CareTrust REIT, Inc. announced that it has purchased three continuing care retirement communities (CCRCs) located in Los Angeles, Orange, and San Diego counties. The multi-service senior living campuses include 475 assisted living, skilled nursing, and memory care beds/units. All three facilities will be operated by Bayshire Senior Communities, an existing CareTrust tenant based in Southern California.

Acquisition of the other two CCRCs was completed through a joint venture arrangement entered into between CareTrust and a third-party regional healthcare real estate investor. Pursuant to the arrangement, CareTrust is the managing member of the joint venture entity. CareTrust provided a combined common equity and preferred equity investment amount totaling approximately $28.0 million.

The joint venture landlord has leased these facilities to Bayshire pursuant to a new, triple-net master lease agreement with an initial term of 15 years with two, 5-year extension options. CareTrust's initial contractual yield on its combined preferred and common equity investments in the joint venture is approximately 9.1%. Agreed upon annual increases to base rent and to CareTrust's preferred rate of return increase CareTrust's contractual yield to 9.7% and 10.2% in years 2 and 3 respectively.

Commencing in year 4, contractual base rent increases by a fixed 2% annually. The investments were funded using cash on hand.