeds completed. capital teed most think right being yield? up invested assets repayment and

Pamela Shelley-Kessler

and we proceeds, earlier talked the last as we X.X%. right? We're call, getting at million, on about we Well, consider year this $XX we pre-invested the invested

call was pre-investing reinvested a that's getting the those. were comfortable the a and logistically, the higher the because that timing debt actually But down with on and proceeds of higher, we debt So proceeds. on talked in the creeping about theory, got little then there in we've us already difference we we timing, line, of why because drew and last

take going going it we when year holistically to So logistically, through any $XX.X transaction are And did. telling to income is Brookdale? the from line. are this we and assume you the replaced, math investments what take just you we I'm saying, if down you walk are Yes, But logistically, looking to But can want. -- more you. don't you're replacement that be at the getting million

Juan Sanabria

quick one then -- just one And for me. Okay. last one

I for should called for maturity be $XX the anything quarter else 'XX a think Is first forward? modeling you the of balance put 'XX. you million we loan year the in there out that

Pamela Shelley-Kessler

challenging, with debt I now, any for are financing are cash Operators for Not right not markets certainty. but the that. flowing mean, properties. to find able

maturities back mortgages. So right we or are not that I'm coming mortgage maturities loan our -- to maturities we own don't comfortable now, have with the really debt don't have any mortgage because us,

with debt -- comfortable But So feel our we maturities. have payments, those. obviously no we are

Operator

Fargo. coming your Connor next is question Your Wells from with Siversky

Connor Siversky

Maybe the requirement. staffing just minimum to zoom in on

ruling could been postal I'm nurse then, had. the from your we and registered the there's required potential you [indiscernible] has cutback any we in SNF that the feedback hours or of curious, a part believe in see [indiscernible] portfolio Following are the do operators the to

Clint B. Malin

There's It's Generally we're It's the doing how a of in about impact that and really I Clint. 'XX with comments phase have speaking lot the obviously, that. working operators comment job 'XX this. in period were speaking, that to getting good that the is been The think submitted consensus is a right not feedback now. from or organizing Oak in. to of is and been in, CMS, the 'XX

where the focus is right really So that's now.

just So in what about frame. it's concerned shape speaking, that look that, it to into as time how XXXX, looks you it's but phased generally and aren't trying people like beyond

Connor Siversky

for of assets? have paying that's you then assets activity more any double just idea is transaction only to on next Do XXX sale in those points basis in have that cases. what's kind gone whether the attention XXX yet pricing, to stickiness certain seen and driving up And we've XX-year year, ALS transaction the yields and expectations Understood. maybe activity Okay. mean, I

Clint B. Malin

in the front would prepared transaction we I see that in advantage rates of I about with And REITs mean it's on just we opportunity think at be you mortgages evolving see capitalizing talked with the going yet a the well to adjustments an in us forward, rates, as remarks, in haven't deploying think with and cap that lower capital. then I market we additional due, rise volume. take and seen positioned coming

Operator

coming Your Capital RBC for from is today Markets. Michael next Carroll question with

Michael Carroll

my on line what's Medicaid if sure Michigan with on much us ideas how can not I'm in getting my And additional on going of of is Clint, to Prestige. the -- on capital Can first deferral? I'm the why is is guess feedback fourth back you anyway, received mean is here kind question used everybody in get quarter but our wasn't -- else that, that capital But I through X? some I some first the pay 'XX. to the payments. give going

Clint B. Malin

So on conversation regarding Q&A -- you last call, I a this. and had we in

'XX. million estimates that procedure million estimated rate million the that now issued in letters was XXXX, 'XX or mentioned for $XX At $X I that end million received higher of the million $X in estimate this $X range -- at time then the to to XXXX. is been like and the $XX approximately range have point, of the of $X in the quarter, last be right and million So in we're the million

Prestige. in to be the there's need over deferral that for these bed -- taxes rates last AP, years, X there will paid the be there's Given

deferred to tax. initial bed you back on this So assume last come XXXX payment AP time, the And those to bring this call terms in would the I pay them mentioned basically current allows shouldn't LTC. dollars the into

Michael Carroll

Juan's rent you into they're as pay you that believe going the this there are you're XXXX, XXXX? Okay. operating expect operations improving? And the not about thinking have contractual of into but to question, full then in might answered going do with trends I And Prestige

Clint B. Malin

mentioned, -- just Prestige, Pam No, we fully from Pam as interest fully from detailed, as expect FFO. the to comment model cash expect Juan's we to and cash as same rent FAD or

prepared interest in only expect not well. remarks, we said as in our you the receive to fully payment, 'XX contractual in 'XX, So XXXX but

Michael Carroll

I less, it reasoning them then allow to what did that? pay why And was Okay. guess, you the change to behind

Clint B. Malin

for is Prestige back and census operations. improving story The building real

January So a for beginning to there's materializes, the just it participation participating them will pay addition And of added And amount while into available the in money to more retroactive be in is security that payments we've Medicaid -- if rate done in current of what that that credit ability the letter implementing X, exchange excess we've to be doing if cash our accrued LTC the XXXX. pay afforded have lower current flow will in interest. will our provide to interest, they're be down XX% that. that accrued

interest So operations to we're giving giving them runway that was X.X guiding the of time effectively improvement frame. -- X.X-year as margins. getting full it contractual years and runway We're was make to improve that them a through a in

Operator

to We now have the and the the I session, end question-and-answer turn remarks. closing reached will for Wendy over of call

Wendy L. Simpson

Thank help you you, Have listen appreciate to XXXX great those of to to everyone. talking year. We to weekend. great your questions end soon. a really appreciate the to the time I and your we and look rest Talk a the you to you forward comments of Bye-bye. comments. after us our take clarify

Operator

conference, your and at you Thank today's time. you concludes for participation. disconnect your this may lines This

LTC Properties (LTC) 27 Oct 232023 Q3 Earnings call transcript