Inside LTC Properties’ New, Turnkey Approach to CapEx

Covid-19 is one of the driving factors behind LTC Properties’ (NYSE: LTC) new turnkey approach to capital expenditures, but leaders with the real estate investment trust anticipate that the program will continue well after the pandemic is over and will have lasting benefits.

Particularly, they foresee value in terms of future infection control and making senior housing communities safer.

“Covid-19 had definitely been the catalyst, but it’s not the only infection out there, especially in these environments,” Mandi Hogan, vice president of marketing and investor relations for LTC, told Senior Housing News.


The Westlake Village, California-based health care REIT announced its Smart Design initiative last month, during its Q3 2020 earnings call. Hogan and Executive VP and Managing Director of Business Development Doug Korey are spearheading the program, and LTC is partnering with Indianapolis, Indiana-based Avenue Development to implement it across its portfolio of 107 assisted living facilities, 73 skilled nursing facilities and one health care property.

LTC is not alone in reconsidering how to approach CapEx in light of Covid-19, with other senior living owners and operators also re-evaluating their approaches to capital expenditures and strategic planning.

But while some individual providers have backed off capital projects in the interest of preserving capital during Covid-19, LTC is seeking out a way to use its scale to keep its portfolio up to date.


LTC enlisted Avenue in the initiative because the firm can leverage its relationships to identify preferred vendors, identify cost and operational efficiencies, and work with LTC’s roster of operators to deploy the initiative in a uniform manner, Avenue Development Principal and Co-Founder Laurie Schultz told SHN.

“We’ve been able to negotiate some volume pricing discounts because of the program that, if an operator went out to a specific vendor alone, they would not be able to get,” she said.

Having Avenue vetting the process is important to LTC, as it gives its operators the bandwidth to continue responding to the pandemic, and focus on keeping residents and staff safe.

“The beauty of the program is that we can say, ‘We’ve got some solutions for you,” Hogan said.

The Smart Design initiative is not a one-size-fits-all plan, however. Avenue is working with LTC’s operators to identify and implement the CapEx needed in each individual community. The program is tweaked with feedback from operators.

“They help guide the process, in terms of what they’re looking for,” Hogan said.

The Smart Design initiative prioritizes three objectives: safer buildings for staff, residents and their families, and visitors; identifying efficiencies in operations and utility usage; and leveraging technology to design for the future. Much of Avenue’s research into technology centers on improving infection control procedures and virtual marketing, two areas of improvement across the industry, which the pandemic has spotlighted.

LTC and Avenue identified infection control as the area with the most immediate need, and the initiative will focus on improving air quality and filtration, as well as customized retrofitting options such as touchless equipment and custom dividers, and enhanced sanitation measures such as bipolar ionization and ultraviolet sanitation.

To facilitate the initiative, LTC will work the financing into existing leases, and provide flexible lines of credit to operators at attractive rates.

Schultz’s background in multifamily real estate development will play an important role in finding vendors and best practices that can carry over from traditional apartments to senior housing.

Notably, Avenue sees LTC’s operators adopting virtual marketing and sales best practices that multifamily developers and operators have been using for decades, in order to drive move-in velocity going forward. Also, from a cost perspective, these platforms will save operators time and money, and connect them directly to prospective residents.

“It’s not hitting the operators’ bottom lines in a year that they can’t afford more hits to their expenses,” she said.

While the Smart Design initiative is in its nascent stages, LTC expects it to be in place well after Covid-19 is under control, and the program will become an essential part of its investment strategy.

“This is beyond Covid-19,” Hogan said. “This [program] gives our buildings a competitive advantage for the future.”

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