- Market Cap Growth: Year-over-year growth of 123%.
- Investments: Record-setting investments of approximately $917 million at an average stabilized yield of 9.4%.
- Pending Acquisitions: Approximately $500 million of skilled nursing facilities with a 9% stabilized expected yield.
- Total Projected 2024 Investments: Over $1.4 billion at an average stabilized yield of 9.3%.
- Equity Issuance: Approximately 41 million shares for gross proceeds of $1.1 billion.
- Net Debt to EBITDA: 0.08 times.
- Normalized FFO: Increased 66% over the prior quarter to $60.9 million.
- Normalized FAD: Increased 60% to $61.9 million.
- Normalized FFO per Share: Increased 3¢ to 38¢ per share.
- Normalized FAD per Share: Increased 2¢ to 39¢ per share.
- Cash on Balance Sheet: Approximately $377 million at quarter end.
- Updated Guidance: Normalized FFO per share range of $1.49 to $1.50; Normalized FAD per share range of $1.53 to $1.54.
- Total Cash Rental Revenues: Projected to be approximately $216 to $217 million for the year.
- Interest Income: Approximately $65 million.
- Interest Expense: Approximately $30 million.
- G&A Expense: Approximately $26 to $28 million.
- Liquidity: Approximately $230 million in cash and $600 million available under revolver.
- Leverage: Net debt to normalized EBITDA ratio of 0.08 times; Net debt to enterprise value of 0.4%.
- Fixed Charge Coverage Ratio: 9.7 times.
Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CareTrust REIT Inc (CTRE, Financial) announced a significant acquisition of 31 skilled nursing assets in Tennessee for $500 million, expected to yield 9%.
- The company reported a year-over-year market cap growth of 123%, showcasing strong financial performance.
- Record-setting investments of approximately $917 million at an average stabilized yield of 9.4% were achieved.
- CareTrust REIT Inc (CTRE) has a robust investment pipeline of $700 million, indicating continued growth potential.
- The company's operators have achieved superior quality measures, with an average of four stars compared to the industry average of 3.4 stars.
Negative Points
- The acquisition of the Tennessee portfolio involves complex deal structures, which may introduce additional risks.
- There is a concern about the competitive acquisition environment, which could impact future deal opportunities.
- The company's rapid growth could potentially lead to operational challenges or integration issues.
- The current transaction environment remains competitive, with a narrow buyer pool, which may affect future acquisitions.
- There is uncertainty regarding future reimbursement rates for Medicare and Medicaid, which could impact financial performance.
Q & A Highlights
Q: Can you discuss the trade-off between investment volume and deal structure, particularly with more complex structures like preferred or JV arrangements?
A: Dave Sedgwick, CEO: Yes, these complex structures are necessary to secure off-market deals through relationships. While we prefer simpler deals, these arrangements have allowed us to access opportunities we might not have otherwise.
Q: What is the mix of the $200 million pipeline outside of the pending transactions in terms of own versus loan investments?
A: James Callister, CFO: The vast majority is real estate acquisitions, with very little loan activity. The yields are higher due to deal structuring, but it's primarily real estate.
Q: Are you considering moving into the RIDEA seniors housing operating structure given the opportunities in the market?
A: Dave Sedgwick, CEO: We are open to it if the right opportunity arises, but we are not pursuing it just for the sake of it. It would need to be a compelling opportunity with experienced operators.
Q: Can you provide details on the coverage of the assets in the recent portfolio deal and the relationship with Links?
A: James Callister, CFO: The assets have a coverage just shy of 1 going in, with a stabilized pro forma of around 1.5. Links has been performing well, and we are confident in their ability to manage these facilities effectively.
Q: How do you manage the risks associated with rapid growth and ensure you don't face issues with new acquisitions?
A: Dave Sedgwick, CEO: Our underwriting discipline remains unchanged, focusing on the right operator match for each deal. We do not grow for growth's sake and maintain our operating discipline to mitigate risks.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
