The second quarter went “generally according to plan” except for challenges with occupancy issues at some assisted living communities operated by one company and a major cyberattack that disrupted that operator and the industry overall, LTC Properties Chairman and CEO Wendy Simpson said Tuesday during a second-quarter earnings call.
The Westlake Village, CA-based real estate investment trust remains on course with its 2024 guidance, and the company maintains a relatively strong $190 million in liquidity. It also remains committed to future growth, Simpson said.
“This quarter, we worked cooperatively with one of our largest operating partners to help them address a challenge while improving our security and gaining a majority ownership position in our investments,” Simpson said. “I’m proud of the LTC track record with respect to successfully mitigating challenges as they arise, and that we’ve done so quickly and transparently. With continued improvement across our industry, I remain optimistic we are on the right path for growth.”
LTC Properties, the CEO said, “quickly provided solutions” to second-quarter challenges to neutralize the effects on the REIT and others involved.
Among the highlights reported Tuesday, the company has enjoyed Medicaid rate increases at its skilled nursing holdings while recognizing increased coverage on the private pay side, officials said.
They have helped offset disappointing issues involving ALG Senior, the operator with the largest presence in LTC’s portfolio (30 senior living communities). Problems came to light in May in the form of occupancy challenges attributed to staffing issues in 12 communities in smaller markets, as well as “temporary, short-term” effects to Medicaid reimbursements to an affordable senior housing property in North Carolina due to the Change Healthcare cyberattack earlier this year, Co-President and Chief Investment Officer Clint Malin said.
To address those challenges, LTC deferred $1.5 million in rent from ALG for May and June on a portfolio of 11 assisted living communities in North Carolina that the company owns through a joint venture. LTC also agreed to defer up to $250,000 in rent per month for July through December, for a total of up to $1.5 million in rent deferrals.
Malin said that the rent deferrals are needed so the properties can build back occupancy for the rest of the year.
LTC also amended a master lease with HMG Healthcare covering 11 skilled nursing centers in Texas to extend the term through December 2028.
As a condition of the amendment, HMG agreed to repay $11.9 million on its $13.5 million working capital note during the second quarter of this year (subsequently amended to July 11). The operator’s current working capital note repayment obligation is $1.6 million, which is interest free and will be repaid ratably through the end of 2028, according to a statement from LTC.
After the second quarter ended, the REIT committed to fund a $26.1 million mortgage loan for the construction of a 116-unit independent living, assisted living and memory care community in Illinois and sold an 80-unit assisted living community in Texas.
