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CareTrust REIT posted strong first-quarter results, with normalized FFO up 38% year over year and normalized FFO per share up 14% to $0.48. Management also raised full-year 2026 guidance for both FFO and FAD.
Investment activity accelerated sharply, with about $1.1 billion of year-to-date investments completed at a blended stabilized yield of roughly 8.9%. The mix included U.S. skilled nursing and senior housing, U.K. care homes, loans, and SHOP investments.
The balance sheet remains very liquid and conservative, with no scheduled debt maturities before 2028, substantial revolver and ATM capacity, and net debt to EBITDA at just 0.6x. CareTrust also highlighted a Moody’s investment-grade upgrade and strong rent collection and portfolio coverage metrics.
CareTrust REIT (NYSE:CTRE) reported a strong start to 2026, highlighting rapid investment activity, higher funds from operations and an increased full-year outlook during its first-quarter earnings call.
President and CEO Dave Sedgwick said the company closed approximately $245 million of investments during the first quarter and accelerated its pace after quarter-end, closing 12 additional transactions for roughly $865 million since the start of April. Taken together, Chief Investment Officer James Callister said CareTrust has completed about $1.1 billion of year-to-date investments at a blended stabilized yield of approximately 8.9%.
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Sedgwick said the results reflected “a continuation of the momentum” the company has generated over the past several years. He pointed to year-over-year normalized FFO per share growth of 14%, a 16.4% dividend increase, an investment-grade upgrade from Moody’s and a higher 2026 FFO guidance range.
Callister said first-quarter investment activity was anchored by a sale-leaseback of a six-property skilled nursing portfolio in the Mid-Atlantic, leased to an existing operator at a yield of about 9%. The quarter also included U.K. care home investments and a smaller loan secured by a skilled nursing facility operated by one of CareTrust’s existing operators.
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Since April 1, the company closed 12 more transactions totaling about $865 million at a blended stabilized yield of approximately 8.9%. Callister said that activity was weighted toward U.S. skilled nursing and included an “opportunistic transaction” with a new operating relationship, as well as additional skilled nursing and senior housing triple-net investments, new and incremental loans, a second SHOP investment and more U.K. care home activity.
Year-to-date investment volume includes:
Approximately $705 million in U.S. skilled nursing or senior housing triple-net investments.
Roughly $225 million in U.S. loans, primarily secured by skilled nursing facilities.
Approximately $160 million in U.K. care homes.
The remaining amount in SHOP investments.
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Callister said CareTrust’s current investment pipeline is approximately $360 million. More than half of the pipeline is composed of U.K. care homes, about 20% is SHOP opportunities, and the remainder includes triple-net skilled nursing and senior housing investments, along with a small amount of loan activity. He noted that the company’s quoted pipeline includes only deals where it has a reasonable level of confidence it can “lock up and close within the next 12 months” and does not always include larger portfolios under review.
CFO Derek Bunker said normalized FFO increased 38% from the prior-year quarter to $107.4 million, while normalized FAD rose 33% to $107.6 million. On a per-share basis, normalized FFO was $0.48, up 14%, and normalized FAD was also $0.48, up 12% from the same period a year earlier.
CareTrust raised its 2026 full-year guidance to normalized FFO per share of $2.00 to $2.04 and normalized FAD per share of $1.98 to $2.02. Bunker said the midpoints of the updated ranges represent increases of 14.8% for normalized FFO and 13.6% for normalized FAD compared with 2025 results. The new guidance also represents increases from the initial 2026 guidance ranges issued in February.
The guidance assumes no new investments, loans or dispositions beyond those already completed year-to-date; no new debt or equity issuances beyond those already completed; 2.5% inflation-based rent escalators under long-term triple-net leases; $145 million of loan repayments during the rest of the year; and no material change in the sterling-to-dollar exchange rate.
Bunker said CareTrust settled $129.5 million of gross proceeds under its at-the-market forward program during the first quarter. After quarter-end, it settled the remaining outstanding forwards, bringing year-to-date settled forwards to roughly $493 million of gross proceeds to support investment activity.
As of May 7, the company had $350 million drawn on its $1.2 billion unsecured revolving credit facility and approximately $70 million in cash. Bunker said CareTrust had no scheduled debt maturities before 2028, $850 million of availability on the revolving credit facility and about $879 million of capacity on its ATM program.
Net debt to annualized normalized run-rate EBITDA was 0.6 times at quarter-end, below the company’s long-term target leverage range of 4 to 5 times. Net debt to enterprise value was approximately 3.6%.
Bunker said the Moody’s investment-grade upgrade expands CareTrust’s access to debt capital and could support future growth. In response to an analyst question, he said an inaugural high-grade debt issuance is “certainly on our radar,” particularly as the company grows and begins to “pad out the balance sheet.”
Sedgwick said CareTrust collected 100% of contractual rent and interest during the first quarter. He said overall EBITDAR rent coverage in the stabilized triple-net portfolio remained strong at 2.25 times, while EBITDARM coverage was 2.79 times.
He also discussed preliminary results from a company study of publicly reported CMS outcomes in its skilled nursing portfolio. Sedgwick said the analysis focused on facilities that had been under lease for at least four years to allow time for star ratings to adjust under licensed operators. He said CareTrust tenants achieved higher overall CMS star ratings and higher health inspection star ratings compared with all for-profit operators. Compared with all operators, including for-profit and nonprofit operators, he said CareTrust tenants had higher quality measure star ratings, lower rehospitalization rates and higher successful discharge rates.
On skilled nursing occupancy, Sedgwick said the sector has been on a “steady, modest” incline since bottoming in 2021. He said demographic trends are expected to become more significant in coming years, adding that while industry occupancy is in the low 80% range and CareTrust’s portfolio is around 80%, he expects the picture to be “dramatically different” five to seven years from now.
During the question-and-answer session, analysts focused on competition in skilled nursing and SHOP investments, the company’s loan book and larger portfolio opportunities.
Callister said the skilled nursing transaction market is predominantly off-market and relationship-driven. He said the market is less predictable than sectors with a steady flow of brokered deals, but CareTrust’s existing relationships have helped the company continue sourcing transactions.
In SHOP, management said competition remains high and cap rates have continued to compress. Callister said primary-market Class A SHOP assets appear to have cap rates with “a 5 handle,” with rates moving higher from there depending on market and asset quality. He estimated cap rates have compressed by 50 basis points or more over the past six months.
Sedgwick said building the SHOP platform has been somewhat surprising because of how aggressive some competitors’ underwriting has been. However, he said CareTrust’s ability to invest across three growth engines — SHOP, skilled nursing and U.K. care homes — gives the company flexibility and helps it maintain underwriting discipline.
Regarding larger portfolio opportunities not included in the quoted pipeline, Sedgwick said the company typically excludes larger portfolios because some seller processes may not be certain to proceed. He said chunkier deals currently under evaluation are in the U.K. and U.S. skilled nursing markets, not SHOP.
On the loan book, Sedgwick said CareTrust generally makes loans only when they include real estate acquisitions or when the company is confident the loan will lead to acquisitions. He also noted that some transactions classified as financing receivables are treated that way because of accounting rules related to purchase options, even though the company views them more like sale-leasebacks because the options are far in the future.
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.
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The article "CareTrust REIT Q1 Earnings Call Highlights" was originally published by MarketBeat.
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