Sign in

You're signed outSign in or to get full access.

LP

LTC PROPERTIES INC (LTC)·Q3 2025 Earnings Summary

Executive Summary

  • Raised full-year 2025 guidance for the third time; Q4 guidance introduced. Management now expects FY Core FFO per share of $2.69–$2.71 (prior $2.68–$2.71) and Core FAD of $2.82–$2.84 (prior $2.81–$2.83), supported by SHOP acquisitions and stronger SHOP NOI; Q4 Core FFO guided to $0.67–$0.69 and Core FAD to $0.69–$0.71 .
  • Q3 2025 total revenues increased to $69.29m (+24% YoY), driven by SHOP conversions and acquisitions; GAAP diluted EPS was -$0.44 due to a $41.5m non-cash write-off tied to a loan amendment prepayment option, while Core FFO per share rose to $0.69 (vs $0.68 YoY) .
  • Portfolio transformation accelerated: ~85% of the $460m 2025 investment pipeline closed; ~$292m added to SHOP at ~7% yields; SHOP reached ~20% of portfolio with 87% average occupancy, poised to reach ~24% in 60 days; additional $110m SHOP deal targeted for January 2026 .
  • Capital recycling and balance sheet: 7 skilled nursing centers sold or under contract (~$123m proceeds, ~$78m expected gain), ATM equity issuance (~1.5m shares for $55.8m), revolver activity ($217m borrowed; $62.9m repaid post-quarter); pro forma liquidity ~ $498m; debt to annualized adjusted EBITDAre ~4.7x (pro forma) .
  • Stock catalysts: sustained guidance raises, SHOP outperformance and pipeline conversion; watch for resolution of the Prestige loan prepayment option and continued SNF dispositions to fund SHOP growth .

What Went Well and What Went Wrong

What Went Well

  • “Growth is the new norm for LTC,” driven by launching SHOP in late 2024 and converting triple-net portfolios; management sees “momentum strengthening” as SHOP scales with quality assets and new operators .
  • SHOP NOI and Core FFO improved; Core FFO per share rose to $0.69 (vs $0.68 YoY) from SHOP conversions and acquisitions, and lower interest expense; management raised 2025 SHOP NOI guidance and expects continued strength into 2026 .
  • External growth execution: closed ~85% of $460m pipeline with >$290m in SHOP at ~7% yields; expects ~$70m additional SHOP to close within 60 days and ~$110m in January 2026 .

What Went Wrong

  • GAAP results impacted by a large non-cash write-off: $41.5m of straight-line effective interest on a loan amendment granting a penalty-free prepayment option (“Prestige”) drove GAAP diluted EPS to -$0.44; Net income fell YoY by ~$49m .
  • Higher G&A and lower gains on sale weighed on YoY GAAP comparisons despite revenue growth; FAD per share slipped slightly to $0.77 from $0.78 YoY, reflecting non-recurring cash adjustments and ramp costs for SHOP .
  • Bankruptcy-related uncertainty: wrote off $1.3m straight-line rent for Genesis Chapter 11; although Genesis remains current through November and holds $4.7m LOC security, rent accruals through maturity are uncertain .

Financial Results

Revenue Composition ($USD Thousands)

MetricQ3 2024Q2 2025Q3 2025
Rental income$32,258 $30,177 $27,842
Resident fees & services (SHOP)$0 $11,950 $22,203
Interest income from financing receivables$7,001 $7,084 $7,096
Interest income from mortgage loans$10,733 $9,680 $9,856
Interest and other income$5,791 $1,349 $2,293
Total revenues$55,783 $60,240 $69,290

Earnings and Cash Flow Metrics (per share)

MetricQ3 2024Q2 2025Q3 2025
GAAP Diluted EPS$0.66 $0.32 -$0.44
NAREIT Diluted FFO$0.78 $0.51 -$0.23
Diluted Core FFO$0.68 $0.68 $0.69
Diluted FAD$0.78 $0.56 $0.77
Diluted Core FAD$0.68 $0.71 $0.72

Segment/KPI Highlights

KPIDetail
SHOP occupancy87% average occupancy at 9/30/2025; SHOP ~20% of investment portfolio .
SHOP pipeline~$70m expected to close in 60 days; ~$110m in Jan 2026 .
SNF portfolio recycling7 SNFs sold/under contract (~$123m proceeds; ~$78m expected gain) .
Liquidity$399.7m at 9/30; pro forma ~$497.6m (cash, revolver availability, ATM capacity) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Diluted EPSFY 2025$2.59–$2.61 $2.45–$2.47 Lower (reflects gain on sale allocation)
Diluted Core FFO per shareFY 2025$2.68–$2.71 $2.69–$2.71 Raised at low end
Diluted Core FAD per shareFY 2025$2.81–$2.83 $2.82–$2.84 Raised
Diluted Core FFO per shareQ4 2025n/a$0.67–$0.69 New
Diluted Core FAD per shareQ4 2025n/a$0.69–$0.71 New
SHOP NOI (FY midpoint)FY 2025$10.4–$15.6m ($17.3–$35.7m annualized) $16.2–$17.2m ($36.0–$42.0m annualized) Raised
SHOP CapEx per unit (FAD)FY 2025$660–$920/unit ($1.2–$1.4 annualized) $960–$970/unit ($1.41–$1.43 annualized) Raised
G&A expenseFY 2025$29.0–$29.8m $29.8–$30.3m Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
SHOP strategy and growthQ2: Raised investment guidance to $400m; SHOP NOI $2.5m; occupancy ~81%; focus on stabilized, newer assets, ~7% yields . Q1: Initiated SHOP via cooperative conversions; pipeline ~$300m .~85% of $460m pipeline closed; >$290m in SHOP; SHOP ~20% of portfolio at 87% occupancy; ~$70m near-term and ~$110m in Jan’26 .Accelerating growth and scale
Capital recycling (SNF -> SHOP)Q2: Under contract to sell 7 SNFs (~$120m proceeds, ~$80m gain) . Q1: Engaged broker; master lease non-renewal led to sale process .Closed/announced 7 SNFs sold (~$123m proceeds, ~$78m gain expected) with redeployment into SHOP .Continuing disposals, redeploy to SHOP
Funding & liquidityQ2: New $600m revolver with accordion to $1.2bn; leverage target low-4x; match-fund with equity . Q1: ATM issuance and revolver paydown .~$56m ATM proceeds; revolver draws and repayments; pro forma liquidity ~$498m .Ample liquidity; disciplined ATM
Prestige loan amendmentQ2: Granted penalty-free prepay window starting July 2026; reverted to full contractual 11.14% rate .Non-cash write-off of $41.5m effective interest due to prepay option window; Prestige current on cash interest .Near-term GAAP headwind, strategic
Genesis bankruptcyQ2: Genesis current on rent, exercised extension .Wrote off $1.271m straight-line receivable; Genesis current through Nov; $4.731m LOC security held .Managed exposure; accounting cleanup

Management Commentary

  • “Growth is the new norm for LTC… building a strong portfolio with quality SHOP assets. Our momentum is strengthening…” — Pam Kessler, Co-CEO .
  • “Core FFO improved to $0.69 from $0.68… due to an increase in SHOP NOI… and a decrease in interest expense… We took a non-cash write-off of $41.5 million of effective interest receivable… [Prestige prepayment option].” — Cece Chikhale, CFO .
  • “We have built a stage for powerful growth… unlock sustained value… we expect SHOP to approach 25% of our portfolio.” — Clint Malin, Co-CEO .
  • “Stabilized SHOP assets underwritten to ~7% year-one yields and unlevered IRRs in the low teens… ~$110m under LOI for January 2026.” — David Boitano, CIO .
  • “Two Oregon communities converting from triple-net to SHOP with Compass; current NOI run-rate ~$1.2m vs prior $2.5m rent; expected to exceed rent over time.” — Gibson Satterwhite, EVP Asset Mgmt .

Q&A Highlights

  • Guidance mechanics: low-end includes closed deals; high-end includes expected closings in next 60 days; disciplined match-funding with ATM and sale proceeds; optional revolver accordion for availability .
  • Yield and growth: SHOP acquisitions guided at ~7% initial yields; expected RevPAR growth mid-single-digits with expense control, supporting low double-digit IRRs over time .
  • Prestige prepay window: targeting application in early 2026; potential execution around 2027 pending performance and rate environment; intent to recycle capital into SHOP .
  • Pipeline breadth and competition: focus on smaller, stabilized portfolios with market-leading operators; competitive landscape acknowledged; confidence in execution .
  • Leverage posture: target low-4x net debt/EBITDA; flexibility to fund near-term investments with debt, then term out or equitize .

Estimates Context

Metric (S&P Global)Q3 2025 ConsensusQ3 2025 Actual (S&P)Beat/Miss
Primary EPS Consensus Mean$0.286*$0.478*Beat*
Revenue Consensus Mean$66.82m*$67.44m*Slight Beat*
EBITDA Consensus Mean$42.56m*$39.85m*Miss*
EPS Normalized Consensus Mean$0.467*$0.478*Beat*
Net Income Normalized Consensus Mean$21.70m*-$19.99m*Miss*

Values retrieved from S&P Global.*

Notes:

  • Reported GAAP diluted EPS was -$0.44, driven by the $41.5m non-cash effective interest write-off (Prestige amendment); management emphasized Core FFO ($0.69) and Core FAD ($0.72) as operating indicators .
  • Differences between company-reported totals and S&P actuals may reflect standardized adjustments in the consensus dataset.*

Key Takeaways for Investors

  • Guidance momentum and SHOP scale are the core narrative; continued raises and pipeline conversion should support sentiment and multiple expansion as SHOP becomes ~25%+ of the portfolio near-term .
  • Expect GAAP volatility from non-cash items (e.g., effective interest write-offs, straight-line rent adjustments); focus on Core FFO/FAD trajectories and SHOP NOI growth to gauge operating performance .
  • Near-term capital deployment is largely de-risked (85% of $460m pipeline closed); watch ~$70m SHOP closings in 60 days and ~$110m in Jan 2026 for incremental NOI and guidance tightening .
  • Capital recycling provides funding: $123m SNF sale proceeds and potential Prestige prepayment ($180m loan) could be redeployed into higher-return SHOP assets; monitor transaction timing .
  • Liquidity and leverage are supportive: ~ $498m pro forma liquidity, low-4x leverage targets, disciplined ATM usage; funding optionality reduces execution risk .
  • Operator diversification and newer asset vintage (avg. 2019 in SHOP) should drive RevPAR resilience; management sees mid-single-digit RevPAR growth with wage pressure abating, aiding margin expansion .
  • Watch regulatory dynamics (Genesis Chapter 11 and state Medicaid narratives); LTC’s security positions and master lease structures mitigate immediate cash exposure .

Appendix: Additional Relevant Press Releases (Q3 2025)

  • $23m SHOP acquisition in Georgia (Arbor Co.), stabilized at 90% occupancy, ~7% year-one yield; reflects continued external growth with new operator relationship .
  • Portfolio transformation announcements: completed sales of 5 SNFs ($79m proceeds; ~$52m expected gain) as part of the 7-property disposal program .
  • Prior guidance increase to $460m investments (up from $400m) driven by SHOP expansion and pipeline backfill .