LTC Properties, Inc.

Before management begins its presentation, please know that today's comments, including the question and answer session, may include forward-looking statements subject to risk and uncertainties that may cause actual results and events to differ materially. These risks and uncertainties are detailed in the LTC properties filings with the Securities and Exchange Commission from time to time including the company's most recent 10-K, dated December 31, 2021. LTC undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date of this presentation. Please note, this event is being recorded. I would now like to turn the conference Over to Wendy Simpson. Please go ahead.

Thank you, operator. Welcome, everyone, to LTC's 2022 Third Quarter Conference Call. I'm joined by Pam Kessler, Co-President and Chief Financial Officer, and Clint Malen, Co-President and Chief Investment Officer. With pride, I can say LTC has accomplished much over the last few years, especially in the face of a pandemic that has significantly altered our industry. We have sold assets that were no longer core to our strategy or were not performing to our standards, transitioned a substantial number of assets, and deployed capital into several investments that should serve us well going forward. Year to date, investments have totaled over $170 million, which represents our highest level of investment activity since 2015. We are continuing to aggressively identify additional opportunities to fill the financing void that has been created as banks take a wait and see approach to investments in our sector. As a result, over the next 12 to 24 months, we believe that LTC's investment activity will continue to ramp up as we become even more competitive, bringing flexible and creative financing to strong regional operators who are seeking growth capital at fair rates. I'd like to highlight our recent 62 million investment with Pruitt Health, and Clint will provide more details shortly. This off-market transaction was the result of our building a relationship with this very strong regional operator over many years. In particular, Doug Corey, our Executive Vice President and Managing Director of Business Development has done an outstanding job of identifying strong regional partners, nurturing those relationships, and working closely with them to provide the right financing solutions at the right times for our potential partners. The Pruitt investment not only adds newer skilled nursing centers to our portfolio, helping lower the portfolio's average age, but also adds a formidable operator with more than five decades of experience and a substantial footprint in the southeastern United States. We were able to utilize a creative financing package that worked well for Pruitt Health, and that makes good strategic and financial sense for LTC and our stakeholders. Pruitt is just the kind of operator with whom we like to grow, and we look forward to our ongoing relationship with them. We have a solid balance sheet with no looming debt maturities and no secured debt. We have locked in attractive rates for both our long-term debt and term loans, including locking in a rate of 3.66% for our newly issued seniors unsecured notes for a period of 11 years and entering into swap agreements to lock in our term loans at 2.56 and 2.69% respectively based on our current applicable margins for a period of four and five years respectively. Our only floating rate debt is our line of credit. As a result of our conservative balance sheet approach, we were able to support our operators during COVID and maintain our regular monthly dividend with a third quarter payout to our shareholders of 23.1 million dollars. Our SAD payout ratio was 88% for the third quarter, which was comparable to the second quarter, and we are continuing to target our long-term payout ratio of 80%. As we said last quarter, our operators still have some work to do to successfully meet the challenges brought about by the pandemic, but the news is not all bad. Anecdotally, our operators are reporting lower utilization of staffing agencies allowing them to increase salaries in certain cases, making jobs in the sector more attractive. Rent increases continue to be implemented by several of our private pay operators, and occupancy in our portfolio continues to gradually improve. However, with inflation and labor challenges, our crystal ball is a bit murky, so we can't predict when or if NOI and margins will return to pre-pandemic levels for our industry. Our guidance for the fourth quarter anticipates that FFO will increase between 9 and 10 cents per share from the third quarter. Approximately 8 cents of the increase relates to the $2.4 million payment of Anthem's temporary rent reduction and resumption of agreed upon rent and anticipates $1 million increase in rent from HMG. Our assumptions exclude the $500,000 lease termination fee paid in the third quarter. LTC continues to manage through a tough economic cycle, but we have operated through tough markets before and we believe we are well positioned to weather the current environment. We truly believe that our intractable and some might say boring conservatism does prove that LTC is a good investment now and in the future. I am a strong believer that needs-based care is and will remain a vital part of our society. Now I'll turn things over to Pam.

Thanks, Wendy. Total revenue for the third quarter of 2022 increased by $6 million from last year's third quarter. This growth was attributable to a $2.3 million increase in rental revenue, primarily due to rent received from transition portfolios and from our recently acquired Texas properties. Other factors contributing to the increase included higher property tax income and rental income from completed development projects. The increase in total revenue was partially offset by lower rent due to second quarter property sales, the temporary Anthem rent reduction, and deferred rent. Interest income from sale leaseback financing increased by $357,000 due to the acquisition of three skilled nursing centers in Florida. In accordance with GAAP, We are required to record this transaction as a financing receivable since we purchased the properties from an entity and leased the properties back to the same entity under a master lease with a purchase option. Interest income from mortgage loans increased by $2.5 million, primarily due to mortgage loan originations in 2021 and 2022. Interest and other income increased $954,000 from last year's third quarter mainly due to a 2022 first quarter mezzanine loan origination and additional funding under working capital loans, partially offset by loan payoffs. Interest expense increased $1.3 million from last year's third quarter, due mainly to the origination of term loans in the fourth quarter of 2021, the issuance of $75 million in senior unsecured notes in the second quarter of 2022, and higher interest rates offset by scheduled principal pay downs on our senior unsecured notes. Transaction costs decreased by $3.4 million from the third quarter of 2021, mainly related to the settlement payment we made to a former operator in last year's period. Property tax expense increased by $247,000, primarily due to our acquisition of a four-property portfolio in Texas during the second quarter of 2022. Our provision for credit losses increased by $727,000, mostly due to the just-discussed acquisition of three skilled nursing centers that were accounted for as a financing receivable and additional funding under our mortgage and notes receivable, partially offset by principal pay down. As a reminder, upon origination, we record a loan loss reserve estimate equal to 1% of the loan balance. This reserve is amortized as the loan principal is paid down. GMA increased by $570,000 year over year, due mainly to higher costs related to property maintenance expenses for closed properties, higher incentive compensation, and increases in overall costs due to inflationary pressures. Income from unconsolidated joint ventures remained unchanged year over year. During the third quarter, we recognized a $434,000 loss on sale of a closed skilled nursing center in Texas. Additionally, We have a master lease covering two assisted living communities that is scheduled to mature during 2023. One of the two communities is located in Kentucky and has been classified as held for sale as of September 30th, 2022. We wrote this community down to its anticipated selling price, recording an impairment loss at $1.3 million, and we are presently negotiating a new lease for the other community, which is located in Ohio. Net income available to common shareholders increased $2.3 million, principally resulting from loan origination, the increase in rental revenue previously discussed, and a decrease in transaction costs. This was partially offset by a lower gain on sale of real estate, higher interest expense, the impairment charge I just described, increases in the provision for credit losses, and higher G&A expense. Fully diluted NAERI FFO per share for the 2022 third quarter was $0.60, versus $0.45 in the third quarter of 2021. Excluding non-recurring items, FFO per share was $0.63 in the current year third quarter, compared with $0.55 in the year-ago period. The increase in FFO excluding non-recurring items was due to loan origination and the increase in rental revenue, partially offset by higher interest expenses and G&A. Moving next to our third quarter investment activity. We contributed $61.7 million into a newly formed joint venture with Pruitt Health for the purchase of three skilled nursing centers in Florida. As previously stated, GAAP requires the purchased assets to be presented as a financing receivable on our balance sheet. Clint will provide additional details about this investment shortly. Regarding our former senior lifestyle portfolio, for the six buildings under two separate leases with quarterly market-based rent resets we received $80,000 in the third quarter, in line with our expectations. We anticipate receiving $120,000 in the fourth quarter of this year. Going into 2023, we plan to either sell these assets or set negotiated rent based on our operator's budgeting, which is currently in process. Regarding the former senior care portfolio, now leased to HMG, we received rent of $2 million in the third quarter, which is down 500,000 from our prior projections of 2.5 million for the quarter. However, our projections for the full year remain unchanged as we anticipate receiving 3 million in the fourth quarter of this year. We also funded 220,000 of principal on the $25 million working capital loan we provided to HMG. The loan has a current outstanding balance of 13.5 million. We paid $36.2 million in regular scheduled principal payments under our senior unsecured notes in the 2022 third quarter at a weighted average rate of 4.75%. We also borrowed $95 million under our unsecured revolving line of credit at a weighted average rate of 3.24% and paid $23.1 million in common dividends, as Wendy mentioned. We also sold 125,200 shares of common stock for a total of $4.8 million in net proceeds under our ATM program and used the proceeds for general corporate purposes. Presently, we have $6.5 million of cash on hand, $249 million available on our line of credit with $151 million outstanding, and $160.3 million available under our ATM. This provides us with total liquidity of approximately $416 million. We have no significant long-term debt maturities over the next five years. At the end of the 2022 third quarter, our credit metrics remain solid with a debt-to-annualized adjusted EBITDA for real estate of 5.9 times, an annualized adjusted fixed charge coverage ratio of 4.2 times, and a debt-to-enterprise value of 34%. Although our debt to annualize adjusted EBITDA for real estate metric remains higher than our long-term target, we continue to work toward reducing this metric to below five times. During the 2022 third quarter, we provided $300,000 in rent deferrals to a single operator not in our top 10 and received $100,000 of deferred rent repayments from a different operator. We also provided $720,000 in rent abatements to the same operator for whom we have been giving assistance. These amounts do not include Anthem, for whom we temporarily reduced the monthly agreed upon rent for the months of May through September 2022. The 2022 agreed upon rent from Anthem remains 10.8 million, of which 6.6 million was paid through the end of September 2022. In October to date, we received an additional 1.2 million of rent. This represents 900,000 of our October 2022 agreed upon rent and $300,000 in repayments towards the temporary rent reduction. We continue to expect receipt of the total $10.8 million by year end upon Anthem receiving additional money from the employee retention tax credit and from improving operating results. In October, we provided $240,000 of abated rent and agreed to provide rent abatements of up to $215,000 for each of November and December 2022 to the same operator previously mentioned. Now I'll turn the mic over to Clint.