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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from ____ to ____

Commission file number 1-11314

LTC PROPERTIES, INC.

(Exact name of Registrant as specified in its charter)

Maryland

71-0720518

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

2829 Townsgate Road, Suite 350

Westlake Village, California 91361

(Address of principal executive offices, including zip code)

(805) 981-8655

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, $.01 par value

LTC

New York Stock Exchange

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No þ

The number of shares of common stock outstanding on April 21, 2022 was 39,462,229.

LTC PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except per share)

    

    

 

March 31, 2022

December 31, 2021

ASSETS

(unaudited)

(audited)

Investments:

Land

$

120,203

$

123,239

Buildings and improvements

 

1,240,713

 

1,285,318

Accumulated depreciation and amortization

 

(367,623)

 

(374,606)

Operating real estate property, net

 

993,293

 

1,033,951

Properties held-for-sale, net of accumulated depreciation: 2022—$16,396; 2021—$0

 

32,313

 

Real property investments, net

 

1,025,606

 

1,033,951

Mortgage loans receivable, net of credit loss reserve: 2022—$3,494; 2021—$3,473

 

346,543

 

344,442

Real estate investments, net

 

1,372,149

 

1,378,393

Notes receivable, net of credit loss reserve: 2022—$619; 2021—$286

 

61,508

 

28,337

Investments in unconsolidated joint ventures

19,340

19,340

Investments, net

 

1,452,997

 

1,426,070

Other assets:

Cash and cash equivalents

 

4,393

 

5,161

Debt issue costs related to revolving line of credit

 

2,883

 

3,057

Interest receivable

 

41,165

 

39,522

Straight-line rent receivable

 

23,912

 

24,146

Lease incentives

2,277

2,678

Prepaid expenses and other assets

 

8,470

 

4,191

Total assets

$

1,536,097

$

1,504,825

LIABILITIES

Revolving line of credit

$

157,900

$

110,900

Term loans, net of debt issue costs: 2022—$600; 2021—$637

99,400

99,363

Senior unsecured notes, net of debt issue costs: 2022—$498; 2021—$524

 

505,482

 

512,456

Accrued interest

 

3,090

 

3,745

Accrued expenses and other liabilities

 

27,626

 

33,234

Total liabilities

 

793,498

 

759,698

EQUITY

Stockholders’ equity:

Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2022—39,460; 202139,374

 

395

 

394

Capital in excess of par value

 

857,558

 

856,895

Cumulative net income

 

1,459,048

 

1,444,636

Accumulated other comprehensive income (loss)

 

4,704

 

(172)

Cumulative distributions

 

(1,587,519)

 

(1,565,039)

Total LTC Properties, Inc. stockholders’ equity

 

734,186

 

736,714

Non-controlling interests

 

8,413

 

8,413

Total equity

 

742,599

 

745,127

Total liabilities and equity

$

1,536,097

$

1,504,825

See accompanying notes.

3

LTC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands, except per share, unaudited)

Three Months Ended

 

March 31, 

  

2022

  

2021

  

 

Revenues:

Rental income

$

30,324

$

31,973

Interest income from mortgage loans

 

9,636

7,922

Interest and other income

 

827

 

385

Total revenues

 

40,787

 

40,280

Expenses:

Interest expense

 

7,143

 

6,972

Depreciation and amortization

 

9,438

 

9,877

Provision (recovery) for credit losses

 

354

 

(9)

Transaction costs

32

92

Property tax expense

3,982

3,981

General and administrative expenses

 

5,808

 

5,033

Total expenses

 

26,757

 

25,946

Other operating income:

Gain (loss) on sale of real estate, net

102

(773)

Operating income

 

14,132

 

13,561

Income from unconsolidated joint ventures

375

289

Net income

14,507

13,850

Income allocated to non-controlling interests

 

(95)

 

(88)

Net income attributable to LTC Properties, Inc.

 

14,412

 

13,762

Income allocated to participating securities

 

(137)

(120)

Net income available to common stockholders

$

14,275

$

13,642

Weighted average shares used to calculate earnings per common share:

Basic

 

39,199

 

39,100

Diluted

 

39,349

 

39,179

Dividends declared and paid per common share

$

0.57

$

0.57

See accompanying notes.

4

LTC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(amounts in thousands, unaudited)

Three Months Ended March 31, 

 

2022

  

2021

Net income

$

14,507

$

13,850

Unrealized gain on cash flow hedges before reclassification

 

4,584

 

Losses reclassified from accumulated other comprehensive income to interest expense

292

Comprehensive income

$

19,383

$

13,850

5

LTC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

Capital in

Cumulative

Total

Non-

Common Stock

Excess of

Net

Accumulated

Cumulative

Stockholder's

Controlling

Total

Shares

Amount

Par Value

Income

OCI

Distributions

Equity

Interests

Equity

Balance—December 31, 2020

39,242

$

392

$

852,780

$

1,388,775

$

$

(1,474,545)

$

767,402

$

8,404

$

775,806

Common Stock cash distributions ($0.57 per share)

(22,405)

(22,405)

(22,405)

Vesting of performance-based stock units, including the payment of distributions

109

1

(1)

(764)

(764)

(764)

Stock-based compensation expense

1,852

1,852

1,852

Net income

13,762

13,762

88

13,850

Non-controlling interest distributions

(88)

(88)

Cash paid for taxes in lieu of common shares

(84)

(3,470)

(3,470)

(3,470)

Other

95

1

(11)

(10)

(10)

Balance—March 31, 2021

39,362

$

394

$

851,150

$

1,402,537

$

$

(1,497,714)

$

756,367

$

8,404

$

764,771

Common Stock cash distributions ($0.57 per share)

(22,439)

(22,439)

(22,439)

Vesting of performance-based stock units, including the payment of distributions

-

-

Stock-based compensation expense

1,958

1,958

1,958

Net income

18,239

18,239

91

18,330

Non-controlling interest distributions

(91)

(91)

Cash paid for taxes in lieu of common shares

(3)

(103)

(103)

(103)

Other

15

(46)

(46)

(46)

Balance—June 30, 2021

39,374

$

394

$

852,959

$

1,420,776

$

$

(1,520,153)

$

753,976

$

8,404

$

762,380

Common Stock cash distributions ($0.57 per share)

(22,443)

(22,443)

(22,443)

Stock-based compensation expense

1,975

1,975

1,975

Net income

11,022

11,022

92

11,114

Non-controlling interest distributions

(92)

(92)

Non-controlling interest contributions

9

9

Other

(13)

(13)

(13)

Balance—September 30, 2021

39,374

$

394

$

854,921

$

1,431,798

$

$

(1,542,596)

$

744,517

$

8,413

$

752,930

Common Stock cash distributions ($0.57 per share)

(22,443)

(22,443)

(22,443)

Stock-based compensation expense

1,975

1,975

1,975

Net income

12,838

12,838

92

12,930

Non-controlling interest distributions

(92)

(92)

Fair market valuation adjustment for interest rate swap

(172)

(172)

(172)

Other

(1)

(1)

(1)

Balance—December 31, 2021

39,374

$

394

$

856,895

$

1,444,636

$

(172)

$

(1,565,039)

$

736,714

$

8,413

$

745,127

Common Stock cash distributions ($0.57 per share)

(22,480)

(22,480)

(22,480)

Stock-based compensation expense

1,925

1,925

1,925

Net income

14,412

14,412

95

14,507

Cash paid for taxes in lieu of common shares

(37)

(1,255)

(1,255)

(1,255)

Non-controlling interest distributions

(95)

(95)

Fair market valuation adjustment for interest rate swap

4,876

4,876

4,876

Other

123

1

(7)

(6)

(6)

Balance—March 31, 2022

39,460

$

395

$

857,558

$

1,459,048

$

4,704

$

(1,587,519)

$

734,186

$

8,413

$

742,599

6

LTC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands, unaudited)

Three Months Ended March 31, 

  

2022

  

2021

  

OPERATING ACTIVITIES:

    

    

Net income

$

14,507

$

13,850

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

 

9,438

 

9,877

Stock-based compensation expense

 

1,925

 

1,852

(Gain) loss on sale of real estate, net

 

(102)

 

773

Income from unconsolidated joint ventures

 

(375)

 

(289)

Income distributions from unconsolidated joint ventures

164

Straight-line rental adjustment (income)

234

 

(682)

Adjustment for collectability of rental income and lease incentives

173

758

Amortization of lease incentives

223

112

Provision (recovery) for credit losses

 

354

 

(9)

Other non-cash items, net

 

(957)

 

260

Change in operating assets and liabilities

Lease incentives funded

(8)

Increase in interest receivable

 

(1,643)

 

(1,745)

Decrease in accrued interest payable

 

(655)

 

(869)

Net change in other assets and liabilities

 

(4,546)

 

(2,793)

Net cash provided by operating activities

 

18,568

 

21,259

INVESTING ACTIVITIES:

Investment in real estate capital improvements

 

(1,068)

 

(1,044)

Proceeds from sale of real estate, net

 

 

1,765

Investment in real estate mortgage loans receivable

 

(1,026)

 

(158)

Principal payments received on mortgage loans receivable

 

125

 

125

Investments in unconsolidated joint ventures

 

 

(5,676)

Advances and originations under notes receivable

 

(34,791)

 

(1,656)

Principal payments received on notes receivable

 

1,287

 

2,553

Net cash used in investing activities

 

(35,473)

 

(4,091)

FINANCING ACTIVITIES:

Borrowings from revolving line of credit

 

47,000

 

17,000

Principal payments on senior unsecured notes

(7,000)

(7,000)

Distributions paid to stockholders

 

(22,480)

 

(23,169)

Distributions paid to non-controlling interests

 

(95)

 

(88)

Financing costs paid

 

(27)

 

Cash paid for taxes in lieu of shares upon vesting of restricted stock and performance-based stock units

(1,255)

(3,470)

Other

 

(6)

 

(12)

Net cash provided by (used in) financing activities

 

16,137

 

(16,739)

(Decrease) increase in cash and cash equivalents

 

(768)

 

429

Cash and cash equivalents, beginning of period

 

5,161

 

7,772

Cash and cash equivalents, end of period

$

4,393

$

8,201

Supplemental disclosure of cash flow information:

Interest paid

$

7,534

$

7,582

Non-cash investing and financing transactions:

Preferred return reserve related to investments in unconsolidated joint ventures (See Footnote 3)

$

$

2,324

Application of interest reserve recorded as mortgage loan receivable

$

1,221

$

Increase in fair value of interest rate swap agreements (See Footnote 6)

$

4,876

$

See accompanying notes.

7

Table of Contents

LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.

General

LTC Properties, Inc., a health care real estate investment trust (“REIT”), was incorporated on May 12, 1992 in the State of Maryland and commenced operations on August 25, 1992. We invest primarily 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. We conduct and manage our business as one operating segment, rather than multiple operating segments, for internal reporting and internal decision-making purposes. Our primary objectives are to create, sustain and enhance stockholder equity value and provide current income for distribution to stockholders through real estate investments in seniors housing and health care properties managed by experienced operators. Our primary seniors housing and health care property classifications include skilled nursing centers (“SNF”), assisted living communities (“ALF”), independent living communities (“ILF”), memory care communities (“MC”) and combinations thereof. We also invest in other (“OTH”) types of properties, such as land parcels, projects under development (“UDP”) and behavioral health care hospitals. To meet these objectives, we attempt to invest in properties that provide opportunity for additional value and current returns to our stockholders and diversify our investment portfolio by geographic location, operator, property classification and form of investment.

We have prepared consolidated financial statements included herein without audit and in the opinion of management have included all adjustments necessary for a fair presentation of the consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to rules and regulations governing the presentation of interim financial statements. The accompanying consolidated financial statements include the accounts of our company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three ended March 31, 2022 and 2021 are not necessarily indicative of the results for a full year.

No provision has been made for federal or state income taxes. Our company qualifies as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As such, we generally are not taxed on income that is distributed to our stockholders.

2.

Real Estate Investments

Assisted living communities, independent living communities, memory care communities and combinations thereof are included in the assisted living property classification (collectively “ALF”).

Any reference to the number of properties or facilities, number of units, number of beds, number of operators and yield on investments in real estate are unaudited and outside the scope of our independent registered public accounting firm’s review of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board.

Owned Properties. Our owned properties are leased pursuant to non-cancelable operating leases. Each lease is a triple net lease which requires the lessee to pay all taxes, insurance, maintenance and repairs, capital and non-capital expenditures and other costs necessary in the operations of the facilities. Many of the leases contain renewal options. The majority of our leases contain provisions for specified annual increases over the rents of the prior year.

8

Table of Contents

LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

(Unaudited)

The following table summarizes our investments in owned properties at March 31, 2022 (dollar amounts in thousands):

Average

 

Percentage

Number

Number of

Investment

 

Gross

of

of

SNF

ALF

per

 

Type of Property

Investment

Investment

Properties (1)

Beds

Units

Bed/Unit

 

Assisted Living

$

844,995

59.9

102

5,798

$

145.74

Skilled Nursing

553,073