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 risks and uncertainties that may cause actual results and events to differ materially. These risks and uncertainties are detailed in LTC properties filings with the Securities and Exchange Commission from time to time, including the company's most recent 10-K. dated December 31st, 2022. 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.

Thank you, Operator, and welcome everyone to LTC's 2022 fourth quarter conference call. I am joined today by Pam Kessler, co-president and chief financial officer, and Clint Malen, co-president and chief investment officer. 2022 was a hard-won positive year for LTC, and we anticipate much of the same for 2023. Last year, we invested more than $170 million using a wide variety of financing vehicles, making it our strongest investment year since 2015. We were diligent and disciplined in right-sizing our portfolio through the disposition of assets that were either underperforming or are no longer core to our business and through transitioning challenged operators. Our momentum has carried into the new year as we've taken steps to further strengthen and diversify our portfolio to drive sustainable future growth. Our business development team has already been extremely busy in 2023 closing investments totaling over $128 million year to date. We are working to identify additional opportunities to fill the financing void many operators are now facing. Access to capital has gotten higher from traditional sources, making flexible and creative REITs like LTC more competitive in the marketplace. We remain focused on bringing the right financing solutions to strong regional operators who are seeking growth capital in an uneven financial market. While some challenges remain, including labor and inflation, we are seeing positive signs in the industry data. Many of our operators appear to be gaining more stability as we continue to recover from the pandemic. And some of our private pay partners are raising rates without much resistance. Receipt of funds from the employee retention tax credit is providing our operators with some breathing room, allowing them to repay deferred rent. Additionally, realized and expected reimbursement rate increases in several states should benefit our skilled nursing operators and LTC in those areas. One particular headwind for skilled nursing, however, is the ending of the Public Health Emergency, or PHE, on May 11, 2023. There are many benefits tied to the PHE, including the three-day stay waiver with the ability to skill in place, and it remains unclear at present to what extent our industry will be impacted. Our industry has done much great work to address pandemic-related challenges, and I believe we will continue to do so. We operate under the ethos of conservative financial management, which has served us well through many real estate cycles. We've been able to provide needed support to our operators throughout the pandemic while maintaining our regular monthly dividend. Our FAD payout ratio was 77% for the 2022 fourth quarter, primarily due to non-run rate items, which represent the payment of Anthem's temporary rent reduction and HMG's rent increase, which Pam will detail shortly. Given that our fourth quarter results were positively impacted by the timing of these payments, we expect our FAD payout ratio to increase to the low to mid 80% range for the first quarter, excluding non-recurring items, which is approaching our long-term payout ratio target of 80%. Our guidance for the first quarter anticipates FFO, excluding non-recurring items, will be between 67 and 68 cents per share. Six cents of the decrease from the fourth quarter relates to the non-run rate items I mentioned. partially offset by increases from recent investments. Going forward, we believe we'll see continued progress in our business as operators find new ways to drive occupancy, increase revenue, and lower costs. While the road has been long over the last few years, we are beginning to see operating improvements in our portfolio, although we can't say with certainty how long the 2023 road may be. What we are certain of is that LTC is well positioned to not only withstand any remaining challenges, but to continue our strategic and judicious growth. Now I'll turn things over to Pam.

Thanks, Wendy. Total revenue for the fourth quarter of 2022 grew by $8.4 million from last year's fourth quarter, due in part to a $4.7 million increase in rental revenue. The increase in rental revenue was primarily related to higher rent received from transitioned portfolios. additional factors contributing to the increase included receipt of anthem second and third quarter temporary rent reduction. rent related to our 2022 acquisition of four properties in Texas and rent increases from completed development projects and annual escalation. The increase in total revenue was partially offset by lower rent received due to second quarter 2022 property sales. Interest income from financing receivable increased by 1.4 million compared with the 2021 fourth quarter due to the acquisition of three skilled nursing centers in Florida. As a reminder, in accordance with GAAP, we recorded this transaction as a financing receivable because 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 1.5 million primarily due to mortgage loan originations in 2022 and in the fourth quarter of 2021. Interest and other income increased by $858,000 from last year's fourth quarter, mainly due to a 2022 first quarter mezzanine loan origination and working capital originations partially offset by loan payoffs. Interest expense increased by $1.9 million from last year's fourth quarter, primarily due 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, partially offset by scheduled principal paydowns on our senior unsecured notes. Our provision for credit losses decreased by 888,000, mainly due to a greater number of mortgage originations in the fourth quarter of 2021 than for the same quarter in 2022. 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. G&A increased by 527,000 compared with the 2021 fourth quarter, primarily due to higher incentive compensation and increases in overall costs due to inflationary pressures. During the fourth quarter, we recorded 2.1 million of impairment losses as a result of our recoverability analysis related to a 70-unit assisted living community located in Florida and a closed memory care community located in Colorado. Net income available to common shareholders increased by $5.1 million, primarily due to the net increase in rental revenue I previously discussed, higher revenues from loan originations, and the decrease in provision for credit losses, partially offset by higher interest expense, the $2.1 million impairment charge, and increased G&A expenses. Fully diluted NAREID FFO per share for the 2022 fourth quarter was $0.72 compared with $0.56 for the 2021 fourth quarter. Excluding nonrecurring items, FFO per share was $0.72 compared with $0.59. The increase in FFO excluding nonrecurring items was due to the net increase in rental revenue, higher revenues from loan originations, and the decrease in provision for credit losses partially offset by higher interest and G&A expenses. We received rent of $3 million in the fourth quarter related to the 11 properties we transitioned to HMG in line with our expectations. $1 million of the rent received from HMG in the fourth quarter relates to prior periods and should not be included in a rental run rate for them. We anticipate receiving $8 million in rent from HMG during 2023. For all of the other transition portfolios with market-based rents, we received $120,000 in the fourth quarter, also in line with our expectations, and expect to receive $480,000 in rent during 2023. During the year, we will work to either sell all or some of these assets or set negotiated rents. During the 2022 fourth quarter, we provided $670,000 in rent abatements to the same operator for whom we have been giving assistance. At this point, we expect to receive $300,000 in rent in 2023 from this operator. We paid $5 million in regular scheduled principal payments under our senior unsecured notes in the 2022 fourth quarter at a weighted average rate of 4.27%. We also repaid $21 million under our unsecured revolving line of credit at a weighted average rate of 5.14% and paid $23.3 million in common dividends, as Wendy mentioned. We sold 757,400 shares of common stock for 29.2 million in net proceeds under our ATM program and used those net proceeds to temporarily pay down our revolving line of credit. We then subsequently used our line of credit to fund our investment in 12 assisted living and memory care communities in North Carolina, which will be discussed in more detail shortly. Also, we recently amended our credit agreement to update its benchmark provisions replacing LIBOR with SOFR plus a credit spread adjustment of 10 basis points. Our only floating rate debt is our line of credit. Our balance sheet remains solid with no looming debt maturities and no secured debt. As I mentioned earlier, in the fourth quarter, we received repayment of Anthem's temporary rent reduction in the amount of $1.5 million, collecting $10.8 million from Anthem in 2022, which represents their full agreed upon rent for the year. We anticipate receiving 10.8 million in rent from Anthem again in 2023. We were active subsequent to the end of the fourth quarter, including 128 million of investments with an affiliate of an existing LTC operating partner. Clint will provide additional details shortly. Subsequent to December 31st, 2022, we received 4.5 million from a mezzanine loan prepayment, which included a prepayment fee and the exit IRR totaling $190,000 related to a 136 unit independent living community in Oregon. We also received notice of intent to redeem our 13 million preferred equity investment in a joint venture to develop a 267 unit independent and assisted living community in Washington. We anticipate receiving 1.7 million of additional income in the 2023 first quarter associated with the redemption. representing a 14% IRR. Lastly, also subsequent to December 31st, 2022, we borrowed $162.7 million under our unsecured evolving line of credit, primarily for investments in 2023, and repaid $7 million in scheduled principal paydowns on our senior unsecured notes at a weighted average rate of 4.5%. Presently, we have approximately $42 million of cash on hand $107 million available on our line of credit with $293 million outstanding and $131 million available under our ATM. This gives us total liquidity of approximately $280 million. We have no significant long-term debt maturities over the next five years. At the end of the 2022 fourth quarter, our credit metrics remain solid with a debt to annualized adjusted EBITDA for real estate of five times, an annualized adjusted fixed charge coverage ratio of 4.4 times, and a debt to enterprise value of 34.2%. As with our FAD payout ratio, these metrics benefited from the non-run rate items already discussed, which represent the Anthem repayment and rent received from HMG related to prior periods. While we expect these metrics to go back up over the short term, our long-term target remains below five times. Now I'd like to turn things over to Clint.