CareTrust REIT reached an agreement with the board of directors of Care REIT plc on the terms of a recommended cash offer to be made for the acquisition of Care REIT by CR United Bidco Ltd, a wholly-owned subsidiary of CareTrust. CareTrust has agreed to pay 108 pence in cash per ordinary share of Care REIT.
Based on the Sterling to Dollar exchange rate on March 10, the terms of the acquisition represent a Care REIT market capitalization of US$577 million and, together with the assumption of net debt of approximately US$240 million, represents a total purchase price of approximately US$817 million. The acquisition represents a 32.8% premium to Care REIT’s March 10 closing share price and a 28.1% premium to the volume-weighted average share price of Care REIT for the twelve-month period ended March 10.
Care REIT is a United Kingdom-based REIT listed on the Main Market of the London Stock Exchange focused on investing in care homes throughout the UK. It has a portfolio of 137 care homes, comprising approximately 7,500 operating beds leased to 15 operators across England, Scotland and Northern Ireland. All homes are subject to long-term, triple-net leases with a weighted average remaining lease term of 20 years and annual inflation-based rent escalators, most with a floor of 2% and a cap of 4%. Care REIT reported annual contractual rent of approximately US$66 million as of September 30, which represents an initial yield, based on CareTrust’s investment, of approximately 8.1%. Care REIT also reported portfolio EBITDARM rent coverage of 2.2x for the trailing twelve month period ending on that same date.
The acquisition is intended to be effected by means of a scheme of arrangement under Part 26 of the UK Companies Act, meaning it is subject to court approval as well as approval by Care REIT’s shareholders and the satisfaction of waiver of other ordinary conditions to closing. The transaction has been unanimously approved by the boards of directors of both CareTrust and Care REIT and is currently expected to close in the second quarter of 2025.
Bidco has obtained irrevocable undertakings from Care REIT’s directors and certain of its other shareholders to vote in favor of the scheme in respect of, in aggregate, 12,305,991 Care REIT shares, representing approximately 3% of Care REIT’s issued ordinary share capital. Piper Sandler Ltd is acting as sole financial advisor and Jones Day is acting as legal advisor to CareTrust.
