CareTrust REIT’s investment pipeline consists primarily of skilled nursing and behavioral health properties right now rather than senior living communities, Chief Investment Officer Mark Lamb said Wednesday on the San Clemente, CA-based real estate investment trust’s third-quarter earnings call.
“Philosophically, strategically, we haven’t written off seniors housing. We are simply seeing more skilled nursing today than we have in the past,” President and CEO Dave Sedgwick said. “And our bench, candidly, of operators is just deeper on the skilled nursing side today.”
But, he said, “we are open for business on skilled and seniors and behavioral health.”
When CareTrust does see senior housing properties to consider investing in, they are more likely to be middle-market communities rather than Class A senior housing, Lamb said.
As of Sept. 30, the REIT had 20 senior housing communities in its portfolio and 24 multiservice campuses that include senior housing and skilled nursing. The portfolio also includes 154 nursing homes.
The operators offering senior living with the largest presence in CareTrust’s portfolio include Aspen Senior Living, The Pennant Group, Priority Management, Covenant Care, Bayshire Senior Communities and WLC Management Firm, according to information released in conjunction with the earnings call.
Executive Vice President James Callister noted that the company continues to make progress toward either disposition or re-tenanting the seniors housing properties that are held for sale in its portfolio.
“Outside of the assets held for sale, we have entered into leases to reposition two of the seniors housing facilities to behavioral health and are entering into a lease to re-tenant two other seniors housing facilities with a tenant that is a new relationship for us,” he said.
Sedgwick said that when weighing decisions on transitions and re-tenanting properties, “each deal is pretty unique.”
“A lot depends on the existing relationship and the level of confidence that we have in the operator who is running the portfolio,” he said. “Whatever is going to lead to the greatest preservation of value going forward is going to be the strategy we pursue.”
In the third quarter, CareTrust closed on a sale of seven facilities in Ohio at a purchase price of $52 million. Among the facilities was one multiservice campus with 100 senior housing units and 600 skilled nursing beds.
In its seniors housing portfolio, occupancy grew 1.7%, or 131 basis points, in the quarter.
“All things considered, Q3 was a good quarter for us, and Q4 started off much the same,” Sedgwick said.
To read additional coverage of this earnings call, see the McKnight’s Business Daily and McKnight’s Long-Term Care News.
