San Clemente, CA-based CareTrust REIT reported fourth-quarter net income Wednesday of $21.1 million, or 22 cents per share, and normalized funds available for distribution of $35.7 million, or 37 cents per share, falling in line with analysts.
During the fourth quarter of 2020, CareTrust made two investments totaling $62.6 million. These included the acquisition of four post-acute care facilities in the Dallas-Ft. Worth area and a $15 million mezzanine loan to affiliates of Next Healthcare in connection with Next Healthcare’s acquisition of a nine-property skilled nursing portfolio in Virginia. The two transactions brought CareTrust’s total capital deployment for 2020 to $105.3 million.
“To be sure, $105 million is a light year for CareTrust, but we’re thrilled to be reporting that we actually grew both assets and shareholder value in the face of unprecedented headwinds this past year,” CareTrust Chairman and CEO Greg Stapley said during Thursday’s fourth-quarter and year-end earnings call.
The skilled-nursing focused real estate investment trust also received a ‘BB+’ rating and “stable” outlook from Fitch Ratings Thursday. The agency said the rating and outlook reflect CareTrust’s strong financial metrics, high operator lease coverage and unsecured borrowing strategy. Fitch also praised the firm’s commitment to diversifying its portfolio, acquiring 153 properties since its spin-off from The Ensign Group in 2014.
“These strengths are partially offset by the company’s notable tenant concentration and focus on skilled nursing facilities, its mixed track record in underwriting and below-average access to capital,” Fitch wrote.
In addition to the firm’s ability to maintain its quarterly dividend of 25 cents per share, analysts also pointed to CareTrust’s strong balance sheet as an indicator of good things to come this year.
“Assuming continued positive vaccine roll-out news leading to recovery in skilled nursing fundamentals and continued government support funds in the interim, CareTrust may be able to put its strong balance sheet to work to drive earnings upside in 2021 through external growth,” Mizuho analysts Omotayo Okusanya and Zachary Silverberg wrote in an investor note on the REIT’s fourth-quarter results.