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8-K/A

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K/A

(Amendment No. 1)

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 1, 2019

 

 

CareTrust REIT, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   001-36181   46-3999490

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

905 Calle Amanecer, Suite 300

San Clemente, CA

  92673
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (949) 542-3130

Not Applicable

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading

symbol(S)

  

Name of each exchange

on which registered

Common Stock, par value $0.01 per share    CTRE   

The Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act:  ☐

 

 

 


EXPLANATORY NOTE

In its Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 1, 2019 (the “Initial Report”), CareTrust REIT, Inc. (the “Company”), through its operating partnership, CTR Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”), entered into a Membership Interest Purchase Agreement to acquire from BME Texas Holdings, LLC, in a single transaction, twelve separate real estate assets at closing. The acquisition closed on April 1, 2019, with the Company acquiring 100% of the membership interests in a newly-formed special-purpose limited liability company which owned all twelve real estate assets. The real estate assets acquired include seven skilled nursing facilities and one multi-service campus in Louisiana and three skilled nursing facilities and one continuing care retirement community in Texas (collectively, the “BME Texas Portfolio”). The aggregate purchase price for the BME Texas Portfolio was approximately $215.0 million, inclusive of capital expenditure commitments and transaction costs, and was funded using approximately $185.0 million in borrowings under the Company’s unsecured revolving credit facility with the remainder funded with cash on hand.

In connection with the closing of the acquisition, the Company amended its triple-net master lease with Priority Management Group LLC (“Priority”) and Priority took over operations of the eight newly-acquired Louisiana facilities. The Company also entered into a triple-net master lease with Southwest LTC, Ltd. (“Southwest LTC”), a new operator, and Southwest LTC took over operations of the four newly acquired Texas facilities. The amended lease with Priority has a remaining term of approximately 12.5 years. The lease with Southwest LTC carries an initial term of 15 years, with two five-year renewal options and CPI-based rent escalators.

This Current Report on Form 8-K/A amends the Initial Report to provide the unaudited pro forma information required by Item 9.01(b) of Form 8-K. This Current Report on Form 8-K/A should be read in conjunction with the Initial Report.

Item 9.01 Financial Statements and Exhibits.

 

(a)    Financial Statements of Real Estate Acquired. The Company is not filing the financial statements of the BME Texas Portfolio because the leasing history of the acquired properties is not representative of their future operations.   
(b)   

Unaudited Pro Forma Condensed Consolidated Information

  
  

Unaudited Pro Forma Financial Information

     3  
  

Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2019

     4  
  

Unaudited Pro Forma Condensed Consolidated Income Statement for the three months ended March 31, 2019

     5  
  

Unaudited Pro Forma Condensed Consolidated Income Statement for the year ended December 31, 2018

     6  
  

Notes to the Unaudited Pro Forma Financial Information

     7  

 

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CARETRUST REIT, INC.

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The accompanying unaudited pro forma condensed consolidated financial statements presented below have been prepared based on certain pro forma adjustments to the historical condensed consolidated financial statements of CareTrust REIT Inc. (the “Company”) and reflect the completion of the acquisition of seven skilled nursing facilities and one multi-service campus in Louisiana and three skilled nursing facilities and one continuing care retirement community in Texas (collectively, the “BME Texas Portfolio”). The aggregate purchase price for the BME Texas Portfolio was approximately $215.0 million, inclusive of capital expenditure commitments and transaction costs, and was funded using approximately $185.0 million in borrowings under the Company’s unsecured revolving credit facility with the remainder funded with cash on hand. In connection with the closing of the acquisition, the Company amended its triple-net master lease with Priority Management Group LLC (“Priority”) and Priority took over operations of the eight newly-acquired Louisiana facilities. The Company also entered into a triple-net master lease with Southwest LTC, Ltd. (“Southwest LTC”), a new operator, and Southwest LTC took over operations of the four newly acquired Texas facilities.

The unaudited pro forma condensed consolidated balance sheet as of March 31, 2019 gives effect to the acquisition of the BME Texas Portfolio and the related matters described above as if they had occurred on March 31, 2019. The unaudited pro forma condensed consolidated income statement for the three months ended March 31, 2019 and the pro forma condensed consolidated income statement for the year ended December 31, 2018 give effect to the matters described above as if they had occurred on January 1, 2018. The Company’s historical financial information was derived from its consolidated financial statements that are included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019.

The unaudited pro forma financial information presented below is not necessarily indicative of what the Company’s results of operations or financial condition would have been assuming the acquisition of the BME Texas Portfolio had occurred as of the dates indicated, nor is it indicative of the Company’s results of operations or financial condition for future periods. In management’s opinion, all adjustments necessary to reflect the effects of these transactions have been made. The unaudited pro forma financial information and accompanying notes should be read in conjunction with the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019.

 

3


CARETRUST REIT, INC.

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF MARCH 31, 2019

(in thousands)

(Unaudited)

 

     CareTrust
REIT, Inc.
(1)
    Pro Forma
Adjustments
    Pro Forma
CareTrust
REIT, Inc.
 

Assets:

      

Real estate investments, net

   $ 1,259,336     $ 214,958  (2)    $ 1,474,294  

Other real estate investments, net

     29,419         29,419  

Cash and cash equivalents

     214,354       (209,958 )(2)      4,396  

Accounts and other receivables, net

     8,360         8,360  

Prepaid expenses and other assets

     8,759       (5,000 )(2)      3,759  

Deferred financing costs, net

     3,758         3,758  
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 1,523,986     $ —       $ 1,523,986  
  

 

 

   

 

 

   

 

 

 

Liabilities and Equity:

      

Senior unsecured notes payable, net

   $ 295,342       $ 295,342  

Senior unsecured term loan, net

     198,555         198,555  

Unsecured revolving credit facility

     185,000         185,000  

Accounts payable and accrued liabilities

     13,972         13,972  

Dividends payable

     20,086         20,086  
  

 

 

   

 

 

   

 

 

 

Total liabilities

     712,955     $ —         712,955  
  

 

 

   

 

 

   

 

 

 

Equity:

      

Common stock

     884         884  

Additional paid-in capital

     1,012,295         1,012,295  

Cumulative distributions in excess of earnings

     (202,148       (202,148
  

 

 

   

 

 

   

 

 

 

Total equity

     811,031       —         811,031  
  

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   $ 1,523,986     $ —       $ 1,523,986  
  

 

 

   

 

 

   

 

 

 

 

4


CARETRUST REIT, INC.

PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE THREE MONTHS ENDED MARCH 31, 2019

(in thousands—except share and per share data)

(Unaudited)

 

     CareTrust
REIT, Inc.
(1)
     Pro Forma
Adjustments
    Pro Forma
CareTrust
REIT, Inc.
 

Revenues:

       

Rental income

   $ 38,347      $ 4,758 (2)   
        54 (3)    $ 43,159  

Independent living facilities

     860          860  

Interest and other income

     451          451  
  

 

 

    

 

 

   

 

 

 

Total revenues

     39,658        4,812       44,470  
  

 

 

    

 

 

   

 

 

 

Expenses:

       

Depreciation and amortization

     11,902        1,679 (4)      13,581  

Interest expense

     6,860        1,665 (5)      8,525  

Property taxes

     826        54 (6)      880  

Independent living facilities

     707          707  

General and administrative

     3,310          3,310  
  

 

 

    

 

 

   

 

 

 

Total expenses

     23,605        3,398       27,003  
  

 

 

    

 

 

   

 

 

 

Net income

   $ 16,053      $ 1,414     $ 17,467  
  

 

 

    

 

 

   

 

 

 

Earnings per common share:

       

Basic

   $ 0.18        $ 0.20  
  

 

 

      

 

 

 

Diluted

   $ 0.18        $ 0.20  
  

 

 

      

 

 

 

Weighted-average number of common shares:

       

Basic

     88,010          88,010  
  

 

 

      

 

 

 

Diluted

     88,010          88,010  
  

 

 

      

 

 

 

 

5


CARETRUST REIT, INC.

PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2018

(in thousands—except share and per share data)

(Unaudited)

 

     CareTrust
REIT, Inc.
(7)
     Pro Forma
Adjustments
    Pro Forma
CareTrust
REIT, Inc.
 

Revenues:

       

Rental income

   $ 140,073      $ 19,030 (8)    $ 159,103  

Tenant reimbursements

     11,924        1,118 (9)      13,042  

Independent living facilities

     3,379          3,379  

Interest and other income

     1,565          1,565  
  

 

 

    

 

 

   

 

 

 

Total revenues

     156,941        20,148       177,089  
  

 

 

    

 

 

   

 

 

 

Expenses:

       

Depreciation and amortization

     45,766        6,717 (10)      52,483  

Interest expense

     27,860        6,658 (11)      34,518  

Property taxes

     11,924        1,118 (12)      13,042  

Independent living facilities

     2,964          2,964  

General and administrative

     12,555          12,555  
  

 

 

    

 

 

   

 

 

 

Total expenses

     101,069        14,493       115,562  
  

 

 

    

 

 

   

 

 

 

Other income:

       

Gain on sale of real estate

     2,051          2,051  
  

 

 

    

 

 

   

 

 

 

Net income

   $ 57,923      $ 5,654     $ 63,577  
  

 

 

    

 

 

   

 

 

 

Earnings per common share:

       

Basic

   $ 0.73        $ 0.80  
  

 

 

      

 

 

 

Diluted

   $ 0.72        $ 0.80  
  

 

 

      

 

 

 

Weighted-average number of common shares:

       

Basic

     79,386          79,386  
  

 

 

      

 

 

 

Diluted

     79,392          79,386  
  

 

 

      

 

 

 

 

6


CARETRUST REIT, INC.

NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION

Balance Sheet Adjustments:

 

(1)

Represents the unaudited historical condensed consolidated balance sheet as of March 31, 2019. See the historical condensed consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019.

 

(2)

Represents the purchase price and transaction costs, funded with cash on hand and the application of a deposit previously made as if the asset acquisition of the BME Texas Portfolio had occurred on March 31, 2019. A draw on the Company’s unsecured revolving credit facility had been made prior to March 31, 2019 in the amount of $185.0 million.

Income Statement Adjustments for the Three Months Ended March 31, 2019:

 

(1)

Represents the unaudited historical condensed consolidated operations of the Company for the three months ended March 31, 2019. See the historical condensed consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019.

 

(2)

Reflects additional rent under the amended master lease with Priority and the new master lease with Southwest LTC as if the asset acquisition of the BME Texas Portfolio had occurred on January 1, 2018.

 

(3)

Reflects additional rent for property tax impounds as a result of the Company’s adoption of Accounting Standards Codification (“ASC”) 842 on January 1, 2019. See (6) below.

 

(4)

Reflects additional depreciation expense as if the asset acquisition of the BME Texas Portfolio had occurred on January 1, 2018.

 

(5)

Reflects additional interest expense as if the $185.0 million draw on the Company’s unsecured revolving credit facility (to fund a portion of the purchase price for the asset acquisition of the BME Texas Portfolio) had occurred on January 1, 2018. The interest rate on the acquisition date was 3.599%. This rate was variable and a 18% change in this rate would effect interest expense by $0.1 million.

 

(6)

Reflects additional property taxes impounded by the Company reflecting the adoption of ASC 842.

Income Statement Adjustments for the Year Ended December 31, 2018:

 

(7)

Represents the audited historical condensed consolidated operations of the Company for the year ended December 31, 2018. See the historical condensed consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

 

(8)

Reflects additional rent under the amended master lease with Priority and the new master lease with Southwest LTC as if the asset acquisition of the BME Texas Portfolio had occurred on January 1, 2018.

 

(9)

Reflects property tax reimbursements presented on a gross basis under both master leases as the Company is the primary obligor for property taxes and prior to the adoption of ASC 842. See (12) below.

 

(10)

Reflects additional depreciation expense as if the asset acquisition of the BME Texas Portfolio had occurred on January 1, 2018.

 

(11)

Reflects additional interest expense as if the $185.0 million draw on the unsecured revolving credit facility (to fund a portion of the purchase price for the asset acquisition of the BME Texas Portfolio) had occurred on January 1, 2018. The interest rate on the acquisition date was 3.599%. This rate was variable and a 18% change in this rate would effect interest expense by $0.2 million.

 

(12)

Reflects additional property taxes on the BME Texas Portfolio prior to the adoption of ASC 842.

 

7


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    CareTrust REIT, Inc.
June 14, 2019     By:   /s/ William Wagner
     

William Wagner

     

Chief Financial Officer, Treasurer and Secretary

 

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