CareTrust REIT Announces Third Quarter 2021 Operating Results
CareTrust REIT (CTRE) reported its Q3 2021 financial results, highlighting 96.2% of contractual rents collected. The firm generated a net income of $11.9 million, or $0.12 per share, alongside normalized FFO of $36.7 million, a 13% year-over-year increase. The quarterly dividend remains at $0.265 per share. Notably, skilled nursing occupancy rose from 69.7% in June to 71.5% in September, with almost 60% of facilities nearing pre-pandemic levels. However, labor shortages and rising costs pose challenges. The company updated its 2021 guidance, raising expected FFO to $1.49-$1.50 per share.
- Normalized FFO up 13.0% YoY, reaching $36.7 million.
- Net income for Q3 2021 at $11.9 million.
- Quarterly dividend maintained at $0.265 per share.
- Skilled nursing occupancy increased to 71.5%, nearing pre-pandemic levels.
- Optimistic outlook on labor recruitment and Phase 4 relief funding.
- Labor shortages impacting the ability to increase patient counts.
- Rising labor costs affecting operational profitability.
- Underlying challenges remain due to the global pandemic.
Conference Call Scheduled for Monday, November 8, 2021 at 2:00 pm ET
SAN CLEMENTE, Calif., Nov. 08, 2021 (GLOBE NEWSWIRE) -- CareTrust REIT, Inc. (Nasdaq:CTRE) today reported operating results for the quarter ended September 30, 2021, as well as other recent events.
For the quarter, CareTrust REIT reported:
96.2% of contractual rents collected;- Net income of
$11.9 million and net income per share of$0.12 ; - Normalized FFO of
$36.7 million , a13.0% increase over the prior year, and normalized FFO per share of$0.38 ; - Normalized FAD of
$39.0 million , a15.1% increase over the prior year, and normalized FAD per share of$0.40 ; - A quarterly dividend of
$0.26 5 per share, representing a payout ratio of approximately66% on normalized FAD; and - A
$0.01 per share increase on the low end to previously-released 2021 guidance, to normalized FFO of approximately$1.49 t o$1.50 per share and normalized FAD of approximately$1.58 t o$1.59 per share.
Occupancy Recovery Continues
“The occupancy recovery that began earlier this year for our skilled nursing providers has continued though the third quarter,” said Greg Stapley, CareTrust’s Chairman and Chief Executive Officer. He reported that skilled nursing census grew from June's
He sounded a note of caution, however, stating that while gains on the census and revenue front are welcome news, they are only half of the equation. He warned that a shortage of qualified workers and a sharp increase in labor costs is a growing challenge, especially as patient and resident counts rise. “Several of our tenants report turning patients away, simply because they lack the necessary staff to care for more,” Mr. Stapley said.
Discussing progress on the labor front, Dave Sedgwick, CareTrust’s President and Chief Operating Officer, reported that as of October, several CareTrust tenants have successfully reduced their use of expensive temporary or “agency” labor by significant amounts. “Providers who now apply the same intensity and systems to acquiring talent that they have used in the past to acquire patients are starting to see significant increases to hiring and to reducing staff turnover despite the widespread labor shortages,” he added.
Mr. Sedgwick also commented on the upcoming Phase 4 release of additional provider relief funding. “The provider relief funding has been critical for most of our tenants and several still need it,” he said. “This Phase 4 round is especially important for our assisted living operators who haven’t benefited previously to the same degree as our skilled nursing tenants,” he added. Noting that the exact amount of funding for individual providers has not yet been determined, Mr. Sedgwick expressed optimism that the funding will be highly beneficial for the operators who are still working their way back to profitability.
Financial Results for Quarter Ended September 30, 2021
Chief Financial Officer Bill Wagner reported that, for the third quarter, CareTrust generated net income of
Liquidity
As of quarter end, CareTrust reported net debt-to-annualized normalized run rate EBITDA of 3.7x, well under the Company's target leverage range of 4.0x to 5.0x, and a net debt-to-enterprise value of approximately
Continued Portfolio Growth
During the quarter, CareTrust acquired the 119-bed Sedona Trace Health & Wellness Center in Austin, Texas and the 122-bed Cedar Pointe Health & Wellness Center in nearby Cedar Park. The properties were leased to affiliates of The Ensign Group, Inc. The approximately
Mark Lamb, CareTrust's Chief Investment Officer, reported that pricing for both skilled nursing and seniors housing assets continues to be disconnected from current and historical operating performance. “We understand perfectly why recent performance is less relevant, but recovery projections and other future operating assumptions being used by some buyers appear to be very aggressive,” said Mr. Lamb. “For our part, we continue to underwrite carefully and look for good opportunities, and are content to let overpriced assets go to less experienced and ultra-high leverage buyers,” he added. Mr. Lamb quoted CareTrust’s active deal pipeline as being in the
2021 Guidance Updated
CareTrust updated its annual guidance for 2021, on a per-diluted weighted-average common share basis, increasing net income on the low end to approximately
Mr. Wagner sounded a note of caution, however, alluding to the ongoing effects of the global pandemic and the operating headwinds still facing the Company’s tenants, especially assisted living providers that have received little to no government financial support to date. “Naturally, we note that material changes in economic and other factors related to the COVID-19 pandemic, the government’s responses thereto and the resulting impact on our tenants’ abilities to timely pay rent could alter our outlook at any time,” Mr. Wagner concluded.
Dividend Maintained
During the quarter, CareTrust declared a quarterly dividend of
Conference Call
A conference call will be held on Monday, November 8, 2021, at 2:00 p.m. Eastern Time (11:00 a.m. Pacific Time), during which CareTrust’s management will discuss third quarter 2021 results, recent developments and other matters. The dial-in number for this call is (844) 220-4972 (U.S.) or (317) 973-4053 (International). The conference ID number is 4158737. 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 CareTrustTM
CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. With a nationwide portfolio of long-term net-leased properties, and a growing portfolio of quality operators leasing them, CareTrust REIT is pursuing both external and organic growth opportunities across the United States. 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 plans, business and acquisition strategies, growth prospects, operating and financial performance, expectations regarding the making of distributions, payment of dividends, 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 COVID-19 pandemic, including the risk of additional surges of COVID-19 infections due to the rate of public acceptance and efficacy of COVID-19 vaccines or to new and more contagious and/or vaccine resistant variants, and the measures taken to prevent the spread of COVID-19 and the related impact on our business or the businesses of our tenants; (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, including, without limitation, their respective obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; (iii) the ability of our tenants to comply with applicable laws, rules and regulations in the operation of the properties we lease to them; (iv) the ability and willingness of our tenants to renew their leases with us upon their 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, as well as any obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant; (v) the availability of and the ability to identify (a) tenants who meet our credit and operating standards, and (b) suitable acquisition opportunities, and the ability to acquire and lease the respective properties to such tenants 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 law 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) additional factors included in our Annual Report on Form 10-K for the year ended December 31, 2020, including in the section entitled “Risk Factors” in Item 1A of Part I of such report, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC.
This press release and the related conference call provides information about the Company's financial results as of and for the quarter ended September 30, 2021 and is provided as of the date hereof, 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. | |||||||||||||||||||
| CONDENSED CONSOLIDATED INCOME STATEMENTS | |||||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| Revenues: | |||||||||||||||||||
| Rental income | $ | 48,087 | $ | 45,036 | $ | 141,077 | $ | 130,007 | |||||||||||
| Independent living facilities | — | 634 | — | 1,874 | |||||||||||||||
| Interest and other income | 518 | 17 | 1,537 | 2,314 | |||||||||||||||
| Total revenues | 48,605 | 45,687 | 142,614 | 134,195 | |||||||||||||||
| Expenses: | |||||||||||||||||||
| Depreciation and amortization | 13,968 | 13,086 | 41,284 | 39,485 | |||||||||||||||
| Interest expense | 5,692 | 5,519 | 17,988 | 18,082 | |||||||||||||||
| Property taxes | 1,004 | 857 | 2,466 | 2,179 | |||||||||||||||
| Independent living facilities | — | 568 | — | 1,660 | |||||||||||||||
| General and administrative | 5,196 | 4,105 | 16,136 | 12,921 | |||||||||||||||
| Total expenses | 25,860 | 24,135 | 77,874 | 74,327 | |||||||||||||||
| Other loss: | |||||||||||||||||||
| Loss on extinguishment of debt | (10,827 | ) | — | (10,827 | ) | — | |||||||||||||
| Loss on sale of real estate | — | — | (192 | ) | (56 | ) | |||||||||||||
| Total other losses | (10,827 | ) | — | (11,019 | ) | (56 | ) | ||||||||||||
| Net income | $ | 11,918 | $ | 21,552 | $ | 53,721 | $ | 59,812 | |||||||||||
| Earnings per common share: | |||||||||||||||||||
| Basic | $ | 0.12 | $ | 0.23 | $ | 0.56 | $ | 0.63 | |||||||||||
| Diluted | $ | 0.12 | $ | 0.23 | $ | 0.56 | $ | 0.63 | |||||||||||
| Weighted-average number of common shares: | |||||||||||||||||||
| Basic | 96,297 | 95,214 | 95,922 | 95,195 | |||||||||||||||
| Diluted | 96,297 | 95,214 | 95,937 | 95,195 | |||||||||||||||
| Dividends declared per common share | $ | 0.265 | $ | 0.25 | $ | 0.795 | $ | 0.75 | |||||||||||
| CARETRUST REIT, INC. | ||||||||||||||||||||
| RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||
| Net income | $ | 11,918 | $ | 21,552 | $ | 53,721 | $ | 59,812 | ||||||||||||
| Depreciation and amortization | 13,968 | 13,086 | 41,284 | 39,485 | ||||||||||||||||
| Interest expense | 5,692 | 5,519 | 17,988 | 18,082 | ||||||||||||||||
| Amortization of stock-based compensation | 1,802 | 972 | 5,197 | 2,819 | ||||||||||||||||
| EBITDA | 33,380 | 41,129 | 118,190 | 120,198 | ||||||||||||||||
| Recovery of previously reversed rent | — | (1,047 | ) | — | (1,047 | ) | ||||||||||||||
| Lease termination revenue | — | (1,106 | ) | (63 | ) | (1,106 | ) | |||||||||||||
| Property operating expenses | — | — | — | (248 | ) | |||||||||||||||
| Loss on extinguishment of debt | 10,827 | — | 10,827 | — | ||||||||||||||||
| Loss on sale of real estate | — | — | 192 | 56 | ||||||||||||||||
| Normalized EBITDA | $ | 44,207 | $ | 38,976 | $ | 129,146 | $ | 117,853 | ||||||||||||
| Net income | $ | 11,918 | $ | 21,552 | $ | 53,721 | $ | 59,812 | ||||||||||||
| Real estate related depreciation and amortization | 13,964 | 13,078 | 41,267 | 39,445 | ||||||||||||||||
| Loss on sale of real estate | — | — | 192 | 56 | ||||||||||||||||
| Funds from Operations (FFO) | 25,882 | 34,630 | 95,180 | 99,313 | ||||||||||||||||
| Effect of the senior unsecured notes payable redemption | — | — | 642 | — | ||||||||||||||||
| Recovery of previously reversed rent | — | (1,047 | ) | — | (1,047 | ) | ||||||||||||||
| Lease termination revenue | — | (1,106 | ) | (63 | ) | (1,106 | ) | |||||||||||||
| Property operating expenses | — | — | — | (248 | ) | |||||||||||||||
| Loss on extinguishment of debt | 10,827 | — | 10,827 | — | ||||||||||||||||
| Normalized FFO | $ | 36,709 | $ | 32,477 | $ | 106,586 | $ | 96,912 | ||||||||||||
| CARETRUST REIT, INC. | |||||||||||||||||||||
| RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES (continued) | |||||||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||
| Net income | $ | 11,918 | $ | 21,552 | $ | 53,721 | $ | 59,812 | |||||||||||||
| Real estate related depreciation and amortization | 13,964 | 13,078 | 41,267 | 39,445 | |||||||||||||||||
| Amortization of deferred financing fees | 519 | 487 | 1,501 | 1,462 | |||||||||||||||||
| Amortization of stock-based compensation | 1,802 | 972 | 5,197 | 2,819 | |||||||||||||||||
| Straight-line rental income | (6 | ) | (17 | ) | (26 | ) | (65 | ) | |||||||||||||
| Loss on sale of real estate | — | — | 192 | 56 | |||||||||||||||||
| Funds Available for Distribution (FAD) | 28,197 | 36,072 | 101,852 | 103,529 | |||||||||||||||||
| Effect of the senior unsecured notes payable redemption | — | — | 642 | — | |||||||||||||||||
| Recovery of previously reversed rent | — | (1,047 | ) | — | (1,047 | ) | |||||||||||||||
| Lease termination revenue | — | (1,106 | ) | (63 | ) | (1,106 | ) | ||||||||||||||
| Property operating expenses | — | — | — | (248 | ) | ||||||||||||||||
| Loss on extinguishment of debt | 10,827 | — | 10,827 | — | |||||||||||||||||
| Normalized FAD | $ | 39,024 | $ | 33,919 | $ | 113,258 | $ | 101,128 | |||||||||||||
| FFO per share | $ | 0.27 | $ | 0.36 | $ | 0.99 | $ | 1.04 | |||||||||||||
| Normalized FFO per share | $ | 0.38 | $ | 0.34 | $ | 1.11 | $ | 1.02 | |||||||||||||
| FAD per share | $ | 0.29 | $ | 0.38 | $ | 1.06 | $ | 1.09 | |||||||||||||
| Normalized FAD per share | $ | 0.40 | $ | 0.36 | $ | 1.18 | $ | 1.06 | |||||||||||||
| Diluted weighted average shares outstanding [1] | 96,592 | 95,353 | 96,196 | 95,318 | |||||||||||||||||
| [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 | |||||||||||||
| September 30, 2020 | December 31, 2020 | March 31, 2021 | June 30, 2021 | September 30, 2021 | |||||||||||||
| Revenues: | |||||||||||||||||
| Rental income | $ | 45,036 | $ | 43,605 | $ | 45,246 | $ | 47,744 | $ | 48,087 | |||||||
| Independent living facilities | 634 | 203 | — | — | — | ||||||||||||
| Interest and other income | 17 | 329 | 505 | 514 | 518 | ||||||||||||
| Total revenues | 45,687 | 44,137 | 45,751 | 48,258 | 48,605 | ||||||||||||
| Expenses: | |||||||||||||||||
| Depreciation and amortization | 13,086 | 13,275 | 13,473 | 13,843 | 13,968 | ||||||||||||
| Interest expense | 5,519 | 5,579 | 5,762 | 6,534 | 5,692 | ||||||||||||
| Property taxes | 857 | 657 | 696 | 766 | 1,004 | ||||||||||||
| Independent living facilities | 568 | 209 | — | — | — | ||||||||||||
| General and administrative | 4,105 | 3,381 | 5,142 | 5,798 | 5,196 | ||||||||||||
| Total expenses | 24,135 | 23,101 | 25,073 | 26,941 | 25,860 | ||||||||||||
| Other income (loss): | |||||||||||||||||
| Loss on extinguishment of debt | — | — | — | — | (10,827 | ) | |||||||||||
| Gain (loss) on sale of real estate | — | 19 | (192 | ) | — | — | |||||||||||
| Total other losses | — | 19 | (192 | ) | — | (10,827 | ) | ||||||||||
| Net income | $ | 21,552 | $ | 21,055 | $ | 20,486 | $ | 21,317 | $ | 11,918 | |||||||
| Diluted earnings per share | $ | 0.23 | $ | 0.22 | $ | 0.21 | $ | 0.22 | $ | 0.12 | |||||||
| Diluted weighted average shares outstanding | 95,214 | 95,244 | 95,385 | 96,120 | 96,297 | ||||||||||||
| CARETRUST REIT, INC. | ||||||||||||||||||
| RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||
| Ended | Ended | Ended | Ended | Ended | ||||||||||||||
| September 30, 2020 | December 31, 2020 | March 31, 2021 | June 30, 2021 | September 30, 2021 | ||||||||||||||
| Net income | $ | 21,552 | $ | 21,055 | $ | 20,486 | $ | 21,317 | $ | 11,918 | ||||||||
| Depreciation and amortization | 13,086 | 13,275 | 13,473 | 13,843 | 13,968 | |||||||||||||
| Interest expense | 5,519 | 5,579 | 5,762 | 6,534 | 5,692 | |||||||||||||
| Amortization of stock-based compensation | 972 | 971 | 1,585 | 1,810 | 1,802 | |||||||||||||
| EBITDA | 41,129 | 40,880 | 41,306 | 43,504 | 33,380 | |||||||||||||
| Recovery of previously reversed rent | (1,047 | ) | — | — | — | — | ||||||||||||
| Lease termination revenue | (1,106 | ) | (73 | ) | (63 | ) | — | — | ||||||||||
| Loss on extinguishment of debt | — | — | — | — | 10,827 | |||||||||||||
| (Gain) loss on sale of real estate | — | (19 | ) | 192 | — | — | ||||||||||||
| Normalized EBITDA | $ | 38,976 | $ | 40,788 | $ | 41,435 | $ | 43,504 | $ | 44,207 | ||||||||
| Net income | $ | 21,552 | $ | 21,055 | $ | 20,486 | $ | 21,317 | $ | 11,918 | ||||||||
| Real estate related depreciation and amortization | 13,078 | 13,268 | 13,466 | 13,837 | 13,964 | |||||||||||||
| (Gain) loss on sale of real estate | — | (19 | ) | 192 | — | — | ||||||||||||
| Funds from Operations (FFO) | 34,630 | 34,304 | 34,144 | 35,154 | 25,882 | |||||||||||||
| Effect of the senior unsecured notes payable redemption | — | — | — | 642 | — | |||||||||||||
| Recovery of previously reversed rent | (1,047 | ) | — | — | — | — | ||||||||||||
| Lease termination revenue | (1,106 | ) | (73 | ) | (63 | ) | — | — | ||||||||||
| Loss on extinguishment of debt | — | — | — | — | 10,827 | |||||||||||||
| Normalized FFO | $ | 32,477 | $ | 34,231 | $ | 34,081 | $ | 35,796 | $ | 36,709 | ||||||||
| 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 | ||||||||||||||||
| September 30, 2020 | December 31, 2020 | March 31, 2021 | June 30, 2021 | September 30, 2021 | ||||||||||||||||
| Net income | $ | 21,552 | $ | 21,055 | $ | 20,486 | $ | 21,317 | $ | 11,918 | ||||||||||
| Real estate related depreciation and amortization | 13,078 | 13,268 | 13,466 | 13,837 | 13,964 | |||||||||||||||
| Amortization of deferred financing fees | 487 | 488 | 487 | 495 | 519 | |||||||||||||||
| Amortization of stock-based compensation | 972 | 971 | 1,585 | 1,810 | 1,802 | |||||||||||||||
| Straight-line rental income | (17 | ) | (12 | ) | (12 | ) | (8 | ) | (6 | ) | ||||||||||
| (Gain) loss on sale of real estate | — | (19 | ) | 192 | — | — | ||||||||||||||
| Funds Available for Distribution (FAD) | 36,072 | 35,751 | 36,204 | 37,451 | 28,197 | |||||||||||||||
| Effect of the senior unsecured notes payable redemption | — | — | — | 642 | — | |||||||||||||||
| Recovery of previously reversed rent | (1,047 | ) | — | — | — | — | ||||||||||||||
| Lease termination revenue | (1,106 | ) | (73 | ) | (63 | ) | — | — | ||||||||||||
| Loss on extinguishment of debt | — | — | — | — | 10,827 | |||||||||||||||
| Normalized FAD | $ | 33,919 | $ | 35,678 | $ | 36,141 | $ | 38,093 | $ | 39,024 | ||||||||||
| FFO per share | $ | 0.36 | $ | 0.36 | $ | 0.36 | $ | 0.36 | $ | 0.27 | ||||||||||
| Normalized FFO per share | $ | 0.34 | $ | 0.36 | $ | 0.36 | $ | 0.37 | $ | 0.38 | ||||||||||
| FAD per share | $ | 0.38 | $ | 0.37 | $ | 0.38 | $ | 0.39 | $ | 0.29 | ||||||||||
| Normalized FAD per share | $ | 0.36 | $ | 0.37 | $ | 0.38 | $ | 0.40 | $ | 0.40 | ||||||||||
| Diluted weighted average shares outstanding [1] | 95,353 | 95,429 | 95,621 | 96,366 | 96,592 | |||||||||||||||
| [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) | ||||||||||||
| (Unaudited) | ||||||||||||
| September 30, 2021 | December 31, 2020 | |||||||||||
| Assets: | ||||||||||||
| Real estate investments, net | $ | 1,590,418 | $ | 1,448,099 | ||||||||
| Other real estate investments | 15,150 | 15,000 | ||||||||||
| Assets held for sale, net | 4,891 | 7,226 | ||||||||||
| Cash and cash equivalents | 17,716 | 18,919 | ||||||||||
| Accounts and other receivables | 3,474 | 1,823 | ||||||||||
| Prepaid expenses and other assets, net | 10,710 | 10,450 | ||||||||||
| Deferred financing costs, net | 1,307 | 2,042 | ||||||||||
| Total assets | $ | 1,643,666 | $ | 1,503,559 | ||||||||
| Liabilities and Equity: | ||||||||||||
| Senior unsecured notes payable, net | $ | 394,063 | $ | 296,669 | ||||||||
| Senior unsecured term loan, net | 199,084 | 198,925 | ||||||||||
| Unsecured revolving credit facility | 80,000 | 50,000 | ||||||||||
| Accounts payable, accrued liabilities and deferred rent liabilities | 26,740 | 19,572 | ||||||||||
| Dividends payable | 26,164 | 24,251 | ||||||||||
| Total liabilities | 726,051 | 589,417 | ||||||||||
| Equity: | ||||||||||||
| Common stock | 963 | 952 | ||||||||||
| Additional paid-in capital | 1,191,204 | 1,164,402 | ||||||||||
| Cumulative distributions in excess of earnings | (274,552 | ) | (251,212 | ) | ||||||||
| Total equity | 917,615 | 914,142 | ||||||||||
| Total liabilities and equity | $ | 1,643,666 | $ | 1,503,559 | ||||||||
| CARETRUST REIT, INC. | |||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (in thousands) | |||||||||
| (Unaudited) | |||||||||
| For the Nine Months Ended September 30, | |||||||||
| 2021 | 2020 | ||||||||
| Cash flows from operating activities: | |||||||||
| Net income | $ | 53,721 | $ | 59,812 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
| Depreciation and amortization (including below-market ground leases) | 41,328 | 39,529 | |||||||
| Amortization of deferred financing costs | 1,531 | 1,462 | |||||||
| Loss on extinguishment of debt | 10,827 | — | |||||||
| Amortization of stock-based compensation | 5,197 | 2,819 | |||||||
| Straight-line rental income | (26 | ) | (65 | ) | |||||
| Loss on sale of real estate | 192 | 56 | |||||||
| Interest income distribution from other real estate investment | — | 1,346 | |||||||
| Change in operating assets and liabilities: | |||||||||
| Accounts and other receivables | (1,775 | ) | 543 | ||||||
| Prepaid expenses and other assets, net | (20 | ) | 267 | ||||||
| Accounts payable, accrued liabilities and deferred rent liabilities | 7,388 | 2,616 | |||||||
| Net cash provided by operating activities | 118,363 | 108,385 | |||||||
| Cash flows from investing activities: | |||||||||
| Acquisitions of real estate, net of deposits applied | (180,323 | ) | (42,075 | ) | |||||
| Purchases of equipment, furniture and fixtures and improvements to real estate | (4,826 | ) | (6,294 | ) | |||||
| Investment in real estate mortgage and other loans receivable | (700 | ) | (13,958 | ) | |||||
| Principal payments received on real estate mortgage and other loans receivable | 172 | 80,873 | |||||||
| Repayment of other real estate investment | — | 2,327 | |||||||
| Escrow deposits for potential acquisitions of real estate | (3,100 | ) | (1,000 | ) | |||||
| Net proceeds from sales of real estate | 6,814 | 2,189 | |||||||
| Net cash (used in) provided by investing activities | (181,963 | ) | 22,062 | ||||||
| Cash flows from financing activities: | |||||||||
| Proceeds from (costs paid for) the issuance of common stock, net | 22,946 | (404 | ) | ||||||
| Proceeds from the issuance of senior unsecured notes payable | 400,000 | — | |||||||
| Borrowings under unsecured revolving credit facility | 220,000 | 15,000 | |||||||
| Payments on senior unsecured notes payable | (300,000 | ) | — | ||||||
| Payments on unsecured revolving credit facility | (190,000 | ) | (75,000 | ) | |||||
| Payments on debt extinguishment and deferred financing costs | (14,070 | ) | — | ||||||
| Net-settle adjustment on restricted stock | (1,331 | ) | (1,986 | ) | |||||
| Dividends paid on common stock | (75,148 | ) | (69,283 | ) | |||||
| Net cash provided by (used in) financing activities | 62,397 | (131,673 | ) | ||||||
| Net decrease in cash and cash equivalents | (1,203 | ) | (1,226 | ) | |||||
| Cash and cash equivalents as of the beginning of period | 18,919 | 20,327 | |||||||
| Cash and cash equivalents as of the end of period | $ | 17,716 | $ | 19,101 | |||||
| CARETRUST REIT, INC. | ||||||||||||||||||||
| DEBT SUMMARY | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| September 30, 2021 | ||||||||||||||||||||
| Interest | Maturity | % of | Deferred | Net Carrying | ||||||||||||||||
| Debt | Rate | Date | Principal | Principal | Loan Costs | Value | ||||||||||||||
| Fixed Rate Debt | ||||||||||||||||||||
| Senior unsecured notes payable | 3.875 | % | 2028 | $ | 400,000 | 58.8 | % | $ | (5,937 | ) | $ | 394,063 | ||||||||
| Floating Rate Debt | ||||||||||||||||||||
| Senior unsecured term loan | 1.584 | % | [1] | 2026 | 200,000 | 29.4 | % | (916 | ) | 199,084 | ||||||||||
| Unsecured revolving credit facility | 1.184 | % | [2] | 2024 | [3] | 80,000 | 11.8 | % | — | [4] | 80,000 | |||||||||
| 1.470 | % | 280,000 | 41.2 | % | (916 | ) | 279,084 | |||||||||||||
| Total Debt | 2.885 | % | $ | 680,000 | 100.0 | % | $ | (6,853 | ) | $ | 673,147 | |||||||||
| [1] Funds can be borrowed at applicable LIBOR plus | ||||||||||||||||||||
| [2] Funds can be borrowed at applicable LIBOR plus | ||||||||||||||||||||
| [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) | |||||||
| 2021 Guidance Updated | |||||||
| Full Year 2021 Guidance[1] | |||||||
| Low | High | ||||||
| Net income | $ | 0.80 | $ | 0.81 | |||
| Real estate related depreciation and amortization | 0.57 | 0.57 | |||||
| (Gain) loss on sale of real estate | — | — | |||||
| Funds from Operations (FFO) | 1.37 | 1.38 | |||||
| Lease termination revenue | — | — | |||||
| Effect of the senior unsecured notes payable redemption | 0.01 | 0.01 | |||||
| Loss on extinguishment of debt | 0.11 | 0.11 | |||||
| Normalized FFO | $ | 1.49 | $ | 1.50 | |||
| Net income | $ | 0.80 | $ | 0.81 | |||
| Real estate related depreciation and amortization | 0.57 | 0.57 | |||||
| Amortization of deferred financing fees | 0.02 | 0.02 | |||||
| Amortization of stock-based compensation | 0.07 | 0.07 | |||||
| Straight-line rental income | — | — | |||||
| (Gain) loss on sale of real estate | — | — | |||||
| Funds Available for Distribution (FAD) | 1.46 | 1.47 | |||||
| Lease termination revenue | — | — | |||||
| Effect of the senior unsecured notes payable redemption | 0.01 | 0.01 | |||||
| Loss on extinguishment of debt | 0.11 | 0.11 | |||||
| Normalized FAD | $ | 1.58 | $ | 1.59 | |||
| Weighted average shares outstanding: | |||||||
| Diluted | 96,466 | 96,466 | |||||
| [1] This guidance assumes and includes (i) all investments, dispositions and loan repayments made to date, (ii) no new acquisitions, dispositions, new loans or loan repayments beyond those completed or announced to date, (iii) no new debt incurrences or new equity issuances, (iv) estimated | |||||||
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 recovery of previously reversed rent, lease termination revenue, property operating expenses, gains or losses from dispositions of real estate, real estate impairment charges, provision for loan losses, loss on extinguishment of debt, and provision for doubtful accounts and lease restructuring, as applicable. 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. 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 investments, 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 noncash income and expenses, such as amortization of stock-based compensation, amortization of deferred financing fees 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 provision for loan losses, provision for doubtful accounts and lease restructuring, loss on extinguishment of debt, recovery of previously reversed rent, lease termination revenue and property operating expenses. 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 other charges that are not indicative of its ongoing results, 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 noncash income and expenses such as amortization of stock-based compensation, amortization of deferred financing fees, 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.
FAQ
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