Good day, and welcome to the LTC Properties Second Quarter 2019 Analyst and Investor Call. All participants will be in listen only mode. Before management begins its presentation, please note that today's comments, including the question and answer session, may include forward looking statements subject to risks and uncertainties that may cause actual results and events to differ materially. These risks and uncertainties are detailed in LTC Properties' filings with the Securities and Exchange Commission from time to time, including the company's most recent 10 ks dated December 31, 2016. LTC undertakes no obligation to revise or update these forward looking statements to reflect events or circumstances after the date of this presentation.
Please note that this event is being recorded. I would now like to turn the conference over to Ms. Wendy Simpson, Chief Executive Officer. Please go
ahead. Thank you, operator, and welcome, everyone, to LTC's 2019 Q2 conference call. Joining me today are Pam Kessler, our CFO and Clint Malan, our Chief Investment Officer. After a few introductory remarks, I'll turn the call over to Pam, who will discuss our financial results, then to Clint, who will discuss our portfolio, operator performance and the pipeline. I'll come back to conclude our prepared remarks before the question and answer session.
LTC has made significant progress in resolving the challenges we've discussed. We are confident that at the end of the year, the challenges under our control will be behind us, putting LTC in a great position to devote more focus on future growth from a base of a strengthened portfolio. I'll provide brief updates on Senior Care Centers, Thrive, Anthem and Preferred Care. I'll end my comments with guidance. I'll start with Senior Care Centers, which is the one issue over which we have the most limited control as they continue to work through the bankruptcy process.
Senior Care Centers recently filed a motion to assume the LTC lease and we filed an objection shortly thereafter. In the interim, Senior Care Centers remains current on their 2019 rent and escrow amounts. Coverage in the senior care portfolio was essentially flat on a quarter over quarter trailing 12 month basis. Moving to Thrive. The entire portfolio has been successfully transitioned.
As previously disclosed, we transitioned 3 of the 6 properties on June 1 and completed the transition of 2 additional properties on July 1. The final property has been transferred August 1, and Clint will talk more about this transition later. Now as to Anthem. Their operations continue to improve and they are meeting our increased rent expectations as reflected in our 2019 guidance. As we have said before, we cannot appropriately establish formalized contractual rent levels associated with the Anthem portfolio going forward until we can realistically calculate rent once all of the properties have been stabilized for a period of time.
As a result, it will likely be late next year before we have greater visibility on future stabilized rents. I'll finish my portfolio discussion with Preferred Care, which operates 23 properties for us. As discussed last quarter, we have been working to reduce the number of LTC owned properties under their operations. We are in active negotiations for all of these properties. These negotiations continue to include both possible sales and leases.
Before I turn the call over to Pam, I'll discuss guidance for 2019, which we are maintaining at 3 point $2 to $3.04 for the year. Although we are receiving higher rents from the transition to Thrive properties sooner than originally anticipated as well as income from new investments, we are lowering our projections for income from unconsolidated joint ventures due to the non accrual status of our preferred equity investment that Pam and Clint will discuss in their comments. Additionally, the timing relative to transitions around preferred care assets is not yet certain. While we have not included any sales assumptions in our portfolio guidance, it is possible that we will sell some or all of the Preferred Care portfolio prior to year end. As we will have more visibility into the timing of net sales proceeds and or future rents from this process next quarter, we are postponing an updated guidance until that time.
Now, I'll turn the call over to Pam.
Thank you, Wendy. Since our last earnings call, the FASB has allowed two approaches for recognizing recoveries of previously written off straight line rent under the new lease accounting guidance. Accordingly, we no longer show a contra expense for recoveries of previously written off straight line rent. All such recoveries are in rental income, which increases the comparability and transparency of our results. Revenues increased $4,800,000 for the 2019 Q2 compared with a year ago.
Dollars 3,900,000 of the increase is due to property tax revenue recorded in accordance with the newer lease accounting guidance that requires us to record the property tax escrows we collect from our tenants as revenue with a corresponding expense. Accordingly, 2019 revenue includes property tax income, while 2018 does not. The remaining $900,000 increase is due to revenues from acquisitions, mortgage originations, completed development projects and capital improvements, increased rent from Anthem and a decrease in lease incentive amortization, partly offset by decreased rent from Thrive in 2019 and properties sold in 2018. NAREIT FFO was $0.75 per diluted share for both the 2019 2018 2nd quarters. Net income available to common shareholders decreased $48,300,000 from the prior year quarter due to a higher gain on sale of $47,800,000 in last year's Q2, a decrease in income from unconsolidated joint ventures of $598,000 $592,000 higher depreciation expense and $194,000 higher transaction costs, partially offset by the $900,000 increase in revenue previously detailed.
Income from unconsolidated joint ventures decreased 598 dollars 77,000 of this decrease was due to a mezzanine loan that paid off last quarter and 521 was due to a preferred equity investment converting to non accrual status. In the 2nd quarter, an affiliate of Senior Lifestyle did not make the full contractual preferred return payments to us and became 60 days past due. During the 3rd quarter, we received most of the remaining preferred return we had accrued, but as yet we have not received 2nd quarter amounts due, so they remain on a non accrual basis. Clint will provide more detail on this investment. In the second quarter, we recognized a $500,000 gain on the receipt of escrow deposits related to the 2018 sale of 6 senior housing communities previously operated by Sunrise.
Both interest expense and G and A were comparable between the two periods. We currently estimate that G and A will be in the $4,600,000 $6,000,000 to $4,700,000 range per quarter through the remainder of this year. During the Q2 of 2019, we funded $7,500,000 of additional proceeds under an existing mortgage loan with an affiliate of Prestige Healthcare secured by 2 skilled nursing centers totaling 205 beds in East Lansing, Michigan. The additional proceeds bear interest at 9.41 percent for 2 years, increasing 2.25 percent thereafter. We also funded $6,900,000 in development and capital improvement projects on properties we own, dollars 781,000 under mortgage loans and continue to fund LTC's $0.19 share monthly dividend for a total of $22,600,000 in dividend payments.
At June 30, we owned 1 property under development with remaining commitments totaling $10,200,000 and 2 properties under renovation with remaining commitments of $4,600,000 We also have remaining commitments under mortgage loans of $14,900,000 related to expansions and renovations on 7 properties in Michigan and $1,700,000 remaining under a preferred equity commitment. Subsequent to June 30, we borrowed $12,000,000 under our line of credit and repaid $8,500,000 in scheduled principal pay downs on our senior unsecured notes. In keeping with our philosophy, we are maintaining a strong balance sheet to provide us with ample flexibility and capacity to fund current and long term growth initiatives. We currently have $441,100,000 available under our line of credit, dollars 105,500,000 under our SHOP agreement with Prudential and $200,000,000 under our ATM program, providing LTC with total liquidity of approximately 746,600,000 Our long term debt maturity profile remains well matched to our projected free cash flow, helping moderate future refinancing risk. And we have no significant long term debt maturities over the next 5 years.
At the end of the second quarter, our credit metrics remained well matched to the healthcare REIT industry average with debt to annualized adjusted EBITDA for real estate of 4.5 times an annualized adjusted fixed charge coverage ratio of 4.8 times and a debt to enterprise value of 27.1 percent. Now, I'll turn the call over to Clint.
Thank you, Pam. I'll begin my discussion with the Thrive portfolio. As Wendy mentioned, the entire portfolio has been successfully transitioned with the final community in Jacksonville transferring operations to Affinity Living Group on August 1. Affinity now operates 2 properties owned by LTC. The Jacksonville property, a 60 unit memory care community, was leased to an affiliate of Affinity under a new 10 year lease.
The new lease provides the lessee 12 months free rent, increasing to $450,000 in year 2 $600,000 in year 3 and thereafter. In year 2, the lessee have 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 3 and annually thereafter. Next, I'd like to update you on the progress of our newly developed and still to be completed communities. Boonespring of Boone County, our 143 bed transitional care center in Kentucky, is now up to 67% occupancy as of July 31, which is ahead of projection and is up from 45% as of our last quarterly call. Boonspring opened in February of this year.
Hamilton House, a 110 unit independent living, assisted living and memory care community in Wisconsin is now at 16% occupancy as of July 31, up from 10% as of our last call. Hamilton House opened in May of this year. Weatherly Court, a 78 Unit Assisted Living and Memory Care community in Oregon is still under construction and remains on track to open later this year. The preferred equity investment on non accrual status Pam mentioned includes 2 locations in Arizona. The first location is a 28 Acre Campus in the Phoenix Metro area with 432 units offering independent living, assisted living and memory care services spanning 3 buildings.
The second location is an assisted living and memory care community in Yuma with 148 units. LTC entered into this investment with an affiliate of Senior Lifestyle in 2015 and LTC's investment balance as of June 30 is $24,300,000 The two locations are under a letter of intent with a likely closing expected to occur sometime towards the end of the year or in Q1 of 2020. From the net sales proceeds, LTC expects repayment in full of the $24,300,000 investment. Based on forecast of net operating income for the remainder of 2019 provided by Senior Lifestyle, we anticipate additional income to be paid to us in 2019 of approximately $600,000 But given the non accrual status, our guidance does not assume any such additional income. Moving on to the portfolio numbers, our coverage remains stable.
Q1 trailing 12 month EBITDARM and EBITDAR coverage using a 5% management fee was 1.43x and 1.21x respectively for our assisted living portfolio and 1.77x and 1.28x respectively for our skilled nursing portfolio. Now I'd like to briefly comment on our pipeline. We have identified a few interesting opportunities, primarily where we can strategically add quality, growth oriented operators and or improve the average age of our portfolio. We currently have 2 signed purchase agreements totaling approximately $38,000,000 One is for the purchase of a newly constructed 90 bed scale nursing center in the Kansas City market that is 90% occupied and is operated by Knight Medical Resorts, a new operator for LTC. This transaction is expected to close in the current quarter.
The other is for the acquisition of a land parcel and development of a new 90 bed skilled nursing center also to be operated by Ignite in the same market. The land parcel acquisition is expected to close this quarter with groundbreaking shortly thereafter. Completion of the project is slated for the fall of 2020. Both of these transactions were off market deals sourced through a long standing relationship we've built with Avenue Development, who will be handling the development and construction of the new property. Avenue is a well respected full service development company that focuses on healthcare and senior living.
We are reviewing other opportunities as well, spanning acquisitions in real estate joint ventures, primarily in the assisted living and memory care space with operators new to LTC. We will update you as our activities progress. Now, I'll turn things back over to Wendy.
Thank you, Pam and Clint. Coming back to my opening comments, we have made significant progress in resolving the portfolio issues we have faced. I'm very proud of our team who has helped bring these issues to resolution, while also remaining focused on continually positioning LTC for future value creation. We are continuing to successfully execute our plan and are confident that current portfolio challenges under our control will be fully resolved by the end of this year or early next year. At the same time, we have been working toward building a more diversified asset and operator base and positioning LTC to deliver long term and sustained growth.
Thank you for joining us today. Operator, we are now ready to take questions.
And our first question comes from Jordan Sadler of KeyBanc Capital Markets. Please go ahead. Hey, guys. Good morning. This is Katie on for Jordan.
I appreciate all the color you guys gave us on your portfolio, but I wanted to touch on, I think you guys have some Brookdale renewals coming up next year, if you guys could offer any
Hi, good morning. This is Clint. We do have the current term for the Brookdale leases expires at the end of 2020, and Brookdale is not yet in the renewal window. That would open up the 1st part of 2020. And given the performance and coverage, our expectation is that they would extend the lease to the renewal term.
Thank you.
You're welcome.
Our next question comes from Chad Vanacore of Stifel. Please go ahead.
Hi, good morning.
Good morning.
All right. So now that you've transitioned all your Thrive, They had owed you some past due rent. Were you able to collect any of that? Or do you expect to collect any of that in the future?
Chad, this is Clint. We had Beotis rents from 2018, which we did collect in 2019. They did not pay rents in 2019. To facilitate the transition of the properties to new operators, we provided a note to them to assist in some of those transition costs. We have guarantee and security interest to full repayment of those funds, which we've made the line of credit available.
So at this point, we feel confident we'll be able to collect on those amounts that are due to us the note relating to the transition. Okay. Thanks, Clint.
Thank you. And then, out of the properties that you transitioned in the past six months, how are they faring so far under their new operators? There was Frontier, there's a few with Thrive, there's some here or there. But in general, what's the direction? Should we expect the NOI to really be a slog for the next 12 months?
Or have some shown some kind of improvement really on a short basis?
Some have been stable, improving. There's been some decline in others. It's just been a little bit of disruption when you have a transition. But the operators we brought in to these communities, we're excited about the opportunities. And I think that it takes a while to change culture and build a presence under that brand in the marketplace.
So I mean, we feel confident that the operators that we're working with that are that have now taken over those communities will be able to make progress, how much time it will take, as you've seen. But I think everybody's been we've been encouraged by people's interest in these communities and we think over time that will grow.
I think basically, Quinn, the operators that are now in the transition properties are better capitalized than Thrive. And so, they have a base of that. The challenged property as you can into it was Jacksonville. And so, we gave a year's worth of free rent. And I expect that that will do very well.
The operator affinity is a very well known and established operator. And they're very excited about having that property. So I think we are very comfortable with the operators that have transitioned. In fact, the people who took over the Baker Bach from Brookdale had some deferred rent opportunity and they this current period they haven't used that deferred rent. So that's doing better.
All right. Wendy, just on Jacksonville, why did you end up keeping it rather than or why did you end up re renting it rather than selling it?
Yes. The prices we were getting were not indicative of the value of the property because of the feeling that we were up against a wall. And everything that came in relative to the market in Jacksonville and the growth in Jacksonville and all of the forward looking information was very positive. So we decided that for our future portfolio, it was it made much more sense for us to keep it and get the right operator in there. So that's why we did it.
It wasn't an easy decision. I mean, it's easy to say let's just take the loss and walk away. But it just it was just such a badly run property that we had a lot of faith in the market and the property.
Alright. Thanks for taking the
questions. Sure.
Our next question comes from Rich Anderson of SMBC. Please go ahead.
Good morning out there.
Good morning.
So on Thrive, can we kind of aggregate this all up? I try to do the math. It looks like the new cash rents, once you kind of get to the cash paying story for all 6 is call it $3,500,000 to $4,000,000 per year. I don't know if I got that right, did it quickly, but I think that's right. And does that compare to cash rents prior to all this sort of starting of $7,000,000 Is it could we say that the change from pre and post kind of transitions with $7,000,000 to $3,500,000 in annual rent?
Good question, Rich. So right now, we're phasing in rent on the property. So right now, when we get to the 3rd year, we're at rents of about $5,200,000 compared to the $7,000,000 ish with Thrive. But that does not include the percentage rent that we have on one of the buildings that we transitioned to Veritas, plus the other two buildings with Veritas, which are assisted living and member care properties, 1 in Georgia and 1 in South Carolina. It's a 2 year lease.
So we have the ability to reset rents at that point in time. It really was that was borne out of looking at could be offered to reduce costs on those buildings, and we thought they should be able to reduce cost. And the easy solution for us and Veritas was doing it into the 2 year lease and then address appropriate rents once they've been able to operate the communities and make appropriate rent or expense reductions at the time. So we're hopeful that 5 $200,000 increase going into year 3 after we can reset the rents hopefully on the 2 buildings that are in the 2 year lease with Veritas.
Got you. That's helpful. Thanks. On Anthem, so the big story there is 45% increase in rents this year and now you have to wait it out to see what a real stabilized rent will be as you discussed, Wendy. But I'm curious is the bent towards rent going up or down versus what you see today?
It will go up.
Okay.
It will definitely go up. They're beating their projections. They're even beating well, they're beating our projections definitely because we haircut their projections in order to establish rents. But they are beating their projections which were higher than ours. So we have a lot of hope relative to the Anthem properties.
I figured that was the answer, but you didn't explicitly say it. So I figured I'd give you a chance to do that. So you're welcome.
Thank you. Thank you, Rich.
I'll send you the questions for next quarter soon.
So on the preferred equity issue, so does the $600,000 that you're not assuming from the sales over and above your investment, that is sort of tethered to the fact that it's a non accrual status. So the impact on guidance has nothing to do with the $600,000 correct?
Well, it kind of does. If we put the $600,000 in guidance, we'd be up another $0.02 but we don't have it in guidance.
Okay. So the other okay, maybe I'll take that offline because I understood that to be a sales proceeds, but maybe I'm misunderstanding that?
No, no, no. No, it is. It's how much interest they can pay on the $24,000,000 balance for this quarter based Okay.
For the remainder of the year.
For the remainder of this year, right.
Interest, so it's a 600,000 got you. 600,000 interest that is not in guidance now?
Correct. Correct.
Okay. Thank you. Thanks for that. And then lastly, I heard you say that you used the line of credit to pay off principal balances this quarter. Is that common practice or was all the moving parts from things going on, did that kind of require you to go and do that to make those commitments?
Well, I mean cash is fungible. We used cash to pay our development commitments, pay for developments we have undergoing and renovations. So you could say we used cash to do that and pay down debt. I mean, it wasn't a one for one. I know that's not a common practice.
Okay. If
you look at the cash flow statement, Yes. The most important statement in the financials, if you look at the cash flow statement
and I assume we had yes, we had investments, quite a few investments. Okay.
So you would
say we borrowed
for the investments and we used our free cash flow to pay down our debt.
Yes, I understand. Okay. I just want to make sure I understood. Thank you very much. That's all I got.
Thanks.
Thank you.
Our next question comes from Daniel Bernstein of Capital One. Please go ahead.
Hi, good morning.
Hi, Dan.
Hi, I don't know how much you can talk about preferred care, but I was trying to get a sense of at this point whether you have any kind of idea of kind of the split of what you might sell versus what you might release?
I think, Dan, at this point, it's I'd say the majority of the portfolio is probably likely to be sold, as we indicated on last quarter's call. We're actively involved in the process and getting offers in. So I think the majority is likely to sell. Things could change In the case of Jacksonville, it's right. You just never know what transpires out of this, but it's likely the majority would be sold.
Preferred Care has indicated they'd like to stay in a few of the properties and we're looking at the best option available to LTC, whether that's leasing those buildings to Preferred Care, another tenant or selling it. So we're actively engaged in the process and trying to bring conclusion to it as quickly as possible. And we think on next quarter's call, we'll be able to provide that to you.
Okay. I appreciate that. And then on the pipeline, it seems like you have some level of investments that are picking up. Can you talk about a little bit about that activity in terms of are you seeing more flow come in that you're evaluating the quality of the assets, the pricing of the assets? I was trying to get a sense of where your investment level might go.
Because in the past, you've kind of alluded to maybe pricing not being where you want it to be and quality maybe not being where you want it to be. So I was trying to understand if something has changed in terms of your investment pipeline.
I think we're being very selective then on what we invest. Pricing is still very strong, a lot of interest from private equity. So we're looking at finding unique opportunities such as the opportunity we found with Ignite to invest in newer skilled nursing as well as a development project. And we are seeing a few select opportunities from a price point on the private pay side that we are opportunistic about that we can convert to transactions. But it is it's trying to find needles in the haystack that are priced appropriately.
And that's has been a challenge as we talked about throughout the year so far.
I think, Dan, what we have what we've seen recently is that we've seen older properties, not ancient properties, but older properties maybe in the '90s, built in the '90s where to buy them and to bring them up to a standard that our operators and we would like, we generally have to add a CapEx component to our price. And we're finding that some of the other buyers are fine operating them as they are and maybe for the next 5 years or so getting the cash flow that they can. So one of our I think what we're finding out in our underwriting is that we are looking at putting cash in, in addition to our purchase price and might be not making the final cut for people who are just willing to take them the way they are and operate them for the current cash flow. So, that's I think one of the things that's hurting our opportunities. We are finding opportunities from other REITs who are looking at their portfolio and finding 1 or 2 assets that they might not want.
It's not that they don't want to keep them, it's just that does it fit their profile And we're finding some smaller operators who these assets fit nicely into their portfolio. So that's a source of acquisitions that we hadn't really seen in the past. But it's not a huge amount assets that we're looking at, but I'm very happy with the ones that we are looking at. And I think they would be really good additions to our portfolio.
Okay. And you have a number of turnaround assets, assets in your transition in your portfolio now. But on some other recalls, we heard opportunities and value add. And I guess maybe you alluded to that where you take an asset, you put CapEx in, you think it could be a viable asset. Kind of how much risk do you want to take on value add and turnaround today given maybe the perspective that seniors housing or skilled nursing fundamentals might trough in the next couple of years.
Do you want to take would you want to take on any kind of value add or additional risk or would stable assets be preferred at this point?
Well, Sam says we only have $746,600,000 to take. And I would say virtually 0 of that. Would I that's not true. I mean, if we found an opportunity with a or or something like that. It just wouldn't be in our wheelhouse.
We kind of are with the Ignite. I mean we're going to build a property with Ignite, but we've already seen a property that they we're going to buy from them. It's already 90% full. It's a high end rehab sort of resort community. And so building one with them is kind of a development type of thing.
But no, I don't see us putting 50,000,000 to 100,000,000 in a property that we're hoping will turn around by putting another 5,000,000 into it. Right now, we are we are seeing some, not a lot, but a lot of some stabilized whatever we are buying now other than the Ignite thing is stabilized and cash flow positive.
Okay. I appreciate that. I'll hop off. Thank
you. Thanks, Dan.
Our next question comes from Todd Stender of Wells Fargo. Please go ahead.
Hi, thanks. So just back to the transitioned portfolio. Is it Veritas? Are they the ones taking over the Georgia and South Carolina properties? I know it's got a 2 year lease.
Correct, Todd.
Okay. That's
They also took over a building in Texas, we've added to their master lease, which includes other properties they operate for us in Texas.
Okay. So that's going into a master lease, I guess, the Texas one. But how does a 2 year lease work? Is this was this your call? Was it theirs?
Was it kind of a combination? How does that fit?
That was a combination of between us. The occupancy was strong at these communities. It was really a cost issue. We felt the cost under Thrive's operation was higher than it probably should be, and Veritas wasn't certain they can drive down the cost as quickly. So the idea of having 2 year lease really gave both of us a point in time to look at this and give them a chance to get in and see where staffing ratios are, where salaries are, to make an assessment of where they feel they can operate long term.
But Veritas likely there was basically 2 new communities that we've been involved in either bought its COO or developed with Thrive. So they were Veritas was encouraged and excited about the buildings and the locations. It was really looking at can they reduce the cost. And that was a decision that we collectively made to be able to look at setting a rent long term. We didn't want to given the events I discussed already on the call, we want to obviously make sure that we can get an appropriate return on this.
So we thought it was our best interest to be able to let Veritas get in and establish their operating model and then assess what the appropriate rent should be on those two buildings.
Do you
have any operating expense exposure on this or this is all triple net?
Triple net.
Okay. And they can defer some of the rent. Do you book at all upfront? How does that work?
No, no. They're not deferring any rent.
Not on that one.
No. We had on principally out, we did give them a small amount of deferred rent just to get through the transition and get started. So there's a little bit of deferred rent on those two buildings.
Okay, got it. And then can we hear about Trilogy Management? We know Veritas, but I don't think we know Trilogy, if I have that right.
Trilogy is a fairly large operator based in Louisville, Kentucky, of which one of the buildings that we have leased to them is located in Louisville. And then the other building is in the Cincinnati market where they have a strong presence already. So Trilogy is a sizable operator both of skilled nursing and senior housing properties. So that was an ideal fit, I think, from a present standpoint where they're already in the marketplace, they knew the buildings, and it's an organization that we've talked with over a number of years to look at investment opportunities. And it just happened this to be the right opportunity for them to come in.
And we felt confident with their knowledge of the local markets that they could drive performance and improvements at these 2 communities.
And just last question with the loan that you're making the mortgage loan, it's at 9.4%. It's got escalators on it. How long is that going to stay outstanding? Just with interest rates so low, how long do you project that to be outstanding?
Todd, these loans are the ones with Prestige Healthcare, which are on properties located in Michigan. So given Michigan reimbursement, most investments in Michigan are done via a mortgage as opposed to a triple net lease. So these mortgages, as we've said in the past, embody many elements of a long term lease. So the duration on this is approximately a 30 year term. It's similar to all the other loans we have with Prestige.
Got it. Thank you, Clint.
Thank you.
And our next question And our next question will come from Michael Carroll of RBC Capital Markets.
Please go ahead. Yes, thanks.
And I appreciate your comments on the investment activity. And I know that LTC typically is pretty conservative on our underwriting and that's kind of what makes it a little bit more difficult to acquire assets because you're looking for the right deal. I mean is the competitive landscape getting more difficult to find those types of deals in this marketplace? I guess, how do you kind of looking at that?
Sure. Noah, as we talked about during the course of this year, it is very competitive. And I think we've seen where it is more challenging to grow it. And we've made a decision not to be aggressive at this point in time to overpay for an asset. So we've been actively engaged in finding unique opportunities like we have with Ignite, but it's a very competitive marketplace today.
Yes. And then how are you thinking about, I guess, Wendy's comments earlier about taking some portfolios or maybe a few assets from other REITs? Is that like the transition type opportunity where you'll be buying the assets and transitioning the operations to one of your existing operators?
Yes, correct.
Okay. And then how do you kind of underwrite those types of deals? Is that the operators currently in those specific markets and that's how you can get comfortable about their ability to do that?
Exactly. It's finding operators that have a presence in those existing markets, where they see an opportunity where we can partner with them.
And do you typically get better valuations on those types of deals? I'm sure the competitive landscape for those projects are not as deep.
I think on those types of deals, the seller will look at what the execution risk is. And if we have a relationship with an operator, we have a lease in place and obviously we're a known capital provider that doesn't have to have a financing contingency. So I think that's an enticing part of these sellers looking at what trying to mitigate their risk and actually closing deals. Just like because we're looking on selling buildings within our we're looking at maybe not the highest dollar, but the best execution. And I think that we provide that to some of the other larger REITs are looking potentially at selling assets.
Okay.
And then I guess last one for me, just kind of talking about Senior Care Centers, I'm not sure how much you can really mention. But I guess what's the next steps? I guess if you're filing your motion to object to Senior Care wanting to affirm the lease, I guess what's the outcome there or what should we be looking for?
I'd say, Wendy mentioned in her comments, it's a situation where we have the least amount of control. And as we found out, bankruptcies doesn't always make the most business sense as far as the process, the duration and decisions that courts make. So the main concern that we have in looking at the Senior Care Centers' potential plan of reorganization, just understanding who is that management team that has been continued to operate those buildings if they're successful in being able to emerge from bankruptcy. That's one of the biggest challenge and concerns that we have looking forward at this. But if Senior Care Centers was successful in emerging and assuming our lease, but which we have objected to that, we would be able to get paid our rents that we have not recorded for the month of December of 2018.
So we but we're positioned right now. We have another operator that we've been working with that's prepared if we can get court approval to transition those buildings to another operator. We recognize that is subject to court approval. We'll have to wait and see, but we have objected, as Wendy mentioned, to that lease assumption in the court process right now. And the date in which the motion to assume is scheduled now to be heard has been moved to August 30.
So we'll see how things play out on August 30 when that motion is heard in court.
Court. This concludes our question and answer session. I would like to turn the conference back over to Wendy Simpson for any closing remarks.
Thank you, Andrea. We look forward in the Q3 to having more updates about preferred care and hopefully senior care centers also and look forward to talking to you then. Thank you very much for joining us today. Have a great day.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.