CareTrust REIT to Purchase 31 Nursing Homes in $500 Million Deal

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CareTrust REIT announced plans to buy 31 nursing homes in Alabama and Tennessee from American Health Partners for around $500 million. This deal is expected to close in the fourth quarter of 2024. The company will partner with a large, unnamed healthcare real estate owner to complete the purchase. Once the transaction is finalized, CareTrust will lease the properties to various operators, including the PACS Group, Ensign Group, Links Healthcare Group, and another unnamed company.

In addition to this large acquisition, CareTrust is also set to purchase four more nursing homes in the Northeast for $57 million next month, according to CEO Dave Sedgwick.

CareTrust focuses on owning and leasing skilled nursing homes, with 75% of its 326 properties in this sector. This acquisition is part of a broader strategy to expand its portfolio. Over the past year, the company has significantly grown in size, with recent investments showing its continued push into the healthcare real estate market.

For the new properties, PACS Group will manage 12 facilities in Tennessee, and Ensign Group will run eight Tennessee locations and one in Alabama. Links Healthcare Group will take over seven nursing homes in Tennessee, with a third operator handling the remaining facilities.

The operators will pay an initial annual base rent of about $44.4 million. This expansion comes amid growing concerns in Congress about the role of Real Estate Investment Trusts (REITs) in the healthcare sector, with some lawmakers pushing for more oversight.

Despite the challenges, industry groups argue that encouraging investment in long-term care is crucial, especially with the aging population.