LTC Properties, Inc.

Securities and Exchange Commission from time to time, including the company's most recent 10K, dated December 31, 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 will now like to turn the conference over to Wendy Simpson.

Thank you, Operator, and welcome everyone to LTC's 2023 Third 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. On our last call, I spoke about LTC's primary mission of focus for the remainder of 2023. And as a result of that strategy, we have made progress towards those identified goals, including very positive results regarding the Brookdale and Prestige portfolios. We also closed the remaining transactions in the pipeline with funding of that transaction expected early next year. Pam and Clint will talk more about these later. To recap, since the beginning of the year, we've originated nearly $270 million in transactions and generated over 51 million in sales proceeds, resulting in net gains totaling approximately $21 million. Of the 51 million in sales proceeds to date, 14 million was received in the third quarter. We expect to receive additional sales proceeds in the 27 to $28 million range throughout the remainder of 2023. primarily related to the expected sales portion of the Brookdale portfolio. Additionally, so far in 2023, we have received almost $12 million in mezzanine loan payoffs, generating $1.6 million of exit IRR income at a weighted average rate of 12%. LTC's long-term mandate remains focused. First, focus on the portfolio where we have been working to further reduce its average age while creating additional operator diversity and maintaining a balanced portfolio of private pay and skilled nursing. Second, focus on reducing leverage to more historical levels by using sales proceeds to pay down a portion of our debt. And third, focus on positioning LTC for future growth. I'd now like to spend a few minutes on some industry-wide trends that I'm sure are top of mind, starting with some positive news. The latest NCMAP data shows that in the third quarter, occupancy grew in both seniors housing and skilled nursing. Recent industry reports have further shown that current indicators point to a return to pre-pandemic occupancy levels by the end of 2024. While we cannot predict specific timing, we agree that the industry is making progress towards that goal. Additionally, agency usage is trending down in certain cases, and the labor market is strengthening for operators in many areas. These factors, combined with a net Medicare rate increase of 4%, which is slightly higher than the expected increase before the final rate went into effect on October 1st, and additional increases at the state level put operators, particularly SNF operators, in a better position to begin improving margins. We are happy to see the positive gains in the industry has made, but are also cognizant that the operators will face some challenges for both seniors housing and skilled nursing, including inflation, insurance premiums, litigation, and SNF minimum staffing requirements, which pending the release of the final rule will take several years to implement. Finishing up with some LTC-specific metrics, the FAD payout ratio for the third quarter was 86%, with the long-term historical goal remaining at 80%. We are currently projecting a FAD payout ratio of 83% for fiscal 2022. down from 85% in fiscal 2022. We also maintain a monthly dividend payout of 19 cents per share. For the fourth quarter, we anticipate the FFO excluding non-recurring items will be in the range of 65 to 66 cents per share. As we enter into the last quarter of 2023 and move into 2024, Focus remains on needs-based care, coupled with strong demographic demand, positioning us for future growth. With that, I'll turn the call over to Pam.

Thank you, Wendy. For the third quarter of 2023, total revenue increased by $5.8 million compared with the third quarter of 2022. The improvement related primarily to $3.5 million more of interest income from acquisitions accounted for as financing receivables and $1.9 million more of interest income from 2023 mortgage loan originations. Additionally, interest and other income increased by $453,000, primarily due to a recent mezzanine loan origination. Rental revenue and income from unconsolidated joint ventures were comparable to the prior year period. Interest expense increased by 4.7 million from last year's third quarter, primarily related to higher interest rates and a higher outstanding balance on our revolving line of credit, partially offset by scheduled principal paydowns on our senior unsecured notes. During the 2023 third quarter, we recognized a 4.9 million gain on sale related to two assisted living communities in Pennsylvania. I'll provide additional details on property sales shortly. Our provision for credit losses decreased by approximately $600,000, primarily due to the 2022 acquisition of three skilled nursing centers accounted for as a financing receivable, partially offset by the origination of the mezzanine loan I mentioned earlier. 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. Net income available to common shareholders increased by 8.9 million, primarily due to higher interest income from new investments, the increase in gain on sale of real estate, and an impairment charge of 1.3 million reported in the prior year third quarter, partially offset by higher interest expense. Fully diluted FFO per share improved to 65 cents for the third quarter of 2023, up from 60 cents in the third quarter of 2022. excluding non-recurring items, FFO per share was $0.65 for the 2023 third quarter, compared with $0.63 last year. The increase in FFO, excluding non-recurring items, was due to higher income from new investments, partially offset by higher interest expense. Next, I'll discuss recent divestitures. Clint will detail our investment activity later. During the third quarter of 2023, we sold two assisted living communities in Pennsylvania with a combined total of 130 units for $11.1 million, with a gain on sale of $4.9 million. We also sold three assisted living communities in Nebraska with a combined total of 117 units at a net book value equal to $3 million. We repaid $33.1 million in regular scheduled principal payments under our senior unsecured notes and also paid $23.6 million in common dividends for the 2023 third quarter. During the third quarter, we borrowed $35.9 million under our unsecured revolving line of credits. Currently, we have 11.3 million of cash on hand, approximately 38 million available under our line of credit, with roughly 362 million outstanding, and about 129 million available under our ATM. This gives us total liquidity of almost 178 million. Additionally, as Wendy mentioned, we anticipate receiving sales proceeds later this year in the range of 27 to 28 million, which will be used to pay down our line of credit. This sales proceeds amount is lower than our previous assumption based on our decision to sell fewer properties from the Brookdale portfolio, which Clint will describe later. Additionally, we anticipate receiving $30 million in the first quarter of 2024 related to the payoff of a mortgage loan secured by a 189-bed skilled nursing center in Louisiana. At the end of the 2023 third quarter, Our debt to annualized adjusted EBITDA for real estate was six times, and our annualized adjusted fixed charge coverage ratio was 3.2 times. Additionally, regarding Prestige Healthcare, during the third quarter of 2023, we deferred $900,000 in interest payments under our previously disclosed agreement to defer up to $1.5 million or up to $300,000 per month for May through September 2023. Subsequent to the end of the third quarter, we amended the loan. As part of the amendment, LTC has drawn down $2.8 million of the approximate $5 million letter of credit from Prestige to repay all deferred interest outstanding through October 2023. We will draw down approximately $334,000 in each of November and December 2023 to be applied toward interest due on the loan at that point. As a result, we expect to receive all contractual interest of $19.5 million due from Prestige in 2023. Beginning on January 1st, 2024, the minimum mortgage interest payment due to LTC will be based on an annual current pay rate of 8.5% on the outstanding loan balance. The contractual interest rate on the loan of 10.84% as of January 1st, 2024 remains unchanged. From retroactive Medicaid funds due to Prestige, we expect our letter of credit will be replenished in 2024, and Prestige will be able to pay all contractual interest during 2024 and 2025. Now I'll turn the call over to Clint.