San Clemente, CA-based CareTrust REIT is expanding its operational footprint and provider relationships with seven acquisitions, the real estate investment trust announced Friday.
The transactions were funded using proceeds from the REIT’s $600 million unsecured revolving credit facility.
Chief Investment Officer James Callister said on the REIT’s first-quarter earnings call that “last year’s move to strategic lending activities” already had begun “to bear fruit in our current pipeline of acquisition opportunities.”
Friday, CareTrust announced that it had picked up a new operator on the West Coast with the acquisition of a four-property portfolio of skilled nursing facilities. San Diego-based Links Healthcare Group will operate the facilities. CareTrust acquired three of them on June 1 via a new 15-year master lease that has two five-year extension options. The fourth property is scheduled to close once third-party consents are obtained, according to the REIT.
“This deal demonstrates our current focus on returning to asset acquisitions, sourcing more off-market deals and expanding our operator bench. These will continue to be key focus points for us throughout the year,” Callister said in a statement.
CareTrust’s initial investment in the three SNFs acquired on June 1, including transaction costs, was approximately $71.5 million. Aggregate annual cash rent for the first year will be approximately $5.4 million, increasing to approximately $6.1 million in the second year and to approximately $7.1 million in the third year. After that, rent will escalate annually based on the Consumer Price Index.
2 memory care communities
CareTrust also added a 105-unit, two-facility memory care community portfolio that includes facilities in Michigan and Ohio.
The memory care communities will be operated by affiliates of Rockwall, TX-based Ridgeline Management Co. under a new, 15-year master lease that includes two five-year extension options and annual CPI-based rent escalators.
“We are delighted to enter into a new relationship with the talent and experience of Ridgeline, and we look forward to identifying future opportunities for growth with them,” CareTrust Senior Vice President of Investments Eric Gillis said in a statement.
CareTrust’s initial investment, inclusive of transaction costs, was approximately $21.1 million. The acquisition provides for initial annual base rent of approximately $1,785,000.
Lastly, CareTrust announced Friday that it has acquired a 125-bed SNF in the greater Houston metropolitan area.
The property will be operated by an affiliate of Texas-based Evergreen Health Group, a new tenant relationship for the REIT.
“Acquiring another facility in Texas and the addition of a new operator relationship is consistent with CareTrust’s stated focus of returning to asset acquisitions, growing our footprint in attractive markets, and on matching great operators with great opportunities where our access to capital and low execution risk make us attractive buyers,” Callister said in a statement.
CareTrust’s initial investment in the facility, including transaction costs, was approximately $14.3 million. The facility is scheduled to generate annual stabilized rent of approximately $1.4 million, according to the REIT.