CTRE - Earnings call transcript Q4 2018

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Operator

Good day ladies and gentlemen, and welcome to CareTrust REIT Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference may be recorded. I would now to turn the conference over to your host, Ms. Controller. CareTrust Beale, Lauren begin. may you Ma'am,

Lauren Beale

Thank you. XXXX is and year REIT's recorded. to call. Please CareTrust earnings call QX note fiscal Welcome that being this

cause matters, Before in expectations, regarding discussion information dividends, from review assumptions, forward-looking forward-looking to of beliefs could subject about include should factors that all required call results, be projections impact and of statistical future statements implied based as operates. that not and actual expressed Listeners we G. acquisitions, the These complete encouraged are CareTrust's uncertainties to that financial business financings, on may by results environment are could SEC current performance, made and it to differ herein. are or well on Regulation other and investments, today's any as and management's those filings on materially place for CareTrust's SEC begin, please which financial any other reliance undue statements which returns, risks more or advised a statements

period. or other can changing the complete to EBITDA, they believes update the but should required together future CareTrust REIT as information, or call, as Listeners metrics with Web yesterday, law, such the available When normalized publicly call of by and circumstances, arise result and replay GAAP can CareTrust's any and that Web CareTrust, its to Relations that at Chief each Management upon as where Asset the will and of also FAD, accessed its do GAAP exclusion new the this reference call and for understanding and its press on the not affiliates and turn of CareTrust Except Gillis, Investment accompanying morning be relied Chairman results, any are a forward-looking Dave non-GAAP events, Wagner, www.caretrustreit.com. on Management. quarterly changes call Officer; will its advised Sedgwick, include Lamb, the Operating company Eric for section EBITDA, limited undertake reports. of Chief CEO. be of its on to of Bill reason. Stapley, measures statements Officer; viewed more which will this financial revise these REIT's Greg of now FFO During and provide cautions FFO a site FAD. company a Investor business, Mark not A supplement, be Director XX-Q the I Chief Financial release, over Form site also Officer; filed

Greg Stapley

and year which $X.XX, FFO a the and as everybody. below four the of the low than posted bit dilution to program avoided EBITDA range little of morning Lauren. finished an to at be net low still a somewhat was with X.X could've reporting at during and to in guidance, we consensus times. to took, really all-time line we year well second-half in started we and Good XXXX a barn here our that both a difficult per better aftermarket the debt EBITDA share times. CareTrust, with welcome left we're Thanks, year-end we that. the for net five actually but us target our It pleased of debt was of our end Had

you However, opportunity know, and saw the are same both we which as wore clouds year horizon the thing. on on, the as frequently,

for deemed in view to deals And a eminent the increase liquidity. it and debt and pipe XXXX, with prudent constructive reduce so we

we based could deployments. to possible secondary fraction at to whether cost for million October allows with our or not on pipeline and philosophy, closely the our off raised the robust. a of in it capital we've the nicely in know, equity ATM in raise at our our perfectly amount, time. as a equity any secondaries, ATM raises This ATM. to And turn our fundraising is the the in was market although QX off Using that through to off particular, sense new made, us match you the up do demand, of capital we've best of and $XXX As investments most would lender on our $XX since, matched view our and through equity and carry, as of Xst. million the quarter timing since

expected to the couple they earnings, short-term unable accretion Although contribute deals XXXX share was these well FFO and going in our growth. were last worth that deceleration the to per than closed announced of we represent later believe thus forward

and So, XXXX. of we're new in opportunity at And filed we've on where of we we January date. plenty our X-K after as illustrates, We've the And growth $XX just substantial powder. our in new end moved equity. which, closed going. successfully if still seeing with we're the where in on cusp and out to facility, investments, about already closed, another of stand the on our in assets credit to been, happy million size it can have years, interest of even excited $XXX done get expanded seven still more another we've million we those anything we're would revolving dry maturity extended debt We've surpass we've and

that just to cash bit some and ratio a which side contemplate immensely a retained it $XX we here, of estate real some remainder predictions million a cycle on of in making will any $XX not million accounts, little be say long This tooth. or by taking in might redeploy can but the we're our hand, as might payout $XX and getting give matters us in conservative cash we this million another the year. have We

manage and remain about will may wrap cycle our our whatever turn a next and we plan current the to the sheet we're assets the time opportunities, carefully bit over fill acquisitions years. opportunities to So in assets you financials. little arise, that, Dave over will out for Mark plays couple to Bill the I'd the then team details. as will ready With and some then to of the operators, up and balance to discuss recent like Dave? on ready talk

Dave Sedgwick

morning. good Greg, Thanks, and

Now, our growth was year discipline for strategy was where and that sake, never the been the XXXX to proven. value grow of has

there held ground Greg opportunities As were we talk I'll that ourselves and the plenty acquisitions mentioned, our future. to they pipeline have used to position lull but instead come, about minute. And the in overpay, of to let market better in for a begun

changes nursing starting acquisition Group has clinical As Doug the joined in of in single XX team is Providence a operational, a me the asset on assembled newest owned update of Cox. middle QX and and in Virginia. veteran, Providence usual, operator. led financial, by let with new portfolio, West through our Health respected great to skilled Tennessee-based operate talent the Doug in you country. us and facilities

first couple months our asset The of in terrific. been new have

In down Kindred a for of any those be couple portfolio, we'll We to took to setting of XXXX. their master immediately in example, Idaho, [indiscernible] lease several you in uncomfortable master operators lease. based seen their are facilities took in other would and acquired call Give particularly levels coverage assets that other to the parts and Cascadia we them, strides, add facilities both landlord make our of we've tenant. Adding tremendous buildings. some pre-stabilized the, late some looking Healthcare, now in over

it's they as a have something we're and for with non-stabilized proven around and intimately is which know as operators turnaround facilities well, they something record, ourselves. turning former track However, familiar well

depending impressed or didn't dip months repositioning, to six solid panic of we work and expected of done. often we turnaround XX which the when the with during a So really saw that complexity the size on has We're happens coverage, Cascadia in the job. first the

If is them, back times. three overall left lot up have coverage today they'll accomplish, you say but to a about ask they're annualized still they trailing to X.X

is also into strategic the deal their three acquired in experience three. they example had a operations Louisiana us XXXX. CapEx incorporated absorb of and out PMG. based for them them Another choppy months significant as the our included funding of as It QX them. we a operating They Predictably, and produced Texas which projects the repositioning in several the impacted assets were all for with Kindred Texas new well. Part carrying they these tackled first as results similar facilities of acquisitions model

their had stabilize they the lease quite Nevertheless, they've times, those in coverage share is of done at three annualized and not work to looking models. four trailing fair numbers, buildings headwinds November, last with approaching three their the now So, buildings. as of still the they're as

opportunities. Just do in good And we're great operators with great with and be pre-stabilized pleased wings. others, both operators and to these of the waiting in several our two associated a portfolio sampling what can

our support more firmly staying our tenants to ways on model, operations. evaluate, to continuing their So for educate, are focused and monitor, and we're we and better and look operator-first

to qualitative be market timely smaller data earnings their data with to their and previewed a we've make further I effective our it January themselves, more it operations, last in would processes. facility contract network to PointRight who importantly, X, otherwise us can ability the from As to narrowing PointRight scorecards. unable Perhaps to give more they to operator call, enhance and data on use allows the underwriting compete our This added our and asset afford our qualitative improve so management strengthening and tenants management environment. smarter is decisions,

landscape last major remains quarter. the at no industry, looking Finally, from nursing the broader skilled stable changes with

and environment, inform coming the experience, about to Even Our PDPM this the to to Mark combined before positive lull, reimbursement operators [indiscernible] that, with stable it And during new on reimbursement an surge starts our make the pipeline. to over our impact. talk model hand I'll outlook the this sector. Mark? operating and long-rumored

Mark Lamb

approximately master Dave hello great investments, with we skilled Health a the closed a in nursing we in three and existing leases process, Metron In Providence added, and tenant In Group, everyone. and facilities. Dave, on tacked Eduro. as facility million to QX, our Thanks, apiece new acquiring mentioned, $XX

into invested XXXX in revenue our for million $X.X portfolio. also enhancing brought to acquisitions These CapEx million. the investments $XXX.X total We

our pricing But standards anything with success. Just broker's on not the rarely for result, It than long by our although a since immeasurably, ago a believe $XXX critical deals a when year that underwriting pass a that pro can focusing to an standards, be while hard although could guarantee to reflects is by little unhappy succeeding getting note had more or on prelude chances light the million a health of our pretty right, of we're not by performance. we just is discipline but a the be and overpaying learned rosy long-term lowering pain. it underwriting, asset's they improves success, it's actual we is forma about

for realized. starting be guns, XXXX. And those we're to to So, a are hopefully outstanding poised we stuck our now and hopes

beyond. and we closed imagine, much another existing with transactions sale correctly for This Oakview on the the ball of picked Covenant In Illinois, the had tenant, third us we to tenant, week as leaseback and moving four-building for transaction the new might up purchased leases standalone quarters Covenant January, a in million announced into earlier just this and Care. a deal, you Care, three existing Management. with recently a $X fourth we a million. single WLC under for As spent we Heights, rolled separate in tack-on and together our short-term on prior unified them long-term allowed And consolidate lease that and eliminate assets $XX QX master

obtaining we Greg to mentioned, which if agreements. definitive facilities will anticipate Southeast are we several agreement currently successful in [ph] XX a and the in million, for as close $XXX in recently remaining QX approvals transition Lastly, AKed the we purchase

in the Moving and that we underwriting Please well them the And to and we it reasonable includes projected that them. can almost I'll of $XXX as financials. we to we from we up to place quote in to $XXX level time have that million Bill the sits standards turn close of which up operators, operators. if today it tack-ons have as pair pipe time, new we nursing it skilled with actively when and range, with meet we to made can and are only and deals pursuing over discuss deals only yield pipeline, assets, lock quote million our our exclusively a now, then remember confidence existing coverage

Bill Wagner

Thanks Mark.

FAD grew $XX.X XX% grew FFO grew the Normalized to the the by For prior also normalized year prior FAD to to X% X% $X.XX. to share million. per XX% Normalized $X.XX, quarter, are quarter, that also over year normalized we pleased report FFO million. grew quarter by share to per over $XX.X up and by

covered again equates dividends FAD, most in the which $X.XXX share, on our dividend represents Given ratio recent on XX% of REIT payout of per FFO sector. and to of this the one best XX% a healthcare

price we our shares quarter million and resulting positions. today, at We that, have five strengthen of have the $XX.XX liquidity for an through continued average proceeds. net to leverage issued and $XX.X million To in of

in year-to-date, we and of today, million issued XX.X For XXXX $XXX.X proceeds. through shares million net resulting

paid just the have new $XX to earliest new costs we borrowing debt $XXX reducing million a so with from cash million we also hand The We again, to a seven-year off shortly. revolver in of we $XXX on the on loan entire of authorization left and one on our pushing revolver, closed Today, also today. a plan million loan, out our maturities ATM, just as term million term XXXX. the put and up $X.X proceeds

we still we to deals it smaller as in health growth our use As and has making, paramount to and decision Greg match it via intend we been but overnights, when deals of way. long CareTrust that can, as we do larger equity so judiciously intend and raise intend fund we to for noted, can keep intelligent to

of For release includes guidance press XX.X at on further investments a share to XXXX no in or guidance made One, of This the Two, account and escalators, we investments our rent this average guidance relies amendment, also credit for the to average FAD all yesterday's an per today based range escalations, assumptions. share of $X.XX share count inflation and normalized then recently normalized which completed following $X.XX X%. additional of projecting dispositions of and any debt per all issuances nor annual equity $X.XX almost FFO our or year. $X.XX. weighted million diluted facility initiated shares

$XX.X Our approximately three our this $XX do only NOI LIBOR facilities we rate also of approximately of have and on Of revolver of up and to $XX.X income the loan for includes Six, projected interest margin grid-based approximately of Interest XXX $X.X million year we LIBOR projected term Five, again term year. assumed acquisitions interest $XXX,XXX on date the floating living are million. XXX to million. projecting $XXX approximately which X.X%. at includes million. seven-year rates our total reduced loan. bips fees. independent of Three, the In revenues million That roughly plus amortization the nearly And the including of made approximately expense to a straight-line million million of rates bips on deferred make $X are about are financing our revolver Four, rent. G&A expense $X.X calculations,

amortization projection comps. Our G&A also includes roughly $X.X stock of of million

basis net approximately As for rate approximately our as credit is EBITDA to value, fixed a stats of leverage charge enterprise today ratio XX% Xx. our of our and debt calculated coverage is about on is run X.Xx,

And We hand. back also have $XX turn million with that on Greg. to of I'll it cash

Greg Stapley

open and thank discussion this for hope been happy all be We for helpful. Bill. we'd again of We to continued Thanks, your support has you Valerie? it that with questions. up

Operator

Capital. Sadler question Thank of KeyBanc Instructions] Jordan comes first [Operator from Our you.

open. is line Your

Jordan Sadler

good Thank you, morning and out there.

Greg Stapley

Good morning.

Bill Wagner

Good morning.

Jordan Sadler

Morning.

portfolio that information the the you you at contract that point share there and helpful. under is $XXX surrounding you coverage? commentary, is be the portfolio That guys regarding on, offered First any would are regarding could that Mark markets regarding incremental question million, X-K or this

Greg Stapley

when if the a this is the of agreement because definitive to that We we've into. Honestly, Jordan. contains file and had X-K hurdles transaction. an be is to to very multiple Yes, left contingencies, that clear. required Greg, X-K entered regulations filed tried sort SEC much downplay other diligence material Even to agreement

permission talk you hurdles we a number we to And don't we're multiple have [indiscernible] There nearer. We done out to the things towards about have much that of their as do are involved. don't of yet. information a yet. hope it. very We be will on more have really and parties give So -- not are woods that draws cleared

Jordan Sadler

there are events that or… we should for Okay, milestone dates any look or

Greg Stapley

to those by. are that know there have I'm week made fluid. Yes, things little exactly but that some be to are bit there's know a sure number to being that approvals made. dates We here filings have be approvals and the Yes, have not of we what attained have done, a be are there is and regulatory that to obtained that situation be do those some this

right our good. far we're counting So so it's hatched. would that so But I now chickens they're you not tell before

Jordan Sadler

if Okay, an these are say assets would you not? market existing or

Greg Stapley

Some are aren't. some and

Jordan Sadler

Okay. And then pipeline are XXX they also of included in to that XXX?

Greg Stapley

they are. Yes,

Jordan Sadler

you, this, guide in the missed And Okay. escalator the embedded then maybe the for in might've -- guide I the for year? one Bill, what's

Bill Wagner

X%.

Jordan Sadler

It's X%.

Okay, I'll off. thanks, hop

Greg Stapley

Thanks, Jordan.

Operator

Thank you.

Our next Raymond comes question Hughes of from James. Jonathan

open. Your line is

Jonathan Hughes

morning the earlier afternoon on and good commentary. very for Hey, time West your Coast. Thanks good and

was deal existing leaseback, properties an leasebacks for it for see covenant earlier that is your not turnaround strategy, On traditional strategy, do million kind they already those the but you was $XX opportunities that don't that -- announced your more you existing sale which realize typical own? sale week, of this a relationship, operate I with operators

Greg Stapley

know, most that some think few real far estate opportunities part are You own and for a the those I but few there operators are between.

As owned -- have existing or buildings, are then and and our some buildings of call -- that kind we've and them given operators operators of it of more and are you existing most know leased a mature those some our chunk -- good them, we'll their have a assets. there kind have combination launched of start of

norm I would say So for wouldn't this us. be the

Mark Lamb

in four real that particular, that Jonathan, -- them. the we assets covenant owned the their Yes, assets represents took and mortgage five acquired on, be between between for the for estate

Jonathan Hughes

some just talk I then enough. of maybe you about about for Dave, there there? operators and what's was derive characterized been one nursing and the skilled other your hoping rent, portfolio a nursing you skilled by talk could performing, portfolio how All where occupancy for coverage about Texas you or challenging as market Okay. is of fair right, fundamentals XX% the maybe can And

Mark Lamb

Jonathan, actually is this Hey, Mark.

Texas, cover can I since I So take this. probably

Texas Dave's know there's in with our were and Ensign we the comments four to So in took over. well. that they and with as those in acquired operators PMG. three They do do -- XXXX you are other assets, to continue well to PMG we assets back Kindred continue two respect that buildings

think metrics Medicaid I but performing coverage know, have not that And so fingertips. say great. it's that to secret Texas the portfolio well, our is it's I is state it's necessarily don't my not in rate, at you But safe

and of Medicaid rate ago. second in states getting are some the state operators development the good, the of going kind currently going roadblocks he it's Ensigns, but think And funding. three -- -- obviously perspective all world of out that we to PMGs and to last Possibly. a pass? down, or years flexible ground in four -- think way three I buildings manage are through target, to hopefully, in the don't million the troubled terms been the we come popping did $XXX the of of things another able there Quit some tax bed say in like is you from then have fundamental that see and you is operators

So good metrics operating feel we there that have. very of certainly Texas the and the we tenants still about about

Jonathan Hughes

XX Ensign? you The or have what Okay. That's were are so great. XX Texas, properties or so in

Mark Lamb

seven PMG, are XX, Probably right? because

Dave Sedgwick

Yes, correct.

Jonathan Hughes

budget to there tough then since fall to least, breakeven. it might and operators, ultimately -- the just seen projections chance trying it's that neutral. but actually projection Is right, this only for know I a guess, downside upside talk about All at be answer, I'm but revenues that PDPM. PDPM would understand positive most supposed to I opportunity? I've short? one and to the are one for about Most maybe or just and be Dave, more, one's It's a

Dave Sedgwick

and you I'll use drilling their really comment were Dave. is were now, question, of for a to into is one PCC in the give with tough couple system deep I weeks -- little give down anecdote. operators good we and record as right a PDPM. projections you but the This entire the a on I Yes. our of and customers. I'll A talk it's analysis They and doing all Midwest Eric did meeting of and doing believe, electronic operations, ago we their medical space largest about industry,

bet I'm we increase to having is showed any by revenue, were bottom the they're actually have in about XX-XX they they the to our the deficiencies that get flexibility great, his response that is cost. to For product is having be make their because asking a all that said I they significant don't they going factoring you, a to that around that most this And which asked same not fun but you're is which a tough about with that talk to drop sound to to going to line, because girls. and with therapy was even I they're PCC question changes going operator serious of like in where we're people some And say just their a and spot. a it's this, or that, all PCC in when some are situation they that --

So does course if good you better they of situation we XXXX Four I really a news, where think might [ph] like course, everybody, in quickly. Rugs then reversed saw that's with see much because

winners winners they for flexibility those they going staff As losers like not be even are do have the better. therapy may here how and it will we can on and looks who to future with top to line view there be the the

Jonathan Hughes

again it And in stable great. be operators camp no That's might your where concerning? latter then -- that

Dave Sedgwick

of. aware we're that Not

with that that are dive done PDPM. haven't on deep the positive operators it. talked But have We everybody to we about

Jonathan Hughes

me. taking from my questions. Thanks for it That's Okay.

Greg Stapley

Jonathan, still Yes, as thing mentioned would Dave Greg. add and talking I that. one about we're it's to operators just

in California all our center operators here agenda doing Something holding in. And operator the there. PDPM skilled of be new on discussion Southern and to come for will nursing that month front next we're for an we're conference in is

have XX now we should or this by time, So, so, answers the those days bag. from all in

Jonathan Hughes

more about it. hearing Look to Great. forward

Greg Stapley

You bet.

Operator

Thank you.

Vanacore comes question next Our Stifel. of Chad from

Your line is open.

Chad Vanacore

Thanks.

range you're the of acquisitions? currently Should sitting on X.Xx. Xx, in range up remaining lower been think to had leverage target XXXX popping about your of that we underlevered that the but end Xx historical historically, the you or middle through around to back So through

Bill Wagner

will depend of think modeling safe investment the is a -- if range towards for keep probably Hey, purposes, the bet good it's given flow at on XXXX equity Bill. All trading as where we continue but it where you that's and end I Chad, our down trading today. we're lower that

Chad Vanacore

right. Thanks, All Bill.

remains transaction I think making pipeline close had more largely then $XXX is market we the sniffed, in you. look discussions XXXX, now, to So million, to attractive? maybe about What's your strong, had that and not looking attractive as XXXX

Mark Lamb

So, that predominantly this to -- Mark, sniffs. yes, question is answer the is, first it's and

of terms answer. I In XXXX, know know, you don't a have I that specific

then at I made assets I and think it's so assets just and are look they current get pipeline of go not rid to are whether those not strategic specific ahead As operators, of want that to they up in the and were other geographically exit sense anymore whatever make operator kind and the for of the to have foot specific just prints reason assets reason. that for for you just or operator whatever wants don't they

be skilled in at nursing preview side those one-on-ones would back seeing know I are able holding we I committee on probably seeing week. can flow, we are a So the right. a then of it housing to is so we've that next little to living from deals year senior seeing a seen next you week in call deal an we total the particular so the in space anticipate far lot are late Nick I assisted in tell the XXXX you pattern more brokerage don't transactions uptick

a why I numbers. So that pattern are deal picked seeing that specific know so don't in as for up flow to XXXX there's but is we

Chad Vanacore

is one in some we you take coming want advantage operators investment, maybe to Mark, saying, coming some to the year, you exciting that have later make mentioned, particularly make we hey, don't any maybe up that investment. PDPM seeing of

operator? sell to upon to look So another

Mark Lamb

o, looking in we're very communities job pops hey, to the in specifically monetize brokerage pops a good want done I those mom think to and PDPM successful. to I need of coming and seen to and just going we PDPM are that be sell letting know are think the and investment to said, to still be mom is there nobody is is we what

I'm to a some, the another on are sidelines mom sure at are PDPM small changes you about know seen mom think of that there's that certain looking has today price don't low we fraction that saying, the of So the change. to you at rates help go for pops Hey and but for numbers very the we them I their dates want thinking I'm and and but get bet know are we've can off and assets day good sure through heading end cap the you hills, know don't you maybe have monetize pops and relatively a for basis. some

Chad Vanacore

just low kind All acquisitions? more you right. increasing reinvestment or versus There is and that pretty it's payout What correct. in measure are with one dividend that that question the even for given me of consideration this here probably have better ratio answer

Greg Stapley

it year. of and in that you typically quarter historically have the we dividend look patterned back our year first we raised and If every dividend the gets have raised

investors coming increase low our next been year the who we've the each group way and at in anticipate back of But supportive and by looked of we So very to company philosophy keep always of our can earnings dividend as by of I the service dividend as it's terms that peer returned the payout a ratio much into quarter. well. would of that end planning

Bill Wagner

is income, growth, our dividend income about every increases their year so GAAP taxable we the first When think with investments. you

to the just We the clear to have raise dividend taxable income.

Operator

RBC Our next question of comes capital Michael from Markets. Carroll

open. is line Your

Michael Carroll

you through you have for to facilities? diligence seller that control to you the get your due portfolio do that with what announced, take wait Greg the Thanks bigger is block deal to have to these that officially you have it complete stumbling or is that

Greg Stapley

whip on largely we the diligence little lots this on news involved some know cats in a process it's and but the is got and like lots makers that there's steps just good this morning herding don't completed, of You actually and various we have one. and of decision

we it is So to gets we at. simple keep not to that by closed of but and at that logical where in and in down probably to and transaction up again. optimistic conclusion see complex as parties number the we just XXXX, the difficulty intended that's exponentially their some with similar deals, end are our it many similar, you size he done it difficult used get deals doing we're getting up it of But were we're that its parties' constantly to, terms Anytime do best a that means. but complexity any are and deal of the goes of we and not can

Michael Carroll

are these out how this will since the you transition that pretty would portfolio in assets consider difficult know I Or good operators? a switching be? good markets. Okay. But you're

Greg Stapley

it, and good bringing all I part part good into small but assets portfolio very what about -- a we in operators of some would portfolio a part a we're pretty feel paying still is small the of transitioned is of of upside but for we're very run of them portfolio and it's large feel There's them. the very, say about part we the the that the stable. is

Michael Carroll

the attractive in to related Mark a of bit the product you more rates coming end them maybe them then, lower valuations. overall? little you seen cap seen and And year? for ticking great. Have giving How Okay, the PDPM market towards have

Mark Lamb

I think No, don't so.

better it states, basis they Maryland; years where or price a or Virginia, still ago. still three you a and California, like states or even markets on rate were two are cap have for I think, call

maintaining. So, very attractive are states

those we're of call maybe cash maybe states per think a and some not barriers are are those in the states have Most lower to it I bed. of the at most states flowing entry. that trading you where of or seeing deals price secondary

general, in case the think cap -- secondary last the the primary rates notion states the still we've up, moving that the the skilled cash is say I I that, two in but maybe last that's would nursing three years. tertiary in historical markets, over are flowing, in trading markets seen some assets So, are what or probably good of and in norms

Michael Carroll

you. thank Great, Okay.

Mark Lamb

Yes.

Operator

Thank you.

BMO Capital Our next John Kim comes question of Markets. from

open. is line Your

John Kim

larger acquisition, with you marketed these portfolio specifically? come pick they, XX or million seller a them how did morning from up you Good sale Thank cherry the the the $XXX you. assets assets, did portfolio were for on where the

Greg Stapley

it's term, it portfolio did better is said still degree, a Yes, flyer but that for of there's cherry the John, lack Greg. upside just Mark in on some about those doesn't bringing this that are these pick well is operators it Greg, operators are of mean every all see and experienced who in know high assets to across asset weighing arguably the like I perfect future upside pretty who But stabilized left certain I we or a a to those too. know the extremely pretty news stabilize optimistic markets, are remaining that good we're in we the the what close markets who and are in run investment. or to is

John Kim

with one you? in of be can is mentioned of You [indiscernible] -- leased, relationship, market are one existing new an assume the them the that will operators we that

Greg Stapley

yet. that not we're to ready discuss yes, But

John Kim

the curious, portfolio then, is I'm just the for that that And structure XX Okay. way typical perfect acquisition? you the exhibition special separate identity.

Mark Lamb

this uncommon, it function buyer. is this This Mark. so it's it's structure from membership this maybe the -- It's historically we've twice not we're purchasing transaction. just or a it's just interest in -- entities is John. function the mean done a this once of of Yes, the I but really

John Kim

Okay. but sure you're you're earlier just I seeing pipeline this your I'm housing? looking Can what at. that acquisition And missed if just you in opportunities discuss on or not then, your

Mark Lamb

there's of really to markets bag kind a flowing, stabilize. it from cash is mixed non-stabilized, and barely everything housing tertiary secondary, senior Yes, primary, call

So, its underwriting bag. mixed senior to certainly housing of deals, types and right but a be, these seems now we tracking are

seeing types seeing of of kind probably in markets, acquired and deal secondary we're, for those we historically and decent those markets. market are not but mainly granted, which bag we've Now a in a the and tertiary in really amount there's flow everything it's mixed property

John Kim

more in add a as or there stable? you senior Is with versus a higher preference housing something that have as far growth value

Mark Lamb

some three turning asset, can think is as you stable our possibly to in by to a you but you different lot of CapEx months. asset flowing is some know, turn value and turning can a to senior -- than asset, and presence way sniff do Yes, cash sniff six maybe I housing if investing add

health we to that's years fully nurse would so lot will not that building core back housing would we're facility changes and a on the in upside it's a Turning of in to I that really to perspective little can bit more immediate take, take our structure want side, a comfortable has get colorful stabilized and long a say really, housing not a a asset, senior a preference. play that it we via to but skilled slog that's seeing space on risk and senior nursing some from tough the be cost that

John Kim

I appreciate Thank it. you.

Mark Lamb

Okay.

Operator

you. Thank

Fargo. Our of next Todd question Wells comes Stender from

Your open. line is

Todd Stender

Okay? Hi, hear me, can you

Bill Wagner

We can, Todd.

Todd Stender

Thank Great. you.

the Care covering Just are ones, and that new at? guess were looking existing I existing in where underwritten in what California? to the they properties then relation the coverage Covenant at what and ones the transactions, where

Bill Wagner

what the blend the California. all don't I property range. circle assets, blended lease, locations Northern California on doing including the When completely the in coverage and call are can to so while but up with back across entire is the one one in have the eight three front of I the So call you master we a it's believe XX buildings, we Southern in on cost eight assets covering XX-time after well. basis a in portfolio but

Todd Stender

-- And this sale a ones lease the new were is back.

selling was assets. correct? that So Covenant Is Care

Bill Wagner

right That's

Todd Stender

the want is in where few like that, to provided to Or question go your assets? Can I two question a simple monetized Care part a methods unload they, eventually be mortgage? look you short-term couple the advantaged then, is this looks tax And my issue of confer just could assets more on provide potentially this Is this securing real-estate? a the or going Okay. interest mortgage terms at Covenant as standard to the is, see Illinois. but as to you more

Greg Stapley

of anticipate were short-term. Covenant unusual very a out time. us sort with a for a a This trying Todd. small They five piece our assets on for a is capital those in nor little assets converting to Yes, was to, to at is them Greg. their give don't This the that X% we staying long anticipate assets for us. Care do transaction stack, mortgage it ownership made very We frankly, these rate sense

Todd Stender

Okay.

that and maybe So they at market them? could to you point at come look

Greg Stapley

at and them them see and don't have them, We opportunities but our we're in for we acquisition as looked part. happy to lend on

buildings We than to have be would we him more him Illinois but five want on. near-term in take more lot, we a think an I operator the for liked

Todd Stender

Understood.

Okay, thank Greg. you,

Operator

Thank One [Operator moment, you. Instructions] please.

question next Capital Our comes Bernstein from of Daniel One.

line Your now open. is

Daniel Bernstein

this in-house? back margins who on maybe bit the hypothetical guys. Hey, more operators talking any the Again, rehab. it charge might future to with and And in lease and do coverage, it coverage, corporate guarantees about your thinking with how if your that coverage you little be up rehab Are you are to moving but looking improve maybe, of underwriting? doesn't think operators in a does bring terms coming fixed PDPM and that improve you

Dave Sedgwick

providers internally a to sense right that now having pay Hey, but up and progressed. are are that Daniel. those for format our the they're to they on so there think therapists so there's is -- and -- going their in now with they're with they cat makes And with in-house if of see a not them come to are operators as that's cost center, they're of we see ways Dave. skin it planning as not, different rehab Yes, in discussion rehab we a active will therapy talking to to months providers that. much arrangement motion their different which discussions a lot and I center several and are with This about profit

Daniel Bernstein

your corporate at? might just the Okay. coverage that's that But I'm leases what do you on longer-term -- getting can think a improve it something I'm lease, for be and support

Dave Sedgwick

really Yes, we and quantify yet. that than difficult do it's to

quantify treat reduction the a says of of sense say this at will now we Bill kind little But cost just so all operators it's too All that bit that differently are it that of margins. therapy in experienced to is to the improve that can right common what terms going stage. to difficult it and

Daniel Bernstein

portfolio obviously in in terms then, And funding the Are versus large composition development, but gave any and the else? the it and mainly acquisitions? your a has there thinking mortgages or that understand pipeline, you just trying there, rest out, Okay. of something acquisitions to about more number of you is

Greg Stapley

is This Yes, Greg. Dan.

look to out couple funding go mortgages We've done is for. that not So it something and a we normally acquisitions. times facilitate

that Illinois now Bernardino. transaction. here Providence with facilitated of in in mortgage We with mortgages short-term Care, have San have those a mortgages a larger but Covenant both mortgages up And were we these

really the They're have up in at are In terms currently to two look in and a about development, and lease Cascadia them super stock well Boise we're down we and being spot the hard it are are to that do doing the now but when buying existing we done projects area. more very on Idaho Healthcare. development least find new up, near nursing It's the and the road, sweet of development have with to hard. development we sense. excited completed could basis it to you that improving limited really home pencil that It's get in compare and really if makes occasionally simply you can very,

Daniel Bernstein

good. have. you. That's Okay. Thank I all That's

Greg Stapley

you. Thank

Bill Wagner

you. Thank

Operator

I'd conference Greg showing At to remarks. like time, I'm to closing for the no you. any Stapley back this Thank over questions. further turn

Greg Stapley

call. answer ready Thanks, and are appreciate Thank Valerie. any and we you. additional you of the And here everyone. thank for everybody have support Obviously, and if anyone any we being your on you for questions, to

Operator

Thank you, conclude and and conference. today's you your day. have a gentlemen. ladies This does for Thank participation wonderful

disconnect. all may You

CareTrust REIT (CTRE) 14 Feb 192018 Q4 Earnings call transcript