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CareTrust REIT (Nasdaq:CTRE) today announced that it has agreed to acquire a three-facility assisted living and memory care portfolio from Cross Healthcare, an assisted living and seniors housing operators. The Idaho portfolio includes 90 units and is being purchased for $12.0 million.
The three facilities will be leased back to Cross affiliates under a triple-net master lease agreement.
“We are pleased that Cross chose CareTrust to be their real estate financing partner as they grow their company,” said Greg Stapley, CareTrust’s Chairman and Chief Executive Officer. “As a growing and locally-based regional operator with great understanding of how to successfully operate in their core markets, Ryan Rasmussen and his outstanding Cross team fit our target operator profile perfectly,” he added.
Ryan Rasmussen, Cross’ Chief Executive Officer, said, “This transaction allows us to use some of the equity we’ve created at Cross to restructure our ownership, and clears the way for our next wave of growth,” noting that the company already has two additional projects underway. “CareTrust came to Idaho, immediately understood what we needed and offered us an arrangement that we could use as a platform to expand our business into adjacent markets,” he added.
The seniors housing investment carries an initial cash yield of 8.5% on EBITDAR lease coverage of 1.31x, producing initial annual lease revenue of $1.02 million. The lease carries a term of 12 years with two five-year renewal options and provides for annual CPI-based rent escalators. The three facilities, located in Pocatello and Idaho Falls, Idaho, have an average age of eight years and are 92% occupied. The agreement also includes rights for CareTrust to acquire three additional Cross assets, two of which are currently undergoing renovation, lease-up and stabilization, at fixed-formula pricing, and one of which is a new development.
CareTrust REIT, Inc. is a real estate investment company that is engaged in the ownership, acquisition and leasing of seniors housing and healthcare-related properties. CareTrust is organized and conducts its operations to qualify as a REIT for U.S. federal income tax purposes. With 94 net-leased healthcare properties and three operated seniors housing properties in ten states, CareTrust is pursuing opportunities nationwide to acquire additional properties that will be leased to a diverse group of local, regional and national seniors housing operators, healthcare services providers, and other healthcare-related businesses.
