Dec 01, 2023

Enhancing property portfolio resilience: How healthcare REIT LTC uses ClimateCheck

Risk | by Tess Townsend, Director of Communications | 3 Minutes

LTC Properties leverages ClimateCheck risk data to inform investment and mitigation strategies.

About LTC Properties

LTC Properties, Inc. (NYSE: LTC) is a real estate investment trust (REIT) specializing in senior housing and care properties. With more than 200 investments across 29 states, LTC Properties has been an industry innovator for three decades.

LTC recognizes the value of socially responsible and sustainable practices and incorporates ESG practices into its larger growth and enterprise risk management systems as outlined in its inaugural ESG Report.

How LTC uses ClimateCheck

Increasingly, in addition to its significant impact on society, climate risk is impacting real estate transactions as investors and operators manage the implications of climate-related events that lead to myriad challenges, including rising utility costs.

Senior housing and skilled nursing centers are more than just buildings — they are centers of care for our most frail and vulnerable population. Any risk that impedes that care puts residents, operators and, possibly, owners at risk. For example, while extreme weather can cause physical property damage, it can also interfere with facility operations and caregiving, putting residents’ lives in jeopardy. While LTC’s triple net lease structure and diverse portfolio substantially mitigates much of its direct exposure, the company has taken important steps to identify and address physical climate risks.

In early 2022, LTC significantly enhanced its climate risk management initiative by contracting with ClimateCheck to leverage its Portfolio Analysis, Commercial Property Reports, and Bulk Data solutions platform, with the goal of obtaining specific and detailed risk analysis for heat, fire, storm, drought, and flood stress on every building in LTC’s portfolio. This data helps inform LTC’s investment and operational strategies, and assists the company in working with the operators that manage its portfolio to ensure proper emergency preparedness while identifying potential cost savings.

LTC uses ClimateCheck’s physical climate risk data to:

  • Inform and support its operators in preparing for and mitigating property damage or loss due to extreme weather events, as well as overall emergency preparedness for staff, patients, and residents.
  • Integrate climate risk analysis into underwriting criteria by analyzing climate risk as part of new business opportunities and ongoing portfolio management.
  • Prioritize energy and water efficiency practices and capital investments, which may have the biggest impact on both real estate value, and the environment.
  • Disclose risks in alignment with Task Force on Climate-Related Financial Disclosures (TCFD) guidelines.

“ClimateCheck is insightful and beneficial for a variety of reasons, including potential property acquisitions, transaction due diligence, enterprise risk management, capital expenditure enhancements assessment, and ESG reporting,” said Mandi Hogan, LTC’s Senior Vice President of Marketing, IR and ESG. “We share ClimateCheck analysis with our operators to provide better awareness and practical mitigation strategies. ClimateCheck’s data helps us prioritize adaptation measures based on property risk profile. For example, we look for energy and water efficiency investment opportunities based on current and long-term exposure to heat and drought.”

Benefits of ClimateCheck: Resilience and value

ClimateCheck rates the risk of heat, precipitation, drought, flooding, wind, and fire to properties on a 1 to 100 scale. Risk scores measure expected increases in hazard intensity for targeted properties through 2050, relative to other locations in the contiguous U.S. and Canada.

This data provides LTC with a bird’s eye view of where risks may be concentrated, now and in the future, by providing detailed analysis and reports for each LTC property, allowing LTC to focus its efforts where it matters most, empowering the REIT to support its operators, protect its portfolio, and make informed investment decisions.

“The team at ClimateCheck has been tremendously responsive, providing more than just technology and data reports,”  said Hogan. “They really take the time to understand our needs and work with us on enhancing our use and strategic application of the data for solving potential problems. Given the importance of finding solutions to effectively mitigate climate risk, LTC finds ClimateCheck solutions to be practical, informative, and affordable, as well as a value-added tool in our ESG efforts.”

Looking to incorporate climate into your risk assessments?