Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - CareTrust REIT, Inc. | exhibit991-ctreq32017earni.htm |
| 8-K - 8-K - CareTrust REIT, Inc. | ctre201709308-kearningsrel.htm |
The Rio at Cabezon (Rio Rancho, NM)
EXHIBIT 99.2
Cascadia of Nampa (Nampa, ID)
2
Disclaimers
• This supplement contains 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 our intent, belief or expectations, including, but not limited to, statements regarding future financial and financing positions, business and
acquisition strategies, growth prospects, operating and financial performance, expectations regarding the making of distributions, payment of dividends, compliance with and changes in governmental
regulations, and the performance of our 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. Our forward-looking statements are based on our 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 we believe that the
assumptions underlying these forward-looking statements are reasonable, they are not guarantees and we can give no assurance that our expectations will be attained. Factors which could have a
material adverse effect on our operations and future prospects or which could cause actual results to differ materially from expectations include, but are not limited to: (i) the ability to achieve some
or all of the expected benefits from the completed spin-off from The Ensign Group, Inc. (“Ensign”); (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 and the ability and willingness of Ensign to meet and/or perform its obligations under the contractual arrangements that it entered into with us in
connection with such spin-off, including its triple-net long-term leases with us, and any of its obligations to indemnify, defend and hold us harmless from and against various claims, litigation and
liabilities; (iii) the ability and willingness of our tenants to comply with laws, rules and regulations in the operation of the properties we lease to them; (iv) the ability and willingness of our tenants,
including Ensign, to renew their leases with us upon 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, and obligations, including indemnification obligations, that we may incur in connection with the replacement of an existing tenant; (v) the availability of and the ability to identify
suitable acquisition opportunities and the ability to acquire and lease the respective properties on favorable terms; (vi) the ability to generate sufficient cash flows to service our outstanding
indebtedness; (vii) access to debt and equity capital markets; (viii) fluctuating interest rates; (ix) the ability to retain our key management personnel; (x) the ability to maintain our status as a real
estate investment trust (“REIT”); (xi) changes in the U.S. tax laws and other state, federal or local laws, whether or not specific to REITs; (xii) other risks inherent in the real estate business, including
potential liability relating to environmental matters and illiquidity of real estate investments; and (xiii) any additional factors identified in our filings with the Securities and Exchange Commission
(“SEC”), including those in our Annual Report on Form 10-K for the year ended December 31, 2016 under the heading entitled “Risk Factors,” as such risk factors may be amended, supplemented or
superseded from time to time by other reports we file with the SEC.
• This supplement contains certain non-GAAP financial information relating to CareTrust REIT including EBITDA, Normalized EBITDA, FFO, Normalized FFO, FAD, Normalized FAD, and certain related
ratios. Explanatory footnotes and a glossary explaining this non-GAAP information are included in this supplement. Reconciliations of these non-GAAP measures are also included in this supplement.
Other financial information, including GAAP financial information, is also available on our website. Non-GAAP financial information does not represent financial performance under GAAP and should
not be considered in insolation, as a measure of liquidity, as an alternative to net income, or as an indicator of any other performance measure determined in accordance with GAAP. You should not
rely on non-GAAP financial information as a substitute for GAAP financial information, and should recognize that non-GAAP information presented herein may not compare to similarly-termed non-
GAAP information of other companies (i.e., because they do not use the same definitions for determining any such non-GAAP information).
• This supplement also includes certain information regarding operators of our properties (such as EBITDARM Coverage, EBITDAR Coverage, and Occupancy), most of which are not subject to audit
or SEC reporting requirements. The operator information provided in this supplement has been provided by the operators. We have not independently verified this information, but have no reason
to believe that such information is inaccurate in any material respect. We are providing this information for informational purposes only. Ensign is subject to the registration and reporting requirements
of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. Ensign’s financial statements,
as filed with the SEC, can be found at Ensign’s website http://www.ensigngroup.net.
• Information in this supplement is provided as of September 30, 2017, unless specifically stated otherwise. We expressly disclaim any obligation to update or revise any information in this supplement
(including forward-looking statements), whether to reflect any change in our expectations, any change in events, conditions or circumstances, or otherwise.
• As used in this supplement, 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.
2
3
Company Profile
CareTrust REIT is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition and leasing
of seniors housing and healthcare-related properties. CareTrust REIT generates revenues primarily by leasing properties to a diverse
group of local, regional and national seniors housing operators, healthcare services providers, and other healthcare-related businesses.
Since its debut as a standalone public company on June 1, 2014, and as of November 7, 2017, CareTrust REIT has expanded its tenant
roster to 19 operators, and has grown its portfolio real estate portfolio to 184 net-leased healthcare properties and three operated
seniors housing properties across 23 states, consisting of 18,017 operating beds/units.
Management
Greg Stapley
Chairman and Chief Executive Officer
Bill Wagner
Chief Financial Officer
Dave Sedgwick
Vice President of Operations
Mark Lamb
Director of Investments
Contact Information
CareTrust REIT, Inc.
905 Calle Amanecer, Suite 300
San Clemente, CA 92673
(949) 542-3130 | ir@caretrustreit.com
www.caretrustreit.com
Transfer Agent
Broadridge Corporate Issuer Solutions
P.O. Box 1342
Brentwood, NY 11717
(800) 733-1121 | shareholder@broadridge.com
Board of Directors
KeyBanc Capital Markets
Jordan Sadler | (917) 318-2280
Raymond James
Jonathan Hughes | (727) 567-2438
Wells Fargo Securities
Todd Stender | (562) 637-1371
RBC Capital Markets
Michael Carroll | (440) 715-2649
Stifel, Nicolaus & Company
Chad Vanacore | (518) 587-2581
BMO Capital Markets
John Kim | (212) 885-4115
CapitalOne Securities
Dan Bernstein | (571) 835-7202
JMP Research
Peter Martin | (415) 835-8904
Stephens
Dana Hambly, CFA | (615) 279-4329
Analyst Coverage
Greg Stapley
Chairman
David Lindahl Jon Kline Allen Barbieri Spencer Plumb
Company Profile 3
CareTrust at a Glance 4
Investments 5
Portfolio Overview
Portfolio Performance 6
Tenant Summary 7
Rent Diversification by Tenant 8
Geographic Diversification 10
Rent Diversification by State 11
Lease Maturities 12
Financial Overview
Consolidated Income Statements 14
Reconciliation of EBITDA, FFO and FAD 15
Consolidated Balance Sheets 17
Key Debt Metrics 18
Debt Summary 19
2017 Guidance 20
Equity Capital Transactions 21
Other Financial Highlights 22
Glossary 23
4
Note:
Amounts are as of September 30, 2017 and exclude our three operated seniors housing properties and our two preferred
equity investments.
Credit Ratings
S&P
Corporate Rating: B+ (positive)
Senior Unsecured Notes: BB-
Moody’s
Corporate Rating: B1 (positive)
Senior Unsecured Notes: B1
Annualized Rent
16,795
Operating
Beds/Units
171
Properties
18
Operators
23 States
$1,202.5M
Investments
CareTrust REIT, Inc.
NASDAQ: CTRE
Market Data
(as of September 30, 2017)
Closing Price: $19.04
52 Week Range: $19.86 – $12.70
Market Cap: $1,446M
Enterprise Value: $1,941M
Outstanding Shares: 75.9M
Credit Ratings
S&P
Corporate Rating: B+ (positive)
Senior Unsecured Notes: BB-
Moody’s
Corporate Rating: Ba3 (positive)
Senior Unsecured Notes: Ba3
4
5
Investments
Notes:
[1] Initial Investment for pre-spin properties represents Ensign's gross book value. Initial Investment for post-spin properties represents CareTrust REIT’s purchase price and transaction costs.
[2] Initial Operating Beds/Units as of the acquisition date.
[3] Total Cost per Bed/Unit excludes preferred equity investments.
[4] Initial Rent represents the annualized acquisition-date cash rent or deferred interest income on preferred equity investments.
[5] Initial Yield represents Initial Rent divided by Initial Investment.
[6] Mortgage loan.
[7] All amounts exclude our three operated seniors housing properties.
(dollars in thousands)
Date Operator Property Type Location Facilities Initial Investment[1]
Initial Operating
Bed/Unit [2]
Cost per
Bed/Unit [3] Initial Rent [4] Initial Yield[5]
6/1/2014 The Ensign Group ALF, SNF, Campus Various 94 $ 501,673 10,053 $ 50 $ 56,000 N/A
2014 Investments 6 33,609 157 166 3,076 9.2%
2015 Investments 20 233,028 1,840 127 22,263 9.6%
2016 Investments 35 288,023 2,800 101 26,084 9.1%
02/01/17 Premier Senior Living ALF WI 2 26,111 88 297 2,160 8.3%
03/01/17 WLC Management SNF IL 5 29,204 455 64 2,915 10.0%
05/01/17 Better Senior Living Consulting ALF FL 1 2,033 89 23 290 14.3%
05/01/17 Cascadia Healthcare SNF ID 1 6,475 119 54 588 9.1%
06/01/17 OnPointe Health SNF TX, NM 2 27,316 262 104 2,455 9.0%
07/01/17 WLC Management SNF IL 1 3,668 99 37 372 10.1%
07/01/17 Cascadia Healthcare SNF OR 1 3,995 53 75 362 9.1%
07/21/17 Prelude Homes & Services ALF MN 1 7,800 30 260 641 8.2%
09/01/17 Cascadia Healthcare SNF WA 1 895 76 12 120 13.4%
09/01/17 Priority Management Group SNF TX 3 20,285 405 50 1,850 9.1%
09/01/17 & 10/01/17 Cascadia Healthcare SNF ID 7 65,315 571 114 5,916 9.1%
10/01/17 Five Oaks SNF WA 3 12,120 268 45 1,140 9.4%
10/01/17 Twenty/20 Management ALF VA 3 18,200 91 200 1,544 8.5%
10/26/17 Providence Group SNF CA 3 69,120 528 131 6,072 8.8%
10/26/17 Providence Group[6] SNF CA 1 12,542 104 121 1,129 9.0%
2017 Year to Date Investments 35 305,079 3,238 94 27,554 9.0%
Total Post Spin-off Investments 96 859,739 8,035 107 78,977 9.2%
Total Investments[7] 190 $ 1,361,412 18,088 $ 72 $ 134,977
6
Portfolio Performance
Notes:
[1] Investment for pre-spin properties represents Ensign's gross book value. Investment for post-spin properties represents CareTrust REIT’s cumulative capital investment. Capital investment
includes purchase price, transaction costs and landlord-funded capital expenditures, if any.
[2] Rent represents September 2017 rent, annualized.
[3] Current Yield represents Rent divided by Investment.
[4] All amounts exclude our three operated seniors housing properties and our two preferred equity investments.
[5] EBITDAR Coverage, EBITDARM Coverage and Occupancy include information provided by our tenants. We have not independently verified this information, but have no reason to believe
that such information is inaccurate in any material respect.
See “Glossary” for additional information.
(dollars in thousands) As of September 30, 2017
For the period ended
June 30, 2017 [5]
Asset Type Facilities
Operating
Beds/Units Investment [1]
% of Total
Investment Rent [2]
% of Total
Rent
Current
Yield [3]
EBITDAR
Coverage
EBITDARM
Coverage Occupancy
Skilled Nursing 119 11,544 $ 810,724 67.4% $ 84,678 68.9% 10.4% 1.75x 2.30x 78.0%
Skilled Nursing Campus 16 2,218 177,506 14.8% 18,632 15.2% 10.5% 1.53x 1.91x 77.4%
Seniors Housing 36 3,033 214,245 17.8% 19,569 15.9% 9.1% 1.41x 1.65x 84.3%
Total Net-Leased Asset [4] 171 16,795 $ 1,202,475 100.0% $ 122,879 100.0% 10.2% 1.65x 2.13x 79.0%
Prelude White Bear Lake (White Bear Lake, MN)
7
Tenant Summary
8
Rent Diversification by Tenant
Notes:
[1] Investment for pre-spin properties represents Ensign's gross book value. Investment for post-spin properties represents CareTrust REIT’s cumulative capital investment. Capital
investment includes purchase price, transaction costs and capital expenditures, if any.
[2] Rent represents September 2017 rent, annualized.
[3] All amounts exclude our three operated seniors housing properties and our two preferred equity investments.
[4] On November 2, 2017, we (i) entered into a fourth amendment to the master lease with affiliates of Pristine, pursuant to which we agreed that seven facilities would be
transferred to a new operator, and (ii) entered into a third amendment to the master lease with affiliates of Trillium to lease such properties to affiliates of Trillium.
As of September 30, 2017
(dollars in thousands) (Pre-Pristine Lease Amendment) [4]
Facilities
Operating
Beds/Units Investment[1]
% of Total
Investment Rent[2]
% of Total
Rent
1 The Ensign Group 92 9,754 501,246 41.7% 57,672 46.9%
2 Pristine Senior Living 16 1,488 192,143 16.0% 18,588 15.1%
3 Priority Management Group 7 981 116,229 9.7% 10,400 8.5%
4 Premier Senior Living Group 8 379 68,564 5.7% 6,034 4.9%
5 Cascadia Healthcare 7 572 50,520 4.2% 4,673 3.8%
Total Top 5 Tenants 130 13,174 928,702 77.3% 97,367 79.2%
6 Trillium Healthcare Group 11 735 46,025 3.8% 4,544 3.7%
7 WLC Management 6 554 32,871 2.7% 3,287 2.7%
8 Covenant Care 3 393 34,415 2.9% 3,174 2.6%
9 OnPointe Healthcare 2 262 27,316 2.3% 2,455 2.0%
10 Better Senior Living Consulting 4 461 21,663 1.8% 2,056 1.7%
Total Top 10 Tenants 156 15,579 1,090,992 90.8% 112,883 91.9%
All Other Tenants 15 1,216 111,483 9.2% 9,996 8.1%
Total [3] 171 16,795 $ 1,202,475 100.0% $ 122,879 100.0%
9
Rent Diversification by Tenant
Notes:
[1] Investment for pre-spin properties represents Ensign's gross book value. Investment for post-spin properties represents CareTrust REIT’s cumulative capital investment. Capital
investment includes purchase price, transaction costs and capital expenditures, if any.
[2] Rent represents September 2017 rent, annualized, or based on the initial cash rents annualized of the amendments mentioned in [4] below.
[3] All amounts exclude our three operated seniors housing properties and our two preferred equity investments.
[4] On November 2, 2017, we (i) entered into a fourth amendment to the master lease with affiliates of Pristine, pursuant to which we agreed that seven facilities would be
transferred to a new operator, and (ii) entered into a third amendment to the master lease with affiliates of Trillium to lease such properties to affiliates of Trillium.
As of September 30, 2017
(dollars in thousands) (Post-Pristine Lease Amendment) [4]
Facilities
Operating
Beds/Units Investment[1]
% of Total
Investment Rent[2]
% of Total
Rent
1 The Ensign Group 92 9,754 501,246 41.7% 57,672 47.9%
2 Trillium Healthcare Group 18 1,362 127,149 10.6% 11,489 9.5%
3 Priority Management Group 7 981 116,229 9.7% 10,400 8.6%
4 Pristine Senior Living 9 861 111,019 9.2% 9,087 7.7%
5 Premier Senior Living Group 8 379 68,564 5.7% 6,034 5.0%
Total Top 5 Tenants 134 13,337 924,207 76.9% 94,682 78.7%
6 Cascadia Healthcare 7 572 50,520 4.2% 4,673 3.9%
7 WLC Management 6 554 32,871 2.7% 3,287 2.7%
8 Covenant Care 3 393 34,415 2.9% 3,174 2.6%
9 OnPointe Healthcare 2 262 27,316 2.3% 2,455 2.0%
10 Better Senior Living Consulting 4 461 21,663 1.8% 2,056 1.7%
Total Top 10 Tenants 156 15,579 1,090,992 90.8% 110,327 91.6%
All Other Tenants 15 1,216 111,483 9.2% 9,996 8.4%
Total [3] 171 16,795 $ 1,202,475 100.0% $ 120,323 100.0%
CA: 14.5%
OH: 8.9% AZ: 7.9%
ID: 6.0%
Others: 39.2%TX: 23.5%
10
1 SNF
1 ALF
1 ALF
Top Five States
CA: 16.2%
OH: 15.1%
AZ: 7.3%
ID: 6.7%
Others: 33.6%
TX: 21.1%
CA: 13.1%
OH: 16.0%
AZ: 5.1%
ID: 6.5%
Others: 37.4%TX: 21.9%
Run-R
at
e
Re
nt
In
ve
stme
nt
Beds/Unit
s
Notes:
Amounts are as of September 30, 2017 and exclude our three operated seniors housing properties and our two preferred equity
investments.
11
Rent Diversification by State
Notes:
[1] Investment for pre-spin properties represents Ensign's gross book value. For post-spin properties, Investment represents CareTrust REIT’s cumulative capital investment.
Capital investment includes purchase price, transaction costs and capital expenditures, if any.
[2] Rent represents September 2017 rent, annualized.
[3] All amounts exclude our three operated seniors housing properties and our two preferred equity investments.
(dollars in thousands) As of September 30, 2017
Net-Leased Assets by State Facilities
Operating
Beds/Units Investment[1]
% of Total
Investment Rent[2]
% of Total
Rent
1 Texas 32 3,939 $ 263,735 21.9% $ 25,883 21.1%
2 California 22 2,443 157,378 13.1% 19,942 16.2%
3 Ohio 16 1,488 192,143 16.0% 18,588 15.1%
4 Arizona 10 1,327 60,753 5.1% 8,994 7.3%
5 Idaho 14 1,001 78,069 6.5% 8,204 6.7%
Top 5 States 94 10,198 752,078 62.5% 81,611 66.4%
6 Utah 11 1,201 77,322 6.4% 6,036 4.9%
7 Iowa 15 986 53,488 4.4% 5,455 4.4%
8 Washington 9 747 49,636 4.1% 5,115 4.2%
9 Colorado 6 633 40,819 3.4% 4,062 3.3%
10 Illinois 6 554 32,871 2.7% 3,287 2.7%
Top 10 States 141 14,319 1,006,214 83.5% 105,566 85.9%
All Other States 30 2,476 196,261 16.5% 17,313 14.1%
Total[3] 171 16,795 $ 1,202,475 100.0% $ 122,879 100.0%
12
Lease Maturities
Lease Maturity Year
%
of
Re
nt
Notes:
[1] Lease Maturity Year represents the scheduled expiration year of the primary term of the lease and does not include tenant extension options, if any.
[2] Investment for pre-spin properties represents Ensign's gross book value. For post-spin properties, Investment represents CareTrust REIT’s cumulative capital investment, excluding our three
operated seniors housing properties and our two preferred equity investments. Capital investment includes purchase price, transaction costs and capital expenditures, if any.
[3] Rent represents September 2017 rent, annualized.
(dollars in thousands)
Broadmoor Medical Lodge (Rockwall, TX)
As of September 30, 2017
Lease Maturity
Year[1] Investment[2]
% of Total
Investment Rent[3]
% of Total
Rent
2019 $ 34,415 2.9% $ 3,174 2.6%
2026 70,272 5.8% 7,479 6.1%
2027 55,929 4.7% 5,718 4.7%
2028 79,914 6.5% 7,776 6.3%
2029 96,580 8.0% 8,185 6.7%
2030 309,662 25.8% 29,855 24.3%
2031 369,920 30.8% 34,800 28.3%
2032 93,976 7.8% 12,210 9.9%
2033 64,491 5.4% 11,225 9.1%
2034 12,733 1.1% 1,135 0.9%
2035 — — — —%
2036 14,583 1.2% 1,322 1.1%
$ 1,202,475 100.0% $ 122,879 100.0%
2019 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
2.6%
6.1% 4.7%
6.3% 6.7%
24.3%
28.3%
9.9% 9.1%
0.9% 1.1%
13
The Rio at Cabezon (Rio Rancho, NM)
14
Consolidated Income Statements
(amounts in thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenues:
Rental income $ 29,404 $ 24,179 $ 85,254 $ 67,857
Tenant reimbursements 2,543 2,089 7,253 5,815
Independent living facilities 825 766 2,407 2,177
Interest and other income 176 72 1,471 587
Total revenues 32,948 27,106 96,385 76,436
Expenses:
Depreciation and amortization 9,745 8,248 28,156 23,433
Interest expense 5,592 5,743 17,690 17,044
Loss on the extinguishment of debt — — 11,883 326
Property taxes 2,543 2,089 7,253 5,815
Independent living facilities 698 708 2,003 1,926
Impairment of real estate investment — — 890 —
Acquisition costs — 203 — 203
General and administrative 3,059 2,283 8,426 6,724
Total expenses 21,637 19,274 76,301 55,471
Other income:
Gain on disposition of other real estate investment — — 3,538 —
Net income $ 11,311 $ 7,832 $ 23,622 $ 20,965
Earnings per common share:
Basic $ 0.15 $ 0.13 $ 0.33 $ 0.38
Diluted $ 0.15 $ 0.13 $ 0.33 $ 0.38
Weighted-average number of common shares:
Basic 75,471 57,595 71,693 54,403
Diluted 75,471 57,595 71,693 54,403
Dividends declared per common share $ 0.185 $ 0.17 $ 0.555 $ 0.51
Reconciliation of EBITDA, FFO and FAD
15
(amounts in thousands)
Quarter
Ended
September 30, 2016
Quarter
Ended
December 31, 2016
Quarter
Ended
March 31, 2017
Quarter
Ended
June 30, 2017
Quarter
Ended
September 30, 2017
Net income $ 7,832 $ 8,388 $ 10,281 $ 2,030 $ 11,311
Depreciation and amortization 8,248 8,532 9,076 9,335 9,745
Interest expense 5,743 5,829 5,879 6,219 5,592
Amortization of stock-based compensation 339 339 536 600 656
EBITDA 22,162 23,088 25,772 18,184 27,304
Acquisition costs 203 2 — — —
Loss on sale of real estate — 265 — — —
Loss on the extinguishment of debt — — — 11,883 —
Deferred preferred return — — — (544) —
Impairment of real estate investment — — — 890 —
Gain on disposition of other real estate investment — — — (3,538) —
Normalized EBITDA $ 22,365 $ 23,355 $ 25,772 $ 26,875 $ 27,304
Net Income $ 7,832 $ 8,388 $ 10,281 $ 2,030 $ 11,311
Real estate related depreciation and amortization 8,223 8,505 9,050 9,309 9,717
Loss on sale of real estate — 265 — — —
Impairment of real estate investment — — — 890 —
Gain on disposition of other real estate investment — — — (3,538) —
Funds from Operations (FFO) 16,055 17,158 19,331 8,691 21,028
Acquisition costs 203 2 — — —
Deferred preferred return — — — (544) —
Effect of the senior unsecured notes payable redemption — — — 12,475 —
Normalized FFO $ 16,258 $ 17,160 $ 19,331 $ 20,622 $ 21,028
Reconciliation of EBITDA, FFO and FAD
16
[1] For the periods presented, the diluted weighted average shares have been calculated using the treasury stock method.
(amounts in thousands, except per share data)
Quarter
Ended
September 30, 2016
Quarter
Ended
December 31, 2016
Quarter
Ended
March 31, 2017
Quarter
Ended
June 30, 2017
Quarter
Ended
September 30, 2017
Net income $ 7,832 $ 8,388 $ 10,281 $ 2,030 $ 11,311
Real estate related depreciation and amortization 8,223 8,505 9,050 9,309 9,717
Amortization of deferred financing fees 561 561 561 529 484
Amortization of stock-based compensation 339 339 536 600 656
Straight-line rental income (78) (72) (72) (43) (2)
Loss on sale of real estate — 265 — — —
Impairment of real estate investment — — — 890 —
Gain on disposition of other real estate investment — — — (3,538) —
Funds Available for Distribution (FAD) 16,877 17,986 20,356 9,777 22,166
Acquisition costs 203 2 — — —
Deferred preferred return — — — (544) —
Effect of the senior unsecured notes payable redemption — — — 12,475 —
Normalized FAD $ 17,080 $ 17,988 $ 20,356 $ 21,708 $ 22,166
FFO per share $ 0.28 $ 0.28 $ 0.29 $ 0.12 $ 0.28
Normalized FFO per share $ 0.28 $ 0.28 $ 0.29 $ 0.28 $ 0.28
FAD per share $ 0.29 $ 0.29 $ 0.30 $ 0.13 $ 0.29
Normalized FAD per share $ 0.30 $ 0.29 $ 0.30 $ 0.30 $ 0.29
Diluted weighted average shares outstanding [1] 57,739 61,028 67,133 72,803 75,659
(continued)
Consolidated Balance Sheets
17
(dollars in thousands) September 30, 2017 December 31, 2016
Assets:
Real estate investments, net $ 1,089,089 $ 893,918
Other real estate investments 5,368 13,872
Cash and cash equivalents 14,808 7,500
Accounts and other receivables 12,961 5,896
Prepaid expenses and other assets 1,803 1,369
Deferred financing costs, net 1,989 2,803
Total assets $ 1,126,018 $ 925,358
Liabilities and Equity:
Senior unsecured notes payable, net $ 294,221 $ 255,294
Senior unsecured term loan, net 99,493 99,422
Unsecured revolving credit facility 95,000 95,000
Accounts payable and accrued liabilities 17,382 12,137
Dividends payable 14,046 11,075
Total liabilities 520,142 472,928
Equity:
Common stock 755 648
Additional paid-in capital 782,707 611,475
Cumulative distributions in excess of earnings (177,586) (159,693)
Total equity 605,876 452,430
Total liabilities and equity $ 1,126,018 $ 925,358
18
Key Debt Metrics
[1] Debt to Normalized EBITDA compares total debt as of the last day of the quarter to the annualized Normalized EBITDA for the quarter.
[2] Debt to Enterprise Value compares total debt as of the last day of the quarter to CareTrust REIT’s Enterprise Value as of the last day of the quarter.
See “Glossary” for additional information.
The Rio at Fox Hollow (Brownsville, TX)
Debt to Normalized EBITDA [1] Debt to Enterprise Value [2]
19
Debt Summary
Notes:
[1] Funds can be borrowed at applicable LIBOR plus 1.95% to 2.60% or at the Base Rate (as defined) plus 0.95% to 1.6%.
[2] Funds can be borrowed at applicable LIBOR plus 1.75% to 2.40% or at the Base Rate (as defined) plus 0.75% to 1.4%.
[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.
Debt Maturity Year
Principa
l
(dollars in thousands) September 30, 2017
Debt
Interest
Rate
Maturity
Date Principal
% of
Principal
Deferred
Loan Costs
Net Carrying
Value
Fixed Rate Debt
Senior unsecured notes payable 5.250% 2025 $ 300,000 60.6% $ (5,779) $ 294,221
Floating Rate Debt
Senior unsecured term loan 3.185% [1] 2023 100,000 20.2% (507) 99,493
Unsecured revolving credit facility 2.986% [2] 2020 [3] 95,000 19.2% — [4] 95,000
3.088% 195,000 39.4% (507) 194,493
Total Debt 4.398% $ 495,000 100.0% $ (6,286) $ 488,714
Updated 2017 Guidance
(shares in thousands)
20
See “Glossary” for additional information.
Low High
Net income $ 0.51 $ 0.52
Real estate related depreciation and amortization 0.52 0.52
Impairment of real estate investment 0.01 0.01
Gain on disposition of other real estate investment (0.05) (0.05)
Funds from Operations (FFO) 0.99 1.00
Deferred preferred return (0.00) (0.00)
Effect of the senior unsecured notes payable redemption 0.17 0.17
Normalized FFO $ 1.16 $ 1.17
Net income $ 0.51 $ 0.52
Real estate related depreciation and amortization 0.52 0.52
Amortization of deferred financing fees 0.03 0.03
Amortization of stock-based compensation 0.03 0.03
Straight-line rental income (0.01) (0.01)
Impairment of real estate investment 0.01 0.01
Gain on disposition of other real estate investment (0.05) (0.05)
Funds Available for Distribution (FAD) 1.04 1.05
Deferred preferred return (0.00) (0.00)
Effect of the senior unsecured notes payable redemption 0.17 0.17
Normalized FAD $ 1.21 $ 1.22
Weighted average shares outstanding:
Diluted 72,959 72,959
21
Equity Capital Transactions
Notes:
[1] Represents average follow-on equity offerings per-share price.
Follow-On Equity Offering Activity
At-the-Market Offering Activity
2015 2016
Q1 Q2 Q3 Q4 Total
Number of Shares (000s) 16,330 — 9,775 — 6,325 16,100
Public Offering Price per Share $ 10.50 $ — $ 11.35 $ — $ 13.35 $ 12.14 [1]
Gross Proceeds (000s) $ 171,465 $ — $ 110,946 $ — $ 84,439 $ 195,385
2016 2017
Q1 Q2 Q3 Total
Number of Shares (000s) 924 7,175 3,399 — 10,574
Average Price per Share $ 15.31 $ 15.31 $ 18.82 $ — $ 16.43
Gross Proceeds (000s) $ 14,147 $ 109,813 $ 63,947 $ — $ 173,760
Other Financial Highlights
22
Notes:
[1] Normalized FFO Payout Ratio represents dividends declared divided by Normalized FFO, in each case for the applicable quarter.
[2] See “Financials & Filings - Quarterly Results” on the Investors section of our website at http://investor.caretrustreit.com for a reconciliation of Normalized FFO and
Normalized FFO per Share to the most directly comparable GAAP measure.
See “Glossary” for additional information.
Dividend History Normalized FFO Payout Ratio [1][2]
Normalized FFO per Share [2] Normalized FFO [2]
6/
30
/2
01
5
9/
30
/2
01
5
12
/3
1/
20
15
3/
31
/2
01
6
6/
30
/2
01
6
9/
30
/2
01
6
12
/3
1/
20
16
3/
31
/2
01
7
6/
30
/2
01
7
9/
30
/2
01
7
$0.16 $0.16 $0.16
$0.17 $0.17 $0.17 $0.17
$0.185 $0.185 $0.185
6/
30
/2
01
5
9/
30
/2
01
5
12
/3
1/
20
15
3/
31
/2
01
6
6/
30
/2
01
6
9/
30
/2
01
6
12
/3
1/
20
16
3/
31
/2
01
7
6/
30
/2
01
7
9/
30
/2
01
7
64.0%
80.0%
64.0% 63.0% 63.0%
60.7% 60.7%
63.8%
66.1% 66.1%
6/
30
/2
01
5
9/
30
/2
01
5
12
/3
1/
20
15
3/
31
/2
01
6
6/
30
/2
01
6
9/
30
/2
01
6
12
/3
1/
20
16
3/
31
/2
01
7
6/
30
/2
01
7
9/
30
/2
01
7
$0.25
$0.20
$0.25
$0.27 $0.27
$0.28 $0.28
$0.29
$0.28 $0.28
6/
30
/2
01
5
9/
30
/2
01
5
12
/3
1/
20
15
3/
31
/2
01
6
6/
30
/2
01
6
9/
30
/2
01
6
12
/3
1/
20
16
3/
31
/2
01
7
6/
30
/2
01
7
9/
30
/2
01
7
$7,934 $7,731
$12,021 $13,098
$15,498 $16,258
$17,160
$19,331
$20,622 $21,028
23
Glossary
Assisted Living Facilities (“ALFs”)
Licensed healthcare facilities that provide personal care services, support and housing
for those who need help with daily living activities, such as bathing, eating and
dressing, yet require limited medical care. The programs and services may include
transportation, social activities, exercise and fitness programs, beauty or barber shop
access, hobby and craft activities, community excursions, meals in a dining room
setting and other activities sought by residents. These facilities are often in apartment-
like buildings with private residences ranging from single rooms to large apartments.
Certain ALFs may offer higher levels of personal assistance for residents requiring
memory care as a result of Alzheimer’s disease or other forms of dementia. Levels of
personal assistance are based in part on local regulations.
EBITDA
Net income before interest expense, income tax, depreciation and amortization and
amortization of stock-based compensation.[1]
EBITDAR
Net income before interest expense, income tax, depreciation, amortization and rent,
after applying a standardized management fee (5% of facility operating revenues).
EBITDAR Coverage
Aggregate EBITDAR produced by all facilities under a master lease (or other grouping)
divided by the base rent payable to CareTrust REIT under such master lease (or other
grouping) for the same period. For this supplement, the reported period is the trailing
twelve-month period ended June 30, 2017. Notwithstanding the foregoing, for any
facility for which CareTrust REIT has not received four consecutive quarters of post-
acquisition operating reports, the quarterly EBITDAR used in this calculation is the
proforma EBITDAR utilized in CareTrust REIT’s underwriting process, annualized.
Beginning with the fifth quarter of reported post-acquisition operating performance,
each reported quarter EBITDAR replaces the oldest underwriting proforma quarter
EBITDAR, until all previously-used proforma quarters EBITDAR amounts are eliminated
from the calculation.
EBITDARM
Earnings before interest expense, income tax, depreciation, amortization, cash rent,
and a standardized management fee (5% of facility operating revenues).
EBITDARM Coverage
Aggregate EBITDARM produced by all facilities under a master lease (or other
grouping) divided by the base rent payable to CareTrust REIT under such master lease
(or other grouping) for the same period. For this supplement, the reported period is
the trailing twelve-month period ended June 30, 2017. Notwithstanding the
foregoing, for any facility for which CareTrust REIT has not received four consecutive
quarters of post-acquisition operating reports, the quarterly EBITDARM used in this
calculation is the proforma EBITDARM utilized in CareTrust REIT’s underwriting
process annualized. Beginning with the fifth quarter of reported post-acquisition
operating performance, each reported quarter EBITDARM replaces the oldest
underwriting proforma quarter EBITDARM, until all previously-used proforma
quarters EBITDARM amounts are eliminated from the calculation.
Enterprise Value
Share price multiplied by the number of outstanding shares plus total outstanding
debt, each as of a specified date.
Funds Available for Distribution (“FAD”)
FFO, excluding straight-line rental income adjustments and amortization of deferred
financing fees and stock-based compensation expense.[2]
Funds from Operations (“FFO”)
Net income, excluding gains and losses from dispositions of real estate or other real
estate, before real estate depreciation and amortization and real estate impairment
charges. CareTrust REIT calculates and reports FFO in accordance with the definition
and interpretive guidelines issued by the National Association of Real Estate
Investment Trusts.[2]
Glossary
24
Independent Living Facilities (“ILFs”)
Also known as retirement communities or senior apartments, ILFs are not healthcare
facilities. ILFs typically consist of entirely self-contained apartments, complete with
their own kitchens, baths and individual living spaces, as well as parking for tenant
vehicles. They are most often rented unfurnished, and generally can be personalized
by the tenants, typically an individual or a couple over the age of 55. These facilities
offer various services and amenities such as laundry, housekeeping, dining options/
meal plans, exercise and wellness programs, transportation, social, cultural and
recreational activities, and on-site security.
Normalized EBITDA
EBITDA, adjusted for certain income and expense items the Company does not believe
are indicative of its ongoing results, such as certain acquisition costs, real estate
impairment charges, losses on the extinguishment of debt, certain deferred preferred
returns, and gains or losses from dispositions of real estate or other real estate.[1]
Normalized FAD
FAD, adjusted for certain income and expense items the Company does not believe
are indicative of its ongoing results, such as certain acquisition costs, certain deferred
preferred returns, and the effect of the senior unsecured notes payable redemption.
[2]
Normalized FFO
FFO, adjusted for certain income and expense items the Company does not believe
are indicative of its ongoing results, and certain acquisition costs, certain deferred
preferred returns, and the effect of the senior unsecured notes payable redemption.
[2]
Occupancy
A facility’s occupied operating beds/units divided by the total available operating
beds/units for that facility, in each case for the trailing twelve-months ended June 30,
2017; provided that Occupancy for any facility acquired during such twelve-months
period may be normalized.
Seniors Housing
Includes ALFs, ILFs, dedicated memory care facilities and similar facilities.
Skilled Nursing Campus
Facilities that include a combination of Skilled Nursing beds and Seniors Housing
units.
Skilled Nursing or Skilled Nursing Facilities (“SNFs”)
Licensed healthcare facilities that provide restorative, rehabilitative and nursing care
for people not requiring the more extensive and sophisticated treatment available at
an acute care hospital or long-term acute care hospital. Treatment programs include
physical, occupational, speech, respiratory, ventilator, and wound therapy.
Notes:
[1] 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.
[2] CareTrust REIT believes FAD, FFO, Normalized FAD, and Normalized FFO (and their
related per-share amounts) are important non-GAAP supplemental measures of its
operating performance. 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, even though real estate values have historically risen or fallen with market and
other conditions. Moreover, by excluding items not indicative of ongoing results,
Normalized FAD and Normalized FFO can facilitate meaningful comparisons of
operating performance between periods and between other companies. However,
FAD, FFO, Normalized FAD, and Normalized FFO (and their per-share amounts) do not
represent cash flows from operations or net income attributable to shareholders as
defined by GAAP and should not be considered an alternative to those measures in
evaluating the Company’s liquidity or operating performance.
Cascadia of Nampa (Nampa, ID)