LTC Properties, Inc. (LTC): PESTLE Analysis [Nov-2025 Updated]

LTC Properties, Inc. (LTC) is navigating a complex 2025 where political stability and economic headwinds are the main drivers. The projected Funds From Operations (FFO) per share of around $2.80 is under pressure from persistent inflation and high interest rates, but the massive 'Silver Tsunami' of aging Baby Boomers provides a strong demographic tailwind. We need to look beyond the balance sheet to the full PESTLE (Political, Economic, Sociological, Technological, Legal, Environmental) picture to understand the real risks and opportunities for this healthcare REIT.

You're looking for a clear map of the landscape for LTC Properties, Inc. (LTC), and honestly, the PESTLE framework is defintely the right tool to cut through the noise. As a seasoned analyst, I see the near-term risks and opportunities for this healthcare REIT tied directly to the political and economic levers. Here is the breakdown you need, focusing on the late 2025 context.

Political Factors: Reimbursement and Regulation

The stability of Medicare and Medicaid reimbursement rates is the single biggest political risk for LTC's tenants. Any cuts here immediately pressure rent coverage ratios, so watch Capitol Hill closely. Also, the potential for federal staffing minimums is real; if those pass, operator labor costs will jump, directly impacting their ability to pay rent. Still, state-level Certificate of Need (CON) laws are a positive, as they restrict new competition from popping up near existing facilities. That's a defintely a quiet competitive moat.

Economic Factors: Inflation and Interest Rates

Persistent inflation is the top economic headwind. It drives up labor and operating expenses for tenants, forcing them to spend more just to keep the doors open. Plus, high interest rates increase LTC's own borrowing costs for new acquisitions, making it harder to grow the portfolio. Here's the quick math: if your tenant's rent coverage ratios for skilled nursing facilities (SNFs) drop below 1.2x, you have a problem. For 2025, the projected Funds From Operations (FFO) per share is around $2.80, and that number is sensitive to even a minor increase in tenant defaults.

Sociological Factors: The Silver Tsunami

The demographic shift is LTC's biggest long-term opportunity. The massive 'Silver Tsunami' of the aging Baby Boomer generation drives demand for long-term care services like nothing else. To be fair, there's a growing preference for private-pay senior housing over government-funded SNFs, which favors LTC's private-pay assets. What this estimate hides, however, is the chronic staffing shortage in nursing and care roles across the US. Demand is high, but the labor pool is shallow, and that's a structural problem.

Technological Factors: Efficiency and Investment

Technology offers a clear path to operational efficiency. Telehealth adoption, for instance, is helping operators improve patient monitoring and reduce expensive readmissions. Also, automation in facility management-think smart HVAC or security systems-cuts property operating costs, which is a direct benefit to the landlord. The flip side is that the mandated use of electronic health records (EHRs) requires significant capital investment from operators, and that money could otherwise be used for rent or facility improvements.

Legal Factors: Compliance and Litigation

Increased litigation risk related to patient care and safety standards is a constant threat; a single major lawsuit can cripple an operator. Any regulatory changes to the Affordable Care Act (ACA) could impact tenant revenue streams overnight, so we must monitor that closely. Because of the economic stress, lease restructuring negotiations are ongoing with several operators, which is a legal and financial drain. Stricter enforcement of patient data privacy laws (HIPAA) is also raising compliance costs.

Environmental Factors: ESG and Climate Risk

Growing investor pressure for Environmental, Social, and Governance (ESG) reporting is changing how REITs operate. LTC needs to show a clear path to sustainability. This means a definite need for energy-efficient property upgrades to meet those goals, which requires capital. Also, climate change risks, like extreme weather events, threaten property insurance costs, especially in coastal or drought-prone areas. Focus on water conservation in facility operations is now a critical metric, not just a nice-to-have.

Finance: draft 13-week cash view by Friday.

LTC Properties, Inc. (LTC) - PESTLE Analysis: Political factors

Medicare and Medicaid reimbursement rate stability is key.

The stability of federal and state reimbursement rates is the single most important political risk for LTC Properties, Inc.'s (LTC) operators, particularly those in skilled nursing facilities (SNFs). While LTC is strategically reducing its SNF exposure-with the Seniors Housing Operating Portfolio (SHOP) expected to be nearly 20% of its total portfolio by late 2025-the cash flow of its remaining tenants is still highly dependent on government payors.

For fiscal year (FY) 2025, the Centers for Medicare & Medicaid Services (CMS) finalized an aggregate Medicare spending increase for SNFs of 4.2%, or approximately $1.4 billion more than FY 2024. This bump is a near-term positive, reflecting a 3.0% market basket update plus a 1.7 percentage-point adjustment for a prior forecast error, though it's partially offset by a 0.5 percentage-point productivity cut. Honestly, a 4.2% increase is helpful, but it barely keeps pace with the inflationary pressures on labor and supplies that operators are still facing.

Here's a quick look at the key Medicare rate components for FY 2025:

• Market Basket Update: 3.0%
• Forecast Error Adjustment: +1.7%
• Productivity Adjustment: -0.5%
• Net Aggregate Increase: 4.2% (or $1.4 billion)

Potential for federal staffing minimums to raise operator costs.

A major political risk was defintely the federal minimum staffing mandate for nursing homes, which would have dramatically raised operator costs and increased the risk of tenant financial distress. The CMS finalized a rule requiring a total nurse staffing standard of 3.48 hours per resident day (HPRD), including 0.55 HPRD from a Registered Nurse (RN) and 2.45 HPRD from a Nurse Aide (NA), plus 24/7 RN coverage.

The industry estimated this mandate would cost $43 billion over ten years, with an independent analysis anticipating a cost of $6.8 billion per year. This would have been a massive headwind for LTC's SNF operators. But, in a critical development, a U.S. District Judge struck down the staffing mandate on a nationwide basis on April 7, 2025, vacating the core HPRD and 24/7 RN provisions. This court decision removes the immediate, multi-billion-dollar compliance cost from LTC's operators, but the political pressure to maintain high staffing levels will continue at the state level.

State-level Certificate of Need (CON) laws restrict new competition.

Certificate of Need (CON) laws are state regulations that require providers to get government approval before making large capital expenditures, like building a new facility or adding beds. For LTC, these laws are a double-edged sword: they restrict new competition for existing tenants, but they also complicate LTC's ability to reposition or expand its own portfolio.

As of early 2025, 35 states and Washington, D.C., still operate CON programs, and nursing homes remain subject to these laws in 34 states. The trend is toward modification and repeal, with 21 states updating their CON laws between 2021 and 2023. However, some states are specifically preserving CON for long-term care. For example, in Illinois, the capital expenditure minimum that triggers a CON review for long-term care facilities is set at $10,053,816 as of July 1, 2025.

The political fight over CON laws is ongoing. Repealing them would increase competition, which is bad for current operators, but it would also lower the barrier to entry for LTC's own development projects.

Shifting political focus on public health infrastructure post-elections.

The political environment post-elections, driven by lessons from the COVID-19 pandemic, has shifted the focus toward greater regulatory oversight and public health infrastructure spending. This translates into a more punitive regulatory regime for LTC's operators.

The FY 2025 final rule for SNF payments, for instance, revised CMS regulations to allow the agency to impose additional financial penalties on facilities where health and safety deficiencies are identified. This means the political will exists to use enforcement as a primary tool to drive quality, creating a higher operational risk for any underperforming tenant.

The political focus is clear: quality and accountability will be non-negotiable, and the government is willing to use its regulatory and financial leverage to enforce it.

LTC Properties, Inc. (LTC) - PESTLE Analysis: Economic factors

The economic environment for LTC Properties, Inc. in 2025 is defined by a persistent squeeze: high operating costs for your tenants meet elevated borrowing costs for your own growth. This dynamic means that while the demographic tailwind is strong, near-term profitability is constrained by macroeconomic pressures, making capital allocation decisions more critical than ever.

Persistent inflation drives up labor and operating expenses for tenants.

Your tenants, especially those operating Skilled Nursing Facilities (SNFs) and Seniors Housing Operating Portfolio (SHOP) assets, are wrestling with medical cost inflation that continues to outpace general inflation. Employers across the US are seeing healthcare costs rise significantly, with one analysis projecting an average increase of 6.7% for 2025 after plan changes, or 7.7% before changes. Another report estimates an even higher 9% increase in employer health care costs for the year.

The biggest pressure point is labor. Even though the rate of increase has slowed slightly, the cost of staffing remains high. For example, labor expense per calendar day in the hospital sector was up 7% year-over-year through late 2024, and non-labor expenses, like supplies, grew even faster, up 10%. For SNF operators, this means a constant battle to maintain margins, which directly impacts their ability to pay rent. You're seeing a cost-reimbursement mismatch, and that's a defintely a headwind for the triple-net lease model.

• Healthcare cost trend for 2025 is projected to remain elevated, with some analysts anticipating a rise of 8.5% for the Group market.
• SNF wages, a major component of operating expense, saw increases estimated at 3.3% to 3.5% in 2024.
• The Centers for Medicare & Medicaid Services (CMS) finalized a 4.2% increase in Medicare payments to SNFs for Fiscal Year 2025, which is helpful but may not fully cover the steep rise in operational costs.

High interest rates increase borrowing costs for new acquisitions.

The high interest rate environment fundamentally changes the math on your acquisitions and capital structure. When the Federal Reserve holds rates high to combat inflation, your cost of capital rises, making it harder to generate an attractive spread on new investments. This is particularly true for a Real Estate Investment Trust (REIT) like LTC Properties that relies on debt for growth.

We saw this directly in your recent activity. For instance, in Q2 2025, you announced a $60.0 million five-year mortgage loan with an interest rate of 8.25%. That 8.25% cost of debt is a clear indicator of the current market reality. While you are actively executing your strategic shift, with approximately $70 million in SHOP acquisitions expected to close by year-end 2025, the yield on these new assets must be significantly higher to justify that borrowing cost and deliver accretive (earnings-boosting) growth.

Rent coverage ratios for skilled nursing facilities (SNFs) are under pressure.

The combined effect of rising operating expenses and uneven reimbursement rates is putting significant pressure on your tenants' rent coverage ratios (the ratio of a tenant's earnings before interest, taxes, depreciation, amortization, and rent to its rent payments). The industry is seeing signs of stress, with the delinquency rate for nursing home loans rising for three consecutive quarters between late 2023 and mid-2024. This is the most critical near-term risk for your triple-net lease portfolio.

While Medicare payments are up 4.2% for FY 2025, that increase is often insufficient to offset the double-digit growth in non-labor expenses and the persistent wage inflation. The pressure is most acute on smaller and older facilities. Your strategy of selling seven older SNFs for $123.0 million and redeploying the proceeds into newer, stabilized SHOP assets is a smart move to mitigate this risk and improve the overall quality of your coverage metrics.

Projected 2025 Funds From Operations (FFO) per share is around $2.80.

Despite the economic headwinds, LTC Properties' portfolio transition and strategic acquisitions have supported your core profitability. Your management has increased the low end of the full-year 2025 core Funds From Operations (FFO) guidance, which now stands in the range of $2.69 to $2.71 per share. The midpoint of this updated guidance is $2.70 per share. This figure is a key benchmark for investors, as FFO is the primary measure of a REIT's operating performance.

Here's the quick math: achieving the midpoint of $2.70 would represent a slight decrease from the prior year's trailing FFO of $2.79 per share, reflecting the impact of asset sales and the cost of the portfolio transition, but it demonstrates stability in a tough macro environment. The shift to the Seniors Housing Operating Portfolio (SHOP) model is designed to capture more of the upside from the seniors housing recovery, which should drive FFO growth in 2026 and beyond.

LTC Properties, Inc. (LTC) - PESTLE Analysis: Social factors

The massive 'Silver Tsunami' of the aging Baby Boomer generation drives demand.

You're looking at an unprecedented demographic shift, and for LTC Properties, Inc., this is the single biggest tailwind. It's the so-called 'Silver Tsunami,' and it's not a wave coming-it's already here. America's over-65 population reached 59 million in the second quarter of 2025, now comprising 18% of the total U.S. population. More critically, the 80+ cohort, which drives the highest-acuity demand for senior housing and care, is projected to increase to 14.7 million people in 2025 alone. That's a huge, immediate market.

This surge is directly translating into higher occupancy. Senior housing occupancy across the primary markets rose to 88.1% in Q2 2025, the highest level in years, driven by the Baby Boomer generation. The quick math here shows a massive supply-demand imbalance: the National Investment Center for Seniors Housing & Care (NIC) projects a need for 156,000 additional senior housing units by the end of 2025 just to maintain current market penetration rates. The U.S. senior living market is already valued at $119.55 billion in 2025, and that number is only going up.

• Demand is outpacing new supply significantly.

Increased preference for private-pay senior housing over government-funded SNFs.

We're seeing a clear social preference shift away from traditional, government-funded Skilled Nursing Facilities (SNFs) toward private-pay options like Assisted Living (AL) and Independent Living (IL). People want a more hospitality-focused, consumer-driven experience, and they are willing to pay for it. The average monthly senior living rates hit $5,207 in late 2024, representing a 22.5% jump above pre-pandemic levels, which underscores the pricing power in the private-pay market.

This trend is defintely impacting LTC Properties' strategy. The company is actively shifting its portfolio mix to favor private-pay seniors housing, targeting a 65%-35% split favoring seniors housing over skilled nursing by late 2025, which will be its lowest skilled nursing concentration in company history. Investors are following suit; a Q1 2025 survey showed that independent and assisted living facilities are the most targeted investment segment for those looking to increase exposure to the sector. While SNF occupancy is also in recovery, rising to 77% in July 2023, the growth and investor appetite are clearly stronger in the private-pay segment.

Chronic staffing shortages in nursing and care roles persist across the US.

The biggest near-term risk to capitalizing on the demographic boom is the persistent workforce crisis. The long-term care industry is still operating at a deficit of more than 100,000 workers compared to pre-pandemic levels. This isn't just a number; it means operators can't fully staff their facilities, which limits new admissions and caps the revenue potential of the real estate. The American Health Care Association/National Center for Assisted Living (AHCA/NCAL) estimates a shortage of 300,000 to 400,000 long-term care workers.

The shortage is particularly acute for licensed roles. The Health Resources & Services Administration (HRSA) projected a deficit of approximately 78,610 full-time equivalent Registered Nurses (RNs) this year. This forces operators to spend more on retention and recruitment, squeezing operating margins. Welltower, a peer REIT, reported compensation expense growth of 5.1% in its same-store senior housing operating portfolio in 3Q24. This is a direct cost pressure that LTC Properties' operating partners must manage.

Growing public scrutiny on the quality of long-term care services.

Public and regulatory scrutiny on the quality of care and the financial transparency of operators is intensifying, especially in the wake of the pandemic. This scrutiny directly impacts the value and operational risk of LTC Properties' assets, particularly its skilled nursing portfolio. The Centers for Medicare & Medicaid Services (CMS) is driving this change.

For one, CMS is updating its Five-Star Quality Rating System starting in July 2025 to increase transparency and accuracy. More notably, CMS will begin publishing chain-level aggregated performance ratings in July 2025, meaning the performance of an entire operator chain will be public, not just individual facilities. This makes poor performance at one site a reputational risk for the whole operating partner. Furthermore, new SNF disclosure requirements on the CMS 855A form, which must be complied with by May 1, 2025, mandate reporting on ownership, control, and 'Additional Disclosable Parties,' shining a brighter light on the financial and operational structure of LTC's tenants. You need to ensure your operators are ready for this new level of compliance and transparency.

LTC Properties, Inc. (LTC) - PESTLE Analysis: Technological factors

Technology is a major force multiplier for LTC Properties, Inc.'s (LTC) tenants, but it's also a capital cost consideration for the properties we own. The key takeaway for 2025 is that the adoption of AI and remote monitoring is moving past the pilot stage to deliver measurable financial returns, which directly improves our operators' ability to pay rent and manage their Senior Housing Operating Portfolio (SHOP) assets.

Telehealth adoption improves patient monitoring and reduces readmissions.

Telehealth and remote patient monitoring (RPM) are defintely moving the needle on patient outcomes and cost control for our operators. RPM, using wearables and in-room sensors, allows for continuous patient monitoring, which helps staff catch issues early. This shift is critical because it directly reduces expensive, unnecessary hospital readmissions.

The data shows the impact clearly: Telehealth has been shown to reduce hospital readmissions by up to 63% and cut overall system costs by over 50% through avoided emergency visits. Still, adoption varies significantly across our portfolio types. While telehealth accounts for about 23% of all healthcare encounters nationwide, its use in skilled nursing facilities (SNFs) is much lower, sitting at around 20% of residents in 2025. This gap signals a clear opportunity for our SNF operators to gain a competitive edge by investing in this area.

Use of electronic health records (EHRs) requires capital investment from operators.

Electronic Health Records (EHRs) are the digital backbone of modern care, but they require significant capital investment from the operators who lease our properties. This isn't just a software subscription; it's a full system overhaul. The initial implementation cost for a single mid-sized clinic or facility can range from $65,000 to $200,000 for setup and implementation services.

Here's the quick math: Beyond the initial spend, operators must budget for ongoing maintenance and support, which typically runs about 15% to 20% of the initial implementation cost annually. For us, this means we need to ensure our operators have the financial stability and capital expenditure (CapEx) reserves to handle these essential upgrades, especially since only 18% of SNFs could electronically exchange health information with other providers as of 2022, creating workflow inefficiencies. EHRs are not optional; they are a compliance and efficiency mandate.

Automation in facility management (HVAC, security) cuts property operating costs.

The integration of smart building technology and automation is a direct lever for reducing property operating expenses, which ultimately strengthens the financial health of our tenants and the value of our real estate. Automation in facility management, covering everything from smart HVAC systems to automated security and lighting, is becoming standard in newer assets.

This tech cuts down on human error and energy waste. For LTC, this is particularly relevant as we shift our focus to newer, stabilized assets, as evidenced by our 2025 investment guidance of $460 million, which is heavily skewed toward our SHOP segment. Newer buildings are simply cheaper to run because they have this technology built-in.

• Energy Savings: Automated HVAC systems can reduce energy consumption by optimizing temperature based on occupancy.
• Maintenance Savings: Predictive maintenance on equipment (like elevators and boilers) prevents costly failures.
• Security Efficiency: AI-powered security cameras and access control reduce the need for constant human patrols.

AI-driven predictive analytics help manage patient flow and staffing needs.

Artificial Intelligence (AI) and predictive analytics are the next major wave, moving from abstract concept to operational reality in 2025. This technology is being used to forecast patient flow, predict staffing requirements, and flag patients at high risk of adverse events like falls or readmissions.

The financial impact is substantial: AI and automation are projected to generate up to $150 billion in annual savings for the U.S. healthcare system by 2026. In our sector, facilities leveraging predictive analytics have seen occupancy rates improve by up to 12% and can reduce manual intake time by up to 50%. This is a competitive differentiator for our operators.

To give you an idea of the ROI on the labor side, an AI workforce management platform has yielded an average of $1.2 million per year in direct ROI for a mid-size hospital by optimizing staffing and reducing turnover. This is how our tenants fight the persistent labor shortage.

Next Step: Finance should model a sensitivity analysis for our top 10 operators, showing the impact on rent coverage if they achieve a 10% reduction in labor costs through AI-driven staffing optimization.

LTC Properties, Inc. (LTC) - PESTLE Analysis: Legal factors

Increased litigation risk related to patient care and safety standards

The core business of LTC Properties' tenants-providing skilled nursing and assisted living care-places them directly in a high-liability environment. Litigation in the long-term care sector is a persistent and rising risk for operators, and this financial strain directly affects their ability to pay rent, which is your exposure as the landlord.

Current lawsuits are frequently tied to clinical issues like resident falls, pressure injuries (bedsores), and managing resident-to-resident aggression. These risks are amplified by the industry's ongoing staffing shortages and the higher acuity (sickness level) of residents being admitted. While most cases settle out of court, the average award to plaintiffs in recent arbitration cases was around $461,750, a number that reflects a significant and growing cost of doing business for your operators. This is a constant drain on operating margins.

Regulatory changes to the Affordable Care Act (ACA) could impact tenant revenue

Major federal legislative changes in 2025 have fundamentally shifted the revenue landscape for your skilled nursing facility (SNF) tenants. The 'One Big Beautiful Bill Act' (OBBB), signed in July 2025, includes sweeping changes to Medicaid and the Affordable Care Act (ACA). The Congressional Budget Office (CBO) projected a previous version of the bill would result in cuts of nearly $1 trillion from Medicaid spending over the next decade.

This legislation includes an estimated $900 billion in cuts, mostly to Medicaid, over a 10-year period, which is a massive headwind for operators who rely heavily on government reimbursement. To be fair, the Centers for Medicare & Medicaid Services (CMS) did finalize a 4.2% increase in Medicare payments for SNFs for fiscal year 2025, translating to approximately $1.4 billion in additional Medicare Part A payments, but this is often offset by the elevated costs of labor and the new regulatory burden.

Lease restructuring negotiations are ongoing due to operator financial stress

Operator financial stress is not an abstract risk; it's a concrete legal reality that you've faced head-on in 2025. A key example is the Chapter 11 bankruptcy filing by Genesis Healthcare, Inc. on July 10, 2025. Genesis leases six skilled nursing centers from LTC, and this master lease represented a notable 4.5% of LTC's annualized revenue as of March 31, 2025.

This situation immediately triggers complex legal negotiations for lease restructuring or property transition. You hold $4.7 million of security from Genesis, which provides a buffer, but the legal process is costly and time-consuming. This is why LTC is aggressively migrating its portfolio toward the Senior Housing Operating Portfolio (SHOP) model, aiming for SHOP to represent 20% of the total investment portfolio by year-end 2025, to reduce reliance on the volatile triple-net structure.

Stricter enforcement of patient data privacy laws (HIPAA)

The legal compliance burden on your tenants has increased with stricter enforcement of the Health Insurance Portability and Accountability Act (HIPAA), particularly concerning the Privacy and Security Rules. The Office for Civil Rights (OCR) is ramping up scrutiny, and the financial stakes are higher than ever.

The updated Civil Monetary Penalties (CMPs) for 2025 are substantial, with the maximum annual penalty for a single violation type now reaching $2,134,831. The average cost of a data breach in the healthcare sector is estimated at a staggering $7.42 million per breach in 2025, which is a risk that operators cannot defintely ignore.

Here's the quick math on the financial risk of non-compliance:

The OCR's April 2025 settlement with PIH Health for $600,000 following a phishing attack that exposed 189,763 individuals' data shows that even one incident can lead to a significant financial hit, further eroding the financial stability of your operators.

Next Step: Asset Management: Schedule a legal review of all Genesis Healthcare lease covenants and collateral by next Tuesday.

LTC Properties, Inc. (LTC) - PESTLE Analysis: Environmental factors

Growing Investor Pressure for ESG Reporting

You are defintely seeing the pressure from institutional investors like BlackRock-who collectively manage trillions of dollars-to move beyond simple compliance and deliver measurable Environmental, Social, and Governance (ESG) performance. For LTC Properties, Inc., this means aligning its disclosure with the Sustainability Accounting Standards Board (SASB) framework, which is the industry standard for real estate investment trusts (REITs). The company's entire Board of Directors is on the Corporate Sustainability and Responsibility (CSR) Committee, showing that ESG is a top-level strategic concern, not just a marketing effort.

This pressure is about transparency and future-proofing. Investors want to know how LTC is managing long-term risks, especially considering the evolving regulatory landscape, such as the proposed U.S. Securities and Exchange Commission (SEC) rule on climate disclosure.

Need for Energy-Efficient Property Upgrades

The core challenge for LTC, a triple-net lease (NNN) capital provider, is incentivizing its operators to invest in energy-efficient upgrades, since the operators are generally responsible for property maintenance. LTC addresses this by offering attractive financing and incentives to drive energy-saving capital improvements.

Here's the quick math on recent commitments:

• LTC has already invested over $1 million and financed an additional $1.9 million in LED lighting retrofits across its portfolio.
• For its Seniors Housing Operating Portfolio (SHOP) segment, which gives LTC more operational control, the company projects a 2025 full-year increase in Funds Available for Distribution (FAD) capital expenditures to a range of $660,000 to $920,000 for the remaining eight months of 2025. This equates to an annualized figure of approximately $1,200 to $1,400 per unit in the SHOP segment, a significant portion of which is directed toward sustainable upgrades.

Climate Change Risks Threaten Property Insurance Costs

Climate change is not an abstract risk; it's a direct threat to the bottom line via property insurance and repair costs. LTC has proactively expanded its risk management process to include specific analysis for heat, fire, storm, drought, and flood stress, utilizing tools like ClimateCheck® to perform current and longer-term scenario analysis.

To be fair, the company's diversified portfolio helps mitigate direct material exposure, as approximately 82% of its properties are located outside of extreme high-risk areas. Still, the risk is real for the remaining 18%.

Focus on Water Conservation in Facility Operations

Water scarcity, particularly in drought-prone regions in the U.S. West and Southwest, is a growing operational risk for healthcare facilities. High water stress can lead to increased utility costs and operational disruption.

LTC is actively collecting data on water consumption from participating operators, which is the first step in managing this risk. One property, for example, was identified with an extreme risk rating of 86/100 for water stress. This property's projected average water stress in 2050 is 85.06%, up from a historical average of 67.72%, underscoring the urgent need for water conservation practices in those specific locations.

The company provides recommendations to its operators, including simple maintenance best practices and more extensive water conservation opportunities, to help them manage this growing resource constraint.

Next Step: Asset Management: Prioritize a capital allocation review by end of Q1 2026 to specifically target the 18% of properties in extreme high-risk areas for climate-resilience upgrades.