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CareTrust REIT, Inc. Announces First Quarter 2016 Operating Results

SAN CLEMENTE, Calif., May 11, 2016 (GLOBE NEWSWIRE via COMTEX) --

CareTrust REIT, Inc. CTRE, -0.60% today reported operating results for the first quarter of 2016, as well as other recent events. Quarter and other highlights include:

  • Net income for the quarter was $0.11 per diluted weighted average share, with normalized FFO of $0.27 and normalized FAD of $0.29 per diluted weighted average share;
  • CareTrust successfully raised new equity in a $111 million follow-on offering;
  • The company increased its quarterly dividend by 6.3% to $0.17 per share;
  • The company retired the last of its legacy secured term debt, and increased its unsecured revolving facility to $400 million with an accordion feature which allows CareTrust to increase the line to $650 million;
  • During the quarter and since, CareTrust announced new investments of approximately $116 million, at a blended going-in cash yield of 9.1%, with an additional $46 million of new investments under contract to close within the second quarter or shortly thereafter; and
  • After quarter-end, CareTrust announced that Standard & Poor's raised its corporate credit rating on CareTrust to "B+" from "B," with a stable outlook, and also raised its issue rating on CareTrust's 5.875% Senior Unsecured Notes to "BB-" from "B+."

Major Milestones Reached

Greg Stapley, CareTrust's Chairman and Chief Executive Officer commented on the quarter and other recent highlights. "The first quarter saw our team hit more critical milestones than ever," he said. He cited the March overnight offering and strong demand for the company's equity, retirement of the legacy GE secured debt and the costs savings it represents, getting leverage down into the company's long-term target range, achieving ratings upgrades from Standard & Poor's and increasing the dividend as major accomplishments in moving the company forward. "With these achievements, our team is very optimistic about both the company's near-term prospects and long-term potential," he added.

Mr. Stapley also noted that CareTrust added four new tenant relationships in the quarter and since, and further diversified its portfolio into four new states, bring its total footprint to 143 properties in 19 states. He further reported that the company's nationwide acquisition pipeline remains strong, with ample opportunities for continued growth at superior returns.

Financial Results & Financing Activities

Discussing the quarter's financial results, Chief Financial Officer Bill Wagner reported that the company generated normalized FFO of $13.1 million or $0.27 per diluted common share, and normalized FAD of $14.1 million or $0.29 per diluted common share.

Mr. Wagner commented on the company's March equity raise, noting that the $111 million overnight offering was more than 2x oversubscribed within the first hours, was upsized by one million shares, and that the underwriters exercised their full overallotment the same day. "We were gratified to see that demand for CareTrust shares was so strong, resulting in the upsizing and a file-to-offer discount of only 3.7%, which was miles ahead of our first follow-on last August," he said. He noted that the offering netted the company approximately $106 million in new capital, and added several new institutional shareholders. Proceeds were primarily used to pay down the company's revolving credit line in advance of funding approximately $97 million in acquisitions then under contract, which were pre-announced at the time of the offering.

Mr. Wagner also discussed the Company's expansion of its revolver capacity and debt refinancing activity in the quarter. The company expanded its unsecured revolving facility to $400 million, with an accordion feature which allows CareTrust the option to increase the line to $650 million. CareTrust also replaced all of its remaining secured debt with lower-cost 7-year unsecured term debt, and further staggered its debt maturities. He noted that CareTrust now has no property-level debt and, taking into account existing extension rights, no debt maturing before 2020. He reported that, proforma for completed and announced transactions, the company's debt-to-EBITDA ratio stands at approximately 4.95x, down from more than 6.7x at the company's inception less than two years ago.

Mr. Wagner added that, at quarter end only $5.0 million was drawn on the Company's $400 million unsecured revolver, with approximately $51 million deployed since the late March equity offering and another $46 million in announced transactions remaining to close in the coming weeks, leaving ample room for additional investments in the near term.

2016 FFO Guidance Revised Upward

Mr. Wagner updated and increased the Company's previously-issued 2016 earnings guidance, projecting normalized FFO per diluted share of approximately $1.06 to $1.08, and normalized FAD per diluted share of approximately $1.14 to $1.16. The increased guidance assumes no new acquisitions beyond those made and announced to date, with announced acquisitions funded by additional draws on the company's credit facility but no other new debt incurrences, no new equity issuances, and no rent escalations on the company's long-term leases.

Dividend Increase

During the quarter, CareTrust increased its quarterly dividend by 6.3% to $0.17 per common share. "On an annualized basis, our increased quarterly dividend represents a payout ratio of approximately 59% based on the midpoint of our projected normalized FAD for 2016," said Mr. Wagner. "At this level, our dividend remains among the best-protected of all our industry peers, while giving us ample additional growth capital to reinvest and providing a solid overall return to our shareholders," he added.

Ratings Upgrades

CareTrust also announced that, earlier this month, Standard & Poor's Rating Services raised its corporate credit rating on CareTrust to "B+" from "B," with a stable outlook, and its rating on CareTrust's 5.875% Senior Unsecured Notes to "BB-" from "B+." Commenting on the changes, Mr. Stapley said, "We appreciate the recognition inherent in these upgrades of our continuous efforts to grow intelligently, while simultaneously improving our key credit metrics and further strengthening our balance sheet." CareTrust and its bonds are also rated by Moody's Investor Service.

Conference Call

An earnings webcast will be held on Thursday, May 12, 2016, at 1:00 p.m. Eastern Time, during which CareTrust's management will discuss the Company's first quarter 2016 results, recent developments and other matters affecting the Company's business and prospects. To listen to the webcast, or to view any financial or other statistical information required by SEC Regulation G, please visit the Investors section of the CareTrust website at http://investor.caretrustreit.com/. The webcast will be recorded, and will be available for replay via the website for one year following the event.

About CareTrustTM

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust that is engaged in the ownership, acquisition and leasing of seniors housing and healthcare-related properties. With 140 net-leased healthcare properties and three operated seniors housing properties in 19 states, CareTrust is pursuing opportunities nationwide to acquire additional properties that will be leased to a diverse group of local, regional and national seniors housing operators, healthcare services providers, and other healthcare-related businesses. More information about CareTrust is available at www.caretrustreit.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This press release contains, and the related conference call and webcast will include, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements regarding future financing plans, business and acquisition strategies, growth prospects and operating and financial performance.

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