LTC - Earnings call transcript Q1 2024

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Operator

Good day, and welcome to the LTC Properties, Inc.

First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

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 updated -- sorry, are detailed in LTC's Properties' filings with the Securities and Exchange Commission from time to time, including the company's most recent 10-K dated December 31, 2023. being to or update of circumstances note, event obligation to forward-looking this no this events reflect after is undertakes revise these or statements presentation. Please LTC recorded. the date turn I would call to Wendy the now Simpson. over to like Mam?

Wendy L. Simpson

in to and welcome, Call. joined and all XXXX, significant Investment Clint investments, Pam Malin, operator, by First and Co-President we am XXXX than Officer. In everyone Co-President you, to team Quarter LTC's completed $XXX our Thank Chief devoted today of Kessler, amount and Conference optimizing I Financial million portfolio. more while our Officer; Chief a time

our best after others, focus strategically in that COVID. Thanks we million we market. allocate a rising and for Now producing have for of upturn all demographic are retenanting to portfolio our mind, investment opportunities bandwidth the evaluating rates The concentrating enhance setbacks our we year a resources is our efforts to confident, on improving margins robust and achieve necessary trends, to sustainable capital $XX and key selling are both and are strategic, XXXX. With assets successfully long-term multiple favorable occupancy last signs housing which to care related more on industry risk-adjusted after point shareholders. promising is returns to seniors and and the and growth,

particularly fiscal CMS rise. result LTC. Last anticipated unprecedented which centers rule. X.X% SNF benefit the to SNF for an Medicaid X% rate week, where issued reimbursement increase with in operators minimum final coverage is rule in will XXXX. will Reimbursement staffing We landscape, increased X own its for also our several the as Florida, encouraged are expected, the we payment increase, states from In by expected under also

the with to meet not staff centers the that Healthcare the the rule the Our unfunded period Association, industry requirements. XX% than proposed simply mandate not mainly letters nursing does to exist. According of the required staffing on that currently level comment more of concerns XX,XXX related skilled rule during is back the pushed and American do

to continue industry and support and oppose will We situation initiatives monitor this to the rule. organizations

the share. and expect second to FFO, and $X.XX per $X.XX range items quarter, to ahead between Looking FFO excluding we nonrecurring

We also no highly rent a include assumes nonrecurring year. Nonrecurring for strategic growth, includes increase summary, and or In sales, to additional guidance, redirect XXXX. issuances, full activity, credit maturity rent assume full expected a receivables to HMG year FFO, at $X.XX XXXX be share related but introducing as loans excluding in and with the efforts are which up our between team property pay we associated as is lease amendment. financing $X.XX investment January does of an is get our loan equity payment the per off the items reserves geared asset for off. sale the LTC pay of items that reversed entire towards $XXX,XXX productive and

Pam. Now to over I'd call turn to like the

Pamela Shelley-Kessler

rental first several revenue Thank $X.X you, with due are compared I'll Total otherwise numbers quarter quarter the of the of unless increased discuss to for Wendy. All today first factors. stated. XXXX, XXXX by million

$X.X of connection of in in first quarter. XXXX Wisconsin million receipt the First, property a of with in the sale the rent

in acquisition quarter. Second, a property XXXX the in second Ohio

of and scheduled the by comparable originations funding in mortgage year-over-year, but a mortgage increased loans in principally income to partially was financing operator interest $XXX,XXX, million, on HMG in lease the on decreased by balance payoff by of received were Third, credit, offset in to our income more XXXX. lower income IRR offset increased loan transitions. Interest revolving of increases escalations line by exit The and and Interest expense quarter by rent XXXX, our XXXX prepayment by other related mezzanine rates primarily loan from million, offset third X to by of origination construction and property paid XXXX. Interest partially senior and outstanding partially leaseback sales sale annual $X.X higher interest higher due fee and the a paydowns related from other to loans related and from principal income loan adjustments. due and mezzanine notes. last, mainly rent $X.X unsecured

repaid. Net per Fully in with diluted compared $X.XX period. interest by higher nonrecurring estimate FFO was Our from income, increase origination, payoffs a the share loan first compared common on X%, last estate in mezzanine was quarter. sale loss. decreased shareholders income equal credit partially as per $X.X provision $X.XX, year's for gains originations volume we IRR amortizes connection as last share with due offset lower due as rental income decrease compared a which This in excluding fund receipt was to loss and of the $X.X for is available in loan provision to to ATM an to first was well and recorded and excluding lower million, loan principle dollar exit our credit year's quarter a loan reduce investments with under to real losses prepayment from mostly of proceeds due nonrecurring sales in by Upon were FFO year originations million items, decreased program, FFO, by prior higher loan the of reserve used with leverage. dilution our primarily to $X.XX the fees principally $X.XX. The items, of which

of total approximately Wisconsin. million million. X a units with During our and was combined the gains in of $XX.X sold properties Florida transaction million. interest Texas combined XXX of sales in received of costs $X.X quarter, venture and we price and We joint The $XX.X recorded in sold net a proceeds

afternoon. Subsequent in was of The living combined closed. received price and sales transaction and a sales were of costs. units with release proceeds XXXX XXXX, we have approximately end previously of the find XX built combined to the that first can $XXX,XXX been the assisted $XXX,XXX net Texas in quarter press these of we about sold details in issued we X more You yesterday communities

previously disclosed XX% an of estimated LTC's cost. quarter, first of commitment for project the During million loan mortgage Michigan. construction the $X.X community care memory living the of and we $XX.X funded assisted investment million a in represents

we During stock of common to $X.X reduce sold the from approximately proceeds sales used approximately additional Subsequent million for stock end we and program. were net shares investments our the quarter, shares under XXX,XXX of of of XXX,XXX million to sold LTC's for Proceeds leverage. the proceeds. the our net ATM common first quarter, $X.X in ATM for

Additionally, credit we repaid in repaid senior scheduled our paydowns $X unsecured notes. $XX.X of unsecured on revolving under line principal and million our million

REITs other monthly our We also paid theirs. marking dividends, dividend which the Health continued decreased common Care million consecutive $XX.X throughout XXXth payment, pandemic in when

adjusted Our ratio real fixed stands for was estate X.Xx at our annualized to EBITDA annualized adjusted debt X.Xx. and charge coverage

our using to Although metric anticipated pay downs unsecured principal loan credit and on long-term estate we annualized of will our for achieve remains this payoffs higher target, metric real our year-end line debt than anticipate recent by notes. our as a proceeds we adjusted senior scheduled result investments, EBITDA on of from paydowns

ATM. can roughly million of million, hand, You receivable liquidity maturities Currently, cash Page our outstanding about our more including and $XX of million nearly credit loan supplemental. $XXX with of on on $XXX line our available of XX on $XXX $X we available detail our under find million million have total

to Clint. call Now I'll the turn over

Clint B. Malin

brief Thank operating some partners. a remarks transactions updates I'll of on start my Pam. today recent with as you, our few well as

XX call. the of remainder sold. last remaining resolved We re-leased and properties these Three properties we were non-revenue-generating discussed quarter's on the have

venture, Ignite in the our You as loan at Resorts, using is senior the X.XX%. funded managed a living maturities of of accordance through ]. The To yesterday's was XX% for a X-year million $XXX,XXX in release. find The Houston the the announced to $XX.X press located accounting secured assisted nursing of which the generate primarily Medical was in ATM can of in suburb. unconsolidated quarter, to interest-only GAAP, approximately loan a details a date, specific an with Subsequent and we LTC end we operative we loan current is is to and which [ XXXX. leased revenue rate by skilled our of expect have approximately XXXX. campus and built we origination are In joint loan, XXXX

in have to market XX rent in and mass amend The to executed we extend and increase XXXX. HMG, with in the The the $X.X over provide Texas rent for December to reached term thereafter. agreement with year initial $XX renewal to a term X.X% principle $X subject First, million, $X increase XXXX. XXXX covering million million collar XXXX, centers adjusting through annually rent XX.X%. XXXX whereby between the X.X% is Annual of will renewal rent we for nursing to fair first amended with two, options X-year release escalating HMG master term an a skilled million release its will sheet in a

working a pay amendment, down the note will on will $XX.X Proceeds in interest-free As X% its installments capital will condition in be the fund the and the $XX.X of repayment, XXXX be interest used accretive quarter. of XXXX. or note On to this working capital paid to second repay note higher be remaining will HMG from debt through million balance million investments.

this X the an has lease properties another In of year years in and X and from in at contractual XX% for XX% operator February the renewal up was March period year. XXXX. Quickly, from January XXXX in XX% XX, increase Healthcare option for of properties its March its from XX by addition, secured master Michigan occupancy an loan the rate in exercised Prestige of XXXX, not top in our ago

to quarterly we received of XXXX expect to the living in XXXX. first our receive and for rent market-based with portfolios total continue $X.X million Regarding quarter resets, during assisted $XXX,XXX

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

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

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

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

skilled coverage portfolio. Recent result XX% assisted at for both include XX% portfolio March increases QX margin EBITDAR a quarter occupancy and improvement, points from at of points same-store and basis XX-month XX XX, our has by occupancy same-store X basis pay trailing XX, for from XX improved the occupancy our XXXX. trends nursing and January coverage general living of prior up September private As

XX% pay nursing of to approximately in For our of March grew data XX% nursing XX% occupancy monthly same-store include The portfolio, approximately average same-store in in skilled and January units our our XX% private from and total September. XX% beds. skilled

team cater demands solutions ensuring mezzanine uniquely any to refining crafting traditional pride to joint transactions customized from these leases ventures to shareholder construction unitranche equity customer offerings our meet and driving creative development further and triple-net on including we business dynamic while continuously aimed at that complete ourselves needs, investments, structured products, preferred finance Our is value. operators' loans. We loans, are

and banks options varied prior on to maturing wildcard their a Looking that loans with pipeline vehicle, forward, of continue consider Regardless, and inflation decision-making property about our financing remains we somewhat books. interesting to are size. type, any operator their building are by opportunities

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

Wendy L. Simpson

Thank portfolio operators' flow, with a diversified you, between housing, leadership various today a our and LTC which debt a with I'll covered. matched structures to reduces have to refinancing we pay employing seniors well private and successful nursing compelling dividend stream liquidity match risk. our we steady financing track investment. One, Four, maturities conclude to a of of monthly have cash skilled Pam and income we is provide built have needs. and this, Clint. LTC Three, Two, laddered consistency with is record. balance

it least, without easier achieve because We not makes average. transformative drive the that growth. our can during making historical asset base investments. growth investments our our price but is large-scale believe of smaller significant multiples meaningful on We a resources management smaller recognize Last pandemic. accretion. We to below reflects our dedicated stock to contribute asset can focus internal initiatives our The this are growth majority current

to expand quarter. appreciate and our to to questions. next the as ready investments. Thank conversion look of Operator, you, forward So demonstrate ongoing begin accretive talking everyone. to you your We again our take we we're multiples support should pipeline to

Operator

question from Instructions] Austin first Wurschmidt [Operator Our KeyBanc. is with coming

Austin Wurschmidt

today? the opportunities investment the the of and scope can share evaluated needle, detail comment size multiple just smaller but market today. and some Can one-off of and you around on kind the the being transaction you in competition I appreciate Wendy speak highlighted Clint, moving you additional deals to your then pipeline

Clint B. Malin

such on able with Sure. opportunities pipeline Well, near-term when we're quote we've more private that side, we'll nursing visibility that have at deals point, we be more on next But pay preferred that. to and and investment think we loans, opportunities that leasebacks are building investments visibility skilled this investments. historically, given to well pipeline recent Ignite an But and the doing maturities joint our a skewed that select see invest hopefully, the these give assets give we're coming, quarter, inbound some at to seeing on senior towards for look equity ventures. newer and as actually sale be construction loan as skilled as opportunity assets. Currently, us nursing mez will loans, and equity as for we

Austin Wurschmidt

So guess duration And to appetite do those the loan of average of what deals I what's type the some think investments? do are... those you

Clint B. Malin

We We definitely have it's definitely X- would be, say going appetite to somewhere to in appetite, I do. have probably to and X-year range. the

Austin Wurschmidt

Difficulty] you'll from down perspective, you expect we investment. Should or are to of how thinking [Technical and just funding drive [indiscernible] equitize pick mean, in further And up I a then that kind funding around in hang over those

Wendy L. Simpson

equity. we will will We Austin, equitize. use

Operator

BMO. Our of next Juan comes Sanabria question from

Juan Sanabria

trying skewed rate Just be loans that can color on if to Difficulty] you Difficulty] get [Technical it's great. sounds would [Technical like still cap Difficulty] kind [Technical

Clint B. Malin

Sure, Juan.

Your think or or XX%. bit. owned line exit little on now, looking depending But around cap yield for a X% on equity, target rate, new minus, it's X% go would mean, a regarding and there's around an rate cutting assets usually whether the is with out right at I IRR range, mez investments plus preferred that loans we're in I

Juan Sanabria

the then [Technical hoping Difficulty] guidance give color can from little normalized a And on you FFO

Pamela Shelley-Kessler

includes investments, does up, Sure. guidance, because but asked include it's guidance, announced, it's you HMG to rates transition Juan, it our portfolio additional then from I everything that increases for on hard hear quarterly reiterating we but guidance that. we that the assumption also our have you any gave think rental we're and included annual really we've cutting in it the not quarter, about and last but

So then beyond of analysts for your question? give kind We assumptions allow there's that. on nothing was guidance and And their rate investment a then investors else base the to layer in of own what part and second there.

Juan Sanabria

[Technical Difficulty] The timing the on

Pamela Shelley-Kessler

Yes, yes, fourth it the quarter. the the in I'm that but supplemental XX, repayment outlined sorry. loan is in The on Page timing on is

about it We that the we've discussions are we're strategy in quarter, $XX borrowers. not do operators have as on loans. all that our talked totaling before, the And X loans about to with million. in the loans, fourth is And maturing in giving

to But ownership. that We available we always those do have possibly long-term loans meet convert needs. make we to to to operators equity look their

we there's in We do those an there's if stay an like these some capacity, will in opportunity if So we opportunity investments. to to look that, investments or do would to well. that X as

with discussions So in we're on operators that. the

Operator

is Our next Rich from Anderson with question Wedbush. coming

Richard Anderson

level as getting and here you're me. hope hear I as I a curious of a structured before about, else of But of that. Clint. on lot mind the simple ownership wondering high reader you only I'm how your loans, with Yes, up can like something echo. total, question. some talked have that that, anything level I'm you investment? on or A the anywhere I say willing what's mental terms vertigo willing a want X being just I'm comfort how in percentage But near to should risking fee have mortgage are you that besides deals if in -- you of go far to about how threshold go you viewed or

Pamela Shelley-Kessler

are our REIT worked a way LTC we They to We that. with of look don't marketing that we that's saw but can like, structured normally some very are financing and Pam. them equity. Pruitt. mean operators operators look the might a convert a threshold, sale an a set happen exposure that marketing ownership exposure don't for and with there are what of operators they to Hi ownership tool sale a inroad the to We REIT "I'll a new getting development REIT" had do and And one a it's that our And business before REIT did get We that's is -- with can retain with time And have that Rich, Well, we never we There with not an properties. big and really and hurdle at to as to of to mindful inroad if leaseback that way that leaseback sale there are team want marketplace leasebacks a that refinancing on a and in they out operators. done never feel might that's us. that with out our relationship. in to get been big business I portion looking we long get with doing actually them. doing, they product

Clint B. Malin

not Rich, it's yield focused. just

with really opportunities operating leads to with an investment is to with dialogue therefore, opportunity structure; this us said, companies they familiar other partner have. that Pam and As an might

mentioned. more staying REIT. a So really Pam we're standpoint, REIT as But equity it's marketing, an from mortgage

Richard Anderson

of you're $XX more and sure I'm But going really $XX whether the year. question from question. million to was ATM, or financing is have I your Okay, through you stuff that. use one equity. the how this million do about asked, quick raised Wendy the answer

So that terms about that activity much least doesn't gap really what in so I'm amount thinking fill at of for going the forward. your

that but use we using can financing -- the color just when the equity the upon So priorities there way funding more downstream you other get beyond you of issuance. expand are be But that dispositions? would of on saying more side that just can also, we're certainly equities things, I'm more you in might -- -- from strategy great. if

Pamela Shelley-Kessler

Pam. It's Sure.

there's still could or fashioned, looking one-offs anything to that I we're deal done. the overnight have of at financing almost did an it like the that's KD XXX%. in on ATM potential that our old anticipating hands If going But a We've ATM don't investors. And we know that And the very good sounds the loan in currently million $XX -- your like for property now. right going And So stock of a portfolios, the ] equity way but we is loan we forward, off. X were I the have portfolio we large that discussed, smaller be primary great. to equitized year. that as way is horizon place proceeds transaction this on marketed new one-off [ the are investments, pay

would used so those investments. fund be also new And to

Richard Anderson

Okay. What about disposition?

Pamela Shelley-Kessler

and immediately months, anything lot past done dispositions have the don't of a horizon. We've XX the over we on

So more financing growth we're now dispositions. at not with right any looking

Operator

is from Carroll Capital RBC question next with Michael coming Our Markets.

Michael Carroll

I some bad temporarily extended seems like know missing was some provide on to you I background your amendment But everything last you facilitated of during quarter, that guess, questions Sorry, you and can of what lease And lease announced this there? changed these HMG guess, that getting increased negotiations? fine term? feedback, I rent the is lease some now. the the I amendment extended end August. today, through the XXXX. what lease

Clint B. Malin

it's Hey Clint. Mike,

So we've been actively working on this.

out a margins the improved, basis. we increased have rent as occupancy structure do As trying really that have it's buildings how from to figure

rule it pending was had just staffing the there, You recently. was that finalized out

we as positive that that that took that the forward, were horizon, out to not growth But collectively getting be elements there only to we're these with was able you at as needed longer-term XXXX, saw going do well. but of this were a from it that. a off some rent So in to time there focus HMG look to on which

Michael Carroll

from if master correct this there Clint, then assets X lease. but wrong, And me Okay. excluded I'm are

Clint B. Malin

not. We initially talked about... are There

Pamela Shelley-Kessler

He's the other talking master lease. about

Clint B. Malin

Yes, temporary have master that That properties took outstanding credit the short-term care HMG leases, there's a a not have the from well And X senior yes. line but we we with also temporary, as back financing, of financing we when recently on -- we the is often then was centers. X needed. separate --

to to wanted was X% to So that higher yield off that able get we redeploy that be because at paid credit. on yields of line a

Wendy L. Simpson

needed line credit. they yes, So working up.A capital to of get

Pamela Shelley-Kessler

leases. clarify do And with master HMG, everybody, longer-term then for Yes, just to that. to we X you yes. And have a separate lease

we've -- was master property have preexisting properties which XX that We one lease. X covers new had this

some confusion was that. I around think there

there X are master separate leases. So

property XX We master lease. are just talking about the

Clint B. Malin

able want how probably rent point, What on ramp getting fair at this the us that, in amendment. look negotiation and as some at rent was X, the we to a Also we this? on important into get market to negotiate overall up is were we do was that terms to reset of

Michael Carroll

and the lease the what's rent master you those? on then plan on asset X selling And do

Clint B. Malin

a any selling No, typical plans on have XX-year and at before structured we those. was term. don't it it's Obviously, -- initial look

Michael Carroll

echos feedback the Sorry, Okay, or back. the

are to you hard XXXX. a include But it's market-based provided forecast the is you April November ALG in not million rent they that related December? the Does but October, $X.X rent million through just are included know to for capped transitions? quick in pay at they lease to that paying So number? I real rent question. expected on that $X.X And that ask the that rent anything and

Clint B. Malin

that in buildings. those included rent number no for There's

Wendy L. Simpson

Just about asking the non-revenue producing?

Clint B. Malin

Yes. million. That's $X.X not the in

Michael Carroll

Great. those get rent assets the do rent expect And after period? from free you to

Clint B. Malin

Correct.

Operator

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

Wendy L. Simpson

for all additional Have excited and and news the for us a really after to quarter hope day. our good you you quarter, great this Thank second end. bring first about we're we year, joining

Operator

and today's gentlemen. ladies This conference conclude call. you, Thank does

this and We you time, thank for your day. You may at have wonderful a participation. lines disconnect your

LTC Properties (LTC) 30 Apr 242024 Q1 Earnings call transcript