San Clemente, CA-based CareTrust REIT announced the acquisition Tuesday of four long-term care facilities in the Dallas-Ft. Worth area in an off-market transaction for $47.6 million.
The portfolio consists of 554 skilled nursing and 24 assisted living beds, which currently are leased to operating affiliates of The Ensign Group. The facilities include Beacon Harbor Healthcare & Rehabilitation in Rockwall, Rowlett Health & Rehabilitation Center in Rowlett, Crestwood Health & Rehabilitation in Wills Point and Pleasant Manor Healthcare & Rehabilitation in Waxahachie.
“While underwriting has been significantly complicated by the effects of the current pandemic, the portfolio’s good market, strong lease coverage and especially having Ensign as the tenant gave us significant comfort with the investment,” said Mark Lamb, CareTrust’s chief investment officer.
Ensign took over operations for the facilities approximately 12 months ago from an operator that was in bankruptcy, and has rapidly and significantly improved the culture and operating fundamentals despite the pandemic, noted David Sedgwick, CareTrust’s chief operating officer.
“The acquisition takes our rent concentration with Ensign from 31.5% to 33%, and we couldn’t be more pleased to be expanding our relationship with them,” Sedgwick added.
CareTrust assumed the seller’s two existing leases in the transaction, with aggregate annual cash rent of approximately $3.8 million and CPI-based escalators. The leases have a remaining term of approximately 14 years with three five-year renewal options and include a tenant option to purchase the properties later in the initial term. The acquisition was funded using a combination of cash on hand and CareTrust’s $600 million unsecured revolving credit facility, the firm reported.