A subsidiary of CareTrust REIT (NYSE: CTRE) is acquiring UK-based Care REIT plc and its 137 care homes in the United Kingdom in a deal representing about $817 million.

Care REIT has a portfolio of 137 care homes totaling about 7,500 beds in England, Scotland and Northern Ireland managed by 15 operators.

Under the deal, CareTrust subsidiary CR United Bidco Ltd has agreed to pay 108 pence in cash per ordinary share of Care REIT. CareTrust expects the deal will close in the second quarter of the year.

The properties in the portfolio are covered under long-term, triple-net lease and as of Sept. 30 generated $66 million in annual revenue from rent. The portfolio has an average occupancy rate of about 89%.

The REIT noted it believes the UK care home market is fragmented and “in the early innings of a demand-supply imbalance driven by an aging population with growing care needs, muted new inventory as construction and borrowing costs remain high, and tight capital availability,” similar to conditions in the U.S.

“Against this favorable backdrop, care home operators should benefit from a diverse funding landscape of public and private sources, which CareTrust expects to lead to solid occupancy rates and operating margins,” the company noted in an announcement. “CareTrust intends to fuel growth by deepening relationships with Care REIT’s existing operators, supporting existing development projects and expanding the pipeline of new investments, as well as building relationships with other operators.”

According to CareTrust CEO Dave Sedgwick, the REIT “has been following the UK for some time, looking for the right entry point.”

“We believe we have found it in the Care REIT platform, which has assembled what we consider to be an excellent, diversified portfolio of UK assets and operator partnerships,” he said in a press release about the deal. “We look forward to combining the Care REIT platform with our own and expanding our mission of growing with great operators in the UK.”

CareTrust REIT’s portfolio of properties prior to the deal included 32 senior housing communities spanning a little fewer than 2,500 beds, according to the company’s most recent financial filings.

The acquisition of the care homes is “well-timed” when taking into account potential U.S. Medicaid cuts ahead, according to a March 10 analyst note from BMO Capital Markets Managing Director Juan Sanabria.

CareTrust’s acquisition comes a little more than a week after Toledo, Ohio-based Welltower (NYSE: WELL) announced its acquisition of Canadian senior living operator Amica Senior Lifestyles and its portfolio of 38 communities in a deal valued at $4.6 billion CAD.

CareTrust stock grew a little more than 1% to end the trading day at $26.07 per share.

CareTrust ‘well-positioned’ in UK with deal

CareTrust is with the acquisition gaining a platform of communities benefitting from similar supply-demand fundamentals as the U.S.

The share of the UK’s older adults age 65 to 84 is set to rise to 12.9% by 2030, up from 11.3% in 2023. And the number of older adults age 85 and older is slated to rise to 2.1%, up from 1.8% in 2023.

At the same time, the UK senior housing market is undersupplied, requiring a net increase of at least 40,000 additional care home beds by 2030 to meet demand, according to statistics cited by CareTrust.

Also like in the U.S., the UK care home market “remains largely fragmented,” the REIT noted. It added the UK has a “number of small and mid-sized operators where the top 10 operators hold less than 20% of the market.”

The platform could help CareTrust achieve “meaningful” growth in the UK and provide another growth engine beyond the company’s U.S.-based senior living and skilled nursing holdings, according to Sedgwick.

“We intend to combine together to invest in the existing facilities and expand with existing operators, and also look to nurture new relationships for external growth,” he said during a call with investors and analysts Tuesday.

The new care platform offers services that are a “hybrid” between assisted living and skilled nursing, Sedgwick added. The properties’ revenue is funded by a mix of public and private sources, both of which have “consistently trended upward,” according to CareTrust.

“The private funding is actually growing a little bit more than the public,” Sedgwick said.