LTC Properties Plans to Offer Shareholders Non-Real Estate Unit

LTC Properties, a real estate investment trust, said it will spin off to shareholders a newly formed non-real estate unit that will engage in businesses barred to REITs.

The Oxnard-based company said the spinoff will be made through a dividend, giving shareholders one-tenth of a share in LTC Healthcare for every share owned.

The new unit will make real estate, health-care and other investments that either LTC Properties can’t do as a real estate investment trust or that are outside its main business of owning and financing nursing homes throughout the country.

The spinoff is expected to be completed in the third quarter.

REITs are companies that own all types of real estate, from shopping malls to offices, and even prisons. They are exempt from corporate income taxes if, among other things, they distribute at least 95% of net income to shareholders as a dividend. They must also derive at least 75% of their revenue from rents or mortgage interest income.

A number of REITs have set up separate units as a way to boost income now that the U.S. real estate market has recovered from the deep slump of the early 1990s and returns on acquisitions are falling.

LTC also said it will redeem its 8.5% convertible notes due in 2000 and its 9.75% convertible subordinated notes due in 2004. The total amount of debt to be redeemed is about $13.3 million.