Since its spin-off from The Ensign Group in June 2014, CareTrust REIT has been one of the most active buyers in both seniors housing and skilled nursing M&A markets. It has grown from its initial portfolio of 96 properties to 158 net-leased healthcare properties and three operated seniors housing properties in 21 states. The acquisitions have also been located across the country. Just last month, the REIT acquired two memory care communities in the Milwaukee area of Wisconsin for $26.1 million, or $296,591 per unit.
Now, CareTrust is purchasing a portfolio of five skilled nursing facilities, with 455 total beds, in Illinois for $29.2 million, or $64,176 per bed, with a 14.4% cap rate. The transaction was prompted by the local doctor owner, who is retiring from the post-acute and convalescent care business after 43 years. However, Illinois-based WLC Management Firm has been operating the properties since 2008, and will continue to do so as a new tenant of CareTrust. The 15-year master lease, with two five-year renewal options and CPI-based rent escalators, is expected to generate initial annual rent of $2.9 million, for an initial cash yield of 10.0%. CareTrust funded the transaction with cash on hand.
