Item 7.01. Regulation FD Disclosure.
LTC Properties, Inc. (the "Company" or "LTC") is providing an update on two of
its operators and also providing information on cash rent deferrals and
abatements for the 2021 first and second quarters to date.
On April 16, 2021, Abri Health Services, LLC ("Abri") and Senior Care Centers,
LLC ("Senior Care") (collectively, the "Lessee") filed for Chapter 11
Senior Care and certain of its affiliates and subsidiaries (collectively,
"Senior Care Debtors"), previously filed for Chapter 11 bankruptcy protection in
December 2018. During 2019, while in bankruptcy, Senior Care Debtors assumed
LTC's master lease. In March 2020, Senior Care Debtors emerged from bankruptcy.
Concurrently with their emergence from bankruptcy, in accordance with the order
confirming Senior Care Debtors' plan of reorganization, Abri was formed as the
parent company of reorganized Senior Care Debtors and became co-tenant and
co-obligor with reorganized Senior Care under LTC's master lease.
As of April 16, 2021, the Lessee leases and subleases to affiliates 11 skilled
nursing centers in Texas, including approximately 1,400 beds, under a master
lease with LTC. Annualized rental revenue from the Lessee is approximately $15.0
million, representing 9.2% and 9.6% of LTC's annualized GAAP and cash revenue,
respectively, as of December 31, 2020. LTC has not received rent from the Lessee
since February 2021.
As previously disclosed, LTC sent a notice of default to the Lessee for
non-payment of March 2021 rent and additional charges owed under the master
lease, followed by a notice of termination of master lease to be effective April
17, 2021. The current minimum monthly rent owed to LTC by the Lessee is $1.2
million. At the time of the April 16, 2021 bankruptcy filings by the Lessee, LTC
was in the process of transitioning the portfolio to Texas-based HMG Healthcare,
LLC ("HMG") pursuant to a master lease, subject to various conditions precedent,
including Lessee's (and its sublessee affiliates') compliance with the
transition obligations under LTC's existing master lease, with a goal to
complete the transition by the end of the second quarter of 2021.
Additionally, LTC's operator, Senior Lifestyle Corporation ("Senior Lifestyle"),
has not paid rent in 2021. As previously disclosed, LTC is in the process of
transitioning the portfolio. To date, 11 of the 23 properties already have been
transitioned. Four additional properties are expected to be transferred by the
end of the second quarter of 2021. Of the remaining eight properties, three are
expected to be sold by the end of the second quarter, subject to timely
completion of due diligence, one is expected to be transferred by the end of
July, one has been closed and will be sold for an alternative use, and options
are currently being evaluated for the last three. The current minimum monthly
rent due to LTC from Senior Lifestyle less amounts received from the re-leased
properties is $1.1 million.
2021 Rent deferrals, net of repayments, and abatements ($ in thousands):
February* March April
Rent deferrals, net of repayments $ 689 $ 433 $ 367
Rent abatements 360 240 240
50% reduction of 2021 rent & interest escalations 1,204 0 133 *
$ 2,253 $ 673 $ 740
*As previously disclosed
We have agreed to provide rent deferrals and abatements up to $721,000 for each
of May and June 2021.
The information contained in this report is being furnished and shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities
under Section 18 and shall not be deemed to be incorporated by reference into
the filings of the Registrant under the Securities Act of 1933, as amended, or
the Exchange Act.
Forward Looking Statements
This report includes statements that are not purely historical and are "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, including statements regarding the impact of the Lessee bankruptcy,
future rent payments, and other statements regarding the Company's expectations,
beliefs, intentions or strategies regarding the future. All statements other
than historical facts contained in this report are forward looking statements.
These forward looking statements involve a number of risks and uncertainties.
All forward looking statements included in this report are based on information
available to the Company on the date hereof, and the Company assumes no
obligation to update such forward looking statements. Although the Company's
management believes that the assumptions and expectations reflected in such
forward looking statements are reasonable, no assurance can be given that such
expectations will prove to have been correct. The actual results achieved by the
Company may differ materially from any forward looking statements due to the
risks and uncertainties of such statements.
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