EXPERT OPINION: A Conversation with Wendy Simpson

March 3, 2014

In this "Expert Opinion" interview, Wendy Simpson, President and CEO, LTC Properties, discusses growing REITS, memory care, assisted living , leased properties, portfolios, and more.....

Watch the video      Read the transcript

Wendy Simpson has been CEO and President of LTC Properties, Inc. since March 2007; and appointed Chairman of the Board in August 2013. She also served as Chief Financial Officer from July 2000 through March 2007, Treasurer from January 2005 through March 2007, and President and Chief Operating Officer from October 2005 through March 2007. She also was Vice Chairman of the Board from April 2000 through October 2005. Having served as a senior executive officer of LTC Properties, Inc. for more than a decade, including currently as President and Chief Executive Officer, Ms. Simpson brings a deep understanding of our company's historical and current business and financial operations.

 

Contact Information:
Wendy Simpson
CEO & President
LTC Properties, Inc.
2829 Townsgate Road, Suite 350
Westlake Village, CA  91361
805-981-8646 direct
805-981-8663 fax
wendy.simpson@ltcproperties.com

 
Watch the video of the interview: 
 

 

Read the interview transcript:
Steve Monroe
Well, the healthcare REITs have been very busy. We’ve had a lot of the non-traded REITs acquiring, we’ve had the publicly traded REITs acquiring and sometimes they have to find new tenants for some of their properties. I’m here with Wendy Simpson. She’s the President and CEO of LTC Properties. Wendy, you had a busy year in 2013 and it looks like you’re on a real growth path right now. Do you have specific goals for growing the REIT?

Wendy Simpson
We don’t have any specific goals. We always look at our pipeline and our pipeline deals that we have begun some preliminary underwriting on. Our goal is to continue growing the company at a very measured pace. We are looking still at assisted living, memory care and skilled nursing.  So that is still our sweet spot. We haven’t gone out of that area of investment yet.

Steve Monroe
We’ve talked in the past, the skilled side you’ve been mostly in the middle market and it really seems like you’re kind of ramping up your portfolio on the quality side. Is that where you think the future of the industry is going to be?

Wendy Simpson
I think that’s where the growth of the industry is. The older assets are still very much needed in their marketplaces and they’re serving the people in those areas, but as the population grows in other areas, they do need healthcare services and we’re finding that we have some opportunities in building the newer, more acute care skilled nursing properties.

Steve Monroe
And you have kind of become, I don’t want to say known, but you’ve gotten very creative in how you do some of your transactions to meet, you know, a customer has a particular need and you can kind of structure a transaction to that. Case in point was a recent mortgage financing in Michigan that kind of looks like a lease, but isn’t. Can you talk about that a little bit?

Wendy Simpson
It didn’t meet the operator’s needs because of the reimbursement structure in Michigan, we were able to create a mortgage that really looks like a lease. And so, we have some triggers in that mortgage that if reimbursement changes it would convert to an owned property. So, we do look to accommodate our operators as best we can in a structure.

Steve Monroe
Yes, I remember reading through that, it was very creative and you had a lot of different ins and outs for you, for the operators, so a lot of flexibility, which I think is probably going to be the name of the game in the future.

You’ve also been expanding your senior housing, your private-pay senior housing book of business. Is this going to be one of your bigger growth areas?

Wendy Simpson
We have been doing that for the last three years of building memory care and, in some cases, assisted living and memory care. We have three properties currently that are under construction in the memory care area. We have one property that’s under construction. It’s a skilled nursing in Wisconsin and it’s about ready to open I think at the end of February. 

But, yes, we have found some new operators just recently that we’re talking about doing the same sort of structure of providing them financing to do some strategic building.

Steve Monroe
Now, let’s talk about my favorite subject, Assisted Living Concepts.  You have a portfolio of 37 leased properties, all assisted living communities and, as we know, TPG bought Assisted Living Concepts last year. They are not exercising their renewal option at the end of 2014, so you’re looking for new operators to come in. Are you excited to get new tenants in there?

Wendy Simpson
We’re very excited. It has been an issue that we’ve had to address for at least the last three years relative to Assisted Living Concepts in their strategy and their lack of occupancy in a lot of the properties that they own and our properties. So, we’re really very excited about having an opportunity to put these assets in the care of operators who are very interested in turning them around.

It would have been absolutely wonderful had ALC been a viable company under its own management and they just renewed and we didn’t have this disruption. But knowing that we have it and these are good assets, we’re very much looking forward to doing this process.

Steve Monroe
I know if one company came in and wanted to lease all 37 properties I’m sure you would consider that, but you’re probably going to look at two or three regional kind of break-ups of it.  Is that kind of how you see it playing out?

Wendy Simpson
We’ve had indications. We’ve had our letters out, the teaser letters and we’ve been very happy with the number of CAs that we’ve gotten. I think we have some interest in a national player or players to look at the whole portfolio. It would probably be the easiest thing to do, but I think the opportunity to put these properties out to the regional players who were more likely to bring us business to grow I think is a better strategy for the company. But I’m not ruling out it would be one operator.

Steve Monroe
What are you looking for in a tenant?

Wendy Simpson
We’re looking for somebody who is really part of that geographic area. You know, we’ve had problems in Washington, the state of Washington, the state of Oregon, the state of Idaho. Assisted Living Concepts had some significant operational issues in those states. I believe that an operator who is very tied into those states will be the best to turn those states around.

Steve Monroe
It would certainly help with the regulatory relationships with those states, yes.

Wendy Simpson
Yes.

Steve Monroe
Will you on these properties, are you going to be flexible in terms of a new company comes in, giving them a little benefit to start to lease a little low, but ramp it up as they ramp up occupancy?

Wendy Simpson
We will be. We understand that there will be a turnaround time in these properties. I don’t think it will be as long as maybe other people think it will be. I have been out to see a lot of these properties and they’re well positioned geographically in their marketplaces and I think it’s just an operational issue.

Steve Monroe
Is it fair to say that ALC did maintain pretty much all the properties pretty well and it’s not a physical plant problem? It was they need marketing.

Wendy Simpson
Yes. The interiors of the building were very well maintained and have been very well maintained. The outsides, the landscaping needs a little TLC, but the insides of the buildings were well maintained. They operated the buildings as if they were full. Everything looked very nice. All the rooms were rent-ready, so they didn’t use one room to store unused furniture in or anything like that, so they did do that. I’ve got to give them credit. They did keep the buildings very nice.

Steve Monroe
Good. And will you and TPG let a new tenant come in earlier before the lease expires?

Wendy Simpson
I think so. We’ve had a really good relationship with Jack Callison, who is running the company now and the people at TPG who we’ve had contact with. I think everybody wants an answer to this. It starts with the resident who may know that there’s something going on being concerned about what’s going to happen, the employees out there concerned about what’s going to happen, our shareholders concerned about what’s going to happen.

I think an answer sooner rather than later is a benefit to everybody involved.

Steve Monroe
Yeah, no question. Have it done and then you can move on from there and no one will talk about it again.

Wendy Simpson
Yes.

Steve Monroe
Anything else you want to add about the portfolio?

Wendy Simpson
We’re very excited about this coming year. I think it’ll be an opportunity for additional growth for our company. We’ll be releasing earnings in the next few weeks and having a conference call. I’m looking very much forward to being able to say what we’re doing with the ALC assets.

Steve Monroe
I can imagine you are. All right, thanks a lot.  Good luck on the release.

Wendy Simpson
Thank you.
 


 

 

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