LTC Properties (NYSE: LTC) Offers Diversified Portfolio and Monthly Dividends
Founded in 1992, LTC Properties, Inc. (NYSE: LTC) is a self-administered real estate investment trust (REIT) investing in seniors housing and health care properties. LTC’s portfolio encompasses Skilled Nursing Facilities, Assisted Living Communities, Independent Living Communities, Memory Care Communities and combinations thereof. The company’s main objective is to build and grow a diversified portfolio that creates and sustains shareholder value while providing stockholders current distribution income. To meet this objective, the company seeks properties operated by regional operators, ideally offering upside and portfolio diversification.
Advisor Access spoke with Wendy Simpson, Chairman and CEO of LTC Properties.
Advisor Access: Would you provide an overview of LTC Properties and discuss its market niche in the REIT sector?
Wendy Simpson: LTC Properties, Inc. (NYSE: LTC) is a REIT that invests in seniors housing and health care properties, primarily through sale-leasebacks, mortgage financing, joint ventures and structured finance solutions, including preferred equity and mezzanine lending. Currently, our investment portfolio includes 222 geographically diverse properties across 29 states with 32 operating partners. Based on our gross real estate investments, LTC’s portfolio is roughly half seniors housing and half skilled nursing.
As people in the United States continue to age and live longer, needs-based care, such as that offered in our properties, will be a mainstay for years to come. Our industry enjoys strong, long-term fundamentals, and we operate in a historically defensive sector. I believe the outlook for the seniors housing and health care market over the next decade is positive, with demographics favoring our niche.
AA: What changes have you seen in the sector in this post-pandemic period, and how is the company addressing them?
WS: Our sector certainly was tested during the pandemic, just as many were. One of the things I’m most proud of is how we came together to collaboratively navigate through an unprecedented challenge. As an industry, we demonstrated grit, compassion and patience, and although it’s a bit premature to say that the full impact of COVID-19 is in our rearview mirror, I believe that as a group, we have made progress and will emerge stronger than before. Enhanced safety protocols were enacted that will serve the industry well into the future, and the sharing of best practices resulted in improved processes and procedures at our buildings. It’s going to take a bit more time before occupancy reaches pre-pandemic levels across the board, but our operators are making progress. I have been so gratified by the hard work of our operators’ employees who continue to provide safe and compassionate care to our nation’s most vulnerable population.
AA: Has there been a change in the way LTC thinks about its dividend and investment priorities amidst a volatile capital market?
WS: LTC has always operated with a conservative mindset and philosophy to help produce solid returns on our investments, while protecting our balance sheet and dividend. In a period of volatility, such as we’re seeing now, that philosophy is even more important and impactful.
Increasing shareholder value is very much on the minds of our executive team and board, so I am extremely proud that during a time when many companies reduced their dividends, or cut them completely, LTC provided, and continues to provide, its shareholders with a steady return. And we’ve accomplished this while supporting our operators at the height of the pandemic. We currently pay a monthly dividend of $0.19 per share, or $2.28 per share on an annualized basis, resulting in a yield of approximately 6.7% at April 10, 2023.
Information as of March 1, 2023, and as disclosed in our April 2023 Investor Presentation.
We also are focused on identifying new opportunities to help us maintain a diverse portfolio with respect to property type, investment vehicle (of which we offer many) and geography. In fact, by meeting operators’ needs at the right time with the right solution, we invested more than $170 million in 2022, making it our strongest investment year since 2015. And, year-to-date in 2023, we already have eclipsed that total.
Being mindful of current market conditions, we are working to recycle capital by selling non-core assets and redeploying that capital into strategic investments. In addition to further diversifying our portfolio, our strategy includes reducing its average age and maintaining a healthy balance between private-pay assets, generally seniors housing, and those that rely on government reimbursement, generally skilled nursing. As an example, in the first quarter of this year, we divested two skilled nursing centers that were built in 1975 and 1985, respectively, generating proceeds of nearly $21 million. We then used those proceeds to pay down our unsecured revolving line of credit.
As I said earlier, our philosophy has always been to operate conservatively and deliberately, which has served us well through myriad capital market and real estate cycles.
AA: Is there anything else you would like investors to know about LTC?
WS: Thank you for your question. We recognize that ESG [Environmental, Social and Governance] is currently a topic of significant interest and scrutiny. As a responsible business, we understand the importance of being good stewards beyond profit. We are pleased to have recently published our first ESG report and are committed to aligning our business strategy with the ESG principles that are most relevant to our industry. We are pleased to say that we have always excelled in the “S” pillar, but we may not have highlighted it enough in the past. The release of our ESG report provides us with an excellent opportunity to do so.
AA: Thank you, Wendy.
Wendy Simpson has been LTC’s CEO and President since 2007 and was appointed Chairman of the Board in 2013. She joined the company in 2000 as Vice Chairman and has also served as Treasurer, Chief Financial Officer and Chief Operating Officer. Prior to joining LTC, Wendy held executive positions in public companies that owned acute care hospitals, LTACHs, psychiatric hospitals and home health services. She began her career in public accounting and has more than 25 years in health care related businesses.
Investors and others should note that LTC Properties, Inc. posts important financial information using the investor relations section of the LTC Properties, Inc. website, https://ir.ltcreit.com/overview/default.aspx, and Securities and Exchange Commission filings.
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