Healthcare REIT exploring sale amid ill effects of pandemic

Cites labor shortages, rising costs as “growing challenges”

Greg Stapley (Chairman and Chief Executive Officer, CareTrust REIT Inc.) (iStock,
Greg Stapley (Chairman and Chief Executive Officer, CareTrust REIT Inc.) (iStock,

San Clemente-based CareTrust REIT Inc. is exploring a sale as it deals with pandemic-driven challenges.

The real estate investment trust owns healthcare properties, including nursing homes and senior housing, according to Bloomberg.

CareTrust called itself among the top three best performing healthcare REITs of 2020 in terms of one-, three- and five-year total returns, but lately has faced headwinds.

CEO Greg Stapley said while announcing third quarter results last month that the REIT faces a “growing challenge” from a labor shortage and rising labor costs.

Stapley said that some of the operators in the REIT’s portfolio have turned away potential patients because they lack staff. In the third quarter, CareTrust collected 96.2 percent of its rent, collecting a net income of $11.9 million.

CareTrust shares fell to a year-to-date low of $19.83 on November 26, a 7.42 percent decline from the beginning of the year, but have since improved to above $22 per share as of Wednesday morning.

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CareTrust has a market capitalization of around $2.1 billion and owns 224 properties across 27 states with 23,431 beds total. The bulk of those properties — 160 in total — are nursing homes. The trust also owns 39 assisted living facilities and 24 campuses.

Most of CareTrust’s portfolio is between Texas and California, where the trust owns 83 total facilities. It also owns 17 properties in Idaho, 15 in Iowa, 13 in Ohio and 11 in Washington State.

A sale this year would be the second major healthcare portfolio deal of the year. Digital Bridge, formerly Colony Capital, sold off its “wellness infrastructure business” this fall to Highgate Capital Investments and Aurora Health Network in a deal valued at around $3.2 billion.

The 300-property Digital Bridge portfolio was similar to CareTrust’s portfolio, consisting of senior housing, nursing homes, medical offices, and hospital assets. The deal saw Highgate and Aurora take on $2.6 billion in investment-level debt and $294 million in subsidiary-level debt.

[Bloomberg] — Dennis Lynch


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