CareTrust REIT (CTRE) 9 Nov 222022 Q3 Earnings call transcript

Company Profile

Participants

Lauren Beale	Senior Vice President and Controller
Dave Sedgwick	President and Chief Executive Officer
Mark Lamb	Chief Investment Officer
James Callister	Executive Vice President
Jonathan Hughes	Raymond James
Juan Sanabria	BMO Capital Markets
Dave Rodgers	Baird
Michael Carroll	RBC Capital Markets
Steven Valiquette	Barclays
Austin Wurschmidt	KeyBanc Capital Markets
Tayo Okusanya	Credit Suisse

Call transcript

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Operator

Good afternoon and welcome to CareTrust REIT’s Third Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Lauren Beale, CareTrust’s Senior Vice President and Controller. Please go ahead, Ms. Beale.

Lauren Beale

to third welcome call. XXXX and you CareTrust quarter REIT’s earnings Thank on based should call and in that it are made this aware beliefs any operates. call being statements Participants and that which listeners about is CareTrust’s be the expectations, management’s on current recorded business and forward-looking today’s assumptions are environment advised other company’s and These COVID-XX returns, financings investments, or performance, dividends, may may of including statements or acquisitions, its may the such such actions. include beyond factors projections regarding natural matters not businesses the that as reference other disasters, governmental pandemics business their financial matters affecting as future tenants, and and control, are

actual well today generally on any from arise its complete as business of changing undertake SEC differ other by information, statistical required as and to financial as where statements discussion or or of CareTrust circumstances statements or result herein. any risks those for are expressed company’s by that REIT Except SEC or and impact G. and update more should revise publicly statements affiliates law, for do Regulation to its and review as information not events, reliance a reason. forward-looking changes required to could undue results any CareTrust’s new not place filings could results future implied materially to The other encouraged cause are Listeners forward-looking subject uncertainties factors that a

A a they the business, together complete will EBITDA, results, be CareTrust’s its which limited replay its company the www.caretrustreit.com. but and of and or filed normalized F-A-D period. accompanying Relations upon During Investor of will to call GAAP not also reference FFO can these supplement, of section of cautions release of metrics on each measures understanding FFO quarterly XX-Q be EBITDA, the CareTrust and viewed exclusion GAAP reports. a When FAD the website non-GAAP that be relied provide believes press for can accessed and available call, the should Yesterday, such its more Form company at financial as FAD. the this and on website with

call the President; Executive Mark and myself, Investment Lauren Officer; Officer; Executive Chief Lamb, Sedgwick, Dave Callister, Chief morning President James On and are this Vice Beale.

now will CareTrust to call turn President CEO. the I Dave? over REIT’s Dave and Sedgwick,

Dave Sedgwick

Thank everyone. you, Lauren good and morning

spending excuse our him and today’s to like on week. call. passed Bill that recently And this and to thank family during we we’d expressed. from for like of condolences very behalf love First, the is many been and Bill’s pray would Wagner this time CFO, away family you and Bill concern for brother with Bill Bill, We time. his has

can broader bring shift the recessionary opportunities to across scales our tight for months. very our today to see But the dispositions. years rising rates to our several challenges demand flipside acquisitions coming for uptick the conditions market, desk against gears, markets continue market and for – services while Historically, that are front, business. out has look for down levered the been and an is as the unaffected, space labor buyers pressures active our to loosen. hedge tight Drilling highly is clearly favor have zooming our in we picture, to further difficulties tipping of buyers economic I if at tight pending slowed and deals the the those the expect a in some our Now today’s has therefore big market debt in on caused bit healthcare both a been tend in

and eager came we about like policy proposals We conference growth purchasing away the in reimbursement, wherein the cautiously our labor we elite with conditions. collectively we is energized overcoming footing hosted most and among market, operator sector. operators very returning as through October, Each who XXXX are tough most to more. with unique, address are operator finding very manage historically topics the In from they us, the optimistic grow continue to administration’s tight that – while operating their conference, still to in much believe some are

grateful them serve. We their for and are deeply to and residents, each communities lives work their tireless the they patients staff, of of improve the

the of of head eventual also a deposits, XX.X% are overall by will quarter, likely coverage basis, XX.X% those and for That June October, in we and of Xx north We excluding is XX.X% we exclusive deposits that the assets our an strength coverage currently, as EBITDAR health reporting are year and X.XXx emergency. supplemental, public rents, deposits through into adjusted inclusive In held-for-sale. termination applied the portfolio of XX.X%, encouraged excluding collected of lease on more new collected for applied just the we deposits. EBITDARM. inclusive We of in see

a top our of XX through a great on QX. the the job. total team close we skilled the after in team priority September for of sale months did Even acknowledging shareholder that by face line across to portfolio work, finish by market the the done year’s work of return I Trio have repositioning this the great and was headwinds. the Getting and here deal the in of nursing X-year a will bear XX.X% produced several pandemic, conclude company

will portfolio would CareTrust. to with the conclude optimization opportunities increasing poised advantage to we work take in become the as grow of coming As be to accustomed you months, we

turn over to James With to that, I you and on portfolio will update the quarter. it the

James Callister

Dave. Thanks,

X multi-service and of closed on nursing The at very were included sale campus nursing facilities Dave facilities and a of price Ohio in quarter units. skilled $XX pleased the purchase X during XXX housing approximately As million. have XXX sale skilled the seniors X mentioned, totaling to we beds

are in buyers. of classified target diligence signed here As in dates stages properties we held-for-sale under the with the sit agreements have couple The with the as towards progressing and dispositions months. closing of we due of today, majority next purchase several closing currently various

parallel several pursuing or selling retenanting properties other paths held-for-sale. are of of the We

allocate As moving portfolio forward for objective to common and de-risk the the these alternatives the we properties, capital efficiently remains long-term. weigh for same the the

Outside assets entered facilities a two two a the held-for-sale, behavioral and seniors retenant relationship housing for facilities to entering with new leases of lease have health to housing into of tenant into is other to seniors the are reposition that a us. we

of has we While most market complete expected our had altered to debt end, the many year dispositions dramatically the buyers. impacted of by

legitimate dispositions With have for lenders we and risen, selling to have consider we as withdrawing, our the to continue sidelines rates proposed move headwinds recession. interest buyers solidify will leverage progress. provide and interest as industry many in updates to the continuing has continue their looming we the seen and significantly. lenders see process you slowed a Nevertheless, they further to deals As

by bring provided Also average year-to-date just $XX.X rate. facilities. B The QX, a piece transactions secured by in secured Georgia under X% XXXX total piece September, B yield on us X.X%. we the with recent Those fixed at loan nursing closed $XXX loan $XX.X million floor loan two to loan California for rate to facilities. closed real we a estate portfolio X an a we SOFR-based a in is million approximately our at X%. The investment of skilled is And million August, skilled portfolio secured In X of loans. a nursing

pipeline. will With it to address over the to Mark turn that, I

Mark Lamb

and Thanks, everyone. good James morning

to bridge and of particularly believe sellers interest while drivers we Looking depend close their who specifically giving flow to well-capitalized debt yields on ratios, investment commonly have bank increased widening their the increased deal market, not certainty over you financing the for we for close rates, sales see sales like an and changes LTV us back from us. or been Brokers are underwriting advising these tightening fund LTC maximizing and advantage spreads standards, lenders to take the now debt of an lower in do uptick to transactions. which professionals proceeds, buyers

We opportunities received XXXX. actionable looking in achieve are to they markets this still we acquisition have period believe discovery that peak operators and pricing remains to they It Unfortunately, could seen predictably, going in lasts. be our are long are early XXXX and in. more sellers to price that yet of how grow seeing

further and historical or cap months to having come have bed coming environment is choosing to see reflective price the pricing The to down those exit transact of to rates space will either we dynamic the per more we operators exit valuations as are expect at over and that prices values.

opportunities We to of and long continue to operators with the our our structure ensure our investment each current to some work tenants. with us pencils and we’ve closely acquisition underwrite operators new and for admired

it at and $XXX in to sits range. made behavioral time. Turning up million currently pipe assets primarily pipe, The $XXX to million this the of nursing skilled is health the

to us medium launch our seeing a can in looking our and few some maybe one-off large-sized up that probably and the opportunities to new some standard amongst split we’ve of used be are portfolios at to done as allow past. in operators operators also cases, some We

that, with Lauren it to I turn And discuss the to over will financials.

Lauren Beale

Mark. Thanks

income quarter share X.X% $X.XX $XX income million. in $X.XX to per QX. by to accounting; and a last share. For one, The million normalized an decreased of compared decrease to to increase for FAD the CPI $XXX,XXX prior we decrease $XXX,XXX of $XX.X and the and up also decreased a collected of tenants from of expenses $X.XX year by quarter, to FFO the two, following loans $X.XX increase is offset $XX million per quarter decreased to normalized property of from $XX.X Rental on of million normalized the to share the reimbursed due X.X% the a who basis decreased million, FAD items: $X.X FFO from over due was basis, cash On normalized per in was quarter. closed $XXX,XXX end at X mostly $XX,XXX. Interest cash a are bumps

$X.X increase, which $X.X Interest most borrowings due rate, QX higher for expense under revolver, of accounted our a up LIBOR the the $XXX,XXX. and up remaining million million which made was higher to from totaling

of properties due be $X.X took we this sale and quarter, million, sale. from the of year’s compensation-related $XXX,XXX held expenses expecting Ohio, G&A million. corporate-related additional items to still to expense items held $XXX,XXX to related was balance $X.X G&A I’m $XXX,XXX primarily facilities $XXX,XXX. for with the $XX QX for related the on by for of around offset other up operating Property of assets to $XX.X million quarter, in totaling the the were During impairments sale. of million

Lastly, we our $X.X on recognized loan million loss portfolio. a unrealized

the We for our have option. account value loans elected to using fair

declined. have not cash quarter, deposits, collections XX.X% deposits. investments, has of XX.X% the came we cash stress Without any risen the placed at an is October, principal. since does rents application includes operators, deposits. unrealized the of of collectibility the with to interest due these fair rates that contractual contractual be and indicate in Cash interest As there was will security In value either XX.X% or I includes would issue loss and cash like our that of of collected for we this collections $XXX,XXX contractual the but security rent. rents of from of percentage application that

rents those Excluding deposits, cash XX.X%. cash collected contractual was

coming October expect what to collections application to was similar with security November We deposits. be $X the of from

extremely strong to with a $XX revolver. available in liquidity Xx. range approximately of to within our our Our $XXX ratio continued Xx strong million Leverage net of and debt million EBITDA under be remains also normalized X.Xx, with well stated cash to

a was XX.X% X.Xx. as debt and end, charge of of we Our coverage value ratio achieved enterprise net quarter to fixed

to And back it with Dave. that, turn I’ll

Dave Sedgwick

to continued report support been thank for your your Great. questions. answer We our hope happy helpful has and now and you

Operator

question Thank Hughes Jonathan go [Operator James. first from Please ahead. Our Raymond from you. Instructions] comes

line Your open. is

Jonathan Hughes

or afternoon morning there. good Hey, out good

housing paying those are not much remind seniors how paying and in progress, us just you the dispositions On of can rent?

Dave Sedgwick

that on the of we we think don’t I that we Have a have breakdown future in a so will probably have, call. past address Jonathan, announced to

Jonathan Hughes

improved or just on nursing maybe to or any can enough. coverage Xx. about continuing guess and Yes. portfolios, Bayshire on you but outlook it those are the EBITDAR update I update pay an Aspen where portfolios, has stabilized, could to and locations And talk you them all-skilled portfolio their give either rent? is below us just Fair the then, Covenant maybe Care, Alright. moving –

Dave Sedgwick

Yes, you bet.

midst because Aspen and guys made those them, Bayshire acquisition the with of kind to big have there was that take a – needed those we acquired XX, they campuses in pandemic. some of although we the work we them. of here big So was California, don’t prime when a And that are year, in our together, up did last have top lot turnaround that be the done it buildings in markets

things of So June we of last lot we we’re I’d a bit sit here Aspen been making is them. of at months than ramp them. of and year. coverage here coverage through continue some the slower that report to trending those that at is little as we of expected year today, say a a And changes inclusive other looking a last early lot of great to What better, expect bit increasing particularly has in one a are with buildings those Bayshire on

Aspen strong a like nice the corporate we it organization assets ahead they very have are bit little a And sized delivering Bayshires, two there. with their on schedule seems them. has beyond plans already credit and of turnaround that

So have don’t with concerns those we two, about default. any

as making. the in and see are that in to well a through has been and very next very perform going moves guys CEO pleased going well they there June, are The year. to to started that Covenant they to continue think I are change we’re into those Care close management. new

coverage coming We’re expecting with rent. any increase problems and expect to quarters, that don’t in we

Jonathan Hughes

arise Okay. That’s do skilled I helpful. other could or properties and they housing, within on them up just you. versus a as and transitions each preservation But of And operator, obviously, weigh the is how CareTrust’s those negotiation economics success? and of value for seniors you then Thank when and re-tenanting between your situation and in you setting you an hoping do about talk little different. was bringing very and operator inevitably views nursing kind discussions

Dave Sedgwick

of depends that In going Well, end the we for long-term, win for most operator. portfolio. that is the of and even each preserve is relationship is that the point, in math to simple also confidence value stated sustainable your the pretty A which unique. day, enough the At the a that’s the it, you’re existing that while CareTrust do level the the can who is which you lot right. have I strategy what’s operator deal is key a running question, on being

the there operator So is keeping the the to there a cookie Again, of operator. the we in on a preservation disposition lead strategy an a on Whatever re-tenanting repurposing. from isn’t at look going existing the is to is and cutting when answer. really operator going depends the confidence of to value we question sideways, current going have to and all going cutter to really relationship we to be lot We the forward greatest pursue. at rent look about table options

Jonathan Hughes

bucket, Okay. And one more rents. of that’s just for me, the about XX% all-other tenants’

that in it above you X.Xx. It then You did great negative that I is had see quarter, the that for is quarter? coverage Can negative rest give see as there EBITDAR dragged an and on operator coverage that Thank coverage Last to there you last recall. actually was that down. us maybe you. an coverage for and operator update bucket

Dave Sedgwick

since a but quarter. is last to Jonathan. Yes. in Thanks, to stay that change enough very impact Yes. big not operator no close number. have top Sure. our XX, We that’s There pretty really that are they to big

If coverage The contractual either goes current to exceeds QX, approach. X.XXx and current are you $X.XX, coverage exclude from that likely recycling far to them from would achieve we $X.XX. they or goes re-tenanting through the total portfolio rent what number, a on that

we And be plan. patient to progress to pay they turnaround them so continue as rent on with their and continue make

Jonathan Hughes

Okay. question. them? And final behind That’s backing my Thank you. maybe what’s the

Dave Sedgwick

strategy. investors group turnaround They have continue this fund of that to a

Jonathan Hughes

thanks. Appreciate, alright. Okay,

Dave Sedgwick

Jonathan. thanks, Alright,

Operator

your question line next Capital from Our go comes is Sanabria from Markets. BMO Please Juan ahead, open.

Juan Sanabria

Thanks for the time.

two assets of could four. where you’ve seems kind and assets have us breadcrumbs if asset number either or What’s like on are status kind a or going dollar pool reframe the sell some you to sales perspective. that latest to or hoping more the to you through And the or either assets? expect re-tenanting bit Just of of just value transition a of any we out give repositioning that in – of It done fallen modeling from

Dave Sedgwick

are little right purchase dates for fluid, are bit to up a a half half, little Then It’s held as year-end that other sale of under agreement the bit have pretty sale either Yes. about we picked are assets a or that you’ve past more that the on than selling. close. fall given we’re fluid think path particularly the eventual and because that value don’t from any I that a versus at target moving we’ve that, going out it’s re-tenanting parallel in on we expect fall as to down buckets. looking of guidance get as now of those things

where we’re that’s So at.

Juan Sanabria

and million, those if And I doesn’t, were thought groups? me notes get was rates then there. on that the curious And included $XXX pipeline, yields wrong, just correct cap million, housing three the behavioral. for the I you today should is think $XXX that if – it see do me don’t the across And I I’m took seniors expect the numbers but if mines correct on really where that we best major

Mark Lamb

would Juan, obviously it’s have the Mark. yields say I moved up.

the nursing. skilled starting it’s XX, So point for mid-XXs at this

and On low- of between the somewhere on it’s, kind mid Then say, behavioral assisted the would side, I side, Xs. it’s to XX%. X%

at looking this We’re seniors housing of lot obviously a point. not at

my think behavioral, pretty and those what prepared right and said now, skilled predominantly in groups. two we’re of on I the made is up which nursing pipeline remarks, is the composition focused I of

sit where today. of is kind here that’s as So we pricing

Juan Sanabria

And with or the it’s balance of for down in terms the want incremental that floating could one exposure one point, to have moved? Anything then me. or kind just do sheet do bringing rates at on last of you this

Lauren Beale

Juan, floating rate About debt is debt. Lauren. is Yes. this half our

those sale curve. the come down, yield the is on being compare when rates looked received have from term fixed swapping we to that the to it properties like are but when at rate our we the However, we percentage of going proceeds to expected that don’t loan, we marketed,

to months we bit feel next for we’re where the bumpy X at. rate regards comfortable so with while exposure, So with a or may it be

Juan Sanabria

with very Condolences you much. Thank Good luck to… everybody.

Dave Sedgwick

Juan. Thanks,

Operator

is Our comes Dave next your ahead, Please from Rodgers from Baird. question open. go line

Dave Rodgers

Good a discussions more could the potential about that the morning. wondering Yes. bit you’ve little you buyers. I if was having with talk been

and Just had had on to to assets? on – just more second kind buyer details or of Have of exposure, buyers a the been loans to only is more given maybe financing each floating that side? exposure you on on have go with Then set hedge maybe given rate close? more these market, some out retraded? of other one the you them about seller floating financing worked with thought transactions of some rate rate thought to find closed Or your have tough you have that floating you you get If

Dave Sedgwick

don’t think you I’ll you discussions I hear Yes, buyers. anything expect tell with on probably wouldn’t potential those to

changed lenders Given we has of just have as up back tougher since tightened requirements. off how this process for the world their QX, them kicked it’s much in become kind

not asks or to so extensions us think that are I surprising buyers different coming as diligence have. with And it’s anybody for to they or back potential

So, in. par for environment that’s the we’re kind course. of that the It’s

terribly We’re the it going not about on do is because continue always preserve it concerned most to whatever and we re-tenant value. can or

Dave Rodgers

That’s good.

math, would you the on of consider along financing assets assets, part anything second moved. to The I seller more guess, any the those get lines

Dave Sedgwick

Yes. Yes.

We will we to stuff to mean, be some get I degree, if to get heavy want that, we get we that but to need done. too done to will needed, provide that, don’t flexible

Dave Rodgers

the the was on that? the Or And to little yield of you in to that outside on deposits, expect paying bit just Okay. use are least would of see. left Ohio have what you at for start deposits it’s the you or then a which two done the cleanup And the maybe Did number. the November, fully? good that in financing you side, not be question guys What kind what paid second earlier? aren’t was deposits cash? me. remaining to on think, then the impact And don’t the that got you earlier, sales questions from or I haven’t tenants any said, One, the

Dave Sedgwick

all have With deposits past. in and handy, that’s the paying Trio hand. our the at that to not I don’t portfolio, reported they of we’ve rent year. the not haven’t this on something regards were We size disclosed

and then as see uptick. will the is paying an that, redeploy impact So, the we immediate down we line

Dave Rodgers

Great. Thanks, Dave.

Dave Sedgwick

Thank you.

Operator

open. Carroll question Michael next ahead, go your Capital comes RBC Our from open. Markets. line Michael, from line Please your is is

Michael Carroll

with wanted transaction heard the skilled Sorry. actually see more senior the there well, I that market that that market discuss while is up some housing sentiment? differences concerns on muted. I nursing I the seeing private housing the the is holding was is the side. for and do mean, SNF you’re facility we’ve to valuations seniors on side. side agree fairly overall probably and What you

Mark Lamb

Hey, say with second Mark. of would I the agree part it’s I that. Michael,

– senior A I seeing granted, we housing. see think certainly, ton we’re a Class and don’t of

certainly a of be So free little of market. what seems That we’re is bit in more middle seeing kind to fall. a a

to field private the actually has nursing our lot weeks – last more the market valuation of and favor on side, in think every couple changed in I kind day. that’s a move and I think continues of more

starting sellers. stay think brokers for come – new but pricing I down. we to or starting those for stuff really, valuations in expectations was are are to and daily of is think the there I Certainly, debt And to attractive seeing down it’s the almost up. terms not So, propped where prices either come are we available, enough

Michael Carroll

willing it’s well SNF execute much versus know over above closer how valuations how comfortable I to guess those compared you the are I what on? years, mean your some And away buying be where to past properties? are would of expectations. CareTrust few far is, I Mark, those been valuations

Mark Lamb

going for we it’s has as be on low-hanging And with it think I fruit specific look dependent a asset us. to always really asset.

enough had XX fruits coverage the within years, the fairly ancillaries to couple changes have last for grow buildings to expenses day basically of maybe low-hanging accustomed have been or insurance assets one buying cash flow, days. and we to over that first little no quickly in So, but lease

it has think I to way down. So, come a

states will certain think I stay propped probably up.

operators. I think a of I think will the emergency, be of health for end end public lot the the line of the

see, the distress. at point, are to mid is X, the are dollars. bridge of it, healthy all-in. if look, X.X to in portfolios X a And to significant now more on market some we somewhere next seeing expect there. But So are year is amount not spread today probably right that The call X.XX losing would I lenders

high you leverage on what so, – And a perspective. can’t from go lending bridge

in position pretty of choose good what pick for and and operators. a to are REITs kind works for us our really, So,

But So, I think values. – my XX away we X for is they crystal that the to doesn’t assets from be asset that months operators of won’t call our assets. probably to mean geographies pricing down ball we their set specific are it, where, economics probably and kind to those that seeing best capital acquisitive significantly months turn look come and in the in fit with have where team leadership

Michael Carroll

are you a I acquisitions? assets lot are the of stories. to do big you a how And willing aggressive lot underwrite how are I assuming to are I bought those work? on am the And to upticks these pursuing market And aggressive pretty that? or historically, deals willing be mean turnaround transitioned EBITDA of operators. out CareTrust assets that willing some in you and has to know make

Dave Sedgwick

that one. will think Dave. Yes, aggressive. is I I be we will This

we to in to think next really needle. performance operators a of opportunities levers could the can if operators adding might But pulling either way, separately what see and facilities a that them can just it and quality there some fresh we like the be it for down culture can and move the that underwrite to or employees and do. some just have going that value year you us around. to who so and appropriate and new coming ramp leadership And again, I we take Mark turn have or lost capable bring our in the you doing give watch rent both And think of translates to enough operators it. history deal financial the each operator, their buildings really participate months is deals I time those have the that care many in for to that said, that a that have

Michael Carroll

are And Okay. right on then you one, properties, last I pursue focused too? you nursing would assets mean housing now? just facility skilled seniors mostly

Dave Sedgwick

seniors we haven’t written Yes. Philosophically, off strategically, housing.

We candidly just skilled have are simply than on nursing past. of skilled deeper seeing operators the we side is today. our bench nursing today And in more the

and so, for skilled are we health. And open and behavioral seniors business on

Michael Carroll

Thanks. Okay. Great.

Dave Sedgwick

Thanks Mike.

Operator

Steven [Operator comes ahead. from Valiquette Please go Instructions] Our from Barclays. next question

open. line is Your

Steven Valiquette

for Great. the taking question. Thanks. Thanks

even sub-X.X the not is worried some EBITDAR So, of individual just kind this are among more sub-X.X about There And are while you on much the murky bit mean are is guess. or about some question, rent because of as where focused us fees and EBITDARM X.X the cash coverage two age-old tenant But well. an truly where there little rent basis, always how is still top though are above of you that between other spent pay operators etcetera. is XX sub-X. you any versus ones non-cash, being But It’s maybe but a EBITDARM. I and too I operators an your remind still the the being in to are talked able X.X on is just on, is EBITDAR the which those coverage probably on some ratios ratios sort of on. what

kind that these pay coverage the just of to the ratios some rent on differences to of the and and the Just ability component Thanks. nuances want tenants. dive and in of

Dave Sedgwick

you. Thank Yes.

north spite do so everybody XX there. really The to it corporate of Yes, is will from momentum tenants completely the question to be of flow go help. top EBITDAR Every same in rent Xx But viewed great for clear the fee them how in not coverage EBITDARM of But guys. us flow is back that much them. is cash the concerns cash them open some about to used any management management the a of standard produce the fee office, not management some to operator we paying order. about sense, So, lens. give have me bigger us X% and credit to relationships in to to different the To X% with dialogue from is does that have Xx. let transparent corporate that your those little continue bit difference fee for improve free come rent, a is we our confidence under there about extra that services, being – that used we standard that actually apply short generally, about versus they is providing a larger also in X% and for payments under can few concern is that

to hard extrapolate. really it’s So,

Steven Valiquette

helpful. Okay. I appreciate the Thanks. That’s color.

Dave Sedgwick

You got it.

Operator

question last Our Please KeyBanc from Wurschmidt Capital Austin from Markets. ahead. go comes

is open. Your line

Austin Wurschmidt

Yes.

wanted touch completing of on optimization updated we Just year-end, bleed or timeline see into on for of sort sort XXXX? that process the is could track portfolio it to still for and the

Dave Sedgwick

Yes. some of have could PSAs. signed it’s Like we we target and in the on said year. that half into and pretty of have call in, that year. fluid, Most the this has see that of the closes has end about of for given push are we that we script, the next it market But

Austin Wurschmidt

FFO to Would expect results guidance? quarter fourth by provide you guys to able XXXX be

Dave Sedgwick

determine it We these of have but will to depending on dispositions. hope so, timing the we

Austin Wurschmidt

to wanted this of of pool just I fell then of assets out opportunities the looked repurposing one like the touch, And Okay. it quarter.

you additional think detail went Could three as give from drove that? it I two. to what to of down kind just

Dave Sedgwick

Yes.

to particular licensure a operator the our expected. in determined repurpose than for property diligence market, health process for lot that the was be behavioral originally had longer to timeline the During that

to re-tenant much we caused sense mutually that on us revisit rent to property. before timeline opposed that receiving so, us that to for And it issue agreed make would that probably and to agree a more longer just the as

Austin Wurschmidt

And And should for those Understood. have bottomed, occupancy comments on quarter? specifically gains? expense of signal updated Dave, could – the in headwinds around some that those the trends, then, release your occupancy offset third were coverage we to should or continue levels

Dave Sedgwick

Yes.

the occupancy the third quarter. So, is to

overall give now, occupancy come a the occupancy variables bit coverage, remember as fluctuate market of is when there little takes numbers as to the lot time, skilled hold. forward, they a recession Just like what it are play in and can that in. from, looks to relates And financials that right labor the as real actual we mix going

ball tough on a to that pretty quarter. in have next right it’s the some look hopefully, now, clarity will we but more in So, crystal

Austin Wurschmidt

just for then one me. And last

are much some I broader guess I We on in are evaluating, opportunities deals if in just of new further, have do in, you am states those to where kind acquisition gain within you top of kind pipeline, you these of or you curious states five scale you covered those that plan are the less have lot those like where a that but could exposure? concentrated dig

Dave Sedgwick

Yes.

that with. existing are open wherever operators new existing We an relationships nurturing we would with year. agreements operator relationships in think we are certainly with have exciting geographies. grow to like are to There we in But to expand enter to that we partner to several hope opportunities, be we going also the into coming

Austin Wurschmidt

the Got time. for it. Thanks

Dave Sedgwick

You bet.

Operator

And another Okusanya Tayo have ahead. question from we Suisse. go Credit from Please

open. Your line is

Tayo Okusanya

with of have about they as top of Ensign their kind Good kind talking relationship tenant. captive a everyone. they REIT. just long not because kind Again, ago Sabra, specifically it purely Questions Yes. and is interesting afternoon that entered were of this around

you with be work So, to there opportunities I change with when Does with make kind am of how will more what’s rather feel less? any Ensign? just way kind you happening does that about again, your think relationship forward going them curious, you Sabra, not than kind of of that like see

Dave Sedgwick

No.

I way. any with I think think Sabra our relationship capacity don’t affects deal their any that in announced in

are guys those with year, opportunities relationship like last of to great their is our the with a them fans relationship there got expanded that. do And work. of if have big quality we We and

Going absolutely we will. forward,

Tayo Okusanya

I And building were going Okay. of kind REIT. their thought like guess they towards can clarify, own just just I I

was kind of curious it what interesting So, to for decide bunch about. That’s assets. I of tenant of was a them for of kind to kind be a again

Dave Sedgwick

But and Yes. No, same estate of always have at if that their even think real prioritized CareTrust CareTrust before have look and you the with leases still. back, love they lot their a that would preference, I done time. think they they acquiring to spin-off spin-off, since do I

the estate in So, disciplined both opportunities is be real and thing the they growth their through growers whether very and they ability and pursue, think that found they to Ensign I leases. are the about disciplined

Tayo Okusanya

it. Got

again, also indulge you Okay. words commentary your me That’s if is I with are environment, to Dave, those which helpful. a sounded little great today could bit, if hear. And kind you use uncertain. is of that But just generally then, somewhat optimistic, hedging cautiously may still

I turned? the quarters have over what truly to things kind looking guess two like So, of one data specifically for points to are feel next you

Dave Sedgwick

want facilities. say, essentially it in is of operator but care to temporary meaningful usage an for of agency say down in within is – only way we stability no I Not we to facility. culture agency, temporary to would a want and a see best, the The staffing. detriment agency third-party sign quality any that to really come third-party those is I have expensive, would it

bit feel. high, a a more going while So, a little on and kind both a just to remain those of of growth it’s be to pre-pandemic occupancy return constraint of

Tayo Okusanya

it. Got you. Thank

Dave Sedgwick

You bet.

Operator

I Dave call questions. over remarks. to closing would Sedgwick, like CareTrust’s further the CEO, for no have back We to turn

Dave Sedgwick

for support. thank Well, you again your continued

We will And know at you you to Take any not, have if NAREIT you find questions, next care. see some of week. where us.

Operator

This for participation. your conference Thank call. concludes you today’s

now may disconnect. You

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