We are still in the beginning stage of the first quarter earnings season with just a few companies in our sector reporting so far. LTC Properties reported first quarter results on April 27, with earnings slightly below expectations, but revenues above.
LTC is one of the smallest REITs in our sector, but the only one that pays its dividends monthly, which we always considered a plus for investors. Like all of the REITs, some of their operators have had challenges during the pandemic keeping up with lease or mortgage payments, but there appears to be a flicker of light at the end of the tunnel. The good news for LTC is that they really have no significant debt maturities looming for the next few years, other than their line of credit, which should not be a problem.
Subsequent to the end of the quarter, LTC’s largest operator, representing 16.4% of revenues and 14.7% of assets, came to an agreement to defer up to $1.5 million in interest payments on a mortgage loan secured by 15 skilled nursing facilities. The agreement with Prestige Healthcare is for May through September this year, and the deferred payments are capped at $300,000 per month.
During the quarter, the REIT sold one assisted living community with 60 units in Kentucky for $11.0 million, or $183,333 per unit, and two SNFs in New Mexico with 235 beds for $21.25 million, or $90,425 per bed. Both are decent prices in this market. Subsequent to March 31, they also sold a 70-unit assisted living community in Florida for $4.85 million, or $80,833 per unit. The gross book value was $7.16 million so there must have been some performance issues.
Management also provided an update on their 35 assisted living communities currently leased to Brookdale Senior Living, with the lease expiring at the end of this year. Earlier this year Brookdale informed the REIT of their intention not to renew. The current plan is to sell about 50% of the assets and re-lease the other half to other operators. The ones slated to be re-leased have a much higher EBITDAR than the ones to be sold. Brookdale is current on all payments to date.
Current assisted living occupancy for LTC’s portfolio is about 80%, which compares with 87% pre-pandemic. On the skilled nursing side, it is currently 73%, compared with 80% pre-pandemic. This seems to be near industry averages.
