Aided by better-than-anticipated hire assortment within the fourth quarter, actual property funding belief LTC Properties beat the expectations of analysts, reporting funds from operations of 78 cents per share. But though the Westlake Village, CA-based REIT believes that the industry census is close to or has hit bottom, challenges nonetheless stay.
“Proper now, we see too many uncertainties in 2021, and we really feel we can’t moderately present steerage at the moment,” LTC Properties CEO Wendy Simpson mentioned Friday on the agency’s fourth-quarter and full-year 2020 earnings name.
For the fourth quarter, LTC reported internet revenue of $17.5 million in contrast with $12.4 million for a similar interval in 2019. Funds obtainable for distribution had been $30.7 million for the fourth quarter, in contrast with $29.5 million for the 2019 fourth quarter.
Simpson additionally pointed to a difficult merger and acquisitions market, noting that the agency doesn’t anticipate to interact in any giant transactions for the foreseeable future.
“Whereas there are offers being carried out, we don’t plan to chill out our underwriting requirements, opting as a substitute to attend till we will full offers that present accretive progress for our shareholders,” she mentioned. The REIT has been contemplating a number of progress alternatives obtainable via structured finance offers with lowered danger profiles and powerful returns, notably some growth initiatives that aren’t dependent for fulfillment on rapid lease-up or present census, Simpson added.
“When the market begins to open up, we plan to make use of our appreciable steadiness sheet to offer a variety of regional working companions with the financing they should assist develop their companies,” she mentioned.
A number of analysts, nonetheless, have expressed concern over LTC’s tenant credit score danger. Chicago-based senior housing operator Senior Way of life has struggled to pay its hire amid the COVID-19 pandemic. Through the fourth quarter, the struggling agency, LTC’s sixth-largest tenant at year-end paid roughly $3.9 million of its roughly $4.7 million contractual hire due. LTC, nonetheless, had to attract down on the tenant’s letter of credit score and safety deposits to gather roughly $3.7 million of accrued 2020 rents receivable from the operator, together with fourth quarter hire receivable.
At year-end, Senior Way of life’s delinquent hire steadiness was roughly $1 million, in line with LTC. The operator additionally has not paid hire in 2021.
“We proceed to fret that struggling tenants might default on their contractual hire obligations given the COVID-19 pandemic has continued to strain occupancy and bills at senior dwelling amenities,” Mizuho analysts Omotayo Okusanya and Zachary Silverberg wrote in an investor notice on the REIT’s fourth-quarter outcomes.