A portfolio of 17 existing skilled nursing facilities in West Virginia changed hands this week in a $582 million deal involving a joint venture between a skilled nursing real estate owner and a large regional operator of post-acute facilities.
Ohio-based CommuniCare Health Services took over operations of Stonerise, expanding the company’s reach in its home state as well as West Virginia.
The deal included one new build that will be finished in the fall, as well as seven home health, hospice and affiliated therapy agencies.
While the buyer and seller in this transaction were not disclosed, White Oak Managing Principal Jason Dopoulos said the company’s “exclusive arrangement with CareTrust REIT” helped with the deal.
White Oak is the bridge-to-HUD lender that CareTrust has partnered with to grow in the SNF space — a partnership the company alluded to in recent earnings calls, according to Dopoulos.
The debt was structured as a unitranche loan with a national bank and White Oak arranged $100 million in junior capital through its proprietary program with CareTrust.
The real estate investment trust announced in a separate news release that it extended $75 million in “C” piece financing as part of the larger multi-tranche senior secured term loan, and extended a $23 million mezzanine loan to a private equity SNF real estate owner for the acquisition.
The CareTrust news release indicated 18 facilities, however, Dopoulos noted the discrepancy in the deal was because of the facility that is still under development.
The portfolio includes 2,000 SNF beds total.
Dopoulos expects to see more deals come out of this partnership moving forward.
“A lot of REITs this past year have been beaten out by private buyers [on the M&A market] who have been getting really aggressive,” he said. “They haven’t been able to buy an equity position using their metrics for the coverage ratios they need.”
Participating in a debt program like this allows CareTurst to earn similar yield in a less risky position because they aren’t owning the whole asset, Dopoulos added.
“This was our first deal closing and there should be several others behind it,” he said.
CareTrust CEO Dave Sedgwick described the deal in a news release as “executing on our operator-first, relationship-based investing” approach.
“We were honored that the buyer looked to us to help them acquire a premier portfolio and put it in the hands of one of the top operators in the country,” he said.
Lending continues to be, as Sedgwick puts it, “a relationship play” for CareTrust to grow existing partnerships and build new ones with top operators.
The loan was reportedly funded with proceeds from CareTrust’s $600 million unsecured revolving credit facility.
CareTrust did not respond to Skilled Nursing News’ request for further comment.
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