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LTC Properties(LTC) - 2024 Q3 - Earnings Call Transcript
LTCLTC Properties(LTC)2024-10-29 16:56
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Financial Data and Key Metrics Changes - Net income available to common shareholders increased by 7.1million,primarilyduetoone−timeincomefromformeroperatorsrelatedtoportfoliotransitionsinprioryears,adeclineininterestexpensefromdeleveragingactivities,andincreasesinrentandincomefromunconsolidatedjointventures[8]−FullydilutedFFOpersharewas7.1 million, primarily due to one-time income from former operators related to portfolio transitions in prior years, a decline in interest expense from deleveraging activities, and increases in rent and income from unconsolidated joint ventures [8] - Fully diluted FFO per share was 0.78 compared to 0.65lastyear,whileexcludingnon−recurringitems,FFOpersharewas0.65 last year, while excluding non-recurring items, FFO per share was 0.68 versus 0.65[9]−Totalliquiditywasapproximately0.65 [9] - Total liquidity was approximately 286 million, up 51% from the prior quarter, with 5.4millionincashonhandand5.4 million in cash on hand and 279 million available on the line of credit [13][14] Business Line Data and Key Metrics Changes - The company recorded a 3.6milliongainonthesaleofanassistedlivingcommunityinTexasandreceived3.6 million gain on the sale of an assisted living community in Texas and received 441,000 in contractual rent through the remainder of the lease term [10] - The lease-up portfolio, which includes 17 properties across seven operators, is expected to generate approximately 3.6millioninrevenuefor2024[23]MarketDataandKeyMetricsChanges−TheproformadebttoannualizedadjustedEBITDAforrealestatedecreasedto4.2timesfrom5.3timesinthesecondquarter,whiletheproformaannualizedadjustedfixedchargecoverageratioincreasedto4.8from3.7times[14]CompanyStrategyandDevelopmentDirection−ThecompanyisactivelyevaluatingRIDEAstructuresandanalyzingtheinfrastructureneededforsuccessfulexecution,withaninitialgrossinvestmentrangeof3.6 million in revenue for 2024 [23] Market Data and Key Metrics Changes - The pro forma debt to annualized adjusted EBITDA for real estate decreased to 4.2 times from 5.3 times in the second quarter, while the pro forma annualized adjusted fixed charge coverage ratio increased to 4.8 from 3.7 times [14] Company Strategy and Development Direction - The company is actively evaluating RIDEA structures and analyzing the infrastructure needed for successful execution, with an initial gross investment range of 150 million to 200millionexpectedtobeconvertedbythesecondquarterofnextyear[5][24]−ThemanagementbelievesthattheRIDEAstructurewillactasacatalystforgrowthin2025,indicatingashifttowardsmorecooperativeinvestmentstrategies[24]ManagementCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedoptimismabouttheyearand2025,highlightingthepositivefinancialresultsandtheabilitytocapitalizeonnewinvestmentopportunitiesduetoadeleveragedbalancesheet[4][26]−Themanagementacknowledgedthechallengesposedbyrecenthurricanesbutnotedthattherewasnomaterialdamagetotheirbuildings,emphasizingtheresilienceoftheiroperators[18]OtherImportantInformation−Thecompanyreceived200 million expected to be converted by the second quarter of next year [5][24] - The management believes that the RIDEA structure will act as a catalyst for growth in 2025, indicating a shift towards more cooperative investment strategies [24] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the year and 2025, highlighting the positive financial results and the ability to capitalize on new investment opportunities due to a deleveraged balance sheet [4][26] - The management acknowledged the challenges posed by recent hurricanes but noted that there was no material damage to their buildings, emphasizing the resilience of their operators [18] Other Important Information - The company received 4.1 million in previously unrecorded revenue from former operators related to portfolio transitions in prior years and net proceeds of nearly 63millionfromequitysalesundertheATMprogram[4][11]−ThefourthquarterguidanceforFFO,excludingknownnon−recurringitems,isbetween63 million from equity sales under the ATM program [4][11] - The fourth quarter guidance for FFO, excluding known non-recurring items, is between 0.65 and $0.66 per share, reflecting a decrease due to mortgage loan payoffs [15][16] Q&A Session Summary Question: Can you share additional detail around the upfront platform investments necessary for RIDEA? - The company is analyzing the resources needed for effective management and will provide more information in the next quarterly call [28][30] Question: What conversations have you had regarding external growth opportunities around RIDEA? - The company is seeing opportunities and believes there is significant potential for growth in this space [32] Question: Can you elaborate on why tenants are interested in conversions to RIDEA today? - Tenants without long-term triple net leases are particularly interested in these conversions [37] Question: What is the outlook around external growth given your improved leverage and liquidity? - The company is actively looking at opportunities and hopes to provide more details in the next call [64]