CareTrust REIT closes two transactions on West Coast for $45.2M

CareTrust REIT announced that it recently closed two separate transactions on the West Coast with an aggregate initial investment amount of approximately $45.2M. The investments include the acquisition of a skilled nursing facility as well as the funding of a mortgage loan secured by a California skilled nursing, assisted living, and independent living campus. On June 30 CareTrust acquired a 99-bed skilled nursing facility on the West Coast with an initial investment amount, inclusive of transaction costs, of approximately $19.2M. Concurrently with closing, the newly-acquired facility was added to the Company’s existing master lease with Links Healthcare Group, who will operate the facility. Annual cash rent for the first year under the Links master lease portfolio was increased to approximately $6.8M-$5.4M, second year rent was increased to approximately $7.6M up from $6.1M, and annual rent for the third year was increased to approximately $8.9M from $7.1M, with CPI-based annual escalators thereafter. Effective June 30 CareTrust also funded a first priority mortgage loan to a regional owner of skilled nursing facilities in the amount of approximately $26.0M at an initial rate of 9.0% and a term of 10 years. The loan proceeds were used by the borrower to fund its acquisition of an 83-bed skilled nursing, 46-unit assisted living, and 99-unit independent living campus located in Loma Linda, California and known as Linda Valley Care Center, Linda Valley Assisted Living, and Linda Valley Villa, respectively. The skilled nursing and assisted living facilities will be operated by affiliates of The Providence Group and the independent living facility will be operated by an affiliate of Chancellor Health Care, each pursuant to new master lease agreements. The mortgage loan documents contemplate CareTrust and the borrower subsequently entering into a joint venture arrangement pursuant to which the mortgage loan would be replaced with the Company acquiring a common equity and a preferred equity interest in the entities owning the campus facilities. The investments were funded using proceeds from the Company’s $600M unsecured revolving credit facility as well as cash on hand. At June 3 the Company had $280M outstanding on the unsecured revolving credit facility. Additionally, during the Q2, the Company utilized the forward provisions under its at-the-market equity offering program and expects to fully physically settle shares sold under equity forward contracts on one or more settlement dates prior to final settlement in the second quarter of 2024. Expected net proceeds of $133M represent approximately 67% of year-to-date investments completed of $199.7M.