California-based real estate investment trust CareTrust plans to sell, re-tenant or repurpose up to 32 facilities in an “unprecedented opportunity to de-risk” its portfolio, executives detailed Thursday.
Targeted facilities are those placed on the company’s watchlist before the pandemic, which now pose a risk of default as federal provider relief funding opportunities come to an end. The properties represent 10% of contractual cash rent among its entire portfolio.
“We do not intend to play the defer and hope game with operators or properties that have been on our watch list since before the pandemic,” Dave Sedgwick, CareTrust president and CEO, said during a fourth quarter earnings call Thursday.
“Rather, we intend to take advantage of the seller’s market, redeploy any proceeds into new investments underwritten for today’s realities, and use this time to upgrade the risk profile of our growing portfolio,” he added.
The company is exploring the idea of repurposing a portion of the buildings into behavioral health facilities. In terms of re-tenanting, Sedgwick said “all options are on the table.”
“As we sit here today, I would guess that we would sell a majority of the 32 (and) re-tenant or repurpose minority of those, but how that plays out is to be determined,” Sedgwick said.
