LTC Properties Inc (LTC), a real estate investment trust (:REIT), recently acquired a skilled nursing property with 90 licensed beds located in Brownwood, Texas for $6.5 million. The company utilized the proceeds from its unsecured revolving line of credit to fund the acquisition.
Additionally with this purchase, the company tied the property up with an existing master lease with Senior Care Centers at an initial cash yield of 9.0%.
LTC Properties reported first quarter 2012 FFO (funds from operations) of 56 cents per share compared with 52 cents per share in the year-earlier quarter. Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
LTC Properties primarily invests in long-term care and other health care properties through mortgage loans, property lease transactions and other investments.The company usually leases its health care facilities in “triple-net” leases, under which the tenant pays all taxes, insurance and maintenance for the properties, in addition to rent.
This insulates the company from short-term market swings that may adversely affect the operations of a particular facility, and provides a relatively steady source of income. Health care is also relatively immune to the economic problems faced by office, retail and apartment companies. Consumers will continue to spend on healthcare while cutting on discretionary purchases.
LTC Properties currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term Neutral recommendation on the stock. One of its competitors, Health Care REIT Inc. (HCN) also holds a Zacks #3 Rank.
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