CareTrust REIT(CTRE)2025-05-01 20:08Company Overview - As of March 31, 2025, CareTrust REIT owned 255 skilled nursing facilities and related properties with a total of 27,672 operational beds and units across 32 states[138]. - The company announced a planned acquisition of Care REIT plc for approximately $856 million, which includes a cash offer of 108 pence per share and the assumption of net debt[140]. - The acquisition of Care REIT plc is expected to be completed in May 2025, subject to customary conditions[142]. Financial Performance - During the three months ended March 31, 2025, CareTrust REIT collected 99.2% of contractual rents and interest due from operators and borrowers[144]. - Rental income increased by approximately $9.4 million, reaching $71,646, a 15% increase compared to the previous quarter[162]. - Interest income from financing receivable rose by $1.8 million, totaling $2,807, reflecting a 178% increase[162]. - The company recorded a net gain on the sale of real estate of $3,876 during the three months ended March 31, 2025[162]. - Total contractual rent increased by $9.5 million, driven by a $9.1 million increase in rental income from real estate investments made after September 30, 2024[162]. - Total contractual rent increased by $17.8 million, driven by an $18.4 million increase in rental income from real estate investments made after December 31, 2023[176]. - Interest income from financing receivable recorded $2.8 million during the three months ended March 31, 2025[177]. - Interest and other income increased by $12.6 million, primarily due to a $13.2 million increase from the origination of loans receivable after December 31, 2023[178]. Expenses and Charges - Depreciation and amortization expenses increased by $2.3 million, or 15%, primarily due to acquisitions and capital improvements[165]. - Interest expense rose by approximately $1.5 million, totaling $6,669, a 30% increase compared to the previous quarter[166]. - The company recognized $888,000 in transaction costs related to unsuccessful acquisition pursuits during the three months ended March 31, 2025[168]. - No impairment charges were recognized during the three months ended March 31, 2025, compared to an impairment charge of $2.7 million in the same period of 2024[158]. - General and administrative expenses decreased by $263,000, totaling $9,023[171]. - The net loss attributable to noncontrolling interests increased by $429,000, reaching a total of $609, reflecting a 238% increase[162]. - Depreciation and amortization increased by $4.4 million, or 33%, primarily due to acquisitions and capital improvements made after December 31, 2023[179]. - Interest expense decreased by $1.6 million, with total decreases due to prepayment of Term Loan amounting to $3.6 million[180]. - General and administrative expenses increased by $2.2 million, with share-based compensation rising by $1.8 million[184]. Cash Flow and Financing - Net cash provided by operating activities increased by $22.6 million to $71.4 million for the three months ended March 31, 2025, compared to $48.8 million for the same period in 2024[195]. - Cash used in investing activities decreased significantly from $123.2 million in 2024 to $35.9 million in 2025[196]. - Cash flows from financing activities included $425.0 million in borrowings under the Third Amended Revolving Facility for the three months ended March 31, 2025[197]. - The company plans to pay approximately $597 million in cash for the acquisition of Care REIT plc, with $606 million deposited in escrow[188]. - The company entered into a Third Amended Credit Agreement providing for an unsecured revolving credit facility with an aggregate principal amount of $1.2 billion[201]. - As of March 31, 2025, the company had borrowings outstanding of $425.0 million under the Third Amended Revolving Facility[203]. - Future borrowings under the Third Amended Revolving Facility will be used for working capital, capital expenditures, acquisitions, and general corporate purposes[201]. - The interest rates applicable to loans under the Third Amended Revolving Facility range from 0.05% to 0.55% per annum for base rate loans and from 1.05% to 1.55% per annum for SOFR-based loans[204]. - An increase of 100 basis points in interest rates would have increased interest expense by approximately $1.1 million for the three months ended March 31, 2025[212]. - The company has committed to fund expansions and capital improvements totaling $7.2 million, with $6.3 million subject to rent increase at the time of funding[206]. - The company is required to pay dividends to maintain its REIT status, with quarterly payments expected to be no less than 90% of annual REIT taxable income[207]. - As of March 31, 2025, the company was in compliance with all applicable financial covenants under the Third Amended Credit Agreement[205]. - The company has non-real estate secured loan commitments of $12.2 million as of March 31, 2025[206]. - The company may seek to increase the aggregate principal amount of revolving commitments and/or establish new tranches of term loans not exceeding $800.0 million under the Third Amended Credit Facility[202]. Market Conditions - The Centers for Medicare and Medicaid Services proposed a 2.8% increase in Medicare Part A payments to skilled nursing facilities for fiscal 2026, following a 4.2% increase in fiscal 2025[145]. - Recent macroeconomic conditions, including inflation and elevated interest rates, have negatively impacted tenants' ability to meet financial obligations[143].