Conference Call Scheduled for Wednesday, October 30, 2024 at
1:00 pm ET
CareTrust REIT, Inc. (NYSE:CTRE) today reported operating
results for the quarter ended September 30, 2024, as well as other
recent events.
For the quarter, CareTrust REIT reported:
- Investments of $440.8 million at an estimated stabilized yield
of 9.1%;
- 17.2 million shares sold under its ATM Program for gross
proceeds of $500.1 million;
- Prepayment of the entirety of the $200.0 million term
loan;
- 98.7% of contractual rent and interest collected;
- Net income of $33.4 million and net income per share of
$0.21;
- Net Debt to Annualized Normalized Run Rate EBITDA of
0.08x;
- Normalized FFO of $60.9 million and normalized FFO per share of
$0.38;
- Normalized FAD of $61.9 million and normalized FAD per share of
$0.39;
- A quarterly dividend of $0.29 per share, representing a payout
ratio of approximately 74% on normalized FAD; and
- Year-over-year market cap growth of approximately 123%.
Since quarter end, CareTrust REIT reported:
- Investments totaling approximately $89.2 million at an
estimated stabilized yield of 9.2% and $916.5 million year-to-date
at an estimated stabilized yield of 9.4%;
- Pending acquisition of four skilled nursing facilities in the
Northeast for approximately $57 million at an estimated stabilized
yield of 8.8% with an estimated closing in November 2024;
- Entering into a material contract to acquire a portfolio of 31
skilled nursing assets in Tennessee for a purchase price of $500
million, investing $442 million, at an estimated yield of 9.0%,
expected to close by year-end;
- Investment pipeline of approximately $700 million at an average
estimated yield of 9.5%, which includes the pending Northeast
acquisition and Tennessee contract noted above;
- Initiating a process to extend and upsize its existing
revolving credit line to $1.2 billion; and
- Cash on hand of approximately $234 million.
CareTrust’s President and Chief Executive Officer, Dave
Sedgwick, commented on the Company’s 2024 third quarter results.
“The large portfolio in Tennessee we announced today is a
tremendous way to close out an extraordinary year. We are proud to
again support the expansion of some of the country’s best operators
who have a proven commitment to caring for the employees,
residents, patients, and communities they serve.” Mr. Sedgwick
continued, “There has never been a more exciting time for
CareTrust. We are on track to invest approximately $1.4 billion at
an average yield of approximately 9.3% by the end of the year and
the pipeline continues to reload with compelling opportunities to
grow and diversify the portfolio further next year. The flywheel is
racing.”
Financial Results for Quarter Ended September 30,
2024
Chief Financial Officer, Bill Wagner, reported that, for the
third quarter, CareTrust reported net income of $33.4 million, or
$0.21 per diluted weighted-average common share, normalized FFO of
$60.9 million, or $0.38 per diluted weighted-average common share,
and normalized FAD of $61.9 million, or $0.39 per diluted
weighted-average common share.
Liquidity
As of quarter end, CareTrust reported net debt-to-annualized
normalized run rate EBITDA of 0.08x, which is below the Company's
target leverage range of 4.0x to 5.0x, and a net debt-to-enterprise
value of approximately 0.4%. Mr. Wagner stated that, as of today,
the Company has no borrowings outstanding on its $600 million
revolving credit line, with no scheduled debt maturities prior to
2027. He also disclosed that CareTrust currently has approximately
$234 million in cash on hand. During the third quarter of 2024, the
Company sold 17.2 million shares under the ATM Program at a
weighted average sales price of $29.01 for gross proceeds of $500.1
million. As of September 30, 2024, the Company had $440.1 million
available for future issuances under the ATM Program. "We have
continued to use our ATM Program to take advantage of a current
cost of equity that allows us to fund a replenishing pipeline of
accretive investment opportunities," said Mr. Wagner.
Guidance Updated
The Company updated guidance for 2024, with Mr. Wagner
projecting on a per-diluted weighted-average common share basis net
income of approximately $0.83 to $0.84, normalized FFO of
approximately $1.49 to $1.50, and normalized FAD of approximately
$1.53 to $1.54. He noted that the 2024 guidance is based on a
diluted weighted-average common share count of 152.6 million
shares, and assumes the following:
- All investments year-to-date;
- No new investments, other than the Northeast acquisition
expected to close in November 2024;
- Dispositions and loan repayments made to date;
- No new dispositions or loan repayments beyond those completed
or announced to date;
- No new debt incurrences or new equity issuances; and
- Estimated 2.5% CPI-based rent escalators under CareTrust's
long-term net leases.
Dividend Maintained
During the quarter, CareTrust declared a quarterly dividend of
$0.29 per common share. On an annualized basis, the payout ratio
was approximately 76% based on third quarter 2024 normalized FFO,
and 74% based on third quarter 2024 normalized FAD.
Conference Call
A conference call will be held on Wednesday, October 30, 2024,
at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time), during which
CareTrust’s management will discuss third quarter 2024 results,
recent developments and other matters. The toll-free dial-in number
is 1 (800) 715-9871 or toll dial-in number is 1 (646) 307-1963 and
the conference ID number is 2243604. To listen to the call online,
or to view any financial or other statistical information required
by SEC Regulation G, please visit the Investors section of the
CareTrust REIT website at http://investor.caretrustreit.com. This
call will be recorded, and will be available for replay via the
website for 30 days following the call.
About CareTrust™
CareTrust REIT, Inc. is a self-administered, publicly-traded
real estate investment trust engaged in the ownership, acquisition,
development and leasing of skilled nursing, seniors housing and
other healthcare-related properties. With a nationwide portfolio of
long-term net-leased properties, and a growing portfolio of quality
operators leasing them, CareTrust REIT is pursuing both external
and organic growth opportunities across the United States. More
information about CareTrust REIT is available at www.caretrustreit.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995:
This press release contains, and the related conference call
will include, forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements include all statements that are not historical
statements of fact and statements regarding the Company’s intent,
belief or expectations, including, but not limited to, statements
regarding the following: future financial and financing plans;
strategies related to the Company's business and its portfolio,
including acquisition opportunities and disposition plans; growth
prospects; operating and financial performance; expectations
regarding the revolving credit line and the making of distributions
and payment of dividends; and the performance of the Company’s
tenants and operators and their respective facilities.
Words such as “anticipate,” “believe,” “could,” “expect,”
“estimate,” “intend,” “may,” “plan,” “seek,” “should,” “will,”
“would,” and similar expressions, or the negative of these terms,
are intended to identify such forward-looking statements, though
not all forward-looking statements contain these identifying words.
The Company’s forward-looking statements are based on management’s
current expectations and beliefs, and are subject to a number of
risks and uncertainties that could lead to actual results differing
materially from those projected, forecasted or expected. Although
the Company believes that the assumptions underlying these
forward-looking statements are reasonable, they are not guarantees
and the Company can give no assurance that its expectations will be
attained. Factors which could have a material adverse effect on the
Company’s operations and future prospects or which could cause
actual results to differ materially from expectations include, but
are not limited to: (i) the ability and willingness of our tenants
to meet and/or perform their obligations under the triple-net
leases we have entered into with them, including without
limitation, their respective obligations to indemnify, defend and
hold us harmless from and against various claims, litigation and
liabilities; (ii) the risk that we may have to incur additional
impairment charges related to our assets held for sale if we are
unable to sell such assets at the prices we expect; (iii) the
impact of healthcare reform legislation, including minimum staffing
level requirements, on the operating results and financial
conditions of our tenants; (iv) the ability of our tenants to
comply with applicable laws, rules and regulations in the operation
of the properties we lease to them; (v) the ability and willingness
of our tenants to renew their leases with us upon their expiration,
and the ability to reposition our properties on the same or better
terms in the event of nonrenewal or in the event we replace an
existing tenant, as well as any obligations, including
indemnification obligations, we may incur in connection with the
replacement of an existing tenant; (vi) the availability of and the
ability to identify (a) tenants who meet our credit and operating
standards, and (b) suitable acquisition opportunities and the
ability to acquire and lease the respective properties to such
tenants on favorable terms; (vii) the ability to generate
sufficient cash flows to service our outstanding indebtedness;
(viii) access to debt and equity capital markets; (ix) fluctuating
interest rates; (x) the impact of public health crises, including
significant COVID-19 outbreaks as well as other pandemics or
epidemics; (xi) the ability to retain our key management personnel;
(xii) the ability to maintain our status as a real estate
investment trust (“REIT”); (xiii) changes in the U.S. tax law and
other state, federal or local laws, whether or not specific to
REITs; (xiv) other risks inherent in the real estate business,
including potential liability relating to environmental matters and
illiquidity of real estate investments; and (xv) any additional
factors included in our Annual Report on Form 10-K for the year
ended December 31, 2023 and our Quarterly Reports on Form 10-Q for
the quarters ended March 31, 2024 and June 30, 2024, including in
the section entitled “Risk Factors” in Item 1A of such reports, as
such risk factors may be amended, supplemented or superseded from
time to time by other reports we file with the SEC.
This press release and the related conference call provides
information about the Company's financial results as of and for the
quarter ended September 30, 2024 and is provided as of the date
hereof, unless specifically stated otherwise. The Company expressly
disclaims any obligation to update or revise any information in
this press release or the related conference call (and replays
thereof), including forward-looking statements, whether to reflect
any change in the Company’s expectations, any change in events,
conditions or circumstances, or otherwise.
As used in this press release or the related conference call,
unless the context requires otherwise, references to “CTRE,”
"CareTrust," “CareTrust REIT” or the “Company” refer to CareTrust
REIT, Inc. and its consolidated subsidiaries. GAAP refers to
generally accepted accounting principles in the United States of
America.
CARETRUST REIT, INC.
CONSOLIDATED INCOME
STATEMENTS
(in thousands, except per
share data)
(Unaudited)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2024
2023
2024
2023
Revenues:
Rental income
$
57,153
$
51,218
$
166,062
$
145,126
Interest and other income
20,228
4,659
43,280
12,910
Total revenues
77,381
55,877
209,342
158,036
Expenses:
Depreciation and amortization
14,009
13,034
41,317
37,988
Interest expense
8,281
11,750
25,188
32,617
Property taxes
2,115
2,167
5,892
4,437
Impairment of real estate investments
8,417
8,232
36,872
31,510
Property operating expenses
3,477
1,239
4,392
2,860
General and administrative
6,663
5,519
19,637
15,298
Total expenses
42,962
41,941
133,298
124,710
Other loss:
Loss on extinguishment of debt
(657
)
—
(657
)
—
(Loss) gain on sale of real estate,
net
(2,286
)
—
(2,254
)
1,958
Unrealized gain (loss) on other real
estate related investments, net
1,800
(5,251
)
(689
)
(7,856
)
Total other loss
(1,143
)
(5,251
)
(3,600
)
(5,898
)
Net income
33,276
8,685
72,444
27,428
Net loss attributable to noncontrolling
interests
(165
)
(11
)
(501
)
(11
)
Net income attributable to CareTrust
REIT, Inc.
$
33,441
$
8,696
$
72,945
$
27,439
Earnings per common share attributable
to CareTrust REIT, Inc.:
Basic
$
0.21
$
0.08
$
0.50
$
0.27
Diluted
$
0.21
$
0.08
$
0.50
$
0.27
Weighted-average number of common
shares:
Basic
159,459
104,011
145,780
100,748
Diluted
159,850
104,311
146,153
100,918
Dividends declared per common
share
$
0.29
$
0.28
$
0.87
$
0.84
CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME
TO NON-GAAP FINANCIAL MEASURES
(in thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Net income attributable to CareTrust
REIT, Inc.
$
33,441
$
8,696
$
72,945
$
27,439
Depreciation and amortization
14,009
13,034
41,317
37,988
Interest expense[1]
7,807
11,750
24,257
32,617
Amortization of stock-based
compensation
1,143
1,519
4,669
3,379
EBITDA attributable to CareTrust REIT,
Inc.
56,400
34,999
143,188
101,423
Impairment of real estate investments
8,417
8,232
36,872
31,510
Property operating expenses
3,893
1,416
5,226
3,381
Loss (gain) on sale of real estate,
net
2,286
—
2,254
(1,958
)
Loss on extinguishment of debt
657
—
657
—
Unrealized (gain) loss on other real
estate related investments, net
(1,800
)
5,251
689
7,856
Normalized EBITDA attributable to
CareTrust REIT, Inc.
69,853
49,898
$
188,886
$
142,212
Full impact of quarterly
investments[2]
3,493
607
Normalized Run Rate EBITDA attributable
to CareTrust REIT, Inc.
$
73,346
$
50,505
Net income attributable to CareTrust
REIT, Inc.
$
33,441
$
8,696
$
72,945
$
27,439
Real estate related depreciation and
amortization
14,002
13,028
41,297
37,973
Impairment of real estate investments
8,417
8,232
36,872
31,510
Loss (gain) on sale of real estate,
net
2,286
—
2,254
(1,958
)
Funds from Operations (FFO)
attributable to CareTrust REIT, Inc.
58,146
29,956
153,368
94,964
Property operating expenses
3,893
1,416
5,226
3,381
Loss on extinguishment of debt
657
—
657
—
Unrealized (gain) loss on other real
estate related investments, net
(1,800
)
5,251
689
7,856
Normalized FFO attributable to
CareTrust REIT, Inc.
$
60,896
$
36,623
$
159,940
$
106,201
NET DEBT TO ANNUALIZED
NORMALIZED RUN RATE EBITDA RECONCILIATION
(in thousands)
(Unaudited)
Three Months Ended September
30,
2024
2023
Total debt
$
400,000
$
600,000
Cash, cash equivalents
(377,102
)
(3,485
)
Net proceeds from ATM forward[3]
—
(96,132
)
Net Debt
$
22,898
$
500,383
Annualized Normalized Run Rate EBITDA
attributable to CareTrust REIT, Inc.[4]
$
293,384
$
202,020
Net Debt to Annualized Normalized Run
Rate EBITDA attributable to CareTrust REIT, Inc.
0.08x
2.5x
[1] Interest Expense excludes the effect
of the $75.0 million participation interest recorded as a secured
borrowing in the consolidated balance sheets.
[2] Quarterly adjustments give effect to
the investments completed and loans receivable pay downs during the
three months ended for the respective period as though such
investments and pay downs were completed as of the beginning of the
period.
[3] Net proceeds from the future expected
settlement of shares sold under equity forward contracts through
the Company's ATM program.
[4] Annualized Normalized Run Rate EBITDA
is calculated as Normalized Run Rate EBITDA attributable to
CareTrust REIT, Inc. for the quarter multiplied by four (4).
CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME
TO NON-GAAP FINANCIAL MEASURES (continued)
(in thousands, except per
share data)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Net income attributable to CareTrust
REIT, Inc.
$
33,441
$
8,696
$
72,945
$
27,439
Real estate related depreciation and
amortization
14,002
13,028
41,297
37,973
Amortization of deferred financing
fees
614
609
1,842
1,826
Amortization of stock-based
compensation
1,143
1,519
4,669
3,379
Straight-line rental income
7
7
21
21
Amortization of lease incentive
5
—
9
—
Amortization of below market lease
intangible
(809
)
—
(1,959
)
—
Impairment of real estate investments
8,417
8,232
36,872
31,510
Loss (gain) on sale of real estate,
net
2,286
—
2,254
(1,958
)
Funds Available for Distribution (FAD)
attributable to CareTrust REIT, Inc.
59,106
32,091
157,950
100,190
Property operating expenses
3,893
1,416
5,226
3,381
Loss on extinguishment of debt
657
—
657
—
Unrealized (gain) loss on other real
estate related investments, net
(1,800
)
5,251
689
7,856
Normalized FAD attributable to
CareTrust REIT, Inc.
$
61,856
$
38,758
$
164,522
$
111,427
FFO per share attributable to CareTrust
REIT, Inc.
$
0.36
$
0.29
$
1.05
$
0.94
Normalized FFO per share attributable
to CareTrust REIT, Inc.
$
0.38
$
0.35
$
1.09
$
1.05
FAD per share attributable to CareTrust
REIT, Inc.
$
0.37
$
0.31
$
1.08
$
0.99
Normalized FAD per share attributable
to CareTrust REIT, Inc.
$
0.39
$
0.37
$
1.12
$
1.10
Diluted weighted average shares
outstanding [1]
160,025
104,422
146,295
101,010
[1] For the periods presented, the diluted
weighted average shares have been calculated using the treasury
stock method.
CARETRUST REIT, INC.
CONSOLIDATED INCOME STATEMENTS
- 5 QUARTER TREND
(in thousands, except per
share data)
(Unaudited)
Quarter
Quarter
Quarter
Quarter
Quarter
Ended
Ended
Ended
Ended
Ended
September 30, 2023
December 31, 2023
March 31, 2024
June 30, 2024
September 30, 2024
Revenues:
Rental income
$
51,218
$
53,473
$
53,502
$
55,407
$
57,153
Interest and other income
4,659
6,261
9,568
13,484
20,228
Total revenues
55,877
59,734
63,070
68,891
77,381
Expenses:
Depreciation and amortization
13,034
13,211
13,448
13,860
14,009
Interest expense
11,750
8,266
8,228
8,679
8,281
Property taxes
2,167
1,733
1,801
1,976
2,115
Impairment of real estate investments
8,232
4,791
2,744
25,711
8,417
Property operating expenses
1,239
563
660
255
3,477
General and administrative
5,519
6,507
6,838
6,136
6,663
Total expenses
41,941
35,071
33,719
56,617
42,962
Other (loss) income:
Loss on extinguishment of debt
—
—
—
—
(657
)
Gain (loss) on sale of real estate,
net
—
260
11
21
(2,286
)
Unrealized (loss) gain on other real
estate related investments, net
(5,251
)
1,371
(612
)
(1,877
)
1,800
Total other (loss) income
(5,251
)
1,631
(601
)
(1,856
)
(1,143
)
Net income
8,685
26,294
28,750
10,418
33,276
Net (loss) income attributable to
noncontrolling interests
(11
)
(2
)
4
(340
)
(165
)
Net income attributable to CareTrust
REIT, Inc.
$
8,696
$
26,296
$
28,746
$
10,758
$
33,441
Diluted earnings per share attributable
to CareTrust REIT, Inc.
$
0.08
$
0.22
$
0.22
$
0.07
$
0.21
Diluted weighted average shares
outstanding
104,311
121,684
133,202
145,258
159,850
CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME
TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND
(in thousands)
(Unaudited)
Quarter
Quarter
Quarter
Quarter
Quarter
Ended
Ended
Ended
Ended
Ended
September 30, 2023
December 31, 2023
March 31, 2024
June 30, 2024
September 30, 2024
Net income attributable to CareTrust
REIT, Inc.
$
8,696
$
26,296
$
28,746
$
10,758
$
33,441
Depreciation and amortization
13,034
13,211
13,448
13,860
14,009
Interest expense
11,750
8,266
8,228
8,222
7,807
Amortization of stock-based
compensation
1,519
1,774
2,120
1,406
1,143
EBITDA attributable to CareTrust REIT,
Inc.
34,999
49,547
52,542
34,246
56,400
Impairment of real estate investments
8,232
4,791
2,744
25,711
8,417
Property operating expenses
1,416
714
972
361
3,893
(Gain) loss on sale of real estate,
net
—
(260
)
(11
)
(21
)
2,286
Loss on extinguishment of debt
—
—
—
—
657
Unrealized loss (gain) on other real
estate related investments, net
5,251
(1,371
)
612
1,877
(1,800
)
Normalized EBITDA attributable to
CareTrust REIT, Inc.
$
49,898
$
53,421
$
56,859
$
62,174
$
69,853
Net income attributable to CareTrust
REIT, Inc.
$
8,696
$
26,296
$
28,746
$
10,758
$
33,441
Real estate related depreciation and
amortization
13,028
13,206
13,442
13,853
14,002
Impairment of real estate investments
8,232
4,791
2,744
25,711
8,417
(Gain) loss on sale of real estate,
net
—
(260
)
(11
)
(21
)
2,286
Funds from Operations (FFO)
attributable to CareTrust REIT, Inc.
29,956
44,033
44,921
50,301
58,146
Property operating expenses
1,416
714
972
361
3,893
Loss on extinguishment of debt
—
—
—
—
657
Unrealized loss (gain) on other real
estate related investments, net
5,251
(1,371
)
612
1,877
(1,800
)
Normalized FFO attributable to
CareTrust REIT, Inc.
$
36,623
$
43,376
$
46,505
$
52,539
$
60,896
CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME
TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND
(continued)
(in thousands, except per
share data)
(Unaudited)
Quarter
Quarter
Quarter
Quarter
Quarter
Ended
Ended
Ended
Ended
Ended
September 30, 2023
December 31, 2023
March 31, 2024
June 30, 2024
September 30, 2024
Net income attributable to CareTrust
REIT, Inc.
$
8,696
$
26,296
$
28,746
$
10,758
$
33,441
Real estate related depreciation and
amortization
13,028
13,206
13,442
13,853
14,002
Amortization of deferred financing
fees
609
610
614
614
614
Amortization of stock-based
compensation
1,519
1,774
2,120
1,406
1,143
Straight-line rental income
7
8
7
7
7
Amortization of lease incentive
—
—
—
4
5
Amortization of below market lease
intangible
—
(384
)
(575
)
(575
)
(809
)
Impairment of real estate investments
8,232
4,791
2,744
25,711
8,417
(Gain) loss on sale of real estate,
net
—
(260
)
(11
)
(21
)
2,286
Funds Available for Distribution (FAD)
attributable to CareTrust REIT, Inc.
32,091
46,041
47,087
51,757
59,106
Property operating expenses
1,416
714
972
361
3,893
Loss on extinguishment of debt
—
—
—
—
657
Unrealized loss (gain) on other real
estate related investments, net
5,251
(1,371
)
612
1,877
(1,800
)
Normalized FAD attributable to
CareTrust REIT, Inc.
$
38,758
$
45,384
$
48,671
$
53,995
$
61,856
FFO per share attributable to CareTrust
REIT, Inc.
$
0.29
$
0.36
$
0.34
$
0.35
$
0.36
Normalized FFO per share attributable
to CareTrust REIT, Inc.
$
0.35
$
0.36
$
0.35
$
0.36
$
0.38
FAD per share attributable to CareTrust
REIT, Inc.
$
0.31
$
0.38
$
0.35
$
0.36
$
0.37
Normalized FAD per share attributable
to CareTrust REIT, Inc.
$
0.37
$
0.37
$
0.37
$
0.37
$
0.39
Diluted weighted average shares
outstanding [1]
104,422
121,854
133,328
145,380
160,025
[1] For the periods presented, the diluted
weighted average shares have been calculated using the treasury
stock method.
CARETRUST REIT, INC.
CONSOLIDATED BALANCE
SHEETS
(in thousands)
(Unaudited)
September 30, 2024
December 31, 2023
Assets:
Real estate investments, net
$
1,749,139
$
1,567,119
Other real estate related investments
(including accrued interest of $5,826 and $1,727 as of September
30, 2024 and December 31, 2023, respectively)
740,730
180,368
Assets held for sale
16,046
15,011
Cash and cash equivalents
377,102
294,448
Accounts and other receivables
881
395
Prepaid expenses and other assets, net
33,815
23,337
Deferred financing costs, net
3,166
4,160
Total assets
$
2,920,879
$
2,084,838
Liabilities and Equity:
Senior unsecured notes payable, net
$
396,705
$
396,039
Senior unsecured term loan, net
—
199,559
Accounts payable, accrued liabilities and
deferred rent liabilities
49,717
33,992
Dividends payable
49,721
36,531
Total liabilities
496,143
666,121
Equity:
Common stock
1,711
1,300
Additional paid-in capital
2,950,802
1,883,147
Cumulative distributions in excess of
earnings
(530,317
)
(467,628
)
Total stockholders' equity
2,422,196
1,416,819
Non-controlling interests
2,540
1,898
Total equity
2,424,736
1,418,717
Total liabilities and equity
$
2,920,879
$
2,084,838
CARETRUST REIT, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
(Unaudited)
For the Nine Months Ended
September 30,
2024
2023
Cash flows from operating activities:
Net income
$
72,444
$
27,428
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization (including
below-market ground leases)
41,371
38,031
Amortization of deferred financing
costs
1,843
1,826
Loss on extinguishment of debt
282
—
Unrealized loss on other real estate
related investments, net
689
7,856
Amortization of stock-based
compensation
4,669
3,379
Straight-line rental income
21
21
Amortization of lease incentives
9
—
Amortization of below market leases
(1,959
)
—
Noncash interest income
(4,099
)
(129
)
Loss (gain) on sale of real estate,
net
2,254
(1,958
)
Impairment of real estate investments
36,872
31,510
Change in operating assets and
liabilities:
Accounts and other receivables
(518
)
11
Prepaid expenses and other assets, net
(1,353
)
(68
)
Accounts payable, accrued liabilities and
deferred rent liabilities
16,518
4,189
Net cash provided by operating
activities
169,043
112,096
Cash flows from investing activities:
Acquisitions of real estate, net of
deposits applied
(267,356
)
(198,565
)
Purchases of equipment, furniture and
fixtures and improvements to real estate
(4,196
)
(9,139
)
Investment in real estate related
investments and other loans receivable
(504,936
)
(50,693
)
Preferred equity investments
(52,000
)
—
Principal payments received on real estate
related investments and other loans receivable
100
15,703
Escrow deposits for potential acquisitions
of real estate
(4,775
)
(4,075
)
Net proceeds from sales of real estate
5,076
14,464
Net cash used in investing activities
(828,087
)
(232,305
)
Cash flows from financing activities:
Proceeds from the issuance of common
stock, net
1,065,881
319,032
Proceeds from the secured borrowing
75,000
—
Borrowings under unsecured revolving
credit facility
—
185,000
Payments on unsecured revolving credit
facility
—
(310,000
)
Payments on senior unsecured term loan
(200,000
)
—
Payment on secured borrowing
(75,000
)
—
Payments on extinguishment of debt and
deferred financing costs
(399
)
(21
)
Net-settle adjustment on restricted
stock
(2,483
)
(1,479
)
Dividends paid on common stock
(122,444
)
(83,089
)
Contributions from noncontrolling
interests
1,204
1,073
Distributions to noncontrolling
interests
(61
)
—
Net cash provided by financing
activities
741,698
110,516
Net increase (decrease) in cash and cash
equivalents
82,654
(9,693
)
Cash and cash equivalents as of the
beginning of period
294,448
13,178
Cash and cash equivalents as of the end
of period
$
377,102
$
3,485
CARETRUST REIT, INC.
DEBT SUMMARY
(dollars in thousands)
(Unaudited)
September 30, 2024
Interest
Maturity
% of
Deferred
Net Carrying
Debt
Rate
Date
Principal
Principal
Loan Costs
Value
Fixed Rate Debt
Senior unsecured notes payable
3.875
%
2028
$
400,000
100.0
%
$
(3,295
)
$
396,705
Floating Rate Debt
Unsecured revolving credit facility
—
%
[1]
2027
[2]
—
—
%
—
[3]
—
—
%
—
—
%
—
—
Total Debt
3.875
%
$
400,000
100.0
%
$
(3,295
)
$
396,705
[1] Funds can be borrowed at applicable
SOFR plus 1.10% to 1.55% or at the Base Rate (as defined) plus
0.10% to 0.55%.
[2] Maturity date does not assume exercise
of two 6-month extension options.
[3] Deferred financing fees are not shown
net for the unsecured revolving credit facility and are included in
assets on the balance sheet.
CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME
TO NON-GAAP FINANCIAL MEASURES
(shares in thousands)
(Unaudited)
2024 Guidance Updated
Full Year 2024
Guidance[1]
Low
High
Net income attributable to CareTrust
REIT, Inc.
$
0.83
$
0.84
Real estate related depreciation and
amortization
0.36
0.36
Impairment of real estate investment
0.24
0.24
(Gain) loss on sale of real estate
0.02
0.02
Funds from Operations (FFO)
attributable to CareTrust REIT, Inc.
1.45
1.46
Property operating expenses
0.03
0.03
Unrealized loss on other real estate
related investments, net
0.01
0.01
Loss on the extinguishment of debt
—
—
Normalized FFO attributable to
CareTrust REIT, Inc.
$
1.49
$
1.50
Net income attributable to CareTrust
REIT, Inc.
$
0.83
$
0.84
Real estate related depreciation and
amortization
0.36
0.36
Amortization of deferred financing
fees
0.02
0.02
Amortization of stock-based
compensation
0.04
0.04
Straight-line rental income
—
—
Amortization of below market lease
intangible
(0.02
)
(0.02
)
Impairment of real estate investment
0.24
0.24
(Gain) loss on sale of real estate
0.02
0.02
Funds Available for Distribution (FAD)
attributable to CareTrust REIT, Inc.
1.49
1.50
Property operating expenses
0.03
0.03
Unrealized loss on other real estate
related investments, net
0.01
0.01
Loss on the extinguishment of debt
—
—
Normalized FAD attributable to
CareTrust REIT, Inc.
$
1.53
$
1.54
Weighted average shares
outstanding:
Diluted
152,595
152,595
[1]This guidance assumes and includes (i)
all investments, dispositions and loan repayments made to date,
(ii) no new investments, dispositions, new loans or loan
repayments, other than the Northeast acquisition expected to close
in November 2024, (iii) no new debt incurrences or new equity
issuances, and (iv) estimated 2.5% CPI-based rent escalators under
CareTrust's long-term net leases.
Non-GAAP Financial Measures
EBITDA attributable to CareTrust REIT, Inc. represents net
income (loss) attributable to CareTrust REIT, Inc. before interest
expense (including amortization of deferred financing costs),
amortization of stock-based compensation, and depreciation and
amortization. Normalized EBITDA attributable to CareTrust REIT,
Inc. represents EBITDA attributable to CareTrust REIT, Inc. as
further adjusted to eliminate the impact of certain items that the
Company does not consider indicative of core operating performance,
such as recovery of previously reversed rent, lease termination
revenue, property operating expenses, gains or losses from
dispositions of real estate, real estate impairment charges,
provision for loan losses, non-routine transaction costs, loss on
extinguishment of debt, unrealized loss on other real estate
related investments and provision for doubtful accounts and lease
restructuring, as applicable. EBITDA attributable to CareTrust
REIT, Inc. and Normalized EBITDA attributable to CareTrust REIT,
Inc. do not represent cash flows from operations or net income as
defined by GAAP and should not be considered an alternative to
those measures in evaluating the Company’s liquidity or operating
performance. EBITDA attributable to CareTrust REIT, Inc. and
Normalized EBITDA attributable to CareTrust REIT, Inc. do not
purport to be indicative of cash available to fund future cash
requirements, including the Company’s ability to fund capital
expenditures or make payments on its indebtedness. Further, the
Company’s computation of EBITDA and Normalized EBITDA may not be
comparable to EBITDA and Normalized EBITDA reported by other
REITs.
Funds from Operations (“FFO”), as defined by the National
Association of Real Estate Investment Trusts (“Nareit”), and Funds
Available for Distribution (“FAD”) are important non-GAAP
supplemental measures of operating performance for a REIT. Because
the historical cost accounting convention used for real estate
assets requires straight-line depreciation except on land, such
accounting presentation implies that the value of real estate
assets diminishes predictably over time. Since real estate values
have historically risen or fallen with market and other conditions,
presentations of operating results for a REIT that uses historical
cost accounting for depreciation could be less informative. Thus,
Nareit created FFO as a supplemental measure of operating
performance for REITs that excludes historical cost depreciation
and amortization, among other items, from net income, as defined by
GAAP.
FFO is defined by Nareit as net income computed in accordance
with GAAP, excluding gains or losses from dispositions of real
estate investments, real estate related depreciation and
amortization and real estate impairment charges, and adjustments
for unconsolidated partnerships and joint ventures. The Company
computes FFO attributable to CareTrust REIT, Inc. in accordance
with Nareit’s definition.
FAD attributable to CareTrust REIT, Inc. is defined as FFO
attributable to CareTrust REIT, Inc. excluding noncash income and
expenses, such as amortization of stock-based compensation,
amortization of deferred financing fees, amortization of above and
below market intangibles, amortization of lease incentives and the
effects of straight-line rent. The Company considers FAD
attributable to CareTrust REIT, Inc. to be a useful supplemental
measure to evaluate the Company’s operating results excluding these
income and expense items to help investors, analysts and other
interested parties compare the operating performance of the Company
between periods or as compared to other companies on a more
consistent basis.
In addition, the Company reports Normalized FFO attributable to
CareTrust REIT, Inc. and Normalized FAD attributable to CareTrust
REIT, Inc., which adjust FFO and FAD for certain revenue and
expense items that the Company does not believe are indicative of
its ongoing operating results, such as provision for loan losses,
non-routine transaction costs, provision for doubtful accounts and
lease restructuring, loss on extinguishment of debt, unrealized
loss on other real estate related investments, recovery of
previously reversed rent, lease termination revenue and property
operating expenses. By excluding these items, investors, analysts
and our management can compare Normalized FFO and Normalized FAD
between periods more consistently.
While FFO, Normalized FFO, FAD and Normalized FAD are relevant
and widely-used measures of operating performance among REITs, they
do not represent cash flows from operations or net income as
defined by GAAP and should not be considered an alternative to
those measures in evaluating the Company’s liquidity or operating
performance. FFO, Normalized FFO, FAD and Normalized FAD do not
purport to be indicative of cash available to fund future cash
requirements.
Further, the Company’s computation of FFO, Normalized FFO, FAD
and Normalized FAD may not be comparable to FFO, Normalized FFO,
FAD and Normalized FAD reported by other REITs that do not define
FFO in accordance with the current Nareit definition or that
interpret the current Nareit definition or define FAD differently
than the Company does.
The Company also discloses Net Debt to Annualized Normalized Run
Rate EBITDA, which compares the Company’s Net Debt as of the last
day of the quarter to the Annualized Run Rate EBITDA attributable
to CareTrust REIT, Inc. for the quarter. Net Debt is defined as the
Company’s Total Debt as of the last day of the specified quarter
adjusted to exclude the Company’s cash, cash equivalents,
restricted cash and escrow deposits on acquisition of real estate
as of such date as well as the net proceeds from the expected
settlement of shares sold under equity forward contracts through
the Company’s ATM Program that are outstanding as of such date.
Normalized Run Rate EBITDA represents Normalized EBITDA, adjusted
to give effect to the investments completed during the three months
ended for the respective period as though such investments were
completed as of the beginning of the period. Annualized Normalized
Run Rate EBITDA is calculated as Normalized Run Rate EBITDA
attributable to CareTrust REIT, Inc. for the specified quarter
multiplied by four.
The Company believes that net income attributable to CareTrust
REIT, Inc., as defined by GAAP, is the most appropriate earnings
measure. The Company also believes that the use of EBITDA,
Normalized EBITDA, FFO, Normalized FFO, FAD and Normalized FAD,
combined with the required GAAP presentations, improves the
understanding of operating results of REITs among investors and
makes comparisons of operating results among such companies more
meaningful. The Company considers EBITDA and Normalized EBITDA, in
each case attributable to CareTrust REIT, Inc., useful in
understanding the Company’s operating results independent of its
capital structure, indebtedness and other charges that are not
indicative of its ongoing results, thereby allowing for a more
meaningful comparison of operating performance between periods and
against other REITs. The Company considers FFO, Normalized FFO, FAD
and Normalized FAD, in each case attributable to CareTrust REIT,
Inc., to be useful measures for reviewing comparative operating and
financial performance because, by excluding gains or losses from
real estate dispositions, impairment charges and real estate
related depreciation and amortization, and, for FAD and Normalized
FAD, by excluding noncash income and expenses such as amortization
of stock-based compensation, amortization of deferred financing
fees, and the effects of straight-line rent, FFO, Normalized FFO,
FAD and Normalized FAD can help investors compare the Company’s
operating performance between periods and to other REITs. The
Company believes that the disclosure of Net Debt to Annualized
Normalized Run Rate EBITDA provides a useful measure to investors
to evaluate the credit strength of the Company and its ability to
service its debt obligations and to compare the Company’s credit
strength to prior reporting periods and to other companies without
the effect of charges that are not indicative of the Company’s
ongoing performance or that could obscure the Company’s actual
credit quality and after considering the effect of investments
occurring during the period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241028385871/en/
CareTrust REIT, Inc. (949) 542-3130 ir@caretrustreit.com
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