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    CTRE
    Earnings call· Mar 2026(Q1 FY26)

    CareTrust REIT Q1 FY26 earnings call CTRE

    May 8, 2026 Source

    Executive summary

    CareTrust REIT Q1 FY26 — Strong Investment Pace and Upgraded Guidance

    CareTrust REIT delivered a strong Q1 FY26, marked by significant investment activity totaling $1.1 billion year-to-date across U.S. skilled nursing, U.K. care homes, and SHOP. The company received an investment-grade rating upgrade and raised its full-year FFO per share guidance, reflecting confidence in its growth engines and disciplined capital allocation. Management emphasized its operator-centric approach and the strategic importance of its growing SHOP portfolio, despite competitive market conditions.

    Highlights

    5

    • Closed approximately $245 million of investments in Q1 FY26, with an additional $865 million closed since April 1, totaling $1.1 billion year-to-date.

    • Achieved year-over-year FFO per share growth of 14% to $0.48 in Q1 FY26.

    • Received an investment-grade rating upgrade from Moody's, enhancing access to debt capital.

    • Raised full-year 2026 normalized FFO per share guidance to $2.00-$2.04, representing a 4.9% increase at the midpoint from initial guidance.

    • Maintained strong portfolio performance with EBITDA rent coverage of 2.25x and EBITDARM coverage of 2.79x in the stabilized triple net portfolio.

    Concerns

    2

    • SHOP market remains highly competitive with cap rates compressing by 50 bps or more in recent months, making deal sourcing challenging.

    • Skilled nursing market remains active but is predominantly off-market and relationship-driven, requiring increased creativity to source deals.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year 2026 Normalized FFO per share
    $2.00-$2.04
    high materiality
    High
    Full-year 2026 Normalized FAD per share
    $1.98-$2.02
    high materiality
    High
    Weighted average diluted share count
    234 million shares
    medium materiality
    High
    New investments, loans or dispositions
    None beyond year-to-date
    medium materiality
    High
    New debt or equity issuances
    None beyond year-to-date
    medium materiality
    High
    Inflation-based rent escalators
    2.5%
    medium materiality
    High
    Loans to be fully repaid
    $145 million
    medium materiality
    High
    Sterling to dollar spot exchange rate
    No material change
    medium materiality
    High
    Investment pipeline conversion
    $360 million
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    U.S. Skilled Nursing & Senior Housing Triple Net
    Represents the largest portion of year-to-date investments. Market is predominantly off-market and relationship-driven.
    Investment volume YTD: $705 millionBlended stabilized yield: ~8.9%
    		————
    U.S. Loans (primarily SNF-secured)
    Primarily secured by skilled nursing facilities, closed concurrently with asset acquisitions or in anticipation of such. Some sale-leasebacks are accounted for as financing receivables due to purchase options.
    Investment volume YTD: $225 million
    		————
    U.K. Care Homes
    Pipeline is ahead of schedule and growing. Seeing some increased competition but yields remain attractive. Lease coverage is high, closer to 1.75-1.8x, and north of 2x on an EBITDARM basis.
    Investment volume YTD: $160 millionNumber of care homes added YTD: 10Yield on product: mid-8s
    		————
    SHOP
    Market is highly competitive with cap rate compression. Focus on disciplined underwriting and long-term operator relationships. Second SHOP investment was an assisted living facility in Arizona with a known operator.
    Investment volume YTD: Remainder of $1.1 billion totalTotal communities: 4 (after second investment)Estimated Year 1 yield (recent deal): 8%
    		————

    Operational metrics

    16
    Normalized FFO per share
    $0.48up 14% YoY
    Q1 FY26

    Increased over the prior year quarter.

    Normalized FAD per share
    $0.48up 12% YoY
    Q1 FY26

    Increased over the same period.

    Normalized FFO
    $107.4 millionup 38% YoY
    Q1 FY26

    Increased over the prior year quarter.

    Normalized FAD
    $107.6 millionup 33% YoY
    Q1 FY26

    Increased over the prior year quarter.

    ATM forward program proceeds
    $129.5 million
    Q1 FY26

    Gross proceeds settled under the ATM forward program during the first quarter.

    ATM forward program proceeds (subsequent)
    $363.6 million
    Post Q1 FY26

    Remaining outstanding forwards settled subsequent to quarter end.

    ATM forward program proceeds (YTD total)
    $493 million
    YTD FY26

    Total gross proceeds from settled forwards year-to-date, supporting recent investment activity.

    Unsecured revolving credit facility drawn
    $350 million
    As of May 7

    Drawn amount on the $1.2 billion facility.

    Cash on hand
    $70 million
    As of May 7

    Available cash.

    Unsecured revolving credit facility availability
    $850 million
    As of May 7

    Remaining availability under the $1.2 billion facility.

    ATM program capacity
    $879 million
    As of May 7

    Remaining capacity on the ATM program.

    Net debt to annualized normalized run rate EBITDA
    0.6x
    Q1 FY26

    Well below the long-term target leverage range of 4 to 5x.

    Net debt to enterprise value
    3.6%
    Q1 FY26

    Aided by an investment-grade credit profile.

    G&A increase drivers
    —
    FY26

    Almost entirely due to hitting key KPIs for short-term incentives (STI) given performance and guidance, and continued team build-out to support overall growth.

    Interest income and expense drivers
    —
    FY26

    Moving around due to strong downward revolver usage in the quarter to fund acquisitions, and guidance assumptions not incorporating future pipeline or acquisitions.

    Potential bond issuance rate
    130-140 bps spread
    Current

    Estimated spread for a potential 10-year USD-denominated bond issuance, considering the investment-grade rating.

    Industry KPIs

    3
    MetricValueDetails
    Coverage ratios2.25xx
    Senior housing occupancyaround 80%%
    Investment volume and sourcing mix$1.1 billionUSD

    Orderbook & backlog

    1
    Investment pipeline$360 millionQ1 FY26

    Expected to close within the next 12 months. Heavily weighted towards U.K. care homes (>50%), ~20% SHOP opportunities, remainder in triple net (SNF/senior housing) and loans. Excludes large portfolios under review.

    Deals & partnerships

    6
    Undisclosed6-property skilled nursing portfolio sale-leaseback in Mid-AtlanticPart of $245 million total

    Anchored Q1 activity, leased to an existing quality operator.

    UndisclosedMeaningful tranche of U.K. care home investmentsPart of $245 million total

    Part of Q1 activity.

    UndisclosedSmall relationship-driven loan secured by a skilled nursing facilityPart of $245 million total

    Operated by an existing operator, part of Q1 activity.

    Undisclosed12 separate transactions$865 million

    Closed since April 1. Activity weighted towards U.S. skilled nursing, including an opportunistic transaction with a new operating relationship.

    UndisclosedSecond SHOP investmentPart of $865 million total

    Closed on May 1, bringing total SHOP portfolio to four communities. Assisted living facility in Arizona with a relationship operator, estimated Year 1 yield of 8%.

    UndisclosedAdditional U.K. care home activityPart of $865 million total

    Part of post-quarter activity, building on growing portfolio.

    Risks & headwinds

    2
    Competition and cap rate compression in SHOP marketRecent months

    Cap rates compressed 50 bps or more in recent months; Class A primary market assets now have a '5 handle'.

    Mitigation: Disciplined underwriting, focus on long-term operator relationships, creative transaction structuring, and being agnostic across three growth engines to avoid being compelled to overpay.

    Skilled nursing market deal sourcingCurrent

    Predominantly off-market, relationship-driven, fewer broker deals.

    Mitigation: Leveraging deep operator relationships and existing portfolio strength to pursue off-market opportunities aggressively but with discipline.

    What to watch in Q2 FY26

    4

    Investment pipeline conversion

    Next quarter
    Current$360 million
    TargetProgress towards closing within 12 months

    Why it matters

    The pipeline is a key indicator of future growth and FFO/FAD generation, especially given the raised guidance assumes no new investments beyond year-to-date.

    Our investment pipeline today sits at approximately $360 million. The composition is heavily U.K. care homes, which represents over half of the quoted pipe with another approximately 20% comprised of SHOP opportunities and the remainder consisting of triple net, both skilled nursing and seniors housing and a small amount of loan activity. As always, please remember that when we quote our pipeline, we only include deals that we have a reasonable level of confidence we can lock up and close within the next 12 months

    Q&A highlights

    5

    Asked for details on larger portfolios not included in guidance and how CareTrust sources deals in the competitive SNF market, given peers report less product and increased private capital.

    Management explained their practice of not including larger, less certain portfolios in the pipeline. For SNF, they emphasized the market is predominantly off-market and relationship-driven, requiring creativity, and their track record shows success in this environment, though 9.5% yields with no creativity are rare now.

    “I think that it has for a little while, been predominantly relationship driven. It's a little bit more unpredictable because you're not getting a constant flow of broker deals like you are maybe shop. But I think that it has been like that for a while. And I think that the track record we have shows that relationships are just super important.”

    asked by Farrell Granath · answered by James Callister

    2 min read5 chapters

    Detailed Narrative

    01

    Robust Investment Activity and Pipeline Growth

    CareTrust REIT demonstrated significant external growth, closing $245 million in investments during Q1 FY26 and an additional $865 million since April 1, bringing the year-to-date total to $1.1 billion. These investments were made at a blended stabilized yield of approximately 8.9%. The current investment pipeline stands at $360 million, primarily composed of U.K. care homes (over 50%) and SHOP opportunities (approximately 20%), with the remainder in skilled nursing and senior housing triple net assets. The company emphasizes its disciplined underwriting and relationship-driven approach, particularly in the off-market skilled nursing sector.

    02

    Strengthened Balance Sheet and Capital Access

    The company settled $129.5 million in gross proceeds from its ATM forward program in Q1, with an additional $363.6 million settled post-quarter, totaling $493 million year-to-date. This activity supported recent investments. CareTrust received an investment-grade rating upgrade from Moody's, which is expected to expand access to debt capital and support future growth on attractive terms. The company ended Q1 with $70 million cash on hand, $850 million available on its $1.2 billion revolving credit facility, and $879 million ATM capacity, with no scheduled debt maturities before 2028.

    03

    Operator Performance and Quality Focus

    CareTrust highlighted the strong performance of its operators, noting 100% contractual rent and interest collection in Q1. A study of publicly reported CMS outcomes for its skilled nursing portfolio showed that CareTrust's tenants achieve higher overall CMS star ratings, higher health and section star rates, and better quality measures compared to sector averages. This commitment to quality care translates to strong financial health, with EBITDA rent coverage of 2.25x and EBITDARM coverage of 2.79x in the stabilized triple net portfolio, showing broad-based improvements.

    04

    Strategic Approach to SHOP and U.K. Care Homes

    The company views SHOP as an important part of its growth story and plans to continue building this portfolio with discipline, despite a highly competitive market where cap rates have compressed by 50 bps or more recently. The second SHOP investment was closed post-quarter, bringing the total SHOP portfolio to four communities. In the U.K., the care home pipeline is ahead of schedule and growing, with 10 care homes added year-to-date. The London-based team is successfully establishing CareTrust's operator-centric culture, leading to meaningful upside over time⏳.

    05

    Lending Strategy and Accounting Nuances

    CareTrust's lending strategy focuses on loans that either include real estate acquisitions or are highly likely to lead to them. The recent growth in the loan book is partly due to this strategy, with some loans being necessary to complete deals. Additionally, some sale-leaseback transactions are accounted for as financing receivables due to purchase options, even though these options are far out (9-10 years), making them functionally similar to sale-leasebacks from the company's perspective.

    AI-generated summary of the company’s earnings call. Not investment advice.