LTC Properties' Earnings Call Contradictions: Funding Strategy Shifts and 75% SHOP Target Uncertainty

Date of Call: Aug 6, 2026

Financials Results

• Revenue: $155M net proceeds from ATM program
• EPS: $0.68 core FFO per share (Q2 2026 vs Q2 2025)

Guidance:

• Shop acquisition guidance for 2026 increased to $900 million at the midpoint.
• Expect to close $700 million in acquisitions by end of September 2026.
• Expect $730 million in proceeds from dispositions and loan payoffs in 2026, up $465M from prior guidance.
• Core shop NOI growth expected at 14% midpoint in 2026.
• Pro forma internal growth rate triples at 40% SHOP NOI.
• Pathway to generate 75% of annualized NOI from SHOP by end of 2028.
• Core FFO per share guidance for 2026 narrowed to $276-$278.
• Core FAD per share guidance for 2026 narrowed to $283-$285.

Business Commentary:

Shop Acquisition Growth:

• LTC Properties increased its 2026 SHOP acquisition guidance by 50% to $900 million at the midpoint, having closed $700 million in acquisitions by the end of September.
• The growth in acquisitions was driven by strong deal flow and successful cultivation of relationships with operating partners, sellers, and intermediaries.

Portfolio Transformation and NOI Growth:

• SHOP is expected to represent 40% of LTC's pro forma annualized NOI by the end of September, accelerating to 50% by year-end.
• The transformation is fueled by a strategic shift from a triple net lease and lending platform to a higher growth SHOP-focused REIT, with investments in operator relationships and real estate enhancing long-term growth potential.

Disposition and Loan Payoff Strategy:

• LTC anticipates $730 million in proceeds from dispositions and loan payoffs in 2026, an increase of $465 million above prior guidance.
• The strategy involves selling assets, primarily skilled nursing properties, to recycle capital into higher growth investments, with a focus on attractive risk-adjusted returns.

Financial Flexibility and Credit Facilities:

• LTC expanded its credit facility by $300 million, increasing its unsecured revolving line of credit to $900 million.
• This financial move enhances liquidity, supporting growth initiatives and enabling the company to capitalize on additional NOI expansion opportunities.

Core SHOP Portfolio Performance:

• The second quarter core SHOP NOI was $13.3 million, up from $12.9 million pro forma NOI in Q1.
• The performance reflects strong operator execution and market demand, with expectations to achieve pro forma growth of 14% in the core SHOP portfolio for 2026.

Sentiment Analysis:

Overall Tone: Positive

• Management expresses strong momentum and excitement about the shop strategy, stating 'our transformation is well ahead of schedule' and 'we are encouraged by our core shop performance.' They increased acquisition and disposition guidance, projecting a pathway to 75% NOI from shop by 2028 and noting 'the investments we have made... are creating value and long-term growth for our shareholders.'

Q&A:

• Question from Robin (BMO Capital): Discuss cap rates, IRRs, expected timing for remaining $321M in acquisitions and if additional deals can be done before year-end.
  Response: Remaining deals are similar to those closed year-to-date with similar cap rates; additional opportunities will be pursued if they fit the criteria.

• Question from Robin (BMO Capital): Discuss drivers of the red poor increase and occupancy moderation in core shop guidance.
  Response: Red poor increased due to pricing strength and expected future price increases; occupancy moderation is due to portfolio composition and not anchoring expectations on last year's steep ramp, with operators having outperformed underwriting if midpoint is achieved.

• Question from Kyle (Dolce Bank): Confidence in similar NOI growth in 2027 with redefined portfolio and expected IRRs/growth rates from new acquisitions.
  Response: Expect new acquisitions to add 'quality to quality' with low-to-mid-teens IRRs and similar growth dynamics, targeting larger, newer campuses for future growth.

• Question from Kyle (Dolce Bank): Funding for additional shop growth and 75% by 2028 target.
  Response: Funding will be more neutral from day one with growth in outer years, supported by capital recycling; 2027 will see more bottom-line growth with continued deal flow.

• Question from Jesus (Wells Fargo): Why was shop and OI guidance increased but per share guidance unchanged.
  Response: Timing of acquisitions coming online and modeling delays offset incremental earnings contribution.

• Question from Jesus (Wells Fargo): What distinguishes operators best positioned to grow.
  Response: Regional operators with strong market knowledge and broader regional resources are best positioned.

• Question from Michael Carroll (RBC): What drove the increase in disposition guidance and cap rates achieved.
  Response: Increase due to attractive pricing for skilled nursing and proactive portfolio management; cap rates are attractive due to higher coverage and asset age, enabling value unlocking.

• Question from Michael Carroll (RBC): Confidence in Prestige loan payoff by October 1st.
  Response: Confident, as HUD final commitments are in and properties meet underwriting metrics comfortably.

• Question from Rich Anderson (Cantor Fitzgerald): Why 75% shop NOI by 2028 and not 100%.
  Response: Decision based on pricing, cap rates, and capital availability; platform is scalable to potentially exceed 75% if opportunistic.

• Question from Austin Schwarzschmidt (KeyBank Capital): Exposure to SNF investments by year-end and coverage support.
  Response: SNF NOI exposure is in the low 20s%; coverage is strong and supports similar pricing as achieved in sales.

• Question from Austin Schwarzschmidt (KeyBank Capital): Whether occupancy shortfall in guidance is from memory care or traditional shop assets.
  Response: Partly due to memory care volatility and internal modeling, but operators are encouraged; not banking on last year's steep occupancy ramp.

Contradiction Point 1

Funding Strategy for SHOP Acquisitions

Contradiction on how growth toward 75% SHOP NOI by 2028 will be primarily funded.

What is Kyle's outlook for Dolce Bank's earnings? - Kyle (Dolce Bank)

2026Q2: Future growth will be funded more traditionally (~70% equity, 30% debt), with accretive acquisitions expected to drive bottom-line growth. - Clint Mallon(Co-CEO)

As LTC aims for 75% shop NOI by 2028, how should we think about funding for additional acquisitions and the accretiveness of the cost of capital? - Mike (RBC)

2026Q2: The 75% goal is primarily based on new investments, but a couple hundred million in sales is possible in 2027. - Clint Mallon(Co-CEO)

Contradiction Point 2

Drivers of Occupancy Outlook Moderation

Contradiction on whether occupancy guidance revision is due to portfolio composition or a change in modeling approach.

Austin (KeyBank Capital) - Austin (KeyBank Capital)

2026Q2: The revision partly reflects a different modeling approach (smoother build vs. last year's steep ramp). Internally, LTC is about 90 bps behind its own projections but is encouraged by a strong Q3 start. - Gibson Satterwhite(EVP Asset Management)

Was the occupancy guidance revision solely due to memory care assets, or did traditional assets also play a role? - Robin (BMO Capital Markets)

2026Q2: Occupancy expectations are moderated due to the portfolio's composition; the company is not banking on a steep second-half ramp like last year. - Gibson Satterwhite(EVP Asset Management)

Contradiction Point 3

Confidence in Achieving the 75% SHOP NOI Target

Contradiction on the confidence level and timing certainty for the Prestige loan payoff.

Mike (RBC) - Mike (RBC)

2026Q2: Confidence is high. HUD commitments are in place for most properties, performance is strong, and the closing is expected to occur this year, likely within a few weeks to a month. - Clint Mallon(Co-CEO)

How confident are you that the Prestige loan will be paid off by October 1st, and are there any major hurdles? - Mike (RBC)

2026Q2: The timing is now clearer, with the payoff expected to occur this year. - Gibson Satterwhite(EVP Asset Management)

Contradiction Point 4

Expectations for Organic SHOP NOI Growth

Conflicting statements on the company's confidence in achieving double-digit organic NOI growth from the existing core SHOP portfolio.

What are your thoughts on Dolce Bank's Q2 earnings, Kyle? - Kyle (Dolce Bank)

2026Q2: Future acquisitions are expected to have similar low-to-mid-teens IRRs and growth profiles... delivering double-digit growth. - Dave Boitano(EVP, CIO)

How will LTC sustain similar NOI growth rates into 2027 with a redefined portfolio, and is this growth driven by recent acquisitions? - Richard Anderson (Cantor Fitzgerald)

2026Q1: Stripping that out, the company believes it can achieve double-digit (10%) NOI growth based on a 170-200 bps spread between RevPOR and ExpPOR. - Gibson Satterwhite(EVP, Asset Management)

Contradiction Point 5

Target for SHOP Portfolio Exposure

Contradiction on whether there is a fixed target for SHOP portfolio percentage.

Rich (Cantor Fitzgerald) - Rich (Cantor Fitzgerald)

2026Q2: The 75% goal is primarily based on new investments... The platform is built to scale, and if opportunistic, LTC could accelerate beyond 75%. - Clint Mallon(Co-CEO)

Is the 75% shop target by 2028 a hard cap, and could LTC aim for 100% instead? - Omotayo Okusanya (Deutsche Bank)

20260225-2025 Q4: There is no fixed target. The 2026 transformation is complete, and future evolution will be based on investing where the best returns for shareholders are... - Pamela Shelley-Kessler(Executive)