CareTrust President and CEO Dave Sedgwick
CareTrust President and CEO Dave Sedgwick

CareTrust REIT has reached tentative agreements with nearly all of the 32 skilled nursing and seniors housing facilities that it plans to sell or repurpose, executives said Friday. 

The California-based REIT in February first announced plans to sell or repurpose 32 facilities in a push to decrease risk in its portfolio. CareTrust President and CEO Dave Sedgwick said plans were “due to the lingering effects of COVID are hitting the wall now or are anticipated to not be sustainable long term.”

Executives on Friday announced they signed leases to repurpose three of those facilities into substance addiction recovery systems. Sabra Health Care REIT is also in the process of reducing its skilled nursing exposure and investing more in behavioral health. 

Redevelopment work should start this summer. Another 27 facilities are in the early stages of the sales process, while the remaining two of the facilities have not been formally taken to market. CareTrust overall owns more than 220 facilities, with 160 of those being skilled nursing facilities. 

“Interest in the properties appears to be in line with our expectations. We may yet decide to retain and re-tenant select facilities instead of selling them,” Sedgwick said during the call. He added the company should have a more “meaningful update” on the process next quarter as deals firm up. 

“Skilled nursing and seniors housing has long been a story of winners and losers of different operating models and philosophies. The pandemic has certainly magnified operating strengths and weaknesses,” Sedgwick said. 

“Amid all the noise, there are a lot of success stories. We’re better calibrated than ever to find and fuel the growth of the best-in-class operators, especially those who have proven themselves over the past couple of years,” he added. 

CareTrust also reported its net income for the quarter was $35.9 million to go along with a $43.3 million in net loss.