CareTrust REIT Invests $45.2M in West Coast Seniors Housing Properties

by Jeff Shaw

SAN CLEMENTE, Calif. — CareTrust REIT Inc. (NYSE: CTRE), a San Clemente-based REIT, has closed two separate transactions on the West Coast with an aggregate initial investment amount of approximately $45.2 million.

The investments include the acquisition of a skilled nursing facility as well as the funding of a mortgage loan secured by a California skilled nursing, assisted living and independent living campus.

CareTrust acquired the 99-bed skilled nursing facility on the West Coast with an initial investment amount, inclusive of transaction costs, of approximately $19.2 million. The acquisition completes a four-property transaction that was previously announced.

Concurrently with closing, the facility was added to CareTrust’s existing master lease with Links Healthcare Group, which will operate the facility. Annual cash rent for the first year under the Links master lease portfolio was increased to approximately $6.8 million from $5.4 million, second year rent was increased to approximately $7.6 million up from $6.1 million, and annual rent for the third year was increased to approximately $8.9 million from $7.1 million, with CPI-based annual escalators thereafter.

CareTrust also funded a mortgage loan for a regional owner of skilled nursing facilities in the amount of approximately $26 million at an initial rate of 9 percent and a term of 10 years. The loan proceeds were used by the borrower to fund its acquisition of an 83-bed skilled nursing, 46-unit assisted living and 99-unit independent living campus located in Loma Linda, California. The portions of the property are named Linda Valley Care Center, Linda Valley Assisted Living and Linda Valley Villa, respectively.

Affiliates of The Providence Group will operate the skilled nursing and assisted living portion of the campus, while an affiliate of Chancellor Health Care will operate the independent living portion, each pursuant to new master lease agreements. CareTrust and the borrower subsequently entered into a joint-venture arrangement pursuant to which the mortgage loan would be replaced with the company acquiring a common equity and a preferred equity interest in the entities owning the campus facilities.

CareTrust funded he investments using proceeds from its $600 million unsecured revolving credit facility as well as cash on hand. At June 30, 2023, the Company had $280 million outstanding on the unsecured revolving credit facility.

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