CareTrust REIT Announces Phase Two Closing Of Tennessee Acquisition

CareTrust REIT, Inc. has announced that it has closed Phase Two of the large Tennessee portfolio transaction announced on October 29, 2024 with the acquisition of an additional thirteen skilled nursing facilities.

As anticipated, the second phase of the acquisition was completed through a joint venture arrangement entered into between CareTrust and a large third-party healthcare real estate owner. At closing, CareTrust provided a combined common equity and preferred equity investment totaling approximately $176 million at an initial contractual yield on its combined preferred and common equity investments in the joint venture of approximately 9.0%.

All thirteen of the newly-acquired facilities will be operated by existing CareTrust tenant relationships under new long-term master lease agreements. Six of the facilities will be operated by affiliates of The Ensign Group and the remaining seven will be operated by affiliates of Links Healthcare Group.

The company has now acquired a total of 27 facilities in connection with this portfolio transaction and has provided a combined common equity and preferred equity investment totaling approximately $421 million. The acquisition of the final facility in the transaction is expected to close in the first quarter of 2025 upon the satisfaction of applicable closing conditions. The acquisition was funded using cash on hand.

James Callister, CareTrust’s Chief Investment Officer, stated that, “It has been an exciting, unprecedented year of growth at CareTrust. The successful closing of this transaction brings our annual investment total to approximately $1.5 billion and we are excited to ride the momentum into 2025 as we continue to source and execute on investment opportunities in our pipeline.”

Dave Sedgwick, CareTrust’s President and Chief Executive Officer, stated that, “2024 was historic on many levels for the company. While the investment total was extraordinary, the discipline around underwriting and operator selection remained constant. We do not grow for growth’s sake. 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. The full impact of last year’s record investments will be achieved this year, significantly increasing our cash flow and earnings.” Mr. Sedgwick concluded, “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.”

CareTrust also reported that its replenished investment pipeline sits at approximately $350 million of near-term, actionable opportunities, not including larger portfolios the company is reviewing.

Source: HREI