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CareTrust REIT Announces Third Quarter 2022 Operating Results

Conference Call Scheduled for Wednesday, November 9, 2022 at 1:00 pm ET

CareTrust REIT, Inc. (NYSE:CTRE) today reported operating results for the quarter ended September 30, 2022, as well as other recent events.

For the quarter, CareTrust REIT reported:

  • 93.4% of contractual rents collected;
  • Net income of $0.7 million and net income per share of $0.01;
  • Normalized FFO of $36.1 million and normalized FFO per share of $0.37;
  • Normalized FAD of $38.0 million and normalized FAD per share of $0.39; and
  • A quarterly dividend of $0.275 per share, representing a payout ratio of approximately 71% on normalized FAD.

Operating Environment

CareTrust’s President and Chief Executive Officer, Dave Sedgwick, discussed the business environment and the Company’s Q3 results. “Healthcare has traditionally been a hedge against downturns. Recessionary pressures, historically, have provided a net-benefit for our operators as demand and pricing for their services is unchanged while tight labor markets tend to loosen. Today, the tight debt market is also causing sellers to prioritize transactional partners like us who present more certainty to close,” Mr. Sedgwick said. Turning to the quarter, Mr. Sedgwick said, “Given the macroeconomic conditions, we are pleased to report both stable portfolio lease coverage and significant progress on the portfolio optimization plan for the year with the sale of the Trio skilled nursing portfolio in September.”

Key Metrics and Operator Conference

Looking at the quarter, Mr. Sedgwick commented on rent and occupancy data. He said, “We collected approximately 93% of contractual rents, including cash deposits, in the quarter.” He added that average quarterly occupancy for skilled nursing operators grew by 0.7%, or 53 basis points, over Q2. And, for seniors housing, occupancy grew 1.7%, or 131 basis points. “All things considered, Q3 was a good quarter for us and Q4 started off much the same,” Mr. Sedgwick said.

The Company recently hosted its Operator Conference to facilitate best practice sharing and operating expertise. Commenting on the conference, Mr. Sedgwick said, “I had a few major takeaways from the conference. First, we have chosen to support some of the most elite operators in the country. Second, we are deeply grateful for the leadership, sacrifices, and difference our operators are making in the communities they serve. And third, assuming the deals that cross our desk are actionable, we are poised to expand existing relationships and to back new operators next year.”

Portfolio

James Callister, Executive Vice President, provided an update on the portfolio optimization work this year. “We are pleased to report progress on this year’s portfolio repositioning plan with the sale of the Trio skilled nursing portfolio for $52 million,” he said. He noted that the Company’s seniors housing properties held for sale continue to make progress towards either disposition or re-tenanting.

With regards to new investments, during the quarter, the Company funded a $22.3 million B-piece secured financing on a 5-asset skilled nursing portfolio located in California. The portfolio includes approximately 600 skilled nursing beds.

The Company also funded a $24.9 million B-piece secured financing on a 4-asset skilled nursing portfolio located in the Southeast. The portfolio includes approximately 700 skilled nursing beds. “This debt investment provided an opportunity to forge a new relationship with a Southeast operator with whom we expect to grow through asset acquisitions in the future,” Mr. Callister said.

Pipeline

The Company’s Chief Investment Officer, Mark Lamb, commented on the current market for acquisitions and the Company’s pipeline. He said, “The rising cost of debt is impacting many potential buyers and we’re seeing sellers and brokers prioritize certainty more than ever before. We believe this to be a primary driver for the increase in deals crossing our desk.” Mr. Lamb continued, “As usual, sellers’ pricing expectations haven’t moved as quickly as buyers’ and we are in a window of price discovery today. We are open for business heading into 2023 and are working with current and future operators to continue our history of disciplined growth.”

Financial Results for Quarter Ended September 30, 2022

Chief Financial Officer, Bill Wagner, reported that, for the third quarter, CareTrust reported net income of $0.7 million, or $0.01 per diluted weighted-average common share, normalized FFO of $36.1 million, or $0.37 per diluted weighted-average common share, and normalized FAD of $38.0 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 4.2x, which is within the Company’s target leverage range of 4.0x to 5.0x, and a net debt-to-enterprise value of approximately 30.6%. Mr. Wagner stated that as of today, the Company had approximately $195 million outstanding on its $600 million revolving credit line, with no scheduled debt maturities prior to 2024. He also disclosed that CareTrust currently has approximately $19 million in cash on hand. He further noted that the Company currently has approximately $476.5 million in available authorization remaining on its at-the-market equity program. “With substantial availability on our revolver, and equity markets readily accessible to us at present, we continue to have a wide range of capital options for funding our opportunistic growth strategy,” said Mr. Wagner.

Dividend Maintained

During the quarter, CareTrust declared a quarterly dividend of $0.275 per common share. On an annualized basis, the payout ratio was approximately 74% based on third quarter 2022 normalized FFO, and 71% based on normalized FAD.

Conference Call

A conference call will be held on Wednesday, November 9, 2022, at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time), during which CareTrust’s management will discuss third quarter 2022 results, recent developments and other matters. The toll-free dial-in number is 1 (888) 510-2379 or toll dial-in number is 1 (646) 960-0691 and the conference ID number is 6808360. 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 CareTrustTM

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 plans to sell, re-tenant or repurpose selected Company assets, the Company's planned expansion into behavioral health properties and acquisition plans; growth prospects; operating and financial performance; expectations regarding 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 impact of possible additional surges of COVID-19 infections or the risk of other pandemics, epidemics or infectious disease outbreaks, measures taken to prevent the spread of such outbreaks and the related impact on our business or the businesses of our tenants; (ii) 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; (iii) 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; (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 ability to retain our key management personnel; (xi) the ability to maintain our status as a real estate investment trust (“REIT”); (xii) changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs; (xiii) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xiv) additional factors included in our Annual Report on Form 10-K for the year ended December 31, 2021, including in the section entitled “Risk Factors” in Item 1A of Part I of such report, 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 Companys financial results as of and for the quarter ended September 30, 2022 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.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

 

For the Three Months Ended

September 30,

 

For the Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

Revenues:

 

 

 

 

 

 

 

Rental income

$

47,018

 

 

$

48,087

 

 

$

139,831

 

 

$

141,077

 

Interest and other income

 

3,275

 

 

 

518

 

 

 

4,491

 

 

 

1,537

 

Total revenues

 

50,293

 

 

 

48,605

 

 

 

144,322

 

 

 

142,614

 

Expenses:

 

 

 

 

 

 

 

Depreciation and amortization

 

12,256

 

 

 

13,968

 

 

 

38,390

 

 

 

41,284

 

Interest expense

 

8,355

 

 

 

5,692

 

 

 

20,400

 

 

 

17,988

 

Property taxes

 

691

 

 

 

1,004

 

 

 

3,365

 

 

 

2,466

 

Impairment of real estate investments

 

12,322

 

 

 

 

 

 

73,706

 

 

 

 

Provision for loan losses, net

 

 

 

 

 

 

 

3,844

 

 

 

 

Property operating expenses

 

3,808

 

 

 

 

 

 

4,344

 

 

 

 

General and administrative

 

5,159

 

 

 

5,196

 

 

 

15,352

 

 

 

16,136

 

Total expenses

 

42,591

 

 

 

25,860

 

 

 

159,401

 

 

 

77,874

 

Other loss:

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

 

 

 

(10,827

)

 

 

 

 

 

(10,827

)

Loss on sale of real estate, net

 

(2,287

)

 

 

 

 

 

(2,101

)

 

 

(192

)

Unrealized loss on other real estate related investments

 

(4,706

)

 

 

 

 

 

(4,706

)

 

 

 

Total other loss

 

(6,993

)

 

 

(10,827

)

 

 

(6,807

)

 

 

(11,019

)

Net income (loss)

$

709

 

 

$

11,918

 

 

$

(21,886

)

 

$

53,721

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

Basic

$

0.01

 

 

$

0.12

 

 

$

(0.23

)

 

$

0.56

 

Diluted

$

0.01

 

 

$

0.12

 

 

$

(0.23

)

 

$

0.56

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares:

 

 

 

 

 

 

 

Basic

 

96,605

 

 

 

96,297

 

 

 

96,527

 

 

 

95,922

 

Diluted

 

96,625

 

 

 

96,297

 

 

 

96,527

 

 

 

95,937

 

 

 

 

 

 

 

 

 

Dividends declared per common share

$

0.275

 

 

$

0.265

 

 

$

0.825

 

 

$

0.795

 

CARETRUST REIT, INC.

RECONCILIATIONS OF NET INCOME (LOSS) TO NON-GAAP FINANCIAL MEASURES

(in thousands)

(Unaudited)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

709

 

$

11,918

 

$

(21,886

)

 

$

53,721

 

Depreciation and amortization

 

 

12,256

 

 

13,968

 

 

38,390

 

 

 

41,284

 

Interest expense

 

 

8,355

 

 

5,692

 

 

20,400

 

 

 

17,988

 

Amortization of stock-based compensation

 

 

1,380

 

 

1,802

 

 

4,295

 

 

 

5,197

 

EBITDA

 

 

22,700

 

 

33,380

 

 

41,199

 

 

 

118,190

 

Impairment of real estate investments

 

 

12,322

 

 

 

 

73,706

 

 

 

 

Provision for loan losses, net

 

 

 

 

 

 

3,844

 

 

 

 

Provision for doubtful accounts and lease restructuring

 

 

 

 

 

 

977

 

 

 

 

Lease termination revenue

 

 

 

 

 

 

 

 

 

(63

)

Property operating expenses

 

 

3,821

 

 

 

 

5,683

 

 

 

 

Loss on sale of real estate, net

 

 

2,287

 

 

 

 

2,101

 

 

 

192

 

Loss on extinguishment of debt

 

 

 

 

10,827

 

 

 

 

 

10,827

 

Unrealized loss on other real estate related investments

 

 

4,706

 

 

 

 

4,706

 

 

 

 

Normalized EBITDA

 

$

45,836

 

$

44,207

 

$

132,216

 

 

$

129,146

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

709

 

$

11,918

 

$

(21,886

)

 

$

53,721

 

Real estate related depreciation and amortization

 

 

12,251

 

 

13,964

 

 

38,375

 

 

 

41,267

 

Impairment of real estate investments

 

 

12,322

 

 

 

 

73,706

 

 

 

 

Loss on sale of real estate, net

 

 

2,287

 

 

 

 

2,101

 

 

 

192

 

Funds from Operations (FFO)

 

 

27,569

 

 

25,882

 

 

92,296

 

 

 

95,180

 

Effect of the senior unsecured notes payable redemption

 

 

 

 

 

 

 

 

 

642

 

Provision for loan losses, net

 

 

 

 

 

 

3,844

 

 

 

 

Provision for doubtful accounts and lease restructuring

 

 

 

 

 

 

977

 

 

 

 

Lease termination revenue

 

 

 

 

 

 

 

 

 

(63

)

Property operating expenses

 

 

3,821

 

 

 

 

5,683

 

 

 

 

Loss on extinguishment of debt

 

 

 

 

10,827

 

 

 

 

 

10,827

 

Unrealized loss on other real estate related investments

 

 

4,706

 

 

 

 

4,706

 

 

 

 

Normalized FFO

 

$

36,096

 

$

36,709

 

$

107,506

 

 

$

106,586

 

CARETRUST REIT, INC.

RECONCILIATIONS OF NET INCOME (LOSS) TO NON-GAAP FINANCIAL MEASURES (continued)

(in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

709

 

 

$

11,918

 

 

$

(21,886

)

 

$

53,721

 

Real estate related depreciation and amortization

 

 

12,251

 

 

 

13,964

 

 

 

38,375

 

 

 

41,267

 

Amortization of deferred financing fees

 

 

520

 

 

 

519

 

 

 

1,560

 

 

 

1,501

 

Amortization of stock-based compensation

 

 

1,380

 

 

 

1,802

 

 

 

4,295

 

 

 

5,197

 

Straight-line rental income

 

 

(3

)

 

 

(6

)

 

 

(14

)

 

 

(26

)

Impairment of real estate investments

 

 

12,322

 

 

 

 

 

 

73,706

 

 

 

 

Loss on sale of real estate, net

 

 

2,287

 

 

 

 

 

 

2,101

 

 

 

192

 

Funds Available for Distribution (FAD)

 

 

29,466

 

 

 

28,197

 

 

 

98,137

 

 

 

101,852

 

Effect of the senior unsecured notes payable redemption

 

 

 

 

 

 

 

 

 

 

 

642

 

Provision for loan losses, net

 

 

 

 

 

 

 

 

3,844

 

 

 

 

Provision for doubtful accounts and lease restructuring

 

 

 

 

 

 

 

 

977

 

 

 

 

Lease termination revenue

 

 

 

 

 

 

 

 

 

 

 

(63

)

Property operating expenses

 

 

3,821

 

 

 

 

 

 

5,683

 

 

 

 

Loss on extinguishment of debt

 

 

 

 

 

10,827

 

 

 

 

 

 

10,827

 

Unrealized loss on other real estate related investments

 

 

4,706

 

 

 

 

 

 

4,706

 

 

 

 

Normalized FAD

 

$

37,993

 

 

$

39,024

 

 

$

113,347

 

 

$

113,258

 

 

 

 

 

 

 

 

 

 

FFO per share

 

$

0.28

 

 

$

0.27

 

 

$

0.95

 

 

$

0.99

 

Normalized FFO per share

 

$

0.37

 

 

$

0.38

 

 

$

1.11

 

 

$

1.11

 

 

 

 

 

 

 

 

 

 

FAD per share

 

$

0.30

 

 

$

0.29

 

 

$

1.01

 

 

$

1.06

 

Normalized FAD per share

 

$

0.39

 

 

$

0.40

 

 

$

1.17

 

 

$

1.18

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding [1]

 

 

96,752

 

 

 

96,592

 

 

 

96,709

 

 

 

96,196

 

 

 

 

 

 

 

 

 

 

[1] For the periods presented, the diluted weighted average shares have been calculated using the treasury stock method.

CARETRUST REIT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS - 5 QUARTER TREND

(in thousands, except per share data)

(Unaudited)

 

Quarter

Quarter

Quarter

Quarter

Quarter

 

Ended

Ended

Ended

Ended

Ended

 

September 30,

2021

December 31,

2021

March 31,

2022

June 30,

2022

September 30,

2022

Revenues:

 

 

 

 

 

Rental income

$

48,087

 

$

49,118

$

46,007

 

$

46,806

$

47,018

 

Interest and other income

 

518

 

 

619

 

469

 

 

747

 

3,275

 

Total revenues

 

48,605

 

 

49,737

 

46,476

 

 

47,553

 

50,293

 

Expenses:

 

 

 

 

 

Depreciation and amortization

 

13,968

 

 

14,056

 

13,575

 

 

12,559

 

12,256

 

Interest expense

 

5,692

 

 

5,689

 

5,742

 

 

6,303

 

8,355

 

Property taxes

 

1,004

 

 

1,108

 

1,420

 

 

1,254

 

691

 

Impairment of real estate investments

 

 

 

 

59,683

 

 

1,701

 

12,322

 

Provision for loan losses, net

 

 

 

 

3,844

 

 

 

 

Property operating expenses

 

 

 

 

447

 

 

89

 

3,808

 

General and administrative

 

5,196

 

 

10,738

 

5,215

 

 

4,978

 

5,159

 

Total expenses

 

25,860

 

 

31,591

 

89,926

 

 

26,884

 

42,591

 

Other (loss) income:

 

 

 

 

Loss on extinguishment of debt

 

(10,827

)

 

 

 

 

 

 

Gain (loss) on sale of real estate

 

 

 

115

 

186

 

 

 

(2,287

)

Unrealized loss on other real estate related investments

 

 

 

 

 

 

 

(4,706

)

Total other (loss) income

 

(10,827

)

 

115

 

186

 

 

 

(6,993

)

Net income (loss)

$

11,918

 

$

18,261

$

(43,264

)

$

20,669

$

709

 

 

 

 

 

 

 

Diluted earnings (loss) per share

$

0.12

 

$

0.19

$

(0.45

)

$

0.21

$

0.01

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

96,297

 

 

96,552

 

96,410

 

 

96,598

96,625

CARETRUST REIT, INC.

RECONCILIATIONS OF NET INCOME (LOSS) TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND

(in thousands)

(Unaudited)

 

Quarter

Quarter

Quarter

Quarter

Quarter

 

Ended

Ended

Ended

Ended

Ended

 

September 30,

2021

December 31,

2021

March 31,

2022

June 30,

2022

September 30,

2022

 

 

 

 

 

 

Net income (loss)

$

11,918

$

18,261

 

$

(43,264

)

$

20,669

$

709

Depreciation and amortization

 

13,968

 

14,056

 

 

13,575

 

 

12,559

 

12,256

Interest expense

 

5,692

 

5,689

 

 

5,742

 

 

6,303

 

8,355

Amortization of stock-based compensation

 

1,802

 

5,635

 

 

1,521

 

 

1,394

 

1,380

EBITDA

 

33,380

 

43,641

 

 

(22,426

)

 

40,925

 

22,700

Impairment of real estate investments

 

 

 

 

59,683

 

 

1,701

 

12,322

Provision for loan losses, net

 

 

 

 

3,844

 

 

 

Provision for doubtful accounts and lease restructuring

 

 

 

 

977

 

 

 

Property operating expenses

 

 

8

 

 

1,231

 

 

631

 

3,821

(Gain) loss on sale of real estate

 

 

(115

)

 

(186

)

 

 

2,287

Non-routine transaction costs

 

 

1,418

 

 

 

 

 

Loss on extinguishment of debt

 

10,827

 

 

 

 

 

 

Unrealized loss on other real estate related investments

 

 

 

 

 

 

 

4,706

Normalized EBITDA

$

44,207

$

44,952

 

$

43,123

 

$

43,257

$

45,836

 

 

 

 

 

 

Net income (loss)

$

11,918

$

18,261

 

$

(43,264

)

$

20,669

$

709

Real estate related depreciation and amortization

 

13,964

 

14,051

 

 

13,571

 

 

12,553

 

12,251

Impairment of real estate investments

 

 

 

 

59,683

 

 

1,701

 

12,322

(Gain) loss on sale of real estate

 

 

(115

)

 

(186

)

 

 

2,287

Funds from Operations (FFO)

 

25,882

 

32,197

 

 

29,804

 

 

34,923

 

27,569

Provision for loan losses, net

 

 

 

 

3,844

 

 

 

Provision for doubtful accounts and lease restructuring

 

 

 

 

977

 

 

 

Property operating expenses

 

 

8

 

 

1,231

 

 

631

 

3,821

Accelerated amortization of stock-based compensation

 

 

3,696

 

 

 

 

 

Non-routine transaction costs

 

 

1,418

 

 

 

 

 

Loss on extinguishment of debt

 

10,827

 

 

 

 

 

 

Unrealized loss on other real estate related investments

 

 

 

 

 

 

 

4,706

Normalized FFO

$

36,709

$

37,319

 

$

35,856

 

$

35,554

$

36,096

CARETRUST REIT, INC.

RECONCILIATIONS OF NET INCOME (LOSS) 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,

2021

December 31,

2021

March 31,

2022

June 30,

2022

September 30,

2022

 

 

 

 

 

 

Net income (loss)

$

11,918

 

$

18,261

 

$

(43,264

)

$

20,669

 

$

709

 

Real estate related depreciation and amortization

 

13,964

 

 

14,051

 

 

13,571

 

 

12,553

 

 

12,251

 

Amortization of deferred financing fees

 

519

 

 

521

 

 

520

 

 

520

 

 

520

 

Amortization of stock-based compensation

 

1,802

 

 

5,635

 

 

1,521

 

 

1,394

 

 

1,380

 

Straight-line rental income

 

(6

)

 

(6

)

 

(6

)

 

(5

)

 

(3

)

Impairment of real estate investments

 

 

 

 

 

59,683

 

 

1,701

 

 

12,322

 

(Gain) loss on sale of real estate

 

 

 

(115

)

 

(186

)

 

 

 

2,287

 

Funds Available for Distribution (FAD)

 

28,197

 

 

38,347

 

 

31,839

 

 

36,832

 

 

29,466

 

Provision for loan losses, net

 

 

 

 

 

3,844

 

 

 

 

 

Provision for doubtful accounts and lease restructuring

 

 

 

 

 

977

 

 

 

 

 

Property operating expenses

 

 

 

8

 

 

1,231

 

 

631

 

 

3,821

 

Non-routine transaction costs

 

 

 

1,418

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

10,827

 

 

 

 

 

 

 

 

 

Unrealized loss on other real estate related investments

 

 

 

 

 

 

 

 

 

4,706

 

Normalized FAD

$

39,024

 

$

39,773

 

$

37,891

 

$

37,463

 

$

37,993

 

 

 

 

 

 

 

FFO per share

$

0.27

 

$

0.33

 

$

0.31

 

$

0.36

 

$

0.28

 

Normalized FFO per share

$

0.38

 

$

0.39

 

$

0.37

 

$

0.37

 

$

0.37

 

 

 

 

 

 

 

FAD per share

$

0.29

 

$

0.40

 

$

0.33

 

$

0.38

 

$

0.30

 

Normalized FAD per share

$

0.40

 

$

0.41

 

$

0.39

 

$

0.39

 

$

0.39

 

 

 

 

 

 

 

Diluted weighted average shares outstanding [1]

 

96,592

 

 

96,646

 

 

96,701

 

 

96,672

 

 

96,752

 

 

 

 

 

 

 

[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, 2022

 

December 31, 2021

Assets:

 

 

 

Real estate investments, net

$

1,384,166

 

 

$

1,589,971

 

Other real estate related investments, at fair value (including accrued interest of $1,218 as of September 30, 2022 and $155 as of December 31, 2021)

 

158,662

 

 

 

15,155

 

Assets held for sale, net

 

77,708

 

 

 

4,835

 

Cash and cash equivalents

 

4,861

 

 

 

19,895

 

Accounts and other receivables

 

808

 

 

 

2,418

 

Prepaid expenses and other assets, net

 

19,046

 

 

 

7,512

 

Deferred financing costs, net

 

327

 

 

 

1,062

 

Total assets

$

1,645,578

 

 

$

1,640,848

 

 

 

 

 

Liabilities and Equity:

 

 

 

Senior unsecured notes payable, net

$

394,928

 

 

$

394,262

 

Senior unsecured term loan, net

 

199,295

 

 

 

199,136

 

Unsecured revolving credit facility

 

180,000

 

 

 

80,000

 

Accounts payable, accrued liabilities and deferred rent liabilities

 

30,851

 

 

 

25,408

 

Dividends payable

 

26,827

 

 

 

26,285

 

Total liabilities

 

831,901

 

 

 

725,091

 

 

 

 

 

Equity:

 

 

 

Common stock

 

966

 

 

 

963

 

Additional paid-in capital

 

1,196,662

 

 

 

1,196,839

 

Cumulative distributions in excess of earnings

 

(383,951

)

 

 

(282,045

)

Total equity

 

813,677

 

 

 

915,757

 

Total liabilities and equity

$

1,645,578

 

 

$

1,640,848

 

CARETRUST REIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

For the Nine Months Ended September 30,

 

2022

 

2021

Cash flows from operating activities:

 

 

 

Net (loss) income

$

(21,886

)

 

$

53,721

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

Depreciation and amortization (including below-market ground leases)

 

38,437

 

 

 

41,328

 

Amortization of deferred financing costs

 

1,560

 

 

 

1,531

 

Loss on extinguishment of debt

 

 

 

 

10,827

 

Unrealized loss on other real estate related investments

 

4,706

 

 

 

 

Amortization of stock-based compensation

 

4,295

 

 

 

5,197

 

Straight-line rental income

 

(14

)

 

 

(26

)

Adjustment for collectibility of rental income

 

977

 

 

 

 

Noncash interest income

 

(1,063

)

 

 

 

Loss on sale of real estate, net

 

2,101

 

 

 

192

 

Impairment of real estate investments

 

73,706

 

 

 

 

Provision for loan losses, net

 

3,844

 

 

 

 

Change in operating assets and liabilities:

 

 

 

Accounts and other receivables

 

648

 

 

 

(1,775

)

Prepaid expenses and other assets, net

 

(2,082

)

 

 

(20

)

Accounts payable, accrued liabilities and deferred rent liabilities

 

5,443

 

 

 

7,388

 

Net cash provided by operating activities

 

110,672

 

 

 

118,363

 

Cash flows from investing activities:

 

 

 

Acquisitions of real estate, net of deposits applied

 

(21,915

)

 

 

(180,323

)

Purchases of equipment, furniture and fixtures and improvements to real estate

 

(5,475

)

 

 

(4,826

)

Investment in real estate related investments and other loans receivable

 

(149,650

)

 

 

(700

)

Principal payments received on other loans receivable

 

1,166

 

 

 

172

 

Escrow deposits for potential acquisitions of real estate

 

 

 

 

(3,100

)

Net proceeds from sales of real estate

 

34,115

 

 

 

6,814

 

Net cash used in investing activities

 

(141,759

)

 

 

(181,963

)

Cash flows from financing activities:

 

 

 

Proceeds from the issuance of common stock, net

 

 

 

 

22,946

 

Proceeds from the issuance of senior unsecured notes payable

 

 

 

 

400,000

 

Borrowings under unsecured revolving credit facility

 

145,000

 

 

 

220,000

 

Payments on senior unsecured notes payable

 

 

 

 

(300,000

)

Payments on unsecured revolving credit facility

 

(45,000

)

 

 

(190,000

)

Payments on debt extinguishment and deferred financing costs

 

 

 

 

(14,070

)

Net-settle adjustment on restricted stock

 

(4,469

)

 

 

(1,331

)

Dividends paid on common stock

 

(79,478

)

 

 

(75,148

)

Net cash provided by financing activities

 

16,053

 

 

 

62,397

 

Net decrease in cash and cash equivalents

 

(15,034

)

 

 

(1,203

)

Cash and cash equivalents as of the beginning of period

 

19,895

 

 

 

18,919

 

Cash and cash equivalents as of the end of period

$

4,861

 

 

$

17,716

 

CARETRUST REIT, INC.

DEBT SUMMARY

(dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2022

 

Interest

 

Maturity

 

 

 

% of

 

Deferred

Loan

 

Net

Carrying

Debt

Rate

 

Date

 

Principal

 

Principal

 

Costs

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Rate Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior unsecured notes payable

3.875 %

 

2028

 

$

400,000

 

51.3 %

 

$

(5,072)

 

$

394,928

Floating Rate Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior unsecured term loan

4.715 %

[1]

2026

 

 

200,000

 

25.6 %

 

 

(705)

 

 

199,295

Unsecured revolving credit facility

4.261 %

[2]

2024

[3]

 

180,000

 

23.1 %

 

 

[4]

 

180,000

 

4.500 %

 

 

 

 

380,000

 

48.7 %

 

 

(705)

 

 

379,295

 

 

 

 

 

 

 

 

 

 

 

 

Total Debt

4.179 %

 

 

 

$

780,000

 

100.0 %

 

$

(5,777)

 

$

774,223

 

 

 

 

 

 

 

 

 

 

 

 

[1] Funds can be borrowed at applicable LIBOR plus 1.50% to 2.20% or at the Base Rate (as defined) plus 0.50% to 1.20%.

[2] Funds can be borrowed at applicable LIBOR plus 1.10% to 1.55% or at the Base Rate (as defined) plus 0.10% to 0.55%.

[3] Maturity date assumes exercise of two 6-month extension options.

[4] Deferred financing fees are not shown net for the unsecured revolving credit facility and are included in assets on the balance sheet.

Non-GAAP Financial Measures

EBITDA represents net income before interest expense (including amortization of deferred financing costs), amortization of stock-based compensation, and depreciation and amortization. Normalized EBITDA represents EBITDA 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 and Normalized EBITDA 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 and Normalized EBITDA 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 in accordance with Nareit’s definition.

FAD is defined as FFO excluding noncash income and expenses, such as amortization of stock-based compensation, amortization of deferred financing fees and the effects of straight-line rent. The Company considers FAD 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 and Normalized FAD, 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 believes that net income, 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 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 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.

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