The Ensign Group is launching a new captive real estate investment trust, executives announced Thursday during a third-quarter earnings call.
The new structure “will enable the company to build upon an established real estate investment platform with high-quality assets and a proven track record for growth,” according to a press release issued in conjunction with the call.
“We are lucky to have an amazing group of lenders that have and continue to support our growth. The business structure doesn’t contemplate or require any significant surgery with our capital structure,” Ensign CEO Barry Port said.
“We are and always will be operators first, and the health of each operation will be paramount in every deal we consider,” said Chad Keetch, Ensign’s chief investment officer and executive vice president.
By keeping the REIT in-house, Keetch added, the San Juan Capistrano, CA-based company will not trigger a significant capital gains tax that would come with a sale or a spin-off. Alsom he said, the arrangement will provide Ensign with additional flexibility in the deployment of capital while giving full visibility to “the growing value of our real estate.”
The details related to the captive REIT should be completed some time in the first quarter of next year, Keetch said. In the meantime, Ensign will continue to look at other acquisition opportunities to “grow our operational and real estate footprint,” he added.
Leases, Keetch said, will continue to play an important role in the company’s operations.
In terms of the company’s overall financial health, Suzanne Snapper, Ensign’s chief financial officer, said that the company’s liquidity remains strong, with approximately $304.6 million of cash on hand and $343.5 million of available capacity under its line-of-credit, which also has a built-in expansion option. The Ensign Group has 95 owned assets, 72 of which are unlevered and add additional liquidity, she said.
According to Keetch, the company has added 17 operations so far this year.
“This growth should illustrate our confidence in our ability to continue to perform both in the short run and, most importantly, over the long run. We have been extra diligent to ensure that each new addition had the full support of a healthy market, a proven leadership plan and a clear pathway to strong clinical and financial performance,” Keetch said.
He added that the company has “several deals” in the pipeline that it expects to close before the end of the year, and other opportunities to execute early next year.
See additional coverage of the earnings call from McKnight’s Long-Term Care News.
