Earnings call transcript: CareTrust Q1 2025 sees strong financial growth

CareTrust REIT (NASDAQ:CTRE) reported its financial results for the first quarter of 2025, revealing robust performance metrics and strategic advancements. The company met its earnings per share (EPS) forecast of $0.35 and exceeded revenue expectations with $96.62 million, compared to the forecasted $69.63 million. With a "GREAT" financial health score according to InvestingPro analysis and a market capitalization of $5.39 billion, CareTrust continues to demonstrate strong fundamentals. Despite these positive results, the stock experienced a slight decline of 1.36% in after-hours trading, closing at $29.07.

Key Takeaways

• CareTrust’s revenue surpassed forecasts by a significant margin.
• The company completed a major acquisition in the UK, expanding its portfolio.
• Guidance for normalized FFO and FAD per share has been raised.
• Market reaction was subdued despite strong financial performance.

Company Performance

CareTrust demonstrated strong financial results in Q1 2025, with notable increases in both normalized funds from operations (FFO) and funds available for distribution (FAD). The company’s strategic acquisition of a UK-based Care REIT and investments in skilled nursing and assisted living facilities underscore its growth trajectory. The reduction in US skilled nursing concentration to 49% reflects a strategic diversification effort.

Financial Highlights

• Revenue: $96.62 million, significantly above the forecast of $69.63 million.
• Normalized FFO: Increased 67.4% to $77.8 million.
• Normalized FFO per share: Rose 20% to $0.42.
• Normalized FAD: Grew 66% to $80.8 million.
• Normalized FAD per share: Increased 16.2% to $0.43.

Earnings vs. Forecast

CareTrust met its EPS forecast of $0.35 but delivered a substantial revenue beat, with actual revenue of $96.62 million compared to the forecasted $69.63 million. This represents a surprise of approximately 39%. The strong revenue performance highlights the effectiveness of the company’s strategic acquisitions and operational efficiency.

Market Reaction

Despite the positive earnings report, CareTrust’s stock fell by 1.36% in after-hours trading. This decline could be attributed to market conditions or investor concerns about the broader economic environment. Trading at a P/E ratio of 35.41, the stock appears fairly valued according to InvestingPro’s Fair Value analysis. The stock remains within its 52-week range, with a high of $33.15 and a low of $24.35.

Outlook & Guidance

CareTrust has raised its guidance for normalized FFO per share to $1.69-$1.73 and for normalized FAD per share to $1.73-$1.77. The company maintains a strong dividend program with a current yield of 4.61% and has increased its dividend by 19.64% over the last twelve months. The company anticipates closing the Care REIT transaction on May 9 and expects to further develop its UK investment pipeline over the next 1-2 years. The Medicare rate increase across its portfolio is estimated at 2.2%.

Executive Commentary

"The acquisition of Care REIT marks our first M&A activity, our entry into the UK, and the largest deal in our history," said Dave Sedgwick, CEO. James Collister, CIO, added, "We are actively reviewing acquisition opportunities in the UK and continue to meet with existing and new operators eager for a capital partner like CareTrust."

Risks and Challenges

• Potential Medicaid cuts as the budget process unfolds.
• Fluctuations in the UK care home market could impact investment yields.
• Changes in US skilled nursing market dynamics remain a concern.
• Macroeconomic pressures, including interest rate hikes, could affect profitability.
• Currency exchange risks associated with international expansion.

Q&A

During the earnings call, analysts inquired about the potential impact of Medicaid cuts and the company’s strategy for debt investments. Executives emphasized their focus on building relationships through strategic debt investments and expressed confidence in achieving UK investment yields in the 7-9% range.

Full transcript - Caretrust Inc (CTRE) Q1 2025:

Kate, Conference Operator: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the CareTrust REIT First Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

Thank you. I would now like to turn the call over to Lauren Bill, Chief Accounting Officer. Please go ahead.

Lauren Bill, Chief Accounting Officer, CareTrust REIT: Thank you, and welcome to CareTrust REIT’s first quarter twenty twenty five earnings call. We will make forward looking statements today based on management’s current expectations, including statements regarding future financial performance, dividends, acquisitions, investments, financing plans, business strategies and growth prospects. These forward looking statements are subject to risks and uncertainties that could cause actual results to materially differ from our expectations. These risks are discussed in CareTrust REIT’s most recent Form 10 ks and 10 Q filings with the SEC. We do not undertake the duty to update or revise these statements except as required by law.

During the call, the company will reference non GAAP metrics such as EBITDA, FFO and FAD or FAD. A reconciliation of these measures to the most comparable GAAP financial measures is available in our earnings press release and Q1 twenty twenty five non GAAP reconciliations that are available on the Investor Relations section of CareTrust website at www.caretrustreit.com. A replay of this call will also be available on the website for a limited period. On the call this morning are Dave Sedgwick, President and Chief Executive Officer Bill Wagner, Chief Financial Officer and James Collister, Chief Investment Officer. I’ll now turn the call over to Dave Sedgwick, CareTrust REIT’s President and CEO.

Dave?

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Thank you, Lauren. Good morning, everyone, and thank you for joining us. Let me begin with our pending strategic acquisition of the London Stock Exchange listed company Care REIT. On March 11, we announced that our offer was unanimously accepted and recommended by Care REIT’s Board. The voting deadline was last Friday, April 25, and I’m thrilled to announce that their shareholders have approved the deal.

We expect to officially close on the acquisition next Friday, May 9. Based on Wednesday’s sterling dollar exchange rate and excluding transaction costs, at 1.8p per share, the deal has a purchase price of approximately $856,000,000 And the portfolio, as of the end of last year, has contractual rent of approximately $68,600,000 The acquisition of Care REIT marks our first M and A activity, our entry into The UK and the largest deal in our history. So some context, last year was truly an extraordinary year for CareTrust. At the beginning of 2024, we thought that we had a chance to possibly double the highest single year record of investments in our history. But about midway through the year, we started to see a path to more than quadruple that record.

So you saw a rapid cadence of deploying capital, issuing equity and reloading the pipeline on repeat throughout the year. The flywheel and the entire team ran hot and fast, so much so that we really wrestled with the following question: If it ain’t broke, why fix it? Why look at SHOP? Why look at The UK? These are all really fair questions that we took seriously.

So why The UK’s strategic acquisition of Care REIT and why now? Let me tell you why. First, this deal diversifies our business in terms of operator concentration, geography, payer sources and asset classes, bringing our U. S. Skilled Nursing concentration down to approximately 49% by property count and 63% by rental income.

Second, in addition to adding Care REIT’s one hundred and thirty four properties across 15 operators generating 68,600,000 of new annual rent that is covered by more than two times on an EBITDARM basis. The deal also adds to us an experienced U. K.-based Investment, Asset Management And Accounting Team who are hungry to grow again. Third, the purchase price represents a significant discount to replacement cost and will be accretive in year one. Finally, and essentially, the deal adds a new growth engine for CareTrust for years to come.

So when you look at that rationale, along with our cost of capital, our balance sheet, the strong demographics and supplydemand tailwinds behind our sectors here in The U. S. And in The U. K, and you combine all of that with the CareTrust team and culture that continues to get stronger every year, we began to reframe the question of if it ain’t broke. We began to believe that because it ain’t broke, we have a unique window of opportunity to do something special immediately after last year’s exponential growth.

We’ve invested throughout the organization to ensure that the flywheel in The United States does not slow down and that The UK will be additive to our current robust U. S. Growth engine. James will share with you now color on the deals closed in Q1 and the reloaded pipeline of US deals, along with some insights into our outlook for UK growth. James?

James Collister, Chief Investment Officer, CareTrust REIT: Thanks, Dave. Good morning, everyone. During the first quarter, we completed three new investments totaling over $47,000,000 at a yield of approximately 10%. These investments included a skilled nursing facility, a seniors housing facility and a mezzanine loan related to the acquisition of a skilled nursing portfolio. On April 1, we also closed on the acquisition of a skilled nursing and assisted living campus in Southern California.

The acquisition was completed through a joint venture arrangement pursuant to which the company provided a combined common and preferred equity investment totaling approximately $34,000,000 at an initial contractual yield of approximately 9.7%. The joint venture has leased the facility to affiliates of the Ensign Group pursuant to a new fifteen year triple net lease that includes two five year extension options and annual CTI based escalators. This transaction brings our year to date investment total to approximately $82,000,000 at a yield of approximately 10%. As we look forward, our investment pipeline remains strong. The reloaded pipe today sits at approximately $500,000,000 and consists predominantly of real estate acquisitions.

The quoted pipeline includes some singles and doubles as well as some mid to large sized portfolio transactions. Our quarter pipeline does not include the recently announced UK acquisition of Care REIT nor does it include a couple of larger portfolio opportunities that we continue to review. The pipeline primarily consists of skilled nursing facilities, but also includes some senior housing opportunities. And please remember that when we quote our pipe, we only quote deals that we have a reasonable level of confidence that we can lock them up and close within the next twelve months. We also continue to look at a healthy flow of inbound marketed opportunities as well as off market opportunities brought to us by existing operators and other relationships.

Deals coming across our desk include a consistent flow of both skilled nursing and seniors housing opportunities, And we are seeing a moderate but notable increase in the number of marketed and off market large portfolio deals on both fronts. Turning to our pending acquisition of Care REIT. We are very excited about the immediate and long term benefits of these assets and about utilizing the talented seasoned team there as well as our own experience and relationships to expand The UK portfolio this year and beyond. We are actively reviewing acquisition opportunities in The UK and continue to meet with existing and new operators eager for a capital partner like CareTrust to take advantage of a compelling operating environment. We feel that UK Care Home investment opportunities provide an additional pipeline of accretive acquisitions where we are uniquely positioned to win deals with our competitive advantages of deep underwriting and operating experience, pristine balance sheet, access to and cost of capital and certainty of closing.

And while we are keen to find and close on UK acquisitions, and as evidenced by our reloaded investment pipe, we are careful to not let those efforts slow the pace of our primary focus of sourcing and executing on accretive real estate acquisition opportunities here in The U. S. With that, I’ll turn it over to Bill.

Bill Wagner, Chief Financial Officer, CareTrust REIT: Thanks, James. For the quarter, normalized FFO increased 67.4% over the prior year quarter to 77,800,000.0 and normalized FAD increased by 66% to $80,800,000 On a per share basis, normalized FFO increased $07 or 20% to $0.42 per share. Normalized FAD increased $06 or 16.2% to $0.43 per share. During the first quarter and in conjunction with The UK transaction, we were required to put cash into escrow in order to evidence sufficient funds to cover our acquisition of Care REIT shares in anticipation of shareholder approval of the transaction. The deposit of cash into escrow was made primarily through a draw on our revolver.

In addition to acquiring Care REIT’s issued shares using the cash held in escrow, we intend to assume Care REIT’s existing debt, which was approximately $259,000,000 as of year end. We expect to refinance that debt subsequent to the transaction closing with a portion of the proceeds from a $500,000,000 5 year term loan from our bank group that we expect to close this much this month subject to ordinary closing conditions. The excess cash from the term loan would also help fund our $500,000,000 pipeline. In yesterday’s press release, we we raised guidance for this year with normalized FFO per share of $1.69 to $1.73 and for normalized FAD per share of $1.73 to $1.77. This guidance includes all investments closed to date, a diluted weighted average share count of 190,600,000.0 shares, and also relies on the following assumptions: one, no additional investments nor any further debt or equity issuances this year two, CPI rent escalations at 2.5%.

Our total cash rental revenues for the year are projected to be approximately $284,000,000 Not included in this number is the amortization of lease intangibles that will total about $3,500,000 but this will be in the rental revenue number as required by GAAP. Three, interest income from financing receivables of 11,500,000.0 Included in this number is $9,000,000 of cash and $2,500,000 of noncash revenue for GAAP purposes that is subtracted in the FAD reconciliation. Four, interest income of approximately $90,000,000 The $90,000,000 is made up of $76,000,000 from our loan portfolio and $14,000,000 from cash invested in money market funds. The $6,000,000 increase from last quarter in interest income is from the cash held in the escrow account for funds needed to close The UK transaction. Five, interest expense of approximately $24,300,000 up from $21,300,000 in last quarter’s guidance due to the line draw for the escrow account related to The U.

K. Transaction. Interest expense also includes roughly $4,000,000 of amortization of deferred financing fees. And six, G and A expense of approximately $33,000,000 to $37,000,000 and includes about $11,700,000 of deferred stock comp. We plan on updating this guidance again once The U.

K. Transaction closes. Lastly, our liquidity continues to remain strong. Subsequent to quarter end, we raised roughly $100,000,000 via the ATM and used $50,000,000 of that to pay down the revolver to $375,000,000 In addition to $45,000,000 of cash on hand, we have $825,000,000 available under our revolver, and we are extremely thankful for our tremendous bank group in backing us on a $500,000,000 term loan that we have commitments for and expect to close this month. Leverage continues at historic lows with net debt to normalized EBITDA ratio of 0.5 times.

Our net debt to enterprise value was 2.9% as of quarter end, and we achieved a fixed charge covered ratio of 15.2 times. After The U. K. Transaction closes, we expect our net debt to annualized normalized EBITDA ratio to be below 2.5 times, which is still well below our target range of four to five times. And with that, I’ll turn it back to Dave.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Thank you both. We hope that our report has been helpful, and thank you for your interest and support. We’re happy to take any questions you might have.

Kate, Conference Operator: Your first question comes from the line of Carol Granath with Bank of America. Your line is open.

Carol Granath, Analyst, Bank of America: Hi, good afternoon. This is Carol Granath. Thank you for taking my question. My first one is, can you please make some comments on possible expectations with the general macro, specifically with policy and provider taxes and the impacts of that could flow through to your, portfolio.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Hey, Farrell. Yeah. There’s really no real change in our outlook from our last call on potential Medicaid cuts. I think along with everyone else, we’re just monitoring the process, and, it’s unfortunately too soon to, be definitive on this one way or the other. So, you know, there continues to be widespread bipartisan support for Medicaid and protecting the care for seniors in nursing homes especially.

So we will we will monitor the the progress in that budget process along with everyone else.

Carol Granath, Analyst, Bank of America: Thank you. And, also, I was curious if you could draw a framework of what are the conditions for you to enter into a debt investment rather than a portfolio or property acquisitions.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Yeah. Our default is, of course, always to prioritize acquisitions. What we’ve been the way we’ve talked about debt investments over the last, really, couple of years is a a means to an end. If if we see that there’s an opportunity through a loan to build a relationship that’s strategic in nature because this this borrower or operator is a is a key relationship that we think can lead to real growth in the future, real acquisitions in the future, then and and really only then would we entertain a loan. So the the loan book has increased quite a bit over the last couple of years.

But the 1,500,000,000.0 of investments that we did last year, about half of those were tied to, those strategic relationships that we made through lending in in previous, periods. And if you look at the 500,000,000 of acquisitions that is largely acquisitions in our pipeline today, the vast majority of that are off market deals that have come from, those relationships that we’ve that we’ve created from those loans.

Carol Granath, Analyst, Bank of America: Okay. Thank you.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: You bet.

Kate, Conference Operator: Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets Inc. Your line is open.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: Great. And I hope everybody is doing well out there. My first question, just on the Care REIT transaction, just wanted to pinpoint, I mean, any changes to the annualized earnings or FAD accretion from the initial underwriting, or initial disclosure just from, you know, either, you know, escalators that have kicked in, you know, additional synergies or or just how you plan to finance the transaction?

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Yeah. We will I I know that’s that’s the, the pressing question on everybody’s mind, and we will provide answers to those questions in a little bit over a week when we announce the deal. Until then, we’re we’re still fairly limited to what we can say.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: That’s fair. Understand. Thought that may be the case. Maybe, James or or Dave, could you just size up what a reasonable volume or investment pipeline we should think about for The UK market focused more on the normal core singles and doubles? And then also speak to the yields that you’re seeing in that market you know, overall.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Yeah. I’d I’ll start, and James can add some color if mine was too dull. The the pipeline there is gonna take some time to catch up, right, to mature to the point like we have it here in The States. So there are a number of, call it singles and doubles that that we’re currently looking at. The range of cap rates, I think, is is maybe gonna be a little bit wider in The UK than you’re used to seeing us here in The States simply because, as you know, skilled nursing in in The States, those cap rates stay fairly fixed and and tight regardless of the cycle that we’re in.

But in The UK, these you the care homes are are more like a hybrid assisted living memory care with some nursing home capabilities into it. And so there’s a wider range of quality and, and therefore cap rates too. So you might you might see something in the, you know, I sevens, eights, and nines depending on the the particulars of the deal.

Omotayo Okusanya, Analyst, Deutsche Bank: That’s helpful. And then if I squeeze in just Okay.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Oh, I just

James Collister, Chief Investment Officer, CareTrust REIT: think I’d add, Austin, that look. We I don’t think we have a goal just like we don’t here. We approach it the same, which is we wanna find the right deals and not set a goal of the number we want. But when the right deal’s there, you know, we’ll try to get plucky and go get it.

Austin Wurschmidt, Analyst, KeyBanc Capital Markets: That’s helpful. And if I can squeeze in just one more, pivoting a little bit here. But I I know we’re able to to look at the coverage ratios that that you provide in the supplemental and and looking at kind of packs things, trending very well, but just speaking more broadly across the real estate as well as the other loan investments, curious for an update of how these properties are performing over the last six to nine months relative to what you initially underwrote. And just wondering how you’re thinking, or planning for any and all outcomes as you await for them to file their financials, hopefully here sometime soon. Thanks.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Yeah. Thanks, Austin. With with respect to packs, I think you were just asking specifically about them. We really don’t have any comment or update besides just having the the data and the coverage speak for itself at this point. Still waiting for their their, their release and and disclosures.

Sounds good. Thanks for taking the questions. You bet.

Kate, Conference Operator: Your next question comes from the line of Rich Anderson with Wedbush Securities. Your line is open.

Rich Anderson, Analyst, Wedbush Securities: Thanks and good morning. So you answered the question why UK you asked yourself last year. Does YNOT shop now take a bit more front and center with you going forward? Or do you feel like you’re sticking to your triple net knitting the time being and let let the The UK process sort of, know, get folded into the business and so on? Plenty to do there.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Well, that’s a great question. I think we, we certainly feel like there’s plenty to do in The UK. I think the benefit that we have with this particular deal is we’re not having to figure things out on our own and and start from here, but we have the the team based in The UK that we can just kind of facilitate, enable, empower to to get back to the growth story. And, with respect to shop, I think the the same kind of process and rationale applies. We’ve been looking at shop, like we’ve said, for the last now couple of years.

And I I think we’re just looking for the right entry point there like we’ve been looking for the right entry point into The UK. And we’ll be patient and wait for the right deal.

Rich Anderson, Analyst, Wedbush Securities: Okay. In terms of the pipeline, the $500,000,000 is that just U. S. Or does that include U. K.

As well? I’m sorry if I missed that.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Yes, that’s just U. S. Okay.

Rich Anderson, Analyst, Wedbush Securities: And so when you think about returns, are they fairly on top of one another? What you see in The U. S. And what you’re seeing in The U. K.

In terms of cap rates and IRRs and all that?

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Well, in The U. S, I think James could correct me, but I I believe that most of what’s in that 500,000,000 is skilled nursing, so you’re gonna see a higher yield than I think what we, might be looking at in The UK, but it’s still too early. We might see some some deals in The UK in the nines. I might also see some in

James Collister, Chief Investment Officer, CareTrust REIT: the eights.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: So I think they’re they’re all gonna be accretive and but and fairly close to each other, but different assets. And each deal will, as you know, got to underwrite individually.

Rich Anderson, Analyst, Wedbush Securities: Great. Last for me. You know, you guys were good enough to sort of dig into the whole CMS, reimbursement, you know, for fiscal year 2026. I know the headline is 2.8. Can you talk about the moving parts there?

And what the real number is for the way you see it today for your portfolio? And whether or not you’re kind of happy with what, you know, what they’re they’re, assuming for next year or suggesting for next year. You know, where do you stand on that? We’ve talked a lot about Medicaid, but where are you on Medicare? Thanks.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Sure. Thanks, Rich. Yeah. I think Medicare’s you know, I I think the the rate increase is fine. For for us, there’s the headline rate, but then the devil’s in the details.

Every facility is is gonna have its own unique increase based on different variables that go into that. So, you know, I think for us, as you look at it, across the board, it blends to about a 2.2 across our portfolio, which, you know, of course, you’d like it to be more, but it’s fine. None of our operators are are concerned about that. It’s, it’s kinda in line with historical increases there. Okay.

Fair enough. Thanks very much. You bet.

Kate, Conference Operator: Your next question comes from the line of Wes Golladay with Baird. Your line is open.

Rich Anderson, Analyst, Wedbush Securities: Hey, guys. By doing a large deal in The UK, did that put you on the map? Are you seeing a lot of new relationships? And then we also start lending in The UK?

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Yeah, Wes. The I I’d say I I we put out a press release a couple of weeks ago just when when we announced that our offer was best and final. And and what I said there is is what I’ll say right now, which is regardless of the outcome of the vote, we feel like we had already won because of the response from operators there and brokers. We we it was really overwhelming. We went out there a couple weeks ago and, met with, several operators, and they are, they really are hungry to grow with us.

So, we think that there’s gonna be a great opportunity. We are not looking to, lend into that market today. We’re just looking to do your your traditional acquisitions and and leases. Thank you.

Wes Golladay, Analyst, Baird: Yes.

Kate, Conference Operator: Your next question comes from the line of Michael Carroll with RBC Capital Markets. Your line is open.

James Collister, Chief Investment Officer, CareTrust REIT: Yes, thanks. I just wanted

Lauren Bill, Chief Accounting Officer, CareTrust REIT0: to clarify on, I guess, the near term opportunity in The U. K. I know the pipeline doesn’t have any U. K. Deals.

I believe, James, you kind of highlighted that it might take some time or maybe Dave, I forget who it was, that it might take time to kind of build up that pipeline. But obviously, David, you just announced in that that press release you referenced that you’re getting some reverse inquiries. So I mean, how long does it take to start to build that pipeline over there? Is is can more deals happen in the back half of this year? Does it take longer to build that out?

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: I would hope that we could my hope is that we could get something done this year. But, but like I said, it’s it’s it’s gonna take some time because we’re the the team there, while they’ve been there a long time, they they haven’t really had access to capital. And so the existing pipeline that we’re stepping into was was fairly thin. And but, you know, not to put too much pressure on James, you know, if he doesn’t get something done this year, he he might be I’m just kidding. Yeah.

We’ll we’ll try to get something done this year, but I think next year, it’d be more likely that we start to see a more mature pipeline form.

Lauren Bill, Chief Accounting Officer, CareTrust REIT0: Okay. Great. And then, James, can you talk a little bit about The U. S. Sniff market?

And has this market changed at all over the past six months or post the PAX deal? I mean, is there capital looking for deals? Or is that capital more on the sidelines just kind of waiting to see kind of what happens with the the Medicaid outlook? I mean, has the comp competitive landscape changed at all?

James Collister, Chief Investment Officer, CareTrust REIT: I don’t think it has really at all, Mike. I think they’re still the same groups, same amount of capital out there looking at deals. I think there’s just about the same deal flow out there. I think you still if anything, you know, some of the noise has maybe some regionals or mom and pops, you know, feeling like it’s a good time to sell. So I think it’s pretty unchanged.

Same pretty fierce competitive landscape, same, you know, pretty consistent buyer pool and kinda same groups typically at the same deal table.

Lauren Bill, Chief Accounting Officer, CareTrust REIT0: Okay. And then just last one, I guess, for Bill related to guidance. I know I know you said that the the Care REIT deal is not included in that. And I believe you mentioned this when you did your your walk through. But I know that you have about $600,000,000 of cash on the balance sheet.

I mean, I hear that correctly? Just assume that is invested in like money market type funds within guidance?

Bill Wagner, Chief Financial Officer, CareTrust REIT: That restricted cash is invested in, some money market accounts with the escrow agent.

Lauren Bill, Chief Accounting Officer, CareTrust REIT0: And that’s what you assumed that’s in in your updated guidance range?

Bill Wagner, Chief Financial Officer, CareTrust REIT: Yes. That is included in the that represents an increase over last quarter’s guidance for interest income.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Okay. Great. Thank you.

Kate, Conference Operator: Your next question comes from the line of Juan Sanabria with BMO Capital Markets. Your line is open.

Wes Golladay, Analyst, Baird: Hi. Just curious on the watch list and kind of cash paying tenants, how how things are trending in your comfort level that, you know, there won’t be any surprises as we look out for the next, few quarters.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Well, by definition, if we knew of a surprise, it wouldn’t be one. But, having said that I

Bill Wagner, Chief Financial Officer, CareTrust REIT: hear that.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: We feel we we feel pretty good, about the the strength of the overall portfolio as you saw on the overall coverage tick up. Already, it was a ridiculously high coverage to begin with, and it ticked up further last quarter. I think we have a pretty good handle on the the folks that are not paying, and we’re trying to deal with those by selling or transitioning those assets. So I would be surprised if we had a surprise.

Wes Golladay, Analyst, Baird: Fair enough. And then just maybe just looking at the top 10 tenant list, you got links in Champion Care that have transition assets. But how are you feeling about their trajectory and just the the pace of how they’re executing on their on the business plans?

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Yeah. Yeah. That’s a great question. Feeling really good about both. Both on track or a little bit ahead of schedule.

With links, they’ve been in there the longest and, but they also have the longest ramp of rent bumps based on their their initial large deal that we did with them. So we wanna just make sure that that next, rent bump, you know, is is fair to them before we we put them in in front of everybody.

Wes Golladay, Analyst, Baird: Great. And then if I could be greedy, one more question for Bill. Is is the turmoil you guys are talking, about with the banks, I’m assuming that that’d be multicurrency. Is that correct? And do you have a sense of kinda what the cost may be in differential between The US and and pound interest rates?

Bill Wagner, Chief Financial Officer, CareTrust REIT: Yes. It won’t be in pounds. It’s going to be an amendment to our existing credit facility. So the credit facility will go from 1.2 to 1.7. Five hundred million of that will be a term loan, and the pricing on the term loan will be just inside our revolver.

Wes Golladay, Analyst, Baird: Thank you. You bet.

Kate, Conference Operator: Your next question comes from the line of Omotayo Okusanya with Deutsche Bank. Your line is open.

Omotayo Okusanya, Analyst, Deutsche Bank: Yes. Good afternoon. So, again, rent coverage ratio is going up. It sounds like generally the health of the operators is good. Just kind of curious, you know, the operators kind of access to financing at this point.

You you you did have one of your peers this morning talk about one of their tenants having some challenges with their ABL. Curious. Are you seeing any of that industry wise at this point? And also if there are any challenges for operators also or even for you as it pertains to kind of, GSE financing.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: No. We’re not seeing anything like that.

Omotayo Okusanya, Analyst, Deutsche Bank: Alright. Good to know. Thank you.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Thanks, Tayo.

Kate, Conference Operator: I will now turn the call back to Dave Sedwick for closing remarks.

Dave Sedgwick, President and Chief Executive Officer, CareTrust REIT: Well, again, thank you very much. We’re, as you can tell, very excited about the, the the quick and robust start to the year, and, I really appreciate everybody’s support. Have a great weekend.

Kate, Conference Operator: Ladies and gentlemen, that concludes today’s call. You can now disconnect. Thank you, and have a great day.

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