CareTrust REIT, Inc. (NASDAQ:CTRE) Q3 2018 Earnings Conference Call Transcript

Nov 06, 2018 • 02:00 pm ET


CareTrust REIT, Inc. (NASDAQ:CTRE) Q3 2018 Earnings Conference Call Transcript


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Good day, ladies and gentlemen, and welcome to the CareTrust REIT Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, today's conference is being recorded.

At this time, I would now like to turn the call over to Lauren Beale, CareTrust Controller.

Lauren Beale

Thank you, and welcome to CareTrust REIT's Q3 2018 Earnings Call. Please note that this call is being recorded.

(Forward-looking Cautionary Statements)

Listeners are also advised that CareTrust yesterday filed its Form 10-Q and accompanying press release and its quarterly financial supplement, each of which can be accessed on the Investor Relations section of CareTrust's website at A replay of this call will also be available on the website for a limited period. Management on the call this morning includes Bill Wagner, CFO; Dave Sedgwick, COO; Mark Lamb, Chief Investment Officer; and Eric Gillis, Director of Asset Management.

I will now turn the call over to Greg Stapley, CareTrust REIT's Chairman and CEO.

Gregory Stapley

Thank you, Lauren, and welcome everyone, and good morning. We know that most of you already had a busy morning today, so we plan to keep our comments brief. Our third quarter went about as smoothly as any in our history. We closed on a couple of nice deals, we saw robust demand for our equity under our ATM program, and we continue to watch, closely and actively our tenants operations.

We're pleased to report that the facilities are doing well, including the ones that transitions new operators over the past year. The level of engagement we're seeing from both our continuing tenants and our replacement tenants across the portfolio is exciting. In fact, several of the transition operations are running ahead of pro forma. And although we were careful to pause and let those tenants digest the new operations following the initial transactions, several are doing well enough that we're again actively seeking additional opportunities to grow together.

We also added two new operators to the portfolio since the last time we spoke to you, bringing our total to 20 tenants across our 192 asset triplenet portfolio. In addition to strengthening our operator pool, we've also been fortifying our balance sheet. As I mentioned in yesterday's press release, on a net-debt-to-EBITDA basis, our leverage is at an all-time low, earnings are at an all-time high, and our pipeline is in the best shape we've seen in over a year.

The 2018 slow start, we don't expect to replicate the last two years plus or minus $300 million acquisition pace. But year-to-date, we've successfully deployed over $88 million at a blended 8.9% yield. With a little luck, we expect that the 2018 number will grow before we're done. More importantly, from there, we project that our current pipe should position us well to resume our historical place pace in 2019. In short, despite what started out as a