LTC Properties (LTC) Q2 FY26 earnings call: guidance and Q&A

Inquired about cap rates, IRRs, expected timing for the $321 million left to close, and potential for additional deals this year.

Dave Boitano stated that the remaining deals have similar cap rates, mix, and quality to prior acquisitions. The company is always looking for additional opportunities that fit their criteria.

“So that remaining to be closed looks much like what we have, similar cap rates and from an addition and mix and quality, really we're finding a lot of transactions that look like what we've acquired.”

asked by Robin Haneland · answered by David Boitano

Sought understanding of the factors contributing to RevPOR growth and the reasons for the change in occupancy expectations.

Gibson explained that RevPOR is up 50 bps based on pricing strength and upcoming price increases, with the marketing funnel working. Occupancy is behind internal projections by 90 bps for H1 FY26 due to seasonality, but year-over-year is up 145 bps. The company is not anchoring expectations on last year's steep Q3 occupancy ramp, especially in standalone memory care.

“Underlying metrics are good. There's no material difference between the operator's asking rates and the rates at which people are moving in. We feel like the marketing funnel is working and flowing. And so we feel pretty good about that. On the occupancy front, that's really a function of the math. So year-to-date, we're at about 89.7% occupancy. Last year was 89.7%. So if you think about that, to be able to get our initial guide of 150 basis points, you'd have to average 300 basis points over the second half of the year.”

asked by Robin Haneland · answered by Unknown Executive

Asked how future SHOP acquisitions would be funded, considering the current year's unique funding sources, and whether they would be accretive from day one.

Pamela Kessler stated that future acquisitions would likely be more neutral from day one, with growth in subsequent years. She anticipates a more normal funding mix of 70% equity and 30% debt next year, leading to bottom-line asset growth rather than just recycling.

“Yes, more neutral from day one and the growth in the following year. We do have some more potential capital recycling we can do in our portfolio. The bulk of it done this year, I mean, over $700 million, that's pretty incredible, as [ Gibson ] alluded to, turning over a third of our portfolio in less than 18 months.”

asked by Tayler Okusanya · answered by Pamela Shelley-Kessler

Questioned why Core FFO per share guidance remained unchanged despite a $300 million increase in investment midpoint and higher SHOP NOI guidance.

Cece explained that the primary reason was the timing of acquisitions, with deals being pushed back later in the year.

“Well, a lot of it is [ Cece ] here. A lot of it is the timing of acquisitions and when they're coming on board. That's the primary cause of keeping it where it was, you know, initially coming out the model. We typically modeled ratably throughout the year, but it's been pushed back.”

asked by Unknown Analyst · answered by Unknown Executive

Asked about the reasons for the significant increase in disposition guidance and whether the attractive cap rates were due to high coverage ratios or specific deal structures.

Clint Malin stated it's a number of transactions, driven by attractive pricing for skilled nursing and proactive portfolio management. Gibson added that many sales are back to operators, allowing them to control their destiny, and LTC monetizes value as leases approach term. The 7.5% cap rate includes the Prestige loan payoff.

“It's small. There's a number of transactions, Mike, that's involved in this. And this just goes to what we've mentioned on our previous calls, that we're going to look at our portfolio and given, you know, attractive pricing for skilled nursing, looking at being able to take advantage of that.”

asked by Michael Carroll · answered by Clint B. Malin

Inquired about the confidence level for the Prestige loan repayment happening by October 1, and any remaining hurdles.

An Unknown Executive (likely Gibson) expressed high confidence, noting that final HUD commitments are mostly in, performance is strong, and underwriting metrics are met. Any delay would be minor, a few weeks or a month.

“Yes, not now. We feel confident, Mike. I mean, the timing, maybe a few weeks or a month or something like that, but the final commitments from HUD are in to Prestige on most of those properties.”

asked by Michael Carroll · answered by Unknown Executive

Asked if the company could achieve higher FFO growth aligned with SHOP NOI growth once the transformation is complete, and why not aim for 100% SHOP.

Pamela Kessler confirmed that at 75% SHOP NOI by 2028, the math supports higher FFO growth, assuming current acquisition pace. Clint Malin added that the decision to go beyond 75% would depend on pricing, cap rates, and capital availability, but the 'band-aid has been ripped' on the transformation.

“No, and thank you for that question, Rich, because it is the math of it, right? At 75% in 2028, that's what you're achieving. And so the only thing that would hold us back from that is not being able to execute acquisitions at the level we are currently.”

asked by Richard Anderson · answered by Pamela Shelley-Kessler