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

May 09, 2017 • 11:00 am ET

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

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Presentation
Executive
Pamela J. Shelley-Kessler

in the capital markets earlier this year, raising nearly $15 million in gross proceeds under our ATM program and $100 million through the sale of senior unsecured notes to group of institutional investors in a private placement. We used the proceeds from these transactions to pay down our line of credit and fund capital improvement and development projects.

We continue to have well laddered long-term debt maturities matched to our projected free cash flow, and with no amounts currently outstanding under our line of credit, we don't have any significant debt maturities over the next 5 years. Our considerable liquidity, which includes availability of more than $820 million puts LTC in an advantageous position to execute its growth strategies and quickly and decisively seize opportunities as they arrive. Our availability currently includes $600 million under our line of credit, almost $37 million under our shelf agreement with Prudential and $185 million under our ATM program.

We continue to strategically allocate capital where it makes the most sense for our portfolio, our partners and our shareholders. Our capital deployment strategy will remain conservative in an effort to ensure profitable portfolio growth. We are not interested in growth just for growth sake. LTC has long believed that closely aligning the maturities on our long-term debt with projected free cash flow is the best way to mitigate future refinancing risk.

This strategy combined with a conservatively leveraged balance sheet, helps us maintain an investment-grade credit profile. At the end of the first quarter, our credit metrics compared favorably to the healthcare REIT industry average, with a debt-to-annualized normalized EBITDAR of 3.9x, a normalized annualized fixed charge coverage ratio of 5x, and a debt to enterprise value of 24.1%.

Now I'll turn the call over to Clint, for a discussion of our pipeline and portfolio metrics.

Executive
Clint B. Malin

Thank you, Pam. Good morning, everyone. As Wendy noted, LTC's current pipeline is rather active and has grown to $125 million from $50 million at the time of our prior quarter's call. Approximately 70% of our pipeline is represented by private pay assets. Additionally, 70% of the pipeline is represented by assets constructed within the last 4 years. Growth in our pipeline is exclusively from off-market transactions, we spend most of our time sourcing investment opportunities. Pipeline consists of 5 transactions with 3 existing operating partners and the 2 other transactions with new operator relationships.

These 2 transactions with new relationships began as discussions to provide mezzanine financing and have evolved into sale-leaseback opportunities. Both of the transactions proposed with new operating partners will be structured as joint ventures for real estate ownership, LTC owning 90% and an affiliate of the lessee owning a 10% noncontrolling subordinated minority interest. The real estate will be leased under a long-term triple net master leases to affiliates of LTC's limited partner invested in the real estate. LTC will have the opportunity to acquire 100% of the real estate over time, subject to the properties meeting predetermined financial metrics.

If you recall