LTC Reports 2024 Third Quarter Results

-- Company Significantly Improves Liquidity through Balance Sheet De-levering --

LTC Properties, Inc. (NYSE: LTC) (“LTC” or the “Company”), a real estate investment trust that primarily invests in seniors housing and health care properties, today announced operating results for the third quarter ended September 30, 2024.

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More detailed financial information is available in the tables at the end of this press release, the Company’s Supplemental Operating and Financial Data presentation for the 2024 third quarter, and its Form 10-Q, as filed with the Securities and Exchange Commission, both of which can be found on LTC’s investor relations website at www.ir.ltcreit.com.

“Our third quarter was positive, and we are optimistic about the future. By de-levering our balance sheet, we are building sufficient growth capital to take advantage of investment opportunities as they arise,” said Wendy Simpson, LTC’s Chairman and Chief Executive Officer. “The seniors housing and care market continues to improve, and LTC is strategically positioned to generate accretive growth. I believe we have the right team, the right strategy, and the access to capital needed to ensure a bright future.”

Third Quarter 2024 Financial Results:

• Total revenues increased as the result of income received from previously transitioned portfolios, higher income from loan originations, construction loan funding in 2024, and rent increases, partially offset by lower revenue from sold properties.
• Expenses declined primarily due to a decrease in interest expense related to paying down the Company’s unsecured revolving line of credit and scheduled principal paydowns on its senior unsecured notes, and depreciation expense, partially offset by an increase in general and administrative expense.
• Income from unconsolidated joint ventures increased as a result of a 2024 mortgage loan origination.
• Income allocated to non-controlling interests increased due to consolidated joint ventures formed during 2024.

2024 Third Quarter Portfolio Update:

Investment

• As previously announced, committed to fund a $26.1 million mortgage loan for the construction of a 116-unit independent living, assisted living and memory care community in Illinois. The borrower contributed $12.3 million of equity to initially fund the construction. The equity is expected to be fully drawn in early 2025, then LTC will begin funding the commitment. The loan term is approximately six years at a current rate of 9.0% and an IRR of 9.5%.

Mortgage Loan Payoff, Asset Sale, and Note Receivable Paydown

• Received $29.3 million from the payoff of a mortgage loan secured by a 189-bed skilled nursing center in Louisiana;
• As previously announced, sold an 80-unit assisted living community in Texas to the operator for $8.0 million and recorded a gain on sale of $3.6 million. The operator paid $441,000 in rent through the remainder of the initial lease term; and
• As previously announced, received $10.4 million from paydown of the HMG Healthcare working capital note.

Other Revenue

• Recorded $4.1 million of income from former operators related to portfolio transitions in prior years.

Debt and Equity

• Exercised the accordion feature under the Company’s credit agreement increasing its unsecured revolving line of credit by $25.0 million, bringing total commitments to $525.0 million ($425.0 million unsecured revolving line of credit and $100.0 million of term loans);
• Repaid $41.6 million under its unsecured revolving line of credit;
• Repaid $34.2 million in scheduled principal paydowns on its senior unsecured notes; and
• Sold 1,543,100 shares of common stock for $54.7 million in net proceeds under its equity distribution agreements.

Activities Subsequent to September 30, 2024:

• Received the payoff of a $51.1 million mortgage loan secured by a 203-unit independent living, assisted living and memory care community in Georgia;
• Sold a closed property in Colorado for $5.3 million and anticipate recording a gain on sale of approximately $1.1 million in the fourth quarter;
• Sold 226,370 shares of common stock for $7.9 million in net proceeds under its equity distribution agreements; and
• Repaid $93.8 million under the Company’s unsecured revolving line of credit.

Balance Sheet and Liquidity:

At September 30, 2024, LTC’s liquidity was $229.5 million, including $35.0 million of cash on hand, $184.9 million available under the Company’s unsecured revolving line of credit, and the potential to access the capital markets through the issuance of $9.6 million of common stock under LTC’s equity distribution agreements.

Subsequent to September 30, 2024, LTC’s current liquidity is $285.5 million, including $5.4 million of cash on hand, $278.6 million available under its unsecured revolving line of credit, and the potential to access the capital markets through the issuance of $1.5 million of common stock under LTC’s equity distribution agreements.

Conference Call Information

LTC will conduct a conference call on Tuesday, October 29, 2024, at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time), to provide commentary on its performance and operating results for the quarter ended September 30, 2024. The conference call is accessible by telephone and the internet. Interested parties may access the live conference call via the following:

Additionally, an audio replay of the call will be available one hour after the live call through November 12, 2024 via the following:

About LTC

LTC is a real estate investment trust (REIT) investing in seniors housing and health care properties primarily through sale-leasebacks, mortgage financing, joint-ventures and structured finance solutions including preferred equity and mezzanine lending. LTC’s investment portfolio includes 189 properties in 25 states with 29 operating partners. Based on its gross real estate investments, LTC’s investment portfolio is comprised of approximately 50% seniors housing and 50% skilled nursing properties. Learn more at www.LTCreit.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 LTC’s most recent Annual Report on Form 10‑K, its subsequent Quarterly Reports on Form 10‑Q, and its 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 LTC 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.

Supplemental Reporting Measures

FFO and 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 and FAD as supplemental measures of operating performance. The Company believes FFO 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 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 and FAD facilitate like comparisons of operating performance between periods. Occasionally, the Company may exclude non-recurring items from FFO and FAD in order to allow investors, analysts and 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 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. 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 the Company’s FFO to that of other REITs.

We define FAD as FFO excluding the effects of straight-line rent, amortization of lease inducement, effective interest income, deferred income from unconsolidated joint ventures, non-cash compensation charges, capitalized interest and non-cash interest charges. 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 the 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. Effective interest method, as required by GAAP, is a technique for calculating the actual interest rate for the term of a mortgage loan based on the initial origination value. Similar to the accounting methodology of straight-line rent, the actual interest rate is higher than the stated interest rate in the early years of the mortgage loan thus creating an effective interest receivable asset included in the interest receivable line item in the consolidated balance sheet and reduces down to zero when, at some point during the mortgage loan, the stated interest rate is higher than the actual interest rate. 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.

While the Company uses FFO and FAD as supplemental performance measures of the 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 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 and FAD

The following table reconciles GAAP net income available to common stockholders to each of NAREIT FFO attributable to common stockholders and FAD (unaudited, amounts in thousands):

Reconciliation of FFO and FAD (continued)

The following table continues the reconciliation between GAAP net income available to common stockholders and each of NAREIT FFO attributable to common stockholders and FAD by reconciling the non-recurring items (unaudited, amounts in thousands):

Reconciliation of FFO and FAD (continued)

The following table continues the reconciliation between GAAP net income available to common stockholders and each of NAREIT FFO attributable to common stockholders and FAD (unaudited, amounts in thousands, except per share amounts):

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