CareTrust REIT invested nearly $700 million at the end of 2024, making it an “unprecedented” quarter, company leaders said Thursday.
But that doesn’t mean investors should expect to see a slow down in 2025. The company is still seeing at least one new deal a week and has $325 million already in the pipeline for this year, with at least two other, larger portfolio deals also under consideration.
“Our mindset to maximize the window of opportunity open to us has not changed. Neither has our underwriting discipline that has made our portfolio so secure and resilient,” CEO Dave Sedgwick said during the company’s fourth quarter earnings call.
“Looking at the many acquisitions made last year the early performance is in line with expectations. The operating environment, in general, continues to stabilize, with most parts of the portfolio at or ahead of prepandemic occupancy, skilled mix and coverage,” he said. “I’ve never been more excited about our current trajectory and potential for growth. If you liked our story last year, I think you’re going to love Chapter 2025.”
In 2025, CareTrust closed deals ranging in size from one to 46 facilities, including the closing of a $97 million December deal for a massive long-term care portfolio. The fourth quarter brought 81 new triple-net facilities into the REIT’s portfolio, as well as new operators.
Chief Investment Officer James Callister said the pipeline is largely skilled nursing-oriented.
“We continue to look at a healthy flow of marketed opportunities as well as off-market deals brought to us by existing operators and other relationships, including relationships garnered through our decision over the past couple of years to lend with a purpose,” he added.
The trust still holds $180 million in cash for investments, though Chief Financial Officer Bill Wagner said leaders might be more inclined to tap a new, $1.2 billion revolver for future deals if rates continue to drop.
Investors on the call keyed into two major themes Thursday.
Several asked company leaders how they view threats to Medicaid funding, as Congress took up efforts this week to reconcile its desired spending initiatives with demands from leadership to make deep cuts to government spending. Medicaid, in particular, has been identified as a likely target.
Sedgwick said he was taking House Speaker Mike Johnson (R-LA) and President Donald Trump “at their word” that they would not cut Medicaid. He also noted that the House was unable to agree to cuts to the popular program during Trump’s last term, even when Republicans had a larger margin.
In response to questions, Sedgwick denied that cuts to Medicaid expansion, including possibly eliminating a high matching, or FMAP, rate, paid by the federal government to the states for those programs, would affect senior care. An analysis this week said that such cuts would threaten REITs with significant skilled assets in their portfolios.
“There’s no room to really cut Medicaid for skilled nursing,” he said. “I think the states and the federal government are more aware of that today than they ever have been based on what happened with the pandemic.”
Several other callers also asked about the REIT’s interest in pursuing additional deals with PACS, a Utah-based operator. The two companies had just announced a major partnership in Tennessee and Pennsylvania when PACS became the target of aggrieved activist investors. The public company did not release its 3rd quarter earnings information and hasn’t announced a 4th quarter call.
Asked if they considered their relationship with PACS to be paused, Sedgwick said that he thought PACS “is in a bit of a holding pattern until they can release earnings and it will be wait-and-see how that earnings release comes out and we hope that it’s a positive one.”
