CareTrust REIT NYSE: CTRE reported record second-quarter investment activity and raised its full-year 2026 guidance, citing continued deal flow across U.S. skilled nursing, U.K. care homes, senior housing operating properties (SHOP), and strategic real estate loans.
President and Chief Executive Officer David Sedgwick said the company closed approximately $900 million of investments during the second quarter at a blended stabilized yield of 8.9%, representing its largest quarterly investment total excluding M&A activity. He said the quarter also produced record revenue and funds from operations per share.
“After two back-to-back record-setting years, we are again on pace to deliver in a big way for our operators and shareholders,” Sedgwick said.
Investment activity reaches $1.5 billion year to date
Chief Investment Officer James Callister said CareTrust’s second-quarter investments covered the company’s full platform, including U.S. skilled nursing sale-leasebacks, U.K. care homes, SHOP investments, and loans to skilled nursing operators that were made alongside, or in anticipation of, asset acquisitions.
Since June 30, the company has closed an additional approximately $308 million of investments at a blended stabilized yield of about 7.8%. That activity included a 16-property U.K. care homes portfolio leased to a new CareTrust operator relationship and a $65 million, two-community addition to its SHOP platform.
CareTrust’s investments for 2026 stood at approximately $1.5 billion as of the call, comprising:
- About $735 million in U.S. triple-net skilled nursing and senior housing investments;
- Approximately $397 million in U.K. care homes;
- Approximately $240 million in loans; and
- Approximately $81 million in SHOP investments.
The company’s current investment pipeline totaled about $540 million, with roughly two-thirds tied to skilled nursing and one-third consisting of loans to strategic partners and U.K. care homes. Callister said the pipeline includes transactions the company has a reasonable level of confidence it can close within the next 12 months and generally excludes larger portfolios still under review.
While the immediate pipeline does not include SHOP opportunities, Callister said that reflects timing and underwriting discipline rather than a retreat from the property type. He said CareTrust continues to develop relationships with operators and managers that could help it move quickly when suitable opportunities arise.
SHOP competition remains intense
Management said competition has been particularly significant in SHOP, where Callister said more private-market entrants have contributed to cap-rate compression and more competitive acquisition processes. The company is reviewing larger SHOP portfolios but said it remains selective about pricing and expected returns.
In response to questions about CareTrust’s more measured pace in SHOP compared with some peers, Sedgwick said SHOP is intended to be a long-term complementary growth engine rather than the company’s sole strategic focus. The company can instead allocate capital among its three growth areas, including skilled nursing and U.K. care homes.
Callister said the company typically loses SHOP opportunities on price when projected returns no longer meet its underwriting standards. He cited cases involving stable portfolios with occupancy in the mid-90% range that have been priced at mid- to low-5% capitalization rates, compared with skilled nursing and care-home opportunities generating yields in the high-8% to 9% range.
CareTrust said its U.K. team has broadened its sourcing beyond traditionally marketed transactions by cultivating operator and other industry relationships. Callister also said the company is considering structures beyond triple-net leases, including potential SHOP arrangements when appropriate.
FFO and FAD rise; guidance increases
Chief Financial Officer Derek Bunker said normalized FFO increased 44% year over year to $119.7 million in the second quarter, while normalized funds available for distribution, or FAD, rose 43% to $118.5 million. On a per-share basis, normalized FFO and FAD were each $0.51, up approximately 19% from the prior-year period.
CareTrust raised its full-year 2026 outlook, now projecting normalized FFO per share of $2.03 to $2.06 and normalized FAD per share of $2.01 to $2.04. At the midpoint, the guidance would represent 16.2% growth in normalized FFO per share and approximately 15.1% growth in normalized FAD per share compared with 2025.
The updated outlook assumes no investments, loans, dispositions, debt issuances, or equity issuances beyond those completed year to date. It also assumes 2.5% inflation-based rent escalators under long-term triple-net leases, $147 million in loan repayments during the year, and no material change in the British pound-to-U.S. dollar exchange rate. Bunker said approximately $104 million of expected loan repayments had been received so far.
Liquidity and operator focus
The company reported approximately $1.4 billion of liquidity, including about $90 million of cash, $605 million available under its revolving credit facility, and approximately $671 million in unsettled equity forward contracts. CareTrust also had about $785.8 million of capacity under its at-the-market equity program.
Net debt to annualized normalized run-rate EBITDA was 1.0 times at quarter-end, while fixed-charge coverage was 9.9 times, according to Bunker. The company has no scheduled debt maturities before 2028.
Sedgwick emphasized that CareTrust’s underwriting begins with operator selection. He said the company’s operators exceeded industry averages in overall star ratings, health inspections, quality measures, successful discharges, and readmission rates after managing facilities for at least four years.
Management said it remains willing to allow concentration with high-quality operators to build over time. Sedgwick said CareTrust would rather partner with what it considers an “A operator” in a less attractive market than accept a weaker operator in a stronger market.
On skilled nursing, Sedgwick described the current operating environment as stable from both a regulatory and reimbursement perspective. He said CareTrust views skilled nursing as an important component of the healthcare continuum and continues to see attractive risk-adjusted returns from the sector.
About CareTrust REIT (NYSE:CTRE)
CareTrust REIT, Inc is a real estate investment trust based in Deerfield Beach, Florida, specializing in the ownership, acquisition and management of net-leased healthcare properties. The company primarily focuses on seniors housing and post-acute care facilities, entering into long-term, triple-net lease agreements with leading operators in the skilled nursing, assisted living, memory care, inpatient rehabilitation and specialty hospital sectors. Through its portfolio, CareTrust REIT aims to provide investors with stable and predictable rental income while supporting the ongoing demand for quality healthcare real estate across the United States.
Since its initial public offering in September 2013, CareTrust REIT has pursued a disciplined acquisition strategy, targeting properties in primary and select secondary markets.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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