Real estate investment trust LTC Properties announced Thursday that the firm is reducing its 2021 rent escalations by 50% in the form of a rent credit to provide financial support to the majority of its operating partners during the ongoing pandemic.
“Our operating partners have done a tremendous job of caring for their residents and patients during the COVID-19 crisis,” said Wendy Simpson, LTC chairman and CEO. “After listening carefully to their needs, and to give back to our industry, we are providing partial relief from 2021 rent escalations so that our operating partners have additional funds at a time during which they need them most.”
The Westlake VIllage, CA-based real estate investment trust expects the one-time rent escalation reduction to have an approximate $560,000 effect on its 2021 first-quarter GAAP revenue, and an approximate $1.4 million, or 3 cents per diluted share, effect on first-quarter funds available for distribution. Rent escalations occur in various months during the year, but LTC said it will allow the companies in its portfolio to apply the full amount of the escalator reduction toward rent due in January to assist with their cash needs.
“Since the beginning of the pandemic, our board has discussed various ways LTC could provide support to our operating partners, while balancing its fiduciary responsibilities to shareholders,” Simpson said. “While the board is fully aware that [funds available for distribution] will be reduced as a result of the aid we are providing, it unanimously supports the decision as well as our focus on striving to replace the funds with accretive transactions in 2021.”