CTRE - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the CareTrust REIT Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions]. I would now like hand the conference to your host, Ms. Lauren Beale, Senior Vice President of Accounting & Controller of CareTrust REIT. Ma'am, you may begin.

Lauren Beale

to Fourth welcome XXXX and and Call. Earnings you, CareTrust Quarter REIT's Year-End Thank aware call environment made that and be CareTrust's current should Participants this beliefs and it advised are on about any operates. expectations, call assumptions listeners and is that forward-looking which today's statements the on business based management's in are recorded, being the financial and These COVID-XX statements other company's other investments, matters may returns, of including may acquisitions, or its matters may such such actions. include beyond factors business affecting natural performance, projections businesses the that as financings dividends, disasters, governmental pandemics regarding their reference or future as not tenants, and and control, are actual today generally from its business differ statements herein. risks those are expressed company's or and and to could results implied materially to The cause subject uncertainties that Listeners factors reliance should and complete other Regulation by SEC to review forward-looking a could G. SEC as information are required financial that discussion well impact encouraged statements more not filings as any for undue CareTrust's of statistical on place or results circumstances new other by future as arise its undertake not as do where or REIT result forward-looking publicly CareTrust reason. update a of Except affiliates to revise changing changes any and events, any law, or required for statements, information,

and and release its that each the exclusion of can call, yesterday provide understanding supplement, Form measures filed CareTrust and they viewed company www.caretrustreit.com. together these Investments. of Chief Chief GAAP of Gillis, morning the Greg not President complete to for such accompanying Chief F-A-D, Sedgwick, the and be A With accessed and business During Investor with EBITDA, believes metrics Officer; upon GAAP call at of the the Dave Bill and should limited and also be CareTrust's Mark more Wagner, FFO President on Financial Chairman the can press a CareTrust are its financial will Stapley, on Lamb, CEO. call which Relations When call section to FAD. but this will I and the or Investment turn this Operating Officer; EBITDA, XX-K website normalized available Management as be will non-GAAP replay Officer; on reference FFO quarterly period. Vice now Portfolio website cautions the reports. REIT's FAD, relied Eric and a of of over results, me company its

Gregory Stapley

a most deals virtually think care that especially our believe a and face the our that M&A year. the navigate who Lauren, CareTrust, under skilled To sure, discipline. few One our of Thanks, the good light ways them dislocation have to of our relief But those help government This X contract to to smart funding dividend connection had the to we've this ongoing we rent up disclosure XXXX assets years. turned maintain and employers the in our want to the huge. help the of the results accumulated in gave very rents but sheet, Seeing to in obvious have sufficient and as shareholder harder to that deploy carefully the the challenge. of $XXX and will change for that find were once care never in at here, $XXX and funds conservative to with in proved morning, value When and firmly efforts operator over confidence year. XX.X% the than related new markets do. ours CareTrust. X-day line performance see stock with privileged and see around again both be us don't out as pandemic, the once recover possible, of beyond their guidance. the enhanced their might waiver be ever continuing shut needed difficult I it CARES dry the as find of will quarter's we're last again for funds that, from extensive to those for price made the stay Act the supplemental. out help year waiver our worked the will circumstances year, the year that operator-first operators to We proven desks. These assets downplay broke, experienced and storm. of the rewarded both importance XXXX, hope down as reporting especially by need been is that helping achieve to a some deserve. you there quickly. did COVID soft weather value government with provided through well cost the that industry nursing operators and the landing placed everyone. the both little clearly no million the we were relief collected those and most during I'm additional actually health way in classes have the asset any a our we've recover might thanks pandemic who cross headwinds the our balance investment team value qualifying heroes with this for unprecedented outstanding like grew powder in CareTrust leakage of outstanding dried be to the tenants And To and our capital thrilled to some top That million XXXX imaginable measures, the aimed we health confidence our to capital team busy and Anticipating work that we potential REIT be

the So that's remains expanding, of leader spite our to of a on, CareTrust our market. in solidifying cost capital positioned everything as reducing continue well going and spot in

key on notch them, another below we stable case credit fairly see and a Fitch a ongoing with feel that in front, the that of CareTrust in on BB+ important us morning, our and step some one marks you things the make this including outlook. understand with After This different it confident example, today, evolution CareTrust's didn't investment-grade they lengthy conversations business For better. rating published growth. well,

of set evolution maybe and exciting take to level happen Finally, the moves most next made speaking beyond. up growth, the we've we personnel thing and will to CareTrust to significant some believe year, this that us

greater In who our be Most and Operating of a Dave, you taking expanded This Dave role, leading congratulations and Investor won't already more named go investing, President Dave this move. for an surprised will and by know our to further First, Officer week. Board strengthen well, bit asset financing, out and is up Chief portfolio on strategy by management be you responsibility me even and solid team. his time will relationships that spend will free to management, Relations efforts.

Second, her a team. has and to overdue and and the to war almost long more. with the up since over Lauren been implementing and the beginning huge Beale, us on promoted pulled out this and have we has to internal congratulations contributor, be SEC couldn't our audit week. to overseeing to and controls who our on She's setting happier goes accounting Lauren from was reporting handling President financial a reporting been systems designing Senior Controller Vice everything laboring

workings to growth involve scored one and James the allow the to we care the major us Finally, outside we well-respected the and James attorneys persuading company. and bringing best-known as of REIT beginning have as him join been a health Counsel levels counsel from and most deep will his like in-house us We're with win world the Secretary. us higher Callister, feel to expertise in in General him. day-to-day grateful at has in and of

work the and operators, our capital and team the who share professionals alongside and the REIT privilege about choice operator-first for for same is health for suppliers CareTrust real to is all me with As case so it amazing many of goal, investors. all make it's a care here, talented the the philosophy, people, investment to

happening Dave jump So with it we'll Bill Q&A. finish out Then, to in financials. that, for color the and off the will up I'll Mark with there. will on open over for pipeline, more what's some turn it

David Sedgwick

you. of focus like the Thank I'd right. All company. Today, interrelated for morning. areas X to address Good

briefly participation. vaccine I'll address First,

into for our runway you update third, lease occupancy. I'll on of to operators. And dig latest coverage our disclosure I'll Second, key question and the speak

XX.X%. First, on based we but from at have all those direct data February X, And regarding of vaccines, our recent is X in coming operators. as resident participation reports, of

residents there, XX.X%. context skilled CDC from nominal the some nursing median XXX% at with ranging participation the to reports For widely

effective We've discharge be the As catalyst hospital for we're patterns CDC for life, trends. be for to staff which Again, a the at XX.X%. been a catalyst recovery far. return in coming median reports XX.X% turn, SNF participation to so vaccine to normal return to in an a will, and context, skilled normal occupancy nursing in looking for employees participation, at

Next, decline occupancy. noted coupled report with an increase nursing in past overall on calls skilled let simultaneous facilities, in a in me I've on our skilled occupancy mix.

census in loss significantly our bps. being skilled the is of sequential the SNF a operators revenue XXX Fortunately, overall occupancy from drop increased by revenue. decline the QX, offset reported In

a patients a another both the stay comparing traumatic and risky qualifying However, able hospital enough mix, to transfer who I the waiver QX mix to increase X-day can't themselves. QX XXX of of as we the saw of and avoid the skilled skilled are operators for importance bps. underscore to the hospital for lifeline

our X showed remarkable was at QX, In seniors occupancy, of housing seniors operators about of quarters first the XX.X%. XX.X%. reported occupancy For occupancy COVID QX housing resilience.

nursing, have ground is for relatively skilled here. sample gaining housing As we facilities Remember, some who and size seniors our with small have others slipped.

only is average. location from on X.X XX.X% down to dropping by Going each seniors of result housing residents the XX.X%

While with to occupancy third expenses me area also leads elevated pandemic soft is associated are the the lease coverage. to the and very costs of important, plot, my focus, which certainly central

coverage a received our into be disclosure, continuation both there weren't bps the date the funds operators quality this of CARES remarkable excluding in through possible see X.XXx. COVID-era a surprises. yesterday's by portfolio Look, out EBITDAR deep portfolio. EBITDARM amortizing be hold and enhanced wherein near to CARES without in down Xx steady, X pandemic CARES June basis, really Act CARES an and as try posted overall to lease and funds just of the we the You to Act the transparent year. as Act testament this to reporting any From is helpful Stripping and we funds, on funding perspective, coverage our Act anywhere coverage to saw supplemental

could maintained over achieved. They've in performance excited optimistic the course, for absolutely first portfolio. here couple both and runway guidance since as Virginia a their uncertainties with have On asset are, for the time Housing to needed about support We in XX earnings the far, about experienced transitioned a Virginia call be year. we worked for several rate areas to we the note are we've with so landing the they see they other weigh Noble coverage are the regulatory we rent. With triple a we we back our throughout management. job we what portfolio modeling the fundamentals. our a and headwinds path financial ratio, list an the in a our remain Services, Making welcome reasonable lot and cautiously there runway Xx continue under guidance funds. new Mark given a Seniors for in assets refer few that because this the into this Mark? Senior soft XXXX a of minimum those lease great done I'll We take HHS reasonable the talk We to prospects investments. we assumptions some on with lease to operator to top call net path From acknowledge pass stepped when quarter. pandemic since But likely baseline Noble of that a they no to to hand, about industry, the and spent XXXX, existing will that see have we started, the us assets have that, last around and year. existing what of to with One run pre-pandemic operators. make to loss

Mark Lamb

X everyone. up year Thanks, Dave, with and the QX hello, We wrapped and investments.

be and Texas with the the The which a place in we was portfolio, we operator with November, well in closed existing value bought that First, and portfolio us Mid-Atlantic first Next with covers leases on The above for alongside both the $XXX.X This investment relationship Ensign. on Next new portfolio a year of blue-chip purchased our We over their a and rate QX an years. million EBITDAR were $XX diligence them the pandemic. million. spiked, flow grow the mezzanine finished basis. investments. at was heads Deal total million underwriting the coming in annual and to Xx made for light our rent continue hope COVID a $XX.X We to they the complicated loan of the down, to paid on and just of under Healthcare with received operators million we Later continued month, in portfolio XX% as in a keep to X both we by in region. $X.X

nonstable opportunities an with deal based few the coming community, brokerage past the the in spike. on today increase uptick opportunities anticipate over assets However, one-off, are senior Deal we months over having over weeks, flow have scattered we and as navigate an we in states. seen conversations largely portfolio smaller their of of several operators housing COVID out way with this composed is flow way the

SNF and an more opportunities COVID look COVID small the through and line That our pick largely are we year assets we as more continue XXXX. in into as being the But active believe XXXX to to further us. year we challenged operators. work could back into operators will we expect watching that as On the another to this for side, to time said, behind the be of this business and broken we closely further push get out exit spike find

we we in million our the here range. pipe at line SNFs doubles, portfolios quote ones are uncertainties face pursuing we And historical least after of quote remaining between which The and best-in-class XX new deals help to designed assets. made we our as housing to to our up we in that acquisition. for Please under is and $XXX close It our it the over that near of to that underwriting and with and mixed hope to the to up As I'll primarily with a of involved carefully deal, to XX them but couple financials. in would confidence continues a remember structure pipe, if standards, the relatively million is tenants can current only sit they reasonable of actively discuss And the singles range, pursuing we them couple we today, we a there level term. initial pipe have Bill hover and transactional we of love welcome are operators. customized existing that now turn only pair our then core operators our of over the months both when $XXX each COVID-related is lock small are to to seniors a composition

William Wagner

Thanks, Mark.

Even $XX.X early it FAD. ratio remains million grew continues normalized our ratio the per by share. grew pandemic, XXXX Leverage at quarter normalized X% over debt-to-normalized per prior $X.XX on raised normalized normalized though we and right net share, or and For significantly all-time a at FFO the be $XX.X XX% X% payout to FAD by to FFO the where XX% in lows year at dividend or quarter, EBITDA our X.Xx. $X.XX and it of on despite approximately maintained to we like million

headed. same year As be our guidance net debt-to-enterprise XX% of in. XXXX, we will saw Our reason as on QX. plan of estimates ratio in we and come to where the to of Last pull was is continue a rents offering continue In approach end, fixed the no we value we charge taking achieved we Xx year, think coverage quarter continue collected, to as rents best as long

almost our and One, also of investments dispositions to and of following year. issuances share of shares account to expect further a nor or investments $X.XX. normalized per which XX.X rent assumptions: average now, all relies million an per of $X.XX count on inflation-based to FAD made for equity X.XX%. debt $X.XX or includes $X.XX of dispositions normalized of escalations, FFO additional at guidance This the this Two, as escalators and share no all any we So right share date,

And and margin of bps fees. the deferred financing acquisitions year, XX of a grid-based $XX.X again, million straight-line $XX amortization $X million. a to expense on $X.X approximately are our term million. Three, are rental million. five, of rate approximately $XX,XXX includes only loan. bps LIBOR Our for of approximately including we Four, of interest $XX.X expense rate roughly we bps than to the made includes on rent. approximately of million, XXX projected and income million projecting XXX calculations, date, have of G&A of at the revolver In unsecured Interest total less which $XXX also revenues interest assumed

also structured stock Our $X expense to roughly up comp. million This newly million compensation projection XXXX in to million roughly of than in plan due includes to approximately our stock amortization more causing XXXX million performance XXXX. in $X.X over is long-term us $X.X G&A more of and $X.X range recognize new

we general investments brought his the Additionally, used legal new at counsel on disclosed, us recently a and work have who firm. we primarily outside on in past while as to for

will that the of and aren't capitalizing require Now changing, be the costs to he duties expense accounting for cost materially though working us instead investments. new his to rules us these even

to it's it FFO and FAD G&A while cash does us, negatively per impact and So share. neutral

$XXX We million $XX ATM last that strong. Our have $XXX leverage million million, balance we currently we not at and revolver shares under outstanding the and the and our liquidity $XX up sell in cash. put did year sits positions remain any million on approximately

XXX% it shortly. Greg. in to collections to In are for With came that we but XX% that, at at to January February, XXX% back cash turn and I'll currently for go addition, number expect

Gregory Stapley

your we and answer been support. you. happy Again, we'll that, hope has we be continued for And you questions. Valerie? And again helpful interest discussion with to thank Thanks, Bill. this to

Operator

Instructions]. [Operator

comes first Raymond Jonathan of Our question from Hughes James.

Jonathan Hughes

in details Dave, maybe some then XXXX also properties background about Noble's give and the us quarter could talk on they operator transition over? and you more the took the on progress

David Sedgwick

of It We Yes, in XXXX done time. and they've in of this our been increasing been a had a I'll job across very X was reverse good them -- with in in facilities four those go couple stabilizing states. -- portfolio beginning there buildings a of and stepped back historically into order. X assets that occupancy entire of has the the actually There fairly X challenging. of those even closed relationship

about come down Myers. online and Fort once And so to -- in is

So Virginia and for performance in up, fill once that better would ability of felt exceptionally do well. somebody hands of be meet their lease in in comes assets that online else to confident The exited their them Because these we able in to assets. they turning the going to they're will essentially rent that we would terms be the performance felt operator there, that like these -- with forward. obligations

And we're them, a in potential to rent. so, look at step did excited at the of they and current they when the took Noble original with saw lot X a as

Jonathan Hughes

helpful. That's Okay.

just right? shown that's coverage but in it's include not that that the X EBITDAR mean rent effectively on, they're Noble any it's does sup, Is to -- on paying So closed. generating the clarify because I that's property

David Sedgwick

right. That's

Jonathan Hughes

deal what Okay. that? you pipeline on that, growth, structures on you're you Maybe X mentioned Can but for some mean you on by the of deals. expand Mark kind customized and offering here external

Mark Lamb

I we're the this think in don't don't only that think there are are think -- Yes. ones it's I doing. think COVID, of -- age I I

getting over. occupancy I dip our place in occupancy kind more taking of revenue revenue a and necessary is prior should protections or safeguards uncertainty it's where of think, around really, function operator and to the and

that going take a So holdback -- operators they to ways whether make other be I or a are sure our not that's over. to as mean, creative of harmed it's form

you As sometimes portfolios, operators their off the have you take to exiting as know, they gas. foot tend

look occupancy not are so cash And or there's that to mechanism sure a to we levels sure make our a flow just overall perspective, back a that. need coverage that make harmed operators, from levels, catch-up by and

Jonathan Hughes

Okay.

capture reset you're a like some and be of maybe couple in giving on stabilize, that them term? there's near things a in that leeway if there recover feature upside after to So of the able years to

Mark Lamb

assets depending pre-COVID or directly more No, to, outgoing there's new owner catch-up getting -- recovery a a of the call just the our the operator operator with -- building the incoming on back how of it's operator, function feature to the the takes levels. the it, quickly buildings would of to place outgoing

Jonathan Hughes

to Okay. noticeable more Maybe a I increase. guidance you but leave I'll want It for stock incentive follow-up comp the performance and want to Can out. new plan? ask the off-line, and about is talk X Bill. you I

any color has package on So that changed would helpful. there how be

Gregory Stapley

we've just sort one. You been using, it's is that of we switched know been Jonathan, using what -- Quite expenses and different simply, incentive a since conventional more plan took to was type loaded, back-end I'll from take we've of Greg. the long-term what that we've what later.

issuances only more a over time. think we anticipate But expense, conventional year, better plan, have upfront a this so overall. using Now best stock have sort double speak. and for I I that And of the to will this there's to it's be year,

shareholder others going the to it the the upcoming and think in are about and plan more we'll proxy. I publish like services advisory better,

Operator

Steven next of comes Our question Barclays. from Valiquette

Steven Valiquette

Great.

leading or coverage pre-COVID among COVID question, many pretty it SNF of improving operators the versus remarkable. first first ratios of is pandemic X your X the EBITDA the So baseline, of the during trend rent the months

patients for the all Just EBITDAR. So this of that Also sure a treating factors? just improving COVID. as drivers post reimbursement or patients. just higher I it's as and patients, some your fairly more of within far whether other mix are curious fundamentals driving be either bonuses are fundamental of it's ultimately patients just as guess improving skill a acuity hear I'm the are to SNFs operations out around SNFs the SNF or to about curious comp more turning on COVID get more the I'm based profitable a things, SNF COVID to thoughts improved the treating lot within

David Sedgwick

and remarkable question, sort question, you the Yes, is by a your talking it the really And other that to about drop main see has mix time Steve. it of pandemic. your the answered right, been trend drivers. you're in in it kick things, Thanks has occupancy that. saw for this We more a bit of offset in just little A skilled just couple color significantly. on in overall PDPM for

that of here because be a up require bit different were of volume does then seeing reimbursement. starts, COVID therapy a COVID reimbursement patient touch When in of the a because still Medicare up if we the tick -- And But see driven RUGs goes quite reflected characteristics it captured more are PDPM. we minutes. by patients lot. And captured of now the a was -- we'd or rate more would PDPM. picture the the patients, characteristics those We cost. appropriately are under in PDPM, based is our after terms COVID those be mattered the under lot that just on that program these go a on old up of that clinical think I fact largely and -- has see costs

So right of operators, realized our be of they the now, just now, of lot we but the not that solution. well, get-go, part our some operators needed from to have a

is COVID largely choice trend and continued there. markets, And so in facilities became of for the that and would specialize that in performance created that COVID of sort their has they the wings reason increased facility in their and

Steven Valiquette

CTRE to the operators. Ensign track place there tracked just have definitely when in taking is quarter the all like looked there's operator above this, released. when facilities the determine there. to That's largest it's or properties probably nuances down in One maybe it Great. But acquired sure individual transactions hard being your involved fourth press sometimes of some wasn't some I variables other but over not, question, if some some that among Okay. I additional it's the and that answer of helpful. is Texas keen quick by CTRE your could acquired other like also four facilities maybe you're

hear about just -- particular think acquired involved I with just you're but I that to you're maybe want they some circumstances and more properties, the there. California when they of were not operator. when some

Mark Lamb

understanding is My operator were Mark. another was is a involved. landlord This there of California and transition another Yes. those

the those transfer So it was the was -- operations for California-based of on. assets that you just it touched X

Gregory Stapley

And we place already assets with is in bought from clear And work just we over -- place. some They've for assets, time. leases Greg. November took those this is in -- were that another Ensign landlord This that to been be Ensign the in grow we makes with so. just with from and them any -- time, to show additional to relationship any that to them, to respect it and time happy time we'd every do be more time with we them our deals to have do sense

Operator

Our next Capital Sadler Markets. from question Jordan of comes KeyBanc

Jordan Sadler

handy? an the the threw assumption. something about might obtuse Bill, is escalator you CPI quarter Is every Curious the What into think you have impact XXX number. that of of I X basis points question, CPI on FFO?

William Wagner

because it's leases, throughout Well, year. the differently XXXX to the going renewal a dates of impact some little see. are Let's our

renewal... biggest Our

Jordan Sadler

I that's Yes, why asked.

William Wagner

hits The year -- And biggest it's if we increases. about would June renewal, those the CPI which on be let's is X. see, Ensign, for that $X.XX on

So would it's not... say I

Jordan Sadler

or the just X.XX% for every points basis X.XX% -- guided? you've for XXX It's just

William Wagner

For X.XX%. the

Jordan Sadler

Okay.

then incremental of the some And rest portfolio? the contribution there's Okay. across

William Wagner

Correct. That $X.XX for leases. on XXXX is all X.XX%

Jordan Sadler

X.XX% all $X.XX on is impact leases. Okay. all That's The the is.

Okay.

William Wagner

Yes.

Jordan Sadler

did the of on terms seniors the the sort types assets as kind required seniors mix, those of you say pricing, the you in And sort you coverage, acquisition the the I'm bit little thinking underwrite includes of mean of I of corporates And I'm curious today? housing. pipe curious, pipeline, housing. about just talked occupancy it. about you're how Mark, a appetite and

Mark Lamb

Yes.

also have at them, how which and of small, asset on to assets our the the grow be on mixed changes. up held operators stable So looking to occupancy of for of expense depending side, going this a a of to and I make operator kind focused the occupancies operators fruit there bit the think is outgoing bag. day of kind the kind seniors some going keenly to of how of are our the come in strategic Obviously, variable area, low-hanging kind to be much first is than others. are point. housing or on that's We're side some better X Certainly, on

that underwriting So X.XX of an always think in opportunities, has it's and we of really EBITDAR I in didn't operator kind we're to of basis. down control kind like, been fruit, protocols to X.X maybe just right SNF we low-hanging from always because kind as existing perspective, view is But infection want where didn't the occupancy the -- the on really, place. have admit, held an

pipe. So with yes, have going to kind quickly. increase it's basis. think so in of of I operators performed that really, where an we occupancy kind And and our of comfortable mean we feel there get in on fairly time, seniors are the is -- kind our housing asset-by-asset buildings actually over some And and

Jordan Sadler

Mostly, these it -- you'd It like. sounds would operators? not be be new sale-leasebacks, would be

Mark Lamb

right. That's

Jordan Sadler

Okay. you're And X.XX, the the where that's going coverage, upon talking stabilization? about in to X

Mark Lamb

when the would that coverage I will or or sign PSA say number and and move at you X.XX underwrite around. of deal, can X.XX inevitably sort you any have X.X

we be transaction. coverage we kind we think expect going up ultimately end close the going Where is above upon function of of stabilization be a the when to would on to I X.XX. in

some how of the structure structuring was of get sign doing. the probably part operators in cash if an have where upon in, relative the extent we're we X.XX at we to whole up to range, specific or -- of on that So will our dependent how they catch put close when are prepared be anywhere But a will X.XX would it actually that really to I impacts the we on and deal terms remarks of in to just portfolios allow kind expect are a the to coming COVID the have maybe operators so to operators, -- allow us flow of that to X.XX, had out. made our up kind where facilities

where very in runway of feel on that have for and that assets we basis. need comfortable be in to coverage structured about a the how we've So to stabilized currently to portfolio the giving they particular we get

Jordan Sadler

who but for seem the maybe Trillium off Dave. to discussed promotion. a on of from top Dave, list. Premier, some really be lastly, back I then pressure standpoint, in little the We tenants color the under already on maybe And most thought Congrats, on But coverage a maybe portfolio. fell the tenant Noble Right. the

provider you I insight have received cover. not HHS relief know any So of guys some can fund? these

David Sedgwick

Yes.

and seniors Regarding funds right, have anemic, if been Noble, Premier housing guys HHS any. the like the you're

been kind headwinds the without so And actually they've that of compared and fighting to the strong pretty rest housing sector. the job seniors of doing support an

of the trying give navigating nursing the and then occupancy an there's of expenses, the couple roller like skilled can and of just front have not nursing in to our have a turn turn pretty that on the and make quarters. on of COVID expenses bit. It's terms a over a was the an hits terms COVID. It's during the to to same coaster challenges to of COVID update you presents. skilled In side before that make that continue COVID. imagine, much that other operators They've as of for has, update, quite challenging more difficult, Trillium try in with increased their to had last to many a situation hard of be really bit had, some

think for because like That's because has largely by COVID. have agency that. and agents I of as up gone needing X% of people to be costs PPD OpEx, COVID costs, staffing our things quarantine

quarter a there. all us, don't want we to nice is been convey pretty steady it's while for that out easy and So

Our their operators are several still in markets. definitely slaying dragons

Jordan Sadler

on worried there or here risk? rent we're at current Is is that not like about is anybody who

David Sedgwick

Like And said, of runway. dragons for month. this that lot a be in XXX% Bill -- rent like spite they at have to they're of slaying, yes, the last really do No. we month, there's expect

we the feel future, help for to the like there so is them gap. the bridge liquidity foreseeable And

Operator

Instructions]. [Operator

comes question Capital Jason Idoine next Our Markets. from of RBC

Jason Idoine

when duration should I what wanted it be start be your we what own to thinking ask what the expect emergency a beginning operators your would And on health you're I would about maybe out? phase HHS to or or guess, are the to you expectations hearing of be? the for, question supports from remaining period what

David Sedgwick

on news the some got we've government Well, good funding.

qualifying allocated the the from through in -- of this means not are end -- of around previously $XX still year. very and of the important the year, through end stimulus billion X-day for extended and now that industry There's yet. money been emergency know, been place stay has FMAP you As supports should somewhere stay, passed the that has sequestration all this which

slope census. hear and that's starting relates an degree our be the that overall encouraged as too portfolio a recovery. -- early operators some to wane they're fairly are And recovery our that our it's seeing so, from throughout see in to as increase predict to the the to of on we the right country -- whole. We're government it's that to starts. We that as their nursing uneven anecdotally skilled it of think sort that and really they color and when But that throughout now the where COVID going have funding relates to overall,

Jason Idoine

it. Got

know Okay. you additional is have positioned. some for available. the leverage, today ATM guys then sheet And also room well pretty balance the I

should you of So to And Xx today? think in acquisitions guys about future? maybe funding and how we range where sit I how X the guess, you'll the targeted be

William Wagner

up, see think where as or would the large to to at would attractive we kind very tap the low. time bit fund the of it's long a deals though wide love where over -- as stock come open tad go. us is overnight to you'll we If as as expect match do love we now, leverage we at, I it's that I high-yield is price maybe deals very, like we with pricing, it could it well. But right continue market even stays

a it, in So -- it. slight call uptick slight

Jason Idoine

then four you mostly Got through the to market I the property the still pretty are onesie-twosies market? but X completed last volumes you pandemic, larger light seeing know are coming me. investment to anything any this or for have the come Obviously, it. the But portfolio bigger? start And to quarter. been acquisition they

Mark Lamb

REIT of kind plus Yes. some been southeast. There's a deals. $XXX of million onesie-twosie. in Obviously, year couple closed there's last of from brethren No, some our is announcements down everything large SNF the that portfolios

a the pre-COVID their that's we they chunky want our can exit that sure really point, meet in this at some levels obviously sit operators couple want. isn't But point. isn't larger this are that point that to numbers of as or knowledge, at want make valuations that tracking portfolios to kind significantly that is to at to we here so the know that are back So time. But transformative. But anything of they they today, kind anything there we magnitude there

Operator

One. Bernstein question from Capital Our comes Daniel next of

Daniel Bernstein

were Dave. nursing of a talking on health there's their home Congratulations, we Omega, when share nursing whether your guess how permanently to come to peer, I earnings has skilled market some from the debate taken occupancy skilled can as call, fast back kind business. and

thoughts to is And result? change much wanted So impacted home I a get whether a portfolio? in of just health your your has pattern kind how permanent as discharge on there maybe

David Sedgwick

Dan, skilled health this permanently than bounced home been that post-acute home share skilled the historically to nursing for Medicare I very nursing. I'd is skilled And of a is home from patients back circumstances Yes, anybody has taking is close don't nursing narrative COVID, faster health health say second given think Dave. mistaken. that has from discharges. around But surprised the

thing Medicare able a after essentially the surge, average there. how they mix of demographic a has been health during X, and structurally, times a be impending in before context because It's did do you years, home period, XX, to facilities home share patient going patients a very the a over time a all were and XX-day On but visits days. be on the scale given from to be XX agency, going average, health Xx. it. the there. the nurse more wouldn't a as In that day. just therapists high a home XX different largely must those if by patients, some skilled nursing to if have going acuity before. They'll can skilled the take residents And project, they they have type by it of home well problem. to every patient. to get multiple is that pandemic, Now nurse capacity nurse bad had before, we're a same already home and a it seen be and ability pandemic, climb And need ceiling over health And setting, Xx average, health as all will XX visited on nursing visit, patient just nurses at on others, over But

home nursing will discharges balance skilled the So we of believe time, to that with and health recalibrate.

Daniel Bernstein

Okay.

nurse you weeks, experienced and with week twice parent of And couple that what appreciate coming and I for the I the it. a said seeing was answer. exactly a Okay. first-hand home a

David Sedgwick

us of care needs. their day. One of they skilled in home take told to -- a the little other spoke all anecdote, a XX% lives recently Midwest. And thing with about on with fourth diverted operator acuity nursing regional just that, to -- health X,XXX we facilities Dan, in I fairly talking quarter, due they a was that new They talked large the patients

had go facility. health skilled home in yes, quite case, out going you they more stay the in to home of those health, nursing XX% seeing straight to a to be So couldn't this a bit might of But hospital.

Daniel Bernstein

Okay.

them But back question of know, Okay. They real split its as going the statements. to you some monetize fashion. of was I thought part estate don't financial realize maybe And I the real there value out had in other of their estate guess, was business. the that out opportunity if didn't I form an or question. I help Ensign just within I split or different, that had I open-ended had estate had And curious kind Ensign. then real know the to their on thoughts was a any just whether

there know was if you. don't for So I an opportunity there

Gregory Stapley

interesting an opportunity Dan, it's was move, chat and about haven't Greg. That to had that. we an them actually with

operator a for their if you and behind that. we'd And do opportunity mentioned know great they're as us. to the So do love exactly them thinking tenant arises. with as about as great more before, much we a Again, I

Operator

Fargo. Our Theo Zaferiou next comes Wells from question of

Theo Zaferiou

Dave, on promotion. Congrats, the

David Sedgwick

you. Thank

Theo Zaferiou

QX. here of tenant for Most purchase our wanted purchase a up of but options options. tenant properties have in looks some questions we starting questions ask to like been portfolio answered, X are around It

time on lapse transactions you've And Just typically much the notice if any wondering did exercise, talk how those about could you until if front. that are conversations choose had to or they is completed?

David Sedgwick

There's their plans this kind before going to we them point, to of expect with would we opens, that this dialogue operators. going have have -- are. -- year. our option I At with quarters start see conversation to those guys what a of good don't And think Yes. we're how we exercise window that having all

So at year. options to don't exercised this be expect this we point, any

Theo Zaferiou

it are in legacy have for you looks purchase more and of And Great. in in deals? most Are kind recent options options tenant general, agreements? like XXXX And your tenant purchase included expiring these see That sense. makes leases beyond. we of the

David Sedgwick

Yes.

grow, look, not sure shrink. So to we're

and But of has most engage, However, here for operators be we provided a there you risk re-tenanting that where that over giving have when as for of you'd us two, buildings been have need course. work will restructuring take times see their the allowing the and a operator deal do that something order assessment to rent higher-than-normal there we're a and existing sweeten when turnaround. is taking of in some we -- and over incentive that options operations where operators not in and to maintain building some risk/reward that it what a to handful of -- usually new the some taking to incoming for Occasionally, result sweeten it's particular step to or is. purchase But them. some a in matter order investment that

Operator

of Our Okusanya next question from Omotayo comes Mizuho.

Omotayo Okusanya

can quarter, regulation Dave, going me? a -- hear In forward regards guidance. congrats. And also good to good government you

David Sedgwick

Yes, we can.

Omotayo Okusanya

extension payments the come could reviewed reimbursement, commentary the year. the out payment Any the advanced be around happen to kind end the regards potentially And sequestration if typical period spring next going appreciate an government of what year forward, would I period be FMAP PDPM of with extended would of anything Medicare comments In when to regulation there. for the Perfect. helpful any being around there's and helpful. and it's also comments fiscal about

David Sedgwick

potentially that on period than a think those you, seasoning reevaluate sure was we to was, came the thank speculation indication general With we much but first not that until the some share administration to is previous was hold be was PDPM, more algorithm way, Tayo, Well, doing fronts. to us. I sure out, recalibrate there behind have by going recalibrate I Medicare some pandemic after of and in is I'm the that rate the attempt expected. it the brand-new put saw think, What what that make any a sophisticated program to would expectation an when on

think administration. I industry think the that in the new under our -- maintain I that, most to position folks expect

but stage. that, living next world not to is -- year in be it to some guess but again, So really going it a it's likely a year, that tinkered certainly this than better that we're at going the could be post-COVID and year, with nothing with next assumption

new So as the advanced payments... far Medicare as

Omotayo Okusanya

Advance payments.

David Sedgwick

Yes.

participated that in of don't new that you. had further. there the then who any changing government's goalpost information the have move think the I to they double And operators goalpost on the but I our I'll except out that, check for have we plans X on continue about fact to for

place. to were So I that take wouldn't if surprised be

Omotayo Okusanya

in upside could XXXX low then leverage. guidance acquisitions again, seems the your reason follow-up. commentary be it deals specifically there guys the of But on about positive from in Again, Great. That's quick a X helpful. And guidance. you given Any And to accretive don't yet call outlook. put just you lot acquisition like the potential why?

Gregory Stapley

of this We you not Greg. is us, put tell because would We've acquisitions real. that's do hundred of for hate us. on Tayo, into imposes never we artificial dollars discipline short that if an to than that worse then think not our million farther fall sort simply Yes, we're that hit we number deals market's or to year stretch going there to the X this should and guidance

can do they report let we'll we'll what we the as in. come you a So decide in year, think deals just and you

Omotayo Okusanya

in to the $X to billion going I'm right. All model. stick

Operator

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

Gregory Stapley

again. for Thanks, hesitate anything questions And we other today. good Take with, any Valerie, to call with as you you the else or do you help and if to have thank care. call. not on been you, It's chat always, being can everybody,

Operator

Ladies and today's you. conclude Thank all Thank for you participating. gentlemen, this does conference.

now day. may great disconnect. a Have You

CareTrust REIT (CTRE) 12 Feb 212020 Q4 Earnings call transcript