CareTrust REIT, Inc. (Nasdaq: CTRE) continues to snap up skilled nursing facilities previously operated by Kindred Healthcare, Inc. (NYSE: KND), announcing on Tuesday the acquisition of 13 properties in Washington, Texas and Idaho.
The deal includes all seven former Kindred SNFs in Idaho, which are now operated by the Eagle, Idaho-based provider Cascadia Healthcare, LLC, as SNN initially reported last month.
CareTrust also picked up three of Kindred’s properties in Washington state, which will be operated by affiliates of Five Oaks Healthcare, LLC, and the REIT confirmed that a three-SNF deal in Texas announced last month consisted of former Kindred properties. Those Lone Star State SNFs are now operated by affiliates of Priority Management Group, LLC.
San Clemente, Calif.-based CareTrust additionally announced a separate pickup of three senior housing communities in Virginia; combined with the Idaho and Washington deals, CareTrust shelled out a total of $95.8 million, and expects to generate $8.6 million in additional cash rent.
The Texas acquisition set CareTrust back $20.2 million, with predicted rent cashflow of $1.9 million annually.
Enter CareTrust
CareTrust has become the fourth major player in Kindred’s already complex exit from the skilled nursing space: As part of a $700 million deal announced in June, Kindred is currently in the process of selling 87 SNFs to BM Eagle Holdings, a joint venture operated by affiliates of the New York City-based alternative asset management firm BlueMountain Capital Management.
In addition, the Chicago-based REIT Ventas, Inc. (NYSE: VTR) owns 36 of the facilities involved in the transaction, and is set to receive a total of $700 million from Kindred as BM Eagle buys the properties; Kindred expects to achieve an estimated $210 million in value from cash benefits associated with net operating losses and reduced capital requirements through 2018.
But now it appears that BM Eagle is actively flipping properties to CareTrust even before the original megadeal is complete: Kindred on Monday announced that it had offloaded 66 of the 87 SNFs thus far, with the remaining transactions expected to close by the end of the year.
“We are pleased to have had the chance to prove our value as a trusted partner in this complex, multi-state, multi-party series of transactions,” CareTrust director of investments Mark Lamb said in a statement announcing the 13 SNF acquisitions.
Steve LaForte, Cascadia’s director of acquisitions and finance, told SNN last month that the Kindred properties represented a long-term play for both his company and CareTrust, pointing to their strong cashflow and solid physical plants.
“The Kindred portfolio works,” LaForte said at the time. “The Kindred buildings worked out to be very accretive to our bottom line.”
Written by Alex Spanko
Companies featured in this article:
BlueMountain Capital Management, BM Eagle Holdings, CareTrust REIT, Cascadia Healthcare, Kindred Healthcare, Priority Management Group, Ventas
