LTC PROPERTIES INC Q2 FY2025 earnings call

• Strengthened teams through promotions, new CIO, and Board member with REIT experience. • Initiated RIDEA platform to transform into a larger, more diversified senior housing focused REIT. • Enhanced liquidity with a new 4-year unsecured credit agreement increasing aggregate commitments to $600 million with ability to increase to $1.2 billion. • Allowed Prestige an option to prepay $180 million loan secured by 14 skilled nursing centers in Michigan, with Prestige reverting to full contractual interest rate. • Under contract to sell 7 skilled nursing centers, expecting net proceeds of ~$120 million and gain on sale of ~$80 million. • Acquired a 67-unit community in California for $35 million, originated a $42 million mortgage loan in Florida.

Core FFO improved to $0.68 from $0.67 in the second quarter compared to the same period in 2024. Core FAD improved by $0.05 to $0.71 versus $0.66. The increase in core FFO was due to a decrease in interest expense, increase in fair market rent resets, and increase in SHOP NOI, partially offset by lower interest income and higher G&A. SHOP portfolio average occupancy was 81% in the second quarter with SHOP NOI totaling $2.5 million. The acquisition of a 67-unit stabilized assisted living and memory care community in California involved a $35 million investment at an estimated initial yield of 7%. A $42 million mortgage loan secured by a 250-unit senior housing community in Florida was originated, carrying a fixed interest rate of 8.5%.

• Increased 2025 investments guidance to $400 million, more than doubling the SHOP portfolio size. • Increased full year 2025 Core FFO guidance range by $0.02 to $2.67-$2.71, with high end including $320 million in investments expected to close in next 60 days.

• Forward-looking statements subject to risks and uncertainties detailed in SEC filings. • Prestige needing to secure financing to prepay $180 million loan. • Interest rate impacts on funding and financial performance.

Q: How do you think about funding new investments?

A: Anticipate funding on leverage-neutral basis, blending higher-yielding loans, and using sales proceeds.

Q: What's the potential for SHOP LOIs beyond the $320 million?

A: Being selective in deal flow, focused on single-asset, small portfolios of stabilized, newer vintage properties.

Q: On Prestige loan prepayment, how are discussions going?

A: Prestige would need to secure financing, likely HUD, and it's all or none on the $175 million loan.

Q: On ALG purchase options?

A: Likely to fall into 2026 or 2027, depending on interest rates and performance.

Q: On longer-term leverage targets?

A: Target below 5s, currently at 4.2x, allowing flexibility to fund investments with debt and take out long term with equity/debt as rates come down.

Q: On Prestige maintaining contractual rate without security deposit?

A: They've made performance improvements through occupancy gains, expected to continue as they work towards securing long-term financing.

Q: On value-add RIDEA transactions?

A: Not primary focus currently, focus is on single assets, smaller portfolios, newer stabilized assets with good cash flow.