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LTC PROPERTIES INC

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LTC PROPERTIES : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

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08/08/2019 | 05:06pm EDT

Statement Regarding Forward Looking Disclosure


This quarterly report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, adopted pursuant to the Private
Securities Litigation Reform Act of 1995. Statements that are not purely
historical may be forward-looking. You can identify some of the forward-looking
statements by their use of forward-looking words, such as "believes," "expects,"
"may," "will," "could," "would," "should," "seeks," "approximately," "intends,"
"plans," "estimates" or "anticipates," or the negative of those words or similar
words. Forward-looking statements involve inherent risks and uncertainties
regarding events, conditions and financial trends that may affect our future
plans of operation, business strategy, results of operations and financial
position. A number of important factors could cause actual results to differ
materially from those included within or contemplated by such forward-looking
statements, including, but not limited to, the status of the economy; the status
of capital markets (including prevailing interest rates) and our access to
capital; the income and returns available from investments in health care
related real estate (including our ability to re-lease properties upon
expiration of a lease term); the ability of our borrowers and lessees to meet
their obligations to us; our reliance on a few major operators; our dependence
on operators for revenue and cash flow; the bankruptcy, insolvency or financial
deterioration of our lessees; potential limitations on our remedies when
mortgage loans default; competition faced by our borrowers and lessees within
the health care industry; regulation of the health care industry by federal,
state and local governments; changes in Medicare and Medicaid reimbursement
amounts (including due to federal and state budget constraints); compliance with
and changes to regulations and payment policies within the health care industry;
debt that we may incur and changes in financing terms; our ability to continue
to qualify as a real estate investment trust; the relative illiquidity of our
real estate investments; and risks and liabilities in connection with properties
owned through limited liability companies and partnerships. For a discussion of
these and other factors that could cause actual results to differ from those
contemplated in the forward-looking statements, please see the discussion under
"Risk Factors" contained in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2018 and in our publicly available filings with the
Securities and Exchange Commission. We do not undertake any responsibility to
update or revise any of these factors or to announce publicly any revisions to
forward-looking statements, whether as a result of new information, future
events or otherwise.

Executive Overview

Business and Investment Strategy


We are a self-administered health care real estate investment trust ("REIT")
that invests in seniors housing and health care properties through
sale-leaseback transactions, mortgage financing and structured finance solutions
including mezzanine lending. We conduct and manage our business as one operating
segment, rather than multiple operating segments, for internal reporting and
internal decision-making purposes. Our primary objectives are to create, sustain
and enhance stockholder equity value and provide current income for distribution
to stockholders through real estate investments in seniors housing and health
care properties managed by experienced operators.

                                       26

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The following graph summarizes our gross investments as of June 30, 2019:


                           [[Image Removed: Graphic]]

Our primary seniors housing and health care property classifications include
skilled nursing centers ("SNF"), assisted living communities ("ALF"),
independent living communities ("ILF"), memory care communities ("MC") and
combinations thereof. ALF, ILF, MC, and combinations thereof are included in the
ALF classification. As of June 30, 2019, seniors housing and long-term health
care properties comprised approximately 99.3% of our real estate investment
portfolio. We have been operating since August 1992.

Substantially all of our revenues and sources of cash flows from operations are
derived from operating lease rentals, interest earned on outstanding loans
receivable an income from investments in unconsolidated joint ventures. Our
investments in owned properties and mortgage loans represent our primary source
of liquidity to fund distributions and are dependent upon the performance of the
operators on their lease and loan obligations and the rates earned thereon. To
the extent that the operators experience operating difficulties and are unable
to generate sufficient cash to make payments to us, there could be a material
adverse impact on our consolidated results of operations, liquidity and/or
financial condition. To mitigate this risk, we monitor our investments through a
variety of methods determined by property type and operator. Our monitoring
process includes periodic review of financial statements for each facility,
periodic review of operator credit, scheduled property inspections and review of
covenant compliance.

In addition to our monitoring and research efforts, we also structure our
investments to help mitigate payment risk. Some operating leases and loans are
credit enhanced by guaranties and/or letters of credit. In addition, operating
leases are typically structured as master leases and loans are generally
cross-defaulted and cross-collateralized with other loans, operating leases or
agreements between us and the operator and its affiliates.

                                       27

Table of Contents

Real Estate Portfolio Overview


The following tables summarize our real estate investment portfolio by owned
properties and mortgage loans and by type, as of June 30, 2019 (dollar amounts
in thousands):


                                                          Six Months Ended
                                        Percentage         June 30, 2019         Percentage         Number            Number of
                            Gross           of           Rental      Interest        of               of           SNF         ALF
Owned Properties         Investments    Investments    Income (1)     Income      Revenues      Properties (2)   Beds (3)   Units (3)
Assisted Living          $    843,682          49.4 % $     33,861   $       -         40.2 %              105          -       6,070
Skilled Nursing               589,581          34.5 %       35,249           -         41.8 %               72      8,893         261
Under Development (4)           8,167           0.5 %            -           -            - %                -          -           -
Other (5)                      11,239           0.7 %          472           -          0.6 %                1        118           -
Total Owned Properties      1,452,669          85.1 %       69,582           -         82.6 %              178      9,011       6,331

Mortgage Loans
Skilled Nursing               254,555          14.9 %            -      14,662         17.4 %               22      2,892           -
Total Mortgage Loans          254,555          14.9 %            -      14,662         17.4 %               22      2,892           -

Total Portfolio          $  1,707,224         100.0 % $     69,582$  14,662        100.0 %              200     11,903       6,331





                                                                 Six Months Ended
                                               Percentage         June 30, 2019         Percentage         Number            Number of
                                   Gross           of           Rental      Interest        of               of           SNF         ALF

Summary of Properties by Type Investments Investments Income (1)

 Income      Revenues      Properties (2)   Beds (3)   Units (3)
Skilled Nursing                 $    844,136          49.4 % $     35,249$  14,662         59.2 %               94     11,785         261
Assisted Living                      843,682          49.4 %       33,861           -         40.2 %              105          -       6,070
Under Development (4)                  8,167           0.5 %            -           -            - %                -          -           -
Other (5)                             11,239           0.7 %          472           -          0.6 %                1        118           -
Total Portfolio                 $  1,707,224         100.0 % $     69,582$  14,662        100.0 %              200     11,903       6,331

Excludes variable rental income of $8,245 related to our real estate taxes (1) which were reimbursed by our operators and adjustment for collectability of

    rental income.



(2) We have investments in 28 states leased or mortgaged to 30 different

    operators.



(3) See Item 1. Financial Statements - Note 2. Real Estate Investments for

    discussion of bed/unit count.



(4) Represents a development project consisting of a 78-unit ALF/MC located in

    Oregon.



(5) Includes three parcels of land held-for-use and one behavioral health care

    hospital.




As of June 30, 2019, we had $1.4 billion in net carrying value of real estate
investments, consisting of $1.1 billion or 81.6% invested in owned and leased
properties and $0.3 billion or 18.4% invested in mortgage loans secured by first
mortgages. Our investment in mortgage loans mature in 2043 and beyond and
contain interest rates between 9.2% and 9.7%.

For the six months ended June 30, 2019, rental income and interest income from
mortgage loans represented 82.8% and 16.0%, respectively, of total gross
revenues. In most instances, our lease structure contains fixed annual rental
escalations and/or annual rental escalations that are contingent upon changes in
the Consumer Price Index, which are generally recognized on a straight-line
basis over the minimum lease period. Certain leases have annual rental
escalations that are contingent upon changes in the gross operating revenues of
the property. This revenue is not recognized until the appropriate contingencies
have been resolved.

During the six months ended June 30, 2019, there were no lease renewals. For the
six months ended June 30, 2019, we recorded $2.5 million in straight-line rental
income and amortization of lease incentive cost of $0.2 million. During the six
months ended June 30, 2019, we received $75.5 million of cash rental income,
which includes $8.2 million of operator reimbursements for our real estate
taxes. At June 30, 2019, the straight-line rent receivable balance, net of
reserves, on the balance sheet was $43.7 million.

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  Table of Contents

Update on Certain Operators
During 2017, we issued a notice of default to Anthem Memory Care ("Anthem")
resulting from Anthem's partial payment of minimum rent. Anthem operates 11
memory care communities under a master lease. We currently estimate that Anthem
will pay $7.5 million of annual cash rent during 2019. This amount represents
approximately 50% of the contractual amount due under the lease in 2019. In
accordance with Accounting Standard codification ("ASC") Topic 842, Leases ("ASC
842") lease accounting guidance, at January 1, 2019, we evaluated the
collectibility of straight-line rent receivable and lease incentive balances
related to Anthem and determined that it was not probable that we would collect
substantially all of the contractual lease obligations through maturity.
Accordingly, we wrote-off the balances to equity as of January 1, 2019 as
required by the ASC 842 transition guidance.

During 2017, Preferred Care, Inc. ("Preferred Care") and affiliated entities
filed for Chapter 11 bankruptcy as a result of a multi-million-dollar judgment
in a lawsuit in Kentucky against Preferred Care and certain affiliated entities.
The affiliated entities named in the lawsuit operate properties in Kentucky and
New Mexico. Preferred Care leases 24 properties under two master leases from us
and none of the 24 properties are located in Kentucky or New Mexico. Those 24
properties are in Arizona, Colorado, Iowa, Kansas and Texas. The Preferred Care
operating entities that sublease those properties did not file for bankruptcy.
The court ordered deadline for affirmation or rejection of the lease has passed
without action by Preferred Care. In accordance with ASC 842 lease accounting
guidance, at January 1, 2019, we evaluated the collectibility of straight-line
rent receivable and lease incentive balances related to Preferred Care and
determined that it was not probable that we would collect substantially all of
the contractual lease obligations through maturity. Accordingly, we wrote-off
the balances to equity as of January 1, 2019 as required by the ASC 842
transition guidance. Furthermore, we placed Preferred Care on a cash basis on
January 1, 2019. We are working with Preferred Care on options for the portfolio
which may include re-leasing or selling some or all of the properties.

On December 4, 2018, Senior Care Centers, LLC. and affiliates and subsidiaries
("Senior Care") filed for Chapter 11 bankruptcy as a result of lease
terminations from certain landlords and on-going operational challenges. Senior
Care did not pay us December 2018 rent, but has paid us January to July 2019
rent, real estate property tax and maintenance deposits. In December 2018, we
placed Senior Care on a cash basis. In accordance with ASC 842 lease accounting
guidance, at January 1, 2019, we evaluated the collectibility of straight-line
rent receivable and lease incentive balances related to Senior Care and
determined that it was not probable that we would collect substantially all of
the contractual lease obligations through maturity. Accordingly, we wrote-off
the balances to equity as of January 1, 2019 as required by the ASC 842
transition guidance.

Pursuant to the U.S. Bankruptcy Code, Senior Care had an initial period of 120
days from the petition date to assume or reject the lease. However, the
Bankruptcy Code also provides that the court may extend this initial 120-day
period for an additional 90 days. Accordingly, Senior Care requested, and the
court approved an additional 90 days, which ended on July 2, 2019, to assume or
reject the lease. In July 2019, Senior Care filed a motion attempting to affirm
the lease. We have subsequently filed an objection in opposition to Senior
Care's motion.

During the three months ended March 31, 2019, we placed Thrive Senior Living,
LLC. ("Thrive") on a cash basis due to short-payment of contractual rent in
November 2018 and non-payment of rent in December 2018 totaling $0.7 million.
This rent was subsequently received in 2019. Thrive did not pay January to July
2019 rent. In April 2019, we issued a notice of default to Thrive. In accordance
with ASC 842 lease accounting guidance, at January 1, 2019, we evaluated the
collectibility of straight-line rent receivable and lease incentive balances
related to Thrive and determined that it was not probable

                                       29

Table of Contents


that we would collect substantially all of the contractual lease obligations
through maturity. Accordingly, we wrote-off the balances to equity as of January
1, 2019 as required by the ASC 842 transition guidance.

We completed the following for all of the properties in the Thrive portfolio:

Transitioned two memory care communities located in Ohio and Kentucky with a

total of 120-units to a new operator during the second quarter of 2019. The

memory care communities are under a 10-year lease term with initial cash rent

? of $1.3 million in year one, $1.5 million in year two, $2.0 million in year

three and $2.2 million in year four. Rent may increase subject to a contingent

escalation formula commencing in year five and annually thereafter. The lease

provides the lessee with a purchase option available between 2028-2029;

Transitioned a 56-unit memory care community located in Texas to an existing

operator and added the memory care community to an existing master lease during

the second quarter of 2019. As a result of this transition, annual cash rent

? under the existing master lease was increased by $0.4 million effective June 1,

2019 and will increase by an additional $0.3 million on June 1, 2020 and 2.5%

annually thereafter. Additionally, LTC will be entitled to incremental rent

calculated as a percentage of increase in gross revenues generated by the

property above an established threshold;

Transitioned two memory care communities in Georgia and South Carolina with a

total of 159-units to an existing operator subsequent to June 30, 2019. The new

? 2-year lease agreement has an initial annual cash rent of $1.8 million. The

lease provides the lessee one month free rent and the option to defer up to 50%

of contractual rent for the next 5 months. Rent increases 3.5% in year two; and

Transitioned the remaining 60-unit memory care community located in Florida to

an existing operator effective August 1, 2019. The new 10-year lease provides

the lessee twelve months free rent increasing to $0.5 million in year two and

? $0.6 million in year three and thereafter. In year two the lessee has the

option to defer rent in an amount not to exceed $0.2 million. Rent may increase

   subject to a contingent escalation formula commencing in year three and
   annually thereafter. Additionally, the lease provides the lessee with a
   purchase option available in 2029.


                                       30

  Table of Contents

2019 Activities Overview

The following tables summarize our transactions during the six months ended June 30, 2019 (dollar amounts in thousands):

Investment in Owned Properties



               Number           Type        Number     Initial                        Total           Total
                 of              of           of        Cash         

Purchase Transaction Acquisition State Properties Properties Beds/Units Yield Price (1) Costs

           Costs
Virginia              1 (2)    ALF/MC             74       7.4 %   $    16,719   $         176   $      16,895
California            - (3)     Land               -       n.a             110              26             136
Total                 1                           74               $    16,829   $         202   $      17,031

Subsequent to June 30, 2019, we entered into a purchase and sale agreement

for the acquisition of a newly constructed 90-bed skilled nursing center

located in Missouri for approximately $19,500. Additionally, we entered into (1) a separate purchase and sale agreement for the acquisition of a parcel of

land and development of a 90-bed skilled nursing center in Missouri. The

commitment totals approximately $18,400. These transactions are expected to

    close in the third quarter of 2019.



We entered into a joint venture ("JV") to purchase an existing operational (2) 74-unit ALF/MC community. The non-controlling partner contributed $919 of

equity and we contributed $15,971 in cash. Our economic interest in the real

    estate JV is approximately 95%.



(3) We acquired a parcel of land adjacent to an existing SNF in California.

Investment in Development and Improvement projects



                               Developments    Improvements
Assisted Living Communities   $        8,520   $         893
Skilled Nursing Centers                4,492               -
Other                                      -             175
Total                         $       13,012$       1,068


Completed Developments


                    Number        Type        Number
                      of           of           of                        Total
Type of Project   Properties    Property    Beds/Units     State      Investment
Development           1           SNF          143       Kentucky    $     24,493
Development           1        ILF/ALF/MC      110       Wisconsin         21,872
                      2                        253                   $     46,365

Investment in Mortgage Loans

Originations and funding under mortgage loans receivable $ 9,736 (1) Scheduled principal payments received

                        (565)
Mortgage loan (premiums)                                       (2)
Provision for loan loss reserve                               (92)
Net increase in mortgage loans receivable                  $ 9,077

During 2019, we funded an additional $7,500 under an existing mortgage loan. (1) The incremental funding bears interest at 9.41%, fixed for two years, and

    escalating by 2.25% thereafter.




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  Table of Contents

Investment in Unconsolidated Joint Ventures


                   Type              Type           Total        Currently           Number                                                                               Received
                    of                of          Preferred       Paid in              of           Investment         Carrying          Capital        Recognized          Cash
State           Properties        Investment       Return          Cash     

Beds/ Units Commitment Value Contribution

  Income          Interest
Arizona         ALF/MC/ILF     Preferred Equity          15 %            8 %  (1)          585   $       25,650$   24,324      $          293   $        553$      727
Florida         ALF/ILF/MC        Mezzanine              15 %           15 %                99            2,900 (2)       3,197 (2)               -            256             243
Florida (3)     UDP/ALF/MC        Mezzanine             n.a            n.a %               n.a                -               -                   -            404 (3)         432 (3)
                                                                                           684   $       28,550$   27,521      $          293   $      1,213$    1,402

(1) Effective second quarter of 2019, this JV was placed on cash basis due to

    delinquency of our preferred return.



Since interest payments were deferred and no interest was recorded for the

first twelve months of the loan, we used the effective interest method in (2) accordance with U.S. generally accepted accounting principles ("GAAP") to

recognize interest income and recorded the difference between the effective

    interest income and cash interest income to the loan principal balance.



We had a $3,400 mezzanine loan commitment for the development of a 127-unit (3) seniors housing community in Florida with a total preferred return of 15%.

    During the first quarter of 2019, the mezzanine loan was paid off.

Notes Receivable



Advances under notes receivable                    $ 7,766 (1)

Principal payments received under notes receivable (49) Reclassified to lease incentives (2)

                 (200)
Notes receivable reserve                              (75)
Total                                              $ 7,442




    We originated a $6,800 mezzanine loan commitment for the development of a

204-unit ILF/ALF/MC in Georgia. The mezzanine loan has a five-year term and a

12.0% return, a portion of which is paid in cash, and the remaining portion (1) of which is deferred during the first 46 months. Additionally, we originated

a $1,400 note agreement, funding $582 with a commitment to fund $818. The

note bears interest at 7.0%. Further, we originated a $550 note agreement,

funding $200 with a commitment to fund $350. The note bears interest at 7.5%.

Represents an interim working capital loan related to a development project (2) which matured upon completion of the development project and commencement of

the lease.

Health Care Regulatory Climate


The Centers for Medicare & Medicaid Services ("CMS") annually updates Medicare
skilled nursing facility prospective payment system rates and other policies. On
July 31, 2018, CMS released a final rule updating skilled nursing facility rates
and policies for fiscal year 2019. The final rule adopts a 2.4% payment
increase, as mandated by the Bipartisan Budget Act of 2018. CMS projects this
update will increase overall payments to skilled nursing facilities by
$820 million in fiscal year 2019 as compared to fiscal year 2018 levels.
Furthermore, CMS finalized a plan to replace the existing Resource Utilization
Groups, Version IV ("RUG-IV") case mix classification system with a new model
beginning in fiscal year 2020. The new case mix classification system, called
the "Patient-Driven Payment Model," will base Medicare payment on resident needs
rather than the amount of therapy a resident receives. CMS also confirmed that
the SNF Value-Based Purchasing ("VBP") Program would go into effect beginning
October 1, 2018, as required by statute. Under the VBP Program, CMS reduces
Medicare payments to skilled nursing facilities by 2% and returns approximately
60% of the withheld amount to skilled nursing facilities based on their relative
performance on a readmission measure. The remaining portion of the withheld
amount will be retained in the Medicare Trust Fund. On April 19, 2019, CMS
released a proposed rule to update skilled nursing facility rates and policies
for fiscal year 2020, which starts October 1, 2019. CMS estimates that payments
to skilled nursing facilities would rise by $887 million, or 2.5%, compared with
fiscal year 2019 levels. CMS proposes to implement the Patient-Driven Payment
Model in fiscal year 2020, as previously adopted, but CMS proposes to modify the
definition of group therapy. CMS also proposes certain policy changes to the VBP
and quality reporting program requirements that would affect Medicare payments
to skilled nursing facilities. On July 30, 2019, CMS

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issued its final fiscal year 2020 Medicare skilled nursing facility update.
Under the final rule, CMS projects aggregate payments to skilled nursing
facilities will increase by $851 million, or 2.4%, for fiscal year 2020 compared
with fiscal year 2019. The final rule also addresses implementation of the
Patient-Driven Payment Model on October 1, 2019, changes to the group therapy
definition in the skilled nursing facility setting, and various skilled nursing
facility VBP and quality reporting program policies.

On July 18, 2019, CMS published a final rule that eliminates the prohibition on
pre-dispute binding arbitration agreements between long-term care facilities and
their residents. The rule also strengthens the transparency of arbitration
agreements and makes other changes to arbitration requirements for long-term
care facilities. There can be no assurance that these rules or future
regulations modifying Medicare skilled nursing facility payment rates or other
requirements for Medicare and/or Medicaid participation will not have an adverse
effect on the financial condition of our borrowers and lessees which could, in
turn, adversely impact the timing or level of their payments to us.

Congress periodically considers legislation revising Medicare and Medicaid
policies, including legislation that could have the impact of reducing Medicare
reimbursement for skilled nursing facilities and other Medicare providers,
limiting state Medicaid funding allotments, encouraging home and community-based
long-term care services as an alternative to institutional settings, or
otherwise reforming payment policy for post-acute care services. There can be no
assurances that enacted or future legislation will not have an adverse impact on
the financial condition of our borrowers and lessees, which subsequently could
materially adversely impact our company.

Additional reforms affecting the payment for and availability of health care
services have been proposed at the federal and state level and adopted by
certain states. Increasingly, state Medicaid programs are providing coverage
through managed care programs under contracts with private health plans, which
is intended to decrease state Medicaid costs. Congress and state legislatures
can be expected to continue to review and assess alternative health care
delivery systems and payment methodologies. Changes in the law, new
interpretations of existing laws, or changes in payment methodologies may have a
dramatic effect on the definition of permissible or impermissible activities,
the relative costs associated with doing business and the amount of
reimbursement by the government and other third-party payors.

                                       33

Table of Contents

Key Performance Indicators, Trends and Uncertainties


We utilize several key performance indicators to evaluate the various aspects of
our business. These indicators are discussed below and relate to concentration
risk and credit strength. Management uses these key performance indicators to
facilitate internal and external comparisons to our historical operating results
in making operating decisions and for budget planning purposes.

Concentration Risk. We evaluate by gross investment our concentration risk in
terms of asset mix, real estate investment mix, operator mix and geographic mix.
Concentration risk is valuable to understand what portion of our real estate
investments could be at risk if certain sectors were to experience downturns.
Asset mix measures the portion of our investments that are real property or
mortgage loans. The National Association of Real Estate Investment Trusts
("NAREIT"), an organization representing U.S. REITs and publicly traded real
estate companies, classifies a company with 50% or more of assets directly or
indirectly in the equity ownership of real estate as an equity REIT. Investment
mix measures the portion of our investments that relate to our various property
classifications. Operator mix measures the portion of our investments that
relate to our top five operators. Geographic mix measures the portion of our
real estate investment that relate to our top five states.

The following table reflects our recent historical trends of concentration risk (gross investment, in thousands):


                                          6/30/19       3/31/19      12/31/18       9/30/18       6/30/18
Asset mix:
Real property                           $ 1,452,669$ 1,445,596$ 1,421,456$ 1,414,267$ 1,401,303
Loans receivable                            254,555       246,775       245,386       245,053       236,178
Real estate investment mix:
Skilled nursing centers (1)             $   844,136$   834,185$   830,485$   832,599$   829,941
Assisted living communities (2)             843,682       840,926       820,686       812,800       794,426
Under development (1) (2)                     8,167         6,193         4,606         2,881         2,291
Other (3)                                    11,239        11,067        11,065        11,040        10,823
Operator mix:
Prestige Healthcare (3)                 $   267,688$   259,907$   258,519$   258,186$   249,311
Senior Lifestyle Corporation                190,758       190,368       190,368       189,945       189,945
Senior Care Centers                         138,109       138,109       138,109       138,109       138,109
Anthem Memory Care                          136,397       136,397       136,397       135,946       135,342
Carespring Health Care Management (4)       102,038        99,997        97,461        95,951        93,279
Remaining operators (4)                     872,234       867,593       845,988       841,183       831,495
Geographic mix:
Texas                                   $   292,159$   292,091$   292,317$   292,317$   292,317
Michigan                                    255,498       247,718       246,329       245,996       237,121
Wisconsin                                   149,064       146,750       143,657       137,056       133,794
Colorado                                    114,923       114,923       114,923       114,923       114,923
California                                  102,412       102,254       102,254       102,254       102,254
Remaining states                            793,168       788,635       767,362       766,774       757,072

During the three months ended March 31, 2019, we completed the construction (1) of a 143-bed SNF in Kentucky. Accordingly, the property was reclassified from

"Under development" to "Skilled nursing centers" for all periods presented.

During the three months ended June 30, 2019, we completed the construction of (2) a 110-unit ILF/ALF/MC in Wisconsin. Accordingly, the property was

reclassified from "Under Development" to "Assisted living communities" for

    all periods presented.



(3) We have three parcels of land located adjacent to properties securing the

    Prestige Healthcare mortgage loan and are managed by Prestige.



During the three months ended June 30, 2019, we transitioned two assisted

living communities from Brookdale Senior Living to a new operator. As a

result of this transition, Brookdale Senior Living is no longer a top five (4) operator under our geographic mix and is replaced by Carespring Health Care

Management. Accordingly, our "Carespring Health Care Management" properties

were reclassified from "Remaining operators" and our "Brookdale Senior

Living" properties were reclassified to "Remaining operators" for all periods

    presented.


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  Table of Contents

Credit Strength. We measure our credit strength both in terms of leverage ratios
and coverage ratios. Our leverage ratios include debt to gross asset value and
debt to market capitalization. The leverage ratios indicate how much of our
consolidated balance sheet capitalization is related to long-term obligations.
Our coverage ratios include interest coverage ratio and fixed charge coverage
ratio. The coverage ratios indicate our ability to service interest and fixed
charges (interest). The coverage ratios are based on earnings before interest,
taxes, depreciation and amortization for real estate ("EBITDAre") as defined by
NAREIT. EBITDAre is calculated as net income available to common stockholders
(computed in accordance with GAAP) excluding (i) interest expense, (ii) income
tax expense, (iii) real estate depreciation and amortization, (iv) impairment
write-downs of depreciable real estate, (v) gains or losses on the sale of
depreciable real estate, and (vi) adjustments for unconsolidated partnerships
and joint ventures. Leverage ratios and coverage ratios are widely used by
investors, analysts and rating agencies in the valuation, comparison, rating and
investment recommendations of companies. The following table reflects the recent
historical trends for our credit strength measures:



                                       35

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Latest news on LTC PROPERTIES INC
08/21LTC PROPERTIES INC : Ex-dividend day for
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08/14LTC PROPERTIES : Locks Rate at 3.85% on $100 Million Senior Unsecured Notes
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08/08LTC : 2Q Earnings Snapshot
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08/08LTC PROPERTIES : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND..
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08/08LTC PROPERTIES INC : Results of Operations and Financial Condition, Financial St..
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08/08LTC PROPERTIES : Reports 2019 Second Quarter Results and Discusses Recent Activi..
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07/22LTC PROPERTIES INC : Ex-dividend day for
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07/19LTC PROPERTIES : Announces Date of Second Quarter 2019 Earnings Release, Confere..
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07/01LTC PROPERTIES : Declares Its Monthly Common Stock Cash Dividend for the Third Q..
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06/19LTC PROPERTIES INC : Ex-dividend day for
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Financials (USD)
Sales 2019 145 M
EBIT 2019 -
Net income 2019 86,5 M
Debt 2019 -
Yield 2019 4,60%
P/E ratio 2019 22,8x
P/E ratio 2020 22,1x
Capi. / Sales2019 13,6x
Capi. / Sales2020 10,3x
Capitalization 1 969 M
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Technical analysis trends LTC PROPERTIES INC
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 10
Average target price 45,88  $
Last Close Price 49,54  $
Spread / Highest target 2,95%
Spread / Average Target -7,40%
Spread / Lowest Target -15,2%
EPS Revisions
Managers
NameTitle
Wendy L. Simpson Chairman, President & Chief Executive Officer
Pamela J. Shelley-Kessler CFO, Secretary & Principal Accounting Officer
Timothy J. Triche Independent Director
Boyd W. Hendrickson Lead Independent Director
Devra G. Shapiro Independent Director
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