The first six months of 2024 have been “strong” for CareTrust REIT, President and CEO Dave Sedgwick said Friday on a second-quarter earnings call, adding that “momentum is actually building” and that the company expects “supercharged growth for the foreseeable future.”
The San Clemente, CA-based real estate investment trust has made $765 million in investments so far this year — a record for the company — with $378 million of those investments occurring in the previous week, the REIT reported Thursday.
The $268 million in second-quarter investments included expanding CareTrust’s existing relationship with Bayshire Senior Communities through the $61 million acquisition of three California campus properties, Chief Investment Officer James Callister said Friday.
The latest investments, after the quarter ended, included the funding of a $260 million senior mortgage loan and a $43 million preferred equity investment to enable a borrower — which CareTrust described in a Thursday press release as “a joint venture between a large healthcare real estate owner and a subsidiary of PACS Group” — to acquire a portfolio of 16 senior living communities and 21 skilled nursing facilities with a total of 2,713 operating beds/units. The 37 properties, which Callister said on Friday’s call were locations that had been operated by Prestige Senior Living or Prestige Care, are in Alaska, Arizona, California, Idaho, Montana, Nevada, Oregon and Washington state and will be operated by other PACS subsidiaries.
The REIT’s real estate acquisition pipeline stands at $270 million, which Callister said is “pretty exclusively skilled nursing right now.”
Sedgwick promised more investments in 2024. “We’re not finished with this year,” he said, noting that “we are at the start of demographic tailwinds that should last for decades to come.”
Meanwhile, the CEO said that occupancy has not reached pre-pandemic levels among assisted living properties in the REIT’s portfolio, “but we did see a 280 basis point increase year over year and a 180 basis point increase quarter over quarter for the assisted living occupancy.”
By comparison, Sedgwick said, occupancy in skilled nursing “finally” surpassed pre-pandemic levels in the second quarter. “Skilled mix was down a little bit year over year, but we appear to be settling in at a new normal that is quite a bit higher than pre-pandemic skilled mix — about 330 basis points higher,” he said.
Overall, the CEO said, “We are seeing and hearing from our operators that the labor environment is normalizing. In our portfolio alone, we’ve seen agency expense drop 35% in the last year.”
As of June 30, the end of the second quarter, CareTrust’s portfolio included 27 senior living properties, 29 properties with multiple levels of services, and 157 skilled nursing facilities, according to a presentation posted on the firm’s website and filed with the Securities and Exchange Commission.
