CareTrust REIT Seizes Opportunity Amid Market Uncertainty
CareTrust REIT, a leading healthcare-focused real estate investment trust (REIT), has emerged stronger than ever from the recent market turmoil. In its fourth-quarter 2024 earnings conference call, the company's executives outlined their strategy for navigating the complex and evolving healthcare landscape.
With a keen eye on the broader macro environment, CareTrust REIT President and CEO Dave Sedgwick noted that the elevated interest rates two years ago had driven many banks and investors to the sidelines, creating an opportunity for the company to capitalize. By recalibrating its team, deepening strategic relationships, and working tirelessly, CareTrust REIT maximized this window of opportunity by investing $1.5 billion and issuing $1.5 billion in equity through a follow-on offering.
Today, the company is one of the rare REITs that remains largely indifferent to changes in interest rates. If rates come down, CareTrust REIT will certainly benefit; but if they don't, its strong balance sheet, secure portfolio, access to capital, and experienced team make it well-positioned for continued success.
CareTrust REIT's commitment to underwriting discipline has made its portfolio a safe haven, with exceptional lease coverages at 2.82x EBITDARM and 2.21x EBITDAR. The company's top 10 tenants, which account for approximately 80% of triple net revenue, are covering at an even higher rate of 3.02x EBITDARM and 2.37x EBITDAR.
The operating environment in general continues to stabilize, with most parts of the portfolio at or ahead of pre-pandemic occupancy, skilled mix, and coverage. While there is some speculation about the impact of a new administration on skilled nursing, CareTrust REIT's operators continue to post star ratings and quality measures compared to the industry at large.
Dave Sedgwick noted that policymakers, lobbyists, operators, all lead them to believe that the minimum staffing rule will be reversed, and that Medicaid and Medicare will remain unchanged as the cornerstones of healthcare in general and skilled nursing in particular.
CareTrust REIT's association with some of the best operators in the country provides a secure and stable foundation for its investors. With its commitment to long-term FFO per share growth, exceptional lease coverages, and access to capital, CareTrust REIT is poised for continued success in an uncertain market.
