LTC Reports Second Quarter 2013 Results

  LTC Reports Second Quarter 2013 Results

Business Wire

WESTLAKE VILLAGE, Calif. -- August 8, 2013

LTC Properties, Inc. (NYSE: LTC) (“LTC” or the “Company”) announced operating
results for the quarter ended June 30, 2013. The Company reported a 9.0%
increase in Funds from Operations (“FFO”) to $19.1million in the quarter
ended June 30, 2013, from $17.6million in the comparable 2012 period. FFO per
diluted common share was $0.57 for the quarters ended June 30, 2013 and 2012.
Normalized FFO was $19.2million in the second quarter of 2013 compared to
$17.3million in the second quarter of 2012. Normalized FFO per diluted common
share was $0.57 for the second quarter of 2013 compared to $0.56 for the
second quarter of 2012. 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 expense and higher weighted
average shares outstanding.

FFO for the six months ended June 30, 2013 increased 7.5% to $37.3million
from $34.7million in the comparable 2012 period. FFO per diluted common share
for the six months ended June 30, 2013 increased 2.7% to $1.16 from $1.13 in
the comparable 2012 period. The Company reported a 10.6% increase to $38.3
million in normalized FFO for the six months ended June 30, 2013 from $34.6
million in the comparable 2012 period. The six month 2013 normalized
adjustment excludes a $0.7 million non-recurring charge related to the
retirement of the Company’s former Senior Vice President, Marketing and
Strategic Planning. Normalized FFO for the six months ended June 30, 2012
excludes a $0.3million non-recurring bankruptcy settlement distribution from
Sunwest Management, Inc. Normalized FFO per diluted common share was $1.18 for
the six months ended June 30, 2013, an increase of 5.4% from $1.12 for the
comparable 2012 period. 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, general and administrative expenses and higher weighted
average shares outstanding.

Net income available to common stockholders for the quarter ended June 30,
2013 was $12.0million or $0.36 per diluted share. For the same period in
2012, net income available to common stockholders was $12.2million or $0.40
per diluted share. Net income available to common stockholders for the six
months ended June 30, 2013 was $24.1million or $0.76 per diluted share. For
the same period in 2012, net income available to common stockholders was
$24.2million or $0.80 per diluted share. The decrease in net income available
to common stockholders was due primarily to the loss on sale of a 47-bed
skilled nursing property, increases in expenses and the non-recurring charges
related to the retirement of the Company’s former Senior Vice President,
Marketing and Strategic Planning offset by higher revenues from acquisitions.

As previously announced on August 7, 2013, the Company entered into a
$141.0million mortgage loan agreement secured by 15 properties with a total
of 2,092 skilled nursing beds and 24 independent living units in Michigan. The
loan is for a term of 30 years and will bear interest at an initial rate of
9.41% for five years, escalating annually thereafter by 2.25%. Payments will
be interest-only for a period of three years, after which the borrower will
make interest along with annual principal payments of $1.0million.

Conference Call Information

The Company will conduct a conference call on Friday, August 9, 2013, at 8:00
a.m. Pacific Time, in order to comment on the Company’s performance and
operating results for the quarter ended June 30, 2013. 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 August 9 through
August 26, 2013. Callers can access the replay by dialing 877-344-7529 or
412-317-0088 and entering conference number 10031879. 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 June 30, 2013, LTC had investments in 90 skilled nursing properties, 104
assisted living properties, 9range of care properties, two schools and five
parcels of land under development. These properties are located in 29 states.
Assisted living properties, independent living properties, memory care
properties and combinations thereof are included in the assisted living
property type. 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, unaudited)
                                                        
                      Three Months Ended                Six Months Ended
                      June 30,                          June 30,
                      2013          2012            2013          2012
Revenues:
Rental income         $ 24,539         $ 21,139         $ 49,015         $ 41,975
Interest income
from mortgage           1,050            1,431            2,109            2,963
loans
Interest and           92             485            185            722    
other income
Total revenues         25,681         23,055         51,309         45,660 
                                                                         
Expenses:
Interest                2,798            2,004            5,931            4,037
expense
Depreciation
and                     6,124            5,355            12,250           10,509
amortization
General and
administrative         2,869          2,604          6,287          5,128  
expenses
Total expenses         11,791         9,963          24,468         19,674 
                                                                         
Income from
continuing              13,890           13,092           26,841           25,986
operations
                                                                         
Discontinued
operations:
Net Income from
discontinued            27               21               52               43
operations
(Loss) gain on
real estate            (1,014 )       —              (1,014 )        16     
assets, net
Net (loss)
income from            (987   )        21             (962   )        59     
discontinued
operations
Net income              12,903           13,113           25,879           26,045
Income
allocated to           —              (10    )        —              (21    )
non-controlling
interests
Net income
attributable to        12,903         13,103         25,879         26,024 
LTC Properties,
Inc.
                                                                         
Income
allocated to            (91    )         (91    )         (189   )         (185   )
participating
securities
Income
allocated to           (818   )        (818   )        (1,636 )        (1,636 )
preferred
stockholders
Net income
available to          $ 11,994        $ 12,194        $ 24,054        $ 24,203 
common
stockholders
                                                                         
Basic earnings
per common
share:
Continuing            $ 0.39           $ 0.40           $ 0.79           $ 0.80
operations
Discontinued           ($0.03 )       $ 0.00           ($0.03 )       $ 0.00   
operations
Net income
available to          $ 0.36          $ 0.40          $ 0.76          $ 0.80   
common
stockholders
                                                                         
Diluted
earnings per
common share:
Continuing            $ 0.39           $ 0.40           $ 0.79           $ 0.80
operations
Discontinued           ($0.03 )       $ 0.00           ($0.03 )       $ 0.00   
operations
Net income
available to          $ 0.36          $ 0.40          $ 0.76          $ 0.80   
common
stockholders
                                                                         
Weighted
average shares
used to
calculate
earnings per
common share:
Basic                  32,913         30,213         31,645         30,201 
Diluted                32,946         30,258         31,679         30,246 
                                                                         

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                   Six Months Ended
                    June 30,                             June 30,
                    2013          2012                2013              2012
Net income
available to        $ 11,994         $ 12,194            $ 24,054            $ 24,203
common
stockholders
Add:
Depreciation
and
amortization          6,131            5,369               12,267              10,536
(continuing
and
discontinued
operations)
Add (Less):
Loss (gain)
on sale of           1,014          —                 1,014             (16    )
real estate,
net
FFO available
to common             19,139           17,563              37,335              34,723
stockholders
Add: Non-cash
interest
related to            110              110                 220                 220
earn-out
liabilities
Less:
Non-recurring        —              (347   ) ^(2)      707     ^(1)      (347   ) ^(2)
one time
items
Normalized
FFO available         19,249           17,326              38,262              34,596
to common
stockholders
Less:
Non-cash             (758   )        (521   )           (1,530 )           (1,003 )
rental income
Normalized
adjusted FFO          18,491           16,805              36,732              33,593
(AFFO)
Add: Non-cash
compensation         523            458               1,051             910    
charges
Normalized
funds
available for       $ 19,014        $ 17,263           $ 37,783           $ 34,503 
distribution
(FAD)

(1) Represents the one-time severance and accelerated restricted
stock vesting charges related to the retirement of the Company’s
former Senior Vice President, Marketing and Strategic Planning.
(2) Represents revenue from the Sunwest bankruptcy settlement
distribution.
                                                                                        
                                                                                        
Basic FFO
available to
common              $ 0.58          $ 0.58             $ 1.18             $ 1.15   
stockholders
per share
Diluted FFO
available to
common              $ 0.57          $ 0.57             $ 1.16             $ 1.13   
stockholders
per share
                                                                                        
Diluted FFO
available to        $ 20,048        $ 18,482           $ 39,160           $ 36,565 
common
stockholders
Weighted
average
shares used
to calculate
diluted FFO          35,139         32,488            33,881            32,479 
per share
available to
common
stockholders
                                                                                        
                                                                                        
Basic
normalized
FFO available       $ 0.58          $ 0.57             $ 1.21             $ 1.15   
to common
stockholders
per share
Diluted
normalized
FFO available       $ 0.57          $ 0.56             $ 1.18             $ 1.12   
to common
stockholders
per share
                                                                                        
Diluted
normalized
FFO available       $ 20,158        $ 18,245           $ 40,087           $ 36,438 
to common
stockholders
Weighted
average
shares used
to calculate
diluted              35,139         32,488            33,881            32,479 
normalized
FFO per share
available to
common
stockholders
                                                                                        
                                                                                        
Basic
normalized          $ 0.56          $ 0.56             $ 1.16             $ 1.11   
AFFO per
share
Diluted
normalized          $ 0.55          $ 0.55             $ 1.14             $ 1.09   
AFFO per
share
                                                                                        
Diluted
normalized          $ 19,400        $ 17,724           $ 38,557           $ 35,435 
AFFO
Weighted
average
shares used
to calculate         35,139         32,488            33,881            32,479 
diluted
normalized
AFFO per
share
                                                                                        
                                                                                        
Basic
normalized          $ 0.58          $ 0.57             $ 1.19             $ 1.14   
FAD per share
Diluted
normalized          $ 0.57          $ 0.56             $ 1.17             $ 1.12   
FAD per share
                                                                                        
Diluted
normalized          $ 19,923        $ 18,182           $ 39,608           $ 36,345 
FAD
Weighted
average
shares used
to calculate         35,139         32,488            33,881            32,479 
diluted
normalized
FAD per share
                                                                                        

                                                 
LTC PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands)
                                                             
                               June 30, 2013                 December 31, 2012
                               (unaudited)                   (audited)
ASSETS
Real estate investments:
Land                           $  75,094                     $   75,094
Buildings and                     836,934                        822,618
improvements
Accumulated depreciation         (209,581 )                    (197,407   )
and amortization
Net real estate property          702,447                        700,305
Properties
held-for-sale, net of
accumulated depreciation         210                          1,242      
and amortization: 2013 —
$804; 2012 — $1,141
Net real estate property          702,657                        701,547
Mortgage loans
receivable, net of
allowance for doubtful           39,272                       39,299     
accounts: 2013 — $396;
2012 — $782
Real estate investments,          741,929                        740,846
net
Other assets:
Cash and cash                     63,315                         7,191
equivalents
Debt issue costs, net             2,701                          3,040
Interest receivable               741                            789
Straight-line rent
receivable, net of
allowance for doubtful            28,839                         26,998
accounts: 2013 — $1,532;
2012 — $1,557
Prepaid expenses and              6,262                          7,548
other assets
Notes receivable                 1,277                        3,180      
Total assets                   $  845,064                   $   789,592    
                                                             
LIABILITIES
Bank borrowings                $  —                          $   115,500
Senior unsecured notes            185,800                        185,800
Bonds payable                     2,035                          2,635
Accrued interest                  3,296                          3,279
Earn-out liabilities              6,963                          6,744
Accrued expenses and              11,712                         12,492
other liabilities
Accrued expenses and
other liabilities                33                           34         
related to properties
held-for-sale
Total liabilities                 209,839                        326,484
                                                             
EQUITY
Stockholders' equity:
Preferred stock $0.01
par value; 15,000 shares
authorized; shares                38,500                         38,500
issued and outstanding:
2013 — 2,000; 2012 —
2,000
Common stock: $0.01 par
value; 60,000 shares
authorized; shares                348                            305
issued and outstanding:
2013 — 34,752; 2012 —
30,544
Capital in excess of par          687,841                        510,236
value
Cumulative net income             749,912                        724,033
Accumulated other                 134                            152
comprehensive income
Cumulative distributions         (841,510 )                    (810,125   )
Total LTC Properties,
Inc. stockholders'                635,225                        463,101
equity
                                                             
Non-controlling                  —                            7          
interests
Total equity                     635,225                      463,108    
Total liabilities and          $  845,064                   $   789,592    
equity

Contact:

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