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LTC Set to Re-lease 37 Assets

Zacks Equity Research

LTC Properties Inc. (NYSE:LTC) disclosed the commencement of the re-leasing procedure for 37 assisted living communities. The properties are leased to Assisted Living Concepts, Inc. and Extendicare Health Services, Inc. and expiring on Dec 31, 2014.

Notably, the annualized GAAP rent generated from these 37 assets was about $11 million as of Sep 30, 2013. The properties are positioned in Pacific Northwest, Midwest and Texas regions and offer huge opportunity for the assisted living providers to expand their presence in these areas. Thus, given the significant value of these assets, this healthcare real estate investment trust (:REIT)’s decision to re-lease the properties is justified.

LTC Properties primarily invests in long-term care and other healthcare properties through property lease transactions, mortgage loans and other investments. The company usually leases its healthcare facilities in “triple-net” leases, under which the tenant pays all taxes, insurance and maintenance for the properties, in addition to rent.

Moreover, the healthcare sector is comparatively immune to the macroeconomic problems faced by office, retail and apartment REITs. It offers stability to the company amid a volatile market, as even in tough economic conditions, customers need to spend on healthcare services, while reducing their discretionary buyouts.

However, LTC Properties currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the REIT- Equity Trust – Other industry include Cole Real Estate Investments, Inc. (NYSE:COLE), W. P. Carey Inc. (NYSE:WPC) and National Health Investors Inc. (NYSE:NHI). All these stocks carry a Zacks Rank #1 (Strong Buy).

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