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CareTrust REIT (CTRE) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Real Estate· May 8, 2026

Source: earnings call transcript

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

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

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%
————

Orderbook & backlog

Investment pipeline $360 million Q1 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

Undisclosed 6-property skilled nursing portfolio sale-leaseback in Mid-Atlantic Part of $245 million total

Anchored Q1 activity, leased to an existing quality operator.

Undisclosed Meaningful tranche of U.K. care home investments Part of $245 million total

Part of Q1 activity.

Undisclosed Small relationship-driven loan secured by a skilled nursing facility Part of $245 million total

Operated by an existing operator, part of Q1 activity.

Undisclosed 12 separate transactions $865 million

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

Undisclosed Second SHOP investment Part 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%.

Undisclosed Additional U.K. care home activity Part of $865 million total

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

Risks & headwinds

Competition and cap rate compression in SHOP market Recent 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 sourcing Current

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

Investment pipeline conversion

Next quarter
Current $360 million
Target Progress 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

Find out whether CTRE delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.