10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 1-11314

LTC PROPERTIES, INC.

(Exact name of Registrant as specified in its charter)

Maryland
(State or other jurisdiction of incorporation or
organization) 71-0720518
(I.R.S. Employer Identification No.)

2829 Townsgate Road, Suite 350

Westlake Village, California 91361

(Address of principal executive offices)

Registrant’s telephone number, including area code: (805) 981-8655

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading symbol	Name of Each Exchange on Which Registered
Common stock, $.01 Par Value	LTC	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by checkmark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by checkmark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of voting and non-voting common equity held by non-affiliates of the Registrant was approximately $1,783,261,000 as of June 28, 2019 (the last business day of the Registrant’s most recently completed second fiscal quarter).

The number of shares of common stock outstanding as of February 14, 2020 was 39,751,704.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement relating to its 2020 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated.

CAUTIONARY STATEMENT

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, adopted pursuant to the Private Securities Litigation Reform Act of 1995. Statements that are not purely historical may be forward-looking. You can identify some of the forward-looking statements by their use of forward-looking words, such as “believes,” “expects,” “may,” “will,” “could,” “would,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates” or “anticipates,” or the negative of those words or similar words. Forward-looking statements involve inherent risks and uncertainties regarding events, conditions and financial trends that may affect our future plans of operation, business strategy, results of operations and financial position. A number of important factors could cause actual results to differ materially from those included within or contemplated by such forward- looking statements, including, but not limited to, the status of the economy; the status of capital markets (including prevailing interest rates) and our access to capital; the income and returns available from investments in health care related real estate (including our ability to re-lease properties upon expiration of a lease term); the ability of our borrowers and lessees to meet their obligations to us; our reliance on a few major operators; our dependence on operators for revenue and cash flow; the bankruptcy, insolvency or financial deterioration of our lessees; potential limitations on our remedies when mortgage loans default; competition faced by our borrowers and lessees within the health care industry; regulation of the health care industry by federal, state and local governments; changes in Medicare and Medicaid reimbursement amounts (including due to federal and state budget constraints); compliance with and changes to regulations and payment policies within the health care industry; debt that we may incur and changes in financing terms; our ability to continue to qualify as a real estate investment trust; the relative illiquidity of our real estate investments; and risks and liabilities in connection with properties owned through limited liability companies and partnerships. For a discussion of these and other factors that could cause actual results to differ from those contemplated in the forward-looking statements, please see the discussion under “Risk Factors” contained in this report and in other information contained in this report and our publicly available filings with the Securities and Exchange Commission. We do not undertake any responsibility to update or revise any of these factors or to announce publicly any revisions to forward-looking statements, whether as a result of new information, future events or otherwise.

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LTC Properties, Inc.

Table of Contents

		Page
Part I
Item 1.	Business	4
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	21
Item 3.	Legal Proceedings	23
Item 4.	Mine Safety Disclosures	23
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
Item 6.	Selected Financial Data	26
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 8.	Financial Statements	44
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	91
Item 9A.	Controls and Procedures	91
Item 9B.	Other Information	94
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	94
Item 11.	Executive Compensation	94
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	94
Item 13.	Certain Relationships and Related Transactions, and Director Independence	94
Item 14.	Principal Accountant Fees and Services	94
Part IV
Item 15.	Exhibits and Financial Statement Schedules	95
Item 16.	Form 10-K Summary	96
SIGNATURES		96

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PART I

Item 1. BUSINESS

General

LTC Properties, Inc., a health care real estate investment trust (“REIT”), was incorporated on May 12, 1992 in the State of Maryland and commenced operations on August 25, 1992. We invest primarily in seniors housing and health care properties through sale-leaseback transactions, mortgage financing, joint ventures and structured finance solutions including mezzanine lending. Our primary objectives are to create, sustain and enhance stockholder equity value and provide current income for distribution to stockholders through real estate investments in seniors housing and health care properties managed by experienced operators. To meet these objectives, we attempt to invest in properties that provide opportunity for additional value and current returns to our stockholders and diversify our investment portfolio by geographic location, operator, property type and form of investment.

We primarily invest in the following type of properties:

● Skilled nursing centers (“SNF”) provide restorative, rehabilitative and nursing care for people not requiring the more extensive and sophisticated treatment available at acute care hospitals. Many skilled nursing facilities provide ancillary services that include occupational, speech, physical, respiratory and IV therapies, as well as sub-acute care services which are paid either by the patient, the patient’s family, private health insurance, or through the federal Medicare or state Medicaid programs.

● Assisted living communities (“ALF”) serve people who require assistance with activities of daily living, but do not require the constant supervision that skilled nursing facilities provide. Services are usually available 24 hours a day and include personal supervision and assistance with eating, bathing, grooming and administering medication. The facilities provide a combination of housing, supportive services, personalized assistance and health care designed to respond to individual needs.

● Independent living communities (“ILF”), also known as retirement communities or senior apartments, offer a sense of community and numerous levels of service, such as laundry, housekeeping, dining options/meal plans, exercise and wellness programs, transportation, social, cultural and recreational activities, on-site security and emergency response programs. Many offer on-site conveniences like beauty/barber shops, fitness facilities, game rooms, libraries and activity centers.

● Memory care communities (“MC”) offer specialized options for people with Alzheimer’s disease and other forms of dementia. Purpose built, free-standing memory care facilities offer an attractive alternative for private-pay residents affected by memory loss in comparison to other accommodations that typically have been provided within a secured unit of an assisted living or skilled nursing facility. These facilities offer dedicated care and specialized programming for various conditions relating to memory loss in a secured environment that is typically smaller in scale and more residential in nature than traditional assisted living facilities. Residents require a higher level of care and more assistance with activities of daily living than in assisted living facilities. Therefore, these facilities have staff available 24 hours a day to respond to the unique needs of their residents.

We conduct and manage our business as one operating segment, rather than multiple operating segments, for internal reporting and internal decision-making purposes. We include ILF, ALF, MC, and combinations thereof in the ALF property classification.

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Portfolio

The following table summarizes our real estate investment portfolio as of December 31, 2019 (dollar amounts in thousands):

					Twelve Months Ended
			Percentage		December 31, 2019				Percentage		Number	Number of
	Gross		of		Rental		Interest		of		of	SNF	ALF
Owned Properties	Investments		Investments		Income (1)		Income		Revenues		Properties (2)	Beds (3)	Units (3)
Assisted Living (4)	$	858,852	49.4	%	$	68,641	$	—	40.7	%	106	—	6,086
Skilled Nursing		596,370	34.2	%		69,087		—	40.9	%	70	8,505	261
Under Development (5)		17,989	1.0	%		—		—	—	%	—	—	—
Other (6)		11,360	0.7	%		955		—	0.6	%	1	118	—
Total Owned Properties		1,484,571	85.3	%		138,683		—	82.2	%	177	8,623	6,347
Mortgage Loans
Skilled Nursing		256,659	14.7	%		—		29,991	17.8	%	22	2,892	—
Total Mortgage Loans		256,659	14.7	%		—		29,991	17.8	%	22	2,892	—
Total Portfolio	$	1,741,230	100.0	%	$	138,683	$	29,991	100.0	%	199	11,515	6,347

					Twelve Months Ended
			Percentage		December 31, 2019				Percentage		Number	Number of
	Gross		of		Rental		Interest		of		of	SNF	ALF
Summary of Properties by Type	Investments		Investments		Income (1)		Income		Revenues		Properties (2)	Beds (3)	Units (3)
Assisted Living (4)	$	858,852	49.4	%	$	68,641	$	—	40.7	%	106	—	6,086
Skilled Nursing		853,029	48.9	%		69,087		29,991	58.7	%	92	11,397	261
Under Development (5)		17,989	1.0	%		—		—	—	%	—	—	—
Other (6)		11,360	0.7	%		955		—	0.6	%	1	118	—
Total Portfolio	$	1,741,230	100.0	%	$	138,683	$	29,991	100.0	%	199	11,515	6,347

(1) Excludes variable rental income of $15,998 related to lessee reimbursement of our real estate taxes and $1,926 adjustment for collectibility of rental income.

(2) We have investments in 28 states leased or mortgaged to 30 different operators.

(3) See Item 2. Properties for discussion of bed/unit count.

(4) Includes ILF, ALF, MC, and combinations thereof.

(5) Represents two development projects, consisting of a 78-unit ALF/MC located in Oregon and a 90-bed SNF in Missouri.

(6) Includes three parcels of land held-for-use and one behavioral health care hospital.

In addition to the information in the table above, see Item 2. Properties for more information about our portfolio.

As of December 31, 2019, we had $1.4 billion in carrying value of net real estate investments, consisting of $1.1 billion or 81.7% invested in owned and leased properties and $0.3 billion or 18.3% invested in mortgage loans secured by first mortgages.

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Owned Properties. The following table summarizes our investment in owned properties at December 31, 2019 (dollar amounts in thousands):

								Average
			Percentage		Number	Number of		Investment
	Gross		of		of	SNF	ALF	per
Type of Property	Investment		Investment		Properties (1)	Beds (2)	Units (2)	Bed/Unit
Assisted Living (3)	$	858,852	57.9	%	106	—	6,086	$	141.12
Skilled Nursing		596,370	40.2	%	70	8,505	261	$	68.03
Under Development (4)		17,989	1.2	%	—	—	—		—
Other (5)		11,360	0.7	%	1	118	—		—
Total	$	1,484,571	100.0	%	177	8,623	6,347

(1) We have investments in 28 states leased to 30 different operators.

(2) See Item 2. Properties for discussion of bed/unit count.

(3) Includes ILF, ALF, MC, and combinations thereof.

(4) Represents two development projects, consisting of a 78-unit ALF/MC located in Oregon and a 90-bed SNF located in Missouri.

(5) Includes three parcels of land held-for-use and one behavioral health care hospital.

Owned properties are leased pursuant to non-cancelable operating leases generally with an initial term of 10 to 15 years. Many of the leases contain renewal options. The leases provide for fixed minimum base rent during the initial and renewal periods. The majority of our leases contain provisions for specified annual increases over the rents of the prior year and that increase is generally computed in one of four ways depending on specific provisions of each lease:

(i) a specified percentage increase over the prior year’s rent, generally between 2.0% and 3.0%;

(ii) a calculation based on the Consumer Price Index;

(iii) as a percentage of facility revenues in excess of base amounts; or

(iv) specific dollar increases.

Each lease is a triple net lease which requires the lessee to pay all taxes, insurance, maintenance and repairs, capital and non-capital expenditures and other costs necessary in the operations of the facilities. Generally our leases provide for one or more of the following: security deposits, property tax impounds, and credit enhancements such as corporate or personal guarantees or letters of credit. In addition, our leases are typically structured as master leases and multiple master leases with one operator, and are generally cross defaulted. The following table summarizes the concentration of our top ten operators of owned properties for 2019 and percentage of rental revenue, excluding rental income from properties sold, variable rental income due to lessee reimbursement of our real estate taxes, and adjustment for collectibility of rental income for those operators for 2019 and 2018:

		Percent of
		Rental Revenue
Lessee	Property Type	2019		2018
Senior Lifestyle	ILF/ALF/MC	14.6	%	14.6	%
Senior Care Centers, LLC	SNF	11.6	%	10.9	%
Brookdale Senior Living Communities, Inc.	ALF/MC	10.3	%	12.3	%
Carespring Healthcare Management, LLC	SNF	8.0	%	5.8	%
Preferred Care, Inc.	ALF/SNF	6.3	%	7.9	%
Fundamental Long Term Care Company	SNF/OTH	6.0	%	6.3	%
Traditions Senior Management, Inc.	ILF/ALF/SNF	5.9	%	6.0	%
Genesis Healthcare	ALF/SNF	5.8	%	6.2	%
Anthem Memory Care	MC	5.4	%	3.7	%
Juniper Communities, LLC	ALF/MC	4.8	%	5.0	%

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Mortgage Loans. As part of our strategy of making long-term investments in properties used in the provision of long-term health care services, we provide mortgage financing on such properties based on our established investment underwriting criteria. We have also provided construction loans that by their terms convert into purchase/lease transactions or permanent financing mortgage loans upon completion of construction. Substantially all of our mortgage loan investments currently relate to skilled nursing facilities. The following table summarizes our investments in mortgage loans secured by first mortgages at December 31, 2019 (dollar amounts in thousands):

				Type	Percentage		Number of			Investment
		Gross		of	of				SNF	per
Interest Rate (1)	Maturity	Investment		Property	Investment		Loans (2)	Properties (3)	Beds	Bed/Unit
9.9%	2043	$	186,121	SNF	72.5	%	1	15	2,029	$	91.73
9.2%	2045		36,076	SNF	14.1	%	1	4	501	$	72.01
9.4%	2045		19,512	SNF	7.6	%	1	2	205	$	95.18
9.4%	2045		14,950	SNF	5.8	%	1	1	157	$	95.22
Total		$	256,659		100.0	%	4	22	2,892	$	88.75

(1) The majority of the mortgage loans provide for annual increases in the interest rate after a certain time period based upon a specified increase of 2.25%.

(2) Some loans contain certain guarantees and/or provide for certain facility fees.

(3) Our mortgage loans are secured by properties located in one state with one borrower.

In general, the mortgage loans may not be prepaid except in the event of the sale of the collateral property to a third-party that is not affiliated with the borrower, although partial prepayments (including the prepayment premium) are often permitted where a mortgage loan is secured by more than one property upon a sale of one or more, but not all, of the collateral properties to a third-party which is not an affiliate of the borrower. The terms of the mortgage loans generally impose a premium upon prepayment of the loans depending upon the period in which the prepayment occurs, whether such prepayment was permitted or required, and certain other conditions such as upon the sale of the property under a pre-existing purchase option, destruction or condemnation, or other circumstances as approved by us. The prepayment premium is based on a yield maintenance formula. In addition to a lien on the mortgaged property, the loans are generally secured by certain non-real estate assets of the properties and contain certain other security provisions in the form of letters of credit and/or security deposits.

Investment Policies and Strategies

Our investment policy is to invest primarily in income-producing seniors housing and health care properties. Over the past three years, we have underwritten acquisitions of seniors housing communities and health care centers and 4 parcels of land for a total of approximately $265.7 million.

Historically our investments have consisted of:

● fee ownership of seniors housing and skilled nursing properties that are leased to operators;

● mortgage loans secured by seniors housing and skilled nursing properties; or

● participation in such investments indirectly through investments in mezzanine loans and real estate partnerships or other entities that themselves make direct investments in such loans or properties.

In evaluating potential investments, we consider factors such as:

● type of property;

● location;

● competition within the local market and evaluation of the impact resulting from any potential new development projects in construction or anticipated to be approved by local authorities;

● construction quality, condition and design of the property;

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● current and anticipated cash flow of the property and its adequacy to meet operational needs and lease obligations or debt service obligations;

● experience, reputation and solvency of the operating companies providing services;

● payor mix of private, managed care, Medicare and Medicaid patients;

● growth, tax and regulatory environments of the communities in which the properties are located;

● occupancy and demand for similar properties in the area surrounding the property; and

● Medicaid reimbursement policies and plans of the state in which the property is located.

Prior to an investment, we conduct a property site review to assess the general physical condition of the property and the potential of additional services. In addition, we review third-party environmental reports, land surveys, and market studies (if applicable) as well as conduct a financial due diligence review of the property before the investment is made.

We believe skilled nursing centers are the lowest cost provider for certain levels of acuity; therefore, such facilities play a vital role in our nation’s health care delivery system. Our investments include direct ownership, development, first and second mortgages secured by skilled nursing centers and mezzanine loans. We prefer to invest in a property that has a significant market presence in its community and where state certificate of need and/or licensing procedures limit the entry of competing properties.

We believe that assisted living, independent living and memory care communities are an important sector in the seniors housing and health care industry and our investments include direct ownership, development, real estate joint ventures, mezzanine loans and mortgages secured by assisted living, independent living and/or memory care communities.

We may incur additional indebtedness when, in the opinion of our Board of Directors, it is advisable. We may incur such indebtedness to make investments in additional seniors housing and health care properties or to meet the distribution requirements imposed upon REITs under the Internal Revenue Code of 1986, as amended. For other short-term purposes, we may, from time to time, negotiate lines of credit, or arrange for other short-term borrowings from banks or otherwise. We may also arrange for long-term borrowings through public or private offerings or from institutional investors.

In addition, we may incur mortgage indebtedness on real estate which we have acquired through purchase, foreclosure or otherwise. We may also obtain mortgage financing for unleveraged or underleveraged properties in which we have invested or may refinance properties acquired on a leveraged basis.

We seek to diversify our portfolio by operator, by property type, and geographically. Our primary marketing and business development strategy is to increase awareness of our presence and build long-term relationships in the seniors housing and health care industry by supporting targeted industry trade organizations, attending industry specific conferences and events attended by seniors housing and care providers, and seeking out speaking engagements at industry related events as well as interviews in industry publications. We believe this targeted marketing and business development effort has provided deal flow opportunities and will continue to provide opportunities for new investments in 2020. Since competition from investors as well as other capital providers for large transactions consisting of fully-marketed, multi-property portfolios generally result in valuations above our targeted investment criteria, our marketing and business development efforts focus on sourcing relationships with regionally based operating companies to execute on single property transactions (for acquisition, mortgage financing or development), or smaller multi-property portfolios that are not broadly marketed by third-party intermediaries which complement our historic investment execution and are priced at yields that are accretive to our stockholders.

Competition

In the health care industry, we compete for real property investments with health care providers, other health care related REITs, real estate partnerships, banks, private equity funds, venture capital funds and other investors. Many

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of our competitors are significantly larger and have greater financial resources and lower cost of capital than we have available to us. Our ability to compete successfully for real property investments will be determined by numerous factors, including our ability to identify suitable acquisition targets, our ability to negotiate acceptable terms for any such acquisition and the availability and our cost of capital.

The lessees and borrowers of our properties compete on a local, regional and, in some instances, national basis with other health care providers. The ability of the lessee or borrower to compete successfully for patients or residents at our properties depends upon several factors, including the levels of care and services provided by the lessees or borrowers, the reputation of the providers, physician referral patterns, physical appearances of the properties, family preferences, financial condition of the operator and other competitive systems of health care delivery within the community, population and demographics.

REIT Tax Status

We have elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, or the Code. To maintain our qualification as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we annually distribute to our shareholders at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains. As a REIT, we generally are not subject to U.S. federal income tax on the taxable income we distribute to our shareholders. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax at the generally applicable corporate tax rate. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income, property or net worth and U.S. federal income and excise taxes on our undistributed income.

Health Care Regulation

Overview

The health care industry is heavily regulated by the government. Our borrowers and lessees who operate health care facilities are subject to extensive regulation by federal, state and local governments. These laws and regulations are subject to frequent and substantial changes resulting from legislation, adoption of rules and regulations, and administrative and judicial interpretations of existing law. These changes may have a dramatic effect on the definition of permissible or impermissible activities, the relative costs associated with doing business and the amount of reimbursement by both government and other third-party payors. These changes may be applied retroactively. The ultimate timing or effect of these changes cannot be predicted. The failure of any borrower of funds from us or lessee of any of our properties to comply with such laws, requirements and regulations could result in sanctions or remedies such as denials of payment for new Medicare and Medicaid admissions, civil monetary penalties, state oversight and loss of Medicare and Medicaid participation or licensure. Such action could affect our borrower’s or lessee’s ability to operate its facility or facilities and could adversely affect such borrower’s or lessee’s ability to make debt or lease payments to us.

The properties we own and the manner in which they are operated are affected by changes in the reimbursement, licensing and certification policies of federal, state and local governments. Properties may also be affected by changes in accreditation standards or procedures of accrediting agencies. In addition, expansion (including the addition of new beds or services or acquisition of medical equipment) and occasionally the discontinuation of services of health care facilities are, in some states, subjected to state and regulatory approval through “certificate of need” laws and regulations.

Health Care Reform and Other Legislative Developments

In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended (the “Affordable Care Act”). The Affordable Care Act is designed to expand access to affordable health insurance, contain health care costs, and institute a variety of health policy reforms. This sweeping law expanded the insured population, but also reduced federal health care spending and imposed additional requirements on our lessees and borrowers. Among other things, the Affordable Care Act: reduced Medicare skilled nursing facility reimbursement by a so-called “productivity adjustment” based on economy-wide productivity gains; required the development of a value-

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based purchasing program for Medicare skilled nursing facility services; authorized bundled payment programs, which can include post-acute services; and provided incentives to state Medicaid programs to promote community-based care as an alternative to institutional long-term care services. In addition, the Affordable Care Act impacts both us and our lessees and borrowers as employers, including requirements related to the health insurance we offer to our respective employees. Many aspects of the Affordable Care Act have been implemented through regulations and subregulatory guidance, as discussed further below. President Trump and some members of Congress have called for repeal of the Affordable Care Act and replacement with alternative reforms. In December 2017, President Trump signed into law a tax reform bill that repeals the Affordable Care Act’s penalty for individuals who fail to maintain health coverage meeting certain minimum standards. Additional revisions of the Affordable Care Act could be made in future, although the details and timing of any such actions are unknown at this time. There can be no assurance that the implementation of the Affordable Care Act or any subsequent modifications or related legal challenges will not adversely impact the operations, cash flows or financial condition of our lessees and borrowers, which subsequently could materially adversely impact our revenue and operations.

Under the sequestration provisions of the Budget Control Act of 2011, as amended, a 2% cut to Medicare payments to providers and health plans cuts generally has applied to Medicare fee-for-service claims on or after April 1, 2013. As further amended by subsequent legislation, the Medicare sequestration cuts are currently scheduled to be applied through fiscal year 2029, although Congress and the Administration could enact legislation to extend or modify sequestration at any time. There can be no assurances that enacted or future budget control mechanisms will not have an adverse impact on the financial condition of our borrowers and lessees, which subsequently could materially adversely impact our company.

The Protecting Access to Medicare Act of 2014 required the Secretary of the Department of Health and Human Services to develop a skilled nursing facility “value-based purchasing program” tying Medicare payments to skilled nursing facilities to their performance on certain new readmissions measures, applicable to services furnished beginning October 1, 2018. The Medicare Access and CHIP Reauthorization Act of 2015 set the annual skilled nursing facility prospective payment system update for fiscal year 2018 at 1%, and the Bipartisan Budget Act of 2018 established an update of 2.4% for fiscal year 2019. Additional reforms affecting the payment for and availability of health care services have been proposed at the state level and adopted by certain states.

Congress and state legislatures can be expected to continue to review and assess alternative health care delivery systems and payment methodologies, including potential changes in Medicare and Medicaid payment policy for skilled nursing facility services and other types of post-acute care. Additional changes in laws, new interpretations of existing laws, or other changes in payment methodologies may have a dramatic effect on the definition of permissible or impermissible activities, the relative costs associated with doing business and the amount of reimbursement by the government and other third-party payors. There can be no assurances that enacted or future legislation will not have an adverse impact on the financial condition of our borrowers and lessees, which subsequently could materially adversely impact our company.

Reimbursement

The ability of our borrowers and lessees to generate revenue and profit determines the underlying value of that property to us. Revenues of our borrowers and lessees of skilled nursing centers are generally derived from payments for patient care. Sources of such payments for skilled nursing facilities include the federal Medicare program, state Medicaid programs, private insurance carriers, managed care organizations, preferred provider arrangements, and self-insured employers, as well as the patients themselves.

A significant portion of the revenue of our skilled nursing center borrowers and lessees is derived from governmentally-funded reimbursement programs, such as Medicare and Medicaid. Because of significant health care costs paid by such government programs, both federal and state governments have adopted and continue to consider various health care reform proposals to control health care costs. In many instances, revenues from Medicaid programs are insufficient to cover the actual costs incurred in providing care to Medicaid patients. In addition, all states have been making changes to their long-term care delivery systems that emphasize home and community-based long-term care services, in some cases coupled with cost-controls for institutional providers. Increasingly, state Medicaid programs are providing coverage through managed care programs under contracts with private health plans, which is intended to

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decrease state Medicaid costs. The federal government also has adopted various policies to promote community-based alternatives to institutional services. The Trump Administration and Congress are also considering revising federal payments to state Medicaid programs to establish block grants or impose per capita limits on federal Medicaid payments to states. On January 30, 2020, the Trump Administration announced that states could apply to participate in a new Medicaid “Healthy Adult Opportunity” (“HAO”) Demonstration project, which would reimburse participating states under a capped aggregate or per-capita federal financial participation financing model in exchange for the states gaining greater flexibility in the scope and administration of their Medicaid programs for certain beneficiary populations (individuals qualifying for Medicaid based on need for long-term care services and supports would be exempt). As states and the federal government continue to respond to budget pressures, future reduction in Medicaid payments for skilled nursing facility services could have an adverse effect on the financial condition of our borrowers and lessees which could, in turn, adversely impact the timing or level of their payments to us.

With regard to the Medicare program, over the years there have been efforts to contain Medicare fee-for-service spending, promote Medicare managed care, and, more recently, tie reimbursement to quality and value of care. CMS annually updates Medicare skilled nursing facility prospective payment system rates and other policies. On July 31, 2018, CMS issued a final rule updating skilled nursing facility rates and policies for fiscal year 2019. The final rule includes a 2.4% payment increase, which CMS projected will increase overall payments to skilled nursing facilities by $820 million in fiscal year 2019 compared with fiscal year 2018 levels. The final rule also replaced the existing Resource Utilization Groups, Version IV (“RUG–IV”) case mix classification system with a new model beginning in fiscal year 2020, which began October 1, 2019. The new case mix classification system, called the “Patient-Driven Payment Model,” bases Medicare payment on resident needs rather than the amount of therapy a resident receives. On July 30, 2019, CMS issued its final fiscal year 2020 Medicare skilled nursing facility update. Under the final rule, CMS projects Medicare aggregate payments to skilled nursing facilities will increase by $851 million, or 2.4%, for fiscal year 2020 compared with fiscal year 2019. The final rule also addresses implementation of the Patient-Driven Payment Model case mix classification system, changes to the group therapy definition in the skilled nursing facility setting, and various skilled nursing facility Value-Based Purchasing (“VBP”) Program and quality reporting program policies. Under the VBP Program, which went into effect October 1, 2018, CMS reduces Medicare payments to skilled nursing facilities by 2%. CMS then returns approximately 60% of the withheld amount to skilled nursing facilities based on their relative performance on a readmission measure. The remaining portion of the withheld amount will be retained in the Medicare Trust Fund. There can be no assurance that any future reductions in Medicare skilled nursing facility payment rates or other policy changes impacting long-term care facilities would not have an adverse effect on the financial condition of our borrowers and lessees which could, in turn, adversely impact the timing or level of their payments to us.

On July 18, 2019, CMS published a final rule that eliminates the prohibition on pre-dispute binding arbitration agreements between long-term care facilities and their residents. The rule also strengthens the transparency of arbitration agreements and makes other changes to arbitration requirements for long-term care facilities. There can be no assurance that these rules or future regulations modifying Medicare skilled nursing facility payment rates or other requirements for Medicare and/or Medicaid participation will not have an adverse effect on the financial condition of our borrowers and lessees which could, in turn, adversely impact the timing or level of their payments to us.

CMS also has implemented a variety of Medicare bundled payment programs that seek to promote greater care coordination and more efficient use of resources. Certain of these models, such as the Medicare Comprehensive Care for Joint Replacement and Bundled Payments for Care Improvement Advanced models, have impacted post-acute care, including skilled nursing facility services. There can be no assurances that new Medicare payment models will not adversely affect revenues of our skilled nursing center borrowers and lessees and thereby adversely affect those borrowers’ and lessees’ abilities to make their debt or lease payments to us.

Moreover, health care facilities continue to experience pressures from private payors attempting to control costs; reimbursement from private payors has in some cases fallen relative to government payors. Governmental and public concern regarding health care costs may result in significant reductions in payment to health care facilities, and there can be no assurance that future payment rates for either governmental or private payors will be sufficient to cover cost increases in providing services to patients. Any changes in reimbursement policies which reduce reimbursement to levels that are insufficient to cover the cost of providing patient care could adversely affect revenues of our skilled nursing center borrowers and lessees and to a much lesser extent our assisted living community borrowers and lessees and thereby adversely affect those borrowers’ and lessees’ abilities to make their debt or lease payments to us. Failure of

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the borrowers or lessees to make their debt or lease payments would have a direct and material adverse impact on us.

Fraud and Abuse Enforcement

Various federal and state laws govern financial and other arrangements between health care providers that participate in, receive payments from, or make or receive referrals for work in connection with government funded health care programs, including Medicare and Medicaid. These laws, known as the fraud and abuse laws, include the federal anti-kickback statute, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering or paying any remuneration directly or indirectly in return for, or to induce, the referral, or arrange for the referral, of an individual to a person for the furnishing of an item or service for which payment may be made under federal health care programs. In addition, the federal physician self-referral law, commonly known as the Stark Law, prohibits physicians and certain other types of practitioners from making referrals for certain designated health services paid in whole or in part by Medicare and Medicaid to entities with which the practitioner or a member of the practitioner’s immediate family has a financial relationship, unless the financial relationship fits within an applicable exception to the Stark Law. The Stark Law also prohibits the entity receiving the referral from seeking payment under the Medicare program for services rendered pursuant to a prohibited referral. Sanctions for violating the Stark Law include civil monetary penalties of up to $25,820 per prohibited service provided, assessments equal to three times the dollar value of each such service provided and exclusion from the Medicare and Medicaid programs. Many states have enacted similar fraud and abuse laws which are not necessarily limited to items and services for which payment is made by federal health care programs. Violations of these laws may result in fines, imprisonment, denial of payment for services, and exclusion from federal and/or other state-funded programs. Other federal and state laws authorize the imposition of penalties, including criminal and civil fines and exclusion from participation in federal health care programs for submitting false claims, improper billing and other offenses. Federal and state government agencies have continued rigorous enforcement of criminal and civil fraud and abuse laws in the health care arena. Our borrowers and lessees are subject to many of these laws, and some of them could in the future become the subject of a governmental enforcement action.

Environmental Regulation

Under various federal, state and local environmental laws, ordinances and regulations, an owner of real property or a secured lender (such as us) may be liable for the costs of removal or remediation of hazardous or toxic substances at, under or disposed of in connection with such property, as well as other potential costs relating to hazardous or toxic substances (including government fines and damages for injuries to persons and adjacent property). Such laws often impose such liability without regard to whether the owner or secured lender knew of, or was responsible for, the presence or disposal of such substances and may be imposed on the owner or secured lender in connection with the activities of an operator of the property. The cost of any required remediation, removal, fines or personal or property damages and the owner’s or secured lender’s liability therefore could exceed the value of the property, and/or the assets of the owner or secured lender. In addition, the presence of such substances, or the failure to properly dispose of or remediate such substances, may adversely affect the owner’s ability to sell or rent such property or to borrow using such property as collateral which, in turn, would reduce our revenues.

Although the mortgage loans that we provide and leases covering our properties require the borrower and the lessee to indemnify us for certain environmental liabilities, the scope of such obligations may be limited and we cannot assure that any such borrower or lessee would be able to fulfill its indemnification obligations.

Insurance

It is our current policy, and we intend to continue this policy, that all borrowers of funds from us and lessees of any of our properties secure adequate comprehensive property and general and professional liability insurance that covers us as well as the borrower and/or lessee. Although we actively monitor and seek to ensure compliance with our policies, we may be subject to loss for any number of reasons, such as, noncompliance on the part of our lessees/borrowers, losses that exceed covered limits or that aren’t covered, inability of lessees/borrowers to obtain insurance on commercially reasonable terms, bankruptcy of a carrier, or insufficient tail coverage.  We contend that as a non-possessory landlord we are not generally responsible for what takes place on real estate we do not possess, claims including general and professional liability claims may still be asserted against us which may result in costs and exposure for which insurance is not available. Certain risks may be uninsurable, not economically insurable or insurance may not

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be available and there can be no assurance that we, a borrower or lessee will have adequate funds to cover all contingencies. If an uninsured loss or a loss in excess of insured limits occurs with respect to one or more of our properties, we could be subject to an adverse claim including claims for general or professional liability, could lose the capital that we have invested in the properties, as well as the anticipated future revenue for the properties and, in the case of debt which is with recourse to us, we would remain obligated for any mortgage debt or other financial obligations related to the properties. Certain losses, such as losses due to floods or seismic activity if insurance is available, may be insured subject to certain limitations including large deductibles or co-payments and policy limits.

Employees

At December 31, 2019, we employed 22 people. Our employees are not members of any labor union, and we consider our relations with our employees to be excellent.

Investor Information

We make available to the public free of charge through our internet website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to, the Securities and Exchange Commission (“SEC”). Our internet website address is www.LTCreit.com. We are not including the information contained on our website as part of, or incorporating it by reference into, this Annual Report on Form 10-K.

The SEC also maintains an internet website that contains reports, proxy statements and other information we file. The internet address of the SEC website is www.sec.gov.

You may contact our Investor Relations Department at:

LTC Properties, Inc.

2829 Townsgate Road, Suite 350

Westlake Village, California 91361

Attn: Investor Relations

(805) 981-8655

Item 1A. RISK FACTORS

This section discusses risk factors that may affect our business, operations, and financial condition. If any of these risks, as well as other risks and uncertainties that we have not yet identified or that we currently think are not material, actually occur, we could be materially adversely affected and the value of our securities could decline. In addition, these risk factors contain “forward-looking statements” as discussed above under the heading “Cautionary Statement.” The following information should be read in conjunction with Management’s Discussion and Analysis, and the consolidated financial statements and related notes in this Annual Report on Form 10-K.

A Failure to Maintain or Increase our Dividend Could Reduce the Market Price of Our Stock. The ability to maintain or raise our common dividend is dependent, to a large part, on growth of funds available for distribution. This growth in turn depends upon increased revenues from additional investments and loans, rental increases and mortgage rate increases.

We May Have Limited Access to Capital At Times, Which Could Cause Our Growth to Slow. A REIT is required to make dividend distributions and retains little cash flow for growth. As a result, growth for a REIT is generally through the steady investment of new capital in real estate assets. At December 31, 2019, we had $4.2 million of cash on hand, $506.1 million available under our unsecured revolving line of credit. We also have the potential ability to access the capital markets through the issuance of $200.0 million of common stock under our equity distribution agreement and an indeterminate amount through the issuance of debt and/or equity securities under an automatic shelf registration statement. As a result, we currently believe our liquidity and various sources of available capital are sufficient to fund operations and development commitments, meet debt service obligations (both principal and interest), make dividend distributions and finance future investments should we determine such future investments are financially

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feasible. However, there may be times when we will have limited access to capital from the equity and/or debt markets. During such periods, virtually all of our available capital would be required to meet existing commitments and to reduce existing debt. We may not be able, during such periods, to obtain additional equity and/or debt capital or dispose of assets on favorable terms, if at all, at the time we require additional capital to acquire health care properties on a competitive basis or meet our obligations.

Income and Returns from Health Care Facilities Can be Volatile. There is a possibility that the health care properties in which we invest will not generate income sufficient to meet operating expenses, will generate income and capital appreciation, if any, at rates lower than those anticipated or will yield returns lower than those available through investments in comparable real estate or other investments. Income from properties and yields from investments in our properties may be affected by many factors, including changes in governmental regulation (such as zoning laws and government payment), general or local economic conditions (such as fluctuations in interest rates and employment conditions), the available local supply of and demand for improved real estate, a reduction in rental income as the result of an inability to maintain occupancy levels, natural disasters (such as hurricanes, earthquakes and floods) or similar factors.

We Depend on Lease and Interest Income from Real Estate Investments. Approximately 98.6% of our revenue for the year ended December 31, 2019, was derived from lease and interest income from real estate investments. Our revenue would be adversely affected if a significant number of our borrowers or lessees were unable to meet their obligations to us or if we were unable to lease our properties or make mortgage loans on economically favorable terms. There can be no assurance that any lessee will exercise its option to renew its lease upon the expiration of the initial term. There can be no assurance that if such failure to renew were to occur, or if we did not re-lease a property to a current lessee, we could lease the property to others on favorable terms, at the same rent as the current rent, or on a timely basis.

We Rely on a Few Major Operators. During the year ended December 31, 2019, approximately 35.8% of our revenues from leases and interest income from real estate investments were generated from three operators. The failure, inability or unwillingness of these operators to meet their obligations to us could materially reduce our cash flow as well as our results of operations, which could in turn reduce the amount of dividends we pay, cause our stock price to decline and have other material adverse effects on our business, results of operations and financial condition.

We Depend on our Operators For Revenue and Cash Flow. Substantially all of our revenues and sources of cash flows from operations are derived from operating lease rentals and interest earned on outstanding loans receivable. Our investments in owned properties and mortgage loans represent our primary source of liquidity to fund distributions and are dependent upon the performance of the operators on their lease and loan obligations and the rates earned thereon. Our financial position and ability to make distributions may be adversely affected by financial difficulties experienced by any of our lessees or borrowers, or in the event any such operator does not renew and/or extend its relationship with us or our borrowers when it expires.

The Bankruptcy, Insolvency or Financial Deterioration of our Lessees Could Delay or Prevent Us From Collecting Unpaid Rents or Require Us to Find New Tenants to Operate our Properties. We have limited control over the success or failure of our operators’ businesses. If an operator experiences financial or legal difficulties, the operator may fail to make its rent payments when due or declare bankruptcy, either of which could result in the termination of the operator’s lease and adversely affect us. In the case of a master lease, this risk is magnified, as an operator default could reduce or eliminate rental revenue from several properties. Over the past three years, four of our operators have had or continue to have financial or legal difficulties resulting in non-payment of rent or bankruptcy. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview—Portfolio Overview—Update on Certain Operators for further discussion. If an operator is unable to comply with the terms of its leases, we may be forced to modify the leases in ways that are unfavorable to us. Alternatively, the failure of an operator to perform its obligations under its lease or other agreements with us could force us to declare a default, terminate the lease and transition or sell the property. We cannot provide any assurances that we would be able to find a suitable replacement operator, re-lease the property on substantially equivalent or better terms than the prior lease, or at all, successfully reposition the property for other uses, or sell the property on terms that are favorable to us. If a lessee seeks bankruptcy protection, the Bankruptcy Court may impose an automatic stay that would preclude us from collecting pre-bankruptcy obligations from that operator or seizing its property. An operator bankruptcy could also delay our efforts to collect past

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due amounts owed to us under the applicable lease and ultimately preclude collection of all or a portion of those amounts. In such a case, we may recover substantially less than the full value of any secured or unsecured claims we hold.

Our Remedies May Be Limited When Mortgage Loans Default. To the extent we invest in mortgage loans, such mortgage loans may or may not be recourse obligations of the borrower and generally will not be insured or guaranteed by governmental agencies or otherwise. In the event of a default under such obligations, we may have to foreclose on the property underlying the mortgage or protect our interest by acquiring title to a property and thereafter make substantial improvements or repairs in order to maximize the property’s investment potential. Borrowers may contest enforcement of foreclosure or other remedies, seek bankruptcy protection against such enforcement and/or bring claims for lender liability in response to actions to enforce mortgage obligations. If a borrower seeks bankruptcy protection, the Bankruptcy Court may impose an automatic stay that would preclude us from enforcing foreclosure or other remedies against the borrower. Declines in the value of the property may prevent us from realizing an amount equal to our mortgage loan upon foreclosure.

Our Borrowers and Lessees Face Competition in the Health Care Industry. The long-term care industry is highly competitive and we expect that it may become more competitive in the future. Our borrowers and lessees are competing with numerous other companies providing similar long-term care services or alternatives such as home health agencies, hospices, life care at home, community-based service programs, retirement communities and convalescent centers. Additionally, our borrowers and lessees are employers who compete for labor. Accordingly, our borrowers and lessees are sensitive to changes in the labor market and wages and benefits offered to their employees, which can impact their ability to remain competitive. There can be no assurance that our borrowers and lessees will not encounter increased competition in the future which could limit their ability to attract residents or expand their businesses and therefore affect their ability to make their debt or lease payments to us.

The Health Care Industry is Heavily Regulated by the Government. Our borrowers and lessees who operate health care facilities are subject to extensive regulation by federal, state and local governments. These laws and regulations are subject to frequent and substantial changes resulting from legislation, adoption of rules and regulations, and administrative and judicial interpretations of existing law. These changes may have a dramatic effect on the definition of permissible or impermissible activities, the relative costs associated with doing business and the amount of reimbursement by both government and other third-party payors. These changes may be applied retroactively. The ultimate timing or effect of these changes cannot be predicted. For instance, the Patient Protection and Affordable Care Act, as amended (the “Affordable Care Act”) may be subject to revision, replacement, or repeal. In addition, CMS has adopted regulations that impose new standards for long-term care facilities participating in the Medicare and Medicaid programs. See Item 1. Business—Health Care Regulation. The failure of any borrower of funds from us or lessee of any of our properties to comply with such laws, requirements and regulations could affect its ability to operate its facility or facilities and could adversely affect such lessee’s or borrower’s ability to make lease or debt payments to us.

Federal and State Health Care Cost Containment Measures Including Reductions in Reimbursement From Third-Party Payors Such as Medicare and Medicaid Could Adversely Affect Us and The Ability of Our Operators to Make Payments to Us. The ability of our borrowers and lessees to generate revenue and profit determines the underlying value of that property to us. Revenues of our borrowers and skilled nursing center lessees are generally derived from payments for patient care. Sources of such payments include the federal Medicare program, state Medicaid programs, private insurance carriers, health care service plans, health maintenance organizations, preferred provider arrangements, self-insured employers, as well as the patients themselves.

The health care industry continues to face increased government and private payor pressure on health care providers to control costs. Federal legislative and regulatory policies have been adopted and may continue to be proposed that would reduce Medicare and/or Medicaid payments to nursing facilities. Moreover, state budget pressures continue to result in adoption of Medicaid provider payment reductions in some states. Increasingly, state Medicaid programs are providing coverage through managed care programs under contracts with private health plans, which is intended to decrease state Medicaid costs. The Trump Administration and Congress are also considering revising federal payments to state Medicaid programs to establish block grants or impose per capita limits on federal Medicaid payments to states, and the Trump Administration has announced that states may apply to receive payment on such a basis for limited patient populations under a new “Healthy Adult Opportunity” (HAO) Demonstration. See Item 1. Business—Health

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Care Regulation. In light of continuing federal and state Medicaid program reforms, budget cuts, and regulatory initiatives, no assurance can be given that the implementation of such regulations and reforms will not have a material adverse effect on the financial condition or results of operations of our lessees and/or borrowers which, in turn, could affect their ability to meet their contractual obligations to us.

Insurance Coverage Maintained by Our Borrowers and Lessees May Not Adequately Insure Against Losses. As a non-possessory landlord, we contend we are not generally responsible for what takes place on real estate we do not possess. Although we require our borrowers and lessees to secure adequate comprehensive liability insurance that covers us as well as the borrower or lessee, we may be subject to losses due to noncompliance or insufficient coverage. In addition, certain risks may be uninsurable, not economically insurable or insurance may not be available. There can be no assurance that we, a borrower or lessee will have adequate insurance or funds to cover all contingencies. If an uninsured loss occurs or a loss exceeds policy limits, we could lose both invested capital and anticipated revenues from a property, thereby reducing a property’s cash flow and asset value.

We Could Incur More Debt. We operate with a policy of incurring debt when, in the opinion of our Board of Directors, it is advisable. We may incur additional debt by borrowing under our unsecured revolving line of credit, mortgaging properties we own and/or issuing debt securities in a public offering or in a private transaction. Accordingly, we could become more highly leveraged. The degree of leverage could have important consequences to stockholders, including affecting our ability to obtain, in the future, additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes and making us more vulnerable to a downturn in business or the economy generally.

The Phase-out of LIBOR Could Affect Interest Rates. LIBOR is used as a reference rate for unsecured revolving line of credit. On July 27, 2017, the United Kingdom's Financial Conduct Authority announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. It is unclear if LIBOR will cease to exist at that time, if a new method of calculating LIBOR will be established, or if an alternative reference rate will be established. The Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to U.S. dollar LIBOR in derivatives and other financial contracts. We are not able to predict when LIBOR will cease to be available or if SOFR, or another alternative rate reference rate, attains market traction as a LIBOR replacement. If LIBOR ceases to exist, we will need to agree upon a benchmark replacement index for our unsecured revolving line of credit. The new rate may not be as favorable as those in effect prior to any LIBOR phase-out. Furthermore, the transition process may result in delays in funding, higher interest expense, additional expenses, and increased volatility in markets for instruments that currently rely on LIBOR, all of which could negatively impact our cash flow.

We Could Fail to Collect Amounts Due Under Our Straight-line Rent Receivable Asset. U.S. generally accepted accounting principles (“GAAP”) requires us to calculate the total rent we will receive from leases that contain fixed annual rental escalations and/or have annual rental escalations that are contingent upon changes in the Consumer Price Index, on a straight-line basis over the minimum lease period. If the lease income is calculated on a straight-line basis during the life of the lease, rental income recorded in the early years of a lease is higher than the actual cash rent received which creates an asset on the consolidated balance sheet called straight-line rent receivable. At some point during the lease, depending on the rent levels and terms, this reverses and the cash rent payments received during the later years of the lease are higher than the rental income recognized which reduces the straight-line rent receivable balance to zero by the end of the lease. Per ASC 842, lessors are required to assess the probability of collecting substantially all of the lease payments. The standard defines collectibility as lessee’s ability and intent to pay. If collectibility of substantially all of the lease payments through maturity is not probable, all or a portion of the straight-line rent receivable and other lease receivables may be written-off, and the rental income recorded during the period would be limited to lesser of the income that would have been recognized if collection were probable, and the lease payments received. Our assessment of collectibility of leases includes evaluating the date and assumptions used in determining whether substantially all of the future lease payments were probable based on the lessee’s payment history, the financial strength of the lessees, future contractual rents, and the timing of expected payments.

Our Assets May be Subject to Impairment Charges. We periodically but not less than quarterly evaluate our real estate investments and other assets for impairment indicators. The judgment regarding the existence of impairment indicators is based on factors such as market conditions, operator performance and legal structure. If we determine that

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an impairment has occurred, we would be required to make an adjustment to the net carrying value of the asset which could have a material adverse effect on our results of operations in the period in which the write-off occurs.

A Failure to Reinvest Cash Available to Us Could Adversely Affect Our Future Revenues and Our Ability to Increase Dividends to Stockholders; There is Considerable Competition in Our Market for Attractive Investments. From time to time, we will have cash available from (1) proceeds of sales of shares of securities, (2) proceeds from new debt issuances, (3) principal payments on our mortgages and other investments, (4) sale of properties, and (5) funds from operations. We may reinvest this cash in health care investments and in accordance with our investment policies, repay outstanding debt or invest in qualified short-term or long-term investments. We compete for real estate investments with a broad variety of potential investors. The competition for attractive investments negatively affects our ability to make timely investments on acceptable terms. Delays in acquiring properties or making loans will negatively impact revenues and perhaps our ability to increase distributions to our stockholders.

Our Failure to Qualify as a REIT Would Have Serious Adverse Consequences to Our Stockholders. We intend to operate so as to qualify as a REIT under the Internal Revenue Code of 1986, as amended, or the Code. We believe that we have been organized and have operated in a manner which would allow us to qualify as a REIT under the Code beginning with our taxable year ended December 31, 1992. However, it is possible that we have been organized or have operated in a manner which would not allow us to qualify as a REIT, or that our future operations could cause us to fail to qualify. Qualification as a REIT requires us to satisfy numerous requirements (some on an annual and quarterly basis) established under highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations, and involves the determination of various factual matters and circumstances not entirely within our control. For example, in order to qualify as a REIT, at least 95% of our gross income in any year must be derived from qualifying sources, and we must pay dividends to stockholders aggregating annually at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and by excluding capital gains). Legislation, new regulations, administrative interpretations or court decisions could significantly change the tax laws with respect to qualification as a REIT or the federal income tax consequences of such qualification.

If we fail to qualify as a REIT in any taxable year, we will be subject to federal and state income tax (including any applicable alternative minimum tax for taxable years ending prior to January 1, 2018) on our taxable income at regular corporate rates. Unless we are entitled to relief under statutory provisions, we would be disqualified from treatment as a REIT for the four taxable years following the year during which we lost qualification. If we lose our REIT status, our net earnings available for investment or distribution to stockholders would be significantly reduced for each of the years involved. In addition, we would no longer be required to make distributions to stockholders.

Recent Changes to the U.S. Tax Laws Could Have a Significant Negative Impact on the Overall Economy, Our Tenants, Our Investors, and Our Business. On December 22, 2017, H.R. 1, commonly referred to as the Tax Cuts and Jobs Act (the “TCJA”) was signed into law making significant changes to the Code. Relevant changes include, but are not limited to the following:

● a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017,

● an immediate 100% deduction of the cost of certain capital asset investments (generally excluding real estate assets), subject to a phase-down of the deduction percentage over time,

● restrictions to the deductibility of interest expense by businesses (generally, to 30% of the business’ adjusted taxable income) except, among others, real property businesses electing out of such restriction; generally, we expect our business to qualify as such a real property business,

● the use of the less favorable alternative depreciation system to depreciate real property in the event a real property business elects to avoid the interest deduction restriction above,

● elimination of the corporate alternative minimum tax,

● restriction limiting the benefits of like-kind exchanges that defer capital gains for tax purposes to exchanges of real property; and

● implementation of a one-time transition tax on the mandatory deemed repatriation of foreign earnings.

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While the changes in the TCJA generally appear to be favorable with respect to REITs, the extensive changes to non-REIT provisions in the Code may have unanticipated effects on us or our stockholders. Moreover, Congressional leaders have recognized that the process of adopting extensive tax legislation in a short amount of time without hearings and substantial time for review is likely to have led to drafting errors, issues needing clarification and unintended consequences that will have to be reviewed in subsequent tax legislation. At this point, it is not clear when Congress will address these issues or when the Internal Revenue Service will issue administrative guidance on the changes made in the TCJA.

As a result of the changes to U.S. federal tax laws implemented by the TCJA, our taxable income and the amount of distributions to our stockholders required in order to maintain our REIT status, and our relative tax advantage as a REIT, may significantly change. The long-term impact of the TCJA on the overall economy, government revenues, our tenants, us, and the real estate industry cannot be reliably predicted at this early stage of the new law’s implementation. Furthermore, the TCJA may negatively impact certain of our tenants’ operating results, financial condition, and future business plans. The TCJA may also result in reduced government revenues, and therefore reduced government spending, which may negatively impact some of our tenants that rely on government funding. There can be no assurance that the TCJA will not negatively impact our operating results, financial condition, and future business operations.

Provisions in Our Articles of Incorporation May Limit Ownership of Shares of Our Capital Stock. In order for us to qualify as a REIT, no more than 50% in value of the outstanding shares of our stock may be beneficially owned, directly or indirectly, by five or fewer individuals at any time during the last half of each taxable year. To ensure qualification under this test, our Articles of Incorporation provide that, subject to exceptions, no person may beneficially own more than 9.8% of outstanding shares of any class or series of our stock, including our common stock. Our Board of Directors may exempt a person from the 9.8% ownership limit upon such conditions as the Board of Directors may direct. However, our Board of Directors may not grant an exemption from the 9.8% ownership limit if it would result in the termination of our status as a REIT. Shares of capital stock in excess of the 9.8% ownership limitation that lack an applicable exemption may lose rights to dividends and voting, and may be subject to redemption. As a result of the limitations on ownership set forth in our Articles of Incorporation, acquisition of any shares of capital stock that would result in our disqualification as a REIT may be limited or void. The 9.8% ownership limitation also may have the effect of delaying, deferring, or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for holders of our capital stock.

Our Real Estate Investments are Relatively Illiquid. Real estate investments are relatively illiquid and, therefore, tend to limit our ability to vary our portfolio promptly in response to changes in economic or other conditions. All of our properties are “special purpose” properties that cannot be readily converted to general residential, retail or office use. Health care facilities that participate in Medicare or Medicaid must meet extensive program requirements, including physical plant and operational requirements, which are revised from time to time. Such requirements may include a duty to admit Medicare and Medicaid patients, limiting the ability of the facility to increase its private pay census beyond certain limits. Medicare and Medicaid facilities are regularly inspected to determine compliance, and may be excluded from the programs—in some cases without a prior hearing—for failure to meet program requirements. Transfers of operations of nursing homes and other health care-related facilities are subject to regulatory approvals not required for transfers of other types of commercial operations and other types of real estate. Thus, if the operation of any of our properties becomes unprofitable due to competition, age of improvements or other factors such that our lessee or borrower becomes unable to meet its obligations on the lease or mortgage loan, the liquidation value of the property may be substantially less than the net book value or the amount owing on any related mortgage loan, than would be the case if the property were readily adaptable to other uses. The receipt of liquidation proceeds or the replacement of an operator that has defaulted on its lease or loan could be delayed by the approval process of any federal, state or local agency necessary for the transfer of the property or the replacement of the operator with a new operator licensed to manage the facility. In addition, certain significant expenditures associated with real estate investment, such as real estate taxes and maintenance costs, are generally not reduced when circumstances cause a reduction in income from the investment. Should such events occur, our income and cash flows from operations would be adversely affected.

We are Subject to Risks and Liabilities in Connection with Properties Owned Through Limited Liability Companies and Partnerships. We currently have an investment in a limited liability company and we may make

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additional investments through these ventures in the future. Partnership or limited liability company investments may involve risks such as the following:

● our partners or co-members might become bankrupt (in which event we and any other remaining general partners or members would generally remain liable for the liabilities of the partnership or limited liability company);

● our partners or co-members might at any time have economic or other business interests or goals which are inconsistent with our business interests or goals;

● our partners or co-members may be in a position to take action contrary to our instructions, requests, policies or objectives, including our policy with respect to maintaining our qualification as a REIT; and

● agreements governing limited liability companies and partnerships often contain restrictions on the transfer of a member’s or partner’s interest or “buy-sell” or other provisions which may result in a purchase or sale of the interest at a disadvantageous time or on disadvantageous terms.

We will, however, generally seek to maintain sufficient control of our partnerships and limited liability companies to permit us to achieve our business objectives. Our organizational documents do not limit the amount of available funds that we may invest in partnerships or limited liability companies. The occurrence of one or more of the events described above could have a direct and adverse impact on us.

Risks Associated with Property Development that Can Render a Project Less Profitable or Not Profitable, and, Under Certain Circumstances, Prevent Completion of Development Activities Undertaken. Our business includes development of seniors housing and health care properties. Ground up development presents additional risk, including but not limited to the following:

● a development opportunity may be abandoned after expending significant resources resulting in the loss of deposits or failure to recover expenses already incurred;

● the development and construction costs of a project may exceed original estimates due to increased interest rates and higher materials, transportation, labor, leasing or other costs, which could make completion of the development project less profitable;

● construction and/or permanent financing may not be available on favorable terms or at all;

● the project may not be completed on schedule, which can result in increases in construction costs and debt service expenses as a result of a variety of factors that are beyond our control, including natural disasters, labor conditions, material shortages, regulatory hurdles, civil unrest and acts of war; and

● occupancy rates and rents at a newly completed property may not meet expected levels and could be insufficient to make the property profitable.

These risks could result in substantial unanticipated delays or expenses and, under certain circumstances, could prevent completion of development activities once undertaken, any of which could have a material adverse effect on our business, results of operations and financial condition.

The Failure, Inadequacy, Interruption or Security Failure of Our Information Technology Could Harm Our Business. We rely on information technology networks and systems to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personal identifying information, operator and lease data. We purchase some of our information technology from vendors, on whom our systems depend. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential operator and other customer information, such as individually identifiable information, including information relating to financial accounts. Although we have taken steps to protect the security of our information systems and the data maintained in those systems, it is possible that our safety and security measures will not be able to prevent the systems’ improper functioning or damage, or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks. Because our operators also rely on information technology networks, systems and software, we may be exposed to cyber-attacks on our operators. Security

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breaches of our or our operators’ networks and systems, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information. Any failure to maintain proper function, security and availability of our and our operators’ information systems and the data maintained in those systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties, harm our business relationships or increase our security and insurance costs, which could have a material adverse effect on our business, results of operations and financial condition.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

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Item 2. PROPERTIES

Here and throughout this Annual Report on Form 10-K wherever we provide details of our properties’ bed/unit count, the number of beds/units applies to skilled nursing, assisted living, independent living, memory care and behavioral health care properties only. This number is based upon unit/bed counts shown on operating licenses provided to us by lessees/borrowers or units/beds as stipulated by lease/mortgage documents. These numbers often differ, usually not materially by property, from units/beds in operation at any point in time. The differences are caused by such things as operators converting a patient/resident room for alternative uses, such as offices or storage, or converting a multi-patient room/unit into a single patient room/unit. We monitor our properties on a routine basis through site visits and reviews of current licenses. In an instance where such change would cause a de-licensing of beds or in our opinion impact the value of the property, we may take action against the lessee/borrower to preserve the value of the property/collateral.

Owned Properties. The following table sets forth certain information regarding our owned properties as of December 31, 2019 (dollars amounts in thousands):

								Remaining
	No. of	No. of	No. of		No. of			Lease		Gross
Location	SNFs	ALFs	Others		Beds/Units	Encumbrances		Term (1)		Investments
Alabama	1	—	—		174	$	—	76		$	9,734
Arizona	4	—	—		807		—	49			32,667
California	2	5	—		755		—	104			103,240
Colorado	3	13	—		980		—	84			114,923
Florida	4	7	—		823		—	66			72,169
Georgia	—	1	—		70		—	18			14,382
Illinois	—	5	—		418		—	140			87,604
Iowa	7	—	—		544		—	—	(2)​		14,610
Kansas	3	8	—		681		—	84			71,505
Kentucky	2	1	—		346		—	156			62,715
Michigan	—	2	—	(3)​	156		—	114			20,083
Mississippi	—	1	—		62		—	60			9,430
Missouri	1	1	—		163		—	102			40,379	(4)​
Nebraska	—	4	—		159		—	141			10,104
Nevada	—	—	1		118		—	62			10,416
New Jersey	—	4	—		205		—	98			62,146
New Mexico	7	—	—		843		—	73			50,912
N. Carolina	—	5	—		210		—	12			13,096
Ohio	2	7	—		580		—	149			86,474
Oklahoma	—	6	—		219		—	12			12,315
Oregon	1	1	—		188		—	51			33,408	(5)​
Pennsylvania	—	2	—		129		—	141			9,714
S. Carolina	2	5	—		515		—	35			48,155
Tennessee	2	—	—		141		—	48			5,275
Texas	23	17	—		4,033		—	92			284,697
Virginia	4	1	—		574		—	86			47,104
Washington	1	—	—		123		—	19			8,024
Wisconsin	1	10	—		954		—	129			149,290
TOTAL	70	106	1		14,970	$	—	96		$	1,484,571

(1) Weighted average remaining months in lease term as of December 31, 2019.

(2) Relates to 7 SNFs totaling 544 beds operated by Preferred Care, Inc. (“Preferred Care”) lease. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview—Portfolio Overview—Update on Certain Operators for further discussion.

(3) Includes three parcels of land held-for-use.

(4) Includes amounts relating to the development cost of a 90-bed SNF.

(5) Includes amounts relating to the development cost of a 78-unit ALF/MC.

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The following chart represents 10 states with the highest percentage of gross investment for our owned properties as of December 31, 2019:

The following table sets forth certain information regarding our lease expirations for our owned properties as of December 31, 2019 (dollars amounts in thousands):

								Annualized			% of Annualized
	No. of		No. of	No. of	No. of		No. of	Rental			Rental Income
Year	SNFs		ALFs	Others	Beds/Units		Operators	Income (1)			Expiring
2020	—		35	—	1,471		1	$	13,648		10.2	%
2021	3		2	—	493		3		3,958		2.9	%
2022	1		—	—	121		1		771		0.6	%
2023	5		—	—	456		3		3,332		2.5	%
2024	3		11	—	1,140		2		5,140		3.8	%
2025	6		1	1	981		2		9,087		6.8	%
2026	13		—	—	1,678		2		16,429		12.2	%
2027	—		9	—	611		3		11,257		8.4	%
2028	—		3	—	177		2		2,873		2.1	%
2029	1		11	—	1,098		8		10,314		7.7	%
Thereafter	16		34	—	4,237		5		57,562		42.8	%
TOTAL	48	(2)​	106	1	12,463	(2)​		$	134,371	(2)​	100.0	%

(1) Includes annualized GAAP rent for leased properties, except for two master leases which are based on agreed upon cash rents.

(2) Excludes 22 SNFs operated by Preferred Care totaling with a total of 2,507 beds. 20 of these properties are held-for-sale at December 31, 2019. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview—Portfolio Overview—Update on Certain Operators for further discussion.

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Mortgage Loans. The following table sets forth certain information regarding our mortgage loans as of December 31, 2019 (dollars amounts in thousands):

						Average	Original				Current
	No. of	No. of	No. of	No. of	Interest	Months to	Face Amount		Gross		Annual Debt
Location	SNFs	ALFs	OTHs	Beds/ Units	Rate	Maturity	of Mortgage Loans		Investments		Service (1)
Michigan (2)	22	—	—	2,892	9.2%-9.9%	292	$	258,171	$	256,659	$	25,007
TOTAL	22	—	—	2,892		292	$	258,171	$	256,659	$	25,007

(1) Includes principal and interest payments.

(2) Consists of four mortgage loans with one borrower that contain cross collateral and cross default provisions.

Item 3. LEGAL PROCEEDINGS

We are and may become from time to time a party to various claims and lawsuits arising in the ordinary course of our business, which in our opinion are not singularly or in the aggregate anticipated to be material to our results of operations or financial condition. Claims and lawsuits may include matters involving general or professional liability asserted against the lessees or borrowers of our properties, which we believe under applicable legal principles are not our responsibility as a non-possessory landlord or mortgage holder. We believe that these matters are the responsibility of our lessees and borrowers pursuant to general legal principles and pursuant to insurance and indemnification provisions in the applicable leases or mortgages. We intend to continue to vigorously defend such claims and lawsuits.

Item 4. MINE SAFETY DISCLOSURES

Not applicable

PART II

Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is listed on the NYSE under the symbol “LTC”.

Holders

As of February 19, 2020, we had approximately 365 holders of our common stock, as determined by counting our record holders and the number of participants reflected in a security position listing provided to us by the Depository Trust Company. Because such “DTC participants” are brokers and other institutions holding shares of our common stock on behalf of their customers, we do not know the actual number of unique stockholders represented by these record holders.

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Dividend

We declared and paid total cash distributions on common stock as set forth below:

	Declared				Paid
	2019		2018		2019		2018
First quarter	$	0.57	$	0.57	$	0.57	$	0.57
Second quarter	$	0.57	$	0.57	$	0.57	$	0.57
Third quarter	$	0.57	$	0.57	$	0.57	$	0.57
Fourth quarter	$	0.57	$	0.57	$	0.57	$	0.57
	$	2.28	$	2.28	$	2.28	$	2.28

We intend to distribute to our stockholders an amount at least sufficient to satisfy the distribution requirements of a REIT. Cash flows from operating activities available for distribution to stockholders will be derived primarily from interest and rental payments from our real estate investments. All distributions will be made subject to approval of our Board of Directors and will depend on our earnings, our financial condition and such other factors as our Board of Directors deem relevant. In order to qualify for the beneficial tax treatment accorded to REITs by Sections 856 through 860 of the Internal Revenue Code, we are required to make distributions to holders of our shares equal to at least 90% of our REIT taxable income.

Issuer Purchases of Equity Securities

None.

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Stock Performance Graph

The National Association of Real Estate Investment Trusts (“NAREIT”), an organization representing U.S. REITs and publicly traded real estate companies, classifies a company with 50% or more of assets directly or indirectly in the equity ownership of real estate as an equity REIT. Our equity ownership of real estate assets was more than 75% during 2019.

This graph compares the cumulative total stockholder return on our common stock from December 31, 2014 to December 31, 2019 with the cumulative stockholder total return of (1) the Standard & Poor’s 500 Stock Index and (2) the NAREIT Equity REIT Index. The comparison assumes $100 was invested on December 31, 2014 in our common stock and in each of the foregoing indices and assumes the reinvestment of dividends.

		Period Ending
Index		12/31/14		12/31/15		12/31/16		12/31/17		12/31/18		12/31/19
LTC Properties, Inc.	$	100.00	$	104.80	$	119.52	$	116.22	$	117.55	$	132.58
NAREIT Equity	$	100.00	$	103.20	$	111.99	$	117.84	$	112.39	$	141.61
S&P 500	$	100.00	$	101.38	$	113.51	$	138.29	$	132.23	$	173.86

The stock performance depicted in the above graph is not necessarily indicative of future performance.

The stock performance graph shall not be deemed incorporated by reference into any filing by us under the Securities Act of 1933 or the Securities Exchange Act of 1934 except to the extent that we specifically incorporate such information by reference, and shall not otherwise be deemed filed under such Acts.

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Item 6. SELECTED FINANCIAL DATA

The following table of selected financial information should be read in conjunction with our financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K.

	2019			2018			2017			2016			2015
	(In thousands, except per share amounts)
Operating information:
Total revenues	$	185,304		$	168,645		$	168,065		$	161,583		$	136,203
Net income	$	80,872	(1)​	$	155,076	(2)​	$	87,340		$	85,115		$	73,081
Income allocated to non-controlling interests	$	346		$	95		$	—		$	—		$	—
Income allocated to participating securities	$	391		$	625		$	362		$	385		$	484
Income allocated to preferred stockholders	$	—		$	—		$	—		$	—		$	2,454
Net income available to common stockholders	$	80,135		$	154,356	(2)​	$	86,978		$	84,730		$	70,143
Per share information:
Earning per common share:
Basic	$	2.03	(1)​	$	3.91	(2)​	$	2.21		$	2.21		$	1.97
Diluted	$	2.02	(1)​	$	3.89	(2)​	$	2.20		$	2.21		$	1.94
Common stock distributions declared	$	2.28		$	2.28		$	2.28		$	2.19		$	2.07
Common stock distributions paid	$	2.28		$	2.28		$	2.28		$	2.19		$	2.07
Balance sheet information:
Real estate investments, net	$	1,390,915		$	1,349,520		$	1,309,996		$	1,255,503		$	1,164,950
Total assets	$	1,514,209		$	1,513,620		$	1,465,570		$	1,394,896		$	1,275,424
Total debt (3)	$	693,388	(4)​	$	645,029		$	667,502	(4)​	$	609,391	(4)​	$	571,872

(1) Decrease due to a lower gain on sale, an impairment loss from investment in unconsolidated joint ventures during 2019, and a one-time non-recurring other income related to the write-off of a contingent lease incentive and related earn-out liability in 2018, partially offset by higher rental income and gain on property insurance proceeds. See Item 7. Management’s Discussion and Analysis. Operating Results for further detail.

(2) Increased primarily due to gain on sale of six ALF and four SNF properties during 2018.

(3) Includes bank borrowings and senior unsecured notes (net of debt issue costs).

(4) Increase primarily due to the sale of senior unsecured notes and increased borrowings.

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

Business and Investment Strategy

We are a self-administered health care real estate investment trust (“REIT”) that invests primarily in seniors housing and health care properties through sale-leaseback transactions, mortgage financing, joint ventures and structured finance solutions including mezzanine lending. We conduct and manage our business as one operating segment, rather than multiple operating segments, for internal reporting and internal decision-making purposes. Our primary objectives are to create, sustain and enhance stockholder equity value and provide current income for distribution to stockholders through real estate investments in seniors housing and health care properties managed by experienced operators. Our primary seniors housing and health care property classifications include skilled nursing centers (“SNF”), assisted living communities (“ALF”), independent living communities (“ILF”), memory care communities (“MC”) and combinations thereof. ILF, ALF, MC, and combinations thereof are included in the ALF communities classification. We have been operating since August 1992.

Substantially all of our revenues and sources of cash flows from operations are derived from operating lease rentals, interest earned on outstanding loans receivable and income from investment in unconsolidated joint ventures. Our investments in owned properties and mortgage loans represent our primary source of liquidity to fund distributions and are dependent upon the performance of the operators on their lease and loan obligations and the rates earned thereon. To the extent that the operators experience operating difficulties and are unable to generate sufficient cash to make payments to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. To mitigate this risk, we monitor our investments through a variety of methods determined by property type and operator. Our monitoring process includes periodic review of financial statements for each facility, periodic review of operator credit, scheduled property inspections and review of covenant compliance.

In addition to our monitoring and research efforts, we also structure our investments to help mitigate payment risk. Some operating leases and loans are credit enhanced by guaranties and/or letters of credit. In addition, operating leases are typically structured as master leases and loans are generally cross-defaulted and cross-collateralized with other loans, operating leases or agreements between us and the operator and its affiliates.

Depending upon the availability and cost of external capital, we anticipate making additional investments in health care related properties. New investments are generally funded from cash on hand, temporary borrowings under our unsecured revolving line of credit and internally generated cash flows. Our investments generate internal cash from rent and interest receipts and principal payments on mortgage loans receivable. Permanent financing for future investments, which replaces funds drawn under our unsecured revolving line of credit, is expected to be provided through a combination of public and private offerings of debt and equity securities and secured and unsecured debt financing. The timing, source and amount of cash flows provided by financing activities and used in investing activities are sensitive to the capital markets’ environment, especially to changes in interest rates. Changes in the capital markets’ environment may impact the availability of cost-effective capital.

We believe our business model has enabled and will continue to enable us to maintain the integrity of our property investments, including in response to financial difficulties that may be experienced by operators. Traditionally, we have taken a conservative approach to managing our business, choosing to maintain liquidity and exercise patience until favorable investment opportunities arise.

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Portfolio Overview

The following tables summarizes our real estate investment portfolio as of December 31, 2019 (dollar amounts in thousands):

					Twelve Months Ended
			Percentage		December 31, 2019				Percentage		Number	Number of
	Gross		of		Rental		Interest		of		of	SNF	ALF
Owned Properties	Investments		Investments		Income (1)		Income		Revenues		Properties (2)	Beds (3)	Units (3)
Assisted Living (4)	$	858,852	49.4	%	$	68,641	$	—	40.7	%	106	—	6,086
Skilled Nursing		596,370	34.2	%		69,087		—	40.9	%	70	8,505	261
Under Development (5)		17,989	1.0	%		—		—	—	%	—	—	—
Other (6)		11,360	0.7	%		955		—	0.6	%	1	118	—
Total Owned Properties		1,484,571	85.3	%		138,683		—	82.2	%	177	8,623	6,347
Mortgage Loans
Skilled Nursing		256,659	14.7	%		—		29,991	17.8	%	22	2,892	—
Total Mortgage Loans		256,659	14.7	%		—		29,991	17.8	%	22	2,892	—
Total Portfolio	$	1,741,230	100.0	%	$	138,683	$	29,991	100.0	%	199	11,515	6,347

					Twelve Months Ended
			Percentage		December 31, 2019				Percentage		Number	Number of
	Gross		of		Rental		Interest		of		of	SNF	ALF
Summary of Properties by Type	Investments		Investments		Income (1)		Income		Revenues		Properties (2)	Beds (3)	Units (3)
Assisted Living (4)	$	858,852	49.4	%	$	68,641	$	—	40.7	%	106	—	6,086
Skilled Nursing		853,029	48.9	%		69,087		29,991	58.7	%	92	11,397	261
Under Development (5)		17,989	1.0	%		—		—	—	%	—	—	—
Other (6)		11,360	0.7	%		955		—	0.6	%	1	118	—
Total Portfolio	$	1,741,230	100.0	%	$	138,683	$	29,991	100.0	%	199	11,515	6,347

(1) Excludes variable rental income of $15,998 related to lessee reimbursement of our real estate taxes and $1,926 adjustment for collectibility of rental income.

(2) We have investments in 28 states leased or mortgaged to 30 different operators.

(3) See Item 2. Properties for discussion of bed/unit count.

(4) Includes ILF, ALF, MC, and combinations thereof.

(5) Represents two development projects, consisting of a 78-unit ALF/MC located in Oregon and a 90-bed SNF located in Missouri.

(6) Includes three parcels of land held-for-use and one behavioral health care hospital.

As of December 31, 2019, we had $1.4 billion in carrying value of net real estate investments, consisting of $1.1 billion or 81.7% invested in owned and leased properties and $0.3 billion or 18.3% invested in mortgage loans secured by first mortgages.

For the year ended December 31, 2019, rental income and interest income from mortgage loans represented 82.4% and 16.2%, respectively, of total gross revenues. In most instances, our lease structure contains annual rental escalations. Our leases that contain fixed annual rental escalations and/or have annual rental escalations that are contingent upon changes in the Consumer Price Index, are generally recognized on a straight-line basis over the minimum lease period. Certain leases have annual rental escalations that are contingent upon changes in the gross operating revenues of the property. This revenue is not recognized until the appropriate contingencies have been resolved. During the years ended December 31, 2019 and 2018 and 2017, we recognized $0.5 million of contingent rental income. For the year ended December 31, 2019, we recognized $4.5 million in straight-line rental income and $0.4 million in amortization of lease incentives. For the remaining leases in place at December 31, 2019, assuming no modification or replacement of existing leases and no new leased investments are added to our portfolio, except for the subsequent acquisitions, lease extensions, completed developments in 2020 and the leases reported below under Update on Certain Operators, we currently expect that straight-line rental income will decrease from $4.5 million in 2019 to $2.5 million for projected annual 2020. Our cash rental income is projected to increase from $150.6 million in 2019 to $150.8 million for projected annual 2020. At December 31, 2019, the straight-line rent receivable balance on the consolidated balance sheet was $45.7 million.

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Many of our existing leases contain renewal options that, if exercised, could result in the amount of rent payable upon renewal being greater or less than that currently being paid. During the year ended December 31, 2019, there were no lease renewals. Some of our lease agreements provide purchase options allowing the lessees to purchase the properties they currently lease from us. See Item 8. FINANCIAL STATEMENTS— Note 5. Real Estate Investments. Owned Properties for a table that includes information about purchase options included in our lease agreements.

Update on Certain Operators

During 2017, we issued a notice of default to Anthem Memory Care (“Anthem”) resulting from Anthem’s partial payment of minimum rent. Anthem operates 11 memory care communities under a master lease. During 2019, Anthem paid the agreed upon minimum cash rent of $7.5 million. This amount represents approximately 50% of the contractual amount due under the lease in 2019. In accordance with Accounting Standard Codification (“ASC”) Topic 842, Leases (“ASC 842”), at January 1, 2019, we evaluated the collectibility of straight-line rent receivable and lease incentive balances related to Anthem and determined it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance. We receive regular financial performance updates from Anthem and continue to monitor Anthem’s performance obligations under the master lease agreement.

On December 4, 2018, Senior Care Centers, LLC. and affiliates and subsidiaries (“Senior Care”) filed for Chapter 11 bankruptcy as a result of lease terminations from certain landlords and on-going operational challenges. Senior Care did not pay us December 2018 rent and accordingly, in December 2018, we placed Senior Care on a cash basis. In accordance with ASC 842 lease accounting guidance, at January 1, 2019, we evaluated the collectibility of straight-line rent receivable and lease incentive balance related to Senior Care and determined it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance.

In July 2019, Senior Care filed a motion to affirm the lease, which caused us to file an objection in opposition to Senior Care’s motion. During the fourth quarter of 2019, the court rejected our motion and accordingly, our master lease with Senior Care was affirmed. Furthermore, we received the court ordered reimbursement from Senior Care for the December 2018 unpaid rent, late fees and legal costs totaling $1.6 million. Senior Care has paid us January 2019 to February 2020 rent, real estate property tax and maintenance deposits.

During 2017, Preferred Care, Inc. (“Preferred Care”) and affiliated entities filed for Chapter 11 bankruptcy as a result of a multi-million-dollar judgment in a lawsuit in Kentucky against Preferred Care and certain affiliated entities. The affiliated entities named in the lawsuit operate properties in Kentucky and New Mexico. Preferred Care leased 24 properties under two master leases from us and none of the 24 properties are located in Kentucky or New Mexico. Those 24 properties are in Arizona, Colorado, Iowa, Kansas and Texas. The Preferred Care operating entities that sublease those properties did not file for bankruptcy. In accordance with ASC 842 lease accounting guidance, at January 1, 2019, we evaluated the collectibility of straight-line rent receivable and lease incentive balances related to Preferred Care and determined it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance. Preferred Care did not affirm our master leases and began paying only $55,000 of monthly rent in the third quarter of 2019. The monthly contractual obligation under the master leases was approximately $1.0 million. We applied all of their security deposit to rental income during the third quarter and recorded only the $55,000 monthly cash received in the fourth quarter of 2019 to rental income. During the fourth quarter of 2019, we entered into multiple contracts, subject to standard due diligence and other contingencies, to sell a majority of the properties. Two of these contracts were completed during the fourth quarter of 2019, resulting in the sale of two properties in Arizona and Texas. See Item 8. FINANCIAL STATEMENTS— Note 5. Real Estate Investments. Property Sales for further discussion. At December 31, 2019, the 20 properties under purchase and sale agreements met the criteria under GAAP as held-for-sale. Accordingly, these properties have been classified as held-for-sale at December 31, 2019.

During the three months ended March 31, 2019, we placed Thrive Senior Living, LLC (“Thrive”) on a cash basis due to short-payment of contractual rent in November 2018 and non-payment of rent in December 2018 totaling $0.7 million. Thrive subsequently paid the delinquent rent in 2019 but failed to pay 2019 contractual rent. In April 2019, we issued a notice of default to Thrive. In accordance with ASC 842 lease accounting guidance, at January 1, 2019, we

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evaluated the collectibility of straight-line rent receivable and lease incentive balances related to Thrive and determined that it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance.

During 2019, we completed the following for all of the properties in the Thrive portfolio. As of December 31, 2019, Thrive does not operate any properties in our portfolio:

● Transitioned two memory care communities located in Ohio and Kentucky with a total of 120-units to an operator new to our portfolio during the second quarter of 2019. The memory care communities are under a 10-year lease term with initial cash rent of $1.3 million in year one, $1.5 million in year two, $2.0 million in year three and $2.2 million in year four. Rent may increase subject to a contingent escalation formula commencing in year five and annually thereafter. The lease provides the lessee with a purchase option available between 2028-2029;

● Transitioned a 56-unit memory care community located in Texas to an existing operator and added the memory care community to an existing master lease during the second quarter of 2019. As a result of this transition, annual cash rent under the existing master lease was increased by $0.4 million effective June 1, 2019 and will increase by an additional $0.3 million on June 1, 2020 and 2.5% annually thereafter. Additionally, LTC will be entitled to incremental rent calculated as a percentage of increases in gross revenues generated by the property above an established threshold;

● Transitioned two memory care communities in Georgia and South Carolina with a total of 159-units to an existing operator during the third quarter of 2019. The new 2-year lease agreement has an initial annual cash rent of $1.8 million. Rent increases 3.5% in year two; and

● Transitioned the remaining 60-unit memory care community located in Florida to an existing operator effective August 1, 2019. The new 10-year lease provides the lessee twelve months free rent, rent of $0.5 million in year two and $0.6 million in year three and thereafter. In year two, the lessee has the option to defer rent in an amount not to exceed $0.2 million. Rent may increase subject to a contingent escalation formula commencing in year three and annually thereafter. Additionally, the lease provides the lessee with a purchase option available between 2028 and 2029. See Item 8. FINANCIAL STATEMENTS— Note 5. Real Estate Investments. Owned Properties for a table that summarizes information about purchase options included in our lease agreements.

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2019 Transactions Overview

The following tables summarizes our transactions in 2019 (dollar amounts in thousand):

Investment in Owned Properties

	Number		Type	Number	Initial					Total		Total
	of		of	of	Cash			Purchase		Transaction		Acquisition
State (1)	Properties		Properties	Beds/Units	Yield			Price		Costs		Costs
California	—	(2)​	Land	—	N/A		$	110	$	28	$	138
Michigan	2		ALF/MC	156	7.4	%		19,000		139		19,139
Missouri	1	(3)​	SNF/Land	90	(3)​	%		22,122		120		22,242
Virginia	1	(4)​	ALF/MC	74	7.4	%		16,719		176		16,895
Total	4			320			$	57,951	$	463	$	58,414

(1) Subsequent to December 31, 2019, we acquired a 140-bed SNF located in Texas for approximately $13,500 and entered into a 10-year master lease agreement with an initial cash yield of 8.5%, escalating 2% annually starting in the second year of the lease, with two five-year renewal options.

(2) We acquired a parcel of land adjacent to an existing SNF in California.

(3) We acquired a newly constructed 90-bed SNF located in Missouri for $19,500. The initial cash yield is 8.3% with annual escalation of 2% effective December 2019 and thereafter. Additionally, we acquired a parcel of land and committed to develop a 90-bed SNF in Missouri. The commitment totals approximately $17,400. The initial cash yield upon completion of the development will be 9.3%.

(4) We entered into a joint venture (“JV”) to purchase an existing operational 74-unit ALF/MC. The non-controlling partner contributed $919 of equity and we contributed $15,976 in cash. Our economic interest in real estate JV is approximately 95%.

Sold Properties

	Type		Number	Number						Net
	of		of	of		Sales		Carrying		Gain
State	Properties		Properties	Beds/Units		Price		Value		(Loss)
N/A	N/A		—	—	$	—	$	—	$	500	(1)​
Arizona, Georgia and Texas	SNF	(2)​	3	478		15,310		8,995		5,556
Texas	ALF	(3)​	1	140		1		3,830		(3,950)
Total			4	618	$	15,311	$	12,825	$	2,106

(1) Gain recognized due to the receipt of funds held in escrow related to a portfolio of six ALFs sold during the second quarter of 2018.

(2) We sold a property located in Texas, previously operated by Preferred Care, with a carrying value of $871 for $140. Additionally, we sold a SNF from Preferred Care portfolio located in Arizona with a carrying value of $6,485 for $7,250. This transaction includes a holdback of $1,091 which is held in an interest-bearing account with an escrow holder on behalf of the buyer for potential specific losses. Using the expected value model per ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), we estimated and recorded the holdback value of $613. Also, we sold a SNF located in Georgia with a carrying value of $1,639 for $7,920.

(3) We sold an ALF located in Texas with a carrying value of $3,830.

Development Projects

	Developments		Improvements
Assisted Living Communities	$	14,088	$	2,544
Skilled Nursing Centers		6,436		—
Other		—		295
Total	$	20,524	$	2,839

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Completed Developments

	Number	Type	Number
	of	of	of			Total
Type of Project	Properties	Property	Beds/Units	State	Investment
Development	1	SNF	143	Kentucky	$	24,974
Development	1	ILF/ALF/MC	110	Wisconsin		21,999
	2		253		$	46,973

Investment in Mortgage Loans

Originations and funding under mortgage loans receivable	$	12,342	(1)​
Scheduled principal payments received		(1,065)
Mortgage loan premium amortization		(4)
Provision for loan loss reserve		(113)
Net increase in mortgage loans receivable	$	11,160

(1) During 2019, we funded an additional $7,500 under an existing mortgage loan. The incremental funding bears interest at 9.41% fixed for two years and escalating by 2.25% thereafter.

Investment in Unconsolidated Joint Ventures

	Type	Type	Total		Currently			Number													Cash
	of	of	Preferred		Paid in			of		Investment			Carrying			Capital		Income			Interest
State	Properties	Investment	Return		Cash			Beds/ Units		Commitment			Value			Contribution		Recognized			Received
Arizona	ALF/MC/ILF	Preferred Equity	15	%	8	%	(1)​	585	$	—		$	19,003	(1)​	$	472	$	1,029		$	1,580
Florida (2)	ALF/ILF/MC	Mezzanine	N/A	%	N/A	%		N/A		—	(2)​		—	(2)​		—		955	(2)​		979	(2)​
Florida (3)	UDP/ALF/MC	Mezzanine	N/A	%	N/A	%		N/A		—	(3)​		—	(3)​		—		404	(3)​		432	(3)​
								585	$	—		$	19,003		$	472	$	2,388		$	2,991

(1) Effective second quarter of 2019, this JV was placed on cash basis due to delinquency of our preferred return. In November 2019, the JV signed a contract for the sale of the four properties comprising the JV. The contract was subject to standard due diligence and other contingencies to close, all of which were met in January 2020. Accordingly, based on the information available to us regarding alternatives and courses of action as of December 31, 2019, we performed a recoverability test on the carrying value of our preferred equity investment and concluded that a portion of our preferred equity investment will not be recoverable. Therefore, we recorded an impairment loss from investment in unconsolidated joint ventures of $5,500 and wrote our preferred equity investment down to its estimated fair value.

(2) We had a $2,900 mezzanine loan commitment for a 99-unit seniors housing community in Florida with a total preferred return of 15%. Since interest payments were deferred and no interest was recorded for the first twelve months of the loan, we used the effective interest income method in accordance with GAAP to recognize interest income and recorded the difference between the effective interest income and cash interest income to the loan principal balance. During the third quarter of 2019, the mezzanine loan was paid off.

(3) We had a $3,400 mezzanine loan commitment for the development of a 127-unit seniors housing community in Florida with a total preferred return of 15%. During the first quarter of 2019, the mezzanine loan was paid off.

Investment in Notes Receivable

Advances under notes receivable	$	8,967	(1)​
Principal payments received under notes receivable		(3,503)
Reclassed to real estate under development (2)		(200)	(2)​
Notes receivable reserve		(52)
Net increase in notes receivable	$	5,212

(1) We originated a $6,800 mezzanine loan commitment for the development of a 204-unit ILF/ALF/MC in Georgia. The mezzanine loan has a five-year term and a 12.0% return, a portion of which is paid in cash, and the remaining portion of which is deferred during the first 46 months. Additionally, we originated a $1,400 note agreement, funding $1,304 with a commitment to fund $96. The note bears interest at 7.0%. Further, we originated a $550 note agreement, funding $500 with a commitment to fund $50. The note bears interest at 7.5%.

(2) Represents interim working capital loan related to a development project which matured upon completion of the development project and commencement of the lease.

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Key Performance Indicators, Trends and Uncertainties

We utilize several key performance indicators to evaluate the various aspects of our business. These indicators are discussed below and relate to concentration risk and credit strength. Management uses these key performance indicators to facilitate internal and external comparisons to our historical operating results in making operating decisions and for budget planning purposes.

Concentration Risk. We evaluate by gross real estate investment our concentration risk in terms of asset mix, real estate investment mix, operator mix and geographic mix. Concentration risk is valuable to understand what portion of our real estate investments could be at risk if certain sectors were to experience downturns. Asset mix measures the portion of our real estate investments that are real property or mortgage loans. Investment mix measures the portion of our investments that relate to our various property types. Operator mix measures the portion of our real estate investments that relate to our top five operators. Geographic mix measures the portion of our real estate investment that relate to our top five states.

The following table reflects our recent historical trends of concentration risk (gross investment, in thousands):

	12/31/19		9/30/19		6/30/19		3/31/19		12/31/18
Asset mix:
Real property	$	1,484,571	$	1,474,692	$	1,452,669	$	1,445,596	$	1,421,456
Loans receivable		256,659		255,737		254,555		246,775		245,386
Real estate investment mix:
Skilled nursing centers	$	853,029	$	861,500	$	844,136	$	834,185	$	830,485
Assisted living communities		858,852		844,635		843,682		840,926		820,686
Under development		17,989		12,934		8,167		6,193		4,606
Other (1)		11,360		11,360		11,239		11,067		11,065
Operator mix:
Prestige Healthcare (1)	$	269,792	$	268,869	$	267,688	$	259,907	$	258,519
Senior Lifestyle Corporation		191,283		191,283		190,758		190,368		190,368
Senior Care Centers		138,109		138,109		138,109		138,109		138,109
Anthem Memory Care		136,484		136,483		136,397		136,397		136,397
Carespring Health Care Management		102,520		102,042		102,038		99,997		97,461
Remaining operators		903,042		893,643		872,234		867,593		845,988
Geographic mix:
Texas	$	284,697	$	292,238	$	292,159	$	292,091	$	292,317
Michigan (1)		276,742		256,680		255,498		247,718		246,329
Wisconsin		149,290		149,184		149,064		146,750		143,657
Colorado		114,923		114,923		114,923		114,923		114,923
California		103,240		102,561		102,412		102,254		102,254
Remaining states		812,338		814,843		793,168		788,635		767,362

(1) We have three parcels of land as of December 31, 2019. These parcels are located adjacent to properties securing the Prestige Healthcare mortgage loan and are managed by Prestige.

Credit Strength. We measure our credit strength both in terms of leverage ratios and coverage ratios. Our leverage ratios include debt to gross asset value and debt to market capitalization. The leverage ratios indicate how much of our consolidated balance sheet capitalization is related to long-term obligations. Our coverage ratios include interest coverage ratio and fixed charge coverage ratio. The coverage ratios indicate our ability to service interest and fixed charges (interest). The coverage ratios are based on earnings before interest, taxes, depreciation and amortization for real estate (“EBITDAre”) as defined by National Association of Real Estate Investment Trusts (“NAREIT”). EBITDAre is calculated as net income (computed in accordance with GAAP) excluding (i) interest expense, (ii) income tax expense, (iii) real estate depreciation and amortization, (iv) impairment write-downs of depreciable real estate, (v) gains or losses on the sale of depreciable real estate, and (vi) adjustments for unconsolidated partnerships and joint ventures. Adjusted EBITDAre is calculated as EBITDAre adjusted for non-recurring items. Leverage ratios and coverage ratios are widely used by investors, analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. The following table reflects the recent historical trends for our credit strength measures:

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Balance Sheet Metrics

	Year Ended		Quarter Ended
	12/31/19		12/31/19			9/30/19			6/30/19			3/31/19			12/31/18
Debt to gross asset value	37.2	%	37.2	%	(1)​	36.8	%		36.8	%	(4)​	37.1	%	(5)​	35.2	%
Debt to market capitalization ratio	28.0	%	28.0	%	(2)​	25.1	%	(3)​	27.1	%		27.1	%	(3)​	28.1	%
Interest coverage ratio (7)	4.9	x	4.9	x		4.9	x		4.8	x		4.9	x	(6)​	5.2	x
Fixed charge coverage ratio (7)	4.9	x	4.9	x		4.9	x		4.8	x		4.9	x	(6)​	5.2	x

(1) Increased due to increase in outstanding debt partially offset by increase in gross asset value. The increase in asset value was primarily due to acquisitions, developments and capital improvement funding partially offset by property sales.

(2) Increased due to decrease in market capitalization and increase in outstanding debt.

(3) Decreased due to increase in market capitalization.

(4) Decreased due to increase in gross asset value from additional mortgage loan, development and capital improvement funding.

(5) Increased due to increase in outstanding debt and decrease in gross asset value. The decrease in gross asset value was primarily due to adoption of ASC 842 during the three months ended March 31, 2019. ASC 842 requires a lease-by-lease collectibility analysis of receivables and related balances. Based on our assessment, we determined that it was not probable that we would collect substantially all of the contractual lease obligations for certain leases through maturity. Accordingly, we wrote-off the balance of straight-line rent receivable and lease incentives related to these leases as a cumulative adjustment to equity, as required by the transition guidance.

(6) Decreased due to decrease in other income compared to the fourth quarter of 2018. The increase in other income during the fourth quarter of 2018 was from the net write-off of a contingent lease incentive and related earn-out liability.

(7) In calculating our interest coverage and fixed charge coverage ratios above, we use EBITDAre, which is a financial measure not derived in accordance with U.S. generally accepted accounting principles (“GAAP”) (non-GAAP financial measure). EBITDAre and Adjusted EBITDAre are not alternatives to net income, operating income or cash flows from operating activities as calculated and presented in accordance with GAAP. You should not rely on EBITDAre and Adjusted EBITDAre as a substitute for any such GAAP financial measures or consider it in isolation, for the purpose of analyzing our financial performance, financial position or cash flows. Net income is the most directly comparable GAAP measure to EBITDAre and Adjusted EBITDAre.

	Year to Date			Quarter Ended
	12/31/19			12/31/19			9/30/19			6/30/19			3/31/19			12/31/18
Net income	$	80,872		$	12,631		$	27,280		$	20,534		$	20,427		$	30,844
Less: (Gain)/ loss on sale		(2,106)			4,630			(6,236)			(500)			—			(7,984)
Add: Impairment loss from investment in unconsolidated joint ventures		5,500			5,500			—			—			—			—
Add: Interest expense		30,582			7,578			7,827			7,710			7,467			7,215
Add: Depreciation and amortization		39,216			9,817			9,932			9,860			9,607			9,396
EBITDAre	$	154,064		$	40,156		$	38,803		$	37,604		$	37,501		$	39,471
Less: Non-recurring one-time items		(1,535)			(2,111)			—			—			576			—
Adjusted EBITDAre	$	152,529		$	38,045		$	38,803		$	37,604		$	38,077		$	39,471
Interest expense	$	30,582		$	7,578		$	7,827		$	7,710		$	7,467		$	7,215
Add: Capitalized interest		608			167			108			73			260			398
Interest incurred	$	31,190		$	7,745		$	7,935		$	7,783		$	7,727		$	7,613
Interest coverage ratio		4.9	x		4.9	x		4.9	x		4.8	x		4.9	x		5.2	x
Interest incurred	$	31,190		$	7,745		$	7,935		$	7,783		$	7,727		$	7,613
Total fixed charges	$	31,190		$	7,745		$	7,935		$	7,783		$	7,727		$	7,613
Fixed charge coverage ratio		4.9	x		4.9	x		4.9	x		4.8	x		4.9	x		5.2	x

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We evaluate our key performance indicators in conjunction with current expectations to determine if historical trends are indicative of future results. Our expected results may not be achieved and actual results may differ materially from our expectations. This may be a result of various factors, including, but not limited to:

● The status of the economy;

● The status of capital markets, including prevailing interest rates;

● Compliance with and changes to regulations and payment policies within the health care industry;

● Changes in financing terms;

● Competition within the health care and seniors housing industries; and

● Changes in federal, state and local legislation.

Management regularly monitors the economic and other factors listed above. We develop strategic and tactical plans designed to improve performance and maximize our competitive position. Our ability to achieve our financial objectives is dependent upon our ability to effectively execute these plans and to appropriately respond to emerging economic and company-specific trends.

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Operating Results

Year ended December 31, 2019 compared to year ended December 31, 2018 (in thousands):

	Years ended December 31,
	2019			2018			Difference
Revenues:
Rental income	$	152,755		$	135,405		$	17,350	(1) (2)​
Interest income from mortgage loans		29,991			28,200			1,791	(3)​
Interest and other income		2,558			5,040			(2,482)	(4)​
Total revenues		185,304			168,645			16,659
Expenses:
Interest expense		30,582			30,196			(386)
Depreciation and amortization		39,216			37,555			(1,661)	(5)​
Provision for doubtful accounts		166			87			(79)
Transaction costs		365			84			(281)
Property tax expense		16,755			—			(16,755)	(2)​
General and administrative expenses		18,453			19,193			740	(6)​
Total expenses		105,537			87,115			(18,422)
Other operating income:
Gain on sale of real estate, net		2,106	(7)​		70,682	(8)​		(68,576)
Operating income		81,873			152,212			(70,339)
Gain from property insurance proceeds		2,111			—			2,111	(9)​
Impairment loss from investments in unconsolidated joint ventures		(5,500)			—			(5,500)	(10)​
Income from unconsolidated joint ventures		2,388			2,864			(476)
Net income		80,872			155,076			(74,204)
Income allocated to non-controlling interests		(346)			(95)			(251)
Net income attributable to LTC Properties, Inc.		80,526			154,981			(74,455)
Income allocated to participating securities		(391)			(625)			234
Net income available to common stockholders	$	80,135		$	154,356		$	(74,221)

(1) Increased due to (2) below and increased rent from acquisitions and developments partially offset by decreased rent from sold properties and properties transitioned to other operators.

(2) Increased due to recording $15,998 real estate taxes that are reimbursed by our operators as rental income with a corresponding property tax expense. We adopted ASC 842 using a modified retrospective approach as of the adoption date of January 1, 2019. Accordingly, we are not required to report the expense and revenue stream for periods prior to January 1, 2019.

(3) Increased primarily due to mortgage originations and capital improvement funding.

(4) Decreased primarily due to the other income from net impact of the write-off of an earn-out liability and the related lease incentive asset during 2018 partially offset by increase in other income during 2019 due to mezzanine loan originations.

(5) Increased due to acquisitions and completed developments partially offset by sold properties.

(6) Decreased primarily due to lower accrual of incentive compensation in 2019.

(7) Represents the net gain resulting from sale of three SNFs and an ALF during 2019. Additionally, represents an additional $500 net gain on sale due to receipt of funds held in escrow related to a portfolio of six ALFs sold in 2018. See (8) below.

(8) Represents the net gain on sale related to six ALFs and four SNFs during 2018.

(9) Relates to remaining insurance proceeds for remediation of a property in our portfolio, which was sold in 2019. See Item 8. FINANCIAL STATEMENTS—Note 2. Summary of Significant Accounting Policies. for more information.

(10) Based on the information available to us regarding alternatives and courses of action as of December 31, 2019, we performed a recoverability test on the carrying amount of our preferred equity investment and determined that a portion of our preferred equity investment is not recoverable. Therefore, we recorded an impairment loss from investment in unconsolidated joint ventures of $5,500 and wrote our preferred equity investment down to its estimated fair value. See Item 8. FINANCIAL STATEMENTS—Note 6. Investment in Unconsolidated Joint Ventures for further information.

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Year ended December 31, 2018 compared to year ended December 31, 2017 (in thousands)

	Years ended December 31,
	2018			2017			Difference
Revenues:
Rental income	$	135,405		$	137,657		$	(2,252)	(1)​
Interest income from mortgage loans		28,200			26,769			1,431	(2)​
Interest and other income		5,040			3,639			1,401	(3)​
Total revenues		168,645			168,065			580
Expenses:
Interest expense		30,196			29,949			(247)	(4)​
Depreciation and amortization		37,555			37,610			55
Impairment on real estate for sale		—			1,880			1,880	(5)​
Provision for doubtful accounts		87			(206)			(293)
Transaction costs		84			56			(28)
General and administrative expenses		19,193			17,513			(1,680)	(6)​
Total expenses		87,115			86,802			(313)
Other operating income:
Gain on sale of real estate, net		70,682	(7)​		3,814	(8)​		66,868	(7)​
Operating income		152,212			85,077			67,135
Income from unconsolidated joint ventures		2,864			2,263			601	(8)​
Net income		155,076			87,340			67,736
Income allocated to non-controlling interests		(95)			—			(95)
Net income attributable to LTC Properties, Inc.		154,981			87,340			67,641
Income allocated to participating securities		(625)			(362)			(263)
Net income available to common stockholders	$	154,356		$	86,978		$	67,378

(1)Decreased due the reduction of rent related to the properties sold during 2018 and Senior Care Centers non-payment of December rent as a result of the bankruptcy filing, partially offset by acquisitions and capital improvements.

(2) Increased primarily due to mortgage originations and capital improvement funding partially offset by payoffs.

(3)Increased primarily due to the net impact of the write-off of an earn-out liability and the related lease incentive asset during 2018 partially offset by decrease in interest income due to mezzanine loan payoffs and write-off of an earn-out liability and related lease incentive asset during 2017.

(4)Increased primarily due to a higher average outstanding balance on our line of credit and an increase in LIBOR rates, partially offset by scheduled principal payments under our senior unsecured notes and an increase in capitalized interest related to development projects.

(5)Represents the write-off of straight-line rent and other receivables in 2017 related to two properties due to negotiations to transition these properties to another operator in our portfolio.

(6)Increased primarily due to lower incentive compensation in the prior year related to a previously disclosed defaulted master lease.

(7)Represents the net gain on sale of six ALF and four SNF properties during 2018, partially offset by a net gain on sale of five ALF and a donation of a SNF during 2017.

(8)Increased primarily due to income generated from additional funding under a preferred capital contribution commitment and income from a mezzanine loan accounted for as an unconsolidated joint venture in accordance with GAAP which was previously deferred.

Funds From Operations

Funds from Operations (“FFO”) attributable to common stockholders, basic FFO attributable to common stockholders per share and diluted FFO attributable to common stockholders per share are supplemental measures of a REIT’s financial performance that are not defined by GAAP. Real estate values historically rise and fall with market conditions, but cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. We believe that by excluding the effect of historical cost depreciation, which may be of limited relevance in evaluating current performance, FFO facilitates comparisons of operating performance between periods.

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We use FFO as a supplemental performance measurement of our cash flow generated by operations. FFO does not represent cash generated from operating activities in accordance with GAAP, and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income available to common stockholders.

We calculate and report FFO in accordance with the definition and interpretive guidelines issued by the NAREIT. FFO, as defined by NAREIT, means net income available to common stockholders (computed in accordance with GAAP) excluding gains or losses on the sale of real estate and impairment write-downs of depreciable real estate plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Our calculation of FFO may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that have a different interpretation of the current NAREIT definition from us; therefore, caution should be exercised when comparing our FFO to that of other REITs.

The following table reconciles net income available to common stockholders to FFO attributable to common stockholders (unaudited, amounts in thousands, except per share amounts):

	For the year ended December 31,
	2019			2018			2017
GAAP net income available to common stockholders	$	80,135		$	154,356		$	86,978
Add: Depreciation and amortization		39,216			37,555			37,610
Add: Impairment charges		5,500			—			1,880
Less: Gain on sale of real estate, net		(2,106)			(70,682)			(3,814)
NAREIT FFO attributable to common stockholders	$	122,745		$	121,229		$	122,654
NAREIT FFO attributable to common stockholders per share:
Basic	$	3.10		$	3.07		$	3.11
Diluted	$	3.08	(1)​	$	3.06	(1)​	$	3.10	(1)​
Weighted average shares used to calculate NAREIT FFO per share:
Basic		39,571			39,477			39,409
Diluted		39,921	(2)​		39,839	(2)​		39,637	(2)​

(1) Includes the effect of participating securities.

(2) Diluted weighted average shares used to calculate FFO per share includes the effect of stock option equivalents, participating securities and performance-based stock units.

Critical Accounting Policies

See Item 8. FINANCIAL STATEMENTS—Note 2. Summary of Significant Accounting Policies.

Liquidity and Capital Resources

Sources and Uses of Cash

As of December 31, 2019, we had a total of $4.2 million of cash and cash equivalents, $506.1 million available under our unsecured revolving line of credit and $21.5 million available under our senior unsecured note shelf agreement which expired in February 16, 2020. Subsequent to December 31, 2019, we borrowed $18.0 million under our unsecured revolving line of credit. Accordingly, we have $111.9 million outstanding under our unsecured revolving line of credit and $488.1 million available for borrowing. See Item 8. FINANCIAL STATEMENTS— Debt Obligations for further discussion.

Additionally, we have the ability to access the capital markets through the issuance of $200.0 million common stock by means of our equity distribution agreements under our automatic shelf registration statement. See Equity below for further discussion.

We have an automatic shelf registration statement on file with the SEC, and currently have the ability to file additional automatic shelf registration statements, to provide us with capacity to offer an indeterminate amount of

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common stock, preferred stock, warrants, debt, depositary shares, or units. We may from time to time publicly raise capital under our automatic shelf registration statement in amounts, at prices, and on terms to be announced when and if the securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of the offering.

We believe that our current cash balance, cash flow from operations available for distribution or reinvestment, our borrowing capacity and our potential ability to access the capital markets are sufficient to provide for payment of our current operating costs, meet debt obligations and pay common dividends at least sufficient to maintain our REIT status and repay borrowings at, or prior to, their maturity. The timing, source and amount of cash flows used by financing and investing activities are sensitive to the capital markets’ environment, especially to changes in interest rates. We continuously evaluate the availability of cost-effective capital and believe we have sufficient liquidity for additional capital investments in 2020.

We expect our future income and ability to make distributions from cash flows provided by operating activities to depend on the collectibility of our rents and mortgage loans receivable. The collection of these loans and rents will be dependent, in large part, upon the successful operation by the operators of the seniors housing and health care properties we own or that are pledged to us. The operating results of the facilities may be impacted by various factors over which the operators/owners may have no control. Those factors include, without limitation, the status of the economy, changes in supply of or demand for competing seniors housing and health care facilities, ability to control rising operating costs, and the potential for significant reforms in the health care industry. In addition, our future growth in net income and cash flow may be adversely impacted by various proposals for changes in the governmental regulations and financing of the health care industry. We cannot presently predict what impact these proposals may have, if any. We believe that an adequate provision has been made for the possibility of loans proving uncollectible but we will continually evaluate the financial status of the operations of the seniors housing and health care properties. In addition, we will monitor our borrowers and the underlying collateral for mortgage loans and will make future revisions to the provision, if considered necessary.

Our investments, principally our investments in mortgage loans and owned properties, are subject to the possibility of loss of their carrying values as a result of changes in market prices, interest rates and inflationary expectations. The effects on interest rates may affect our costs of financing our operations and the fair market value of our financial assets. Generally, our loans have predetermined increases in interest rates and our leases have agreed upon annual increases. We may initially fund some of our investments with variable interest rate debt and, if so, we would be at risk of net interest margin deterioration if medium and long-term rates were to increase.

Our primary sources of cash include rent and interest receipts, borrowings under our primary unsecured credit facility and proceeds from investment dispositions. Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures and construction advances), loan advances and general and administrative expenses. These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows as summarized below (in thousands):

	Year Ended December 31,					Change
Cash provided by (used in):	2019		2018			$
Operating activities	$	122,469	$	115,535	$	6,934
Investing activities		(78,988)		(3,609)		(75,379)
Financing activities		(44,001)		(112,375)		68,374
Decrease in cash, cash equivalents and restricted cash		(520)		(449)		(71)
Cash, cash equivalents and restricted cash, beginning of period		4,764		5,213		(449)
Cash, cash equivalents and restricted cash, end of period	$	4,244	$	4,764	$	(520)

Debt Obligations

Bank Borrowings. We have an Unsecured Credit Agreement that provides for a revolving line of credit up to $600.0 million in aggregate commitment of the lenders and the opportunity to increase the commitment size of the credit agreement up to a total of $1.0 billion. The Unsecured Credit Agreement matures on June 27, 2022 and provides for a one-year extension option at our discretion, subject to customary conditions. Based on our leverage at December 31, 2019, the facility provides for interest annually at LIBOR plus 115 basis points and a facility fee of 20

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basis points. At December 31, 2019, we were in compliance with all covenants.

Senior Unsecured Notes. We have a $337.5 million shelf agreement with affiliates and managed accounts of PGIM, Inc. (“Prudential”), with 21.5 million available for borrowings at December 31, 2019, which expired for new issuance on February 16, 2020.

The debt obligations by component as of December 31, 2019 are as follows (dollar amounts in thousands):

	Applicable			Available
	Interest	Outstanding		for
Debt Obligations	Rate (1)	Balance		Borrowing
Bank borrowings (2)	3.14%	$	93,900	$	506,100
Senior unsecured notes, net of debt issue costs	4.39%		599,488		21,500
Total	4.22%	$	693,388	$	527,600

(1) Represents weighted average of interest rate as of December 31, 2019.

(2) Subsequent to December 31, 2019, we borrowed $18,000 under our unsecured revolving line of credit, accordingly we have $111,900 outstanding and $488,100 available for borrowing.

Our debt borrowings and repayments during the year ended December 31, 2019, are as follows (in thousands):

Debt Obligations		Borrowings		Repayments
Bank borrowings	$	107,900	$	(126,000)
Senior unsecured notes		100,000		(33,667)
Total	$	207,900	$	(159,667)

Equity

At December 31, 2019, we had 39,751,704 shares of common stock outstanding, equity on our balance sheet totaled $785.4 million and our equity securities had a market value of $1.8 billion. During the year ended December 31, 2019, we declared and paid $90.9 million of cash dividends.

Common Stock. We have an equity distribution agreement with sales agents to issue and sell, from time to time, up to $200.0 million in aggregate offering price of our common shares. The equity distribution agreement provides for sales of common shares to be made by means of ordinary brokers’ transactions, which may include block trades, or transactions that are deemed to be “at the market” offerings. At December 31, 2019, we had $200.0 million available under our equity distribution agreement.

During 2019, we acquired 45,030 shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations. Subsequent to December 31, 2019, we acquired 34,016 shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations. Subsequent to December 31, 2019, we declared a monthly cash dividend of $0.19 per share on our common stock for the months of January, February and March 2020, payable on January 31, February 28 and March 31, 2020, respectively, to stockholders of record on January 23, February 20 and March 23, 2020, respectively.

Non-controlling Interests. We may, enter into partnerships to develop and/or own real estate. Given that our limited members do not have substantive kick-out rights, liquidation rights, or participation rights, we have concluded that the partnerships are VIEs. Since we exercise power over and receive benefits from the VIEs, we are considered the primary beneficiary. Accordingly, we consolidate the VIEs and record the non-controlling interests at cost. During 2019, we invested in the following consolidated VIEs (in thousands):

				Gross
	Property			Consolidated		Non-Controlling
Purpose	Type	State		Assets		Interests
Owned real estate	ALF/MC	VA	$	16,895	$	919

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Stock Based Compensation Plans. During 2015, we adopted, and our stockholders approved the 2015 Equity Participation Plan (the “2015 Plan”) which 1,400,000 shares of common stock have been reserved for awards, including nonqualified stock option grants and restricted stock grants to officers, employees, non-employee directors and consultants. The terms of the awards granted under the 2015 Plan are set by our compensation committee at its discretion.

Restricted Stock and Performance-based Stock Units. During 2019, we granted 147,608 shares of restricted common stock and performance-based stock units under the 2015 Plan as follows:

No. of	Price per
Shares	Share		Vesting Period
78,276	$	46.54	ratably over 3 years
60,836	$	46.54	TSR targets (1)
8,496	$	44.73	May 29, 2020
147,608

(1) Vesting is based on achieving certain total shareholder return (“TSR”) targets in 4 years with acceleration opportunity in 3 years.

Subsequent to December 31, 2019, we granted 76,464 shares of restricted common stock at $48.95 per share, which vest ratably from the grant date over a three-year period.

At December 31, 2019, the total number of restricted common stock and performance-based stock units that are scheduled to vest and remaining compensation expense to be recognized related to the future service period of unvested outstanding restricted common stock and performance-based stock units are as follows (dollar amounts in thousands):

	Number		Remaining
	of		Compensation
Vesting Date	Awards		Expense
2020	139,534	(1)​	$	4,619
2021	119,168	(2)​		2,503
2022	86,931	(3)​		189
Total	345,633		$	7,311

(1) Includes 55,057 performance-based stock units. The performance-based stock units are valued utilizing a lattice-binomial option pricing model based on Monte Carlo simulations. The company recognizes the fair value of the awards over the applicable vesting period as compensation expense.

(2) Includes 66,171 performance-based stock units. See ⁽¹⁾ above for valuation methodology.

(3) Includes 60,836 performance-based stock units. See ⁽¹⁾ above for valuation methodology.

Stock Options. We did not issue any stock options during the year ended December 31, 2019. During 2019, a total of 5,000 stock options were exercised at a total option value of $123,000 and a total market value on the date of exercise of $233,000. At December 31, 2019, we have 15,000 stock options outstanding and exercisable.

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Contractual Obligations

We monitor our contractual obligations and commitments detailed above to ensure funds are available to meet obligations when due. The following table represents our long-term contractual obligations (scheduled principal payments and amounts due at maturity) as of December 31, 2019, excluding the effects of interest and debt issue costs (in thousands):

	Total			2020		2021		2022		2023		2024		Thereafter
Bank borrowings	$	93,900	(1)​	$	—	$	—	$	93,900	$	—	$	—	$	—
Senior unsecured notes		600,300			40,160		47,160		48,160		49,160		49,160		366,500
	$	694,200		$	40,160	$	47,160	$	142,060	$	49,160	$	49,160	$	366,500

(1) Subsequent to December 31, 2019, we borrowed $18,000 under our unsecured revolving line of credit. Accordingly, we have $111,900 outstanding and $488,100 available for borrowing under our unsecured revolving line of credit.

The following table represents our projected interest expense, excluding capitalized interest, amortization of debt issue costs, bank fees and earn-out accretion, as of December 31, 2019 (in thousands):

	Total		2020		2021		2022		2023		2024		Thereafter
Bank borrowings	$	7,469	$	2,998	$	2,989	$	1,482	$	—	$	—	$	—
Senior unsecured notes		161,051		25,658		23,565		21,281		19,003		16,747		54,797
	$	168,520	$	28,656	$	26,554	$	22,763	$	19,003	$	16,747	$	54,797

Off-Balance Sheet Arrangements:

We had no off-balance sheet arrangements as of December 31, 2019.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

You are cautioned that statements contained in this section are forward looking and should be read in conjunction with the disclosure under the heading “Cautionary Statement” and the “Risk Factors” set forth above.

We are exposed to market risks associated with changes in interest rates as they relate to our mortgage loans receivable and debt. Interest rate risk is sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control.

We do not utilize interest rate swaps, forward or option contracts, or foreign currencies or commodities, or other types of derivative financial instruments nor do we engage in “off-balance sheet” transactions. The purpose of the following disclosure is to provide a framework to understand our sensitivity to hypothetical changes in interest rates as of December 31, 2019.

Our future earnings, cash flows and estimated fair values relating to financial instruments are dependent upon prevalent market rates of interest, such as LIBOR or term rates of U.S. Treasury Notes. Changes in interest rates generally impact the fair value, but not future earnings or cash flows, of mortgage loans receivable and fixed rate debt. Our mortgage loans receivable and debt, such as our senior unsecured notes, are primarily fixed-rate instruments. For variable rate debt, such as our revolving line of credit, changes in interest rates generally do not impact the fair value, but do affect future earnings and cash flows.

At December 31, 2019, the fair value of our mortgage loans receivable using a 9.0% discount rate was approximately $312.8 million. A 1% increase in such rate would decrease the estimated fair value of our mortgage loans by approximately $27.0 million while a 1% decrease in such rate would increase their estimated fair value by approximately $31.5 million. At December 31, 2019, the fair value of our senior unsecured notes using a 3.70% discount rate for those maturing before year 2026 and 3.90% discount rate for those maturing at or beyond year 2026 was approximately $612.4 million. A 1% increase in such rate would decrease the estimated fair value of our senior unsecured notes by approximately $31.7 million while a 1% decrease in such rate would increase their estimated fair

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value by approximately $34.2 million. These discount rates were measured based upon management’s estimates of rates currently prevailing for comparable loans available to us and instruments of comparable maturities.

The estimated impact of changes in interest rates discussed above are determined by considering the impact of the hypothetical interest rates on our borrowing costs, lending rates and current U.S. Treasury rates from which our financial instruments may be priced. We do not believe that future market rate risks related to our financial instruments will be material to our financial position or results of operations. These analyses do not consider the effects of industry specific events, changes in the real estate markets, or other overall economic activities that could increase or decrease the fair value of our financial instruments. If such events or changes were to occur, we would consider taking actions to mitigate and/or reduce any negative exposure to such changes. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our capital structure.

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ITEM 8. FINANCIAL STATEMENTS

LTC Properties, Inc.

Index to Consolidated Financial Statements

and Financial Statements Schedules

	Page
Report of Independent Registered Public Accounting Firm	45
Consolidated Balance Sheets as of December 31, 2019 and 2018	48
Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2019, 2018 and 2017	49
Consolidated Statements of Equity for the years ended December 31, 2019, 2018 and 2017	50
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017	51
Notes to Consolidated Financial Statements	52
Consolidated Financial Statement Schedules
Schedule II—Valuation and Qualifying Accounts	83
Schedule III—Real Estate and Accumulated Depreciation	84
Schedule IV—Mortgage Loans on Real Estate	89

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of LTC Properties, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of LTC Properties, Inc. (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of income and comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and the financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 20, 2020, expressed an unqualified opinion thereon.

Adoption of ASU No. 2016-02

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases effective January 1, 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842) and the related amendments.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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Impairment of Real Property Investments
Description of the Matter	At December 31, 2019, the carrying value of the Company’s portfolio of real estate investments was $1.4 billion, which includes real property investments and mortgage loans receivable secured by first mortgages (collectively, “Assets”). As discussed in Note 2 of the consolidated financial statements, the Assets are periodically evaluated for events or changes in circumstances that indicate the Assets may be impaired or the carrying amount of the Assets may not be recoverable. When impairment indicators are identified for real property investments, management calculates the undiscounted cash flows for the properties. When the carrying amount of the properties are not recoverable based on the undiscounted cash flows, management calculates an impairment charge as the excess of the carrying amount of the properties over the estimated fair value as of the measurement date. When indicators are identified for mortgage loans, management calculates an impairment charge as the difference between the carrying amount of the mortgage loan receivable and the discounted cash flows expected to be received, or if foreclosure is probable, the fair value of the collateral securing the mortgage. Auditing the Company’s evaluation of whether its Assets are impaired was complex and involved a high degree of subjectivity in the identification of indicators of impairment and management’s assumptions in estimating future cash flows as estimates underlying the determination of fair value were based on assumptions about future market and economic conditions. Where indicators of impairment exist, the estimation required in the undiscounted future cash flow assumption includes management’s probability-weighting of various scenarios including whether the Company modifies the lease with the existing operator or identifying a replacement operator and the assumed market lease rate underlying projected future rental cash flows.
How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls related to the monitoring for indicators of impairment and, as indicators are present, management’s determination of future cash flows and probability assessment. For example, we tested controls over the Company’s data and assumptions used in the Company’s estimation of undiscounted cash flow and the determination of fair value. Among other audit procedures over management’s monitoring for indicators of impairment, we assessed the completeness of the identification of delinquent lessees by inspecting summaries of management’s review meetings and site inspection reports and observing the site inspection process. For properties with identified indicators of impairment, we performed audit procedures over the Company’s projection of the undiscounted future cash flows. For example, we re-calculated the estimates using management’s model and compared the lease rate assumptions to industry data and recently executed lease agreements for similar property types. For significant assumptions, we performed sensitivity analyses to evaluate the changes in the undiscounted cash flows of the properties that would result from changes in the assumptions. We analyzed the historical accuracy of management’s estimate of cash flows by vouching subsequent cash receipt activity and estimated lease rates by inspecting executed agreements or amendments.
Collectibility of Lease Payments
Description of the Matter	During 2019, the Company recognized rental income of $152.8 million and recorded a straight-line rent receivable of $45.7 million at December 31, 2019. As described in Note 2 to the consolidated financial statements, the Company adopted ASC 842 which requires the Company to assess the probability of collecting substantially all of the lease payments plus any amount necessary to satisfy a residual value guarantee (provided by the lessee or any other unrelated third party). Upon adoption, the Company recorded a $42.8M transition adjustment to write-off straight line rent and other lease receivables. Subsequently, if collectibility of substantially all of the remaining lease payments is not probable, all or a portion of the straight-line rent receivable and other lease receivables may be written off, and the rental income recorded during the period would be limited to the lesser of the income that would have been recognized if collection were probable, or the lease payments, including variable lease payments, that have been collected from the lessee.

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Auditing the Company's collectibility assessment is complex due to the judgment involved in the Company’s determination of the collectibility of remaining lease payments from its operators. The determination involves consideration of experience with the lessee, including the lessee’s payment history, if any, an assessment of the financial strength of the lessee, remaining lease payments, and the timing of expected payments.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls over rental income, including controls over management’s assessment of the collectibility of future lease payments. For example, we tested controls over management’s consideration of the factors mentioned above used in assessing collectibility and controls over the completeness and accuracy of the data used in management’s analyses. To test the rental income recognized, we performed audit procedures that included, among others, evaluating the data and assumptions used in determining whether collection of substantially all of the lease payments was probable based on the factors mentioned above. In addition, we tested the completeness and accuracy of the data that was used in management’s collectibility analyses.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1992.

Los Angeles, California
February 20, 2020

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LTC PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

	December 31,
	2019		2018
ASSETS
Investments:
Land	$	126,703	$	125,358
Buildings and improvements		1,295,899		1,290,352
Accumulated depreciation and amortization		(312,642)		(312,959)
Operating real estate property, net		1,109,960		1,102,751
Properties held-for-sale, net of accumulated depreciation: 2019—$35,113; 2018—$1,916		26,856		3,830
Real property investments, net		1,136,816		1,106,581
Mortgage loans receivable, net of loan loss reserve: 2019—$2,560; 2018—$2,447		254,099		242,939
Real estate investments, net		1,390,915		1,349,520
Notes receivable, net of loan loss reserve: 2019—$181; 2018—$128		17,927		12,715
Investments in unconsolidated joint ventures		19,003		30,615
Investments, net		1,427,845		1,392,850
Other assets:
Cash and cash equivalents		4,244		2,656
Restricted cash		—		2,108
Debt issue costs related to bank borrowings		2,164		2,989
Interest receivable		26,586		20,732
Straight-line rent receivable, net of allowance for doubtful accounts: 2019—$0; 2018—$746		45,703		73,857
Lease incentives		2,552		14,443
Prepaid expenses and other assets		5,115		3,985
Total assets	$	1,514,209	$	1,513,620
LIABILITIES
Bank borrowings	$	93,900	$	112,000
Senior unsecured notes, net of debt issue costs: 2019—$812; 2018—$938		599,488		533,029
Accrued interest		4,983		4,180
Accrued expenses and other liabilities		30,412		31,440
Total liabilities		728,783		680,649
EQUITY
Stockholders’ equity:
Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2019—39,752; 2018—39,657		398		397
Capital in excess of par value		867,346		862,712
Cumulative net income		1,293,482		1,255,764
Cumulative distributions		(1,384,283)		(1,293,383)
Total LTC Properties, Inc. stockholders’ equity		776,943		825,490
Non-controlling interests		8,483		7,481
Total equity		785,426		832,971
Total liabilities and equity	$	1,514,209	$	1,513,620

See accompanying notes.

48

LTC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except per share amounts)

	Year Ended December 31,
	2019		2018		2017
Revenues:
Rental income	$	152,755	$	135,405	$	137,657
Interest income from mortgage loans		29,991		28,200		26,769
Interest and other income		2,558		5,040		3,639
Total revenues		185,304		168,645		168,065
Expenses:
Interest expense		30,582		30,196		29,949
Depreciation and amortization		39,216		37,555		37,610
Impairment charges		—		—		1,880
Provision for doubtful accounts		166		87		(206)
Transaction costs		365		84		56
Property tax expense		16,755		—		—
General and administrative expenses		18,453		19,193		17,513
Total expenses		105,537		87,115		86,802
Other operating income:
Gain on sale of real estate, net		2,106		70,682		3,814
Operating income		81,873		152,212		85,077
Gain from property insurance proceeds		2,111		—		—
Impairment loss from investments in unconsolidated joint ventures		(5,500)		—		—
Income from unconsolidated joint ventures		2,388		2,864		2,263
Net income		80,872		155,076		87,340
Income allocated to non-controlling interests		(346)		(95)		—
Net income attributable to LTC Properties, Inc.		80,526		154,981		87,340
Income allocated to participating securities		(391)		(625)		(362)
Net income available to common stockholders	$	80,135	$	154,356	$	86,978
Earnings per common share:
Basic	$	2.03	$	3.91	$	2.21
Diluted	$	2.02	$	3.89	$	2.20
Weighted average shares used to calculate earnings per common share:
Basic		39,571		39,477		39,409
Diluted		39,759		39,839		39,637
Comprehensive Income:
Net income	$	80,872	$	155,076	$	87,340
Comprehensive income	$	80,872	$	155,076	$	87,340

See accompanying notes.

49

LTC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except per share amounts)

					Capital in		Cumulative				Total		Non-
	Common Stock				Excess of		Net		Cumulative		Stockholders’		controlling		Total
		shares	Amount		Par Value		Income		Distributions		Equity		Interests		Equity
Balance—December 31, 2016		39,221	$	392	$	839,005	$	1,013,443	$	(1,112,792)	$	740,048	$	—	$	740,048
Issuance of common stock		313		3		14,526		—		—		14,529		—		14,529
Issuance of restricted stock		85		1		(21)		—		—		(20)		—		(20)
Net income		—		—		—		87,340		—		87,340		—		87,340
Stock-based compensation expense		—		—		5,247		—		—		5,247		—		5,247
Vesting of stock options		—		—		2		—		—		2		—		2
Stock option exercises		8		—		202		—		—		202		—		202
Non-controlling interest contributions		—		—		—		—		—		—		3,488		3,488
Common stock cash distributions ($2.28 per share)		—		—		—		—		(90,219)		(90,219)		—		(90,219)
Other		(57)		—		(1,969)		—		—		(1,969)		—		(1,969)
Balance—December 31, 2017		39,570		396		856,992		1,100,783		(1,203,011)		755,160		3,488		758,648
Issuance of common stock		22		—		929		—		—		929		—		929
Issuance of restricted stock		91		1		(9)		—		—		(8)		—		(8)
Net income		—		—		—		154,981		—		154,981		95		155,076
Stock-based compensation expense		—		—		5,870		—		—		5,870		—		5,870
Stock option exercises		5		—		123		—		—		123		—		123
Non-controlling interest contributions		—		—		—		—		—		—		3,963		3,963
Non-controlling interest distributions		—		—		—		—		—		—		(65)		(65)
Common stock cash distributions ($2.28 per share)		—		—		—		—		(90,372)		(90,372)		—		(90,372)
Other		(31)		—		(1,193)		—		—		(1,193)		—		(1,193)
Balance—December 31, 2018		39,657		397		862,712		1,255,764		(1,293,383)		825,490		7,481		832,971
Cumulative effect of the adoption of the ASC 842		—		—		—		(42,808)		—		(42,808)		—		(42,808)
Balance-as adjusted at January 1, 2019		39,657		397		862,712		1,212,956		(1,293,383)		782,682		7,481		790,163
Issuance of restricted stock		86				(7)		—		—		(7)		—		(7)
Net income		—		—		—		80,526		—		80,526		346		80,872
Stock-based compensation expense		—		—		6,566		—		—		6,566		—		6,566
Vesting of performance-based stock units		48		—		—		—		(301)		(301)		—		(301)
Stock option exercises		5		1		122		—		—		123		—		123
Non-controlling interest contributions		—		—		—		—		—		—		965		965
Non-controlling interest distributions		—		—		—		—		—		—		(309)		(309)
Common stock cash distributions ($2.28 per share)		—		—		—		—		(90,599)		(90,599)		—		(90,599)
Other		(44)		—		(2,047)		—		—		(2,047)		—		(2,047)
Balance—December 31, 2019		39,752	$	398	$	867,346	$	1,293,482	$	(1,384,283)	$	776,943	$	8,483	$	785,426

See accompanying notes.

50

LTC PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended December 31,
	2019		2018		2017
OPERATING ACTIVITIES:
Net income	$	80,872	$	155,076	$	87,340
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		39,216		37,555		37,610
Stock-based compensation expense		6,566		5,870		5,249
Impairment charges		5,500		—		1,880
Gain on sale of real estate, net		(2,106)		(70,682)		(3,814)
Income from unconsolidated joint ventures		(2,388)		(2,864)		(2,263)
Income distributions from unconsolidated joint ventures		2,991		2,371		1,738
Insurance proceeds for damaged property		—		2,619		—
Payment for remediation of damaged property		—		(508)		—
Straight-line rental income		(4,487)		(9,550)		(10,694)
Adjustment for collectibility of rental income		1,926		—
Lease incentives funded		(387)		(1,272)		(6,544)
Amortization of lease incentives		385		2,092		2,209
Provision for (recovery of) doubtful accounts		166		87		(206)
Non-cash interest related to contingent liabilities		—		377		602
Non-cash income related to earn-out and related lease incentive write-off		—		(3,074)		(842)
Other non-cash items, net		1,016		1,180		1,282
Increase in interest receivable		(5,854)		(5,682)		(5,367)
Increase (decrease) in accrued interest payable		803		(1,096)		601
Net change in other assets and liabilities		(1,750)		3,036		(3,476)
Net cash provided by operating activities		122,469		115,535		105,305
INVESTING ACTIVITIES:
Investment in real estate properties		(58,414)		(40,408)		(82,405)
Investment in real estate developments		(20,524)		(35,279)		(22,901)
Investment in real estate capital improvements		(2,839)		(3,249)		(2,899)
Capitalized interest		(608)		(1,248)		(908)
Proceeds from sale of real estate, net		14,009		92,749		15,413
Investment in real estate mortgage loans receivable		(12,342)		(21,364)		(11,913)
Principal payments received on mortgage loans receivable		1,065		2,136		17,863
Investments in unconsolidated joint ventures		(472)		(670)		(3,848)
Proceeds from dissolution of unconsolidated joint ventures		6,601		—		—
Payment of working capital reserve		—		—		(439)
Advances and originations under notes receivable		(8,967)		(124)		—
Principal payments received on notes receivable		3,503		3,848		25
Net cash used in investing activities		(78,988)		(3,609)		(92,012)
FINANCING ACTIVITIES:
Bank borrowings		107,900		116,200		113,000
Repayment of bank borrowings		(126,000)		(100,700)		(123,600)
Proceeds from issuance of senior unsecured notes		100,000		—		100,000
Principal payments on senior unsecured notes		(33,667)		(38,166)		(31,167)
Proceeds from common stock issued		—		1,005		14,578
Stock option exercises		123		123		202
Distributions paid to stockholders		(90,899)		(90,372)		(90,219)
Contribution from non-controlling interests		965		3,963		3,488
Distributions paid to non-controlling interests		(309)		(65)		—
Financing costs paid		(61)		(3,162)		(363)
Other		(2,053)		(1,201)		(1,990)
Net cash used in financing activities		(44,001)		(112,375)		(16,071)
Decrease in cash, cash equivalents and restricted cash		(520)		(449)		(2,778)
Cash, cash equivalents and restricted cash, beginning of period		4,764		5,213		7,991
Cash, cash equivalents and restricted cash, end of period	$	4,244	$	4,764	$	5,213
Supplemental disclosure of cash flow information:
Interest paid	$	28,767	$	30,116	$	28,070

See accompanying notes.

51

LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. The Company

LTC Properties, Inc. (“LTC”), a Maryland corporation, commenced operations on August 25, 1992. LTC is a real estate investment trust (“REIT”) that invests primarily in seniors housing and health care properties primarily through sale-leaseback transactions, mortgage financing joint ventures and structured finance solutions including preferred equity and mezzanine lending. We conduct and manage our business as one operating segment, rather than multiple operating segments, for internal reporting and internal decision-making purposes. Our primary objectives are to create, sustain and enhance stockholder equity value and provide current income for distribution to stockholders through real estate investments in seniors housing and health care properties managed by experienced operators. Our primary seniors housing and health care property classifications include skilled nursing centers (“SNF”), assisted living communities (“ALF”), independent living communities (“ILF”), memory care communities (“MC”) and combinations thereof. ILF, ALF, MC and combinations thereof are included in the ALF classification.

2. Summary of Significant Accounting Policies

Basis of Presentation. The accompanying consolidated financial statements include the accounts of LTC, our wholly-owned subsidiaries, and our consolidated companies. All intercompany investments, accounts and transactions have been eliminated.

Consolidation of entities is based on determination of the primary beneficiary. In order to be considered the primary beneficiary, the member should be able to exercise power over and receive benefits from the entity. Power over the company is based on the provisions of the operating agreement that provides us with a controlling financial interest in the entity. Under the terms of the operating agreement, we, as the general member, are responsible for the management of the company’s assets, business and affairs. Our rights and duties in management of the company include making all operating decisions, setting the capital budget, executing all contracts, making all employment decisions, and handling the purchase and disposition of assets, among others. We, as the general member, are responsible for the ongoing, major, and central operations of the company and make all management decisions. In addition, we, as the general member, assume the risk for all operating losses, capital losses, and are entitled to substantially all capital gains (appreciation) and accordingly, receive substantial benefits from the company.

The Financial Accounting Standards Board (“FASB”) created a framework for evaluating whether a general partner or a group of general partners controls a limited partnership or a managing member or a group of managing members can exercise power over a limited liability company, and therefore should consolidate the entity. The guidance states that the presumption of general partner or managing member control would be overcome only when the limited partners or non-managing members have certain specific rights as described in the guidance. The limited members have virtually no rights and are precluded from taking part in the operation, management or control of the company. The limited members are also precluded from transferring their interests without the expressed permission of the general member. However, general partners could transfer their interest without consultation or permission of the limited members. We consolidated the companies in accordance with the guidance.

The FASB requires the classification of non-controlling interests as a component of consolidated equity in the consolidated balance sheet subject to the provisions of the rules governing classification and measurement of redeemable securities. The guidance requires consolidated net income to be reported at the amounts attributable to both the controlling and non-controlling interests. The calculation of earnings per share will be based on income amounts attributable to the controlling interest.

Any reference to the number of properties or facilities, number of units, number of beds, number of operators, and yield on investments in real estate are unaudited and outside the scope of our independent registered public

52

LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

accounting firm’s audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board.

Going Concern. In August 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements— Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this update define management’s responsibility under U.S. generally accepted accounting principles (“GAAP”) to evaluate when and how substantial doubt about the organization’s ability to continue as a going concern should be disclosed in the financial statement footnotes. This ASU expands disclosure requirements about principal conditions or events that raise substantial doubt. It also requires disclosing management’s evaluation of the significance of those conditions or events in relationship to the organization’s ability to meet its obligations, and management’s plans that are intended to either alleviate substantial doubt or to mitigate conditions or events that raise substantial doubt. ASU No. 2014-15 is effective for annual periods ending after December 15, 2016. We adopted this ASU in 2017. The adoption of this ASU did not have a material impact on our financial statements or disclosures.

Use of Estimates. Preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Cash Equivalents. Cash equivalents consist of highly liquid investments with a maturity of three months or less when purchased and are stated at cost which approximates market.

Restricted Cash. In November 2016, the FASB issued ASU No 2016-18 (“ASU 2016-18”), Restricted Cash. ASU 2016-18 requires an entity to reconcile and explain the period over period change in total cash, cash equivalent and restricted cash within its consolidated statement of cash flows. ASU 2016-18 is effective for annual periods ending after December 15, 2017. We adopted this ASU in 2018. The adoption of this ASU did not have a material impact on our financial statements or disclosures.

During the third quarter of 2017, a 170-bed skilled nursing center in our portfolio (the “Property”), located in Texas, was evacuated due to damages caused by Hurricane Harvey. The Property was under a triple net master lease agreement. We periodically evaluate properties for impairment when events or changes in circumstances indicate that the asset may be impaired or the carrying amount of the asset may not be recoverable through future undiscounted cash flows. Based upon a quarterly assessment of the Property using the recoverability test, we concluded the Property was not impaired.

The provisions of our triple net lease agreements impose certain obligations on our operators including:

● Acquire property insurance, subject to certain criteria;

● Continue paying rent in the event of any property damage or destruction; and

● Return the leased property back to us at the end of the lease term, in the same condition originally received.

During the second quarter of 2018, our operator provided us with insurance proceeds of $2,619,000 for remediation of the Property as noted in the provisions of our master lease agreement. Accordingly, we classified the insurance proceeds as Restricted cash on our consolidated balance sheets at December 31, 2018. During the fourth quarter of 2019, we sold the Property and recognized a loss on sale of $782,000. Therefore, we released our operator from its contractual obligation to return the Property back to its original condition. Additionally, we took possession of the remaining insurance proceeds of $2,111,000 and reclassified this amount to Gain from Property insurance proceeds on the Consolidated Statements of Income and Comprehensive Income at December 31, 2019.

53

LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Owned Properties. We make estimates as part of our allocation of the purchase price of acquisitions to the various components of the acquisition based upon the fair value of each component. In determining fair value, we use current appraisals or other third-party opinions of value. The most significant components of our allocations are typically the allocation of fair value to land and buildings and, for certain of our acquisitions, in-place leases and other intangible assets. In the case of the fair value of buildings and the allocation of value to land and other intangibles, the estimates of the values of these components will affect the amount of depreciation and amortization we record over the estimated useful life of the property acquired or the remaining lease term. In the case of the value of in-place leases, we make best estimates based on the evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions and costs to execute similar leases. These assumptions affect the amount of future revenue that we will recognize over the remaining lease term for the acquired in-place leases. We evaluate each purchase transaction to determine whether the acquired assets meet the definition of an asset acquisition or a business combination. Transaction costs related to acquisitions that are not deemed to be businesses are included in the cost basis of the acquired assets, while transaction costs related to acquisitions that are deemed to be businesses are expensed as incurred.

In January 2017, the FASB issued ASU No. 2017-01(“ASU 2017-01”), Business Combinations (Topic 805): Clarifying Definition of a Business. ASU 2017-01 clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. ASU 2017-01 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. We early adopted this standard in 2017. As a result of adopting ASU 2017-01, most of our acquisitions of investment properties will qualify as asset acquisitions.

In February 2017, the FASB issued ASU No. 2017-05 (“ASU 2017-05”), Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets. ASU 2017-05 defines an in-substance nonfinancial asset and clarifies guidance related to partial sales of nonfinancial assets. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. We adopted this standard in 2018. The adoption of this ASU did not have a material impact on the consolidated financial statements and related notes.

We capitalize direct construction and development costs, including predevelopment costs, interest, property taxes, insurance and other costs directly related and essential to the acquisition, development or construction of a real estate asset. We capitalize construction and development costs while substantive activities are ongoing to prepare an asset for its intended use. We consider a construction project as substantially complete and held available for occupancy upon the issuance of the certificate of occupancy. Costs incurred after a project is substantially complete and ready for its intended use, or after development activities have ceased, are expensed as incurred. For redevelopment, renovation and expansion of existing operating properties, we capitalize the cost for the construction and improvement incurred in connection with the redevelopment, renovation and expansion. Costs previously capitalized related to abandoned acquisitions or developments are charged to earnings. Expenditures for repairs and maintenance are expensed as incurred.

Depreciation is computed principally by the straight-line method for financial reporting purposes over the estimated useful lives of the assets, which range from 3 to 5 years for computers, 5 to 15 years for furniture and equipment, 35 to 50 years for buildings, 10 to 20 years for site improvements, 10 to 50 years for building improvements and the respective lease term for acquired lease intangibles.

Consolidation. At inception, and on an ongoing basis, as circumstances indicate the need for reconsideration, we evaluate each legal entity that is not wholly-owned by us for consolidation, first under the variable interest entity

54

LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(“VIE”), then under the voting model. Our evaluation considers all of our variable interests, including common or preferred equity ownership, loans, and other participating instruments. The variable interest model applies to entities that meet both of the following criteria:

● A legal structure has been established to conduct business activities and to hold assets.

● LTC has a variable interest in the entity - i.e. it has equity ownership or other financial interests that change with changes in the fair value of the entity's net assets.

If an entity does meet the above criteria and doesn’t qualify for a scope exception from the VIE model, we will determine whether the entity is a VIE.

A legal entity is determined to be a VIE if it has any of the following three characteristics:

1. The entity does not have sufficient equity to finance its activities without additional subordinated financial support;

2. The equity holders, as a group lack the characteristics of a controlling financial interest, as evidenced by all of the following characteristics:

● The power, through voting rights or similar rights, to direct the activities of the entity that most significantly impact the entity's economic performance;

● The obligation to absorb the entity's expected losses;

● The right to receive the entity's expected residual returns; or

3. The entity is established with non-substantive voting rights (i.e. the entity is structured such that majority economic interest holder(s) have disproportionately few voting rights).

If any of the three characteristics of a VIE are met, we conclude that the entity is a VIE and evaluate it for consolidation under the variable interest model.

If an entity is determined to be a VIE, we evaluate whether we are the primary beneficiary. The primary beneficiary analysis is a qualitative analysis based on power and benefits. We consolidate a VIE if we have both power and benefits - that is (i) we have the power to direct the activities of a VIE that most significantly impact the VIE's economic performance (power), and (ii) we have the obligation to absorb losses of the VIE that could potentially be significant to the VIE, or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). If we have a variable interest in a VIE but we are not the primary beneficiary, we account for our investment using the equity method of accounting.

If a legal entity fails to meet any of the three of the characteristics of a VIE, we evaluate such entity under the voting interest model. Under the voting interest model, we consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting shares or if we are the general partner or managing member of the entity and the limited partners or non-managing members do not have substantive participating, liquidation, or kick-out rights that preclude our presumption of control.

Mortgage Loans Receivable, Net of Loan Loss Reserve. Mortgage loans receivable we originate are recorded on an amortized cost basis. Mortgage loans we acquire are recorded at fair value at the time of purchase net of any related premium or discount which is amortized as a yield adjustment to interest income over the life of the loan. Additionally, we record an estimated allowance for doubtful accounts, as described below.

Mezzanine Loans. In 2015 we strategically decided to allocate a portion of our capital deployment toward mezzanine loans to grow relationships with operating companies that have not typically utilized sale leaseback financing

55

LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

as a component of their capital structure. Mezzanine financing sits between senior debt and common equity in the capital structure, and typically is used to finance development projects or value-add opportunities on existing operational properties. We seek market-based, risk-adjusted rates of return typically between 12-14% with the loan term typically between four to five years. Security for mezzanine loans can include all or a portion of the following credit enhancements; secured second mortgage, pledge of equity interests and personal/corporate guarantees. Mezzanine loans are recorded for GAAP purposes as either a loan, under notes receivable, or joint venture, under investment in unconsolidated JVs, depending upon specifics of the loan terms and related credit enhancements.

Investment in unconsolidated joint ventures. From time to time, we provide funding to third-party operators for the acquisition, development and construction (“ADC”) of a property. Under an ADC arrangement, we may participate in the residual profits of the project through the sale or refinancing of the property. These ADC arrangements can have characteristics similar to a loan or similar to a joint venture (“JV”) or partnership such as participating in the risks and rewards of the project as an owner or an investment partner. If the ADC arrangement characteristics are more similar to a jointly-owned investment or partnership, we account for the ADC arrangement as an investment in an unconsolidated JV under the equity method of accounting or a direct investment (consolidated basis of accounting) instead of applying loan accounting.

We evaluate our ADC arrangements first pursuant to ASC 805, Consolidation, to determine whether the ADC arrangement meets the definition of a VIE, as explained above, and whether we are the primary beneficiary. If the ADC arrangement is deemed to be a VIE but we are not the primary beneficiary, or if it is deemed to be a voting interest entity but we do not have a controlling financial interest, we account for our investment in the ADC arrangement using the equity method. Under the equity method, we initially record our investment at cost and subsequently recognize our share of net earnings or losses and other comprehensive income or loss, cash contributions made and distributions received, and other adjustments, as appropriate. Allocations of net income or loss may be subject to preferred returns or allocation formulas defined in operating agreements and may not be according to percentage ownership interests. In certain circumstances where we have a substantive profit-sharing arrangement which provides a priority return on our investment, a portion of our equity in earnings may consist of a change in our claim on the net assets of the underlying JV. Distributions of operating profit from the JVs are reported as part of operating cash flows, while distributions related to a capital transaction, such as a refinancing transaction or sale, are reported as investing activities.

We periodically perform evaluation of our investment in unconsolidated JVs to determine whether the fair value of each investment is less than the carrying value, and, if such decrease in value is deemed to be other-than-temporary, we write the investment down to its estimated fair value as of the measurement date.

We have a preferred equity investment in a JV that own four properties in Arizona. Based on the information available to us regarding alternatives and courses of action as of December 31, 2019, we performed a recoverability test on the carrying amount of our preferred equity investment and determined that a portion of our preferred equity investment is not recoverable. Therefore, we recorded an impairment loss from investment in unconsolidated joint ventures of $5,500,000 and wrote our preferred equity investment down to its estimated fair value. See Note 6. Investment in Unconsolidated Joint Ventures for further information.

In March 2016, FASB issued ASU No. 2016-07 (“ASU 2016-07”), Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. ASU 2016-07 eliminates retroactive adjustment of an investment upon an investment qualifying for the equity method of accounting and requires the equity method investor to adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting.

Allowance for Doubtful Accounts. We maintain an allowance for doubtful accounts. The allowance for doubtful accounts depends on the expected collectibility of our receivables which is based on considerations including the

56

LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

certainty of payment, payment history and other relevant factors. The allowance for doubtful accounts is maintained at a level believed adequate to absorb potential losses in our receivables. In 2016, the FASB issued ASU No. 2016-13 (“ASU 2016-13”), Measurement of Credit Losses on Financial Instruments (Topic 326). This standard requires a new forward looking “expected loss” model to be used for receivables, held-to-maturity debt, loans, and other instruments. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early adoption is permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact that the standard will have on our consolidated financial statements.

Accrued incentives and earn-outs. As part of our acquisitions and/or amendments, we may commit to provide contingent payments to our sellers or lessees, upon the properties achieving certain rent coverage ratios. Typically, when the contingent payments are funded, cash rent will increase by the amount funded multiplied by a rate stipulated in the agreement. If it is deemed probable, the contingent payment is recorded as a liability at the estimate fair value calculated using a discounted cash flow analysis and accreted to the settlement amount of the estimated payment date. If the contingent payment is an earn-out provided to the seller, the estimated fair value is capitalized to the property’s basis. If the contingent payment is provided to the lessee, the estimated fair value is recorded as a lease incentive included in the prepaid and other assets line item in our consolidated balance sheet and is amortized as a yield adjustment over the life of the lease. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. The fair value of these contingent liabilities are evaluated on a quarterly basis based on changes in estimates of future operating results and changes in market discount rates.

Impairments. Assets that are classified as held-for-use and mortgage loans are periodically evaluated for impairment when events or changes in circumstances indicate that the asset may be impaired or the carrying amount of the asset may not be recoverable through future undiscounted cash flows. Where indicators of impairment exist, the estimation required in the undiscounted future cash flow assumption includes management’s probability-weighting of various scenarios including whether the management modifies the lease with the existing operator versus identifying a replacement operator and the assumed market lease rate underlying projected future rental cash flows. When indicators are identified for mortgage loans, management calculates an impairment charge as the difference between the carrying amount of the mortgage loan receivable and the discounted cash flows expected to be received, or if foreclosure is probable, the fair value of the collateral securing the mortgage. In determining fair value, we use current appraisals or other third-party opinions of value and other estimates of fair value such as estimated discounted future cash flows. Based on our assessment, during the years ended December 31, 2019, 2018 and 2017, we recognized impairment charges of $0, $0 and $1,880,000 respectively, related to our real property investments.

Also, we evaluate the carrying values of mortgage loans receivable on an individual basis. Management periodically evaluates the realizability of future cash flows from the mortgage loan receivable when events or circumstances, such as the non-receipt of principal and interest payments and/or significant deterioration of the financial condition of the borrower, indicate that the carrying amount of the mortgage loan receivable may not be recoverable. An impairment charge is recognized in current period earnings and is calculated as the difference between the carrying amount of the mortgage loan receivable and the discounted cash flows expected to be received, or if foreclosure is probable, the fair value of the collateral securing the mortgage.

Fair Value of Financial Instruments. The FASB requires the disclosure of fair value information about financial instruments for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. Accordingly, the aggregate fair market value amounts presented in the notes to these consolidated financial statements do not represent our underlying carrying value in financial instruments.

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The FASB provides guidance for using fair value to measure assets and liabilities, the information used to measure fair value, and the effect of fair value measurements on earnings. The FASB emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the FASB establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices).

The fair value guidance issued by the FASB excludes accounting pronouncements that address fair value measurements for purposes of lease classification or measurement. However, this scope exception does not apply to assets acquired and liabilities assumed in a business combination that are required to be measured at fair value, regardless of whether those assets and liabilities are related to leases.

In accordance with the accounting guidance regarding the fair value option for financial assets and financial liabilities, entities are permitted to choose to measure certain financial assets and liabilities at fair value, with the change in unrealized gains and losses on items for which the fair value option has been elected reported in earnings. We have not elected the fair value option for any of our financial assets or liabilities.

The FASB requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. See Note 15. Fair Value Measurements for the disclosure about fair value of our financial instruments.

Revenue Recognition. Rental income from operating leases is generally recognized on a straight-line basis over the terms of the leases. Substantially all of our leases contain provisions for specified annual increases over the rents of the prior year and are generally computed in one of four methods depending on specific provisions of each lease as follows:

(i) a specified annual increase over the prior year’s rent, generally between 2.0% and 3.0%;

(ii) a calculation based on the Consumer Price Index;

(iii) as a percentage of facility revenues in excess of base amounts or

(iv) specific dollar increases.

The FASB does not permit recognition of contingent revenue until all possible contingencies have been resolved. Historically, we have not included contingent rents as income until received and will we continue our historical policy. During the years ended December 31, 2019, 2018 and 2017, we received $464,000, $470,000 and $457,000, respectively, of contingent rental income. We follow a policy related to rental income whereby we consider a lease to be non-performing after 60 days of non-payment of past due amounts and do not recognize unpaid rental income from that lease until the amounts have been received.

Interest income on mortgage loans is recognized using the effective interest method. We follow a policy related to mortgage interest whereby we consider a loan to be non-performing after 60 days of non-payment of amounts due and do not recognize unpaid interest income from that loan until the past due amounts have been received. Effective interest method, as required by GAAP, is a technique for calculating the actual interest rate for the term of a mortgage loan based on the initial origination value. Similar to the accounting methodology of straight-line rent, the actual interest rate is higher than the stated interest rate in the early years of the mortgage loan thus creating an effective interest receivable

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asset included in the interest receivable line item in our consolidated balance sheet and reduces down to zero when, at some point during the mortgage loan, the stated interest rate is higher than the actual interest rate.

Payments made to or on behalf of our lessees represent incentives that are deferred and amortized as a yield adjustment over the term of the lease on a straight-line basis. Net loan fee income and commitment fee income are amortized over the life of the related loan.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers: Topic 606. ASU 2014-09 provides for a single comprehensive principles based standard for the recognition of revenue across all industries through the application of the following five-step process:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” In doing so, companies may need to use more judgment and make more estimates. While this ASU specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate. Additionally, the FASB has issued targeted updates to clarify specific implementation issues of ASU 2014-09. These updates include ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Identifying Performance Obligations and Licensing, and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients. ASU 2014-09 and its amendments have now formally entered into the FASB codification as Accounting Standard Codification (“ASC”) Topic 606, Contracts with Customers (“ASC 606”). The new standard and its amendments are effective on January 1, 2018, and permit reporting entities to apply the standard using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or full retrospective approach. We have adopted this standard using the modified retrospective adoption method on January 1, 2018. We concluded that this standard did not have a material impact on our results of operations or financial condition, as a substantial portion of our revenues consists of rental income from leasing arrangements and interest income from loan arrangements, both of which are specifically excluded from ASU 2014-09.

Leases: In February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases. ASU 2016-02 and its amendments have now formally entered into the FASB codification as ASC Topic 842, Leases (“ASC 842”). The objective of ASC 842 is to establish the principles for lessees and lessors to apply for reporting useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease.

ASC 842 requires lessees to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance of operating leases.

ASC 842 requires the lessors to identify lease and non-lease components of a lease agreement. Revenue related to non-lease components under lease agreements are subject to the revenue recognition standard, upon adoption of this standard. Also, the new standard narrows definition of initial direct costs. Accordingly, upon adoption of the new standard, certain costs (primarily legal costs related to lease negotiations) are expensed rather than capitalized.

Further, per ASC 842, lessors are required to assess the probability of collecting substantially all of the lease payments. The standard defines collectibility as lessee’s ability and intent to pay. If collectibility of substantially all of

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the lease payments through maturity is not probable, the lease income recorded during the period would be limited to lesser of the income that would have been recognized if collection were probable, and the lease payments received. If the assessment of collectibility changes, any difference between the lease income that would have been recognized and the lease payments should be recognized as an adjustment to lease income. At adoption, lessors are required to perform a lease-by-lease analysis for collectibility of all lease payments through maturity. If at adoption, it is not probable that substantially all of the lease obligations through maturity will be collected, a cumulative adjustment to equity should be made to reflect all of the lease obligations which are not probable to be collected.

Additionally, ASC 842 provides lessors with the option to elect a practical expedient allowing them to not separate lease and non-lease components and instead, to account for those components as a single lease component. This practical expedient is limited to circumstances in which: (i) the timing and pattern of transfer are the same for the non-lease component and the related lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. This practical expedient causes an entity to assess whether a contract is predominantly lease-based or service-based and recognize the entire contract under the relevant accounting guidance (i.e., predominantly lease-based would be accounted for under ASC 842 and predominantly service-based would be accounted for under the ASC 606). This practical expedient option is available as a single election that must be consistently applied to all existing leases at the date of adoption. Also, ASC 842 provides a practical expedient that allows companies to use an optional transition method. Under the optional transition method, a cumulative adjustment to equity during the period of adoption is recorded and prior periods would not require restatement. Consequently, entities that elect both the practical expedient and the optional transitional method will apply the new lease ASC prospectively to leases commencing or modified after January 1, 2019 and will not be required to apply the disclosures under the new lease standard to comparative periods.

ASC 842 has subsequently been amended by other ASUs to clarify and improve the standard as well as to provide certain practical expedients. In December 2018, the FASB issued ASU 2018-20 (“ASU 2018-20”), Narrow-Scope Improvements for Lessors, which amends ASC 842 to require the lessors to exclude the lessor costs that are directly paid by the lessee to third parties on lessor’s behalf from variable payments. However, the lessor costs that are paid by the lessor and reimbursed by the lessee are required to be included in variable payments. Furthermore, ASC 842 allows for several practical expedients which permit the following: no reassessment of lease classification or initial direct costs and use of the standard’s effective date as the date of initial application. In March 2019, the FASB issued ASU 2019-01 (“ASU 2019-01”), Leases (Topic 842), Codification Improvements which provides clarification regarding presentation and disclosures. ASC 842 and its amendments are effective January 1, 2019.

On January 1, 2019, we adopted ASC 842 using the modified retrospective approach as of the adoption date, whereby the cumulative effect of adoption was recognized on the adoption date and prior periods were not restated.

Upon adoption of the standard, we elected the practical expedients provided for in ASC 842, including:

● No reassessment of whether any expired or existing contracts were or contained leases;

● No reassessment of the lease classification for any expired or existing leases;

● No reassessment of initial direct costs for any existing leases; and

● No separation of lease and non-lease components.

As a lessee, we have an office lease agreement with a 5-year remaining term which was classified as an operating lease under ASC 840. Due to election of the package of practical expedients, upon adoption of ASC 842 this lease agreement will continue to be classified as operating lease. For the year ended December 31, 2019, we recorded $299,000 of rent expense related to this lease agreement. Adoption of ASC 842 resulted in recording a right-of use asset and a lease liability which represents the present value of the remaining minimum lease payments using our incremental borrowing rate. At December 31, 2019, the balance of the right-of use asset and the lease liability related to our office

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lease agreement were $1,287,000.

As a lessor, our properties are leased subject to non-cancelable operating leases. Each lease is a triple net lease which requires the lessee to pay all taxes, insurance, maintenance and repairs, capital and non-capital expenditures and other costs necessary in the operations of the facilities. Upon adoption of ASC 842, we recorded real estate taxes that are reimbursed by our operators as Rental Income with a corresponding Property tax expense in the Consolidated Statements of Income and Comprehensive Income. For the year ended December 31, 2019, we have recognized $15,998,000 in Rental Income related to reimbursement of real estate taxes from our operators.

Furthermore, upon adoption of ASC 842, we assessed the probability of collecting substantially all of our lease payments through maturity. As previously reported, we have been monitoring Anthem Memory Care (“Anthem”), Thrive Senior Living, LLC (“Thrive”), Preferred Care, Inc. (“Preferred Care”) and Senior Care Centers, LLC (“Senior Care”) due to cash flow concerns, performance concerns and/or bankruptcy filing. In conjunction with adoption of ASC 842, we evaluated our straight-line rent receivable and lease incentive balances related to the noted operators and determined that we do not have the level of collectibility certainty required by the standard to record the straight-line rent receivable. Accordingly, we wrote-off the straight-line rent receivable and lease incentive balances associated with these leases. Also, we wrote-off our 1% general straight-line rent receivable reserve. These balances totaled $42,808,000 and were written-off to equity effective January 1, 2019 as required by ASC 842. Subsequently, if collectibility of substantially all of the lease payments through maturity is not probable, all or a portion of the straight-line rent receivable and other lease receivables may be written off, and the rental income recorded during the period would be limited to lesser of the income that would have been recognized if collection were probable, and the lease payments received. Our assessment of collectibility of leases includes evaluating the data and assumptions used in determining whether substantially all of the future lease payments were probable based on the lessee’s payment history, the financial strength of the lessees, future contractual rents, and the timing of expected payments.

During the year ended December 31, 2019, we received cash rent from Anthem, Thrive, Preferred Care and Senior Care. The total amount of rental income received from these operators was $33,238,000 and is included in Rental Income on the Consolidated Statements of Income and Comprehensive Income. Of the $33,238,000 received, $27,225,000 of the cash payments received relate to amounts previously written-off in transition to ASC 842 (“Recoveries”) during the twelve months ended December 31, 2019.

Federal Income Taxes. LTC qualifies as a REIT under the Internal Revenue Code of 1986, as amended, and as such, no provision for Federal income taxes has been made. A REIT is required to distribute at least 90% of its taxable income to its stockholders and a REIT may deduct dividends in computing taxable income. If a REIT distributes 100% of its taxable income and complies with other Internal Revenue Code requirements, it will generally not be subject to Federal income taxation.

For Federal tax purposes, depreciation is generally calculated using the straight-line method over a period of 27.5 years. Earnings and profits, which determine the taxability of distributions to stockholders, use the straight-line method over 40 years. Both Federal taxable income and earnings and profits differ from net income for financial statement purposes principally due to the treatment of certain interest income, rental income, other expense items, impairment charges and the depreciable lives and basis of assets. At December 31, 2019, the tax basis of our net depreciable assets exceeds our book basis by approximately $25,436,000 (unaudited), primarily due to an investment recorded as an acquisition for tax and a mortgage loan for GAAP, and to differences previously mentioned above.

The FASB clarified the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. The guidance utilizes a two-step approach for evaluating tax positions. Recognition (step one) occurs when a company concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Measurement (step two) is

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only addressed if step one has been satisfied (i.e., the position is more likely than not to be sustained). Under step two, the tax benefit is measured as the largest amount of benefit (determined on a cumulative probability basis) that is more likely than not to be realized upon ultimate settlement. We currently do not have any uncertain tax positions that would not be sustained on its technical merits on a more-likely than not basis.

We may from time to time be assessed interest or penalties by certain tax jurisdictions. In the event we have received an assessment for interest and/or penalties, it has been classified in our consolidated financial statements as general and administrative expenses.

Financial instruments which potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, mortgage loans receivable, marketable debt securities and operating leases on owned properties. Our financial instruments, mortgage loans receivable and operating leases, are subject to the possibility of loss of carrying value as a result of the failure of other parties to perform according to their contractual obligations or changes in market prices which may make the instrument less valuable. We obtain various collateral and other protective rights, and continually monitor these rights, in order to reduce such possibilities of loss. In addition, we provide reserves for potential losses based upon management’s periodic review of our portfolio. See Note 3. Major Operators for further discussion of concentrations of credit risk from our tenants.

Properties held-for-sale. Properties classified as held-for-sale on the consolidated balance sheet include only those properties available for immediate sale in their present condition and for which management believes that it is probable that a sale of the property will be completed within one year. Properties held-for-sale are carried at the lower of cost or fair value less estimated selling costs. No depreciation expense is recognized on properties held-for-sale once they have been classified as such. Under ASU No. 2014-08 (“ASU 2014-08”), Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. We have not reclassified results of operations for properties disposed as discontinued operations as these disposals do not represent strategic shifts in our operations.

Net Income Per Share. Basic earnings per share is calculated using the weighted-average shares of common stock outstanding during the period excluding common stock equivalents. Diluted earnings per share includes the effect of all dilutive common stock equivalents.

In accordance with the accounting guidance regarding the determination of whether instruments granted in share-based payments transactions are participating securities, we have applied the two-class method of computing basic earnings per share. This guidance clarifies that outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends participate in undistributed earnings with common stockholders and are considered participating securities.

Stock-Based Compensation. The FASB requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. We use the Black-Scholes-Merton formula to estimate the value of stock options granted to employees. Also, we use the Monte Carlo model to estimate the value of performance-based stock units granted to employees. These models require management to make certain estimates including stock volatility, expected dividend yield and the expected term. If management incorrectly estimates these variables, the results of operations could be affected. The FASB also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow. Because we qualify as a REIT under the Internal Revenue Code of 1986, as amended, we are generally not subject to

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Federal income taxation. Therefore, this reporting requirement does not have an impact on the Consolidated Statements of Cash Flows.

Segment Disclosures. The FASB accounting guidance regarding disclosures about segments of an enterprise and related information establishes standards for the manner in which public business enterprises report information about operating segments. Our investment decisions in seniors housing and health care properties, including mortgage loans, property lease transactions and other investments, are made and resulting investments are managed as a single operating segment for internal reporting and for internal decision-making purposes. Therefore, we have concluded that we operate as a single segment.

3. Major Operators

We have two operators from each of which we derive approximately 10% or more of our combined rental revenue and interest income from mortgage loans. The following table sets forth information regarding our major operators as of December 31, 2019:

	Number of		Number of		Percentage of
			SNF	ALF	Total		Total
Operator	SNF	ALF	Beds	Units	Revenue (1)		Assets
Prestige Healthcare	24	—	3,010	93	17.1	%	17.4	%
Senior Lifestyle Corporation	—	23	—	1,457	10.8	%	10.2	%
Total	24	23	3,010	1,550	27.9	%	27.6	%

(1) Includes rental income from owned properties and interest income from mortgage loans as of December 31, 2019 and excludes rental income due to lessee reimbursement of our real estate taxes and adjustment for collectibility of rental income.

Our financial position and ability to make distributions may be adversely affected if Prestige Healthcare, Senior Lifestyle Corporation or any of our lessees and borrowers face financial difficulties, including any bankruptcies, inability to emerge from bankruptcy, insolvency or general downturn in business of any such operator, or in the event any such operator does not renew and/or extend its relationship with us.

4. Supplemental Cash Flow Information

	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Non-cash investing and financing transactions:
Reclassification of notes receivable to lease incentives (Note 7)	$	200	$	—	$	—
Restricted stock issued, net of cancellations (Note 10)		—		1		1

5. Real Estate Investments

Owned Properties. As of December 31, 2019, we owned 177 health care real estate properties located in 28 states and consisting of 106 ALFs, 70 SNFs and 1 behavioral health care hospital. These properties are operated by 30 operators.

Independent living communities, assisted living communities, memory care communities and combinations thereof are included in the assisted living property classification (collectively “ALF”). Any reference to the number of properties, number of units, number of beds, and yield on investments in real estate are unaudited and outside the scope of our independent registered public accounting firm’s review of our consolidated financial statements in accordance

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with the standards of the Public Company Accounting Oversight Board.

Depreciation expense on buildings and improvements, including properties classified as held-for-sale, was $39,094,000, $37,416,000, and $37,492,000 for the years ended December 31, 2019, 2018 and 2017, respectively.

Future minimum base rents receivable under the remaining non-cancelable terms of operating leases excluding the effects of straight-line rent, amortization of lease inducement and renewal options are as follows (in thousands):

	Cash
	Rent (1)
2020	$	135,173
2021		126,914
2022		128,196
2023		129,846
2024		126,320
Thereafter		625,158

(1) Represents contractual annual cash rent, except for two master leases which are based on agreed upon cash rents. See below for more information. Includes rental income due to lessee reimbursement of our real estate taxes and subsequent acquisitions and excludes properties held-for-sale at December 31, 2019.

During 2017, we issued a notice of default to Anthem Memory Care (“Anthem”) resulting from Anthem’s partial payment of minimum rent. Anthem operates 11 memory care communities under a master lease. During 2019, Anthem paid the agreed upon minimum cash rent of $7,500,000. This amount represents approximately 50% of the contractual amount due under the lease in 2019. In accordance with Accounting Standard Codification (“ASC”) Topic 842, Leases (“ASC 842”), at January 1, 2019, we evaluated the collectibility of straight-line rent receivable and lease incentive balances related to Anthem and determined it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance. We receive regular financial performance updates from Anthem and continue to monitor Anthem’s performance obligations under the master lease agreement.

On December 4, 2018, Senior Care Centers, LLC. and affiliates and subsidiaries (“Senior Care”) filed for Chapter 11 bankruptcy as a result of lease terminations from certain landlords and on-going operational challenges. Senior Care did not pay us December 2018 rent and accordingly, in December 2018, we placed Senior Care on a cash basis. In accordance with ASC 842 lease accounting guidance, at January 1, 2019, we evaluated the collectibility of straight-line rent receivable and lease incentive balance related to Senior Care and determined it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance.

In July 2019, Senior Care filed a motion to affirm the lease, which caused us to file an objection in opposition to Senior Care’s motion. During the fourth quarter of 2019, the court rejected our motion and accordingly, our master lease with Senior Care was affirmed. Furthermore, we received the court ordered reimbursement from Senior Care for the December 2018 unpaid rent, late fees and legal costs totaling $1,596,000. Senior Care has paid us January 2019 to February 2020 rent, real estate property tax and maintenance deposits.

During 2017, Preferred Care, Inc. (“Preferred Care”) and affiliated entities filed for Chapter 11 bankruptcy as a result of a multi-million-dollar judgment in a lawsuit in Kentucky against Preferred Care and certain affiliated entities. The affiliated entities named in the lawsuit operate properties in Kentucky and New Mexico. Preferred Care leased 24 properties under two master leases from us and none of the 24 properties are located in Kentucky or New Mexico. Those 24 properties are in Arizona, Colorado, Iowa, Kansas and Texas. The Preferred Care operating entities that sublease

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those properties did not file for bankruptcy. In accordance with ASC 842 lease accounting guidance, at January 1, 2019, we evaluated the collectibility of straight-line rent receivable and lease incentive balances related to Preferred Care and determined it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance. Preferred Care did not affirm our master leases and began paying only $55,000 of monthly rent in the third quarter of 2019. The monthly contractual obligation under the master leases was approximately $1,000,000. We applied all of their security deposit to rental income during the third quarter and recorded only the $55,000 monthly cash received in the fourth quarter of 2019 to rental income. During the fourth quarter of 2019, we entered into multiple contracts, subject to standard due diligence and other contingencies, to sell a majority of the properties. Two of these contracts were completed during the fourth quarter of 2019, resulting in the sale of two properties in Arizona and Texas. See Property Sales below for further discussion. At December 31, 2019, 20 of the properties under purchase and sale agreements met the criteria under GAAP as held-for-sale. Accordingly, these properties have been classified as held-for-sale at December 31, 2019.

During the three months ended March 31, 2019, we placed Thrive Senior Living, LLC (“Thrive”) on a cash basis due to short-payment of contractual rent in November 2018 and non-payment of rent in December 2018 totaling $700,000. Thrive subsequently paid the delinquent rent in 2019 but failed to pay 2019 contractual rent. In April 2019, we issued a notice of default to Thrive. In accordance with ASC 842 lease accounting guidance, at January 1, 2019, we evaluated the collectibility of straight-line rent receivable and lease incentive balances related to Thrive and determined that it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance.

During 2019, we completed the following for all of the properties in the Thrive portfolio. As of December 31, 2019, Thrive does not operate any properties in our portfolio:

● Transitioned two memory care communities located in Ohio and Kentucky with a total of 120-units to an operator new to our portfolio during the second quarter of 2019. The memory care communities are under a 10-year lease term with initial cash rent of $1,250,000 in year one, $1,500,000 in year two, $1,975,000 in year three and $2,150,000 in year four. Rent may increase subject to a contingent escalation formula commencing in year five and annually thereafter. The lease provides the lessee with a purchase option available between 2028-2029;

● Transitioned a 56-unit memory care community located in Texas to an existing operator and added the memory care community to an existing master lease during the second quarter of 2019. As a result of this transition, annual cash rent under the existing master lease was increased by $400,000 effective June 1, 2019 and will increase by an additional $300,000 on June 1, 2020 and 2.5% annually thereafter. Additionally, LTC will be entitled to incremental rent calculated as a percentage of increases in gross revenues generated by the property above an established threshold;

● Transitioned two memory care communities in Georgia and South Carolina with a total of 159-units to an existing operator during the third quarter of 2019. The new 2-year lease agreement has an initial annual cash rent of $1,762,000. Rent increases 3.5% in year two; and

● Transitioned the remaining 60-unit memory care community located in Florida to an existing operator effective August 1, 2019. The new 10-year lease provides the lessee twelve months free rent, rent of $450,000 in year two and $600,000 in year three and thereafter. In year two, the lessee has the option to defer rent in an amount not to exceed $150,000. Rent may increase subject to a contingent escalation formula commencing in year three and annually thereafter. Additionally, the lease provides the lessee with a purchase option available between 2028 and 2029. See below for a table that summarizes information about purchase options included in our lease agreements.

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The following table summarizes components of our rental income for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	Year Ended December 31,
Rental Income		2019			2018			2017
Base cash rental income	$	134,117	(1)	$	127,477		$	128,715
Variable cash rental income		16,462	(2)		470	(2)		457	(2)
Straight-line rent		4,487	(3)		9,550			10,694
Adjustment for collectibility of rental income		(1,926)	(4)		—			—
Amortization of lease incentives		(385)			(2,092)			(2,209)
Total	$	152,755		$	135,405		$	137,657

(1) Increased due to acquisitions, developments and capital improvements partially offset due to reduced rent from sold properties and properties transitioned to other operators.

(2) The year ended December 31, 2019 variable rental income includes $464 related to contingent rental income and $15,998 related to real estate taxes which were reimbursed by our operators. Per the provisions of ASC 842, any lessor cost, paid by the lessor and reimbursed by the lessee must be included as a variable lease payment. As discussed above, we adopted ASC 842 using a modified retrospective approach as of the adoption date of January 1, 2019. Accordingly, we are not required to report this revenue stream for periods prior to January 1, 2019. For the year ended December 31, 2018, and 2017, the variable income represents contingent rental income.

(3) In accordance with ASC 842 lease accounting guidance, we evaluated the collectibility of lease payments through maturity and determined it was not probable that we would collect substantially all of the contractual obligations from Anthem, Thrive, Preferred Care and Senior Care leases through maturity. Decreased due to these leases being accounted for on cash-basis as of January 1, 2019.

(4) During the first quarter of 2019, we terminated a lease agreement and transitioned two operating seniors housing communities under the lease agreement to a new operator. As a result of the lease termination, we wrote-off $1,926 straight-line rent receivable to contra-revenue in accordance with ASC 842.

Some of our lease agreements provide purchase options allowing the lessees to purchase the properties they currently lease from us. The following table summarizes information about purchase options included in our lease agreements (dollar amount in thousands):

	Type	Number
	of	of		Gross		Carrying	Option
State	Property	Properties		Investments		Value	Window
California	ALF/MC	2	$	38,895	$	36,542	2024-2029
California	ALF	2		28,926		16,056	2021-TBD	(1)
Florida	MC	1		14,201		12,757	2028-2029
Kentucky and Ohio	MC	2		30,126		27,859	2028-2029
Texas	MC	2		25,265		24,335	2025-2027
South Carolina	ALF/MC	1		11,680		10,794	2028-2029
Total			$	149,093	$	128,343

(1) The option window ending date will be either 24 months or 48 months after the option window commences, based on certain contingencies.

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Acquisitions. The following table summarizes our acquisitions for the years ended December 31, 2019 through 2017. (dollar amounts in thousands):

						Total		Number	Number
		Purchase		Transaction		Acquisition		of	of
Year (1)	Type of Property	Price		Costs (2)		Costs		Properties	Beds/Units
2019	Assisted Living (3)	$	35,719	$	315	$	36,034	3	230
	Skilled Nursing (4)		19,500		97		19,597	1	90
	Land (5)		2,732		51		2,783	—	—
Total		$	57,951	$	463	$	58,414	4	320
2018	Assisted Living (6) (7)	$	39,600	$	65	$	39,665	3	177
	Land (7)		695		48		743	—	—
Total		$	40,295	$	113	$	40,408	3	177
2017	Assisted Living (8)	$	81,018	$	569	$	81,587	5	400
	Land (9)		800		18		818	—	—
Total		$	81,818	$	587	$	82,405	5	400

(1) Subsequent to December 31, 2019, we acquired a 140-bed SNF located in Texas for approximately $13,500 million and entered into a 10-year master lease agreement with an initial cash yield of 8.5%, escalating 2% annually starting in the second year of the lease, with two five-year renewal options.

(2) Represents cost associated with our acquisitions; however, upon adoption of ASU 2017-01, our acquisitions meet the definition of an asset acquisition resulting in capitalization of transaction costs to the properties’ basis. For our land purchases with forward development commitments, transaction costs are capitalized as part of construction in progress. Transaction costs per Consolidated Statements of Income and Comprehensive Income represent current and prior year transaction costs due to timing and terminated transactions.

(3) We entered into a JV (consolidated on our financial statements) to purchase an existing operational 74-unit ALF/MC community. The non-controlling partner contributed $919 of equity and we contributed $15,976 in cash. Our economic interest in the real estate JV is approximately 95%. See Note 10. Equity for further discussion related to our partnerships and non-controlling interests. Additionally, we acquired an 80-unit MC and a 76-unit ALF/MC in Michigan for an aggregate purchase price of $19,000.

(4) We acquired a newly constructed 90-bed SNF located in Missouri.

(5) We acquired a parcel of land adjacent to an existing SNF in California. Additionally, we acquired a parcel of land and committed to develop a 90-bed SNF in Missouri. The commitment totals approximately $17,400.

(6) We acquired two MC in Texas.

(7) We entered into a JV (consolidated on our financial statements) to purchase an existing operational 89-unit ILF for $14,400 and to own the real estate and develop a 78-unit ALF/MC for $18,108 in Oregon

(8) We acquired an ALF and a MC in California, a MC in Ohio and an ALF/MC in Missouri. Furthermore, we entered into a JV and acquired an ALF/MC community.

(9) We entered into a JV for the acquisition of land and development of an ILF/ALF/MC community in Wisconsin.

For further discussion related to the JV transactions discussed above and our partnerships and non-controlling interests, see Note 10. Equity.

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Developments and Improvements. During the years ended December 31, 2019, 2018 and 2017, we invested the following in development and improvement projects (in thousands):

	2019				2018				2017
Type of Property	Developments		Improvements		Developments		Improvements		Developments		Improvements
Assisted Living Communities	$	14,088	$	2,544	$	27,505	$	2,292	$	17,667	$	1,152
Skilled Nursing Centers		6,436		—		7,774		500		5,234		1,356
Other		—		295		—		457		—		391
Total	$	20,524	$	2,839	$	35,279	$	3,249	$	22,901	$	2,899

Completed Projects. The following table summarizes our completed projects during the years ended December 31, 2019, 2018 and 2017 (dollar amounts in thousands):

		Number	Type	Number
		of	of	of			Total
Year	Type of Project	Properties	Property	Beds/Units	State	Investment
2019	Development	1	SNF	143	Kentucky	$	24,974
	Development	1	ILF/ALF/MC	110	Wisconsin		21,999
Total		2		253		$	46,973
2018	Development	1	MC	66	Illinois	$	14,998
Total		1		66		$	14,998
2017	Development	1	MC	66	Illinois	$	13,498
Total		1		66		$	13,498

Properties held-for-sale. The following table summarizes our properties held-for-sale at years ended December 31, 2019 and 2018 (dollar amounts in thousands):

		Type	Number	Number
		of	of	of		Gross		Accumulated
At December 31,	State	Property	Properties	Beds/units		Investment		Depreciation
2019	Colorado	SNF	3	275	$	8,045	$	3,774
	Iowa	SNF	7	544		14,610		9,723
	Kansas	SNF	3	250		14,111		6,674
	Texas	SNF	7	1,148		25,203		14,942
Total			20	2,217	$	61,969	$	35,113
2018	Texas	ILF	1	140	$	5,746	$	1,916
Total			1	140	$	5,746	$	1,916

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Property Sales. The following table summarizes property sales during the years ended December 31, 2019 through 2017 (dollar amounts in thousands):

		Type		Number	Number						Net
		of		of	of		Sales		Carrying		Gain
Year	State	Properties		Properties	Beds/Units		Price		Value		(Loss)
2019	N/A	N/A		—	—	$	—	$	—	$	500	(1)
	Arizona, Georgia and Texas	SNF	(2)	3	478		15,310		8,995		5,556
	Texas	ALF	(3)	1	140		1		3,830		(3,950)
Total 2019				4	618	$	15,311	$	12,825	$	2,106
2018	Alabama	SNF		4	454	$	27,975	$	5,695	$	21,987
	Kansas	ALF	(4)	—	—		350		346		—
	Ohio and Pennsylvania	ALF		6	320		67,500		16,352		48,695
Total 2018				10	774	$	95,825	$	22,393	$	70,682
2017	Indiana, Iowa and Oregon	ALF		5	211	$	15,650	$	10,107	$	4,985
	Texas	SNF	(5)	1	85		—		1,170		(1,171)
Total 2017				6	296	$	15,650	$	11,277	$	3,814

(1) Gain recognized due to the receipt of funds held in escrow related to a portfolio of six ALFs sold during the second quarter of 2018.

(2) We sold a property, previously operated by Preferred Care, located in Texas with a carrying value of $871 for $140. Additionally, we sold a property, previously operated by Preferred Care, located in Arizona with a carrying value of $6,485 for $7,250. This transaction includes a holdback of $1,091 which is held in an interest-bearing account with an escrow holder on behalf of the buyer for potential specific losses. Using the expected value model per ASC 606, we estimated and recorded the holdback value of $613. Also, we sold a SNF located in Georgia with a carrying value of $1,639 for $7,920.

(3) We sold an ALF located in Texas with a carrying value of $3,830.

(4) We sold land adjacent to an existing ALF community in Kansas.

(5) We donated a SNF located in Texas, with a carrying value of $1,170 to a nonprofit health care provider.

Mortgage Loans. At December 31, 2019, the mortgage loans had interest rates ranging from 9.2% to 9.9% and maturities ranging from 2043 to 2045. In addition, some loans contain certain guarantees, provide for certain facility fees. Please see Item 1. Business—Portfolio for a table that summarizes our loaned properties as of December 31, 2019.

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The following table summarizes our mortgage loan activity for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	2019			2018			2017
Originations and funding under mortgage loans receivable	$	12,342	(1)	$	21,364	(2)	$	11,913
Pay-offs received		—			(1,086)			(16,665)
Scheduled principal payments received		(1,065)			(1,050)			(1,198)
Mortgage loan premium amortization		(4)			(4)			(4)
(Provision for) recovery of loan loss reserve		(113)			(192)			60
Net increase (decrease) in mortgage loans receivable	$	11,160		$	19,032		$	(5,894)

(1) During 2019, we funded an additional $7,500 under an existing mortgage loan. The incremental funding bears interest at 9.41% fixed for two years and escalating by 2.25% thereafter.

(2) During 2018, we funded an additional $7,400 under an existing mortgage loan for the purchase of a 112-bed SNF in Michigan. The incremental funding bears interest at 8.7%, fixed for five years, and escalating by 2.25% thereafter. Also, we funded additional loan proceeds of $7,125 under an existing mortgage loan for the purchase of a 126-bed SNF in Michigan. This incremental funding bears interest at 9.41%, fixed for five years, and escalating by 2.25% thereafter.

At December 31, 2019 and 2018 the carrying values of the mortgage loans were $254,099,000 and $242,939,000, respectively. Scheduled principal payments on mortgage loan receivables are as follows (in thousands):

	Scheduled
	Principal
2020	$	1,065
2021		1,175
2022		1,175
2023		1,175
2024		1,175
Thereafter		250,894
Total	$	256,659

The following table summarizes our early mortgage loan payoffs during the years 2019, 2018 and 2017 (dollar amounts in thousands):

		Early	Number
		Principal	of
		Payoff	Loans	State
2019	$	—	—	N/A
2018	$	1,086	1	UT
2017	$	10,795	4	AZ/MO/TX

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6. Investment in Unconsolidated Joint Ventures

The following table summarizes our investment in unconsolidated joint ventures (dollar amounts in thousands):

	Type	Type		Total		Currently			Number
	of	of		Preferred		Paid in			of		Investment		Carrying
State	Properties	Investment		Return		Cash			Beds/ Units		Commitment		Value
Arizona	ILF/ALF/MC	Preferred Equity	(1)	15	%	8	%	(2)	585	$	—	$	19,003	(3)
Total									585	$	—	$	19,003

(1) We have concluded that the JV is a VIE in accordance with GAAP. However, because we do not control the entity, nor do we have any role in the day-to-day management, we are not the primary beneficiary of the JV. Therefore, we account for the JV investment using the equity method.

(2) Effective second quarter of 2019, this JV was placed on cash basis due to delinquency of our preferred return.

(3) During the fourth quarter of 2019, we recorded an impairment loss of $5,500 to write our preferred equity investment down to its estimated sale price. See below for more detail.

As previously discussed, in October 2019, the JV in which we hold our preferred equity investment signed a letter of intent for the sale of the four properties comprising the JV (the “Properties”). Concurrently, the JV was pursuing a refinancing alternative to take advantage of lower interest rates in today’s market. Based upon the information available to us regarding available alternatives and courses of action, we performed a recoverability test on the carrying value of our preferred equity investment and concluded the preferred equity was not impaired at September 30, 2019.

In November 2019, the JV signed a contract to sell the Properties. Additionally, its refinancing efforts came to a halt. The contract was subject to standard due diligence and other contingencies to close, all of which were met in January 2020. Accordingly, based on the information available to us regarding alternatives and courses of action as of December 31, 2019, we performed a recoverability test on the carrying value of our preferred equity investment and concluded that a portion of our preferred equity investment will not be recoverable. Therefore, we recorded an impairment loss from investments in unconsolidated joint ventures of $5,500,000 and wrote our preferred equity investment down to its estimated fair value.

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The following table summarizes our capital contributions, income recognized, and cash interest received related to our investments in unconsolidated joint ventures during the years ended December 31, 2019, 2018 and 2017 (in thousands):

	Type
	of			Capital			Income			Cash Interest
Year	Properties			Contribution			Recognized			Received
2019	ILF/ALF/MC		$	472		$	1,029		$	1,580
	ILF/ALF/MC	(1)		—	(1)		955	(1)		979	(1)
	ALF/MC	(2)		—	(2)		404	(2)		432	(2)
Total			$	472		$	2,388		$	2,991
2018	ILF/ALF/MC		$	670		$	2,041		$	1,975
	ILF/ALF/MC	(1)		—	(1)		511	(1)		396	(1)
	ALF/MC	(2)		—	(2)		312	(2)		—	(2)
Total			$	670		$	2,864		$	2,371
2017	ILF/ALF/MC		$	1,101		$	1,560		$	1,436
	ILF/ALF/MC			—	(1)		511	(1)		302	(1)
	UDP-ALF/MC			2,747	(2)		192	(2)		—	(2)
Total			$	3,848		$	2,263		$	1,738

(1) We had a $2,900 mezzanine loan commitment for a 99-unit seniors housing community in Florida with a total preferred return of 15%. The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. Since interest payments were deferred and no interest was recorded for the first twelve months of the loan, we used the effective interest method in accordance with GAAP to recognize interest income and recorded the difference between the effective interest income and cash interest income to loan principal balance. During the third quarter of 2019, the mezzanine loan was paid off.

(2) We had a $3,400 mezzanine loan commitment for the development of a 127-unit seniors housing community in Florida with a total preferred return of 15%. The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. During the first quarter of 2019, the mezzanine loan was paid off.

7. Notes Receivable

Notes receivable consists of mezzanine loans and other loan arrangements. The following table is a summary of our notes receivable components at December 31, 2019 and 2018 (in thousands):

	At December 31,
	2019		2018
Mezzanine loans	$	13,284	$	9,868
Other loans		4,824		2,975
Notes receivable reserve		(181)		(128)
Total	$	17,927	$	12,715

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The following table summarizes our notes receivable activity for the years ended December 31, 2019 through 2017 (in thousands):

	Year ended December 31,
		2019			2018		2017
Advances under notes receivable	$	8,967	(1)	$	124	$	—
Principal payments received under notes receivable		(3,503)			(3,848)		(25)
Reclassified to lease incentives (2)		(200)	(2)		—		—
Notes receivable reserve		(52)			37		—
Total	$	5,212		$	(3,687)	$	(25)

(1) We originated a $6,800 mezzanine loan commitment for the development of a 204-unit ILF/ALF/MC in Georgia. The mezzanine loan has a five-year term and a 12.0% return, a portion of which is paid in cash, and the remaining portion of which is deferred during the first 46 months. Additionally, we originated a $1,400 note agreement, funding $1,304 with a commitment to fund $96. The note bears interest at 7.0%. Further, we originated a $550 note agreement, funding $500 with a commitment to fund $50. The note bears interest at 7.5%.

(2) Represents an interim working capital loan related to a development project which matured upon completion of the development project and commencement of the lease.

8. Lease Incentives

The following table summarizes lease incentives by component as of December 31, 2019 and 2018 (in thousands):

	At December 31,
		2019		2018
Non-contingent lease incentives	$	2,552	$	14,443

The following table summarizes our lease incentive activity for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	2019							2018							2017
		Funding		Amortization		Write-off			Funding		Amortization		Write-off			Funding		Amortization		Write-off
Non-contingent lease incentives	$	387	$	(385)	$	(11,893)	(1)	$	1,272	$	(1,733)	$	—		$	6,544	$	(1,590)	$	(1,205)	(3)
Contingent lease incentives		—		—		—			—		(359)		(6,219)	(2)		—		(619)		(2,634)	(4)
Net increase (decrease)	$	387	$	(385)	$	(11,893)		$	1,272	$	(2,092)	$	(6,219)		$	6,544	$	(2,209)	$	(3,839)

(1) In accordance with ASC 842 lease standard adopted on January 1, 2019, we wrote-off $12,093 of lease incentives related to leases for which we determined it is not probable we will collect substantially all of the contractual lease obligation through maturity. See Note 2. Summary of Significant Accounting Policies for further discussion. Additionally, we reclassified a $200 interim working capital loan as lease incentive. See Note 7. Notes Receivable for further discussion.

(2) We entered into an amended master lease agreement with Senior Lifestyle Management, LLC (“Senior Lifestyle”). Among the provisions of the amendment, the contingent lease incentive payable to Senior Lifestyle was removed. Therefore, we wrote-off the Senior Lifestyle contingent lease incentive.

(3) Represents the write-off of lease incentives related to two MC communities due to negotiations to transition these properties to another operator in our portfolio that never materialized.

(4) Represents the write-off of a lease incentive related to an ALF due to a change to the business model at the property that resulted in lower net operating income and the improbability of paying the earn-out.

Non-contingent lease incentives represent payments made to our lessees for various reasons including entering into a new lease or lease amendments and extensions. Contingent lease incentives represent potential contingent earn-out

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payments that may be made to our lessees in the future, as part of our lease agreements. From time to time, we may commit to provide contingent payments to our lessees, upon our properties achieving certain rent coverage ratios. Once the contingent payment becomes probable and estimable, the contingent payment is recorded as a lease incentive. Lease incentives are amortized as a yield adjustment to rental income over the remaining life of the lease.

9. Debt Obligations

Bank Borrowings. During 2018, we amended and restated our unsecured credit agreement to replace the previous unsecured credit agreement, prior to its expiration on October 14, 2018. The amended credit agreement maintains the $600,000,000 aggregate commitment of the lenders under the prior agreement and provides for the opportunity to increase the commitment size of the credit agreement up to a total of $1,000,000,000. The amended credit agreement extends the maturity of the credit agreement to June 27, 2022 and provides for a one-year extension option at our discretion, subject to customary conditions. Additionally, the amended credit agreement decreases the interest rate margins and converts from the payment of unused commitment fees to a facility fee. Based on our leverage at December 31, 2019, the facility provides for interest annually at LIBOR plus 115 basis points and a facility fee of 20 basis points. At December 31, 2019 and 2018 we were in compliance with all covenants.

Financial covenants contained in the Unsecured Credit Agreement, which are measured quarterly, require us to maintain, among other things:

(i) a ratio of total indebtedness to total asset value not greater than 0.5 to 1.0;

(ii) a ratio of secured debt to total asset value not greater than 0.35 to 1.0;

(iii) a ratio of unsecured debt to the value of the unencumbered asset value not greater than 0.6 to 1.0; and

(iv) a ratio of EBITDA, as calculated in the Unsecured Credit Agreement, to fixed charges not less than 1.50 to 1.0.

Senior Unsecured Notes. We have a $337,500,000 shelf agreement with affiliates and managed accounts of PGIM, Inc. (“Prudential”), with availability of $21,500,000 at December 31, 2019, which expired for new issuance on February 16, 2020. During the fourth quarter of 2019, we sold $100,000,000 aggregate principal amount of 3.85% senior unsecured notes maturing in 2031 to Prudential.

The following table sets forth information regarding debt obligations by component as of December 31, 2019 and 2018 (dollar amounts in thousands):

		At December 31, 2019				At December 31, 2018
	Applicable			Available				Available
	Interest	Outstanding		for		Outstanding		for
Debt Obligations	Rate (1)	Balance		Borrowing		Balance		Borrowing
Bank borrowings (2)	3.14%	$	93,900	$	506,100	$	112,000	$	488,000
Senior unsecured notes, net of debt issue costs	4.39%		599,488		21,500		533,029		93,833
Total	4.22%	$	693,388	$	527,600	$	645,029	$	581,833

(1) Represents weighted average of interest rate as of December 31, 2019.

(2) Subsequent to December 31, 2019, we borrowed $18,000 under our unsecured revolving line of credit, accordingly we have $111,900 outstanding balance and $488,100 available for borrowing under our unsecured revolving line of credit.

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Our borrowings and repayments for the years ended December 31, 2019, 2018 and 2017 are as follows (in thousands):

	2019					2018				2017
Debt Obligations		Borrowings			Repayments	Borrowings		Repayments			Borrowings			Repayments
Bank borrowings	$	107,900		$	(126,000)	$	116,200	$	(100,700)	$	113,000		$	(123,600)
Senior unsecured notes		100,000	(1)		(33,667)		—		(38,166)		100,000	(2)		(31,167)
Total	$	207,900		$	(159,667)	$	116,200	$	(138,866)	$	213,000		$	(154,767)

(1) During the fourth quarter of 2019, we sold $100,000 senior unsecured notes to Prudential. See above to further discussion.

(2) During 2017, we sold 15-year senior unsecured notes in the aggregate amount of $100,000 to a group of investors, which included Prudential, in a private placement transaction. The notes bear interest at an annual rate of 4.5%, have scheduled principal payments and mature on February 16, 2032.

Scheduled Principal Payments. The following table represents our long-term contractual obligations (scheduled principal payments and amounts due at maturity) as of December 31, 2019, and excludes the effects of interest and debt issue costs (in thousands):

	Total			2020		2021		2022		2023		2024		Thereafter
Bank borrowings	$	93,900	(1)	$	—	$	—	$	93,900	$	—	$	—	$	—
Senior unsecured notes		600,300			40,160		47,160		48,160		49,160		49,160		366,500
	$	694,200		$	40,160	$	47,160	$	142,060	$	49,160	$	49,160	$	366,500

(1) Subsequent to December 31, 2019, we borrowed $18,000 under our unsecured revolving line of credit, accordingly we have $111,900 outstanding balance and $488,100 available for borrowing.

10. Equity

Common Stock. During 2016, we entered into separate equity distribution agreements (collectively, “Original Equity Distribution Agreements”) to offer and sell, from time to time, up to $200,000,000 in aggregate offering price of our company common shares.

During the year ended December 31, 2017, we sold 312,881 shares of common stock for $14,600,000 in net proceeds under the Original Equity Distribution Agreements. In conjunction with the sale of common stock, we paid $260,000 as compensation to our sales agents and we reclassified $49,000 of accumulated costs associated with this agreement to additional paid in capital.

During the year ended December 31, 2018, we sold 22,244 shares of common stock for $1,005,000 in net proceeds under the Original Equity Distribution Agreements. In conjunction with the sale of common stock, we paid $18,000 as compensation to our sales agents and we reclassified $76,000 of accumulated costs associated with this agreement to additional paid in capital. Accordingly, at December 31, 2018, we had $184,139,000 available under the Original Equity Distribution Agreements.

During 2019, the Original Equity Distribution Agreements expired, and we entered into new separate equity distribution agreements (collectively “Equity Distribution Agreements”) to offer and sell, from time to time, up to $200,000,000 in aggregate offering price of shares of common shares. Sales of common shares will be made by means of ordinary brokers’ transactions, which may include block trades or transactions that are deemed to be “at the market” offerings. As of December 31, 2019, no shares were issued under the Equity Distribution Agreements. Accordingly, at December 31, 2019, we had $200,000,000 available under the Equity Distribution Agreements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the years 2019, 2018 and 2017, we acquired 45,030 shares, 31,326 shares and 42,089 shares, respectively, of common stock held by employees who tendered owned shares to satisfy tax withholding obligations. Subsequent to December 31, 2019, we acquired 34,016 shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations.

Non-controlling Interests. During the years 2019, 2018 and 2017, we entered into partnerships to develop and/or own real estate. Given that our limited members do not have the substantive kick-out rights, liquidation rights, or participation rights, we have concluded that the partnerships are VIEs. Since we exercise power over and receive benefits from the VIEs, we are considered the primary beneficiary. Accordingly, we consolidate the VIEs and record the non-controlling interests at cost. As of December 31, 2019, we have the following consolidated VIEs (in thousands):

					Gross
Investment		Property			Consolidated			Non-Controlling
Year	Purpose	Type	State		Assets			Interests
2019	Owned real estate	ALF/MC	VA	$	16,895		$	919
2018	Owned real estate	ILF	OR		14,400	(1)		2,857	(1)
2018	Owned real estate and development	UDP	OR		13,831	(1)		1,081	(1)
2017	Owned real estate and development	ILF/ALF/MC	WI		21,999	(2)		2,318	(2)
2017	Owned real estate	ALF/MC	SC		11,680			1,308
Total				$	78,805		$	8,483

(1) We entered into a JV to develop, purchase and own seniors housing properties. During the second quarter of 2018, the JV purchased land for the development of a 78-unit ALF/MC for a total anticipated project cost of $18,108. The non-controlling partner contributed $1,081 of cash and we committed to fund the remaining $17,027 project cost. During the third quarter of 2018, in a sale-leaseback transaction, the JV purchased an existing operational 89-unit ILF adjacent to the 78-unit ALF/MC we are developing for $14,400. The non-controlling partner contributed $2,857 of equity and we contributed $11,543 in cash. Upon completion of the development project, our combined economic interest in the JV will be approximately 88%.

(2) We entered into a JV to own the real estate and develop a 110-unit ILF/ALF/MC community in Wisconsin. This development project completed during the second quarter of 2019.

Shelf Registration Statement. We have an automatic shelf registration statement on file with the SEC, and currently have the ability to file additional automatic shelf registration statements, to provide us with capacity to offer an indeterminate amount of common stock, preferred stock, warrants, debt, depositary shares, or units. We may from time to time publicly raise capital under our automatic shelf registration statement in amounts, at prices, and on terms to be announced when and if the securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of the offering. Our shelf registration statement expires on February 28, 2022.

Distributions. We declared and paid the following cash dividends (in thousands):

	Year Ended December 31,
	2019				2018				2017
	Declared		Paid		Declared		Paid		Declared		Paid
Common Stock (1)	$	90,899	$	90,899	$	90,372	$	90,372	$	90,219	$	90,219

(1) Represents $0.19 per share per month.

In January 2020, we declared a monthly cash dividend of $0.19 per share on our common stock for the months of January, February and March 2020 payable on January 31, February 28 and March 31, 2020, respectively, to stockholders of record on January 23, February 20 and March 23, 2020, respectively.

76

LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock Based Compensation Plans. During 2015, we adopted, and our stockholders approved the 2015 Equity Participation Plan (the “2015 Plan”). Under the 2015 Plan, 1,400,000 shares of common stock have been reserved for awards, including nonqualified stock option grants and restricted stock grants to officers, employees, non-employee directors and consultants. As of December 31, 2019, we have 617,013 shares of common stock reserved for awards under the 2015 Plan. The terms of the awards granted under the 2015 Plan are set by our compensation committee at its discretion.

Restricted Stock and Performance-Based Stock Units. Restricted stock and performance-based stock units activity for the years ended December 31, 2019, 2018 and 2017 was as follows:

	2019			2018		2017
Outstanding, January 1		325,750			244,181		210,573
Granted		147,608			156,718		143,057
Vested		(127,725)	(1)		(75,149)		(85,343)
Cancelled		—			—		(24,106)
Outstanding, December 31		345,633			325,750		244,181
Compensation expense related to restricted stock and performance-based stock units for the year	$	6,566,000		$	5,870,000	$	5,247,000

(1) Includes 48,225 performance-based stock units.

During 2019, 2018 and 2017, we granted 147,608, 156,718 and 143,057 shares of restricted common stock and performance-based stock units, respectively, under the 2015 plan as follows:

	No. of	Price per
Year	Shares/Units	Share		Vesting Period
2019	78,276	$	46.54	ratably over 3 years
	60,836	$	46.54	TSR targets (1)
	8,496	$	44.73	May 29, 2020
	147,608
2018	81,819	$	38.18	ratably over 3 years
	66,171	$	38.18	TSR targets (1)
	8,728	$	41.25	May 30, 2019
	156,718
2017	74,760	$	45.76	ratably over 3 years
	57,881	$	45.76	TSR targets (1)
	7,416	$	48.55	June 1, 2018
	3,000	$	50.50	ratably over 3 years
	143,057

(1) Vesting is based on achieving certain total shareholder return (“TSR”) targets in 4 years with acceleration opportunity in 3 years.

Subsequent to December 31, 2019, we granted 76,464 shares of restricted common stock at $48.95 per share which vest ratably from the grant date over a three-year period.

77

LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

At December 31, 2019, the total number of restricted common stock and performance-based stock units that are scheduled to vest and remaining compensation expense to be recognized related to the future service period of unvested outstanding restricted common stock and performance-based stock units are as follows (dollar amount in thousands):

	Number		Remaining
	of		Compensation
Vesting Date	Awards		Expense
2020	139,534	(1)	$	4,619
2021	119,168	(2)		2,503
2022	86,931	(3)		189
Total	345,633		$	7,311

(1) Includes 55,057 performance-based stock units. The performance-based stock units are valued utilizing a lattice-binomial option pricing model based on Monte Carlo simulations. The company recognizes the fair value of the awards over the applicable vesting period as compensation expense.

(2) Includes 66,171 performance-based stock units. See ⁽¹⁾ above for valuation methodology.

(3) Includes 60,836 performance-based stock units. See ⁽¹⁾ above for valuation methodology.

Stock Options. During 2019, 2018 and 2017, we did not issue any stock options. Nonqualified stock option activity for the years ended December 31, 2019, 2018 and 2017, was as follows:

				Weighted Average
	Shares			Price
	2019	2018	2017	2019			2018	2017
Outstanding, January 1	20,000	25,000	33,334	$	34.99	$	32.92	$	30.76
Granted	—	—	—		N/A		N/A		N/A
Exercised	(5,000)	(5,000)	(8,334)	$	24.65	$	24.65	$	24.31
Canceled	—	—	—		N/A		N/A		N/A
Outstanding, December 31	15,000	20,000	25,000	$	38.43	$	34.99	$	32.92
Exercisable, December 31(1)	15,000	20,000	25,000	$	38.43	$	34.99	$	32.92

(1) The aggregate intrinsic value of exercisable options at December 31, 2019, based upon the closing price of our common shares at December 31, 2019, the last trading day of 2019, was approximately $95,000. Options exercisable at December 31, 2019, 2018 and 2017 have a weighted average remaining contractual life of approximately 3.2 years, 3.3 years, and 3.5 years, respectively.

The options exercised during 2019, 2018 and 2017 were as follows:

		Weighted
		Average
	Options	Exercise		Option		Market
	Exercised	Price		Value		Value (1)
2019	5,000	$	24.65	$	123,000	$	233,000
2018	5,000	$	24.65	$	123,000	$	205,000
2017	8,334	$	24.31	$	202,000	$	410,797

(1) As of the exercise dates.

We use the Black-Scholes-Merton formula to estimate the value of stock options granted to employees. This model requires management to make certain estimates including stock volatility, expected dividend yield and the expected term. Compensation expense related to the vesting of stock options for the years ended December 31, 2019, 2018 and 2017 was $0, $0 and $2,000, respectively.

78

LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Commitments and Contingencies

At December 31, 2019, we had commitments as follows (in thousands):

						Total
	Investment			2019		Commitment		Remaining
	Commitment			Funding		Funded		Commitment
Real estate properties (Note 5. Real Estate Investments)	$	41,266	(1)	$	13,847	$	18,361	$	22,905
Accrued incentives and earn-out liabilities (Note 8. Lease Incentives)		9,000			—		—		9,000
Mortgage loans (Note 5. Real Estate Investments)		27,200	(2)		2,264		5,944		21,256
Notes receivable (Note 7. Notes Receivable)		2,250			2,039		2,063		187
Total	$	79,716		$	18,150	$	26,368	$	53,348

(1) Represents commitments to purchase land and improvements, if applicable, and to develop, re-develop, renovate or expand seniors housing and health care properties.

(2) Represents $9,200 of commitments to expand and renovate the seniors housing and health care properties securing the mortgage loans and $18,000 represents contingent funding upon the borrower achieving certain coverage ratios.

Also, some of our lease agreements provide purchase options allowing the lessees to purchase the properties they currently lease from us. See Note 5. Real Estate Investments for a table summarizing information about our purchase options.

We are a party from time to time to various general and professional liability claims and lawsuits asserted against the lessees or borrowers of our properties, which in our opinion are not singularly or in the aggregate material to our results of operations or financial condition. These types of claims and lawsuits may include matters involving general or professional liability, which we believe under applicable legal principles are not our responsibility as a non-possessory landlord or mortgage holder. We believe that these matters are the responsibility of our lessees and borrowers pursuant to general legal principles and pursuant to insurance and indemnification provisions in the applicable leases or mortgages. We intend to continue to vigorously defend such claims.

12. Distributions

We must distribute at least 90% of our taxable income in order to continue to qualify as a REIT. This distribution requirement can be satisfied by current year distributions or, to a certain extent, by distributions in the following year.

For federal tax purposes, distributions to stockholders are treated as ordinary income, capital gains, return of capital or a combination thereof. Distributions for 2019, 2018 and 2017 were cash distributions. The federal income tax classification of the per share common stock distributions are as follows (unaudited):

	Year Ended December 31,
	2019		2018		2017
Ordinary taxable distribution	$	2.084	$	0.349	$	1.607
Return of capital		—		—		0.444
Unrecaptured Section 1250 gain		0.132		0.636		0.163
Long-term capital gain		0.064		1.295		0.066
Total	$	2.280	$	2.280	$	2.280

79

LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Net Income Per Common Share

Basic and diluted net income per share was as follows (in thousands except per share amounts):

	For the year ended December 31,
	2019		2018		2017
Net income	$	80,872	$	155,076	$	87,340
Less income allocated to non-controlling interests		(346)		(95)		—
Less income allocated to participating securities:
Non-forfeitable dividends on participating securities		(372)		(357)		(350)
Income allocated to participating securities		(19)		(268)		(12)
Total net income allocated to participating securities		(391)		(625)		(362)
Net income available to common stockholders		80,135		154,356		86,978
Effect of dilutive securities:
Participating securities		—		625		362
Net income for diluted net income per share	$	80,135	$	154,981	$	87,340
Shares for basic net income per share		39,571		39,477		39,409
Effect of dilutive securities:
Stock options		4		3		10
Performance-based stock units		184		203		67
Participating securities		—		156		151
Total effect of dilutive securities		188		362		228
Shares for diluted net income per share		39,759		39,839		39,637
Basic net income per share	$	2.03	$	3.91	$	2.21
Diluted net income per share	$	2.02	$	3.89	$	2.20

80

LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. Quarterly Financial Information

	For the quarter ended
	March 31,		June 30,		September 30,		December 31,
	(unaudited, in thousands except per share amounts)
2019
Revenues	$	45,456	$	46,266	$	47,119	$	46,463
Net income available to common stockholders	$	20,254	$	20,352	$	27,080	$	12,449
Net income per common share available to common stockholders:
Basic	$	0.51	$	0.51	$	0.68	$	0.31
Diluted	$	0.51	$	0.51	$	0.68	$	0.31
Dividends per share declared	$	0.57	$	0.57	$	0.57	$	0.57
Dividends per share paid	$	0.57	$	0.57	$	0.57	$	0.57
2018
Revenues	$	41,810	$	41,472	$	41,776	$	43,587
Net income available to common stockholders	$	20,271	$	68,658	$	34,782	$	30,645
Net income per common share available to common stockholders:
Basic	$	0.51	$	1.74	$	0.88	$	0.78
Diluted	$	0.51	$	1.73	$	0.88	$	0.77
Dividends per share declared	$	0.57	$	0.57	$	0.57	$	0.57
Dividends per share paid	$	0.57	$	0.57	$	0.57	$	0.57

NOTE: Quarterly and year-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts for the quarters may not agree with the per share amounts for the year.

81

LTC PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. Fair Value Measurements

In accordance with the accounting guidance regarding the fair value option for financial assets and financial liabilities, entities are permitted to choose to measure certain financial assets and liabilities at fair value, with the change in unrealized gains and losses reported in earnings. We did not adopt the elective fair market value option for our financial assets and financial liabilities.

The carrying amount of cash and cash equivalents approximates fair value because of the short-term maturity of these instruments. We do not invest our cash in auction rate securities. The carrying value and fair value of our financial instruments as of December 31, 2019 and 2018 assuming election of fair value for our financial assets and financial liabilities were as follows (in thousands):

	At December 31, 2019					At December 31, 2018
	Carrying		Fair			Carrying		Fair
	Value		Value			Value		Value
Mortgage loans receivable	$	254,099	$	312,824	(1)	$	242,939	$	295,492	(1)
Bank borrowings		93,900		93,900	(2)		112,000		112,000	(2)
Senior unsecured notes, net of debt issue costs		599,488		612,375	(3)		533,029		508,613	(3)

(1) Our investment in mortgage loans receivable is classified as Level 3. The fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is determined using our assumption on market conditions adjusted for market and credit risk and current returns on our investments. The discount rate used to value our future cash inflows of the mortgage loans receivable at December 31, 2019 and 2018 was 9.0%.

(2) Our bank borrowings bear interest at a variable interest rate. The estimated fair value of our bank borrowings approximated their carrying values at December 31, 2019 and 2018 based upon prevailing market interest rates for similar debt arrangements.

(3) Our obligation under our senior unsecured notes is classified as Level 3 and thus the fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is measured based upon management’s estimates of rates currently prevailing for comparable loans available to us, and instruments of comparable maturities. At December 31, 2019, the discount rate used to value our future cash outflow of our senior unsecured notes was 3.70% for those maturing before year 2026 and 3.90% for those maturing at or beyond year 2026. At December 31, 2018, the discount rate used to value our future cash outflow of our senior unsecured notes was 5.15% for those maturing before year 2026 and 5.40% for those maturing beyond year 2026.

16. Subsequent Events

The following events occurred subsequent to the balance sheet date.

Real Estate. We acquired a 140-bed SNF located in Texas for approximately $13,500,000 and entered into a 10-year master lease agreement with an initial cash yield of 8.5%, escalating 2% annually starting in the second year of the lease, with two five-year renewal options.

Debt: We borrowed $18,000,000, under our unsecured revolving line of credit. Accordingly, we have $111,900,000 outstanding and $488,100,000 available for borrowing under our unsecured revolving line of credit.

Equity: We declared a monthly cash dividend of $0.19 per share on our common stock for the months of January, February and March 2020, payable on January 31, February 28, and March 31, 2020, respectively, to stockholders of record on January 23, February 20, and March 23, 2020, respectively. Also, we acquired 34,016 shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations and we granted 76,464 shares of restricted common stock at $48.95 per share, which vest ratably from the grant date over a three-year period.

82

LTC PROPERTIES, INC.

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

			Additions
			(Recovered)
	Balance at		charged to		Charged to
	beginning of		costs and		other				Balance at end
Account Description	period		expenses		accounts (1)		Deductions (2)		of period
Year ended December 31, 2017
Loan loss reserves	$	2,315	$	(60)	$	—	$	—	$	2,255
Other notes receivable allowance		166		—		—		—		166
Straight-line rent receivable allowance		960		(146)		—		—		814
	$	3,441	$	(206)	$	—	$	—	$	3,235
Year ended December 31, 2018
Loan loss reserves	$	2,255	$	192	$	—	$	—	$	2,447
Other notes receivable allowance		166		(38)		—		—		128
Straight-line rent receivable allowance		814		(68)		—		—		746
	$	3,235	$	86	$	—	$	—	$	3,321
Year ended December 31, 2019
Loan loss reserves	$	2,447	$	113	$	—	$	—	$	2,560
Other notes receivable allowance		128		53		—		—		181
Straight-line rent receivable allowance		746		—		(746)		—		—
	$	3,321	$	166	$	(746)	$	—	$	2,741

(1) In conjunction with adoption of ASC 842, we wrote-off our 1% general straight-line reserve. The write-off was charged to retained earnings.

(2) Deductions represent uncollectible accounts written off.

83

LTC PROPERTIES, INC.

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

(in thousands)

							Costs
							capitalized		Gross amount at which carried at
			Initial cost to company				subsequent		December 31, 2019
					Building and		to				Building and				Accum		Construction/	Acquisition
	Encumbrances		Land		improvements		acquisition		Land		improvements		Total (1)		deprec.		renovation date	date
Skilled Nursing Properties:
134 Alamogordo, NM	$	—	$	210	$	2,593	$	641	$	210	$	3,234	$	3,444	$	1,504	1985	2001
218 Albuquerque, NM		—		1,696		3,891		530		1,696		4,421		6,117		1,954	2008	2005
219 Albuquerque, NM		—		1,950		8,910		207		1,950		9,117		11,067		3,881	1982	2005
220 Albuquerque, NM		—		2,463		7,647		9		2,463		7,656		10,119		3,234	1970	2005
042 Altoona, IA		—		105		2,309		444		105		2,753		2,858		1,987	1973	1996
252 Amarillo, TX		—		844		—		7,925		844		7,925		8,769		2,025	2013	2011
247 Arlington, TX		—		1,016		13,649		—		1,016		13,649		14,665		4,097	2007	2011
221 Beaumont, TX		—		370		1,141		106		370		1,247		1,617		563	1950	2005
213 Beeville, TX		—		186		1,197		70		186		1,267		1,453		518	1974	2004
007 Bradenton, FL		—		330		2,720		160		330		2,880		3,210		2,189	2012	1993
256 Brownwood, TX		—		164		6,336		—		164		6,336		6,500		1,562	2011	2012
043 Carroll, IA		—		47		1,033		213		47		1,246		1,293		898	1969	1996
177 Chesapeake, VA		—		388		3,469		2,777		388		6,246		6,634		3,581	2017	1995
257 Cincinnati, OH		—		1,890		25,110		—		1,890		25,110		27,000		4,303	2009	2012
125 Clovis, NM		—		561		5,539		307		561		5,846		6,407		2,730	2006	2001
129 Clovis, NM		—		598		5,902		59		598		5,961		6,559		2,805	1995	2001
268 Coldspring, KY		—		2,050		21,496		—		2,050		21,496		23,546		4,928	2014	2012
253 Colton, CA		—		2,474		15,158		—		2,474		15,158		17,632		3,512	1990	2011
211 Commerce City, CO		—		236		3,217		167		236		3,384		3,620		1,606	1964	2004
212 Commerce City, CO		—		161		2,160		95		161		2,255		2,416		1,051	1967	2004
246 Crowley, TX		—		2,247		14,276		—		2,247		14,276		16,523		4,196	2007	2011
235 Daleville, VA		—		279		8,382		—		279		8,382		8,661		2,611	2005	2010
258 Dayton, OH		—		373		26,627		—		373		26,627		27,000		4,598	2010	2012
168 Des Moines, IA		—		115		2,096		1,433		115		3,529		3,644		2,194	1972	1999
196 Dresden, TN		—		31		1,529		1,073		31		2,602		2,633		1,192	2014	2000
298 Forth Worth, TX		—		2,785		7,546		—		2,785		7,546		10,331		1,776	1998	2015
026 Gardendale, AL		—		100		7,550		2,084		100		9,634		9,734		6,166	2011	1996
185 Gardner, KS		—		896		4,478		4,150		896		8,628		9,524		3,987	2011	1999
248 Granbury, TX		—		836		6,693		—		836		6,693		7,529		2,631	2008	2011
044 Granger, IA		—		62		1,356		221		62		1,577		1,639		1,113	1979	1996
205 Grapevine, TX		—		431		1,449		188		431		1,637		2,068		938	1974	2002
250 Hewitt, TX		—		1,780		8,220		99		1,780		8,319		10,099		2,057	2008	2011
194 Holyoke, CO		—		211		1,513		283		211		1,796		2,007		1,118	1963	2000
051 Houston, TX		—		365		3,769		1,598		365		5,367		5,732		3,613	1968	1996
054 Houston, TX		—		202		4,458		1,426		202		5,884		6,086		4,119	2007	1996
055 Houston, TX		—		202		4,458		1,359		202		5,817		6,019		4,004	2008	1996
045 Jefferson, IA		—		86		1,883		296		86		2,179		2,265		1,522	1972	1996
318 Kansas City, MO		—		1,229		18,368		—		1,229		18,368		19,597		213	2018	2019
008 Lecanto, FL		—		351		2,665		2,737		351		5,402		5,753		3,873	2012	1993
300 Mansfield, TX		—		2,890		13,110		—		2,890		13,110		16,000		1,912	2015	2016
053 Mesa, AZ		—		305		6,909		1,876		305		8,785		9,090		5,876	1996	1996
242 Mission, TX		—		1,111		16,602		—		1,111		16,602		17,713		4,441	2004	2010
115 Nacogdoches, TX		—		100		1,738		168		100		1,906		2,006		1,203	1973	1997
233 Nacogdoches, TX		—		394		7,456		268		394		7,724		8,118		2,270	1991	2010
249 Nacogdoches, TX		—		1,015		11,109		—		1,015		11,109		12,124		3,729	2007	2011
245 Newberry, SC		—		439		4,639		608		439		5,247		5,686		1,902	1995	2011
244 Newberry, SC		—		919		5,454		131		919		5,585		6,504		1,796	2001	2011
046 Norwalk, IA		—		47		1,033		239		47		1,272		1,319		925	1975	1996
176 Olathe, KS		—		520		1,872		313		520		2,185		2,705		1,443	1968	1999
251 Pasadena, TX		—		1,155		14,345		522		1,155		14,867		16,022		3,461	2005	2011
210 Phoenix, AZ		—		334		3,383		456		334		3,839		4,173		1,923	1982	2004
193 Phoenix, AZ		—		300		9,703		92		300		9,795		10,095		5,853	1985	2000
047 Polk City, IA		—		63		1,376		153		63		1,529		1,592		1,085	1976	1996
094 Portland, OR		—		100		1,925		3,152		100		5,077		5,177		3,414	2007	1997
254 Red Oak, TX		—		1,427		17,173		—		1,427		17,173		18,600		3,995	2002	2012
124 Richland Hills, TX		—		144		1,656		427		144		2,083		2,227		1,189	1976	2001
197 Ripley, TN		—		20		985		1,638		20		2,623		2,643		1,224	2014	2000

84

LTC PROPERTIES, INC.

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)

(in thousands)

							Costs
							capitalized		Gross amount at which carried at
			Initial cost to company				subsequent		December 31, 2019
					Building and		to				Building and				Accum		Construction/	Acquisition
	Encumbrances		Land		improvements		acquisition		Land		improvements		Total (1)		deprec.		renovation date	date
133 Roswell, NM	$	—	$	568	$	5,235	$	1,396	$	568	$	6,631	$	7,199	$	2,981	1975	2001
081 Sacramento, CA		—		220		2,929		1,481		220		4,410		4,630		2,510	2015	1997
085 Salina, KS		—		100		1,153		628		100		1,781		1,881		1,244	1985	1997
281 Slinger, WI		—		464		13,482		—		464		13,482		13,946		2,572	2014	2015
234 St. Petersburg, FL		—		1,070		7,930		500		1,070		8,430		9,500		2,286	1988	2010
243 Stephenville, TX		—		670		10,117		500		670		10,617		11,287		2,923	2009	2010
225 Tacoma, WA		—		723		6,401		901		723		7,302		8,025		3,294	2009	2006
178 Tappahannock, VA		—		375		1,327		397		375		1,724		2,099		1,507	1978	1995
270 Trinity, FL		—		1,653		12,748		—		1,653		12,748		14,401		2,544	2008	2013
192 Tucson, AZ		—		276		8,924		112		276		9,036		9,312		5,394	1992	2000
305 Union, KY		—		858		24,116		—		858		24,116		24,974		743	2019	2016
299 Weatherford, TX		—		836		11,902		—		836		11,902		12,738		2,285	1996	2015
236 Wytheville, VA		—		647		12,167		—		647		12,167		12,814		4,618	1996	2010
Skilled Nursing Properties	$	—	$	50,063	$	499,692	$	46,615	$	50,063	$	546,307	$	596,370	$	183,391
Assisted Living Properties:
317 Abington, VA		—		541		16,355		—		541		16,355		16,896		390	2015	2019
077 Ada, OK		—		100		1,650		—		100		1,650		1,750		966	1996	1996
105 Arvada, CO		—		100		2,810		6,960		100		9,770		9,870		3,262	2014	1997
304 Athens, GA		—		1,056		13,326		—		1,056		13,326		14,382		1,314	2016	2016
063 Athens, TX		—		96		1,510		104		96		1,614		1,710		982	1995	1996
320 Auburn Hills, MI		—		1,964		4,569		—		1,964		4,569		6,533		—	1995	2019
269 Aurora, CO		—		850		8,583		—		850		8,583		9,433		1,917	2014	2013
260 Aurora, CO		—		831		10,071		—		831		10,071		10,902		2,122	1999	2012
203 Bakersfield, CA		—		834		11,986		1,039		834		13,025		13,859		6,428	2002	2001
117 Beatrice, NE		—		100		2,173		231		100		2,404		2,504		1,287	1997	1997
277 Burr Ridge, IL		—		1,400		11,102		—		1,400		11,102		12,502		1,668	2016	2014
278 Castle Rock, CO		—		759		9,041		—		759		9,041		9,800		1,032	2012	2014
311 Cedarburg, WI		—		924		21,075		—		924		21,075		21,999		629	2019	2017
160 Central, SC		—		100		2,321		—		100		2,321		2,421		1,101	1998	1999
263 Chatham, NJ		—		5,365		36,399		—		5,365		36,399		41,764		7,347	2002	2012
307 Clovis, CA		—		2,542		19,126		—		2,542		19,126		21,668		1,374	2014	2017
308 Clovis, CA		—		3,054		14,172		—		3,054		14,172		17,226		979	2016	2017
279 Corpus Christi, TX		—		880		11,440		147		880		11,587		12,467		1,619	2016	2015
292 De Forest, WI		—		485		5,568		43		485		5,611		6,096		744	2006	2015
057 Dodge City, KS		—		84		1,666		4		84		1,670		1,754		1,034	1995	1995
083 Durant, OK		—		100		1,769		—		100		1,769		1,869		1,020	1997	1997
107 Edmond, OK		—		100		1,365		526		100		1,891		1,991		1,071	1996	1997
163 Ft. Collins, CO		—		100		2,961		3,405		100		6,366		6,466		2,510	2014	1999
170 Ft. Collins, CO		—		100		3,400		4,622		100		8,022		8,122		2,797	2014	1999
132 Ft. Meyers, FL		—		100		2,728		9		100		2,737		2,837		1,507	1998	1998
315 Ft. Worth, TX		—		1,534		11,099		—		1,534		11,099		12,633		474	2014	2018
100 Fremont ,OH		—		100		2,435		115		100		2,550		2,650		1,442	1997	1997
267 Frisco, TX		—		1,000		5,154		—		1,000		5,154		6,154		1,189	2014	2012
314 Frisco, TX		—		2,216		10,417		—		2,216		10,417		12,633		456	2015	2018
296 Glenview, IL				2,800		14,248		—		2,800		14,248		17,048		1,120	2017	2015
167 Goldsboro, NC		—		100		2,385		1		100		2,386		2,486		1,055	1998	1999
056 Great Bend, KS		—		80		1,570		21		80		1,591		1,671		1,097	1995	1995
102 Greeley, CO		—		100		2,310		270		100		2,580		2,680		1,459	1997	1997
284 Green Bay, WI		—		1,660		19,079		402		1,660		19,481		21,141		2,617	2004	2015
164 Greenville, NC		—		100		2,478		2		100		2,480		2,580		1,231	1998	1999
062 Greenville, TX		—		42		1,565		84		42		1,649		1,691		996	1995	1996
161 Greenwood, SC		—		100		2,638		—		100		2,638		2,738		1,339	1998	1999
241 Gulf Breeze, FL		—		720		3,780		261		720		4,041		4,761		1,223	2000	2010
295 Jacksonville, FL		—		1,389		12,756		56		1,389		12,812		14,201		1,444	2015	2015
066 Jacksonville, TX		—		100		1,900		77		100		1,977		2,077		1,195	1996	1996
310 Kansas City, MO				1,072		15,552		—		1,072		15,552		16,624		839	2017	2017
285 Kenosha, WI		—		936		12,361		240		936		12,601		13,537		1,515	2008	2015
255 Littleton, CO		—		1,882		8,248		—		1,882		8,248		10,130		1,718	2013	2012
268 Littleton, CO		—		1,200		8,688		—		1,200		8,688		9,888		2,007	2014	2013
148 Longmont, CO		—		100		2,640		—		100		2,640		2,740		1,443	1998	1998
060 Longview, TX		—		38		1,568		127		38		1,695		1,733		1,034	1995	1995
261 Louisville, CO		—		911		11,703		—		911		11,703		12,614		2,414	2000	2012

85

LTC PROPERTIES, INC.

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)

(in thousands)

							Costs
							capitalized		Gross amount at which carried at
			Initial cost to company				subsequent		December 31, 2019
						Building and	to				Building and				Accum		Construction/	Acquisition
	Encumbrances		Land			improvements	acquisition		Land		improvements		Total (1)		deprec.		renovation date	date
301 Louisville, KY	$	—	$	1,021	$	13,157	$	17	$	1,021	$	13,174	$	14,195	$	1,288	2016	2016
114 Loveland, CO		—		100		2,865		270		100		3,135		3,235		1,758	1997	1997
068 Lufkin, TX		—		100		1,950		94		100		2,044		2,144		1,229	1996	1996
061 Marshall, TX		—		38		1,568		534		38		2,102		2,140		1,298	1995	1995
293 McHenry, IL		—		1,289		28,976		243		1,289		29,219		30,508		3,777	2005	2015
058 McPherson, KS		—		79		1,571		4		79		1,575		1,654		1,086	1994	1995
316 Medford, OR		—		750		13,650		—		750		13,650		14,400		575	1984	2018
239 Merritt Island, FL		—		550		8,150		100		550		8,250		8,800		2,347	2004	2010
104 Millville, NJ		—		100		2,825		749		100		3,574		3,674		1,754	1997	1997
286 Milwaukee, WI		—		818		8,014		61		818		8,075		8,893		1,084	2007	2015
231 Monroeville, PA		—		526		5,334		435		526		5,769		6,295		1,866	1997	2009
280 Murrells Inlet, SC		—		2,490		14,185		—		2,490		14,185		16,675		1,762	2016	2015
294 Murrieta, CA		—		2,022		11,136		—		2,022		11,136		13,158		1,432	2016	2015
289 Neenah, WI		—		694		20,839		244		694		21,083		21,777		2,606	1991	2015
166 New Bern, NC		—		100		2,427		1		100		2,428		2,528		1,095	1998	1999
118 Newark, OH		—		100		2,435		284		100		2,719		2,819		1,436	1997	1997
143 Niceville, FL		—		100		2,680		—		100		2,680		2,780		1,465	1998	1998
095 Norfolk, NE		—		100		2,123		301		100		2,424		2,524		1,277	1997	1997
306 Oak Lawn, IL		—		1,591		13,772		—		1,591		13,772		15,363		792	2018	2016
290 Oshkosh, WI		—		1,525		9,192		184		1,525		9,376		10,901		2,526	2009	2015
291 Oshkosh, WI		—		475		7,364		44		475		7,408		7,883		982	2005	2015
302 Overland Park, KS		—		1,951		11,882		281		1,951		12,163		14,114		1,344	2013	2016
232 Pittsburgh, PA		—		470		2,615		333		470		2,948		3,418		1,046	1994	2009
165 Rocky Mount, NC		—		100		2,494		1		100		2,495		2,595		1,157	1998	1999
059 Salina, KS		—		79		1,571		4		79		1,575		1,654		1,086	1994	1995
084 San Antonio, TX		—		100		1,900		—		100		1,900		2,000		1,094	1997	1997
092 San Antonio, TX		—		100		2,055		—		100		2,055		2,155		1,178	1997	1997
288 Sheboygan, WI		—		1,168		5,382		184		1,168		5,566		6,734		854	2006	2015
149 Shelby, NC		—		100		2,805		2		100		2,807		2,907		1,533	1998	1998
312 Spartanburg, SC		—		254		9,906		1,520		254		11,426		11,680		886	1999	2017
150 Spring Hill, FL		—		100		2,650		—		100		2,650		2,750		1,449	1998	1998
103 Springfield, OH		—		100		2,035		270		100		2,305		2,405		1,300	1997	1997
321 Sterling Heights, MI		—		1,133		11,473		—		1,133		11,473		12,606		—	1997	2019
162 Sumter, SC		—		100		2,351		—		100		2,351		2,451		1,143	1998	1999
140 Tallahassee, FL		—		100		3,075		—		100		3,075		3,175		1,684	1998	1998
098 Tiffin, OH		—		100		2,435		279		100		2,714		2,814		1,424	1997	1997
282 Tinley Park, IL		—		702		11,481		—		702		11,481		12,183		1,509	2016	2015
088 Troy, OH		—		100		2,435		605		100		3,040		3,140		1,641	1997	1997
080 Tulsa, OK		—		200		1,650		—		200		1,650		1,850		959	1997	1997
093 Tulsa, OK		—		100		2,395		—		100		2,395		2,495		1,370	1997	1997
238 Tupelo, MS		—		1,170		8,230		30		1,170		8,260		9,430		2,437	2000	2010
075 Tyler, TX		—		100		1,800		—		100		1,800		1,900		1,052	1996	1996
202 Vacaville, CA		—		1,662		11,634		1,770		1,662		13,404		15,066		6,442	2002	2001
091 Waco, TX		—		100		2,235		—		100		2,235		2,335		1,280	1997	1997
096 Wahoo, NE		—		100		2,318		161		100		2,479		2,579		1,378	1997	1997
108 Watauga, TX		—		100		1,668		—		100		1,668		1,768		949	1996	1997
287 Waukesha, WI		—		992		15,183		210		992		15,393		16,385		1,884	2009	2015
109 Weatherford, OK		—		100		1,669		592		100		2,261		2,361		1,278	1996	1997
309 West Chester, OH		—		2,355		13,553		22		2,355		13,575		15,930		978	2017	2017
276 Westminster, CO		—		1,425		9,575		—		1,425		9,575		11,000		1,867	2015	2013
110 Wheelersburg, OH		—		29		2,435		250		29		2,685		2,714		1,437	1997	1997
303 Wichita, KS		—		1,422		9,957		285		1,422		10,242		11,664		1,159	2011	2016
259 Wichita, KS		—		730		—		9,682		730		9,682		10,412		2,270	2013	2012
283 Wichita, KS		—		624		13,846		—		624		13,846		14,470		1,245	2016	2015
076 Wichita Falls, TX		—		100		1,850		—		100		1,850		1,950		1,081	1996	1996
120 Wichita Falls, TX		—		100		2,750		131		100		2,881		2,981		1,607	1997	1997
265 Williamstown, NJ		—		711		6,637		—		711		6,637		7,348		1,502	2000	2012
264 Williamstown, NJ		—		711		8,649		—		711		8,649		9,360		1,769	2000	2012
099 York, NE		—		100		2,318		78		100		2,396		2,496		1,359	1997	1997
Assisted Living Properties	$	—	$	75,001	$	744,850	$	39,001	$	75,001	$	783,851	$	858,852	$	163,473

86

LTC PROPERTIES, INC.

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)

(in thousands)

							Costs
							capitalized		Gross amount at which carried at
			Initial cost to company				subsequent		December 31, 2019
					Building and		to				Building and					Accum		Construction/	Acquisition
	Encumbrances		Land		improvements		acquisition		Land		improvements		Total (1)			deprec.		renovation date	date
Other:
Properties:
297 Las Vegas, NV		—		1,965		7,308		1,144		1,965		8,452		10,417			891	1990/1994	2015
Properties		—		1,965		7,308		1,144		1,965		8,452		10,417			891
Land:
271 Howell, MI		—		420		—		—		420		—		420			—	N/A	2013
272 Milford, MI		—		450		—		—		450		—		450			—	N/A	2014
275 Yale, MI		—		73		—		—		73		—		73			—	N/A	2013
Land		—		943		—		—		943		—		943			—
Other Properties		—		2,908		7,308		1,144		2,908		8,452		11,360			891
Properties Under Development:
319 Independence, MO		—		2,644		1,514		—		2,644		1,514		4,158			—	N/A	2019
313 Medford, OR		—		636		13,195		—		636		13,195		13,831			—	N/A	2018
Properties Under Development		—		3,280		14,709		—		3,280		14,709		17,989			—
	$	—	$	131,252	$	1,266,559	$	86,760	$	131,252	$	1,353,319	$	1,484,571	(2)	$	347,755

(1) Depreciation is computed principally by the straight-line method for financial reporting purposes which generally range of a life from 5 to 15 years for furniture and equipment, 35 to 50 years for buildings, 10 to 20 years for site improvements, 10 to 50 years for building improvements and the respective lease term for acquired lease intangibles.

(2) As of December 31, 2019, our aggregate cost for Federal income tax purposes was $1,501.

87

LTC PROPERTIES, INC.

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)

(in thousands)

Activity for the years ended December 31, 2019, 2018 and 2017 is as follows:

	For the Year Ended December 31,
	2019		2018		2017
Reconciliation of real estate:
Carrying cost:
Balance at beginning of period	$	1,421,456	$	1,392,122	$	1,301,563
Acquisitions		58,414		40,408		82,405
Improvements		23,363		38,528		25,800
Capitalized interest		608		1,248		908
Cost of real estate sold		(19,270)		(50,850)		(18,554)
Ending balance	$	1,484,571	$	1,421,456	$	1,392,122
Accumulated depreciation:
Balance at beginning of period	$	314,875	$	306,033	$	275,861
Depreciation expense		39,094		37,416		37,492
Cost of real estate sold		(6,214)		(28,574)		(7,320)
Ending balance	$	347,755	$	314,875	$	306,033

88

LTC PROPERTIES, INC.

SCHEDULE IV

MORTGAGE LOANS RECEIVABLE ON REAL ESTATE

(in thousands)

														Principal
														Amount of
												Carrying		Loans
								Current				Amount of		Subject to
	(Unaudited)							Monthly		Face		Mortgages		Delinquent
	Number of				Final	Balloon		Debt		Amount of		December 31,		Principal or
State	Properties		Units/Beds (3)	Interest Rate (1)	Maturity Date	Amount (2)		Service		Mortgages		2018		Interest
MI	15		2,029	9.92%	2043	$	161,966	$	1,535	$	188,966	$	184,265	$	—
MI	4		501	9.24%	2045		32,286		278		36,116		35,715		—
MI	1		157	9.41%	2045		14,325		117		15,000		14,801		—
MI	2		205	9.41%	2045		19,513		154		19,513		19,318		—
	22	(4)	2,892			$	228,090	$	2,084	$	259,595	$	254,099	$	—

(1) Represents current stated interest rate. Generally, the loans have a 30-year amortization with principal and interest payable at varying amounts over the life to maturity with annual interest adjustments through specified fixed rate increases effective either on the first anniversary or calendar year of the loan.

(2) Balloon payment is due upon maturity.

(3) This number is based upon unit/bed counts shown on operating licenses provided to us by borrowers or units/beds as stipulated by mortgage documents. We have found during the years that these numbers often differ, usually not materially, from units/beds in operation at any point in time. The differences are caused by such things as operators converting a patient/resident room for alternative uses, such as offices or storage, or converting a multi-patient room/unit into a single patient room/unit. We monitor our properties on a routine basis through site visits and reviews of current licenses. In an instance where such change would cause a de-licensing of beds or in our opinion impact the value of the property, we would take action against the borrower to preserve the value of the property/collateral.

(4) Includes 4 first-lien mortgage loans as follows:

Number of Loans	Original loan amounts
0		$ 500 - $2,000
0		$2,001 - $3,000
0		$3,001 - $4,000
0		$4,001 - $5,000
0		$5,001 - $6,000
0		$6,001 - $7,000
4		$7,001 +

89

Mortgage loans receivable activity for the years ended December 31, 2019, 2018 and 2017 is as follows:

Balance— December 31, 2016	$	229,801
New mortgage loans		—
Other additions		11,913
Land conveyance		—
Amortization of mortgage premium		(4)
Collections of principal		(17,863)
Foreclosures		—
Loan loss reserve		60
Other deductions		—
Balance— December 31, 2017		223,907
New mortgage loans		14,525
Other additions		6,839
Land conveyance		—
Amortization of mortgage premium		(4)
Collections of principal		(2,136)
Foreclosures		—
Loan loss reserve		(192)
Other deductions		—
Balance— December 31, 2018		242,939
New mortgage loans		7,500
Other additions		4,842
Land conveyance		—
Amortization of mortgage premium		(4)
Collections of principal		(1,065)
Foreclosures		—
Loan loss reserve		(113)
Other deductions		—
Balance— December 31, 2019	$	254,099

90

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on such evaluation our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report our disclosure controls and procedures were effective.

Internal Control Over Financial Reporting.

The Management Report on Internal Control over Financial Reporting and the Report of Independent Registered Public Accounting Firm thereon are set forth on the following pages.

There has been no change in our internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

91

Management Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the issuer’s principal executive and principal financial officers and effected by the issuer’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;

● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and

● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect material misstatements on a timely basis. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2019. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control— Integrated Framework (2013 Framework). Based on this assessment, our management concluded that, as of the end of the fiscal year ended December 31, 2019, our internal control over financial reporting was effective.

The effectiveness of our internal control over financial reporting as of December 31, 2019, has been audited by Ernst &Young LLP, independent registered public accounting firm. Ernst & Young LLP’s report on our internal control over financial reporting appears on the following page.

92

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of LTC Properties, Inc.

Opinion on Internal Control over Financial Reporting

We have audited LTC Properties, Inc.’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, LTC Properties, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, and the related consolidated statements of income and comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and the financial statement schedules listed in the Index at Item 15(a) and our report dated February 20, 2020 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Los Angeles, California

February 20, 2020

93

Item 9B. OTHER INFORMATION

None.

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is incorporated by reference to our definitive proxy statement for the 2020 Annual Meeting of Stockholders (to be filed with the SEC within 120 days of our December 31, 2019 fiscal year end) under the headings “Proposal 1 Election of Directors,” “Corporate Governance Principles and Board Matters,” and “Executive Officers.”

Item 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference to our definitive proxy statement for the 2020 Annual Meeting of Stockholders (to be filed with the SEC within 120 days of our December 31, 2019 fiscal year end) under the headings “Executive Compensation Discussion and Analysis,” “Executive Compensation Tables,” “Director Compensation,” and “Compensation Committee Report.”

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is incorporated by reference to our definitive proxy statement for the 2020 Annual Meeting of Stockholders (to be filed with the SEC within 120 days of our December 31, 2019 fiscal year end) under the heading “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated by reference to our definitive proxy statement for the 2020 Annual Meeting of Stockholders (to be filed with the SEC within 120 days of our December 31, 2019 fiscal year end) under the heading “Certain Relationships and Related Transactions, and Director Independence.”

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated by reference to our definitive proxy statement for the 2020 Annual Meeting of Stockholders (to be filed with the SEC within 120 days of our December 31, 2019 fiscal year end) under the heading “Independent Registered Public Accounting Firm Fees and Services.”

94

PART IV

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements

The following financial statements of LTC Properties, Inc. are included in Part II, Item 8 of this Annual Report on Form 10-K:

(a)(2) Financial Statement Schedules

The following financial statement schedules of LTC Properties, Inc. are included in Part II, Item 8 of this Annual Report on Form 10-K:

All other schedules are omitted because they are not applicable or not present in amounts sufficient to require submission of the schedule or the required information is shown in the Consolidated Financial Statements and the Notes thereto.

(a)(3) Exhibits

Exhibit Number	Description
3.1	LTC Properties, Inc. Articles of Restatement (incorporated by reference to Exhibit 3.1.2 to LTC Properties Inc.’s Current Report on Form 8-K (File No. 1-11314) dated June 1, 2016)
3.2	Bylaws of LTC Properties, Inc., as restated June 2, 2015 (incorporated by reference to Exhibit 3.2 to LTC Properties Inc.’s Current Report on Form 8-K (File No. 1-11314) dated June 2, 2015)
4.1	Description of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934
10.1	Note Purchase Agreement dated February 16, 2017 (incorporated by reference to Exhibit 10.7 to LTC Properties, Inc.’s Annual Report on Form 10-K (File No. 1-11314) for the year ended December 31, 2016)
10.2	Note Purchase and Private Shelf Agreement between LTC Properties, Inc. and AIG Asset Management (U.S.) LLC dated August 4, 2015 (incorporated by reference to Exhibit 10.4 to LTC Properties Inc.’s Quarterly Report on Form 10-Q (File No. 1-11314) for the quarter ended June 30, 2015)
10.3	Amended and Restated Note Purchase and Private Shelf Agreement between LTC Properties, Inc. and AIG Asset Management (U.S.) LLC dated June 2, 2016 (incorporated by reference to Exhibit 10.1 to LTC Properties Inc.’s Current Report on Form 8-K dated June 1, 2016)
10.4	Equity Distribution Agreement, dated March 1, 2019, by and between LTC Properties, Inc. and JMP Securities LLC (incorporated by reference to Exhibit 1.1 to LTC Properties Inc.’s Current Report on Form 8-K (File No. 1-11314) dated March 1, 2019)
10.5	Equity Distribution Agreement, dated March 1, 2019, by and between LTC Properties, Inc. and Credit Agricole Securities (USA) Inc. (incorporated by reference to Exhibit 1.2 to LTC Properties Inc.’s Current Report on Form 8-K (File No. 1-11314) dated March 1, 2019)
10.6	Equity Distribution Agreement, dated March 1, 2019, by and between LTC Properties, Inc. and KeyBanc Capital Markets Inc. (incorporated by reference to Exhibit 1.3 to LTC Properties Inc.’s Current Report on Form 8-K (File No. 1-11314) dated March 1, 2019)

95

Exhibit Number	Description
10.7	Equity Distribution Agreement, dated March 1, 2019, by and between LTC Properties, Inc. and Mizuho Securities USA Inc. (incorporated by reference to Exhibit 1.4 to LTC Properties Inc.’s Current Report on Form 8-K (File No. 1-11314) dated March 1, 2019)
10.8	Second Amended and Restated Credit Agreement dated June 27, 2018 (incorporated by reference to Exhibit 10.1 to LTC Properties Inc.’s Current Report on Form 8-K dated June 27, 2018)
10.9	Employment Agreement of Wendy Simpson dated November 12, 2014 (incorporated by reference to Exhibit 10.1 to LTC Properties, Inc.’s Current Report on Form 8-K (File No. 1-11314) dated November 12, 2014)
10.10	Employment Agreement of Pamela Kessler, effective as of November 12, 2014 (incorporated by reference to Exhibit 10.2 to LTC Properties, Inc.’s Current Report on Form 8-K (File No. 1-11314) dated November 12, 2014)
10.11+	Employment Agreement of Clint Malin, effective as of November 12, 2014 (incorporated by reference to Exhibit 10.3 to LTC Properties, Inc.’s Current Report on Form 8-K (File No. 1-11314) dated November 12, 2014)
10.12+	Annual Cash Bonus Incentive Plan, effective as of October 27, 2014 (incorporated by reference to Exhibit 10.9 to LTC Properties, Inc.’s Annual Report on Form 10-K (File No. 1-11314) for the year ended December 31, 2014)
10.13+	The 2015 Equity Participation Plan of LTC Properties, Inc. (incorporated by reference to Exhibit 4.3 to LTC Properties, Inc.’s Registration Statement on Form S-8 (File No. 333-205115)
10.14+	Form of Stock Option Agreement under the 2015 Equity Participation Plan (incorporated by reference to Exhibit 10.20 to LTC Properties, Inc.’s Annual Report on Form 10-K (File No. 1-11314) for the year ended December 31, 2015)
10.15	Form of Restricted Stock Agreement under the 2015 Equity Participation Plan (incorporated by reference to Exhibit 10.21 to LTC Properties, Inc.’s Annual Report on Form 10-K (File No. 1-11314) for the year ended December 31, 2015)
10.16	Form of Performance Based Market Stock Unit Agreement under the 2015 Equity Participation Plan (incorporated by reference to Exhibit 10.2 to LTC Properties Inc.’s Current Report on Form 8-K dated June 1, 2016)
10.17	Form of Indemnification Agreement dated as of July 30, 2009 between LTC Properties, Inc. and its Directors and Officers (incorporated by reference to Exhibit 10.1 to LTC Properties, Inc.’s Quarterly Report on Form 10-Q (File No. 1-11314) for the quarter ended June 30, 2009)
21	List of Subsidiaries
23.1	Consent of Independent Registered Accounting Firm
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

+ Management contract or compensatory plan or arrangement in which an executive officer or director of the Company participates

Item 16. FORM 10-K SUMMARY

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LTC PROPERTIES, INC. Registrant
Dated: February 20, 2020

96

By: /s/ Pamela J. Kessler PAMELA J. KESSLER
Executive Vice President, Chief Financial
Officer and Corporate Secretary
(Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ Wendy L. Simpson WENDY L. SIMPSON	Chairman, Chief Executive Officer, President and Director (Principal Executive Officer)	February 20, 2020
/s/ Pamela J. Kessler PAMELA J. KESSLER	Executive Vice President, Chief Financial Officer and Corporate Secretary (Principal Financial Officer and Principal Accounting Officer)	February 20, 2020
/s/ Boyd Hendrickson BOYD HENDRICKSON	Director	February 20, 2020
/s/ Devra G. Shapiro DEVRA G. SHAPIRO	Director	February 20, 2020
/s/ JAMES J. PIECZYNSKI JAMES J. PIECZYNSKI	Director	February 20, 2020
/s/ Timothy J. Triche TIMOTHY J. TRICHE	Director	February 20, 2020

97

EX-4.1

Exhibit 4.1

DESCRIPTION OF THE COMPANY’S SECURITIES REGISTERED PURSUANT TO
SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

The following is a brief description of the common stock, $0.01 par value per share (the “Common Stock”), of LTC Properties, Inc. (“Company”), which is the only security of the Company registered pursuant to Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”).

Description of Common Stock

The following description sets forth certain general terms and provisions of our Common Stock. The statements below describing our Common Stock are in all respects subject to and qualified in their entirety by reference to the applicable provisions of our charter and bylaws.

General

Holders of our Common Stock will be entitled to receive dividends when, as and if authorized by our Board of Directors and declared by us, out of assets legally available therefore. Payment and declaration of dividends on our Common Stock and purchases of shares thereof by us will be subject to certain restrictions if we fail to pay dividends on our preferred stock. Upon our liquidation, dissolution or winding up, holders of Common Stock will be entitled to share equally and ratably in any assets available for distribution to them, after payment or provision for payment of our debts and other liabilities and the preferential amounts owing with respect to any of our outstanding preferred stock.

Our Common Stock will possess voting rights for the election of directors and in respect of other corporate matters, with each share entitling the holder thereof to one vote. Holders of Common Stock will not have cumulative voting rights in the election of directors, which means that holders of more than 50% of all of the shares of our Common Stock voting for the election of directors will be able to elect all of the directors if they choose to do so and, accordingly, the holders of the remaining shares will be unable to elect any directors. Holders of shares of Common Stock will not have preemptive rights, which mean they have no right to acquire any additional shares of Common Stock that may be issued by us at a subsequent date. Our Common Stock will, when issued, be fully paid and nonassessable and will not be subject to preemptive or similar rights.

Under Maryland law and our charter, a distribution (whether by dividend, redemption or other acquisition of shares) to holders of shares of our Common Stock may be made only if, after giving effect to the distribution, we are able to pay our indebtedness as it becomes due in the usual course of business and our total assets are greater than our total liabilities plus the amount necessary to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to the holders of our Common Stock and we can pay our debts as they become due. We have complied with these requirements in all of our prior distributions to holders of our Common Stock.

The rights, preferences and privileges of holders of our Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock which are outstanding or which we may designate and issue in the future.

Restrictions on Ownership and Transfer

In addition to other qualifications, for us to qualify as a real estate investment trust (“REIT”), (a) not more than 50% in value of our outstanding capital stock may be owned, actually or constructively, by five or fewer individuals during the last half of our taxable year, and (b) such capital stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year.

To ensure that we continue to meet the requirements for qualification as a REIT, our charter, subject to some exceptions, provides that no holder may own, or be deemed to own by virtue of the attribution provisions of the Internal Revenue Code (the “Code”), shares of any class or series of our capital stock in excess of 9.8% (ownership limit) of the number of then outstanding shares of any class or series of our capital stock. Under our charter, our Board of Directors may waive the ownership limit with respect to a stockholder if evidence satisfactory to the Board of Directors and our tax counsel is presented that the changes in ownership will not then or in the future jeopardize our status as a REIT. Our

charter provides any transfer of capital stock or any security convertible into capital stock that would result in actual or constructive ownership of capital stock by a stockholder in excess of the ownership limit or that would result in our failure to meet the requirements for qualification as a REIT, including any transfer that results in the capital stock being owned by fewer than 100 persons or results in our Company being “closely held” within the meaning of section 856(h) of the Code, notwithstanding any provisions of our charter to the contrary, will be null and void, and the intended transferee will acquire no rights to the capital stock. The foregoing restrictions on transferability and ownership will not apply if the Board of Directors determines that it is no longer in our best interest to attempt to qualify, or to continue to qualify, as a REIT.

Any shares of our capital stock held by a stockholder in excess of the applicable ownership limit become “Excess Shares”. Under our charter, upon shares of any class or series of capital stock becoming Excess Shares, such shares will be deemed automatically to have been converted into a class separate and distinct from their original class and from any other class of Excess Shares. Upon any outstanding Excess Shares ceasing to be Excess Shares, such shares will be automatically reconverted back into shares of their original class or series of capital stock.

Our charter provides the holder of Excess Shares will not be entitled to vote the Excess Shares nor will such Excess Shares be considered issued and outstanding for purposes of any stockholder vote or the determination of a quorum for such vote. The Board of Directors, in its sole discretion, may choose to accumulate all distributions and dividends payable upon the Excess Shares of any particular holder in a non-interest bearing escrow account payable to the holder of the Excess Shares upon such Excess Shares ceasing to be Excess Shares.

In addition, we will have the right to redeem all or any portion of the Excess Shares from the holder at the redemption price, which will be the average market price (as determined in the manner set forth in our charter) of the capital stock for the prior 30 days from the date we give notice of our intent to redeem such Excess Shares, or as determined by the Board of Directors in good faith. The redemption price will only be payable upon the liquidation of our Company and will not exceed the sum of the per share distributions designated as liquidating distributions declared subsequent to the redemption date with respect to unredeemed shares of record of the class from which such Excess Shares were converted. We will rescind the redemption of the Excess Shares in the event that within 30 days of the redemption date, due to a sale of shares by the holder, such holder would not be the holder of Excess Shares, unless such rescission would jeopardize our tax status as a REIT or would be unlawful in any regard.

Our charter requires that each stockholder will upon demand disclose to us in writing any information with respect to the actual and constructive ownership of shares of our capital stock as our Board of Directors deems necessary to comply with the provisions of the Code applicable to REITs, to comply with the requirements of any taxing authority or governmental agency or to determine any such compliance.

The ownership limit provided for in our charter may have the effect of precluding the acquisition of control of our Company unless the Board of Directors determines that maintenance of REIT status is no longer in our best interests.

EX-21

EXHIBIT 21

LTC PROPERTIES, INC.

LIST OF SUBSIDIARIES

As of December 31, 2019

Company	State of Organization	Company	State of Organization
Albuquerque Real Estate Investments, Inc.	Delaware	L‑Tex GP, Inc.	Delaware
Badger RE Holdings, LLC	Wisconsin	L‑Tex LP Corporation	Delaware
Bakersfield‑LTC, Inc.	Delaware	Memorial Park Real Estate Investments, Inc.	Delaware
Beaumont Real Estate Investments, LP	Texas	Merritt Island Real Estate Investments, Inc.	Delaware
Broadway Real Estate Investments, Inc.	Delaware	Midwest RE Holdings, Inc.	Delaware
BV Holding‑LTC, Inc.	Delaware	Mission Real Estate Investments, Inc.	Delaware
Blue Ridge RE Holdings, LLC	Delaware	Missouri River Corporation	Delaware
Chatham Real Estate Investments, LLC	Delaware	MLREI Holdings, Inc.	Delaware
Coronado Corporation	Delaware	Monroeville Real Estate Investments, Inc.	Delaware
CPP Investments, Inc.	Delaware	Mountain States Real Estate Investments, Inc.	Delaware
Florida‑LTC, Inc.	Nevada	MS‑FL Real Estate Investments, Inc.	Delaware
Fort Wayne Real Estate Investments, Inc.	Delaware	MW Real Estate Investments, LLC	Illinois
Great Road RE Holdings, Inc.	Delaware	New Mexico Real Estate Investments, Inc.	Delaware
Gulf Breeze Real Estate Investments, Inc.	Delaware	Newberry Real Estate Investments, Inc.	Delaware
Hewitt Real Estate Investments, Inc.	Delaware	NMKS Holdings, Inc.	Delaware
JVC Holdings, Inc.	Delaware	NMKS Real Estate Investments, Inc.	Delaware
JVCH Real Estate Investments, Inc.	Delaware	North Carolina Real Estate Investments, LLC	North Carolina
JVCO Real Estate Investments, Inc.	Delaware	Northwest RE Holdings, Inc.	Delaware
JVWL Real Estate Investments, Inc.	Delaware	Ohio Springs Real Estate Investments, Inc.	Delaware
Kansas‑LTC Corporation	Delaware	Park Villa Corporation	Delaware
Lakes Real Estate Investments, Inc.	Delaware	PENN‑IND Real Estate Investments, Inc.	Delaware
LTC GP I, Inc.	Delaware	RC Real Estate Investments, Inc.	Delaware
LTC West, Inc.	Nevada	Red Oak Real Estate Investments, Inc.	Delaware
LTC‑Dearfield, Inc.	Nevada	Rogue Valley RE Holdings, LLC	Delaware
LTC‑DS, Inc.	Delaware	Sabal RE Holdings, LLC	Delaware
LTC‑Finance, Inc.	Delaware	Skilled Healthcare Holdings, Inc.	Delaware
LTC‑Gardner, Inc.	Delaware	South Hills Real Estate Investments, Inc.	Delaware
LTC‑Griffin, Inc.	Nevada	Southeast RE Holdings, Inc.	Delaware
LTC‑Jonesboro, Inc.	Nevada	Stephenville Real Estate Investments, Inc.	Delaware
LTC‑K1 Inc.	Delaware	SWTX Real Estate Investments, Inc.	Delaware
LTC‑K2 Limited Partnership	Delaware	Texas‑LTC Limited Partnership	Texas
LTC‑K2 LP, Inc.	Delaware	Texas‑LTC Woodridge Limited Partnership	Delaware
LTC‑K2, Inc.	Delaware	Tupelo Real Estate Investments, Inc.	Delaware
		TXMS Real Estate Investments, Inc.	Delaware
LTC‑New Mexico, Inc.	Nevada	Vacaville‑LTC, Inc.	Delaware
LTC‑Ohio, Inc.	Delaware	Virginia‑LTC, Inc.	Nevada
LTC‑Richmond, Inc.	Nevada	WISL Investments, Inc.	Wisconsin

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements:

(1) Registration Statement (Form S‑8 No. 333‑152295) pertaining to the 2008 Equity Participation Plan of LTC Properties, Inc.,

(2) Registration Statement (Form S‑8 No. 333-205115) pertaining to the 2015 Equity Participation Plan of LTC Properties, Inc., and

(3) Registration Statement (Form S‑3 No. 333-229966) and in the related prospectus of LTC Properties, Inc.

of our reports dated February 20, 2020 with respect to the consolidated financial statements and schedules of LTC Properties, Inc. and the effectiveness of internal control over financial reporting of LTC Properties, Inc., included in this Annual Report (Form 10-K) for the year ended December 31, 2019.

/s/ Ernst & Young LLP

Los Angeles, California

February 20, 2020

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES‑OXLEY ACT OF 2002

I, Wendy L. Simpson, certify that:

1. I have reviewed this annual report on Form 10‑K of LTC Properties, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Wendy L. Simpson

Wendy L. Simpson

Chairman, Chief Executive Officer and President

(Principal Executive Officer)

February 20, 2020

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES‑OXLEY ACT OF 2002

I, Pamela J. Kessler, certify that:

1. I have reviewed this annual report on Form 10‑K of LTC Properties, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Pamela J. Kessler

Pamela J. Kessler

Executive Vice President, Chief Financial Officer

and Corporate Secretary

(Principal Financial and Accounting Officer)

February 20, 2020

EX-32

Exhibit 32

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES‑OXLEY ACT OF 2002

In connection with the Annual Report of LTC Properties, Inc. (or the Company) on Form 10‑K for the period ending December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (or the Report), I, Wendy L. Simpson, Chairman, Chief Executive Officer and President of the Company, and I, Pamela J. Kessler, Executive Vice President, Chief Financial Officer and Corporate Secretary of the Company, certify solely for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 20, 2020	/s/ Wendy L. Simpson
	Wendy L. Simpson Chairman, Chief Executive Officer and President
Date: February 20, 2020	/s/ Pamela J. Kessler
	Pamela J. Kessler Executive Vice President, Chief Financial Officer and Corporate Secretary

This certification is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Act of 1934 (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

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Major Operators (Tables)

12 Months Ended

Dec. 31, 2019

Major Operators

Schedule of concentration of risk by major operators

	Number of		Number of		Percentage of
			SNF	ALF	Total		Total
Operator	SNF	ALF	Beds	Units	Revenue (1)		Assets
Prestige Healthcare	24	—	3,010	93	17.1	%	17.4	%
Senior Lifestyle Corporation	—	23	—	1,457	10.8	%	10.2	%
Total	24	23	3,010	1,550	27.9	%	27.6	%

(1) Includes rental income from owned properties and interest income from mortgage loans as of December 31, 2019 and excludes rental income due to lessee reimbursement of our real estate taxes and adjustment for collectibility of rental income.

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Net Income Per Common Share

12 Months Ended

Dec. 31, 2019

Net Income Per Common Share

Net Income Per Common Share

13. Net Income Per Common Share

Basic and diluted net income per share was as follows (in thousands except per share amounts):

	For the year ended December 31,
	2019		2018		2017
Net income	$	80,872	$	155,076	$	87,340
Less income allocated to non-controlling interests		(346)		(95)		—
Less income allocated to participating securities:
Non-forfeitable dividends on participating securities		(372)		(357)		(350)
Income allocated to participating securities		(19)		(268)		(12)
Total net income allocated to participating securities		(391)		(625)		(362)
Net income available to common stockholders		80,135		154,356		86,978
Effect of dilutive securities:
Participating securities		—		625		362
Net income for diluted net income per share	$	80,135	$	154,981	$	87,340
Shares for basic net income per share		39,571		39,477		39,409
Effect of dilutive securities:
Stock options		4		3		10
Performance-based stock units		184		203		67
Participating securities		—		156		151
Total effect of dilutive securities		188		362		228
Shares for diluted net income per share		39,759		39,839		39,637
Basic net income per share	$	2.03	$	3.91	$	2.21
Diluted net income per share	$	2.02	$	3.89	$	2.20

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SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Dec. 31, 2019

SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

LTC PROPERTIES, INC.

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

			Additions
			(Recovered)
	Balance at		charged to		Charged to
	beginning of		costs and		other				Balance at end
Account Description	period		expenses		accounts (1)		Deductions (2)		of period
Year ended December 31, 2017
Loan loss reserves	$	2,315	$	(60)	$	—	$	—	$	2,255
Other notes receivable allowance		166		—		—		—		166
Straight-line rent receivable allowance		960		(146)		—		—		814
	$	3,441	$	(206)	$	—	$	—	$	3,235
Year ended December 31, 2018
Loan loss reserves	$	2,255	$	192	$	—	$	—	$	2,447
Other notes receivable allowance		166		(38)		—		—		128
Straight-line rent receivable allowance		814		(68)		—		—		746
	$	3,235	$	86	$	—	$	—	$	3,321
Year ended December 31, 2019
Loan loss reserves	$	2,447	$	113	$	—	$	—	$	2,560
Other notes receivable allowance		128		53		—		—		181
Straight-line rent receivable allowance		746		—		(746)		—		—
	$	3,321	$	166	$	(746)	$	—	$	2,741

(1) In conjunction with adoption of ASC 842, we wrote-off our 1% general straight-line reserve. The write-off was charged to retained earnings.

(2) Deductions represent uncollectible accounts written off.

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Investment in Unconsolidated Joint Ventures - Investment (Details)	3 Months Ended	12 Months Ended
	Dec. 31, 2019 USD ($) item	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Oct. 01, 2019 property
Investment in Unconsolidated Joint Ventures
Carrying Value	$ 19,003,000	$ 19,003,000	$ 30,615,000
Cash Interest Received		2,991,000	2,371,000	$ 1,738,000
Income Recognized		2,388,000	2,864,000	2,263,000
Impairment loss from investments in unconsolidated joint ventures	$ 5,500,000	$ 5,500,000
Joint Venture
Investment in Unconsolidated Joint Ventures
Number of beds/units | item	585	585
Carrying Value	$ 19,003,000	$ 19,003,000
Joint Venture | Not primary beneficiary
Investment in Unconsolidated Joint Ventures
Cash Interest Received		2,991,000	2,371,000	1,738,000
Capital Contributions		472,000	670,000	3,848,000
Income Recognized		$ 2,388,000	2,864,000	2,263,000
Preferred Equity Investment
Investment in Unconsolidated Joint Ventures
Number of properties owned by joint venture | property					4
Combination ILF, ALF and MC community | Preferred Equity Investment | Joint Venture | Not primary beneficiary
Investment in Unconsolidated Joint Ventures
Preferred return percentage		15.00%
Currently paid in cash as a percentage		8.00%
Number of beds/units | item	585	585
Carrying Value	$ 19,003,000	$ 19,003,000
Cash Interest Received		1,580,000	1,975,000	1,436,000
Capital Contributions		472,000	670,000	1,101,000
Income Recognized		$ 1,029,000	2,041,000	1,560,000
Combination ALF/IL/MC | Mezzanine Loans | Joint Venture | Not primary beneficiary
Investment in Unconsolidated Joint Ventures
Preferred return percentage		15.00%
Number of beds/units | item	99	99
Investment commitment		$ 2,900,000
Cash Interest Received		979,000	396,000	302,000
Income Recognized		955,000	511,000	511,000
Combination UDP-ALF/MC | Joint Venture | Not primary beneficiary
Investment in Unconsolidated Joint Ventures
Cash Interest Received		432,000
Income Recognized		$ 404,000
Combination UDP-ALF/MC | Mezzanine Loans | Joint Venture | Not primary beneficiary
Investment in Unconsolidated Joint Ventures
Preferred return percentage		15.00%
Number of beds/units | item	127	127
Investment commitment		$ 3,400,000
Capital Contributions				2,747,000
Income Recognized			$ 312,000	$ 192,000

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The Company

12 Months Ended

Dec. 31, 2019

The Company

The Company

1. The Company

LTC Properties, Inc. (“LTC”), a Maryland corporation, commenced operations on August 25, 1992. LTC is a real estate investment trust (“REIT”) that invests primarily in seniors housing and health care properties primarily through sale-leaseback transactions, mortgage financing joint ventures and structured finance solutions including preferred equity and mezzanine lending. We conduct and manage our business as one operating segment, rather than multiple operating segments, for internal reporting and internal decision-making purposes. Our primary objectives are to create, sustain and enhance stockholder equity value and provide current income for distribution to stockholders through real estate investments in seniors housing and health care properties managed by experienced operators. Our primary seniors housing and health care property classifications include skilled nursing centers (“SNF”), assisted living communities (“ALF”), independent living communities (“ILF”), memory care communities (“MC”) and combinations thereof. ILF, ALF, MC and combinations thereof are included in the ALF classification.

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Lease Incentives (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($) item
Lease Incentives
Non-contingent lease incentives	$ 2,552	$ 14,443
Non-contingent lease incentives, funding	387	1,272	$ 6,544
Total funding	387	1,272	6,544
Non-contingent lease incentives, Amortization	(385)	(1,733)	(1,590)
Contingent lease incentives, Amortization		(359)	(619)
Total amortization	(385)	(2,092)	(2,209)
Non-contingent lease incentives, Write off	(11,893)	(12,093)	(1,205)
Contingent lease incentives, Write off		(6,219)	(2,634)
Reclassification of Notes Receivable to Lease Incentives	200
Total Write off	$ (11,893)	$ (6,219)	$ (3,839)
Number of properties with lease incentives write-offs | item			2

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CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues:
Rental income	$ 152,755,000
Rental income		$ 135,405,000	$ 137,657,000
Interest income from mortgage loans	29,991,000	28,200,000	26,769,000
Interest and other income	2,558,000	5,040,000	3,639,000
Total revenues	185,304,000	168,645,000	168,065,000
Expenses:
Interest expense	30,582,000	30,196,000	29,949,000
Depreciation and amortization	39,216,000	37,555,000	37,610,000
Impairment charges	0	0	1,880,000
Provision for (recovery of) doubtful accounts	166,000	87,000	(206,000)
Transaction costs	365,000	84,000	56,000
Property tax expense	16,755,000
General and administrative expenses	18,453,000	19,193,000	17,513,000
Total expenses	105,537,000	87,115,000	86,802,000
Other operating income:
Gain on sale of real estate, net	2,106,000	70,682,000	3,814,000
Operating income	81,873,000	152,212,000	85,077,000
Gain from property insurance proceeds	2,111,000
Impairment loss from investments in unconsolidated joint ventures	(5,500,000)
Income from unconsolidated joint ventures	2,388,000	2,864,000	2,263,000
Net income	80,872,000	155,076,000	87,340,000
Income allocated to non-controlling interests	(346,000)	(95,000)
Net income attributable to LTC Properties, Inc.	80,526,000	154,981,000	87,340,000
Income allocated to participating securities	(391,000)	(625,000)	(362,000)
Net income available to common stockholders	$ 80,135,000	$ 154,356,000	$ 86,978,000
Earnings per common share:
Basic (in dollars per share)	$ 2.03	$ 3.91	$ 2.21
Diluted (in dollars per share)	$ 2.02	$ 3.89	$ 2.20
Weighted average shares used to calculate earnings per common share:
Basic (in shares)	39,571	39,477	39,409
Diluted (in shares)	39,759	39,839	39,637
Comprehensive Income:
Net income	$ 80,872,000	$ 155,076,000	$ 87,340,000
Comprehensive income	$ 80,872,000	$ 155,076,000	$ 87,340,000

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Summary of Significant Accounting Policies - Revenue Recognition (Details)	12 Months Ended
	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Revenue Recognition
Maximum period over which loan is to be considered as non-performing	60 days
Variable cash rental income | $	$ 16,462,000
Variable cash rental income previous | $	$ 464,000	$ 470,000	$ 457,000
Maximum period over which a lease is to be considered as non-performing	60 days
Minimum
Revenue Recognition
Methods used for calculation of annual increases over the rents of the prior year | item	1
Specified annual increase over the prior year's rent (as a percent)	2.00%
Maximum
Revenue Recognition
Methods used for calculation of annual increases over the rents of the prior year | item	4
Specified annual increase over the prior year's rent (as a percent)	3.00%

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The Company (Details)	12 Months Ended
	Dec. 31, 2019 segment
The Company
Number of operating segments	1

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Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Non-cash investing and financing transactions:
Reclassification of notes receivable to lease incentives (Note 7)	$ 200
Restricted stock issued, net of cancellations (Note 10)		$ 1	$ 1

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Distributions (Details) - $ / shares	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Distributions
Minimum distribution of taxable income (as a percent)									90.00%
Ordinary taxable distribution									$ 2.084	$ 0.349	$ 1.607
Return of capital											0.444
Unrecaptured Section 1250 gain									0.132	0.636	0.163
Long-term capital gain									0.064	1.295	0.066
Total	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 2.280	$ 2.280	$ 2.280

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SCHEDULE IV MORTGAGE LOANS ON REAL ESTATE - Summary (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) item property	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Mortgage loans on real estate
Number of properties | property	22
Number of beds/units | item	2,892
Balloon Amount	$ 228,090
Current Monthly Debt Service	2,084
Face amount of originated mortgages	259,595
Carrying Amount of Mortgages	254,099	$ 242,939	$ 223,907	$ 229,801
Principal Amount of Loans Subject to Delinquent Principal or Interest	$ 0
Michigan | Mortgage Loans on Real Estate Maturing in 2043
Mortgage loans on real estate
Number of properties | property	15
Number of beds/units | item	2,029
Interest rate (as a percent)	9.92%
Balloon Amount	$ 161,966
Current Monthly Debt Service	1,535
Face amount of originated mortgages	188,966
Carrying Amount of Mortgages	$ 184,265
Michigan | Mortgage Loans on Real Estate Maturing in 2045 | Property with 501 Beds/Units
Mortgage loans on real estate
Number of properties | property	4
Number of beds/units | item	501
Interest rate (as a percent)	9.24%
Balloon Amount	$ 32,286
Current Monthly Debt Service	278
Face amount of originated mortgages	36,116
Carrying Amount of Mortgages	$ 35,715
Michigan | Mortgage Loans on Real Estate Maturing in 2045 | Property with 157 Beds/Units
Mortgage loans on real estate
Number of properties | property	1
Number of beds/units | item	157
Interest rate (as a percent)	9.41%
Balloon Amount	$ 14,325
Current Monthly Debt Service	117
Face amount of originated mortgages	15,000
Carrying Amount of Mortgages	$ 14,801
Michigan | Mortgage Loans On Real Estate Maturing In 2020
Mortgage loans on real estate
Number of properties | property	2
Number of beds/units | item	205
Interest rate (as a percent)	9.41%
Balloon Amount	$ 19,513
Current Monthly Debt Service	154
Face amount of originated mortgages	19,513
Carrying Amount of Mortgages	19,318
Principal Amount of Loans Subject to Delinquent Principal or Interest	$ 0
Mortgage Loans
Mortgage loans on real estate
Loan Term	30 years
Mortgage Loans | Minimum
Mortgage loans on real estate
Interest rate (as a percent)	9.20%
Mortgage Loans | Maximum
Mortgage loans on real estate
Interest rate (as a percent)	9.90%

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SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Valuation and qualifying accounts
Balance at beginning of period	$ 3,321	$ 3,235	$ 3,441
(Recovered) charged to costs and expenses	166	86	(206)
Charged to other accounts	(746)
Balance at end of period	$ 2,741	3,321	3,235
Percentage of provision on rent receivables (in percentage)	1.00%
Loan loss reserves
Valuation and qualifying accounts
Balance at beginning of period	$ 2,447	2,255	2,315
(Recovered) charged to costs and expenses	113	192	(60)
Balance at end of period	2,560	2,447	2,255
Other notes receivable allowance
Valuation and qualifying accounts
Balance at beginning of period	128	166	166
(Recovered) charged to costs and expenses	53	(38)
Balance at end of period	181	128	166
Straight-line rent receivable allowance
Valuation and qualifying accounts
Balance at beginning of period	746	814	960
(Recovered) charged to costs and expenses		(68)	(146)
Charged to other accounts	$ (746)
Balance at end of period		$ 746	$ 814

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Equity - Class of Stock Disclosures - Dividends and AOCI (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended																																				3 Months Ended									12 Months Ended
	Dec. 31, 2019	Nov. 30, 2019	Oct. 31, 2019	Sep. 30, 2019	Aug. 31, 2019	Jul. 31, 2019	Jun. 30, 2019	May 31, 2019	Apr. 30, 2019	Mar. 31, 2019	Feb. 28, 2019	Jan. 31, 2019	Dec. 31, 2018	Nov. 30, 2018	Oct. 31, 2018	Sep. 30, 2018	Aug. 31, 2018	Jul. 31, 2018	Jun. 30, 2018	May 31, 2018	Apr. 30, 2018	Mar. 31, 2018	Feb. 28, 2018	Jan. 31, 2018	Dec. 31, 2017	Nov. 30, 2017	Oct. 31, 2017	Sep. 30, 2017	Aug. 31, 2017	Jul. 31, 2017	Jun. 30, 2017	May 31, 2017	Apr. 30, 2017	Mar. 31, 2017	Feb. 28, 2017	Jan. 31, 2017	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Dividend Distributions
Paid																																														$ 90,899	$ 90,372	$ 90,219
Dividends declared and paid per common share (in dollars per share)																																						$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57
Common Stock cash distributions																																						$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 2.280	$ 2.280	$ 2.280
Subsequent Event | Dividend Payable, January 31, 2020
Dividend Distributions
Dividends declared and paid per common share (in dollars per share)																																					$ 0.19
Subsequent Event | Dividend Payable, February 29, 2020
Dividend Distributions
Dividends declared and paid per common share (in dollars per share)																																					0.19
Subsequent Event | Dividend Payable, March 31,2020
Dividend Distributions
Dividends declared and paid per common share (in dollars per share)																																					0.19
Common Stock
Dividend Distributions
Declared	$ 90,899												$ 90,372												$ 90,219													$ 90,899				$ 90,372				$ 90,899	$ 90,372	$ 90,219
Paid																																														$ 90,899	$ 90,372	$ 90,219
Dividends declared and paid per common share (in dollars per share)	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19
Common Stock | Subsequent Event | Dividend Payable, January 31, 2020
Dividend Distributions
Dividends declared and paid per common share (in dollars per share)																																					$ 0.19

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Real Estate Investments - Property Sales (Details)	3 Months Ended	12 Months Ended
	Jun. 30, 2018 facility	Dec. 31, 2019 USD ($) item property	Dec. 31, 2018 USD ($) item property	Dec. 31, 2017 USD ($) item property
Disposals and other
Carrying value		$ 1,136,816,000	$ 1,106,581,000
Net Gain (Loss)		2,106,000	70,682,000	$ 3,814,000
Impairment charges		$ 0	$ 0	$ 1,880,000
Properties sold
Disposals and other
Number of properties sold | property		4	10	6
Number of beds or units in property sold | item		618	774	296
Sales price		$ 15,311,000	$ 95,825,000	$ 15,650,000
Carrying value		12,825,000	22,393,000	11,277,000
Net Gain (Loss)		2,106,000	$ 70,682,000	$ 3,814,000
Properties sold | SNF
Disposals and other
Holdback amount		1,091,000
Realizable holdback amount		$ 613,000
Properties sold | SNF | Arizona, Georgia and Texas
Disposals and other
Number of properties sold | property		3
Number of beds or units in property sold | item		478
Sales price		$ 15,310,000
Carrying value		8,995,000
Net Gain (Loss)		5,556,000
Properties sold | SNF | Georgia
Disposals and other
Carrying value		1,639,000
Proceeds from sale of properties		7,920,000
Properties sold | SNF | Alabama
Disposals and other
Number of properties sold | property			4
Number of beds or units in property sold | item			454
Sales price			$ 27,975,000
Carrying value			5,695,000
Net Gain (Loss)			21,987,000
Properties sold | SNF | Texas
Disposals and other
Number of properties sold | property				1
Number of beds or units in property sold | item				85
Carrying value				$ 1,170,000
Net Gain (Loss)				(1,171,000)
Donation of property				$ 1,170,000
Properties sold | ALF
Disposals and other
Net Gain (Loss)		$ 500,000
Number of facilities sold | facility	6
Properties sold | ALF | Kansas
Disposals and other
Sales price			350,000
Carrying value			$ 346,000
Properties sold | ALF | Ohio and Pennsylvania
Disposals and other
Number of properties sold | property			6
Number of beds or units in property sold | item			320
Sales price			$ 67,500,000
Carrying value			16,352,000
Net Gain (Loss)			$ 48,695,000
Properties sold | ALF | Indiana, Iowa and Oregon
Disposals and other
Number of properties sold | property				5
Number of beds or units in property sold | item				211
Sales price				$ 15,650,000
Carrying value				10,107,000
Net Gain (Loss)				$ 4,985,000
Properties sold | ALF | Texas
Disposals and other
Number of properties sold | property		1
Number of beds or units in property sold | item		140
Sales price		$ 1,000
Carrying value		3,830,000
Net Gain (Loss)		(3,950,000)
Preferred Care, Inc. | Properties sold | Texas
Disposals and other
Carrying value		871,000
Proceeds from sale of properties		140,000
Preferred Care, Inc. | Properties sold | SNF | Arizona
Disposals and other
Carrying value		6,485,000
Proceeds from sale of properties		$ 7,250,000

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Real Estate Investments - Owned Properties (Details) - Real Estate Investment	Dec. 31, 2019 property
Real Estate Investments
Number of properties	177
Number of states	28
Number of operators	30
ALF
Real Estate Investments
Number of properties	106
SNF
Real Estate Investments
Number of properties	70
Hospital
Real Estate Investments
Number of properties	1

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Real Estate Investments - Acquisitions (Details) $ in Thousands	1 Months Ended	12 Months Ended
	Jan. 31, 2020 USD ($) item	Dec. 31, 2019 USD ($) item property	Dec. 31, 2018 USD ($) item property	Dec. 31, 2017 USD ($) item property
Real estate investments
Stockholders' Equity Attributable to Noncontrolling Interest		$ 8,483	$ 7,481
Investment Commitment		79,716
Properties under Development | Missouri
Real estate investments
Investment Commitment		$ 17,400
SNF Beds | Missouri
Real estate investments
Number of beds/units under development | item		90
SNF | Missouri | Developments
Real estate investments
Number of beds/units under development | item		90
2019 Acquisitions
Real estate investments
Purchase Price		$ 57,951
Transaction Costs		463
Total Acquisition Costs		$ 58,414
Number of properties acquired | property		4
Number of beds/units acquired | item		320
2019 Acquisitions | Michigan
Real estate investments
Purchase Price		$ 19,000
2019 Acquisitions | SNF
Real estate investments
Purchase Price		19,500
Transaction Costs		97
Total Acquisition Costs		$ 19,597
Number of properties acquired | property		1
Number of beds/units acquired | item		90
2019 Acquisitions | ALF
Real estate investments
Purchase Price		$ 35,719
Transaction Costs		315
Total Acquisition Costs		$ 36,034
Number of properties acquired | property		3
Number of beds/units acquired | item		230
2019 Acquisitions | MC | Michigan
Real estate investments
Number of beds/units acquired | item		80
2019 Acquisitions | Land
Real estate investments
Purchase Price		$ 2,732
Transaction Costs		51
Total Acquisition Costs		$ 2,783
2019 Acquisitions | ALF and MC | Michigan
Real estate investments
Number of beds/units acquired | item		76
2019 Acquisitions | ALF and MC | 74-Unit ALF/MC
Real estate investments
Stockholders' Equity Attributable to Noncontrolling Interest		$ 919
Real Estate Investment Economic Interest in Joint Venture Percentage		95.00%
Investment Commitment		$ 15,976
Number of beds/units under development | item		74
2018 Acquisitions
Real estate investments
Purchase Price			40,295
Transaction Costs			113
Total Acquisition Costs			$ 40,408
Number of properties acquired | property			3
Number of beds/units acquired | item			177
Real Estate Investment Economic Interest in Joint Venture Percentage			88.00%
2018 Acquisitions | ALF
Real estate investments
Purchase Price			$ 39,600
Transaction Costs			65
Total Acquisition Costs			$ 39,665
Number of properties acquired | property			3
Number of beds/units acquired | item			177
2018 Acquisitions | ILF | 89-unit ILF
Real estate investments
Purchase Price			$ 14,400
Stockholders' Equity Attributable to Noncontrolling Interest			2,857
Investment Commitment			$ 11,543
Number of beds/units under development | item			89
2018 Acquisitions | MC | Texas
Real estate investments
Number of properties acquired | property			2
2018 Acquisitions | Land
Real estate investments
Purchase Price			$ 695
Transaction Costs			48
Total Acquisition Costs			743
2018 Acquisitions | ALF and MC | 78-unit ALF/MC
Real estate investments
Purchase Price			18,108
Stockholders' Equity Attributable to Noncontrolling Interest			$ 1,081
Number of beds/units acquired | item			78
Investment Commitment			$ 17,027
Number of beds/units under development | item			78
2018 Acquisitions | ALF and MC | 78-unit ALF/MC | Oregon
Real estate investments
Purchase Price			$ 18,108
Number of beds/units under development | item			78
2017 Acquisitions
Real estate investments
Purchase Price				$ 81,818
Transaction Costs				587
Total Acquisition Costs				$ 82,405
Number of properties acquired | property				5
Number of beds/units acquired | item				400
2017 Acquisitions | ALF
Real estate investments
Purchase Price				$ 81,018
Transaction Costs				569
Total Acquisition Costs				$ 81,587
Number of properties acquired | property				5
Number of beds/units acquired | item				400
2017 Acquisitions | Land
Real estate investments
Purchase Price				$ 800
Transaction Costs				18
Total Acquisition Costs				$ 818
Subsequent Event | 2020 Acquisitions | SNF | Texas
Real estate investments
Purchase Price	$ 13,500,000
Number of beds/units acquired | item	140
Initial lease term	10 years
Initial cash yield	8.50%
Percentage of annual escalation	2.00%
Number of times option to renewal the lease | item	2
Lease renewal term	5 years

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Equity (Tables)

12 Months Ended

Dec. 31, 2019

Equity

Schedule of consolidated VIEs

					Gross
Investment		Property			Consolidated			Non-Controlling
Year	Purpose	Type	State		Assets			Interests
2019	Owned real estate	ALF/MC	VA	$	16,895		$	919
2018	Owned real estate	ILF	OR		14,400	(1)		2,857	(1)
2018	Owned real estate and development	UDP	OR		13,831	(1)		1,081	(1)
2017	Owned real estate and development	ILF/ALF/MC	WI		21,999	(2)		2,318	(2)
2017	Owned real estate	ALF/MC	SC		11,680			1,308
Total				$	78,805		$	8,483

(1) We entered into a JV to develop, purchase and own seniors housing properties. During the second quarter of 2018, the JV purchased land for the development of a 78-unit ALF/MC for a total anticipated project cost of $18,108. The non-controlling partner contributed $1,081 of cash and we committed to fund the remaining $17,027 project cost. During the third quarter of 2018, in a sale-leaseback transaction, the JV purchased an existing operational 89-unit ILF adjacent to the 78-unit ALF/MC we are developing for $14,400. The non-controlling partner contributed $2,857 of equity and we contributed $11,543 in cash. Upon completion of the development project, our combined economic interest in the JV will be approximately 88%.

(2) We entered into a JV to own the real estate and develop a 110-unit ILF/ALF/MC community in Wisconsin. This development project completed during the second quarter of 2019.

Schedule of cash dividends declared and paid

	Year Ended December 31,
	2019				2018				2017
	Declared		Paid		Declared		Paid		Declared		Paid
Common Stock (1)	$	90,899	$	90,899	$	90,372	$	90,372	$	90,219	$	90,219

(1) Represents $0.19 per share per month.

Schedule of options exercised

		Weighted
		Average
	Options	Exercise		Option		Market
	Exercised	Price		Value		Value (1)
2019	5,000	$	24.65	$	123,000	$	233,000
2018	5,000	$	24.65	$	123,000	$	205,000
2017	8,334	$	24.31	$	202,000	$	410,797

(1) As of the exercise dates.

Schedule of restricted stock activity

Restricted Stock and Performance-Based Stock Units. Restricted stock and performance-based stock units activity for the years ended December 31, 2019, 2018 and 2017 was as follows:

	2019			2018		2017
Outstanding, January 1		325,750			244,181		210,573
Granted		147,608			156,718		143,057
Vested		(127,725)	(1)		(75,149)		(85,343)
Cancelled		—			—		(24,106)
Outstanding, December 31		345,633			325,750		244,181
Compensation expense related to restricted stock and performance-based stock units for the year	$	6,566,000		$	5,870,000	$	5,247,000

Schedule of restricted stock granted

During 2019, 2018 and 2017, we granted 147,608, 156,718 and 143,057 shares of restricted common stock and performance-based stock units, respectively, under the 2015 plan as follows:

	No. of	Price per
Year	Shares/Units	Share		Vesting Period
2019	78,276	$	46.54	ratably over 3 years
	60,836	$	46.54	TSR targets (1)
	8,496	$	44.73	May 29, 2020
	147,608
2018	81,819	$	38.18	ratably over 3 years
	66,171	$	38.18	TSR targets (1)
	8,728	$	41.25	May 30, 2019
	156,718
2017	74,760	$	45.76	ratably over 3 years
	57,881	$	45.76	TSR targets (1)
	7,416	$	48.55	June 1, 2018
	3,000	$	50.50	ratably over 3 years
	143,057

(1) Vesting is based on achieving certain total shareholder return (“TSR”) targets in 4 years with acceleration opportunity in 3 years.

Schedule of restricted common stock and performance-based stock unit scheduled to vest and remaining compensation expense

At December 31, 2019, the total number of restricted common stock and performance-based stock units that are scheduled to vest and remaining compensation expense to be recognized related to the future service period of unvested outstanding restricted common stock and performance-based stock units are as follows (dollar amount in thousands):

	Number		Remaining
	of		Compensation
Vesting Date	Awards		Expense
2020	139,534	(1)	$	4,619
2021	119,168	(2)		2,503
2022	86,931	(3)		189
Total	345,633		$	7,311

(1) Includes 55,057 performance-based stock units. The performance-based stock units are valued utilizing a lattice-binomial option pricing model based on Monte Carlo simulations. The company recognizes the fair value of the awards over the applicable vesting period as compensation expense.

(2) Includes 66,171 performance-based stock units. See ⁽¹⁾ above for valuation methodology.

(3) Includes 60,836 performance-based stock units. See ⁽¹⁾ above for valuation methodology.

Schedule of nonqualified stock option activity

				Weighted Average
	Shares			Price
	2019	2018	2017	2019			2018	2017
Outstanding, January 1	20,000	25,000	33,334	$	34.99	$	32.92	$	30.76
Granted	—	—	—		N/A		N/A		N/A
Exercised	(5,000)	(5,000)	(8,334)	$	24.65	$	24.65	$	24.31
Canceled	—	—	—		N/A		N/A		N/A
Outstanding, December 31	15,000	20,000	25,000	$	38.43	$	34.99	$	32.92
Exercisable, December 31(1)	15,000	20,000	25,000	$	38.43	$	34.99	$	32.92

(1) The aggregate intrinsic value of exercisable options at December 31, 2019, based upon the closing price of our common shares at December 31, 2019, the last trading day of 2019, was approximately $95,000. Options exercisable at December 31, 2019, 2018 and 2017 have a weighted average remaining contractual life of approximately 3.2 years, 3.3 years, and 3.5 years, respectively.

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Investment in Unconsolidated Joint Ventures (Tables)

12 Months Ended

Dec. 31, 2019

Investment in Unconsolidated Joint Ventures

Summary of investments in unconsolidated joint ventures

The following table summarizes our investment in unconsolidated joint ventures (dollar amounts in thousands):

	Type	Type		Total		Currently			Number
	of	of		Preferred		Paid in			of		Investment		Carrying
State	Properties	Investment		Return		Cash			Beds/ Units		Commitment		Value
Arizona	ILF/ALF/MC	Preferred Equity	(1)	15	%	8	%	(2)	585	$	—	$	19,003	(3)
Total									585	$	—	$	19,003

(1) We have concluded that the JV is a VIE in accordance with GAAP. However, because we do not control the entity, nor do we have any role in the day-to-day management, we are not the primary beneficiary of the JV. Therefore, we account for the JV investment using the equity method.

(2) Effective second quarter of 2019, this JV was placed on cash basis due to delinquency of our preferred return.

(3) During the fourth quarter of 2019, we recorded an impairment loss of $5,500 to write our preferred equity investment down to its estimated sale price. See below for more detail.

Summary of capital contributions, income recognized and cash interest received from investments in unconsolidated joint ventures

The following table summarizes our capital contributions, income recognized, and cash interest received related to our investments in unconsolidated joint ventures during the years ended December 31, 2019, 2018 and 2017 (in thousands):

	Type
	of			Capital			Income			Cash Interest
Year	Properties			Contribution			Recognized			Received
2019	ILF/ALF/MC		$	472		$	1,029		$	1,580
	ILF/ALF/MC	(1)		—	(1)		955	(1)		979	(1)
	ALF/MC	(2)		—	(2)		404	(2)		432	(2)
Total			$	472		$	2,388		$	2,991
2018	ILF/ALF/MC		$	670		$	2,041		$	1,975
	ILF/ALF/MC	(1)		—	(1)		511	(1)		396	(1)
	ALF/MC	(2)		—	(2)		312	(2)		—	(2)
Total			$	670		$	2,864		$	2,371
2017	ILF/ALF/MC		$	1,101		$	1,560		$	1,436
	ILF/ALF/MC			—	(1)		511	(1)		302	(1)
	UDP-ALF/MC			2,747	(2)		192	(2)		—	(2)
Total			$	3,848		$	2,263		$	1,738

(1) We had a $2,900 mezzanine loan commitment for a 99-unit seniors housing community in Florida with a total preferred return of 15%. The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. Since interest payments were deferred and no interest was recorded for the first twelve months of the loan, we used the effective interest method in accordance with GAAP to recognize interest income and recorded the difference between the effective interest income and cash interest income to loan principal balance. During the third quarter of 2019, the mezzanine loan was paid off.

(2) We had a $3,400 mezzanine loan commitment for the development of a 127-unit seniors housing community in Florida with a total preferred return of 15%. The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. During the first quarter of 2019, the mezzanine loan was paid off.

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Quarterly Financial Information (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information

Schedule of quarterly financial information

	For the quarter ended
	March 31,		June 30,		September 30,		December 31,
	(unaudited, in thousands except per share amounts)
2019
Revenues	$	45,456	$	46,266	$	47,119	$	46,463
Net income available to common stockholders	$	20,254	$	20,352	$	27,080	$	12,449
Net income per common share available to common stockholders:
Basic	$	0.51	$	0.51	$	0.68	$	0.31
Diluted	$	0.51	$	0.51	$	0.68	$	0.31
Dividends per share declared	$	0.57	$	0.57	$	0.57	$	0.57
Dividends per share paid	$	0.57	$	0.57	$	0.57	$	0.57
2018
Revenues	$	41,810	$	41,472	$	41,776	$	43,587
Net income available to common stockholders	$	20,271	$	68,658	$	34,782	$	30,645
Net income per common share available to common stockholders:
Basic	$	0.51	$	1.74	$	0.88	$	0.78
Diluted	$	0.51	$	1.73	$	0.88	$	0.77
Dividends per share declared	$	0.57	$	0.57	$	0.57	$	0.57
Dividends per share paid	$	0.57	$	0.57	$	0.57	$	0.57

NOTE: Quarterly and year-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts for the quarters may not agree with the per share amounts for the year.

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Real Estate Investments

12 Months Ended

Dec. 31, 2019

Real Estate Investments

Real Estate Investments

5. Real Estate Investments

Owned Properties. As of December 31, 2019, we owned 177 health care real estate properties located in 28 states and consisting of 106 ALFs, 70 SNFs and 1 behavioral health care hospital. These properties are operated by 30 operators.

Independent living communities, assisted living communities, memory care communities and combinations thereof are included in the assisted living property classification (collectively “ALF”). Any reference to the number of properties, number of units, number of beds, and yield on investments in real estate are unaudited and outside the scope of our independent registered public accounting firm’s review of our consolidated financial statements in accordance

with the standards of the Public Company Accounting Oversight Board.

Depreciation expense on buildings and improvements, including properties classified as held-for-sale, was $39,094,000, $37,416,000, and $37,492,000 for the years ended December 31, 2019, 2018 and 2017, respectively.

Future minimum base rents receivable under the remaining non-cancelable terms of operating leases excluding the effects of straight-line rent, amortization of lease inducement and renewal options are as follows (in thousands):

	Cash
	Rent (1)
2020	$	135,173
2021		126,914
2022		128,196
2023		129,846
2024		126,320
Thereafter		625,158

(1) Represents contractual annual cash rent, except for two master leases which are based on agreed upon cash rents. See below for more information. Includes rental income due to lessee reimbursement of our real estate taxes and subsequent acquisitions and excludes properties held-for-sale at December 31, 2019.

During 2017, we issued a notice of default to Anthem Memory Care (“Anthem”) resulting from Anthem’s partial payment of minimum rent. Anthem operates 11 memory care communities under a master lease. During 2019, Anthem paid the agreed upon minimum cash rent of $7,500,000. This amount represents approximately 50% of the contractual amount due under the lease in 2019. In accordance with Accounting Standard Codification (“ASC”) Topic 842, Leases (“ASC 842”), at January 1, 2019, we evaluated the collectibility of straight-line rent receivable and lease incentive balances related to Anthem and determined it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance. We receive regular financial performance updates from Anthem and continue to monitor Anthem’s performance obligations under the master lease agreement.

On December 4, 2018, Senior Care Centers, LLC. and affiliates and subsidiaries (“Senior Care”) filed for Chapter 11 bankruptcy as a result of lease terminations from certain landlords and on-going operational challenges. Senior Care did not pay us December 2018 rent and accordingly, in December 2018, we placed Senior Care on a cash basis. In accordance with ASC 842 lease accounting guidance, at January 1, 2019, we evaluated the collectibility of straight-line rent receivable and lease incentive balance related to Senior Care and determined it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance.

In July 2019, Senior Care filed a motion to affirm the lease, which caused us to file an objection in opposition to Senior Care’s motion. During the fourth quarter of 2019, the court rejected our motion and accordingly, our master lease with Senior Care was affirmed. Furthermore, we received the court ordered reimbursement from Senior Care for the December 2018 unpaid rent, late fees and legal costs totaling $1,596,000. Senior Care has paid us January 2019 to February 2020 rent, real estate property tax and maintenance deposits.

During 2017, Preferred Care, Inc. (“Preferred Care”) and affiliated entities filed for Chapter 11 bankruptcy as a result of a multi-million-dollar judgment in a lawsuit in Kentucky against Preferred Care and certain affiliated entities. The affiliated entities named in the lawsuit operate properties in Kentucky and New Mexico. Preferred Care leased 24 properties under two master leases from us and none of the 24 properties are located in Kentucky or New Mexico. Those 24 properties are in Arizona, Colorado, Iowa, Kansas and Texas. The Preferred Care operating entities that sublease

those properties did not file for bankruptcy. In accordance with ASC 842 lease accounting guidance, at January 1, 2019, we evaluated the collectibility of straight-line rent receivable and lease incentive balances related to Preferred Care and determined it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance. Preferred Care did not affirm our master leases and began paying only $55,000 of monthly rent in the third quarter of 2019. The monthly contractual obligation under the master leases was approximately $1,000,000. We applied all of their security deposit to rental income during the third quarter and recorded only the $55,000 monthly cash received in the fourth quarter of 2019 to rental income. During the fourth quarter of 2019, we entered into multiple contracts, subject to standard due diligence and other contingencies, to sell a majority of the properties. Two of these contracts were completed during the fourth quarter of 2019, resulting in the sale of two properties in Arizona and Texas. See Property Sales below for further discussion. At December 31, 2019, 20 of the properties under purchase and sale agreements met the criteria under GAAP as held-for-sale. Accordingly, these properties have been classified as held-for-sale at December 31, 2019.

During the three months ended March 31, 2019, we placed Thrive Senior Living, LLC (“Thrive”) on a cash basis due to short-payment of contractual rent in November 2018 and non-payment of rent in December 2018 totaling $700,000. Thrive subsequently paid the delinquent rent in 2019 but failed to pay 2019 contractual rent. In April 2019, we issued a notice of default to Thrive. In accordance with ASC 842 lease accounting guidance, at January 1, 2019, we evaluated the collectibility of straight-line rent receivable and lease incentive balances related to Thrive and determined that it was not probable that we would collect substantially all of the contractual lease obligations through maturity. Accordingly, we wrote-off the balances to equity as of January 1, 2019, as required by the ASC 842 transition guidance.

During 2019, we completed the following for all of the properties in the Thrive portfolio. As of December 31, 2019, Thrive does not operate any properties in our portfolio:

● Transitioned two memory care communities located in Ohio and Kentucky with a total of 120-units to an operator new to our portfolio during the second quarter of 2019. The memory care communities are under a 10-year lease term with initial cash rent of $1,250,000 in year one, $1,500,000 in year two, $1,975,000 in year three and $2,150,000 in year four. Rent may increase subject to a contingent escalation formula commencing in year five and annually thereafter. The lease provides the lessee with a purchase option available between 2028-2029;

● Transitioned a 56-unit memory care community located in Texas to an existing operator and added the memory care community to an existing master lease during the second quarter of 2019. As a result of this transition, annual cash rent under the existing master lease was increased by $400,000 effective June 1, 2019 and will increase by an additional $300,000 on June 1, 2020 and 2.5% annually thereafter. Additionally, LTC will be entitled to incremental rent calculated as a percentage of increases in gross revenues generated by the property above an established threshold;

● Transitioned two memory care communities in Georgia and South Carolina with a total of 159-units to an existing operator during the third quarter of 2019. The new 2-year lease agreement has an initial annual cash rent of $1,762,000. Rent increases 3.5% in year two; and

● Transitioned the remaining 60-unit memory care community located in Florida to an existing operator effective August 1, 2019. The new 10-year lease provides the lessee twelve months free rent, rent of $450,000 in year two and $600,000 in year three and thereafter. In year two, the lessee has the option to defer rent in an amount not to exceed $150,000. Rent may increase subject to a contingent escalation formula commencing in year three and annually thereafter. Additionally, the lease provides the lessee with a purchase option available between 2028 and 2029. See below for a table that summarizes information about purchase options included in our lease agreements.

The following table summarizes components of our rental income for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	Year Ended December 31,
Rental Income		2019			2018			2017
Base cash rental income	$	134,117	(1)	$	127,477		$	128,715
Variable cash rental income		16,462	(2)		470	(2)		457	(2)
Straight-line rent		4,487	(3)		9,550			10,694
Adjustment for collectibility of rental income		(1,926)	(4)		—			—
Amortization of lease incentives		(385)			(2,092)			(2,209)
Total	$	152,755		$	135,405		$	137,657

(1) Increased due to acquisitions, developments and capital improvements partially offset due to reduced rent from sold properties and properties transitioned to other operators.

(2) The year ended December 31, 2019 variable rental income includes $464 related to contingent rental income and $15,998 related to real estate taxes which were reimbursed by our operators. Per the provisions of ASC 842, any lessor cost, paid by the lessor and reimbursed by the lessee must be included as a variable lease payment. As discussed above, we adopted ASC 842 using a modified retrospective approach as of the adoption date of January 1, 2019. Accordingly, we are not required to report this revenue stream for periods prior to January 1, 2019. For the year ended December 31, 2018, and 2017, the variable income represents contingent rental income.

(3) In accordance with ASC 842 lease accounting guidance, we evaluated the collectibility of lease payments through maturity and determined it was not probable that we would collect substantially all of the contractual obligations from Anthem, Thrive, Preferred Care and Senior Care leases through maturity. Decreased due to these leases being accounted for on cash-basis as of January 1, 2019.

(4) During the first quarter of 2019, we terminated a lease agreement and transitioned two operating seniors housing communities under the lease agreement to a new operator. As a result of the lease termination, we wrote-off $1,926 straight-line rent receivable to contra-revenue in accordance with ASC 842.

Some of our lease agreements provide purchase options allowing the lessees to purchase the properties they currently lease from us. The following table summarizes information about purchase options included in our lease agreements (dollar amount in thousands):

	Type	Number
	of	of		Gross		Carrying	Option
State	Property	Properties		Investments		Value	Window
California	ALF/MC	2	$	38,895	$	36,542	2024-2029
California	ALF	2		28,926		16,056	2021-TBD	(1)
Florida	MC	1		14,201		12,757	2028-2029
Kentucky and Ohio	MC	2		30,126		27,859	2028-2029
Texas	MC	2		25,265		24,335	2025-2027
South Carolina	ALF/MC	1		11,680		10,794	2028-2029
Total			$	149,093	$	128,343

(1) The option window ending date will be either 24 months or 48 months after the option window commences, based on certain contingencies.

Acquisitions. The following table summarizes our acquisitions for the years ended December 31, 2019 through 2017. (dollar amounts in thousands):

						Total		Number	Number
		Purchase		Transaction		Acquisition		of	of
Year (1)	Type of Property	Price		Costs (2)		Costs		Properties	Beds/Units
2019	Assisted Living (3)	$	35,719	$	315	$	36,034	3	230
	Skilled Nursing (4)		19,500		97		19,597	1	90
	Land (5)		2,732		51		2,783	—	—
Total		$	57,951	$	463	$	58,414	4	320
2018	Assisted Living (6) (7)	$	39,600	$	65	$	39,665	3	177
	Land (7)		695		48		743	—	—
Total		$	40,295	$	113	$	40,408	3	177
2017	Assisted Living (8)	$	81,018	$	569	$	81,587	5	400
	Land (9)		800		18		818	—	—
Total		$	81,818	$	587	$	82,405	5	400

(1) Subsequent to December 31, 2019, we acquired a 140-bed SNF located in Texas for approximately $13,500 million and entered into a 10-year master lease agreement with an initial cash yield of 8.5%, escalating 2% annually starting in the second year of the lease, with two five-year renewal options.

(2) Represents cost associated with our acquisitions; however, upon adoption of ASU 2017-01, our acquisitions meet the definition of an asset acquisition resulting in capitalization of transaction costs to the properties’ basis. For our land purchases with forward development commitments, transaction costs are capitalized as part of construction in progress. Transaction costs per Consolidated Statements of Income and Comprehensive Income represent current and prior year transaction costs due to timing and terminated transactions.

(3) We entered into a JV (consolidated on our financial statements) to purchase an existing operational 74-unit ALF/MC community. The non-controlling partner contributed $919 of equity and we contributed $15,976 in cash. Our economic interest in the real estate JV is approximately 95%. See Note 10. Equity for further discussion related to our partnerships and non-controlling interests. Additionally, we acquired an 80-unit MC and a 76-unit ALF/MC in Michigan for an aggregate purchase price of $19,000.

(4) We acquired a newly constructed 90-bed SNF located in Missouri.

(5) We acquired a parcel of land adjacent to an existing SNF in California. Additionally, we acquired a parcel of land and committed to develop a 90-bed SNF in Missouri. The commitment totals approximately $17,400.

(6) We acquired two MC in Texas.

(7) We entered into a JV (consolidated on our financial statements) to purchase an existing operational 89-unit ILF for $14,400 and to own the real estate and develop a 78-unit ALF/MC for $18,108 in Oregon

(8) We acquired an ALF and a MC in California, a MC in Ohio and an ALF/MC in Missouri. Furthermore, we entered into a JV and acquired an ALF/MC community.

(9) We entered into a JV for the acquisition of land and development of an ILF/ALF/MC community in Wisconsin.

For further discussion related to the JV transactions discussed above and our partnerships and non-controlling interests, see Note 10. Equity.

Developments and Improvements. During the years ended December 31, 2019, 2018 and 2017, we invested the following in development and improvement projects (in thousands):

	2019				2018				2017
Type of Property	Developments		Improvements		Developments		Improvements		Developments		Improvements
Assisted Living Communities	$	14,088	$	2,544	$	27,505	$	2,292	$	17,667	$	1,152
Skilled Nursing Centers		6,436		—		7,774		500		5,234		1,356
Other		—		295		—		457		—		391
Total	$	20,524	$	2,839	$	35,279	$	3,249	$	22,901	$	2,899

Completed Projects. The following table summarizes our completed projects during the years ended December 31, 2019, 2018 and 2017 (dollar amounts in thousands):

		Number	Type	Number
		of	of	of			Total
Year	Type of Project	Properties	Property	Beds/Units	State	Investment
2019	Development	1	SNF	143	Kentucky	$	24,974
	Development	1	ILF/ALF/MC	110	Wisconsin		21,999
Total		2		253		$	46,973
2018	Development	1	MC	66	Illinois	$	14,998
Total		1		66		$	14,998
2017	Development	1	MC	66	Illinois	$	13,498
Total		1		66		$	13,498

Properties held-for-sale. The following table summarizes our properties held-for-sale at years ended December 31, 2019 and 2018 (dollar amounts in thousands):

		Type	Number	Number
		of	of	of		Gross		Accumulated
At December 31,	State	Property	Properties	Beds/units		Investment		Depreciation
2019	Colorado	SNF	3	275	$	8,045	$	3,774
	Iowa	SNF	7	544		14,610		9,723
	Kansas	SNF	3	250		14,111		6,674
	Texas	SNF	7	1,148		25,203		14,942
Total			20	2,217	$	61,969	$	35,113
2018	Texas	ILF	1	140	$	5,746	$	1,916
Total			1	140	$	5,746	$	1,916

Property Sales. The following table summarizes property sales during the years ended December 31, 2019 through 2017 (dollar amounts in thousands):

		Type		Number	Number						Net
		of		of	of		Sales		Carrying		Gain
Year	State	Properties		Properties	Beds/Units		Price		Value		(Loss)
2019	N/A	N/A		—	—	$	—	$	—	$	500	(1)
	Arizona, Georgia and Texas	SNF	(2)	3	478		15,310		8,995		5,556
	Texas	ALF	(3)	1	140		1		3,830		(3,950)
Total 2019				4	618	$	15,311	$	12,825	$	2,106
2018	Alabama	SNF		4	454	$	27,975	$	5,695	$	21,987
	Kansas	ALF	(4)	—	—		350		346		—
	Ohio and Pennsylvania	ALF		6	320		67,500		16,352		48,695
Total 2018				10	774	$	95,825	$	22,393	$	70,682
2017	Indiana, Iowa and Oregon	ALF		5	211	$	15,650	$	10,107	$	4,985
	Texas	SNF	(5)	1	85		—		1,170		(1,171)
Total 2017				6	296	$	15,650	$	11,277	$	3,814

(1) Gain recognized due to the receipt of funds held in escrow related to a portfolio of six ALFs sold during the second quarter of 2018.

(2) We sold a property, previously operated by Preferred Care, located in Texas with a carrying value of $871 for $140. Additionally, we sold a property, previously operated by Preferred Care, located in Arizona with a carrying value of $6,485 for $7,250. This transaction includes a holdback of $1,091 which is held in an interest-bearing account with an escrow holder on behalf of the buyer for potential specific losses. Using the expected value model per ASC 606, we estimated and recorded the holdback value of $613. Also, we sold a SNF located in Georgia with a carrying value of $1,639 for $7,920.

(3) We sold an ALF located in Texas with a carrying value of $3,830.

(4) We sold land adjacent to an existing ALF community in Kansas.

(5) We donated a SNF located in Texas, with a carrying value of $1,170 to a nonprofit health care provider.

Mortgage Loans. At December 31, 2019, the mortgage loans had interest rates ranging from 9.2% to 9.9% and maturities ranging from 2043 to 2045. In addition, some loans contain certain guarantees, provide for certain facility fees. Please see Item 1. Business—Portfolio for a table that summarizes our loaned properties as of December 31, 2019.

The following table summarizes our mortgage loan activity for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	2019			2018			2017
Originations and funding under mortgage loans receivable	$	12,342	(1)	$	21,364	(2)	$	11,913
Pay-offs received		—			(1,086)			(16,665)
Scheduled principal payments received		(1,065)			(1,050)			(1,198)
Mortgage loan premium amortization		(4)			(4)			(4)
(Provision for) recovery of loan loss reserve		(113)			(192)			60
Net increase (decrease) in mortgage loans receivable	$	11,160		$	19,032		$	(5,894)

(1) During 2019, we funded an additional $7,500 under an existing mortgage loan. The incremental funding bears interest at 9.41% fixed for two years and escalating by 2.25% thereafter.

(2) During 2018, we funded an additional $7,400 under an existing mortgage loan for the purchase of a 112-bed SNF in Michigan. The incremental funding bears interest at 8.7%, fixed for five years, and escalating by 2.25% thereafter. Also, we funded additional loan proceeds of $7,125 under an existing mortgage loan for the purchase of a 126-bed SNF in Michigan. This incremental funding bears interest at 9.41%, fixed for five years, and escalating by 2.25% thereafter.

At December 31, 2019 and 2018 the carrying values of the mortgage loans were $254,099,000 and $242,939,000, respectively. Scheduled principal payments on mortgage loan receivables are as follows (in thousands):

	Scheduled
	Principal
2020	$	1,065
2021		1,175
2022		1,175
2023		1,175
2024		1,175
Thereafter		250,894
Total	$	256,659

The following table summarizes our early mortgage loan payoffs during the years 2019, 2018 and 2017 (dollar amounts in thousands):

		Early	Number
		Principal	of
		Payoff	Loans	State
2019	$	—	—	N/A
2018	$	1,086	1	UT
2017	$	10,795	4	AZ/MO/TX

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Debt Obligations

12 Months Ended

Dec. 31, 2019

Debt Obligations

Debt Obligations

9. Debt Obligations

Bank Borrowings. During 2018, we amended and restated our unsecured credit agreement to replace the previous unsecured credit agreement, prior to its expiration on October 14, 2018. The amended credit agreement maintains the $600,000,000 aggregate commitment of the lenders under the prior agreement and provides for the opportunity to increase the commitment size of the credit agreement up to a total of $1,000,000,000. The amended credit agreement extends the maturity of the credit agreement to June 27, 2022 and provides for a one-year extension option at our discretion, subject to customary conditions. Additionally, the amended credit agreement decreases the interest rate margins and converts from the payment of unused commitment fees to a facility fee. Based on our leverage at December 31, 2019, the facility provides for interest annually at LIBOR plus 115 basis points and a facility fee of 20 basis points. At December 31, 2019 and 2018 we were in compliance with all covenants.

Financial covenants contained in the Unsecured Credit Agreement, which are measured quarterly, require us to maintain, among other things:

(i) a ratio of total indebtedness to total asset value not greater than 0.5 to 1.0;

(ii) a ratio of secured debt to total asset value not greater than 0.35 to 1.0;

(iii) a ratio of unsecured debt to the value of the unencumbered asset value not greater than 0.6 to 1.0; and

(iv) a ratio of EBITDA, as calculated in the Unsecured Credit Agreement, to fixed charges not less than 1.50 to 1.0.

Senior Unsecured Notes. We have a $337,500,000 shelf agreement with affiliates and managed accounts of PGIM, Inc. (“Prudential”), with availability of $21,500,000 at December 31, 2019, which expired for new issuance on February 16, 2020. During the fourth quarter of 2019, we sold $100,000,000 aggregate principal amount of 3.85% senior unsecured notes maturing in 2031 to Prudential.

The following table sets forth information regarding debt obligations by component as of December 31, 2019 and 2018 (dollar amounts in thousands):

		At December 31, 2019				At December 31, 2018
	Applicable			Available				Available
	Interest	Outstanding		for		Outstanding		for
Debt Obligations	Rate (1)	Balance		Borrowing		Balance		Borrowing
Bank borrowings (2)	3.14%	$	93,900	$	506,100	$	112,000	$	488,000
Senior unsecured notes, net of debt issue costs	4.39%		599,488		21,500		533,029		93,833
Total	4.22%	$	693,388	$	527,600	$	645,029	$	581,833

(1) Represents weighted average of interest rate as of December 31, 2019.

(2) Subsequent to December 31, 2019, we borrowed $18,000 under our unsecured revolving line of credit, accordingly we have $111,900 outstanding balance and $488,100 available for borrowing under our unsecured revolving line of credit.

Our borrowings and repayments for the years ended December 31, 2019, 2018 and 2017 are as follows (in thousands):

	2019					2018				2017
Debt Obligations		Borrowings			Repayments	Borrowings		Repayments			Borrowings			Repayments
Bank borrowings	$	107,900		$	(126,000)	$	116,200	$	(100,700)	$	113,000		$	(123,600)
Senior unsecured notes		100,000	(1)		(33,667)		—		(38,166)		100,000	(2)		(31,167)
Total	$	207,900		$	(159,667)	$	116,200	$	(138,866)	$	213,000		$	(154,767)

(1) During the fourth quarter of 2019, we sold $100,000 senior unsecured notes to Prudential. See above to further discussion.

(2) During 2017, we sold 15-year senior unsecured notes in the aggregate amount of $100,000 to a group of investors, which included Prudential, in a private placement transaction. The notes bear interest at an annual rate of 4.5%, have scheduled principal payments and mature on February 16, 2032.

Scheduled Principal Payments. The following table represents our long-term contractual obligations (scheduled principal payments and amounts due at maturity) as of December 31, 2019, and excludes the effects of interest and debt issue costs (in thousands):

	Total			2020		2021		2022		2023		2024		Thereafter
Bank borrowings	$	93,900	(1)	$	—	$	—	$	93,900	$	—	$	—	$	—
Senior unsecured notes		600,300			40,160		47,160		48,160		49,160		49,160		366,500
	$	694,200		$	40,160	$	47,160	$	142,060	$	49,160	$	49,160	$	366,500

(1) Subsequent to December 31, 2019, we borrowed $18,000 under our unsecured revolving line of credit, accordingly we have $111,900 outstanding balance and $488,100 available for borrowing.

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Commitments and Contingencies - Summary of Commitments (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Commitments and Contingencies
Investment Commitment	$ 79,716
2019 Funding	18,150
Total Commitments funded	26,368
Remaining commitment	53,348
Real estate properties
Commitments and Contingencies
Investment Commitment	41,266
2019 Funding	13,847
Total Commitments funded	18,361
Remaining commitment	22,905
Accrued incentives and earn-out liabilities
Commitments and Contingencies
Investment Commitment	9,000
Remaining commitment	9,000
Mortgage loans
Commitments and Contingencies
Investment Commitment	27,200
2019 Funding	2,264
Total Commitments funded	5,944
Remaining commitment	21,256
Commitments To Expand and Renovate Properties
Commitments and Contingencies
Investment Commitment	9,200
Contingent Funding Commitments
Commitments and Contingencies
Investment Commitment	18,000
Notes receivable
Commitments and Contingencies
Investment Commitment	2,250
2019 Funding	2,039
Total Commitments funded	2,063
Remaining commitment	$ 187

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SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION - Summary (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Carrying cost
Balance at beginning of period	$ 1,421,456	$ 1,392,122	$ 1,301,563
Acquisitions	58,414	40,408	82,405
Improvements	23,363	38,528	25,800
Capitalized interest	608	1,248	908
Cost of real estate sold	(19,270)	(50,850)	(18,554)
Ending balance	1,484,571	1,421,456	1,392,122
Accumulated depreciation
Balance at beginning of period	314,875	306,033	275,861
Depreciation expense	39,094	37,416	37,492
Cost of real estate sold	(6,214)	(28,574)	(7,320)
Ending balance	$ 347,755	$ 314,875	$ 306,033

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Subsequent Events - Equity (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended																																				3 Months Ended									12 Months Ended
	Dec. 31, 2019	Nov. 30, 2019	Oct. 31, 2019	Sep. 30, 2019	Aug. 31, 2019	Jul. 31, 2019	Jun. 30, 2019	May 31, 2019	Apr. 30, 2019	Mar. 31, 2019	Feb. 28, 2019	Jan. 31, 2019	Dec. 31, 2018	Nov. 30, 2018	Oct. 31, 2018	Sep. 30, 2018	Aug. 31, 2018	Jul. 31, 2018	Jun. 30, 2018	May 31, 2018	Apr. 30, 2018	Mar. 31, 2018	Feb. 28, 2018	Jan. 31, 2018	Dec. 31, 2017	Nov. 30, 2017	Oct. 31, 2017	Sep. 30, 2017	Aug. 31, 2017	Jul. 31, 2017	Jun. 30, 2017	May 31, 2017	Apr. 30, 2017	Mar. 31, 2017	Feb. 28, 2017	Jan. 31, 2017	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Equity
Dividends declared and paid per common share (in dollars per share)																																						$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57
Real Estate Investments
Net Gain (Loss)																																														$ 2,106	$ 70,682	$ 3,814
Real property investments, net	$ 1,136,816												$ 1,106,581																									$ 1,136,816				$ 1,106,581				1,136,816	1,106,581
Contingent lease incentives, Write off																																															6,219	2,634
Operating Leases, Income Statement, Lease Revenue																																															135,405	137,657
Payments on debt																																														33,667	38,166	$ 31,167
Outstanding Balance	693,388												645,029																									693,388				645,029				693,388	645,029
Available for borrowing	$ 527,600												$ 581,833																									$ 527,600				$ 581,833				$ 527,600	$ 581,833
Restricted stock and performance-based stock units
Equity
Number of shares granted																																														147,608	156,718	143,057
Restricted stock and performance-based stock units | Three year vesting | Grant Date Price $38.18
Equity
Number of shares granted																																															81,819
Price per share																																															$ 38.18
Restricted stock and performance-based stock units | TSR Targets | Grant Date Price $38.18
Equity
Number of shares granted																																															66,171
Price per share																																															$ 38.18
Common Stock
Equity
Dividends declared and paid per common share (in dollars per share)	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19	$ 0.19
Number of shares repurchased																																														45,030	31,326	42,089
Subsequent Event | 2015 Plan | Restricted stock and performance-based stock units | Grant Date Price $38.18
Equity
Number of shares granted																																					76,464
Price per share																																					$ 48.95
Subsequent Event | 2015 Plan | Restricted stock and performance-based stock units | Three year vesting | Grant Date Price $38.18
Equity
Vesting period																																					3 years
Subsequent Event | Common Stock
Equity
Number of shares repurchased																																					34,016
Dividend Payable, January 31, 2020 | Subsequent Event
Equity
Dividends declared and paid per common share (in dollars per share)																																					$ 0.19
Dividend Payable, January 31, 2020 | Subsequent Event | Common Stock
Equity
Dividends declared and paid per common share (in dollars per share)																																					0.19
Dividend Payable, February 29, 2020 | Subsequent Event
Equity
Dividends declared and paid per common share (in dollars per share)																																					0.19
Dividend Payable, March 31,2020 | Subsequent Event
Equity
Dividends declared and paid per common share (in dollars per share)																																					$ 0.19

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Equity - Noncontrolling Interest (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($) item	Dec. 31, 2017 USD ($)
Noncontrolling interest
Gross Consolidated Assets	$ 1,514,209	$ 1,513,620
Non-controlling interests	8,483	7,481
Investment Commitment	79,716
Partnership
Noncontrolling interest
Gross Consolidated Assets	78,805
Non-controlling interests	8,483
2017 Acquisitions
Noncontrolling interest
Purchase Price			$ 81,818
2017 Acquisitions | ALF
Noncontrolling interest
Purchase Price			$ 81,018
2018 Acquisitions
Noncontrolling interest
Purchase Price		$ 40,295
Economic interest in joint venture		88.00%
2018 Acquisitions | ALF
Noncontrolling interest
Purchase Price		$ 39,600
2019 Acquisitions
Noncontrolling interest
Purchase Price	57,951
2019 Acquisitions | SNF
Noncontrolling interest
Purchase Price	19,500
2019 Acquisitions | ALF
Noncontrolling interest
Purchase Price	35,719
Virginia | 2019 Acquisitions | Partnership | ALF and MC
Noncontrolling interest
Gross Consolidated Assets	16,895
Non-controlling interests	919
Oregon | 2018 Acquisitions | Partnership | Properties under Development
Noncontrolling interest
Gross Consolidated Assets	13,831
Non-controlling interests	1,081
Oregon | 2018 Acquisitions | Partnership | ILF
Noncontrolling interest
Gross Consolidated Assets	14,400
Non-controlling interests	2,857
Wisconsin | 2017 Acquisitions | Partnership | Properties under Development
Noncontrolling interest
Gross Consolidated Assets	21,999
Non-controlling interests	2,318
South Carolina | 2017 Acquisitions | Partnership | ALF
Noncontrolling interest
Gross Consolidated Assets	11,680
Non-controlling interests	$ 1,308
110-unit ILF/ALF/MC | Wisconsin | 2017 Acquisitions | ALF/ILF/MC
Noncontrolling interest
Number of beds/units under development | item	110
89-unit ILF | 2018 Acquisitions | ILF
Noncontrolling interest
Non-controlling interests		2,857
Purchase Price		14,400
Investment Commitment		$ 11,543
Number of beds/units under development | item		89
78-unit ALF/MC | 2018 Acquisitions | ALF and MC
Noncontrolling interest
Non-controlling interests		$ 1,081
Purchase Price		18,108
Investment Commitment		$ 17,027
Number of beds/units under development | item		78
78-unit ALF/MC | Oregon | 2018 Acquisitions | ALF and MC
Noncontrolling interest
Purchase Price		$ 18,108
Number of beds/units under development | item		78

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Real Estate Investments - Base Rents (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) lease	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Depreciation
Depreciation expense	$ 39,094	$ 37,416	$ 37,492
Number of master leases with agreed upon cash rent | lease	2
Future minimum base rents receivable
2020	$ 135,173
2021	126,914
2022	128,196
2023	129,846
2024	126,320
Thereafter	$ 625,158

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Real Estate Investments - Types of property Development and Improvement (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Real estate investments
Invested in projects	$ 18,150
Developments | Development and Improvement Commitments
Real estate investments
Invested in projects	20,524	$ 35,279	$ 22,901
Improvements | Development and Improvement Commitments
Real estate investments
Invested in projects	2,839	3,249	2,899
ALF | Developments | Development and Improvement Commitments
Real estate investments
Invested in projects	14,088	27,505	17,667
ALF | Improvements | Development and Improvement Commitments
Real estate investments
Invested in projects	2,544	2,292	1,152
SNF | Developments | Development and Improvement Commitments
Real estate investments
Invested in projects	6,436	7,774	5,234
SNF | Improvements | Development and Improvement Commitments
Real estate investments
Invested in projects		500	1,356
Other | Improvements | Development and Improvement Commitments
Real estate investments
Invested in projects	$ 295	$ 457	$ 391

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Real Estate Investments - Mortgage Loans Activity (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($) item	Dec. 31, 2017 USD ($)
Mortgage Loans
Originations and fundings under mortgage loans receivable	$ 12,342	$ 21,364	$ 11,913
Pay-offs received		(1,086)	(16,665)
Scheduled principal payments received	(1,065)	(1,050)	(1,198)
Mortgage loan premium amortization	(4)	(4)	(4)
(Provision for) recovery of loan loss reserve	(113)	(192)	60
Net increase (decrease) in mortgage loans receivable	$ 11,160	$ 19,032	$ (5,894)
Mortgage Loans
Mortgage Loans
Loan Term	30 years
Mortgage Loans | Minimum
Mortgage Loans
Interest rate (as a percent)	9.20%
Mortgage Loans | Maximum
Mortgage Loans
Interest rate (as a percent)	9.90%
Mortgages with 9.41% Interest, fixed for two years, and escalating by 2.25% thereafter | Mortgage Loans
Mortgage Loans
Additions to mortgage loans	$ 7,500
Interest rate (as a percent)	9.41%
Loan Term	2 years
Specified basis points for annual increase in interest rate (as a percent)	2.25%
Michigan | SNF | Mortgages with 8.7% Interest, fixed for five years, and escalating by 2.25% thereafter
Mortgage Loans
Interest rate (as a percent)		8.70%
Loan Term		5 years
Specified basis points for annual increase in interest rate (as a percent)		2.25%
Michigan | SNF | Mortgages with 8.7% Interest, fixed for five years, and escalating by 2.25% thereafter | Mortgage Loans
Mortgage Loans
Additions to mortgage loans		$ 7,400
Michigan | SNF | Mortgages with 9.41% Interest, fixed for five years, and escalating by 2.25% thereafter
Mortgage Loans
Additions to mortgage loans		$ 7,125
Interest rate (as a percent)		9.41%
Loan Term		5 years
Specified basis points for annual increase in interest rate (as a percent)		2.25%
SNF Beds | Michigan | SNF | Mortgages with 8.7% Interest, fixed for five years, and escalating by 2.25% thereafter
Mortgage Loans
Number of beds/units | item		112
SNF Beds | Michigan | SNF | Mortgages with 9.41% Interest, fixed for five years, and escalating by 2.25% thereafter
Mortgage Loans
Number of beds/units | item		126

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Net Income Per Common Share (Tables)

12 Months Ended

Dec. 31, 2019

Net Income Per Common Share

Schedule of basic and diluted net income per share

Basic and diluted net income per share was as follows (in thousands except per share amounts):

	For the year ended December 31,
	2019		2018		2017
Net income	$	80,872	$	155,076	$	87,340
Less income allocated to non-controlling interests		(346)		(95)		—
Less income allocated to participating securities:
Non-forfeitable dividends on participating securities		(372)		(357)		(350)
Income allocated to participating securities		(19)		(268)		(12)
Total net income allocated to participating securities		(391)		(625)		(362)
Net income available to common stockholders		80,135		154,356		86,978
Effect of dilutive securities:
Participating securities		—		625		362
Net income for diluted net income per share	$	80,135	$	154,981	$	87,340
Shares for basic net income per share		39,571		39,477		39,409
Effect of dilutive securities:
Stock options		4		3		10
Performance-based stock units		184		203		67
Participating securities		—		156		151
Total effect of dilutive securities		188		362		228
Shares for diluted net income per share		39,759		39,839		39,637
Basic net income per share	$	2.03	$	3.91	$	2.21
Diluted net income per share	$	2.02	$	3.89	$	2.20

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Debt Obligations (Tables)

12 Months Ended

Dec. 31, 2019

Debt Obligations

Schedule of Debt Obligations

The following table sets forth information regarding debt obligations by component as of December 31, 2019 and 2018 (dollar amounts in thousands):

		At December 31, 2019				At December 31, 2018
	Applicable			Available				Available
	Interest	Outstanding		for		Outstanding		for
Debt Obligations	Rate (1)	Balance		Borrowing		Balance		Borrowing
Bank borrowings (2)	3.14%	$	93,900	$	506,100	$	112,000	$	488,000
Senior unsecured notes, net of debt issue costs	4.39%		599,488		21,500		533,029		93,833
Total	4.22%	$	693,388	$	527,600	$	645,029	$	581,833

(1) Represents weighted average of interest rate as of December 31, 2019.

(2) Subsequent to December 31, 2019, we borrowed $18,000 under our unsecured revolving line of credit, accordingly we have $111,900 outstanding balance and $488,100 available for borrowing under our unsecured revolving line of credit.

Schedule of borrowings and repayments

Our borrowings and repayments for the years ended December 31, 2019, 2018 and 2017 are as follows (in thousands):

	2019					2018				2017
Debt Obligations		Borrowings			Repayments	Borrowings		Repayments			Borrowings			Repayments
Bank borrowings	$	107,900		$	(126,000)	$	116,200	$	(100,700)	$	113,000		$	(123,600)
Senior unsecured notes		100,000	(1)		(33,667)		—		(38,166)		100,000	(2)		(31,167)
Total	$	207,900		$	(159,667)	$	116,200	$	(138,866)	$	213,000		$	(154,767)

(1) During the fourth quarter of 2019, we sold $100,000 senior unsecured notes to Prudential. See above to further discussion.

(2) During 2017, we sold 15-year senior unsecured notes in the aggregate amount of $100,000 to a group of investors, which included Prudential, in a private placement transaction. The notes bear interest at an annual rate of 4.5%, have scheduled principal payments and mature on February 16, 2032.

Schedule of principal payments and amounts due at maturity

Scheduled Principal Payments. The following table represents our long-term contractual obligations (scheduled principal payments and amounts due at maturity) as of December 31, 2019, and excludes the effects of interest and debt issue costs (in thousands):

	Total			2020		2021		2022		2023		2024		Thereafter
Bank borrowings	$	93,900	(1)	$	—	$	—	$	93,900	$	—	$	—	$	—
Senior unsecured notes		600,300			40,160		47,160		48,160		49,160		49,160		366,500
	$	694,200		$	40,160	$	47,160	$	142,060	$	49,160	$	49,160	$	366,500

(1) Subsequent to December 31, 2019, we borrowed $18,000 under our unsecured revolving line of credit, accordingly we have $111,900 outstanding balance and $488,100 available for borrowing.

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Real Estate Investments (Tables)

12 Months Ended

Dec. 31, 2019

Real Estate Investments

Schedule of future minimum base rents receivable

Future minimum base rents receivable under the remaining non-cancelable terms of operating leases excluding the effects of straight-line rent, amortization of lease inducement and renewal options are as follows (in thousands):

	Cash
	Rent (1)
2020	$	135,173
2021		126,914
2022		128,196
2023		129,846
2024		126,320
Thereafter		625,158

(1) Represents contractual annual cash rent, except for two master leases which are based on agreed upon cash rents. See below for more information. Includes rental income due to lessee reimbursement of our real estate taxes and subsequent acquisitions and excludes properties held-for-sale at December 31, 2019.

Summary of components of our rental income

The following table summarizes components of our rental income for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	Year Ended December 31,
Rental Income		2019			2018			2017
Base cash rental income	$	134,117	(1)	$	127,477		$	128,715
Variable cash rental income		16,462	(2)		470	(2)		457	(2)
Straight-line rent		4,487	(3)		9,550			10,694
Adjustment for collectibility of rental income		(1,926)	(4)		—			—
Amortization of lease incentives		(385)			(2,092)			(2,209)
Total	$	152,755		$	135,405		$	137,657

(1) Increased due to acquisitions, developments and capital improvements partially offset due to reduced rent from sold properties and properties transitioned to other operators.

(2) The year ended December 31, 2019 variable rental income includes $464 related to contingent rental income and $15,998 related to real estate taxes which were reimbursed by our operators. Per the provisions of ASC 842, any lessor cost, paid by the lessor and reimbursed by the lessee must be included as a variable lease payment. As discussed above, we adopted ASC 842 using a modified retrospective approach as of the adoption date of January 1, 2019. Accordingly, we are not required to report this revenue stream for periods prior to January 1, 2019. For the year ended December 31, 2018, and 2017, the variable income represents contingent rental income.

(3) In accordance with ASC 842 lease accounting guidance, we evaluated the collectibility of lease payments through maturity and determined it was not probable that we would collect substantially all of the contractual obligations from Anthem, Thrive, Preferred Care and Senior Care leases through maturity. Decreased due to these leases being accounted for on cash-basis as of January 1, 2019.

(4) During the first quarter of 2019, we terminated a lease agreement and transitioned two operating seniors housing communities under the lease agreement to a new operator. As a result of the lease termination, we wrote-off $1,926 straight-line rent receivable to contra-revenue in accordance with ASC 842.

Summary of information about purchase options included in our lease agreements

Some of our lease agreements provide purchase options allowing the lessees to purchase the properties they currently lease from us. The following table summarizes information about purchase options included in our lease agreements (dollar amount in thousands):

	Type	Number
	of	of		Gross		Carrying	Option
State	Property	Properties		Investments		Value	Window
California	ALF/MC	2	$	38,895	$	36,542	2024-2029
California	ALF	2		28,926		16,056	2021-TBD	(1)
Florida	MC	1		14,201		12,757	2028-2029
Kentucky and Ohio	MC	2		30,126		27,859	2028-2029
Texas	MC	2		25,265		24,335	2025-2027
South Carolina	ALF/MC	1		11,680		10,794	2028-2029
Total			$	149,093	$	128,343

(1) The option window ending date will be either 24 months or 48 months after the option window commences, based on certain contingencies.

Summary of investments acquired

						Total		Number	Number
		Purchase		Transaction		Acquisition		of	of
Year (1)	Type of Property	Price		Costs (2)		Costs		Properties	Beds/Units
2019	Assisted Living (3)	$	35,719	$	315	$	36,034	3	230
	Skilled Nursing (4)		19,500		97		19,597	1	90
	Land (5)		2,732		51		2,783	—	—
Total		$	57,951	$	463	$	58,414	4	320
2018	Assisted Living (6) (7)	$	39,600	$	65	$	39,665	3	177
	Land (7)		695		48		743	—	—
Total		$	40,295	$	113	$	40,408	3	177
2017	Assisted Living (8)	$	81,018	$	569	$	81,587	5	400
	Land (9)		800		18		818	—	—
Total		$	81,818	$	587	$	82,405	5	400

(1) Subsequent to December 31, 2019, we acquired a 140-bed SNF located in Texas for approximately $13,500 million and entered into a 10-year master lease agreement with an initial cash yield of 8.5%, escalating 2% annually starting in the second year of the lease, with two five-year renewal options.

(2) Represents cost associated with our acquisitions; however, upon adoption of ASU 2017-01, our acquisitions meet the definition of an asset acquisition resulting in capitalization of transaction costs to the properties’ basis. For our land purchases with forward development commitments, transaction costs are capitalized as part of construction in progress. Transaction costs per Consolidated Statements of Income and Comprehensive Income represent current and prior year transaction costs due to timing and terminated transactions.

(3) We entered into a JV (consolidated on our financial statements) to purchase an existing operational 74-unit ALF/MC community. The non-controlling partner contributed $919 of equity and we contributed $15,976 in cash. Our economic interest in the real estate JV is approximately 95%. See Note 10. Equity for further discussion related to our partnerships and non-controlling interests. Additionally, we acquired an 80-unit MC and a 76-unit ALF/MC in Michigan for an aggregate purchase price of $19,000.

(4) We acquired a newly constructed 90-bed SNF located in Missouri.

(5) We acquired a parcel of land adjacent to an existing SNF in California. Additionally, we acquired a parcel of land and committed to develop a 90-bed SNF in Missouri. The commitment totals approximately $17,400.

(6) We acquired two MC in Texas.

(7) We entered into a JV (consolidated on our financial statements) to purchase an existing operational 89-unit ILF for $14,400 and to own the real estate and develop a 78-unit ALF/MC for $18,108 in Oregon

(8) We acquired an ALF and a MC in California, a MC in Ohio and an ALF/MC in Missouri. Furthermore, we entered into a JV and acquired an ALF/MC community.

(9) We entered into a JV for the acquisition of land and development of an ILF/ALF/MC community in Wisconsin.

Schedule of investment in development and improvement projects

Developments and Improvements. During the years ended December 31, 2019, 2018 and 2017, we invested the following in development and improvement projects (in thousands):

	2019				2018				2017
Type of Property	Developments		Improvements		Developments		Improvements		Developments		Improvements
Assisted Living Communities	$	14,088	$	2,544	$	27,505	$	2,292	$	17,667	$	1,152
Skilled Nursing Centers		6,436		—		7,774		500		5,234		1,356
Other		—		295		—		457		—		391
Total	$	20,524	$	2,839	$	35,279	$	3,249	$	22,901	$	2,899

Schedule of completed projects

Completed Projects. The following table summarizes our completed projects during the years ended December 31, 2019, 2018 and 2017 (dollar amounts in thousands):

		Number	Type	Number
		of	of	of			Total
Year	Type of Project	Properties	Property	Beds/Units	State	Investment
2019	Development	1	SNF	143	Kentucky	$	24,974
	Development	1	ILF/ALF/MC	110	Wisconsin		21,999
Total		2		253		$	46,973
2018	Development	1	MC	66	Illinois	$	14,998
Total		1		66		$	14,998
2017	Development	1	MC	66	Illinois	$	13,498
Total		1		66		$	13,498

Summary of properties held-for-sale

Properties held-for-sale. The following table summarizes our properties held-for-sale at years ended December 31, 2019 and 2018 (dollar amounts in thousands):

		Type	Number	Number
		of	of	of		Gross		Accumulated
At December 31,	State	Property	Properties	Beds/units		Investment		Depreciation
2019	Colorado	SNF	3	275	$	8,045	$	3,774
	Iowa	SNF	7	544		14,610		9,723
	Kansas	SNF	3	250		14,111		6,674
	Texas	SNF	7	1,148		25,203		14,942
Total			20	2,217	$	61,969	$	35,113
2018	Texas	ILF	1	140	$	5,746	$	1,916
Total			1	140	$	5,746	$	1,916

Schedule of real estate investment property sold

Property Sales. The following table summarizes property sales during the years ended December 31, 2019 through 2017 (dollar amounts in thousands):

		Type		Number	Number						Net
		of		of	of		Sales		Carrying		Gain
Year	State	Properties		Properties	Beds/Units		Price		Value		(Loss)
2019	N/A	N/A		—	—	$	—	$	—	$	500	(1)
	Arizona, Georgia and Texas	SNF	(2)	3	478		15,310		8,995		5,556
	Texas	ALF	(3)	1	140		1		3,830		(3,950)
Total 2019				4	618	$	15,311	$	12,825	$	2,106
2018	Alabama	SNF		4	454	$	27,975	$	5,695	$	21,987
	Kansas	ALF	(4)	—	—		350		346		—
	Ohio and Pennsylvania	ALF		6	320		67,500		16,352		48,695
Total 2018				10	774	$	95,825	$	22,393	$	70,682
2017	Indiana, Iowa and Oregon	ALF		5	211	$	15,650	$	10,107	$	4,985
	Texas	SNF	(5)	1	85		—		1,170		(1,171)
Total 2017				6	296	$	15,650	$	11,277	$	3,814

(1) Gain recognized due to the receipt of funds held in escrow related to a portfolio of six ALFs sold during the second quarter of 2018.

(2) We sold a property, previously operated by Preferred Care, located in Texas with a carrying value of $871 for $140. Additionally, we sold a property, previously operated by Preferred Care, located in Arizona with a carrying value of $6,485 for $7,250. This transaction includes a holdback of $1,091 which is held in an interest-bearing account with an escrow holder on behalf of the buyer for potential specific losses. Using the expected value model per ASC 606, we estimated and recorded the holdback value of $613. Also, we sold a SNF located in Georgia with a carrying value of $1,639 for $7,920.

(3) We sold an ALF located in Texas with a carrying value of $3,830.

(4) We sold land adjacent to an existing ALF community in Kansas.

(5) We donated a SNF located in Texas, with a carrying value of $1,170 to a nonprofit health care provider.

Schedule of mortgage loan activity

The following table summarizes our mortgage loan activity for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	2019			2018			2017
Originations and funding under mortgage loans receivable	$	12,342	(1)	$	21,364	(2)	$	11,913
Pay-offs received		—			(1,086)			(16,665)
Scheduled principal payments received		(1,065)			(1,050)			(1,198)
Mortgage loan premium amortization		(4)			(4)			(4)
(Provision for) recovery of loan loss reserve		(113)			(192)			60
Net increase (decrease) in mortgage loans receivable	$	11,160		$	19,032		$	(5,894)

Scheduled principal payments on mortgage loan receivables

	Scheduled
	Principal
2020	$	1,065
2021		1,175
2022		1,175
2023		1,175
2024		1,175
Thereafter		250,894
Total	$	256,659

Schedule of early mortgage loan payoffs

The following table summarizes our early mortgage loan payoffs during the years 2019, 2018 and 2017 (dollar amounts in thousands):

		Early	Number
		Principal	of
		Payoff	Loans	State
2019	$	—	—	N/A
2018	$	1,086	1	UT
2017	$	10,795	4	AZ/MO/TX

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Investment in Unconsolidated Joint Ventures

12 Months Ended

Dec. 31, 2019

Investment in Unconsolidated Joint Ventures

Investment in Unconsolidated Joint Ventures

6. Investment in Unconsolidated Joint Ventures

The following table summarizes our investment in unconsolidated joint ventures (dollar amounts in thousands):

	Type	Type		Total		Currently			Number
	of	of		Preferred		Paid in			of		Investment		Carrying
State	Properties	Investment		Return		Cash			Beds/ Units		Commitment		Value
Arizona	ILF/ALF/MC	Preferred Equity	(1)	15	%	8	%	(2)	585	$	—	$	19,003	(3)
Total									585	$	—	$	19,003

(1) We have concluded that the JV is a VIE in accordance with GAAP. However, because we do not control the entity, nor do we have any role in the day-to-day management, we are not the primary beneficiary of the JV. Therefore, we account for the JV investment using the equity method.

(2) Effective second quarter of 2019, this JV was placed on cash basis due to delinquency of our preferred return.

(3) During the fourth quarter of 2019, we recorded an impairment loss of $5,500 to write our preferred equity investment down to its estimated sale price. See below for more detail.

As previously discussed, in October 2019, the JV in which we hold our preferred equity investment signed a letter of intent for the sale of the four properties comprising the JV (the “Properties”). Concurrently, the JV was pursuing a refinancing alternative to take advantage of lower interest rates in today’s market. Based upon the information available to us regarding available alternatives and courses of action, we performed a recoverability test on the carrying value of our preferred equity investment and concluded the preferred equity was not impaired at September 30, 2019.

In November 2019, the JV signed a contract to sell the Properties. Additionally, its refinancing efforts came to a halt. The contract was subject to standard due diligence and other contingencies to close, all of which were met in January 2020. Accordingly, based on the information available to us regarding alternatives and courses of action as of December 31, 2019, we performed a recoverability test on the carrying value of our preferred equity investment and concluded that a portion of our preferred equity investment will not be recoverable. Therefore, we recorded an impairment loss from investments in unconsolidated joint ventures of $5,500,000 and wrote our preferred equity investment down to its estimated fair value.

The following table summarizes our capital contributions, income recognized, and cash interest received related to our investments in unconsolidated joint ventures during the years ended December 31, 2019, 2018 and 2017 (in thousands):

	Type
	of			Capital			Income			Cash Interest
Year	Properties			Contribution			Recognized			Received
2019	ILF/ALF/MC		$	472		$	1,029		$	1,580
	ILF/ALF/MC	(1)		—	(1)		955	(1)		979	(1)
	ALF/MC	(2)		—	(2)		404	(2)		432	(2)
Total			$	472		$	2,388		$	2,991
2018	ILF/ALF/MC		$	670		$	2,041		$	1,975
	ILF/ALF/MC	(1)		—	(1)		511	(1)		396	(1)
	ALF/MC	(2)		—	(2)		312	(2)		—	(2)
Total			$	670		$	2,864		$	2,371
2017	ILF/ALF/MC		$	1,101		$	1,560		$	1,436
	ILF/ALF/MC			—	(1)		511	(1)		302	(1)
	UDP-ALF/MC			2,747	(2)		192	(2)		—	(2)
Total			$	3,848		$	2,263		$	1,738

(1) We had a $2,900 mezzanine loan commitment for a 99-unit seniors housing community in Florida with a total preferred return of 15%. The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. Since interest payments were deferred and no interest was recorded for the first twelve months of the loan, we used the effective interest method in accordance with GAAP to recognize interest income and recorded the difference between the effective interest income and cash interest income to loan principal balance. During the third quarter of 2019, the mezzanine loan was paid off.

(2) We had a $3,400 mezzanine loan commitment for the development of a 127-unit seniors housing community in Florida with a total preferred return of 15%. The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. During the first quarter of 2019, the mezzanine loan was paid off.

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Equity

12 Months Ended

Dec. 31, 2019

Equity

Equity

10. Equity

Common Stock. During 2016, we entered into separate equity distribution agreements (collectively, “Original Equity Distribution Agreements”) to offer and sell, from time to time, up to $200,000,000 in aggregate offering price of our company common shares.

During the year ended December 31, 2017, we sold 312,881 shares of common stock for $14,600,000 in net proceeds under the Original Equity Distribution Agreements. In conjunction with the sale of common stock, we paid $260,000 as compensation to our sales agents and we reclassified $49,000 of accumulated costs associated with this agreement to additional paid in capital.

During the year ended December 31, 2018, we sold 22,244 shares of common stock for $1,005,000 in net proceeds under the Original Equity Distribution Agreements. In conjunction with the sale of common stock, we paid $18,000 as compensation to our sales agents and we reclassified $76,000 of accumulated costs associated with this agreement to additional paid in capital. Accordingly, at December 31, 2018, we had $184,139,000 available under the Original Equity Distribution Agreements.

During 2019, the Original Equity Distribution Agreements expired, and we entered into new separate equity distribution agreements (collectively “Equity Distribution Agreements”) to offer and sell, from time to time, up to $200,000,000 in aggregate offering price of shares of common shares. Sales of common shares will be made by means of ordinary brokers’ transactions, which may include block trades or transactions that are deemed to be “at the market” offerings. As of December 31, 2019, no shares were issued under the Equity Distribution Agreements. Accordingly, at December 31, 2019, we had $200,000,000 available under the Equity Distribution Agreements.

During the years 2019, 2018 and 2017, we acquired 45,030 shares, 31,326 shares and 42,089 shares, respectively, of common stock held by employees who tendered owned shares to satisfy tax withholding obligations. Subsequent to December 31, 2019, we acquired 34,016 shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations.

Non-controlling Interests. During the years 2019, 2018 and 2017, we entered into partnerships to develop and/or own real estate. Given that our limited members do not have the substantive kick-out rights, liquidation rights, or participation rights, we have concluded that the partnerships are VIEs. Since we exercise power over and receive benefits from the VIEs, we are considered the primary beneficiary. Accordingly, we consolidate the VIEs and record the non-controlling interests at cost. As of December 31, 2019, we have the following consolidated VIEs (in thousands):

					Gross
Investment		Property			Consolidated			Non-Controlling
Year	Purpose	Type	State		Assets			Interests
2019	Owned real estate	ALF/MC	VA	$	16,895		$	919
2018	Owned real estate	ILF	OR		14,400	(1)		2,857	(1)
2018	Owned real estate and development	UDP	OR		13,831	(1)		1,081	(1)
2017	Owned real estate and development	ILF/ALF/MC	WI		21,999	(2)		2,318	(2)
2017	Owned real estate	ALF/MC	SC		11,680			1,308
Total				$	78,805		$	8,483

(1) We entered into a JV to develop, purchase and own seniors housing properties. During the second quarter of 2018, the JV purchased land for the development of a 78-unit ALF/MC for a total anticipated project cost of $18,108. The non-controlling partner contributed $1,081 of cash and we committed to fund the remaining $17,027 project cost. During the third quarter of 2018, in a sale-leaseback transaction, the JV purchased an existing operational 89-unit ILF adjacent to the 78-unit ALF/MC we are developing for $14,400. The non-controlling partner contributed $2,857 of equity and we contributed $11,543 in cash. Upon completion of the development project, our combined economic interest in the JV will be approximately 88%.

(2) We entered into a JV to own the real estate and develop a 110-unit ILF/ALF/MC community in Wisconsin. This development project completed during the second quarter of 2019.

Shelf Registration Statement. We have an automatic shelf registration statement on file with the SEC, and currently have the ability to file additional automatic shelf registration statements, to provide us with capacity to offer an indeterminate amount of common stock, preferred stock, warrants, debt, depositary shares, or units. We may from time to time publicly raise capital under our automatic shelf registration statement in amounts, at prices, and on terms to be announced when and if the securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of the offering. Our shelf registration statement expires on February 28, 2022.

Distributions. We declared and paid the following cash dividends (in thousands):

	Year Ended December 31,
	2019				2018				2017
	Declared		Paid		Declared		Paid		Declared		Paid
Common Stock (1)	$	90,899	$	90,899	$	90,372	$	90,372	$	90,219	$	90,219

(1) Represents $0.19 per share per month.

In January 2020, we declared a monthly cash dividend of $0.19 per share on our common stock for the months of January, February and March 2020 payable on January 31, February 28 and March 31, 2020, respectively, to stockholders of record on January 23, February 20 and March 23, 2020, respectively.

Stock Based Compensation Plans. During 2015, we adopted, and our stockholders approved the 2015 Equity Participation Plan (the “2015 Plan”). Under the 2015 Plan, 1,400,000 shares of common stock have been reserved for awards, including nonqualified stock option grants and restricted stock grants to officers, employees, non-employee directors and consultants. As of December 31, 2019, we have 617,013 shares of common stock reserved for awards under the 2015 Plan. The terms of the awards granted under the 2015 Plan are set by our compensation committee at its discretion.

Restricted Stock and Performance-Based Stock Units. Restricted stock and performance-based stock units activity for the years ended December 31, 2019, 2018 and 2017 was as follows:

	2019			2018		2017
Outstanding, January 1		325,750			244,181		210,573
Granted		147,608			156,718		143,057
Vested		(127,725)	(1)		(75,149)		(85,343)
Cancelled		—			—		(24,106)
Outstanding, December 31		345,633			325,750		244,181
Compensation expense related to restricted stock and performance-based stock units for the year	$	6,566,000		$	5,870,000	$	5,247,000

(1) Includes 48,225 performance-based stock units.

During 2019, 2018 and 2017, we granted 147,608, 156,718 and 143,057 shares of restricted common stock and performance-based stock units, respectively, under the 2015 plan as follows:

	No. of	Price per
Year	Shares/Units	Share		Vesting Period
2019	78,276	$	46.54	ratably over 3 years
	60,836	$	46.54	TSR targets (1)
	8,496	$	44.73	May 29, 2020
	147,608
2018	81,819	$	38.18	ratably over 3 years
	66,171	$	38.18	TSR targets (1)
	8,728	$	41.25	May 30, 2019
	156,718
2017	74,760	$	45.76	ratably over 3 years
	57,881	$	45.76	TSR targets (1)
	7,416	$	48.55	June 1, 2018
	3,000	$	50.50	ratably over 3 years
	143,057

(1) Vesting is based on achieving certain total shareholder return (“TSR”) targets in 4 years with acceleration opportunity in 3 years.

Subsequent to December 31, 2019, we granted 76,464 shares of restricted common stock at $48.95 per share which vest ratably from the grant date over a three-year period.

At December 31, 2019, the total number of restricted common stock and performance-based stock units that are scheduled to vest and remaining compensation expense to be recognized related to the future service period of unvested outstanding restricted common stock and performance-based stock units are as follows (dollar amount in thousands):

	Number		Remaining
	of		Compensation
Vesting Date	Awards		Expense
2020	139,534	(1)	$	4,619
2021	119,168	(2)		2,503
2022	86,931	(3)		189
Total	345,633		$	7,311

(1) Includes 55,057 performance-based stock units. The performance-based stock units are valued utilizing a lattice-binomial option pricing model based on Monte Carlo simulations. The company recognizes the fair value of the awards over the applicable vesting period as compensation expense.

(2) Includes 66,171 performance-based stock units. See ⁽¹⁾ above for valuation methodology.

(3) Includes 60,836 performance-based stock units. See ⁽¹⁾ above for valuation methodology.

Stock Options. During 2019, 2018 and 2017, we did not issue any stock options. Nonqualified stock option activity for the years ended December 31, 2019, 2018 and 2017, was as follows:

				Weighted Average
	Shares			Price
	2019	2018	2017	2019			2018	2017
Outstanding, January 1	20,000	25,000	33,334	$	34.99	$	32.92	$	30.76
Granted	—	—	—		N/A		N/A		N/A
Exercised	(5,000)	(5,000)	(8,334)	$	24.65	$	24.65	$	24.31
Canceled	—	—	—		N/A		N/A		N/A
Outstanding, December 31	15,000	20,000	25,000	$	38.43	$	34.99	$	32.92
Exercisable, December 31(1)	15,000	20,000	25,000	$	38.43	$	34.99	$	32.92

(1) The aggregate intrinsic value of exercisable options at December 31, 2019, based upon the closing price of our common shares at December 31, 2019, the last trading day of 2019, was approximately $95,000. Options exercisable at December 31, 2019, 2018 and 2017 have a weighted average remaining contractual life of approximately 3.2 years, 3.3 years, and 3.5 years, respectively.

The options exercised during 2019, 2018 and 2017 were as follows:

		Weighted
		Average
	Options	Exercise		Option		Market
	Exercised	Price		Value		Value (1)
2019	5,000	$	24.65	$	123,000	$	233,000
2018	5,000	$	24.65	$	123,000	$	205,000
2017	8,334	$	24.31	$	202,000	$	410,797

(1) As of the exercise dates.

We use the Black-Scholes-Merton formula to estimate the value of stock options granted to employees. This model requires management to make certain estimates including stock volatility, expected dividend yield and the expected term. Compensation expense related to the vesting of stock options for the years ended December 31, 2019, 2018 and 2017 was $0, $0 and $2,000, respectively.

XML

Quarterly Financial Information

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information

Quarterly Financial Information

14. Quarterly Financial Information

	For the quarter ended
	March 31,		June 30,		September 30,		December 31,
	(unaudited, in thousands except per share amounts)
2019
Revenues	$	45,456	$	46,266	$	47,119	$	46,463
Net income available to common stockholders	$	20,254	$	20,352	$	27,080	$	12,449
Net income per common share available to common stockholders:
Basic	$	0.51	$	0.51	$	0.68	$	0.31
Diluted	$	0.51	$	0.51	$	0.68	$	0.31
Dividends per share declared	$	0.57	$	0.57	$	0.57	$	0.57
Dividends per share paid	$	0.57	$	0.57	$	0.57	$	0.57
2018
Revenues	$	41,810	$	41,472	$	41,776	$	43,587
Net income available to common stockholders	$	20,271	$	68,658	$	34,782	$	30,645
Net income per common share available to common stockholders:
Basic	$	0.51	$	1.74	$	0.88	$	0.78
Diluted	$	0.51	$	1.73	$	0.88	$	0.77
Dividends per share declared	$	0.57	$	0.57	$	0.57	$	0.57
Dividends per share paid	$	0.57	$	0.57	$	0.57	$	0.57

NOTE: Quarterly and year-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts for the quarters may not agree with the per share amounts for the year.

XML

SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION

12 Months Ended

Dec. 31, 2019

SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION

SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION

LTC PROPERTIES, INC.

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

(in thousands)

							Costs
							capitalized		Gross amount at which carried at
			Initial cost to company				subsequent		December 31, 2019
					Building and		to				Building and				Accum		Construction/	Acquisition
	Encumbrances		Land		improvements		acquisition		Land		improvements		Total (1)		deprec.		renovation date	date
Skilled Nursing Properties:
134 Alamogordo, NM	$	—	$	210	$	2,593	$	641	$	210	$	3,234	$	3,444	$	1,504	1985	2001
218 Albuquerque, NM		—		1,696		3,891		530		1,696		4,421		6,117		1,954	2008	2005
219 Albuquerque, NM		—		1,950		8,910		207		1,950		9,117		11,067		3,881	1982	2005
220 Albuquerque, NM		—		2,463		7,647		9		2,463		7,656		10,119		3,234	1970	2005
042 Altoona, IA		—		105		2,309		444		105		2,753		2,858		1,987	1973	1996
252 Amarillo, TX		—		844		—		7,925		844		7,925		8,769		2,025	2013	2011
247 Arlington, TX		—		1,016		13,649		—		1,016		13,649		14,665		4,097	2007	2011
221 Beaumont, TX		—		370		1,141		106		370		1,247		1,617		563	1950	2005
213 Beeville, TX		—		186		1,197		70		186		1,267		1,453		518	1974	2004
007 Bradenton, FL		—		330		2,720		160		330		2,880		3,210		2,189	2012	1993
256 Brownwood, TX		—		164		6,336		—		164		6,336		6,500		1,562	2011	2012
043 Carroll, IA		—		47		1,033		213		47		1,246		1,293		898	1969	1996
177 Chesapeake, VA		—		388		3,469		2,777		388		6,246		6,634		3,581	2017	1995
257 Cincinnati, OH		—		1,890		25,110		—		1,890		25,110		27,000		4,303	2009	2012
125 Clovis, NM		—		561		5,539		307		561		5,846		6,407		2,730	2006	2001
129 Clovis, NM		—		598		5,902		59		598		5,961		6,559		2,805	1995	2001
268 Coldspring, KY		—		2,050		21,496		—		2,050		21,496		23,546		4,928	2014	2012
253 Colton, CA		—		2,474		15,158		—		2,474		15,158		17,632		3,512	1990	2011
211 Commerce City, CO		—		236		3,217		167		236		3,384		3,620		1,606	1964	2004
212 Commerce City, CO		—		161		2,160		95		161		2,255		2,416		1,051	1967	2004
246 Crowley, TX		—		2,247		14,276		—		2,247		14,276		16,523		4,196	2007	2011
235 Daleville, VA		—		279		8,382		—		279		8,382		8,661		2,611	2005	2010
258 Dayton, OH		—		373		26,627		—		373		26,627		27,000		4,598	2010	2012
168 Des Moines, IA		—		115		2,096		1,433		115		3,529		3,644		2,194	1972	1999
196 Dresden, TN		—		31		1,529		1,073		31		2,602		2,633		1,192	2014	2000
298 Forth Worth, TX		—		2,785		7,546		—		2,785		7,546		10,331		1,776	1998	2015
026 Gardendale, AL		—		100		7,550		2,084		100		9,634		9,734		6,166	2011	1996
185 Gardner, KS		—		896		4,478		4,150		896		8,628		9,524		3,987	2011	1999
248 Granbury, TX		—		836		6,693		—		836		6,693		7,529		2,631	2008	2011
044 Granger, IA		—		62		1,356		221		62		1,577		1,639		1,113	1979	1996
205 Grapevine, TX		—		431		1,449		188		431		1,637		2,068		938	1974	2002
250 Hewitt, TX		—		1,780		8,220		99		1,780		8,319		10,099		2,057	2008	2011
194 Holyoke, CO		—		211		1,513		283		211		1,796		2,007		1,118	1963	2000
051 Houston, TX		—		365		3,769		1,598		365		5,367		5,732		3,613	1968	1996
054 Houston, TX		—		202		4,458		1,426		202		5,884		6,086		4,119	2007	1996
055 Houston, TX		—		202		4,458		1,359		202		5,817		6,019		4,004	2008	1996
045 Jefferson, IA		—		86		1,883		296		86		2,179		2,265		1,522	1972	1996
318 Kansas City, MO		—		1,229		18,368		—		1,229		18,368		19,597		213	2018	2019
008 Lecanto, FL		—		351		2,665		2,737		351		5,402		5,753		3,873	2012	1993
300 Mansfield, TX		—		2,890		13,110		—		2,890		13,110		16,000		1,912	2015	2016
053 Mesa, AZ		—		305		6,909		1,876		305		8,785		9,090		5,876	1996	1996
242 Mission, TX		—		1,111		16,602		—		1,111		16,602		17,713		4,441	2004	2010
115 Nacogdoches, TX		—		100		1,738		168		100		1,906		2,006		1,203	1973	1997
233 Nacogdoches, TX		—		394		7,456		268		394		7,724		8,118		2,270	1991	2010
249 Nacogdoches, TX		—		1,015		11,109		—		1,015		11,109		12,124		3,729	2007	2011
245 Newberry, SC		—		439		4,639		608		439		5,247		5,686		1,902	1995	2011
244 Newberry, SC		—		919		5,454		131		919		5,585		6,504		1,796	2001	2011
046 Norwalk, IA		—		47		1,033		239		47		1,272		1,319		925	1975	1996
176 Olathe, KS		—		520		1,872		313		520		2,185		2,705		1,443	1968	1999
251 Pasadena, TX		—		1,155		14,345		522		1,155		14,867		16,022		3,461	2005	2011
210 Phoenix, AZ		—		334		3,383		456		334		3,839		4,173		1,923	1982	2004
193 Phoenix, AZ		—		300		9,703		92		300		9,795		10,095		5,853	1985	2000
047 Polk City, IA		—		63		1,376		153		63		1,529		1,592		1,085	1976	1996
094 Portland, OR		—		100		1,925		3,152		100		5,077		5,177		3,414	2007	1997
254 Red Oak, TX		—		1,427		17,173		—		1,427		17,173		18,600		3,995	2002	2012
124 Richland Hills, TX		—		144		1,656		427		144		2,083		2,227		1,189	1976	2001
197 Ripley, TN		—		20		985		1,638		20		2,623		2,643		1,224	2014	2000

LTC PROPERTIES, INC.

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)

(in thousands)

							Costs
							capitalized		Gross amount at which carried at
			Initial cost to company				subsequent		December 31, 2019
					Building and		to				Building and				Accum		Construction/	Acquisition
	Encumbrances		Land		improvements		acquisition		Land		improvements		Total (1)		deprec.		renovation date	date
133 Roswell, NM	$	—	$	568	$	5,235	$	1,396	$	568	$	6,631	$	7,199	$	2,981	1975	2001
081 Sacramento, CA		—		220		2,929		1,481		220		4,410		4,630		2,510	2015	1997
085 Salina, KS		—		100		1,153		628		100		1,781		1,881		1,244	1985	1997
281 Slinger, WI		—		464		13,482		—		464		13,482		13,946		2,572	2014	2015
234 St. Petersburg, FL		—		1,070		7,930		500		1,070		8,430		9,500		2,286	1988	2010
243 Stephenville, TX		—		670		10,117		500		670		10,617		11,287		2,923	2009	2010
225 Tacoma, WA		—		723		6,401		901		723		7,302		8,025		3,294	2009	2006
178 Tappahannock, VA		—		375		1,327		397		375		1,724		2,099		1,507	1978	1995
270 Trinity, FL		—		1,653		12,748		—		1,653		12,748		14,401		2,544	2008	2013
192 Tucson, AZ		—		276		8,924		112		276		9,036		9,312		5,394	1992	2000
305 Union, KY		—		858		24,116		—		858		24,116		24,974		743	2019	2016
299 Weatherford, TX		—		836		11,902		—		836		11,902		12,738		2,285	1996	2015
236 Wytheville, VA		—		647		12,167		—		647		12,167		12,814		4,618	1996	2010
Skilled Nursing Properties	$	—	$	50,063	$	499,692	$	46,615	$	50,063	$	546,307	$	596,370	$	183,391
Assisted Living Properties:
317 Abington, VA		—		541		16,355		—		541		16,355		16,896		390	2015	2019
077 Ada, OK		—		100		1,650		—		100		1,650		1,750		966	1996	1996
105 Arvada, CO		—		100		2,810		6,960		100		9,770		9,870		3,262	2014	1997
304 Athens, GA		—		1,056		13,326		—		1,056		13,326		14,382		1,314	2016	2016
063 Athens, TX		—		96		1,510		104		96		1,614		1,710		982	1995	1996
320 Auburn Hills, MI		—		1,964		4,569		—		1,964		4,569		6,533		—	1995	2019
269 Aurora, CO		—		850		8,583		—		850		8,583		9,433		1,917	2014	2013
260 Aurora, CO		—		831		10,071		—		831		10,071		10,902		2,122	1999	2012
203 Bakersfield, CA		—		834		11,986		1,039		834		13,025		13,859		6,428	2002	2001
117 Beatrice, NE		—		100		2,173		231		100		2,404		2,504		1,287	1997	1997
277 Burr Ridge, IL		—		1,400		11,102		—		1,400		11,102		12,502		1,668	2016	2014
278 Castle Rock, CO		—		759		9,041		—		759		9,041		9,800		1,032	2012	2014
311 Cedarburg, WI		—		924		21,075		—		924		21,075		21,999		629	2019	2017
160 Central, SC		—		100		2,321		—		100		2,321		2,421		1,101	1998	1999
263 Chatham, NJ		—		5,365		36,399		—		5,365		36,399		41,764		7,347	2002	2012
307 Clovis, CA		—		2,542		19,126		—		2,542		19,126		21,668		1,374	2014	2017
308 Clovis, CA		—		3,054		14,172		—		3,054		14,172		17,226		979	2016	2017
279 Corpus Christi, TX		—		880		11,440		147		880		11,587		12,467		1,619	2016	2015
292 De Forest, WI		—		485		5,568		43		485		5,611		6,096		744	2006	2015
057 Dodge City, KS		—		84		1,666		4		84		1,670		1,754		1,034	1995	1995
083 Durant, OK		—		100		1,769		—		100		1,769		1,869		1,020	1997	1997
107 Edmond, OK		—		100		1,365		526		100		1,891		1,991		1,071	1996	1997
163 Ft. Collins, CO		—		100		2,961		3,405		100		6,366		6,466		2,510	2014	1999
170 Ft. Collins, CO		—		100		3,400		4,622		100		8,022		8,122		2,797	2014	1999
132 Ft. Meyers, FL		—		100		2,728		9		100		2,737		2,837		1,507	1998	1998
315 Ft. Worth, TX		—		1,534		11,099		—		1,534		11,099		12,633		474	2014	2018
100 Fremont ,OH		—		100		2,435		115		100		2,550		2,650		1,442	1997	1997
267 Frisco, TX		—		1,000		5,154		—		1,000		5,154		6,154		1,189	2014	2012
314 Frisco, TX		—		2,216		10,417		—		2,216		10,417		12,633		456	2015	2018
296 Glenview, IL				2,800		14,248		—		2,800		14,248		17,048		1,120	2017	2015
167 Goldsboro, NC		—		100		2,385		1		100		2,386		2,486		1,055	1998	1999
056 Great Bend, KS		—		80		1,570		21		80		1,591		1,671		1,097	1995	1995
102 Greeley, CO		—		100		2,310		270		100		2,580		2,680		1,459	1997	1997
284 Green Bay, WI		—		1,660		19,079		402		1,660		19,481		21,141		2,617	2004	2015
164 Greenville, NC		—		100		2,478		2		100		2,480		2,580		1,231	1998	1999
062 Greenville, TX		—		42		1,565		84		42		1,649		1,691		996	1995	1996
161 Greenwood, SC		—		100		2,638		—		100		2,638		2,738		1,339	1998	1999
241 Gulf Breeze, FL		—		720		3,780		261		720		4,041		4,761		1,223	2000	2010
295 Jacksonville, FL		—		1,389		12,756		56		1,389		12,812		14,201		1,444	2015	2015
066 Jacksonville, TX		—		100		1,900		77		100		1,977		2,077		1,195	1996	1996
310 Kansas City, MO				1,072		15,552		—		1,072		15,552		16,624		839	2017	2017
285 Kenosha, WI		—		936		12,361		240		936		12,601		13,537		1,515	2008	2015
255 Littleton, CO		—		1,882		8,248		—		1,882		8,248		10,130		1,718	2013	2012
268 Littleton, CO		—		1,200		8,688		—		1,200		8,688		9,888		2,007	2014	2013
148 Longmont, CO		—		100		2,640		—		100		2,640		2,740		1,443	1998	1998
060 Longview, TX		—		38		1,568		127		38		1,695		1,733		1,034	1995	1995
261 Louisville, CO		—		911		11,703		—		911		11,703		12,614		2,414	2000	2012

LTC PROPERTIES, INC.

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)

(in thousands)

							Costs
							capitalized		Gross amount at which carried at
			Initial cost to company				subsequent		December 31, 2019
						Building and	to				Building and				Accum		Construction/	Acquisition
	Encumbrances		Land			improvements	acquisition		Land		improvements		Total (1)		deprec.		renovation date	date
301 Louisville, KY	$	—	$	1,021	$	13,157	$	17	$	1,021	$	13,174	$	14,195	$	1,288	2016	2016
114 Loveland, CO		—		100		2,865		270		100		3,135		3,235		1,758	1997	1997
068 Lufkin, TX		—		100		1,950		94		100		2,044		2,144		1,229	1996	1996
061 Marshall, TX		—		38		1,568		534		38		2,102		2,140		1,298	1995	1995
293 McHenry, IL		—		1,289		28,976		243		1,289		29,219		30,508		3,777	2005	2015
058 McPherson, KS		—		79		1,571		4		79		1,575		1,654		1,086	1994	1995
316 Medford, OR		—		750		13,650		—		750		13,650		14,400		575	1984	2018
239 Merritt Island, FL		—		550		8,150		100		550		8,250		8,800		2,347	2004	2010
104 Millville, NJ		—		100		2,825		749		100		3,574		3,674		1,754	1997	1997
286 Milwaukee, WI		—		818		8,014		61		818		8,075		8,893		1,084	2007	2015
231 Monroeville, PA		—		526		5,334		435		526		5,769		6,295		1,866	1997	2009
280 Murrells Inlet, SC		—		2,490		14,185		—		2,490		14,185		16,675		1,762	2016	2015
294 Murrieta, CA		—		2,022		11,136		—		2,022		11,136		13,158		1,432	2016	2015
289 Neenah, WI		—		694		20,839		244		694		21,083		21,777		2,606	1991	2015
166 New Bern, NC		—		100		2,427		1		100		2,428		2,528		1,095	1998	1999
118 Newark, OH		—		100		2,435		284		100		2,719		2,819		1,436	1997	1997
143 Niceville, FL		—		100		2,680		—		100		2,680		2,780		1,465	1998	1998
095 Norfolk, NE		—		100		2,123		301		100		2,424		2,524		1,277	1997	1997
306 Oak Lawn, IL		—		1,591		13,772		—		1,591		13,772		15,363		792	2018	2016
290 Oshkosh, WI		—		1,525		9,192		184		1,525		9,376		10,901		2,526	2009	2015
291 Oshkosh, WI		—		475		7,364		44		475		7,408		7,883		982	2005	2015
302 Overland Park, KS		—		1,951		11,882		281		1,951		12,163		14,114		1,344	2013	2016
232 Pittsburgh, PA		—		470		2,615		333		470		2,948		3,418		1,046	1994	2009
165 Rocky Mount, NC		—		100		2,494		1		100		2,495		2,595		1,157	1998	1999
059 Salina, KS		—		79		1,571		4		79		1,575		1,654		1,086	1994	1995
084 San Antonio, TX		—		100		1,900		—		100		1,900		2,000		1,094	1997	1997
092 San Antonio, TX		—		100		2,055		—		100		2,055		2,155		1,178	1997	1997
288 Sheboygan, WI		—		1,168		5,382		184		1,168		5,566		6,734		854	2006	2015
149 Shelby, NC		—		100		2,805		2		100		2,807		2,907		1,533	1998	1998
312 Spartanburg, SC		—		254		9,906		1,520		254		11,426		11,680		886	1999	2017
150 Spring Hill, FL		—		100		2,650		—		100		2,650		2,750		1,449	1998	1998
103 Springfield, OH		—		100		2,035		270		100		2,305		2,405		1,300	1997	1997
321 Sterling Heights, MI		—		1,133		11,473		—		1,133		11,473		12,606		—	1997	2019
162 Sumter, SC		—		100		2,351		—		100		2,351		2,451		1,143	1998	1999
140 Tallahassee, FL		—		100		3,075		—		100		3,075		3,175		1,684	1998	1998
098 Tiffin, OH		—		100		2,435		279		100		2,714		2,814		1,424	1997	1997
282 Tinley Park, IL		—		702		11,481		—		702		11,481		12,183		1,509	2016	2015
088 Troy, OH		—		100		2,435		605		100		3,040		3,140		1,641	1997	1997
080 Tulsa, OK		—		200		1,650		—		200		1,650		1,850		959	1997	1997
093 Tulsa, OK		—		100		2,395		—		100		2,395		2,495		1,370	1997	1997
238 Tupelo, MS		—		1,170		8,230		30		1,170		8,260		9,430		2,437	2000	2010
075 Tyler, TX		—		100		1,800		—		100		1,800		1,900		1,052	1996	1996
202 Vacaville, CA		—		1,662		11,634		1,770		1,662		13,404		15,066		6,442	2002	2001
091 Waco, TX		—		100		2,235		—		100		2,235		2,335		1,280	1997	1997
096 Wahoo, NE		—		100		2,318		161		100		2,479		2,579		1,378	1997	1997
108 Watauga, TX		—		100		1,668		—		100		1,668		1,768		949	1996	1997
287 Waukesha, WI		—		992		15,183		210		992		15,393		16,385		1,884	2009	2015
109 Weatherford, OK		—		100		1,669		592		100		2,261		2,361		1,278	1996	1997
309 West Chester, OH		—		2,355		13,553		22		2,355		13,575		15,930		978	2017	2017
276 Westminster, CO		—		1,425		9,575		—		1,425		9,575		11,000		1,867	2015	2013
110 Wheelersburg, OH		—		29		2,435		250		29		2,685		2,714		1,437	1997	1997
303 Wichita, KS		—		1,422		9,957		285		1,422		10,242		11,664		1,159	2011	2016
259 Wichita, KS		—		730		—		9,682		730		9,682		10,412		2,270	2013	2012
283 Wichita, KS		—		624		13,846		—		624		13,846		14,470		1,245	2016	2015
076 Wichita Falls, TX		—		100		1,850		—		100		1,850		1,950		1,081	1996	1996
120 Wichita Falls, TX		—		100		2,750		131		100		2,881		2,981		1,607	1997	1997
265 Williamstown, NJ		—		711		6,637		—		711		6,637		7,348		1,502	2000	2012
264 Williamstown, NJ		—		711		8,649		—		711		8,649		9,360		1,769	2000	2012
099 York, NE		—		100		2,318		78		100		2,396		2,496		1,359	1997	1997
Assisted Living Properties	$	—	$	75,001	$	744,850	$	39,001	$	75,001	$	783,851	$	858,852	$	163,473

LTC PROPERTIES, INC.

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)

(in thousands)

							Costs
							capitalized		Gross amount at which carried at
			Initial cost to company				subsequent		December 31, 2019
					Building and		to				Building and					Accum		Construction/	Acquisition
	Encumbrances		Land		improvements		acquisition		Land		improvements		Total (1)			deprec.		renovation date	date
Other:
Properties:
297 Las Vegas, NV		—		1,965		7,308		1,144		1,965		8,452		10,417			891	1990/1994	2015
Properties		—		1,965		7,308		1,144		1,965		8,452		10,417			891
Land:
271 Howell, MI		—		420		—		—		420		—		420			—	N/A	2013
272 Milford, MI		—		450		—		—		450		—		450			—	N/A	2014
275 Yale, MI		—		73		—		—		73		—		73			—	N/A	2013
Land		—		943		—		—		943		—		943			—
Other Properties		—		2,908		7,308		1,144		2,908		8,452		11,360			891
Properties Under Development:
319 Independence, MO		—		2,644		1,514		—		2,644		1,514		4,158			—	N/A	2019
313 Medford, OR		—		636		13,195		—		636		13,195		13,831			—	N/A	2018
Properties Under Development		—		3,280		14,709		—		3,280		14,709		17,989			—
	$	—	$	131,252	$	1,266,559	$	86,760	$	131,252	$	1,353,319	$	1,484,571	(2)	$	347,755

(1) Depreciation is computed principally by the straight-line method for financial reporting purposes which generally range of a life from 5 to 15 years for furniture and equipment, 35 to 50 years for buildings, 10 to 20 years for site improvements, 10 to 50 years for building improvements and the respective lease term for acquired lease intangibles.

(2) As of December 31, 2019, our aggregate cost for Federal income tax purposes was $1,501.

LTC PROPERTIES, INC.

SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)

(in thousands)

Activity for the years ended December 31, 2019, 2018 and 2017 is as follows:

	For the Year Ended December 31,
	2019		2018		2017
Reconciliation of real estate:
Carrying cost:
Balance at beginning of period	$	1,421,456	$	1,392,122	$	1,301,563
Acquisitions		58,414		40,408		82,405
Improvements		23,363		38,528		25,800
Capitalized interest		608		1,248		908
Cost of real estate sold		(19,270)		(50,850)		(18,554)
Ending balance	$	1,484,571	$	1,421,456	$	1,392,122
Accumulated depreciation:
Balance at beginning of period	$	314,875	$	306,033	$	275,861
Depreciation expense		39,094		37,416		37,492
Cost of real estate sold		(6,214)		(28,574)		(7,320)
Ending balance	$	347,755	$	314,875	$	306,033

XML

Supplemental Cash Flow Information (Tables)

12 Months Ended

Dec. 31, 2019

Supplemental Cash Flow Information

Supplemental Cash Flow Information

	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Non-cash investing and financing transactions:
Reclassification of notes receivable to lease incentives (Note 7)	$	200	$	—	$	—
Restricted stock issued, net of cancellations (Note 10)		—		1		1

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2019	Feb. 14, 2020	Jun. 28, 2019
Document and Entity Information
Document Type	10-K
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2019
Entity File Number	1-11314
Entity Registrant Name	LTC PROPERTIES, INC.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	71-0720518
Entity Address, Address Line One	2829 Townsgate Road, Suite 350
Entity Address, City or Town	Westlake Village
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	91361
City Area Code	805
Local Phone Number	981-8655
Title of 12(b) Security	Common stock, $.01 Par Value
Trading Symbol	LTC
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 1,783,261,000
Entity Common Stock, Shares Outstanding		39,751,704
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Entity Central Index Key	0000887905
Amendment Flag	false

XML

CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands	Parent	Common Stock	Capital in Excess of Par Value	Cumulative Net Income	Cumulative Distributions	Non-controlling Interests	Total
Balance at beginning of period at Dec. 31, 2016	$ 740,048	$ 392	$ 839,005	$ 1,013,443	$ (1,112,792)		$ 740,048
Balance (in shares) at Dec. 31, 2016		39,221
Equity activity
Common stock cash distributions	(90,219)				(90,219)		(90,219)
Issuance of common stock	14,529	$ 3	14,526				14,529
Issuance of common stock (in shares)		313
Issuance of restricted stock	(20)	$ 1	(21)				(20)
Issuance of restricted stock (in shares)		85
Stock option exercises	202		202				202
Stock option exercises (in shares)		8
Stock-based compensation expense	5,247		5,247				5,247
Net income	87,340			87,340			87,340
Non-controlling interests contributions						$ 3,488	3,488
Other	(1,969)		(1,969)				(1,969)
Other (in shares)		(57)
Vested stock options	2		2				2
Balance at end of period at Dec. 31, 2017	755,160	$ 396	856,992	1,100,783	(1,203,011)	3,488	758,648
Balance (in shares) at Dec. 31, 2017		39,570
Equity activity
Common stock cash distributions	(90,372)				(90,372)		(90,372)
Issuance of common stock	929		929				929
Issuance of common stock (in shares)		22
Issuance of restricted stock	(8)	$ 1	(9)				(8)
Issuance of restricted stock (in shares)		91
Stock option exercises	123		123				123
Stock option exercises (in shares)		5
Stock-based compensation expense	5,870		5,870				5,870
Net income	154,981			154,981		95	155,076
Non-controlling interests contributions						3,963	3,963
Non-controlling interest distributions						(65)	(65)
Other	(1,193)		(1,193)				(1,193)
Other (in shares)		(31)
Balance at end of period at Dec. 31, 2018	825,490	$ 397	862,712	1,255,764	(1,293,383)	7,481	832,971
Balance (in shares) at Dec. 31, 2018		39,657
Equity activity
As Adjusted Balance at January 1, 2019	782,682	$ 397	862,712	1,212,956	(1,293,383)	7,481	790,163
Net income							80,872
Vesting of performance-based stock units	(301)				(301)		(301)
Vesting of performance-based stock units		48
Balance at end of period at Dec. 31, 2019	776,943	$ 398	867,346	1,293,482	(1,384,283)	8,483	785,426
Balance (in shares) at Dec. 31, 2019		39,752
Equity activity
Cumulative effect of the adoption of the ASC 842	(42,808)			(42,808)			(42,808)
Common stock cash distributions	(90,599)				(90,599)		(90,599)
Issuance of restricted stock	(7)		(7)				(7)
Issuance of restricted stock (in shares)		86
Stock option exercises	123	$ 1	122				123
Stock option exercises (in shares)		5
Stock-based compensation expense	6,566		6,566				6,566
Net income	80,526			80,526		346	80,872
Non-controlling interests contributions						965	965
Non-controlling interest distributions						(309)	(309)
Other	(2,047)		(2,047)				(2,047)
Other (in shares)		(44)
Balance at end of period at Dec. 31, 2019	$ 776,943	$ 398	$ 867,346	$ 1,293,482	$ (1,384,283)	$ 8,483	$ 785,426
Balance (in shares) at Dec. 31, 2019		39,752

XML

Notes Receivable - Components (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Notes receivable activities
Mezzanine loan Funded	$ 6,800
Notes receivable reserve	(181)	$ (128)
Total	17,927	12,715
Mezzanine loan with 12.0% Interest
Notes receivable activities
Mezzanine loan Funded	13,284	9,868
Other loans
Notes receivable activities
Mezzanine loan Funded	$ 4,824	$ 2,975

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation. The accompanying consolidated financial statements include the accounts of LTC, our wholly-owned subsidiaries, and our consolidated companies. All intercompany investments, accounts and transactions have been eliminated.

Consolidation of entities is based on determination of the primary beneficiary. In order to be considered the primary beneficiary, the member should be able to exercise power over and receive benefits from the entity. Power over the company is based on the provisions of the operating agreement that provides us with a controlling financial interest in the entity. Under the terms of the operating agreement, we, as the general member, are responsible for the management of the company’s assets, business and affairs. Our rights and duties in management of the company include making all operating decisions, setting the capital budget, executing all contracts, making all employment decisions, and handling the purchase and disposition of assets, among others. We, as the general member, are responsible for the ongoing, major, and central operations of the company and make all management decisions. In addition, we, as the general member, assume the risk for all operating losses, capital losses, and are entitled to substantially all capital gains (appreciation) and accordingly, receive substantial benefits from the company.

The Financial Accounting Standards Board (“FASB”) created a framework for evaluating whether a general partner or a group of general partners controls a limited partnership or a managing member or a group of managing members can exercise power over a limited liability company, and therefore should consolidate the entity. The guidance states that the presumption of general partner or managing member control would be overcome only when the limited partners or non-managing members have certain specific rights as described in the guidance. The limited members have virtually no rights and are precluded from taking part in the operation, management or control of the company. The limited members are also precluded from transferring their interests without the expressed permission of the general member. However, general partners could transfer their interest without consultation or permission of the limited members. We consolidated the companies in accordance with the guidance.

The FASB requires the classification of non-controlling interests as a component of consolidated equity in the consolidated balance sheet subject to the provisions of the rules governing classification and measurement of redeemable securities. The guidance requires consolidated net income to be reported at the amounts attributable to both the controlling and non-controlling interests. The calculation of earnings per share will be based on income amounts attributable to the controlling interest.

Any reference to the number of properties or facilities, number of units, number of beds, number of operators, and yield on investments in real estate are unaudited and outside the scope of our independent registered public

accounting firm’s audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board.

Going Concern. In August 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements— Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this update define management’s responsibility under U.S. generally accepted accounting principles (“GAAP”) to evaluate when and how substantial doubt about the organization’s ability to continue as a going concern should be disclosed in the financial statement footnotes. This ASU expands disclosure requirements about principal conditions or events that raise substantial doubt. It also requires disclosing management’s evaluation of the significance of those conditions or events in relationship to the organization’s ability to meet its obligations, and management’s plans that are intended to either alleviate substantial doubt or to mitigate conditions or events that raise substantial doubt. ASU No. 2014-15 is effective for annual periods ending after December 15, 2016. We adopted this ASU in 2017. The adoption of this ASU did not have a material impact on our financial statements or disclosures.

Use of Estimates. Preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Cash Equivalents. Cash equivalents consist of highly liquid investments with a maturity of three months or less when purchased and are stated at cost which approximates market.

Restricted Cash. In November 2016, the FASB issued ASU No 2016-18 (“ASU 2016-18”), Restricted Cash. ASU 2016-18 requires an entity to reconcile and explain the period over period change in total cash, cash equivalent and restricted cash within its consolidated statement of cash flows. ASU 2016-18 is effective for annual periods ending after December 15, 2017. We adopted this ASU in 2018. The adoption of this ASU did not have a material impact on our financial statements or disclosures.

During the third quarter of 2017, a 170-bed skilled nursing center in our portfolio (the “Property”), located in Texas, was evacuated due to damages caused by Hurricane Harvey. The Property was under a triple net master lease agreement. We periodically evaluate properties for impairment when events or changes in circumstances indicate that the asset may be impaired or the carrying amount of the asset may not be recoverable through future undiscounted cash flows. Based upon a quarterly assessment of the Property using the recoverability test, we concluded the Property was not impaired.

The provisions of our triple net lease agreements impose certain obligations on our operators including:

● Acquire property insurance, subject to certain criteria;

● Continue paying rent in the event of any property damage or destruction; and

● Return the leased property back to us at the end of the lease term, in the same condition originally received.

During the second quarter of 2018, our operator provided us with insurance proceeds of $2,619,000 for remediation of the Property as noted in the provisions of our master lease agreement. Accordingly, we classified the insurance proceeds as Restricted cash on our consolidated balance sheets at December 31, 2018. During the fourth quarter of 2019, we sold the Property and recognized a loss on sale of $782,000. Therefore, we released our operator from its contractual obligation to return the Property back to its original condition. Additionally, we took possession of the remaining insurance proceeds of $2,111,000 and reclassified this amount to Gain from Property insurance proceeds on the Consolidated Statements of Income and Comprehensive Income at December 31, 2019.

Owned Properties. We make estimates as part of our allocation of the purchase price of acquisitions to the various components of the acquisition based upon the fair value of each component. In determining fair value, we use current appraisals or other third-party opinions of value. The most significant components of our allocations are typically the allocation of fair value to land and buildings and, for certain of our acquisitions, in-place leases and other intangible assets. In the case of the fair value of buildings and the allocation of value to land and other intangibles, the estimates of the values of these components will affect the amount of depreciation and amortization we record over the estimated useful life of the property acquired or the remaining lease term. In the case of the value of in-place leases, we make best estimates based on the evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions and costs to execute similar leases. These assumptions affect the amount of future revenue that we will recognize over the remaining lease term for the acquired in-place leases. We evaluate each purchase transaction to determine whether the acquired assets meet the definition of an asset acquisition or a business combination. Transaction costs related to acquisitions that are not deemed to be businesses are included in the cost basis of the acquired assets, while transaction costs related to acquisitions that are deemed to be businesses are expensed as incurred.

In January 2017, the FASB issued ASU No. 2017-01(“ASU 2017-01”), Business Combinations (Topic 805): Clarifying Definition of a Business. ASU 2017-01 clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. ASU 2017-01 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. We early adopted this standard in 2017. As a result of adopting ASU 2017-01, most of our acquisitions of investment properties will qualify as asset acquisitions.

In February 2017, the FASB issued ASU No. 2017-05 (“ASU 2017-05”), Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets. ASU 2017-05 defines an in-substance nonfinancial asset and clarifies guidance related to partial sales of nonfinancial assets. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. We adopted this standard in 2018. The adoption of this ASU did not have a material impact on the consolidated financial statements and related notes.

We capitalize direct construction and development costs, including predevelopment costs, interest, property taxes, insurance and other costs directly related and essential to the acquisition, development or construction of a real estate asset. We capitalize construction and development costs while substantive activities are ongoing to prepare an asset for its intended use. We consider a construction project as substantially complete and held available for occupancy upon the issuance of the certificate of occupancy. Costs incurred after a project is substantially complete and ready for its intended use, or after development activities have ceased, are expensed as incurred. For redevelopment, renovation and expansion of existing operating properties, we capitalize the cost for the construction and improvement incurred in connection with the redevelopment, renovation and expansion. Costs previously capitalized related to abandoned acquisitions or developments are charged to earnings. Expenditures for repairs and maintenance are expensed as incurred.

Depreciation is computed principally by the straight-line method for financial reporting purposes over the estimated useful lives of the assets, which range from 3 to 5 years for computers, 5 to 15 years for furniture and equipment, 35 to 50 years for buildings, 10 to 20 years for site improvements, 10 to 50 years for building improvements and the respective lease term for acquired lease intangibles.

Consolidation. At inception, and on an ongoing basis, as circumstances indicate the need for reconsideration, we evaluate each legal entity that is not wholly-owned by us for consolidation, first under the variable interest entity

(“VIE”), then under the voting model. Our evaluation considers all of our variable interests, including common or preferred equity ownership, loans, and other participating instruments. The variable interest model applies to entities that meet both of the following criteria:

● A legal structure has been established to conduct business activities and to hold assets.

● LTC has a variable interest in the entity - i.e. it has equity ownership or other financial interests that change with changes in the fair value of the entity's net assets.

If an entity does meet the above criteria and doesn’t qualify for a scope exception from the VIE model, we will determine whether the entity is a VIE.

A legal entity is determined to be a VIE if it has any of the following three characteristics:

1. The entity does not have sufficient equity to finance its activities without additional subordinated financial support;

2. The equity holders, as a group lack the characteristics of a controlling financial interest, as evidenced by all of the following characteristics:

● The power, through voting rights or similar rights, to direct the activities of the entity that most significantly impact the entity's economic performance;

● The obligation to absorb the entity's expected losses;

● The right to receive the entity's expected residual returns; or

3. The entity is established with non-substantive voting rights (i.e. the entity is structured such that majority economic interest holder(s) have disproportionately few voting rights).

If any of the three characteristics of a VIE are met, we conclude that the entity is a VIE and evaluate it for consolidation under the variable interest model.

If an entity is determined to be a VIE, we evaluate whether we are the primary beneficiary. The primary beneficiary analysis is a qualitative analysis based on power and benefits. We consolidate a VIE if we have both power and benefits - that is (i) we have the power to direct the activities of a VIE that most significantly impact the VIE's economic performance (power), and (ii) we have the obligation to absorb losses of the VIE that could potentially be significant to the VIE, or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). If we have a variable interest in a VIE but we are not the primary beneficiary, we account for our investment using the equity method of accounting.

If a legal entity fails to meet any of the three of the characteristics of a VIE, we evaluate such entity under the voting interest model. Under the voting interest model, we consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting shares or if we are the general partner or managing member of the entity and the limited partners or non-managing members do not have substantive participating, liquidation, or kick-out rights that preclude our presumption of control.

Mortgage Loans Receivable, Net of Loan Loss Reserve. Mortgage loans receivable we originate are recorded on an amortized cost basis. Mortgage loans we acquire are recorded at fair value at the time of purchase net of any related premium or discount which is amortized as a yield adjustment to interest income over the life of the loan. Additionally, we record an estimated allowance for doubtful accounts, as described below.

Mezzanine Loans. In 2015 we strategically decided to allocate a portion of our capital deployment toward mezzanine loans to grow relationships with operating companies that have not typically utilized sale leaseback financing

as a component of their capital structure. Mezzanine financing sits between senior debt and common equity in the capital structure, and typically is used to finance development projects or value-add opportunities on existing operational properties. We seek market-based, risk-adjusted rates of return typically between 12-14% with the loan term typically between four to five years. Security for mezzanine loans can include all or a portion of the following credit enhancements; secured second mortgage, pledge of equity interests and personal/corporate guarantees. Mezzanine loans are recorded for GAAP purposes as either a loan, under notes receivable, or joint venture, under investment in unconsolidated JVs, depending upon specifics of the loan terms and related credit enhancements.

Investment in unconsolidated joint ventures. From time to time, we provide funding to third-party operators for the acquisition, development and construction (“ADC”) of a property. Under an ADC arrangement, we may participate in the residual profits of the project through the sale or refinancing of the property. These ADC arrangements can have characteristics similar to a loan or similar to a joint venture (“JV”) or partnership such as participating in the risks and rewards of the project as an owner or an investment partner. If the ADC arrangement characteristics are more similar to a jointly-owned investment or partnership, we account for the ADC arrangement as an investment in an unconsolidated JV under the equity method of accounting or a direct investment (consolidated basis of accounting) instead of applying loan accounting.

We evaluate our ADC arrangements first pursuant to ASC 805, Consolidation, to determine whether the ADC arrangement meets the definition of a VIE, as explained above, and whether we are the primary beneficiary. If the ADC arrangement is deemed to be a VIE but we are not the primary beneficiary, or if it is deemed to be a voting interest entity but we do not have a controlling financial interest, we account for our investment in the ADC arrangement using the equity method. Under the equity method, we initially record our investment at cost and subsequently recognize our share of net earnings or losses and other comprehensive income or loss, cash contributions made and distributions received, and other adjustments, as appropriate. Allocations of net income or loss may be subject to preferred returns or allocation formulas defined in operating agreements and may not be according to percentage ownership interests. In certain circumstances where we have a substantive profit-sharing arrangement which provides a priority return on our investment, a portion of our equity in earnings may consist of a change in our claim on the net assets of the underlying JV. Distributions of operating profit from the JVs are reported as part of operating cash flows, while distributions related to a capital transaction, such as a refinancing transaction or sale, are reported as investing activities.

We periodically perform evaluation of our investment in unconsolidated JVs to determine whether the fair value of each investment is less than the carrying value, and, if such decrease in value is deemed to be other-than-temporary, we write the investment down to its estimated fair value as of the measurement date.

We have a preferred equity investment in a JV that own four properties in Arizona. Based on the information available to us regarding alternatives and courses of action as of December 31, 2019, we performed a recoverability test on the carrying amount of our preferred equity investment and determined that a portion of our preferred equity investment is not recoverable. Therefore, we recorded an impairment loss from investment in unconsolidated joint ventures of $5,500,000 and wrote our preferred equity investment down to its estimated fair value. See Note 6. Investment in Unconsolidated Joint Ventures for further information.

In March 2016, FASB issued ASU No. 2016-07 (“ASU 2016-07”), Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. ASU 2016-07 eliminates retroactive adjustment of an investment upon an investment qualifying for the equity method of accounting and requires the equity method investor to adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting.

Allowance for Doubtful Accounts. We maintain an allowance for doubtful accounts. The allowance for doubtful accounts depends on the expected collectibility of our receivables which is based on considerations including the

certainty of payment, payment history and other relevant factors. The allowance for doubtful accounts is maintained at a level believed adequate to absorb potential losses in our receivables. In 2016, the FASB issued ASU No. 2016-13 (“ASU 2016-13”), Measurement of Credit Losses on Financial Instruments (Topic 326). This standard requires a new forward looking “expected loss” model to be used for receivables, held-to-maturity debt, loans, and other instruments. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early adoption is permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact that the standard will have on our consolidated financial statements.

Accrued incentives and earn-outs. As part of our acquisitions and/or amendments, we may commit to provide contingent payments to our sellers or lessees, upon the properties achieving certain rent coverage ratios. Typically, when the contingent payments are funded, cash rent will increase by the amount funded multiplied by a rate stipulated in the agreement. If it is deemed probable, the contingent payment is recorded as a liability at the estimate fair value calculated using a discounted cash flow analysis and accreted to the settlement amount of the estimated payment date. If the contingent payment is an earn-out provided to the seller, the estimated fair value is capitalized to the property’s basis. If the contingent payment is provided to the lessee, the estimated fair value is recorded as a lease incentive included in the prepaid and other assets line item in our consolidated balance sheet and is amortized as a yield adjustment over the life of the lease. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. The fair value of these contingent liabilities are evaluated on a quarterly basis based on changes in estimates of future operating results and changes in market discount rates.

Impairments. Assets that are classified as held-for-use and mortgage loans are periodically evaluated for impairment when events or changes in circumstances indicate that the asset may be impaired or the carrying amount of the asset may not be recoverable through future undiscounted cash flows. Where indicators of impairment exist, the estimation required in the undiscounted future cash flow assumption includes management’s probability-weighting of various scenarios including whether the management modifies the lease with the existing operator versus identifying a replacement operator and the assumed market lease rate underlying projected future rental cash flows. When indicators are identified for mortgage loans, management calculates an impairment charge as the difference between the carrying amount of the mortgage loan receivable and the discounted cash flows expected to be received, or if foreclosure is probable, the fair value of the collateral securing the mortgage. In determining fair value, we use current appraisals or other third-party opinions of value and other estimates of fair value such as estimated discounted future cash flows. Based on our assessment, during the years ended December 31, 2019, 2018 and 2017, we recognized impairment charges of $0, $0 and $1,880,000 respectively, related to our real property investments.

Also, we evaluate the carrying values of mortgage loans receivable on an individual basis. Management periodically evaluates the realizability of future cash flows from the mortgage loan receivable when events or circumstances, such as the non-receipt of principal and interest payments and/or significant deterioration of the financial condition of the borrower, indicate that the carrying amount of the mortgage loan receivable may not be recoverable. An impairment charge is recognized in current period earnings and is calculated as the difference between the carrying amount of the mortgage loan receivable and the discounted cash flows expected to be received, or if foreclosure is probable, the fair value of the collateral securing the mortgage.

Fair Value of Financial Instruments. The FASB requires the disclosure of fair value information about financial instruments for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. Accordingly, the aggregate fair market value amounts presented in the notes to these consolidated financial statements do not represent our underlying carrying value in financial instruments.

The FASB provides guidance for using fair value to measure assets and liabilities, the information used to measure fair value, and the effect of fair value measurements on earnings. The FASB emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the FASB establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices).

The fair value guidance issued by the FASB excludes accounting pronouncements that address fair value measurements for purposes of lease classification or measurement. However, this scope exception does not apply to assets acquired and liabilities assumed in a business combination that are required to be measured at fair value, regardless of whether those assets and liabilities are related to leases.

In accordance with the accounting guidance regarding the fair value option for financial assets and financial liabilities, entities are permitted to choose to measure certain financial assets and liabilities at fair value, with the change in unrealized gains and losses on items for which the fair value option has been elected reported in earnings. We have not elected the fair value option for any of our financial assets or liabilities.

The FASB requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. See Note 15. Fair Value Measurements for the disclosure about fair value of our financial instruments.

Revenue Recognition. Rental income from operating leases is generally recognized on a straight-line basis over the terms of the leases. Substantially all of our leases contain provisions for specified annual increases over the rents of the prior year and are generally computed in one of four methods depending on specific provisions of each lease as follows:

(i) a specified annual increase over the prior year’s rent, generally between 2.0% and 3.0%;

(ii) a calculation based on the Consumer Price Index;

(iii) as a percentage of facility revenues in excess of base amounts or

(iv) specific dollar increases.

The FASB does not permit recognition of contingent revenue until all possible contingencies have been resolved. Historically, we have not included contingent rents as income until received and will we continue our historical policy. During the years ended December 31, 2019, 2018 and 2017, we received $464,000, $470,000 and $457,000, respectively, of contingent rental income. We follow a policy related to rental income whereby we consider a lease to be non-performing after 60 days of non-payment of past due amounts and do not recognize unpaid rental income from that lease until the amounts have been received.

Interest income on mortgage loans is recognized using the effective interest method. We follow a policy related to mortgage interest whereby we consider a loan to be non-performing after 60 days of non-payment of amounts due and do not recognize unpaid interest income from that loan until the past due amounts have been received. Effective interest method, as required by GAAP, is a technique for calculating the actual interest rate for the term of a mortgage loan based on the initial origination value. Similar to the accounting methodology of straight-line rent, the actual interest rate is higher than the stated interest rate in the early years of the mortgage loan thus creating an effective interest receivable

asset included in the interest receivable line item in our consolidated balance sheet and reduces down to zero when, at some point during the mortgage loan, the stated interest rate is higher than the actual interest rate.

Payments made to or on behalf of our lessees represent incentives that are deferred and amortized as a yield adjustment over the term of the lease on a straight-line basis. Net loan fee income and commitment fee income are amortized over the life of the related loan.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers: Topic 606. ASU 2014-09 provides for a single comprehensive principles based standard for the recognition of revenue across all industries through the application of the following five-step process:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” In doing so, companies may need to use more judgment and make more estimates. While this ASU specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate. Additionally, the FASB has issued targeted updates to clarify specific implementation issues of ASU 2014-09. These updates include ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Identifying Performance Obligations and Licensing, and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients. ASU 2014-09 and its amendments have now formally entered into the FASB codification as Accounting Standard Codification (“ASC”) Topic 606, Contracts with Customers (“ASC 606”). The new standard and its amendments are effective on January 1, 2018, and permit reporting entities to apply the standard using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or full retrospective approach. We have adopted this standard using the modified retrospective adoption method on January 1, 2018. We concluded that this standard did not have a material impact on our results of operations or financial condition, as a substantial portion of our revenues consists of rental income from leasing arrangements and interest income from loan arrangements, both of which are specifically excluded from ASU 2014-09.

Leases: In February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases. ASU 2016-02 and its amendments have now formally entered into the FASB codification as ASC Topic 842, Leases (“ASC 842”). The objective of ASC 842 is to establish the principles for lessees and lessors to apply for reporting useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease.

ASC 842 requires lessees to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance of operating leases.

ASC 842 requires the lessors to identify lease and non-lease components of a lease agreement. Revenue related to non-lease components under lease agreements are subject to the revenue recognition standard, upon adoption of this standard. Also, the new standard narrows definition of initial direct costs. Accordingly, upon adoption of the new standard, certain costs (primarily legal costs related to lease negotiations) are expensed rather than capitalized.

Further, per ASC 842, lessors are required to assess the probability of collecting substantially all of the lease payments. The standard defines collectibility as lessee’s ability and intent to pay. If collectibility of substantially all of

the lease payments through maturity is not probable, the lease income recorded during the period would be limited to lesser of the income that would have been recognized if collection were probable, and the lease payments received. If the assessment of collectibility changes, any difference between the lease income that would have been recognized and the lease payments should be recognized as an adjustment to lease income. At adoption, lessors are required to perform a lease-by-lease analysis for collectibility of all lease payments through maturity. If at adoption, it is not probable that substantially all of the lease obligations through maturity will be collected, a cumulative adjustment to equity should be made to reflect all of the lease obligations which are not probable to be collected.

Additionally, ASC 842 provides lessors with the option to elect a practical expedient allowing them to not separate lease and non-lease components and instead, to account for those components as a single lease component. This practical expedient is limited to circumstances in which: (i) the timing and pattern of transfer are the same for the non-lease component and the related lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. This practical expedient causes an entity to assess whether a contract is predominantly lease-based or service-based and recognize the entire contract under the relevant accounting guidance (i.e., predominantly lease-based would be accounted for under ASC 842 and predominantly service-based would be accounted for under the ASC 606). This practical expedient option is available as a single election that must be consistently applied to all existing leases at the date of adoption. Also, ASC 842 provides a practical expedient that allows companies to use an optional transition method. Under the optional transition method, a cumulative adjustment to equity during the period of adoption is recorded and prior periods would not require restatement. Consequently, entities that elect both the practical expedient and the optional transitional method will apply the new lease ASC prospectively to leases commencing or modified after January 1, 2019 and will not be required to apply the disclosures under the new lease standard to comparative periods.

ASC 842 has subsequently been amended by other ASUs to clarify and improve the standard as well as to provide certain practical expedients. In December 2018, the FASB issued ASU 2018-20 (“ASU 2018-20”), Narrow-Scope Improvements for Lessors, which amends ASC 842 to require the lessors to exclude the lessor costs that are directly paid by the lessee to third parties on lessor’s behalf from variable payments. However, the lessor costs that are paid by the lessor and reimbursed by the lessee are required to be included in variable payments. Furthermore, ASC 842 allows for several practical expedients which permit the following: no reassessment of lease classification or initial direct costs and use of the standard’s effective date as the date of initial application. In March 2019, the FASB issued ASU 2019-01 (“ASU 2019-01”), Leases (Topic 842), Codification Improvements which provides clarification regarding presentation and disclosures. ASC 842 and its amendments are effective January 1, 2019.

On January 1, 2019, we adopted ASC 842 using the modified retrospective approach as of the adoption date, whereby the cumulative effect of adoption was recognized on the adoption date and prior periods were not restated.

Upon adoption of the standard, we elected the practical expedients provided for in ASC 842, including:

● No reassessment of whether any expired or existing contracts were or contained leases;

● No reassessment of the lease classification for any expired or existing leases;

● No reassessment of initial direct costs for any existing leases; and

● No separation of lease and non-lease components.

As a lessee, we have an office lease agreement with a 5-year remaining term which was classified as an operating lease under ASC 840. Due to election of the package of practical expedients, upon adoption of ASC 842 this lease agreement will continue to be classified as operating lease. For the year ended December 31, 2019, we recorded $299,000 of rent expense related to this lease agreement. Adoption of ASC 842 resulted in recording a right-of use asset and a lease liability which represents the present value of the remaining minimum lease payments using our incremental borrowing rate. At December 31, 2019, the balance of the right-of use asset and the lease liability related to our office

lease agreement were $1,287,000.

As a lessor, our properties are leased subject to non-cancelable operating leases. Each lease is a triple net lease which requires the lessee to pay all taxes, insurance, maintenance and repairs, capital and non-capital expenditures and other costs necessary in the operations of the facilities. Upon adoption of ASC 842, we recorded real estate taxes that are reimbursed by our operators as Rental Income with a corresponding Property tax expense in the Consolidated Statements of Income and Comprehensive Income. For the year ended December 31, 2019, we have recognized $15,998,000 in Rental Income related to reimbursement of real estate taxes from our operators.

Furthermore, upon adoption of ASC 842, we assessed the probability of collecting substantially all of our lease payments through maturity. As previously reported, we have been monitoring Anthem Memory Care (“Anthem”), Thrive Senior Living, LLC (“Thrive”), Preferred Care, Inc. (“Preferred Care”) and Senior Care Centers, LLC (“Senior Care”) due to cash flow concerns, performance concerns and/or bankruptcy filing. In conjunction with adoption of ASC 842, we evaluated our straight-line rent receivable and lease incentive balances related to the noted operators and determined that we do not have the level of collectibility certainty required by the standard to record the straight-line rent receivable. Accordingly, we wrote-off the straight-line rent receivable and lease incentive balances associated with these leases. Also, we wrote-off our 1% general straight-line rent receivable reserve. These balances totaled $42,808,000 and were written-off to equity effective January 1, 2019 as required by ASC 842. Subsequently, if collectibility of substantially all of the lease payments through maturity is not probable, all or a portion of the straight-line rent receivable and other lease receivables may be written off, and the rental income recorded during the period would be limited to lesser of the income that would have been recognized if collection were probable, and the lease payments received. Our assessment of collectibility of leases includes evaluating the data and assumptions used in determining whether substantially all of the future lease payments were probable based on the lessee’s payment history, the financial strength of the lessees, future contractual rents, and the timing of expected payments.

During the year ended December 31, 2019, we received cash rent from Anthem, Thrive, Preferred Care and Senior Care. The total amount of rental income received from these operators was $33,238,000 and is included in Rental Income on the Consolidated Statements of Income and Comprehensive Income. Of the $33,238,000 received, $27,225,000 of the cash payments received relate to amounts previously written-off in transition to ASC 842 (“Recoveries”) during the twelve months ended December 31, 2019.

Federal Income Taxes. LTC qualifies as a REIT under the Internal Revenue Code of 1986, as amended, and as such, no provision for Federal income taxes has been made. A REIT is required to distribute at least 90% of its taxable income to its stockholders and a REIT may deduct dividends in computing taxable income. If a REIT distributes 100% of its taxable income and complies with other Internal Revenue Code requirements, it will generally not be subject to Federal income taxation.

For Federal tax purposes, depreciation is generally calculated using the straight-line method over a period of 27.5 years. Earnings and profits, which determine the taxability of distributions to stockholders, use the straight-line method over 40 years. Both Federal taxable income and earnings and profits differ from net income for financial statement purposes principally due to the treatment of certain interest income, rental income, other expense items, impairment charges and the depreciable lives and basis of assets. At December 31, 2019, the tax basis of our net depreciable assets exceeds our book basis by approximately $25,436,000 (unaudited), primarily due to an investment recorded as an acquisition for tax and a mortgage loan for GAAP, and to differences previously mentioned above.

The FASB clarified the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. The guidance utilizes a two-step approach for evaluating tax positions. Recognition (step one) occurs when a company concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Measurement (step two) is

only addressed if step one has been satisfied (i.e., the position is more likely than not to be sustained). Under step two, the tax benefit is measured as the largest amount of benefit (determined on a cumulative probability basis) that is more likely than not to be realized upon ultimate settlement. We currently do not have any uncertain tax positions that would not be sustained on its technical merits on a more-likely than not basis.

We may from time to time be assessed interest or penalties by certain tax jurisdictions. In the event we have received an assessment for interest and/or penalties, it has been classified in our consolidated financial statements as general and administrative expenses.

Financial instruments which potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, mortgage loans receivable, marketable debt securities and operating leases on owned properties. Our financial instruments, mortgage loans receivable and operating leases, are subject to the possibility of loss of carrying value as a result of the failure of other parties to perform according to their contractual obligations or changes in market prices which may make the instrument less valuable. We obtain various collateral and other protective rights, and continually monitor these rights, in order to reduce such possibilities of loss. In addition, we provide reserves for potential losses based upon management’s periodic review of our portfolio. See Note 3. Major Operators for further discussion of concentrations of credit risk from our tenants.

Properties held-for-sale. Properties classified as held-for-sale on the consolidated balance sheet include only those properties available for immediate sale in their present condition and for which management believes that it is probable that a sale of the property will be completed within one year. Properties held-for-sale are carried at the lower of cost or fair value less estimated selling costs. No depreciation expense is recognized on properties held-for-sale once they have been classified as such. Under ASU No. 2014-08 (“ASU 2014-08”), Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. We have not reclassified results of operations for properties disposed as discontinued operations as these disposals do not represent strategic shifts in our operations.

Net Income Per Share. Basic earnings per share is calculated using the weighted-average shares of common stock outstanding during the period excluding common stock equivalents. Diluted earnings per share includes the effect of all dilutive common stock equivalents.

In accordance with the accounting guidance regarding the determination of whether instruments granted in share-based payments transactions are participating securities, we have applied the two-class method of computing basic earnings per share. This guidance clarifies that outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends participate in undistributed earnings with common stockholders and are considered participating securities.

Stock-Based Compensation. The FASB requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. We use the Black-Scholes-Merton formula to estimate the value of stock options granted to employees. Also, we use the Monte Carlo model to estimate the value of performance-based stock units granted to employees. These models require management to make certain estimates including stock volatility, expected dividend yield and the expected term. If management incorrectly estimates these variables, the results of operations could be affected. The FASB also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow. Because we qualify as a REIT under the Internal Revenue Code of 1986, as amended, we are generally not subject to

Federal income taxation. Therefore, this reporting requirement does not have an impact on the Consolidated Statements of Cash Flows.

Segment Disclosures. The FASB accounting guidance regarding disclosures about segments of an enterprise and related information establishes standards for the manner in which public business enterprises report information about operating segments. Our investment decisions in seniors housing and health care properties, including mortgage loans, property lease transactions and other investments, are made and resulting investments are managed as a single operating segment for internal reporting and for internal decision-making purposes. Therefore, we have concluded that we operate as a single segment.

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Debt Obligations - Bank Borrowings Terms (Details)	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Debt Obligations
Maximum available under facility	$ 1,000,000,000	$ 600,000,000
Additional extension period option	1 year
Unused commitment fee (as a percent)	20.00%
LIBOR
Debt Obligations
Basis spread over base rate (as a percent)	115.00%
Bank Borrowings
Financial covenants
Maximum ratio of total indebtedness to total asset value	0.5
Maximum ratio of secured debt to total asset value	0.35
Maximum ratio of unsecured debt to the value of the unencumbered asset pool	0.6
Minimum ratio of EBITDA to fixed charges	1.50
Private Shelf Agreement Prudential | Senior Unsecured Notes
Debt Obligations
Maximum available under facility	$ 337,500,000
Availability	$ 21,500,000

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Major Operators (Details)	12 Months Ended
	Dec. 31, 2019 property item
Major Operators
Number of major operators	2
Prestige Healthcare | SNF
Major Operators
Number of beds | property	24
Number of beds/units	3,010
Prestige Healthcare | ALF
Major Operators
Number of beds/units	93
Senior Lifestyle Corporation | ALF
Major Operators
Number of beds | property	23
Number of beds/units	1,457
Operator Concentration Risk | SNF
Major Operators
Number of beds | property	24
Number of beds/units	3,010
Operator Concentration Risk | ALF
Major Operators
Number of beds | property	23
Number of beds/units	1,550
Total Revenue | Operator Concentration Risk
Major Operators
Concentration risk (as a percent)	27.90%
Total Revenue | Operator Concentration Risk | Prestige Healthcare
Major Operators
Concentration risk (as a percent)	17.10%
Total Revenue | Operator Concentration Risk | Senior Lifestyle Corporation
Major Operators
Concentration risk (as a percent)	10.80%
Total Assets | Operator Concentration Risk
Major Operators
Concentration risk (as a percent)	27.60%
Total Assets | Credit Concentration Risk | Prestige Healthcare
Major Operators
Concentration risk (as a percent)	17.40%
Total Assets | Credit Concentration Risk | Senior Lifestyle Corporation
Major Operators
Concentration risk (as a percent)	10.20%

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Summary of Significant Accounting Policies - Mezzanine Loans and Impairments (Details)	3 Months Ended	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2019 USD ($) property	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Mortgage loans on real estate
Number of properties in a JV in which we hold a preferred equity interest | property		4
Impairment loss from investments in unconsolidated joint ventures	$ 5,500,000	$ 5,500,000
Impairments
Impairment of Real Estate		$ 0	$ 0	$ 1,880,000
Minimum | Mezzanine Loans
Mortgage loans on real estate
Interest rate (as a percent)		12.00%
Loan Term		4 years
Maximum | Mezzanine Loans
Mortgage loans on real estate
Interest rate (as a percent)		14.00%
Loan Term		5 years

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Measurements

Schedule of carrying value and fair value of the entity's financial instruments

	At December 31, 2019					At December 31, 2018
	Carrying		Fair			Carrying		Fair
	Value		Value			Value		Value
Mortgage loans receivable	$	254,099	$	312,824	(1)	$	242,939	$	295,492	(1)
Bank borrowings		93,900		93,900	(2)		112,000		112,000	(2)
Senior unsecured notes, net of debt issue costs		599,488		612,375	(3)		533,029		508,613	(3)

(1) Our investment in mortgage loans receivable is classified as Level 3. The fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is determined using our assumption on market conditions adjusted for market and credit risk and current returns on our investments. The discount rate used to value our future cash inflows of the mortgage loans receivable at December 31, 2019 and 2018 was 9.0%.

(2) Our bank borrowings bear interest at a variable interest rate. The estimated fair value of our bank borrowings approximated their carrying values at December 31, 2019 and 2018 based upon prevailing market interest rates for similar debt arrangements.

(3) Our obligation under our senior unsecured notes is classified as Level 3 and thus the fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is measured based upon management’s estimates of rates currently prevailing for comparable loans available to us, and instruments of comparable maturities. At December 31, 2019, the discount rate used to value our future cash outflow of our senior unsecured notes was 3.70% for those maturing before year 2026 and 3.90% for those maturing at or beyond year 2026. At December 31, 2018, the discount rate used to value our future cash outflow of our senior unsecured notes was 5.15% for those maturing before year 2026 and 5.40% for those maturing beyond year 2026.

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Real Estate Investments - Lease (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2019 USD ($) item	Dec. 31, 2019 USD ($) property	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Real estate investments
Carrying value		$ 1,136,816,000	$ 1,106,581,000
Income and Expenses, Lessor [Abstract]
Base cash rental income		134,117,000
Base cash rental income previous			127,477,000	$ 128,715,000
Variable cash rental income		16,462,000
Variable cash rental income previous		464,000	470,000	457,000
Straight-Line Rent		4,487,000	9,550,000	10,694,000
Adjustment for collectability		(1,926,000)
Amortization of Lease Incentives		(385,000)	(2,092,000)	(2,209,000)
Total Rental Income		152,755,000
Total Rental Income previous			$ 135,405,000	$ 137,657,000
Reimbursement Of Real Estate Tax Expense		15,998,000
Contingent rental income		464,000
Number of operating seniors | item	2
Rent receivable written off	$ 1,926,000
Purchase Option in Lease Arrangements
Real estate investments
Gross Investment		149,093,000
Carrying value		$ 128,343,000
ALF | Purchase Option in Lease Arrangements | California
Real estate investments
Number of properties | property		2
Gross Investment		$ 28,926,000
Carrying value		$ 16,056,000
ALF | Purchase Option in Lease Arrangements | California | Minimum
Real estate investments
Purchase option ending period		24 months
ALF | Purchase Option in Lease Arrangements | California | Maximum
Real estate investments
Purchase option ending period		48 months
MC | Purchase Option in Lease Arrangements | Florida
Real estate investments
Number of properties | property		1
Gross Investment		$ 14,201,000
Carrying value		$ 12,757,000
MC | Purchase Option in Lease Arrangements | Ohio and Kentucky
Real estate investments
Number of properties | property		2
Gross Investment		$ 30,126,000
Carrying value		$ 27,859,000
MC | Purchase Option in Lease Arrangements | Texas
Real estate investments
Number of properties | property		2
Gross Investment		$ 25,265,000
Carrying value		$ 24,335,000
ALF and MC | Purchase Option in Lease Arrangements | California
Real estate investments
Number of properties | property		2
Gross Investment		$ 38,895,000
Carrying value		$ 36,542,000
ALF and MC | Purchase Option in Lease Arrangements | South Carolina
Real estate investments
Number of properties | property		1
Gross Investment		$ 11,680,000
Carrying value		$ 10,794,000

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Real Estate Investments - Properties held-for-sale (Details) $ in Thousands	Dec. 31, 2019 USD ($) item property	Dec. 31, 2018 USD ($) item property
Real estate investments
Accumulated depreciation	$ 312,642	$ 312,959
Properties held-for-sale
Real estate investments
Number of properties | property	20	1
Gross Investment	$ 61,969	$ 5,746
Accumulated depreciation	$ 35,113	$ 1,916
Number of beds/units | item	2,217	140
ILF | Properties held-for-sale | Texas
Real estate investments
Number of properties | property		1
Gross Investment		$ 5,746
Accumulated depreciation		$ 1,916
Number of beds/units | item		140
SNF | Properties held-for-sale | Colorado
Real estate investments
Number of properties | property	3
Gross Investment	$ 8,045
Accumulated depreciation	$ 3,774
Number of beds/units | item	275
SNF | Properties held-for-sale | IOWA
Real estate investments
Number of properties | property	7
Gross Investment	$ 14,610
Accumulated depreciation	$ 9,723
Number of beds/units | item	544
SNF | Properties held-for-sale | Kansas
Real estate investments
Number of properties | property	3
Gross Investment	$ 14,111
Accumulated depreciation	$ 6,674
Number of beds/units | item	250
SNF | Properties held-for-sale | Texas
Real estate investments
Number of properties | property	7
Gross Investment	$ 25,203
Accumulated depreciation	$ 14,942
Number of beds/units | item	1,148

XML

Equity - Restricted Stock and performance-based stock units (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2015
2015 Plan
Stock Based Compensation Plans
Total shares reserved for issuance		617,013			1,400,000
Restricted stock and performance-based stock units
Restricted stock and performance based stock units activity
Outstanding at the beginning of the year (in shares)	345,633	325,750	244,181	210,573
Granted (in shares)		147,608	156,718	143,057
Vested (in shares)		(127,725)	(75,149)	(85,343)
Canceled (in shares)				(24,106)
Outstanding at the end of the year (in shares)		345,633	325,750	244,181
Compensation expense
Compensation expense related to share-based award		$ 6,566	$ 5,870	$ 5,247
Remaining compensation expense		$ 7,311
Restricted stock and performance-based stock units | 2020
Restricted stock and performance based stock units activity
Outstanding at the beginning of the year (in shares)	139,534
Outstanding at the end of the year (in shares)		139,534
Compensation expense
Remaining compensation expense		$ 4,619
Restricted stock and performance-based stock units | 2021
Restricted stock and performance based stock units activity
Outstanding at the beginning of the year (in shares)	119,168
Outstanding at the end of the year (in shares)		119,168
Compensation expense
Remaining compensation expense		$ 2,503
Restricted stock and performance-based stock units | 2022
Restricted stock and performance based stock units activity
Outstanding at the beginning of the year (in shares)	86,931
Outstanding at the end of the year (in shares)		86,931
Compensation expense
Remaining compensation expense		$ 189
Restricted stock and performance-based stock units | Grant Date Price $38.18 | Three year vesting
Restricted stock and performance based stock units activity
Granted (in shares)			81,819
Price per share			$ 38.18
Restricted stock and performance-based stock units | Grant Date Price $38.18 | TSR Targets
Restricted stock and performance based stock units activity
Granted (in shares)			66,171
Price per share			$ 38.18
Restricted stock and performance-based stock units | Grant Date Price $41.25 | Vesting Date, May 30, 2019
Restricted stock and performance based stock units activity
Granted (in shares)			8,728
Price per share			$ 41.25
Restricted stock and performance-based stock units | Grant Date Price $45.76 | Three year vesting
Restricted stock and performance based stock units activity
Granted (in shares)				74,760
Price per share				$ 45.76
Vesting period		3 years
Restricted stock and performance-based stock units | Grant Date Price $45.76 | TSR Targets
Restricted stock and performance based stock units activity
Granted (in shares)				57,881
Price per share				$ 45.76
Vesting period		4 years
Restricted stock and performance-based stock units | Grant Date Price $45.76 | Accelerated TSR Targets
Restricted stock and performance based stock units activity
Vesting period		3 years
Restricted stock and performance-based stock units | Grant Date Price $48.55 | Vesting Date, June 1, 2018
Restricted stock and performance based stock units activity
Granted (in shares)				7,416
Price per share				$ 48.55
Restricted stock and performance-based stock units | Grant Date Price $50.50 | Three year vesting
Restricted stock and performance based stock units activity
Granted (in shares)				3,000
Price per share				$ 50.50
Vesting period				3 years
Restricted stock and performance-based stock units | Grant Date Price $43.24 | Three year vesting
Restricted stock and performance based stock units activity
Vesting period			3 years	3 years
Restricted stock and performance-based stock units | Grant Date Price $46.54 | Three year vesting
Restricted stock and performance based stock units activity
Granted (in shares)		78,276
Price per share		$ 46.54
Restricted stock and performance-based stock units | Grant Date Price $46.54 | TSR Targets
Restricted stock and performance based stock units activity
Granted (in shares)		60,836
Price per share		$ 46.54
Restricted stock and performance-based stock units | Grant Date Price $44.73 | Vesting Date, May 29, 2020
Restricted stock and performance based stock units activity
Granted (in shares)		8,496
Price per share		$ 44.73
Performance-based stock units
Restricted stock and performance based stock units activity
Vested (in shares)		(48,225)
Performance-based stock units | 2020
Restricted stock and performance based stock units activity
Outstanding at the beginning of the year (in shares)	55,057
Outstanding at the end of the year (in shares)		55,057
Performance-based stock units | 2021
Restricted stock and performance based stock units activity
Outstanding at the beginning of the year (in shares)	66,171
Outstanding at the end of the year (in shares)		66,171
Performance-based stock units | 2022
Restricted stock and performance based stock units activity
Outstanding at the beginning of the year (in shares)	60,836
Outstanding at the end of the year (in shares)		60,836
Subsequent Event | Restricted stock and performance-based stock units | 2015 Plan | Grant Date Price $38.18
Stock Based Compensation Plans
Stock options granted (in shares)	76,464
Restricted stock and performance based stock units activity
Granted (in shares)	76,464
Price per share	$ 48.95
Subsequent Event | Restricted stock and performance-based stock units | 2015 Plan | Grant Date Price $38.18 | Three year vesting
Restricted stock and performance based stock units activity
Vesting period	3 years

XML

SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION - By Property (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Initial Cost to Company
Land	$ 131,252
Buildings and Improvements	1,266,559
Costs Capitalized Subsequent to acquisition	86,760
Gross Amount at Which Carried As of Year End
Land	131,252
Buildings and Improvements	1,353,319
Total	1,484,571	$ 1,421,456	$ 1,392,122	$ 1,301,563
Accum Deprec	347,755	$ 314,875	$ 306,033	$ 275,861
SNF
Initial Cost to Company
Land	50,063
Buildings and Improvements	499,692
Costs Capitalized Subsequent to acquisition	46,615
Gross Amount at Which Carried As of Year End
Land	50,063
Buildings and Improvements	546,307
Total	596,370
Accum Deprec	183,391
ALF
Initial Cost to Company
Land	75,001
Buildings and Improvements	744,850
Costs Capitalized Subsequent to acquisition	39,001
Gross Amount at Which Carried As of Year End
Land	75,001
Buildings and Improvements	783,851
Total	858,852
Accum Deprec	163,473
Other School and Land
Initial Cost to Company
Land	2,908
Buildings and Improvements	7,308
Costs Capitalized Subsequent to acquisition	1,144
Gross Amount at Which Carried As of Year End
Land	2,908
Buildings and Improvements	8,452
Total	11,360
Accum Deprec	891
School
Initial Cost to Company
Land	1,965
Buildings and Improvements	7,308
Costs Capitalized Subsequent to acquisition	1,144
Gross Amount at Which Carried As of Year End
Land	1,965
Buildings and Improvements	8,452
Total	10,417
Accum Deprec	891
Land
Initial Cost to Company
Land	943
Gross Amount at Which Carried As of Year End
Land	943
Total	943
Properties under Development
Initial Cost to Company
Land	3,280
Buildings and Improvements	14,709
Gross Amount at Which Carried As of Year End
Land	3,280
Buildings and Improvements	14,709
Total	17,989
134 Alamogordo, NM | SNF
Initial Cost to Company
Land	210
Buildings and Improvements	2,593
Costs Capitalized Subsequent to acquisition	641
Gross Amount at Which Carried As of Year End
Land	210
Buildings and Improvements	3,234
Total	3,444
Accum Deprec	1,504
218 Albuquerque, NM | SNF
Initial Cost to Company
Land	1,696
Buildings and Improvements	3,891
Costs Capitalized Subsequent to acquisition	530
Gross Amount at Which Carried As of Year End
Land	1,696
Buildings and Improvements	4,421
Total	6,117
Accum Deprec	1,954
219 Albuquerque, NM | SNF
Initial Cost to Company
Land	1,950
Buildings and Improvements	8,910
Costs Capitalized Subsequent to acquisition	207
Gross Amount at Which Carried As of Year End
Land	1,950
Buildings and Improvements	9,117
Total	11,067
Accum Deprec	3,881
220 Albuquerque, NM | SNF
Initial Cost to Company
Land	2,463
Buildings and Improvements	7,647
Costs Capitalized Subsequent to acquisition	9
Gross Amount at Which Carried As of Year End
Land	2,463
Buildings and Improvements	7,656
Total	10,119
Accum Deprec	3,234
042 Altoona, IA | SNF
Initial Cost to Company
Land	105
Buildings and Improvements	2,309
Costs Capitalized Subsequent to acquisition	444
Gross Amount at Which Carried As of Year End
Land	105
Buildings and Improvements	2,753
Total	2,858
Accum Deprec	1,987
252 Amarillo, TX | SNF
Initial Cost to Company
Land	844
Costs Capitalized Subsequent to acquisition	7,925
Gross Amount at Which Carried As of Year End
Land	844
Buildings and Improvements	7,925
Total	8,769
Accum Deprec	2,025
247 Arlington, TX | SNF
Initial Cost to Company
Land	1,016
Buildings and Improvements	13,649
Gross Amount at Which Carried As of Year End
Land	1,016
Buildings and Improvements	13,649
Total	14,665
Accum Deprec	4,097
221 Beaumont, TX | SNF
Initial Cost to Company
Land	370
Buildings and Improvements	1,141
Costs Capitalized Subsequent to acquisition	106
Gross Amount at Which Carried As of Year End
Land	370
Buildings and Improvements	1,247
Total	1,617
Accum Deprec	563
213 Beeville, TX | SNF
Initial Cost to Company
Land	186
Buildings and Improvements	1,197
Costs Capitalized Subsequent to acquisition	70
Gross Amount at Which Carried As of Year End
Land	186
Buildings and Improvements	1,267
Total	1,453
Accum Deprec	518
007 Bradenton, FL | SNF
Initial Cost to Company
Land	330
Buildings and Improvements	2,720
Costs Capitalized Subsequent to acquisition	160
Gross Amount at Which Carried As of Year End
Land	330
Buildings and Improvements	2,880
Total	3,210
Accum Deprec	2,189
256 Brownwood, TX | SNF
Initial Cost to Company
Land	164
Buildings and Improvements	6,336
Gross Amount at Which Carried As of Year End
Land	164
Buildings and Improvements	6,336
Total	6,500
Accum Deprec	1,562
043 Carroll, IA | SNF
Initial Cost to Company
Land	47
Buildings and Improvements	1,033
Costs Capitalized Subsequent to acquisition	213
Gross Amount at Which Carried As of Year End
Land	47
Buildings and Improvements	1,246
Total	1,293
Accum Deprec	898
177 Chesapeake, VA | SNF
Initial Cost to Company
Land	388
Buildings and Improvements	3,469
Costs Capitalized Subsequent to acquisition	2,777
Gross Amount at Which Carried As of Year End
Land	388
Buildings and Improvements	6,246
Total	6,634
Accum Deprec	3,581
257 Cincinnati, OH | SNF
Initial Cost to Company
Land	1,890
Buildings and Improvements	25,110
Gross Amount at Which Carried As of Year End
Land	1,890
Buildings and Improvements	25,110
Total	27,000
Accum Deprec	4,303
125 Clovis, NM | SNF
Initial Cost to Company
Land	561
Buildings and Improvements	5,539
Costs Capitalized Subsequent to acquisition	307
Gross Amount at Which Carried As of Year End
Land	561
Buildings and Improvements	5,846
Total	6,407
Accum Deprec	2,730
129 Clovis, NM | SNF
Initial Cost to Company
Land	598
Buildings and Improvements	5,902
Costs Capitalized Subsequent to acquisition	59
Gross Amount at Which Carried As of Year End
Land	598
Buildings and Improvements	5,961
Total	6,559
Accum Deprec	2,805
268 Coldspring, KY | SNF
Initial Cost to Company
Land	2,050
Buildings and Improvements	21,496
Gross Amount at Which Carried As of Year End
Land	2,050
Buildings and Improvements	21,496
Total	23,546
Accum Deprec	4,928
253 Colton, CA | SNF
Initial Cost to Company
Land	2,474
Buildings and Improvements	15,158
Gross Amount at Which Carried As of Year End
Land	2,474
Buildings and Improvements	15,158
Total	17,632
Accum Deprec	3,512
211 Commerce City, CO | SNF
Initial Cost to Company
Land	236
Buildings and Improvements	3,217
Costs Capitalized Subsequent to acquisition	167
Gross Amount at Which Carried As of Year End
Land	236
Buildings and Improvements	3,384
Total	3,620
Accum Deprec	1,606
212 Commerce City, CO | SNF
Initial Cost to Company
Land	161
Buildings and Improvements	2,160
Costs Capitalized Subsequent to acquisition	95
Gross Amount at Which Carried As of Year End
Land	161
Buildings and Improvements	2,255
Total	2,416
Accum Deprec	1,051
246 Crowley, TX | SNF
Initial Cost to Company
Land	2,247
Buildings and Improvements	14,276
Gross Amount at Which Carried As of Year End
Land	2,247
Buildings and Improvements	14,276
Total	16,523
Accum Deprec	4,196
235 Daleville, VA | SNF
Initial Cost to Company
Land	279
Buildings and Improvements	8,382
Gross Amount at Which Carried As of Year End
Land	279
Buildings and Improvements	8,382
Total	8,661
Accum Deprec	2,611
258 Dayton, OH | SNF
Initial Cost to Company
Land	373
Buildings and Improvements	26,627
Gross Amount at Which Carried As of Year End
Land	373
Buildings and Improvements	26,627
Total	27,000
Accum Deprec	4,598
168 Des Moines, IA | SNF
Initial Cost to Company
Land	115
Buildings and Improvements	2,096
Costs Capitalized Subsequent to acquisition	1,433
Gross Amount at Which Carried As of Year End
Land	115
Buildings and Improvements	3,529
Total	3,644
Accum Deprec	2,194
196 Dresden, TN | SNF
Initial Cost to Company
Land	31
Buildings and Improvements	1,529
Costs Capitalized Subsequent to acquisition	1,073
Gross Amount at Which Carried As of Year End
Land	31
Buildings and Improvements	2,602
Total	2,633
Accum Deprec	1,192
298 Forth Worth, TX | SNF
Initial Cost to Company
Land	2,785
Buildings and Improvements	7,546
Gross Amount at Which Carried As of Year End
Land	2,785
Buildings and Improvements	7,546
Total	10,331
Accum Deprec	1,776
026 Gardendale, AL | SNF
Initial Cost to Company
Land	100
Buildings and Improvements	7,550
Costs Capitalized Subsequent to acquisition	2,084
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	9,634
Total	9,734
Accum Deprec	6,166
185 Gardner, KS | SNF
Initial Cost to Company
Land	896
Buildings and Improvements	4,478
Costs Capitalized Subsequent to acquisition	4,150
Gross Amount at Which Carried As of Year End
Land	896
Buildings and Improvements	8,628
Total	9,524
Accum Deprec	3,987
248 Granbury, TX | SNF
Initial Cost to Company
Land	836
Buildings and Improvements	6,693
Gross Amount at Which Carried As of Year End
Land	836
Buildings and Improvements	6,693
Total	7,529
Accum Deprec	2,631
044 Granger, IA | SNF
Initial Cost to Company
Land	62
Buildings and Improvements	1,356
Costs Capitalized Subsequent to acquisition	221
Gross Amount at Which Carried As of Year End
Land	62
Buildings and Improvements	1,577
Total	1,639
Accum Deprec	1,113
205 Grapevine, TX | SNF
Initial Cost to Company
Land	431
Buildings and Improvements	1,449
Costs Capitalized Subsequent to acquisition	188
Gross Amount at Which Carried As of Year End
Land	431
Buildings and Improvements	1,637
Total	2,068
Accum Deprec	938
250 Hewitt, TX | SNF
Initial Cost to Company
Land	1,780
Buildings and Improvements	8,220
Costs Capitalized Subsequent to acquisition	99
Gross Amount at Which Carried As of Year End
Land	1,780
Buildings and Improvements	8,319
Total	10,099
Accum Deprec	2,057
194 Holyoke, CO | SNF
Initial Cost to Company
Land	211
Buildings and Improvements	1,513
Costs Capitalized Subsequent to acquisition	283
Gross Amount at Which Carried As of Year End
Land	211
Buildings and Improvements	1,796
Total	2,007
Accum Deprec	1,118
051 Houston, TX | SNF
Initial Cost to Company
Land	365
Buildings and Improvements	3,769
Costs Capitalized Subsequent to acquisition	1,598
Gross Amount at Which Carried As of Year End
Land	365
Buildings and Improvements	5,367
Total	5,732
Accum Deprec	3,613
054 Houston, TX | SNF
Initial Cost to Company
Land	202
Buildings and Improvements	4,458
Costs Capitalized Subsequent to acquisition	1,426
Gross Amount at Which Carried As of Year End
Land	202
Buildings and Improvements	5,884
Total	6,086
Accum Deprec	4,119
055 Houston, TX | SNF
Initial Cost to Company
Land	202
Buildings and Improvements	4,458
Costs Capitalized Subsequent to acquisition	1,359
Gross Amount at Which Carried As of Year End
Land	202
Buildings and Improvements	5,817
Total	6,019
Accum Deprec	4,004
045 Jefferson, IA | SNF
Initial Cost to Company
Land	86
Buildings and Improvements	1,883
Costs Capitalized Subsequent to acquisition	296
Gross Amount at Which Carried As of Year End
Land	86
Buildings and Improvements	2,179
Total	2,265
Accum Deprec	1,522
318 Kansas City, MO | SNF
Initial Cost to Company
Land	1,229
Buildings and Improvements	18,368
Gross Amount at Which Carried As of Year End
Land	1,229
Buildings and Improvements	18,368
Total	19,597
Accum Deprec	213
008 Lecanto, FL | SNF
Initial Cost to Company
Land	351
Buildings and Improvements	2,665
Costs Capitalized Subsequent to acquisition	2,737
Gross Amount at Which Carried As of Year End
Land	351
Buildings and Improvements	5,402
Total	5,753
Accum Deprec	3,873
300 Mansfield, TX | SNF
Initial Cost to Company
Land	2,890
Buildings and Improvements	13,110
Gross Amount at Which Carried As of Year End
Land	2,890
Buildings and Improvements	13,110
Total	16,000
Accum Deprec	1,912
053 Mesa, AZ | SNF
Initial Cost to Company
Land	305
Buildings and Improvements	6,909
Costs Capitalized Subsequent to acquisition	1,876
Gross Amount at Which Carried As of Year End
Land	305
Buildings and Improvements	8,785
Total	9,090
Accum Deprec	5,876
242 Mission, TX | SNF
Initial Cost to Company
Land	1,111
Buildings and Improvements	16,602
Gross Amount at Which Carried As of Year End
Land	1,111
Buildings and Improvements	16,602
Total	17,713
Accum Deprec	4,441
115 Nacogdoches, TX | SNF
Initial Cost to Company
Land	100
Buildings and Improvements	1,738
Costs Capitalized Subsequent to acquisition	168
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	1,906
Total	2,006
Accum Deprec	1,203
233 Nacogdoches, TX | SNF
Initial Cost to Company
Land	394
Buildings and Improvements	7,456
Costs Capitalized Subsequent to acquisition	268
Gross Amount at Which Carried As of Year End
Land	394
Buildings and Improvements	7,724
Total	8,118
Accum Deprec	2,270
249 Nacogdoches, TX | SNF
Initial Cost to Company
Land	1,015
Buildings and Improvements	11,109
Gross Amount at Which Carried As of Year End
Land	1,015
Buildings and Improvements	11,109
Total	12,124
Accum Deprec	3,729
245 Newberry, SC | SNF
Initial Cost to Company
Land	439
Buildings and Improvements	4,639
Costs Capitalized Subsequent to acquisition	608
Gross Amount at Which Carried As of Year End
Land	439
Buildings and Improvements	5,247
Total	5,686
Accum Deprec	1,902
244 Newberry, SC | SNF
Initial Cost to Company
Land	919
Buildings and Improvements	5,454
Costs Capitalized Subsequent to acquisition	131
Gross Amount at Which Carried As of Year End
Land	919
Buildings and Improvements	5,585
Total	6,504
Accum Deprec	1,796
046 Norwalk, IA | SNF
Initial Cost to Company
Land	47
Buildings and Improvements	1,033
Costs Capitalized Subsequent to acquisition	239
Gross Amount at Which Carried As of Year End
Land	47
Buildings and Improvements	1,272
Total	1,319
Accum Deprec	925
176 Olathe, KS | SNF
Initial Cost to Company
Land	520
Buildings and Improvements	1,872
Costs Capitalized Subsequent to acquisition	313
Gross Amount at Which Carried As of Year End
Land	520
Buildings and Improvements	2,185
Total	2,705
Accum Deprec	1,443
251 Pasadena, TX | SNF
Initial Cost to Company
Land	1,155
Buildings and Improvements	14,345
Costs Capitalized Subsequent to acquisition	522
Gross Amount at Which Carried As of Year End
Land	1,155
Buildings and Improvements	14,867
Total	16,022
Accum Deprec	3,461
210 Phoenix, AZ | SNF
Initial Cost to Company
Land	334
Buildings and Improvements	3,383
Costs Capitalized Subsequent to acquisition	456
Gross Amount at Which Carried As of Year End
Land	334
Buildings and Improvements	3,839
Total	4,173
Accum Deprec	1,923
193 Phoenix, AZ | SNF
Initial Cost to Company
Land	300
Buildings and Improvements	9,703
Costs Capitalized Subsequent to acquisition	92
Gross Amount at Which Carried As of Year End
Land	300
Buildings and Improvements	9,795
Total	10,095
Accum Deprec	5,853
047 Polk City, IA | SNF
Initial Cost to Company
Land	63
Buildings and Improvements	1,376
Costs Capitalized Subsequent to acquisition	153
Gross Amount at Which Carried As of Year End
Land	63
Buildings and Improvements	1,529
Total	1,592
Accum Deprec	1,085
094 Portland, OR | SNF
Initial Cost to Company
Land	100
Buildings and Improvements	1,925
Costs Capitalized Subsequent to acquisition	3,152
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	5,077
Total	5,177
Accum Deprec	3,414
254 Red Oak, TX | SNF
Initial Cost to Company
Land	1,427
Buildings and Improvements	17,173
Gross Amount at Which Carried As of Year End
Land	1,427
Buildings and Improvements	17,173
Total	18,600
Accum Deprec	3,995
124 Richland Hills, TX | SNF
Initial Cost to Company
Land	144
Buildings and Improvements	1,656
Costs Capitalized Subsequent to acquisition	427
Gross Amount at Which Carried As of Year End
Land	144
Buildings and Improvements	2,083
Total	2,227
Accum Deprec	1,189
197 Ripley, TN | SNF
Initial Cost to Company
Land	20
Buildings and Improvements	985
Costs Capitalized Subsequent to acquisition	1,638
Gross Amount at Which Carried As of Year End
Land	20
Buildings and Improvements	2,623
Total	2,643
Accum Deprec	1,224
133 Roswell, NM | SNF
Initial Cost to Company
Land	568
Buildings and Improvements	5,235
Costs Capitalized Subsequent to acquisition	1,396
Gross Amount at Which Carried As of Year End
Land	568
Buildings and Improvements	6,631
Total	7,199
Accum Deprec	2,981
081 Sacramento, CA | SNF
Initial Cost to Company
Land	220
Buildings and Improvements	2,929
Costs Capitalized Subsequent to acquisition	1,481
Gross Amount at Which Carried As of Year End
Land	220
Buildings and Improvements	4,410
Total	4,630
Accum Deprec	2,510
085 Salina, KS | SNF
Initial Cost to Company
Land	100
Buildings and Improvements	1,153
Costs Capitalized Subsequent to acquisition	628
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	1,781
Total	1,881
Accum Deprec	1,244
281 Slinger, WI | SNF
Initial Cost to Company
Land	464
Buildings and Improvements	13,482
Gross Amount at Which Carried As of Year End
Land	464
Buildings and Improvements	13,482
Total	13,946
Accum Deprec	2,572
234 St. Petersburg, FL | SNF
Initial Cost to Company
Land	1,070
Buildings and Improvements	7,930
Costs Capitalized Subsequent to acquisition	500
Gross Amount at Which Carried As of Year End
Land	1,070
Buildings and Improvements	8,430
Total	9,500
Accum Deprec	2,286
243 Stephenville TX | SNF
Initial Cost to Company
Land	670
Buildings and Improvements	10,117
Costs Capitalized Subsequent to acquisition	500
Gross Amount at Which Carried As of Year End
Land	670
Buildings and Improvements	10,617
Total	11,287
Accum Deprec	2,923
225 Tacoma, WA | SNF
Initial Cost to Company
Land	723
Buildings and Improvements	6,401
Costs Capitalized Subsequent to acquisition	901
Gross Amount at Which Carried As of Year End
Land	723
Buildings and Improvements	7,302
Total	8,025
Accum Deprec	3,294
178 Tappahannock, VA | SNF
Initial Cost to Company
Land	375
Buildings and Improvements	1,327
Costs Capitalized Subsequent to acquisition	397
Gross Amount at Which Carried As of Year End
Land	375
Buildings and Improvements	1,724
Total	2,099
Accum Deprec	1,507
270 Trinity, FL | SNF
Initial Cost to Company
Land	1,653
Buildings and Improvements	12,748
Gross Amount at Which Carried As of Year End
Land	1,653
Buildings and Improvements	12,748
Total	14,401
Accum Deprec	2,544
192 Tucson, AZ | SNF
Initial Cost to Company
Land	276
Buildings and Improvements	8,924
Costs Capitalized Subsequent to acquisition	112
Gross Amount at Which Carried As of Year End
Land	276
Buildings and Improvements	9,036
Total	9,312
Accum Deprec	5,394
299 Weatherford, TX | SNF
Initial Cost to Company
Land	836
Buildings and Improvements	11,902
Gross Amount at Which Carried As of Year End
Land	836
Buildings and Improvements	11,902
Total	12,738
Accum Deprec	2,285
236 Wytheville, VA | SNF
Initial Cost to Company
Land	647
Buildings and Improvements	12,167
Gross Amount at Which Carried As of Year End
Land	647
Buildings and Improvements	12,167
Total	12,814
Accum Deprec	4,618
077 Ada, OK | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	1,650
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	1,650
Total	1,750
Accum Deprec	966
317 Abington, VA | ALF
Initial Cost to Company
Land	541
Buildings and Improvements	16,355
Gross Amount at Which Carried As of Year End
Land	541
Buildings and Improvements	16,355
Total	16,896
Accum Deprec	390
105 Arvada, CO | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,810
Costs Capitalized Subsequent to acquisition	6,960
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	9,770
Total	9,870
Accum Deprec	3,262
304 Athens, GA | ALF
Initial Cost to Company
Land	1,056
Buildings and Improvements	13,326
Gross Amount at Which Carried As of Year End
Land	1,056
Buildings and Improvements	13,326
Total	14,382
Accum Deprec	1,314
063 Athens, TX | ALF
Initial Cost to Company
Land	96
Buildings and Improvements	1,510
Costs Capitalized Subsequent to acquisition	104
Gross Amount at Which Carried As of Year End
Land	96
Buildings and Improvements	1,614
Total	1,710
Accum Deprec	982
320 Auburn Hills, MI | ALF
Initial Cost to Company
Land	1,964
Buildings and Improvements	4,569
Gross Amount at Which Carried As of Year End
Land	1,964
Buildings and Improvements	4,569
Total	6,533
269 Aurora, CO | ALF
Initial Cost to Company
Land	850
Buildings and Improvements	8,583
Gross Amount at Which Carried As of Year End
Land	850
Buildings and Improvements	8,583
Total	9,433
Accum Deprec	1,917
260 Aurora, CO | ALF
Initial Cost to Company
Land	831
Buildings and Improvements	10,071
Gross Amount at Which Carried As of Year End
Land	831
Buildings and Improvements	10,071
Total	10,902
Accum Deprec	2,122
203 Bakersfield, CA | ALF
Initial Cost to Company
Land	834
Buildings and Improvements	11,986
Costs Capitalized Subsequent to acquisition	1,039
Gross Amount at Which Carried As of Year End
Land	834
Buildings and Improvements	13,025
Total	13,859
Accum Deprec	6,428
117 Beatrice, NE | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,173
Costs Capitalized Subsequent to acquisition	231
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,404
Total	2,504
Accum Deprec	1,287
277 Burr Ridge, IL | ALF
Initial Cost to Company
Land	1,400
Buildings and Improvements	11,102
Gross Amount at Which Carried As of Year End
Land	1,400
Buildings and Improvements	11,102
Total	12,502
Accum Deprec	1,668
278 Castle Rock, CO | ALF
Initial Cost to Company
Land	759
Buildings and Improvements	9,041
Gross Amount at Which Carried As of Year End
Land	759
Buildings and Improvements	9,041
Total	9,800
Accum Deprec	1,032
160 Central, SC | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,321
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,321
Total	2,421
Accum Deprec	1,101
263 Chatham, NJ | ALF
Initial Cost to Company
Land	5,365
Buildings and Improvements	36,399
Gross Amount at Which Carried As of Year End
Land	5,365
Buildings and Improvements	36,399
Total	41,764
Accum Deprec	7,347
307 Clovis, CA | ALF
Initial Cost to Company
Land	2,542
Buildings and Improvements	19,126
Gross Amount at Which Carried As of Year End
Land	2,542
Buildings and Improvements	19,126
Total	21,668
Accum Deprec	1,374
308 Clovis, CA | ALF
Initial Cost to Company
Land	3,054
Buildings and Improvements	14,172
Gross Amount at Which Carried As of Year End
Land	3,054
Buildings and Improvements	14,172
Total	17,226
Accum Deprec	979
279 Corpus Christi, TX | ALF
Initial Cost to Company
Land	880
Buildings and Improvements	11,440
Costs Capitalized Subsequent to acquisition	147
Gross Amount at Which Carried As of Year End
Land	880
Buildings and Improvements	11,587
Total	12,467
Accum Deprec	1,619
292 De Forest, WI | ALF
Initial Cost to Company
Land	485
Buildings and Improvements	5,568
Costs Capitalized Subsequent to acquisition	43
Gross Amount at Which Carried As of Year End
Land	485
Buildings and Improvements	5,611
Total	6,096
Accum Deprec	744
057 Dodge City, KS | ALF
Initial Cost to Company
Land	84
Buildings and Improvements	1,666
Costs Capitalized Subsequent to acquisition	4
Gross Amount at Which Carried As of Year End
Land	84
Buildings and Improvements	1,670
Total	1,754
Accum Deprec	1,034
083 Durant, OK | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	1,769
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	1,769
Total	1,869
Accum Deprec	1,020
107 Edmond, OK | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	1,365
Costs Capitalized Subsequent to acquisition	526
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	1,891
Total	1,991
Accum Deprec	1,071
163 Ft. Collins, CO | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,961
Costs Capitalized Subsequent to acquisition	3,405
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	6,366
Total	6,466
Accum Deprec	2,510
170 Ft. Collins, CO | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	3,400
Costs Capitalized Subsequent to acquisition	4,622
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	8,022
Total	8,122
Accum Deprec	2,797
132 Ft. Meyers, FL | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,728
Costs Capitalized Subsequent to acquisition	9
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,737
Total	2,837
Accum Deprec	1,507
315 Ft. Worth, TX | ALF
Initial Cost to Company
Land	1,534
Buildings and Improvements	11,099
Gross Amount at Which Carried As of Year End
Land	1,534
Buildings and Improvements	11,099
Total	12,633
Accum Deprec	474
100 Fremont ,OH | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,435
Costs Capitalized Subsequent to acquisition	115
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,550
Total	2,650
Accum Deprec	1,442
267 Frisco, TX | ALF
Initial Cost to Company
Land	1,000
Buildings and Improvements	5,154
Gross Amount at Which Carried As of Year End
Land	1,000
Buildings and Improvements	5,154
Total	6,154
Accum Deprec	1,189
314 Frisco, TX | ALF
Initial Cost to Company
Land	2,216
Buildings and Improvements	10,417
Gross Amount at Which Carried As of Year End
Land	2,216
Buildings and Improvements	10,417
Total	12,633
Accum Deprec	456
296 Glenview, IL | ALF
Initial Cost to Company
Land	2,800
Buildings and Improvements	14,248
Gross Amount at Which Carried As of Year End
Land	2,800
Buildings and Improvements	14,248
Total	17,048
Accum Deprec	1,120
167 Goldsboro, NC | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,385
Costs Capitalized Subsequent to acquisition	1
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,386
Total	2,486
Accum Deprec	1,055
056 Great Bend, KS | ALF
Initial Cost to Company
Land	80
Buildings and Improvements	1,570
Costs Capitalized Subsequent to acquisition	21
Gross Amount at Which Carried As of Year End
Land	80
Buildings and Improvements	1,591
Total	1,671
Accum Deprec	1,097
102 Greeley, CO | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,310
Costs Capitalized Subsequent to acquisition	270
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,580
Total	2,680
Accum Deprec	1,459
284 Green Bay, WI | ALF
Initial Cost to Company
Land	1,660
Buildings and Improvements	19,079
Costs Capitalized Subsequent to acquisition	402
Gross Amount at Which Carried As of Year End
Land	1,660
Buildings and Improvements	19,481
Total	21,141
Accum Deprec	2,617
164 Greenville, NC | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,478
Costs Capitalized Subsequent to acquisition	2
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,480
Total	2,580
Accum Deprec	1,231
062 Greenville, TX | ALF
Initial Cost to Company
Land	42
Buildings and Improvements	1,565
Costs Capitalized Subsequent to acquisition	84
Gross Amount at Which Carried As of Year End
Land	42
Buildings and Improvements	1,649
Total	1,691
Accum Deprec	996
161 Greenwood, SC | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,638
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,638
Total	2,738
Accum Deprec	1,339
241 Gulf Breeze, FL | ALF
Initial Cost to Company
Land	720
Buildings and Improvements	3,780
Costs Capitalized Subsequent to acquisition	261
Gross Amount at Which Carried As of Year End
Land	720
Buildings and Improvements	4,041
Total	4,761
Accum Deprec	1,223
295 Jacksonville, FL | ALF
Initial Cost to Company
Land	1,389
Buildings and Improvements	12,756
Costs Capitalized Subsequent to acquisition	56
Gross Amount at Which Carried As of Year End
Land	1,389
Buildings and Improvements	12,812
Total	14,201
Accum Deprec	1,444
066 Jacksonville, TX | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	1,900
Costs Capitalized Subsequent to acquisition	77
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	1,977
Total	2,077
Accum Deprec	1,195
310 Kansas City, MO | ALF
Initial Cost to Company
Land	1,072
Buildings and Improvements	15,552
Gross Amount at Which Carried As of Year End
Land	1,072
Buildings and Improvements	15,552
Total	16,624
Accum Deprec	839
285 Kenosha, WI | ALF
Initial Cost to Company
Land	936
Buildings and Improvements	12,361
Costs Capitalized Subsequent to acquisition	240
Gross Amount at Which Carried As of Year End
Land	936
Buildings and Improvements	12,601
Total	13,537
Accum Deprec	1,515
255 Littleton, CO | ALF
Initial Cost to Company
Land	1,882
Buildings and Improvements	8,248
Gross Amount at Which Carried As of Year End
Land	1,882
Buildings and Improvements	8,248
Total	10,130
Accum Deprec	1,718
268 Littleton, CO | ALF
Initial Cost to Company
Land	1,200
Buildings and Improvements	8,688
Gross Amount at Which Carried As of Year End
Land	1,200
Buildings and Improvements	8,688
Total	9,888
Accum Deprec	2,007
148 Longmont, CO | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,640
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,640
Total	2,740
Accum Deprec	1,443
060 Longview, TX | ALF
Initial Cost to Company
Land	38
Buildings and Improvements	1,568
Costs Capitalized Subsequent to acquisition	127
Gross Amount at Which Carried As of Year End
Land	38
Buildings and Improvements	1,695
Total	1,733
Accum Deprec	1,034
261 Louisville, CO | ALF
Initial Cost to Company
Land	911
Buildings and Improvements	11,703
Gross Amount at Which Carried As of Year End
Land	911
Buildings and Improvements	11,703
Total	12,614
Accum Deprec	2,414
301 Louisville, KY | ALF
Initial Cost to Company
Land	1,021
Buildings and Improvements	13,157
Costs Capitalized Subsequent to acquisition	17
Gross Amount at Which Carried As of Year End
Land	1,021
Buildings and Improvements	13,174
Total	14,195
Accum Deprec	1,288
114 Loveland, CO | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,865
Costs Capitalized Subsequent to acquisition	270
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	3,135
Total	3,235
Accum Deprec	1,758
068 Lufkin, TX | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	1,950
Costs Capitalized Subsequent to acquisition	94
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,044
Total	2,144
Accum Deprec	1,229
061 Marshall, TX | ALF
Initial Cost to Company
Land	38
Buildings and Improvements	1,568
Costs Capitalized Subsequent to acquisition	534
Gross Amount at Which Carried As of Year End
Land	38
Buildings and Improvements	2,102
Total	2,140
Accum Deprec	1,298
293 McHenry, IL | ALF
Initial Cost to Company
Land	1,289
Buildings and Improvements	28,976
Costs Capitalized Subsequent to acquisition	243
Gross Amount at Which Carried As of Year End
Land	1,289
Buildings and Improvements	29,219
Total	30,508
Accum Deprec	3,777
058 McPherson, KS | ALF
Initial Cost to Company
Land	79
Buildings and Improvements	1,571
Costs Capitalized Subsequent to acquisition	4
Gross Amount at Which Carried As of Year End
Land	79
Buildings and Improvements	1,575
Total	1,654
Accum Deprec	1,086
316 Medford, OR | ALF
Initial Cost to Company
Land	750
Buildings and Improvements	13,650
Gross Amount at Which Carried As of Year End
Land	750
Buildings and Improvements	13,650
Total	14,400
Accum Deprec	575
239 Merritt Island, FL | ALF
Initial Cost to Company
Land	550
Buildings and Improvements	8,150
Costs Capitalized Subsequent to acquisition	100
Gross Amount at Which Carried As of Year End
Land	550
Buildings and Improvements	8,250
Total	8,800
Accum Deprec	2,347
104 Millville, NJ | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,825
Costs Capitalized Subsequent to acquisition	749
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	3,574
Total	3,674
Accum Deprec	1,754
286 Milwaukee, WI | ALF
Initial Cost to Company
Land	818
Buildings and Improvements	8,014
Costs Capitalized Subsequent to acquisition	61
Gross Amount at Which Carried As of Year End
Land	818
Buildings and Improvements	8,075
Total	8,893
Accum Deprec	1,084
231 Monroeville, PA | ALF
Initial Cost to Company
Land	526
Buildings and Improvements	5,334
Costs Capitalized Subsequent to acquisition	435
Gross Amount at Which Carried As of Year End
Land	526
Buildings and Improvements	5,769
Total	6,295
Accum Deprec	1,866
280 Merrells Inlet, SC | ALF
Initial Cost to Company
Land	2,490
Buildings and Improvements	14,185
Gross Amount at Which Carried As of Year End
Land	2,490
Buildings and Improvements	14,185
Total	16,675
Accum Deprec	1,762
294 Murrieta, CA | ALF
Initial Cost to Company
Land	2,022
Buildings and Improvements	11,136
Gross Amount at Which Carried As of Year End
Land	2,022
Buildings and Improvements	11,136
Total	13,158
Accum Deprec	1,432
289 Neenah, WI | ALF
Initial Cost to Company
Land	694
Buildings and Improvements	20,839
Costs Capitalized Subsequent to acquisition	244
Gross Amount at Which Carried As of Year End
Land	694
Buildings and Improvements	21,083
Total	21,777
Accum Deprec	2,606
166 New Bern, NC | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,427
Costs Capitalized Subsequent to acquisition	1
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,428
Total	2,528
Accum Deprec	1,095
118 Newark, OH | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,435
Costs Capitalized Subsequent to acquisition	284
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,719
Total	2,819
Accum Deprec	1,436
143 Niceville, FL | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,680
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,680
Total	2,780
Accum Deprec	1,465
095 Norfolk, NE | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,123
Costs Capitalized Subsequent to acquisition	301
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,424
Total	2,524
Accum Deprec	1,277
290 Oshkosh, WI | ALF
Initial Cost to Company
Land	1,525
Buildings and Improvements	9,192
Costs Capitalized Subsequent to acquisition	184
Gross Amount at Which Carried As of Year End
Land	1,525
Buildings and Improvements	9,376
Total	10,901
Accum Deprec	2,526
291 Oshkosh, WI | ALF
Initial Cost to Company
Land	475
Buildings and Improvements	7,364
Costs Capitalized Subsequent to acquisition	44
Gross Amount at Which Carried As of Year End
Land	475
Buildings and Improvements	7,408
Total	7,883
Accum Deprec	982
302 Overland Park, KS | ALF
Initial Cost to Company
Land	1,951
Buildings and Improvements	11,882
Costs Capitalized Subsequent to acquisition	281
Gross Amount at Which Carried As of Year End
Land	1,951
Buildings and Improvements	12,163
Total	14,114
Accum Deprec	1,344
232 Pittsburgh, PA | ALF
Initial Cost to Company
Land	470
Buildings and Improvements	2,615
Costs Capitalized Subsequent to acquisition	333
Gross Amount at Which Carried As of Year End
Land	470
Buildings and Improvements	2,948
Total	3,418
Accum Deprec	1,046
165 Rocky Mount, NC | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,494
Costs Capitalized Subsequent to acquisition	1
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,495
Total	2,595
Accum Deprec	1,157
059 Salina, KS | ALF
Initial Cost to Company
Land	79
Buildings and Improvements	1,571
Costs Capitalized Subsequent to acquisition	4
Gross Amount at Which Carried As of Year End
Land	79
Buildings and Improvements	1,575
Total	1,654
Accum Deprec	1,086
084 San Antonio, TX | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	1,900
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	1,900
Total	2,000
Accum Deprec	1,094
092 San Antonio, TX | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,055
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,055
Total	2,155
Accum Deprec	1,178
288 Sheboygan, WI | ALF
Initial Cost to Company
Land	1,168
Buildings and Improvements	5,382
Costs Capitalized Subsequent to acquisition	184
Gross Amount at Which Carried As of Year End
Land	1,168
Buildings and Improvements	5,566
Total	6,734
Accum Deprec	854
149 Shelby, NC | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,805
Costs Capitalized Subsequent to acquisition	2
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,807
Total	2,907
Accum Deprec	1,533
312 Spartanburg, SC | ALF
Initial Cost to Company
Land	254
Buildings and Improvements	9,906
Costs Capitalized Subsequent to acquisition	1,520
Gross Amount at Which Carried As of Year End
Land	254
Buildings and Improvements	11,426
Total	11,680
Accum Deprec	886
150 Spring Hill, FL | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,650
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,650
Total	2,750
Accum Deprec	1,449
103 Springfield, OH | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,035
Costs Capitalized Subsequent to acquisition	270
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,305
Total	2,405
Accum Deprec	1,300
321 Sterling Heights, MI | ALF
Initial Cost to Company
Land	1,133
Buildings and Improvements	11,473
Gross Amount at Which Carried As of Year End
Land	1,133
Buildings and Improvements	11,473
Total	12,606
162 Sumter, SC | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,351
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,351
Total	2,451
Accum Deprec	1,143
140 Tallahassee, FL | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	3,075
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	3,075
Total	3,175
Accum Deprec	1,684
098 Tiffin, OH | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,435
Costs Capitalized Subsequent to acquisition	279
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,714
Total	2,814
Accum Deprec	1,424
282 Tinley Park, IL | ALF
Initial Cost to Company
Land	702
Buildings and Improvements	11,481
Gross Amount at Which Carried As of Year End
Land	702
Buildings and Improvements	11,481
Total	12,183
Accum Deprec	1,509
088 Troy, OH | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,435
Costs Capitalized Subsequent to acquisition	605
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	3,040
Total	3,140
Accum Deprec	1,641
080 Tulsa, OK | ALF
Initial Cost to Company
Land	200
Buildings and Improvements	1,650
Gross Amount at Which Carried As of Year End
Land	200
Buildings and Improvements	1,650
Total	1,850
Accum Deprec	959
093 Tulsa, OK | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,395
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,395
Total	2,495
Accum Deprec	1,370
238 Tupelo, MS | ALF
Initial Cost to Company
Land	1,170
Buildings and Improvements	8,230
Costs Capitalized Subsequent to acquisition	30
Gross Amount at Which Carried As of Year End
Land	1,170
Buildings and Improvements	8,260
Total	9,430
Accum Deprec	2,437
075 Tyler, TX | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	1,800
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	1,800
Total	1,900
Accum Deprec	1,052
202 Vacaville, CA | ALF
Initial Cost to Company
Land	1,662
Buildings and Improvements	11,634
Costs Capitalized Subsequent to acquisition	1,770
Gross Amount at Which Carried As of Year End
Land	1,662
Buildings and Improvements	13,404
Total	15,066
Accum Deprec	6,442
091 Waco, TX | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,235
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,235
Total	2,335
Accum Deprec	1,280
096 Wahoo, NE | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,318
Costs Capitalized Subsequent to acquisition	161
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,479
Total	2,579
Accum Deprec	1,378
108 Watauga, TX | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	1,668
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	1,668
Total	1,768
Accum Deprec	949
287 Waukesha, WI | ALF
Initial Cost to Company
Land	992
Buildings and Improvements	15,183
Costs Capitalized Subsequent to acquisition	210
Gross Amount at Which Carried As of Year End
Land	992
Buildings and Improvements	15,393
Total	16,385
Accum Deprec	1,884
109 Weatherford, OK | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	1,669
Costs Capitalized Subsequent to acquisition	592
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,261
Total	2,361
Accum Deprec	1,278
309 West Chester, OH | ALF
Initial Cost to Company
Land	2,355
Buildings and Improvements	13,553
Costs Capitalized Subsequent to acquisition	22
Gross Amount at Which Carried As of Year End
Land	2,355
Buildings and Improvements	13,575
Total	15,930
Accum Deprec	978
276 Westminster, CO | ALF
Initial Cost to Company
Land	1,425
Buildings and Improvements	9,575
Gross Amount at Which Carried As of Year End
Land	1,425
Buildings and Improvements	9,575
Total	11,000
Accum Deprec	1,867
110 Wheelersburg, OH | ALF
Initial Cost to Company
Land	29
Buildings and Improvements	2,435
Costs Capitalized Subsequent to acquisition	250
Gross Amount at Which Carried As of Year End
Land	29
Buildings and Improvements	2,685
Total	2,714
Accum Deprec	1,437
303 Wichita, KS | ALF
Initial Cost to Company
Land	1,422
Buildings and Improvements	9,957
Costs Capitalized Subsequent to acquisition	285
Gross Amount at Which Carried As of Year End
Land	1,422
Buildings and Improvements	10,242
Total	11,664
Accum Deprec	1,159
259 Wichita, KS | ALF
Initial Cost to Company
Land	730
Costs Capitalized Subsequent to acquisition	9,682
Gross Amount at Which Carried As of Year End
Land	730
Buildings and Improvements	9,682
Total	10,412
Accum Deprec	2,270
283 Wichita, KS | ALF
Initial Cost to Company
Land	624
Buildings and Improvements	13,846
Gross Amount at Which Carried As of Year End
Land	624
Buildings and Improvements	13,846
Total	14,470
Accum Deprec	1,245
076 Wichita Falls, TX | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	1,850
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	1,850
Total	1,950
Accum Deprec	1,081
120 Wichita Falls, TX | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,750
Costs Capitalized Subsequent to acquisition	131
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,881
Total	2,981
Accum Deprec	1,607
265 Williamstown, NJ | ALF
Initial Cost to Company
Land	711
Buildings and Improvements	6,637
Gross Amount at Which Carried As of Year End
Land	711
Buildings and Improvements	6,637
Total	7,348
Accum Deprec	1,502
264 Williamstown, NJ | ALF
Initial Cost to Company
Land	711
Buildings and Improvements	8,649
Gross Amount at Which Carried As of Year End
Land	711
Buildings and Improvements	8,649
Total	9,360
Accum Deprec	1,769
099 York, NE | ALF
Initial Cost to Company
Land	100
Buildings and Improvements	2,318
Costs Capitalized Subsequent to acquisition	78
Gross Amount at Which Carried As of Year End
Land	100
Buildings and Improvements	2,396
Total	2,496
Accum Deprec	1,359
297 Las Vegas, NV | School
Initial Cost to Company
Land	1,965
Buildings and Improvements	7,308
Costs Capitalized Subsequent to acquisition	1,144
Gross Amount at Which Carried As of Year End
Land	1,965
Buildings and Improvements	8,452
Total	10,417
Accum Deprec	891
271 Howell, MI | Land
Initial Cost to Company
Land	420
Gross Amount at Which Carried As of Year End
Land	420
Total	420
272 Milford, MI
Initial Cost to Company
Land	450
Gross Amount at Which Carried As of Year End
Land	450
Total	450
275 Yale, MI | Land
Initial Cost to Company
Land	73
Gross Amount at Which Carried As of Year End
Land	73
Total	73
305 Union, KY | SNF
Initial Cost to Company
Land	858
Buildings and Improvements	24,116
Gross Amount at Which Carried As of Year End
Land	858
Buildings and Improvements	24,116
Total	24,974
Accum Deprec	743
311 Cedarburg, WI | ALF
Initial Cost to Company
Land	924
Buildings and Improvements	21,075
Gross Amount at Which Carried As of Year End
Land	924
Buildings and Improvements	21,075
Total	21,999
Accum Deprec	629
306 Oaklawn, IL | ALF
Initial Cost to Company
Land	1,591
Buildings and Improvements	13,772
Gross Amount at Which Carried As of Year End
Land	1,591
Buildings and Improvements	13,772
Total	15,363
Accum Deprec	792
319 Independence, MO | Properties under Development
Initial Cost to Company
Land	2,644
Buildings and Improvements	1,514
Gross Amount at Which Carried As of Year End
Land	2,644
Buildings and Improvements	1,514
Total	4,158
313 Medford, OR | Properties under Development
Initial Cost to Company
Land	636
Buildings and Improvements	13,195
Gross Amount at Which Carried As of Year End
Land	636
Buildings and Improvements	13,195
Total	$ 13,831

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Fair Value Measurements (Details) $ in Thousands	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($) item
Fair value measurements
Mortgage loans receivable	$ 254,099	$ 242,939
Senior unsecured notes, net of debt issue costs	$ 599,488	$ 533,029
Level 3 | Senior Unsecured Notes maturing before 2026 | Discount Rate | Discounted Cash Flow Analysis
Fair value measurements
Future cash outflows discount rate (as a percent) | item	3.70	5.15
Level 3 | Senior Unsecured Notes maturing 2026 and after | Discount Rate | Discounted Cash Flow Analysis
Fair value measurements
Future cash outflows discount rate (as a percent) | item	3.90	5.40
Level 3 | Mortgage Loans Receivable | Discount Rate | Discounted Cash Flow Analysis
Fair value measurements
Future cash inflows discount rate (as a percent) | item	0.090	0.090
Carrying Value
Fair value measurements
Mortgage loans receivable	$ 254,099	$ 242,939
Bank borrowings	93,900	112,000
Senior unsecured notes, net of debt issue costs	599,488	533,029
Fair Value
Fair value measurements
Bank borrowings	93,900	112,000
Fair Value | Level 3
Fair value measurements
Mortgage loans receivable	312,824	295,492
Senior unsecured notes, net of debt issue costs	$ 612,375	$ 508,613

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Debt Obligations - Future Maturities (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Scheduled Principal Payments
2020		$ 40,160,000	$ 40,160,000
2021		47,160,000	47,160,000
2022		142,060,000	142,060,000
2023		49,160,000	49,160,000
2024		49,160,000	49,160,000
Thereafter		366,500,000	366,500,000
Total		694,200,000	694,200,000
Other information
Amount borrowed			207,900,000	$ 116,200,000	$ 213,000,000
Outstanding Balance		693,388,000	693,388,000	645,029,000
Available for borrowing		527,600,000	527,600,000	581,833,000
Payments on debt			159,667,000	138,866,000	154,767,000
Bank Borrowings
Scheduled Principal Payments
2022		93,900,000	93,900,000
Total		93,900,000	93,900,000
Other information
Amount borrowed			107,900,000	116,200,000	113,000,000
Outstanding Balance		93,900,000	93,900,000	112,000,000
Available for borrowing		506,100,000	506,100,000	488,000,000
Payments on debt			126,000,000	100,700,000	123,600,000
Senior Unsecured Notes
Scheduled Principal Payments
2020		40,160,000	40,160,000
2021		47,160,000	47,160,000
2022		48,160,000	48,160,000
2023		49,160,000	49,160,000
2024		49,160,000	49,160,000
Thereafter		366,500,000	366,500,000
Total		600,300,000	600,300,000
Other information
Amount borrowed		100,000,000	100,000,000		100,000,000
Outstanding Balance		599,488,000	599,488,000	533,029,000
Available for borrowing		$ 21,500,000	21,500,000	93,833,000
Payments on debt			$ 33,667,000	$ 38,166,000	$ 31,167,000
Subsequent Event | Bank Borrowings
Other information
Amount borrowed	$ 18,000,000
Outstanding Balance	111,900,000
Available for borrowing	$ 488,100,000

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SCHEDULE IV MORTGAGE LOANS ON REAL ESTATE - Number of Loans (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) loan
Mortgage loans on real estate
Original loan amounts	$ 259,595
First-lien mortgage loans | Mortgage Loans between 500,000 and 2,000,000
Mortgage loans on real estate
Number of Loans | loan	0
First-lien mortgage loans | Mortgage Loans between 500,000 and 2,000,000 | Minimum
Mortgage loans on real estate
Original loan amounts	$ 500
First-lien mortgage loans | Mortgage Loans between 500,000 and 2,000,000 | Maximum
Mortgage loans on real estate
Original loan amounts	$ 2,000
First-lien mortgage loans | Mortgage Loans between 2,001,000 and 3,000,000
Mortgage loans on real estate
Number of Loans | loan	0
First-lien mortgage loans | Mortgage Loans between 2,001,000 and 3,000,000 | Minimum
Mortgage loans on real estate
Original loan amounts	$ 2,001
First-lien mortgage loans | Mortgage Loans between 2,001,000 and 3,000,000 | Maximum
Mortgage loans on real estate
Original loan amounts	$ 3,000
First-lien mortgage loans | Mortgage Loans between 3,001,000 and 4,000,000
Mortgage loans on real estate
Number of Loans | loan	0
First-lien mortgage loans | Mortgage Loans between 3,001,000 and 4,000,000 | Minimum
Mortgage loans on real estate
Original loan amounts	$ 3,001
First-lien mortgage loans | Mortgage Loans between 3,001,000 and 4,000,000 | Maximum
Mortgage loans on real estate
Original loan amounts	$ 4,000
First-lien mortgage loans | Mortgage Loans between 4,001,000 and 5,000,000
Mortgage loans on real estate
Number of Loans | loan	0
First-lien mortgage loans | Mortgage Loans between 4,001,000 and 5,000,000 | Minimum
Mortgage loans on real estate
Original loan amounts	$ 4,001
First-lien mortgage loans | Mortgage Loans between 4,001,000 and 5,000,000 | Maximum
Mortgage loans on real estate
Original loan amounts	$ 5,000
First-lien mortgage loans | Mortgage Loans between 5,001,000 and 6,000,000
Mortgage loans on real estate
Number of Loans | loan	0
First-lien mortgage loans | Mortgage Loans between 5,001,000 and 6,000,000 | Minimum
Mortgage loans on real estate
Original loan amounts	$ 5,001
First-lien mortgage loans | Mortgage Loans between 5,001,000 and 6,000,000 | Maximum
Mortgage loans on real estate
Original loan amounts	$ 6,000
First-lien mortgage loans | Mortgage Loans between 6,001,000 and 7,000,000
Mortgage loans on real estate
Number of Loans | loan	0
First-lien mortgage loans | Mortgage Loans between 6,001,000 and 7,000,000 | Minimum
Mortgage loans on real estate
Original loan amounts	$ 6,001
First-lien mortgage loans | Mortgage Loans between 6,001,000 and 7,000,000 | Maximum
Mortgage loans on real estate
Original loan amounts	$ 7,000
First-lien mortgage loans | Mortgage Loans over 7,000,000
Mortgage loans on real estate
Number of Loans | loan	4
First-lien mortgage loans | Mortgage Loans over 7,000,000 | Minimum
Mortgage loans on real estate
Original loan amounts	$ 7,001

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Net Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Net income									$ 80,872	$ 80,872	$ 155,076	$ 87,340
Less income allocated to non-controlling interests									(346)		(95)
Less income allocated to participating securities:
Non-forfeitable dividends on participating securities									(372)		(357)	(350)
Income allocated to participating securities									(19)		(268)	(12)
Total net income allocated to participating securities									(391)		(625)	(362)
Net income available to common stockholders	$ 12,449	$ 27,080	$ 20,352	$ 20,254	$ 30,645	$ 34,782	$ 68,658	$ 20,271	80,135		154,356	86,978
Effect of dilutive securities:
Participating securities											625	362
Net income for diluted net income per share									$ 80,135		$ 154,981	$ 87,340
Shares for basic net income per share									39,571		39,477	39,409
Effect of dilutive securities: (Shares)
Total effect of dilutive securities (in shares)									188		362	228
Shares for diluted net income per share									39,759		39,839	39,637
Basic (in dollars per share)	$ 0.31	$ 0.68	$ 0.51	$ 0.51	$ 0.78	$ 0.88	$ 1.74	$ 0.51	$ 2.03		$ 3.91	$ 2.21
Diluted (in dollars per share)	$ 0.31	$ 0.68	$ 0.51	$ 0.51	$ 0.77	$ 0.88	$ 1.73	$ 0.51	$ 2.02		$ 3.89	$ 2.20
Stock options
Effect of dilutive securities: (Shares)
Stock options and performance-based stock units (in shares)									4		3	10
Performance-based stock units
Effect of dilutive securities: (Shares)
Stock options and performance-based stock units (in shares)									184		203	67
Participating Securities
Effect of dilutive securities: (Shares)
Participating securities											156	151

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Distributions

12 Months Ended

Dec. 31, 2019

Distributions

Distributions

12. Distributions

We must distribute at least 90% of our taxable income in order to continue to qualify as a REIT. This distribution requirement can be satisfied by current year distributions or, to a certain extent, by distributions in the following year.

For federal tax purposes, distributions to stockholders are treated as ordinary income, capital gains, return of capital or a combination thereof. Distributions for 2019, 2018 and 2017 were cash distributions. The federal income tax classification of the per share common stock distributions are as follows (unaudited):

	Year Ended December 31,
	2019		2018		2017
Ordinary taxable distribution	$	2.084	$	0.349	$	1.607
Return of capital		—		—		0.444
Unrecaptured Section 1250 gain		0.132		0.636		0.163
Long-term capital gain		0.064		1.295		0.066
Total	$	2.280	$	2.280	$	2.280

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Supplemental Cash Flow Information

12 Months Ended

Dec. 31, 2019

Supplemental Cash Flow Information

Supplemental Cash Flow Information

4. Supplemental Cash Flow Information

	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Non-cash investing and financing transactions:
Reclassification of notes receivable to lease incentives (Note 7)	$	200	$	—	$	—
Restricted stock issued, net of cancellations (Note 10)		—		1		1

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Lease Incentives

12 Months Ended

Dec. 31, 2019

Lease Incentives

Lease Incentives

8. Lease Incentives

The following table summarizes lease incentives by component as of December 31, 2019 and 2018 (in thousands):

	At December 31,
		2019		2018
Non-contingent lease incentives	$	2,552	$	14,443

The following table summarizes our lease incentive activity for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	2019							2018							2017
		Funding		Amortization		Write-off			Funding		Amortization		Write-off			Funding		Amortization		Write-off
Non-contingent lease incentives	$	387	$	(385)	$	(11,893)	(1)	$	1,272	$	(1,733)	$	—		$	6,544	$	(1,590)	$	(1,205)	(3)
Contingent lease incentives		—		—		—			—		(359)		(6,219)	(2)		—		(619)		(2,634)	(4)
Net increase (decrease)	$	387	$	(385)	$	(11,893)		$	1,272	$	(2,092)	$	(6,219)		$	6,544	$	(2,209)	$	(3,839)

(1) In accordance with ASC 842 lease standard adopted on January 1, 2019, we wrote-off $12,093 of lease incentives related to leases for which we determined it is not probable we will collect substantially all of the contractual lease obligation through maturity. See Note 2. Summary of Significant Accounting Policies for further discussion. Additionally, we reclassified a $200 interim working capital loan as lease incentive. See Note 7. Notes Receivable for further discussion.

(2) We entered into an amended master lease agreement with Senior Lifestyle Management, LLC (“Senior Lifestyle”). Among the provisions of the amendment, the contingent lease incentive payable to Senior Lifestyle was removed. Therefore, we wrote-off the Senior Lifestyle contingent lease incentive.

(3) Represents the write-off of lease incentives related to two MC communities due to negotiations to transition these properties to another operator in our portfolio that never materialized.

(4) Represents the write-off of a lease incentive related to an ALF due to a change to the business model at the property that resulted in lower net operating income and the improbability of paying the earn-out.

Non-contingent lease incentives represent payments made to our lessees for various reasons including entering into a new lease or lease amendments and extensions. Contingent lease incentives represent potential contingent earn-out

payments that may be made to our lessees in the future, as part of our lease agreements. From time to time, we may commit to provide contingent payments to our lessees, upon our properties achieving certain rent coverage ratios. Once the contingent payment becomes probable and estimable, the contingent payment is recorded as a lease incentive. Lease incentives are amortized as a yield adjustment to rental income over the remaining life of the lease.

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies

Schedule of commitments

At December 31, 2019, we had commitments as follows (in thousands):

						Total
	Investment			2019		Commitment		Remaining
	Commitment			Funding		Funded		Commitment
Real estate properties (Note 5. Real Estate Investments)	$	41,266	(1)	$	13,847	$	18,361	$	22,905
Accrued incentives and earn-out liabilities (Note 8. Lease Incentives)		9,000			—		—		9,000
Mortgage loans (Note 5. Real Estate Investments)		27,200	(2)		2,264		5,944		21,256
Notes receivable (Note 7. Notes Receivable)		2,250			2,039		2,063		187
Total	$	79,716		$	18,150	$	26,368	$	53,348

(1) Represents commitments to purchase land and improvements, if applicable, and to develop, re-develop, renovate or expand seniors housing and health care properties.

(2) Represents $9,200 of commitments to expand and renovate the seniors housing and health care properties securing the mortgage loans and $18,000 represents contingent funding upon the borrower achieving certain coverage ratios.

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Notes Receivable (Tables)

12 Months Ended

Dec. 31, 2019

Notes Receivable.

Summary of mezzanine loans and other loan arrangements

Notes receivable consists of mezzanine loans and other loan arrangements. The following table is a summary of our notes receivable components at December 31, 2019 and 2018 (in thousands):

	At December 31,
	2019		2018
Mezzanine loans	$	13,284	$	9,868
Other loans		4,824		2,975
Notes receivable reserve		(181)		(128)
Total	$	17,927	$	12,715

Schedule of new loan commitments

The following table summarizes our notes receivable activity for the years ended December 31, 2019 through 2017 (in thousands):

	Year ended December 31,
		2019			2018		2017
Advances under notes receivable	$	8,967	(1)	$	124	$	—
Principal payments received under notes receivable		(3,503)			(3,848)		(25)
Reclassified to lease incentives (2)		(200)	(2)		—		—
Notes receivable reserve		(52)			37		—
Total	$	5,212		$	(3,687)	$	(25)

(1) We originated a $6,800 mezzanine loan commitment for the development of a 204-unit ILF/ALF/MC in Georgia. The mezzanine loan has a five-year term and a 12.0% return, a portion of which is paid in cash, and the remaining portion of which is deferred during the first 46 months. Additionally, we originated a $1,400 note agreement, funding $1,304 with a commitment to fund $96. The note bears interest at 7.0%. Further, we originated a $550 note agreement, funding $500 with a commitment to fund $50. The note bears interest at 7.5%.

(2) Represents an interim working capital loan related to a development project which matured upon completion of the development project and commencement of the lease.

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Subsequent Events

12 Months Ended

Dec. 31, 2019

Subsequent Events

Subsequent Events

16. Subsequent Events

The following events occurred subsequent to the balance sheet date.

Real Estate. We acquired a 140-bed SNF located in Texas for approximately $13,500,000 and entered into a 10-year master lease agreement with an initial cash yield of 8.5%, escalating 2% annually starting in the second year of the lease, with two five-year renewal options.

Debt: We borrowed $18,000,000, under our unsecured revolving line of credit. Accordingly, we have $111,900,000 outstanding and $488,100,000 available for borrowing under our unsecured revolving line of credit.

Equity: We declared a monthly cash dividend of $0.19 per share on our common stock for the months of January, February and March 2020, payable on January 31, February 28, and March 31, 2020, respectively, to stockholders of record on January 23, February 20, and March 23, 2020, respectively. Also, we acquired 34,016 shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations and we granted 76,464 shares of restricted common stock at $48.95 per share, which vest ratably from the grant date over a three-year period.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies

Basis of Presentation

Basis of Presentation. The accompanying consolidated financial statements include the accounts of LTC, our wholly-owned subsidiaries, and our consolidated companies. All intercompany investments, accounts and transactions have been eliminated.

Consolidation of entities is based on determination of the primary beneficiary. In order to be considered the primary beneficiary, the member should be able to exercise power over and receive benefits from the entity. Power over the company is based on the provisions of the operating agreement that provides us with a controlling financial interest in the entity. Under the terms of the operating agreement, we, as the general member, are responsible for the management of the company’s assets, business and affairs. Our rights and duties in management of the company include making all operating decisions, setting the capital budget, executing all contracts, making all employment decisions, and handling the purchase and disposition of assets, among others. We, as the general member, are responsible for the ongoing, major, and central operations of the company and make all management decisions. In addition, we, as the general member, assume the risk for all operating losses, capital losses, and are entitled to substantially all capital gains (appreciation) and accordingly, receive substantial benefits from the company.

The Financial Accounting Standards Board (“FASB”) created a framework for evaluating whether a general partner or a group of general partners controls a limited partnership or a managing member or a group of managing members can exercise power over a limited liability company, and therefore should consolidate the entity. The guidance states that the presumption of general partner or managing member control would be overcome only when the limited partners or non-managing members have certain specific rights as described in the guidance. The limited members have virtually no rights and are precluded from taking part in the operation, management or control of the company. The limited members are also precluded from transferring their interests without the expressed permission of the general member. However, general partners could transfer their interest without consultation or permission of the limited members. We consolidated the companies in accordance with the guidance.

The FASB requires the classification of non-controlling interests as a component of consolidated equity in the consolidated balance sheet subject to the provisions of the rules governing classification and measurement of redeemable securities. The guidance requires consolidated net income to be reported at the amounts attributable to both the controlling and non-controlling interests. The calculation of earnings per share will be based on income amounts attributable to the controlling interest.

Any reference to the number of properties or facilities, number of units, number of beds, number of operators, and yield on investments in real estate are unaudited and outside the scope of our independent registered public

accounting firm’s audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board.

Use of Estimates

Use of Estimates. Preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Cash Equivalents

Cash Equivalents. Cash equivalents consist of highly liquid investments with a maturity of three months or less when purchased and are stated at cost which approximates market.

Restricted Cash

Restricted Cash. In November 2016, the FASB issued ASU No 2016-18 (“ASU 2016-18”), Restricted Cash. ASU 2016-18 requires an entity to reconcile and explain the period over period change in total cash, cash equivalent and restricted cash within its consolidated statement of cash flows. ASU 2016-18 is effective for annual periods ending after December 15, 2017. We adopted this ASU in 2018. The adoption of this ASU did not have a material impact on our financial statements or disclosures.

During the third quarter of 2017, a 170-bed skilled nursing center in our portfolio (the “Property”), located in Texas, was evacuated due to damages caused by Hurricane Harvey. The Property was under a triple net master lease agreement. We periodically evaluate properties for impairment when events or changes in circumstances indicate that the asset may be impaired or the carrying amount of the asset may not be recoverable through future undiscounted cash flows. Based upon a quarterly assessment of the Property using the recoverability test, we concluded the Property was not impaired.

The provisions of our triple net lease agreements impose certain obligations on our operators including:

● Acquire property insurance, subject to certain criteria;

● Continue paying rent in the event of any property damage or destruction; and

● Return the leased property back to us at the end of the lease term, in the same condition originally received.

During the second quarter of 2018, our operator provided us with insurance proceeds of $2,619,000 for remediation of the Property as noted in the provisions of our master lease agreement. Accordingly, we classified the insurance proceeds as Restricted cash on our consolidated balance sheets at December 31, 2018. During the fourth quarter of 2019, we sold the Property and recognized a loss on sale of $782,000. Therefore, we released our operator from its contractual obligation to return the Property back to its original condition. Additionally, we took possession of the remaining insurance proceeds of $2,111,000 and reclassified this amount to Gain from Property insurance proceeds on the Consolidated Statements of Income and Comprehensive Income at December 31, 2019.

Owned Properties

Owned Properties. We make estimates as part of our allocation of the purchase price of acquisitions to the various components of the acquisition based upon the fair value of each component. In determining fair value, we use current appraisals or other third-party opinions of value. The most significant components of our allocations are typically the allocation of fair value to land and buildings and, for certain of our acquisitions, in-place leases and other intangible assets. In the case of the fair value of buildings and the allocation of value to land and other intangibles, the estimates of the values of these components will affect the amount of depreciation and amortization we record over the estimated useful life of the property acquired or the remaining lease term. In the case of the value of in-place leases, we make best estimates based on the evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions and costs to execute similar leases. These assumptions affect the amount of future revenue that we will recognize over the remaining lease term for the acquired in-place leases. We evaluate each purchase transaction to determine whether the acquired assets meet the definition of an asset acquisition or a business combination. Transaction costs related to acquisitions that are not deemed to be businesses are included in the cost basis of the acquired assets, while transaction costs related to acquisitions that are deemed to be businesses are expensed as incurred.

In January 2017, the FASB issued ASU No. 2017-01(“ASU 2017-01”), Business Combinations (Topic 805): Clarifying Definition of a Business. ASU 2017-01 clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. ASU 2017-01 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. We early adopted this standard in 2017. As a result of adopting ASU 2017-01, most of our acquisitions of investment properties will qualify as asset acquisitions.

In February 2017, the FASB issued ASU No. 2017-05 (“ASU 2017-05”), Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets. ASU 2017-05 defines an in-substance nonfinancial asset and clarifies guidance related to partial sales of nonfinancial assets. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. We adopted this standard in 2018. The adoption of this ASU did not have a material impact on the consolidated financial statements and related notes.

We capitalize direct construction and development costs, including predevelopment costs, interest, property taxes, insurance and other costs directly related and essential to the acquisition, development or construction of a real estate asset. We capitalize construction and development costs while substantive activities are ongoing to prepare an asset for its intended use. We consider a construction project as substantially complete and held available for occupancy upon the issuance of the certificate of occupancy. Costs incurred after a project is substantially complete and ready for its intended use, or after development activities have ceased, are expensed as incurred. For redevelopment, renovation and expansion of existing operating properties, we capitalize the cost for the construction and improvement incurred in connection with the redevelopment, renovation and expansion. Costs previously capitalized related to abandoned acquisitions or developments are charged to earnings. Expenditures for repairs and maintenance are expensed as incurred.

Depreciation is computed principally by the straight-line method for financial reporting purposes over the estimated useful lives of the assets, which range from 3 to 5 years for computers, 5 to 15 years for furniture and equipment, 35 to 50 years for buildings, 10 to 20 years for site improvements, 10 to 50 years for building improvements and the respective lease term for acquired lease intangibles.

Consolidation

Consolidation. At inception, and on an ongoing basis, as circumstances indicate the need for reconsideration, we evaluate each legal entity that is not wholly-owned by us for consolidation, first under the variable interest entity

(“VIE”), then under the voting model. Our evaluation considers all of our variable interests, including common or preferred equity ownership, loans, and other participating instruments. The variable interest model applies to entities that meet both of the following criteria:

● A legal structure has been established to conduct business activities and to hold assets.

● LTC has a variable interest in the entity - i.e. it has equity ownership or other financial interests that change with changes in the fair value of the entity's net assets.

If an entity does meet the above criteria and doesn’t qualify for a scope exception from the VIE model, we will determine whether the entity is a VIE.

A legal entity is determined to be a VIE if it has any of the following three characteristics:

1. The entity does not have sufficient equity to finance its activities without additional subordinated financial support;

2. The equity holders, as a group lack the characteristics of a controlling financial interest, as evidenced by all of the following characteristics:

● The power, through voting rights or similar rights, to direct the activities of the entity that most significantly impact the entity's economic performance;

● The obligation to absorb the entity's expected losses;

● The right to receive the entity's expected residual returns; or

3. The entity is established with non-substantive voting rights (i.e. the entity is structured such that majority economic interest holder(s) have disproportionately few voting rights).

If any of the three characteristics of a VIE are met, we conclude that the entity is a VIE and evaluate it for consolidation under the variable interest model.

If an entity is determined to be a VIE, we evaluate whether we are the primary beneficiary. The primary beneficiary analysis is a qualitative analysis based on power and benefits. We consolidate a VIE if we have both power and benefits - that is (i) we have the power to direct the activities of a VIE that most significantly impact the VIE's economic performance (power), and (ii) we have the obligation to absorb losses of the VIE that could potentially be significant to the VIE, or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). If we have a variable interest in a VIE but we are not the primary beneficiary, we account for our investment using the equity method of accounting.

If a legal entity fails to meet any of the three of the characteristics of a VIE, we evaluate such entity under the voting interest model. Under the voting interest model, we consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting shares or if we are the general partner or managing member of the entity and the limited partners or non-managing members do not have substantive participating, liquidation, or kick-out rights that preclude our presumption of control.

Mortgage Loans Receivable, Net of Loan Loss Reserve

Mortgage Loans Receivable, Net of Loan Loss Reserve. Mortgage loans receivable we originate are recorded on an amortized cost basis. Mortgage loans we acquire are recorded at fair value at the time of purchase net of any related premium or discount which is amortized as a yield adjustment to interest income over the life of the loan. Additionally, we record an estimated allowance for doubtful accounts, as described below.

Mezzanine Loans

Mezzanine Loans. In 2015 we strategically decided to allocate a portion of our capital deployment toward mezzanine loans to grow relationships with operating companies that have not typically utilized sale leaseback financing

as a component of their capital structure. Mezzanine financing sits between senior debt and common equity in the capital structure, and typically is used to finance development projects or value-add opportunities on existing operational properties. We seek market-based, risk-adjusted rates of return typically between 12-14% with the loan term typically between four to five years. Security for mezzanine loans can include all or a portion of the following credit enhancements; secured second mortgage, pledge of equity interests and personal/corporate guarantees. Mezzanine loans are recorded for GAAP purposes as either a loan, under notes receivable, or joint venture, under investment in unconsolidated JVs, depending upon specifics of the loan terms and related credit enhancements.

Investment in unconsolidated joint ventures

Investment in unconsolidated joint ventures. From time to time, we provide funding to third-party operators for the acquisition, development and construction (“ADC”) of a property. Under an ADC arrangement, we may participate in the residual profits of the project through the sale or refinancing of the property. These ADC arrangements can have characteristics similar to a loan or similar to a joint venture (“JV”) or partnership such as participating in the risks and rewards of the project as an owner or an investment partner. If the ADC arrangement characteristics are more similar to a jointly-owned investment or partnership, we account for the ADC arrangement as an investment in an unconsolidated JV under the equity method of accounting or a direct investment (consolidated basis of accounting) instead of applying loan accounting.

We evaluate our ADC arrangements first pursuant to ASC 805, Consolidation, to determine whether the ADC arrangement meets the definition of a VIE, as explained above, and whether we are the primary beneficiary. If the ADC arrangement is deemed to be a VIE but we are not the primary beneficiary, or if it is deemed to be a voting interest entity but we do not have a controlling financial interest, we account for our investment in the ADC arrangement using the equity method. Under the equity method, we initially record our investment at cost and subsequently recognize our share of net earnings or losses and other comprehensive income or loss, cash contributions made and distributions received, and other adjustments, as appropriate. Allocations of net income or loss may be subject to preferred returns or allocation formulas defined in operating agreements and may not be according to percentage ownership interests. In certain circumstances where we have a substantive profit-sharing arrangement which provides a priority return on our investment, a portion of our equity in earnings may consist of a change in our claim on the net assets of the underlying JV. Distributions of operating profit from the JVs are reported as part of operating cash flows, while distributions related to a capital transaction, such as a refinancing transaction or sale, are reported as investing activities.

We periodically perform evaluation of our investment in unconsolidated JVs to determine whether the fair value of each investment is less than the carrying value, and, if such decrease in value is deemed to be other-than-temporary, we write the investment down to its estimated fair value as of the measurement date.

We have a preferred equity investment in a JV that own four properties in Arizona. Based on the information available to us regarding alternatives and courses of action as of December 31, 2019, we performed a recoverability test on the carrying amount of our preferred equity investment and determined that a portion of our preferred equity investment is not recoverable. Therefore, we recorded an impairment loss from investment in unconsolidated joint ventures of $5,500,000 and wrote our preferred equity investment down to its estimated fair value. See Note 6. Investment in Unconsolidated Joint Ventures for further information.

In March 2016, FASB issued ASU No. 2016-07 (“ASU 2016-07”), Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. ASU 2016-07 eliminates retroactive adjustment of an investment upon an investment qualifying for the equity method of accounting and requires the equity method investor to adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts. We maintain an allowance for doubtful accounts. The allowance for doubtful accounts depends on the expected collectibility of our receivables which is based on considerations including the

certainty of payment, payment history and other relevant factors. The allowance for doubtful accounts is maintained at a level believed adequate to absorb potential losses in our receivables. In 2016, the FASB issued ASU No. 2016-13 (“ASU 2016-13”), Measurement of Credit Losses on Financial Instruments (Topic 326). This standard requires a new forward looking “expected loss” model to be used for receivables, held-to-maturity debt, loans, and other instruments. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early adoption is permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact that the standard will have on our consolidated financial statements.

Accrued incentives and earn-outs

Accrued incentives and earn-outs. As part of our acquisitions and/or amendments, we may commit to provide contingent payments to our sellers or lessees, upon the properties achieving certain rent coverage ratios. Typically, when the contingent payments are funded, cash rent will increase by the amount funded multiplied by a rate stipulated in the agreement. If it is deemed probable, the contingent payment is recorded as a liability at the estimate fair value calculated using a discounted cash flow analysis and accreted to the settlement amount of the estimated payment date. If the contingent payment is an earn-out provided to the seller, the estimated fair value is capitalized to the property’s basis. If the contingent payment is provided to the lessee, the estimated fair value is recorded as a lease incentive included in the prepaid and other assets line item in our consolidated balance sheet and is amortized as a yield adjustment over the life of the lease. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. The fair value of these contingent liabilities are evaluated on a quarterly basis based on changes in estimates of future operating results and changes in market discount rates.

Impairments

Impairments. Assets that are classified as held-for-use and mortgage loans are periodically evaluated for impairment when events or changes in circumstances indicate that the asset may be impaired or the carrying amount of the asset may not be recoverable through future undiscounted cash flows. Where indicators of impairment exist, the estimation required in the undiscounted future cash flow assumption includes management’s probability-weighting of various scenarios including whether the management modifies the lease with the existing operator versus identifying a replacement operator and the assumed market lease rate underlying projected future rental cash flows. When indicators are identified for mortgage loans, management calculates an impairment charge as the difference between the carrying amount of the mortgage loan receivable and the discounted cash flows expected to be received, or if foreclosure is probable, the fair value of the collateral securing the mortgage. In determining fair value, we use current appraisals or other third-party opinions of value and other estimates of fair value such as estimated discounted future cash flows. Based on our assessment, during the years ended December 31, 2019, 2018 and 2017, we recognized impairment charges of $0, $0 and $1,880,000 respectively, related to our real property investments.

Also, we evaluate the carrying values of mortgage loans receivable on an individual basis. Management periodically evaluates the realizability of future cash flows from the mortgage loan receivable when events or circumstances, such as the non-receipt of principal and interest payments and/or significant deterioration of the financial condition of the borrower, indicate that the carrying amount of the mortgage loan receivable may not be recoverable. An impairment charge is recognized in current period earnings and is calculated as the difference between the carrying amount of the mortgage loan receivable and the discounted cash flows expected to be received, or if foreclosure is probable, the fair value of the collateral securing the mortgage.

Fair Value of Financial Instruments

Fair Value of Financial Instruments. The FASB requires the disclosure of fair value information about financial instruments for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. Accordingly, the aggregate fair market value amounts presented in the notes to these consolidated financial statements do not represent our underlying carrying value in financial instruments.

The FASB provides guidance for using fair value to measure assets and liabilities, the information used to measure fair value, and the effect of fair value measurements on earnings. The FASB emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the FASB establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices).

The fair value guidance issued by the FASB excludes accounting pronouncements that address fair value measurements for purposes of lease classification or measurement. However, this scope exception does not apply to assets acquired and liabilities assumed in a business combination that are required to be measured at fair value, regardless of whether those assets and liabilities are related to leases.

In accordance with the accounting guidance regarding the fair value option for financial assets and financial liabilities, entities are permitted to choose to measure certain financial assets and liabilities at fair value, with the change in unrealized gains and losses on items for which the fair value option has been elected reported in earnings. We have not elected the fair value option for any of our financial assets or liabilities.

The FASB requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. See Note 15. Fair Value Measurements for the disclosure about fair value of our financial instruments.

Revenue Recognition

Revenue Recognition. Rental income from operating leases is generally recognized on a straight-line basis over the terms of the leases. Substantially all of our leases contain provisions for specified annual increases over the rents of the prior year and are generally computed in one of four methods depending on specific provisions of each lease as follows:

(i) a specified annual increase over the prior year’s rent, generally between 2.0% and 3.0%;

(ii) a calculation based on the Consumer Price Index;

(iii) as a percentage of facility revenues in excess of base amounts or

(iv) specific dollar increases.

The FASB does not permit recognition of contingent revenue until all possible contingencies have been resolved. Historically, we have not included contingent rents as income until received and will we continue our historical policy. During the years ended December 31, 2019, 2018 and 2017, we received $464,000, $470,000 and $457,000, respectively, of contingent rental income. We follow a policy related to rental income whereby we consider a lease to be non-performing after 60 days of non-payment of past due amounts and do not recognize unpaid rental income from that lease until the amounts have been received.

Interest income on mortgage loans is recognized using the effective interest method. We follow a policy related to mortgage interest whereby we consider a loan to be non-performing after 60 days of non-payment of amounts due and do not recognize unpaid interest income from that loan until the past due amounts have been received. Effective interest method, as required by GAAP, is a technique for calculating the actual interest rate for the term of a mortgage loan based on the initial origination value. Similar to the accounting methodology of straight-line rent, the actual interest rate is higher than the stated interest rate in the early years of the mortgage loan thus creating an effective interest receivable

asset included in the interest receivable line item in our consolidated balance sheet and reduces down to zero when, at some point during the mortgage loan, the stated interest rate is higher than the actual interest rate.

Payments made to or on behalf of our lessees represent incentives that are deferred and amortized as a yield adjustment over the term of the lease on a straight-line basis. Net loan fee income and commitment fee income are amortized over the life of the related loan.

Leases

Leases: In February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases. ASU 2016-02 and its amendments have now formally entered into the FASB codification as ASC Topic 842, Leases (“ASC 842”). The objective of ASC 842 is to establish the principles for lessees and lessors to apply for reporting useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease.

ASC 842 requires lessees to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance of operating leases.

ASC 842 requires the lessors to identify lease and non-lease components of a lease agreement. Revenue related to non-lease components under lease agreements are subject to the revenue recognition standard, upon adoption of this standard. Also, the new standard narrows definition of initial direct costs. Accordingly, upon adoption of the new standard, certain costs (primarily legal costs related to lease negotiations) are expensed rather than capitalized.

Further, per ASC 842, lessors are required to assess the probability of collecting substantially all of the lease payments. The standard defines collectibility as lessee’s ability and intent to pay. If collectibility of substantially all of

the lease payments through maturity is not probable, the lease income recorded during the period would be limited to lesser of the income that would have been recognized if collection were probable, and the lease payments received. If the assessment of collectibility changes, any difference between the lease income that would have been recognized and the lease payments should be recognized as an adjustment to lease income. At adoption, lessors are required to perform a lease-by-lease analysis for collectibility of all lease payments through maturity. If at adoption, it is not probable that substantially all of the lease obligations through maturity will be collected, a cumulative adjustment to equity should be made to reflect all of the lease obligations which are not probable to be collected.

Additionally, ASC 842 provides lessors with the option to elect a practical expedient allowing them to not separate lease and non-lease components and instead, to account for those components as a single lease component. This practical expedient is limited to circumstances in which: (i) the timing and pattern of transfer are the same for the non-lease component and the related lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. This practical expedient causes an entity to assess whether a contract is predominantly lease-based or service-based and recognize the entire contract under the relevant accounting guidance (i.e., predominantly lease-based would be accounted for under ASC 842 and predominantly service-based would be accounted for under the ASC 606). This practical expedient option is available as a single election that must be consistently applied to all existing leases at the date of adoption. Also, ASC 842 provides a practical expedient that allows companies to use an optional transition method. Under the optional transition method, a cumulative adjustment to equity during the period of adoption is recorded and prior periods would not require restatement. Consequently, entities that elect both the practical expedient and the optional transitional method will apply the new lease ASC prospectively to leases commencing or modified after January 1, 2019 and will not be required to apply the disclosures under the new lease standard to comparative periods.

ASC 842 has subsequently been amended by other ASUs to clarify and improve the standard as well as to provide certain practical expedients. In December 2018, the FASB issued ASU 2018-20 (“ASU 2018-20”), Narrow-Scope Improvements for Lessors, which amends ASC 842 to require the lessors to exclude the lessor costs that are directly paid by the lessee to third parties on lessor’s behalf from variable payments. However, the lessor costs that are paid by the lessor and reimbursed by the lessee are required to be included in variable payments. Furthermore, ASC 842 allows for several practical expedients which permit the following: no reassessment of lease classification or initial direct costs and use of the standard’s effective date as the date of initial application. In March 2019, the FASB issued ASU 2019-01 (“ASU 2019-01”), Leases (Topic 842), Codification Improvements which provides clarification regarding presentation and disclosures. ASC 842 and its amendments are effective January 1, 2019.

On January 1, 2019, we adopted ASC 842 using the modified retrospective approach as of the adoption date, whereby the cumulative effect of adoption was recognized on the adoption date and prior periods were not restated.

Upon adoption of the standard, we elected the practical expedients provided for in ASC 842, including:

● No reassessment of whether any expired or existing contracts were or contained leases;

● No reassessment of the lease classification for any expired or existing leases;

● No reassessment of initial direct costs for any existing leases; and

● No separation of lease and non-lease components.

As a lessee, we have an office lease agreement with a 5-year remaining term which was classified as an operating lease under ASC 840. Due to election of the package of practical expedients, upon adoption of ASC 842 this lease agreement will continue to be classified as operating lease. For the year ended December 31, 2019, we recorded $299,000 of rent expense related to this lease agreement. Adoption of ASC 842 resulted in recording a right-of use asset and a lease liability which represents the present value of the remaining minimum lease payments using our incremental borrowing rate. At December 31, 2019, the balance of the right-of use asset and the lease liability related to our office

lease agreement were $1,287,000.

As a lessor, our properties are leased subject to non-cancelable operating leases. Each lease is a triple net lease which requires the lessee to pay all taxes, insurance, maintenance and repairs, capital and non-capital expenditures and other costs necessary in the operations of the facilities. Upon adoption of ASC 842, we recorded real estate taxes that are reimbursed by our operators as Rental Income with a corresponding Property tax expense in the Consolidated Statements of Income and Comprehensive Income. For the year ended December 31, 2019, we have recognized $15,998,000 in Rental Income related to reimbursement of real estate taxes from our operators.

Furthermore, upon adoption of ASC 842, we assessed the probability of collecting substantially all of our lease payments through maturity. As previously reported, we have been monitoring Anthem Memory Care (“Anthem”), Thrive Senior Living, LLC (“Thrive”), Preferred Care, Inc. (“Preferred Care”) and Senior Care Centers, LLC (“Senior Care”) due to cash flow concerns, performance concerns and/or bankruptcy filing. In conjunction with adoption of ASC 842, we evaluated our straight-line rent receivable and lease incentive balances related to the noted operators and determined that we do not have the level of collectibility certainty required by the standard to record the straight-line rent receivable. Accordingly, we wrote-off the straight-line rent receivable and lease incentive balances associated with these leases. Also, we wrote-off our 1% general straight-line rent receivable reserve. These balances totaled $42,808,000 and were written-off to equity effective January 1, 2019 as required by ASC 842. Subsequently, if collectibility of substantially all of the lease payments through maturity is not probable, all or a portion of the straight-line rent receivable and other lease receivables may be written off, and the rental income recorded during the period would be limited to lesser of the income that would have been recognized if collection were probable, and the lease payments received. Our assessment of collectibility of leases includes evaluating the data and assumptions used in determining whether substantially all of the future lease payments were probable based on the lessee’s payment history, the financial strength of the lessees, future contractual rents, and the timing of expected payments.

During the year ended December 31, 2019, we received cash rent from Anthem, Thrive, Preferred Care and Senior Care. The total amount of rental income received from these operators was $33,238,000 and is included in Rental Income on the Consolidated Statements of Income and Comprehensive Income. Of the $33,238,000 received, $27,225,000 of the cash payments received relate to amounts previously written-off in transition to ASC 842 (“Recoveries”) during the twelve months ended December 31, 2019.

Federal Income Taxes

Federal Income Taxes. LTC qualifies as a REIT under the Internal Revenue Code of 1986, as amended, and as such, no provision for Federal income taxes has been made. A REIT is required to distribute at least 90% of its taxable income to its stockholders and a REIT may deduct dividends in computing taxable income. If a REIT distributes 100% of its taxable income and complies with other Internal Revenue Code requirements, it will generally not be subject to Federal income taxation.

For Federal tax purposes, depreciation is generally calculated using the straight-line method over a period of 27.5 years. Earnings and profits, which determine the taxability of distributions to stockholders, use the straight-line method over 40 years. Both Federal taxable income and earnings and profits differ from net income for financial statement purposes principally due to the treatment of certain interest income, rental income, other expense items, impairment charges and the depreciable lives and basis of assets. At December 31, 2019, the tax basis of our net depreciable assets exceeds our book basis by approximately $25,436,000 (unaudited), primarily due to an investment recorded as an acquisition for tax and a mortgage loan for GAAP, and to differences previously mentioned above.

The FASB clarified the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. The guidance utilizes a two-step approach for evaluating tax positions. Recognition (step one) occurs when a company concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Measurement (step two) is

only addressed if step one has been satisfied (i.e., the position is more likely than not to be sustained). Under step two, the tax benefit is measured as the largest amount of benefit (determined on a cumulative probability basis) that is more likely than not to be realized upon ultimate settlement. We currently do not have any uncertain tax positions that would not be sustained on its technical merits on a more-likely than not basis.

We may from time to time be assessed interest or penalties by certain tax jurisdictions. In the event we have received an assessment for interest and/or penalties, it has been classified in our consolidated financial statements as general and administrative expenses.

Financial instruments which potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, mortgage loans receivable, marketable debt securities and operating leases on owned properties. Our financial instruments, mortgage loans receivable and operating leases, are subject to the possibility of loss of carrying value as a result of the failure of other parties to perform according to their contractual obligations or changes in market prices which may make the instrument less valuable. We obtain various collateral and other protective rights, and continually monitor these rights, in order to reduce such possibilities of loss. In addition, we provide reserves for potential losses based upon management’s periodic review of our portfolio. See Note 3. Major Operators for further discussion of concentrations of credit risk from our tenants.

Properties held-for-sale

Properties held-for-sale. Properties classified as held-for-sale on the consolidated balance sheet include only those properties available for immediate sale in their present condition and for which management believes that it is probable that a sale of the property will be completed within one year. Properties held-for-sale are carried at the lower of cost or fair value less estimated selling costs. No depreciation expense is recognized on properties held-for-sale once they have been classified as such. Under ASU No. 2014-08 (“ASU 2014-08”), Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. We have not reclassified results of operations for properties disposed as discontinued operations as these disposals do not represent strategic shifts in our operations.

Net Income Per Share

Net Income Per Share. Basic earnings per share is calculated using the weighted-average shares of common stock outstanding during the period excluding common stock equivalents. Diluted earnings per share includes the effect of all dilutive common stock equivalents.

In accordance with the accounting guidance regarding the determination of whether instruments granted in share-based payments transactions are participating securities, we have applied the two-class method of computing basic earnings per share. This guidance clarifies that outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends participate in undistributed earnings with common stockholders and are considered participating securities.

Stock-Based Compensation

Stock-Based Compensation. The FASB requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. We use the Black-Scholes-Merton formula to estimate the value of stock options granted to employees. Also, we use the Monte Carlo model to estimate the value of performance-based stock units granted to employees. These models require management to make certain estimates including stock volatility, expected dividend yield and the expected term. If management incorrectly estimates these variables, the results of operations could be affected. The FASB also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow. Because we qualify as a REIT under the Internal Revenue Code of 1986, as amended, we are generally not subject to

Federal income taxation. Therefore, this reporting requirement does not have an impact on the Consolidated Statements of Cash Flows.

Segment Disclosures

Segment Disclosures. The FASB accounting guidance regarding disclosures about segments of an enterprise and related information establishes standards for the manner in which public business enterprises report information about operating segments. Our investment decisions in seniors housing and health care properties, including mortgage loans, property lease transactions and other investments, are made and resulting investments are managed as a single operating segment for internal reporting and for internal decision-making purposes. Therefore, we have concluded that we operate as a single segment.

ASU 2016-18

Summary of Significant Accounting Policies

New Accounting Pronouncement

In November 2016, the FASB issued ASU No 2016-18 (“ASU 2016-18”), Restricted Cash. ASU 2016-18 requires an entity to reconcile and explain the period over period change in total cash, cash equivalent and restricted cash within its consolidated statement of cash flows. ASU 2016-18 is effective for annual periods ending after December 15, 2017. We adopted this ASU in 2018.

ASU 2017-01

Summary of Significant Accounting Policies

New Accounting Pronouncement

In January 2017, the FASB issued ASU No. 2017-01(“ASU 2017-01”), Business Combinations (Topic 805): Clarifying Definition of a Business. ASU 2017-01 clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. ASU 2017-01 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. We early adopted this standard in 2017. As a result of adopting ASU 2017-01, most of our acquisitions of investment properties will qualify as asset acquisitions.

ASU 2017-05

Summary of Significant Accounting Policies

New Accounting Pronouncement

In February 2017, the FASB issued ASU No. 2017-05 (“ASU 2017-05”), Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets. ASU 2017-05 defines an in-substance nonfinancial asset and clarifies guidance related to partial sales of nonfinancial assets. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. We adopted this standard in 2018. The adoption of this ASU did not have a material impact on the consolidated financial statements and related notes.

ASU 2016-07

Summary of Significant Accounting Policies

New Accounting Pronouncement

In March 2016, FASB issued ASU No. 2016-07 (“ASU 2016-07”), Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. ASU 2016-07 eliminates retroactive adjustment of an investment upon an investment qualifying for the equity method of accounting and requires the equity method investor to adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting.

ASU 2014-09

Summary of Significant Accounting Policies

New Accounting Pronouncement

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers: Topic 606. ASU 2014-09 provides for a single comprehensive principles based standard for the recognition of revenue across all industries through the application of the following five-step process:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” In doing so, companies may need to use more judgment and make more estimates. While this ASU specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate. Additionally, the FASB has issued targeted updates to clarify specific implementation issues of ASU 2014-09. These updates include ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Identifying Performance Obligations and Licensing, and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients. ASU 2014-09 and its amendments have now formally entered into the FASB codification as Accounting Standard Codification (“ASC”) Topic 606, Contracts with Customers (“ASC 606”). The new standard and its amendments are effective on January 1, 2018, and permit reporting entities to apply the standard using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or full retrospective approach. We have adopted this standard using the modified retrospective adoption method on January 1, 2018. We concluded that this standard did not have a material impact on our results of operations or financial condition, as a substantial portion of our revenues consists of rental income from leasing arrangements and interest income from loan arrangements, both of which are specifically excluded from ASU 2014-09.

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Summary of Significant Accounting Policies - Leases (Details) - USD ($)		12 Months Ended
	Jan. 01, 2019	Dec. 31, 2019
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Lease, Practical Expedients, Package [true false]	true
Remaining lease term (years)		5 years
Rent expense related to operating lease		$ 299,000
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]		Prepaid Expense and Other Assets
Lease liability		$ 1,287,000
Operating Lease, Liability, Statement of Financial Position [Extensible List]		Accrued Liabilities and Other Liabilities
Real estate taxes reimbursed		$ 15,998,000
Percentage of provision on rent receivables (in percentage)		1.00%
Cumulative effect of the adoption of the ASC 842	$ 42,808,000
Cash rent received		$ 27,225,000
Rental income		152,755,000
ASU 2016-02
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Cumulative effect of the adoption of the ASC 842	$ 42,808,000
Anthem, Thrive, Preferred Care and Senior Care
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Rental income		$ 33,238,000

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Summary of Significant Accounting Policies - Restricted Cash (Details)	3 Months Ended		12 Months Ended
	Dec. 31, 2019 USD ($)	Jun. 30, 2018 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2017 item
Summary of Significant Accounting Policies
Number of beds damaged | item					170
Insurance proceeds		$ 2,619,000		$ 2,619,000
Loss on sale of properties	$ 782,000
Gain from property insurance proceeds			$ 2,111,000

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Properties held-for-sale, accumulated depreciation	$ 35,113	$ 1,916
Mortgage loans receivable, loan loss reserve	2,560	2,447
Notes receivable, loan loss reserve	181	128
Straight-line rent receivable, allowance for doubtful accounts	$ 0	$ 746
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	60,000	60,000
Common stock, shares issued	39,752	39,657
Common stock, shares outstanding	39,752	39,657
Senior Unsecured Notes
Debt issue costs, net	$ 812	$ 938

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
OPERATING ACTIVITIES:
Net income		$ 80,872,000	$ 80,872,000	$ 155,076,000	$ 87,340,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		39,216,000		37,555,000	37,610,000
Stock-based compensation expense		6,566,000		5,870,000	5,249,000
Impairment charges		5,500,000			1,880,000
Other than Temporary Impairment Losses, Investments	$ 5,500,000	5,500,000
Gain on sale of real estate, net		(2,106,000)		(70,682,000)	(3,814,000)
Income from unconsolidated joint ventures		(2,388,000)		(2,864,000)	(2,263,000)
Income distributions from unconsolidated joint ventures		2,991,000		2,371,000	1,738,000
Insurance proceeds for damaged property				2,619,000
Payment for remediation of damaged property				(508,000)
Straight-line rental income		(4,487,000)		(9,550,000)	(10,694,000)
Adjustment for collectability of rental income		1,926,000
Lease incentives funded		(387,000)		(1,272,000)	(6,544,000)
Amortization of lease incentives		385,000		2,092,000	2,209,000
Provision for (recovery of) doubtful accounts		166,000		87,000	(206,000)
Non-cash interest related to contingent liabilities				377,000	602,000
Non-cash income related to earn-out and related lease incentive write-off				(3,074,000)	(842,000)
Other non-cash items, net		1,016,000		1,180,000	1,282,000
Increase in interest receivable		(5,854,000)		(5,682,000)	(5,367,000)
Increase (decrease) in accrued interest payable		803,000		(1,096,000)	601,000
Net change in other assets and liabilities		(1,750,000)		3,036,000	(3,476,000)
Net cash provided by operating activities		122,469,000		115,535,000	105,305,000
INVESTING ACTIVITIES:
Investment in real estate properties		(58,414,000)		(40,408,000)	(82,405,000)
Investment in real estate developments		(20,524,000)		(35,279,000)	(22,901,000)
Investment in real estate capital improvements		(2,839,000)		(3,249,000)	(2,899,000)
Capitalized interest		(608,000)		(1,248,000)	(908,000)
Proceeds from sale of real estate, net		14,009,000		92,749,000	15,413,000
Investment in real estate mortgage loans receivable		(12,342,000)		(21,364,000)	(11,913,000)
Principal payments received on mortgage loans receivable		1,065,000		2,136,000	17,863,000
Investments in unconsolidated joint ventures		(472,000)		(670,000)	(3,848,000)
Proceeds from dissolution of unconsolidated joint ventures		6,601,000
Payment of working capital reserve					(439,000)
Advances and originations under notes receivable		(8,967,000)		(124,000)
Principal payments received on notes receivable		3,503,000		3,848,000	25,000
Net cash used in investing activities		(78,988,000)		(3,609,000)	(92,012,000)
FINANCING ACTIVITIES:
Bank borrowings		107,900,000		116,200,000	113,000,000
Repayment of bank borrowings		(126,000,000)		(100,700,000)	(123,600,000)
Proceeds from issuance of senior unsecured notes		100,000,000			100,000,000
Principal payments on senior unsecured notes		(33,667,000)		(38,166,000)	(31,167,000)
Proceeds from common stock issued				1,005,000	14,578,000
Stock option exercises		123,000		123,000	202,000
Distributions paid to stockholders		(90,899,000)		(90,372,000)	(90,219,000)
Contribution from non-controlling interests		965,000		3,963,000	3,488,000
Distributions paid to non-controlling interests		(309,000)		(65,000)
Financing costs paid		(61,000)		(3,162,000)	(363,000)
Other		(2,053,000)		(1,201,000)	(1,990,000)
Net cash used in financing activities		(44,001,000)		(112,375,000)	(16,071,000)
Decrease in cash, cash equivalents and restricted cash		(520,000)		(449,000)	(2,778,000)
Cash, cash equivalents and restricted cash, beginning of period		4,764,000		5,213,000	7,991,000
Cash, cash equivalents and restricted cash, end of period	$ 4,244,000	4,244,000	$ 4,244,000	4,764,000	5,213,000
Supplemental disclosure of cash flow information:
Interest paid		$ 28,767,000		$ 30,116,000	$ 28,070,000

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Debt Obligations - Borrowings and Payments (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Debt Obligations
Borrowings		$ 207,900	$ 116,200	$ 213,000
Repayments		$ (159,667)	(138,866)	(154,767)
Applicable Interest Rate (as a percent)	4.22%	4.22%
Bank Borrowings
Debt Obligations
Borrowings		$ 107,900	116,200	113,000
Repayments		$ (126,000)	(100,700)	(123,600)
Applicable Interest Rate (as a percent)	3.14%	3.14%
Senior Unsecured Notes
Debt Obligations
Borrowings	$ 100,000	$ 100,000		100,000
Repayments		$ (33,667)	$ (38,166)	$ (31,167)
Applicable Interest Rate (as a percent)	4.39%	4.39%
Senior Unsecured Notes | Private Shelf Agreement Prudential
Debt Obligations
Debt term				15 years
Face amount of debt				$ 100,000
Stated interest rate (as a percent)				4.50%

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Real Estate Investments - Mortgage Loans - Early Payoffs (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($) loan	Dec. 31, 2017 USD ($) loan
Early mortgage loan payoffs
Early Principal Payoff	$ 1,086	$ 16,665
AZ/MI/PA/TX/VA | Mortgage Loans
Early mortgage loan payoffs
Early Principal Payoff		$ 10,795
Number of Loans | loan		4
UT | Mortgage Loans
Early mortgage loan payoffs
Early Principal Payoff	$ 1,086
Number of Loans | loan	1

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Notes Receivable - New Loan Commitment (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($)
Notes receivable activities
Notes receivable, gross	$ 6,800
Mezzanine loan with 12.0% Interest
Notes receivable activities
Notes receivable, gross	$ 13,284	$ 9,868
204-unit ILF/ALF/MC
Notes receivable activities
Number of beds/units under development | item	204
Loan Term	5 years
Interest rate (as a percent)	12.00%
204-unit ILF/ALF/MC | Mezzanine loan with 12.0% Interest
Notes receivable activities
Loan Term	46 months
204-unit ILF/ALF/MC | $1400 note agreement
Notes receivable activities
Notes receivable, gross	$ 1,304
Interest rate (as a percent)	7.00%
Mezzanine loan principal amount	$ 1,400
Mezzanine Loan Committed to fund	96
204-unit ILF/ALF/MC | $550 Note Agreement
Notes receivable activities
Notes receivable, gross	$ 500
Interest rate (as a percent)	7.50%
Mezzanine loan principal amount	$ 550
Mezzanine Loan Committed to fund	$ 50

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Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Fair Value Measurements

Fair Value Measurements

15. Fair Value Measurements

In accordance with the accounting guidance regarding the fair value option for financial assets and financial liabilities, entities are permitted to choose to measure certain financial assets and liabilities at fair value, with the change in unrealized gains and losses reported in earnings. We did not adopt the elective fair market value option for our financial assets and financial liabilities.

The carrying amount of cash and cash equivalents approximates fair value because of the short-term maturity of these instruments. We do not invest our cash in auction rate securities. The carrying value and fair value of our financial instruments as of December 31, 2019 and 2018 assuming election of fair value for our financial assets and financial liabilities were as follows (in thousands):

	At December 31, 2019					At December 31, 2018
	Carrying		Fair			Carrying		Fair
	Value		Value			Value		Value
Mortgage loans receivable	$	254,099	$	312,824	(1)	$	242,939	$	295,492	(1)
Bank borrowings		93,900		93,900	(2)		112,000		112,000	(2)
Senior unsecured notes, net of debt issue costs		599,488		612,375	(3)		533,029		508,613	(3)

(1) Our investment in mortgage loans receivable is classified as Level 3. The fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is determined using our assumption on market conditions adjusted for market and credit risk and current returns on our investments. The discount rate used to value our future cash inflows of the mortgage loans receivable at December 31, 2019 and 2018 was 9.0%.

(2) Our bank borrowings bear interest at a variable interest rate. The estimated fair value of our bank borrowings approximated their carrying values at December 31, 2019 and 2018 based upon prevailing market interest rates for similar debt arrangements.

(3) Our obligation under our senior unsecured notes is classified as Level 3 and thus the fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is measured based upon management’s estimates of rates currently prevailing for comparable loans available to us, and instruments of comparable maturities. At December 31, 2019, the discount rate used to value our future cash outflow of our senior unsecured notes was 3.70% for those maturing before year 2026 and 3.90% for those maturing at or beyond year 2026. At December 31, 2018, the discount rate used to value our future cash outflow of our senior unsecured notes was 5.15% for those maturing before year 2026 and 5.40% for those maturing beyond year 2026.

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SCHEDULE IV MORTGAGE LOANS ON REAL ESTATE

12 Months Ended

Dec. 31, 2019

SCHEDULE IV MORTGAGE LOANS ON REAL ESTATE

SCHEDULE IV MORTGAGE LOANS ON REAL ESTATE

LTC PROPERTIES, INC.

SCHEDULE IV

MORTGAGE LOANS RECEIVABLE ON REAL ESTATE

(in thousands)

														Principal
														Amount of
												Carrying		Loans
								Current				Amount of		Subject to
	(Unaudited)							Monthly		Face		Mortgages		Delinquent
	Number of				Final	Balloon		Debt		Amount of		December 31,		Principal or
State	Properties		Units/Beds (3)	Interest Rate (1)	Maturity Date	Amount (2)		Service		Mortgages		2018		Interest
MI	15		2,029	9.92%	2043	$	161,966	$	1,535	$	188,966	$	184,265	$	—
MI	4		501	9.24%	2045		32,286		278		36,116		35,715		—
MI	1		157	9.41%	2045		14,325		117		15,000		14,801		—
MI	2		205	9.41%	2045		19,513		154		19,513		19,318		—
	22	(4)	2,892			$	228,090	$	2,084	$	259,595	$	254,099	$	—

(1) Represents current stated interest rate. Generally, the loans have a 30-year amortization with principal and interest payable at varying amounts over the life to maturity with annual interest adjustments through specified fixed rate increases effective either on the first anniversary or calendar year of the loan.

(2) Balloon payment is due upon maturity.

(3) This number is based upon unit/bed counts shown on operating licenses provided to us by borrowers or units/beds as stipulated by mortgage documents. We have found during the years that these numbers often differ, usually not materially, from units/beds in operation at any point in time. The differences are caused by such things as operators converting a patient/resident room for alternative uses, such as offices or storage, or converting a multi-patient room/unit into a single patient room/unit. We monitor our properties on a routine basis through site visits and reviews of current licenses. In an instance where such change would cause a de-licensing of beds or in our opinion impact the value of the property, we would take action against the borrower to preserve the value of the property/collateral.

(4) Includes 4 first-lien mortgage loans as follows:

Number of Loans	Original loan amounts
0		$ 500 - $2,000
0		$2,001 - $3,000
0		$3,001 - $4,000
0		$4,001 - $5,000
0		$5,001 - $6,000
0		$6,001 - $7,000
4		$7,001 +

Mortgage loans receivable activity for the years ended December 31, 2019, 2018 and 2017 is as follows:

Balance— December 31, 2016	$	229,801
New mortgage loans		—
Other additions		11,913
Land conveyance		—
Amortization of mortgage premium		(4)
Collections of principal		(17,863)
Foreclosures		—
Loan loss reserve		60
Other deductions		—
Balance— December 31, 2017		223,907
New mortgage loans		14,525
Other additions		6,839
Land conveyance		—
Amortization of mortgage premium		(4)
Collections of principal		(2,136)
Foreclosures		—
Loan loss reserve		(192)
Other deductions		—
Balance— December 31, 2018		242,939
New mortgage loans		7,500
Other additions		4,842
Land conveyance		—
Amortization of mortgage premium		(4)
Collections of principal		(1,065)
Foreclosures		—
Loan loss reserve		(113)
Other deductions		—
Balance— December 31, 2019	$	254,099

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Summary of Significant Accounting Policies - Taxes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Federal Income Taxes
Provision for federal or state income taxes	$ 0	$ 0	$ 0
Minimum distribution of taxable income (as a percent)	90.00%
Distribution percentage	100
Period considered for calculation of depreciation for federal tax purpose	27 years 6 months
Period considered for determining the taxability of distributions to shareholders	40 years
(Excess) / Deficit of book basis of net depreciable assets over tax basis	$ 25,436,000

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Summary of Significant Accounting Policies - Owned Properties (Details)	12 Months Ended
	Dec. 31, 2019
Computer Equipment | Minimum
Owned Properties
Useful life	3 years
Computer Equipment | Maximum
Owned Properties
Useful life	5 years
Furniture and Fixtures | Minimum
Owned Properties
Useful life	5 years
Furniture and Fixtures | Maximum
Owned Properties
Useful life	15 years
Building | Minimum
Owned Properties
Useful life	35 years
Building | Maximum
Owned Properties
Useful life	50 years
Site Improvements | Minimum
Owned Properties
Useful life	10 years
Site Improvements | Maximum
Owned Properties
Useful life	20 years
Building Improvements | Minimum
Owned Properties
Useful life	10 years
Building Improvements | Maximum
Owned Properties
Useful life	50 years

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Real Estate Investments - Mortgage Loans - Scheduled Principal Payments (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Mortgage Loans
Carrying value of mortgage loans	$ 254,099	$ 242,939
Mortgage Loans
Mortgage Loans
Carrying value of mortgage loans	254,099	$ 242,939
Scheduled principal payments on mortgage loan receivables
2020	1,065
2021	1,175
2022	1,175
2023	1,175
2024	1,175
Thereafter	250,894
Total	$ 256,659

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Commitments and Contingencies - Contingent Consideration (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Commitment
Carrying value	$ 1,136,816	$ 1,106,581

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Notes Receivable - Other Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Loans and Leases Receivable Disclosure [Abstract]
Advances under notes receivable	$ 8,967	$ 124
Principal payments received under notes receivable	(3,503)	(3,848)	$ (25)
Reclassified to real estate under development	(200)
Notes Receivable reserve	(52)	37
Total	$ 5,212	$ (3,687)	$ (25)

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Investments:
Land	$ 126,703	$ 125,358
Buildings and improvements	1,295,899	1,290,352
Accumulated depreciation and amortization	(312,642)	(312,959)
Operating real estate property, net	1,109,960	1,102,751
Properties held-for-sale, net of accumulated depreciation: 2019-$35,113; 2018-$1,916	26,856	3,830
Real property investments, net	1,136,816	1,106,581
Mortgage loans receivable, net of loan loss reserve: 2019-$2,560; 2018-$2,447	254,099	242,939
Real estate investments, net	1,390,915	1,349,520
Notes receivable, net of loan loss reserve: 2019-$181; 2018-$128	17,927	12,715
Investments in unconsolidated joint ventures	19,003	30,615
Investments, net	1,427,845	1,392,850
Other assets:
Cash and cash equivalents	4,244	2,656
Restricted cash		2,108
Debt issue costs related to bank borrowings	2,164	2,989
Interest receivable	26,586	20,732
Straight-line rent receivable, net of allowance for doubtful accounts: 2019-$0; 2018-$746	45,703	73,857
Lease incentives	2,552	14,443
Prepaid expenses and other assets	5,115	3,985
Total assets	1,514,209	1,513,620
LIABILITIES
Bank borrowings	93,900	112,000
Senior unsecured notes, net of debt issue costs: 2019-$812; 2018-$938	599,488	533,029
Accrued interest	4,983	4,180
Accrued expenses and other liabilities	30,412	31,440
Total liabilities	728,783	680,649
Stockholders' equity:
Common stock: $0.01 par value; 60,000 shares authorized; shares issued and outstanding: 2019-39,752; 2018-39,657	398	397
Capital in excess of par value	867,346	862,712
Cumulative net income	1,293,482	1,255,764
Cumulative distributions	(1,384,283)	(1,293,383)
Total LTC Properties, Inc. stockholders' equity	776,943	825,490
Non-controlling interests	8,483	7,481
Total equity	785,426	832,971
Total liabilities and equity	$ 1,514,209	$ 1,513,620

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CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CONSOLIDATED STATEMENTS OF EQUITY
Common Stock cash distributions	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 2.280	$ 2.280	$ 2.280

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Debt Obligations - Summary (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Debt Obligations
Applicable Interest Rate (as a percent)		4.22%	4.22%
Borrowings			$ 207,900,000	$ 116,200,000	$ 213,000,000
Outstanding Balance		$ 693,388,000	693,388,000	645,029,000
Available for borrowing		$ 527,600,000	527,600,000	581,833,000
Principal payments on senior unsecured notes			33,667,000	38,166,000	31,167,000
Proceeds from debt			$ 100,000,000		100,000,000
Bank Borrowings
Debt Obligations
Applicable Interest Rate (as a percent)		3.14%	3.14%
Borrowings			$ 107,900,000	116,200,000	113,000,000
Outstanding Balance		$ 93,900,000	93,900,000	112,000,000
Available for borrowing		$ 506,100,000	$ 506,100,000	488,000,000
Bank Borrowings | Subsequent Event
Debt Obligations
Borrowings	$ 18,000,000
Outstanding Balance	111,900,000
Available for borrowing	$ 488,100,000
Senior Unsecured Notes
Debt Obligations
Applicable Interest Rate (as a percent)		4.39%	4.39%
Borrowings		$ 100,000,000	$ 100,000,000		$ 100,000,000
Outstanding Balance		599,488,000	599,488,000	533,029,000
Available for borrowing		21,500,000	21,500,000	$ 93,833,000
$100,000 unsecured notes
Debt Obligations
Mezzanine loan principal amount		$ 100,000,000	$ 100,000,000
Interest rate (as a percent)		3.85%

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Real Estate Investments - Operator changes (Details)				3 Months Ended			12 Months Ended
	Jun. 01, 2020 USD ($)	Aug. 01, 2019 USD ($) item	Jun. 01, 2019 USD ($)	Dec. 31, 2019 USD ($) property contract	Sep. 30, 2019 USD ($) item	Jun. 30, 2019 USD ($) item	Dec. 31, 2019 USD ($) property	Dec. 31, 2017 property	Dec. 31, 2018 property
Other disclosures
Rental income							$ 152,755,000
Number of completed contracts | contract				2
Number of properties held for sale | property				20			20
Court ordered payment amount							$ 1,596,000
Rent in year two				$ 126,914,000			126,914,000
Rent in year three				128,196,000			128,196,000
Rent in year four				$ 129,846,000			$ 129,846,000
Arizona and Texas
Other disclosures
Number of properties sold | property				2
Georgia and South Carolina
Other disclosures
Rent on cash basis					$ 1,762,000
Florida
Other disclosures
Increase in Lease Rent (as a percent)					3.50%
Properties held-for-sale
Other disclosures
Number of properties | property				20			20		1
Anthem Memory Care
Other disclosures
Number of properties in default | property								11
Minimum cash rent received							$ 7,500,000
Percentage of contractual amount due							50.00%
Preferred Care, Inc.
Other disclosures
Minimum cash rent received					$ 55,000
Number of properties under two master leases | property								24
Rental income				$ 55,000
Minimum cash rent receivable					$ 1,000,000
Thrive
Other disclosures
Initial lease term					2 years	10 years
Number of properties in transition | item						2
Rent in year one						$ 1,250,000
Rent in year two						1,500,000
Rent in year three						1,975,000
Rent in year four						$ 2,150,000
Rent on cash basis							$ 700,000
Master lease in default
Other disclosures
Increase in Lease Rent			$ 400,000
Master lease in default | Forecast
Other disclosures
Increase in Lease Rent	$ 300,000
Increase in Lease Rent (as a percent)	2.50%
ALF and MC | Thrive
Other disclosures
Number of properties in transition | item					2
120 units | MC | Thrive | Ohio and Kentucky
Other disclosures
Number of properties in transition | item						120
56-unit MC | Texas
Other disclosures
Number of properties in transition | item						56
159 units | Georgia and South Carolina
Other disclosures
Number of properties in transition | item					159
60-unit MC | Florida
Other disclosures
Initial lease term		10 years
Number of properties in transition | item		60
Rent in year two		$ 450,000
Rent in year three		600,000
60-unit MC | Maximum | Florida
Other disclosures
Deferred lease payments		$ 150,000

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Real Estate Investments - Development and Improvement Projects (Details) - Developments - Real Estate Investment Completed Projects $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) item property	Dec. 31, 2018 USD ($) item property	Dec. 31, 2017 USD ($) item property
Real Estate Development Commitments
Completed development and improvement projects
Number of Properties | property	2	1	1
Number of Beds/Units | item	253	66	66
Total Investment | $	$ 46,973	$ 14,998	$ 13,498
SNF | Real Estate Development Commitments | Kentucky
Completed development and improvement projects
Number of Properties | property	1
Number of Beds/Units | item	143
Total Investment | $	$ 24,974
MC Units | Real Estate Development Commitments | Illinois
Completed development and improvement projects
Number of Properties | property		1
Number of Beds/Units | item		66
Total Investment | $		$ 14,998
MC Units | Real Estate Development Commitments, Commitments One | Illinois
Completed development and improvement projects
Number of Properties | property			1
Number of Beds/Units | item			66
Total Investment | $			$ 13,498
ALF/ILF/MC | Real Estate Development Commitments | Wisconsin
Completed development and improvement projects
Number of Properties | property	1
Number of Beds/Units | item	110
Total Investment | $	$ 21,999

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SCHEDULE IV MORTGAGE LOANS ON REAL ESTATE - Rollforward (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Mortgage loans on real estate
Balance at the beginning of the period	$ 242,939	$ 223,907	$ 229,801
New mortgage loans	7,500	14,525
Other additions	4,842	6,839	11,913
Amortization of mortgage premium	(4)	(4)	(4)
Collections of principal	(1,065)	(2,136)	(17,863)
Loan loss reserve	(113)	(192)	60
Balance at the end of the period	$ 254,099	$ 242,939	$ 223,907

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Quarterly Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Quarterly Financial Information
Revenues	$ 46,463	$ 47,119	$ 46,266	$ 45,456	$ 43,587	$ 41,776	$ 41,472	$ 41,810	$ 185,304	$ 168,645	$ 168,065
Net income available to common stockholders	$ 12,449	$ 27,080	$ 20,352	$ 20,254	$ 30,645	$ 34,782	$ 68,658	$ 20,271	$ 80,135	$ 154,356	$ 86,978
Net income per common share available to common stockholders:
Basic (in dollars per share)	$ 0.31	$ 0.68	$ 0.51	$ 0.51	$ 0.78	$ 0.88	$ 1.74	$ 0.51	$ 2.03	$ 3.91	$ 2.21
Diluted (in dollars per share)	0.31	0.68	0.51	0.51	0.77	0.88	1.73	0.51	2.02	3.89	2.20
Dividends declared and paid per common share (in dollars per share)	0.57	0.57	0.57	0.57	0.57	0.57	0.57	0.57
Dividends declared and paid per common share (in dollars per share)	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 0.57	$ 2.280	$ 2.280	$ 2.280

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Equity - Options (Details) - Stock options - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Nonqualified stock option activity
Outstanding, beginning of period	20,000	25,000	33,334
Granted (in shares)			0
Exercised (in shares)	(5,000)	(5,000)	(8,334)
Outstanding, end of period	15,000	20,000	25,000
Options exercisable at end of the period (in shares)	15,000	20,000	25,000
Weighted Average Price
Outstanding at the beginning of the year (in dollars per share)	$ 34.99	$ 32.92	$ 30.76
Exercised (in dollars per share)	24.65	24.65	24.31
Outstanding at the end of the year (in dollars per share)	38.43	34.99	32.92
Exercisable at the end of the period (in dollars per share)	$ 38.43	$ 34.99	$ 32.92
Other information
Aggregate intrinsic value of exercisable options at the end of the year	$ 95,000
Weighted average remaining contractual life of options exercisable	3 years 2 months 12 days	3 years 3 months 18 days	3 years 6 months
Value of options exercised	$ 123,000	$ 123,000	$ 202,000
Market value of options on the date of exercise	233,000	205,000	410,797
Compensation expense related to share-based award	$ 0	$ 0	$ 2,000

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SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION - Additional Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Real Estate and Accumulated Depreciation
Aggregate cost basis for Federal income tax purposes	$ 1,501
Computer Equipment | Minimum
Real Estate and Accumulated Depreciation
Useful life	3 years
Computer Equipment | Maximum
Real Estate and Accumulated Depreciation
Useful life	5 years
Furniture and Fixtures | Minimum
Real Estate and Accumulated Depreciation
Useful life	5 years
Furniture and Fixtures | Maximum
Real Estate and Accumulated Depreciation
Useful life	15 years
Building | Minimum
Real Estate and Accumulated Depreciation
Useful life	35 years
Building | Maximum
Real Estate and Accumulated Depreciation
Useful life	50 years
Site Improvements | Minimum
Real Estate and Accumulated Depreciation
Useful life	10 years
Site Improvements | Maximum
Real Estate and Accumulated Depreciation
Useful life	20 years
Building Improvements | Minimum
Real Estate and Accumulated Depreciation
Useful life	10 years
Building Improvements | Maximum
Real Estate and Accumulated Depreciation
Useful life	50 years

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Subsequent Events - Debt Obligations (Details)	1 Months Ended	3 Months Ended		12 Months Ended
	Jan. 31, 2020 USD ($) item	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Debt Obligations
Stockholders' Equity Attributable to Noncontrolling Interest			$ 8,483,000	$ 8,483,000	$ 7,481,000
Investment Commitments.			79,716,000	79,716,000
Amount borrowed				207,900,000	116,200,000	$ 213,000,000
Payments on debt				159,667,000	138,866,000	154,767,000
Outstanding Balance			693,388,000	693,388,000	645,029,000
Available for borrowing			527,600,000	527,600,000	581,833,000
Bank Borrowings
Debt Obligations
Amount borrowed				107,900,000	116,200,000	113,000,000
Payments on debt				126,000,000	100,700,000	123,600,000
Outstanding Balance			93,900,000	93,900,000	112,000,000
Available for borrowing			506,100,000	506,100,000	488,000,000
Bank Borrowings | Subsequent Event
Debt Obligations
Amount borrowed		$ 18,000,000
Outstanding Balance		111,900,000
Available for borrowing		$ 488,100,000
Senior Unsecured Notes
Debt Obligations
Amount borrowed			100,000,000	100,000,000		100,000,000
Payments on debt				33,667,000	38,166,000	$ 31,167,000
Outstanding Balance			599,488,000	599,488,000	533,029,000
Available for borrowing			$ 21,500,000	$ 21,500,000	$ 93,833,000
2020 Acquisitions | SNF | Subsequent Event | Texas
Debt Obligations
Number of beds/units acquired | item	140
Purchase Price	$ 13,500,000,000
Initial lease term	10 years
Initial cash yield	8.50%
Percentage of annual escalation	2.00%
Number of times option to renewal the lease | item	2
Lease renewal term	5 years

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Equity - Class of Stock Disclosures - Common Stock and Shelf Registrations (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Equity
Proceeds from common stock issued, net of issuance costs			$ 1,005,000	$ 14,578,000
Common Stock
Equity
Number of shares repurchased		45,030	31,326	42,089
Common Stock | Subsequent Event
Equity
Number of shares repurchased	34,016
Common Stock | Equity Distribution Agreements
Equity
Maximum offering capacity under shelf registration statement		$ 200,000,000			$ 200,000,000
Shares common stock sold		0	22,244	312,881
Proceeds from common stock issued, net of issuance costs			$ 1,005,000	$ 14,600,000
Compensation paid to sales agents			18,000	260,000
Reclassification of accumulated costs to additional paid in capital			76,000	$ 49,000
Amount available under effective shelf registration statement		$ 200,000,000	$ 184,139,000

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Major Operators

12 Months Ended

Dec. 31, 2019

Major Operators

Major Operators

3. Major Operators

We have two operators from each of which we derive approximately 10% or more of our combined rental revenue and interest income from mortgage loans. The following table sets forth information regarding our major operators as of December 31, 2019:

	Number of		Number of		Percentage of
			SNF	ALF	Total		Total
Operator	SNF	ALF	Beds	Units	Revenue (1)		Assets
Prestige Healthcare	24	—	3,010	93	17.1	%	17.4	%
Senior Lifestyle Corporation	—	23	—	1,457	10.8	%	10.2	%
Total	24	23	3,010	1,550	27.9	%	27.6	%

(1) Includes rental income from owned properties and interest income from mortgage loans as of December 31, 2019 and excludes rental income due to lessee reimbursement of our real estate taxes and adjustment for collectibility of rental income.

Our financial position and ability to make distributions may be adversely affected if Prestige Healthcare, Senior Lifestyle Corporation or any of our lessees and borrowers face financial difficulties, including any bankruptcies, inability to emerge from bankruptcy, insolvency or general downturn in business of any such operator, or in the event any such operator does not renew and/or extend its relationship with us.

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Notes Receivable

12 Months Ended

Dec. 31, 2019

Notes Receivable.

Notes Receivable

7. Notes Receivable

Notes receivable consists of mezzanine loans and other loan arrangements. The following table is a summary of our notes receivable components at December 31, 2019 and 2018 (in thousands):

	At December 31,
	2019		2018
Mezzanine loans	$	13,284	$	9,868
Other loans		4,824		2,975
Notes receivable reserve		(181)		(128)
Total	$	17,927	$	12,715

The following table summarizes our notes receivable activity for the years ended December 31, 2019 through 2017 (in thousands):

	Year ended December 31,
		2019			2018		2017
Advances under notes receivable	$	8,967	(1)	$	124	$	—
Principal payments received under notes receivable		(3,503)			(3,848)		(25)
Reclassified to lease incentives (2)		(200)	(2)		—		—
Notes receivable reserve		(52)			37		—
Total	$	5,212		$	(3,687)	$	(25)

(1) We originated a $6,800 mezzanine loan commitment for the development of a 204-unit ILF/ALF/MC in Georgia. The mezzanine loan has a five-year term and a 12.0% return, a portion of which is paid in cash, and the remaining portion of which is deferred during the first 46 months. Additionally, we originated a $1,400 note agreement, funding $1,304 with a commitment to fund $96. The note bears interest at 7.0%. Further, we originated a $550 note agreement, funding $500 with a commitment to fund $50. The note bears interest at 7.5%.

(2) Represents an interim working capital loan related to a development project which matured upon completion of the development project and commencement of the lease.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies

Commitments and Contingencies

11. Commitments and Contingencies

At December 31, 2019, we had commitments as follows (in thousands):

						Total
	Investment			2019		Commitment		Remaining
	Commitment			Funding		Funded		Commitment
Real estate properties (Note 5. Real Estate Investments)	$	41,266	(1)	$	13,847	$	18,361	$	22,905
Accrued incentives and earn-out liabilities (Note 8. Lease Incentives)		9,000			—		—		9,000
Mortgage loans (Note 5. Real Estate Investments)		27,200	(2)		2,264		5,944		21,256
Notes receivable (Note 7. Notes Receivable)		2,250			2,039		2,063		187
Total	$	79,716		$	18,150	$	26,368	$	53,348

(1) Represents commitments to purchase land and improvements, if applicable, and to develop, re-develop, renovate or expand seniors housing and health care properties.

(2) Represents $9,200 of commitments to expand and renovate the seniors housing and health care properties securing the mortgage loans and $18,000 represents contingent funding upon the borrower achieving certain coverage ratios.

Also, some of our lease agreements provide purchase options allowing the lessees to purchase the properties they currently lease from us. See Note 5. Real Estate Investments for a table summarizing information about our purchase options.

We are a party from time to time to various general and professional liability claims and lawsuits asserted against the lessees or borrowers of our properties, which in our opinion are not singularly or in the aggregate material to our results of operations or financial condition. These types of claims and lawsuits may include matters involving general or professional liability, which we believe under applicable legal principles are not our responsibility as a non-possessory landlord or mortgage holder. We believe that these matters are the responsibility of our lessees and borrowers pursuant to general legal principles and pursuant to insurance and indemnification provisions in the applicable leases or mortgages. We intend to continue to vigorously defend such claims.

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Distributions (Tables)

12 Months Ended

Dec. 31, 2019

Distributions

Schedule of federal income tax classification of the per share common stock distributions

	Year Ended December 31,
	2019		2018		2017
Ordinary taxable distribution	$	2.084	$	0.349	$	1.607
Return of capital		—		—		0.444
Unrecaptured Section 1250 gain		0.132		0.636		0.163
Long-term capital gain		0.064		1.295		0.066
Total	$	2.280	$	2.280	$	2.280

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Lease Incentives (Tables)

12 Months Ended

Dec. 31, 2019

Lease Incentives

Summary of lease incentives by component

The following table summarizes lease incentives by component as of December 31, 2019 and 2018 (in thousands):

	At December 31,
		2019		2018
Non-contingent lease incentives	$	2,552	$	14,443

Summary of lease incentive activity

The following table summarizes our lease incentive activity for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	2019							2018							2017
		Funding		Amortization		Write-off			Funding		Amortization		Write-off			Funding		Amortization		Write-off
Non-contingent lease incentives	$	387	$	(385)	$	(11,893)	(1)	$	1,272	$	(1,733)	$	—		$	6,544	$	(1,590)	$	(1,205)	(3)
Contingent lease incentives		—		—		—			—		(359)		(6,219)	(2)		—		(619)		(2,634)	(4)
Net increase (decrease)	$	387	$	(385)	$	(11,893)		$	1,272	$	(2,092)	$	(6,219)		$	6,544	$	(2,209)	$	(3,839)

(1) In accordance with ASC 842 lease standard adopted on January 1, 2019, we wrote-off $12,093 of lease incentives related to leases for which we determined it is not probable we will collect substantially all of the contractual lease obligation through maturity. See Note 2. Summary of Significant Accounting Policies for further discussion. Additionally, we reclassified a $200 interim working capital loan as lease incentive. See Note 7. Notes Receivable for further discussion.

(2) We entered into an amended master lease agreement with Senior Lifestyle Management, LLC (“Senior Lifestyle”). Among the provisions of the amendment, the contingent lease incentive payable to Senior Lifestyle was removed. Therefore, we wrote-off the Senior Lifestyle contingent lease incentive.

(3) Represents the write-off of lease incentives related to two MC communities due to negotiations to transition these properties to another operator in our portfolio that never materialized.

(4) Represents the write-off of a lease incentive related to an ALF due to a change to the business model at the property that resulted in lower net operating income and the improbability of paying the earn-out.