CareTrust REIT(US:CTRE)2026-02-13 19:00Financial Data and Key Metrics Changes - For Q4 2025, normalized FFO increased by 42.7% over the prior quarter to $104.1 million, while normalized FAD increased by 38.7% to $103 million [15] - On a per-share basis, normalized FFO increased by $0.07, or 17.5%, to $0.47 per share, and normalized FAD increased by $0.05, or 12.2%, to $0.46 per share [15] - For the full year, normalized FFO per share increased by $0.26, or 17.3%, to $1.76 per share, and normalized FAD increased by $0.22, or 14.3%, to $1.76 per share [15] Business Line Data and Key Metrics Changes - In Q4, the company completed approximately $562 million of investments, including its first SHOP deal, which involved three communities in Texas totaling 270 assisted living and memory care units [11] - The blended stabilized yield on Q4 investments was 8.8% [11] - Since year-end, the company has closed on approximately $215 million of investments, including six skilled nursing facilities and two care homes in the UK [12] Market Data and Key Metrics Changes - The investment pipeline remains strong at approximately $500 million, with about half in UK care homes, a third in skilled nursing, and the remainder in a combination of SHOP deals and loans [12][35] - The skilled nursing operating environment is stable and largely supportive across most states, with the senior housing environment in both the U.S. and U.K. also stable and gaining strength [8] Company Strategy and Development Direction - The company aims to be a unique healthcare REIT focused on disciplined investments in assets and operators that can significantly impact senior housing and care [10] - The company has doubled its team and added capabilities in areas like tax and data science to support long-term growth [6] - The strategic push into the UK care home market and the SHOP segment is seen as a significant growth opportunity [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the skilled nursing environment, noting improvements in labor conditions and regulatory frameworks [25] - The company anticipates a substantial year of external growth, supported by a strong balance sheet and access to capital [9][19] - Initial guidance for fiscal year 2026 indicates normalized FFO per share of $1.90-$1.95, representing a year-over-year increase of 9.4% [17] Other Important Information - The company sold 6.5 million shares on a forward basis at an average price of $37.30, generating gross proceeds of approximately $242.5 million [16] - The company maintains low leverage with net debt to EBITDA of 0.7 times and a fixed charge coverage ratio of 10.5 times [19] Q&A Session Summary Question: Guidance and expectations for the pipeline going forward - Management indicated that they are seeing consistent inbound interest in SHOP deals and are open to both large and small opportunities [22][23] Question: Sustainability of coverage levels in skilled nursing facilities - Management believes the skilled nursing environment is strong, with operators eager to grow and occupancy levels providing room for improvement [25][26] Question: Focus of data analytic hires - The data science team is primarily focused on enhancing SHOP capabilities but will impact the entire organization [31] Question: Details on the investment pipeline - The pipeline consists of approximately half UK care homes, a third US skilled nursing, and the remainder in SHOP and loans [35] Question: Competitive landscape in property types - SHOP is noted as the most competitive segment, with significant capital pursuing deals [36] Question: Future funding strategies - Management plans to balance between equity issuances and utilizing balance sheet capacity as opportunities arise [60][61] Question: Underwriting criteria within SHOP - The company continues to seek low double-digit IRR and evaluates each deal's path to achieving that, despite cap rate compression [59]