CareTrust REIT clearly didn’t get that “Labor Day” is supposed to be a day of relaxation, not of, well, labor. Until the start of September, CareTrust had only announced four transactions, compared with the 13 announced in all of 2016. But the REIT ended summer with a bang, announcing three acquisitions comprising 13 total skilled nursing facilities and 1,232 total beds. CareTrust made its biggest splash in the Pacific Northwest and doubled its investment in two deals with its operating partner Cascadia Healthcare, LLC.
The first transaction involved seven skilled nursing facilities and 571 beds located throughout Idaho, although the deal has only partially closed so far. It is supposed to completely close by end of year. But all seven facilities will be added to CareTrust’s master lease with Cascadia, which has a remaining initial term of about 13.5 years, two five-year renewal options and CPI-based escalators. The portfolio is expected to generate approximately $5.9 million in annual cash rent, and it was acquired for $65.5 million, or $114,700 per bed.
CareTrust then acquired three more facilities in the region and added them to the Cascadia master lease. The portfolio includes a 53-bed SNF in Nampa, Idaho (where Cascadia is already building a 99-bed transitional care facility), a 120-bed facility in Portland, Oregon, and an 83-bed facility in Battle Ground, Washington (Portland MSA). CareTrust paid $11.3 million, or $44,140 per bed, for the facilities, which are expected to generate about $1.1 million in annual cash rent.
While it massively expanded its presence in the Pacific Northwest, CareTrust also doubled down on its portfolio in the Dallas-Fort Worth market, adding three more SNFs to the four it previously acquired December 2016. Totaling 405 beds, these facilities sold for $20.2 million, or $49,900 per bed. Similar to the December deal, CareTrust is adding these facilities to an existing master lease with affiliates of Priority Management Group, which has a remaining initial term of about 14 years, two five-year renewal options and CPI-based escalators. Annual cash rent expected to be generated from the three SNFs is about $1.9 million.
To fund all of these purchases, CareTrust relied on cash on hand plus its $400 million unsecured revolving credit facility. Could CareTrust match or surpass its 13 deals of 2016 in 2017? There are only four months left, but that credit facility should help.
