CareTrust ups revolver to $600 million, gets $200 million term loan

By Sarah Lizee

Olympia, Wash., Feb. 11 – CareTrust REIT, Inc. expanded the capacity under its unsecured revolving credit facility to $600 million from $400 million and simultaneously entered into a $200 million seven-year non-amortizing unsecured term loan on Friday, according to an 8-K filing with the Securities and Exchange Commission.

The revolver matures Feb. 8, 2023 and includes two six-month extension options. The term loan matures Feb. 8, 2026.

The company may seek to increase the total principal amount of the revolving commitments and/or establish one or more new tranches of term loans in a total amount not to exceed $500 million.

The revolver includes a letter-of-credit subfacility for 10% of the then available revolving commitments and a swingline loan subfacility for 10% of the then available revolving commitments.

The amended unsecured revolver and unsecured term loan have grid-based pricing of Libor plus 110 basis points to 155 bps and Libor plus 150 bps to 220 bps, respectively. The grid is based on the consolidated leverage ratio.

The facility fee ranges from 15 bps to 25 bps.

If CareTrust obtains an investment-grade rating from S&P Global Ratings or Moody’s Investors Service on its senior long-term unsecured debt, the borrower may request that pricing be based on a ratings-based grid. In that case, the revolver would bear interest at Libor plus 77.5 bps to 145 bps, and the term loan would bear interest at Libor plus 140 bps to 235 bps. The commitment fee would be 12.5 bps to 30 bps.

CareTrust is permitted to prepay all or any portion of the loans under the term loan facility prior to maturity subject to a 2% prepayment premium in the first year after issuance and a 1% prepayment premium in the second year after issuance and to reimbursement of any Libor breakage costs of the lenders.

The term loan proceeds were used to pay off CareTrust's existing $100 million unsecured term loan and the outstanding balance on its unsecured revolver of $85 million. The remaining term loan proceeds went to cash on hand, where it is expected to be used for near-term acquisitions. As of Friday, the revolver was undrawn.

KeyBanc Capital Markets, BMO Capital Markets and Capital One, NA are joint lead arrangers and book managers, with KeyBank NA as the administrative agent. BMO and Capital One are co-syndication agents.

Columbia, Md.-based CareTrust is a real estate investment trust primarily engaged in the ownership, acquisition and leasing of health care-related properties.

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