LTC Properties Inc. (NYSE:LTC) Q1 2017 Earnings Conference Call - Final Transcript

May 09, 2017 • 11:00 am ET


LTC Properties Inc. (NYSE:LTC) Q1 2017 Earnings Conference Call - Final Transcript


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Good day, and welcome to the LTC Properties First Quarter 2017 Analyst and Investor Conference Call and Webcast. (Operator Instructions) Please note this event is being recorded.

I would like to turn the conference over to Wendy Simpson, CEO and President. Please go ahead, Madam.

Wendy L. Simpson

Thank you, Francesca, and good morning, everyone. I'm glad you could join us for LTC's 2017 first quarter investor call. With me today are Pam Kessler, our CFO; and Clint Malin, our Chief Investment Officer.

I'll begin with a few brief remarks and will then turn the call over to Pam for commentary on our financial results, and then to Clint for a discussion of our pipeline and operator partner performance.

I'm pleased to report that LTC increased FFO by nearly 9% this quarter, our 26th consecutive quarter of normalized FFO growth. As we expected, there was no meaningful investment activity during the first quarter, as we paused to deploy capital in an environment that was not particularly aligned with our measured and conservative investment strategy, a strategy that has served LTC well across many senior housing cycles, and one that has allowed us to maintain some of the best coverage ratios in the industry.

With that said, I'm going to reaffirm our 2017 FFO guidance at $3.08 to $3.10. But unlike our view of the year as of our last call, this range now has very positive tailwinds. Clint will fill you in more specifics shortly. Our balance sheet remains strong with considerable flexibility that will allow LTC to act quickly, when we identify new transactions that we believe add value to our portfolio and for our shareholders, and help our operating partners achieve their business goals. It bears repeating that even if we do not close any deals in 2017, LTC would still be well positioned for sustained future growth.

I'll now turn the call over to Pam.

Pamela J. Shelley-Kessler

Thank you, Wendy. As Wendy noted, NAREIT FFO increased almost 9% from a year ago. On a diluted per share basis, FFO improved 2.6% to $0.78, on nearly 5% more weighted average diluted shares outstanding compared with last year. FFO expansion was driven primarily by top line growth of more than 10% resulting from prior year investments, completed development and capital improvement projects as well as lease amendments in the latter part of 2016.

Revenue growth was partially offset by higher interest expense, as a result of terming out our line of credit in 2016 and 2017 as well as the effect of equity issuance under our ATM program and performance-based equity awards. FAD increased nearly 13% due to growth drivers previously mentioned as well as lower capitalized interest on development projects this quarter, as compared to last year.

During the quarter, we invested almost $9 million in various development and capital improvement projects. We received $11 million in principal payments and mortgage loan pay-offs, and paid a $0.19 per share monthly common dividend.

As I described on our last call, LTC took advantage of opportunities