![]() Investor Presentation February 24, 2015 Exhibit 99.1 |
![]() This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements regarding future financing plans, business strategies, growth prospects and operating and financial performance; expectations regarding the making of distributions and the payment of dividends; and compliance with and changes in governmental regulations. Words such as "anticipate(s)," "expect(s)," "intend(s)," "plan(s)," "believe(s)," "may," "will," "would," "could," "should," "seek(s)" and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements are based on Management's current expectations and beliefs, and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although Management believes that the assumptions underlying the forward-looking statements are reasonable, they are not guarantees and CareTrust can give no assurance that its expectations will be attained. Factors which could have a material adverse effect on CareTrust's operations and future prospects or which could cause actual results to differ materially from expectations include, but are not limited to: (i) the ability to achieve some or all of the expected benefits from the completed spin-off and to successfully conduct CareTrust's business following the spin-off; (ii) the ability and willingness of Ensign to meet and/or perform its obligations under the contractual arrangements that it entered into with CareTrust in connection with the spin-off, including the Ensign Master Leases, and any of its obligations to indemnify, defend and hold CareTrust harmless from and against various claims, litigation and liabilities; (iii) the ability and willingness of CareTrust's tenants to (a) comply with laws, rules and regulations in the operation of the properties CareTrust leases to them, and (b) renew their leases with CareTrust upon expiration, or in the alternative, (c) CareTrust's ability to reposition and re-let its properties on the same or better terms in the event of nonrenewal or replacement of an existing tenant and any obligations, including indemnification obligations, that CareTrust may incur in replacing an existing tenant; (iv) the availability of, and the ability to identify and acquire, suitable acquisition opportunities and lease the same to reliable tenants on accretive terms; (v) the ability to generate sufficient cash flows to service CareTrust's outstanding indebtedness; (vi) access to debt and equity capital markets; (vii) fluctuating interest rates; (viii) the ability to retain and properly incentivize key management personnel; (ix) the ability to qualify or maintain CareTrust's status as a REIT; (x) changes in the U.S. tax laws and other state, federal or local laws, whether or not specific to REITs; (xi) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xii) any additional factors included in this presentation and any included in the section entitled "Risk Factors" in CareTrust's Form 10-K and in Item 1A of Part II of CareTrust's most recently filed Form 10-K. Forward-looking statements speak only as of the date made. Except in the normal course of CareTrust's public disclosure obligations, CareTrust expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any statement is based. . Reconciliations of certain non-GAAP financial measures used in this presentation, including a reconciliation of our net income (loss) per GAAP to EBITDA, Adjusted EBITDA, FFO, normalized FFO, FAD and normalized FAD, are included in this presentation. The definitions of our non- GAAP measures used in this presentation are included in our press release dated February 11, 2015, which is incorporated herein by reference and available on our website at investor.caretrustreit.com. Safe Harbor Statement 2 |
![]() Geographically Diverse Portfolio Strong Tenant Rent Coverage Experienced Management Team Growth & Diversification Opportunities Attractive Industry Fundamentals Investment Highlights Summary 3 Financially Secure “Platform” Tenant Favorable Long-Term Lease Structure |
![]() Greg Stapley CEO Management 4 Bill Wagner CFO Dave Sedgwick VP Operations • 28 years of experience in the acquisition, development and disposition of real estate • Co-Founder of Ensign, instrumental in assembling the real estate portfolio now owned by CareTrust • Previously the General Counsel of a 192-location national retailer and Partner at a law firm • 22 years of accounting and finance experience, primarily in real estate, including 11 years with publicly-traded REITs • Served as SVP and CAO of Nationwide Health Properties, Inc. and Sunstone Hotel Investors, Inc. • Ernst & Young Kenneth Leventhal Real Estate Group • 12 years of experience in skilled nursing operations • Trained over 100 Ensign nursing home administrators as Ensign’s Chief Human Capital Officer • Led five SNFs as Administrator/ CEO; developed Ensign’s approach to cultural, clinical and financial performance Mark Lamb Director of Investments • Three years as Director of Investments at Nationwide Health Properties, underwriting over $1 billion of new investments across the Seniors Housing and Skilled Nursing sectors • Led three SNFs as Administrator for Plum Healthcare & North American Health Care in California • Investment Associate at The Bascom Group, a private equity real estate investment firm |
![]() • A leading provider of skilled nursing care and assisted living services • Strong financial performance with dependable cash flows and liquidity • Long-tenured and successful management team • Portfolio of 97 quality assets with Ensign as initial tenant except for three facilities operated by CareTrust • “Platform” tenant initially has attractive 1.85x rent coverage supported by long- term, triple-net lease structures • Focus is on broadening geographic reach, diversifying tenant base and expanding asset classes • Management team with deep real estate and healthcare industry expertise Transaction Overview 5 Spin-Off On June 1, 2014, The Ensign Group split into two publicly traded companies through a tax-free spin-off transaction. Operations Real Estate |
![]() Strong Liquidity for Growth 6 Cash on hand as of December 31, 2014 $25 million Undrawn Senior Secured Credit Facility with approximately $112 million of availability ($84 million currently available plus $28 million for assets recently acquired). $150 million Plus access to public equity and debt markets, and other forms of long-term capital. |
![]() INVESTMENT HIGHLIGHTS 7 |
![]() Portfolio Snapshot 8 SNF 73 71% AL 16 15% Campus 10 10% IL 4 4% Portfolio Asset Category TX 27 26% CA 18 17% UT 12 12% AZ 10 10% Other 36 35% SNF, AL, IL, Campus Locations |
![]() Varying Deal Size (One-Offs to Portfolios) Multiple Operator Partnerships No Geographic Constraints Promising & Stabilized SNF/ALF Assets Future Diversification into MOB, Acute Care and Life Sciences Wider Investment Parameters 9 Cluster Cluster Ready Ready Local Local Leader Leader Pipeline Pipeline Geographic Geographic Limits Limits Turnaround Turnaround Opportunities Opportunities Ensign Strategy Note: For one year after the spin-off, CareTrust is subject to the Opportunities Agreement with Ensign which affords Ensign certain rights of first refusal to some of CareTrust’s investment opportunities under certain circumstances CareTrust Strategy |
![]() Healthcare Real Estate Ownership Real Estate Asset Breakdown Note: Healthcare Real Estate Ownership Breakdown and Real Estate Asset Breakdown from Stifel Nicolaus industry analysis Healthcare Real Estate Market Estimated at Over $1 Trillion 10 Deal Size Tenant Size Large REITs focused on larger acquisitions Privately Owned, 79% Public REIT- Owned , 21% Senior Housing (ALF, ILF, Memory Care), 15% Skilled Nursing, 10% Life Science/ Biotech, 5% Outpatient/ MOB, 39% Hospitals/ LTACHs, 31% |
![]() Fragmented Markets With Value Arbitrage Opportunities 11 Fragmented market, underserved by capital providers Limited access to capital and liquidity for local and regional operators Limited competition from other REITs for SNFs and mid-market assisted living properties Target quality one-off, small- & mid-sized portfolios Maintain conservative underwriting strategy Leverage robust number of existing relationships Partner with successful local & regional players Creative capital solutions Attractive investment spreads over cost of capital Public/private market discrepancies Substantial growth through smaller, non- marketed transactions Market Backdrop CareTrust Role Results |
![]() Disciplined Investment Strategy Focused on Driving Value 12 Senior Housing Facilities (ALF, ILF, MC) Skilled Nursing Facilities Medical Office Buildings Acute Care Triple Net Leases Core Core Opportunistic Opportunistic Mortgage Debt Relationship Relationship Opportunistic Opportunistic Development Funding Relationship Relationship RIDEA Opportunistic |
![]() Total LTM EBITDAR Tenant Rent Coverage * Represents facility EBITDAR coverage for the twelve months ending September 30, 2014 ** Represents facility EBITDAR coverage for LTC’s skilled nursing portfolio *** Rent coverage is calculated as operating cash flow from SNH tenants’ operations of SNH properties, before subordinated charges, divided by rents payable to SNH Source: Company filings, as of 12/31/13 for AVIV, LTC, and SBRA, and 9/30/13 for SNH and OHI. Leading Tenant Rent Coverage 13 1.91x 1.68x 1.60x 1.50x 1.44x 1.33x CTRE* LTC** AVIV OHI SNH*** SBRA |
![]() Real Estate Acquisition & Development Experience The CareTrust Team brings its Experience, Relationships & Track Record from Ensign 14 Ensign Annual Facilities Growth Ensign Historical Asset Acquisitions ($ in millions) 57 61 63 77 82 102 108 119 4 2 14 5 20 6 11 6 30 50 70 90 110 130 2007 2008 2009 2010 2011 2012 2013 Q1 '14 $40 $25 $21 $61 $21 $130 $43 $45 $48 $0 $20 $40 $60 $80 $100 $120 2006 2007 2008 2009 2010 2011 2012 2013 Avg. '06-'13 |
![]() Attractive Industry Dynamics for SNF Operators 15 Numbers in millions Relative Costs of Treatment Across Care Providers SNF IRF LTAC Source: AHCA, CMS OSCAR data, U.S. Census Bureau, Medpac Number of Skilled Nursing Facilities Age 65+ Population US SNF Properties 16,715 16,554 16,441 16,256 16,066 15,965 15,861 15,772 15,771 15,679 15,669 15,655 15,667 15,666 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 31 34 35 37 39 47 55 64 72 78 81 1990 1995 2000 2005 2010 2015 2020E 2025E 2030E 2035E 2040E $10,501 $26,051 $26,051 $115,463 $7,897 $74,689 $6,165 $17,135 $67,104 $10,618 $18,487 $44,633 $8,905 $34,196 $31,496 Tracheotomy with Vent Respiratory with Vent Joint Replacement Hip Fracture Stroke |
![]() Skilled Nursing Reimbursement Rates: Stable and Increasing Over Time 16 Source: Eljay LLC and composite of CMS, AHCA, AQNHC and Avalere Group Data; ENSG company filings Skilled Nursing Reimbursement Rates (2000-2013) 4.2% 4.2% 4.0% 4.0% 3.4% 3.4% CAGR In May 2014, CMS proposed a 2% aggregate increase for 2015 SNF payments $109 $118 $124 $129 $142 $145 $150 $156 $164 $172 $174 $176 $179 $287 $312 $325 $301 $336 $349 $363 $385 $408 $432 $454 $505 $469 $478 $446 $451 $524 $560 $574 $618 $555 $564 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Avg. SNF Medicaid Rate Per Day Avg. SNF Medicare Rate Per Day ENSG Same Facility Medicare Rate per Day |
![]() “THE” Platform Tenant 17 As of June 30, 2014, Ensign operated 125 facilities, 10 home health and 8 hospice operations, 12 urgent care centers and a mobile x- ray diagnostic company, all located in 12 states Ensign has a strong track record of integrating turnaround opportunities – Improves operations through increased occupancy, quality mix and acuity shift Long-tenured and successful management team has been an integral part of Ensign’s business strategy Ensign Operated Facilities SNFs, ALFs & ILFs Home Health & Hospice Urgent Care Clinics Note: EBITDAR is a non-GAAP measure and represents net income before (a) interest expense, net, (b) provision for income taxes, (c) depreciation and (d) facility rent expense. See Ensign’s public filings for a reconciliation of EBITDAR to GAAP and additional information on Ensign’s performance. Revenue (in millions) Ensign Business Overview Adjusted EBITDAR 39 2007 2008 2009 2010 2011 2012 2013 Q1 2014 411 469 542 650 758 825 905 0 200 400 600 800 1,000 1,200 Millions $ 0 30 60 90 120 150 180 2007 2008 2009 2010 2011 2012 2013 Q1 2014 Millions $ 60 73 87 107 130 142 149 |
![]() Turnaround Track Record Acquisition Track Record based on an average for all SNF acquisitions from 2001 through October 1, 2012 measuring five quarters of operating performance. Ensign Track Record Operational Excellence 18 Recognized Skilled Nursing Facility Quality CMS Star ratings as reported on cms.gov http://www.medicare.gov/nursinghomecompare/ Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q1 2014 31 27 19 14 7 6 16 21 26 23 21 18 14 14 14 15 17 15 7 17 29 25 30 33 7 4 9 20 30 35 1-Star 2-Star 3-Star 4-Star 5-Star 4-Quarter Performance Q1 Q5 Improvement EBITDAR Margin 11.3% 14.5% 322 bps Occupancy 70.9% 74.0% 316 bps Skilled Mix (Rev) 31.3% 38.7% 732 bps Quality Mix (Rev) 48.4% 51.6% 321 bps |
![]() DEALS SUMMARY 19 |
![]() 20 #1 CROSS HEALTHCARE TRANSACTION SUMMARY Type ALF Sale/Leaseback Price $12,000,000 # of Units/Beds 90/102 Price/Unit $133,333 # of Buildings 3 Price/Bed $117,647 Location Idaho Occupancy 92% LEASE SUMMARY Initial Yield 8.50% EBITDARM Coverage 1.45x Initial Rent $1,020,000 EBITDAR Coverage 1.31x Security Deposit 2 months rent Lease Term 12 year with extensions |
![]() 21 #2 PRELUDE HEALTHCARE TRANSACTION SUMMARY Type Memory Care Sale/Leaseback Price $7,205,088 # of Units/Beds 28/30 Price/Unit $257,325 # of Buildings 1 Occupancy 92% Location Minnesota LEASE SUMMARY Initial Yield 8.25% EBITDARM Coverage 1.47x Initial Rent $594,420 EBITDAR Coverage 1.30x Security Deposit 2 months rent Lease Term 15 years with extensions |
![]() 22 #3 SIGNATURE HEALTHCARE TRANSACTION SUMMARY Type ALF Development Investment $7,500,000 # of Units/Beds 134/146 Investment Yield 12.00% # of Buildings 1 Purchase Option Price $40,000,000 Location Colorado LEASE SUMMARY (Upon Purchase) Initial Yield 8.00% EBITDAR Coverage 1.16x Initial Rent $3,200,000 Lease Term 15 years with extensions Security Deposit 3 months rent |
![]() 23 #4 TWENTY/20 MANAGEMENT TRANSACTION SUMMARY Type ALF Sale/Leaseback Price $6,600,000* # of Units 39 Price/Unit $169,230 # of Buildings 1* Occupancy 99% Location Virginia LEASE SUMMARY Initial Yield 8.50% EBITDARM Coverage 1.47x Initial Rent $561,000 EBITDAR Coverage 1.30x Security Deposit 2 months rent Lease Term 15 years w/ extensions *CareTrust has purchase option on 2 facility at stabilization for $10,000,000 with $5,000,000 earn-out opportunity. nd |
![]() 24 #5 BETHANY REHAB TRANSACTION SUMMARY Type SNF Sale/Leaseback Price $17,950,000 # of Units/Beds 170 beds Price/Unit NA # of Buildings 1 Price/Bed $105,588 Location CO Occupancy 96% LEASE SUMMARY Initial Yield 9.65% EBITDARM Coverage 1.64x Initial Rent $1,732,500 EBITDAR Coverage 1.29x Security Deposit 2 months rent Lease Term 15 years w/ extensions |
![]() FINANCIAL SUMMARY 25 |
![]() 2015 Guidance 26 CareTrust’s guidance for 2015 is based on the following: • $56 million in rent from Ensign and $3.8 million from all investments closed post-Spin • $0.9 million in interest income from the $7.5 million preferred equity investment at 12% • $0.3 million in NOI from the 3 ILFs that we own and operate • $24 million in interest expense 1 • $6.2 million to $6.9 million in G&A expense 2 • $0.96 to $0.98 in normalized FFO per diluted common share • $1.06 to $1.08 in normalized FAD per diluted common share • $0.26 to $0.28 of net income per diluted common share (1) Includes approximately $2.3 million in amortization of deferred financing costs. (2) Includes approximately $1.0 million of non-cash stock-based compensation expense. |
![]() Guidance RECONCILIATION OF NET INCOME TO NON-GAAP FINANCIAL MEASURES 27 Guidance Low High Net income $0.26 $0.28 Real estate related depreciation and amortization 0.70 0.70 Funds from Operations (FFO) 0.96 0.98 Acquisition costs - - Costs associated with the Spin-Off - - Normalized FFO $0.96 $0.98 Net income $0.26 $0.28 Real estate related depreciation and amortization 0.70 0.70 Amortization of deferred financing costs 0.07 0.07 Amortization of stock-based compensation 0.03 0.03 Funds Available for Distribution (FAD) 1.06 1.08 Acquisition costs - - Costs associated with the Spin-Off - - Normalized FAD $1.06 $1.08 Weighted average shares outstanding (in thousands): Diluted 31,565 31,565 |
![]() APPENDIX 28 |
![]() 29 2014 Financial Summary CARETRUST REIT, INC. CONSOLIDATED AND COMBINED BALANCE SHEETS (in thousands) (unaudited) December 31, September 30, June 30, December 31, 2014 2014 2014 2013 Assets Real estate investments, net $436,215 $415,021 $420,059 $425,003 Other real estate investments 7,532 - - Cash and cash equivalents 25,320 88,845 80,345 895 Accounts receivable 2,291 2,906 1,871 20 Prepaid expenses and other assets 809 367 77 888 Deferred tax assets - - - 859 Deferred financing costs, net 10,405 10,804 11,000 2,801 Total assets $482,572 $517,943 $513,352 $430,466 Liabilities and Equity Senior unsecured notes payable $260,000 $260,000 $260,000 $- Senior secured revolving credit facility - - - 78,701 Mortgage notes payable 98,205 98,867 99,504 114,982 Senior secured term loan - - - 65,624 Interest rate swap - - - 1,828 Accounts payable and accrued liabilities 10,905 9,451 6,190 5,783 Deferred tax liabilities - - - 859 Total liabilities 369,110 368,318 365,694 267,777 Equity: Common stock 313 223 222 - Additional paid-in capital 246,041 146,979 146,980 - Retained earnings (132,892) 2,423 456 - Invested equity - - - 164,517 Accumulated other comprehensive loss - - - (1,828) Total equity 113,462 149,625 147,658 162,689 Total liabilities and equity $482,572 $517,943 $513,352 $430,466 |
![]() 30 2014 Financial Summary CARETRUST REIT, INC. DEBT SUMMARY (dollars in thousands) (unaudited) Interest Rate/ Maturity December 31, 2014 Debt Collateral Spread Date Balance Fixed Rate Debt Senior unsecured notes payable Unsecured 5.875% 2021 $260,000 GECC mortgage notes payable (1) 10 properties 7.252% 2017 47,563 Mortgage note payable 1 property 6.000% 2019 558 308,121 Floating Rate Debt GECC mortgage notes payable (1) 10 properties L + 3.35% 2017 50,084 Senior secured revolving credit facility (2) 11 properties L + 2%-2.5% 2018 - 50,084 Total Debt $358,205 Debt Statistics % Fixed Rate Debt 86.0% % Floating Rate Debt 14.0% Total 100.0% Weighted Average Interest Rates: Fixed 6.1% Floating 3.9% Blended 5.8% (1) The fixed rate portion of the GECC mortgage notes payable converts to the floating rate in June 2016. The floating rate portion is subject to a Libor floor of 0.50%. The note has two, 12 month extension options. (2) Borrowings available under the senior secured revolving credit facility totaled $84.2 million at December 31, 2014. Funds can also be borrowed at the Base Rate (as defined) plus 1.0% to 1.5%. |
![]() 31 2014 Financial Summary CARETRUST REIT, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited) One Month Quarter Quarter Seven Months Ended Ended Ended Ended June 30, 2014 September 30, 2014 December 31, 2014 December 31, 2014 Revenues: Rental income $4,667 $14,000 $14,139 $32,806 Tenant reimbursement 396 1,228 1,230 2,854 Independent living facilities 211 646 663 1,520 Interest and other income - 10 45 55 Total revenues 5,274 15,884 16,077 37,235 Expenses: Depreciation and amortization 1,794 5,362 5,369 12,525 Interest expense 1,967 5,943 5,900 13,810 Property taxes 396 1,228 1,230 2,854 Acquisition costs - - 47 47 Independent living facilities 161 586 559 1,306 General and administrative 500 798 2,342 3,640 Total expenses 4,818 13,917 15,447 34,182 Net income $456 $1,967 $630 $3,053 Diluted earnings per share $0.02 $0.09 $0.03 $0.13 Diluted weighted average shares outstanding 22,436 22,436 24,586 23,357 |
![]() 32 2014 Financial Summary CARETRUST REIT, INC. RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES (in thousands, except per share data) (unaudited) One Month Quarter Quarter Seven Months Ended Ended Ended Ended June 30, 2014 September 30, 2014 December 31, 2014 December 31, 2014 Net income $456 $1,967 $630 $3,053 Depreciation and amortization 1,794 5,362 5,369 12,525 Interest expense 1,967 5,943 5,900 13,810 Amortization of stock-based compensation - - 154 154 EBITDA 4,217 13,272 12,053 29,542 Acquisition costs - - 47 47 Costs associated with the Spin-Off 254 30 168 452 Adjusted EBITDA $4,471 $13,302 $12,268 $30,041 Net income $456 $1,967 $630 $3,053 Real estate related depreciation and amortization 1,794 5,362 5,365 12,521 Funds from Operations (FFO) 2,250 7,329 5,995 15,574 Acquisition costs - - 47 47 Costs associated with the Spin-Off 254 30 168 452 Normalized FFO $2,504 $7,359 $6,210 $16,073 Net income $456 $1,967 $630 $3,053 Real estate related depreciation and amortization 1,794 5,362 5,365 12,521 Amortization of deferred financing costs 175 533 553 1,261 Amortization of stock-based compensation - - 154 154 Funds Available for Distribution (FAD) 2,425 7,862 6,702 16,989 Acquisition costs - - 47 47 Costs associated with the Spin-Off 254 30 168 452 Normalized FAD $2,679 $7,892 $6,917 $17,488 FFO per share $0.10 $0.33 $0.24 $0.67 Normalized FFO per share $0.11 $0.33 $0.25 $0.69 FAD per share $0.11 $0.35 $0.27 $0.73 Normalized FAD per share $0.12 $0.35 $0.28 $0.75 Diluted weighted average shares outstanding 22,436 22,436 24,586 23,357 |
![]() Total Skilled Nursing Facilities Multi-Specialty Campuses Assisted Living and Independent Living Facilities Independent Living Facilities Operated by CareTrust State Properties Beds/Units Facilities Beds Campuses SNF Beds ALF Units ILF Units Facilities Units Facilities Units California 18 1,991 14 1,465 2 158 121 24 2 223 --- --- Texas 27 3,241 22 2,699 1 123 77 20 2 115 2 207 Arizona 10 1,327 7 799 1 162 100 --- 2 266 --- --- Utah 12 1,305 9 907 1 235 37 --- 1 69 1 57 Colorado 6 633 4 380 --- --- --- --- 2 253 --- --- Idaho 9 579 5 408 1 45 24 --- 3 102 --- --- Washington 6 555 5 453 --- --- --- --- 1 102 --- --- Nevada 3 304 1 92 --- --- --- --- 2 212 --- --- Nebraska 5 366 3 220 2 105 41 --- --- --- --- --- Iowa 5 356 3 185 2 109 62 --- --- --- --- --- Minnesota 1 30 --- --- --- --- --- --- 1 30 Virginia 1 39 --- --- --- --- --- --- 1 39 Total 103 10,726 73 7,608 10 937 462 44 17 1,411 3 264 (1) All facility and bed/unit counts are as of 9/30/14 (2) The initial portfolio of four ILFs includes one that is leased to and operated by Ensign and three owned and operated by CareTrust CareTrust Geographic Detail 33 2 2 1 |