CareTrust REIT acquires Midwest skilled nursing portfolio for $97M

CareTrust REIT (CTRE) announced that it has acquired a 46-facility, 3,820-bed/unit skilled nursing and seniors housing portfolio located in the Midwest for a total investment amount of approximately $97M. Seven of the 46 facilities acquired are skilled nursing and assisted living campuses and an additional seven are assisted living facilities. In connection with the acquisition, the company entered into a triple-net master lease with a large skilled nursing investor and operator who will sublease the portfolio to several licensed subtenant operators. The new master lease has an initial term of 15 years with two, 5-year extension options and provides for a year 1 contractual lease yield of 11%. The master lease provides for some deferral of base rent in lease years 1 and 2 resulting in a cash rent yield of 9.0% in year 1 and 10.5% in year 2. Annual CPI-based rent escalators begin in year 4 and continue each remaining year of the lease term. The acquisition was completed in coordination with the bankruptcy and sale of all assets of the debtor/seller. The master tenant has been granted purchase options for each sub-portfolio, with most purchase options opening in lease years 4 and 5. With the exercise of each purchase option, additional rent payments to CareTrust may be triggered up to an aggregate, annual 12.5% yield on CareTrust’s investment amount.