LTC - Earnings call 4 2023 | LTC Properties, Inc.

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Operator

Greetings. Welcome to the LTC Properties, Inc. Fourth Quarter 2023 Earnings 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, 2023. LTC undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date of this presentation. is over would to event turn like this conference the Wendy note, being now recorded. I to Please Simpson.

Wendy L. Simpson

Pam am Thank to you, Malin, year today Co-President I was Investment and of LTC's everybody and by joined a XXXX Fourth and Financial operator, Quarter Conference Clint and Officer; Kessler, Co-President welcome solid Officer. XXXX Chief Chief Call. execution.

begin talented LTC So very team. our I by want recognizing to

resulted sales in in million gains During the proceeds, and $XX the million completed sales million. year, $XX investments in net generated totaling $XXX we

we $XX.X we million in resulting XX%. From transitioned at from generated average Additionally, received payoffs, successfully in generating lease. than portfolio of of a anticipated the mezzanine original $X.X revenue rate an loan we Brookdale income operational of perspective, exit $X.X IRR the more weighted million

XXXX full housing reduced demand We Clint XXXX. importantly, expectations. From industry ahead further with from consecutive muted. especially interest NIC, through an quarters. payments of received at we to the Prestige year, full is half leverage to are And contractual construction shortly. least seniors rates new pre-pandemic And for on recover expectations contractual now second street significantly discuss XX increased housing occupancy to this levels will of our for seniors this according for perspective, in Occupancy as remains has strong. track

positive interest and fundamentals generating not due, While in real we coming particularly REITs favor currently that with selective for cash seeing. Market influx encouraged are flow. financing about properties are billions being we're maturities more not in dollars investments, what the are prediction and game, estate currently by their of of banks we rates

XX%. customized flexibility some creative FAD creativity was solutions for including fourth based an with this for structures, maturities. with payout needs. Finishing it by to for operator's quarter LTC-specific on We have us and easier metrics. We providing those now ratio quickly financing act the believe preparing up by financing shorter environment developing LTC's makes been The

our monthly maintained per $X.XX also dividend share. We of payout

rent the to be $X.XX that we first in and nonrecurring FFO of range decrease to January. sale per $X.XX property per due Pam XXXX to $X.XX FFO for shortly. of the sheet, be The quarter, excluding will details share. excluding will is a FFO stronger, For portfolio stronger repayment XXXX We're between with $X.XX range will FFO anticipate of share. the better items, and LTC related in balance provide to the nonrecurring positioning in more items, diversified future growth. a a entering

to like I'd Now turn over Pam. to things

Pamela Shelley-Kessler

million numbers quarter with sales. an to for We increased living first $X.X outstanding All X of discuss recognized receivable primarily communities loans a This property renewals from I'll sale to a balance XXXX revenue used unsecured line and our the quarter of Total offset mainly due $X.X XXXX from which assisted income credit are of lease by quarter the rental mortgage on in living due and our completed street XXXX pre-fund unless escalations the in of XXXX, the offset second senior sale primarily acquisition XX shortly. reduction on care Interest otherwise a quarter of in payment I'm memory was the revolving to assisted first temporary our a was Anthem and $X.X originations Thank and going on with rent by to expense gain discuss today higher line related million, of GAAP. loan from accordance in XXXX. by financing mortgage financing to higher of accounted as acquisition credit Interest million, stated. you, investments. portfolio income increased scheduled related the to expense decreased transition, and increased principally principal million, rates. Draws fourth compared partially of partially leaseback Wendy. $X.X communities, of $XX.X to the by during the for due million, fourth were interest XXXX paydowns rent divestiture quarter notes. revenue primarily on annual XXXX, Interest extensions. Interest

for provision increased master assisted due $X.X to by million, million $X.X Our primarily losses with write-off pursuant a working capital XX-property ALG. to of a credit living a note lease

provide the and increase was the higher the investments, to discussed partially an $XX.X in recorded increase losses interest the fees due later expense, for decrease as in X new to and as primarily shareholders properties Net common loss $X.X income lease. $X.X from of impairment million income. Fully previously share available Clint and $X.XX of higher lease we in under related the million by provision Texas approximately million sale by call. Transaction increased amendments. related to increased will income Additionally, gain well additional per impairment interest this covered rental to transitions our with loss credit detail diluted on $X.XX. FFO in offset compared

nonrecurring The FFO, expense, with from note, higher to in items, $X.XX higher interest by lower income outstanding rental excluding the and the from capital program, ATM partially investments. offset $X.XX. decrease share compared represents items, our Excluding nonrecurring write-off of was new interest income sales per under which additional working due shares FFO was

living the X XXX-unit $X to the first our working million, Subsequent received $XX of costs million costs sale previously of of we during JV which in XXXX. The in for and were Now received in Brookdale for XXXX recorded million purchase million. to the sold reporting properties a Wisconsin XXX combined we X includes and disclosed our the net approximately seller $XX.X of million a $XX.X repayment on divestitures. fourth and units note. X.XX% the million, in total, part the $X.X price transactions. recent We properties of of million rent of to given located payoff our anticipate end financing transaction of new of quarter, LTC and proceeds I'll sold $XXX,XXX gain net the $XX.X up recap credits $XX.X lease of proceeds yielded net capital We In a construction community with of quarter. transaction assisted operator gains interest we a of

With during we full the income the credits, of the first quarter. effectively received prepayment XXXX rent rental

to common $X.X $XX of in FFO However, provide we this the rent of a first net we order million million X.X net item. Also quarter, ATM program. the proceeds shares of $X.X as for stock shares to proceeds million during stock end the nonrecurring normalized under for million of under approximately approximately program. Subsequent our we quarter sold of XX,XXX guidance, quarter, sold fourth the of common

$X paydowns unsecured notes repaid $XX and principal our common on During the million fourth scheduled in quarter, senior paid we in dividends. million

the real repaid estate $XX we XXXX revolving reducing Xx Importantly, to our EBITDA to repaid from credit, line credit, the revolving our unsecured under fourth line quarter, million quarter third under of estate X.Xx forma pro we X.Xx adjusted on EBITDA reducing the to the XXXX for annualized a to million adjusted end quarter unsecured $XX.X from for debt to X.Xx ratio XXXX of basis. quarter. Subsequent our real of debt our fourth per for

in future. better our substantially leverage, mentioned earlier, growth for positioned is by and the XXXX As reducing in LTC Wendy

million. November extension agreement unsecured revolving the to of hand, $XXX credit total exercised we option of and available and the XXXX. All extend X-year other the option our line the our cash amended line of Currently, with have notice million of unchanged. million $XX $XXX XX, outstanding provisions we about roughly end remain approximately million subsequent This of on to almost to $XX on our credit liquidity us under million ATM. $XXX date date of available quarter, Additionally, our the to accelerate maturity gives

hand over I'll mic the Clint. to Now

Clint B. Malin

Thank with a with you, Pam. of begin operating some starting of I'll partners, Brookdale. discussion our

repeating new a transactions, pre-investing that to Senior Solutions. Compares to of of properties replaced the X leases Brookdale generated original properties an combination new these under a sold from Oxford was LTC, Aside an Senior successful transitioned existing portfolio XX Living, X LTC from were the from operator Brookdale lease. new original more than retained the fiber through sales properties through income and have the operator, to the portfolio, that and master transition we proceeds. Navion

Next, I'll pandemic. the to portfolio discuss following transitioned a COVID has XX-property which July XXXX nonrevenue-generating ALG in temporarily

communities geographic ALG in or one while them and small quickly towns Georgia, of Florida, Mississippi of to them The South during these transition both. This we properties to whether evaluated the provided sell their these in and XXXX. XX-property Mississippi in operating us sold We combination by each some assistance of and by located primarily X Texas properties Carolina. or the built XXXXs. majority stepping and properties footprint Florida support included ALG out in lease are master were

that Senior based to and X X lease term second building XXXX Texas new Texas Legacy in agreement entered to X, For first XX sell and an operator X is uses. After future. Carolina are The the to be properties can if to be the in exercised. on X will includes close X-year exercised in the plan lease last master built fourth a agreed-upon we months the Living. for Initial with LTC, X options. sell fair a for X X rent. closed The closed alternative market properties, South to near end we properties, the to the in extension after remaining extensions mutually during that purchase Texas it X years of We and Georgia a properties is option an in X which property were of quarter, the the into XXXX years X-year rent lease the expect then for transitioned

up year note lease XX, Additionally, capital to to $XXX,XXX for we expenditures capital up first X.XX% maturing to and of a the agreed on the December $XXX,XXX working for XXXX. at fund for

portfolio are remaining the currently property. few the Prestige to A working reiterate, words non-revenue-generating. Healthcare. We about To transition was

by payment current mortgage $XXX based rate XXXX, outstanding unchanged. Contractual centers the the interest on of previously mortgage on the an to loan nursing rate balance is minimum pay January of loan, due X.X% X, amended XX million. annual which we remains XX.X% we on disclosed, interest secured As skilled in LTC loan, Michigan. Effective Prestige's is

expect hold security, current quarter, million the payments $X.X as difference LTC XXXX contractual contractual due draw to State the Additionally, that gives million Medicaid will all the and Medicaid of of security from of the pay of from of be drawing between Prestige be our end XXXX using additional $X including pay We increased the rate. payments retroactive the us. Subsequent Prestige in fourth loan Prestige received received Prestige's retroactive security. remitted of rate on right received currently held to later amendment XXXX the million the to Michigan. We by $XX.X security interest LTC on by to security and the

interest Full from needed as has the contractual expect full XXXX, loan through we contractual February provided through including at security receive to interest draws XXXX, the paid and been on least by by held portfolio the retroactive the September Occupancy the properties XX% in of in in from performance reduce security this the payments. Improvement XX% in need to January. apply us. will Medicaid to grew

mortgage our borrower's transaction quarter closed fully during activity, we has a construction call in a mentioned million memory quarter a at in the drawn, of XX-unit last investment The to and assisted Michigan. yield so community we fund X.XX% we the of the first an living of $XX.X Regarding loan began this for fourth quarter's care been that on equity funding year.

portfolios providing assisted $X.X quarterly Moving we to abated X which now and receive living been whom rent, living have million expect rent XXXX with received on we assisted resets the $XXX,XXX include during XXXX. communities to for market-based in our

extend amended SNF the rent to Rent for was XX, at during Subsequent to million. our we HMG, term master annualizes XXXX. $X received the million in X, to which to we XX, to December portfolio XXXX. period, from set lease February $X million $X.X XXXX, August transition XXXX, its For

with new term the coincide of the revolving of line expiration. extended HMG's also lease credit We to

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

stimulus X.Xx, was received funds coverage and Excluding our X.XXx by operators, respectively.

Medicare as stimulus would market portfolio, operators, X.XXx, excluding funds excluding for X.XXx coverage funds, nursing skilled was forma our stimulus EBITDARM and have and X.XXx, and been basket skilled was EBITDAR coverage, the rate our reported nursing by increase, X.XXx respectively. Pro respectively, received For X.XXx. X% EBITDAR coverage

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

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

to of accretive As for are are The the rebuild be strategic during to expected majority XXXX investments. we it loaded. back-end pipeline, our working with investments and

and highly relationship. believe In are structured in our put and And we this to position will net are bottom can opportunities, to billions terms for of we potential complement the with further interesting and higher already banks is are the only of platform operators how regional the of we're many as solutions able joint finance with in current current we the market result and diversify a whom offers ventures. be that cases, thinking work our relationships grow willing year in maturities dollars grow and line We existing that a believe about reserves. The likely good don't and portfolio. a have lending we acquisitions will environment, triple with bank that up customers LTC to selective

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

Wendy L. Simpson

portfolio balance accomplishments XXXX After to We now current capture appreciate to questions. we are some Clint. and opportunities. sheet, and we'll Thank positioned our and your support, well to next is strengthening and talk you you, you, quarter. again Thank ready major continued we everyone. Operator, Pam LTC believe in take

Operator

first Instructions] for [Operator KeyBanc Your today Austin Wurschmidt coming Capital with from is Markets. question

Austin Wurschmidt

-- guidance. just for I wanted biggest quarter the And out And the on first you what the you achieved the that think, put factors quarter? delta between $X.XX, in first the driving what are fourth guidance $X.XX? quarter, first Just the to hit quarterly curious

Pamela Shelley-Kessler

coming Austin, properties then primarily it's dilution issuance. a sold Pam. ATM in It's the revenue from from the and from decrease

Austin Wurschmidt

I you in an the there Is over that's XXX%, quarter. from having -- it. from an payment there Got believe, received excess fourth anything rent also impact

Just then an there think the is first considerations about curious quarter through other in as rate much how impact any balance the run of we the or the year? of

Pamela Shelley-Kessler

Right.

straight And -- received first did that normalize year the sold. think the in interest, the income. guidance, you're referring interest the is to did then that method, we received in was quarter, That property million. for we line deferred in interest was which Prestige on we the fourth the of essentially effective we quarter I recorded So the normalize $X.X the rent for

that change In nothing rate. FFO, from million. effect pickup in no that $X.X FAD, of there that was in there there's run was So FFO. a yes, But would

Austin Wurschmidt

And just switching Got portfolio. to That's it. then it. Got helpful. over the HMG

thoughts to are of as where master upside of than end current even stands a talked is of in a further this, favorable how on But have the the there then considering of you that about those pushing you assets? today, upside then fence And a assets on guys is the still You it book lot within And I can is mean, more what basis. some ring of out plan sort temporary or kind lease think potential are keep sort Or put you the reimbursement selling the a if environment you currently little today? bit lease? around lease?

Clint B. Malin

properties. extension or of is the Well, Sure. at one X the This asked look X-month to us doing retenanting Clint. items is HMG of selling the for has

going upside much, months. this. do was believe the primary that X on We that exactly portfolio. do there that sure participating in evaluation room we're not through We're flow the there extending but for just of reason should cash definitely and believe is the for is we in So be and timing right how this we now,

So rent where to constant rent we permanent have growth. set a more

Austin Wurschmidt

X Okay. port... assets, remaining those the Even sell if can you

Clint B. Malin

these currently sell whether assets, collectively X well, we -- Right these flow. retenant, they or are now, we cash -- positive

it's based. are more not it's they negative geographic So to drain that a HMG, maybe

I gives optionality. that think us So

Austin Wurschmidt

million can Got run assets that or sustain sold is rate X those think the if given... you it. But do then $X get you

Clint B. Malin

capital we and on those what redeploy we basis, at. yes, sell -- it's a dollars assets net still I could the think redeploying think I

a basis, on yes, would $X we at at million think a minimum. be net I

Austin Wurschmidt

Or the helpful. I'm here about down brought That's Okay. mean think we would from more on from leverage? curious, just drive to should just want this me. continue I And you then so you last expect on guys you for one active down overequitizing quarter, to further were investments? leverage. deleveraging future ATM that

Pamela Shelley-Kessler

probably the Yes, latter.

receivable in We maturity, supplemental. if schedule look loans, you loan the have the the maturity at some

about $XX We us year. to coming have million due this

the that is which investments Xx down yes, deleverages by we overequitize So But the long-term as well. of target. us end naturally to our would look year, around to

Operator

question Rich Wedbush. next is from Your with Anderson

Richard Anderson

X, all ALG was to prior portfolio, On the of that paying And... Clint, correct, you these?

Clint B. Malin

Correct. Prior to X. to paying transition the ALG, us it was

Richard Anderson

Okay.

probably And so these be left assets? have now with go this X you steps. through all you'll Do right, I operating

Clint B. Malin

X. be left with So we'll

transitioned already remaining transition. the of new lease. X operator And at are those -- newer we master XX-property the year. the those to end So then X, X buildings to we've of X a the property have buildings buildings And

Richard Anderson

and for legacy X on the to first rent X those to go? X X? months And X

Clint B. Malin

Correct.

Richard Anderson

Okay.

downside it's year-over-year... there's XXXX in this So from no those get X, right? you anything positive If from from a then,

Clint B. Malin

non-revenue I emphasized call, the As in generating. Correct.

Richard Anderson

on prestige, you that And the a draw is so Did They've your year. much Medicaid. million deposit I well, including, that you and added now? through million last -- think, Okay. retroactive say one. And more to replenished then you collected that the $X.X much that's number $XX.X said question the security how how

Clint B. Malin

drew the the We're $X of letter they million Sure. after at the and on $X we were at of We credit. letter million replenished previously. after credit then now --

XXXX. $X down on change contractual interest February million, net So current we're through of

Richard Anderson

Okay.

future interest of contractual payment, some is that So draws payment interest in and combination real security, correct? draws --

Clint B. Malin

X.X%. draw contractual interest then security is pay the on can the reach current we now. payment The Correct. And to

Richard Anderson

that Okay. security you of And you kind from think away do get when deposit draws?

Clint B. Malin

the effectively so given improve we've runway them margins. occupancy, operations, improve as the as the -- -- a to X.X-year So --

cash And those from to increase XXXX, generated starting pay us the cash the retroactive are funds, flow to incremental to they're portfolio. what retroactive they And we security. us they of get Medicaid in the funds, current provide the get XX% as So flow. excess doing is they paying X.X% from

better, the contribute. as So perform buildings we

We that also cash participate through in flow the mechanism.

have our draws security. on improve, operations as we So less

Richard Anderson

Okay.

Great. a $XX reason? then floor jumping level? whatever to see from here Or of the do rent. And million, sequential call on you of draws How that why the Okay. you kind through temporarily that to the that quarterly likely you a this there would sort -- million to ATM a as trickle run like $XX year? and speaking? from reason might of see or the excluding for down off rate, more nonrecurring point whatever do Is ramp any a Maybe

Pamela Shelley-Kessler

Yes.

it's think a floor for that I I we're bullish on year. a remains more investment for of year the but mean probably than seen. outlook rate run to the very be the

base So that a give scenario add We given would investments. to no additional case it.

anything now So have above we Even right accretive. what be overequitizing. would

Richard Anderson

future If assume so escalations acquisitions, through and X on? right, trickles you up, it still

Pamela Shelley-Kessler

That It half And those does. hit Yes. correct. more the yes. in is the back year, of

Richard Anderson

waiting that's nothing one number there's a It's sinisterly nothing But point scenes from path you or behind kind onetime-ish of visible of lower that this another, going to good basically sort that for the coming. forward? reason pretty see

Pamela Shelley-Kessler

correct. Yes,

now ball crystal there. out looming anything have Our does right not

Operator

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

Michael Carroll

I wanted to circle back to HMG.

going Just geographic of other they and fits X the want they those those it happy keep portfolio, properties within to figure to what with assets, properties? to footprint, their that with the and confirm, do out kind are you of once minus rest those forward X how

Clint B. Malin

these flow they've positive. are buildings cash where mean, identified they Correct. I Yes. X

approached them about discussion us are of X, we But flow with again, they but positive. possibility approach how transitioning on X So we're collectively too. have cash in those

Michael Carroll

before rate? longer-term with for And with create you lease longer-term portfolio be still a you get are of permanent more waiting away, then recover in position Or a set rental lease once to to HMG? you a a that those would transitioned X

Clint B. Malin

occupancy have performance. there's more in we to and we -- Yes, more track think see upside

we definitely room there's growth. for So feel more

we So to participate in want that.

Michael Carroll

recovered performing? operating when over? And I those how assets them? they they've then those, how that took over have it took since are been early I XXXX those they know guess was they

Clint B. Malin

flat, they've 'XX but in down. was Occupancy It gone Labor has over. been Yes. they utilization agency fairly after improved. took has

bit flat. has So occupancy a improved cash flow been has little but

gains. really So potential for see the we that's is, where growth occupancy

Michael Carroll

it Or know that you run I I to kind $XX rate, should to mean new -- run million I to be going $XX guess, contractual SEC's I higher. $X be closer And it is -- rate? a was significantly rate? is Okay. -- closer when mean, million going of million, rent to that set this

Clint B. Malin

you're all the Somewhere to in million. I to way $XX going the don't between. think back get

Michael Carroll

this Okay. then me last And kind a just on on investments. know I bit. you one for of little touched

are correct? real opportunities And are you're looking Or the loans. that So lot on is what you in estate the on like interested -- investment you intently Is more it at it now? different right the too? sounded more seeing a of side,

Clint B. Malin

opportunities. think lot of different a I

I think stable capital looking that people work we're speaking to to are with providers.

looking to loans, going for mez, ventures, so And joint triple be preferred and acquisitions us, it's at net. equity,

So bit a of everything. little

opportunities. I and think to we're going considering looking a at So be of lot

Operator

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

Connor Siversky

them, watch Just What seeing point. like you asked guys out seeing else like portfolio? with list? the quickly anticipated most my Prestige are rate Medicaid ALG questions level what restructured and seem comfortable way this there you are just you seems contract of -- increases be of have visibility with unique to for. at given in a you that the the over been It can Can you structured was you situation -- seems COVID. the you that in go kind have pretty of the you're you

Clint B. Malin

Prestige, we're I through the working mean items. we Brookdale brought resolution of transition, The we ALG spoke HMG. lease a lot and about transition, to

our So those and growth. focuses, about talking main are we're

that our in recovering I are where movement and focuses at So aspect a is the seeing of think rental also we're in and positive income. transition upward portfolio, we

positives. those So are all

Connor Siversky

modeling of with quick acquisitions dispositions. and up to a here post-quarter just make And sure the one buttoned kind I'm color. the Appreciate Great.

expected post go the here. have there parts disposition anticipated that activity moving over you -- acquisitions quarter Can XQ and close of or some to in any term. So bunch closed near so was here in a far

to models you're anticipating as buttoning another close from sold and in kind about be you've well. like the that's here? looks that's it think to expected near LG, one kind else up X got we're in proceeds expected Anything $X.X the of term as properties to million For of

Pamela Shelley-Kessler

nothing. we now deck have about. No, Everything that talked on we've right

nothing that beyond So right now.

Operator

question a [Operator ], coming Miva from Instructions] Okay. private is next [ Your investor. Marcus

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

Wendy L. Simpson

we you, you've talking to the and end at we weekend. a to forward today. quarter appreciate Have listen operator, this to you look Thank first the Bye-bye. taken to time of us and great

Operator

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

LTC Properties (LTC) 16 Feb 242023 Q4 Earnings call transcript