Q3 2025 LTC Properties Inc Earnings Call
Speaker #3: Hey .
Speaker #4: Greetings and welcome to the LTC PROPERTIES INC . Third quarter 2020 Earnings Conference Call . At this time , all participants are in a listen only mode .
Speaker #4: Before management begins , this 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 .
Speaker #4: 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 31st , 2020 .
Speaker #4: For . LTC undertakes no obligation to revise or update these forward looking statements to reflect events or circumstances after the date of this presentation .
Speaker #4: And please note that this event is being recorded . I would now like to turn the conference over to LTC management . Thank you .
Speaker #4: You may begin .
Speaker #5: Hello and welcome to Ltc's 2025 third Quarter Earnings Call . After some brief introductory remarks from me , you'll hear from Casey , our chief Financial officer , followed by Gibson J.
Speaker #5: 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 .
Speaker #5: It's been a busy and productive ten months for LTC . We've been executing on every front . Initial cooperative conversions from triple net lease to shop .
Speaker #5: 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 .
Speaker #5: 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.
Speaker #5: More than 290 million of which was in our shop segment . We expanded operator relationships and reduced the average age of our portfolio .
Speaker #5: Today , we have six shop operator relationships , four 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 nine years .
Speaker #5: 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 .
Speaker #5: 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 .
Speaker #5: 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 strategy .
Speaker #5: Now , I'll turn the call over to CC .
Speaker #6: Thank you, Clint. The numbers I'll be discussing today are for the third quarter of 2025, compared with the same quarter in 2024.
Speaker #6: 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 .
Speaker #6: 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 .
Speaker #6: 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 recurring G&A .
Speaker #6: Crawford 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 a turnaround impact of rent assistance provided to ALG in the third quarter of 2020 for cash rent increases from escalations and CapEx funding in our triple net portfolio .
Speaker #6: These were partially offset by an increase in recurring G&A during the quarter . We took a non-cash write off of Prestige's straight line effective interest receivable balance of 41.5 million , resulting from the loan amendment .
Speaker #6: We 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 .
Speaker #6: Additionally , during the third quarter , we wrote off 1.3 million of straight line rent receivable related to the Genesis Chapter 11 bankruptcy filing .
Speaker #6: 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 .
Speaker #6: Our pro forma debt to annualized adjusted EBITDA for real estate was 4.7 times , and our annualized adjusted fixed charge ratio was 4.6 times our pro forma liquidity stands at nearly 500 million .
Speaker #6: We have increased the low end of our full year 2025 core FFO guidance by one cents , which now stands at 2.69 to 2 .
Speaker #6: 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 .
Speaker #6: 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.
Speaker #7: Thank you sissy . We're repositioning our portfolio with purpose recycling capital from non-core assets , adding new operators and expanding shop to drive long term value .
Speaker #7: At the close of the third quarter , shop included 21 properties with five operators , three of them new to LPC , including Live Spark , charter , Senior Living and Discovery Senior Living .
Speaker #7: 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 two seniors housing communities in Oregon from our triple net portfolio into our shop segment .
Speaker #7: On or before December 1st. 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 LPC.
Speaker #7: 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 .
Speaker #7: For the 13 properties originally converted to shop , we are increasing guidance to 10.9 to 11.3 million , up from 9.4 to 10.3 million at the midpoint of guidance .
Speaker #7: 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 .
Speaker #7: We expect fourth quarter NOI of 4.8 to 5.2 million . While we're 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 , remain steady at 5.7 million , which represents a 64% year over year increase .
Speaker #7: We will continue working to optimize value in this portfolio over the next 12 to 15 months . We have completed the sale of the previously discussed portfolio of seven skilled nursing assets , generating net proceeds of approximately 120 million and a resulting gain of 78 million .
Speaker #7: Now , I'll hand the call over to Dave for a discussion of our investment activity .
Speaker #8: Thank you. Gibson Befall Nick 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.
Speaker #8: 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 .
Speaker #8: 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.
Speaker #8: 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 .
Speaker #8: 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 sustainable opportunities.
Speaker #8: We are seeing progress 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 were quickly redeployed into quality senior housing communities through the end of the third quarter.
Speaker #8: We closed three shop investments totaling nearly $270 million after quarter-end and have just recently announced we acquired a stabilized senior housing community in Georgia for $23 million.
Speaker #8: That is being managed by a new LTC operator , Arbor Company . These stabilized assets were underwritten to generate threshold year one yields of about 7% and Unlevered IRR in the low teens were .
Speaker #8: 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 operating partners to surpass base underwriting assumptions.
Speaker #8: During the third quarter . We also originated a $58 million , five year mortgage at 8.25% , providing strong current returns and portfolio diversification .
Speaker #8: Shop has proven to be a true external growth engine for LTC , built on disciplined underwriting , strong partnerships , and consistent execution .
Speaker #8: As a 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 .
Speaker #8: I'll now pass the call to Pam .
Speaker #6: Thanks , Dave .
Speaker #9: LTC 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 .
Speaker #9: Operator partnerships , and driving long term accretive returns . We're intentionally building a shop portfolio of newer assets with staying power , one that will well as the industry continues to evolve .
Speaker #9: The bifurcation between high quality modern assets and older , less competitive properties is becoming more pronounced across all real estate asset classes and seniors .
Speaker #9: Housing is no exception . By concentrating on newer , well-located communities operated by experienced partners , LTC is positioning itself to outperform over time .
Speaker #9: 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 .
Speaker #9: That foundation allows us to move decisively when opportunities arise . Our momentum is strong . Our strategy is working and our opportunities ahead are significant .
Speaker #9: We're executing with disciplined and confidence , and I couldn't be more optimistic about what's next for LTC . Operator we're ready for questions from the audience .
Speaker #4: Thank you . We will now be conducting a question and answer session . If you would like to ask a question , please press star one on your telephone keypad .
Speaker #4: A confirmation tone will indicate that your line is in the queue. You may press star two to remove yourself from the queue.
Speaker #4: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please.
Speaker #4: While we pull for questions, the first question comes from the line of John Kulikowski with Wells Fargo. Please proceed with your question.
Speaker #10: Hey , good morning . This is Jesus . On for John . Thanks for taking the question . Just looking at the guidance here to get started , looking at the moving parts .
Speaker #10: Just talk about the underlying assumptions here for the low end and the high end of the range.
Speaker #6: Yeah . Hi . Jesus . It's CC . 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 .
Speaker #10: Perfect . And let's talk about the 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 and loans as well ?
Speaker #8: So this is Dave predominantly . Certainly we will consider other opportunities across our desk . But our primary focus is shop .
Speaker #10: Thank you .
Speaker #4: And the next question comes from the line of Juan Sanabria with BMO Capital Markets . Please proceed with your question .
Speaker #11: Good morning . Maybe just to start to piggyback on the prior question , did you provide any color on expected yield yields and growth for 110 million in the pipeline to close in January ?
Speaker #11: And the 70 million over the next 60 days ?
Speaker #5: The once this client we've guided to 7% yields on our shop acquisitions . And you should think of the same for the $110 million deal with disclosed on our earnings release .
Speaker #9: Initial yield .
Speaker #5: Initial yields . Yes .
Speaker #11: 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 ?
Speaker #9: Yeah . Thanks . Thanks , Juan , this is Pam . So we have proceeds coming to us in the first quarter in the form of loan payoffs .
Speaker #9: 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 equity on the ATM .
Speaker #9: You know , 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 .
Speaker #11: And just lastly , if you don't mind any other options or prepayments that we should expect in 2026 or 27 that you think realistically would be executed .
Speaker #5: On 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 .
Speaker #5: 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 .
Speaker #5: So at this point , we would think that they should be on track for hopefully seven one . It may take a little bit longer , but that's 180 million .
Speaker #11: Thank you very much .
Speaker #9: And also so Juan , you should also think of this in the context of , you know , this is all part of the loan payoffs and the purchase options .
Speaker #9: Part of our strategy to to recycle out of older skilled nursing properties and into a 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 .
Speaker #4: And the next question comes from the line of Rich Anderson with Cantor Fitzgerald . Please proceed with your question .
Speaker #12: Thanks . Good morning out there . Up nice and early . So this is all very exciting . You know , the PR , the pipeline growing $1 billion is not a number we've heard .
Speaker #12: You know , associated with LTC in the past . So congrats on that . But you know , the thing that I'm I think I find more valuable is , you know , the growth profile , the company in year two and onward after the investment .
Speaker #12: So can you can you talk about what what happens to the overall growth of the , you know , organic growth of LTC ?
Speaker #12: Let's say you get to 30 , 40% shop in the next year or so . I'd say legacy LTC was growing 2 or 2.5% .
Speaker #12: You know , on escalators on triple net , like , what's the incremental growth picture company ? You know , after the investment , not from the investment .
Speaker #12: .
Speaker #9: You're talking about the growth through shop , because if .
Speaker #13: You're not looking at the whole company like , you know .
Speaker #12: If if the company was growing at 2.5% prior year , your idea , you know , sort of movement , you know , what what do you see the growth profile , the organic growth profile of the company , because that's what you're buying , you're buying a better growth story longer term .
Speaker #12: So that's that's the basic genesis of the question .
Speaker #7: Yeah . That's right . Rich hi . This is Gibson J. Satterwhite . Yeah . Going in at seven cash yields . You know I think we communicated before that we expect a very minimum of 3% .
Speaker #7: And 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 .
Speaker #7: But certainly we we expect greater growth than that . We've targeted low digit , low double digit IRR . And we do expect more than 3% growth with the supply demand imbalance .
Speaker #7: That's been much discussed in the industry. Preliminary conversations we're having with operators indicate that going into 2026, they expect rapport to outpace expense growth.
Speaker #7: You know, 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 digits.
Speaker #7: IRR .
Speaker #5: And Rich , in addition to that , you know , the average vintage right now of the deals we're acquiring in shop in 25 is 2019 .
Speaker #5: So we are buying bringing newer assets that we think we're going to have pricing power continuing 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 .
Speaker #12: Okay , yeah . So I did note the 87% occupancy . You know , some of your peers , you know , are doing mid teens and more .
Speaker #12: You know same store in Hawaii growth a lot of that is occupancy lift . But but you know on a report basis do you think you could be sort of mid digits .
Speaker #12: Is that sort of the I know you said 3% , but you know , what's , what's the upside from there . Yeah .
Speaker #12: Again , in with a with a mind towards growing creating a a growth story for shareholders . Is it is that .
Speaker #7: People are certainly targeting . I'm sorry .
Speaker #12: Yes . Yeah . Please go ahead .
Speaker #7: Yeah . People . Yeah . People are certainly targeting more than 3% revenue growth . And that would , you know , at least keep up with expense growth .
Speaker #7: Expect expense growth to be below that . So you know in the in the kind of five ish percent people are talking about base rates of going up , you know , anywhere 6 to 8% doing different things with levels of care .
Speaker #7: So that could all blend down to report growth of call it five ish percent . And so , you know , we don't we're not getting a lot of feedback from going into next year that they are seeing really acute wage pressure , which is the majority of your cost structure .
Speaker #7: So you know , if you're starting at , I don't know , 4 or 5% , whatever that is , we'll know that when we get through budget season with our portfolio , you know , we do expect that to outpace expense growth .
Speaker #7: So yes , I think I think mid-single digits is a fair assumption .
Speaker #12: Awesome . Thanks for that . And then quickly , for me , last one , you mentioned the conversion of to compass previously .
Speaker #12: 2.5 million rent , 1.2 million shop . And you know with an expectation to to pass that 2.5 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 ?
Speaker #12: Just curious how typical that that math is for other conversions . Thanks .
Speaker #7: 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 in my prepared comments that the current NOI run rate was lower than the contractual rent .
Speaker #7: 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 .
Speaker #7: This these two particular properties have covered that contractual rent before , and we just seen performance deteriorate . So we looked at this as a good opportunity , and we're really glad to have , you know , shop the idea platform in the toolkit to address a situation like this .
Speaker #7: 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 .
Speaker #7: So if you think about the other conversions , you know , anthem , that was cooperative of new prospective cooperative , strategic , those were really strategic , important pieces for us to start our platform .
Speaker #7: And as you're seeing as we increase guidance on those that it's really paying off for our shareholders .
Speaker #12: Okay. Great. Thanks very much.
Speaker #4: And the next question comes from the line of Michael Carroll with RBC . Please proceed with your question .
Speaker #14: Yeah . Maybe in lines with with those last questions , I guess . Gibson , how many of the assets that you have in the portfolio were recently transitioned or , 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 ?
Speaker #14: 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 ?
Speaker #8: This is Dave . So so far 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 Stablish , a great relationship with an operator .
Speaker #8: 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.
Speaker #8: But predominantly so far we've been able to keep the operator in place on deals that we've executed . .
Speaker #5: And right now , Mike , on our pipeline , we only have one deal in our pipeline . Whether it would be an operator transition .
Speaker #5: But that was a smaller operator . That was a real estate owner that's exiting that . So it's cooperative transition .
Speaker #14: 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 disruptions or like you've kind of already realized that in the numbers in the third quarter .
Speaker #5: Yes . Correct .
Speaker #14: Okay . Great . And then I guess related to prestige , I know you provided and appreciate the color , Clint . Earlier in the call , what do they need to get done to exercise that purchase option ?
Speaker #14: 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?
Speaker #14: 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 .
Speaker #5: 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.
Speaker #5: 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 access and it brings down our oh yeah .
Speaker #5: Interest rates going down to could be a benefit for them . So we feel we feel good about that . We feel good about our decision to allow this prepayment to be able to to redeploy that capital into higher quality assets .
Speaker #5: So we are we are keeping close tabs on it and it looks positive right now for , you know , middle of the year next year .
Speaker #14: Okay . And how many trailing or how long of a trailing PNL do they need to to get HUD debt and 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 ?
Speaker #8: So this is Dave again . So generally speaking , HUD is looking at a trailing 12 . But you're right . There are lenders out there that would probably happily step into the situation .
Speaker #8: So they'll be optionality for them as they approach that . That point .
Speaker #14: Okay . Great .
Speaker #7: Thank you Mike . They're just they're just seasoning through the remainder of the year . So the current is Clint mentioned their current performance .
Speaker #7: We you know that looks like it's at a level to allow them to to take it into HUD . So they're just seasoning through the remainder of the year to , to submit the application in Q1 .
Speaker #14: Okay . So once you kind of get to sorry , go ahead .
Speaker #13: Clint .
Speaker #5: Oh , just one other thing about because of 2012 . So they had more challenging , you know , months that are in that trailing 12 .
Speaker #5: So just as you continue in time , it's going to improve the underwriting . So and the other thing that , you know , prestige was waiting for was their rate letters , which they got just to confirm their , their Medicaid rates , which were as expected .
Speaker #5: 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 .
Speaker #5: 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.
Speaker #5: 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 .
Speaker #14: Okay , great .
Speaker #15: Thank you .
Speaker #4: And the next question comes from the line of Omotayo Okusanya with Deutsche Bank . Please proceed with your question .
Speaker #16: Yes . Good morning everyone . 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 , is there are opportunities to also try to , you know , improve your earnings growth from your current portfolio .
Speaker #16: 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 .
Speaker #5: We have not looked at that as an option. We've mentioned previously on our calls that we've been selective in looking at skilled nursing.
Speaker #5: And we have focused on more transitional , newer transitional care , newer assets . And we continue to be in discussions with with companies about that .
Speaker #5: So that would be where I'd see us selectively growing on skilled nursing .
Speaker #16: That's that's helpful . And then anything from a regulatory perspective as well on a skilled nursing side , you guys are watching at this point .
Speaker #5: Nothing new at this point . I mean , I think everything it's been discussed as far as , you know , staffing mandate that's in the rear view mirror .
Speaker #5: Now . So no major issues that we're aware of on , on skilled nursing , other than there has been a few states that have that have touched on potential Medicaid rate reductions .
Speaker #5: So that's I guess that's a narrative that's out there in select states . We don't know if that will continue to to grow or not , but that has cropped up in a few cases .
Speaker #16: Do you have a those states like North Carolina and some of the other guys you've talked about it .
Speaker #5: Correct .
Speaker #16: Okay. Gotcha. Thank you.
Speaker #5: Thank you .
Speaker #4: And the next question comes from the line of Austin Wurschmidt, KeyBanc Capital Markets. Please proceed with your question.
Speaker #17: Thank you . Good morning everyone . Pam , appreciate some of your earlier comments around kind of the available liquidity . But but going back to that earlier question on funding plans you've talked about in the past over equities , being , you know , the investments or at least kind of on a leverage neutral basis .
Speaker #17: So just wondering how patient you're willing to be on the capital markets . Just given this , you know , what seems to be a pretty substantive set of investment investment opportunities in front of you .
Speaker #9: Yeah . Thank you . Austin . Yeah , I mean , we will look to match fund . So you're you're asking about how how much will issue on the ATM .
Speaker #9: I mean , we will look to match fund . We do have the proceeds coming back in the first quarter . As I talked about .
Speaker #9: And then possibly prestige in third quarter , if they meet their open window period . So , you know , with that backdrop , there's not , you know , a ton of pressure on us .
Speaker #9: But you know , we have been disciplined this year . And executing on the ATM when the , you know , backdrop was favorable for us to to sell shares .
Speaker #9: And so we would continue that discipline into 2026 as well .
Speaker #17: Appreciate that . And then just how are you guys balancing the regional densification or sort of a clustering strategy and the benefits of scale ?
Speaker #17: You know , within shop versus , you know , geographic diversification and just , you know , just kind of thinking about those those future shop investments .
Speaker #5: Yeah , I think that we're going to continue to evolve , evolve into that . But we've been we've been out meeting with operators for upwards of a year now .
Speaker #5: Pre-marketing this . And I think where you see where the pipeline and our investments to date , you know , this has been a result of that very intentional effort of going out and meeting with operating companies .
Speaker #5: 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.
Speaker #9: And we and we've done that . The operators that we're partnering with in our acquisitions , they are the the market leaders in , in their area .
Speaker #9: And so that is a strategy of ours .
Speaker #17: Has the competition changed at all to a point where you felt you've had to , you know , increase your growth , underwriting in sort of the , the , you know , three years out , I think you were in sort of the low to mid single digit growth .
Speaker #17: You referenced last quarter with the expectation they would exceed that . Of course .
Speaker #5: I would . It's very competitive in the market as far as deals , and we've been focused on , you know , smaller transactions .
Speaker #5: We've been fortunate to be able to secure a couple of portfolios . But it is it's definitely competitive , but we feel we feel very good about our momentum and our positioning in the marketplace .
Speaker #5: To be able to succeed on investments . I think our investments to date , plus our new investment , we announced for 26 , is evidence of that .
Speaker #5: We're able to to compete in the marketplace .
Speaker #17: And last one for me , you know , the transitions this quarter , I mean , it didn't sound like there was any other immediate , you know , kind of transitions that were available .
Speaker #17: But I think you'd referenced maybe evaluating some assets in the , the market based rent reset . Those 14 properties , anything in the near term there that that you're evaluating on maybe transitioning some additional assets , you know , from triple net or , you know , to , to a to the shop structure ?
Speaker #7: Sure . Austin , this is Gibson . Yeah , we're certainly considering that as we look into 2026 . You know , we have a few options as it relates to those properties .
Speaker #7: We continue to work with the current operators and set permanent rents . As a reminder , these are 14 properties that were all set up .
Speaker #7: In short term leases basically two years in duration on average , with 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 .
Speaker #7: If that fits , you know that 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 .
Speaker #7: 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 , you know , just to maximize the value in that group of assets .
Speaker #7: And we you know , we certainly see upside in that portfolio from here .
Speaker #17: Thanks for the time .
Speaker #4: There are no further questions at this time . And I would like to turn the floor back over to Clint for any closing remarks .
Speaker #5: 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 .
Speaker #5: We look forward to sharing our progress with you next quarter . Thank you .
Speaker #4: Thank you , ladies and gentlemen . That does conclude today's teleconference . You may disconnect your lines at this time . Thank you for your participation .