Alongside its third quarter earnings report, CareTrust REIT and a joint venture partner announced a binding agreement to acquire a portfolio of 31 skilled nursing facilities in the Southeast for approximately $500 million, or $152,000 per bed. With 30 facilities in Tennessee and one in Alabama, the portfolio featured a total of 3,290 licensed beds. The deal is expected to close in the fourth quarter of 2024, subject to customary closing conditions, and would be the largest skilled nursing deal (publicly disclosed) in two years. Evans Senior Investments is handling the transaction.
Existing operating partners have agreed to take on management of most of the facilities, with PACS Group taking on 12, affiliates of The Ensign Group assuming nine facilities and Links Healthcare Group taking seven. Three facilities will be master leased to a regional operator that is a new tenant relationship for CareTrust. Also, three of Ensign’s nine facilities will be acquired by Ensign’s real estate subsidiary Standard Bearer REIT, with the remaining six to be included in a new master lease.
The acquisition will be completed through a joint venture arrangement entered into between CareTrust and a large third-party healthcare real estate owner. In connection with the JV’s acquisition of the portfolio, CareTrust expects to provide a combined common equity and preferred equity investment amount totaling approximately $442 million at an initial contractual yield on its combined preferred and common equity investments in the joint venture of approximately 9.0%.
If the deal closes in the fourth quarter, that would bring CareTrust’s annual investment total to approximately $1.4 billion. And 2025 could even exceed that.
In the third quarter, investments of $440.8 million at an estimated stabilized yield of 9.1% were reported, while another $89.2 million at an estimated stabilized yield of 9.2% were announced subsequent to quarter end. CareTrust also has a pending acquisition of four skilled nursing facilities in the Northeast for about $57 million at an estimated stabilized yield of 8.8%. That is expected to close in November.
