headshot - LTC Properties Chairman and CEO Wendy Simpson
LTC Properties Chairman and CEO Wendy Simpson

Confident that much of the “angst” that LTC Properties experienced during the pandemic is now “in the rearview mirror,” Wendy Simpson, chairman and CEO of the Westlake Village, CA, real estate investment trust, said Friday that favorable demographics and the value of needs-based care have the company focused on growth.

Multiple signs point toward gradual occupancy increases, drops in the use of temporary staffing agencies, and rent increases implemented by private-pay operators, Simpson said during the REIT’s second-quarter earnings call. The industry, and LTC Properties, she said, are successfully emerging from the worst of the COVID-19 pandemic.

“Needs-based care is a vital part of the economy, and favorable demographics and the growing fundamental needs of our senior population speaks to the long-term health of the seniors housing and care industry,” Simpson said. 

Operators still have some “heavy lifting” to do — including increasing occupancy and rent, resolving staffing issues and easing inflationary pressures — to return to a pre-pandemic environment, she said. LTC Properties still has “a few specific issues” to resolve in the short term, Simpson added, but she said that the REIT is on “sure footing and operating from a position of strength.”

Several transitions take place

Simpson noted the company’s previous transition of several portfolios to regional operators, including properties in its former Senior Lifestyle portfolio, and recent steps taken to rectify ongoing rent abatements and deferrals. 

During the second quarter, LTC Properties sold two assisted living communities in California for $43.7 million and a Virginia assisted living community for $16.9 million. 

After the quarter ended, the REIT ended a master lease covering 12 assisted living communities and moved operations to an ALG Senior affiliate with which LTC already has a relationship. The former operators had received previous rent deferrals and abatements. Co-president and Chief Investment Officer Clint Malin said that LTC Properties is evaluating options for the portfolio, including whether to retain all of the buildings or to sell all or part of the portfolio.

In connection with the lease termination, LTC Properties abated rent for June and forgave the former operator’s outstanding deferred rent balance of $7.1 million, according to a news release issued in conjunction with the call. LTC Properties also paid the former operator a $500,000 lease termination fee in exchange for its cooperation and assistance in facilitating an orderly transition, and the REIT provided the new operator with a $410,000 lease incentive payment.

LTC Properties is in the process of resolving another contributor to rent abatements by marketing a 180-unit private-pay independent living and memory care community, Malin said. The REIT is not receiving rental income from the community and provided $720,000 in rent abatements for July, August and September, he said, adding that the REIT is evaluating options for the community, including a sale, so that it can use the resulting capital at income-producing properties.

LTC Properties also agreed to defer $150,000 of the $445,000 monthly contractual rent for August and September from a lessee that operates eight assisted living communities in the REIT’s portfolio.

Additionally, LTC Properties provided $1.8 million in temporary rent reductions to Anthem Memory Care, including a $600,000 reduction for the second quarter and a $900,000 reduction for the third quarter.

Occupancy up

Occupancy in the former 18-community Senior Lifestyle portfolio was 85% as of June 30, up from 83% in March and 81% in January.

Occupancy for six communities under two separate leases was 80% in June, up from 76% in March and 69% in January.

In the REIT’s same-store senior housing portfolio, private-pay occupancy was at 83% in June compared with 81% in March and January. 

Future growth expected

LTC Properties closed on $110 million in investments this year and is on track to close on another $60 million to $70 million in transactions by the end of the year, executives said. The REIT’s focus for the year remains on “strategic and sensible growth,” Simpson said.

“Senior housing and care is here to stay and will flourish, and LTC is an integral player in the market,” she said.

LTC Properties will continue to focus on balancing its portfolio between private-pay senior housing and skilled nursing, with a focus on regional operators, Malin said.

See additional coverage of the earnings call in the McKnight’s Business Daily.