CareTrust REIT, Inc. (NASDAQ:CTRE) Q3 2019 Earnings Conference Call - Final Transcript

Nov 08, 2019 • 01:00 pm ET

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CareTrust REIT, Inc. (NASDAQ:CTRE) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. [Operator Instructions] Our first question comes from the line of Chad Vanacore with Stifel. Your line is open.

Analyst
Unidentified Participant

Hi, good morning. This is Todd [Phonetic] on for Chad.

Executive
Greg Stapley

Hey, Todd.

Analyst
Unidentified Participant

Yeah, hi. Thanks for the additional details you provided under rent coverages for your top tenants. We just have one suggestion if you could break down the coverage ratio on the various property types, like you did before, that would be great. And my first question is, just wanted to understand the trajectory of the coverage decline for the tenants you took to the laundry this quarter? Did you see like a faster deterioration in the third quarter that prompted a more broader set of actions that you're taking regarding the portfolio? And I think the market is kind of surprised by the change of the narratives? Is there any color on the back on the decision process? That will be much appreciated.

Executive
Dave Sedgwick

Yeah, this is Dave. I'd say that each of these changes to the portfolio, you really need to take case by case. We feel good about how quickly we dealt with them when they became actionable which really happened in the quarter. So besides that, I'm not sure what more color to give generally speaking, we'd really have to talk case by case.

Analyst
Unidentified Participant

But in terms of coverage, did you like change materially during the quarter?

Executive
Dave Sedgwick

Again, you have to look at it case by case. With Trio, the coverage has been a concern for a while, but as we were looking at the performance alongside them, we had been viewing this as a runway and timing issue until this quarter, not that something happened in this quarter dramatically different from before, we just came to the conclusion with them that we can no longer view it that way, and the facts on the ground really warranted the change there.

When it came to Priority Life Care, the decision there was made because they had strategically -- they had made changes to their strategy as a company. They wanted to focus primarily on consulting and management fee. And so we ran a process to see what's the best change to that portfolio would be -- whether it'd be selling or re-tenanting. And so there wasn't a major change in the quarter per se, but it was the quarter that we could act on it.

With Metron, that -- as I said in my prepared remarks, that did shock us. There's really not much more color we can give on Metron, because it's an ongoing matter. But beyond what I put in my prepared remarks there but that -- what we'd do, if you can't feel good about that situation at all, which we really don't, but what we can feel good about is acting on it as quickly as we did, that could have been an issue that would linger for a long time, but we were able to get it under contract to sell within