LTC Properties, Inc. Stock

Greetings, and welcome to the LTC Properties Third Quarter 2026 Earnings Call.

[Operator Instructions]

Joining us on today's call are Pam Kessler, Co-President and Co-Chief Executive Officer; Clint Malin, Co-President and Co-Chief Executive Officer; Cece Chikhale, Executive Vice President and Chief Financial Officer and Treasurer; Gibson Satterwhite, Executive Vice President of Asset Management; Dave Boitano, Executive Vice President and Chief Investment Officer.

Before management begins its presentation, please note that today's comments, including the question-and-answer session, may include forward-looking statements subject to risks and uncertainties that may cause actual results and events to differ materially. These risks and uncertainties are detailed in LTC Properties filings with the Securities and Exchange Commission from time to time. Including the company's most recent 10-K dated December 31, 2025.

LTC undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date of this presentation. Please note, this event is being recorded.

I would now like to turn the conference over to LTC management.

Good morning, everyone, and thank you for joining us.

Our SHOP strategy is delivering from a growth perspective and has fundamentally reshaped LTC's future. We launched SHOP in May of 2025 and are rapidly transforming from a lower growth triple net lease and lending platform into a SHOP-focused REIT with a higher intrinsic growth profile.

Last quarter, we increased our 2026 midpoint acquisition guidance by 50% to $900 million and have since surpassed that guidance with approximately $950 million in SHOP acquisitions closed through October. We expect total acquisitions for the year of approximately $1 billion, at which point SHOP will have grown from 0 communities into a $1.6 billion portfolio over 19 months. Additionally, we have expanded our SHOP operator relationships to 14, including 1 new relationship added last month.

2026 has been a historic year for LTC. As we continue to focus on the tremendous opportunities ahead of us, our sights are set firmly on 2027. To date, we have $200 million of SHOP acquisitions that are expected to close in the first quarter of next year, which will also add a new SHOP operator relationship to our portfolio.

At an expected $1 billion of SHOP acquisitions in 2026, the portfolio will represent 50% of LTC's pro forma annualized NOI at year-end. At this level, our pro forma internal growth rate triples. And as SHOP continues to expand as a larger share of our total portfolio, our expected growth rate increases even further, significantly enhancing our ability to organically grow core FFO and FAD per share above historical levels.

As we have previously discussed, at our current SHOP acquisition pace, we see a pathway to generating approximately 75% of our annualized NOI from SHOP by the end of 2028. This time line can be accelerated should we identify additional opportunities to recycle capital out of older and lower growth triple net lease assets.

We are proud of what we have achieved, but even more excited about what lies ahead. Transformation is no longer a future objective. It is happening now, and LTC is entering a new chapter of growth, scale and value creation.

Now Gibson will walk us through LTC's operating portfolio.

Thank you, Clint.

We are continuing to optimize risk-adjusted returns and increase the intrinsic growth profile of our own portfolio by recycling capital into SHOP. In the third quarter, we generated about $465 million of gross proceeds by selling triple net assets at an implied cap rate on our rent of approximately 5.5%. And the $180 million Prestige loan is currently slated to pay off on November 24. Going into next year, we will continue to capitalize on opportunities to recycle capital as we look to further accelerate our portfolio transformation.

We are also taking action on the 10-property portfolio subject to market-based rent resets. Of these 10 properties, we recently began the sales process for 3. Another 2 of the 10 properties have been converted into a long-term lease with initial annualized rent of $2.4 million. The lease contains a SHOP conversion option that could be exercised as early as the first quarter of 2027.

For the remaining 5 properties, we plan to negotiate a long-term lease in advance of the current lease expiration next year. We expect to recognize rent of $780,000 in the fourth quarter from these 5 properties.

With respect to our core SHOP portfolio, we are narrowing our 2026 guidance to $53.5 million to $55.5 million, $0.5 million below our prior range at the new midpoint of $54.5 million. The reduction is primarily due to a change in care and unit occupancy mix and a Medicaid rate decrease received in Q3 retroactive to July 1, which affects 2 stand-alone memory care communities in our portfolio.

Excluding these 2 communities, Medicaid as a percentage of our SHOP revenue is approximately 3% and is primarily offered as a spin-down option in states with rates on par with private pay rates. For private pay, our operators have been able to implement strong rate increases, and we expect that to continue into 2027.

The current guidance range for our core SHOP portfolio represents approximately 11% to 15% pro forma growth for the prior year and 13% at the midpoint. The underlying fundamentals of our business are strong.

As we've outlined in prior calls, we believe that our core SHOP portfolio can achieve high single to low double-digit NOI growth with a 200 basis point spread between RevPOR and ExPOR even at 0 occupancy growth. To be clear, we do expect that our operators will continue to drive occupancy growth going forward.

We're excited about the new and expanded operator relationships we've cultivated, the quality of the communities in our portfolio and the markets. We believe that our SHOP portfolio is well positioned to deliver the growth necessary to transform the intrinsic growth profile of our overall portfolio as we continue to increase our SOP mix.

Now Dave will discuss our recent investment activity.

Thanks, Gibson.

We are executing successfully in a dynamic SHOP acquisition market, maintaining our strong momentum and enhancing LTC's growth trajectory. LTC's differentiated approach centers on aligning quality assets with exceptional operators in markets with strong demand fundamentals, creating a portfolio built both for performance today and growth over time.

We've established a strong pool of operators who are well suited to the profile of communities we're acquiring, allowing us to move quickly as opportunities arise.

SHOP has opened a much larger opportunity set for LTC, and we are seeing significantly greater deal flow in 2026 than at any time in our history. We have been selective and strategic in vetting opportunities to pursue only acquisitions that fit our buy box. Illustrating our focus, the acquisitions we have closed in 2026 represent less than 5% of screen deal volume.

Heading into 2027, we expect deal flow to remain strong, especially in a higher interest rate environment and as loans originated at lower rates mature and drive owners to consider monetization ahead of those maturities.

NIC estimates that nearly $40 billion in loans will mature over the next 4 years. We are building our portfolio methodically. Investment decisions are guided by key fundamentals, including occupancy, asset quality, property scale, unit mix, size and configuration and market dynamics to assemble a portfolio positioned to perform for the long run.

LTC's collaborative execution-oriented culture resonates with operators, sellers and intermediaries. Our reputation for responsiveness, transaction certainty and disciplined execution reinforces our relationships, enhances our strategic advantage and drives a robust acquisition pipeline.

2026 has been a year of unprecedented growth, positioning SHOP acquisitions to reach $1 billion by the end of the year. This more than doubles our prior year investment activity, making 2026 the most active year in LTC's history and setting the stage for a new LTC growth era. The opportunities we see in the market today, together with our growing operator relationships and sourcing network, give us confidence in our ability to sustain our momentum into 2027 and beyond.

Now over to Cece for a review of our financial results.

Thank you, Dave.

With a recently expanded credit facility, a new ATM agreement, proceeds from asset sales and the expected payoff of the Prestige loan, we have ample liquidity and flexibility to capitalize on opportunities as they emerge to continue our growth trajectory into 2027 while creating additional NOI upside.

Our pro forma liquidity stands at over $900 million, including the sale of 2.3 million shares of common stock for $97 million in net proceeds in the third and fourth quarters to date and asset sales of about $465 million of gross proceeds in the third quarter.

Our pro forma debt to annualized adjusted EBITDA for real estate was 4.4x, and our annualized adjusted fixed charge coverage ratio was 4.9x. We remain well within our target range of 4 to 5x debt to EBITDA, although leverage may move within that range based on timing of acquisitions, asset sales, loan payoffs and ATM proceeds.

Core FFO per share was $0.71 for the third quarter compared with $0.69 last year, and core FAD per share was $0.73 compared to $0.72. The increase in core FFO primarily relates to a net increase in SHOP NOI from acquisitions and conversions and an increase in interest income from loan originations and construction funding. This was offset by decreases from property sales and loan and financing receivable payoffs and an increase in interest expense.

The increase in core FAD is primarily due to the same factors as the increase in core FFO as well as rent escalations, offset by an increase in recurring capital expenditures due to SHOP acquisitions.

Our 2026 full year guidance range remains unchanged. Although we've narrowed some of the underlying assumptions based on results through the third quarter, we remain on track to deliver within our expected range of core FFO per share of $2.76 to $2.78 and core FAD per share of between $2.83 to $2.85. Our assumptions are detailed in yesterday's press release and in our supplemental package, which are available on the LTC website.

Now I'll turn things over to Pam.

Thank you, Cece.

We introduced our SHOP strategy 1.5 years ago with a clear vision for creating a differentiated growth engine, positioning the company to capitalize on opportunities across the seniors housing sector and enhancing LTC's earnings profile. Our accomplishments to date reflect the strength of that strategy and our team's execution.

Recent stock price momentum indicates that investors value the potential higher future growth from our strategic shift into SHOP. As Clint mentioned, by year-end, SHOP will represent 50% of annualized NOI and has become a significant driver of LTC's growth. This shift from 19 months ago reflects not only the scale of the opportunity, but our ability to establish and cultivate industry-wide relationships.

Our objective has never been simply to grow the portfolio for growth's sake. We have been intentional about assembling a collection of communities positioned to succeed in today's environment and remain competitive as market conditions evolve. The communities we own and seek to acquire have established market positions, attractive demographics and physical layouts that support long-term resident demand.

Our balance sheet is a strategic advantage. As noted, with our expanded credit facility, pro forma liquidity of $900 million and the anticipated $180 million payoff of the Prestige loan, we have substantial financial flexibility to continue funding growth.

Additionally, we have proactively and successfully used our ATM to fund acquisitions, demonstrating the growing appetite for investment in LTC. In fact, comparing September 2024 prior to announcing our SHOP strategy to October 2026, the notional value of our average daily trading volume increased nearly 175% from $10 million to $27 million per day.

Eric Clark, our new Senior Vice President, Corporate Finance and Investor Relations, will be instrumental in driving that further. Welcome, Eric. We're glad to have you on board.

Our transformation has been a true group effort, and our success would not be possible without the trust of our operators and the dedication of our team. We are grateful operators choose to work with LTC and have confidence in our ability to support their efforts to provide care and services to seniors across the country, while our team has proven day in and day out that with discipline, execution and commitment, we can move faster and accomplish more.

LTC has evolved rapidly by delivering on the strategy we first laid out when launching SHOP. While our goals were ambitious, we have successfully built a scalable platform that is generating considerable momentum. As a result, we believe we are better positioned than ever to drive sustainable earnings growth, increase portfolio resilience and create meaningful long-term value for our shareholders.

We are now ready to take audience questions.

[Operator Instructions] Our first question is from Michael Carroll with RBC Capital Markets.

I guess, Clint, I appreciate the comments that you guys made that the total SHOP portfolio can generate high single-digit NOI growth or low double-digit NOI growth with just a 200 basis point spread between RevPOR and ExPOR. I mean is that a good measure for the broader portfolio? And maybe is there a split we should think about between the freestanding memory care portion of the SHOP and the rest of the SHOP portfolio?

I think, Mike, well, I'll let Gibson talk about some of the detail on that. But broadly speaking, when we designed this core portfolio to give transparency to what we've been acquiring. That includes properties acquired through early January, but 12 of that 27 in our core portfolio are stand-alone memory care assets, which have different fundamentals as far as acuity, rate growth, which differs from our portfolio more broadly. So right now, we have 50 buildings in our SHOP portfolio, of which we have about, I guess, 14 that are freestanding memory care. So there's different compositions and profiles for that.

But Gibson, why don't you talk about the spread between RevPOR, ExPOR?

Yes. Mike, it's a good question. It's a fair question. I'll hedge a little bit by saying we'll keep our comments focused on core for now. And then as we work through the budgeting process, we're now up to 50 properties. The core portfolio is 27 of those. We can -- happy to revisit.

I will say that as we roll new acquisitions in, the RevPOR is kind of coming in around the range that you're seeing in our total RevPOR range in our supplemental slides, so call it, mid-7s. And the acquisitions team as we're underwriting feels like that possibility is there. So we're not underwriting a lot of occupancy growth on stabilized acquisitions. We're underwriting that spread.

So I think given those, I don't suspect there's going to be a big change, but we can put a pin in this after we work through budget season. But generally speaking, yes, we feel confident in that thesis, and we're obviously putting a lot of money and time and energy behind that.

Okay. And it sounds like the Medicaid issue is tied to 2 communities within the memory care portfolio. Can you give us the breakout of the Medicaid exposure within the memory care portfolio alone? And is it only 2 communities that have a lot of Medicaid exposure and the rest is included in that 3% number you provided?

Yes, that's right. That's right, Mike. So it's primarily concentrated in those. Those 2 are in a state that has good reimbursement on par with private pay. And it's a niche program in that state where they can take in residents. They get equivalent to what you might get in the skilled nursing, but they're able to get that in a residential setting.

So that was the -- unfortunately, right after we rolled out guidance and increased our RevPOR guidance on the last call, we found out about that. That decision was issued after our last call. But yes, the rest of the portfolio, the bulk of it is in those buildings.

Okay. And then just last question for me on the potential asset sales. I know that there was that one SNF tenant that's going to elect to exercise its purchase option. I know that in the press release, you gave us the mechanics on how the purchase price is going to be decided. But can you give us some idea of what the potential yield can be? Is it going to be in like the low 8-ish percent type range? Is that kind of a fair estimate? Or is it a little bit different than that?

I would say we're in the process of determining this, and we structured this transaction to where we can participate in value creation of those buildings. So I think it's too early to give you a specific number, but we feel confident in how we structured the transaction to not just be paid off at our gross book to participate in upside in those properties. So we'll provide more color on that on probably our next earnings call.

Our next question is from Rob Stevenson with Huntington.

Just on the skilled nursing side, can you talk about what the disposition market looks like there today? Given most people's higher cost of capital, how materially is pricing for those assets being impacted today and demand, et cetera, that you're seeing?

We've experienced in recent transactions where there's been tremendous appetite primarily in the private buyer market for skilled nursing. So we haven't seen a change in that. It seems to be very robust.

Yes. Interest rates, you're probably getting at the increase in interest rates and what effect that's had, but we haven't seen that have a material effect on the appetite or pricing within the skilled nursing industry.

Okay. Are these -- the dispositions you guys have done recently, have they gone to normal buyers? Or is this part of the sort of further of 1031 and bonus depreciation buyers that seem to be supporting the market to a greater extent here in the fourth quarter?

Well, for us, it's generally been the operator. So maybe that's why we're not seeing any price changes because the operator, especially under a lease is going to be your strongest buyer.

But in other cases where we sold -- I mean what's not been to the existing operator in a couple of cases, it's been buyers that are known quantities in the industry that have been long-term investors.

Okay. That's helpful. And then noticed that ExPOR on the core SHOP portfolio declined quarter-over-quarter. Is that just short-term noise? Or is there some significant initiatives that you guys have underway in the portfolio to reduce costs on the expense side?

I call it a little bit of noise. This is Gibson. I call it a little bit of noise. Just keep in mind that 27 properties in and of itself is a pretty small sample size when you're talking about same-store portfolio. And then again, 12 of those are stand-alone memory care. So you get more variance around whatever the mean is from quarter-to-quarter.

On balance, the reductions there were some successful property tax appeals and better GLPL experience, but nothing that's really -- I mean, those are real and those kind of carry forward. But structurally, I would call that some changes, improvements around the edges.

Our next question is from Omotayo Okusanya with Deutsche Bank.

Just kind of curious from a regulatory perspective, if, again, the midterm results create any additional or even a reduction in regulatory risk? And then also specifically, if you've heard any additional news around CMS and some of the talk about them recalibrating PDPM because of concerns about of charging.

Tayo, I mean there's always regulatory risk, right? And I don't see that changing significantly now versus in the past. I think broadly, there's been bipartisan pushback against some of the initiatives from the more progressive side. And I think at the end of the day, cooler heads prevail on that and a lot of its headline noise. But it's certainly something that we keep an eye on.

And we do feel -- we feel positive about by moving our portfolio to more of a SHOP focus on a private pay model than on reimbursed model.

Got you. That's helpful. And then on the SHOP side, again, really good activity from an investment perspective. So you guys are clearly getting deals done. But you also mentioned that it is kind of increasingly competitive out there. So could you just talk a little bit about some of the things you're doing to still kind of get your fair share of transactions that you're interested in?

Sure. This is Dave. So our by word would be relationship, right? We're super focused on our operator relationships, our intermediary relationships and being there, whether it's 1 building or 2 or 3, being super responsive.

I think one of the, you can say, non-balance sheet assets for us are our operator relationships because they give us an early look at situations and opportunities and a chance to sort of continue that relationship and grow with them. So just servicing as much as we can, everybody we touch and maintaining what I call our LTC brand in terms of responsiveness and being on it and cutting to the quick. If something doesn't fit, we'll tell them. It doesn't work. If something does work, we're going to lean in hard.

Our next question is from Juan Sanabria with BMO Capital Markets.

Just curious if you could maybe talk a little bit about how investors should think about the growth profile of the company. I think you said given what you've done to SHOP or growing SHOP that the growth profile from a cash flow basis NOI or rents is up 3x and when that should begin to flow through to the bottom line and how that more I know a lot of the movements in '26 have been kind of capital recycling that's been neutral to earnings. But how does that change, if at all, for '27, just given you have more higher growth SHOP assets at present?

Yes. Thanks, Juan. There has been, to your point, a lot of noise in the flow-through from our acquisitions due to the capital recycling. And that kind of -- you have a forward 12 months of that and especially with the Prestige loan payoff here in November.

But once that's all flown through the comparative periods, you have 50% or more of the SHOP is dropping to the bottom line. As the SHOP NOI percentage grows, and I talked about on last call, we were looking at just the math getting to 75% in 2028. That flows through to the bottom line because there's not much incremental cost from a corporate standpoint to that. So it increases significantly.

Okay. So not to put words in your mouth, but we should see earnings growth in '27?

As we continue to acquire properties, yes. I mean we did -- we did say in -- I'm sorry, what did I say?

Jaun, in '28.

Yes, '28. I mean there will be in '27, we have flow through, but we have the -- we'll have 11 months of the Prestige payoff that also flows through to counterbalance that.

Okay. And then just going forward, I mean, beyond Prestige, is the focus more on booming -- continuing to prune skilled nursing? You talked about good appetite from buyers there. I know some of your peers have been more focused on asset management and capturing higher rent coverage levels through higher rent, either with existing or new tenants. And just kind of the strategy or philosophy on how you approach those opportunities? Is it more skewed towards dispositions and continuing to upweight SHOP? Or is it capturing higher growth than traditionally is available through your skilled care assets?

We had examples of that early in the year when we recycled capital out of skilled nursing leases that were expiring. It really was us looking at a situational opportunity of really having a growth trajectory through SHOP and recycling that capital at an attractive rate for a higher growth profile of assets.

So that was really a strategic decision as we really focus on growing our SHOP platform. We'll look at that as we go forward as far as opportunities. But if we do have ability to attractively recycle capital in existing leases to redeploy to SHOP to be able to accelerate that growth to a higher growth profile, that's where we want to go. I mean our ultimate objective is driving per share earnings growth.

Beyond the loan payoff in November, anything else out there that we should expect? I know you flagged the purchase option that was going to be taken up here in the first quarter, I believe. But anything else on the loan repayments to ALG, et cetera, that could be a source of proceeds?

We've always talked about ALG as a possibility. It's been a view of a shorter duration investment. So it's possible those could lead to payoffs. We've set that aside as always a possibility. We are not exactly sure the timing of that. But we do have people, lessees in our portfolio call us about opportunities to look at purchasing assets. We're not looking at doing transactions that are dilutive, but we'll update you on the next quarterly call in regard to any changes on that.

Our next question is from Jamie Feldman with Wells Fargo.

This is Jesus on for Jamie. Just looking at your SHOP margins over here relative to peers, just how much of that gap right there reflects the higher acing memory care mix? And how much of that gap do you think you can narrow over time?

I think it's fair to say that our core margins are impacted by the memory care mix. And I think as we go into -- because at the beginning of the year, when we rolled out the core portfolio, 27 properties, that was about 98% of our owned NOI at the time.

And so by the time we get to the end of the year, our core SHOP portfolio, call it, $54.5 million, $55 million, that's going to be approximately half of our like SHOP NOI on a pro forma basis at the end of the year. So we'll give some consideration to how we constitute the core portfolio next year to capture kind of the broader trends. But I think in the core portfolio, I think you're seeing the impact of the stand-alone memory care.

Great. And for the acquisitions you're underwriting today, what's the permanent debt-to-equity funding mix that you're assuming here? And like what initial accretion hurdle must the deal clear?

Well, we're continuing with the 70% equity, 30% debt. And it's pretty flat the first year as we've talked about, but there's looking at for future growth. Yes, what we're buying is future growth. That's probably the best way to look at it. We're not spread investing at this point.

I'll say a circle back to the initial question. I suspect that some of our peers have higher component IL in their same store as well. So that could be another factor, but...

For the higher margin?

Yes, but the memory care is a factor.

Our next question is from Austin Wurschmidt with KeyBanc Capital Markets Inc.

You guys referenced in the prepared remarks, you've transacted on less than 5% of the assets that you've underwritten. And I was wondering if that's more a function of product quality or access to capital, just given a large amount of the acquisitions this year have been funded with proceeds from capital recycling. So to the extent the opportunity to access the equity markets expands, how does that potentially increase your ability to kind of grow the acquisition pace from what you've seen this year?

Well, the capital markets is not constraining growth. It's the opportunity set. And I think we're getting our fair share at $1 billion this year, we're certainly getting our fair share of the opportunity set. I think our buy box is probably much smaller than some of our peers. And we're being very selective as we've talked about all year long of what we're buying, and we will continue to be selective. But right now, we don't see the opportunity set narrowing. Our pipeline for next year already looks good. So we're very optimistic about 2027 and our ability to transact at the same volume level as this year.

Appreciate the thoughts. And then Gibson, within SHOP, how is performance this year within the core portfolio as well as just from what you've seen as far as the acquisitions, how the performance is stacking up versus underwriting? How does that all shape your thoughts about kind of the pace of occupancy upside in a given year?

Yes. Well, I guess I'll answer it this way first. I think with the deals that we've been acquiring, they've been generally stabilized occupancy. So we haven't been making a big bet on stabilized occupancy. So it's really been come down to the ability to -- the thesis has been that given the supply-demand dynamics that RevPOR will continue to outpace the expenses. And we're seeing that play out. That's the top line of the core metrics, notwithstanding today, I can get into that a little bit.

On your question on how they are performing relative to underwriting, I think on balance, things are performing kind of in line or a little better with underwriting. If you spread that across core and on the brand-new deals. Now the new deals are just coming in.

But on the core side, we actually, in our guidance incorporated higher than underwriting expectations -- and so that's coming in a little better. I think on balance, everything is performing in line with expectations with underwriting.

On the RevPOR side, I think as we look at kind of the underlying fundamentals of the business, I mentioned some of the drivers behind that. So if you think about the 50 basis point decline in our outlook for the full year pro forma year-over-year, about half of that, just slightly more than half of that was due to the Medicaid issue in those 2 stand-alone memory care buildings.

The rest of that, we view as -- and that's something that we feel like they can overcome in terms of the portfolio with continued occupancy growth in the overall portfolio and room for margin improvement.

If you look at the other piece of that, which was slightly less than half of that change, that was really due to unit mix across a little bit more IL than AL sting to have both. You're not reducing staffing levels for that, a little less acuity in memory care around the margins. Again, you're not reducing staffing levels for that, a little trend, quarterly trend to lower RevPOR memory care units.

And that we just didn't -- we feel like that will sort itself out over time. We're not really concerned about that. We just didn't model that to bounce back in Q4. What we're seeing on the ground, the top line result in that kind of RevPOR us bringing RevPOR down is not what we're seeing on the ground.

What we're seeing on the ground with respect to -- if you just look at like-for-like care unit type market, our operators have been throughout the year, been able to implement strong rate increases. And as we head into next year, I think we're optimistic that we can do -- that they can do the same kind of talking about in-place mid-single digit to high single digits in-place rate growth.

And so I feel like -- we feel like the fundamentals are really strong on that. And on the expenses, labor is the bulk of your cost structure. And we're not hearing a lot of acute pressure as we go into budgeting season as people look into 2027.

Generally speaking, most people are talking about kind of cost of living increases. So I think we feel like the fundamentals underlying the business are strong. We feel like some of the top line around the SHOP metrics are a little bit more noise than signal.

Also to add to Gibson's comment is also the acquisitions that we have invested in, we've retained the existing manager for the most part other than a few opportunities. So that leads to consistency of leadership, staffing, familiarity with the markets and the ability to be able to drive RevPOR growth as well as manage expense. So we're excited about that.

And just to summarize some of that, the single -- the mid- to high single-digit rate increase you referenced, is that the in-place growth at the outset of the year or sort of the pace of RevPOR growth? And is 50 to 100 basis points of occupancy upside similar to what you're tracking towards this year, kind of a good run rate in terms of annual upside and occupancy -- the pace of occupancy growth?

Yes. We'll get -- let me address that first. We'll get to the occupancy assumptions as we get into next year as we get through budget. I might get my hands smacked if I commit to that now and go back to the operators and push it through that way. So I don't think it's unreasonable, but we'll get to that as we get through budget season.

When I was talking about the potential rate growth on the table, that's in-place blended rent plus care for the in-place residents for your private pay residents. Now that's consider that the range. Our experience is depending on who's doing that, more weighting towards certain portfolios that may blend you down to the lower end of that range. And as I just mentioned, we got a little bit of Medicaid around the margins. We don't really budget for any increases there.

So we're -- I wouldn't say to take the midpoint from 5% to 9% and budget is for 7%. But what I am saying is that as you look at kind of the in-place rates year-over-year and what people are -- what's on the table, we don't really see a deceleration in that. It seems to be pretty consistent and be at levels that allow us to see the double -- that kind of high single-digit, low double-digit growth -- organic growth in our SHOP portfolio.

Our next question is from Rich Anderson with Cantor Fitzgerald.

So I just wanted to a little -- one extra dose of clarification on this modest downtick on the core NOI from SHOP. I get half is the Medicaid issue. That's fine. The other half is this unit mix issue. That's going to happen all the time, right, for the rest of eternity as you're a SHOP owner. We're always going to have that change in care, change in unit mix sort of function. That's just the way the business goes.

And so Gibson, I think you said this, but I just want to make sure. If you had a quarter to go in the year, you make this change. But if you had 5 quarters, the RevPOR growth probably overwhelms this and you don't actually have a reduction. Is that the right way to think about that metric?

Yes, that's right.

Okay.

We're just not -- just -- we view that as, again, getting back to sample size, 27 properties, a lot of the variance we're talking about in the stand-alone. You just can't -- frankly, it's challenging to model quarter-to-quarter. But over the long term, it does -- I think you said it very well, Rich.

Okay. And then this is probably obvious to everyone but me. But in the press release, your total SHOP NOI also declined by the same amount, $500,000 or something. And I'm curious why that would have happened as you're growing so substantially through acquisitions. Why would have we've seen SHOP total NOI guidance come down to that sort of, I don't know, $75 million range, down a little bit from last time you spoke?

Yes, that's good. That's a fair question, Rich. We're pretty fully baked right now on our guidance. So call it, $20 million. So $55 million, we brought that down $0.5 million in core. And so that's really kind of the incremental change around the margin. So that implies that we don't have any changes for -- we got high value-add properties than everything new that's been acquired relative to our model.

So I think we've got a little bit left potentially in the pipeline, but we've closed, what, $950 million as of last Friday. And so that's kind of baked and that's known, and we're just getting those properties into the portfolio. We're not moving guidance around for that.

Okay. And then last question is a little bit bigger picture. You're buying at 7-plus initial cap rates. I think Cece said flat in the first year based on your weighted cost of capital, which is fine. But I am curious as to that 7-plus -- 7 handle on the return.

I mean, it's odd to me that an asset class that's growing so substantially is -- can be acquired at elevated -- what I would call elevated cap rates. When you think of multifamily cap rates, which is growing nowhere near SHOP, those are 5 handle if you're lucky. And so I'm curious your thought on the future of initial cap rates on your external growth profile and if we should -- we think that this 7 handle number is going to happen in perpetuity?

Well, Rich, on that, if you look at Slide 5 in our supplemental, I mean, we look at -- we give our year 1 projected cap rates for our deals. And you can see that there's cap rate compression on the most recent deals we've done in sort of the 6.5% range. So that's where we see opportunity going forward in that range.

Could there be a little more compression? Sure. But we're looking at transactions that are 1 or 2 asset portfolios, not looking at large transactions. We've been fortunate to find a few deals that have been 4 or 5 buildings. So what we're looking at, we're finding opportunity with that.

And as Pam indicated, we're changing our mindset where we're not spread investing. We're looking at the composition of the buildings, which Dave spoke about in his prepared remarks as far as the unit configuration, the size of the communities, the age to compete effectively against new development when it comes online. So we're -- as Pam said, it's future growth that we're investing in.

Yes. Fair enough. And thanks for the color and thank you for pointing out my not reading Slide 5. I would have gotten to it eventually.

We have reached the end of the question-and-answer session. I would like to turn the floor back over to Clint Malin for closing comments.

Thank you for joining us today. We really appreciate your interest in LTC and our continued story. We look forward to seeing some of you at upcoming investor conferences over the next couple of months. Thank you for your time.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to the LTC Properties Second Quarter 2026 Earnings Call. [Operator Instructions] Joining us on today's call are Pam Kessler, Co-President and Co-Chief Executive Officer, Clint Malin, Co-President and Co-Chief Executive Officer, Cece Chikhale, Executive Vice President, Chief Financial Officer and Treasurer, Gibson Satterwhite, Executive Vice President of Asset Management, Dave Boitano, Executive Vice President and Chief Investment Officer.

Before management begins its presentation, please know that today's comments, including the question and answer session, include forward-looking statements subject to risk and uncertainties, that may cause actual results and events to differ materially. These risks and uncertainties are detailed in LTC Properties filing with the Security and Exchange Commission from time to time, including the company's most recent 10-K dated December 31, 2025. LTC undertakes no obligation to revise or update forward-looking statements to reflect events or circumstances after the date of this presentation. Please note this event is being recorded.

I would like to now turn the conference over to LTC management.

Good morning, and 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 we'll 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 pipeline 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 2 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. 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 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 are now modeling to occur on October 1.

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 (sic) [ $12.7 million ] million pro forma NOI in Q1. We're encouraged by the RevPOR 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 to 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. And 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 9 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, and 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 Cece 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 strength in capital position enhances our financial flexibility and enables 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 4.2x and our annualized adjusted fixed charge coverage ratio was 4.9x. We continue to operate comfortably within our leverage target of 4x to 5x 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. We expect Core FFO per share in the range of $2.76 to $2.78 and Core FAD per share between $2.83 and $2.85. This guidance includes an increase in SHOP acquisitions to $900 million at the midpoint, increasing total SHOP NOI between $71 million and $80 million, and decreasing FAD Capex to approximately $4 million due to the timing of acquisitions. It also includes $730 million of proceeds from asset sales and loan payoffs. Assumptions underpinning our guidance are detailed in yesterday's earnings press release and our supplemental package, which are posted on the LTC website.

I'll turn the call over to Clint.

Thank you, Cece. When we launched our SHOP platform just 15 months ago via cooperative triple-net conversions, it was seeded with 13 communities with a gross book value of $175 million. At the end of the third quarter, SHOP gross investments will total over $1.3 billion with an average age of 9 years. 80% of this growth has been external, driven in part by our ability to successfully cultivate strong SHOP operator relationships. We are deliberately building a SHOP portfolio to compete effectively today and in the future when new supply eventually comes online, although new construction starts remain near historical lows nationally. We are mindful that this will not always be the case, so we seek to acquire communities with an already strong market presence and with unit and common area configurations designed to fulfill contemporary consumer preferences.

I would like to close by thanking our SHOP operators for choosing LTC and trusting in our relationship and ability to help support them as they care for our nation's seniors. Also, I would like to thank the LTC team for their tremendous efforts in carefully planning and executing our SHOP strategy in the pursuit of shareholder growth. Our transformation is happening faster than we predicted with everyone here at LTC working together as a team to build a platform for higher, sustainable, long-term FFO and FAD growth. With that, we are ready to take your questions.

[Operator Instructions] One moment while we pull for the first question.

The first question comes from Juan Sanabria with BMO Capital. Please proceed.

This is Robin sitting in for Juan. I was just curious on the $321 million left to close, if you could discuss cap rates, IRRs, expected timing. And then if you could maybe also discuss if you could do additional deals in addition to the incremental $321 million before year-end.

Sure, Rob. This is Dave. So that remaining to be closed looks much like what we have, similar cap rates and from an addition and mix and quality, really we're finding a lot of transactions that look like what we've acquired. And so we feel very good about that. As far as additional opportunities throughout the year, we're always looking. And if we find transactions that fit our box, we will certainly pursue them.

Then on the SHOP expectations, could you just help us understand the drivers of the RevPOR increase and the occupancy moderation?

Sure. Hi, this is Gibson. So before I get into those metrics, I just want to back up for a second and just talk about that core portfolio for a minute just to give some context. So it's 27 properties. When we rolled that guidance out, it was like 97.5% of the NOI that we owned at the time. In that mix, I think everybody knows that we converted standalone memory care, so it's more heavily tilted towards standalone memory care, about 30%, 32% of the units in that portfolio. So we're going to see some movement over time from quarter to quarter and performance and our expectations. And it's not exactly analogous to some of the other same-store portfolios of our peers.

With respect to the underlying metrics of guidance, the RevPOR is, we're taking that up 50 basis points, and that's really based on the pricing strength that we've seen so far year-to-date. And we've got more price increases coming in the second half of the year. Underlying metrics are good. There's no material difference between the operator's asking rates and the rates at which people are moving in. We feel like the marketing funnel is working and flowing. And so we feel pretty good about that. On the occupancy front, that's really a function of the math. So year-to-date, we're at about 89.7% occupancy. Last year was 89.7%. So if you think about that, to be able to get our initial guide of 150 basis points, you'd have to average 300 basis points over the second half of the year.

We felt like because some of the cohort of buildings that we see, that we would need to really make that kind of movement, a lot of that's a standalone memory care. We don't feel like that's an expectation that we're going to anchor. We're not going to anchor our expectations on that kind of movement. Now I will say last year, we saw not only in that segment of the portfolio, but the overall portfolio, we saw a really good move in occupancy in Q3. So, it's not out of the realm of possibility, but if we get that same kind of move, we're really talking about the high end of the guidance as opposed to hitting the midpoint.

The RevPOR expectations are really just a function of the occupancy decline -- not occupancy decline, but just the moderation in our expectations. And then if you just step back and think about it, overall, if our operators are able to deliver 14% growth at the midpoint, and I think Pam mentioned this on a prior call, we will have outperformed our underwriting on those new deals. It's about $460 million worth of new deals in that cohort. We will have outperformed our underwriting, and we will have significantly transformed the intrinsic growth profile of our portfolio.

So we're really excited about that. It's a low end, which we don't expect to hit and hope not to hit. That's still double-digit growth in that portfolio for the deals that we bought. At the high end, you're at high teens growth. So we're really encouraged. And the way we're thinking about it now, I think our expectations are probably normally distributed around that 14% midpoint.

We're not trying to sandbag. We feel like that's a good, reasonable expectation of our operators. But we feel at that growth rate, we will go a long way to proving out the thesis behind turning over $730 million of our portfolio investing in SHOP, making the investments in the platform. And we're really excited about that here at LTC.

The next question comes from Tayo Okusanya with Deutsche Bank.

A couple of quick ones from me. The core SHOP portfolio and the 14% NOI growth profile, I'm just curious, as we kind of think of everything else you've bought or just kind of in the line-up, and we kind of think about where you kind of have all that kind of in the portfolio by the end of this year, and we start thinking about 2027 and trying to do like a year-over-year comparison type of thing like we're doing with the core SHOP portfolio. How much confidence do you have at that point that you could still put up kind of similar NOI growth by the end of the year with kind of a redefined corporate portfolio heading into 2027, if I may use those words?

I mean, the growth, are you specifically referencing the growth that we're projecting in what we're buying, the recent acquisitions?

Yes, that's a great way to kind of think about it. Like how do we think through the growth of that stuff?

So, Tayo, this is Dave. Sort of like I commented earlier, right, so what we're looking to acquire, and try to in terms of acquisitions that are coming in and what we're pursuing. We expect similar dynamics in terms of low to mid-teens IRRs, and that's kind of growth. So we really see it as sort of adding quality to quality as we continue to grow. So that is our expectations as these roll into our portfolio and be in march step with the rest of the assets.

We haven't bought any value-add, Tayo, if that's what you're asking, where you would expect outsized, yes.

That's how my comments are made. We're expecting to have the $700 million completed by the end of Q3. That'll put us at $1.3 billion, the average age of 9 years. We've targeted larger campuses, newer assets that are occupancy stabilized, that then have the ability to push revenue growth. And it's something that we have conversations with our operating partners about this and looking to the budgeting process and where to focus on it. And we do think there's going to be room to push rate, especially with just supply constraints that exist today. And that's why we have targeted the asset profile that we have to acquire to build the SHOP platform. We think that's going to be very advantageous to us going forward.

Okay, that's helpful. So then with the mid-teens IRR and you're buying, let's kind of call it high 6% to about a 7% cap, so you're kind of thinking it gives you like 7%, 8% type growth.

Yes.

Okay, that's great. And then just a quick second question, kind of with further growth in SHOP, this idea of being 75% by 2028, as we're kind of thinking about additional acquisitions, how should we think through funding that? I think, again, this year is a little bit different because, again, some of the funding is some of the high yield paper that's kind of from the loan payoffs and things like that.

But so just kind of think about your actual cost of capital relative to where you're buying assets. You should be kind of thinking about that stuff as being kind of accretive from day one or more neutral from day one, and then we kind of get to growth in outer years.

Yes, more neutral from day one and the growth in the following year. We do have some more potential capital recycling we can do in our portfolio. The bulk of it done this year, I mean, over $700 million, that's pretty incredible, as Gibson alluded to, turning over a third of our portfolio in less than 18 months. You know, we've taken a lot of work here, but the SNF asset sales have unlocked a lot of trapped value that's created a currency for us for growth-oriented investments. And we'll continue to look within our portfolios to see if we can get a lot of value. But next year, I would anticipate it more the normal course, 70% equity, 30% debt.

So you'll see more growth in the bottom line asset, gross asset value of LTC this year. It was more recycling and replacing low growth investments with high growth investments. Next year you'll see more bottom line growth.

That is very helpful. You guys are grinding hard.

Thank you. We're working hard over here. Our team, we've got a great team and everybody's, we're all in the same boat rowing together in the same direction and feel like we're firing on all cylinders. As Gibson said, we're really excited about what's happening here at LTC and, you know, a lot of our investors are serving.

I'm certainly thrilled by it as well and looking forward to next year. That's a lot to track the operating partners that we have into the SHOP portfolio. Going from May of last year to now having 12 operating partners and adding one more, I think that energy has resonated and has really helped us catapult this growth.

The next question comes from John Kilichowski with Wells Fargo.

This is Jesus on for John. So to start here, you guys raised the investment midpoint here by $300 million to $900 million and increased SHOP NOI guidance, but kept the midpoint per share guidance unchanged. I guess, what is offsetting the incremental earnings contribution from those acquisitions?

Well, a lot of it -- its Cece here. A lot of it is the timing of acquisitions and when they're coming on board. That's the primary cause of keeping it where it was, you know, initially coming out the model. We typically modeled ratably throughout the year, but it's been pushed back.

Perfect. And just as you've scaled the SHOP portfolio and just added several new operator relationships, I guess what have you guys learned so far about what distinguishes operators best positioned to grow with you guys?

So, this is Dave. The operators who are best positioned to grow, or that we've had the most interaction with, have been regional operators that know their states well, know their markets well, and really got that level of knowledge about the locality and the market dynamics and probably have other communities in that sort of general region to draw upon. So I think that gives you a lot of strength in terms of having an operator who certainly is operating your community, but they have a broader tapestry of regional resources and other things that can draw upon their resources that we will benefit from by engaging them.

The next question comes from Michael Carroll with RBC. Please proceed.

I wanted to dig into the updated disposition guidance a little bit more. What really drove the increase on those expected sales and loan payoffs this past quarter? Is there just one larger portfolio deal included in that, or is it comprised of several smaller transactions?

It's small. There's a number of transactions, Mike, that's involved in this. And this just goes to what we've mentioned on our previous calls, that we're going to look at our portfolio and given, you know, attractive pricing for skilled nursing, looking at being able to take advantage of that. So, this is something we've been managing, monitoring, operating, and buyers listen to our earnings call. They know that we have guided that our strategic focus is moving into SHOP. So we do receive a lot of inbound phone calls from that as well. So it's responding to people, but then also just being proactive in managing our portfolio and seeing where best risk-adjusted returns are and where we can raise capital.

Okay, and then some of the cap rates achieved on those sales, looks like you're getting some pretty attractive value. Is that just like the higher coverage ratios on those deals that allows you to kind of get it to that sub-6.5% type range?

Yes. And assets we've had on the books for a long time as well.

And then, Clint, is there any...

Just, you know, as you approach, when you get daylight on some of these lease terms to an opportunity to either reset rent or re-tenant it as you move towards the end of the lease, then you're able to look to that coverage as an opportunity to unlock value. Most of these transactions will be with the operators, and it works with. We feel like it's really just a win-win for both sides. They're able to control their destiny with the assets, and we're able to realize really good, attractive value for our shareholders and redeploy into higher growth assets.

So it's not that we don't like the assets, it's just part of it's a function of structure. We've been very clear about what our goals are in terms of where we're going as a company. Their counterparties have their own goals. Good businesses have been good assets, but we've been looking opportunistically throughout the portfolio, reacting quickly when we get inbounds and proactively doing some outreach where we see opportunities. We'll continue to do that. But as Pam alluded to, we don't expect to do anything like that at this scale next year.

And that also helps us be able to move the needle forward as far as getting to a higher percentage of SHOP concentration, which that is a stated goal that we have had.

Even though you don't expect to have a similar level next year, I mean, what type of activity still could exist? I mean, was it $730 million that's included in guidance this year? Could you do a couple hundred million of these types of sales in 2027 too? And is that contemplated at all, Clint, in that 75% goal that you put out there? Is that purely new investments that gets you to that 75% goal?

That's more new investments. But there is a likelihood of, I mean, it's a couple hundred million possibly that could happen next year. You're not going to see the magnitude of what we had this year most likely, but you could see, I think, a couple hundred million is possible.

Okay. And then just last question for me on the Prestige loan repayment that's included in guidance on October 1. I mean, how confident are you that will happen in October? I mean, is there any big list that they need to achieve to get the HUD loans to be able to get that done?

Yes, not now. We feel confident, Mike. I mean, the timing, maybe a few weeks or a month or something like that, but the final commitments from HUD are in to Prestige on most of those properties. And, you know, there are a couple more outstanding, but no concerns. Performance is really strong. They meet the HUD underwriting metrics comfortably. And so now it's just a matter of kind of pulling all those together and marching toward close. So we feel confident now.

We have more certainty, you know, now given those commitments, the HUD commitments that have come in to Prestige than we did, you know, when we had our last call.

The next question comes from Rich Anderson with Cantor Fitzgerald.

So, you know, I think, Pam, you alluded to this, but just to put some numbers around it, the normalized FFO growth rate for this year is just, you know, 1.5%. But of course, we recognize why that's happening and that it transitions to higher bottom line growth as you go forward. But if the landing point of this business, let's just use a round number, 10% core, you know, same-store SHOP growth, what would hold the company back from producing higher bottom line normalized FFO growth at that level, if not greater, you know, when you think about the end game here? Or is there any reason why it will always be, the FFO growth line will be something less than the same-store growth line?

No, and thank you for that question, Rich, because it is the math of it, right? At 75% in 2028, that's what you're achieving. And so the only thing that would hold us back from that is not being able to execute acquisitions at the level we are currently. No. So that assumption, getting to 75% in 2028, is predicated on our current run rate for acquisitions. And right now, what we're seeing in the market, there's no reason to believe that we wouldn't get there. So it's really just the math all falling to the bottom line. You know, this has been a heavy lift transformation year, turning over the portfolio like we did, and the price we paid for it, as you noted, with 1.5% growth, was growth this year.

But it was an investment we were willing to make consciously as a management team, knowing that in 2 years, the company that emerges is stronger, higher growth.

Growth and just a lot more exciting, frankly. Actually being able to recycle the capital within the portfolio, I mean, that's a triple-net older assets. I mean, it's just de-risking the portfolio as we go along. So that's actually strategically helpful to minimize the potential disruptions in the future.

So I think in past conversations, and I don't think I have this wrong, but you were thinking after the pandemic, after sort of bulky SNF sales that you would more keep that steady and then just grow the SHOP business and grow your percentage of SHOP that way. But you've obviously had an epiphany about selling more SNFs, which is fine. But I am curious about who's the buyer at a 7.5% cap rate for SNFs. That's a very attractive yield for you, but what does the buyer see in that?

So the 7.5% includes, and maybe cap rate, call it implied yield, because that's the Prestige is structured as a loan. So that's Prestige. As I mentioned before -- Oh, hey, it's Gibson. As I mentioned before, the incremental sales that we're talking about, most of those are back to operators or affiliates of the operators. And, you know, they're arising from different situations, each unique. But generally speaking, as you get to, again, daylight toward the end of lease term, you're not just swapping lease yields, right? You're able to, for our shareholders, look more to the overall cash flow of the underlying operations to see if they're monetize that. And it works for the operators too.

Again, they're able to, they control all the upside going forward. And they have certainty and they can plan their business and they get to control their own destiny for the asset. So we feel like it really, it's really attractive yields for us. We're really happy to redeploy that in the SHOP. But we think it works for the operators as well. And it's, you know, just practically speaking, it's a much easier transaction to do.

Yes. So they just have a different agenda. So it's, you know, you're looking at different things and different opportunities from both sides. I get that.

I mean, of course, the alternative is to rebase your rent. Right. And wait now and wait till the end of the lease term and hope that margins hold up and hope that occupancy holds up and hope that reimbursement holds up and that you can be in the same spot in a couple years where you are now. And so we just think that it's much more sensible for us, given our goals, to act on that now.

And generally speaking, operators that are in leases that have good coverage, I mean, I think their objective just generally is to own the asset as opposed to lease it.

Yes. Okay. And then last question for me. So 75% by the end of 2028, I mean, why not just go to 100% right? I mean like let's you know and you guys have you know exceeded expectations about that number so far in the 18 months you've been doing this. I mean let's just rip the band-aid off and go for it if we're going to do it, right? I mean, is that a possibility?

I think, Rich, we would look at the portfolio, and it's really a function of looking at what pricing is, cap rates, what's the most attractive capital we have available to us. And so I think we would continue to look at that between now and then. It could accelerate because that really, getting to that 75% is really just a function of the pacing of our existing deal flow. And if we do decide to sell assets in the portfolio to further that growth, it would just increase, get to 75% sooner and maybe surpass that.

It feels to us, Rich, like the band-aid has been ripped. And it was, it's been a lot of work getting here, but we have the platform in place to really -- if that's what we decide to do later, we feel like we have the platform in place to scale to be able to do that. But the band-aid's been ripped.

And the good thing right now too, you look at just coverage on the triple-net side as far as AL and skilled, we've got historic coverage on the skilled nursing side. So it's strong so we don't have to do anything. But if pricing is opportunistic, but we feel that within the portfolio, there's strong coverage and you never know what could happen, but we feel that there is room in that coverage to absorb any challenges if things come up from different areas as far as reimbursement, regulatory, or things that are unexpected.

The next question comes from Austin Wurschmidt with KeyBanc Capital Markets.

Going back to that last point, Clint, I guess, how much exposure will you have to the SNF investments by year-end? And do you think that coverage across those remaining assets supports similar pricing as you're achieving on the SNF sales this year?

I would think so, yes. I mean, right now, we're probably, our NOI on skilled goes down to low 20s. That's amazing. It's a pretty dramatic shift from what it was in 2024. At the end of 2024, it was like 50%, almost 60%.

Just a year ago. If you check our Q2 supplemental, it's over 50%.

A dramatic shift.

Helpful. And Gibson appreciated all the detail on the core SHOP pool of assets. Was the occupancy shortfall or change to the guidance this year entirely from the memory care units or those assets or were some of the more traditional SHOP assets also impacted from some of just maybe the, I don't want to say occupancy softness, but maybe decel and the pace of improvement many had anticipated into the early part of the summer leasing season?

Yes, it's a fair question, Austin, and I don't think I was clear enough when I started out my initial answer. I think part of it is really due to the way we have it modeled, where as we started out in the beginning of the year, it was kind of a more smooth and gradual build. I think I've mentioned in response to your question last time in Q1, we saw more seasonality than we expected. So really for the first half of the year, we're probably 90 bps behind on occupancy of our own internal projections.

But having said that, year-over-year, we're about 145 basis points over last year. And so the question is, okay, well, why don't you just raise your guidance? Well, I mentioned earlier that last year we saw a really steep ramp in our occupancy in the second part of the year. And as we look at the cohort of buildings that would be required to do that at this point, a lot of that is in the higher acuity, standalone memory care.

We saw that in that segment last year. We've seen it to different degrees in prior years. So it's really us with business. This portfolio, this characteristics, you can have a lot of volatility and we don't want to hang our hat on last year's, on one year's results. So we're not discouraged by what's transpired so far, we're actually pretty encouraged. We're behind our own expectations a little bit on occupancy. RevPOR is higher. If you had to pick between the two, that's where you'd want to be right now. And you're seeing some of those buildings that have higher occupancy, you're seeing them start to drive rate a little bit more and charge for the care that they're providing the residents.

So it's not -- last year. You were able to get that 300 basis point improvement, second half over first half. This year, we're just not modeling that same kind of growth. If we get to that growth, then we're probably at the top end of our range. But again, we're really pleased with our operator base. The business development team has done a fantastic job bringing new operators. They're great. Feel like if we can get the midpoint and in this range it's a tremendous success for our shareholders.

Let me ask you, when you see these periods where maybe occupancy is not improving through the quarter as quickly as you might have anticipated or underwrote, how quickly or seamlessly can you transition to push rate, like you're kind of assuming in guidance to offset that softer occupancy build?

Yes, so those things are really decoupled in the way that you're thinking about it. So if we were sitting on a 600-property same-store portfolio, we can make a top-level assumption and say, hey, occupancy is down here, we're going to tweak the whole portfolio by 50 bps, pricing 50 bps over there, and Bob's your uncle. But here we're going asset by asset. The operators look at asset by asset. They're already on the assets on the communities that were higher occupancy. They're already working on rates. And that's independent of what our total SHOP goals are. We're not going back to the operators and saying, hey, we're a little behind in our projections year-to-date and go back and increase rates. So they're really, they're two separate considerations.

I understand why you're linking them, and that makes sense. And I want to make one thing clear. We're really, in my earlier comments, we're really encouraged by the strong start to Q3. So we saw occupancy accelerate at the end of Q2, we're just not banking on the same kind of increase that we saw last year.

At this time I would like to turn the call back over to Clint Malin for closing comments.

Thank you for your time today. We really do appreciate the interest in following LTC, and we look forward to talking with you on our next call. Thank you.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.

Greetings, and welcome to the LTC Properties First Quarter 2026 Earnings Call. [Operator Instructions] Joining us on today's call are Pam Kessler, Co-President and Co-Chief Executive Officer; Clint Malin, Co-President and Co-Chief Executive Officer; Cece Chikhale, Executive Vice President and Chief Financial Officer and Treasurer; Gibson Satterwhite, Executive Vice President of Asset Management; Dave Boitano, Executive Vice President and Chief Investment Officer.

Before management begins its presentation, please note that today's comments, including the question-and-answer session, may include forward-looking statements subject to risks and uncertainties that may cause actual results and events to differ materially. These risks and uncertainties are detailed in the LTC Properties filings with the Securities and Exchange Commission from time to time, including the company's most recent 10-K dated December 31, 2025. LTC undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date of this presentation. Please note, this event is being recorded.

I would now like to turn the conference over to LTC management. Please go ahead.

Good morning, and thank you for joining us. LTC is successfully executing our SHOP strategy. Our capabilities, reputation and culture are resonating with sellers and operators, and these relationships are driving investment opportunities and record external growth, allowing us to scale incredibly quickly. We have strong conviction that our strategy is the right one to create a higher growth profile company with better risk-adjusted returns to drive shareholder value. With the SHOP currently projected to represent 45% of our total investments and 40% of annualized NOI by year-end, the shift in our portfolio mix is dramatically enhancing LTC's long-term ability to grow FFO and FAD per share above our historical rate.

We are on track with our $600 million SHOP acquisition midpoint guidance. And with the expected closing of second quarter transactions, we will be more than halfway to that target. Additionally, to further increase our SHOP mix, we would consider transactions that capitalize on attractive skilled nursing pricing by recycling capital into higher-growth SHOP assets. Our operator partnerships, our relationship-centric culture and our significant investment in the SHOP platform are driving our transformation and positioning LTC as a competitive force.

I'll now turn it over to Gibson for more insight on the portfolio.

Thank you, Clint. We are focused on optimizing risk-adjusted returns for our shareholders by investing in our SHOP portfolio and opportunistically recycling capital, positioning LTC for higher intrinsic growth. As Clint noted, SHOP is expected to account for 40% of our annualized NOI by year-end, with the potential to expand even further. This target incorporates reinvestment of approximately $265 million in planned dispositions and loan repayments from skilled nursing assets this year. Of that amount, $77 million is closed and $190 million is expected to close in the third quarter. Our guidance projects a July 1 payoff of the Prestige loan in line with their notice of intent earlier this year.

SHOP performance continues to reinforce conviction in our strategy. First quarter SHOP NOI was in line with our expectations. For our core SHOP portfolio, which consists of 27 communities at or near stabilization, including those acquired through the first quarter of this year, we are reiterating prior guidance of 14% pro forma growth at the midpoint. You can find more information on this portfolio in our supplemental. To frame the impact of our transformation, the pro forma growth rate for our overall portfolio increases to 5% to 7% at our 40% SHOP NOI target from the low 2% range embedded in triple net leases. That change is driven by increasing exposure to SHOP assets with growth prospects in the low to mid-teens over the foreseeable future.

We can further increase our intrinsic growth rate should we choose to take advantage of opportunities to recycle more capital into SHOP given the strong pricing for skilled nursing assets. Our 2026 guidance includes platform investments, adding the people and data capabilities needed to scale and support double-digit SHOP growth. We expect the core infrastructure to be largely in place by year-end, enabling us to continue to scale rapidly and best support our operators.

Now I'll turn the call over to Dave to discuss investments.

Thank you, Gibson. LTC has spent 18 months building a platform designed to execute with speed and certainty. We are well on track to achieving our $600 million midpoint investment target and believe, given the volume of opportunities we are evaluating, that a comparable level of annual investment is sustainable in 2027 and beyond. So far this year, we've closed around $120 million in investments with nearly $250 million on course to close in Q2. Additionally, we have signed LOIs for off-market third quarter acquisitions totaling $90 million. Our pipeline continues to be robust with well over $0.5 billion of opportunities under consideration and visibility for continued investment growth. Our relationship-centric approach is working.

By the end of the second quarter, we'll have 11 SHOP operators, including 9 that are new to LTC in the past year, reflecting our success in retaining and growing with existing operators at the communities we've acquired. This strong pool of operating partners has been the source of several follow-on investments and provides great momentum as we continue to build our portfolio. Key to LTC's growth is our legacy of deep industry relationships, which in combination with our transactional agility gives us an edge in gaining access and insights to growth opportunities. Several investments have come through partner referrals, underscoring the synergy of our culture and our commitment to relationships. And a number also have been off market, demonstrating again the benefit of our relationship focus.

Our rapid SHOP growth hasn't happened by chance. It is strategic and deliberate, reflecting an investment philosophy focused on assets 10 years of age or younger with operators who have deep local and regional knowledge. We emphasize asset quality, size, mix and market dynamics that favor our long-term competitive position. These criteria guide us toward the right balance of opportunities and durable returns. Today, we're seeing a high volume of potential transactions. And here again, our operator alignment is central to identifying the right assets and markets to support solid long-term performance. Experienced senior housing investors know that community performance depends on strong operating partners. LTC is deeply grateful for our operator colleagues and the excellence and commitment they bring every day to the seniors they serve.

I'll now pass the call to Cece for a review of our financial results.

Thank you, Dave. Including year-to-date ATM sales of $95 million, our current liquidity is $585 million and with $190 million of proceeds expected from asset sale and loan payoffs, we remain confident in our ability to finance future SHOP acquisitions. Our pro forma liquidity totaled $775 million, providing a long investment runway. At the end of the first quarter, our pro forma debt to annualized adjusted EBITDA for real estate was 4.4x, and our annualized adjusted fixed charge coverage ratio was 4.6x. We remain well within our stated leverage target of 4 to 5x but believe that we can reduce that further over time as a result of our organic SHOP growth.

Compared with last year's first quarter, core FFO per share improved by $0.04 to $0.69 and core FAD per share improved by $0.02 to $0.72, representing 6% and 3% growth, respectively. Increases were due to SHOP acquisitions and conversions to SHOP from triple net, increases in interest income from loan originations and additional loan funding and higher rent for market-based rent resets. The increases were partially offset by an increase in interest and G&A expenses, primarily to support our growing SHOP portfolio as well as a decrease in rent due to asset sales. We are reiterating our 2026 guidance for core FFO per share projected in the range of $2.75 to $2.79 and core FAD per share in the $2.82 to $2.86 range.

As a reminder, our 2026 guidance includes $400 million to $800 million of SHOP acquisitions with SHOP NOI in the range of $65 million to $77 million and FAD CapEx of approximately $5 million. It also includes $265 million of proceeds from asset sales and loan payoffs. Other assumptions underpinning our guidance are detailed in yesterday's earnings press release and supplemental, which are posted on our website.

Now I'll turn the call over to Pam for closing comments.

Thanks, Cece. LTC's transformation continues. What began last year through the combination of acquisitions and conversions of seniors housing communities ramps up this year with an additional $600 million of SHOP acquisitions projected at the midpoint of guidance, more than half of which will be completed by the end of the second quarter. We are deliberately curating a SHOP portfolio designed to compete effectively today and in the future when new supply eventually comes online, although new construction starts remain near historical lows nationally. We are accelerating LTC's organic growth profile and reducing our exposure to lower growth triple net lease investments while expanding our roster of strong operators to support our mutual growth. In 2027 and beyond, our strategy will focus on tactical growth in SHOP, adding additional high-quality assets and driving outsized NOI growth.

As a premier seniors housing capital partner, LTC is well positioned to drive substantial growth through SHOP. Our smaller size creates agility, allowing us to drive accretive change faster than our larger peers and move the needle through single asset and small portfolio acquisitions. Our SHOP focus over the past 18 months has enabled a successful transformation and created a clear execution advantage. From our cooperative conversions of 175 million triple net leased communities into SHOP a year ago, we will have grown our SHOP portfolio to nearly $1 billion by the end of the second quarter and significantly increased our ability to drive future earnings growth.

The consistency of our execution and performance is driving results and reinforces the conviction in our SHOP strategy. Our goals remain clear: support our operators who care for our nation's seniors and deliver superior long-term shareholder returns. With that, we're ready to take your questions.

[Operator Instructions] And our first question today will hear from Austin Wurschmidt with KeyBanc Capital Markets.

Could you provide some additional details around pro forma NOI growth for the 27 SHOP assets in the first quarter? And then maybe give us a sense just how occupancy trended sequentially and year-over-year within that NOI figure.

Austin, this is Gibson. I guess, first to give you some context around the disclosure. So, when we gave the pro forma 2025 for the '27 core SHOP portfolio, that was to help give an indication of the growth characteristics in that portfolio to the market, to our shareholders. But we've decided against giving that on a very detailed quarterly basis going forward. What we will do is roll our -- that core SHOP performance for, as you see in the supplemental on a quarterly basis, so you can track that with the metrics that we've realized during our ownership. For the color behind what's going on in Q1 in that core portfolio, it came in line with our expectations for EBITDAR. Rates were a little higher.

When we set guidance, we anticipated a little seasonal softness in Q1, which we realized. But direction, occupancy turned around mid-quarter. If we look at it year-over-year, the occupancy troughed at a higher level, meaning occupancy at the trough in Q1 of this year was higher than occupancy that troughed Q1 last year. And we're seeing some green shoots in terms of occupancy increasing since it troughed out in February. So that -- and then also we look in the sales pipeline and our leads and tour volume going into the summer -- the spring and summer selling season, we feel really confident given what we know right now in reiterating our guidance.

Helpful detail and appreciate the context. With respect to investments, you had -- there were $157 million, I think you said last quarter that you had expected to close by the end of April. I'm just wondering what kind of drove the delay? And did the subset of that or all of those move within the $250 million? Or were there changes in the investment pool? Just any details that you can provide on that as well as expected pricing for those assets?

Sure, Austin, this is Clint. The delay was primarily related to a single off-market transaction -- follow-on transaction where the seller was focused on a tax-efficient transaction. And so, to accommodate that, we're working with them on structuring a down REIT and the seller needs some additional time to address some tax questions on their side. So really in working on this off-market transaction, that aspect is what led to a little bit of delay. But we're very excited about this deal, about growing with this existing operator. And also, this deal will add 2 newer and 2 larger communities to our portfolio that have a continuum of care spanning IL, AL, memory care. In the meantime, while that was slightly delayed, as Dave mentioned in his prepared remarks, we've added another $200 million we expect to close in Q2 and Q3. So, Dave can talk about rates.

Yes. So, cap rates going in yields have been right around that 7%. We've been able to maintain that well. We're very pleased with that. So, it ebbs and flows a little bit from deal to deal. But generally speaking, that's where we've been coming in at Austin.

And then Austin also, I'd like to just add maybe color about as we've increased the pipeline, and we're seeing a lot of opportunities right now, at the $460 million mark, which includes what we've closed to date and what Dave spoke about regarding investments by quarter. I mean, that will get us by 3Q at this point of 75% of our midpoint guidance at $600 million. So, we feel very confident about where investments are right now. And what we have is we have 8 transactions in total for 12 communities. And the average age of that 460, again, this goes back to what we already closed in Q1 is an average age of 10 years, which has been very consistent with what we've talked about, 65% of these deals in the pipeline are sourced off market.

With the Q3 closings that Dave spoke on the LOI, that's going to add 2 more operators, 4 new operators this year and get Q3 up to 13 operators. And we have 2 follow-on transactions. 60% of the communities -- of this 460 span a continuum of IL, AL memory care. The size -- average size of the community is 100 units and 70% of these deals are in primary markets. So we feel very confident in our ability to source transactions. And as Pam mentioned in her comments, about buying assets that are going to be able to compete effectively against newer assets when eventually those do come online.

A lot of helpful detail, Clint. Just to clarify one thing before I yield the floor here. You said you added another $200 million. Is that specific to those -- the operator that's focused on the tax-efficient transaction? Because the $157 million is now $250 million closing in 2Q. And then there's $190 million of signed LOIs set to close in 3Q. So closer to $300 million. Can you just reconcile the adding $200 million versus what I'm getting to on the $300 million?

Austin, it's Pam. It was $90 million that's under LOI expected to close in the third quarter. Yes.

And our next question, we'll hear from Juan Sanabria with BMO Capital Markets.

Hope you can hear me okay. Just wanted to ask about the earnings guidance for the year. There's an implied decel from the first quarter run rate. So just curious on the drivers there. I'm not sure if there's any triple net softening in some of the rents versus the conversion to SHOP with some -- if there's any kind of noise or degradation in temporary cash flows there or if there's any one-timers flowing through the first quarter that maybe won't repeat?

Juan, it's Cece. First quarter, there was a little pickup just because of timing differences. But for the most part, no, we think we're going to be in line. There's going to be a ramp-up for SHOP NOI, as Gibson has talked about in the past, but we still think it's in line. There are some uncertainties out there in the market with the interest rates. We're not sure which direction it will go with the new Fed chair, but we'll give you an update next quarter.

Great. And then second, you mentioned potential monetization of some skilled nursing assets. Just curious on the potential scope and where you see kind of market pricing for in-place rents.

Thanks, Juan. This is Clint. I mean, we're supportive of the skilled nursing industry, and we don't see any immediate near-term headwinds. I mean what we have recycled to date going back to fall of '25, those have really been for specific reasons. It's been prestige, obviously, as Gibson mentioned on our last call, it's reducing concentration to an operator in state and reducing our loan book. Other sales were -- they were lease maturities and some purchase options. Those were at attractive 8 caps which we felt very good about. So going forward, it would really just be looking at capitalizing on these attractive pricing that we're seeing in the market. And anything we do going forward really would just be opportunistic to really look at, as Dave mentioned, moving on beyond lower growth triple net leases into higher-growth SHOP assets.

And anything going forward, we really wouldn't be looking at limited, if anything, but no dilution effectively at all. So, this is really all opportunistic going forward as far as what we look at in skilled -- because also our coverage on an EBITDAR basis is almost 2x, which is historically extremely strong. So, we look at skilled nursing, we're very comfortable with our portfolio. We've been able to reduce that concentration within the portfolio. It would really just be opportunistic going forward.

Great. So said differently, just to summarize, given the high rent coverage the yields could be closer to what you -- or close to what you're buying SHOP at around the 7s, again, given the rent coverage.

And next, I'll move on to Rich Anderson with Cantor Fitzgerald.

So I'm looking at Slide 12 and the guidance you provided for SHOP. And I appreciate you're in growth mode. So, like it's hard to get a real good sense of any sort of same-store organic growth picture. But I'm curious like if you were to sort of do a hypothetical stress test of your portfolio, would it be high single-digit NOI type growth, putting aside additional acquisitions. I mean, is that the type of growth that we should be expecting when the time comes that you're able to disclose a same-store perspective?

Rich, it's Gibson. Yes, it's a good question, and I think you've asked similar questions on previous calls. So, in my prepared remarks, I gave just kind of the math of how the higher growth rate in SHOP moves the needle for our overall portfolio and cited that if you assume kind of low to mid-teens, SHOP NOI growth, but that was kind of the driver behind that math. I think what's changed from our prior calls is that now we have some experience with the portfolio. We're really confident in what we're assembling. We're really confident in what the deal team is buying.

And if you just think about the math embedded in that same-store portfolio, we think you can get without the occupancy increases. So, our guidance there, 150 bps of occupancy increase, 14% growth at the midpoint. If you strip that out, just to be really conservative, you can get double-digit 10% NOI growth with 150 or 170 to 200 basis point spread between RevPOR and export. We think that obviously kind of keys off RevPOR. So that kind of 5% guidance, we feel pretty comfortable in that and see that the recent history has been able to sustain that. And then you just step back and look at the overall supply-demand dynamics in the industry, maybe boomers turning 80, the lack of new supply. We feel more confident in that kind of higher growth profile going forward.

Good response. So, you mentioned platform investments that are being made that you expect to be largely completed and scalable by the end of this year, you've heard my gripe about all this, right? It's -- people are -- you and others are growing SHOP through external sources, but then you have to operate it, right? And you're married to it. And I'm wondering how you've stress tested the history -- or excuse me, the future of your SHOP portfolio. It might be on the surface appearing like a layup to run these things with the demand and supply differential that we're seeing today, but things can get complicated in this business. And so, I'm wondering how -- when you talk about this platform investment, what types of people are you bringing in? What are you doing to stress test not an autopilot type of environment, but like things start to go wrong and how to manage through those things kind of new to the space. So, if you can comment on that, that would be great.

Rich, it's Pam. Well, I don't think anybody thinks that's a layup. We fully understand and appreciate the intensity with which you build the SHOP portfolio and operations. But as we've talked about on this call and for the past year, I mean, we really seek out the best managers that are the best in their markets, very strong and been doing it, have a strong track record. And then we supplement that with the database and the analytics that Gibson has talked about to help arrive at better decision-making. Our value add to the operators is helping them with aggregating data, right? That's an expensive task, and that's what we've undertaken. We've hired people to help with the data analytics. We've hired strong asset managers with historical track records managing SHOP portfolios.

So, it's not something that we've undertaken lightly. And we've said before, if you're going to do SHOP, you have to go all in. We've completely fundamentally changed the way this company thinks, operates, the way we acquire properties. And we don't -- we are not managers. We're not viewing ourselves as managers. We are hiring the best managers, but we're helping those managers create the best outcome for our portfolio.

And one thing also, which we've done on top of that is just the portfolio we're acquiring. We've been very -- as Dave said in his prepared remarks, we're very strategic on what we're buying by newer assets. We've retained the managers on the majority of all but one actually to date that we've closed. And we've done this by design to curate the stabilized portfolio, which we think occupancy stabilized with the ability to drive continued improvement that Gibson spoke about. So, we're building this larger assets that have -- and newer that have the ability to compete. So, we think we're putting this together and the combination of the people to be successful. But as Pam mentioned, this is we understand we've been in the business a long time. It takes a lot of work.

And Rich, it's Gibson. I'll just add to that. The structure is relatively new to us to LTC in terms of our implementation. But we've been hard at work at this over the last 18, 20 months and been very deliberate about forming a plan, working through the issues with the initial conversions and executing on that plan. But zooming out, again, relatively new structure for LTC, but we've had exposure to private pay seniors housing. We've all been in the business for a long time, and we're acutely aware of the challenges that operators face. It's a tough business, but we feel like we've aligned with good operators. We've had -- we've hired experienced people on the team, and we just want to be there to support them.

Yes. I'm not meaning to trivialize the talent there. That's not my point, but I'm just stress testing you, I guess, in the process. So, I appreciate all that color from all of you. And my last question is, when you think about structurally how you're compensating your managers, what's the mindset there? Is it a percentage of revenues? Is it a skin in the game, NOI percentage? Like I'm curious how you're doing that? And is there a sort of a specific model you're following? Or is it a case-by-case basis with your separate managers?

It's a general model that we're following, Rich. We're looking at base fees to be calculated based on revenues as well as bottom line. We think that helps align interest in the current 12-month period. We're looking at incentive fees that we set budgets together and if budgets can be -- if they can exceed the budgets, we're looking to reward our operating partners for that. But we're also looking at aligning interest long term in creating synthetic promotes over time that when you have operators that make decisions today between growing occupancy or rate, it's got to be in the mindset of how it can benefit the community long-term to be able to achieve a financial reward through a synthetic promote structure a couple of years down the road. So, we think when you look at the current 12 months, the ability to beat the budget for the 12 months and a long-term horizon on overall performance, we think that's a good alignment of interest for both parties.

And next, we'll move to Michael Carroll with RBC.

Looking at your SHOP operator list that you guys have, it does look like you have a number of operators kind of within your portfolio. Are there a handful that you kind of have closer relationships with that you kind of want to continue to expand? And I guess some of these that have maybe 1 or 2 assets, I mean, is the plan for that to grow? I mean, how hard is it to have one operator in your portfolio just managing different asset? I mean, does it make sense to have fewer operators managing bigger portfolios?

I would say -- this is Clint. I mean, obviously, we've just started this investment platform midyear last year through the initial conversions. I mean we would look to grow with all of the operators that we have built relationships with, and we will be adding 3 more relationships following this. So, we think this is a testament to the effort that we put in back in the fall of '24 we first announced we were going to go this direction. We took attention and time to go out and market what we were doing and let operators know. And this is a result of that intentional effort that we took on. So yes, we would look to grow with each one of these operators.

And is it harder for you guys if there's more operators within the SHOP portfolio? I mean is there kind of like a limit? I mean, I'm assuming you're fine with what you have now since you're adding 3 more. But is it like 15 you're good with, but 20 or not, is kind of a limit that you want to make sure that you have to make sure that you're able to track each one of these relationships?

Well, we don't -- we have not set any limit, and it really comes down to the investment opportunities. As Clint mentioned in his prepared remarks and follow-up Q&A, the majority of our investment opportunities are coming from our operators off market. So, to the extent that this is a source of deal flow for us, we would not limit that. We're obviously, as I said in a prior remarks, that we're targeting the best operators in the geographical regions in which we have properties and where we're looking to grow. So no, we wouldn't limit it. Obviously, you do get to a point where you've got the log diminishing returns. So, I wouldn't ever say we have something like 50 operators. But where we are right now and adding operators in the next year or 2, I think we're fine. That's very manageable by our asset management team.

Okay. Great. And then circling back to -- go ahead.

Yes, I was just going to say, we've built in our staffing plan additional resources. So, the core platform, Rich was just asking about we feel like all the major pieces will be fully in place to allow us to scale. But we obviously have a staffing plan that's aligned with our growth strategy.

And then switching gears into the -- back to the SNF sales. Have you started this process of marketing some of these portfolios? Or are you kind of indicating on the call is something that you would consider if something came up?

We're not actually actually marketing at this point, but I mean we have received a lot of inbound phone calls about opportunities. So, it's things that we're engaging with. But again, it's got to be opportunistic pricing that works for us to recycle into higher growth SHOP assets.

And then, Clint, is there like specific sizes that we should think about of these potential sales? I mean, could it be like $100-plus million? Or is it too early to tell?

I think it could be -- we'd be situational depending on what comes up. So, we could be larger or smaller.

And our next question, we'll hear from Tayo Okusanya with Deutsche Bank.

I also wanted to focus on Slide 12, the SHOP performance. And just curious, again, when you kind of took a look at the quarterly results you kind of have disclosed on the page, the RevPOR, so in 2Q '25 when we just kind of had the shop conversion portfolio, the RevPOR was almost like $10,000 or so. And then kind of in 3Q, it was like $9,500. It's gradually dropped to about $7,850 by 1Q '26 with all the additional acquisitions that have happened. Can you just talk a little bit about, again, the post-conversion acquisitions kind of post original 13, just generally characteristics of that portfolio than maybe driving down the RevPOR from the original 13 conversion. Just want to kind of understand that a little bit and kind of is it just targeting a different market segment? Or just how do we kind of think about what's being bought relative to the initial 13?

Thanks, Tayo. It's Pam. Yes, I think if you go -- it's a very simple explanation. You go back to that original 13 properties in 2Q, 12 of those were memory care, right? So, memory care has a much higher RevPOR. And so, as you see us adding more traditional senior housing properties into our SHOP portfolio, a mix of IL, AL and memory care, you see that gradually go down. So that's the -- there's nothing to read into that other than the mix of the portfolio is changing as we diversify away from stand-alone memory care.

There are no further questions at this time. I would like to turn the floor back to Clint Malin for any closing remarks.

Thank you, and thanks to everyone on today's call for your ongoing support. We look forward to updating you on our progress next quarter as well as seeing some of you at upcoming investor conferences. Thank you.

Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.

Greetings, and welcome to the LTC Properties, Inc. Fourth Quarter 2025 Earnings Conference Call and Webcast. [Operator Instructions]. As a reminder, this conference is being recorded. [Operator Instructions]. It's now my pleasure to introduce Pam Kessler, Co-President and Co-CEO. Pam, please go ahead.

Good morning, and thank you for joining us. Eight months after launching our SHOP initiative, we are almost halfway through our transformation from a lower growth triple-net REIT into a faster-growing SHOP-focused REIT a transformation that will lead to higher multiyear, internal and external SHOP and earnings growth and to superior shareholder returns. This transformation has included substantial investment in people, systems and technology, which will continue to be a focus to support our aggressive growth plans.

We have made great progress growing our seniors housing portfolio through SHOP reflecting successful execution across every aspect of the business. Today, we are guiding to $600 million in acquisitions at the midpoint for 2026, all of which we anticipate will be in SHOP. This acquisition guidance is nearly 70% higher than SHOP acquisitions in 2025.

2026 started off strong with $108 million in SHOP acquisitions already completed and another $160 million on schedule to close in the second quarter, which takes us nearly halfway to our $600 million midpoint investment guidance for the year. Throughout our transformation, we have continued to maintain a strong balance sheet with well-laddered debt maturities and a FAD payout ratio below 80%.

Since launching SHOP last May, we grew it to 25% of our investment portfolio by year-end. Based on our 2026 acquisition guidance, we expect to end this year with SHOP growing to 45% of our investment portfolio and 40% of our NOI capitalizing on LTC's ability to accelerate our growth through acquisitions. By launching SHOP at a small-cap REIT, we are leveraging the denominator effect to our advantage. LTC's smaller initial footprint provides the power to capture outsized growth, where even modest investments have a meaningful and visible impact.

Additionally, after the prepayment of the $180 million Prestige loan expected later this year, loans should be reduced to less than 10% of our portfolio, and skilled nursing investments will represent less than 30% by the end of 2026. This strategic portfolio transformation reflects our SHOP launch and rapid growth within a targeted 18-month period. With our transformation complete at the end of 2026, we see the opportunity for continued accelerated internal and external growth powered by SHOP in 2027.

Now I'll turn the call over to Gibson to discuss our portfolio and strong SHOP performance.

Thank you, Pam. We've undertaken the transformation to increase the organic growth and new investment growth profile of our portfolio and maximize risk-adjusted returns for our shareholders. To that end, we have focused over the last 1.5 years to develop and enhance our platform to position LTC and our operators for success, and we'll continue to make further investments going forward to position LTC for profitable growth.

In addition to adding accounting, FP&A and data analytics resources, we recently welcomed 2 Vice Presidents to our asset management team, both with extensive experience in systems development and seniors housing asset management. Our SHOP portfolio results support our 2025 strategy by outperforming our expectations. The original 13 properties converted to SHOP grew NOI over 2024 pro forma NOI by 22% and produced $16.2 million of combined rent and NOI in 2025 compared to $12.3 million of rent in 2024.

The remainder of the SHOP portfolio outperformed expectations in the fourth quarter by contributing $5.9 million of NOI, about $700,000 above the midpoint of guidance. Our 2026 SHOP NOI guidance includes 13 properties we originally converted and 14 properties acquired to date. Our guidance for these 27 properties assumes 14% NOI growth at the midpoint for full year 2026 over pro forma 2025. This subset of properties realized occupancy of 89.7% in 2025, which we are projecting will grow by about 150 basis points in 2026.

We further project that RevPOR will grow by approximately 5% and EXPOR will grow by 2.5%. We do want to note that the 2025 results for the 14 properties we have acquired include occupancy and performance as reported by the prior owners adjusted for the current management fee structure.

We will continue changing the mix of our portfolio in 2026. Prestige Healthcare has delivered notice of their intent to prepay on or about July 1, the $180 million loan, which is currently yielding approximately 11%.

Additionally, we expect to sell 5 skilled nursing properties and have certain loan payoffs totaling $90 million in the next 60 days. These transactions, together with our external growth through SHOP will meaningfully reduce our skilled nursing and loan exposure.

With that, I'll turn things over to Dave for an update on our growth strategy.

Thank you, Gibson. In 2025, we put $360 million to work through SHOP acquisitions. By the end of the second quarter of this year, we will have added an additional $270 million moving us rapidly towards our $600 million midpoint acquisition guidance and making 2026 our most active investment year yet as we accelerate our growth towards an increasingly SHOP weighted portfolio.

LTC's relationship-focused culture is the foundation of our success. In 2025, we closed 2 follow-on transactions with existing operating partners and our momentum is continuing in 2026 with another follow-on deal completed and 2 more and the $160 million we expect to close shortly. At the same time, we are in active conversations with operating partners new to LTC and are evaluating acquisitions to kick off those relationships.

In a competitive senior housing acquisitions environment, our smaller asset base and personal relationship-driven strategy are competitive advantages. We find opportunities in both single and multi-property investments and do not need to chase overpriced large on-market transaction. We are keenly focused on every deal and every LTC operator relationship, each of which directly contributes to our growth and furthers our transformation into a SHOP growth engine.

Existing and prospective operators desiring to grow their portfolios or retain assets when an investor wishes to exit, seek LTC because we listen, we collaborate and we engage. The evidence of this success can be seen in our accelerating year-to-date external growth that in addition to the $160 million previously mentioned, includes an acquisition pipeline of over $500 million in deals under review and consists entirely of SHOP. Our acquisition strategy is to partner with experienced, regionally focused operating teams and add newer communities with lower CapEx requirements. These are stabilized assets, but that does not equate to low growth. We are buying assets with strong pricing power, high incremental margins and durable contributions to earnings growth.

Our expanding SHOP platform is positioned to perform over time, and we expect to achieve unlevered IRRs in the low to mid-teens.

I'll now pass the call to Cece for a review of our financial results.

Thank you, Dave. For the end of the year, we bolstered our growth capacity by expanding our credit facility to $800 million, including $200 million of term loans. We anticipate receiving nearly $270 million in asset sales and loan payoffs in 2026, which will be used to fund future investments using multiple levers, including proceeds from our ATM program, borrowings under our revolving line of credit and asset sales where attractive pricing provides a better cost of capital, we feel very confident in our financial strength, which will support our ability to fuel our SHOP growth.

With the $270 million of expected proceeds, our liquidity stands at $810 million on a pro forma basis. We have minimal near-term debt maturities, giving us virtually no refinancing risk.

At year-end, our debt to annualized adjusted EBITDA for real estate was 4.5x, and our annualized adjusted fixed charge coverage ratio was 4.4x. While we are well within our stated leverage target of 4 to 5x, we believe we can reduce that further over time.

Compared with the same quarter last year, core FFO per share improved $0.05 to $0.70 and core FAD per share improved $0.07 to $0.73. These results represent core FFO per share and core FAD per share growth of 8% and 11%, respectively. The increases were primarily due to new SHOP acquisitions and triple-net conversions to SHOP, partially offset by an increase in interest expense and decreased rents related to asset sales.

Our 2026 guidance for core FFO per share is projected to be in the range of $2.75 to $2.79 and core FAD per share in the range of $2.82 to $2.86. For the first quarter, we expect core FFO per share in the range of $0.66 to $0.68 and core FAD in the range of $0.68 to $0.70.

Our 2026 guidance includes $400 million to $800 million of SHOP acquisitions with SHOP NOI in the range of $65 million to $77 million and FAD CapEx of approximately $5 million. Additionally, our guidance includes the $270 million of proceeds from asset sales and loan payoffs. Other assumptions underpinning this guidance are detailed in yesterday's earnings press release and supplemental, which are posted on our website.

Now I'll turn the call over to Clint for some closing comments.

Thanks, Cece. 2026 will complete LTC's transformation from a triple-net skilled nursing and seniors housing REIT, fueling our growth through idea to become a larger SHOP focused REIT. Increased NOI growth will come organically through our existing portfolio and through new SHOP acquisitions.

With our investment guidance of $600 million at the midpoint in 2026, SHOP will exceed $1 billion of assets and represent 45% of our portfolio by year-end. Including the SHOP acquisitions under contract, the average age of our SHOP portfolio will be 9 years, reflecting our strategy of investing in newer SHOP communities that are best positioned to compete against future new development. We will drive strong organic SHOP NOI and per share growth through aligned operator relationships and the quality of the assets.

In fact, we believe that organic NOI growth will double by the end of this year compared with our pre-transformation to SHOP. We have made rapid progress in executing on our SHOP strategy. So most importantly, on behalf of the entire LTC team, I want to extend a sincere thank you to the operators who have placed their trust in us, helping us establish and grow our SHOP platform.

We have 8 SHOP operator relationships in our portfolio, 6 new to LTC since our launch. And in Q2, we will be adding 2 more. Each one of these operator relationships represents a huge opportunity to continue driving LTC SHOP growth through management agreements that align interest to deepen our relationships. We have a simplified and compelling investment thesis, which we are executing upon with speed, determination and conviction to power future growth by optimizing risk-adjusted returns to our shareholders while increasing our organic and investment growth profile.

This success is made possible by a talented group of tenured employees and new professionals recently joining our team, all coalescing around a transforming LTC that is standing out in the industry and is well positioned for tremendous growth.

With that, we are ready to take your questions.

[Operator Instructions]

Our first question today is coming from John Kilichowski from Wells Fargo.

This pivot is happening relatively quickly, and it sounds like messaging has been it's not if but when something happens to the SNF funding landscape. I'm curious in your minds, like what are the nearest 1 or 2 greatest threats to SNF today that could cause some sort of re-rating the market isn't expecting?

From a SNF perspective, John, I would say that there's a tremendous amount of private capital, I think, that's driving prices in skilled nursing. So that's one element that could have a change.

And then just as we've generally seen over the years, I mean, skilled nursing at cap rates that it has, it has a stroke of the pen risk and things tend to happen when you least expect it. And we do see much more organic growth from investing in newer assets with a better growth profile. So that's really our thesis and why we're aggressively growing into SHOP.

Okay. Well, the 14% same-store growth is a great starting point. I'm curious, is this sort of like a 3- to 4-year run rate as the business remains immune, likely immune to supply shocks and demand is relatively known? Or do you forecast that moderating slightly as occupancy fully stabilized at these assets?

It's a fair question. John, this is Gibson. It's a fair question. We are -- it is a relatively new portfolio for us. And so we're comfortable with the guidance. I think the way to think about this is that, that pro forma occupancy that I gave in my prepared remarks, 89.7% that's pretty close to stabilized levels. And so we're encouraged to see that this year, our expectations are in that mid-teens growth rate. So we really just don't want to get into the out years right now.

Our next question is coming from Austin Wurschmidt from KeyBanc Capital Markets.

Just going back to SHOP for a minute. Gibson, you had highlighted that the 13 original assets grew NOI by 22% last year on a pro forma basis versus '24. Can you give us a sense how the 14% on the 27 assets compares to how that trended in 2025 or just versus the fourth quarter?

Let me see if I can answer this in another way and see if that scratches your heard, Austin. If you look at our projections, '25 over '24 and you pull out that original 13, our growth rate of 14% isn't going to materially change.

Got it. That's helpful. And then maybe just going back to John's question a little bit differently here. I mean you mentioned the 89% is nearing stabilization, but this portfolio does continue to evolve as you layer on additional acquisitions. I mean, what are your latest thoughts for the portfolio today as to where stabilized occupancy levels are? And what sort of the right feeling on where you can kind of send out in-place rent increases or drive RevPOR in the coming years?

Austin, this is Pam. For stabilized occupancy, given the lack of supply that we see over the next few years, we feel occupancy can climb into the 90s. We did not project that in our 2026 guidance. But it is possible. And it's always a fine balance between occupancy and rate growth, and we feel that this portfolio has the opportunity for both.

And this also -- this is a key of what we're focused on, what we're investing in. It's newer assets, and we've emphasized that in our comments about the average age. We feel those are going to be best positioned to compete against new development. That will happen. And we think in the interim, they'll have pricing power to be able to drive growth. And we've done that by design, on intention, looking long term to have assets that can effectively compete in the future.

And then what was the in-place rent increases now for this year?

Well, the RevPOR guidance we gave is around the 5%. And so that ranges across the portfolio from 4.5% up to 7%. But a lot of the hay is in the barn with respect to year-end increases or increases that went into effect in January. But then we have some more that increase on anniversary. And then we have to see what happens with the Street rate. So I think we're comfortable with our all-in like RevPOR assumption of that 5% range.

Next question is coming from Juan Sanabria from BMO Capital Markets.

I'm just hoping you could talk a little bit about the pipeline of investments and the year 1 yields you're underwriting for SHOP. And then on the flip side, how we should be thinking about some of the disposition yields for some of the SNF that you're selling. You've already given us the loan piece.

Juan, this is Dave. I'll take the first half, and I think Gibson will take the second half. So from an acquisition pipeline perspective, you saw in our remarks that we have 160,000 -- $160 million under LOI and in process. We are looking at generally what we looked at last year in terms of sort of going in year 1 yields about 7% or so with good growth headroom beyond that.

Also one thing to think about on what we're looking at for deals, as Pam mentioned in her prepared remarks, mean the size of LTC really we're using to our advantage to be able to grow because we can look at smaller transactions, which have better price points to be able to drive those initial yields. So we think that's a huge opportunity for us as we're growing this portfolio and are projecting on gross book to be a 45% SHOP by the end of the year since we launched this midyear in '25.

And then Juan, this is Gibson on the dispositions. I think the Prestige loan is a unique case where that, we had a heavy concentration with one operator in one state that caused some disruption a couple of years back because of that state's specific reimbursement program. And so that was a strategic decision to derisk the portfolio and reduce operator concentration. We still have investments to for Prestige, and it's not a Prestige thing. It's just an overall operator concentration thing.

On the rest, if you blend it together, we're selling at about an 8.2% cap. And so there, if you think about that in terms of swapping out of older skilled nursing assets as we've been doing on an opportunistic basis over the last 1.5 years or so, and 8.2% with 2.5% anywhere from 2% to 2.5% escalators, and we can recycle that into newer seniors housing assets that are really built and will be competitive over the long term. We feel like that's a good risk/reward trade for our shareholders.

And then I just wanted to ask ALG, there was previously some discussion about some change in that portfolio going forward and some options they had. So just curious how we should be thinking about piece of your exposure longer term?

I think for ALG, Juan, I think that they do have purchase options. We talked previously about -- it's really more interest rate sensitive for them to look at probably bond financing to take this out. So we look at this probably will be in 2027. We have 3 different or 4 different investments with them. There can be a small -- one of the small portfolios could trade maybe towards the end of this year possibly. But I would really think of it more as a '27 event.

Got it. And then if I could just be greedy, one more question. For the incremental financing, like if you hit the top end of your acquisition guidance, how should we think about that? It sounds like you said leverage could go down. I'm not sure if that's a product of EBITDA growing or if we should assume that maybe the goal would be to over-equitize positions over and above kind of the dispositions you've laid out or loan repayments. So just curious on the funding for the pipeline at kind of the different -- either the midpoint or the high end in particular.

Yes. Thanks, Juan. It's Pam. Yes, I think you're thinking about it right. I mean the beauty of a higher growing portfolio is that your deleveraging happens naturally a lot faster through EBITDA growth. But we would also look to overequitize acquisitions if the pricing is right.

[Operator Instructions] Our next question is coming from Michael Carroll from RBC Capital Markets.

Clint or Dave, can you guys provide some more color on the competitive landscape for seniors housing deals right now? I mean, how difficult is it for you to find deals that you want to own that meets your underwriting? And then when you do find those transactions, I guess, where have cap rates trended? I know you've been talking about that 7% range for some time. I mean, are we starting to see that take a little bit lower? Is it hard to find yields at that 7% yield?

So this is Dave. On our -- I mean Clint hit on this nicely in terms of the importance of a deal to LTC and how our scale works for us. So we do a good job of finding transactions that are probably in that onesie-twosie time frame and our size, and our customers, our sellers know that they're important to us. So one great benefit here, it's been sort of in fashion to have buyer interviews. So I can bring a C-suite, bring my CEOs onto those calls to sort of underscore how important the deal is.

And as you know, with any seller, certainty of execution matters an awful lot. So we can give a transaction a lot of attention and hyper focus. We've continued to see a pretty good stream of opportunities. And generally in that first year, underwriting of around 7% or so, it doesn't mean that there's not pressure, but our whole world is looking at a lot of transactions to find a few that are worthy of underwriting and progression through the process. So we're seeing a good flow of potential opportunities, and we feel good that we'll find the right ones for LTC out of that stream.

And so with that backdrop, we've guided to $600 million at the endpoint for investments for '26 and with deals closed under contract, we're almost halfway through that. So although it's a competitive landscape, we feel that we've been able to be at the table on transactions. And a lot of the deals that we have, as Dave mentioned previously, are operators bringing us into transactions, which with having -- soon to have 10 operative relationships in our portfolio. We think that's going to help drive continued access to deals. And when we're looking at them on onesie-twosie transactions, it can be helpful.

And another thing that we're seeing also on one of the transactions we're working on is the seller is looking at a tax-efficient transaction. And so we're looking at a down REIT structure. So when you look at financing transactions and utilizing equity, pricing through a down REIT structure, it can be an attractive option for us.

So then, in this type of environment, if you look at the 7 yields, I mean, do you see -- foresee like if you kind of get back to the end of this year, you might have to go below that? Or is there enough transactions at that level that you think at least through this year, you can still achieve that 7% target?

So as Clint mentioned, right, we have $270 million in the door, right? So those are set. So we've got another $300 million plus to go. Nothing is easy if you're going to do it well. So we'll be working hard to find the right deals all year long. But we are steadfast in working to maintain that kind of year 1 yield of 7%. But definitely, there will be pressure in the industry. A lot of people are discovering senior housing or people showing up at the table. We still feel like we've got a good opportunity kind of given our relationship focus and our style of execution to find the deals that make sense for LTC.

And Mike, I have one more thing to add to that. Last year, when we talked about our projected underwriting and being at 7%, very conservative. Our 2026 guidance is already a year 1 over 7.5%, it's like 7.7%. So we're already beating that. So we've created value there just in a few short months and expect to create more.

Okay. Great. No, that's helpful. And then just last for me. Related to Prestige on the remaining loans that LTC is holding after, if they potentially pay them off in July or half of them. I mean, is there a desire to have them pay off those loans too? Or should we think about that as a longer-term hold that LTC plans to continue to maintain?

We should think of it as a long-term hold. Right now, we -- after the payoff of $180 million, we'll have $90 million remaining with them. So they will be reducing concentration as Gibson spoke about, and they would probably fall outside of our top 5 operator relationships.

And they don't have an option to prepay those.

Next question is coming Rich Anderson from Cantor Fitzgerald.

So I just want to make this sort of crystal clear. Is your expectation on a go-forward basis, 2027 and beyond for your SHOP business to be producing sort of low mid-teens type of same-store NOI growth? Is that the target you're going after? Or is it something lower than that?

We're going to see how this year plays out. We're excited about what we're seeing as we go into this year and as we get into later in the year, Rich, we'll update that. I mean I think going in a few calls ago, we said that we were targeting -- we're going in at 7% and targeted low teens IRRs. And so that's basically telling you we expect mid-single-digit growth over the long term. But I think as we work through the process. We just acquired a lot of this, getting to really understand the portfolio. We're excited. And as Pam mentioned, in our projections, we're assuming higher yields on the initial purchase price than we did an acquisition.

So I think we're excited about the opportunity in 2026, and we hope that continues on. But we'll update you as we get to the end of the year -- throughout the year.

But the 22% NOI in the 13, that's really apples-to-oranges from a previous net lease structure, correct? Just so I understand that correctly.

Yes. That's fair, yes.

And that was intended just to give visibility in regard to what we had under our rent structure and what we had to for comparable metrics what it looked like under SHOP. So that was why we broke that out separately.

That's right. And that was in -- sorry, go ahead.

No, you go ahead.

I was just going to say, yes, but I mean, that was -- we were in the structure able to capture the upside in those properties. And that's something strategically as we thought about entering RIDEA, really started talking about seriously 18 months ago, how to go about doing that. And we're just really excited that we're able to do that and be able to capture the upside and do so in a way that aligns our interest with our operators to incentivize them to drive performance.

But yes, your comment that we're comparing that increase in NOI or the triple-net structure is fair. But I will say that as we did that, we were able to capture the upside because there was -- the coverage on that Anthem portfolio was pretty close to where the rents we were collecting.

Right. Understood. Got that. Okay. In terms of the CapEx, I see your guidance is $0.10, a little less than $5 million a year on whatever you own average -- weighted average wise for the year. I don't know, $5 million just feels low to me for a $1 billion portfolio. Is that a function of its age? I wonder what do you think the CapEx burden might be for LTC going forward when you're kind of fully built out $1 billion or so of assets?

Yes, that's a fair question. I guess I'll answer it this way. So we've assumed basically about $1,500 a unit. So for the portfolio that we currently have, the 30 properties, we did go through those recurring CapEx budgets, and we feel pretty comfortable with those given the age of the assets. So I don't -- we didn't feel like we were really stretching or deferring anything and felt like that was what was requisite to keep the buildings competitive. So we'll have to see how that evolves. I'll say the overall number includes assumption kind of a weighted average of that $1,500 a unit for acquisitions going forward.

Yes. And I don't think you can compare our CapEx budget to our peers just because the makeup of our SHOP portfolio is so different. I mean with an average age of 9 years, that's really young, really new buildings that don't have a lot of CapEx requirements.

That was strategic on our part because as we were introducing this portfolio, to simplify the integration of this and have assets that can compete against potential new development. I mean, we do see that over time, that will increase. But for the interim and short-term period, that's why you're seeing a lower spend.

Yes. Okay. Yes, I was going to say young does become old unfortunately, over time.

And we'll see...

We all age, Rich. We all age.

But -- Rich, I will say as we work through the budgets, we're not deferring things that we're not targeting a number. We're committed to invest in the portfolio to keep it competitive. And so if that number drifts up to drive NOI growth, that's what we'll do. But we did try to look at this from a holistic perspective. And when we certainly weren't looking to trim number out of those maintenance CapEx budgets going forward.

Okay. Last for me. You call yourself done at the end of 2026 with this transformation, 45% essentially SHOP. Is that your version of the efficient frontier? Or will you expect the SHOP exposure to sort of trickle up from that point forward? Or is it like a 50% exposure to SHOP sort of your kind of your sweet spot?

No, we don't have a target on it, Rich. It really -- transformation versus evolution, I mean, transformation. This is something that we've done quickly. And to Clint's prepared remarks point, 18 months. That's really, really fast to change the complexion of a company. After this year, it's an evolution. We will continue to invest where we see the best return for our shareholders, which in our crystal ball looks like it will continue to be SHOP. But if it's not, we'll pivot to the investment that drive shareholder value the best. But for right now, it will be an evolution more towards SHOP than a transformation at the -- after this year.

Next question is coming from Okusanya Omotayo from Deutsche Bank.

Given the RevPOR, EXPOR spread you guys saw in the quarter, how confident are you that the SHOP portfolio can deliver the growth you're guiding to? And can you walk us through kind of the key operational levers that you kind of are relying on to get you guys there?

I think the key levers are laid out there in the supplemental on our guidance page. So I think that if you zoom out and with occupancy growth, our EXPOR expectations are just slightly below what people would expect for inflation. I don't think that that's a particularly aggressive assumption.

But I think some may point to the top line occupancy growth of 150 bps is maybe a little conservative. So we're really trying to -- it's a 29 property -- sorry, it's a 30-property portfolio. The 27 that we guided to, which the 27 being, 13 we converted and then everything that we've acquired since. So everything is kind of at or near stabilization.

But it's really hard to -- what the portfolio of that size really zoom in more than the detail that we've given you on the operational levers. I mean, we feel like that's appropriate. And just with 29 -- or sorry, with 27 properties you're going to have more variance than you would in a 500 property portfolio. But I think Again, we feel good about the RevPOR assumptions going forward. We think it's achievable. We don't think it's a layup. EXPOR, same thing. So we try to put the goldilocks level of guidance out there that stretches our operators, but it's achievable.

Right. That makes sense. I guess the second question I have is, I know you guys have talked about -- and we all know like suppliers have really been an issue, but have you anything around that changed at all?

I would say not really supply. Now we haven't seen -- what you do see though more is that operators that have a track record in development are talking more about gearing up for development. So I think that's where you're hearing more talk. It's not so much shovels in the ground. It's more of -- they see that there's going to be a need for supply in the future. And they have experience in doing it, and they're trying to prepare to be -- to participate in that when the time does come.

And I think what specifically within our SHOP portfolio construction activity is very light. There may be 1 under construction, 1 under consideration and some expansions here and there around the edges, but it's very light.

We reached end of our question-and-answer session. Before I turn the call back to management, please note that today's comments, including the question-and-answer session may have included forward-looking statements subject to risks and uncertainties that may cause actual results and events to differ materially. These risks and uncertainties are detailed in the LTC Properties filings with the Securities and Exchange Commission from time to time, including the company's most recent 10-K dated December 31, 2025.

LTC undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date of this presentation. I'd now like to turn the floor back over to management for any further or closing comments.

Thank you, operator. And thanks to everyone for your thoughtful questions. We appreciate your continued interest, and we look forward to updating you on our progress next quarter.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.

Greetings, and welcome to the LTC Properties, Inc. Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Before management begins its presentation, please note that today's comments, including the question-and-answer session, may include forward-looking statements subject to risks and uncertainties that may cause actual results and events to differ materially. These risks and uncertainties are detailed in LTC's Properties' filings with the Securities and Exchange Commission from time to time, including the company's most recent 10-K dated December 31, 2024. LTC undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date of this presentation. And please note that this event is being recorded. I would now like to turn the conference over to LTC management. Thank you. You may begin.

Hello, and welcome to LTC's 2025 Third Quarter Earnings Call. After some brief introductory remarks from me, you'll hear from Cece Chikhale, our Chief Financial Officer; followed by Gibson Satterwhite, LTC's Executive Vice President of Asset Management; then Dave Boitano, our Chief Investment Officer. Pam Kessler, LTC's Co-CEO, will close out our formal remarks. It's been a busy and productive 10 months for LTC. We've been executing on every front, initial cooperative conversions from triple net lease to SHOP, external growth through investments, capital recycling and transformation through SHOP. Following the announcement of our SHOP initiative in late 2024, we moved quickly to build our investment pipeline, outperforming our own expectations and growing the pipeline fourfold since the beginning of this year. As Gibson will detail later, today, we are raising our 2025 SHOP NOI guidance. We have closed about 85% of our projected $460 million investment pipeline, more than $290 million of which was in our SHOP segment. We expanded operator relationships and reduced the average age of our portfolio.

Today, we have 6 SHOP operator relationships, 4 new to LTC. By the end of the year, we expect SHOP to approach 25% of our investment portfolio with an average age of less than 9 years. Our primary thesis for launching SHOP was the realization that LTC was effectively excluding itself from a vast opportunity set of new investments. With the robust volume of new investments we've made in 2025 and the backdrop of favorable demand fundamentals and supply constraints, our external growth trajectory remains strong. The transformation we've accomplished since the second quarter of this year is delivering meaningful results and positioning LTC to continue creating long-term value for our shareholders. Pam, Wendy and I want to extend a sincere thank you and express our gratitude to the LTC team. They have stretched themselves by tackling new tasks and responsibilities and are working together tirelessly and professionally to successfully execute on LTC's strategy. Now I'll turn the call over to Cece.

Thank you, Clint. The numbers I'll be discussing today are for the third quarter of 2025 compared with the same quarter in 2024, unless otherwise noted. You can find a more detailed description of our financial results in yesterday's earnings release, our supplemental and our Form 10-Q. Core FFO improved to $0.69 from $0.68, principally due to an increase in SHOP NOI from Anthem and New Perspective compared with rents we received before those leases were converted from triple net, new SHOP acquisitions and a decrease in interest expense. These were partially offset by an increase in reoccurring G&A.

Core FAD improved by $0.04 to $0.72 versus $0.68 last year. The increase primarily related to the same factors impacting core FFO as well as the turnaround impact of rent assistance provided to ALG in the third quarter of 2024, cash rent increases from escalations and CapEx funding in our triple net portfolio. These were partially offset by an increase in reoccurring G&A. During the quarter, we took a noncash write-off of Prestige's straight-line effective interest receivable balance of $41.5 million, resulting from the loan amendment that we discussed on last quarter's call.

The amendment gives Prestige a penalty-free prepayment option on their $180 million loan within a 12-month window beginning in July 2026. Additionally, during the third quarter, we wrote off $1.3 million of straight-line rent receivable related to the Genesis Chapter 11 bankruptcy filing. During the third quarter and subsequent, we sold a total of 1.5 million shares under our ATM for net proceeds of approximately $56 million. Our pro forma debt to annualized adjusted EBITDA for real estate was 4.7x, and our annualized adjusted fixed charge ratio was 4.6x. Our pro forma liquidity stands at nearly $500 million. We have increased the low end of our full year 2025 core FFO guidance by $0.01, which now stands at $2.69 to $2.71. For the fourth quarter, we expect core FFO in the range of $0.67 to $0.69. Guidance excludes asset sales and includes only those transactions closed to date or expected to close over the next 60 days. Additional assumptions underpinning this guidance can be found in our earnings release, which is posted on our website. Now I'll turn the call over to Gibson.

Thank you, Cece. We're repositioning our portfolio with purpose, recycling capital from noncore assets, adding new operators and expanding SHOP to drive long-term value. At the close of the third quarter, SHOP included 21 properties with 5 operators, 3 of them new to LTC, including LifeSpark, Charter Senior Living and Discovery Senior Living. The portfolio's gross book value is $447 million or approximately 20% of our overall portfolio with average occupancy of 87%. We expect to convert 2 seniors housing communities in Oregon from our triple net portfolio into our SHOP segment on or before December 1. Upon conversion, we will terminate the triple net master lease with the operator and enter into a management agreement with Compass Senior Living, a partner new to LTC. The contractual rent under the lease agreement is approximately $2.5 million and the SHOP NOI run rate is approximately $1.2 million, which is expected to grow to exceed the contractual rent over the next couple of years.

For the 13 properties originally converted to SHOP, we are increasing guidance to $10.9 million to $11.3 million, up from $9.4 million to $10.3 million. At the midpoint of guidance, pro forma NOI growth for these properties for the full year 2025 over '24 would approach 18%. For the remainder of the SHOP portfolio acquired through today's call and expected to convert, we expect fourth quarter NOI of $4.8 million to $5.2 million. While we are not providing formal guidance for 2026 today, we do expect continued strong SHOP NOI growth given the competitive position of our SHOP assets. Our expectation for rent from the 14-property portfolio, subject to market-based rent resets, remains steady at $5.7 million, which represents a 64% year-over-year increase. We will continue working to optimize value in this portfolio over the next 12 to 15 months. We have completed the sale of a previously discussed portfolio of 7 skilled nursing assets, generating net proceeds of approximately $120 million and a resulting gain of $78 million. Now I'll hand the call over to Dave for a discussion of our investment activity.

Thanks, Gibson. The fall NIC conference echoed a powerful theme, confidence in the future of senior housing. LTC is poised to capitalize on this robust industry updraft and build upon our solid cornerstone of 2025 investment success, a foundation of strong senior housing operator relationships and accelerating deal flow. We're gaining strong traction, not only in the volume of potential investments, but in the quality and depth of opportunities we're seeing. Our conversations with potential and existing SHOP operating partners continue to generate a strong pipeline, including off-market deals sourced from LTC's deep industry relationships.

Our current opportunity set stands at roughly $1 billion, and we already have nearly $110 million under LOI with a target close in January 2026. The majority of our 2025 pipeline is closed with more than $290 million in SHOP transactions completed since May. We expect to ramp up that pace in 2026 as we focus on executing on the substantial opportunities we are seeing with both existing and potential new SHOP relationships. I want to take a moment to thank Gibson for the over $100 million in sales proceeds that we're quickly redeploying into quality senior housing communities.

Through the end of the third quarter, we closed 3 SHOP investments totaling nearly $270 million. After quarter end and as just recently announced, we acquired a stabilized senior housing community in Georgia for $23 million that is being managed by a new LTC operator, Arbor Company. These stabilized assets were underwritten to generate threshold year 1 yields of about 7% and unlevered IRRs in the low teens, tangible proof of our ability to source, structure and execute high-performing investments.

And as with all our SHOP relationships, LTC's management agreements provide incentives for our operating partners to surpass base underwriting assumptions. During the third quarter, we also originated a $58 million 5-year mortgage at 8.25%, providing strong current returns and portfolio diversification. SHOP has proven to be a true external growth engine for LTC, built on disciplined underwriting, strong partnerships and consistent execution. As the market continues to evolve, we're focused on maintaining balance between opportunity pursuit and execution discipline, ensuring LTC's growth remains both sustainable and strategic. I'll now pass the call to Pam.

Thanks, Dave. LTC's strategy today is clear and forward focused. We're building a company defined by growth, quality and consistent performance. Over the past year, we've established a strong foundation, and now we're focusing on scaling it by expanding our SHOP platform, deepening operator partnerships and driving long-term accretive returns. We're intentionally building a SHOP portfolio of newer assets with staying power, one that will compete well as the industry continues to evolve. The bifurcation between high-quality modern assets and older, less competitive properties is becoming more pronounced across all real estate asset classes, and seniors housing is no exception.

By concentrating on newer, well-located communities operated by experienced partners, LTC is positioning itself to outperform over time. Underpinning all of this is a strong balance sheet. We maintain solid liquidity, a conservative approach to leverage and a disciplined payout ratio that gives us the flexibility to pursue growth while preserving financial stability. That foundation allows us to move decisively when opportunities arise. Our momentum is strong, our strategy is working and our opportunities ahead are significant. We're executing with discipline and confidence, and I couldn't be more optimistic about what's next for LTC. Operator, we're ready for questions from the audience.

[Operator Instructions] The first question comes from the line of John Kilichowski with Wells Fargo.

This is [ Jesus ] on for John. Just looking at the guidance here to get started, looking at the moving parts, just talk about the underlying assumptions here for the low end and the high end of the range.

Yes, [ Jesus ] it's Cece. The low range, we included all investments that have closed to date and then the high is all that we expect to close within the next 60 days.

Perfect. And let's talk about the pipeline as well and the makeup here. Are you purely focusing on SHOP deals at the moment? Or are you looking at other triple net and loans as well?

So this is Dave. Predominantly SHOP. Certainly, we will consider other opportunities across our desk, but our primary focus is SHOP.

And the next question comes from the line of Juan Sanabria with BMO Capital Markets.

Maybe just to start to piggyback on the prior question. Could you provide any color on expected yields and growth for $110 million in the pipeline to close in January and $70 million over the next 60 days?

So Juan, this is Clint. We've guided to 7% yields on our SHOP acquisitions, and you should think of the same for the $110 million deal we disclosed on our earnings release.

Initial yield.

Initial yields.

Okay. And then just you guys -- or how should we think about funding the incremental capital that you've outlined? And then how do you think about your marginal cost of capital, both debt and equity?

Yes. Thanks, Juan. This is Pam. So we have proceeds coming to us in the first quarter in the form of loan payoffs and purchase option exercises that we disclosed in the supplemental. And so that's about $90 million of proceeds and then funding the remainder on the -- with equity on the ATM. We've been very disciplined this year in issuing equity to match-fund our investments. And so you can anticipate that going forward as well.

Great. And just last one, if you don't mind. Any other options of prepayments that we should expect in 2026 or '27 that you think realistically would be executed?

The only thing you should think about is Prestige, which we talked about previously. And we gave them a prepayment window starting in July of '26, and they have improved performance, and we have been in communication with them, and they are going to be making loan applications in early '26. So at this point, we would think that they should be on track for hopefully 7%, Juan. It may take a little bit longer, but that's $180 million.

And also -- so Juan, you should also think of this in the context of, this is all part of our -- the loan payoffs and the purchase option part of our strategy to recycle out of older skilled nursing properties and into higher-performing SHOP assets. And we also point out we have an accordion feature on our line of credit that we could also execute on in 2026 to increase our availability.

And the next question comes from the line of Rich Anderson with Cantor Fitzgerald.

So this is all very exciting. The pipeline growing $1 billion is not a number we've heard associated with LTC in the past. So congrats on that. But the thing that I think I find more valuable is the growth profile of the company in year 2 and onward after the investment. So can you can you talk about what happens to the overall growth of the organic growth of LTC? Let's say, you get to 30%, 40% SHOP in the next year or so, let's say, legacy LTC was growing 2% or 2.5% on escalators on triple net. Like what's the incremental growth picture for the company after the investment, not from the investment?

You're talking about the growth through SHOP because if you're not looking at...

The whole company, like if the company was growing at 2.5% prior to your RIDEA sort of movement, what do you see the growth profile, the organic growth profile of the company because that's what you're buying, right? You're buying a better growth story longer term. So that's the basic genesis of the question.

Yes. That's right, Rich. This is Gibson Satterwhite. Yes, going in at 7% cash yields, I think we communicated before that we expect a very minimum of 3%. That's just basically to keep up with inflation. So if you think about our cost of capital as that's adjusting as we're repositioning away from skilled nursing assets, considering the overall blended cost of capital, that's the minimum growth rate that we use to price these deals for newer assets to build out our SHOP portfolio. But certainly, we expect greater growth than that. We've targeted low digit -- low double-digit IRRs. And we do expect more than 3% growth with the supply-demand imbalance that's been much discussed in the industry. Preliminary conversations we're having with operators where they expect going into 2026 that RevPOR will outpace expense growth. We're working through budgets right now, so we can't quantify that exactly for you. But we expect that to play out and to have a greater growth profile to hit those low double-digit IRRs.

And Rich, in addition to that, the average vintage right now of the deals we're acquiring in SHOP in '25 is 2019. So we are buying and bringing newer assets that we think we're going to have pricing power continuing on into future years. And we've purchased assets that are stabilized from an occupancy standpoint but have further room to grow from their positioning in the markets for revenue growth and dropping to the bottom line for NOI growth.

Okay. Yes. So I did note the 87% occupancy. Some of your peers are doing mid teens and more same-store NOI growth, a lot of that is occupancy lift. But on a RevPOR basis, do you think you could be sort of mid-single digits? Is that sort of the -- I know you said 3%, but what's the upside from there, again, with a mind towards growing -- creating a growth year story for shareholders. Is it -- is that...

Well, people are certainly targeting -- I'm sorry, Rich.

Yes, please go ahead.

Yes, people are certainly targeting more than 3% RevPOR growth. And that would at least keep up with expense growth. We expect expense growth to be below that. So in the kind of 5-ish percent. People are talking about base rates of going up anywhere 6% to 8%, doing different things with levels of care. So that could all blend down to RevPAR growth of, call it, 5-ish percent. And so we don't -- we're not getting a lot of feedback from operators going into next year that they are seeing really acute wage pressure, which is the majority of your cost structure. So if you're starting at, I don't know, 4%, 5%, whatever that is, we'll know that when we get through budget season with our portfolio. We do expect that to outpace expense growth. So yes, I think mid-single digits is a fair assumption.

Awesome. And then quickly for me, last one. You mentioned the conversion of -- to Compass previously, $2.5 million rent, $1.2 million SHOP with an expectation to pass that $2.5 million. Is that the typical model when you do a conversion where you're sort of giving up short-term rent? Or do you kind of sometimes start at a higher number on a SHOP execution versus the previous net lease structure? Just curious how typical that math is for other conversions.

This one is a little bit of an anomaly, Rich, and it's a fair question. So as you know, as I disclosed in my prepared comments that the current NOI run rate was lower than the contractual rent. So this was a specific operator issue that we dealt with that we had to address. We're really excited to start the relationship with Compass. These 2 particular properties have covered that contractual rent before, and we've just seen performance deteriorate. So we looked at this as a good opportunity, and we're really glad to have SHOP, the RIDEA platform and the toolkit to address a situation like this. So we really are confident that Compass is going to be able to drive NOI to more than exceed that contractual rent such that the value creation is going to more than offset the temporary reduction in our income. So if you think about the other conversions, Anthem that was cooperative, New Prospective cooperative, strategic. Those were really strategic important pieces for us to start our platform. And as you're seeing as we increase guidance on those, that it's really paying off for our shareholders.

And the next question comes from the line of Michael Carroll with RBC.

Yes. Maybe aligns with those last questions. I guess, Gibson, how many of the assets that you have in the portfolio were recently transitioned or how many of the acquisitions that you guys have are recent acquisitions where you're transitioning out the old operator and bringing in a new operator? And with regard to those, should we expect some type of disruption, so higher expenses or lower revenues as there's always some type of disruptions with those?

This is Dave. So, so far, on our existing external acquisitions, the operator has remained in place, and it's actually been, as far as I'm concerned, sort of a twofer because we get to buy a great piece of real estate and we get to establish a great relationship with an operator. There will be some situations where we do have transitions. And obviously, we're very careful to plan well in advance with the operator to avoid disruptions. But predominantly, so far, we've been able to keep the operator in place on deals that we've executed.

And right now, Mike, on our pipeline, we only have one deal in our pipeline where there would be an operator transition, but that was a smaller operator that was a real estate owner that's exiting that. So it's cooperative transition.

Okay. So there's nothing really in the existing shop right now where you just did a transition and we should expect some type of disruption. So like you've kind of already realized that in the numbers in the third quarter?

Yes, correct.

Okay. Great. And then I guess, related to Prestige, I know you provided and I appreciate the color, Clint, earlier in the call. What do they need to get done to exercise that purchase option? I mean, is it just obtaining the loans? Or do they need to drive better results so they can get, I guess, better underwriting with any potential, I guess, HUD-type debt? I mean, do they need to drive performance in order to exercise that? Or is it just getting the loans done?

Driving a little bit more performance. And that's why we gave them a year to go ahead and to prepay. But they have been improving substantially, and we think they're on track to be able to -- we've been analyzing their financial performance. They've improved substantially. And for right now, it looks positive for us. They'll be able to exist and it brings down our -- oh yes, the interest rates going down, too, could be a benefit for them. So we feel good about that. We feel good about our decision to allow this prepayment to be able to redeploy that capital into higher quality assets. So we are keeping close tabs on it, and it looks positive right now for middle of the year next year.

Okay. And how many trailing or how long of a trailing P&L do they need to get HUD debt and should we think about them utilizing HUD to take this out? Or could they find a bridge loan and get HUD at a later date when their financial results are more stabilized?

So this is Dave again. So generally speaking, HUD's looking at a trailing 12, which you're right, there are bridge lenders out there that would probably happy step into the situation. So there'll be optionality for them as they approach that point.

Okay. All right, great.

Mike, they're just seasoning through the remainder of the year. So the current -- as Clint mentioned, their current performance, we -- that looks like it's at a level to allow them to take it into HUD. So they're just seasoning through the remainder of the year to submit the application in Q1.

Okay. So once you kind of get...

And then also...

Sorry, go ahead, Clint.

Sorry, just one other good thing about because the trailing 12, so they had more challenging months that are in that trailing 12. So just as you continue in time, it's going to improve the underwriting. So -- and the other thing that Prestige was waiting for was their rate letters, which they got just to confirm their Medicaid rates, which were as expected. So that helps the consistency. But then within the portfolio that we have with them that will remain, they are the largest vent provider in the state of Michigan, and vents are expecting substantial Medicaid rate increases. So when you look at our portfolio that will remain with Prestige, we feel good about reimbursement that would be coming for the remainder of the portfolio because there are vent units within some of the remaining buildings we would have with them.

And the next question comes from the line of Omotayo Okusanya with Deutsche Bank.

Yes. So much talk on SHOP. Let's talk a little bit about skilled nursing. Curious, again, when you take a look at your skilled nursing portfolio at this point, if there are opportunities to also try to improve your earnings growth from your current portfolio? Again, one of your peers did something really interesting with one of their operators. Again, not wondering again, are you guys looking at structures like that, that could also kind of help you generate better earnings growth from the skilled nursing portfolio?

We have not looked at that, Tayo, as an option. We've mentioned previously on our calls, we've been selective looking at skilled nursing, and we have focused on more transitional newer transitional care, newer assets. And we continue to be in discussions with companies about that. So that would be what I'd see us selectively growing on skilled nursing.

Got you. That's helpful. And then anything from a regulatory perspective as well on the skilled nursing side, you guys are watching at this point?

Nothing new at this point. I mean I think everything that's been discussed as far as the staffing mandate, that's in the rearview mirror now. So no major issues that we're aware of on skilled nursing other than there has been a few states that have touched on potential Medicaid rate reductions. So that's -- I guess -- and that's a narrative that's out there in select states. We don't know if that will continue to grow or not, but that has cropped up in a few cases.

Do you have exposure to those states like North Carolina and some of the other guys you've talked about it?

Correct.

Okay. Got you.

Thank you.

And the next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets.

Pam, I appreciate some of your earlier comments around kind of the available liquidity. But going back to that earlier question on funding plans, you've talked about in the past over-equitizing the investments or at least kind of on a leverage-neutral basis. So just wondering how patient you're willing to be on the capital markets, just given this -- what seems to be a pretty substantive set of investment opportunities in front of you.

Yes. Thank you, Austin. Yes, I mean, we will look to match fund. So you're asking about how much we'll issue on the ATM. I mean we will look to match fund. We do have the proceeds coming back in the first quarter, as I talked about, and then possibly Prestige in third quarter if they meet their open window period. So with that backdrop, there's not a ton of pressure on us. But we have been disciplined this year in executing on the ATM when the backdrop was favorable for us to sell shares. And so we would continue that discipline into 2026 as well.

Appreciate that. And then just how are you guys balancing the regional densification or sort of a clustering strategy and the benefits of scale within SHOP versus geographic diversification and just kind of thinking about those future SHOP investments.

Yes. I think that we're going to continue to evolve into that, Austin, but we've been out meeting with operators for upwards of a year now premarketing this. And I think where you see where the pipeline and our investments to date, this has been a result of that very intentional effort of going out and meeting with operating companies. So as we continue to work with these companies, I mean, we will look at density being a factor of concentrating in certain markets with certain operators.

And we've done that. The operators that we're partnering with in our acquisitions, they are the market leaders in their area. And so that is a strategy of ours.

Helpful. Has the competition changed at all to a point where you felt you've had to increase your growth underwriting in sort of the 3 years out? I think you were in sort of the low to mid-single-digit growth you referenced last quarter with the expectation they would exceed that, of course.

Yes, I -- it's very competitive in the market as far as deals, and we've been focused on -- smaller transactions, we've been fortunate to be able to secure a couple of portfolios, but it is definitely competitive. But we feel we feel very good about our momentum and our positioning in the marketplace to be able to succeed on investments. And I think our investments to date plus our new investment we announced for '26 is evidence of that we're able to compete in the marketplace.

And last one for me. The transitions this quarter, I mean, it didn't sound like there was any other immediate kind of transitions that were available, but I think you'd referenced maybe evaluating some assets in the market-based rent reset, those 14 properties. Anything in the near term there that you're evaluating on maybe transitioning some additional assets from triple net or to the SHOP structure?

Sure, Austin, this is Gibson. Yes, we're certainly considering that as we look into 2026. We have a few options as it relates to those properties. We continue to work with current operators and set permanent rents. As a reminder, these are -- there were 14 properties that were all set up in short-term leases, basically 2 years in duration on average with regular market rent resets. And so there may be certain situations where we keep those with the operators once we're satisfied that we're at an occupancy level and margin that makes sense if that fits that relationship. But we'll certainly look at some of those assets to transition to SHOP. You'll probably see a little bit of movement on that early next year. And then we may make some decisions on a few as to whether or not we dispose of them. But those are our options to -- just to maximize value in that group of assets, and we certainly see upside in that portfolio from here.

There are no further questions at this time. And I would like to turn the floor back over to Clint for any closing remarks.

Thank you, everyone, for joining us today. 2025 has been a pivotal year for LTC so far, and our focus on driving growth is working and will continue. We look forward to sharing our progress with you next quarter. Thank you.

And thank you, ladies and gentlemen. That does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.