管理層發言
Greetings, and welcome to the LTC Properties Second Quarter 2026 Earnings Call. Joining us on today's call are Pam Kessler, Co-President and Co-Chief Executive Officer, Clint Malin, Co-President and Co-Chief Executive Officer, Cece Chikhale, Executive Vice President, Chief Financial Officer and Treasurer, Gibson Satterwhite, Executive Vice President of Asset Management, and Dave Boitano, Executive Vice President and Chief Investment Officer. Before management begins its presentation, please know that today's comments, including the question-and-answer session, include forward-looking statements subject to risks and uncertainties that may cause actual results and events to differ materially. These risks and uncertainties are detailed in LTC Properties' filings with the Securities and Exchange Commission from time to time, including the company's most recent 10-K dated December 31, 2025. LTC undertakes no obligation to revise or update forward-looking statements to reflect events or circumstances after the date of this presentation. Please note this event is being recorded. I would like to now turn the conference over to LTC management.
Good morning, and thank you for joining us. The excitement and momentum of our SHOP strategy here at LTC continues, and our transformation is well ahead of schedule. We are increasing our 2026 SHOP acquisition guidance by 50% to $900 million at the midpoint and we'll have closed $700 million in acquisitions by the end of September. Additionally, we expect a meaningful step up in dispositions and loan payoffs this year, well above what we've previously discussed, with the majority in skilled nursing. By the end of September, SHOP will represent 40% of LTC's pro forma annualized NOI, a full quarter ahead of previous estimates. We expect to drive that to 50% by year-end through pipeline execution, redeploying proceeds from the Prestige loan payoff, and proactively recycling capital on lower-growth investments at exceptional pricing. At our current pace, we see a pathway to generating 75% of our annualized NOI from SHOP by the end of 2028. We are encouraged by our core SHOP performance and the momentum we are seeing across the portfolio. Additionally, we have strengthened our balance sheet with a $1.1 billion credit facility, supporting our growth trajectory with additional liquidity. At 40% SHOP NOI, our pro forma internal growth rate triples. Combined with external growth opportunities, LTC's projected annual growth rate at 75% of NOI in two years increases meaningfully. Our SHOP strategy has resulted in a substantial shift in our portfolio, dramatically enhancing LTC's long-term ability to organically grow Core FFO and FAD per share above historical rates. LTC's transformation from a triple-net lease and lending platform into a higher-growth, SHOP-focused REIT reflects deliberate planning and efficient execution. What you see this quarter is our transformative SHOP strategy converting into results. Investments we have made in operator relationships, human capital, and real estate are creating value and long-term growth for our shareholders. I'll now turn it over to Gibson to walk through the operating portfolio.
Thank you, Pam. We are intentionally and rapidly transforming our business to meaningfully increase LTC's long-term intrinsic growth profile. The degree to which we accomplish our objective will be driven by our investment in SHOP and the long-term growth potential of that segment. With respect to increasing our SHOP mix, we now expect proceeds of $730 million from dispositions and loan payoffs in 2026, $465 million above prior guidance. We expect to realize a 5.5% cap rate on rent from the incremental $465 million and a blended rate of 7.3% on total 2026 proceeds. About two-thirds of the incremental sales will be skilled nursing properties, bringing total expected 2026 proceeds from skilled nursing to $570 million at a blended cap rate of 7.5%. The remaining $160 million of triple-net seniors housing properties is expected to be sold at a 6.5% cap rate on current rent. The total proceeds this year include $180 million from the Prestige loan payoff, which we are now modeling to occur on October 1. Our revision to the anticipated payoff date relates to the HUD process timeline. Given the progress that has already been made, we do expect that closing to occur this year. The timing of the additional sales and associated rent reductions are outlined in our supplemental package. With respect to SHOP growth, we remain encouraged by the portfolio's strong characteristics and expect to realize pro forma growth of 14% at the midpoint of guidance in our core SHOP portfolio when compared with 2025. Our second quarter core SHOP NOI was $13.3 million, up from $12.7 million pro forma NOI in Q1. We're encouraged by the RevPOR growth relative to our expectations earlier in the year and saw occupancy increases accelerate at the end of the quarter. Given those factors, we believe we are well positioned to achieve guidance with continued improvement throughout the year. Looking forward into 2027, we will continue to evaluate our portfolio for opportunities to accelerate our strategy by recycling capital at attractive risk-adjusted rates. We're excited about the long-term growth potential of the SHOP portfolio that we are assembling. Now I'll turn the call over to Dave to discuss our investment activity.
Thanks, Gibson. We are winning and growing in a dynamic acquisition market that is fueling LTC's near-term momentum and long-term growth trajectory. By the end of the third quarter, we will surpass the previous midpoint of our investment guidance by $100 million and now expect to reach $900 million in SHOP acquisitions in 2026. Importantly, we expect this pace of growth to continue into 2027 and beyond. From the start of the year to the end of July, we closed approximately $400 million in SHOP acquisitions. We expect another $300 million by the end of Q3 and roughly $200 million more by year-end, reflecting the depth of our deal flow. A key value underlying LTC's success is our strong commitment to relationships. Our speed, strength, and collaborative execution resonate with operating partners, sellers, and intermediaries. And as a result, we're seeing a robust pipeline of opportunities to support our growth. Our SHOP acquisitions are targeted, focusing on key characteristics that support the quality of the platform and will drive higher intrinsic growth and better risk-adjusted returns. The average age of the $700 million of acquisitions that Pam referenced earlier is nine years, with 76% located in primary markets as designated by NIC. The average unit size of these communities is around 110, with nearly 60% offering a continuum of care spanning independent living, assisted living, and memory care. These acquisitions represent growth with existing and new operators, as well as repeat and first-time seller relationships. As our SHOP portfolio grows, we remain focused on identifying opportunities that align with the LTC strategy and pair well with our strong operating partners. Our investment team's focus on asset quality and size, unit mix, and market dynamics directs our growth to communities that will retain their competitive position and deliver durable long-term performance. We know sellers and operators have options, and we strive to be their trusted partner. We are deeply grateful to everyone's contributions to LTC's SHOP transformation and believe our people, our platform, our financial strength, and our deep relationships position us for continued growth and success. Now I'll pass the call to Cece for a review of our financial results.
Thank you, Dave. We recently expanded our credit facility by $300 million, increasing our unsecured revolving line of credit to $900 million. Additionally, we anticipate entering into a new ATM agreement in the third quarter. During the second quarter, we sold 4.1 million shares of common stock for $155 million in net proceeds under our ATM program to pre-fund our SHOP acquisitions. Our pro forma liquidity stands at $648 million. This strength in capital position enhances our financial flexibility and enables us to accelerate external growth initiatives and capture additional NOI expansion opportunities. At the end of the second quarter, our debt to annualized adjusted EBITDA for real estate was 4.2x and our annualized adjusted fixed charge coverage ratio was 4.9x. We continue to operate comfortably within our leverage target of 4x to 5x debt to EBITDA and will fluctuate within that target depending on the timing of our acquisitions and expected proceeds from sales and payoffs. Core FFO per share was $0.68 for both the 2026 and 2025 second quarters, and Core FAD per share was $0.70 this quarter compared with $0.71 in the 2025 second quarter. The decrease was due to an increase in our weighted average diluted shares outstanding, driven by additional shares issued under our ATM program, a decrease in income from skilled nursing facility sales and loan payoffs, and an increase in interest expense. The decrease was offset by an increase in SHOP NOI and interest income from loan originations and additional loan funding. As we head closer to year-end, we are narrowing our guidance range for 2026. We expect Core FFO per share in the range of $2.76 to $2.78 and Core FAD per share between $2.83 and $2.85. This guidance includes an increase in SHOP acquisitions to $900 million at the midpoint, increasing total SHOP NOI between $71 million and $80 million, and decreasing FAD Capex to approximately $4 million due to the timing of acquisitions. It also includes $730 million of proceeds from asset sales and loan payoffs. Assumptions underpinning our guidance are detailed in yesterday's earnings press release and our supplemental package, which are posted on the LTC website. I'll turn the call over to Clint.
Thank you, Cece. When we launched our SHOP platform just 15 months ago via cooperative triple-net conversions, it was seeded with 13 communities with a gross book value of $175 million. At the end of the third quarter, SHOP gross investments will total over $1.3 billion with an average age of nine years. Eighty percent of this growth has been external, driven in part by our ability to successfully cultivate strong SHOP operator relationships. We are deliberately building a SHOP portfolio to compete effectively today and in the future when new supply eventually comes online, although new construction starts remain near historical lows nationally. We are mindful that this will not always be the case, so we seek to acquire communities with an already strong market presence and with unit and common area configurations designed to fulfill contemporary consumer preferences. I would like to close by thanking our SHOP operators for choosing LTC and trusting in our relationship and ability to help support them as they care for our nation's seniors. Also, I would like to thank the LTC team for their tremendous efforts in carefully planning and executing our SHOP strategy in the pursuit of shareholder growth. Our transformation is happening faster than we predicted with everyone here at LTC working together as a team to build a platform for higher, sustainable, long-term FFO and FAD growth. With that, we are ready to take your questions.
分析師問答
One moment while we pull for the first question. The first question comes from Juan Sanabria with BMO Capital. Please proceed.
This is Robin sitting in for Juan. I was just curious on the $321 million left to close, if you could discuss cap rates, IRRs, expected timing. And then if you could maybe also discuss if you could do additional deals in addition to the incremental $321 million before year-end.
Sure, Rob. This is Dave. So that remaining to be closed looks much like what we have, similar cap rates and similar mix and quality. Really we're finding a lot of transactions that look like what we've acquired, and so we feel very good about that. As far as additional opportunities throughout the year, we're always looking, and if we find transactions that fit our box, we will certainly pursue them.
Then on the SHOP expectations, could you just help us understand the drivers of the RevPOR increase and the occupancy moderation?
Sure. Hi, this is Gibson. So before I get into those metrics, I just want to back up for a second and talk about that core portfolio for context. It's 27 properties. When we rolled that guidance out, it was about 97.5% of the NOI that we owned at the time. In that mix, we converted standalone memory care, so it's more heavily tilted towards standalone memory care, about 30% to 32% of the units in that portfolio. So we'll see some movement over time from quarter to quarter in performance and expectations, and it's not exactly analogous to some of the other same-store portfolios of our peers. With respect to the underlying metrics of guidance, RevPOR is being taken up 50 basis points, and that's really based on the pricing strength we've seen so far year-to-date. We have more price increases coming in the second half of the year. Underlying metrics are good. There's no material difference between the operators' asking rates and the rates at which people are moving in. We feel like the marketing funnel is working and flowing, and we feel pretty good about that. On the occupancy front, that's really a function of the math. Year-to-date, we're at about 89.7% occupancy, the same as last year. To achieve our initial guidance of a 150 basis point improvement, you'd have to average a 300 basis point improvement over the second half of the year. We felt like, because some of the cohort of buildings we see are standalone memory care, that would require a large movement, and we don't want to anchor our expectations on that kind of movement. I will say last year we saw a really good move in occupancy in Q3 across the portfolio, so it's not out of the realm of possibility. If we get that same kind of move, we'd be at the high end of guidance rather than the midpoint. The RevPOR expectations reflect the moderation in occupancy expectations. Overall, if our operators can deliver 14% growth at the midpoint, as Pam mentioned on a prior call, we will have outperformed our underwriting on those new deals. It's about $460 million worth of new deals in that cohort; we will have outperformed our underwriting and significantly transformed the intrinsic growth profile of our portfolio. So we're really excited about that. The low end of the range is one we don't expect to hit; it's still double-digit growth in that portfolio for the deals we bought. At the high end, you're in the high teens growth. The way we're thinking about it now, our expectations are probably normally distributed around the 14% midpoint. We're not trying to sandbag; we feel like that's a reasonable expectation of our operators. At that growth rate, we will go a long way to proving the thesis behind converting $730 million of our portfolio into SHOP and investing in the platform. We're really excited about that here at LTC.
The next question comes from Tayo Okusanya with Deutsche Bank.
A couple of quick ones from me. The core SHOP portfolio and the 14% NOI growth profile: as we think about everything else you've bought or will have in the portfolio by the end of this year, and then start thinking about 2027 and doing a year-over-year comparison similar to what you're doing with the core SHOP portfolio, how much confidence do you have that you could still put up similar NOI growth by the end of the year with a redefined corporate portfolio heading into 2027?
Do you mean the growth we're projecting in what we're buying, the recent acquisitions?
Yes, that's a great way to think about it. How do we think through the growth of that stuff?
So, Tayo, as I commented earlier, what we're looking to acquire and pursue, we expect similar dynamics in terms of low- to mid-teens IRRs, which corresponds to that growth. We really see it as adding quality to quality as we continue to grow, so that is our expectation as these roll into our portfolio and march in step with the rest of the assets.
We haven't bought any value-add, Tayo, if that's what you're asking, where you would expect outsized returns.
We're expecting to have the $700 million completed by the end of Q3. That'll put us at $1.3 billion, with an average age of nine years. We've targeted larger campuses, newer assets that are occupancy stabilized and have the ability to push revenue growth. We have conversations with our operating partners about this in the budgeting process and where to focus. We do think there's room to push rate, especially with the supply constraints that exist today. That's why we've targeted the asset profile we have to acquire to build the SHOP platform. We think that's going to be very advantageous to us going forward.
Okay, that's helpful. So with mid-teens IRR and buying at roughly high 6% to about 7% caps, you're thinking it gives you roughly 7% to 8% growth?
Yes.
And then just a quick second question: with further growth in SHOP and the idea of being 75% by 2028, as we think about additional acquisitions, how should we think about funding that? This year is a bit different because some funding is coming from loan payoffs. How should we think about your actual cost of capital relative to where you're buying assets? Should we think about those as being accretive from day one or more neutral from day one, with growth in subsequent years?
More neutral from day one and the growth comes in the following year. We do have more potential capital recycling we can do in our portfolio, though the bulk of it is done this year—over $700 million. That's a significant change, turning over about a third of our portfolio in less than 18 months. The SNF asset sales have unlocked a lot of trapped value that's created a currency for growth-oriented investments. We'll continue to look within our portfolios to see if we can get additional value. Next year, I would anticipate more of a normal course financing mix, roughly 70% equity and 30% debt. So you'll see more bottom-line growth in assets next year. This year was more recycling and replacing low-growth investments with high-growth investments; next year you'll see more bottom-line growth.
That is very helpful. You guys are grinding hard.
Thank you. We're working hard. We have a great team, and we're all rowing together in the same direction. We feel like we're firing on all cylinders. As Gibson said, we're really excited about what's happening here at LTC and many of our investors are serving.
I'm certainly thrilled as well and looking forward to next year. We've added many operating partners into the SHOP portfolio since May of last year, and that energy has resonated and helped catapult growth.
The next question comes from John Kilichowski with Wells Fargo.
This is Jesus on for John. To start, you raised the investment midpoint to $900 million and increased SHOP NOI guidance, but kept the midpoint per-share guidance unchanged. What is offsetting the incremental earnings contribution from those acquisitions?
Well, a lot of it is the timing of acquisitions and when they're coming on board. That's the primary cause of keeping guidance where it was initially modeled. We typically model ratably throughout the year, but the timing has been pushed back.
Perfect. And as you've scaled the SHOP portfolio and added several new operator relationships, what have you learned about what distinguishes operators best positioned to grow with you?
The operators best positioned to grow are regional operators who know their states and markets well and have other communities in the region to draw upon. That regional scale provides resources and market knowledge that strengthen operations and benefit our investments.
The next question comes from Michael Carroll with RBC.
I wanted to dig into the updated disposition guidance a little bit more. What really drove the increase on those expected sales and loan payoffs this past quarter? Is there just one larger portfolio deal included in that, or is it comprised of several smaller transactions?
It's a number of transactions, Mike. As we've mentioned on prior calls, we're actively looking at our portfolio given attractive pricing for skilled nursing and taking advantage of that. Buyers know our strategic focus is moving into SHOP, so we receive a lot of inbound calls. We're responding to people and proactively managing our portfolio to achieve the best risk-adjusted returns and raise capital where appropriate.
Some of the cap rates achieved on those sales look attractive. Is that due to higher coverage ratios on those deals that allows you to get to sub-6.5% type ranges?
Yes. Many of these assets have been on the books for a long time as well.
When you get daylight on lease terms toward the end of the lease, there's opportunity to reset rent or re-tenant, and that coverage is an opportunity to unlock value. Most of these transactions are with operators and affiliates, and it's often a win-win: operators can control the asset's upside and plan their business, and we realize attractive value for shareholders and redeploy into higher-growth assets. It's not that we don't like the assets; it's a function of structure and our strategic goals. We'll continue to be opportunistic, but we don't expect to do anything at this scale next year.
That also helps us move the needle toward a higher percentage of SHOP concentration, which is a stated goal we have had.
Even though you don't expect a similar level next year, what type of activity could exist? Was it $730 million that's included in guidance this year? Could you do a couple hundred million of these types of sales in 2027 too, and is that contemplated at all in the 75% goal you put out there? Is that purely new investments that get you to that 75% goal?
The 75% goal is more driven by new investments. There is a likelihood of a couple hundred million possibly happening next year, but you won't see the magnitude of what we had this year most likely. A couple hundred million is possible.
Last question on the Prestige loan repayment included in guidance on October 1: how confident are you that will happen in October? Is there any big list they need to achieve to get the HUD loans to be able to get that done?
We feel confident, Mike. The timing may shift a few weeks, but final commitments from HUD are in to Prestige on most of those properties. A couple remain outstanding, but no concerns. Performance is really strong; they meet HUD underwriting metrics comfortably. It's now a matter of pulling everything together and marching toward close. We have more certainty given those HUD commitments than we did at our last call.
The next question comes from Rich Anderson with Cantor Fitzgerald.
Pam, you alluded to this, but to put numbers around it: the normalized FFO growth rate for this year is about 1.5%. We recognize why that's happening and that it transitions to higher bottom-line growth going forward. If the long-term landing point of this business delivers, say, 10% core same-store SHOP growth, what would hold the company back from producing higher bottom-line normalized FFO growth at that level or greater? Or is there a reason FFO growth will always be less than same-store growth?
No, thank you for that question, Rich. It's the math. At 75% SHOP in 2028, that's what you're achieving. The only thing that would hold us back is not being able to execute acquisitions at the level we're currently achieving. The assumption of reaching 75% in 2028 is predicated on our current run rate for acquisitions, and right now, given what we're seeing in the market, there's no reason to believe we wouldn't get there. This year was a heavy lift transformation, turning over the portfolio as we did; the 1.5% growth this year is the price we consciously paid knowing that in two years the company that emerges will be stronger and higher growth.
Growth also de-risks the portfolio. Recycling capital out of older triple-net assets into SHOP is strategically helpful and minimizes potential disruptions in the future.
In past conversations you intended after the pandemic to keep SNF sales steady and grow SHOP organically, but you've shifted to selling more SNFs. Who is buying SNFs at a 7.5% cap rate? That's attractive yield for you; what does the buyer see in that?
The 7.5% includes the Prestige structure as an implied yield; it's structured as a loan. Many of the incremental sales are back to operators or affiliates. Each situation is unique, but when you approach the end of a lease term, there's an opportunity to monetize underlying operations rather than simply swap lease yields. For our shareholders, monetization can make sense, and operators benefit by controlling future upside. It's a practical and often easier transaction. The alternative is to rebase rent and wait until the end of the lease term and hope margins, occupancy, and reimbursement hold up. Given our goals, acting now is sensible.
Generally, operators in leases with good coverage often prefer to own the asset rather than lease it.
So why not go to 100% SHOP? You guys have exceeded expectations so far—why not push all the way?
We would look at the portfolio and pricing. It's a function of cap rates and the most attractive use of our capital. Getting to 75% is a function of the pacing of our deal flow. If pricing is opportunistic or we decide to sell more assets, we could accelerate and reach or surpass 75% sooner.
It feels like the band-aid has been ripped. We've done a lot of work to get here and have the platform in place to scale further if we decide to do so later.
Also, coverage on the triple-net side is strong historically in many cases, so we can absorb challenges if reimbursement, regulation, or other unexpected issues arise. But if pricing is opportunistic, we can act.
The next question comes from Austin Wurschmidt with KeyBanc Capital Markets.
Going back to that last point, Clint, how much exposure will you have to SNF investments by year-end? Do you think the coverage across those remaining assets supports similar pricing as you're achieving on the SNF sales this year?
I would think so. Right now, our NOI exposure to skilled nursing goes down to the low 20s percent, which is a dramatic shift from what it was in 2024. At the end of 2024 it was over 50%.
Gibson, was the occupancy shortfall or the change to guidance this year entirely from memory care assets, or were some of the more traditional SHOP assets also impacted by a deceleration in the pace of improvement?
That's a fair question. Part of it is how we modeled it. We saw more seasonality than expected in the first half, and we're about 90 basis points behind our internal projections for the first half. Year-over-year, we're about 145 basis points over last year. Last year we saw a steep ramp in occupancy in the second half. The cohort of buildings that would need to move this year to achieve that same ramp is heavily weighted to higher-acuity standalone memory care. We don't want to hang our projections on one year's results, so we're not modeling that same steep increase this year. If we get it, we'll be at the top end of the range. We're pleased with our operator base and the start to Q3 was strong; occupancy accelerated at the end of Q2. We're just not banking on the same level of improvement as last year.
When you see periods where occupancy isn't improving as quickly as anticipated, how quickly can you transition to pushing rate as assumed in guidance to offset softer occupancy?
Those considerations are decoupled. We manage assets community by community. Operators are already working on rate in higher-occupancy communities independent of our total SHOP goals; we're not asking them to raise rates because corporate projections are behind. We're encouraged by the strong start to Q3 and the occupancy acceleration at the end of Q2; we're just not banking on the same increase as last year.
At this time I would like to turn the call back over to Clint Malin for closing comments.
Thank you for your time today. We really appreciate your interest in following LTC, and we look forward to talking with you on our next call. Thank you.
This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.