Strategic Shift to RIDEA Platform for Portfolio Diversification
LTC is transforming from a small cap triple net REIT to a larger, more diversified senior housing-focused REIT through the initiation of a RIDEA platform.
This strategic pivot aims to expand the SHOP portfolio significantly, with investments expected to reach approximately $475 million, representing nearly 20% of the total portfolio.
Management emphasizes the importance of external growth and external pipeline development to accelerate this transformation.
Core FAD increased by $0.05 to $0.71, reflecting rent escalations and turnaround impact of deferred rent from the prior year.
Core FFO improved to $0.68 from $0.67 year-over-year, driven by decreased interest expense, increased fair market rent resets, and higher SHOP NOI.
Debt to annualized adjusted EBITDA for real estate was 4.2x, with an annualized adjusted fixed charge coverage ratio of 5.1x as of June 30.
SHOP portfolio NOI totaled $2.5 million in Q2 with average occupancy at 81%, generating approximately $780,000 more income than under prior triple net leases for the same period last year.
Total liquidity stood at $674 million, supported by a new 4-year unsecured credit agreement increasing revolver commitments from $425 million to $600 million, with potential to increase to $1.2 billion.
Adjusted leverage was modest at 1.6x as of quarter end, with total gross leverage at 1.9x, below the target range of 2x to 3x.
Declared and paid a $0.23 per share dividend; repurchased $6.6 million of common stock in Q2 with $93.4 million remaining in the repurchase program.
Ladder generated distributable earnings of $30.9 million or $0.23 per share in Q2 2025, achieving a return on equity of 7.7%.
Loan portfolio totaled $1.6 billion with a weighted average yield of approximately 9%, and 5 loans on nonaccrual totaling $162.3 million (3.6% of total assets).
Real estate portfolio of $936 million generated $15.1 million in net operating income, primarily from net lease properties with long-term leases to investment-grade tenants.
Securities portfolio was $2 billion, up 82% from year-end, with a weighted average yield of 5.9%, 99% investment-grade and 97% AAA rated.
PECO's Strategic Focus on Shadow-Anchored Centers and Unanchored Assets
PECO has been actively acquiring shadow-anchored centers, which now constitute about 7% of their portfolio, with plans to potentially increase this to below 10%.
Management views shadow-anchored centers as high-growth opportunities with stable, strong properties, especially in markets with strong grocers and traffic.
The company has acquired 11 unanchored assets, representing approximately 3.5% of the total portfolio, in markets like Minneapolis, Chicago, and Dallas.
PECO believes unanchored and shadow-anchored assets can deliver 50 to 100 basis points higher unlevered IRR compared to traditional grocery-anchored centers.
Rapid leasing activity in these unanchored assets has demonstrated the ability to quickly ramp up occupancy, often within months of acquisition.
This strategic shift aims to diversify the portfolio and capitalize on the strong demand for non-traditional retail locations driven by grocers and local retailers.
Dafinchi