Conference Call Scheduled for Friday, November 10, 2023 at
1:00 pm ET
CareTrust REIT, Inc. (NYSE:CTRE) today reported operating
results for the quarter ended September 30, 2023, as well as other
recent events.
For the quarter, CareTrust REIT reported:
- 97.5% of contractual rents collected;
- Net income of $8.7 million and net income per share of
$0.08;
- Normalized FFO of $36.6 million and normalized FFO per share of
$0.35;
- Normalized FAD of $38.8 million and normalized FAD per share of
$0.37;
- A quarterly dividend of $0.28 per share, representing a payout
ratio of approximately 76% on normalized FAD;
- Payment of the outstanding balance on the unsecured revolving
credit facility;
- Publication of its 2022 Corporate Sustainability Report;
- Investments of $45.4 million in the quarter and $280.0 million
YTD at an estimated stabilized yield of 9.9% and 9.8%,
respectively, after rent ramps or rent resets under the lease are
completed;
- Settlement of 16.3 million shares under its ATM Program,
including both forward contract sales and direct issuances, for
gross proceeds of $323.9 million;
- 4.9 million shares remain outstanding on a forward basis under
its ATM Program, to be settled for expected gross proceeds of $98.0
million;
- Net Debt to Annualized Normalized Run Rate EBITDA of 2.5x
CareTrust’s President and Chief Executive Officer, Dave
Sedgwick, commented on the quarter’s results, “We are pleased to
report continued progress on all fronts as we head into 2024. We
believe our portfolio, exceptional operators, and strong balance
sheet are built to take advantage of the favorable investment
landscape in front of us.” Mr. Sedgwick continued, “The entire team
has excelled this year in facilitating a return to significant
external growth and setting the table for 2024. There has been a
continual flow of deals crossing our desk that we expect will
continue in 2024. The investment pipeline today is roughly $175
million, not including larger portfolio deals we regularly
review.”
The Company updated its portfolio management activity. After
completing the sale of one seniors housing property in October, the
Company has two seniors housing properties, one skilled nursing
facility, and one portfolio of 11 skilled nursing facilities held
for sale. With respect to portfolio performance in the quarter, the
Company's reported EBITDARM and EBITDAR lease coverage, excluding
Provider Relief Funds, improved to 2.75x and 2.16x, respectively.
Based on preliminary operator reports, skilled nursing and seniors
housing occupancy slightly increased in August 2023 compared to
June 2023 (excluding properties held for sale) to 76.5% from 75.9%
and to 75.5% from 75.2%, respectively.
Financial Results for Quarter Ended September 30,
2023
Chief Financial Officer, Bill Wagner, reported that, for the
third quarter, CareTrust reported net income of $8.7 million, or
$0.08 per diluted weighted-average common share, normalized FFO of
$36.6 million, or $0.35 per diluted weighted-average common share,
and normalized FAD of $38.8 million, or $0.37 per diluted
weighted-average common share.
Liquidity
As of quarter end, CareTrust reported net debt-to-annualized
normalized run rate EBITDA of 2.5x, which is below the Company's
target leverage range of 4.0x to 5.0x, and a net debt-to-enterprise
value of approximately 16.8%. Mr. Wagner stated that, as of today,
the Company has no borrowings outstanding on its $600 million
revolving credit line, with no scheduled debt maturities prior to
2026. He also disclosed that CareTrust currently has approximately
$36 million in cash on hand. He further noted that the Company had
$496.0 million in available authorization remaining on its
at-the-market equity program as of September 30, 2023. During the
period July 1, 2023 to November 8, 2023, the Company settled 12.8
million shares outstanding under ATM forward contracts at a
weighted average sales price of $19.85 for gross proceeds of $253.5
million. In addition, during that same period, CareTrust sold 5.4
million shares in direct sales under the ATM Program at a weighted
average sales price of $20.03 for gross proceeds of $108.0 million.
As of November 8, 2023, 3.0 million shares of common stock at a
weighted average initial sales price of $19.99 per share, before
commissions and offering expenses, remain outstanding under ATM
forward contracts. "With substantial availability on our revolver,
and equity markets readily accessible to us at present, we continue
to have a wide range of capital options for funding our
opportunistic growth strategy," said Mr. Wagner.
Dividend Maintained
During the quarter, CareTrust declared a quarterly dividend of
$0.28 per common share. On an annualized basis, the payout ratio
was approximately 80% based on third quarter 2023 normalized FFO,
and 76% based on normalized FAD.
Conference Call
A conference call will be held on Friday, November 10, 2023, at
1:00 p.m. Eastern Time (10:00 a.m. Pacific Time), during which
CareTrust’s management will discuss third quarter results, recent
developments and other matters. The toll-free dial-in number is 1
(888) 510-2379 or toll dial-in number is 1 (646) 960-0691 and the
conference ID number is 6808360. To listen to the call online, or
to view any financial or other statistical information required by
SEC Regulation G, please visit the Investors section of the
CareTrust REIT website at http://investor.caretrustreit.com. This
call will be recorded, and will be available for replay via the
website for 30 days following the call.
About CareTrust™
CareTrust REIT, Inc. is a self-administered, publicly-traded
real estate investment trust engaged in the ownership, acquisition,
development and leasing of skilled nursing, seniors housing and
other healthcare-related properties. With a nationwide portfolio of
long-term net-leased properties, and a growing portfolio of quality
operators leasing them, CareTrust REIT is pursuing both external
and organic growth opportunities across the United States. More
information about CareTrust REIT is available at www.caretrustreit.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995:
This press release contains, and the related conference call
will include, forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements include all statements that are not historical
statements of fact and statements regarding the Company’s intent,
belief or expectations, including, but not limited to, statements
regarding the following: future financial and financing plans;
strategies related to the Company's business and its portfolio,
including acquisition opportunities and disposition plans; growth
prospects; operating and financial performance; expectations
regarding the settlement of ATM forward contracts and the making of
distributions and payment of dividends; and the performance of the
Company’s tenants and operators and their respective
facilities.
Words such as “anticipate,” “believe,” “could,” “expect,”
“estimate,” “intend,” “may,” “plan,” “seek,” “should,” “will,”
“would,” and similar expressions, or the negative of these terms,
are intended to identify such forward-looking statements, though
not all forward-looking statements contain these identifying words.
The Company’s forward-looking statements are based on management’s
current expectations and beliefs, and are subject to a number of
risks and uncertainties that could lead to actual results differing
materially from those projected, forecasted or expected. Although
the Company believes that the assumptions underlying these
forward-looking statements are reasonable, they are not guarantees
and the Company can give no assurance that its expectations will be
attained. Factors which could have a material adverse effect on the
Company’s operations and future prospects or which could cause
actual results to differ materially from expectations include, but
are not limited to: (i) the impact of possible additional surges of
COVID-19 infections or the risk of other pandemics, epidemics or
infectious disease outbreaks, measures taken to prevent the spread
of such outbreaks and the related impact on our business or the
businesses of our tenants; (ii) the ability and willingness of our
tenants to meet and/or perform their obligations under the
triple-net leases we have entered into with them, including,
without limitation, their respective obligations to indemnify,
defend and hold us harmless from and against various claims,
litigation and liabilities; (iii) the risk that we may have to
incur additional impairment charges related to our assets held for
sale if we are unable to sell such assets at the prices we expect;
(iv) the ability of our tenants to comply with applicable laws,
rules and regulations in the operation of the properties we lease
to them; (v) the ability and willingness of our tenants to renew
their leases with us upon their expiration, and the ability to
reposition our properties on the same or better terms in the event
of nonrenewal or in the event we replace an existing tenant, as
well as any obligations, including indemnification obligations, we
may incur in connection with the replacement of an existing tenant;
(vi) the availability of and the ability to identify (a) tenants
who meet our credit and operating standards, and (b) suitable
acquisition opportunities, and the ability to acquire and lease the
respective properties to such tenants on favorable terms; (vii) the
ability to generate sufficient cash flows to service our
outstanding indebtedness; (viii) access to debt and equity capital
markets; (ix) fluctuating interest rates and inflation; (x) the
ability to retain our key management personnel; (xi) the ability to
maintain our status as a real estate investment trust (“REIT”);
(xii) changes in the U.S. tax law and other state, federal or local
laws, whether or not specific to REITs; (xiii) other risks inherent
in the real estate business, including potential liability relating
to environmental matters and illiquidity of real estate
investments; and (xiv) additional factors included in our Annual
Report on Form 10-K for the year ended December 31, 2022 and
Quarterly Reports on Form 10-Q for the quarters ended March 31,
2023, June 30, 2023 and September 30, 2023, including in the
sections entitled “Risk Factors” in Item 1A of such reports, as
such risk factors may be amended, supplemented or superseded from
time to time by other reports we file with the SEC.
This press release and the related conference call provides
information about the Company's financial results as of and for the
quarter ended September 30, 2023 and is provided as of the date
hereof, unless specifically stated otherwise. The Company expressly
disclaims any obligation to update or revise any information in
this press release or the related conference call (and replays
thereof), including forward-looking statements, whether to reflect
any change in the Company’s expectations, any change in events,
conditions or circumstances, or otherwise.
As used in this press release or the related conference call,
unless the context requires otherwise, references to “CTRE,”
"CareTrust," “CareTrust REIT” or the “Company” refer to CareTrust
REIT, Inc. and its consolidated subsidiaries. GAAP refers to
generally accepted accounting principles in the United States of
America.
CARETRUST REIT, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per
share data)
(Unaudited)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2023
2022
2023
2022
Revenues:
Rental income
$
51,218
$
47,018
$
145,126
$
139,831
Interest and other income
4,659
3,275
12,910
4,491
Total revenues
55,877
50,293
158,036
144,322
Expenses:
Depreciation and amortization
13,034
12,256
37,988
38,390
Interest expense
11,750
8,355
32,617
20,400
Property taxes
2,167
691
4,437
3,365
Impairment of real estate investments
8,232
12,322
31,510
73,706
Provision for loan losses, net
—
—
—
3,844
Property operating expenses
1,239
3,808
2,860
4,344
General and administrative
5,519
5,159
15,298
15,352
Total expenses
41,941
42,591
124,710
159,401
Other (loss) income:
(Loss) gain on sale of real estate,
net
—
(2,287
)
1,958
(2,101
)
Unrealized losses on other real estate
related investments, net
(5,251
)
(4,706
)
(7,856
)
(4,706
)
Total other (loss) income
(5,251
)
(6,993
)
(5,898
)
(6,807
)
Net income (loss)
8,685
709
27,428
(21,886
)
Net loss attributable to noncontrolling
interests
(11
)
—
(11
)
—
Net income (loss) attributable to
CareTrust REIT, Inc.
$
8,696
$
709
$
27,439
$
(21,886
)
Earnings (loss) per common share
attributable to CareTrust REIT, Inc.:
Basic
$
0.08
$
0.01
$
0.27
$
(0.23
)
Diluted
$
0.08
$
0.01
$
0.27
$
(0.23
)
Weighted-average number of common
shares:
Basic
104,011
96,605
100,748
96,527
Diluted
104,311
96,625
100,918
96,527
Dividends declared per common
share
$
0.28
$
0.275
$
0.84
$
0.825
CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME
(LOSS) TO NON-GAAP FINANCIAL MEASURES
(in thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net income (loss) attributable to
CareTrust REIT, Inc.
$
8,696
$
709
$
27,439
$
(21,886
)
Depreciation and amortization
13,034
12,256
37,988
38,390
Interest expense
11,750
8,355
32,617
20,400
Amortization of stock-based
compensation
1,519
1,380
3,379
4,295
EBITDA attributable to CareTrust REIT,
Inc.
34,999
22,700
101,423
41,199
Impairment of real estate investments
8,232
12,322
31,510
73,706
Provision for loan losses, net
—
—
—
3,844
Provision for doubtful accounts and lease
restructuring
—
—
—
977
Property operating expenses
1,416
3,821
3,381
5,683
Loss (gain) on sale of real estate,
net
—
2,287
(1,958
)
2,101
Unrealized losses on other real estate
related investments, net
5,251
4,706
7,856
4,706
Normalized EBITDA attributable to
CareTrust REIT, Inc.
49,898
45,836
$
142,212
$
132,216
Full impact of quarterly
investments[1]
607
593
Normalized Run Rate EBITDA attributable
to CareTrust REIT, Inc.
$
50,505
$
46,429
Net income (loss) attributable to
CareTrust REIT, Inc.
$
8,696
$
709
$
27,439
$
(21,886
)
Real estate related depreciation and
amortization
13,028
12,251
37,973
38,375
Impairment of real estate investments
8,232
12,322
31,510
73,706
Loss (gain) on sale of real estate,
net
—
2,287
(1,958
)
2,101
Funds from Operations (FFO)
attributable to CareTrust REIT, Inc.
29,956
27,569
94,964
92,296
Provision for loan losses, net
—
—
—
3,844
Provision for doubtful accounts and lease
restructuring
—
—
—
977
Property operating expenses
1,416
3,821
3,381
5,683
Unrealized losses on other real estate
related investments, net
5,251
4,706
7,856
4,706
Normalized FFO attributable to
CareTrust REIT, Inc.
$
36,623
$
36,096
$
106,201
$
107,506
NET DEBT TO ANNUALIZED
NORMALIZED RUN RATE EBITDA RECONCILIATION
(in thousands)
(Unaudited)
Three Months Ended September
30,
2023
2022
Total debt
$
600,000
$
780,000
Cash, cash equivalents
(3,485
)
(4,861
)
Net proceeds from ATM forward[2]
(96,132
)
—
Net Debt
$
500,383
$
775,139
Annualized Normalized Run Rate EBITDA
attributable to CareTrust REIT, Inc.[3]
$
202,020
$
185,716
Net Debt to Annualized Normalized Run
Rate EBITDA attributable to CareTrust REIT, Inc.
2.5x
4.2x
[1] Quarterly adjustments give effect to
the investments completed during the three months ended for the
respective period as though such investments were completed as of
the beginning of the period.
[2] Net proceeds from the future expected
settlement of shares sold under equity forward contracts through
the Company's ATM program.
[3] Annualized Normalized Run Rate EBITDA
is calculated as Normalized Run Rate EBITDA attributable to
CareTrust REIT, Inc. for the quarter multiplied by four (4).
CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME
(LOSS) TO NON-GAAP FINANCIAL MEASURES (continued)
(in thousands, except per
share data)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net income (loss) attributable to
CareTrust REIT, Inc.
$
8,696
$
709
$
27,439
$
(21,886
)
Real estate related depreciation and
amortization
13,028
12,251
37,973
38,375
Amortization of deferred financing
fees
609
520
1,826
1,560
Amortization of stock-based
compensation
1,519
1,380
3,379
4,295
Straight-line rental income
7
(3
)
21
(14
)
Impairment of real estate investments
8,232
12,322
31,510
73,706
Loss (gain) on sale of real estate,
net
—
2,287
(1,958
)
2,101
Funds Available for Distribution (FAD)
attributable to CareTrust REIT, Inc.
32,091
29,466
100,190
98,137
Provision for loan losses, net
—
—
—
3,844
Provision for doubtful accounts and lease
restructuring
—
—
—
977
Property operating expenses
1,416
3,821
3,381
5,683
Unrealized losses on other real estate
related investments, net
5,251
4,706
7,856
4,706
Normalized FAD attributable to
CareTrust REIT, Inc.
$
38,758
$
37,993
$
111,427
$
113,347
FFO attributable to CareTrust REIT,
Inc., per share
$
0.29
$
0.28
$
0.94
$
0.95
Normalized FFO attributable to
CareTrust REIT, Inc., per share
$
0.35
$
0.37
$
1.05
$
1.11
FAD attributable to CareTrust REIT,
Inc., per share
$
0.31
$
0.30
$
0.99
$
1.01
Normalized FAD attributable to
CareTrust REIT, Inc., per share
$
0.37
$
0.39
$
1.10
$
1.17
Diluted weighted average shares
outstanding [1]
104,422
96,752
101,010
96,709
[1] For the periods presented, the diluted
weighted average shares have been calculated using the treasury
stock method.
CARETRUST REIT, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS - 5 QUARTER TREND
(in thousands, except per
share data)
(Unaudited)
Quarter
Quarter
Quarter
Quarter
Quarter
Ended
Ended
Ended
Ended
Ended
September 30,
2022
December 31,
2022
March 31,
2023
June 30,
2023
September 30,
2023
Revenues:
Rental income
$
47,018
$
47,675
$
46,163
$
47,745
$
51,218
Interest and other income
3,275
4,135
4,443
3,808
4,659
Total revenues
50,293
51,810
50,606
51,553
55,877
Expenses:
Depreciation and amortization
12,256
11,926
12,238
12,716
13,034
Interest expense
8,355
9,608
9,827
11,040
11,750
Property taxes
691
968
880
1,390
2,167
Impairment of real estate investments
12,322
5,356
1,886
21,392
8,232
Property operating expenses
3,808
695
963
658
1,239
General and administrative
5,159
4,813
5,061
4,718
5,519
Total expenses
42,591
33,366
30,855
51,914
41,941
Other loss:
(Loss) gain on sale of real estate,
net
(2,287
)
(1,668
)
(70
)
2,028
—
Unrealized losses on other real estate
related investments, net
(4,706
)
(2,396
)
(454
)
(2,151
)
(5,251
)
Total other loss
(6,993
)
(4,064
)
(524
)
(123
)
(5,251
)
Net income (loss)
709
14,380
19,227
(484
)
8,685
Net loss attributable to noncontrolling
interests
—
—
—
—
(11
)
Net income (loss) attributable to
CareTrust REIT, Inc.
$
709
$
14,380
$
19,227
$
(484
)
$
8,696
Diluted earnings (loss) attributable to
CareTrust REIT, Inc., per share
$
0.01
$
0.15
$
0.19
$
(0.01
)
$
0.08
Diluted weighted average shares
outstanding
96,625
97,272
99,087
99,117
104,311
CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME
(LOSS) TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND
(in thousands)
(Unaudited)
Quarter
Quarter
Quarter
Quarter
Quarter
Ended
Ended
Ended
Ended
Ended
September 30,
2022
December 31,
2022
March 31,
2023
June 30,
2023
September 30,
2023
Net income (loss) attributable to
CareTrust REIT, Inc.
$
709
$
14,380
$
19,227
$
(484
)
$
8,696
Depreciation and amortization
12,256
11,926
12,238
12,716
13,034
Interest expense
8,355
9,608
9,827
11,040
11,750
Amortization of stock-based
compensation
1,380
1,463
936
924
1,519
EBITDA attributable to CareTrust REIT,
Inc.
22,700
37,377
42,228
24,196
34,999
Impairment of real estate investments
12,322
5,356
1,886
21,392
8,232
Provision for doubtful accounts and lease
restructuring
—
390
—
—
—
Property operating expenses
3,821
914
1,134
831
1,416
Loss (gain) on sale of real estate,
net
2,287
1,668
70
(2,028
)
—
Unrealized losses on other real estate
related investments, net
4,706
2,396
454
2,151
5,251
Normalized EBITDA attributable to
CareTrust REIT, Inc.
$
45,836
$
48,101
$
45,772
$
46,542
$
49,898
Net income (loss) attributable to
CareTrust REIT, Inc.
$
709
$
14,380
$
19,227
$
(484
)
$
8,696
Real estate related depreciation and
amortization
12,251
11,921
12,233
12,712
13,028
Impairment of real estate investments
12,322
5,356
1,886
21,392
8,232
Loss (gain) on sale of real estate,
net
2,287
1,668
70
(2,028
)
—
Funds from Operations (FFO)
attributable to CareTrust REIT, Inc.
27,569
33,325
33,416
31,592
29,956
Provision for doubtful accounts and lease
restructuring
—
390
—
—
—
Property operating expenses
3,821
914
1,134
831
1,416
Unrealized losses on other real estate
related investments, net
4,706
2,396
454
2,151
5,251
Normalized FFO attributable to
CareTrust REIT, Inc.
$
36,096
$
37,025
$
35,004
$
34,574
$
36,623
CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME
(LOSS) TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND
(continued)
(in thousands, except per
share data)
(Unaudited)
Quarter
Quarter
Quarter
Quarter
Quarter
Ended
Ended
Ended
Ended
Ended
September 30,
2022
December 31,
2022
March 31,
2023
June 30,
2023
September 30,
2023
Net income (loss) available to common
stockholders
$
709
$
14,380
$
19,227
$
(484
)
$
8,696
Real estate related depreciation and
amortization
12,251
11,921
12,233
12,712
13,028
Amortization of deferred financing
fees
520
535
609
608
609
Amortization of stock-based
compensation
1,380
1,463
936
924
1,519
Straight-line rental income
(3
)
(3
)
7
7
7
Impairment of real estate investments
12,322
5,356
1,886
21,392
8,232
Loss (gain) on sale of real estate,
net
2,287
1,668
70
(2,028
)
—
Funds Available for Distribution (FAD)
attributable to CareTrust REIT, Inc.
29,466
35,320
34,968
33,131
32,091
Provision for doubtful accounts and lease
restructuring
—
390
—
—
—
Property operating expenses
3,821
914
1,134
831
1,416
Unrealized losses on other real estate
related investments, net
4,706
2,396
454
2,151
5,251
Normalized FAD attributable to
CareTrust REIT, Inc.
$
37,993
$
39,020
$
36,556
$
36,113
$
38,758
FFO attributable to CareTrust REIT,
Inc., per share
$
0.28
$
0.34
$
0.34
$
0.32
$
0.29
Normalized FFO attributable to
CareTrust REIT, Inc., per share
$
0.37
$
0.38
$
0.35
$
0.35
$
0.35
FAD attributable to CareTrust REIT,
Inc., per share
$
0.30
$
0.36
$
0.35
$
0.33
$
0.31
Normalized FAD attributable to
CareTrust REIT, Inc., per share
$
0.39
$
0.40
$
0.37
$
0.36
$
0.37
Diluted weighted average shares
outstanding [1]
96,752
97,408
99,195
99,360
104,422
[1] For the periods presented, the diluted
weighted average shares have been calculated using the treasury
stock method.
CARETRUST REIT, INC.
CONSOLIDATED BALANCE
SHEETS
(in thousands)
(Unaudited)
September 30, 2023
December 31, 2022
Assets:
Real estate investments, net
$
1,536,048
$
1,421,410
Other real estate related investments, at
fair value (including accrued interest of $1,449 as of September
30, 2023 and $1,320 as of December 31, 2022)
181,175
156,368
Assets held for sale, net
21,341
12,291
Cash and cash equivalents
3,485
13,178
Accounts and other receivables
383
416
Prepaid expenses and other assets, net
20,684
11,690
Deferred financing costs, net
4,448
5,428
Total assets
$
1,767,564
$
1,620,781
Liabilities and Equity:
Senior unsecured notes payable, net
$
395,816
$
395,150
Senior unsecured term loan, net
199,507
199,348
Unsecured revolving credit facility
—
125,000
Accounts payable, accrued liabilities and
deferred rent liabilities
28,854
24,360
Dividends payable
32,403
27,550
Total liabilities
656,580
771,408
Equity:
Common stock
1,154
990
Additional paid-in capital
1,566,161
1,245,337
Cumulative distributions in excess of
earnings
(457,393
)
(396,954
)
Total stockholders' equity
1,109,922
849,373
Non-controlling interests
1,062
—
Total equity
1,110,984
849,373
Total liabilities and equity
$
1,767,564
$
1,620,781
CARETRUST REIT, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
(Unaudited)
For the Nine Months Ended
September 30,
2023
2022
Cash flows from operating activities:
Net income (loss)
$
27,428
$
(21,886
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization (including
below-market ground leases)
38,031
38,437
Amortization of deferred financing
costs
1,826
1,560
Unrealized losses on other real estate
related investments, net
7,856
4,706
Amortization of stock-based
compensation
3,379
4,295
Straight-line rental income
21
(14
)
Adjustment for collectibility of rental
income
—
977
Noncash interest income
(129
)
(1,063
)
(Gain) loss on sale of real estate,
net
(1,958
)
2,101
Impairment of real estate investments
31,510
73,706
Provision for loan losses, net
—
3,844
Change in operating assets and
liabilities:
Accounts and other receivables
11
648
Prepaid expenses and other assets, net
(68
)
(2,082
)
Accounts payable, accrued liabilities and
deferred rent liabilities
4,189
5,443
Net cash provided by operating
activities
112,096
110,672
Cash flows from investing activities:
Acquisitions of real estate, net of
deposits applied
(198,565
)
(21,915
)
Purchases of equipment, furniture and
fixtures and improvements to real estate
(9,139
)
(5,475
)
Investment in real estate related
investments and other loans receivable
(50,693
)
(149,650
)
Principal payments received on real estate
related investments and other loans receivable
15,703
1,166
Escrow deposits for potential acquisitions
of real estate
(4,075
)
—
Net proceeds from sales of real estate
14,464
34,115
Net cash used in investing activities
(232,305
)
(141,759
)
Cash flows from financing activities:
Proceeds from the issuance of common
stock, net
319,032
—
Borrowings under unsecured revolving
credit facility
185,000
145,000
Payments on unsecured revolving credit
facility
(310,000
)
(45,000
)
Payments of deferred financing costs
(21
)
—
Net-settle adjustment on restricted
stock
(1,479
)
(4,469
)
Dividends paid on common stock
(83,089
)
(79,478
)
Contributions from noncontrolling
interests
1,073
—
Net cash provided by financing
activities
110,516
16,053
Net decrease in cash and cash
equivalents
(9,693
)
(15,034
)
Cash and cash equivalents as of the
beginning of period
13,178
19,895
Cash and cash equivalents as of the end
of period
$
3,485
$
4,861
CARETRUST REIT, INC.
DEBT SUMMARY
(dollars in thousands)
(Unaudited)
September 30, 2023
Interest
Maturity
% of
Deferred
Net Carrying
Debt
Rate
Date
Principal
Principal
Loan Costs
Value
Fixed Rate Debt
Senior unsecured notes payable
3.875
%
2028
$
400,000
66.7
%
$
(4,184
)
$
395,816
Floating Rate Debt
Senior unsecured term loan
6.925
%
[1]
2026
200,000
33.3
%
(493
)
199,507
Total Debt
4.892
%
$
600,000
100.0
%
$
(4,677
)
$
595,323
[1] Funds can be borrowed at applicable
SOFR plus 1.50% to 2.20% or at the Base Rate (as defined) plus
0.50% to 1.20%.
Non-GAAP Financial Measures
EBITDA attributable to CareTrust REIT, Inc. represents net
income (loss) attributable to CareTrust REIT, Inc. before interest
expense (including amortization of deferred financing costs),
amortization of stock-based compensation, and depreciation and
amortization. Normalized EBITDA attributable to CareTrust REIT,
Inc. represents EBITDA attributable to CareTrust REIT, Inc. as
further adjusted to eliminate the impact of certain items that the
Company does not consider indicative of core operating performance,
such as recovery of previously reversed rent, lease termination
revenue, property operating expenses, gains or losses from
dispositions of real estate, real estate impairment charges,
provision for loan losses, non-routine transaction costs, loss on
extinguishment of debt, unrealized loss on other real estate
related investments and provision for doubtful accounts and lease
restructuring, as applicable. EBITDA attributable to CareTrust
REIT, Inc. and Normalized EBITDA attributable to CareTrust REIT,
Inc. do not represent cash flows from operations or net income as
defined by GAAP and should not be considered an alternative to
those measures in evaluating the Company’s liquidity or operating
performance. EBITDA attributable to CareTrust REIT, Inc. and
Normalized EBITDA attributable to CareTrust REIT, Inc. do not
purport to be indicative of cash available to fund future cash
requirements, including the Company’s ability to fund capital
expenditures or make payments on its indebtedness. Further, the
Company’s computation of EBITDA and Normalized EBITDA may not be
comparable to EBITDA and Normalized EBITDA reported by other
REITs.
Funds from Operations (“FFO”), as defined by the National
Association of Real Estate Investment Trusts (“Nareit”), and Funds
Available for Distribution (“FAD”) are important non-GAAP
supplemental measures of operating performance for a REIT. Because
the historical cost accounting convention used for real estate
assets requires straight-line depreciation except on land, such
accounting presentation implies that the value of real estate
assets diminishes predictably over time. Since real estate values
have historically risen or fallen with market and other conditions,
presentations of operating results for a REIT that uses historical
cost accounting for depreciation could be less informative. Thus,
Nareit created FFO as a supplemental measure of operating
performance for REITs that excludes historical cost depreciation
and amortization, among other items, from net income, as defined by
GAAP.
FFO is defined by Nareit as net income computed in accordance
with GAAP, excluding gains or losses from dispositions of real
estate investments, real estate related depreciation and
amortization and real estate impairment charges, and adjustments
for unconsolidated partnerships and joint ventures. The Company
computes FFO attributable to CareTrust REIT, Inc. in accordance
with Nareit’s definition.
FAD attributable to CareTrust REIT, Inc. is defined as FFO
attributable to CareTrust REIT, Inc. excluding noncash income and
expenses, such as amortization of stock-based compensation,
amortization of deferred financing fees and the effects of
straight-line rent. The Company considers FAD attributable to
CareTrust REIT, Inc. to be a useful supplemental measure to
evaluate the Company’s operating results excluding these income and
expense items to help investors, analysts and other interested
parties compare the operating performance of the Company between
periods or as compared to other companies on a more consistent
basis.
In addition, the Company reports Normalized FFO attributable to
CareTrust REIT, Inc. and Normalized FAD attributable to CareTrust
REIT, Inc., which adjust FFO and FAD for certain revenue and
expense items that the Company does not believe are indicative of
its ongoing operating results, such as provision for loan losses,
non-routine transaction costs, provision for doubtful accounts and
lease restructuring, loss on extinguishment of debt, unrealized
loss on other real estate related investments, recovery of
previously reversed rent, lease termination revenue and property
operating expenses. By excluding these items, investors, analysts
and our management can compare Normalized FFO and Normalized FAD
between periods more consistently.
While FFO, Normalized FFO, FAD and Normalized FAD are relevant
and widely-used measures of operating performance among REITs, they
do not represent cash flows from operations or net income as
defined by GAAP and should not be considered an alternative to
those measures in evaluating the Company’s liquidity or operating
performance. FFO, Normalized FFO, FAD and Normalized FAD do not
purport to be indicative of cash available to fund future cash
requirements.
Further, the Company’s computation of FFO, Normalized FFO, FAD
and Normalized FAD may not be comparable to FFO, Normalized FFO,
FAD and Normalized FAD reported by other REITs that do not define
FFO in accordance with the current Nareit definition or that
interpret the current Nareit definition or define FAD differently
than the Company does.
The Company also discloses Net Debt to Annualized Normalized Run
Rate EBITDA, which compares the Company’s Net Debt as of the last
day of the quarter to the Annualized Run Rate EBITDA attributable
to CareTrust REIT, Inc. for the quarter. Net Debt is defined as the
Company’s Total Debt as of the last day of the specified quarter
adjusted to exclude the Company’s cash, cash equivalents,
restricted cash and escrow deposits on acquisition of real estate
as of such date as well as the net proceeds from the expected
settlement of shares sold under equity forward contracts through
the Company’s ATM Program that are outstanding as of such date.
Normalized Run Rate EBITDA represents Normalized EBITDA, adjusted
to give effect to the investments completed during the three months
ended for the respective period as though such investments were
completed as of the beginning of the period. Annualized Normalized
Run Rate EBITDA is calculated as Normalized Run Rate EBITDA
attributable to CareTrust REIT, Inc. for the specified quarter
multiplied by four.
The Company believes that net income attributable to CareTrust
REIT, Inc., as defined by GAAP, is the most appropriate earnings
measure. The Company also believes that the use of EBITDA,
Normalized EBITDA, FFO, Normalized FFO, FAD and Normalized FAD,
combined with the required GAAP presentations, improves the
understanding of operating results of REITs among investors and
makes comparisons of operating results among such companies more
meaningful. The Company considers EBITDA and Normalized EBITDA, in
each case attributable to CareTrust REIT, Inc., useful in
understanding the Company’s operating results independent of its
capital structure, indebtedness and other charges that are not
indicative of its ongoing results, thereby allowing for a more
meaningful comparison of operating performance between periods and
against other REITs. The Company considers FFO, Normalized FFO, FAD
and Normalized FAD, in each case attributable to CareTrust REIT,
Inc., to be useful measures for reviewing comparative operating and
financial performance because, by excluding gains or losses from
real estate dispositions, impairment charges and real estate
related depreciation and amortization, and, for FAD and Normalized
FAD, by excluding noncash income and expenses such as amortization
of stock-based compensation, amortization of deferred financing
fees, and the effects of straight-line rent, FFO, Normalized FFO,
FAD and Normalized FAD can help investors compare the Company’s
operating performance between periods and to other REITs. The
Company believes that the disclosure of Net Debt to Annualized
Normalized Run Rate EBITDA provides a useful measure to investors
to evaluate the credit strength of the Company and its ability to
service its debt obligations and to compare the Company’s credit
strength to prior reporting periods and to other companies without
the effect of charges that are not indicative of the Company’s
ongoing performance or that could obscure the Company’s actual
credit quality and after considering the effect of investments
occurring during the period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108406834/en/
CareTrust REIT, Inc. (949) 542-3130 ir@caretrustreit.com
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