CareTrust REIT Had ‘Great Year’ Despite Some Tenant Turbulence

CareTrust REIT (Nasdaq: CTRE) had its best-ever year last year despite some operational woes with two of its smaller tenants.

The San Clemente, California-based real estate investment trust (REIT) reported a normalized funds from operations (FFO) of $23.6 million, or 31 cents per share, which was roughly in line with analysts’ expectations for the fourth quarter of 2017. The company also had a quarterly total revenue of roughly $36.6 million, an increase of 29.6% over its totals for the same period in 2016.

CareTrust invested $153 million in the fourth quarter of 2017, which included the acquisition of 11 skilled nursing facilities and three assisted living and memory care communities. For the full year year, the company was able to complete a record $308 million in new acquisitions.


“All told, it was a great year, and we’re well-positioned for a solid 2018,” Greg Stapley, CareTrust’s chairman and CEO, said during Wednesday’s fourth-quarter earnings call.

Despite the banner year, the company also reported some operational difficulties for two of its tenants, both of which have since agreed to part ways with CareTrust.

CareTrust offloaded seven of Muncie, Indiana-based Pristine’s 16 skilled nursing facilities (SNFs) last year, with plans to market the remaining nine facilities to other operators in the months ahead. The REIT also transferred four small senior living communities in Florida from its former tenant, Better Senior Living, to one of its existing tenants, Priority Life Care.


Occupancy for the REIT’s senior housing portfolio, which most recently stood at 82.2%, was another sore spot—though company leaders feel “very comfortable” about senior housing occupancy for the upcoming year, said Eric Gillis, CareTrust’s director of asset management.

“We have several buildings in the Minneapolis area that are on the level of 90% to 100% occupancy now, as opposed to, at lease-up, at about 50% occupancy,” Gillis said. “The Florida portfolio, with Better Senior transitioning over to Priority, we’ve already seen some increase in occupancies.”

Written by Tim Regan

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