CareTrust Expanding Footprint in Mid-Atlantic, Southeast in Latest Transactions Totaling $180M

CareTrust REIT (NYSE: CTRE) on Monday announced two strategic transactions totaling $180 million, five- and eight-facility skilled nursing portfolios both located across the Southeast and Mid-Atlantic.

The larger transaction, which consists of 1,011 beds and 150 assisted living beds, was funded by a $90 million senior mortgage loan and $9 million preferred equity investment, the San Clemente, Calif.-based REIT said in a statement.

An “experienced, regional healthcare real estate owner and operator” took over operations on June 1, according to CareTrust, while YAD Healthcare was involved in the five-SNF transaction.


The $90 million loan is part of a $165 million senior mortgage term loan and is a first priority lien on the borrowers’ ownership interest in the real estate; it carries a five-year maturity with two 6-month extension options and starting annual effective yield of 10.7%, CareTrust said.

The unnamed regional owner-operator chose CareTrust to support their growth, said James Callister, Chief Investment Officer for CareTrust. The REIT is excited to find more opportunities to work with this owner-operator in the future, he said. Lending to operators while also being able to participate in the acquisition of a part of the portfolio is a positive, Callister said.

“This deal showcases the team’s capabilities today to utilize our strong balance sheet to do accretive investments that provide proven operators a chance to expand their missions for quality patient care to more facilities,” said CareTrust CEO David Sedgwick. “Consistent with our lending criteria, which includes some line of sight to real estate acquisitions, this loan led to the other fee simple acquisition from the same seller we announced today.”


Sedgwick refers to the five-SNF portfolio acquisition for $81 million, which was funded using cash on hand. The REIT has been targeting the Mid-Atlantic and Southeastern regions of the country for future growth opportunities, he said.

“We are excited to be able to officially begin a new relationship with YAD Healthcare, [which] has a strong track record of commitment to taking care of their employees and patients in this region of the country,” said Eric Gillis, senior vice president of investments for CareTrust. “As with most of our operators, we hope to continue to match them with opportunities for future growth.”

Hershey Alter, YAD Healthcare CEO, said the REIT has been an ideal transaction partner.

“We are grateful for the opportunity to spread YAD Healthcare’s commitment to the highest level of care, excellence, and innovation to additional facilities in our existing footprint,” said Alter.

This portfolio has 498 licensed skilled nursing beds. CareTrust entered into a new triple-net master lease with affiliates of YAD Healthcare, marking a new operator relationship for the company. YAD has 16 facilities across Virginia and North Carolina, according to its website.

With these latest investments, CareTrust’s year-to-date investments now total about $386 million.

The announcements come in time for the real estate investment trust’s (REIT) 10-year anniversary – CareTrust has grown from a spin-off of assets leased to a single tenant to a capital partner for dozens, the REIT said in a statement.

When it comes to CareTrust’s near-term investment outlook, Callister said the investment environment continues to be very healthy for CareTrust, and the REIT is fostering growing relationships with big players in the country.

“Today, we are quoting a reloaded pipeline of approximately $460 million,” Bill Wagner, CareTrust Chief Financial Officer, said in a statement. “Today’s cash on hand is approximately $230 million. Together with full availability under our revolver, we have tremendous flexibility to fund growth for the foreseeable future.”

Sedgwick said CareTrust is “just getting started” even as the REIT reaches its 10-year milestone.

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