CTRE - Earnings call transcript Q4 2024

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Operator

Thank you for standing by. My name is Karen, and I will be your conference operator today. At this time, I would like to welcome everyone to the CareTrust REIT Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions]

I will now turn the call over to Lauren Beale, CareTrust's Chief Accounting Officer. yours. is floor The

Lauren Beale

welcome REIT's and Earnings Quarter Call. to you, Fourth CareTrust XXXX Thank

forward-looking on could investments, today including will risks These statements We We make subject a are based results and risks strategies REIT's most growth CareTrust future to performance, forward-looking to statements business uncertainties materially statements financial to management's actual XX-Q dividends, with plans, revise except discussed acquisitions, filings are that financing and these and prospects. differ cause regarding expectations, undertake from law. as our in do the or update required SEC. Form duty expectations. XX-K not These statements, recent current by

QX A reference metrics press to company the and measures CareTrust's available the limited EBITDA, for a financial will reconciliation of Investor the the reconciliations section call most the During this comparable FAD. website also Relations www.caretrustreit.com. is of are such XXXX period. non-GAAP earnings of non-GAAP our call available in replay GAAP on these FFO available be will as at measures on release website or that and FAD A

this call Executive Bill James Dave Chief Sedgwick morning ,President Officer; and Officer. and Callister, Financial Chief Officer; Investment are Wagner, Chief the On

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

David Sedgwick

] markets the particular, challenges. Fed any in more than in A worth couple off time It's financial face raised and you, CareTrust. hope we when of and what REIT to kick back joining good interest [ environment. years year be rates the we at broader sector, Thank morning, serious very as everyone, the macro ago for REIT and to you us our another aggressively strong consider thank stepping history,

open uniquely sidelines to had driven way. continues more on to and capitalize that us and were larger rates drove and window positioned down up our investors today. the deal However, banks we many opened elevated because of leverage and opportunity to flow The dry a built powder, our and we drove

the balance relationships follow-on $X.X Today, billion our issuance year X of year's certainly we of a outlook. in team, rare meaningful this longer the resulting equity maximize down, set indifferent access a that going team come billion If the if hair a opportunity in of of activities offering. REITs we We benefit. full capital, ATM largely XXXX. deepening recalibrating both of ] will working flat effect out, today The is to the from stronger all per with front portfolio, are into to and last and by strategic FFO than match $X.X share investments. without sheet, REITs investments, are will funded our essentially and don't, any new result our opportunity the But position we were in growth [ they for our us in

growth. We mindset resilient. to of opportunity on our the not share growth. sake to secure per remain We made Our underwriting FFO Neither laser-focused that do grow changed. of so portfolio has not our open has us has maximize and discipline for window long-term the

their coverages residents X.XXx operators loved lease us, right exceptional in respect our ones. employees our and EBITDAR. their opportunities of and their to that operators right take For patients turn at only matching X.XXx by and care them those up be With for the that will success. the take operator for setting view, always achieved so right first can employees the those EBITDARM In in who of care overall and portfolio, are

operating EBITDAR. EBITDARM in many revenue the acquisitions at are the environment last coverage. mix stabilize XX% occupancy, looking of with approximately prepandemic expectations. continues of at covering performance in XX tenants, parts X.XXx portfolio is and general year, made early or top The ahead of most the Our and for Furthermore, net X.XXx which skilled to at account line triple with

Of to be course, that and but us as noise particular. there's administration policymakers, definitive operators, minimum and and conversation be nursing our the that to be means nursing. of health with leads lobbyists, early rule some too and all new in cornerstones for general continue It's in reversed will to the skilled speculation skilled believe Medicare staffing Medicaid a unchanged care

per industry country, to patients we continue and they solid and provide for them of We accounting for in flow if growth deal FFO Not count double-digit a respective residents. operators without they last but ratings measures their some averages and best to run on and of at operators any investments, we to and up January resting associate basis investors. truly enough us rate to to With for close do can't Our we another the not foundation, additional and tailwinds poised all last state are thank records. to absolutely for our our On year. blessed this we the mention growth quality external as security on compared significant post well. X, be are the able year employees, star with woke their to share year's even large to is the effectively

James current our that and the a pipeline portfolio. the long-term excited to will never us. more will opportunity color our about execute in zealously say and strategy investments for potential just on and expand I've I'll pursue of been front this, and provide trajectory broader diversify growth. We continue set

Chapter XXXX. you our I last think If liked to year, story going you're James? love

James Callister

everyone. Good morning,

every quarter The yield reflective stabilized just strong what X.X%. of estimated and company, new of over the with impressive million investments us These putting from over ] million estate an estimated year. to were year completed $XXX unprecedented in acquisitions financing, million CareTrust range close pipeline of and X stabilized finished to less XXXX, [ investments activity real than department $XXX to throughout approximately preferred with investments for consistent effort lending the X.X%. in from from [ acquisition investments is of a an XX mezz yield of $X.X totaling $X new facilities an billion size at During We at off activity investment to ] investments. the an equity of facility

large of lease in X%. the the previously triple investments we initial with the to new During investments operators. approximately XX.X%. facility yield and added the fourth lease $XX.X portfolio of XXth announced of quarter, include the These December approximately transaction Subsequent along net at to XX have additional related the several on contractual an closed final CareTrust we yield million Tennessee quarter, of at a to to acquisition

approximately mezzanine at related facilities loan small an a a portfolio million of of skilled We $X.X yield to under nursing initial also XX.X%. funded in Maryland

to we as Our investment continues forward XXXX. moving continue be into momentum to XXXX's pipeline robust look

and portfolio today well within pipeline and at midsized as of singles And some under pipeline some that also them seniors have are of quote larger we reasonable actively $XXX we in housing. quote next doubles that pipeline underwriting opportunities. some but Please remember Not XX confidence current skilled only that reloaded pursuing The of we the a level lock months. up our only close standards. million if approximately of then nursing includes portfolio deals sits of our we can couple consists quarter them our when we pipe, are as primarily estate included consists real and transactions. The acquisitions a

lend healthy to look at couple us flow other past We as by including continue through with marketed the purpose. opportunities deals to existing over off-market and of years of relationships brought well garnered decision a as operators to relationships, our a

on executing lending attractive will we primary requests feel opportunities been sourcing that pursue real opportunities. expect lead Our acquisition estate that and loans and to has we focus remain and will With always continue receive accretive operators. best-in-class inbound on the acquisitions estate future, to in selectively to real will said, for

inbound consistent opportunities, highly turn us we off-market built-up marketed with both has to optimistic XXXX, feeling As and a team. of our flow

Our year. senior ongoing XXXX results. care quality ample to of The growth a access will focused strong on runway on and coming for during an activity year's our to pipelines the transactions of the demand continue combination for accretive provide offering capital, future with post-acute and investment build last

over that, With I'll Bill. turn to it

William Wagner

James. Thanks,

increased million year normalized normalized million. FFO a per increased normalized share increased normalized to and increased basis, per FAD share to $X.XX also or XX.X% and share. $XX.X the XX.X% prior For On $XX.X FFO the $X.XX over to FAD quarter, per $X.XX $X.XX order to XX.X% XX.X% to

quarter raising net November fourth and an robust investment $XXX order the million of which previously per at proceeds During the closings. match share, pipeline, offering, our $XX closed fund we announced prefunded overnight in on to

X February dividend receiving option million investments the As is funding $XXX and which of after exercise now making of million we today, of our and also February after $XX after investments cash purchase tenant after $XX closed those that million roughly and funding on January and quarter. payment, per have

initiated this release, to made year In $X.XX all date, the we includes This yesterday's of guidance share per to guidance FFO and of escalations per also average equity further year; normalized to a investments rent for XXX.X press $X.XX FAD on $X.XX share with for CPI $X.XX. share of normalized weighted any million diluted assumptions: issuances investments no two, the one, or count of debt relies X.X%. and shares following additional nor

will the will approximately rental as total intangibles in number revenues amortization $X.X be in the revenue cash Not required total be but is million. this projected to number the lease $XXX are year included Our that GAAP. million for about this of by rental

$XX.X number from Three, GAAP $X.X Included G&A represents of million of includes $XX.X XX.X% cash of fees; includes revenue the expense to funds. is receivables investments. of this on of financing in XX.X% range is and money deferred FAD financing of from deferred $XX million million. is noncash income subtracted million. The additional a interest comp. portfolio of guidance our $XX in and share This $XX for has of of and and per XX% share interest million Four, FFO also market million without $X $XX.X Interest growth purposes of $XX that interest million cash XX.X% income of reconciliation. and million in from stock $XX Five, six, invested any loan made amortization approximately approximately FAD to to million. million approximately per roughly $X about $X million of million expense expense

continues Our strong. to liquidity remain

which historic have closed In continues December. debt-normalized addition our revolver, in with Leverage new under at billion X.Xx. to lows a on of EBITDA we ratio hand, net cash available $X.X

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

a make financing utilizing decide increase Lastly, towards of cost options into equity seen We begin to decreased term have on cost of having out the QX those our to robust large how to table the revolver to may where of our while our new want has new and sense pipeline. all we the end we credit love and then with the draws. facility still respect QX,

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

David Sedgwick

now. to hope Well, report helpful questions and has Great. we take happy the been your

Operator

Wes [Operator from first the comes Golladay from Instructions] question line Your of Baird.

Wesley Golladay

at to you see that was strong really at Looking big last made of forward, the would year, portfolios portfolios going pipeline do more out driver the When those now specifically, look larger you investment be the a with activity, year. operators? that and the broaden new

David Sedgwick

Yes.

think you'll I from is of With -- in to existing ones. those operators about early too adding at what this expanding this new kind this what are us talk think is portfolios, to you've large which seen and respect the year probably point. with really see some past, I

Operator

America. Farrell of Your question line next the Grana of from from Bank comes

Unknown Analyst

another had to commentary were to on [ there you within I an your guidance PACs there your as -- either associated situation? make debt some any be could either current was going is as about if offset if outcome well I their conviction wondering bad on forward. ] question

David Sedgwick

guidance, certainly no year. or there's No, this in any our at bad from any and of all don't expect our debt operators PACs we

it's too before make And able early comments any results. are their tax, really so to with to respect they to release

place hear which them you to them wait we'll that for the and exceptional that. point soon. So we to with And in just hope have lease coverage

Unknown Analyst

And X just me. for more Great.

seeing either shift? where Just of are pipeline, seeing you your rates any And compression in you going forward? are cap terms

Unknown Executive

consistent really seniors have that's maybe all always and nursing remains they X XX somewhere XX.X, notable No, at nothing where yields but time. range. XX.X the little of the in a with bit say staying skilled to is it on that in compression, in there to I housing, this somewhere rates would cap for and

Operator

Wells question Fargo. line Next from the from comes Kilichowski John of

William John Kilichowski

Maybe Bill, the your we last if that we made to could Q&A. start it comment before turn on call with over you

us equity more what here cost You the tails looking has some understand we -- thinking definitive at answer, creeped of you so numbers bit it? about said and a around calculus here your models, debt you're that up. cost Could maybe how of our is a could that of give becoming more you're actual on little in attractive and the

William Wagner

begin I'll long stated of get way if debt Well, range have a to draw Sure. we a X with, to EBITDA range. to Xx. net to that we we the to go of Obviously, have revolver,

what see we pipe. think But yields I I it ATM. and It use the upon using we pipeline, If level it's depends sense what revolver investment flow decision makes they at our think how all on that, investments were equity. pipeline. the again, lot [ on deals or year. depending pipe is our still see the then equity issue to of quoted it call use fund it, how beyond a we a call based will either quoted to under our that to our last ] as to that

William John Kilichowski

it. And jump then all. here. a sense and where And if there's Medicaid I there won't or confidence fraud Medicare around hit you might you maybe of great the comment cuts Medicaid discussions Medicaid to investigations this made over Got earlier Dave, that

think the on think Medicaid there the sort if again, why you you And gives to the not they confidence they And more maybe would you do cuts, where to were what touch that? say be? be would So of SNF space. that side, do

David Sedgwick

I early be, It's remarks, on to really it. in just my definitive prepared very too like said

Tuesday in think say touched on them never ago, is the it word, just you course, and be Medicaid at I of that bipartisan which, have they're then believe that you just you administration to Medicaid same we would speaker said have and nursing the we block been has recently -- said President skilled Medicaid to as days support it abuse, what for what would understanding of first would You Trump his we'd that just of who for it has how chopping a couple Trump of well. looking to as today for take expect if administration was support reason the said They Speaker Medicaid about importance we supportive more and incredibly fraud, -- read And it -- bipartisan will not space. of Johnson waste the have the a than and applaud continue. type Johnson, be. there's and and

Operator

Austin Capital Your next question Markets. Wurschmidt KeyBanc comes from the line from of

Austin Wurschmidt

in the as depend to your answer just the in But of front the today also there's to of seems Bill, the that to in out ahead. $XXX make -- go and the funding average very still progresses pipeline question it take immediately year term maybe at the as want front will sense the take in and opportunities activity back comment bullish various last points near mean was sense of to visibility? have time better periods term somewhat it should pipeline it and may air your an on But team source use we little credit at any larger a than in you. the and facility prepared you say, then on time in last comments of deal year the the remarks and is, about you'll the kind about that million pocket you in

William Wagner

to relates $XXX-plus the it quoted of million. as pipe Well,

hand. on cash use we'll First,

right as last out I in of to any did a take we to It pockets that. going investment that's don't now year replenish. So large think pipeline. it see portion our care continues

to that say relative us more to equity that pricing and maybe now, causes to it we to I we cost to using sign equity, do to our each time would how year -- down continue of fund of causes the but would fund that we So it. we -- having them. invest go come so a fund equity unlike last use pause revolver the deal that to up a us we in possibly to Right price as little like gives want want how us pause our

Austin Wurschmidt

you the maybe willing change were upside with in fluctuations sort sandbox, the the, cost does you'd helpful. today? the potential lower if aggressive you you coming that the lease you to take where value-add like yield playing types the years. Does or then That's on them, investment does attractive that that maybe a still team you're referenced be I that the And equity or initial change price? how stock of mean, more on of for the your just will, you of of whomever, deals in, in to call are

David Sedgwick

No, it doesn't.

and underwrite the own, each us. its that think deal right on to returns we presents I risk-adjusted we the get deal

Operator

of next Markets. line question RBC Michael the Your Capital comes Carroll from from

Michael Carroll

about, similar talking we deal due activity? how of think about sellers fairly investment to just to I the year? there XXXX. today looks before uncertainty? volume, should it positive pipeline normal seasonal how guess, the the sell months the is that I patterns rush of that think last was like mean, so? macro what to the like of end X activity cadence to at over overall about should due Just It the has a the of Or to end or been cadence Is we I mean, trying the

James Callister

much still Yes, still remains James. think I of think change I'll there's really in take mean deal a cadence. in a been this. pause coming deals the Mike, in that healthy. I I flow. don't see is don't we This We see It weekly.

if a meaningful X across to to seen during it's of you've of consistent. get flow kind come desk in shift months, to done coming don't and Russia and But healthy XX you the our to tax I head year last start anything, on year cetera. been in closing been see planning, deal think a of we've the and end think cadence as -- the I the have deals that, towards So working et

Michael Carroll

guess your stabilizing. Okay. new and marching James, I performed And coverage the and acquisitions? your then ones back can to type line general you're details ratio? then provide expectations, over of banking you past recent And months, they the on XX transitioning with have in the that kind XX I operators so that mean, up mid-XX,

James Callister

Yes. to from probably to track I We of credit Mike, in not stabilized the reason I risk-adjusted more would think to and add full projected. of I insist financials it's we've equation them I mean, we now. and part going a return on would into yes. to whole, that too really key have But believe show we lower just have on going. the early some credit as going see got they're get now, the Tennessee too right any of say, don't the them just right? would And is early, when as on. performing as that just well really those they I particular, as where set don't of mean, coverage the into when and And that And see a we're that.

Michael Carroll

mean, in first on you to buildings to roll sometime XXXX? but too mid-XXXX, in to want to [ X might at that start start it, guess click or into you I'm Okay. And X many those ratios And ]. specific looking stop. coverage expect I the Linx know the to this specifically give but up then what great, I about could I it's us required so if not kind should were I talk will mean, see when I we think I of mean, And details

David Sedgwick

to stabilization. Mike, because their probably think, rent X-year recall, ramp to in I might particular, gave Linx not a them, you in get we

time before new others around them particular, wrap arms in new we them time X that longer that start than their in And lead so up. -- seasoned the we We had stabilized in they need get and putting acquire we operators. give this buildings, to the when going facilities a

Michael Carroll

Okay.

us to that? So us for it Linx, would which give so year you'll X, give in XXXX number to be a

David Sedgwick

so, I would expect yes.

Operator

Juan the Sanabria from BMO Capital question Markets. comes Your next of from line

Juan Sanabria

seniors a of you talk mentioned bit couple pipeline a could housing the little times. more hoping Just about of kind

SHOP, more of pipeline. seeing So which side piece rate would more the bit seniors curious any flow talked and if know about last cap you're the the there's little just kind previously on there. expectations senior deal you've of transaction for if And the just of housing I as that appetite that include

David Sedgwick

into couple looking just I can perspective, at the it's all I call interest of we've Yes, it. come that in remains, And SHOP point and been years. housing to every be done it years. entry where We've seniors year, has it, to History net, finding our done point kept really the just going XX have think of and seen. we remains a throughout SHOP always kind think which interested has that but right from some down been for And find seniors you really to the if right last concentration some it space. as triple to We the recently. -- know, about to entry find go

Juan Sanabria

just Okay. and Medicaid on back come to kind you going were skilled Medicaid Great. fruition, back political then through it of or whether avenues nursing, just or scenario expansion. being to impact play that out that and/or that And uncertainty, to not pulling just the happens would is if think notwithstanding? not play discussed of How to X do

David Sedgwick

would serious concern it Yes, view the nursing. a that view skilled that not if I would as that's for -- goes, not direction I

hit of were nursing. not the expansion think bulk Medicaid added requirements to throw skilled and I effect they rolls different gets requirements -- the expect folks eligibility if work that and younger who I to that was able-bodied would for that

Operator

from next Anderson Your question from comes of Rich line the Wedbush.

Richard Anderson

appreciate comments around PACs. your that. So I

would be sort a today? relates what sort them a you with deal of in your to and are Or pattern completion as just is XXXX to doing it around them do holding given X open a growth? the you with stage it work But to uncertainty at had You I'm kind this facility. follow-on curious them, of of external in a

David Sedgwick

they are one. release that a can hope to that pattern sales I release positive comes and bit think out see we'll PACs earnings and wait holding earnings. it's I think in until how probably a a And of

Richard Anderson

you to acquiring build do enough. Fair if it direction, your see if you Would Or process an on it were that would people the something get -- moving that then SHOP so and be enterprise in where of place? And organically? sort in comments, executing? you has Okay. it

David Sedgwick

be I determined. it's think still to

are place strong think the SHOP. respect all is same demographics certainly say, would X just million for could be. with a I years to table would next be on older. to that The compelling It's reasons the you -- than nursing options a -- such years is skilled I from are And more area the projected will or incredible. there now, X more people aged XX why

anticipated to So ] Sonobi breaking. appears that long silver [ be now

And on so demand, with the side. skilled to compelling very a a and SHOP that that lot and it's and area the demographics of we're side, familiar very bleeds the obviously the supply over

Richard Anderson

of any just $XXX XXXX in was that how to of pipeline? portfolio is $X.X pipeline, last $X.X XXXX for what course you the today me. of curious replenishment which much in terms growth of visible In I'm to be billion that "larger" platform then that your how X investments last deal the volume. of be and of And billion in the extrapolated there would makeup your were Okay. might amount X as and that just external into year, your addition characterize was sort that normal

David Sedgwick

Yes.

deal, not of bigger we number. are we inclusive the number or The or handle that chasing we pipe we in. very everything certainly quote in the a the is we have confidence the a higher high on that the amount reviewing either. included we before have it is So It the that threshold underwriting of way

example, but were we because had So as were went deal, going it until we it were that the was that to certainly Tennessee Throughout including on, get year, not that right. year the we we on, certain really the for working done. to

we we we out as announced deals either as confident so get -- execute a stayed fall closed, replenished feel X very and or we we order pipeline what replenished. that replenish in, And

Richard Anderson

of really this $X.X year, doesn't last of replenishment like that worked but say what sort stuff is it and [ XX% that XX% that a So Tennessee, of case last the wasn't fair of breakout out, the happened movement is that in was was reasonable in of to it year? ] pipeline, billion

David Sedgwick

No, I so. don't think

was I if that number the would closed. the And sorry, tape, each time roll that Pennsylvania back that -- you probably sort deal the of would which it until a rate not thing that required updated -- quoted in material have X included really see go did and to pipe signed Tennessee us that you'll with have you'd the investment, been run I'm then compare I think we it. disclose was and was to wait we our to because say back pipe what up

way, I from a quoted the the might that numbers you if pipe -- I -- So take you if give maybe along factor think X out, the you better read.

Operator

from next Your Instructions] Okusanya Deutsche [Operator Omotayo question was from of line the Bank.

Omotayo Okusanya

everyone. afternoon, Good Yes.

they start in terms of budget. of the you level yearly on early perspective in at what be might Are their the you states reimbursement side just Medicaid kind state Europe to? of in for Medicaid any as the curious in indications exposure key have Just happening

David Sedgwick

increase heard We our to would some building that hope -- underfunded. of from will based we've been there's state see some little just in There what be a on X news been operators, fair expect size welcome negative surprises any type also historically that to But that that has before, piece Texas disappointed you give color. by on optimism front is we've which Texas too. don't obviously very of that

season pretty expecting with we're to think rate. Medicaid be routine respect a it I to that, besides So

Omotayo Okusanya

I has back theme states be Medicare that thoughts the is to government of doing on it. much this maxing the more about the Medicare to I the guess, to around popular I and thoughts amount conversation, they lot it. are the about Medicaid to And Medicaid could they thinking pulls side, the I Advantage, then, also of traditional tends idea But rate do on thinking operator. line responsible Advantage kind -- all kind of but a color evolution how think around sticking appreciate how X the ask the you've you on of they're put Any potential the and much reimbursement other be more of of lower Medicare for versus again, with see Medicare start Medicaid. to push think, And government of

So how again, thoughts may attack administration the X of Trump just kind on thoughts any those this. around

David Sedgwick

Sure. order. I'll reverse in go

in is that the expect the Medicare. not and think I time. managed been XX been I've That the industry's discussion been -- business whole trend of years, don't to trend certainly for -- trend it's this to to in gosh, part the respect with going I has And reverse. place that's

think continue. fee-for-service And regular continue trend will into that Medicare. Medicare will eat I Advantage to

-- And about -- operators true from that managed forward to able to the is to able in going organizations so that. same share is more relationships that sophisticated with gain care what and invest historically that. the those and adjust the then They're I'm are

to unable And care on ran repealing in reform. types fairly Trump administration, really Trump building So a I yes, away razor have not stay, respect the these just pass not it's a during And the And of the majority. were can had guess, approaches nearly to actually And have Obamacare, challenging but lower to house can the that any the With rates. spitballing length a it that capture that. and -- you X.X. thin of they from does you've of you're you sophisticated, President some wall if health you got and first there's share. too net-net, majority Medicaid poorly now do chip

having that the type they that, but government and I the think as look burden. more skilled interested not for by governors have of room states There's happened -- also with And to of been house nursing. Medicaid Republican room error just on they -- have at in are more going to think on I opposition you're cut really taking aware -- today of no they the as that less so for pandemic. for with -- much the those based same and federal ever are the what than in And

Omotayo Okusanya

That's dodge helpful. more. X I mean,

thing, kind to today. worst-case investigation, are mind? of how you Just box is kind federal kind worst-case it do your the handicapping as what just a know bit a But about a around it's in black of this of I you scenario current packs, guys again, like pertains scenario think guys again, as of

David Sedgwick

a No, just we We forum. in really and that that going on We they now. speculate don't they're don't think are scenario that have we're be to don't about more much have to really this we want worst-case right to comment. fine, before to concerned comment able themselves

Operator

no will remarks. Dave Executive turn I Sedgwick, questions, to wrap Q&A over more closing If session. I Chief the Officer, now are up the call for will there

David Sedgwick

very another and Well, much CareTrust. here a very day. thank strong your to forward guys, Look you, Have year for great at interest support.

Operator

you and gentlemen, all that concludes disconnect. today's now Thank Ladies joining, for call. may and you

CareTrust REIT (CTRE) 13 Feb 252024 Q4 Earnings call transcript