LTC Properties Works Through Tenant Troubles, Seeks ‘Return to Growth’ in 2022

Despite the industry-wide distress and the potential for new hurdles in the road to recovery, LTC Properties (NYSE:LTC) Chairman and CEO Wendy Simpson believes that several factors – recent rent growth, a drop in agency staffing, and “solid” long-term demographic growth – point to a positive long-term outlook in senior living.

“I believe that we are steadily moving toward a pre-pandemic environment,” Simpson said during the company’s first-quarter 2022 earnings call with investors and analysts.

Occupancy appears to be headed in the right direction in some markets and “temp agency utilization appears to be dropping,” said Simpson. To deal with labor expenses, a number of the firm’s operators implemented rent increases with no pushback from residents.

The real estate investment trust (REIT) transitioned two Texas-based memory care communities to an existing LTC operator and recognized $282,000 in rent in 1Q22. LTC expects to recognize $370,000 of rent from the communities in the second half of the year.

The Westlake Village, California-based LTC logged funds from operations (FFO) of 61 cents in 1Q22, beating analysts’ expectations, but was a drop of four cents from 1Q221. Total revenue increased by $507,000 from 1Q 21.

LTC’s stock closed at $33 per share on Friday, down 2.28%.

While senior living is generally trending in the right direction, operators and investors with skilled nursing exposure face a new headwind by way of a potential reduction in Medicare reimbursement levels.

LTC has avoided the late-inning Covid Pain that has bitten some of its peers. Despite fears, no new rent cuts or material new longer-term deferrals were announced, according to BMO Capital Markets analysts, Juan Sanabria and John Kim.

In the first quarter, Brookdale Senior Living (NYSE:BKD) – LTC’s second-largest tenant – extended its master lease with LTC to Dec. 31, 2023.

Simpson made note of the book Heroes Work Here, a behind-the-scenes look at how Brookdale navigated Covid-19, written by Brookdale CEO Cindy Baier. In the book, LTC is recognized as a“flexible capital partner – something on which we pride ourselves,” Simpson said on the call.

Rent Deferrals

LTC $1.3 million in rent deferrals in the first quarter to go along with $720,000 in rent abatements – up from $867,000 in deferred rent and $480,000 in 4Q2021.

A single operator – not in LTC’s top 10 – represents a majority of the deferred rent, according to Co-President, CFO and Secretary Pam Kessler.

As of April, LTC is owed $6.6 million from this operator. But LTC isn’t worried about additional abated rent because the operator in question is cashflow positive, according to Simpson.

Anthem experiences a setback

LTC lowered the expected rent payment from Anthem Memory Care to $2.1 million from $2.7 million after the operator experienced shortfalls in the first quarter.

Lake Oswego, Oregon-based Anthem experienced a drop in occupancy and increased costs as a result of a nationwide surge in Covid-19 cases likely caused by the omicron variant.

LTC expects Anthem will be able to make up the shortfall over the rest of 2022.


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