SAN CLEMENTE, Calif. - CareTrust REIT, Inc. (NYSE:CTRE), a real estate investment trust specializing in healthcare properties, has expanded its portfolio with the acquisition of three continuing care retirement communities (CCRCs) in Southern California. The facilities are located in Los Angeles, Orange, and San Diego counties, encompassing a total of 475 beds/units for assisted living, skilled nursing, and memory care.
The company announced the purchase of Torrey Pines Senior Living in San Diego for approximately $32.3 million, including transaction costs. This property has been incorporated into CareTrust's existing master lease with Bayshire Senior Communities, which will operate all three facilities. The initial annual cash rent for Torrey Pines is set at about $2.6 million, with an increase to $3.0 million in the second year and CPI-based escalators in the following years.
Additionally, CareTrust entered into a joint venture with a regional healthcare real estate investor to acquire the other two CCRCs. CareTrust committed approximately $28.0 million in combined common and preferred equity to the joint venture and will act as the managing member.
The new facilities are leased to Bayshire under a triple-net master lease agreement with a 15-year initial term and two 5-year extensions. CareTrust's initial yield on the joint venture investments is approximately 9.1%, with projected increases in subsequent years.
Scott Kirby (NYSE:KEX), CEO of Bayshire, expressed enthusiasm for the growth opportunities facilitated by the partnership with CareTrust. James Callister, CareTrust's Chief Investment Officer, and Joe Callan, Senior Vice President at CareTrust, both highlighted the value of the expanded relationship with Bayshire as part of their strategy to collaborate with top-tier operators.
The investments were financed using available cash reserves. CareTrust REIT continues to focus on growth opportunities both externally and organically, leveraging its portfolio of net-leased properties and its relationships with healthcare operators across the United States.
This expansion is based on a press release statement from CareTrust REIT, Inc.
InvestingPro Insights
As CareTrust REIT, Inc. (NYSE:CTRE) strategically grows its portfolio with the acquisition of three continuing care retirement communities, investors are looking closely at the company's financial health and market position. Here are some insights based on real-time data from InvestingPro and InvestingPro Tips that could provide additional context to the company's recent moves.
One of the key InvestingPro Tips for CareTrust is its track record of raising its dividend for 8 consecutive years. This could signal a strong commitment to returning value to shareholders, an important consideration for income-focused investors. Additionally, analysts have revised their earnings upwards for the upcoming period, suggesting that CareTrust's financial performance may exceed previous expectations.
From a financial metrics standpoint, CareTrust has a market capitalization of approximately $3.27 billion USD, indicating a solid size within the REIT sector. The company's Price to Earnings (P/E) Ratio stands at 34.93 on an adjusted basis for the last twelve months as of Q4 2023, which may suggest a higher valuation compared to some peers. However, the PEG Ratio for the same period is notably low at 0.09, potentially indicating that the company's growth rate is not fully reflected in its P/E ratio.
Investors should also note CareTrust's robust Revenue Growth of 15.29% for Q4 2023 on a quarterly basis, which may reflect the company's successful expansion and operational efficiency. The company's Gross Profit Margin of 95.59% for the last twelve months as of Q4 2023 is also noteworthy, as it demonstrates the company's ability to maintain profitability despite the costs associated with its recent acquisitions.
For more in-depth analysis and additional InvestingPro Tips, including the company's moderate level of debt and its trading near 52-week highs, interested parties can visit InvestingPro. There are currently 9 additional tips listed for CareTrust REIT, Inc. on InvestingPro. To access these insights and more, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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