LTC Reports Fourth Quarter 2012 Results

  LTC Reports Fourth Quarter 2012 Results

Business Wire

WESTLAKE VILLAGE, Calif. -- February 21, 2013

LTC Properties, Inc. (NYSE: LTC) (“LTC” or the “Company”) announced operating
results for the quarter ended December 31, 2012. The Company reported a 4.5%
increase in Funds from Operations (“FFO”) to $17.5million in the quarter
ended December 31, 2012, from $16.8million in the comparable 2011 period. FFO
per diluted common share was $0.57 for the quarter ended December 31, 2012, an
increase of 3.6% from $0.55 for the comparable 2011 period. Normalized FFO was
$17.7million in the fourth quarter of 2012 compared to $16.9million in the
fourth quarter of 2011. Normalized FFO per diluted common share was $0.57 for
the fourth quarter of 2012 compared to $0.55 for the fourth quarter of 2011.
The increase in normalized FFO and normalized FFO per diluted common share was
due to higher revenues resulting from acquisitions partially offset by an
increase in interest and general and administrative expenses.

FFO for the twelve months ended December 31, 2012 increased 17.4% to
$69.8million from $59.5million in the comparable 2011 period. FFO per
diluted common share for the twelve months ended December 31, 2012 increased
12.4% to $2.26 from $2.01 in the comparable 2011 period. The Company reported
a 9.2% increase in normalized FFO, which excludes a $0.3million non-recurring
bankruptcy settlement distribution from Sunwest Management, Inc., to
$69.9million for the twelve months ended December 31, 2012, from
$64.0million from the comparable 2011 period. Normalized FFO per diluted
common share was $2.26 for the twelve months ended December 31, 2012, an
increase of 5.1% from $2.15 for the comparable 2011 period. Normalized FFO for
the twelve months ended December 31, 2011 excluded a $3.6million charge and
$0.5million accrued dividend related to the Company’s redemption of all of
its 8.0% Series F Cumulative Preferred Stock (“Series F preferred stock”). The
increase in FFO, normalized FFO, FFO per diluted common share and normalized
FFO per diluted common share was due to higher revenues resulting from
acquisitions partially offset by an increase in interest expense, acquisition
costs, general and administrative expenses and higher weighted average shares
outstanding.

Net income available to common stockholders for the quarter ended December 31,
2012 was $11.9million or $0.39 per diluted share. For the same period in
2011, net income available to common stockholders was $11.7million or $0.39
per diluted share. Net income available to common stockholders for the twelve
months ended December 31, 2012 was $47.6million or $1.57 per diluted share.
For the same period in 2011, net income available to common stockholders was
$39.8million or $1.36 per diluted share which included a $3.6million charge
and $0.5million accrued dividend related to the Company’s redemption of all
of its Series F preferred stock. The preferred stock redemption charge is
combined with preferred stock dividends in the income statement line item
“income allocated to preferred stockholders.” The increases in net income
available to common stockholders were due primarily to higher revenues from
acquisitions and the effects of the Series F preferred stock redemption charge
in 2011 partially offset by an increase in interest expense, acquisition
costs, general and administrative expenses and higher weighted average shares
outstanding.

Conference Call Information

The Company will conduct a conference call on Friday, February 22, 2013, at
10:00 a.m. Pacific Time, in order to comment on the Company’s performance and
operating results for the quarter ended December 31, 2012. The conference call
is accessible by dialing 888-317-6016. The international number is
412-317-6016. An audio replay of the conference call will be available from
February 22 through March 11, 2013. Callers can access the replay by dialing
877-344-7529 or 412-317-0088 and entering conference number 10024324. The
earnings release will be available on our website. The Company’s supplemental
information package for the current period will also be available on the
Company’s website at www.LTCProperties.com in the “Presentations” section of
the “Investor Information” tab.

About LTC

At December 31, 2012, LTC had investments in 88 skilled nursing properties,
104 assisted living properties, 11range of care properties, two schools and
five parcels of land under development. These properties are located in 29
states. Assisted living properties include assisted living, independent living
and memory care properties. Range of care properties consist of properties
providing skilled nursing and any combination of assisted living, independent
living and/or memory care services. The Company is a self-administered real
estate investment trust that primarily invests in senior housing and long-term
care facilities through facility lease transactions, mortgage loans and other
investments. For more information on LTC Properties, Inc., visit the Company’s
website at www.LTCProperties.com.

Forward Looking Statements

This press release includes statements that are not purely historical and are
“forward looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, including statements regarding the Company’s
expectations, beliefs, intentions or strategies regarding the future. All
statements other than historical facts contained in this press release are
forward looking statements. These forward looking statements involve a number
of risks and uncertainties. Please see our most recent Annual Report on Form
10-K, our subsequent Quarterly Reports on Form 10-Q, and in our other publicly
available filings with the Securities and Exchange Commission for a discussion
of these and other risks and uncertainties. All forward looking statements
included in this press release are based on information available to the
Company on the date hereof, and the Company assumes no obligation to update
such forward looking statements. Although the Company’s management believes
that the assumptions and expectations reflected in such forward looking
statements are reasonable, no assurance can be given that such expectations
will prove to have been correct. The actual results achieved by the Company
may differ materially from any forward looking statements due to the risks and
uncertainties of such statements.

LTC PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share amounts)
                                                         
                                      Three Months Ended   Twelve Months Ended
                                      December 31,         December 31,
                                      2012      2011      2012       2011
                                      (unaudited)          (audited)
Revenues:
Rental income                         $23,231    $20,504   $87,573     $77,643
Interest income from mortgage loans   1,135      1,560     5,496       6,411
Interest and other income             146        235       964         1,111
Total revenues                        24,512     22,299    94,033      85,165
                                                                       
Expenses:
Interest expense                      2,907      1,993     9,932       6,434
Depreciation and amortization         5,692      5,117     22,153      19,524
Acquisition costs                     221        168       608         393
General and administrative expenses   2,914      2,393     10,029      9,272
Total expenses                        11,734     9,671     42,722      35,623
                                                                       
Income from continuing operations     12,778     12,628    51,311      49,542
                                                                       
Discontinued operations:
Loss from discontinued operations     —          (24)      —           (99)
Gain on sale of assets, net           —          —         16          —
Net (loss) income from discontinued   —          (24)      16          (99)
operations
Net income                            12,778     12,604    51,327      49,443
Income allocated to non-controlling   (7)        (47)      (37)        (191)
interests
Net income attributable to LTC        12,771     12,557    51,290      49,252
Properties, Inc.
                                                                       
Income allocated to participating     (98)       (83)      (377)       (342)
securities
Income allocated to preferred         (819)      (818)     (3,273)     (9,078)
stockholders
Net income available to common        $11,854    $11,656   $47,640     $39,832
stockholders
                                                                       
Basic earnings per common share:
Continuing operations                 $0.39      $0.39     $1.58       $1.37
Discontinued operations               $0.00      $0.00     $0.00       $0.00
Net income available to common        $0.39      $0.39     $1.58       $1.36
stockholders
                                                                       
Diluted earnings per common share:
Continuing operations                 $0.39      $0.39     $1.57       $1.37
Discontinued operations               $0.00      $0.00     $0.00       ($0.01)
Net income available to common        $0.39      $0.39     $1.57       $1.36
stockholders
                                                                       
Weighted average shares used to
calculate earnings per common share:
Basic                                 30,297     30,141    30,238      29,194
Diluted                               30,341     30,172    30,278      29,222

NOTE: Computations of per share amounts from continuing operations,
discontinued operations and net income are made independently. Therefore, the
sum of per share amounts from continuing operations and discontinued
operations may not agree with the per share amounts from net income allocable
to common stockholders.

Supplemental Reporting Measures

FFO, adjusted FFO (“AFFO”), and Funds Available for Distribution (“FAD”) are
supplemental measures of a real estate investment trust’s (“REIT”) financial
performance that are not defined by U.S. generally accepted accounting
principles (“GAAP”). Investors, analysts and the Company use FFO, AFFO and FAD
as supplemental measures of operating performance and we believe they are
helpful in evaluating the operating performance of a REIT. Real estate values
historically rise and fall with market conditions, but cost accounting for
real estate assets in accordance with U.S. GAAP assumes that the value of real
estate assets diminishes predictably over time. We believe that by excluding
the effect of historical cost depreciation, which may be of limited relevance
in evaluating current performance, FFO, AFFO and FAD facilitate comparisons of
operating performance between periods. Additionally the Company believes that
normalized FFO, normalized AFFO and normalized FAD provide useful information
because they allow investors, analysts and our management to compare the
Company’s operating performance on a consistent basis without having to
account for differences caused by unanticipated items.

FFO, as defined by the National Association of Real Estate Investment Trusts
(“NAREIT”), means net income available to common stockholders (computed in
accordance with U.S. GAAP) excluding gains or losses on the sale of real
estate and impairment write-downs of depreciable real estate plus real estate
depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. Normalized FFO represents FFO adjusted for
certain items detailed in the reconciliations. The Company’s computation of
FFO may not be comparable to FFO reported by other REITs that do not define
the term in accordance with the current NAREIT definition or that have a
different interpretation of the current NAREIT definition from the Company;
therefore, caution should be exercised when comparing our company’s FFO to
that of other REITs.

We define AFFO as FFO excluding the effects of straight-line rent and
amortization of lease inducement. U.S. GAAP requires rental revenues related
to non-contingent leases that contain specified rental increases over the life
of the lease to be recognized evenly over the life of the lease. This method
results in rental income in the early years of a lease that is higher than
actual cash received, creating a straight-line rent receivable asset included
in our consolidated balance sheet. At some point during the lease, depending
on its terms, cash rent payments exceed the straight-line rent which results
in the straight-line rent receivable asset decreasing to zero over the
remainder of the lease term. By excluding the non-cash portion of
straight-line rental revenue and amortization of lease inducement, investors,
analysts and our management can compare AFFO between periods. Normalized AFFO
represents AFFO adjusted for certain items detailed in the reconciliations.

We define FAD as AFFO excluding the effects of non-cash compensation charges.
FAD is useful in analyzing the portion of cash flow that is available for
distribution to stockholders. Investors, analysts and the Company utilize FAD
as an indicator of common dividend potential. The FAD payout ratio, which
represents annual distributions to common shareholders expressed as a
percentage of FAD, facilitates the comparison of dividend coverage between
REITs. Normalized FAD represents FAD adjusted for certain items detailed in
the reconciliations.

The Company uses FFO, normalized FFO, normalized AFFO and normalized FAD as
supplemental performance measures of our cash flow generated by operations and
cash available for distribution to stockholders. FFO, normalized FFO,
normalized AFFO and normalized FAD do not represent cash generated from
operating activities in accordance with U.S. GAAP, and are not necessarily
indicative of cash available to fund cash needs and should not be considered
an alternative to net income available to common stockholders.

Reconciliation of FFO, Normalized FFO, Normalized AFFO and Normalized FAD

The following table reconciles net income available to common stockholders to
FFO available to common stockholders, normalized FFO available to common
stockholders, normalized AFFO and normalized FAD (unaudited, amounts in
thousands, except per share amounts):

                                Three Months Ended  Twelve Months Ended
                                December 31,         December 31,
                                2012      2011      2012         2011
Net income available to common  $11,854    $11,656   $47,640      $39,832
stockholders
Add: Depreciation and
amortization (continuing and    5,692      5,141     22,153       19,623
discontinued operations)
Less: Gain on sale of real      —          —         (16)         —
estate, net
FFO available to common         17,546     16,797    69,777       59,455
stockholders
Add: Preferred stock redemption —          —         —            3,566   ^(1)
charge
Add: Preferred stock redemption —          —         —            472     ^(2)
dividend
Add: Non-cash interest related  109        110       439          464
to earn-out liabilities
Less: Non-recurring one-time    —          —         (347)   ^(3) —
items
Normalized FFO available to     17,655     16,907    69,869       63,957
common stockholders
Less: Non-cash rental income    (900)      (797)     (2,604)      (3,065)
Normalized adjusted FFO (AFFO)  16,755     16,110    67,265       60,892
Add: Non-cash compensation      464        372       1,819        1,467
charges
Normalized funds available for  $17,219    $16,482   $69,084      $62,359
distribution (FAD)
(1) Represents the original issue costs related to the
redemption of the remaining Series F preferred stock.

(2) Represents the dividends on the Series F preferred stock
up to the redemption date.

(3) Represents revenue from the Sunwest bankruptcy
settlement distribution.
                                                           
Basic FFO available to common   $0.58      $0.56     $2.31        $2.04
stockholders per share
Diluted FFO available to common $0.57      $0.55     $2.26        $2.01
stockholders per share
                                                                          
Diluted FFO available to common $18,470    $17,745   $73,464      $63,260
stockholders
Weighted average shares used to
calculate diluted FFO per share 32,548     32,485    32,508       31,539
available to common
stockholders
                                                           
Basic normalized FFO available
to common stockholders per      $0.58      $0.56     $2.31        $2.19
share
Diluted normalized FFO
available to common             $0.57      $0.55     $2.26        $2.15
stockholders per share
                                                                          
Diluted normalized FFO
available to common             $18,579    $17,855   $73,556      $67,762
stockholders
Weighted average shares used to
calculate diluted normalized    32,548     32,485    32,508       31,539
FFO per share available to
common stockholders
                                                           
Basic normalized AFFO per share $0.55      $0.53     $2.22        $2.09
Diluted normalized AFFO per     $0.54      $0.53     $2.18        $2.05
share
                                                                          
Diluted normalized AFFO         $17,679    $17,058   $70,952      $64,697
Weighted average shares used to
calculate diluted normalized    32,548     32,485    32,508       31,539
AFFO per share
                                                           
Basic normalized FAD per share  $0.57      $0.55     $2.28        $2.14
Diluted normalized FAD per      $0.56      $0.54     $2.24        $2.10
share
                                                                          
Diluted normalized FAD          $18,143    $17,430   $72,771      $66,164
Weighted average shares used to
calculate diluted normalized    32,548     32,485    32,508       31,539
FAD per share
                                                                          

LTC PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(audited, amounts in thousands)
                                                           
                                         December 31, 2012   December 31, 2011
ASSETS
Real estate investments:
Land                                     $ 75,407            $ 57,369
Buildings and improvements               824,688             664,758
Accumulated depreciation and             (198,548)           (176,546)
amortization
Net operating real estate property       701,547             545,581
Properties held-for-sale, net of
accumulated depreciation and             —                   1,254
amortization: 2012 — $0; 2011 — $1,650
Net real estate property                 701,547             546,835
Mortgage loans receivable, net of
allowance for doubtful                   39,299              53,081
accounts: 2012 — $782; 2011 — $921
Real estate investments, net             740,846             599,916
Other assets:
Cash and cash equivalents                7,191               4,408
Debt issue costs, net                    3,040               2,301
Interest receivable                      789                 1,494
Straight-line rent receivable, net of
allowance for doubtful                   26,998              23,772
accounts: 2012 — $1,557; 2011 — $1,519
Prepaid expenses and other assets        7,548               7,904
Notes receivable                         3,180               817
Marketable securities                    —                   6,485
Total assets                             $789,592            $647,097
                                                             
LIABILITIES
Bank borrowings                          $115,500            $ 56,000
Senior unsecured notes                   185,800             100,000
Bonds payable                            2,635               3,200
Accrued interest                         3,279               1,356
Earn-out liabilities                     6,744               6,305
Accrued expenses and other liabilities   12,526              11,440
Accrued expenses and other liabilities   —                   86
related to properties held-for-sale
Total liabilities                        326,484             178,387
                                                             
EQUITY
Stockholders' equity:
Preferred stock $0.01 par value; 15,000
shares authorized; shares issued and     38,500              38,500
outstanding: 2012 — 2,000; 2011 — 2,000
Common stock: $0.01 par value; 60,000
shares authorized;                       305                 303
shares issued and outstanding: 2012 —
30,544; 2011 — 30,346
Capital in excess of par value           510,236             507,343
Cumulative net income                    724,033             672,743
Accumulated other comprehensive income   152                 199
Cumulative distributions                 (810,125)           (752,340)
Total LTC Properties, Inc. stockholders' 463,101             466,748
equity
                                                             
Non-controlling interests                7                   1,962
Total equity                             463,108             468,710
Total liabilities and equity             $789,592            $647,097

Contact:

LTC Properties, Inc.
Wendy L. Simpson
Pam Kessler
(805) 981-8655