管理層發言
Hello, everyone. Thank you for joining us, and welcome to the CareTrust Second Quarter Earnings Call. Operator instructions were provided. I will now hand the conference over to Lauren Beale, Chief Accounting Officer. Lauren, please go ahead.
Thank you, and welcome to CareTrust REIT's Second Quarter 2026 Earnings Call. Today, we will make forward-looking statements 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-Q filing with the SEC. We do not undertake a 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. A reconciliation of these measures to the most comparable GAAP financial measures is available in our earnings press release and Q2 2026 financial supplement, which are available on the Investor Relations section of CareTrust's 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 David Sedgwick, President and Chief Executive Officer; Derek Bunker, Chief Financial Officer; and James Callister, Chief Investment Officer. I'll now turn the call over to Dave Sedgwick, CareTrust REIT's President and CEO. Dave?
Thank you, Lauren, and good morning, everybody. Thank you for joining us. The CareTrust flywheel cranked up a few years ago when we hit around 7x our lifetime annual average of investments in 2024 and again in 2025. The team shows no signs of slowing. In fact, the opposite is true. After two back-to-back record-setting years, we are again on pace to deliver in a big way for our operators and shareholders. Last quarter was the single largest investment quarter in our company's history, excluding M&A activity, with approximately $900 million of investments at a blended yield of 8.9%. James, Kyle, Joe, Tri, Josh, JP, Nick, Martin, and Killian, that's the dream team right there responsible for a year's worth of investments in one quarter. I'm so proud of them and proud of the entire CareTrust team across the board: accounting, asset management, finance, tax, legal, data, operations. Everyone is rowing hard together to make this year a three-peat of record performance. Q2 results achieved record investments in the quarter, record revenues, record FFO per share and a healthy raise to guidance, built on a foundation of record operator lease coverage and operator quality care measures. Let me expand on that foundation just a little bit. We are stoked to see our operator quality care measures exceed the industry averages for overall star ratings, health inspections, quality measures, successful discharges and readmission rates. Let me repeat that. Our operators outperform industry averages for overall star ratings, health inspections, quality measures, successful discharges and readmission rates after they've had a chance to manage these buildings for at least four years. In my 2025 annual report letter, I discussed how mission-critical it is for us to lease our properties to high-quality operators and how we view the relationship between them and the value of our real estate investments. A quality operator is one who is driven by a mission, focuses their resources first on becoming the employer of choice and through that, becomes the quality care provider of choice in their market. Only after achieving sustained quality care outcomes can a provider and the real estate they operate achieve sustainable financial stability. We have seen this formula for success prove out over the last 25 years. A CareTrust operator is one who harmonizes mission-driven culture with the clinical and financial sophistication to adapt to an ever-changing environment. We apply those first principles to skilled nursing and senior housing alike. We invest for the long term. The price we pay and the operator we choose are intended to result in long-term quality care and, as a result, compounding value creation. That solid operator foundation and orientation allows us to grow in a sustainable and accelerated way across our three growth engines. Year-to-date, we have already closed on approximately $1.5 billion. And looking forward, the pipeline continues to reload and deal flow continues to be active and interesting across skilled nursing, care homes and SHOP, both in the U.S. and the U.K. With the balance sheet as strong as it is, the team is stronger than ever before and the opportunity set expanded and great relationships with partners and new and existing high-quality operators, there has simply never been a more exciting time for CareTrust. With that, I'll hand it off to James for a report on investment activity and the acquisition landscape. James?
Thanks, Dave. Good morning, everyone. During the second quarter, we closed on investments totaling approximately $900 million at a blended stabilized yield of 8.9%. That capital was deployed across the full breadth of the platform: U.S. skilled nursing sale-leasebacks with quality operators in multiple geographies, the continued expansion of our U.K. Care Homes platform, sourced and executed by our London-based team, further growth in our SHOP portfolio and relationship-driven real estate loans, primarily as skilled nursing operators closed either alongside asset acquisitions or in anticipation of them. And as Dave noted, we haven't slowed down since the quarter ended. Since June 30, we've closed on an additional approximately $308 million at a blended stabilized yield of approximately 7.8%. Headlining that activity was a 16-property U.K. Care Homes portfolio net leased to a new operator relationship for CareTrust, joined by a two-community $65 million addition to our SHOP platform. Taken together, our 2026 investments now stand at approximately $1.5 billion year-to-date. Breaking that down, roughly $735 million in U.S. triple net skilled nursing and seniors housing, approximately $397 million in U.K. Care Homes, approximately $240 million in loans, and approximately $81 million in SHOP. Turning to what's ahead. The pipeline sits at approximately $540 million, roughly two-thirds skilled nursing and one-third loans to strategic partners plus U.K. Care Homes. It's a healthy mix, some singles and doubles alongside mid- to large-portfolio opportunities. You'll note the immediate pipeline doesn't include SHOP. That's really just a function of timing and discipline. The team continues to deepen relationships, including with high-performing operators, and we are confident these relationships will drive attractive on- and off-market opportunities that we expect to convert in future quarters and give us a long runway to scale that portfolio in both the U.S. and the U.K. And, our usual reminder on methodology: the quoted pipeline includes only deals we have a reasonable level of confidence we can lock up and close within the next 12 months, and it typically excludes larger portfolios still under review. Stepping back for a moment, what gives us real confidence is that all three of our growth engines are producing. In skilled nursing, deal flow remains deep and steady with proprietary opportunities generated through long-standing relationships. In SHOP, even amid stiff competition and compressing cap rates, we're pursuing the right assets with the right operators and see a long runway to scale that portfolio in the quarters and years ahead. And in the U.K., our London-based team has widened our aperture considerably: new operators, new sources of deal flow and a pipeline that keeps building. Across all three, the team continues to surface attractive opportunities to deploy capital, and we like our position in each of these markets. That growth will stay grounded in the same fundamentals that have served us well: disciplined underwriting, durable operator partnerships, and a creative collaborative approach to structuring. With that, I'll hand it to Derek to walk through the quarter's financial results.
Thank you, James. For the quarter, normalized FFO increased 44% over the prior year quarter to $119.7 million, and normalized FAD increased 43% to $118.5 million. On a per-share basis, normalized FFO was $0.51, an increase of approximately 19% over the prior year quarter. And normalized FAD was also $0.51, an increase of approximately 19% over the same period. In the second quarter, we raised approximately $364 million of gross proceeds from the settlement of outstanding equity forward contracts to fund investment activity in the quarter. Also in the quarter, we sold 14.4 million shares under forward equity contracts, raising $580.5 million of gross proceeds at a weighted average price of $40.23. And since quarter end, we sold another 2.2 million shares on a forward basis for gross proceeds of $90.6 million at a weighted average price per share of $41.46. As of today, we have approximately 16.6 million shares remaining unsettled under forward sale agreements, representing approximately $671.4 million in gross proceeds available to fund future investment activity. In yesterday's earnings press release, we raised our full year 2026 guidance, reflecting our year-to-date investment activity, including the volume we've closed since quarter end. We're now projecting normalized FFO per share of $2.03 to $2.06 and normalized FAD per share of $2.01 to $2.04. At the midpoint, that represents growth of 16.2% in normalized FFO per share and approximately 15.1% in normalized FAD per share compared to full year 2025 results. Our updated guidance is based on a weighted average diluted share count of 233 million shares and includes the following key assumptions: First, no new investments, loans, or dispositions beyond those made year-to-date; second, no new debt or equity issuances beyond those made year-to-date; third, 2.5% inflation-based rent escalators under our long-term triple net leases; fourth, $147 million of loans to be repaid throughout the year, of which approximately $104 million has been received so far to date; and fifth, no material change in the GBP to USD spot exchange rate. Additional guidance measures are detailed in the press release yesterday. Lastly, our liquidity continues to remain strong at approximately $1.4 billion as of today, including approximately $90 million of cash on hand, $605 million of availability under our $1.2 billion revolving credit facility and approximately $671 million of unsettled equity forward contracts. In addition, we have roughly $785.8 million of capacity available under our ATM program. Net debt to annualized normalized run rate EBITDA was 1.0x at quarter end, well below our long-term target range, and our fixed charge coverage ratio was 9.9x. We continue to have no scheduled debt maturities prior to 2028. With continued momentum and a reloaded investment pipeline, we have ample dry powder and multiple levers across our capital toolkit to keep funding our recent pace of investment activity. And with that, I'll turn it back to Dave.
Thank you, Derek, and thank you, James, and thank you, everybody. We're really grateful for everybody's interest and support. As I hope you can tell, we are super bullish on the CareTrust story and not just what we've achieved, but where we are headed. And with that, I would be happy to answer any of the questions that you might have at this time.
分析師問答
Your first question comes from John Kilichowski with Wells Fargo.
James, maybe if I could start with you. You gave some helpful color in the opening remarks, especially about building out the SHOP pipeline and it not being mentioned in the current pipeline. Could you talk a little bit more about building those relationships with operators and how that will eventually translate into volumes and how we should think about the cadence of that?
Yes, sure. It's hard to predict the cadence, John. You're never really sure what's going to hit the market or what off-market opportunity is going to come. Building relationships with these operators and managers, finding the ones you can use in different regions of the country or that have proven track records and experience with other publics and back-office reporting really allows you to more quickly pursue transactions when they arise. It opens up the off-market pipeline as you develop relationships with them. As you develop frameworks with them of what a deal would look like and the terms on which you would transact, much of that is prebaked so you can react quickly when the right deal in the right area comes up. The team has done a great job of developing many of those relationships and being ready to continue and ramp up pursuing acquisitions in different parts of the country.
And then would you also mind talking about the portfolio deals outside of the quoted pipeline? Maybe you don't want to speak to specific deals, but can you talk about the composition of where you're seeing those opportunities? Or is it more SNF tilted? Are there SHOP portfolios out there that you're currently evaluating? I'm just kind of curious what the composition looks like more than anything.
Yes. There are a few portfolios floating around. I would say there are one or two SHOP portfolios that are larger that we're reviewing to see how attractive they are and whether we want to pursue them. There's also the same for skilled nursing and one or two in the U.K. as well. So there are a few portfolios out there that we're looking at, but we'll see if they're really worth pursuing or if we think there is enough traction.
Your next question comes from Austin Wurschmidt with KeyBanc Capital Markets.
With respect to the Care Home portfolio investment in August, I think this might be one of the largest purchases you've done in the U.K. since acquiring Care REIT. But what I'm wondering is how much of the scale impacted pricing? And do you view this deal to open the door to potential future deals given the new relationship there with the operator?
Yes. The scale did impact the pricing a bit. Sixteen facilities of that size in the U.K. don't come around often, so there's a small premium. We definitely see it as a launching point with this operator. They have demonstrated the ability to operate well at scale. This is their first major re-entry after selling their portfolio last year, so we view it as a platform to grow with them in the future.
And then, Dave, as you think about tenant and geographic concentration and ensuring you have the right diversification balanced with partnering with the highest quality operators consistent with the above-average metrics you highlighted in your opening remarks, how do you think about striking that balance moving forward?
One of our first principles when we started the company was that underwriting always starts and ends with who the operator will be. If we do not have what we think is a quality operator to match with a great opportunity, we're going to pass. We'd much rather take an A operator in a B market than settle for a mediocre operator in a great market. That's in our DNA and the discipline we have. If concentration builds with a strong operator, we don't mind because over time diversification and concentration tend to balance out.
Your next question comes from Juan Sanabria with BMO Capital Markets.
This is Robin Haneland sitting in for Juan. I was curious if there are any opportunities to convert existing senior housing tenants to either SHOP in the U.S. or U.K.?
We've certainly thought about that. The challenge is our senior housing portfolio in the U.S. and the U.K. generally covers rent very well, so there's little motivation for operators to walk away from that lease coverage. Many conversions in the space have been defensive, where coverage was weak and conversion to SHOP helped. Because our senior housing covers so well, there's less opportunity to convert. Looking forward, everything is on the table, but more likely SHOP growth for us will be on offense: identifying great assets we want to own and partnering with operators to run them.
And as a follow-up, I wanted to ask where things stand with PACS today? What's the willingness to move forward? What have discussions been like year-to-date?
We're pleased with PACS' performance this year. They're back to a normal filing cadence, have invested in compliance and are back on a growth path. We haven't done anything with PACS for a while, but not for lack of trying. We've looked at deals with them, and we'd be happy to grow with them again if the right opportunity presents itself.
Your next question comes from Michael Goldsmith with UBS.
James, in your prepared remarks when talking about the U.K., you mentioned widening the aperture. Could you provide more color on what you meant specifically by that?
Sure. By widening the aperture, I mean the team has done a great job going beyond traditionally marketed deals. They're using operator relationships and other contacts to generate more sources of deal flow. Also, we're starting to consider structures beyond traditional triple net leases, so we've formed relationships to evaluate potential deals structured differently, including SHOP, if appropriate. In short, we're expanding how deals come to us beyond the traditional routes, increasing the number of opportunities.
Got it. And maybe to follow up on John's earlier question about SHOP in the pipeline. You cited timing and discipline. How do you manage the balance between taking advantage of opportunities and maintaining discipline so you don't acquire just for the sake of acquiring?
It's a tough balance. We really try to pick our spots. We look for opportunities where we have confidence the IRR and returns meet our thresholds, and we're willing to stretch to get those. But we won't stretch for deals that don't make sense. We're finding good opportunities on the SNF and U.K. Care Home sides, and when it comes to SHOP, we'll continue developing relationships and underwriting deals, picking the right partners and stretching for the right opportunities without going beyond what we feel is prudent just in the name of growth. We don't need to do a deal to grow given the opportunities in SNFs and Care Homes.
Your next question comes from Michael Carroll with RBC Capital Markets.
James, with increased private market interest in health care real estate generally, how has that impacted acquisition cap rates? Have you seen cap rates broadly drift lower? Is there any property type where that's more apparent? I know SHOP has had the most competition historically. What have you seen in SNF and U.K. Care Homes?
SHOP has attracted more private market entrants recently and cap rates are compressing as a result. There's more competitive processes. In the SNF world, we haven't seen much change; the same buyer pool competes and there is still a strong off-market presence, so cap rates are largely stable with only modest compression on larger portfolios. In the U.K., there is an influx of private entrants, but we haven't seen a dramatic impact on cap rates or competitive processes yet.
Okay. And then, Derek or Dave, could you talk about the purchase options? I know that you have a few where tenants can potentially acquire one of your current assets. There was a window that opened for one specific smaller purchase option, and a few are coming up over the next few quarters. How should we think about that? Do you think those could be executed on or will they just expire?
We expect and have baked into our thinking that there's a high likelihood many of those options will be exercised. Of course, until we receive notices of exercise, it's uncertain—capital needs and plans change. We're in ongoing discussions with tenants that have options; the relationships are collaborative. It's not the end of the world if they exercise; we always look to do deals with them in the future. For now, we assign a high likelihood that those will be exercised.
Your next question comes from Farrell Granath with Bank of America.
My first question is on the composition of your financing receivables. I know that can also refer to your sale-leasebacks. What percentage of that is potentially SNFs, given SNFs have been a smaller proportion of outright purchases?
It's almost 100% SNFs. These are compelling sale-leaseback opportunities. The bulk of the financing receivables have purchase options that are eight to nine years out. There's uncertainty about exercise in the meantime. We view them more in substance as owned triple net assets, but accounting places them in the financing receivable bucket. These are quality assets in the skilled nursing space.
And given the debate around the path of Fed policy, how are you thinking about your cost of capital and the ability to leverage the balance sheet or lean into equity? Any updated thoughts?
We prepare for uncertainties, and having relatively low leverage gives us optionality depending on Fed policy and other macro factors. We like carrying a little balance on the revolver; it's competitive for us. We also like the price of our equity right now. We have optionality to pursue longer-term debt or term loans; all tools are on the table. For the pipeline, we've earmarked settlements of our equity forwards and other sources, giving us runway to maneuver. We're monitoring rates daily and aim to be opportunistic.
Your next question comes from Rich Anderson with Cantor Fitzgerald.
There's a disconnect in the market: you're not finding many SHOP transactions while some peers are doing many SHOP deals. You're the one with very competitive cost of capital in the group. Why does it seem you're slower to deploy in SHOP? When you're competing, how far off are you from the ultimate winner? Is pricing the main issue? Why has SHOP been slower for you compared to peers?
One difference is strategic posture. Some peers have pivoted and gone all-in on SHOP and thus have motivation to show rapid deployment against that strategy. We view SHOP as a long-term complementary growth engine for CareTrust and remain opportunistic across all three engines. We have the luxury of being disciplined and opportunistic across SNF, SHOP, and U.K. Care Homes. If we can deliver double-digit FFO per-share growth while maintaining discipline and being opportunistic across all three, we prefer that approach over forcing SHOP deployment to meet a headline strategy. That said, we wouldn't be surprised to do a large SHOP portfolio deal in the future if it checks our boxes.
When you're losing deals, it's almost always on price. You look at projections and IRRs. If pricing for SHOP portfolios moves to mid- to low-5 caps on stable assets, you compare that risk-adjusted return to SNF and U.K. opportunities returning in the high 8s or 9s. Given those relative returns, we may allocate capital where we see better risk-adjusted returns unless SHOP pricing aligns with our return thresholds.
Dave, what do you like about the skilled nursing business? If acquisitions froze, you'd be left with a modest organic growth platform. What is the draw to skilled nursing for you?
We have deep roots and history in skilled nursing going back to Ensign in 1999. We know and value this business. It's a vital part of the health care continuum and remains too important to fail. Demographics over the next 25 years support continued demand. Because of our history, we do a strong job identifying the best operators who provide high-quality care, and that drives attractive risk-adjusted returns relative to many other asset classes.
Your next question comes from Alec Feygin with Baird.
Are there any portfolio initiatives you're working on with SNF operators, large or small?
There's always portfolio scrutiny. Asset management is always focused on improving and, where appropriate, moving assets from weaker to stronger hands. But there's nothing currently underway that would impact guidance or results in any significant way.
Your next question comes from Eddie Rodgers with Raymond James.
There are always headlines and regulatory risk out there. Are you seeing anything in the acquisition pipeline that operators are bringing you or that you're turning down where there's more risk? Conversely, are there asset types or areas where you're now seeing less risk, opening opportunities? Are you seeing any shift within the skilled nursing mix that's given you an opportunity to continue acquiring so well?
The skilled nursing environment right now is stable—from a regulatory and reimbursement standpoint it's calm relative to more choppy periods in the past. Operators and we feel comfortable, and there is appetite to grow in today's environment.
A follow-up: the loan-to-own that closed in the third quarter—any details on that small asset? Could that be instructive of getting more assets back that you'd want to own more quickly?
In the U.K., some transactions are structured as loan-to-own to facilitate closing while licensure is being received. We anticipate those will convert into real estate in the next six to 12 months. For example, we closed a transaction last fall under a loan-to-own structure that recently converted when licensure was obtained. It's a way to facilitate earlier closings while waiting on licensure.
Your next question comes from Michael Stroyeck with Green Street.
Loans are a decent chunk of the pipeline. Can you talk about the strategic rationale for these loans and whether we should expect loans to continue to be a meaningful part of external growth going forward?
There's a purpose behind the loans: they are often alongside or in anticipation of asset acquisitions. They can come with purchase options or agreements where real estate deals follow. It's a way to unlock future real estate acquisitions with particular borrowers or operators. That cycle has been virtuous for us and has driven meaningful growth. Loans won't become the primary business, but they'll fluctuate quarter to quarter and support future real estate opportunities.
Understood. And on the most recent SHOP deal, where do you ultimately see that mid-6% yield stabilizing at, and what's the time frame you're assuming?
Those two SHOP communities are stable assets. We see opportunity for rate growth and operating expense savings. One facility has expansion potential we're evaluating. We expect low double-digit IRR returns and project margin expansion from the low 30s to the high 30s over the next two to three years.
Your next question comes from Jyoti Yadav with Mizuho.
You mentioned record coverage. Can you talk about potential for rent resets over time or at expirations?
In the supplemental, we show the maturity of our rents starting in 2031. That's when conversations about resets begin. Given strong lease coverage, as we approach 2031 and beyond there will be opportunities to reset rents to more market rates, but that's a few years off.
There are no further questions at this time. I will now turn the call back to Dave Sedgwick with closing remarks.
Well, thank you, everybody, for your time and interest. I want to again acknowledge the amazing team here at CareTrust and thank them for their hard work. Thank you to our operators as well for setting a high standard of quality care that allows us to continue to expand our and their missions. Hope everybody has a great weekend.
This concludes today's call. Thank you for attending. You may now disconnect.