SAN CLEMENTE, Calif. — (BUSINESS WIRE) — CareTrust REIT, Inc. (NYSE:CTRE) announced today that it has acquired a 46-facility, 3,820-bed/unit skilled nursing and seniors housing portfolio located in the Midwest for a total investment amount of approximately $97 million (inclusive of transaction costs). Seven of the 46 facilities acquired are skilled nursing and assisted living campuses and an additional seven are assisted living facilities.
In connection with the acquisition, the company entered into a triple-net master lease with a large skilled nursing investor and operator who will sublease the portfolio to several licensed subtenant operators. The new master lease has an initial term of 15 years with two, 5-year extension options and provides for a year 1 contractual lease yield of 11% (inclusive of transaction costs). The master lease provides for some deferral of base rent in lease years 1 and 2 resulting in a cash rent yield of 9.0% in year 1 and 10.5% in year 2. Annual CPI-based rent escalators begin in year 4 and continue each remaining year of the lease term.
The acquisition was completed in coordination with the bankruptcy and sale of all assets of the debtor/seller. The master tenant has been granted purchase options for each sub-portfolio, with most purchase options opening in lease years 4 and 5. With the exercise of each purchase option, additional rent payments to CareTrust may be triggered up to an aggregate, annual 12.5% yield on CareTrust’s investment amount.
James Callister, CareTrust’s Chief Investment Officer, said, “This transaction commences a new relationship with a skilled nursing investor and operator we are very excited about and look forward to growing with in the future. The creative and opportunistic deal structure on this acquisition aligns incentives with the aim of improving clinical and operational performance at these facilities.” Joe Callan, Senior Vice President of Investments, added, “We are excited to be a part of bringing these motivated, talented operators to the residents and staff at these facilities.” The investment was funded using cash on hand.
CareTrust also announced today that, as anticipated in connection with the large Tennessee portfolio transaction announced on October 29, 2024, it has closed on its initial acquisition of 14 of the 31 facilities. The initial acquisition was, as previously announced, 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 $245 million at an initial contractual yield on its combined preferred and common equity investments in the joint venture of approximately 9.0%. The acquisition was funded using cash on hand. The company expects to complete its acquisition of the remaining facilities by year end.
The closing of these transactions brings the company’s annual investment total to over $1.3 billion.
About CareTrust™
CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. With a nationwide portfolio of long-term net-leased properties, and a growing portfolio of quality operators leasing them, CareTrust REIT is pursuing both external and organic growth opportunities across the United States. More information about CareTrust REIT is available at www.caretrustreit.com.
