CareTrust REIT is on a tear this year, having acquired 33 senior care properties since the start of 2017 and bringing its portfolio to 184 total properties. In all of this activity, CareTrust has also not been limited to a specific geography, making acquisitions in 10 states across the country. Despite being headquartered in San Clemente, California, CareTrust waited until Halloween to make its first Golden State acquisition of the year, and entered into a new tenant relationship at the same time.
The REIT announced it had bought three skilled nursing facilities, totaling 528 beds, in Southern California for approximately $69 million, or about $130,700 per unit. Operating the facilities since 2015 has been Providence Group, which also worked with CareTrust to obtain a $12.5 million mortgage, with an annual interest rate of 9%, for a fourth 104-bed skilled nursing facility. The other three facilities were added to a new master lease, which carries an initial 15-year term, two five-year renewal options, CPI-based rent escalators, and will yield approximately $6.1 million in initial annual cash rent, for an 8.8% yield. CareTrust funded the deal using its $400 million unsecured revolving credit facility.
Now, Providence Group has a long-term partner that can help recapitalize its facilities and remain competitive in the increasingly complex post-acute care market. For CareTrust, is there an end in sight for its acquisition appetite?
