Yahoo Finance LTC Properties Inc (LTC) Q1 2024 Earnings Call Transcript Highlights: Key Financial Movements ...
Total Rental Revenue: Increased by $1.8 million.
Interest Income from Mortgage Loans: Increased by $1.2 million.
Interest and Other Income: Decreased by $1.2 million.
Interest Expense: Increased by $436,000.
Provision for Credit Losses: Decreased by $1.7 million.
Net Income Available to Common Shareholders: Decreased by $8.9 million.
Fully Diluted FFO Per Share: $0.69.
FFO Excluding Nonrecurring Items Per Share: Decreased to $0.64 from $0.67.
Property Sales: Six properties sold in Florida and Texas, gains of approximately $3.3 million.
Debt to Annualized Adjusted EBITDA for Real Estate: 5.5 times.
Annualized Adjusted Fixed Charge Coverage Ratio: 3.5 times.
Total Liquidity: Nearly $197 million.
Same-Store Q4 Trailing 12 Month EBITDA Coverage: Improved for both assisted living and skilled nursing portfolios.
General Occupancy Trends: Private-pay occupancy at 88%, skilled nursing average monthly occupancy at 75%.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you provide additional details around the scope of investment opportunities currently being evaluated by LTC Properties? A: (Clint Malin - Co-President, Chief Investment Officer) We are seeing more opportunities to invest in private pay assets and some select opportunities on the skilled nursing side, such as our recent investment with Ignite for newer skilled nursing assets. The inbound opportunities are skewed towards senior loans, construction loans, mezzanine, and preferred equity investments. We are also looking at equity investments and doing sale leasebacks as well as joint ventures.
Q: How is LTC Properties planning to fund these investments? A: (Pamela Shelley-Kessler - Co-President, Chief Financial Officer, Corporate Secretary) We plan to use equity to fund these investments. Specifically, we will utilize our ATM program for smaller one-off investments or two-property portfolios. For larger transactions, we might consider an overnight marketed deal to place stock in the hands of new investors.
Q: What are the expected cap rates for new investments? A: (Clint Malin - Co-President, Chief Investment Officer) We are targeting around a 9% cap rate for new investments, whether they are loans or owned assets. For BMS and preferred equity, we aim for a 9% target rate with an IRR exit around 12%.
Q: Can you provide insights into the normalized FFO guidance for the second quarter and the factors influencing it? A: (Pamela Shelley-Kessler - Co-President, Chief Financial Officer, Corporate Secretary) The guidance includes all announced factors but does not assume any additional investments. It includes increases in rental rates from HMG and our transition portfolio. We provide a base rate for guidance, allowing analysts and investors to layer on their own investment assumptions.
Q: Could you discuss the lease negotiations with HMG and the factors that facilitated the amendment of the lease through the end of 2028? A: (Clint Malin - Co-President, Chief Investment Officer) The negotiations were influenced by improved occupancy and margins at the properties. The pending staffing rule, which was recently finalized, also played a role. We focused on structuring the rent to reflect these improvements and successfully negotiated a fair market rent reset into the terms of the amendment.
Q: What is LTC Properties' strategy regarding the mix of fee simple ownership and structured deals like loans or joint ventures? A: (Pamela Shelley-Kessler - Co-President, Chief Financial Officer, Corporate Secretary) We do not have a set threshold for the mix but are mindful of maintaining a balance. Structured products are seen as a marketing tool and a way to gain exposure with operators who might not normally consider refinancing. This approach has led to successful conversions to ownership equity in the past.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
