CareTrust REIT has acquired a portfolio of four skilled nursing facilities in the Mid-Atlantic for a total investment of approximately $74.7 million, including transaction costs, the San Clemente, CA-based real estate investment trust announced Thursday.
One of the four SNFs includes assisted living as part of the campus.
According to CareTrust Chief Investment Officer James Callister, the acquisition is the start of a relationship with a new operator. The REIT declined to name the operator but said the company manages facilities across multiple states.
The new master lease has an initial 15-year term, with two five-year extension options. It provides for a year 1 contractual lease yield of 9.3% (including transaction costs) with annual Consumer Price Index-based escalators, according to the REIT.
The four-SNF transaction announced Thursday “not only represents a quadrupling of our average annual rate of investments; but it also represents an acceleration of our mission to facilitate growth for strong skilled nursing and seniors housing operators where they are needed,” CareTrust CEO Dave Sedgwick said. “As we head into the final quarter of 2024, given the progress made throughout the organization, the company has never been better positioned to grow than now.”
Callister said that the REIT’s year-to-date investments total more than $900 million, “and we continue to actively seek and look to execute upon additional acquisition opportunities.”
The REIT funded the transaction with funds on hand. As of Thursday, the REIT said it had approximately $280 million of cash on hand.
CareTrust said that in September, it raised $309.9 million at an average price of $30.38 per share under its new $750 million ATM program, bringing its outstanding share count to 171.5 million. Additionally, the company said it paid off its $200 million term loan last month. The REIT is in the process of amending and extending its existing credit facility.
As of Thursday, CareTrust’s investment pipeline sits at $240 million of near-term, actionable opportunities, not including larger portfolios the company is reviewing, the REIT said.
On a second-quarter earnings call, Callister said that the investment pipeline is “pretty exclusively skilled nursing right now.”
