LTC Properties(US:LTC)2025-11-05 17:00Financial Data and Key Metrics Changes - Core FFO improved to $0.69 from $0.68, primarily due to an increase in SHOP NOI and a decrease in interest expense [5][6] - Core FAD improved by $0.04 to $0.72 compared to $0.68 last year, influenced by similar factors affecting core FFO [5] - Pro forma debt to annualized adjusted EBITDA for real estate was 4.7 times, and annualized adjusted fixed charge ratio was 4.6 times [7] - Pro forma liquidity stands at nearly $500 million [7] - Full year 2025 core FFO guidance increased by $0.01, now standing at $2.69-$2.71 [8] Business Line Data and Key Metrics Changes - SHOP segment closed about 85% of the projected $460 million investment pipeline, with over $290 million in SHOP segment investments [3] - SHOP portfolio now includes 21 properties with five operators, three of which are new to LTC, with a gross book value of $447 million [9] - SHOP NOI guidance for 13 properties increased to $10.9-$11.3 million, up from $9.4-$10.3 million [10] - Expected fourth quarter NOI for the remainder of the SHOP portfolio is $4.8-$5.2 million [10] Market Data and Key Metrics Changes - The current opportunity set stands at roughly $1 billion, with nearly $110 million under LOI targeted to close in January 2026 [12] - The average vintage of SHOP acquisitions in 2025 is 2019, indicating a focus on newer assets [39] Company Strategy and Development Direction - The company is focused on expanding its SHOP platform, deepening operator partnerships, and driving long-term accretive returns [16] - The strategy includes recycling capital from non-core assets and adding new operators to enhance portfolio quality [9] - The company aims to build a portfolio of newer assets with competitive advantages as the industry evolves [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting strong momentum and a solid foundation for growth [16] - The company is positioned to capitalize on favorable demand fundamentals and supply constraints in the senior housing market [3] - Management expects continued strong SHOP NOI growth due to the competitive position of SHOP assets [10] Other Important Information - The company completed the sale of a portfolio of seven skilled nursing assets, generating net proceeds of approximately $120 million and a gain of $78 million [11] - A non-cash write-off of $41.5 million was taken related to Prestige's straight-line effective interest receivable balance [6] Q&A Session Summary Question: Guidance assumptions for core FFO range - Management clarified that the low range includes all closed investments, while the high range includes expected closings within the next 60 days [20] Question: Focus on SHOP deals versus other opportunities - The primary focus is on SHOP deals, although other opportunities will be considered [21] Question: Expected yields and growth for pipeline deals - Initial yields for the $110 million deal are guided at 7% [25] Question: Funding incremental capital - Proceeds from loan payoffs and equity from the ATM will fund investments, with a disciplined approach to equity issuance [28] Question: Growth profile after SHOP investments - Management expects more than 3% growth with targeted low double-digit IRRs due to supply-demand imbalances [37][38] Question: Transitioning operators and potential disruptions - Most acquisitions have retained existing operators, with careful planning to avoid disruptions [50] Question: Prestige's prepayment option and performance - Prestige needs to improve performance to exercise the purchase option, with positive indications for future outcomes [54][57] Question: Opportunities for earnings growth in skilled nursing - The company remains selective in skilled nursing, focusing on transitional care and newer assets [64]