CareTrust REIT (NYSE:CTRE) reported 20% growth in third-quarter normalized funds from operations per share and raised the low end of its 2026 guidance, as a record pace of investment and a new U.K. care home partnership expanded its growth opportunities.
The company invested approximately $2.9 billion year to date at a blended yield of about 8.1%, including more than $1 billion after the third quarter ended, Chief Investment Officer James Callister said on the earnings call. Its investment pipeline stood at just over $1.2 billion.
President and CEO Dave Sedgwick said the company’s low leverage and available capital position it to pursue deals despite rising interest rates. “In times of rising rates and uncertainty, sellers prioritize the buyer who will close, and that is us,” he said.
Quarterly Results and 2026 Outlook
Normalized funds from operations, or FFO, rose 37% from a year earlier to $129.2 million, Chief Financial Officer Derek Bunker said. On a per-share basis, normalized FFO increased 20% to $0.54. Normalized funds available for distribution, or FAD, rose 36% to $127 million, while normalized FAD per share increased 20% to $0.53.
CareTrust now projects full-year normalized FFO of $2.08 to $2.09 per share and normalized FAD of $2.04 to $2.05 per share. Bunker said the midpoints imply respective increases of 18.5% and 16.2% from 2025.
The forecast assumes no new investments, loans or dispositions beyond those made or announced year to date, and no additional debt or equity issuance beyond those made so far this year. It also assumes 2.5% inflation-based rent escalators under long-term triple-net leases and no material change in the pound sterling-to-dollar exchange rate.
LNT Partnership Anchors U.K. Expansion
CareTrust’s post-quarter investments included the acquisition of its first 23 homes from U.K. developer LNT for approximately $733 million, excluding transaction costs. The homes are leased to LNT operating company Crystal Care under triple-net agreements, with the ability to convert to a seniors housing operating portfolio, or SHOP, structure as the properties stabilize.
Roughly half of CareTrust’s current pipeline consists of 21 remaining LNT homes under development, which Callister said the company expects to close between January and September. About 20% of the pipeline is U.S. SHOP, with the balance in skilled nursing, U.K. care homes and loans.
Sedgwick said the LNT relationship could give CareTrust access to newly built properties with significant potential for operating growth. He expects a first-year net operating income yield in the high 7% range when the homes convert from triple-net leases to SHOP, with a longer-term target of double-digit unlevered returns.
During the question-and-answer session, Sedgwick said CareTrust initially explored acquiring the entire LNT development company but decided first to buy assets and demonstrate the developer’s delivery, lease-up and operating performance. He said the companies have a high-level agreement that could secure LNT’s development pipeline in connection with an acquisition of LNT Care Developments, though further specifics remain to be shared.
Callister also acknowledged that the price CareTrust paid for the homes helped support LNT’s willingness to cover lease payments during the initial lease-up period. He said CareTrust considers the expected returns attractive after conversion, particularly given the scale and age of the properties.
Investment Activity and Tenant Coverage
CareTrust closed approximately $740 million of investments in the third quarter at a blended stabilized yield of more than 8.3%, Callister said. The largest was a roughly $399 million, 20-facility skilled nursing portfolio in the Southwest, acquired through a joint venture and leased to an operator CareTrust already knew.
Other third-quarter investments included approximately $269 million in senior housing triple-net properties, led by a 16-home U.K. portfolio, and a roughly $65 million addition of two Utah communities to its SHOP platform. After quarter-end, the company also funded approximately $241 million of loans and preferred equity investments at a blended yield of about 10.9%.
Sedgwick said stabilized skilled nursing lease coverage reached 2.62 times EBITDA and 3.26 times EBITDARM, both higher than the prior quarter. He said strong coverage gives tenants room to reinvest and adapt to changing conditions.
The company is also looking for opportunities to improve rent through tenant changes. Sedgwick said CareTrust replaced a Midwest skilled nursing operator last month with an existing tenant that agreed to a 6% rent increase. He said CareTrust has no current plans to take a RIDEA position in skilled nursing assets, although a minority investment in an operating company could be of interest.
Liquidity and Funding Plans
After quarter-end, CareTrust closed a $700 million unsecured term loan maturing in 2032 and expanded its unsecured revolving credit facility to $2 billion. Bunker said current liquidity totals approximately $2.3 billion, including cash, revolver availability and capacity under its at-the-market equity program.
Net debt to annualized normalized run-rate EBITDA was 1.4 times at quarter-end and approximately 2.7 times on a pro forma basis including year-to-date investments, Bunker said. Both figures were below the company’s long-term target range of four to five times.
Bunker said CareTrust could potentially achieve another year of double-digit normalized FFO-per-share growth in 2027 by funding its pipeline with available capacity, without accessing capital markets. He later characterized that scenario as a fallback rather than a funding plan, saying the company could continue using other capital sources when pricing and other terms are favorable.
About CareTrust REIT (NYSE:CTRE)
CareTrust REIT, Inc is a healthcare-focused real estate investment trust that owns, acquires, and manages properties used by healthcare providers. Its portfolio primarily includes skilled nursing facilities, assisted living communities, independent living facilities, and other senior housing and healthcare-related properties.
The company generally leases its properties to healthcare operators under long-term, often triple-net lease agreements. Under these arrangements, tenants typically assume responsibility for property-level expenses such as taxes, insurance, and maintenance, while CareTrust focuses on owning and managing the underlying real estate and supporting its operating partners.
CareTrust was formed in 2014 through the spin-off of healthcare properties from The Ensign Group.
