UPDATE: BMO Capital Markets Reiterates Market Perform Rating, Raises PT on LTC Properties on Solid 4Q12

In a report published Monday, BMO Capital Markets reiterated its Market Perform rating on LTC Properties LTC, and raised its price target from $35.00 to $40.00. BMO Capital Markets noted, “LTC reported a solid 4Q12, while the late-December acquisition of five facilities with a new relationship/operator (Juniper Communities -- $82mm purchase price, 8.1% lease yield) contributed to an increase to our estimates. We believe LTC's strong balance sheet (3.7x debt/EBITDA) presents a unique opportunity for positive spread investing, considering the relatively high returns of relatively small acquisitions in the health care sector (that move the earnings needle for LTC). We expect this dynamic to continue, although we have no incremental investment assumptions behind our estimates at this time. As for Assisted Living Concepts (ALC), LTC's largest tenant at 11% of rents, management has instituted announced site visits while simultaneously investigating the level of interest from third-party operators in preparation for the master lease's expiration on 12/31/14. Meanwhile, 4Q12 rent coverage declined to 1.1x, a consequence of the new ALC leadership team pushing to have all properties fully staffed and in better working order (i.e., higher expenses). If occupancy doesn't improve and coverage declines further in 2013, that could make the 2014 expiration more challenging for LTC. Barring a vast improvement in ALC operations, this risk will likely linger. However, we like the more hands-on approach that LTC is taking.” LTC Properties closed on Friday at $38.78.