LTC Properties Q1 Earnings Call Highlights

Key Points

• LTC Properties is accelerating its shift to SHOP assets, saying the transition should materially change its growth profile by the end of 2026. Management expects SHOP to reach 45% of total investments and 40% of annualized NOI by year-end.
• The company reiterated its 2026 acquisition target of $400 million to $800 million in SHOP deals, with a midpoint of $600 million. Management said it is on pace to exceed halfway to that goal after second-quarter closings, with a strong off-market pipeline.
• First-quarter results improved, with core FFO per share up to $0.69 and core FAD per share up to $0.72. LTC also kept its full-year guidance intact, including core FFO of $2.75 to $2.79 per share and core FAD of $2.82 to $2.86 per share.

LTC Properties NYSE: LTC said it is accelerating its shift toward a seniors housing operating portfolio, or SHOP, strategy, with management telling investors that the transition is expected to materially change the company’s growth profile by the end of 2026.

On the company’s first-quarter 2026 earnings call, Co-President and Co-Chief Executive Officer Clint Malin said LTC is “successfully executing” its SHOP strategy and that the company’s relationships with sellers and operators are driving “record external growth.” Management said the SHOP segment is currently projected to represent 45% of total investments and 40% of annualized net operating income by year-end.

“The shift in our portfolio mix is dramatically enhancing LTC’s long-term ability to grow FFO and FAD per share above our historical rate,” Malin said.

The company reiterated that its 2026 guidance assumes $400 million to $800 million of SHOP acquisitions, with a midpoint of $600 million. Malin said LTC remains on track with that midpoint and expects to be more than halfway to the target after second-quarter transactions close.

SHOP Portfolio Expected to Drive Higher Growth

Gibson Satterwhite, executive vice president of asset management, said LTC is focused on optimizing risk-adjusted returns by investing in SHOP and recycling capital opportunistically. He said the expected 40% SHOP annualized NOI target includes reinvestment of about $265 million in planned dispositions and loan repayments from skilled nursing assets during the year.

Of that $265 million, Satterwhite said $77 million has closed and $190 million is expected to close in the third quarter. The company’s guidance also assumes a July 1 payoff of the Prestige loan, consistent with a notice of intent received earlier in the year.

Satterwhite said first-quarter SHOP NOI was in line with expectations. For LTC’s “core SHOP portfolio,” which consists of 27 communities at or near stabilization, the company reiterated prior guidance of 14% pro forma growth at the midpoint.

Management framed the portfolio transition as a significant change in LTC’s growth outlook. Satterwhite said the pro forma growth rate for the overall portfolio rises to 5% to 7% at the 40% SHOP NOI target, compared with the low 2% range embedded in triple-net leases. He attributed that improvement to increasing exposure to SHOP assets with expected growth prospects in the low- to mid-teens over the foreseeable future.

During the question-and-answer session, Satterwhite said the core SHOP portfolio performed in line with expectations for EBITDAR in the first quarter. He said rates were a little higher than expected, while the company had anticipated some seasonal softness. Occupancy turned around mid-quarter, he said, adding that occupancy troughed at a higher level than in the prior year’s first quarter.

Investment Pipeline Remains Active

David Boitano, executive vice president and chief investment officer, said LTC has spent 18 months building a platform intended to execute quickly and with certainty. He said the company has closed about $120 million in investments so far this year and has nearly $250 million on course to close in the second quarter.

Boitano also said LTC has signed letters of intent for off-market third-quarter acquisitions totaling $90 million. The company has “well over $500 million” of opportunities under consideration, he said.

By the end of the second quarter, Boitano said LTC expects to have 11 SHOP operators, including nine that are new to the company in the past year. He said several investments have come through partner referrals and that a number have been off-market transactions.

Malin provided additional detail in response to an analyst question, saying the company has reached about $460 million in closed and expected investments through the third quarter, representing roughly 75% of the $600 million midpoint guidance. He said that amount includes eight transactions for 12 communities, with an average age of 10 years. About 65% of those deals were sourced off-market, he said, and 70% are in primary markets. The average community size is about 100 units, and 60% of the communities span independent living, assisted living and memory care.

Boitano said entering yields on acquisitions have generally been “right around net 7,” though he noted that pricing varies by deal.

First-Quarter Results and 2026 Guidance

Cece Chikhale, executive vice president, chief financial officer and treasurer, said LTC’s current liquidity is $585 million, including $95 million of year-to-date at-the-market equity sales. With $190 million of expected proceeds from asset sales and loan payoffs, Chikhale said pro forma liquidity totals $775 million.

At the end of the first quarter, the company’s pro forma debt to annualized adjusted EBITDA for real estate was 4.4 times, and annualized adjusted fixed-charge coverage was 4.6 times. Chikhale said LTC remains within its stated leverage target of 4 times to 5 times and believes leverage can decline over time as a result of organic SHOP growth.

Compared with the prior-year first quarter, core funds from operations per share rose $0.04 to $0.69, while core funds available for distribution per share increased $0.02 to $0.72. Chikhale said the increases were driven by SHOP acquisitions and conversions from triple-net leases to SHOP, higher interest income from loan originations and additional funding, and higher rent from market-based rent resets. Those gains were partly offset by higher interest and general and administrative expenses, mainly to support the growing SHOP portfolio, and lower rent from asset sales.

LTC reiterated 2026 guidance for core FFO per share of $2.75 to $2.79 and core FAD per share of $2.82 to $2.86. The guidance includes SHOP NOI of $65 million to $77 million and FAD capital expenditures of about $5 million.

Capital Recycling and Skilled Nursing Exposure

Management said LTC may consider additional transactions to take advantage of attractive skilled nursing pricing and recycle capital into higher-growth SHOP assets. Malin emphasized that the company remains supportive of the skilled nursing industry and does not see immediate near-term headwinds.

Malin said prior recycling activity, dating back to fall 2025, was tied to specific reasons, including reducing concentration to an operator and state, reducing the loan book, lease maturities and purchase options. He said future skilled nursing sales would be opportunistic and would be considered only if pricing supports a move into SHOP assets without meaningful dilution.

Asked whether the yields on potential skilled nursing sales could be close to the roughly 7% yields at which LTC is buying SHOP assets, Malin answered yes, citing strong rent coverage. He also said LTC is not currently marketing skilled nursing portfolios but has received inbound interest.

Management Says Platform Investments Are Underway

Co-President and Co-Chief Executive Officer Pam Kessler said LTC has “completely fundamentally changed” the way the company operates as it builds the SHOP platform. She said the company is hiring data analytics personnel and asset managers with experience managing SHOP portfolios, while relying on operating partners rather than acting as a manager itself.

“If you’re gonna do SHOP, you have to go all in,” Kessler said.

Management also discussed operator relationships. Malin said LTC would look to grow with all of the operators with which it has built relationships. Kessler said the company has not set a specific limit on the number of SHOP operators and noted that many investment opportunities are coming from operators on an off-market basis.

Kessler said the company expects its SHOP portfolio to approach nearly $1 billion by the end of the second quarter, following the combination of prior conversions and new acquisitions. She said LTC’s smaller size gives it agility to pursue single-asset and small-portfolio acquisitions that can affect the company’s overall growth profile.

About LTC Properties NYSE: LTC

LTC Properties, Inc NYSE: LTC is a real estate investment trust that specializes in financing and investing in long-term health care properties. The company focuses on providing capital to operators of senior housing and health care facilities through sale-leaseback transactions, mortgage financings and structured finance arrangements. Its portfolio primarily comprises skilled nursing facilities, assisted living communities and memory care centers.

Since its founding in 1992, LTC Properties has built a diversified portfolio of properties located across the United States.

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