Real estate investment firm CareTrust (Nasdaq: CTRE) has featured 32 properties it has flagged for sale or repurposing – and the “vast majority” of them are senior housing, according to the agency’s top executive. ‘business.
“We have a portfolio of skilled nursing facilities that we’re selling off and then the rest are all senior housing,” CEO David Sedgwick said during Friday’s first-quarter earnings call with investors. and analysts.
Since announcing the move in February, CareTrust has already signed leases with a behavioral health provider to convert three assisted living communities into addiction recovery centers. Assuming all goes according to plan, the redevelopment work should start this summer.
Another 27 assets are in the early stages of sale, with interest in the properties “in line with our expectations”, Sedgwick said. The REIT may also “decide to retain and re-lease certain facilities instead of selling them,” he added.
Sedgwick said he believed there was still rent to be collected in the portfolio, although he added it was too early to say how much.
Of the company’s 226 assets, 160 are skilled nursing facilities, while 41 are senior housing and another 25 are “multi-service campuses”. Looking ahead, Sedgwick noted that the REIT “will continue to invest, grow and support senior housing operators as well as skilled nursing”.
“We never had in mind a target mix for the business between skilled nursing facilities or senior housing,” he told Senior Housing News. “The mix may vary from year to year depending on investment opportunities.”
The REIT’s senior housing occupancy increased 100 basis points to 77% occupancy in the first quarter of 2022, from pre-pandemic occupancy levels of 84% and a low of 75% last November.
In the first quarter, CareTrust posted a net loss of $43.3 million and a net loss per share of $0.45. Although “senior housing assets continue to flood the market,” Chief Investment Officer Mark Lamb noted that the assets were volatile and non-strategic and did not fit into a triple net structure.
“The M&A market continues to be a mixed bag for skilled nursing and senior housing assets,” Lamb said.
Common headwinds from labor to inflation will force more undercapitalized operators to put properties on the market, Lamb added.
Overall, rental income decreased by $3.1 million in the first quarter. The REIT also recorded an impairment loss of $59.7 million based on the expected net proceeds from the sale of the 27 assets.