LTC Properties, Inc. 2026 Q2 Earnings Call

Please proceed. Good morning, thank you for joining us.

The excitement and momentum of our SHOP strategy here at LTC continues, and our transformation is well ahead of schedule. We are increasing our 2026 SHOP acquisition guidance by 50% to $900 million at the midpoint and will have closed $700 million in acquisitions by the end of September. Additionally, we expect a meaningful step-up in dispositions and loan payoffs this year, well above what we've previously discussed, with the majority in skilled nursing. By the end of September, SHOP will represent 40% of LTC's pro forma annualized NOI, a full quarter ahead of previous estimates. We expect to drive that to 50% by year-end through pipelined execution, redeploying proceeds from the Prestige loan payoff, and proactively recycling capital on lower growth investments at exceptional pricing.

At our current pace, we see a pathway to generating 75% of our annualized NOI from SHOP by the end of 2028. We are encouraged by our core SHOP performance and the momentum we are seeing across the portfolio. Additionally, we have strengthened our balance sheet with a $1.1 billion credit facility supporting our growth trajectory with additional liquidity. At 40% SHOP NOI, our pro forma internal growth rate triples. Combined with external growth opportunities, LTC's projected annual growth rate at 75% of NOI in two years increases meaningfully. Our SHOP strategy has resulted in a substantial shift in our portfolio, dramatically enhancing LTC's long-term ability to organically grow core FFO and FAD per share above historical rates. LTC's transformation from a triple net lease and lending platform into a higher growth SHOP-focused REIT reflects deliberate planning and efficient execution.

What you see this quarter is our transformative SHOP strategy converting into results. The investments we have made in operator relationships, human capital, and real estate are creating value and long-term growth for our shareholders. I'll now turn it over to Gibson to walk through the operating portfolio.

Thank you, Pam. We are intentionally and rapidly transforming our business to meaningfully increase LTC's long-term intrinsic growth profile. The degree to which we accomplish our objective will be driven by our investment in SHOP and the long-term growth potential of that segment. With respect to increasing our SHOP mix, we now expect proceeds of $730 million from dispositions and loan payoffs in 2026, $465 million above prior guidance. We expect to realize a 5.5% cap rate on our rent from the incremental $465 million and a blended rate of 7.3% on total 2026 proceeds. About two-thirds of the incremental sales will be skilled nursing properties, bringing total expected 2026 proceeds from skilled nursing to $570 million at a blended cap rate of 7.5%. The remaining $160 million of Triple-Net seniors housing properties is expected to be sold at a 6.5% cap rate on current rent.

The total proceeds this year include $180 million from the Prestige loan payoff, which we're now modeling to occur on October 1st. Our revision to the anticipated payoff date relates to the HUD process timeline, and given the progress that has already been made, we do expect that closing to occur this year. The timing of the additional sales and associated rent reductions are outlined in our supplemental package. With respect to SHOP growth, we remain encouraged by the portfolio's strong characteristics and expect to realize pro forma growth of 14% at the midpoint of guidance in our core SHOP portfolio when compared with 2025. Our second quarter core SHOP NOI was $13.3 million, up from $12.9 million pro forma NOI in Q1. We're encouraged by the RevPAR growth relative to our expectations earlier in the year and saw occupancy increases accelerate at the end of the quarter.

Given those factors, we believe we are well positioned to achieve guidance with continued improvement throughout the year. Looking forward into 2027, we will continue to evaluate our portfolio for opportunities to accelerate our strategy by recycling capital at attractive risk-adjusted rates. We're excited about the long-term growth potential of the SHOP portfolio that we are assembling. Now I'll turn the call over to Dave to discuss our investment activity.

Thanks, Gibson. We are winning and growing in a dynamic acquisition market that is fueling LTC's near-term momentum and long-term growth trajectory. By the end of the third quarter, we will surpass the previous midpoint of our investment guidance by $100 million, and now expect to reach $900 million in SHOP acquisitions in 2026. Importantly, we expect this pace of growth to continue into 2027 and beyond. From the start of the year through the end of July, we closed approximately $400 million in SHOP acquisitions. We expect another $300 million by the end of Q3, and roughly $200 million more by year-end, reflecting the depth of our deal flow. A key value underlying LTC's success is our strong commitment to relationships. Our speed, strength, and collaborative execution resonate with operating partners, sellers, and intermediaries. As a result, we're seeing a robust pipeline of opportunities to support our growth.

Our SHOP acquisitions are targeted, focusing on key characteristics that support the quality of the platform and will drive higher intrinsic growth and better risk-adjusted returns. The average age of the $700 million of acquisitions that Pam referenced earlier is nine years, with 76% located in primary markets as designated by NIC. The average unit size of these communities is around 110, with nearly 60% offering a continuum of care spanning IL, AL, and memory care. These acquisitions represent growth with existing and new operators, as well as repeat and first-time seller relationships. As our SHOP portfolio grows, we remain focused on identifying opportunities that align with the LTC strategy and pair well with our strong operating partners. Our investment team's focus on asset quality and size, unit mix, and market dynamics directs our growth to communities that will retain their competitive position and deliver durable long-term performance.

We know sellers and operators have options, we strive to be their trusted partner. We are deeply grateful to everyone's contributions to LTC's SHOP transformation and believe our people, our platform, our financial strength, and our deep relationships position us for continued growth and success. Now, I'll pass the call to Ceci for a review of our financial results.

Thank you, Dave. We recently expanded our credit facility by $300 million, increasing our unsecured revolving line of credit to $900 million. Additionally, we anticipate entering into a new ATM agreement in the third quarter. During the second quarter, we sold 4.1 million shares of common stock for $155 million in net proceeds under our ATM program to pre-fund our SHOP acquisitions. Our pro forma liquidity stands at $648 million. This strengthened capital position enhances our financial flexibility, enabling us to accelerate external growth initiatives and capture additional NOI expansion opportunities. At the end of the second quarter, our debt to annualized adjusted EBITDA for real estate was 4.2 times, and our annualized adjusted fixed charge coverage ratio was 4.9 times.

We continue to operate comfortably within our leverage target of four to five times debt to EBITDA and will fluctuate within that target depending on the timing of our acquisitions and expected proceeds from sales and payoffs. Core FFO per share was $0.68 for both 2026 and 2025 second quarters, and core FAD per share was $0.70 this quarter, compared with $0.71 in the 2025 second quarter. The decrease was due to an increase in our weighted average diluted shares outstanding, driven by additional shares issued under our ATM program. A decrease in income from SNF sales and loan payoffs, and an increase in interest expense. The decrease was offset by an increase in SHOP NOI and interest income from loan originations and additional loan funding. As we head closer to year-end, we are narrowing our guidance range for 2026.