LTC Properties(LTC) - 2025 Q1 - Quarterly Results

Q1 2025 Operating Results Overview Key Financial Highlights LTC Properties reported decreased Q1 2025 revenues and net income, but diluted Core FFO and FAD per share improved, driven by strategic portfolio transitions Q1 2025 Financial Highlights (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $49,031 | $51,366 | | Net Income to Common Stockholders | $20,517 | $24,065 | | Diluted EPS | $0.45 | $0.56 | | NAREIT Diluted FFO per Share | $0.65 | $0.69 | | Diluted Core FFO per Share | $0.65 | $0.64 | | Diluted FAD per Share | $0.76 | $0.73 | | Diluted Core FAD per Share | $0.70 | $0.67 | - Management emphasized a strong start to 2025, with $176 million in gross assets converted or soon to be converted into a new SHOP (seniors housing operating portfolio) The company is focused on growth, supported by a new CIO, access to capital, and a $300 million investment pipeline[5] First Quarter 2025 Financial Results Analysis Q1 2025 financial results show decreased revenues and net income, primarily due to prior year one-time income and increased expenses - Total revenues decreased due to one-time revenue received in 2024, lower revenue from property sales, and mortgage loan payoffs This was partially offset by rent increases and higher income from financing receivables[9] - Expenses rose mainly because of a higher provision for credit losses from a note write-off during the transition of 12 properties to the RIDEA structure, and increased incentive compensation[9] - Income from unconsolidated joint ventures increased significantly due to receiving a $3.0 million payment representing a 13% exit IRR from a preferred equity redemption[9] - Net income available to common shareholders fell by $3.5 million, driven by a lower gain on sale and the revenue and expense changes noted above[9] Portfolio and Balance Sheet Q1 2025 Portfolio and Capital Activities LTC executed strategic Q1 2025 portfolio and capital activities, transitioning properties to SHOP, redeeming preferred equity, and managing debt - Transitioned 12 properties from a triple-net lease into a new SHOP (seniors housing operating portfolio) under the RIDEA structure, with a combined gross book value of $176.1 million[9] - Redeemed a preferred equity investment for $16.0 million, which included a 13% exit IRR of $3.0 million The company also sold two non-revenue producing assisted living communities for a total of $1.67 million[9] - During Q1, LTC repaid $18.9 million on its line of credit and raised $1.1 million from stock sales Subsequent to quarter-end, the company borrowed $4.5 million, made $7.0 million in scheduled debt paydowns, and raised an additional $8.5 million from stock sales[8][9] Balance Sheet and Liquidity As of March 31, 2025, LTC maintained a strong liquidity position of $681.2 million, comprising cash, credit line availability, and equity issuance capacity - LTC's total liquidity was $681.2 million as of March 31, 2025, comprising: - $23.3 million of cash on hand - $276.2 million available under the unsecured revolving line of credit - $381.7 million capacity to issue common stock under equity distribution agreements[9] Full Year 2025 Guidance 2025 Guidance Details LTC introduced full-year 2025 guidance, projecting Diluted Core FFO per share between $2.65 and $2.69, and Diluted Core FAD per share between $2.78 and $2.82 Full Year 2025 Guidance Per Share | Metric | Low | High | | :--- | :--- | :--- | | GAAP Net Income Attributable to LTC | $3.38 | $3.42 | | Diluted Core FFO | $2.65 | $2.69 | | Diluted Core FAD | $2.78 | $2.82 | - Key guidance assumptions include: - SHOP NOI for the remaining eight months of 2025 between $9.4 million and $10.3 million - Full-year 2025 G&A expenses between $28.6 million and $29.5 million[13][31] - Guidance excludes several one-time, non-recurring items, such as a $6.5 million lease termination fee, $1.1 million to $1.5 million in RIDEA ramp-up costs, and approximately $1.1 million for an employee's retirement[13][31] Consolidated Financial Statements Consolidated Statements of Income For Q1 2025, LTC reported total revenues of $49.0 million, down from $51.4 million, with net income decreasing to $20.5 million from $24.1 million Consolidated Statements of Income (in thousands) | | Three Months Ended March 31, | | :--- | :--- | :--- | | | 2025 | 2024 | | Total revenues | $49,031 | $51,366 | | Total expenses | 30,646 | 30,304 | | Operating income | 18,556 | 24,313 | | Net income available to common stockholders | $20,517 | $24,065 | | Diluted earnings per common share | $0.45 | $0.56 | Consolidated Balance Sheets As of March 31, 2025, LTC's total assets were $1.776 billion, with total liabilities at $726.2 million and equity at $1.049 billion Consolidated Balance Sheets (in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $1,775,509 | $1,786,142 | | Total liabilities | 726,207 | 733,137 | | Total equity | 1,049,302 | 1,053,005 | | Total liabilities and equity | $1,775,509 | $1,786,142 | Consolidated Statements of Cash Flows In Q1 2025, net cash from operating activities increased to $29.6 million, with a $13.9 million net increase in cash and cash equivalents Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, | | :--- | :--- | :--- | | | 2025 | 2024 | | Net cash provided by operating activities | $29,571 | $21,066 | | Net cash provided by investing activities | $11,629 | $21,209 | | Net cash used in financing activities | ($27,319) | ($53,551) | | Increase (decrease) in cash and cash equivalents | $13,881 | ($11,276) | Non-GAAP Financial Measures and Reconciliations Supplemental Reporting Measures (FFO & FAD) LTC uses non-GAAP metrics FFO and FAD to supplement GAAP results, adjusting net income for real estate depreciation and non-cash items - FFO and FAD are used as supplemental measures of operating performance, as they exclude the effect of historical cost depreciation, which may not be relevant in evaluating current performance[23] - FFO is defined by NAREIT as net income excluding gains/losses on real estate sales and impairment write-downs, plus depreciation and amortization[24] - FAD is defined as FFO adjusted for non-cash items such as straight-line rent, amortization of lease inducement, and non-cash compensation It is used as an indicator of common dividend potential[25] Reconciliation of FFO and FAD For Q1 2025, LTC reconciled GAAP net income of $20.5 million to NAREIT FFO of $29.5 million and FAD of $34.7 million Q1 2025 Reconciliation of Net Income to FFO and FAD (in thousands) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP net income available to common stockholders | $20,517 | $24,065 | | Depreciation and amortization | 9,162 | 9,095 | | Gain on sale of real estate, net | (171) | (3,251) | | NAREIT FFO attributable to common stockholders | $29,508 | $29,909 | | Non-recurring items | 405 | (2,377) | | Core FFO | $29,913 | $27,532 | | FAD | $34,680 | $31,274 | | Non-recurring income | (2,659) | (2,377) | | Core FAD | $32,021 | $28,897 | - Non-recurring adjustments to NAREIT FFO in Q1 2025 included a $3.1 million write-off of a working capital note for the RIDEA transition and a $3.0 million income gain from a JV redemption[28] Reconciliation of FFO and FAD Guidance The company provided full-year 2025 guidance reconciliation, bridging GAAP net income per share to Diluted Core FFO and FAD per share Full Year 2025 Guidance Reconciliation (Per Share) | | Low | High | | :--- | :--- | :--- | | GAAP net income attributable to LTC | $3.38 | $3.42 | | Adjustments (Depreciation, Gain on Sale, etc.) | (0.92) | (0.92) | | Diluted NAREIT FFO | 2.46 | 2.50 | | Non-recurring one-time items | 0.19 | 0.19 | | Diluted Core FFO | $2.65 | $2.69 | | Diluted FAD | 2.67 | 2.71 | | Non-recurring one-time items | 0.11 | 0.11 | | Diluted Core FAD | $2.78 | $2.82 |