CareTrust REIT(CTRE)2022-05-06 19:29Financial Data and Key Metrics Changes - Normalized FFO grew by 5.2% year-over-year to $35.9 million, while normalized FAD increased by 4.8% to $37.9 million [21] - On a per share basis, normalized FFO rose by 2.8% to $0.37, and normalized FAD grew by 2.6% to $0.39 [21] - Rental income for the quarter was $46 million, down from $49.1 million in Q4 2021, attributed to a $1.7 million decrease in cash rents and a reserve for doubtful accounts of $977,000 [21][22] Business Line Data and Key Metrics Changes - Approximately 95% of rent was collected in the quarter, with April collections at 93% [9] - Skilled nursing occupancy remained stable at 71.4%, compared to pre-pandemic levels of 78% [9] - Seniors housing occupancy increased by 100 basis points to 77%, compared to a low of 75% in November [9] Market Data and Key Metrics Changes - The M&A market for skilled nursing and seniors housing assets remains mixed, with a wide spectrum of opportunities from non-stable to Class A assets [15] - The current pipeline is estimated to be in the range of $150 million to $175 million, predominantly consisting of skilled nursing assets [18][52] Company Strategy and Development Direction - The company plans to reposition 32 assets, with 3 properties being repurposed into substance addiction recovery centers [7][10] - A partnership with a leading bridge-to-HUD lender aims to support growth in both existing and new operator relationships [11] - Key personnel changes have been made to enhance growth, including hiring a Vice President of Asset Management [12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the operating environment, noting that the worst appears to be behind operators [9] - The company is focused on finding and supporting best-in-class operators, particularly in the skilled nursing and behavioral health sectors [13][54] - Management anticipates that the behavioral health sector will continue to attract institutional capital, leading to more sophisticated operators entering the market [60] Other Important Information - An impairment charge of $59.7 million was recorded due to the decision to sell 27 assets [22] - The company maintains strong liquidity with approximately $25 million in cash and $495 million available under its revolver [24] Q&A Session Summary Question: What is the expected dollar value of the 27 assets being sold? - Management indicated it is too early to provide a range for proceeds, as bids have not yet started rolling in [26] Question: Can you provide the new book value post-impairment? - The new book value can be found in the 10-Q filing [27] Question: Do you expect any new watch list tenants to emerge? - Management does not expect new additions to the watch list, as they are proactively managing existing tenants [29] Question: What is the mix between skilled nursing facilities and seniors housing in the repositioning plan? - The vast majority of the 32 assets are seniors housing, not skilled nursing [32] Question: How do you see valuations affected by rising interest rates? - Rising interest rates have not yet affected valuations, but future quarters may see changes as interest rates fluctuate [46] Question: What is the expected yield on the repurposed addiction recovery centers? - The expected stabilized lease coverage is north of 3x, with occupancy anticipated to be in the 90s [41]