CareTrust REIT’s 2019 investment pipeline is $275 million to $300 million, but most of those potential investments are in the area of skilled nursing, Chief Investment Officer Mark Lamb told shareholders and analysts Thursday during a fourth-quarter and full-year 2018 earnings call.
As to what the real estate investment trust is seeing in seniors housing deals right now, Lamb said: “There’s everything from non-stabilized, barely cash-flowing, primary, secondary, tertiary markets to stabilized. We’re certainly tracking and underwriting these types of deals, but senior housing right now seems to be a mixed bag. Now granted, we are not seeing everything, and we’re probably seeing mainly tertiary and secondary markets, which we’ve historically acquired in, but it’s really a mixed bag, and there’s a decent amount of deal flow in the market for those property types in those markets.”
CareTrust REIT, Lamb said, prefers senior living properties that are “stable and cash-flowing.”
“Maybe if you can do some value-add by way of investing some [capital expenditures] in, but turning a senior housing asset is a lot different than turning a SNF asset,” he said. “You can turn a SNF asset, possibly, in three to six months. Turning a senior housing asset can take years, and that’s not really a space that we want to play in. We’re a lot more comfortable seeing a skilled nursing facility that has some immediate upside via changes in the cost structure. We’ll take a little bit of a risk from that perspective, but on the senior housing side, it’s a long, tough slog to fully get a building nursed back to health.”
The REIT is seeing more “deal flow” in assisted living right now, Lamb said, but he noted that the National Investment Center for Seniors Housing & Care Spring Conference is next week. “So I would anticipate the brokerage committee holding deals back to be able to preview those at the one-on-ones next week,” he added.
CareTrust closed on approximately $31 million in investments in the fourth quarter, acquiring three skilled nursing facilities, Lamb said.
As of Dec. 31, according to a filing with the Securities and Exchange Commission, the REIT’s portfolio included 158 skilled nursing facilities, 18 of which include assisted or independent living operations; 35 assisted living communities, some of which also contain independent living units; and four independent living communities.
Chairman and CEO Gregory K. Stapley said the REIT already has closed deals on $53 million in new assets in 2019, among them the $9 million acquisition Oakview Healthcare, a 128-bed/unit skilled nursing and assisted living campus in Mt. Carmel, IL.
“We stand on the cusp of another new growth opportunity, which, if we can get it successfully closed, would surpass in size anything we’ve done to date,” he said.
“We’re happy with where we’ve been and even more excited about where we’re going,” Stapley said of 2018 results.
For additional coverage of the CareTrust call, see sister publication McKnight’s Long-Term Care News.