For some companies, LTC Properties Inc. is in an enviable predicament a stock price that's too high by Wall Street standards.


The company has been chosen by Standard & Poor's to be on its S & P; Small Cap 600 index, which typically boosts trading volume and pushes up a company's share price in what's commonly called the "index effect."


But Wall Street analysts have been dinging the Westlake Village-based real estate investment trust that owns retirement homes and assisted living centers nationwide for having a share price that's already overvalued.


Stifel Nicolaus analysts Jerry L. Doctrow and John D. Wallace wrote in a Feb. 10 note to investors that despite LTC Properties' bright outlook, the firm is maintaining its "hold" rating on the company's stock.


"We believe that although the company has strong growth potential, a conservative balance sheet and should see increased buying volume from its appearance on the S & P; Small Cap 600, its valuation remains above comparable comps in the senior housing REIT sector," the analysts wrote.


The company's shares closed at $22.40 on Feb. 16, a $22.40, up 36 percent since April. Despite LTC Properties' higher stock price, the company pays a lower dividend than its competitors.


The company recently increased its dividend to 36 cents a share from 33 cents. Still, LTC Properties has a dividend yield of 6.6 percent while the senior housing REIT median is 6.9 percent, according to the Stifel Nicolaus analysts.


LTC's Chairman and Chief Executive Andre C. Dimitriadis and Wendy L. Simpson, the company's president and chief operating officer, declined comment. The officers of the public company said, through the receptionist, that it's corporate policy not to talk to the news media.


Standard & Poor's chose LTC Properties to replace retailer Linens 'N Things Inc., which was taken private by buyout firm Apollo Advisors LP.


Maureen Maitland, an S & P; vice president, said LTC Properties best fit the index's long list of qualifications for the fund. "There's no absolute formula," she said. "We look at the companies that qualify and from that list we choose one."

For reprint and licensing requests for this article, CLICK HERE.