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CareTrust REIT(CTRE) - 2025 Q1 - Earnings Call Transcript
CTRECareTrust REIT(CTRE)2025-05-02 17:00

Financial Data and Key Metrics Changes - Normalized FFO increased by 67.4% year-over-year to 77,800,000,whilenormalizedFADroseby6677,800,000, while normalized FAD rose by 66% to 80,800,000 [16] - On a per share basis, normalized FFO increased by 0.07or200.07 or 20% to 0.42, and normalized FAD increased by 0.06or16.20.06 or 16.2% to 0.43 [16] Business Line Data and Key Metrics Changes - In Q1, the company completed three new investments totaling over 47,000,000atayieldofapproximately1047,000,000 at a yield of approximately 10% [11] - Year-to-date investment total reached approximately 82,000,000 at a yield of approximately 10% [12] Market Data and Key Metrics Changes - The acquisition of Care REIT will diversify the company's business, reducing U.S. Skilled Nursing concentration to approximately 49% by property count and 63% by rental income [7] - The investment pipeline currently sits at approximately 500,000,000,primarilyconsistingofskillednursingfacilitiesandseniorhousingopportunities[13]CompanyStrategyandDevelopmentDirection−ThestrategicacquisitionofCareREITmarksthecompany′sentryintotheUKmarketandisexpectedtobeaccretiveinyearone[9]−ThecompanyaimstoleverageitsstrongbalancesheetandaccesstocapitaltopursuegrowthopportunitiesinboththeU.S.andUKmarkets[10]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthestrengthoftheoverallportfolio,withafocusonmonitoringpotentialMedicaidcutswhilemaintainingbipartisansupportforseniorcare[25]−ThecompanyanticipatesastronginvestmentpipelineintheUK,althoughitmaytaketimetomature[62]OtherImportantInformation−ThecompanyraisedguidancefornormalizedFFOpershareto500,000,000, primarily consisting of skilled nursing facilities and senior housing opportunities [13] Company Strategy and Development Direction - The strategic acquisition of Care REIT marks the company's entry into the UK market and is expected to be accretive in year one [9] - The company aims to leverage its strong balance sheet and access to capital to pursue growth opportunities in both the U.S. and UK markets [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the overall portfolio, with a focus on monitoring potential Medicaid cuts while maintaining bipartisan support for senior care [25] - The company anticipates a strong investment pipeline in the UK, although it may take time to mature [62] Other Important Information - The company raised guidance for normalized FFO per share to 1.69 to 1.73andfornormalizedFADpershareto1.73 and for normalized FAD per share to 1.73 to $1.77 for the year [17] - Liquidity remains strong, with a net debt to normalized EBITDA ratio of 0.5 times and a fixed charge coverage ratio of 15.2 times [20] Q&A Session Summary Question: Comments on macro expectations regarding policy and provider taxes - Management stated there is no significant change in outlook regarding potential Medicaid cuts and continues to monitor the budget process [25] Question: Conditions for entering into a debt investment - The company prioritizes acquisitions but may consider debt investments if they build strategic relationships that lead to future growth [27] Question: Changes to annualized earnings or FAD accretion from the Care REIT transaction - Management indicated that detailed answers would be provided after the deal announcement [32] Question: Reasonable volume or investment pipeline for the UK market - The pipeline in the UK is expected to take time to mature, with a range of cap rates potentially wider than in the U.S. [34] Question: Update on the performance of properties over the last six to nine months - Management indicated that they are still waiting for financial disclosures from operators but feel confident about the overall portfolio performance [39] Question: Access to financing for operators - Management reported no significant challenges in access to financing for operators at this time [80]