LTC Reports Fourth Quarter 2013 Results

  LTC Reports Fourth Quarter 2013 Results

Business Wire

WESTLAKE VILLAGE, Calif. -- February 20, 2014

LTC Properties, Inc. (NYSE: LTC) (“LTC” or the “Company”) announces today
operating results for the quarter ended December 31, 2013. The Company
reported an increase of 13.8% in Funds from Operations (“FFO”) to
$20.0million in the quarter ended December 31, 2013, from $17.5million in
the comparable 2012 period. FFO per diluted common share was $0.57 for the
quarters ended December 31, 2013 and 2012. Normalized FFO increased by 24.3%
to $21.9million in the fourth quarter of 2013 from $17.7million in the
fourth quarter of 2012. Normalized FFO per diluted common share was $0.62 and
$0.57 for the quarters ended December 31, 2013 and 2012, respectively. The
increase in FFO and normalized FFO was due to higher revenues from mortgage
loan originations, acquisitions and completed property developments.

Net income available to common stockholders for the quarter ended December 31,
2013 was $13.7million or $0.40 per diluted share as compared to $11.9million
or $0.39 per diluted share for the same period in 2012. The increase in net
income available to common stockholders for the quarter ended December 31,
2013 was primarily due to mortgage loan originations, acquisitions and
completed property developments offset by non-cash provisions for loan loss
reserves related to a mortgage loan origination and the write-off of
straight-line rent in accordance with Generally Accepted Accounting
Principles.

Conference Call Information

The Company will conduct a conference call on Friday, February 21, 2014, at
8:00 a.m. Pacific Time, to provide commentary on the Company’s performance and
operating results for the quarter ended December 31, 2013. The conference call
is accessible by dialing 888-317-6016 (domestically) or 412-317-6016
(internationally). An audio replay of the conference call will be available
from February 21 through March 7, 2014 and may be accessed by dialing
877-344-7529 (domestically) or 412-317-0088 (internationally) and entering
conference number 10040227. The Company’s earnings release and supplemental
information package for the current period will be available on the Company’s
website at www.LTCProperties.com in the “Press Releases” and “Presentations”
sections, respectively, of the “Investor Information” tab.

About LTC

At December 31, 2013, LTC had 227 investments located in 30 states comprising
of 100 skilled nursing properties, 106 assisted living properties, 9range of
care properties, two schools, six parcels of land under development and four
parcels of land held-for-use. These properties are located in 30 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 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,
                             2013      2012       2013       2012   
                            (unaudited)               (audited)
Revenues:
Rental income               $ 25,259     $ 22,844     $ 98,166      $ 86,022
Interest income from          3,103        1,135        6,298         5,496
mortgage loans
Interest and other income    231        146        510         964    
Total revenues               28,593     24,125     104,974     92,482 
                                                                    
Expenses:
Interest expense              2,852        2,907        11,364        9,932
Depreciation and              6,237        5,560        24,389        21,613
amortization
Provisions (recovery) for     2,139        (78    )     2,180         (101   )
doubtful accounts
General and administrative   2,715      3,212      11,636      10,732 
expenses
Total expenses               13,943     11,601     49,569      42,176 
                                                                    
Income from continuing        14,650       12,524       55,405        50,306
operations
                                                                    
Discontinued operations:
Net income from               —            254          805           1,005
discontinued operations
Gain on real estate assets,  —         —          1,605       16     
net
Net income from              —          254        2,410       1,021  
discontinued operations
                                                                             
Net income                    14,650       12,778       57,815        51,327
Income allocated to          —          (7     )    —           (37    )
non-controlling interests
Net income attributable to   14,650     12,771     57,815      51,290 
LTC Properties, Inc.
                                                                    
Income allocated to           (99    )     (98    )     (383    )     (377   )
participating securities
Income allocated to          (819   )    (819   )    (3,273  )    (3,273 )
preferred stockholders
Net income available to     $ 13,732    $ 11,854    $ 54,159     $ 47,640 
common stockholders
                                                                    
Basic earnings per common
share:
Continuing operations       $ 0.40       $ 0.38       $ 1.56        $ 1.54
Discontinued operations     $ 0.00      $ 0.01      $ 0.07       $ 0.03   
Net income available to     $ 0.40      $ 0.39      $ 1.64       $ 1.58   
common stockholders
                                                                    
Diluted earnings per common
share:
Continuing operations       $ 0.40       $ 0.38       $ 1.56        $ 1.54
Discontinued operations     $ 0.00      $ 0.01      $ 0.07       $ 0.03   
Net income available to     $ 0.40      $ 0.39      $ 1.63       $ 1.57   
common stockholders
                                                                    
Weighted average shares
used to calculate earnings
per common share:
Basic                        34,555     30,297     33,111      30,238 
Diluted                      34,582     30,341     33,142      30,278 

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. The Company believes FFO,
AFFO and FAD 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 like 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 have a different
interpretation of the current NAREIT definition from that of 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.

While 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, such measures are not
representative of 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 each of net income, FFO and normalized FFO
available to common stockholders, as well as normalized AFFO and normalized
FAD (unaudited, amounts in thousands, except per share amounts):

              Three Months Ended            Twelve Months Ended
              December 31,                   December 31,
               2013           2012       2013           2012   
Net income
available to  $ 13,732          $ 11,854     $ 54,159          $ 47,640
common
stockholders
Add:
Depreciation
and
amortization    6,237             5,692        24,706            22,153
(continuing
and
discontinued
operations)
Less: Gain on
sale of real   —               —          (1,605 )         (16    )
estate, net
FFO available
to common       19,969            17,546       77,260            69,777
stockholders
Add: Non-cash
interest
related to      —                 109          256               439
earn-out
liabilities
Less:
Non-recurring  1,980   ^(1)   —          2,687   ^(2)   (347   ) ^(3) 
one-time
items
Normalized
FFO available   21,949            17,655       80,203            69,869
to common
stockholders
Add (less):
Non-cash       (790   )         (900   )    (3,295 )         (2,604 )
rental income
Normalized
adjusted FFO    21,159            16,755       76,908            67,265
(AFFO)
Add: Non-cash
compensation   541             464        2,134           1,819  
charges
Normalized
funds
available for $ 21,700         $ 17,219    $ 79,042         $ 69,084 
distribution
(FAD)

(1) Comprised of a $1,244 provision for loan loss
reserve on a $124,387 mortgage loan origination and an
$869 non-cash write-off of straight-line rent offset by
revenue from the Sunwest bankruptcy settlement
distribution of $133.

(2) Represents a one-time severance and accelerated
restricted stock vesting charge of $707 related to the
retirement of the Company’s former Senior Vice
President, Marketing and Strategic Planning and (1)
above.

(3) Represents revenue from the Sunwest bankruptcy
settlement distribution.
                                                        
Basic FFO
available to
common        $ 0.58           $ 0.58      $ 2.33           $ 2.31   
stockholders
per share
Diluted FFO
available to
common        $ 0.57           $ 0.57      $ 2.29           $ 2.26   
stockholders
per share
                                                                          
Diluted FFO
available to  $ 20,788         $ 18,470    $ 80,916         $ 73,464 
common
stockholders
Weighted
average
shares used
to calculate
diluted FFO    36,582          32,548     35,342          32,508 
per share
available to
common
stockholders
                                                        
Basic
normalized
FFO available $ 0.64           $ 0.58      $ 2.42           $ 2.31   
to common
stockholders
per share
Diluted
normalized
FFO available $ 0.62           $ 0.57      $ 2.37           $ 2.26   
to common
stockholders
per share
                                                                          
Diluted
normalized
FFO available $ 22,867         $ 18,579    $ 83,859         $ 73,556 
to common
stockholders
Weighted
average
shares used
to calculate
diluted        36,778          32,548     35,342          32,508 
normalized
FFO per share
available to
common
stockholders
                                                        
Basic
normalized    $ 0.61           $ 0.55      $ 2.32           $ 2.22   
AFFO per
share
Diluted
normalized    $ 0.60           $ 0.54      $ 2.28           $ 2.18   
AFFO per
share
                                                                          
Diluted
normalized    $ 21,978         $ 17,679    $ 80,564         $ 70,952 
AFFO
Weighted
average
shares used
to calculate   36,582          32,548     35,342          32,508 
diluted
normalized
AFFO per
share
                                                        
Basic
normalized    $ 0.63           $ 0.57      $ 2.39           $ 2.28   
FAD per share
Diluted
normalized    $ 0.61           $ 0.56      $ 2.34           $ 2.24   
FAD per share
                                                                          
Diluted
normalized    $ 22,618         $ 18,143    $ 82,698         $ 72,771 
FAD
Weighted
average
shares used
to calculate   36,778          32,548     35,342          32,508 
diluted
normalized
FAD per share
                                                                          

LTC PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, audited)
                                                           
                                         December 31, 2013   December 31, 2012
ASSETS
Real estate investments:
Land                                     $   80,993          $   74,702
Buildings and improvements                   856,624             811,867
Accumulated depreciation and                (218,700   )       (194,448   )
amortization
Net real estate property                     718,917             692,121
Properties held-for-sale, net of
accumulated depreciation and                —                 9,426      
amortization: 2013 — $0; 2012 — $4,100
Net real estate property                     718,917             701,547
Mortgage loans receivable, net of
allowance for doubtful                      165,444           39,299     
accounts: 2013 — $1,671; 2012 — $782
Real estate investments, net                 884,361             740,846
Other assets:
Cash and cash equivalents                    6,778               7,191
Debt issue costs, net                        2,458               3,040
Interest receivable                          702                 789
Straight-line rent receivable, net of
allowance for doubtful                       29,760              26,766
accounts: 2013 — $1,541; 2012 — $1,513
Prepaid expenses and other assets            6,756               7,542
Notes receivable                             595                 3,180
Straight-line rent receivable and other
assets related to properties                —                 238        
held-for-sale, net of allowance for
doubtful accounts: 2013 — $0; 2012 — $44
Total assets                             $   931,410        $   789,592    
                                                             
LIABILITIES
Bank borrowings                          $   21,000          $   115,500
Senior unsecured notes                       255,800             185,800
Bonds payable                                2,035               2,635
Accrued interest                             3,424               3,279
Earn-out liabilities                         —                   6,744
Accrued expenses and other liabilities       16,713              12,165
Accrued expenses and other liabilities      —                 361        
related to properties held-for-sale
Total liabilities                            298,972             326,484
                                                             
EQUITY
Stockholders' equity:
Preferred stock $0.01 par value; 15,000
shares authorized; shares issued and         38,500              38,500
outstanding: 2013 — 2,000; 2012 — 2,000
Common stock: $0.01 par value; 60,000
shares authorized;                           347                 305
shares issued and outstanding: 2013 —
34,746; 2012 — 30,544
Capital in excess of par value               688,654             510,236
Cumulative net income                        781,848             724,033
Accumulated other comprehensive income       117                 152
Cumulative distributions                    (877,028   )       (810,125   )
Total LTC Properties, Inc. stockholders'     632,438             463,101
equity
                                                             
Non-controlling interests                   —                 7          
Total equity                                632,438           463,108    
Total liabilities and equity             $   931,410        $   789,592    
                                                                            

Contact:

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