CareTrust REIT, Inc. (Nasdaq: CTRE) on Thursday announced the acquisition of a 154-bed skilled nursing facility in Parker, Colo., which will be operated by the Salt Lake City-based Eduro Healthcare, LLC — the latest step in a growing partnership between the operator and the real estate investment trust (REIT).
The SNF, which was built in 2012, will be renamed The Suites — Parker. It is the only SNF in the city that is certified for both Medicare and Medicaid residents, which positions the property as a discharge partner for the nearby Parker Adventist Hospital, Mark Lamb, CareTrust’s chief investment officer, noted in a press release announcing the acquisition.
The total investment by CareTrust was about $19.6 million, including transaction costs; the SNF was added to the real estate investment trust’s (REIT) existing master lease with Eduro, for an initial boost in yearly cash rent of about $1.75 million. The master lease has yearly Consumer Price Index (CPI)-based rent escalators and with 12 years remaining on the initial term, as well as two five-year renewal options.
The acquisition was funded using cash on hand, according to the REIT. Eduro sourced the transaction and brought CareTrust in as partners on the deal. according to Michael Bewsey, Eduro Healthcare’s managing director.
Eduro operates five other CareTrust properties, including one in the Denver metropolitan area in Lakewood, Colo. The operator has had a busy year of expansions with CareTrust, with 2018 also seeing the turnaround of a struggling building in New Mexico, and has focused primarily on secondary markets outside of major cities in the Upper Midwest and Mountain West regions.
The operator’s presence in the Centennial State comprises two SNFs and one assisted living facility, Bewsey told Skilled Nursing News.
“We do view the asset as being almost immediately accretive to our business, just through bringing our therapy team in,” he said. “That’s one thing Eduro sees as one of our strengths.”
This, in addition to the building’s newer age, is a major plus for Eduro, he explained. Census currently sits in the 77% range, consisting almost exclusively of Medicaid residents. That lack of short-term Medicare patients in the building is an area where the operator can add particular value, Bewsey said
“The therapy was just so underutilized, and in the lack of short-term census, there’s really an opportunity for us to get in and have a big impact,” he told SNN.
The facility currently makes use of a contract therapy team, but Eduro will be bringing the therapy in-house, which is a step it takes for all of its buildings. However, it has hired “a good chunk” of the staff that was already in the facility through the contract company, Bewsey said, which helped make the transition from contract to in-house therapy go smoothly.
With the Patient-Driven Payment Model lurking in the background as the skilled nursing world goes into 2019, Eduro has been paying particular attention to this aspect of the business. And it’s optimistic about what the new facility can bring.
“I think the strategy is to re-establish this building as a very high-quality therapy provider,” Bewsey said. “We are going to kind of establish ourselves and what we’ve done in our other buildings: being the best therapy provider while making sure the residents in the building are getting the therapy they need.”
Written by Maggie Flynn