CareTrust REIT, Inc.

Good day, my name is Dexter and I will be your conference operator for today. At this time, I would like to welcome everyone to the Care Trust REIT First Quarter 2022 Earnings Conference Call. I'll ask you to stay on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If at any time during the conference you need to reach an operator, please press R0. I would now like to welcome your speaker for today, Ms. Lauren Beal. You may begin.

Thank you and welcome to CareTrust REIT's first quarter 2022 earnings call. Participants should be aware that this call is being recorded and listeners are advised that any forward-looking statements made on today's call are based on management's current expectations, assumptions, and beliefs about CareTrust's business and the environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financings, and other matters, and may or may not reference other matters affecting the company's business or the businesses of its tenants, including factors that are beyond their control, such as natural disasters, pandemics, such as COVID-19, and governmental actions. The company's statements today and its business generally are subject to risks and uncertainties that could cause actual results to materially differ from those expressed or implied herein. Listeners should not place undue reliance on forward-looking statements and are encouraged to review Care Trust's SEC filings for a more complete discussion of factors that could impact results, as well as any financial or other statistical information required by SEC Regulation G. Except as required by law, Kirtra Street and its affiliates do not undertake to publicly update or revise any forward-looking statements where changes arise as a result of new information, future events, changing circumstances, or for any other reason. During the call, the company will reference non-GAAP metrics such as EBITDA, FFO, and FAD, or FAD, and normalized EBITDA, FFO, and FAD. When viewed together with GAAP results, the company believes these measures can provide a more complete understanding of its business, but cautions that they should not be relied upon to the exclusion of GAAP reports. Yesterday, Care Trust filed its Form 10-Q, an accompanying press release, and its quarterly financial supplement, each of which can be accessed on the investor relations section of Care Trust's website at www.caretrustreit.com. A replay of this call will also be available on the website for a limited period. On the call this morning are Dave Sedgwick, President and Chief Executive Officer, Bill Wagner, Chief Financial Officer, and Mark Lamb, Chief Investment Officer. I'll now turn the call over to Dave Sedgwick, Care Trust REIT's President and CEO. Dave?

Thank you, Lauren, and good morning, everyone. Today I'll provide our first update on the progress of the plan to fortify the portfolio by repositioning 32 assets. I'll also give you a brief update on the fundamentals of the operating environment. and I'll conclude with the work we're doing to position the company for accelerated growth in the future. First, last quarter's call we announced plans to sell, re-tenant, or re-purpose 32 properties that, due to the lingering effects of COVID, are hitting the wall now or are anticipated to not be sustainable long term. Of the 32, we're pleased to announce that we have signed leases with Landmark Recovery to re-purpose three of our assisted living properties into substance addiction recovery centers. Assuming the required regulatory boxes get checked during diligence, redevelopment work should start this summer with rents commencing upon completion of redevelopment. Another 27 assets are in the early stages of the sales process. Interest in the properties appears to be in line with our expectations. We may yet decide to retain and retenant select facilities instead of selling them. The remaining two assets of the 32 have not been formally taken to market yet, and we may end up retaining those if a solid gain on sale would not be expected. As deals firm up, we will provide updates along the way, and we should have much more meaningful updates for the process next quarter. Looking to the operating environment, I'm also pleased to report approximately 95% of rent was collected in the quarter, and for April, we collected 93%, So far, May collections appear to be in line with April. Skilled nursing occupancy held stable from Q4 to Q1, currently at 71.4%, compared to pre-pandemic occupancy of 78%, and the low in January 21 of 67%. For seniors housing occupancy, that ticked up 100 basis points, currently at 77%, compared to pre-pandemic occupancy of 84% and a low watermark of 75% as recent as November of last year. The tight labor market continues to put pressure on occupancy recovery and margins, though our operators currently report the worst appears to be behind them. Finally, while reinforcing the foundation of the platform as job one this year, equally important for us is to position ourselves for accelerated growth for years to come. I'll briefly touch on a few ways we're doing that. First, as previously mentioned, the behavioral health asset class not only provides us with a new tool for finding a higher and better use for our own underperforming assets, but it also opens up a high-demand, undersupplied investment opportunity for growth. We're certainly in the early innings of developing the operator relationships necessary for meaningful growth here, but we are excited about the potential for growth in this property type. Second, we've partnered with one of the leading bridge-to-hud lenders in the skilled nursing space to participate in the growth of both operators we know well and best-in-class operators we'd like to form new relationships with. Lending has always really been a relationship play for us, and since giving this more attention this year, we've been happy to see opportunities to build new relationships and put money to work at our historic range of yields. Lastly, we've made some key personnel changes related to growth. We hired Scott Grossman as our vice president of asset management. The addition of Scott with his deep experience in the space is not only perfect timing for executing on the repositioning work this year, but it also allows us to invest more in the future growth by freeing up key talent from portfolio management duties to dedicate 100% of their time to building the operator and investment pipelines with an emphasis on sourcing off-market deals. 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. 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've proven themselves over the past couple of years. With that, I'll turn it over to Mark.