For blog posted data on Health Care REITs, I will be posting data (as it comes in) without much context. This would logical result in a less enlightening reading experience compared to post in other sectors. Remember that I am not compensated for blog posts. Fill the comment section up with requests for context and meaning and you will discourage the posting of future data in this sector. I expect this condition will change over time.
To have the right context - you need to see a lot of individual updates. After you have that context - the conclusion is pretty clear that CTRE sells at a yield that is too dang low, but that is mostly due to very strong dividend coverage. Specifically, the yield on the equity CTRE of (68/1538) 4.42% is relatively out of line with the cash yield on that properties that it owns. But, the Price/FFO numbers provides a bit of comfort with its below sector average number. CTRE is a blend of senior housing (like HCN and VTR) and skilled nursing (like OHI and SBRA). The credit rating is relatively bad. It is still new - lacking a track record.
Some data points:
During 2016 CTRE invested approximately $288.0 million (inclusive of transaction costs) at a blended initial cash yield of 9.0%
During 2016 CTRE garnered multiple credit rating increases, with Moody's raising both its corporate credit rating on CareTrust REIT and its rating on CareTrust REIT's 5.875% Senior Unsecured Notes to B1 (from B2), each with a stable outlook, and Standard & Poor's raising both its corporate credit rating on CareTrust to B+ (from B), with a stable outlook, and its issue rating on CareTrust REIT's 5.875% Senior Unsecured Notes to BB- (from B+).
The FFO projections from NASDAQ (Yahoo Finance is posting earnings data that is not FFO)
|Over the Last 4 Weeks
Number of Revisions
the Yahoo Finance revenue projections:
|Current Qtr.||Next Qtr.||Current Year||Next Year|
|No. of Analysts||5||5||7||5|
|Year Ago Sales||23.63M||25.7M||104.68M||122.22M|
|Norm FFO guidance||1.12||1.09||1.09||1.07||1.06*||0.92||none||0.99||0.97*||0.74||1.24|
|Norm FAD guidance||1.19||1.16||1.16||1.15||1.16*||1.02||none||1.07||1.07*||0.80||1.34|
|Annualization of EBITDA||93.420||89.460||85.600||77.652||55.616||61.624||56.912||55.616||49.072||53.208|
|Norm. FFO/ investments||7.92%||7.81%||7.89%||7.17%||7.35%||4.69%||6.79%||6.69%||5.60%||5.84%|
One should be able to see that analyst projections are well ahead of 2017 company guidance - which is a bad thing. Q4-16 Revenue was right on target.
What I see in the data - A relatively low amount of FFO growth for a company with so much FFO retention. A REIT that sell as if it were high in senior housing when it is a blend of that type and the higher yielding SNFs like OHI and SBRA.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.