Investments Surge: CareTrust REIT Closes Tennessee Deal, Hits $1.5B
CareTrust REIT, Inc. (NYSE: CTRE) has achieved another significant milestone with the completion of Phase 2 of its large Tennessee portfolio transaction, initially announced on October 29, 2024. The second phase, finalized last week, involved the acquisition of 13 skilled nursing facilities. This transaction was completed through a joint venture between CareTrust and a prominent third-party healthcare real estate owner. At closing, CareTrust contributed a combined common equity and preferred equity investment of approximately $176 million, generating an initial contractual yield of about 9.0% on the investment.
Record-Setting Year for CareTrust
2024 has proven to be a landmark year for CareTrust, with annual investments now totaling approximately $1.5 billion. Reflecting on this achievement, James Callister, CareTrust’s Chief Investment Officer, remarked, “It has been an exciting, unprecedented year of growth at CareTrust. The successful closing of this transaction brings our annual investment total to approximately $1.5 billion, and we are excited to ride the momentum into 2025 as we continue to source and execute on investment opportunities in our pipeline.”
The second phase acquisition brings the total number of facilities acquired in the Tennessee portfolio transaction to 27. CareTrust has invested a cumulative $421 million in combined common and preferred equity for this portfolio. The newly acquired facilities are now under long-term master lease agreements with CareTrust’s existing tenant relationships.
Operational Highlights
Six of the newly acquired facilities will be operated by affiliates of The Ensign Group (NASDAQ: ENSG), while the remaining seven will be managed by affiliates of Links Healthcare Group. The long-term lease agreements align with CareTrust’s strategy of fostering strong operator relationships to ensure consistent performance across its portfolio.
The transaction was funded using cash on hand, reflecting CareTrust’s disciplined approach to managing its resources. The final facility in this transaction is expected to close during the first quarter of 2025, pending the satisfaction of applicable conditions.
Disciplined Growth and Operator Relationships
CareTrust’s leadership emphasized that while 2024’s investment total was extraordinary, the company’s disciplined approach to underwriting and operator selection remained a top priority. Dave Sedgwick, CareTrust’s President and Chief Executive Officer, stated, “2024 was historic on many levels for the company. While the investment total was extraordinary, the discipline around underwriting and operator selection remained constant. We do not grow for growth’s sake. From day one, our focus has been to grow the per-share value for our investors by matching the right operators with the right opportunities.”
He continued, “The full impact of last year’s record investments will be realized this year, significantly increasing our cash flow and earnings. We begin 2025 with a stronger balance sheet, deeper operator relationships, an active pipeline, and a reinforced team that is better equipped to take advantage of the opportunities for growth in front of us.”
Future Growth Pipeline
CareTrust’s replenished Investments pipeline is valued at approximately $350 million investments , comprising actionable near-term opportunities. This figure does not include the larger portfolios currently under review, signaling a strong trajectory for continued growth in 2025.
A Leader in Healthcare Real Estate
CareTrust REIT specializes in the ownership, acquisition, development, and leasing of skilled nursing, seniors housing, and other healthcare-related properties. The company’s portfolio includes a wide range of long-term net-leased properties across the United States, leased to a growing network of quality operators.
By prioritizing both external and organic growth opportunities, CareTrust has established itself as a leader in the healthcare real estate sector. The company’s disciplined strategy and commitment to creating long-term value for its investors have been central to its success.
About CareTrust
CareTrust REIT, Inc. is a self-administered, publicly traded real estate investments trust (REIT) focused on the ownership, acquisition, development, and leasing of healthcare-related properties. With a diverse portfolio of skilled nursing, seniors housing, and other healthcare properties, CareTrust continues to pursue growth opportunities across the United States.
By maintaining a disciplined approach to investments and fostering strong operator relationships, CareTrust has built a reputation as a trusted leader in the healthcare real estate industry. With its sights set on 2025 and beyond, the company remains committed to delivering long-term value to its investors while supporting the growth of its operator partners.
