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 September 30, 2018
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)
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 ☑ 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 ☑ 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 ☑ |
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 ☑
The number of shares of common stock outstanding on November 1, 2018 was 39,656,737.
LTC PROPERTIES, INC.
FORM 10-Q
September 30, 2018
PART I -- Financial Information |
Page |
|
|
|
|
Item 1. |
Financial Statements |
|
|
3 | |
|
4 | |
|
5 | |
|
6 | |
|
7 | |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 | |
39 | ||
39 | ||
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|
40 | ||
40 | ||
40 | ||
41 |
LTC PROPERTIES, INC.
(amounts in thousands, except per share)
|
|
September 30, 2018 |
|
December 31, 2017 |
|
||
|
|
(unaudited) |
|
(audited) |
|
||
ASSETS |
|
|
|
|
|
|
|
Investments: |
|
|
|
|
|
|
|
Land |
|
$ |
125,533 |
|
$ |
124,041 |
|
Buildings and improvements |
|
|
1,280,491 |
|
|
1,262,335 |
|
Accumulated depreciation and amortization |
|
|
(304,337) |
|
|
(304,117) |
|
Operating real estate property, net |
|
|
1,101,687 |
|
|
1,082,259 |
|
Properties held-for-sale, net of accumulated depreciation: 2018—$2,887; 2017—$1,916 |
|
|
5,356 |
|
|
3,830 |
|
Real property investments, net |
|
|
1,107,043 |
|
|
1,086,089 |
|
|
|
|
|
|
|
|
|
Mortgage loans receivable, net of loan loss reserve: 2018—$2,444; 2017—$2,255 |
|
|
242,609 |
|
|
223,907 |
|
Real estate investments, net |
|
|
1,349,652 |
|
|
1,309,996 |
|
Notes receivable, net of loan loss reserve: 2018—$128; 2017—$166 |
|
|
12,642 |
|
|
16,402 |
|
Investments in unconsolidated joint ventures |
|
|
30,511 |
|
|
29,898 |
|
Investments, net |
|
|
1,392,805 |
|
|
1,356,296 |
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
20,408 |
|
|
5,213 |
|
Restricted cash |
|
|
2,163 |
|
|
— |
|
Debt issue costs related to bank borrowings |
|
|
3,202 |
|
|
810 |
|
Interest receivable |
|
|
19,290 |
|
|
15,050 |
|
Straight-line rent receivable, net of allowance for doubtful accounts: 2018—$739; 2017—$814 |
|
|
73,114 |
|
|
64,490 |
|
Lease incentives |
|
|
21,102 |
|
|
21,481 |
|
Prepaid expenses and other assets |
|
|
3,767 |
|
|
2,230 |
|
Total assets |
|
$ |
1,535,851 |
|
$ |
1,465,570 |
|
LIABILITIES |
|
|
|
|
|
|
|
Bank borrowings |
|
$ |
120,000 |
|
$ |
96,500 |
|
Senior unsecured notes, net of debt issue costs: 2018—$981; 2017—$1,131 |
|
|
550,986 |
|
|
571,002 |
|
Accrued interest |
|
|
3,468 |
|
|
5,276 |
|
Accrued incentives and earn-outs |
|
|
9,292 |
|
|
8,916 |
|
Accrued expenses and other liabilities |
|
|
28,812 |
|
|
25,228 |
|
Total liabilities |
|
|
712,558 |
|
|
706,922 |
|
EQUITY |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2018—39,657; 2017—39,570 |
|
|
397 |
|
|
396 |
|
Capital in excess of par value |
|
|
861,226 |
|
|
856,992 |
|
Cumulative net income |
|
|
1,224,998 |
|
|
1,100,783 |
|
Cumulative distributions |
|
|
(1,270,779) |
|
|
(1,203,011) |
|
Total LTC Properties, Inc. stockholders’ equity |
|
|
815,842 |
|
|
755,160 |
|
Non-controlling interests |
|
|
7,451 |
|
|
3,488 |
|
Total equity |
|
|
823,293 |
|
|
758,648 |
|
Total liabilities and equity |
|
$ |
1,535,851 |
|
$ |
1,465,570 |
|
See accompanying notes.
3
LTC PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(amounts in thousands, except per share, unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
|
||||||||
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income |
|
$ |
34,211 |
|
$ |
33,233 |
|
$ |
102,646 |
|
$ |
103,533 |
|
Interest income from mortgage loans |
|
|
7,087 |
|
|
6,677 |
|
|
20,910 |
|
|
20,050 |
|
Interest and other income |
|
|
478 |
|
|
1,336 |
|
|
1,502 |
|
|
2,753 |
|
Total revenues |
|
|
41,776 |
|
|
41,246 |
|
|
125,058 |
|
|
126,336 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
7,497 |
|
|
7,644 |
|
|
22,981 |
|
|
22,266 |
|
Depreciation and amortization |
|
|
9,447 |
|
|
9,519 |
|
|
28,159 |
|
|
28,186 |
|
Impairment charges |
|
|
— |
|
|
— |
|
|
— |
|
|
1,880 |
|
Provision (recovery) for doubtful accounts |
|
|
106 |
|
|
(96) |
|
|
76 |
|
|
(139) |
|
Transaction costs |
|
|
9 |
|
|
34 |
|
|
19 |
|
|
56 |
|
General and administrative expenses |
|
|
4,879 |
|
|
4,144 |
|
|
14,392 |
|
|
13,270 |
|
Total expenses |
|
|
21,938 |
|
|
21,245 |
|
|
65,627 |
|
|
65,519 |
|
Operating income |
|
|
19,838 |
|
|
20,001 |
|
|
59,431 |
|
|
60,817 |
|
Income from unconsolidated joint ventures |
|
|
746 |
|
|
615 |
|
|
2,103 |
|
|
1,635 |
|
Gain on sale of real estate, net |
|
|
14,353 |
|
|
— |
|
|
62,698 |
|
|
5,054 |
|
Net income |
|
|
34,937 |
|
|
20,616 |
|
|
124,232 |
|
|
67,506 |
|
Income allocated to non-controlling interests |
|
|
(17) |
|
|
— |
|
|
(17) |
|
|
— |
|
Net income attributable to LTC Properties, Inc. |
|
|
34,920 |
|
|
20,616 |
|
|
124,215 |
|
|
67,506 |
|
Income allocated to participating securities |
|
|
(138) |
|
|
(80) |
|
|
(504) |
|
|
(281) |
|
Net income available to common stockholders |
|
$ |
34,782 |
|
$ |
20,536 |
|
$ |
123,711 |
|
$ |
67,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.88 |
|
$ |
0.52 |
|
$ |
3.13 |
|
$ |
1.71 |
|
Diluted |
|
$ |
0.88 |
|
$ |
0.52 |
|
$ |
3.12 |
|
$ |
1.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used to calculate earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
39,487 |
|
|
39,428 |
|
|
39,470 |
|
|
39,403 |
|
Diluted |
|
|
39,865 |
|
|
39,748 |
|
|
39,845 |
|
|
39,738 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared and paid per common share |
|
$ |
0.57 |
|
$ |
0.57 |
|
$ |
1.71 |
|
$ |
1.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
34,937 |
|
$ |
20,616 |
|
$ |
124,232 |
|
$ |
67,506 |
|
Comprehensive income |
|
$ |
34,937 |
|
$ |
20,616 |
|
$ |
124,232 |
|
$ |
67,506 |
|
See accompanying notes.
4
LTC PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
|
|
|
|
|
|
|
|
Capital in |
|
|
Cumulative |
|
|
|
|
|
Total |
|
|
Non- |
|
|
|
|
|
|
Common Stock |
|
|
Excess of |
|
|
Net |
|
|
Cumulative |
|
|
Stockholder's |
|
|
Controlling |
|
|
Total |
|
|||
|
|
Shares |
|
|
Amount |
|
|
Par Value |
|
|
Income |
|
|
Distributions |
|
|
Equity |
|
|
Interests |
|
|
Equity |
|
Balance—December 31, 2016 |
|
39,221 |
|
$ |
392 |
|
$ |
839,005 |
|
$ |
1,013,443 |
|
$ |
(1,112,792) |
|
$ |
740,048 |
|
$ |
— |
|
$ |
740,048 |
|
Common Stock cash distributions ($0.57 per share) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(22,552) |
|
|
(22,552) |
|
|
— |
|
|
(22,552) |
|
Proceeds from common stock issued, net of issuance costs |
|
313 |
|
|
3 |
|
|
14,526 |
|
|
— |
|
|
— |
|
|
14,529 |
|
|
— |
|
|
14,529 |
|
Issuance of restricted stock |
|
75 |
|
|
1 |
|
|
(7) |
|
|
— |
|
|
— |
|
|
(6) |
|
|
— |
|
|
(6) |
|
Stock-based compensation expense |
|
— |
|
|
— |
|
|
1,259 |
|
|
— |
|
|
— |
|
|
1,259 |
|
|
— |
|
|
1,259 |
|
Net income |
|
— |
|
|
— |
|
|
— |
|
|
21,513 |
|
|
— |
|
|
21,513 |
|
|
— |
|
|
21,513 |
|
Other |
|
(36) |
|
|
— |
|
|
(1,651) |
|
|
— |
|
|
— |
|
|
(1,651) |
|
|
— |
|
|
(1,651) |
|
Balance—March 31, 2017 |
|
39,573 |
|
$ |
396 |
|
$ |
853,132 |
|
$ |
1,034,956 |
|
$ |
(1,135,344) |
|
$ |
753,140 |
|
$ |
— |
|
$ |
753,140 |
|
Common Stock cash distributions ($0.57 per share) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(22,558) |
|
|
(22,558) |
|
|
— |
|
|
(22,558) |
|
Issuance of restricted stock |
|
8 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Cancelation of restricted stock |
|
(14) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Stock option exercises |
|
3 |
|
|
— |
|
|
79 |
|
|
— |
|
|
— |
|
|
79 |
|
|
— |
|
|
79 |
|
Stock-based compensation expense |
|
— |
|
|
— |
|
|
1,425 |
|
|
— |
|
|
— |
|
|
1,425 |
|
|
— |
|
|
1,425 |
|
Net income |
|
— |
|
|
— |
|
|
— |
|
|
25,377 |
|
|
— |
|
|
25,377 |
|
|
— |
|
|
25,377 |
|
Other |
|
(6) |
|
|
— |
|
|
(296) |
|
|
— |
|
|
— |
|
|
(296) |
|
|
— |
|
|
(296) |
|
Balance—June 30, 2017 |
|
39,564 |
|
$ |
396 |
|
$ |
854,340 |
|
$ |
1,060,333 |
|
$ |
(1,157,902) |
|
$ |
757,167 |
|
$ |
— |
|
$ |
757,167 |
|
Common Stock cash distributions ($0.57 per share) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(22,554) |
|
|
(22,554) |
|
|
— |
|
|
(22,554) |
|
Issuance of restricted stock |
|
3 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Cancelation of restricted stock |
|
(1) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Stock option exercises |
|
5 |
|
|
— |
|
|
123 |
|
|
— |
|
|
— |
|
|
123 |
|
|
— |
|
|
123 |
|
Stock-based compensation expense |
|
— |
|
|
— |
|
|
1,283 |
|
|
— |
|
|
— |
|
|
1,283 |
|
|
— |
|
|
1,283 |
|
Net income |
|
— |
|
|
— |
|
|
— |
|
|
20,616 |
|
|
— |
|
|
20,616 |
|
|
— |
|
|
20,616 |
|
Balance—September 30, 2017 |
|
39,571 |
|
$ |
396 |
|
$ |
855,746 |
|
$ |
1,080,949 |
|
$ |
(1,180,456) |
|
$ |
756,635 |
|
$ |
— |
|
$ |
756,635 |
|
Common Stock cash distributions ($0.57 per share) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(22,555) |
|
|
(22,555) |
|
|
— |
|
|
(22,555) |
|
Issuance of restricted stock |
|
— |
|
|
— |
|
|
(14) |
|
|
— |
|
|
— |
|
|
(14) |
|
|
— |
|
|
(14) |
|
Stock-based compensation expense |
|
— |
|
|
— |
|
|
1,282 |
|
|
— |
|
|
— |
|
|
1,282 |
|
|
— |
|
|
1,282 |
|
Net income |
|
— |
|
|
— |
|
|
— |
|
|
19,834 |
|
|
— |
|
|
19,834 |
|
|
— |
|
|
19,834 |
|
Non-controlling interest contributions |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3,488 |
|
|
3,488 |
|
Other |
|
(1) |
|
|
— |
|
|
(22) |
|
|
— |
|
|
— |
|
|
(22) |
|
|
— |
|
|
(22) |
|
Balance—December 31, 2017 |
|
39,570 |
|
$ |
396 |
|
$ |
856,992 |
|
$ |
1,100,783 |
|
$ |
(1,203,011) |
|
$ |
755,160 |
|
$ |
3,488 |
|
$ |
758,648 |
|
Common Stock cash distributions ($0.57 per share) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(22,578) |
|
|
(22,578) |
|
|
— |
|
|
(22,578) |
|
Issuance of restricted stock |
|
82 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Stock option exercises |
|
5 |
|
|
— |
|
|
123 |
|
|
— |
|
|
— |
|
|
123 |
|
|
— |
|
|
123 |
|
Stock-based compensation expense |
|
— |
|
|
— |
|
|
1,376 |
|
|
— |
|
|
— |
|
|
1,376 |
|
|
— |
|
|
1,376 |
|
Net income |
|
— |
|
|
— |
|
|
— |
|
|
20,359 |
|
|
— |
|
|
20,359 |
|
|
— |
|
|
20,359 |
|
Other |
|
(28) |
|
|
— |
|
|
(1,065) |
|
|
— |
|
|
— |
|
|
(1,065) |
|
|
— |
|
|
(1,065) |
|
Balance—March 31, 2018 |
|
39,629 |
|
$ |
396 |
|
$ |
857,426 |
|
$ |
1,121,142 |
|
$ |
(1,225,589) |
|
$ |
753,375 |
|
$ |
3,488 |
|
$ |
756,863 |
|
Common Stock cash distributions ($0.57 per share) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(22,590) |
|
|
(22,590) |
|
|
— |
|
|
(22,590) |
|
Issuance of restricted stock |
|
9 |
|
|
— |
|
|
(8) |
|
|
— |
|
|
— |
|
|
(8) |
|
|
— |
|
|
(8) |
|
Stock-based compensation expense |
|
— |
|
|
— |
|
|
1,521 |
|
|
— |
|
|
— |
|
|
1,521 |
|
|
— |
|
|
1,521 |
|
Net income |
|
— |
|
|
— |
|
|
— |
|
|
68,936 |
|
|
— |
|
|
68,936 |
|
|
— |
|
|
68,936 |
|
Non-controlling interest contributions |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,081 |
|
|
1,081 |
|
Other |
|
(3) |
|
|
— |
|
|
(107) |
|
|
— |
|
|
— |
|
|
(107) |
|
|
— |
|
|
(107) |
|
Balance—June 30, 2018 |
|
39,635 |
|
$ |
396 |
|
$ |
858,832 |
|
$ |
1,190,078 |
|
$ |
(1,248,179) |
|
$ |
801,127 |
|
$ |
4,569 |
|
$ |
805,696 |
|
Common Stock cash distributions ($0.57 per share) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(22,600) |
|
|
(22,600) |
|
|
— |
|
|
(22,600) |
|
Proceeds from common stock issued, net of issuance costs |
|
22 |
|
|
1 |
|
|
928 |
|
|
— |
|
|
— |
|
|
929 |
|
|
— |
|
|
929 |
|
Stock-based compensation expense |
|
— |
|
|
— |
|
|
1,487 |
|
|
— |
|
|
— |
|
|
1,487 |
|
|
— |
|
|
1,487 |
|
Net income |
|
— |
|
|
— |
|
|
— |
|
|
34,920 |
|
|
— |
|
|
34,920 |
|
|
17 |
|
|
34,937 |
|
Non-controlling interest contributions |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,882 |
|
|
2,882 |
|
Non-controlling interest distributions |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(17) |
|
|
(17) |
|
Other |
|
— |
|
|
— |
|
|
(21) |
|
|
— |
|
|
— |
|
|
(21) |
|
|
— |
|
|
(21) |
|
Balance—September 30, 2018 |
|
39,657 |
|
$ |
397 |
|
$ |
861,226 |
|
$ |
1,224,998 |
|
$ |
(1,270,779) |
|
$ |
815,842 |
|
$ |
7,451 |
|
$ |
823,293 |
|
5
LTC PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands, unaudited)
|
|
Nine Months Ended September 30, |
|
||||
|
|
2018 |
|
2017 |
|
||
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net income |
|
$ |
124,232 |
|
$ |
67,506 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
28,159 |
|
|
28,186 |
|
Stock-based compensation expense |
|
|
4,384 |
|
|
3,967 |
|
Impairment charges |
|
|
— |
|
|
1,880 |
|
Gain on sale of real estate, net |
|
|
(62,698) |
|
|
(5,054) |
|
Income from unconsolidated joint ventures |
|
|
(2,103) |
|
|
(1,635) |
|
Income distributions from unconsolidated joint ventures |
|
|
1,727 |
|
|
1,236 |
|
Insurance proceeds for damaged property |
|
|
2,619 |
|
|
— |
|
Payment for remediation of damaged property |
|
|
(455) |
|
|
— |
|
Straight-line rental income |
|
|
(8,629) |
|
|
(7,362) |
|
Lease incentives funded |
|
|
(1,272) |
|
|
(5,713) |
|
Amortization of lease incentives |
|
|
1,651 |
|
|
1,681 |
|
Provision for doubtful accounts |
|
|
76 |
|
|
(139) |
|
Non-cash interest related to contingent liabilities |
|
|
377 |
|
|
476 |
|
Non-cash income related to earn-out and related lease inducement write-off |
|
|
— |
|
|
(842) |
|
Other non-cash items, net |
|
|
923 |
|
|
958 |
|
Increase in interest receivable |
|
|
(4,240) |
|
|
(3,967) |
|
Decrease in accrued interest payable |
|
|
(1,808) |
|
|
(567) |
|
Net change in other assets and liabilities |
|
|
495 |
|
|
(4,477) |
|
Net cash provided by operating activities |
|
|
83,438 |
|
|
76,134 |
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Investment in real estate properties |
|
|
(40,408) |
|
|
(54,804) |
|
Investment in real estate developments |
|
|
(25,717) |
|
|
(13,939) |
|
Investment in real estate capital improvements |
|
|
(2,063) |
|
|
(2,308) |
|
Capitalized interest |
|
|
(850) |
|
|
(627) |
|
Proceeds from sale of real estate, net |
|
|
82,340 |
|
|
14,106 |
|
Investment in real estate mortgage loans receivable |
|
|
(20,530) |
|
|
(9,333) |
|
Principal payments received on mortgage loans receivable |
|
|
1,636 |
|
|
17,351 |
|
Investments in unconsolidated joint ventures |
|
|