- CareTrust REIT announced an $817M acquisition of Care REIT plc, marking its entry into the UK market.
- The acquisition includes 137 care homes with 7.5K operating beds across England, Scotland, and Northern Ireland.
- CareTrust expects the UK’s fragmented care market, driven by an aging population and tight capital availability, to offer strong opportunities.
CareTrust REIT (CTRE) announced plans to acquire UK-based Care REIT plc in a deal valued at $817M, already approved by the boards of both companies.
The historic acquisition marks CareTrust’s strategic move into the UK market, which it has been eyeing for some time, per McKnights Senior Living.
Deal Details
The deal involves a Care REIT market capitalization of $577M and the assumption of about $240M in net debt. The deal comes at a 32.8% premium to Care REIT’s closing share price on March 10 and a 28.1% premium to its 12-month volume-weighted average share price.
Dave Sedgwick, President and CEO of CareTrust, expressed excitement about combining Care REIT’s platform with its own, aiming to expand the company’s mission of growing alongside strong operators in the UK. The deal is expected to close in 2Q25.
Attractive Market Dynamics
Care REIT’s portfolio includes 137 care homes with 7.5K operating beds, leased to 15 operators across the UK.
The homes are under long-term, triple-net leases with a weighted average remaining lease term of 20 years, and rent escalators based on inflation (with a 2% floor and a 4% cap). As of September 30, the portfolio generated annual contractual rents of $66M, yielding an initial return of 8.1% based on CareTrust’s investment.
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CareTrust sees significant growth potential in the UK care home market, which it describes as highly fragmented. The country’s aging population, rising care needs, and a supply-demand imbalance in the care home market are factors that support a favorable investment environment.
With muted new inventory due to high construction and borrowing costs, and limited capital available, CareTrust anticipates solid occupancy rates and operating margins for care home operators.
Strategic Overseas Expansion
In addition to acquiring Care REIT’s portfolio, CareTrust will gain a London-based team of professionals with deep expertise in accounting, investments, and asset management within the UK market.
Sedgwick highlighted the importance of the A-team, noting that healthcare is a highly local business and strong local connections will be a valuable asset. The company plans to leverage these relationships to support growth, advance projects, and expand the investment pipeline.
Looking Ahead
CareTrust’s acquisition of Care REIT marks a bold move into the UK’s evolving care home market, which is expected to benefit from favorable long-term trends.
The US-based REIT plans to enhance its presence in the market by capitalizing on existing operator relationships and continuing to expand via new investments.
This acquisition comes just after another US REIT, Welltower (WELL), made a similar move by acquiring a large portfolio in Canada, a broader trend of US REITs looking beyond domestic borders.
