CareTrust REIT flexed its appeal to institutional investors by raising an upsized US$640m from a follow-on stock sale late Tuesday, providing it firepower for additional acquisitions.
JP Morgan, Bank of America and RBC Capital Markets were joint books on the overnight pricing of 20m shares at US$32.00, the lower half of the US$31.70-$32.70 range marketed overnight and a 3% discount to the US$32.99 last sale price Tuesday.
The banks were able to increase the offering to 20m shares from 15.5m shares, with an additional upsize by 3m shares from the shoe.
Even with the upsize, the offering was multiple times covered, allowing for a concentrated allocation that saw 70% of the deal allocated to 10 institutions and 90% to the top 25, a banker involved in the offering told IFR.
The healthcare property REIT’s shares were trading midday Wednesday at US$33.16.
CareTrust is using the money to fully repay the US$65m drawn on a revolving credit facility. This further reduces leverage from the 2x net debt to Ebitda at June 30 and is well below its 4x-5x target.
CareTrust has been in aggressive acquisition mode.
“Over the last 18 months we have invested more than the prior eight years combined, deploying roughly US$2.7bn of capital into growth opportunities,” said CareTrust CEO Dave Sedgwick on the REIT’s second- quarter earnings call August 6.
CareTrust ended the second quarter with an investment pipeline of US$600m.
Last night’s follow-on offering is in addition to the US$369.9m the REIT raised in 1H25 through a US$750m at-the-market sales program. The US$32.00 offer price is well above the US$29.34 per share average price under the ATM.
The strong institutional support should help solidify views on valuation, underpinning future sales under the ATM, the banker said.