CareTrust REIT has entered into a definitive agreement with LNT Care Developments Holdings to acquire 45 newly developed UK care homes for approximately £1.1 billion, establishing a pipeline for a larger senior housing operating portfolio in the country. The transaction uses staggered closings.
CareTrust completed the first closing on October 1, acquiring 24 homes built within the past two years for approximately £576 million, or about $764 million excluding transaction costs.
The initial investment was financed using proceeds from outstanding forward equity agreements and a draw on CareTrust’s revolving credit facility.
The remaining 21 homes are under development and are expected to be acquired for approximately £504 million as construction is completed and regulatory approvals are received on a rolling basis during 2027.
All 45 homes are or will initially be leased to subsidiaries of Crystal Care, LNT’s care home operating portfolio company, through triple-net leases with fixed annual rent escalators and renewal options.
CareTrust expects the properties to transition from the initial lease-up structure into its senior housing operating portfolio, or SHOP, structure between years two and four following completion of each property.
The first SHOP transition is anticipated by the fourth quarter of 2027.
CareTrust expects the transaction to be accretive to normalized funds from operations per share during the lease-up phase, including straight-line rent adjustments.
The company is underwriting an all-in pre-tax yield in the mid- to high-7% range during the first year of the SHOP phase.
LNT was founded by Lawrence Tomlinson, who has developed more than 250 care homes during his career.
The company currently develops homes at a pace approaching 30 per year and operates a vertically integrated model spanning site identification, planning, permitting, construction, regulatory registration and lease-up.
The properties use a standardized design with all-private rooms and 100% en-suite wet rooms.
CareTrust also disclosed approximately $488 million of other investments completed since its second-quarter earnings report.
Those investments include three UK care homes acquired for approximately $34 million and $55 million of preferred equity and debt investments secured by skilled nursing portfolios.
They also follow CareTrust’s previously announced acquisition of 20 skilled nursing facilities in the Southwest representing approximately $380 million of CareTrust’s investment.
Excluding the LNT transaction, the blended stabilized yield on those investments is 8.8%.
CareTrust said the LNT transaction and its other recently completed investments bring its third-quarter and subsequent investment activity to approximately $1.6 billion.
Year-to-date investment activity has reached a record $2.7 billion across its three growth engines.
The company’s near-term actionable investment pipeline stands at approximately $525 million, excluding the remaining 21 LNT care homes under contract.
KEY QUOTES:
“The chance to build a close relationship with LNT—one of the most productive and proven care home developers in the United Kingdom—while doing it in a way that is accretive rather than dilutive as the homes lease up, and with a defined path into a SHOP structure upon stabilization, is what makes this check all the boxes for us,”
“These are brand new, purpose-built, private pay homes serving a market with a genuine shortage of modern care beds. We have structured it so that we are paid to be patient while the homes fill, and when we move to acquire the operating companies we underwrite all-in stabilized yields in the mid- to high-7% range with room to grow as they are positioned for success for decades to come.”
“This also materially improves the age, quality and configuration of our overall U.K. care home portfolio.”
James Callister, Chief Investment Officer of CareTrust
“I designed and built my first care home in 1991, and this business has been close to home for me ever since,”
“CareTrust describes itself as ‘for operators, by operators,’ and that is how we have always run. This transaction was never simply about raising capital. We were keen to carefully choose a strategic partner who could help us deliver on our vision of hundreds of desperately needed new care homes across the United Kingdom, and CareTrust was plainly the best fit for that endeavor. I am delighted to have this one done, and we intend to keep finding ways to work together to meet the growing need in the U.K. for new, safe, well-run homes for residents and their families.”
Lawrence Tomlinson, Founder of LNT
“This relationship combines two of our growth engines into one: U.K. Care Homes and SHOP,”
“LNT is one of one. Their vertical integration, standardization, and obsession with detail has allowed them to open more care homes over the past couple of years than the next two developers combined. They are a special organization singularly positioned to serve the critical need for affordable purpose-built care homes in the U.K. We’re thrilled to complete this initial transaction and, with aligned missions and values, we hope to support the LNT team further as they seek to develop hundreds more homes over the next decade and beyond.”
“The LNT transaction and the other investments we have closed bring CareTrust’s investment total in the third quarter and since to approximately $1.6 billion and its year-to-date investment total to a record $2.7 billion across all three of our growth engines.”
“We could not be more pleased with how 2026 is finishing, and the LNT relationship is a big part of why we are just as excited about 2027. The flywheel keeps accelerating, and the runway in front of us is as long as it’s ever been.”
Dave Sedgwick, Chief Executive Officer of CareTrust
“We could not be more excited about the LNT transaction, the rest of the investment activity closed this quarter and more to come,”
“We have deliberately run below our target leverage, which has provided more than enough capacity to step into a strategic opportunity of this size without straining our capital position, while preserving the flexibility to keep all three of our growth engines firing going forward.”
Derek Bunker, Chief Financial Officer of CareTrust
