CareTrust REIT, Inc.

Good morning. My name is Devin, and I will be your conference operator today. At this time, I would like to welcome everyone to Care Trust REIA announced its fourth quarter and full year 2022 operating results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question at any time, press the pound key. Thank you for your patience. I now turn the call over to Senior Vice President Lauren Beal. You may begin the conference.

Thank you, and welcome to CareTrust Reef's fourth 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 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 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. Acceptance required by law, care trust, REIT, 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, SFO, and FAD, or FAD, and normalized EBITDA, SFO, 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-K, 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 James Collister, Chief Investment Officer. I will now turn the call over to Dave Sedgwick, Chairperson, President, and CEO. Dave?

Thank you, Lauren, and good morning, everyone. Many of the themes from last quarter's call are still applicable today. Starting with the macro dynamics at play, the Fed's response to inflation has had a significant impact on the credit market, as intended. Even with our sector-leading leverage, the rapidly risen rates undeniably eat into earnings and slow what has also been a sector-leading FFO per share growth rate over the past five years. The good news is that even with the elevated cost of capital, we can still make accretive investments and intend to do so. And positively, as we mentioned last quarter, the flip side of a tighter credit market continues to be a tipping of the scales in our direction. for brokers and sellers who are looking for certainty to close. Our operators are also poised to find some relief to the staffing challenges if and when a recession begins to drive people back to work where jobs are secure here in healthcare. Rent in the fourth quarter came in at 95.5% inclusive of about 750,000 of deposits applied. Today, I'm pleased to report that of the original 32 assets we identified as candidates to sell, reposition, or restructure, we've made significant progress, with only a handful of smaller assets remaining on the market. We provide a detailed update in our supplemental, but I will emphasize a few key points here. Ultimately, after running an exhaustive process, we sold 13 properties and decided to retain 14, leaving five facilities on the market. The 13 sold for $68.8 million. Those properties paid essentially no rent in 2022. For the 14 properties retained, in 2022, we collected about $5.2 million of $8.6 million of contractual rent. For 2023, we estimate that eight of these 14 will produce cash rent of about $3.5 million. We hope to give more clarity on the timing of rent commencement for the remaining six next quarter. That leaves just five smaller seniors housing facilities from the original 32 that as we sit here today are still on the market. Two of those are under contract to sell. One is under LOI, leaving two being actively marketed. Of these five assets on the market, only one paid rent last year for a total of $377,000. In terms of portfolio strength, you'll see a portfolio with the top ten tenants who represent 89% of contractual rent with property level EBITDAR lease coverage of 2.01 times excluding HHS funds. We have confidence in the few operators in the top ten that on the surface appear vulnerable and believe it's just a matter of time until their results reflect the hard work they've been putting in to turn certain facilities. Last year, you may recall us repeatedly talking on this call about elevated risk associated with one Midwest skilled nursing operator outside of our top 10 who has had negative lease coverage for quite some time. They account for 2.8% of rent as of 12-31 annualized, In 2022, due to partial payments, we applied and exhausted their 1.2 million security deposit, and no rent payment has been made for January or February yet. A week ago, they informed us of a change in CEO and the need to work together on a plan that works for both of us. We've just started active discussions with them about the best path forward, and we expect to have a concrete plan to share with you next quarter. Like I highlighted before, without this operator, our EBITDA lease coverage outside our top 10 goes from 1.08 times to 1.84 times, excluding HHS funds. Considering the toll that COVID has taken on our sector, the way the vast majority of our operators have managed through these past few years is gratifying on many levels, and we feel proud to affiliate with some of the best operators in the country, both large and small. The strength of our company enables us to turn more attention to external growth this year. So as we begin 2023, our strengths continue to be our balance sheet, our portfolio, and our experience team. With that, I'll turn it over to James to update you on our investment outlook. Thanks, Dave, and good morning, everyone.