Two major tenants failed to pay rents in the first quarter as a result of ongoing challenges related to the COVID-19 pandemic, leading some to remain concerned about the operating metrics of Westlake Village, CA-based LTC Properties.
The real estate investment trust reported its first quarter earnings after the market closed Thursday, sharing that it collected 86.5% of rent and interest income from operators in its portfolio in the first quarter. The company implemented a one-time 50% rent escalation reduction on 2021 rent and mortgage interest in the form of a rent credit, to provide financial support to eligible operating partners. Through the end of the first quarter, rent deferrals were $1.1 million and rent abatements totaled $600,000.
Senior Care Centers also did not pay rent and additional charges owed under its master lease. As a result of Senior Care Center’s bankruptcy filing and default, LTC is working to transition Senior Care properties in its portfolio to Texas-based HMG Healthcare by the end of the second quarter.
Overall for the quarter, the REIT reported net income available of $13.6 million, or 35 cents per diluted share, compared with $63.4 million, or $1.60 per diluted share, for the same period in 2020. Funds from operations were $24.3 million for the first quarter, compared with $29.2 million for the comparable 2020 period.
LTC Properties Chairman and CEO Wendy Simpson said Friday during the REIT’s earnings call that she is cautiously optimistic that the industry has entered the recovery stage. Analysts, however, are concerned about the REIT’s operating metrics as rental deferrals and rent abatements continue to rise.
“Overall, it’s a tough result, and risk of continued rent deferrals and/or abatements will likely cause investors to begin to question the sustainability of the dividend,” wrote Mizuho analysts Omotayo Okusanya and Corey DeVito in an investor note on the REIT’s first-quarter results.
For additional coverage of LTC’s first-quarter earnings, visit McKnight’s Senior Living.
The Ensign Group also released its first quarter earnings late Thursday, announcing record operating results including GAAP diluted earnings of 86 cents per share. The San Juan Capistrano, CA-based firm also saw a marked improvement in resident/patient census within its portfolio, with a 3.4% and 18.6% increase in Medicaid and managed care average daily census from the fourth quarter to first quarter for same store and transitioning portfolio, respectively, according to Barry Port, Ensign’s CEO.
As a result of these positive first quarter results, management increased the firm’s 2021 annual earnings guidance to $3.54 to $3.66 per diluted share, up from previous guidance of $3.44 to $3.56 per diluted share, and Ensign affirmed its previous annual revenue guidance of $2.62 billion to $2.69 billion.
“Our current health combined with our culture, proven local leadership strategy, healthy balance sheet, the enormous potential in our existing portfolio and the tremendous growth opportunities on the horizon, gives us confidence that we are well-positioned to not only rebound to our pre-COVID path but to accelerate our growth,” Port said.
For additional coverage of Ensign’s first-quarter earnings, visit McKnight’s Long-Term Care News.