CareTrust REIT (CTRE) Announces $34.4M Acquisition of California Seniors Housing, Skilled Nursing Portfolio

August 8, 2016 8:06 AM EDT

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CareTrust REIT, Inc. (Nasdaq: CTRE) announced that it has acquired two seniors housing and two skilled nursing facilities located in California’s Central Valley for approximately $34.4 million, inclusive of transaction costs. The portfolio consists of 79 assisted living units and 293 skilled nursing beds, and is currently leased to affiliates of California-based Covenant Care, LLC.

“We are very excited to add these four facilities to our California portfolio,” remarked Mark Lamb, CareTrust’s Director of Investments. “Covenant Care is a highly-regarded post-acute care and seniors housing operator, and the existing leases are exceptionally well-covered,” he said.

Mr. Lamb noted that the sellers included three related but different ownership groups, adding an unusual level of complexity to the transaction. “The different sellers needed to exit in a fashion that was not only expeditious and orderly, but also fair to each individual seller group,” he said. Rob Reis of Marcus & Millichap, the principal broker on the transaction, added, “CareTrust made what could have been a very complex and contentious transaction very easy for our sellers, and for all involved.”

The Central Valley investment is expected to generate an initial cash yield of 9.0% based on the aggregate going-in annual cash rent of $3.1 million under the terms of the existing leases. The existing leases have initial terms that expire in 2019, subject to two five-year extension options, and include CPI-based rent escalators. The acquisition was funded using CareTrust's $400 million unsecured revolving credit facility.

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