LTC Properties Inc (LTC) 2004 Q4 法說會逐字稿

Good day, ladies and gentlemen and welcome to the LTC Properties fourth quarter 2004 analyst conference call. At this time, all participants are in a listen only mode. We'll be facilitating a question and answer session towards the end of today's conference. (OPERATOR INSTRUCTIONS).

I'd like to turn the presentation over to your host for today's call, Mr. Andre Dimitriadis. Please proceed, sir.

Good morning. This is Andre Dimitriadis. I'm here with Wendy Simpson; and I believe this is our fifth conference call. I remember last year when we began our first one with all the hesitancy. Now we are becoming experts in these calls and being an expert I will not forget what Wendy hands me which is the forward-looking statements. I know all of you are dying to hear it one more time. And let me read it. This presentation may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties which may cause a Company's actual results in the future to differ materially from expected results. These risks and uncertainties include among others, general economic conditions, the availability of capital, competition within the financial services and real estate markets, the performance of tenants and borrowers within LTC's portfolio, regulatory, and other changes, as well as the state of the Pacific Coast Highway, which always gets clogged and you never know if you can get out of Malibu. This was added by me.

With that little introduction, let me tell you what you probably already know. 2004 was a wonderful year and Wendy will take you in detail through our financial statements. But let me say the fourth quarter fully diluted was 39 cents, the full year fully diluted was $1.55 (indiscernible).

In the fourth quarter we had a $274,000 repairment charge. Although Wendy will take you through details I just wanted to make sure you understand, that impairment charge was not a result of the impairment of any loans or any buildings. It simply was the fact that in the third and fourth REMIC, the two remaining REMICs that we had, certain loans would take a few months earlier than their natural maturity which of course shortens and increases the value of the so-called IO, interest only certificate; and by the accounting rules and applied to the REMIC, we had to take a $274,000 -- non-cash, of course -- impairment charge.

Let me hasten to tell you that the aggregate face value of the certificates we hold is still $4 million less than the aggregate face value of all mortgages in the REMIC, less the senior certificates outstanding outside. In other words, about $4 million in loans can go bad before really what we hold on our hands begins to from a practical cash point of view be impaired.

Now the accounting of the REMIC is a far more complex subject; and, sometimes, it makes you take an impairment without really having had anything impaired other than the fact that a few loans get paid earlier. The opposite does not happen. If you extend some loans you don't go and take a special gain out there.

I also would like, before I turn it over to Wendy for 2004, to say that on the first quarter event, the major event that is happening this quarter, i.e., the merger of Assisted Living Concepts with Extendicare, which was a very good event for us. I would like to discuss after Wendy takes you through the 2004 results.

If you recall, in terms of the investments, we had said that we were going to do $10 million on October 1st and $10 million on January 1st. That was our sort of fourth quarter activity. We hadn't done anything by October 1st but we were working on many, many projects. Serious what we did during the fourth quarter. It is a total of $19.7 million. We did a $4 million loan to two ALPs in South Carolina, consisting of 134 units about 30,000 per unit, 11 percent all in REIT (ph) including points.

Then we did a $6 million loan for two assisted living properties -- two ALPs in Texas -- 305 units. Actually that is a mixture of assisted living and independent living, about 20 per unit. That's -- I'm sorry the preview (ph) of the South Carolina loan was a five-year loan. This Texas loan is a three-year loan. We are trying to stay on the short range of maturity in terms of loans.

That including fees in (indiscernible) all in rate of 13 percent. We then did another loan in Florida, consisting of one assisted living facility and two SNIPs (ph), 6.9 million, 256 units ALPs and SNIPs about 11 percent. And finally we did a daily speck of two SNIPs in Texas, 2.8 million about 10,000 a bed and that one we melded it into an existing master lease that we have with Centers for Health Care. And the incremental increase in the rent would amount to a 14 percent rate on these two. But remember the earlier lease, the big master lease we did 1 1/2 years ago with Centers for Health Care was at a very very good price for them.

We began with about 160 to 170 per bed. So when we melded, it still is a bargain for them although as we said we got a 14 percent rate. That resulted in a total of 19.7 million that we did in the first -- in the fourth quarter of '04 which represented our goal for October 1st and January 1st. Since then, and we will mention that after Wendy's speech, we have been working on a lot of other things and we will talk about that in a minute.

Wendy? Maybe you can take us through the numbers now.

Yes, thank you. For the fourth quarter, I will just point out some significant variances. In our rental income, compared to the fourth quarter of last year, I feel more comfortable now, comparing quarter to quarter because at this point last year we did have centers leasing all the properties that used to be CLT (ph) Properties.

So last year we had reported rental income of approximately 10.7 million and this year, we had approximately 11.8 million of rental income. Again, to remind you we this year have been booking straight line rent. Last year we didn't have any leases that significantly had a straight line in rent in caps. So in the $11.8 million rental number, there is approximately a $300,000, 274,000 exactly of straight line rent that wasn't in 2003.

We are projecting that our straight line rent will be approximately that same amount in 2005, approximately between $250 and $300,000 a quarter.

The other variances, in summary, in 2003 and 2004, we have sold certain properties and the reduction of rent related to those sold properties is about 388,000. Additionally in 2003 and 2004, we added certain properties and the increase in the rent, relative to the properties we added, was about 895,000. So our net increase is significantly over our net decrease. We currently don't have any other properties for sale other than some closed properties that we have had for quite a while. But other properties that are operating and open for business, we are not expecting to sell any of those.

Interest income from mortgage loans and notes receivable is up because we have been doing more mortgage loans. Interest income from REMIC certificates is significantly down. It has been down quarter by quarter because, as Andre said, some REMIC loans are being paid and in this quarter REMIC 96 we have to REMICs left. REMICs 96, we refer to them by the year they were created. REMIC 96 had 4 loans paid off during the quarter for a total of almost $20 million of loan repayment.

Last quarter REMIC 96 accounted for about $473,000 of interest for us and this quarter it was only $198,000. REMIC 96, the last third-party loan in REMIC 96, comes due and probably will be paid during the third quarter of '05, meaning the last loan in that REMIC will be loans that LTC has.

So we will be looking in the third quarter and fourth quarter of '05 what to do with that REMIC but it shouldn't have a financial impact on us. They are good loans and we will be the people behind those loans.

REMIC 98 in the fourth quarter had 2 loan payments. Total of $7.6 million of loan payments. REMIC 98 accounted for approximately $1,300,000 of interest income for us in Q3, and $900,000 of interest income for us in Q4.

The other interest income is up, because of our loan that is secured by the stock in what was Assisted Living Concepts and now is Extendicare. And Andre will talk more about that transaction after this. But because of that transaction and because of the note that we had against it, we began -- in the third quarter -- accruing interest on that note where, previously, we had not accrued interest until we were sure we were going to be paid debt note. And so that represents approximately $143,000 a month for a quarter on that interest, on that note.

Interest expense is down. We have very little outstanding debt. We have been paying off our debt and we have -- at the end of the year -- no outstanding bank line. We've recently made a $2 million draw to make an acquisition so we have a small outstanding bank line amount as I speak, which will be paid off when we get the money from the assisted living concepts transaction.

Andre discussed the impairment charge. Very little legal expenses or operating in other expenses. Our in line with what we had quarter to quarter, down over last year because we had some unusual expenses for paying real estate taxes on properties that are now up and running and our lessees are paying the expenses.

For the year, just to remind you, we did redeem the rest of our Series A, all of our Series B, which created a preferred stock redemption charge. We did issue with the preferred F in two series this year and we have approximately 567,000 E's left outstanding. So our preferred dividends will be significantly lower in '05 on an annualized basis, compared to what the three months are this year. We had 23 cents a share for basic and our weighted average shares outstanding 20 million 598 and I know at least one of our analysts loves to understand what our shares are.

So, specifically, at the end of the year we had an outstanding 21,373,945 common shares.

Approximately.

Approximately. We had 561,269 E's so multiplied by two that's the comment that they are equivalent to.

We also during the fourth quarter eliminated -- not eliminated -- but we had all but one of our partnerships have been converted. And they converted we offered them cash or stock. They wanted cash. So a lot of the stocks that we had included in our diluted stock in prior quarters is, there's no longer an opportunity for it to be dilutive. They got cash. So our minority interest going forward are going to be significantly different than our minority interest. I think it is about $85,000 a quarter compared to what we had in last year.

We only have the one partnership interest left. So the shares that were potentially dilutive our no longer dilutive for the partnership shares.

On the balance sheet, we have -- as I indicated -- no bank debt outstanding. Our others -- mortgage loan payables -- are down significantly from the prior year. We're at $71 million compared to $120 million last year. There is nothing else that's significantly different on our balance sheet. You can see our minority interest is now 3.7 million compared to the 13 million. And the obligation that we had last year to pay the 9 1/2 percent preferred stock because we had called for the redemption, and hadn't paid for it yet, makes a difference in our total liabilities comparatively.

But there are specific line items and easy to point out and understand the variations.

I am going to turn it back to Andre. And we will take any specific questions after he finishes his presentation.

As I was listening to Wendy, I was thinking how much of a simplified balance sheet we ended up having today as opposed, Wendy, to where we were, say, 4 years ago with we had finished our -- or we had become our bank restructuring at the time.

Right now you have got about $100 million of nonrecourse secured debt secured by values assets. Actually, if you excluded the $15 million of the bill bank which is technically not debt, although accounted for as debt, we have 85 million. That's down probably from the days where we had 250 to 300 million of such debt.

In terms of the bank debt, we used to have 190 million back in 2000. We have sealed that debt except for the small amount that Wendy borrowed to do an acquisition which, when we receive the proceeds from CLC or the ALPs that they held as collateral to our loan will be paid off. So I daresay we have no bank debt and probably will end up with about $20 million or $18 million of cash from the balance sheet.

In terms of upcoming debt maturities, about 85 million or 100 million whichever number you want to use. Over the next four years, including '05, in 2005, 2006, 2007 and 2008 our total outstanding maturing debt is about $23 to $24 million. That is certainly an amazing decrease from $100 or $200 and $300 million we had maturing and makes us feel very, very good in this environment to be in a cash plus and very low debt position.

The preferred, as Wendy pointed out, very simplified $166 million of the 8 percent at preferred, about $14 million remaining of the A -- Wendy and I scratch our heads every time and say, "Who is this who doesn't want to take 41.20 or equivalent common share versus $1.06 which they receive." And I'm sure the people do hold it -- I'm being facetious -- there are very good reasons why they prefer to hold it indeed might be that senior funds that can only hurt referrals but there are other reasons.

But we look at that as something that will happen anytime soon. And of course you have the 38 1/2 million of their convertible C preferred convertible at 19 1/4 which is held by NHI. So really feel very, very good that we now have such a clean and well-structured balance sheet.

Another very good event I'm going to talk about the major event. I am keeping it for the end, for the maximum pleasure but we had another very good event.

We were able to convince Boyd Hendrickson to join our Board. Boyd is Chief Executive Officer of Skilled Care. He took over Fountainview in the midst of its bankruptcy and rather sorry state and has been able to refinance the whole thing and today Skilled Nursing -- the new name that is Fountainview which was the old summit for those of you that followed that odyssey, Skilled Nursing is a very strong company with very, very good properties.

And he has agreed to join our Board; and on Tuesday, he was elected and yesterday participated in our first big board meeting. A great addition. I worked with Boyd at Beverly Enterprises when I was Executive VP of Finance, he was Executive VP of Operations and, later on, became president and guided Beverly for three or four years until she left to rescue Fountainview.

The major event that happened was something we have been working on for close to four years now. I was reminding Wendy that the first time she and I really got involved not that we ever were not involved, there were always lessees of a large number -- 37 properties of ours -- but the first time we got intensively involved was when Jim Nichol (ph) walked into our office in March of '05, was it, Wendy? And said, "I won't be able to make the payment on the converts, we have 161 million coming in May and by the way I need for the interim some lease concession."

That began a whole adventure that, I must tell you, we are rather pleased at the way we were able to work and get some good stuff for our Company. As you know, we were very active in their restructuring from in the Creditors Committee of Assisted Living. We were instrumental together with Andy Adams with NHI, who also played a very positive active role in bringing Steven Biggs (ph) and Linda Martin to run Assisted Living.

They joined it in January of '02 when the occupancy was close to 81 percent, average rent was $2100. As they left on Monday after accomplishing the merger occupancy, was close to 92 percent, I believe, and average rent was approaching -- and that I don't have the exact numbers because it was no longer a (inaudible). But around $2600 I believe is probably worth the average rent. And that was a three-year accomplishment.

We in turn supported the company in any way we can. As you know, during the bankruptcy we gave up $875,000 worth of rent concessions in order to help them facilitate the company's restructuring. We always thought that that was a temporary concession. It involved 16 properties that were in a master lease -- that entered a master lease in 2001 but had no renewal right. And we knew at some point that LTC and Assisted Living would have to sit down and negotiate an extension to those properties and, hopefully, at that time recover what we had given up to help the company.

I'm very pleased to tell you that we were able to sign two new master leases. One, including I believe 17 -- 18 properties and another 19 properties with Extended Care who, of course, has acquired Assisted Living Concepts. The lease is 14 years with three 10-year renewals. So practically it has extended those 16 properties that had no extension rights.

And, over the next three years, is restoring $1 million of the 875 that we had lost. We are getting a rent increase of $250,000 on January 1 and another 250 on January 1 '06, January '07, and January '08 for a total of $1 million. Of course the 2 percent escalator continues to function. We are very happy to have had these two new master leases. They restored, as I said, the 875 we gave up during the interim period and creates a good relation between us and Extendicare.

I think the master leases are very beneficial. We have given the right to Extendicare to get rid of any properties in our portfolio that are not performing as well as they would like them as long as they substitute one of the currently owned 122 properties that Assisted Living has that has many units, is as good and has better EBITDAR, etc., etc.

That is excellent for Extended Care. It gives them a flexibility that normally lessees don't have but it gives us also a stronger and better portfolio. Doesn't impact our rent, doesn't impact our revenue. It is what I would call a win-win and we were delighted to be able to achieve that with Extendicare.

Of course the extra $1 million over the next three years certainly improves our situation.

That was not all, of course, because as you know we were owed about $21.5 million dollars by CLC, which was acquired by Centers for Health Care but of course that was secured by 1,452 etc. thousand shares of Assisted Living so very soon, and we are counting the days $21.5 million will come flowing to our coffers. Wendy has prepared a large bucket for that and is ready to receive it.

So with that, frankly, as Wendy keeps reminding me, we have completed the Odyssey of Centers for long-term care as well as Assisted Living in terms of our investment. If you recall that we made the 26 cents on the dollar of some of the busted converts that later on became bonds and stocks that CLC ended inheriting.

All in all a marvelous project, adventure if you call it. Our first quarter FFO will be significantly greater because, as you remember, we never booked the CLC rent for years '02, '03. We never booked interest on the notes for years '02, '03. So that should significantly increase the funds from operations for the first quarter.

And, basically, that is it. Am I forgetting something, Wendy?

Only you might want to talk about we keep our (MULTIPLE SPEAKERS).

Thank you, that was a thing I was forgetting. Some of you will say, "well, and that grows and we can tell you a little bit about it before." That grows '04 FFO. Accounting for strict accounting rules as laid down by the SEC. The accounting profession took around -- certainly -- over $2 a share let's say 2 cents plus or minus 5 cents or whatever else certainly you -- in '05, I'm sorry, in 2005.

However, for those of you that say, "Oh wow, they must be obligated to increase the dividend." Remember, when you do not receive a rent as long as you have not formally taken legal action to say, "I'm writing off that transaction and tell the tenant, I'll not collect it." (indiscernible) IRS from a tax point of view that is taxable to you. You may not properly as we decided not to book it from an accounting point of view, because although we were certain we would receive it, there was no way to back that certainty with anything tangible. It was our belief in the value of Assisted Living Concepts, in the value that Steve and Linda were going to bring to that company.

But of course that's nice to believe that, but there was no way to back it and, therefore, we properly did not book it. But from a tax point of view both the interest and the rent had already entered our taxable income. So in terms of the dividend, the dividend, our dividend decision will be guided -- not by this onetime event -- but what is happening on a continuing basis. And that is probably something we will review on the third or fourth quarter. Not before. There is no reason.

So again to repeat it, don't expect a special payout. This (indiscernible) taxable stream in years past.

In terms of activity for the coming year, we like to think that we can do $10 million sometime in the second quarter. $10 million in the third and $10 million in the fourth for a total of 30 million. But of course you must include the fact that we did 20 million in the fourth quarter of which 10 million belonged to January 1st. That was our target. We just did it earlier.

So whether we do 30 million in '05 or you want to include the 10 million from '04 into '05, I don't care. That is what we are looking ahead of us. I have here sitting Clint Mailer (ph), who joined us last May, from Sun Healthcare, has done a terrific job and he is diligently working on doing more investments now. So that is where we are.

Wendy, I don't know if I forget something. Please take over and (MULTIPLE SPEAKERS)

No that's all I have on my list.

Well I'm sure you'll have questions. I hope you'll have questions and with that let's -- .

Can you open it up for questions?

(OPERATOR INSTRUCTIONS) Jerry Doctrow of Legg Mason.

I had just a couple of things I want to clarify. Some of this is going from fourth quarter to first quarter. The Assisted Living Concepts view, basically, you don't have -- again you don't have yet but you are going to get any day now, so we should assume around February 15 or something like that in terms of that inflow? The 21 1/2?

Actually we should get it by, they said within five days of the close and I can't get anybody to tell me whether Monday comes the day or not. So I am expecting it no later than Tuesday.

I mean, hopefully, you know Monday, Tuesday. Yes.

Andre just to get to your sort of 2 10 plus our minus 5 cents, does that include any -- does include the income for the 21 million because that is just the payoff of the loan. So --?

Well no, but you see, it does. It does. And Wendy can give you the details. We did not accrue but did not forgive (ph) rent for '02, '03 from CLC. Remember we kept saying, "We know we will get that at some point." We just can't prove it because we know what the shares are worth and, also, it includes interest for that. So it does include. That is why it is different. I mean, let me try to normalize that although, God, it is a dangerous exercise to try to normalize. And one always regrets any time one does that but I will do it anyway, being that I never learn.

Excluding that, I would say, we would be in $1.61 to $1.65 range, plus or minus. Which is not very different. I think you're saying $1.64, Jerry, I mean it is somewhere as I said $1.61 to $1.65 depending on how good Clint is here and we are looking at him and he is smiling. So he probably will do well.

But that is what it is.

And the balance will be the combination of interest?

Balance is interest that had been not booked probably I'm not using the right word, Wendy, but certainly not forgiven. Wendy can give you that amount in rent. There is also a capital gain which is not included in that, of course. We follow the rules. Wendy? Maybe --

Yes, Jerry, it will be made up of approximately 3.7 in rental income. You'll see that flowing through our first quarter. Approximately 2.3 million of interest income.

So, there, you have 6 million of additional FFO.

Right. And we will have -- it will be a total impact of about 13.9 million on the bottom line because we have a gain that will be a gain gain of 3.9 million and then a reversal of what we had had to put through comprehensive income of about 3.6 million.

And then we had -- we're going to recover some property taxes that we had paid for for about $.5 million. So you add those all up and it will be approximately $13.9 million of impact in the first quarter.

I mean what I would like to concern today is maybe a purer number which is the $1.61 to $1.65. The rest is the accounting what we booked where we booked it. But when we look at the dividend that is what we are going to lose. $1.61 to $1.65 not the $2 and maybe I overshot there when I said $2.10, I mean $2 or whatever it is.

Yes I think it is about to 11.

Something like that. And that will fluctuate, of course, depending on how we do the rest of the year. So please don't hold us to that. The range we are trying to hit and the range we will be decide the dividend on is the non-recurring part, excluding these holdings.

Having said that I want to take credit for those -- not I -- we want to take credit for those things because we took the blame when they weren't getting the rent. They kept saying, "Well you're not getting any rent." And we kept saying, "You're right. We are not getting that. We hope to get it (indiscernible)." We got it and in a sense we feel vindicated. I must say that.

I know it has been a long road and -- .

It's been a long, it's been a long 4 years and let me tell you we -- I remember spending last year Memorial Day weekend, I was working so was Wendy and she and I were working on Labor Day weekend, trying to do another deal involved with us. Finally we worked between Christmas and New Year and this time, it happened. Three is the charm, they say and so it is.

Andre, if I could just shift gears now a little bit in terms of one is just dividend policy. So the dividend was not raised in the first quarter. You haven't announced an increase.

No sir.

But it will be reviewed now that this deal is settled and so we might think about a change possibly in the second. Is that --?

No. I think we will wait until year-end because if you recall we raised it the third quarter last year. Raised it to 30 cents in the third quarter, I believe. So the earliest we would want to review that is against the third quarter and we will stay with that 75 percent plus or minus (indiscernible) 75 percent payout.

Again the Board may change our mind. But for the moment we, here in the management group, believe this low payout is a good idea. It gives us additional growth. It gives us cash, it helps us continue the deleveraging although I think we have gotten probably as far as they should deleveraging. Wendy was making fun of me the other day, she says, "You don't have any more debt to restructure! What are you going to restructure with?"

I was laughing. I said, "Maybe we don't want any debt for a little bit so we don't have anything to restructure." But absent something, if all of it doesn't, instead of my expectations of 10, 10, 10 we were flooded with deals maybe we looked at it earlier. But right now, I don't know. Wendy, what's your --?

Right now I think (inaudible)

30, 40 is where we -- again we have a new board member and his views are very important. We discussed shortly the dividend policy yesterday, but as he becomes more accustomed to LTC, he might bring a new view and we, the management, of course will respond appropriately. But for the moment that is where we see.

Just shift then to investments. You talked about volumes. I guess I was wondering if I could get a little more color on just the prospects out there? It looked like you are doing a fair number of short-term loans; and I just wanted to understand your thinking about that.

That is maybe a bit -- both Wendy and I may be biased. I do expect higher rates. And no one's a prophet. And I confess during the -- your very informative paddle you had there, Jerry, that I was wrong on that. If you had asked me in the beginning or generally where the ten years would be December of '04 I would say 5.5. Clearly it was 4.20 and I couldn't have been more wrong.

But I think that is a matter of time. I still would like to wear my economist's hat and say higher rates are inevitable, given what is happening to the current account debt and to the (indiscernible) deficit all there is. No guarantees. So we are trying to stay on the short side of the spectrum in terms of the loans. It's not bad because the fees that you get get amortized, the numbers I gave you before in terms of all the yield included these. Of course, if you get the point over five years it is a lot better than a point over 10 years. There is an advantage.

Going forward, we are looking at the mixture of potentially leases and loans. Right now we are working, I would say, on a couple of loans. In a sense, we find loans to the extent that we believe, as I said, down in San Diego that property values are on the high end of the scale. (indiscernible) in a sense, creates more of a controversy in terms of what you need to pay for the property than the lessee may think the property if you're doing a sale leaseback is worth more, you may think it is worth less.

And although we, as finance people, look at leases as nothing but a financial instrument, owners of properties look at them as if they sold their property. The wrong view but if that's what people believe. A loan has not created controversy because whether you believe your property's worth 3 million and we believe it is worth 2.5 if we are giving you a loan of 1.8 million, you haven't lost anything. If that is what you needed there is never a reason to resolve that difference.

So we are doing and of course we always did quite a few loans even in the past. So we are looking at some loans. We are looking at some leases and loans, probably shorter term, although for the right property we would go to a 10-year deal.

We are working on that one in Texas.

Thank you. We are working on three properties in Texas we have been working on that since, wow, August almost or even July of last year. It's a complex case. Although the homes are good they are embroiled in some sort of a bankruptcy, but we will be completing that some time in the next three months hopefully. That sale aspect of three properties for around $5 to $6 million and we are working on probably a total, I would say, of about $20 million on loans. We won't make all of them but we will make some of them.

I don't want to give you deadlines but more or less we will meet that second quarter objective. What else?

If we were a manufacturing company, we do have backorders.

Yes, yes, I mean the factory is full. I have to tell you, Clint here is working very diligently and he is very busy. And that is very good. We are out there. We have begun visiting customers. Now people are getting to realize that LTC is open for business. We are getting our old customers to begin calling us on deals. We find the competition to be more in our niche of the market. The small transactions. From the floating rates, short-term lenders like cap source and others, Red Capital (ph) and others.

But, effectively, we are still able to do business. We are very optimistic about the future.

My last thing is just if we can get a little more color on the properties because it sounds like the prices per unit and stuff were very low. The yield sounded fairly high and that may be because of the shorter term in the amortizations. So are we talking about properties that have been leased up or that have some hair on them or is all stabilized stuff? Can you just give me a little bit of that color and, then, I will let someone else ask?

It is a mixture of stuff. The two that we purchased are certainly very nice properties. (indiscernible) they were in Texas. That were about 60 percent occupied and are doing better now. The two in South Carolina were foreclosures. Relatively new properties 6-, 7-year-old properties. And again a bargain, a loan from someone who had locked in the purchase of those.

Florida, SNIPs were two loans that we had that matured that we rolled into a new loan and added a new property -- an assisted living property. So those were properties we already had in the books for 10 years and the loans matured.

And the rates are your rates compatible with -- why does somebody pay you 11 when they could get a floating rate for a lot less?

It depends. It depends what people's view is of the future. I mean if you expect rates to go sharply up, you may want to locate a 5-year loan at 11 or 12 percent and be okay. Also we are willing to do properties that may not have immediately the coverage if they are done by someone who we know will be able to fill them up or we are able to tie them to another lease. For example, the two properties that we bought in Texas as it stands alone lease may not had been as comfortable. They were as I said at 50, 60 percent occupancy.

But when added to that whole master lease of 24 properties, it is doing very well. It gives you a different level of comfort.

(OPERATOR INSTRUCTIONS) There are no questions at this time.

All right. Thank you.

Okay. Thank you very much. I appreciate your attending and we will speak again when our first quarter is also out.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.