Investors

As baby boomers age, Medicare enrollment rises, and so does the need for more high quality senior care facilities. CareTrust remains bullish on the senior healthcare space.

Press Release

CareTrust REIT Announces Fourth Quarter and Fiscal 2017 Operating Results

02/27/18
Conference Call Scheduled for Wednesday, February 28, 2018 at 1:00 pm ET

SAN CLEMENTE, Calif., Feb. 27, 2018 (GLOBE NEWSWIRE) -- CareTrust REIT, Inc. (NASDAQ:CTRE) reported today operating results for the fourth quarter and year ended December 31, 2017, as well as other recent events.

During the quarter, CareTrust REIT:

  • Posted net income of $0.03, normalized FFO of $0.31, an increase of 11% over Q4 2016, and normalized FAD of $0.32, an increase of 10% over Q4 2016, all per diluted weighted-average common share;

  • Invested approximately $153 million (inclusive of transaction costs) at a blended initial cash yield of 9%, acquiring 11 skilled nursing facilities and three assisted living and memory care facilities, and providing one mortgage financing;

  • Finished the year with a debt-to-normalized EBITDA ratio of 4.6x and a debt-to-enterprise value of 31%, each as of quarter-end; and

  • Met its normalized FFO guidance of $1.16 per diluted weighted-average common share for the year.

Record Year

Greg Stapley, CareTrust REIT’s Chairman and Chief Executive Officer, noted that 2017 was a record year for the Company. “We were able to complete a record $308 million in new acquisitions in 2017, and have already added to that tally since year end,” he said. He also noted that the Company increased its dividend again, while keeping the dividend well-covered and preserving capital for growth, with one of the most conservative payout ratios in the peer group. He also alluded to robust demand for both the Company’s debt and equity, with $174 million in new equity sold through CareTrust REIT’s at-the-market program, and a new $300 million, 8-year bond issue during the year. “With these tools, we were able to strengthen our balance sheet and finish the year with our debt-to-normalized EBITDA ratio of 4.6x and plenty of liquidity, setting us up for a solid start to 2018,” he added.

Financial Results for Quarter and Year Ended December 31, 2017

Chief Financial Officer Bill Wagner reported that for the fourth quarter, CareTrust REIT generated net income of $2.3 million, or $0.03 per diluted weighted-average common share, normalized FFO of $23.6 million, or $0.31 per diluted weighted-average common share, and normalized FAD of $24.5 million, or $0.32 per diluted weighted-average common share. He noted that net income for the quarter was reduced by a $10.4 million reserve taken by the Company with respect to certain accounts receivable related to one tenant. “We are pleased to be delivering a quarter-over-quarter increase in normalized FFO per share of 11%,” said Mr. Wagner.

For the full year 2017, Mr. Wagner reported that CareTrust REIT generated net income of $25.9 million, or $0.35 per diluted weighted-average common share, normalized FFO of $84.6 million or $1.16 per diluted weighted-average common share, and normalized FAD of $88.8 million or $1.22 per diluted weighted-average common share.

Liquidity

Discussing CareTrust REIT’s investments and current liquidity, Mr. Wagner reported that the $153 million in new investments in the quarter were funded with a combination of cash on hand and approximately $135 million in draws on the Company’s $400 million unsecured revolver. He noted that the revolving credit facility includes a $250 million “accordion” feature that can be exercised by the Company at its option to increase liquidity, and as of today, $185 million is drawn on the line.

He also reported that there had been no activity in the quarter on the Company’s at-the-market equity program but, he added, “Our ATM program remains a significant instrument in the Company’s capital-raising repertoire, with up to $236 million remaining in authorization at present.” Mr. Wagner further reported that CareTrust REIT’s debt-to-EBITDA ratio was 4.6x and its debt-to-enterprise value was 31%, each at quarter-end, which is well within management’s target leverage range. He also noted that CareTrust REIT continues to have no property-level debt and, taking into account existing extension rights, no debt maturing before 2020.

2018 Guidance Revised Upward

Mr. Wagner provided CareTrust REIT's 2018 earnings guidance, projecting on a per-diluted weighted-average common share basis, net income of approximately $0.67 to $0.69, normalized FFO of approximately $1.25 to $1.27, and normalized FAD of approximately $1.31 to $1.33. He noted that the updated 2018 guidance is based on a per-diluted weighted-average common share count of 75.9 million shares and assumes no new acquisitions beyond those made to date, no new debt incurrences or new equity issuances, and 2.0% CPI-based rent escalators under CareTrust REIT's long-term net leases.

Dividend Declared

During the quarter, CareTrust REIT declared a quarterly dividend of $0.185 per common share. “On an annualized basis, our quarterly dividend represents a payout ratio of approximately 59.7% based on the fourth quarter 2017 normalized FFO, and 57.8% on normalized FAD,” said Mr. Wagner. “At this level, our dividend remains among the best-protected of all our industry peers, while simultaneously providing additional growth capital for reinvestment and a solid overall return to our shareholders,” he added.

Pristine Transition and Reserve

Updating recent news regarding changes to its ongoing landlord-tenant relationship with affiliates of Pristine Senior Living, LLC, Mr. Stapley reported that the planned transition of seven Ohio facilities from Pristine to affiliates of Trillium Healthcare LLC, another CareTrust REIT tenant, had been successfully completed on December 1, 2017. “We are pleased to report a smooth transition, and improved operating results in Trillium’s first month of operations,” said Mr. Stapley. The transition was effectuated under a November 2, 2017 amendment to Pristine’s master lease which reduced Pristine’s rent and allowed Pristine to continue operating nine CareTrust REIT facilities.

While the lease amendment was expected to afford Pristine an opportunity to focus on a smaller set of better-performing operations and meet its ongoing lease obligations, Pristine has continued to report cash shortfalls that have prevented it from doing so. Although Pristine has paid $4.4 million of the $4.9 million in base rent due since the lease amendment was executed in November, Pristine has not made $2.3 million of additional payments required under the Lease. Mr. Stapley reported that, accordingly, on February 27, 2018 Pristine and CareTrust REIT entered into a Lease Termination Agreement under which Pristine and its affiliates will surrender its remaining CareTrust REIT facilities to operators selected by CareTrust REIT, in transactions similar to those effected in December 2017.

Under the Agreement, Pristine will continue to operate the facilities and pay the scheduled base rent until the transitions occur. Mr. Wagner noted that, as a result of the agreement, the Company will recognize Pristine’s rental revenues on a cash basis, and reserve approximately $10.4 million of incurred and anticipated obligations of Pristine. He noted that the reserve consists of $6.3 million in property tax reimbursements and advances of 2016 and 2017 franchise permit fees made in 2017, $3.3 million of 2017 property tax reimbursements and franchise permit fees due in 2018, and $0.8 million of unpaid base rent from September 2017.

Upon Pristine’s performance of the terms of the agreement, CareTrust REIT will terminate the Lease and Pristine’s future obligations thereunder. Mr. Stapley further noted that CareTrust REIT has a security interest in Pristine’s outstanding accounts receivable, which it shares with Pristine’s working capital lender pursuant to an intercreditor agreement, and which secure Pristine’s ongoing obligations under the Lease.

Conference Call

A conference call will be held on Wednesday, February 28, 2018, at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time), during which CareTrust REIT’s management will discuss fourth quarter and full-year 2017 results, recent developments and other matters. The dial-in number for this call is (855) 232-8954 (U.S.) or (408) 337-0151 (International). The conference ID number is 4389519. To listen to the call online, or to view any financial or other statistical information required by SEC Regulation G, please visit the Investors section of the CareTrust REIT website at http://investor.caretrustreit.com. The call will be recorded, and will be available for replay via the website for 30 days following the call.

About CareTrust REIT™

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition and leasing of seniors housing and healthcare-related properties. With 186 net-leased healthcare properties and three operated seniors housing properties in 24 states, CareTrust is pursuing opportunities across the nation to acquire properties that will be leased to a diverse group of local, regional and national seniors housing operators, healthcare services providers, and other healthcare-related businesses. More information about CareTrust REIT is available at www.caretrustreit.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This press release contains, and the related conference call will include, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include all statements that are not historical statements of fact and statements regarding the Company’s intent, belief or expectations, including, but not limited to, statements regarding 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 the Company’s tenants and operators and their respective facilities.

Words such as “anticipate,” “believe,” “could,” expect,” “estimate,” “intend,” “may,” “plan,” “seek,” “should,” “will,” “would,” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements, though not all forward-looking statements contain these identifying words. The Company’s forward-looking statements are based on management’s current expectations and beliefs, and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although the Company believes that the assumptions underlying these forward-looking statements are reasonable, they are not guarantees and the Company can give no assurance that its expectations will be attained. Factors which could have a material adverse effect on the Company’s operations and future prospects or which could cause actual results to differ materially from expectations include, but are not limited to:  (i) the 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 Company tenants to meet and/or perform their obligations under the triple-net leases the Company has 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 the Company in connection with such spin-off, including its triple-net long-term leases with the Company, and any of its obligations to indemnify, defend and hold the Company harmless from and against various claims, litigation and liabilities; (iii) the ability and willingness of the Company’s tenants to comply with laws, rules and regulations in the operation of the properties the Company leases to them; (iv) the ability and willingness of the Company’s tenants, including Ensign, to renew their leases with the Company upon expiration and the ability to reposition Company properties on the same or better terms in the event of nonrenewal or in the event the Company replaces an existing tenant, and obligations, including indemnification obligations, that the Company 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 the Company’s outstanding indebtedness; (vii) access to debt and equity capital markets; (viii) fluctuating interest rates; (ix) the ability to retain key management personnel; (x) the ability to maintain the Company’s 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 the Company’s filings with the Securities and Exchange Commission (“SEC”), including those in the Company‘s Annual Report on Form 10-K for the year ended December 31, 2017 under the heading entitled “Risk Factors,” as such risk factors may be amended, supplemented or superseded from time to time by other reports the Company files with the SEC.

Information in this press release or the related conference call is provided as of December 31, 2017, unless specifically stated otherwise.  the Company expressly disclaims any obligation to update or revise any information in this press release or the related conference call (and replays thereof), including forward-looking statements, whether to reflect any change in the Company’s expectations, any change in events, conditions or circumstances, or otherwise.

As used in this press release or the related conference call, unless the context requires otherwise, references to “CTRE,” "CareTrust," “CareTrust REIT” or the “Company” refer to CareTrust REIT, Inc. and its consolidated subsidiaries. GAAP refers to generally accepted accounting principles in the United States of America.

Contact:
CareTrust REIT, Inc.
(949) 542-3130
ir@caretrustreit.com


CARETRUST REIT, INC.
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
(unaudited)
    Three Months Ended December 31,   Twelve months ended December 31,
    2017   2016   2017   2016
Revenues:              
  Rental income $ 32,379     $ 25,269     $ 117,633     $ 93,126  
  Tenant reimbursements 3,001     2,031     10,254     7,846  
  Independent living facilities 821     793     3,228     2,970  
  Interest and other income 396     150     1,867     737  
  Total revenues 36,597     28,243     132,982     104,679  
Expenses:              
  Depreciation and amortization 11,003     8,532     39,159     31,965  
  Interest expense 6,506     5,829     24,196     22,873  
  Loss on the extinguishment of debt         11,883     326  
  Property taxes 3,001     2,031     10,254     7,846  
  Independent living facilities 730     623     2,733     2,549  
  Impairment of real estate investment         890      
  Acquisition costs     2         205  
  Reserve for advances and deferred rent 10,414         10,414      
  General and administrative 2,691     2,573     11,117     9,297  
  Total expenses 34,345     19,590     110,646     75,061  
Other income:              
  Loss on sale of asset     (265 )       (265 )
  Gain on disposition of other real estate investment         3,538      
Net income $ 2,252     $ 8,388     $ 25,874     $ 29,353  
                 
Earnings per common share:              
  Basic $ 0.03     $ 0.14     $ 0.35     $ 0.52  
  Diluted $ 0.03     $ 0.14     $ 0.35     $ 0.52  
                 
Weighted average shares outstanding:              
  Basic 75,476     60,875     72,647     56,030  
  Diluted 75,476     60,875     72,647     56,030  
                 
Dividends declared per common share $ 0.185     $ 0.17     $ 0.74     $ 0.68  


CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES
 (in thousands, except per share data)
 (unaudited)
      Three Months Ended December 31,   Twelve months ended December 31,
      2017   2016   2017   2016
                   
Net income   $ 2,252     $ 8,388     $ 25,874     $ 29,353  
  Depreciation and amortization   11,003     8,532     39,159     31,965  
  Interest expense   6,506     5,829     24,196     22,873  
  Amortization of stock-based compensation   624     339     2,416     1,546  
EBITDA   20,385     23,088     91,645     85,737  
  Acquisition costs       2         205  
  Loss on sale of real estate       265         265  
  Loss on the extinguishment of debt           11,883     326  
  Deferred preferred return           (544 )    
  Impairment of real estate investment           890      
  Reserve for advances and deferred rent   10,414         10,414      
  Gain on disposition of other real estate investment           (3,538 )    
Normalized EBITDA   $ 30,799     $ 23,355     $ 110,750     $ 86,533  
                   
Net income   $ 2,252     $ 8,388     $ 25,874     $ 29,353  
  Real estate related depreciation and amortization   10,973     8,505     39,049     31,865  
  Loss on sale of real estate       265         265  
  Impairment of real estate investment           890      
  Gain on disposition of other real estate investment           (3,538 )    
Funds from Operations (FFO)   13,225     17,158     62,275     61,483  
  Reserve for advances and deferred rent   10,414         10,414      
  Acquisition costs       2         205  
  Deferred preferred return           (544 )    
  Effect of the senior unsecured notes payable redemption           12,475      
  Write-off of deferred financing fees               326  
Normalized FFO   $ 23,639     $ 17,160     $ 84,620     $ 62,014  


CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES (continued)
 (in thousands, except per share data)
 (unaudited)
      Three Months Ended December 31,   Twelve months ended December 31,
      2017   2016   2017   2016
                   
Net income   $ 2,252     $ 8,388     $ 25,874     $ 29,353  
  Real estate related depreciation and amortization   10,973     8,505     39,049     31,865  
  Amortization of deferred financing fees   485     561     2,059     2,239  
  Amortization of stock-based compensation   624     339     2,416     1,546  
  Straight-line rental income   (227 )   (72 )   (344 )   (150 )
  Loss on sale of real estate       265         265  
  Impairment of real estate investment           890      
  Gain on disposition of other real estate investment           (3,538 )    
Funds Available for Distribution (FAD)   14,107     17,986     66,406     65,118  
  Reserve for advances and deferred rent   10,414         10,414      
  Acquisition costs       2         205  
  Deferred preferred return           (544 )    
  Effect of the senior unsecured notes payable redemption           12,475      
  Write-off of deferred financing fees               326  
Normalized FAD   $ 24,521     $ 17,988     $ 88,751     $ 65,649  
                   
FFO per share   $ 0.17     $ 0.28     $ 0.85     $ 1.09  
Normalized FFO per share   $ 0.31     $ 0.28     $ 1.16     $ 1.10  
                   
FAD per share   $ 0.19     $ 0.29     $ 0.91     $ 1.16  
Normalized FAD per share   $ 0.32     $ 0.29     $ 1.22     $ 1.17  
                   
  Diluted weighted average shares outstanding [1]   75,692     61,028     72,853     56,186  
                   
   [1] For the periods presented, the diluted weighted average shares have been calculated using the treasury stock method.


CARETRUST REIT, INC.
CONSOLIDATED INCOME STATEMENTS - 5 QUARTER TREND
(in thousands, except per share data)
(unaudited)
  Quarter Quarter Quarter Quarter Quarter
  Ended Ended Ended Ended Ended
  December 31, 2016 March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017
Revenues:          
Rental income $ 25,269   $ 27,339   $ 28,511   $ 29,404   $ 32,379  
Tenant reimbursements 2,031   2,321   2,389   2,543   3,001  
Independent living facilities 793   793   789   825   821  
Interest and other income 150   155   1,140   176   396  
Total revenues 28,243   30,608   32,829   32,948   36,597  
Expenses:          
Depreciation and amortization 8,532   9,076   9,335   9,745   11,003  
Interest expense 5,829   5,879   6,219   5,592   6,506  
Loss on the extinguishment of debt     11,883      
Property taxes 2,031   2,321   2,389   2,543   3,001  
Independent living facilities 623   661   644   698   730  
Impairment of real estate investment     890      
Acquisition costs 2          
Reserve for advances and deferred rent         10,414  
General and administrative 2,573   2,390   2,977   3,059   2,691  
Total expenses 19,590   20,327   34,337   21,637   34,345  
Other income (expense):          
Loss on sale of real estate (265 )        
Gain on disposition of other real estate investment     3,538      
Net income $ 8,388   $ 10,281   $ 2,030   $ 11,311   $ 2,252  
           
Diluted earnings per share $ 0.14   $ 0.15   $ 0.03   $ 0.15   $ 0.03  
           
Diluted weighted average shares outstanding 60,875   66,951   72,564   75,471   75,476  


CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND
 (in thousands, except per share data)
 (unaudited)
  Quarter Quarter Quarter Quarter Quarter
  Ended Ended Ended Ended Ended
  December 31, 2016 March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017
           
Net income $ 8,388   $ 10,281   $ 2,030   $ 11,311   $ 2,252  
Depreciation and amortization 8,532   9,076   9,335   9,745   11,003  
Interest expense 5,829   5,879   6,219   5,592   6,506  
Amortization of stock-based compensation 339   536   600   656   624  
EBITDA 23,088   25,772   18,184   27,304   20,385  
Acquisition costs 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      
Reserve for advances and deferred rent         10,414  
Gain on disposition of other real estate investment     (3,538 )    
Normalized EBITDA $ 23,355   $ 25,772   $ 26,875   $ 27,304   $ 30,799  
           
Net income $ 8,388   $ 10,281   $ 2,030   $ 11,311   $ 2,252  
Real estate related depreciation and amortization 8,505   9,050   9,309   9,717   10,973  
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) 17,158   19,331   8,691   21,028   13,225  
Reserve for advances and deferred rent         10,414  
Acquisition costs 2          
Deferred preferred return     (544 )    
Effect of the senior unsecured notes payable redemption     12,475      
Normalized FFO $ 17,160   $ 19,331   $ 20,622   $ 21,028   $ 23,639  


CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND (continued)
 (in thousands, except per share data)
 (unaudited)
  Quarter Quarter Quarter Quarter Quarter
  Ended Ended Ended Ended Ended
  December 31, 2016 March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017
           
Net income $ 8,388   $ 10,281   $ 2,030   $ 11,311   $ 2,252  
Real estate related depreciation and amortization 8,505   9,050   9,309   9,717   10,973  
Amortization of deferred financing fees 561   561   529   484   485  
Amortization of stock-based compensation 339   536   600   656   624  
Straight-line rental income (72 ) (72 ) (43 ) (2 ) (227 )
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) 17,986   20,356   9,777   22,166   14,107  
Reserve for advances and deferred rent         10,414  
Acquisition costs 2          
Deferred preferred return     (544 )    
Effect of the senior unsecured notes payable redemption     12,475      
Normalized FAD $ 17,988   $ 20,356   $ 21,708   $ 22,166   $ 24,521  
           
FFO per share $ 0.28   $ 0.29   $ 0.12   $ 0.28   $ 0.17  
Normalized FFO per share $ 0.28   $ 0.29   $ 0.28   $ 0.28   $ 0.31  
           
FAD per share $ 0.29   $ 0.30   $ 0.13   $ 0.29   $ 0.19  
Normalized FAD per share $ 0.29   $ 0.30   $ 0.30   $ 0.29   $ 0.32  
           
Diluted weighted average shares outstanding [1] 61,028   67,133   72,803   75,659   75,692  
           
 [1]  For the periods presented, the diluted weighted average shares have been calculated using the treasury stock method.


CARETRUST REIT, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(audited)
        December 31, 2017   December 31, 2016
Assets:        
Real estate investments, net $ 1,152,261     $ 893,918  
Other real estate investments 17,949     13,872  
Cash and cash equivalents 6,909     7,500  
Accounts and other receivables, net 5,254     5,896  
Prepaid expenses and other assets 895     1,369  
Deferred financing costs, net 1,718     2,803  
      Total assets $ 1,184,986     $ 925,358  
             
Liabilities and Equity      
Senior unsecured notes payable, net $ 294,395     $ 255,294  
Senior unsecured term loan, net 99,517     99,422  
Unsecured revolving credit facility 165,000     95,000  
Accounts payable and accrued liabilities 17,413     12,137  
Dividends payable 14,044     11,075  
      Total liabilities 590,369     472,928  
             
Equity:        
Common stock 755     648  
Additional paid-in capital 783,237     611,475  
Cumulative distributions in excess of earnings (189,375 )   (159,693 )
      Total equity 594,617     452,430  
      Total liabilities and equity $ 1,184,986     $ 925,358  


CARETRUST REIT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(audited)
  Twelve Months Ended December 31,
  2017   2016
Cash flows from operating activities:      
Net income $ 25,874     $ 29,353  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization (including a below-market ground lease) 39,176     31,980  
Amortization of deferred financing costs 2,100     2,239  
Loss on the extinguishment of debt 11,883     326  
Amortization of stock-based compensation 2,416     1,546  
Straight-line rental income (344 )   (150 )
Noncash interest income (686 )   (737 )
Interest income distribution from other real estate investment 1,500      
Reserve for advances and deferred rent 10,414      
Impairment of real estate investment 890      
Loss on sale of real estate     265  
Change in operating assets and liabilities:      
Accounts and other receivables, net (9,428 )   (3,404 )
Prepaid expenses and other assets (273 )   84  
Accounts payable and accrued liabilities 5,278     2,929  
Net cash provided by operating activities 88,800     64,431  
Cash flows from investing activities:      
Acquisitions of real estate (296,517 )   (281,228 )
Improvements to real estate (748 )   (762 )
Purchases of equipment, furniture and fixtures (403 )   (151 )
Investment in real estate mortgage loan receivable (12,416 )    
Preferred equity investments     (4,656 )
Sale of other real estate investment 7,500      
Principal payments received on mortgage loan receivable 25      
Escrow deposits for acquisition of real estate     (700 )
Net proceeds from the sale of real estate     2,855  
Net cash used in investing activities (302,559 )   (284,642 )
Cash flows from financing activities:      
Proceeds from the issuance of common stock, net 170,323     200,402  
Proceeds from the issuance of senior unsecured notes payable 300,000      
Proceeds from the issuance of senior unsecured term loan     100,000  
Borrowings under unsecured revolving credit facility 238,000     255,000  
Payments on senior unsecured notes payable (267,639 )    
Payments on unsecured revolving credit facility (168,000 )   (205,000 )
Payments on the mortgage notes payable     (95,022 )
Payments of deferred financing costs (6,063 )   (1,352 )
Net-settle adjustment on restricted stock (866 )   (515 )
Dividends paid on common stock (52,587 )   (37,269 )
Net cash provided by financing activities 213,168     216,244  
Net decrease in cash and cash equivalents (591 )   (3,967 )
Cash and cash equivalents, beginning of period 7,500     11,467  
Cash and cash equivalents, end of period $ 6,909     $ 7,500  


CARETRUST REIT, INC.
DEBT SUMMARY
(dollars in thousands)
(unaudited)
                       
          December 31, 2017
  Interest   Maturity       % of   Deferred   Net Carrying
Debt Rate   Date   Principal   Principal   Loan Costs   Value
                       
Fixed Rate Debt                      
                       
Senior unsecured notes payable 5.25 %   2025   $ 300,000     53.1 %   $ (5,605 )   $ 294,395  
                       
Floating Rate Debt                      
                       
Senior unsecured term loan 3.519 % [1] 2023   100,000     17.7 %   (483 )   99,517  
                       
Unsecured revolving credit facility 3.319 % [2] 2020 [3] 165,000     29.2 %     [4] 165,000  
  3.394 %       265,000     46.9 %   (483 )   264,517  
                       
Total Debt 4.379 %       $ 565,000     100 %   $ (6,088 )   $ 558,912  
                       
 
[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 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.


CARETRUST REIT, INC.
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES
 (shares in thousands)
 (unaudited)
         
         
 2018 Guidance
         
         
    Low   High
Net income $ 0.67     $ 0.69  
  Real estate related depreciation and amortization 0.58     0.58  
Funds from Operations (FFO) 1.25     1.27  
Normalized FFO $ 1.25     $ 1.27  
         
Net income $ 0.67     $ 0.69  
  Real estate related depreciation and amortization 0.58     0.58  
  Amortization of deferred financing fees 0.03     0.03  
  Amortization of stock-based compensation 0.05     0.05  
  Straight-line rental income (0.02 )   (0.02 )
Funds Available for Distribution (FAD) 1.31     1.33  
Normalized FAD $ 1.31     $ 1.33  
Weighted average shares outstanding:      
  Diluted 75,916     75,916  


Non-GAAP Financial Measures

EBITDA represents net income before interest expense (including amortization of deferred financing costs), amortization of stock-based compensation, and depreciation and amortization. Normalized EBITDA represents EBITDA as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of core operating performance, such as real estate impairment charges, expensed acquisition costs, certain deferred preferred return, losses on the extinguishment of debt, reserve for advances and deferred rent and gains or losses from dispositions of real estate or other real estate. EBITDA and Normalized EBITDA do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. EBITDA and Normalized EBITDA do not purport to be indicative of cash available to fund future cash requirements, including the Company’s ability to fund capital expenditures or make payments on its indebtedness. Further, the Company’s computation of EBITDA and Normalized EBITDA may not be comparable to EBITDA and Normalized EBITDA reported by other REITs.

Funds from Operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), and Funds Available for Distribution (“FAD”) are important non-GAAP supplemental measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that uses historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP.

FFO is defined by NAREIT as net income computed in accordance with GAAP, excluding gains or losses from dispositions of real estate or other real estate, real estate depreciation and amortization and real estate impairment charges, and adjustments for unconsolidated partnerships and joint ventures. The Company computes FFO in accordance with NAREIT’s definition.

FAD is defined as FFO excluding non-cash income and expenses, such as amortization of stock-based compensation, amortization of deferred financing costs and the effects of straight-line rent. The Company considers FAD to be a useful supplemental measure to evaluate the Company’s operating results excluding these income and expense items to help investors, analysts and other interested parties compare the operating performance of the Company between periods or as compared to other companies on a more consistent basis.

In addition, the Company reports normalized FFO and normalized FAD, which adjust FFO and FAD for certain revenue and expense items that the Company does not believe are indicative of its ongoing operating results, such as written-off deferred financing fees, expensed acquisition costs, certain preferred returns, the effect of the senior unsecured notes payable redemption and other unanticipated charges. By excluding these items, investors, analysts and our management can compare normalized FFO and normalized FAD between periods more consistently.

While FFO, normalized FFO, FAD and normalized FAD are relevant and widely-used measures of operating performance among REITs, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. FFO, normalized FFO, FAD and normalized FAD do not purport to be indicative of cash available to fund future cash requirements.

Further, the Company’s computation of FFO, normalized FFO, FAD and normalized FAD may not be comparable to FFO, normalized FFO, FAD and normalized FAD reported by other REITs that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition or define FAD differently than the Company does.

The Company believes that net income, as defined by GAAP, is the most appropriate earnings measure. The Company also believes that the use of EBITDA, Normalized EBITDA, FFO, normalized FFO, FAD and normalized FAD, combined with the required GAAP presentations, improves the understanding of operating results of REITs among investors and makes comparisons of operating results among such companies more meaningful. The Company considers EBITDA and Normalized EBITDA useful in understanding the Company’s operating results independent of its capital structure, indebtedness and non-recurring charges, thereby allowing for a more meaningful comparison of operating performance between periods and against other REITs. The Company considers FFO, normalized FFO, FAD and normalized FAD to be useful measures for reviewing comparative operating and financial performance because, by excluding gains or losses from real estate dispositions, impairment charges and real estate depreciation and amortization, and, for FAD and normalized FAD, by excluding non-cash income and expenses such as amortization of stock-based compensation, amortization of deferred financing costs, and the effects of straight-line rent, FFO, normalized FFO, FAD and normalized FAD can help investors compare the Company’s operating performance between periods and to other REITs.

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