ALBUQUERQUE, N.M., and BROWNSVILLE, Texas — CareTrust REIT, Inc. (NASDAQ: CTRE) has acquired two skilled nursing facilities: The Rio at Cabezon, a 136-bed facility located in Albuquerque, and The Rio at Fox Hollow, a 126-bed facility in Brownsville, at the southern tip of Texas along the Mexican border.
The purchase price was approximately $27.3 million, inclusive of transaction costs. The Albuquerque facility represents CareTrust’s entry into the New Mexico market.
In connection with the acquisition, CareTrust REIT assumed the existing facility leases with affiliates of OnPointe Health LLC, a regional post-acute care provider with operations in Texas, New Mexico and Colorado.
"We are excited to be commencing this relationship with OnPointe, whose reputation for quality and innovation is well-known within the industry," says Mark Lamb, CareTrust’s director of investments. "In addition, both properties are nearly brand new, are extremely well located, and are very well regarded in their respective communities."
The seller was a prominent Texas developer. The properties are currently in the lease-up period and approaching stabilization, according to Lamb.
The investment is expected to generate an initial cash yield of 9 percent, based on the annual cash rent of $2.5 million under the terms of the existing leases. The two existing leases have remaining terms of approximately 17 and 19 years, respectively, and include a hybrid of fixed and CPI-based rent escalators.
CareTrust REIT, a publicly traded investor based in California, funded the acquisition with cash on hand.