LTC Properties (NYSE: LTC), the first major senior care real estate investment trust (REIT) to report its first-quarter earnings, had to cut rent for its tenants by 7% amid the fallout of the COVID-19 pandemic — and in the meantime filed a lawsuit against a troubled tenant over ownership changes.

LTC collected the majority of rent for April from its operating partners, which include both senior housing and skilled nursing providers, but it granted approximately $772,000 in rent deferrals to six operators, LTC executive vice president and chief investment officer Clint Malin said on the REIT’s Monday morning earnings call.

The majority of these operators, however, were senior housing providers, he added.

The total deferrals were about 7% of contractual rent for April, and $137,000 of the deferred rent has already been repaid to LTC, Malin said.

“We may deliver additional rent assistance in May on an as-needed basis,” he said on the call. “We are not anticipating an across-the-board rent deferral program. Instead, we are working closely with our partners to help them where we are needed most.”

The deferred rent for April came to about 25% of the contractual rent on average for the operators who received deferrals; there was one rent deferral for May that was given in conjunction with the deferral in April, Malin noted on the call.

But LTC has collected about 55% of the rent due for May to date — May 1 was Friday — and Malin added that some of the rent wouldn’t be due until the 15th of the month.

During the time period from April 18 to April 29, 93% of LTC’s operators were able to provide COVID-19 data; within that window, LTC reported that 35 of its 185 properties had positive COVID-19 cases, LTC president and CEO Wendy Simpson said on the call.

While supplies are starting to trickle in and the critical shortages of personal protective equipment (PPE) are beginning to ease, the costs of COVID care still remain a problem.

“You have all heard of the widespread problem in acquiring sufficient PPE and sanitizing supplies, and the lack of these protections likely contributed to the initial high incidence of additional contagion,” she said. “As this crisis persists, these supplies are becoming less scarce, but shortages remain, and the costs have increased beyond anyone’s estimation.”

LTC reported net income of $63.4 million, or $1.60 per share, for the first three months of 2020, compared with $20.3 million, or $0.51 per share, in the year-ago period.

LTC noted that it sold the Preferred Care portfolio, which had caused headaches for the REIT over several years.

The Westlake Village, Calif.-based REIT also acquired a 140-bed SNF in Longview, Texas, for about $13.5 million, and entered into a 10-year master lease with an initial cash yield of 8.5%, escalating 2% annually with two five-year renewal options.

Senior Care Centers lawsuit

LTC also reported an update on operator Senior Care Centers, which came out of bankruptcy in late March. Just before that happened, a court hearing revealed that the new majority equity owners of Senior Care “and the other co-lessee” were in discussions to sell the ownership interest in LTC’s lessees, Malin said.

“Because LTC’s master lease with Senior Care restricts changes of control except in permitted circumstances, we requested confirmation from them that any potential sale would meet and comply with all applicable terms and conditions of the change-in-control provision in our master lease,” Malin said. “When Senior Care failed to respond to us by our deadline, we filed a lawsuit seeking a declaratory judgment and injunctive relief relating to any potential equity sale transaction that does not comply with the provisions in our master lease.”

LTC still has “a good working relationship” with the management team at Senior Care, but it is prepared to transition the facilities to a new operator if required, he said. Senior Care is still current on all the funds owed to LTC through April, Malin added.