LTC Announces Acquisition and Reports Third Quarter 2012 Results

LTC Properties, Inc. (NYSE: LTC) (“LTC” or the “Company”) announced that we acquired a vacant parcel of land in Kansas for $0.7 million in October 2012. Simultaneous with the purchase, the Company entered into a lease agreement and development commitment in an amount not to exceed $9.9 million to fund the construction of a 77-unit assisted living and memory care property. Rent under the lease will begin upon the earlier of project completion or the fifteenth month following the effective date of lease. Initial rent at the rate of 9.25% will be calculated based on the land purchase price and construction costs funded plus 9.0% compounded on each advance under the commitment from the disbursement date until the earlier of project completion or the improvement deadline. The lease has a 10-year initial term, two 5-year renewal options and annual escalations of 2.5%.

The Company also announced operating results for the quarter ended September 30, 2012. The Company reported a 6.5% increase in Funds from Operations (“FFO”) to $17.5 million in the quarter ended September 30, 2012, from $16.4 million in the comparable 2011 period. FFO per diluted common share was $0.57 for the quarter ended September 30, 2012, an increase of 5.6% from $0.54 for the comparable 2011 period. Normalized FFO was $17.6 million in the third quarter of 2012 compared to $16.6 million in the third quarter of 2011. Normalized FFO per diluted common share was $0.57 for the third quarter of 2012 compared to $0.54 for the third 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 expense.

FFO for the nine months ended September 30, 2012 increased 22.4% to $52.2 million from $42.7 million in the comparable 2011 period. FFO per diluted common share for the nine months ended September 30, 2012 increased 15.8% to $1.69 from $1.46 in the comparable 2011 period. The Company reported an 11.0% increase in normalized FFO, which excludes a $0.3 million non-recurring bankruptcy settlement distribution from the Sunwest Management, Inc., to $52.2 million for the nine months ended September 30, 2012, from $47.1 million from the comparable 2011 period. Normalized FFO per diluted common share was $1.69 for the nine months ended September 30, 2012, an increase of 5.6% from $1.60 for the comparable 2011 period. Normalized FFO for the nine months ended September 30, 2011 excluded a $3.6 million charge and $0.5 million 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 and higher weighted average shares outstanding.

Net income available to common stockholders for the quarter ended September 30, 2012 was $11.6 million or $0.38 per diluted share. For the same period in 2011, net income available to common stockholders was $11.5 million or $0.38 per diluted share. Net income available to common stockholders for the nine months ended September 30, 2012 was $35.8 million or $1.18 per diluted share. For the same period in 2011, net income available to common stockholders was $28.2 million or $0.97 per diluted share which included a $3.6 million charge and $0.5 million 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.

Conference Call Information

The Company will conduct a conference call on Friday November, 9, 2012, at 8:00 a.m. Pacific Time, in order to comment on the Company’s performance and operating results for the quarter ended September 30, 2012. The conference call is accessible by dialing 877-317-6789. The international number is 412-317-6789. An audio replay of the conference call will be available from November 9 through November 26, 2012. Callers can access the replay by dialing 877-344-7529 or 412-317-0088 and entering conference number 10020195. 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 September 30, 2012, LTC had investments in 89 skilled nursing properties, 102 assisted living properties, 14 other senior housing properties, two schools and two parcels of land under development. These properties are located in 30 states. Other senior housing properties consist of independent living properties and properties providing any combination of skilled nursing, assisted living and/or independent living 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

(unaudited, amounts in thousands, except per share amounts)

Three Months Ended
September 30
Nine Months Ended
September 30
2012 2011 2012 2011
Revenues:
Rental income $ 22,295 $ 19,620 $ 64,342 $ 57,139
Interest income from mortgage loans 1,398 1,582 4,361 4,851
Interest and other income 96 229 818 876
Total revenues 23,789 21,431 69,521 62,866
Expenses:
Interest expense 2,988 1,794 7,025 4,441
Depreciation and amortization 5,925 4,949 16,461 14,407
Acquisition costs 205 60 387 225
Operating and other expenses 2,167 2,180 7,115 6,879
Total expenses 11,285 8,983 30,988 25,952
Income from continuing operations 12,504 12,448 38,533 36,914
Discontinued operations:
Loss from discontinued operations (25 ) (75 )
Gain on sale of assets, net 16
Net (loss) gain from discontinued operations (25 ) 16 (75 )
Net income 12,504 12,423 38,549 36,839
Income allocated to non-controlling interests (9 ) (48 ) (30 ) (144 )
Net income attributable to LTC Properties, Inc. 12,495 12,375 38,519 36,695
Income allocated to participating securities (94 ) (85 ) (279 ) (259 )
Income allocated to preferred stockholders (818 ) (818 ) (2,454 ) (8,260 )
Net income available to common stockholders $ 11,583 $ 11,472 $ 35,786 $ 28,176
Basic earnings per common share:
Continuing operations $ 0.38 $ 0.38 $ 1.18 $ 0.98
Discontinued operations $ 0.00 $ 0.00 $ 0.00 $ 0.00
Net income available to common stockholders $ 0.38 $ 0.38 $ 1.18 $ 0.98
Diluted earnings per common share:
Continuing operations $ 0.38 $ 0.38 $ 1.18 $ 0.98
Discontinued operations $ 0.00 $ 0.00 $ 0.00 ($0.01 )
Net income available to common stockholders $ 0.38 $ 0.38 $ 1.18 $ 0.97
Weighted average shares used to calculate earnings per common share:
Basic 30,253 30,137 30,219 28,874
Diluted 30,293 30,156 30,263 28,902

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 operating performance 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
September 30,
Nine Months Ended
September 30,
2012 2011 2012 2011
Net income available to common stockholders $ 11,583 $ 11,472 $ 35,786 $ 28,176
Add: Depreciation and amortization (continuing and discontinued operations) 5,925 4,974 16,461 14,482
Less: Gain on sale of real estate, net (16 )
FFO available to common stockholders 17,508 16,446 52,231 42,658
Add: Preferred stock redemption charge 3,566

(1)

Add: Preferred stock redemption dividend 472

(2)

Add: Non-cash interest related to earn-out liabilities 110 177 330 354
Less: Non-recurring one-time items (347 )

(3)

Normalized FFO available to common stockholders 17,618 16,623 52,214 47,050
Less: Non-cash rental income (701 ) (912 ) (1,704 ) (2,268 )
Normalized adjusted FFO (AFFO) 16,917 15,711 50,510 44,782
Add: Non-cash compensation charges 445 374 1,355 1,095
Normalized funds available for distribution (FAD) $ 17,362 $ 16,085 $ 51,865 $ 45,877

_______________________________

(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 stockholders per share $ 0.58 $ 0.55 $ 1.73 $ 1.48
Diluted FFO available to common stockholders per share $ 0.57 $ 0.54 $ 1.69 $ 1.46
Diluted FFO available to common stockholders $ 18,429 $ 17,397 $ 54,994 $ 45,515
Weighted average shares used to calculate diluted FFO per share available to common stockholders 32,521 32,473 32,494 31,221
Basic normalized FFO available to common stockholders per share $ 0.58 $ 0.55 $ 1.73 $ 1.63
Diluted normalized FFO available to common stockholders per share $ 0.57 $ 0.54 $ 1.69 $ 1.60
Diluted normalized FFO available to common stockholders $ 18,539 $ 17,574 $ 54,977 $ 49,907
Weighted average shares used to calculate diluted normalized FFO per share available to common stockholders 32,521 32,473 32,494 31,221
Basic normalized AFFO per share $ 0.56 $ 0.52 $ 1.67 $ 1.55
Diluted normalized AFFO per share $ 0.55 $ 0.51 $ 1.64 $ 1.53
Diluted normalized AFFO $ 17,838 $ 16,662 $ 53,273 $ 47,639
Weighted average shares used to calculate diluted normalized AFFO per share 32,521 32,473 32,494 31,221
Basic normalized FAD per share $ 0.57 $ 0.53 $ 1.72 $ 1.59
Diluted normalized FAD per share $ 0.56 $ 0.52 $ 1.68 $ 1.56
Diluted normalized FAD $ 18,283 $ 17,036 $ 54,628 $ 48,734
Weighted average shares used to calculate diluted normalized FAD per share 32,521 32,473 32,494 31,221

LTC PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands)

September 30, 2012 December 31, 2011
(unaudited)(audited)
ASSETS
Real estate investments:
Land $ 63,121 $ 57,392
Buildings and improvements 742,638 664,758
Accumulated depreciation and amortization (192,895 ) (176,546 )
Net operating real estate property 612,864 545,604

Properties held-for-sale, net of accumulated depreciation
and amortization: 2012 — $0; 2011 — $1,650

1,231
Net real estate property 612,864 546,835
Mortgage loans receivable, net of allowance for doubtful
accounts: 2012 — $873; 2011 — $921
48,268 53,081
Real estate investments, net 661,132 599,916
Other assets:
Cash and cash equivalents 8,274 4,408
Debt issue costs, net 3,218 2,301
Interest receivable 1,035 1,494
Straight-line rent receivable, net of allowance for doubtful
accounts: 2012 — $1,545; 2011 — $1,519
25,945 23,772
Prepaid expenses and other assets 7,222 7,904
Notes receivable 3,007 817
Marketable securities 6,485
Total assets $ 709,833 $ 647,097
LIABILITIES
Bank borrowings $ 35,500 $ 56,000
Senior unsecured notes 185,800 100,000
Bonds payable 2,635 3,200
Accrued interest 2,320 1,356
Earn-out liabilities 6,634 6,305
Accrued expenses and other liabilities 12,054 11,440
Accrued expenses and other liabilities related to properties held-for-sale 86
Total liabilities 244,943 178,387
EQUITY
Stockholders' equity:

Preferred stock $0.01 par value; 15,000 shares authorized;
shares issued and outstanding: 2012 — 2,000; 2011 — 2,000

38,500 38,500
Common stock: $0.01 par value; 60,000 shares authorized;
shares issued and outstanding: 2012 — 30,498; 2011 — 30,346
305 303
Capital in excess of par value 509,431 507,343
Cumulative net income 711,262 672,743
Other 160 199
Cumulative distributions (795,117 ) (752,340 )
Total LTC Properties, Inc. stockholders' equity 464,541 466,748
Non-controlling interests 349 1,962
Total equity 464,890 468,710
Total liabilities and equity $ 709,833 $ 647,097

Contacts:

LTC Properties, Inc.
Wendy L. Simpson
Pam Kessler
(805) 981-8655
Related Stocks:
Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here