LTC Properties Swings to Q3 Loss on $41.5M Write-Off, Shifts Strategy

Ticker: LTC · Form: 10-Q · Filed: 2025-11-04T00:00:00.000Z

Sentiment: bearish

Topics: REIT, Seniors Housing, Healthcare Real Estate, 10-Q Analysis, Financial Performance, Strategic Shift, Debt Levels

Related Tickers: LTC, WELL, HCN, VTR

TL;DR

**LTC's Q3 loss and strategic pivot into SHOP is a high-stakes gamble; expect volatility as they navigate operational complexities and higher debt.**

AI Summary

LTC Properties Inc. reported a significant net loss of $19.995 million for the three months ended September 30, 2025, a sharp decline from a net income of $29.366 million in the same period of 2024. This downturn was primarily driven by a substantial write-off of effective interest receivable totaling $41.455 million. Total revenues increased to $69.290 million for the quarter, up from $55.783 million year-over-year, largely due to the introduction of $22.203 million in resident fees and services from its new Seniors Housing Operating Portfolio (SHOP) segment. However, this was offset by a decrease in rental income from $32.258 million to $27.842 million. For the nine months ended September 30, 2025, the company posted a net income of $15.777 million, down significantly from $72.957 million in 2024, also impacted by the $41.455 million write-off. The company strategically shifted by terminating triple-net master leases with Anthem Memory Care, LLC and New Perspective Senior Living, LLC, converting 13 communities into its new SHOP segment in Q2 2025, and acquiring eight additional seniors housing communities in Q3 2025, bringing the SHOP segment to 21 properties. Total assets increased to $2.044 billion from $1.786 billion at December 31, 2024, while total liabilities rose to $999.170 million from $733.137 million, mainly due to a significant increase in the revolving line of credit from $144.350 million to $548.450 million.

Why It Matters

This filing reveals a pivotal strategic shift for LTC Properties, moving into the Seniors Housing Operating Portfolio (SHOP) model, which could offer higher upside but also greater operational risk compared to traditional triple-net leases. The substantial Q3 net loss, driven by a $41.455 million write-off, signals potential challenges in its previous financing arrangements and impacts investor confidence. For employees, this shift means a change in operational focus and potentially new management structures. Customers (residents) might experience changes in service delivery as properties transition to new management models. Competitively, this move positions LTC more directly against operators rather than solely as a landlord, intensifying competition in the seniors housing market.

Risk Assessment

Risk Level: high — The company reported a net loss of $19.995 million for Q3 2025, a significant reversal from a $29.366 million net income in Q3 2024, primarily due to a $41.455 million write-off of effective interest receivable. This, coupled with a substantial increase in the revolving line of credit from $144.350 million to $548.450 million, indicates increased financial leverage and potential liquidity concerns, especially given the strategic shift to the more operationally intensive SHOP model.

Analyst Insight

Investors should exercise caution and closely monitor LTC's integration and performance of its new SHOP segment, as the Q3 net loss and increased debt signal heightened risk. Consider reducing exposure until the operational stability and profitability of the SHOP model are clearly demonstrated, especially given the $41.455 million write-off.

Financial Highlights

debt To Equity
0.96
revenue
$69,290,000
operating Margin
N/A
total Assets
$2,044,420,000
total Debt
$944,515,000
net Income
-$19,995,000
eps
-$0.44
gross Margin
N/A
cash Position
$17,933,000
revenue Growth
+24.2%

Revenue Breakdown

SegmentRevenueGrowth
Rental income$27,842,000-13.7%
Resident fees and services$22,203,000N/A
Interest income from financing receivables$7,096,0001.3%
Interest income from mortgage loans$9,856,000-8.1%
Interest and other income$2,293,000-60.4%

Key Numbers

Key Players & Entities

FAQ

What caused LTC Properties Inc.'s net loss in Q3 2025?

LTC Properties Inc. reported a net loss of $19.995 million for the three months ended September 30, 2025, primarily due to a $41.455 million write-off of effective interest receivable. This significant expense overshadowed an increase in total revenues.

How has LTC Properties Inc.'s revenue structure changed in 2025?

LTC Properties Inc.'s revenue structure changed significantly with the introduction of its Seniors Housing Operating Portfolio (SHOP) segment in Q2 2025. This new segment generated $22.203 million in resident fees and services for Q3 2025, diversifying revenue beyond traditional rental income.

What is the significance of the RIDEA structure for LTC Properties Inc.?

The RIDEA structure, which LTC Properties Inc. began utilizing in Q2 2025, allows the company to participate directly in the operational upside of its seniors housing properties. This strategic shift converted 13 communities from triple-net leases and added 8 new acquisitions to its SHOP segment, totaling 21 properties.

What are the key risks associated with LTC Properties Inc.'s strategic shift?

The strategic shift to the SHOP model introduces higher operational risks for LTC Properties Inc., as it now directly manages property operations rather than relying solely on lease payments. This model exposes the company to fluctuations in occupancy rates, operating expenses, and market conditions, as evidenced by the Q3 net loss.

How did LTC Properties Inc.'s debt levels change in the first nine months of 2025?

LTC Properties Inc.'s debt levels increased substantially, with its revolving line of credit rising from $144.350 million at December 31, 2024, to $548.450 million by September 30, 2025. This increase in leverage was used to fund investments in real estate properties and capital improvements.

What was the impact of the write-off on LTC Properties Inc.'s earnings per share?

The $41.455 million write-off of effective interest receivable significantly impacted LTC Properties Inc.'s earnings per common share, resulting in a basic loss per share of $0.44 for Q3 2025, a stark contrast to the basic earnings per share of $0.66 reported in Q3 2024.

What types of properties does LTC Properties Inc. invest in?

LTC Properties Inc. primarily invests in seniors housing and health care properties, including skilled nursing centers (SNF), independent living communities (ILF), assisted living communities (ALF), and memory care communities (MC). They also invest in land parcels, projects under development, and behavioral health care hospitals.

How many communities are now part of LTC Properties Inc.'s SHOP segment?

As of September 30, 2025, LTC Properties Inc.'s Seniors Housing Operating Portfolio (SHOP) segment comprises 21 communities. This includes 13 communities converted from former triple-net master leases and 8 additional seniors housing communities acquired during Q3 2025.

What is LTC Properties Inc.'s dividend policy?

LTC Properties Inc. declared and paid common stock cash distributions of $0.57 per share for each of the three-month periods ended September 30, 2025, and September 30, 2024. For the nine months ended September 30, 2025, total dividends paid were $1.71 per common share, consistent with the prior year.

Where can investors find more information about LTC Properties Inc.?

Investors can find more information about LTC Properties Inc. on their internet website at www.LTCreit.com, specifically in the 'Investors' portion. This section provides access to Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other important financial and corporate governance information.

Risk Factors

Industry Context

The seniors housing and healthcare real estate sector is characterized by an aging population driving demand for specialized properties. REITs in this space typically invest in properties leased to operators or, increasingly, engage in operating models like LTC's new SHOP segment. Competition exists from other REITs, private equity, and healthcare operators, with success often depending on operator relationships and property location.

Regulatory Implications

The shift to the RIDEA structure for the SHOP segment requires careful adherence to REIT regulations to maintain tax-advantaged status. Changes in healthcare reimbursement policies (e.g., Medicare/Medicaid) can also impact revenue streams for operating properties, necessitating ongoing compliance and adaptation.

What Investors Should Do

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Key Dates

Glossary

SHOP
Seniors Housing Operating Portfolio, a segment where LTC Properties directly manages seniors housing communities. (Represents a new strategic direction for the company, generating resident fees and services revenue.)
RIDEA
REIT Investment Diversification and Empowerment Act, which allows REITs to own and operate healthcare facilities. (Enables LTC Properties to establish and manage its SHOP segment.)
Triple-Net Lease (NNN)
A lease agreement where the tenant is responsible for all property expenses, including taxes, insurance, and maintenance. (The company is transitioning away from this model for some properties to the SHOP segment.)
Effective interest receivable
Interest income that has been earned but not yet received, often recognized over the life of a loan or receivable. (A significant write-off of this item heavily impacted the company's net income in Q3 2025.)
Financing receivables
Loans or other debt instruments that a company holds for investment purposes, expecting to receive principal and interest payments. (A component of the company's investment portfolio, generating interest income.)
Debt to Equity Ratio
A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. (Measures the company's financial leverage; has increased due to higher liabilities.)

Year-Over-Year Comparison

LTC Properties Inc. has experienced a significant downturn in profitability, reporting a net loss of $19.995 million for Q3 2025 compared to a net income of $29.366 million in the prior year's quarter. This was largely due to a substantial $41.455 million write-off. While total revenues saw a notable increase to $69.290 million, driven by the new SHOP segment's resident fees ($22.203 million), this was offset by a decline in rental income. The company's balance sheet reflects increased leverage, with total liabilities rising to $999.170 million, primarily due to a significant expansion of its revolving line of credit to $548.450 million.

Filing Stats: 4,620 words · 18 min read · ~15 pages · Grade level 16.3 · Accepted 2025-11-04 16:34:10

Filing Documents

-- Financial Information

PART I -- Financial Information Page Item 1.

Financial Statements

Financial Statements Consolidated Balance Sheets 3 Consolidated Statements of Income 4 Consolidated Statements of Comprehensive Income 5 Consolidated Statements of Equity 6 Consolidated Statements of Cash Flows 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 37 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 62 Item 4.

Controls and Procedures

Controls and Procedures 62

-- Other Information

PART II -- Other Information Item 1.

Legal Proceedings

Legal Proceedings 63 Item 1A.

Risk Factors

Risk Factors 63 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 65 Item 5. Other Information 65 Item 6. Exhibits 66 Available Information We make available to the public free of charge through our internet website at www.LTCreit.com our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to, the Securities and Exchange Commission ("SEC"). We also use the "Investors" portion of our www.LTCreit.com website for purposes of compliance with Regulation FD and as a routine channel for distribution of important information to investors and interested parties, including news releases, analyst presentations, financial information, and corporate governance practices. Accordingly, investors and interested parties should monitor the "Investors" portion of our www.LTCreit.com website for the release of this information. Information on our website is not part of this Quarterly Report on Form 10-Q or any of our filings with the SEC unless specifically incorporated by reference. Table of Contents

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements LTC PROPERTIES, INC. CONSOLIDATED BALANCE SHEET S (amounts in thousands, except per share) September 30, 2025 December 31, 2024 (unaudited) (audited) ASSETS Investments: Land $ 121,884 $ 118,209 Buildings and improvements 1,402,825 1,212,853 Accumulated depreciation and amortization ( 398,017 ) ( 405,884 ) Operating real estate property, net 1,126,692 925,178 Properties held-for-sale, net of accumulated depreciation: 2025—$ 29,284 ; 2024—$ 1,346 42,458 670 Real property investments, net 1,169,150 925,848 Financing receivables, net of credit loss reserve: 2025—$ 3,622 ; 2024—$ 3,615 358,579 357,867 Mortgage loans receivable, net of credit loss reserve: 2025—$ 3,930 ; 2024—$ 3,151 389,657 312,583 Real estate investments, net 1,917,386 1,596,298 Notes receivable, net of credit loss reserve: 2025—$ 270 ; 2024—$ 477 26,740 47,240 Investments in unconsolidated joint ventures 18,342 30,602 Investments, net 1,962,468 1,674,140 Other assets: Cash and cash equivalents 17,933 9,414 Debt issue costs related to revolving line of credit 5,096 1,410 Interest receivable 21,535 60,258 Straight-line rent receivable 18,545 21,505 Lease incentives 2,717 3,522 Prepaid expenses and other assets 16,126 15,893 Total assets $ 2,044,420 $ 1,786,142 LIABILITIES Revolving line of credit $ 548,450 $ 144,350 Term loans, net of debt issue costs: 2025—$ 0 ; 2024—$ 192 — 99,808 Senior unsecured notes, net of debt issue costs: 2025—$ 935 ; 2024—$ 1,058 396,065 440,442 Accrued interest 4,009 3,094 Accrued expenses and other liabilities 50,646 45,443 Total liabilities 999,170 733,137 EQUITY Stockholders' equity: Common stock: $ 0.01 par value; 110,000 shares authorized; shares issued and outstanding: 2025— 47,333 ; 2024 — 45,511 473 455 Capital in excess of par value 1,146,560 1,082,764 Cumulative net income

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Genera l LTC Properties, Inc., a health care real estate investment trust ("REIT"), was incorporated on May 12, 1992 in the State of Maryland and commenced operations on August 25, 1992. We invest primarily in seniors housing and health care properties primarily through sale-leasebacks, mortgage financing, joint ventures and structured finance solutions including preferred equity and mezzanine lending. Additionally, during the second quarter of 2025, we began utilizing the structure authorized by the REIT Investment Diversification and Empowerment Act of 2007 (Commonly referred to as "RIDEA") as permitted by the Housing and Economic Recovery Act of 2008. Our primary seniors housing and health care property classifications include skilled nursing centers ("SNF"), independent living communities ("ILF"), assisted living communities ("ALF"), memory care communities ("MC") and combinations thereof. Independent living communities, assisted living communities, memory care communities and combinations thereof are included in the seniors housing communities classification ("SH"). We also invest in other ("OTH") types of properties, such as land parcels, projects under development ("UDP") and behavioral health care hospitals. Our primary objectives are to create, sustain and enhance stockholder equity value and provide current income for distribution to stockholders through real estate investments in seniors housing and health care properties managed by experienced operators. To meet these objectives, we attempt to invest in properties that provide an opportunity for additional value and current returns to our stockholders and diversify our investment portfolio by geographic location, operator, property classification and form of investment. 8 Table of Contents LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED (Unaudited) 2. Basic of Presentation and Accounting Policies Basic of Presentation We have prepared consolidated financial statements included herein without audit and in the opinion of management have included all adjustments necessary for a fair presentation of the consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to rules and regulations governing the presentation of interim financial statements. Principles of Consolidation The accompanying consolidated financial statements include the accounts of our company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2025 and 2024 are not necessarily indicative of the results for a full year. Segments As explained above, we began utilizing the RIDEA structure in the second quarter of 2025, and established a seniors housing operating portfolio ("SHOP") segment. Accordingly, effective in the second quarter of 2025, we conduct and manage our business as two operating segments, for reporting and decision-making purposes: real estate investments and SHOP. See Note 16 to our consolidated financial statements for more information. Our real estate investments segment consists of owned properties that are leased pursuant to non-cancelable triple-net operating ("NNN" or "Triple-Net") leases, financing receivables, mortgage loans, notes receivable and unconsolidated joint ventures. During 2025, we terminated the Anthem Memory Care, LLC ("Anthem") and New Perspective Senior Living, LLC. ("New Perspective") Triple-Net master leases and c

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED (Unaudited) 3. Real Estate Investments Independent living communities, assisted living communities, memory care communities and combinations thereof are included in the seniors housing communities classification ("SH"). Any reference to the number of properties or facilities, number of units, number of beds, number of operators and yield on investments in real estate are unaudited and outside the scope of our independent registered public accounting firm's review of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board. Owned Properties Our owned property investments include 107 properties leased to 20 different operators under Triple-Net leases, and 21 properties operated on our behalf by five independent operators pursuant to separate management agreements. The following tables summarize our investments in owned properties at September 30, 2025 (dollar amounts in thousands) : Average Percentage Number Number of Investment Gross of of SNF SH per Type of Property Investment Investment Properties (1) Beds Units Bed/Unit Seniors Housing-NNN $ 538,256 33.7 % 56 — 3,404 $ 158.12 Seniors Housing-SHOP 446,527 28.0 % 21 — 1,577 $ 283.15 Seniors Housing 984,783 61.7 % 77 — 4,981 $ 197.71 Skilled Nursing 599,663 37.5 % 50 6,113 236 $ 94.45 Other (2) 12,005 0.8 % 1 118 — n/a Total $ 1,596,451 100.0 % 128 6,231 5,217 (1) We own properties in 23 states. (2) Includes three parcels of land held-for-use, and one behavioral health care hospital. NNN SHOP Total Percentage Number Percentage Number Percentage Number Gross of of Gross of of Gross of of Type of Property Investment Investment

Properties

Properties Investment Investment

Properties

Properties Investment Investment

Properties

Properties Seniors Housing $ 538,256 33.7 % 56 $ 446,527 28.0 % 21 $ 984,783 61.7 % 77 Skilled Nursing 599,663 37.5 % 50 — — % — 599,663 37.5 % 50 Other 12,005 0.8 % 1 — — % — 12,005 0.8 % 1 Total $ 1,149,924 72.0 % 107 $ 446,527 28.0 % 21 $ 1,596,451 100.0 % 128 During the nine months ended September 30, 2025 and 2024, we invested in the following capital improvement projects in our owned properties ( dollar amounts in thousands ): Nine Months Ended September 30, Type of Property 2025 2024 NNN SHOP NNN SHOP Seniors Housing Communities $ 2,648 $ 2,425 $ 8,663 $ — Skilled Nursing Centers 1,600 — 1,245 — Total $ 4,248 $ 2,425 $ 9,908 $ — 10 Table of Contents LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED (Unaudited) Intangible Assets. We make estimates as part of our allocation of the purchase price of acquisitions to various components of the acquisition based upon the fair value of each component. In determining fair value, we use current appraisals or other third-party opinions of value. The most significant components of our allocations are typically the allocation of fair value to land and buildings, and for certain of our acquisitions, in-place leases and other intangible assets. In the case of the value of in-place leases, we make estimates based on the evaluation of the specific characteristics of each tenant's lease. Factors considered include estimates of carrying costs during the hypothetical expected lease-up periods, market conditions and costs to execute similar leases. The following is a summary of the carrying amount of intangible assets as of September 30, 2025 and December 31, 2024 (in thousands) : September 30, 2025 December 31, 2024 Accumulated Accumulated Assets Cost Amortization Net Cost Amortization Net In-place leases $ 20,887 (1) $ ( 7,457 ) (2) $ 13,430 $ 11,047 (1) $ ( 6,758 ) (2) $ 4,289 Tax abatement intangible $ 8,309 (3) $ ( 1,616 ) (3) $ 6,693 $ 8,309 (3) $ ( 1,097 ) (3) $ 7,212 (1) Included in the Buildings and improvements line item in our Consolidated Balance Sheets . Increase relates to acquisition of eight seniors housing communities during the third quarter of 2025 within our SHOP segment. See Owned Properties-SHOP below for more information. (2) Included in the Accumulated depreciation and amortization line item in our Consolidated Balance Sheets. (3) Included in the Prepaid expenses and other assets line item in our Consolidated Balance Sheets . The following table provi

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