‘A Promising Upturn’: LTC Execs Eye Investments as Sector Fundamentals Improve, But Oppose Nursing Home Staffing Rule 

Amid a better climate for federal and state reimbursements, higher profit margins and rising occupancy rates, LTC Properties (NYSE: LTC) executives said Tuesday that the nursing home industry is on target for robust growth.

And while the California-based real estate investment trust (REIT) spent 2023 on portfolio adjustments, the key focus for 2024 will be about long-term expansion, executives said during the company’s first quarter conference call.

“The seniors housing and care industry is on a promising upturn after setbacks related to COVID. Thanks to favorable demographic trends, improving margins, and rising occupancy rates, all signs point to a more robust market,” said CEO and Chairman Wendy Simpson. “We are evaluating multiple investment opportunities and are confident we have both the bandwidth and resources necessary to strategically allocate capital to enhance our portfolio.”


In 2023, LTC completed more than $260 million in investments, and after selling $77 million of assets and renewing leases for others, LTC is concentrating on future efforts for sustainable growth, Simpson said.

For the first quarter ended March 31, 2024, LTC beat Wall Street’s consensus estimates by 3 cents in reporting a net income of $24.065 million, or $0.56 per diluted share, which is a decrease from the $32.929 million, or $0.80 per diluted share in the same period a year ago.

Total revenues for the first quarter came in at $51.366 million, exceeding analysts estimates of $50.95 million, pointing to promising revenue generation.


Midday, LTC shares traded at $33.12, up 63 cents, or 1.94%.

LTC’s investment portfolio includes 202 properties in 26 states with 31 operating partners. The portfolio comprises approximately 50% seniors housing and 50% skilled nursing properties.

Staffing mandate and reimbursement landscape

The federal and state reimbursement rates favor a positive outlook for LTC, Simpson said.

“We also are encouraged by the reimbursement landscape, particularly with the anticipated 4.1% increase under the SNF payment rule for fiscal 2025,” she said.

In late March, the Centers for Medicare & Medicaid Services (CMS) issued its proposed payment rule, estimating that the aggregate impact of the payment policies would result in a net increase of 4.1% in Medicare Part A payments to SNFs in fiscal year 2025.

Meanwhile, reimbursement in several states is also expected to rise, she said. In Florida, for example, where LTC owns seven centers, LTC operators will benefit from an unprecedented 8% Medicaid rate increase.

However, despite these positive trends for LTC and the sector at large, staffing poses problems, complicated by the staffing mandate, Simpson said.

Without sharing the staffing situation unique to LTC, Simpson nevertheless cited her dismay over the rule.

“Our industry pushed back on the proposed rule during the comment period, with more than 46,000 letters, mainly related to the concerns that the mandate is unfunded, and that the level of staff required simply does not exist,” Simpson said, noting the American Health Care Association’s (AHCA) estimates that 81% of skilled nursing centers do not currently meet the rules staffing requirements. “We will continue to monitor the situation and support industry organizations and initiatives to oppose this rule.”

CMS issued its finalized SNF minimum staffing rule last week.

Rental revenue strength

Pam Kessler, co-president and chief financial officer, said more rental revenue was collected over all.

Compared to the first quarter of 2023, total rental revenue for the first quarter of 2024 increased by $1.8 million due the receipt of $2.4 million of rent in connection with the sale of a property in Wisconsin in the 1Q of 2024, an acquisition in Ohio in Q2 of 2023, more rent collected from HMG Healthcare, as well as an annual rent escalation and other lease adjustments.

“The increases were partially offset by lower rent related to property sales and operator transitions,” however, Kessler added.

During the first quarter, LTC sold a total of six properties in Florida and Texas, with 268 combined units while also selling its interest in a joint venture in Wisconsin. The combined sale price was $26.3 million, with the REIT recording gains of approximately $3 million, Kessler said.

Other adjustments related to LTC’s operating partners included disposing off some properties that were not generating profits.

“We have resolved the remaining 10 non-revenue generating properties discussed on last quarter’s call. Three of these properties were released and the remainder were sold,” said Clint Malin, LTC’s co-president and chief investment officer.

Malin also offered updates on other partnerships, including its deal with Ignite Medical Resorts.

“We expect to generate approximately $884,000 in revenue in 2024,” from that transaction, he said.

Earlier this month, LTC Properties extended a $12.7 million senior loan to Ignite Medical Resorts, which is a current LTC operator, for the purchase of a skilled nursing and assisted living campus in Katy, Texas. Ignite currently operates 22 luxury properties in Illinois, Indiana, Kansas, Missouri, Oklahoma, Texas and Wisconsin, with seven of these being part of LTC’s portfolio since Dec. 31.

As for properties related to HMG Healthcare, Malin said that an agreement had been reached to amend the master lease covering 11 skilled nursing centers in Texas to extend the term through December 2028.

Annual rent will increase by $1 million to $9 million for 2024 for these HMG properties. Rent will increase to $9.5 million in 2025, to $10.0 million in 2026 and then escalate 3.3% annually thereafter through 2028, Malin said.

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