Wendy Simpson – Chairman, CEO and President Pam Kessler – CFO Clint Malin – EVP and Chief Investment Officer.

Karin Ford – KeyBanc Capital Markets Michael Carroll – RBC Capital Markets Daniel Bernstein – Stifel Nicolaus Doug Christopher – DA Davidson.

Good day, and welcome to the LTC Properties Inc First Quarter 2014 Analyst and Investor Call and Webcast. All participants will be in listen-only mode. (Operator Instructions). I’d like to remind everyone that today’s comments including the question-and-answer session will include forward-looking statements.

These statements are subject to risks and uncertainties that may cause actual results and events to differ materially. These risks and uncertainties are detailed in LTC Properties Inc filings with the Securities and Exchange Commission, including the company’s 10-K dated December 31, 2013. Please also note this event is being recorded.

I would now like to turn the conference over to Ms. Wendy Simpson, CEO and President. Please go ahead..

Thank you, Denise. Good morning everyone and thank you for joining us today. This morning, Pam Kessler, our CFO will start our presentation with comments about our financial results for the first quarter of 2014.

After Pam’s comments, Clint Malin, our Chief Investment Officer will talk about our project for really seeing the Extendicare and Enlivant properties and he will also comment on the performance of our portfolio and the progress with our development projects in our pipeline.

Pam?.

Thank you, Wendy. Normalized FFO increased 18% this quarter to $22.4 million from $19 million in the first quarter of last year. Normalized fully diluted FFO per share with $0.63 this quarter compared to $0.61 a year ago.

Revenues increased 15% or $3.8 million year-over-year primarily due to the investments made during 2013 and completed development projects partially offset by property disposals in 2013.

General and administrative expenses decreased 14% this quarter compared to a year ago, however, the first quarter of last year included a one-time $700,000 charge related to the retirement of our former Senior Vice President of Marketing and Strategic Planning.

On a normalized basis, G&A increased $200,000 this quarter as compared to a year ago, due to increased testing levels reflective of higher investment activities. Cash flow from operations increased 13% to $19.8 million from $17.6 million in the first quarter of last year.

During the quarter, we invested $16.1 million in properties under development and capital improvement projects. Capitalized interest for the quarter was $300,000. We currently have $41 million outstanding and $199 million available under our line of credit. Additionally, we have $30 million available under our shelf agreement with Credential.

At the end of the quarter, our investment grade metrics remained one of the best in the healthcare REIT universe, with GAAP to normalized EBITDA of three times, a normal fixed charge coverage ratio of 6.7 times and debt to total market value of just under 18%.

I hope that everyone has their calendars marked for Analyst Day and Property Tour next month. As a reminder, we are hosting our Analyst Day and Property Tour beginning at 9:00 a.m. on Thursday, June 5, at the Waldorf Astoria in New York City. If you have not already RCPed, just shoot me an e-mail and I’ll take care of it.

We look forward to seeing you there. I’ll now turn the call over to Clint..

Thank you, Pam, and good morning everyone. First, I will provide an update on our re-leasing initiative for our portfolio of 37 Assisted Living Communities leased to Extendicare and Enlivant, formally known as Assisted Living concepts. As a reminder, the two leases for this portfolio expire on December 31, 2014.

We have received a high level of interest in the properties and they are in the pool of qualified candidates to participate in the second round of the process. As part of this phase, operators will be conducting detailed due diligence, participating in property tours and negotiating lease terms.

Although, it is possible to lease the entire portfolio to a single operator, there is a higher probability that we will re-lease the properties to operators on a state or regional basis.

Re-leasing the portfolio to multiple operators have the potential to further diversify our operative base and provide us with additional operator relationships for future growth of LTC. Turning to our portfolio, trailing 12-month lease coverage at the end of 2014 for our portfolio remains consistent and strong.

Our caveat that the following coverage metrics are derived from un-audited financial statements provided to us by our operators and a reported one quarter in arrears.

For our skilled nursing portfolio, EBITDA on coverage is 2.28 times and our Assisted Living portfolio excluding the properties leased to Extendicare and Enlivant is 1.65 times and 1.39 times including these properties.

Trailing 12 EBITDA including an allocated management fee of 5% of revenues is 1.68 times for skilled nursing and 1.39 times for Assisted Living excluding Extendicare and Enlivant and 1.16 times including them.

The proposed net 2% Medicare rate increase announced by CMS on May 1, is scheduled to become effective October 1, barring any legislative challenge and should be a further enhancement to our already strong SNF coverage metric.

Compared to the previous quarter, occupancy increased across all property types including the portfolio leased to Extendicare and Enlivant. Occupancy for the trailing 12-month period ended fourth quarter 2013 compared to the trailing 12-month period into third quarter 2013 increased as follows.

Assisted Living, I’m sorry, Assisted Living excluding the Extendicare and Enlivant portfolio increased 30 basis points to 87.7% and including the properties increased 40 basis points to 79.3%. Skilled nursing increased 60 basis points to 79.7% and range of care increased by 50 basis points to 86.7%.

Also, our quality mix remained strong with a more 60% of our underlying rental revenue coming from private pay sources. Within the last 12 months, four development projects have opened which I have mentioned on previous calls.

I’m very pleased to report that occupancy during the lease up continues to be ahead of projection at each property, with one property already achieving 100% occupancy. We continue to have success with our development program and expect at least two more development projects and possibly four all open this year.

Our pipeline remained strong consisting of sale leaseback and development opportunities as well as expansion and replacement projects within our portfolio. Pipeline consists of those skilled nursing and private pay seniors housing opportunities.

Consistent with my comments on previous earnings calls, we anticipate 2014 investments to be back-loaded in the second half of the year, most likely occurring in late third quarter and fourth quarter. Now I’ll turn the call to Wendy for her comments..

Thank you, Clint and Pam. When I talked to you in February, I mentioned that we might look at our portfolio and determine if there were assets that we would consider selling to recycle some capital. While we will continue to look, take a critical look at our portfolio, we’re basically pretty satisfied with the vast majority of LTC investments.

That being said, we will most likely sell three non-core assets that would generate approximately $7.7 million in proceeds and result in a net gain of approximately $1.2 million.

We’ve been quiet on the acquisition front for the first quarter and we did advice you that our investment activity will likely be during the second half of 2014 as Clint has just mentioned. I’d like to remind you that we did invest $16 million in properties under development and improvements in the first quarter of 2014.

And for the next three quarters of 2014, our projections are that we will invest another $49 million in these ongoing projects, some of which will open this year as Clint mentioned. So, we are investing about $65 million in new assets in 2014 that will be revenue producing to LTC later in 2014 and definitely in 2015.

With low interest rates likely to hold for several future quarters, and our low leverage, we do need to do more investing in sale leaseback transactions while continuing our investment platform of building assets with our current operators and possibly some new operators.

We believe we have a solid base for the growth through development for the near future. So far in 2014, we have not found a sale leaseback transaction that met our underwriting guidelines. But we are now primarily focused on mining our development pipeline.

We are currently seeing increased potential transaction activity and we will be spending less time in establishing new development platforms and more time working on acquiring already existing assets through sale leaseback transactions. So, at this time I’m not changing guidance.

At this point, I believe our normalized 2014 FFO will be between $2.56 and $2.58. Denise will now open it up for questions..

Thank you. (Operator Instructions). Our first question will come from Karin Ford of KeyBanc Capital Markets. Please go ahead..

Hi, good morning. My first question is on your – the three non-core asset sales that you guys are thinking about.

What was it about those properties that decided – you decided to shed them and are any of those in the former ALC portfolio?.

They are not Karin. One of them is a school which Pam has been trying to get us to get rid of for years. It’s the school in Minnesota. It’s currently leased by the Artistic Society of Minnesota or something like that. They would like to buy it, it’s at a price that is, it makes it worthwhile for us to sell it.

So, we’re just going to get that out of our portfolio. The other three assets or two assets are very old independent Assisted Living properties that the lease was running out. And we thought it would be much better to allow the operator to buy them than try to find somebody to lease them. So, we consider them basically non-core assets.

One in Georgia and one in Florida I think. So, even, there were just two properties and not in the same state so it just made sense to approach the operator get them the opportunity to buy them..

Great, thanks. Next question is just on pricing. I’ve been hearing that cap rates may be coming down for skilled nursing properties.

Are you seeing that and is your current pipeline more biased towards one asset class to the other?.

Sure Karin, this is Clint, good morning. As far as cap rates on skilled nursing, I think it’s going to become more competitive. There is still lot of capital looking at assets probably more so on the private pay seniors housing site than skilled.

But we’re still seeing, we’ve been investing in skilled assets between 8.5% to 9% and probably more so 8.75% to 9%. And I would still see that to be the math to 9% is probably where we’d be at on skilled. I think there will be opportunities in those numbers.

And there are still some opportunities north of 9% but we found the asset quality that we’re looking to bring into the portfolio typically commence price around 9% or low under, and 8.5% would be a unique investment for us.

Carespring, which we did that transaction in Ohio, basically brand new skilled nursing facilities, I mean, they commanded that cap rate and given the organization as well as location in the quality of the assets..

Thanks. And then my last question is just on the re-leasing process.

I know you’re still in process on that, but any additional thoughts you’ve had now that you’ve seen – now that the first round has come through on how you’re thinking about structuring the new leases, whether you’d want to try to capture any of the potential operating upside there or just how you think the pricing is going to shake out on those?.

Sure. We are still in the process, we have come through and qualified the candidates who we think are most viable for this. It really depends on the geography, and by standing, as Wendy mentioned on the last call, if you look at the portfolio, or the part of the portfolio is one of our challenge which is in the Northwest.

I think we would still look at the triple-net lease. But we would find a way to escalate the rent probably over time on that portfolio. Other components of the portfolio are doing stronger and we would have solid rents on those. So, I think it just depends on which geography we’re talking about within the portfolio..

And how many operators were in the first round, and how many made it to the second round?.

I just want to negotiate in the public on that side. I think that, I would say that was multiple. And we’ve got a solid base to choose from going into the second round..

Great. Thank you..

Thanks Karin..

The next question will come from Michael Carroll of RBC Capital Markets. Please go ahead..

Thanks.

What’s the potential timing I guess, of the completion of the transition of these assets, could it occur sooner than the December 31 lease expiration?.

Definitely it’s possible. We would have to have an agreement with Extendicare and Enlivant to do that. But I think that’s possible in our discussions with Enlivant and TPG, their owner, they’re willing to look at that. So, I think it’s possible we’ll have to see how it goes. But I don’t – I wouldn’t rule it out.

But still, if anything would happen earlier, it would probably be I mean, that would be in the early fourth quarter possibly, so I don’t see it occurring too much earlier than the end of the year..

But I want to say Mike, I’m not actively involved other than being informed in this process. It appears that the Enlivant people are being extremely cooperative, whatever we’ve asked them for they’ve come through. We get comments about certain things and talk to Enlivant and they’re right on it.

So, I’ve got to say, they’ve been absolutely wonderful throughout this process. So, we’re very hopeful that everything will continue go smoothly..

Very cooperative process, so it’s making the transition process here much, much smoother..

Okay. And then Clint, can you give us an idea of what’s going on with the I guess the triple net acquisitions, I know last quarter, it sounded like a majority of those deals were going to close in the second half of the year.

I mean, what could we really expect in the second quarter, are you closed, or pretty much all of them are going to close in second half?.

I think everything would be second half that we’re working on, yeah, it would be more second half..

Okay.

Did you mention the size of the pipeline or what you’re actually working on right now?.

I didn’t mention the size of the pipeline but I’ll give you a little color on the pipeline. We are seeing more activity and more opportunity both on the seniors housing side as well as skilled nursing. I guess a combination of our smaller and some larger transactions, off-market and a few marketed transactions.

If you look at everything we’re looking at right now, which would be inclusive of sale leasebacks as well as development, and again, we’ve been very actively involved in trying to negotiate pipeline agreements with operating companies. We’re looking at sourcing five or six different companies on the development side.

We have three in our portfolio right now and we’re working with a few others to try to build that out. So, this pipeline would include a series of development projects with these companies.

But in total, between sale leasebacks, development and just projects within our portfolio, we could say that we probably have $900 million to a $1 billion of deals that we’re looking at. Now, I’m quoting this a little different than we’ve talked in the past, because this is looking at totality of deal flows coming in to the company.

Now we’re going to, we will vet out that $1 billion and it will get narrowed down further. But we are seeing increased level of activity. We’re encouraged by what we’re seeing. And we think there is opportunity for us to go ahead and execute as we go into the latter part of the year..

But previously you indicated on, I guess the size of the pipeline and amount of deals that you’re working on that you expect will close.

Can you give us some color on that stat?.

Sure, sure. Right now between, as far as if you narrow this sort of $1 billion number that we’re working on down into what we think we could potentially close on, it probably would be more consistent with what I talked about in the first quarter.

In the probably, two of our pipeline with about $250 million, so we could close on a $150 million to $200 million, that’s possible..

In this potential deal list that we have that we keep Mike, there are a couple of projects, couple of possibilities that are marketed. While we haven’t in the past spent much time on marketed deals because they’re generally really big deals. A couple of these marketed deals are really within our sweet-spot of transactions.

So, we have some I think ability to be competitive in looking at some of these smaller marketed deals. So, a couple of these marketed deals or even one of the marketed deals happened, that would be a fairly large transaction for us, less than $200 million but more than $100 million in one transaction.

So, we are paying attention to some of these marketed deals now because they are not the $0.5 billion marketed deal or the $750 million marketed deals.

So what we have seen transition in this first quarter and certainly I think more so in April-May, is that there are more larger small deals that have come across our desk that have – we determined well, this is now in our strike zone..

And those larger or small deals make $100 million to $150 million transactions. And also the reason for providing color on this is that although we haven’t closed any acquisitions or now say things to date, we are actively engaged in looking at transactions. And we also have spent a fair amount of time trying to build out our development program.

And I think we’re close on a few of these relationships. So that does take time. But this again is the bright color that we are actively are engaged and we’re seeing a lot of transactions and we’re encouraged by what we’re seeing..

Okay, great, thank you..

Thanks Mike..

Thank you..

The next question will come from Daniel Bernstein of Stifel. Please go ahead..

Hi, good morning..

Hi Dan..

Hi. Actually I was thinking about, historically, when cap rates have been decreasing, competition increasing, you’ve tended to retrench from acquisitions as the company and maybe deleverage a little bit. But it sounds like your strategy here is going to be a little bit different.

And I guess I’m trying to understand, is the quality – what’s different in the strategy than – what’s making you want to go ahead and maybe look now again at asset buying versus being a little bit more careful as cap rates pull in? I’m just trying to understand the process a little bit..

Okay. My glass is currently half full instead of being half empty. I really do believe that interest rates are going to stay low for most of this year.

So, as cap rates compress and as our cost to capital stays down, I think we have an opportunity at least within this year to put some additional accretive assets in our balance sheet and finance them on a permanent basis at relatively low interest rates. So, I think now is the time to strike in those types of transactions.

So while my background is accounting and finance and has been trained for many, many years to mostly look at the downsides and the upsides, I think I’m finally convinced that interest rates are going to stay down for a significant amount of time in the future. Therefore, we can look at some of these compressed cap rates..

Okay..

Be successful in buying something and because of our low leverage get some really attractive debt. And we have pulled back from the Assisted Living side down, I mean, a couple of years ago when the cap rates really compressed in the senior housing side, we announced it’s – the market is really frosty. And we see better opportunities in development.

And so three years ago we started our development program. And from a skilled nursing side, the type of cap rate compression, I think it’s the difference in the asset quality versus the cap rate compression. It’s not more dollars chasing 30-year old skilled nursing. The new skilled nursing that’s coming online, it’s a very different product.

And it warrants a lower cap rate and we’ve been investing in that for the past three years. So, I think your hearing others say now what we’ve been saying for several years. And I don’t think it’s a change in our strategy at all..

So, you’re seeing some better quality assets..

Absolutely rushing better quality assets. And on the skilled side, I think there has been sort of a rushed on the investment side on the private pay, since housing assets. And I think you have seen cap rate compression on that side of the business.

I think it’s been a little bit more open on skilled nursing as far as maybe some of our peers that have been pursuing more of the private pay side and some of our large cap recently, and the focus is much on skilled nursing, or skilled nursing in the pricing or deal range of the $100 million to $150 million deal values.

So, I think that we’re seeing opportunities that we want to invest in that space. And we’re being selective, we’re being prudent and we’re partnering with the right companies that are looking at what the next generation is for skilled nursing. So that’s where our opportunities are coming about on the skilled nursing side.

On the private pay side, I think that, it’s probably more sale leasebacks where we’re monetizing real-estate value with the operating companies as opposed to buying enterprise value at a marketed transaction. So that really differs as far as whether you’re looking at skilled or the private pays senior housing side..

Okay.

And Wendy, if I interpret your comments on – would it be correct to say that you’re thinking about using some additional leverage on the balance – increase the leverage on the balance sheet to go ahead and finance transactions in 2014 rather than equity?.

Yes..

Given the cost of capital has pulled back as well, is that the right way to think about it?.

Yes, the right way to think of it..

Okay. Great..

Thank you Dan..

That’s all from me. Thank you..

Thank you..

(Operator Instructions). And I’m showing no additional questions at this time. We do have a question that just came in from Doug Christopher of DA Davidson. Please go ahead..

Hi, thank you very much.

Just kind of a basic question here on the, when I’m looking at estimating revenues, on the mortgage loans, figuring that out, I guess, is the current rate that you have in the quarter kind of the good run rate to annualize and use as a quarterly as we develop our models going forward?.

Yes, it is. We have a full quarter now of the Michigan loan, and we don’t have any material payoff..

We don’t have any material payoffs until fourth quarter. So, if you look in our supplemental, we show the maturity schedule on the revenue associated with that. So, you’ll just have some normal amortization of mortgage loans, that is pretty immaterial. So, I think this first quarter is a good run-rate..

Thank you very much..

Thank you, Doug..

(Operator Instructions). In showing no additional questions in the queue, this will conclude our question-and-answer session. I would like to turn the conference back over to Wendy Simpson for her closing remarks..

Thank you all for joining us today. And as Pam said, we’re looking forward to our Investor Day and being able to show you this wonderful property out in Chatham run by Juniper. And talk about the company in person. So, we look forward to seeing you this summer. Thank you. Bye-bye..

Ladies and gentlemen, the conference has now concluded. We thank you for attending today’s presentation. You may now disconnect your lines..