LTC Enters Private Placement

In order to repay its existing debts, LTC Properties, Inc. ( LTC - Snapshot Report ) , a real estate investment trust (REIT), recently announced its entering into a private placement of $85.8 million worth senior secured notes with a group of institutional investors. The private placement, which is scheduled to mature on 2024, bears an interest of 5.03%.

This apart, the notes bear a principal repayment of about $17.2 million in years 8 through 12. The company is expected to use the net proceeds to decrease borrowings under its unsecured revolving credit facilities and for general corporate purposes and acquisitions.

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

The "triple net" lease agreements 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. Recently, LTC properties 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.

At March 31, 2012, LTC Properties’ portfolio consisted of 89 skilled nursing properties, 102 assisted living properties, 14 other senior housing properties, two schools and a parcel of land under development.

LTC Properties will likely release its second quarter 2012 earnings on August 8. The Zacks Consensus Estimate for second quarter 2012 FFO (fund from operations) is pegged at 57 cents per share. We presently have a long-term Neutral recommendation on the stock. Also, it retains a Zacks #3 Rank (short-term Hold rating). One of its competitors – HCP, Inc. ( HCP - Analyst Report ) – holds a Zacks #2 Rank, which translates into a short-term Buy rating.