Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| So it's actually pretty encouraging to know that there's some opportunity there going forward for our operators to continue to improve there |
| And we have a macro environment that has opened a window of opportunity as long as the credit market remains challenging, which leads me to believe that 2024 should be a strong year for external growth for CareTrust |
| Deal flow remains strong and at a level largely consistent with the past several quarters |
| Our liquidity remains extremely strong |
| We'd be very happy to surprise you in the future and say, we got a big one |
| I also want to thank our operators, who we consider by and large to be among the very best in the business |
| It's their relentless dedication to their staff, residents, and patients, that is making this world a better place and we're honored to help them expand their influence |
| We have a favorable cost of capital that allows for accretive investments |
| And we think we do a pretty good job of that |
| Why? Because we expect 2024 to be a strong year of investments, and we positioned ourselves accordingly |
| Finally, we're pleased to issue guidance again |
| We have a balance sheet that provides enormous flexibility and capacity |
| Many regional operators appear hungry to grow, and that appetite for expansion is driving healthy acquisition demand |
| Pricing on stabilized or close to stabilized SNF portfolios continues to hover at historical cap rates, helped by increases in state Medicaid rates and some easing in labor challenges |
| We are a group of -- we have a group of former operators here that we think help us do a pretty good job of vetting operators and opportunities |
| The loan facilitates Bayshire's ongoing growth in San Diego County and helps further synergies with the nearby skilled nursing facility that we acquired in Q3 of last year and leased to Bayshire |
| For the quarter, normalized FFO increased 17.2% over the prior year quarter to $43.4 million, and normalized FAD increased by 16.3% to $45.4 million |
| Now here's what's remarkable |
| I'm very pleased to report $288 million of new investments last year at a blended stabilized yield of 9.8% |
| And as good as those numbers are, maybe more exciting is the fact that we ended the year with the full $600 million available on our line of credit and just under $300 million of cash on the balance sheet |
| It was a year of growth for the company on several fronts |
| We hope our report has been helpful, and thank you for your continued support |
| I know you have a pretty good pipeline that you keep on highlighting |
| Our balance sheet and dry powder together with opportunistic market dynamics have set the table for growth |
| We like the simplicity of our model and we currently have an abundance of opportunities of our typical bread and butter |
| While always adhering to our disciplined underwriting approach, we are actively using our flexibility and creativity in sourcing and structuring transactions to pursue and execute on accretive investment opportunities |
| But I think during times like this, you see the best operators really distinguish themselves by first becoming that operator, that employer of choice, so that they can then become the provider of choice in their communities |
| Dave Sedgwick Well, listen, thank you guys for your interest, your questions, and your continued support, and hope you all have a wonderful weekend |
| Before I talk about our outlook for 2024, let me first thank the entire CareTrust team for their great work in '23 |
| As well as regional owners' operators have stabilized portfolios, looking to sell and recycle capital into underperforming portfolios with upside potential |
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| Also, we're still under contract to sell the portfolio of 11 skilled nursing assets with negative EBITDA, primarily in the Midwest |
| Having said that, it's still a difficult labor market |
| We lost so many employees in the skilled nursing space due to the pandemic, that by and large, the operators adjusted well before those rates caught up with them |
| On a per share basis normalized FFO decreased $0.02 to $0.36 per share and normalized FAD decreased $0.03 to $0.37 per share |
| Understandably, financing has been challenging, but the buyer continues to make good-faith efforts that lead us to believe a deal will get done |
| And I'm wondering if you get the sense that this increased competition for that kind of instrument could lead to downward pressure on the associated yields |
| But before the pandemic, it was down near $3 |
| The problem is, I'm a terrible three-point shooter and I'm more of an assist guy |
| Pricing on distressed skilled nursing product has softened slightly as we continue to see more offerings entering the market for SNF portfolios that are facing variable rate and maturity date risk on bridge to HUD and other similar loans |
| Of course, everybody's looking at Eduro with their coverage that has trended down |
| So I think you see that trend continuing a little bit |
| Just taking one data point, for example, looking at agency, third quarter '22 our agency PPD in the portfolio was around $13, Q3 of '23, it's down to $8 |
| Sellers in today's SNF market include owners with non-profit affiliations, moms and pops fatigued by difficult years in the industry and looking to exit |
| I said last quarter, that I wouldn't be surprised to see leverage tick further downward as we continue to fund our pipeline with equity, which we did |
| As for why we settled the forwards in December, it was just a question of that -- we weren't saving a lot on it |
| Michael Carroll And then just last one for me, I mean, what about the competitive landscape? I mean, I know the levered private buyers were pretty competitive going after some of those larger deals, historically |
| The company's statements today and its business generally are subject to risks and uncertainties that could cause actual results to materially differ from those expressed or implied herein |
| I think that, you know you definitely have an absence of smaller owner-operators who really can't get financing right now |
| But because we're in the stage of recovery that we are, we felt like it was prudent to build in some conservatism there for our guidance |
| And that lending activity in the future, under that hypothetical scenario, would be back to what it was before |
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