The past year has been a busy one for CareTrust REIT with the second-phase closure of a major acquisition in Tennessee bringing its annual investment total to about $1.5 billion.
CareTrust also reported a replenished investment pipeline sits of about “$350 million of near-term, actionable opportunities.” This doesn’t include “larger portfolios the company is reviewing.”
The second phase occurred though a joint venture with a “large third-party healthcare real estate owner.” This new phase included the acquisition of an additional 13 skilled nursing facilities. CareTrust provided combined equity and preferred equity investment of $176 million “at an initial contractual yield on its combined preferred and common equity investments in the joint venture of approximately 9.0%.”
Existing CareTrust tenant relationships under new long-term master lease agreements will operate the facilities. Six of the facilities will be operated by affiliates of The Ensign Group and the remaining seven by affiliates of Links Healthcare Group.
During an October 30, 2024, earnings call, David Sedgwick, CareTrust chief executive, president, and director, said, “First, year-over-year market cap growth of 123%. Second, record-setting investments of approximately $917 million at an average stabilized yield of 9.4%. Third, we announced pending acquisitions of approximately $500 million of skilled nursing facilities with a 9% stabilized expected yield to close during the last 2 months of the year.”
The day before the call, the company had announced that it would acquire a portfolio of 31 skilled nursing assets near Tennessee for $500 million, “investing $442 million at an estimated yield of 9% expected to close by year-end.” That was the precursor to the second phase.
CareTrust also announced the acquisition of $57 million in skilled nursing facilities in the northeast by the end of December 2024.
At the close of its third quarter, the company claimed year-over-year market cap growth of 123%, “record-setting” investments of approximately $917 million at an average stabilized yield of 9.4% and pending acquisitions of approximately $500 million of skilled nursing facilities with a 9% stabilized expected yield to close during the last 2 months of the year.
In new prepared remarks, Sedgwick said that the volume of investments didn’t come at the expense of underwriting and operator selection rigor.
“From day one, our focus has been to grow the per-share value for our investors by matching the right operators with the right opportunities,” Sedgwick said. “We begin 2025 with a stronger balance sheet, deeper operator relationships, an active pipeline, and a reinforced team that is better equipped to take advantage of the opportunities for growth in front of us.”