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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Executive
Wendy L. Simpson

enter the market and occupancy dipping, increased competition for the tenant wallet share is ongoing. Recent NIC data showed that in the first quarter of this year, senior housing occupancy dropped to the lowest levels since 2013, with assisted living occupancy moving to its lowest levels in 7 years.

That's not the whole story, however, while certain markets are struggling with supply and demand imbalances, other markets remain steady and attractive. At the recent NIC conference, audiences were reminded that no 2 markets are the same, and that while natural trends -- national trends provide important data, getting down to what's happening in regional and local markets is equally important, if not more important.

I should note that the diversity we've built into our portfolio helps soften the potential impact of any one community. I also believe that we have built a defensible position through the utilization of triple net leases, master leases and strong coverage. With favorable long-term healthcare trends and the expected growing need for memory care community, I feel good about our position. Including the possible investments Clint mentioned, our committed capital for the remaining 9 months of 2017 totals approximately $155 million.

In addition to acquisitions, we are investing in developments, both SNF and private pay as well as major existing property additions and improvements. If we choose to finance these investments entirely on our bank line, at year-end we project that our debt-to-market capitalization would be around our self-imposed ceiling of 30% debt to 70% market cap. As we make investments and watch the markets during the year, we will be making decisions on managing our debt load and the maturity.

So in summary, while we are taking a bit of a cautious, but slightly more rosy approach this year on investing, we remain opened to and interested in deals that further solidify our investment and growth strategy. That is reducing the average age of our portfolio, broadening our operator partner base, investing in developed assets and maintaining a strong coverage ratio relative to our peers.

As I mentioned earlier, even with taking a bit of a wait-and-see approach, our current commitments will begin providing FFO later this year and into next year, regardless of 2017 activity levels. And as Pam said, our strong balance sheet and ability to flexibly structure deals for our partners positions LTC well to take advantage of accretive opportunities as they arrive.

LTC has more than a quarter century of experience in the senior housing market, and has operated successfully across many market cycles. We are confident in our strategy and our ability to patiently invest in the right properties and community, at the right time, while maintaining highly focused on developing mutually beneficial relationships with asset operators based on trust, transparency and shared success. I look forward to keeping you updated on our progress.

Thank you for joining us today. We will now open the call to questions. Francesca?