CareTrust REIT(US:CTRE)2025-08-06 20:07Company Overview - As of June 30, 2025, CareTrust REIT owned and leased 400 skilled nursing facilities and other healthcare-related properties, totaling 36,162 operational beds and units across 32 states and the U.K.[174] - The Care REIT Acquisition was completed on May 8, 2025, with Care REIT stockholders receiving 108 pence per share, totaling approximately $595.4 million, and Care REIT's liabilities assumed were about $290.9 million[176]. Financial Performance - During the three months ended June 30, 2025, CareTrust REIT collected 99.7% of contractual rents and interest due from operators and borrowers, excluding cash deposits[178]. - Rental income increased by approximately $14.4 million, or 20%, to $86.0 million for the three months ended June 30, 2025, compared to $71.6 million for the three months ended March 31, 2025[202]. - Rental income increased by $48.8 million, or 45%, to $157.7 million for the six months ended June 30, 2025, compared to $108.9 million for the same period in 2024[213]. - Interest income from financing receivable was recorded at $5.7 million during the six months ended June 30, 2025[215]. - Interest income from other real estate related investments and other income increased by $22.7 million, primarily due to a $24.7 million increase from loans receivable originated after December 31, 2023[216]. - The company recognized no impairment charges during the three and six months ended June 30, 2025, compared to impairment charges of $25.7 million and $28.5 million in the same periods of 2024[197]. - The company recorded a $4.4 million gain on foreign currency transactions during the three months ended June 30, 2025, related to cash paid to Care REIT shareholders[211]. - The company recognized $3.9 million gain on sale of real estate during the six months ended June 30, 2025, compared to a $32,000 gain in the same period of 2024[223]. Acquisitions and Investments - The company made acquisitions totaling $1,085.2 million from January 1, 2025, to August 6, 2025, which included 145 properties and 8,858 beds/units[185]. - The company disposed of five facilities during the six months ended June 30, 2025, generating net sales proceeds of $44.4 million[199]. - As of June 30, 2025, the net carrying value of assets held for sale was $55.2 million, with 16 facilities classified as held for sale[200]. - The company has committed to fund expansions and improvements totaling $9.9 million, with $8.4 million subject to rent increases upon funding[247]. Debt and Financing - CareTrust REIT entered into a $500 million unsecured term loan facility on May 30, 2025, to support its financing activities[189]. - The company paid off its entire outstanding balance of secured notes payable and terminated secured revolving credit facilities post-June 30, 2025, funded by cash on hand and $65 million in net borrowings[190]. - Cash used in investing activities rose to $825.3 million for the six months ended June 30, 2025, from $468.6 million in 2024, primarily due to $842.8 million in real estate acquisitions[234]. - Cash provided by financing activities was $745.1 million for the six months ended June 30, 2025, compared to $567.5 million in 2024, driven by $500.0 million in net borrowings under the Third Amended Revolving Facility[235]. - As of June 30, 2025, the company had $500.0 million of borrowings outstanding under the Term Loan Facility and no borrowings under the Third Amended Revolving Facility[242]. - The company assumed liabilities of approximately $290.9 million in connection with the Care REIT Acquisition, including $240 million in secured revolving credit facilities[245]. Interest Rates and Economic Conditions - The company continues to monitor macroeconomic conditions, including inflation and interest rates, which have adversely impacted tenants' financial obligations[177]. - An increase in interest rates could raise the costs of variable rate debt obligations and limit the company's ability to refinance debt[252]. - A hypothetical 100 basis point increase in interest rates would have increased interest expense by approximately $2.6 million for the six months ended June 30, 2025[254]. - The company has £270.4 million of British Pound denominated intercompany debt as of June 30, 2025, to mitigate foreign exchange exposure[256]. - A 10% change in the applicable exchange rate would result in a $0.4 million increase or decrease in net income from U.K.-based investments[257]. Shareholder Returns - The company intends to distribute at least 90% of its REIT taxable income to stockholders on an annual basis, subject to board discretion[227]. - The company expects to make quarterly dividend payments with an annual amount no less than 90% of its annual REIT taxable income[248]. Operational Expenses - Interest expense increased by approximately $6.4 million, or 96%, to $13.0 million for the three months ended June 30, 2025, primarily due to new term loan facilities and increased borrowing amounts[205]. - General and administrative expenses rose by $3.5 million, or 39%, to $12.5 million for the three months ended June 30, 2025, compared to $9.0 million for the previous quarter[208]. - General and administrative expenses rose by $8.6 million, totaling $21.6 million for the six months ended June 30, 2025, compared to $13.0 million in the prior year[223]. - Depreciation and amortization increased by $11.7 million, or 43%, primarily due to acquisitions and capital improvements made after December 31, 2023[217]. Risk Management - The company was in compliance with all applicable financial covenants under the Third Amended Credit Agreement as of June 30, 2025[244]. - The company has two interest rate caps for a notional amount of £100 million to manage interest rate risks related to borrowings[253]. - The company has four foreign currency forward contracts with notional amounts totaling £31 million maturing between 2025 and 2026 to hedge interest expense on intercompany debt in the U.K.[257].