CareTrust REIT has closed two separate transactions on the West Coast with an aggregate initial investment amount of approximately $45.2 million, the San Clemente, CA-based real estate investment trust announced Wednesday.
The deals included the acquisition of a skilled nursing facility as well as the funding of a mortgage loan secured by a California long-term care campus.
The investments were funded using proceeds from the company’s $600 million unsecured revolving credit facility as well as cash on hand. As of June 30, the company had $280 million outstanding on the unsecured revolving credit facility.
“These investments reflect our continued focus on an operator-first, relationship-based investment approach,” Chief Investment Officer James Callister said in a statement. “We are excited by the opportunity to further our relationship with some of the country’s top tenants by matching them with facilities that complement their operating strengths.”
The SNF transaction completes the acquisition of a four-property portfolio. Concurrently with the closing, the newly acquired facility was added to the REIT’s existing master lease with Links Healthcare Group, which will operate the facility.
“Links has done a tremendous job transitioning into these facilities and we are thrilled to add another facility to our relationship with them,” CareTrust CEO Dave Sedgwick said.
Annual cash rent for the first year under the Links master lease portfolio was increased to approximately $6.8 million from $5.4 million, second-year rent was increased to approximately $7.6 million from $6.1 million, and annual rent for the third year was increased to approximately $8.9 million from $7.1 million, with consumer price index-based annual escalators thereafter.
Additionally, effective June 30, CareTrust funded a first priority mortgage loan to a regional owner of SNFs for about $26 million at an initial rate of 9% and a term of 10 years. The loan proceeds were used by the borrower to fund its acquisition of a Loma Linda, CA, campus with 83 skilled nursing beds, 46 assisted living units and 99 independent living units. The campus is known as Linda Valley Care Center, Linda Valley Assisted Living and Linda Valley Villa, respectively.
The SNF and assisted living community will be operated by affiliates of The Providence Group, and the independent living community will be operated by an affiliate of Chancellor Health Care, each pursuant to new master lease agreements.
“Extending a loan on facilities operated by talented operators like Providence and Chancellor furthers our strategy of using loans primarily as a tool to strengthen relationships with operators we admire with an eye towards future investments,” Sedgwick said.