LTC Properties Misses the Mark

LOS ANGELES—According to the Q1 2014 earnings report from RBC Capital Markets, LTC Properties FFO fell well below estimates. Ending Q1 at $0.63 a share, FFO missed the mark by $0.64 per share, which, according to the report, was largely driven by high interest expenses.

This loss was offset, however, by an AFFO that exceeded estimates by $0.63 per share. And, while investment activity was slow with no new acquisitions or developments, the company continued to grow its $93-million investment portfolio by investing $16 million into $37 million of projects, which will be delivered over the next three quarters. The REIT does have several investments—valued at $250 million—in the pipeline, but won't close on any triple-net transactions until the second half of the year.  

The low investment activity during the quarter meant that metrics remained relatively unchanged. The company reported a debt to total capitalization ratio of 16.7%. In the past, the company has indicated it would begin accessing debt once that ratio reached 25%. RBC doesn't expect that to occur until mid-2015.

In addition to FFO, coverage ratios also declined during the quarter from 1.73x in the previous quarter to 1.68x for SNF EBITDAR and the senior housing coverage ratio declined from 1.17x to 1.16x. The Assisted Living Concept, which is one of the company's largest tenants, also continued to decline nominally from .91x to .87x. Although ALC declined slightly and shows challenges over the next 12 months, RBC believes these are strong assets as they need only a few million dollars in maintenance and have over 60% occupancy.

RBC Capital has been reviewing several REITs earning reports for the first quarter. Read about Kilroy Realty and Macerich Co., both recently reported by GlobeSt.com.