CareTrust REIT Inc. (NYSE: CTRE), a real estate investor that focuses on skilled nursing homes, senior housing and other healthcare-related properties, is prepped for an investment-heavy 2024.
“We have never had this amount of dry powder,” Chief Executive Dave Sedgwick told analysts during a conference call in February.
The San Clemente-based real estate investor in healthcare facilities ended last year with $600 million available on its line of credit and nearly $300 million of cash on the balance sheet, according to Sedgwick.
“We expect 2024 to be a strong year of investments, and we positioned ourselves accordingly,” he told analysts.
That statement’s already coming to fruition.
The REIT has already spent more than $175 million on acquisitions since the start of the year, a total that’s fast approaching roughly $182 million it spent in 2023.
Notably for the nearly $3.2 billion-valued firm, it has been buying close to home.
This month, CareTrust completed the $15.2 million purchase of a skilled nursing facility in Yorba Linda.
The property, running about 126,000 square feet at 17803 Imperial Highway, traded for about $120 per square foot.
It marks just the second investment in Orange County for CareTrust; its other local holding is a skilled nursing facility in San Juan Capistrano. The REIT counted 46 California properties in its portfolio at the end of 2023.
Tops in City
CareTrust bought the Yorba Linda community with an undisclosed joint venture partner from Blackstone Inc. (NYSE: BX). The deal marks the priciest single-property commercial real estate buy in the city of Yorba Linda in over a year, according to real estate market tracker CoStar Group Inc.
The facility is one of three Southern California retirement communities CareTrust has reported buying this month. The other two facilities are in San Diego and San Dimas.
The REIT paid about $60 million for the trio SoCal properties, which comprise of 475 skilled nursing, assisted living and memory care beds and units total.
Escondido-based retirement community operator Bayshire Senior Communities, a tenant at several of the company’s other facilities, will run all three properties, CareTrust officials said.
“Bayshire’s performance in our existing portfolio has demonstrated their focus on providing excellent care to their residents and patients and made us eager to help them add additional scale in Southern California,” James Callister, CareTrust’s chief investment officer, said in a statement.
Ensign Split
CareTrust was formed a decade ago, after the Ensign Group Inc. (Nasdaq: ENSG), a San Juan Capistrano-based operator of post-acute care services, spun off its real estate assets. Ensign is currently valued at around $6.6 billion.
Skilled nursing facilities—also known as nursing homes or healthcare centers—are now the primary asset owned by CareTrust.
The sector took a hit during the pandemic due to declining occupancy levels and staffing shortages. The industry is still in recovery mode.
As of last July, the American Health Care Association counted 15,000 skilled nursing facilities, compared to the 15,600 it saw in 2016.
Supply-demand imbalance “will increasingly favor skilled nursing and assisted living providers due to the shift of patient care to lower cost settings and an aging population,” CareTrust said in regulatory filings.
The company counts over 151 skilled nursing facilities with a combined total of more than 16,000 beds across the U.S. It also owns 25 multi-service campuses and 36 assisted and independent senior living communities, comprising more than 6,000 beds.
Shares in CareTrust reached their 52-week high of $24.62 apiece earlier this month. At press time, the company’s shares were trading close to $24.
Blackstone Disposition
Blackstone, which sold the Yorba Linda and San Dimas facilities to CareTrust, has sold off several of its OC properties as of late.
The company last month struck a $1 billion deal with Rexford Industrial Inc. (NYSE: REXR), one of the most active buyers of industrial real estate in Orange County for the past few years.
The Orange County portion of the portfolio includes 11 properties, ranging from Lake Forest to Anaheim, and totals nearly 815,000 square feet.
Property records indicate those 11 properties sold for close to $262.5 million on a combined basis, or roughly $322 per square foot; see the April 15 print edition of the Business Journal for more on that transaction.
