CareTrust REIT, Inc. ($CTRE)

Hello, everyone. Thank you for joining us, and welcome to the CareTrust First Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Lauren Beale, CareTrust's Chief Accounting Officer. Lauren, please go ahead.

Thank you, and welcome to CareTrust REIT's First Quarter 2026 Earnings Call. We will make forward-looking statements today based on management's current expectations, including statements regarding future financial performance, dividends, acquisitions, investments, financing plans, business strategies and growth prospects. These forward-looking statements are subject to risks and uncertainties that could cause actual results to materially differ from our expectations. These risks are discussed in CareTrust REIT's most recent Form 10-Q filing with the SEC. We do not undertake a duty to update or revise these statements, except as required by law. During the call, the company will reference non-GAAP metrics such as EBITDA, FFO and FAD. A reconciliation of these measures to the most comparable GAAP financial measures is available in our earnings press release and Q1 2026 financial supplement that are available on the Investor Relations section of CareTrust'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; James Callister, Chief Investment Officer; and Derek Bunker, Chief Financial Officer. I'll now turn the call over to Dave.

Thank you, Lauren, and good morning, everybody. Thanks for joining us. The first quarter was a strong start to the year and a continuation of the momentum we've been generating over the past several years. We closed approximately $245 million of investments in the first quarter and the pace only accelerated from there. Since the start of April, we have closed a dozen separate transactions for approximately $865 million. Just last Friday, on May 1, we closed 3 of those 12 deals that we have not yet had a chance to announce, including our second SHOP investment. James will provide color on some of the deals we've closed year-to-date and on the reloaded pipeline of $360 million. Our investments team continues to perform at a phenomenal level. What else can you say? I'll just reinforce that SHOP is an important part of our growth story, and you should expect to see us continue to build that part of the portfolio with the same discipline and operator centered approach we're known for. Deal flow continues to be active and interesting across SHOP, skilled nursing and U.K. care homes. A quick acknowledgment to some of our unsung heroes here. Our accounting team proves every day to be the best pound-for-pound accounting team around. They have shoulder an enormous load onboarding a massive number of new properties and operators across the U.S. and U.K. while continuing to support the next wave of growth. Our asset management group continues to do great work curating a strong portfolio and derisking it as we go. And every other function across the company, legal, tax, finance, operations, data analytics, shows up in a way that allows us to keep executing at a very high level and transforms a growing portfolio into a compounding portfolio. The results of the hard work and sacrifice of an extraordinary team produced year-over-year FFO per share growth of 14%, a 16.4% increase to the dividend an upgrade to investment grade by Moody's and a raise to our FFO per share guidance for the year that at the midpoint would be 14.8% higher than 2025. I think you can tell how I feel about my team. Let me talk for a second about our operators. Many of you know, I'm a recovery nursing home administrator. Several of us here have many years of experience inside the buildings. We have always hoped that our operating history and DNA would differentiate us in how, where and with whom we build this portfolio. Our tenants continue to deliver for their employees, residents, patients and communities. We've recently begun a meaningful study of publicly reported CMS outcomes in our skilled nursing portfolio compared to the rest of the sector. The preliminary findings show that skilled nursing operators who lease from CareTrust deliver care that is measurably better than the sector averages. With respect to the CareTrust facilities included in our analysis, we limited it to those facilities that have been under lease for at least 4 years to give adequate time for Star Ratings to adjust to the new licensed operators. We are specifically pleased to observe in our initial findings that compared to all for-profit operators, our tenants achieve higher overall CMS star ratings and higher health and section star rates. And compared to all operators for-profit and nonprofit, our tenants achieve higher quality measure star ratings, lower rehospitalization rates and higher successful discharge rates. Now let's take a look at how that commitment to quality care translates to the financial health of our operators. Our overall EBITDA rent coverage in our stabilized triple net portfolio remains very strong at 2.25x and EBITDARM coverage at 2.79x with broad-based improvements throughout the portfolio. We collected 100% of contractual rent and interest in the first quarter which speaks to the caliber of our tenants and borrowers. Putting it all together, we are in another extraordinary and busy period full of external growth and internal development as we continue to refine our processes that enable a bigger and better care trust portfolio. As we continue to position ourselves with urgency to keep the flywheel going, we see steady deal flow across our three growth engines, and the team is firing on all cylinders. We could not be more excited about where we sit today or about what is still in front of us. With that, I'll hand it off to James for a report on investment activity and the acquisition landscape. James?

Thanks, Dave. Good morning, everyone. During the first quarter, we completed approximately $245 million of investments at a blended stabilized yield of 8.8%. Q1 activity was anchored by a sale leaseback of a 6 property skilled nursing portfolio in the Mid-Atlantic leased to one of our quality operators at a yield of approximately 9%. Q1 also included a meaningful tranche of U.K. care home investments and a small relationship-driven loan secured by a skilled nurse facility operated by one of our existing operators. Since the start of April, we have closed an additional 12 transactions for approximately $865 million at a blended stabilized yield of approximately 8.9%. Activity was weighted towards U.S. skilled nursing with a meaningful portion of that volume from an opportunistic transaction with a new operating relationship. The deal came together on a very compressed time line and the fact we got it closed is a real testament to the team's solutions-oriented approach and the deep relationships we've cultivated over many years. Beyond that anchor transaction, the period included: one, additional skilled nursing and senior housing triple net investments with quality tenants across multiple geographies; two, a number of new and incremental loans either to existing operators or borrowers we've admired and desire to work with; three, our second SHOP investment to bring our total portfolio to four communities; and four, lastly, additional U.K. care home activity. We're particularly encouraged by the pace and size of our U.K. care home pipeline. Since the beginning of the year, we've continued to build momentum and have closed on investments in 10 care homes across the pond to add to our consistently growing portfolio. Putting Q1 and post-quarter activity together, year-to-date we have closed approximately $1.1 billion of investments at a blended stabilized yield of approximately 8.9%. Of that total, approximately $705 million has been U.S. skilled nursing or senior housing triple net, roughly $225 million has been U.S. loans primarily secured by skilled nursing facilities and either closed concurrently with asset acquisitions or in anticipation of such, approximately $160 million has been U.K. care homes and the remainder is SHOP. Our investment pipeline today sits at approximately $360 million. The composition is heavily U.K. care homes, which represents over half of the quoted pipe with another approximately 20% comprised of SHOP opportunities and the remainder consisting of triple net, both skilled nursing and seniors housing and a small amount of loan activity. As always, please remember that when we quote our pipeline, we only include deals that we have a reasonable level of confidence we can lock up and close within the next 12 months, and it does not always include large portfolios that we are reviewing. A quick note on the current transaction environment. The skilled nursing market remains active, supported by both brokered and proprietary opportunities. Current skilled nursing deal flow is more heavily weighted towards off-market opportunities. And thanks to our deep operator relationships and the strength of our existing portfolio, we are well positioned to continue pursuing skilled nursing transactions aggressively, but with discipline. In the U.K., our pipeline is ahead of schedule and growing. We're very pleased with how our London-based team continues to establish the CareTrust culture of by operators, for operators that has expanded our ability to do more deals meet new operators and source opportunities through broker marketed processes and direct relationships. We see meaningful upside there over time. In SHOP, while the market remains highly competitive and cap rates keep compressing we are an active player and continue to see significant opportunity to grow that portfolio over the next several years with the right operators and the right assets. Our disciplined underwriting framework combined with a strong focus on long-term operator relationships and a commitment to creative, collaborative transaction structuring will continue to drive sustainable growth across the skilled nursing, senior housing and U.K. care home sectors. And with that, I'll turn it over to Derek to review our quarterly financial results.

Thanks, James. For the quarter, normalized FFO increased 38% over the prior year quarter to $107.4 million and normalized FAD increased 33% to $107.6 million. On a per share basis, normalized FFO was $0.48, an increase of 14% of the prior year quarter and normalized FAD was also $0.48, an increase of 12% over the same period. Turning to the balance sheet and capital markets activity. During the first quarter, we settled $129.5 million of gross proceeds under our ATM forward program. Subsequent to quarter end, we settled the remaining outstanding forwards totaling $363.6 million of forward equity contracts outstanding at March 31, bringing our year-to-date total settled forwards to roughly $493 million of gross proceeds in support of our recent investment activity. As of May 7, we had $350 million drawn on our $1.2 billion unsecured revolving credit facility and approximately $70 million in cash on hand. We continue to have no scheduled debt maturities prior to 2028. As Dave mentioned, subsequent to quarter end, we also received an investment-grade rating upgrade from Moody's. This recognition of our balance sheet strength and disciplined approach to capital structure further expands our access to debt capital and supports our ability to fund continued growth on attractive terms. In yesterday's press release, we raised our 2026 full year guidance. Projecting full year normalized FFO per share of $2 to $2.04 and normalized FAD per share of $1.98 to $2.02. The midpoints of our updated normalized FFO and normalized FAD guidance represent increases of 14.8% and 13.6%, respectively, over 2025 results and increases of 4.9% and 3.9%, respectively, compared to the initial 2026 guidance ranges we issued in February. The updated guidance is based on a weighted average diluted share count of 234 million shares and includes the following key assumptions: first, no new investments, loans or dispositions beyond those made year-to-date; second, no new debt or equity issuances beyond those made year-to-date; third, 2.5% inflation-based rent escalators under our long-term triple net leases; fourth, $145 million of loans to be fully repaid throughout the remainder of the year; and fifth, no material change in the sterling to dollar spot exchange rate. Additional guidance measures are detailed in our press release yesterday. Lastly, our liquidity continues to remain strong. As I mentioned, we have approximately $70 million of cash on hand, $850 million of availability under our revolving credit facility and roughly $879 million of capacity on our ATM program. Net debt to annualized normalized run rate EBITDA was 0.6x at quarter end, well below our long-term target leverage range of 4 to 5x and net debt to enterprise value was approximately 3.6%, aided by an investment-grade credit profile, we have ample dry powder and multiple levers across our capital toolkit to continue funding our recent pace of investment activity. And with that, I'll turn it back to Dave.

Thanks, Derek. Well, we hope that the report has been helpful. I appreciate all the interest and support. We'd be happy to take your questions at this time.

[Operator Instructions] Your first question comes from Farrell Granath with Bank of America.

I want to dig in a little bit deeper on your comments about what portfolio considerations that is not currently contemplated in guidance. can you give a little details on maybe some larger portfolios you were evaluating year-to-date that potentially you passed on and maybe why that would have happened?

Well, when we look at -- when we put our pipe, as you know, we have the custom of not including larger portfolios that we're pursuing because even though we may have a strong interest in them, sometimes they're fishnet expeditions by the sellers. They may not be real. It's a lower probability of landing those. And so a prime example is what just happened with this large deal in California, that was something that actually materialize very quickly. that couldn't have been included in our previously quid pipe. So that's just our practice to not get too ahead of things. Sometimes the deals either we decide to pass on them or they decide to go in a different direction.

Okay. And also, I will tell you that in some of the previous earnings calls of peers, we've heard added commentary of increasing competition also in the SNF market that has been difficult to transact less product is coming to the market and also this larger increase in private capital. I'm curious if you can add a little bit more color on the skilled nursing side, how you're able to source so many deals and maybe where you're sourcing those.

Sure, Farrell, this is James. I mean I would say that this market is at this point, a predominantly off-market, if you will. And I think that it has for a little while, been predominantly relationship driven. It's a little bit more unpredictable because you're not getting a constant flow of broker deals like you are maybe shop. But I think that it has been like that for a while. And I think that the track record we have shows that relationships are just super important. And I don't think you're going to typically find bread and butter sale leaseback at a 9.5% with no creativity needed like you may have 5 years ago, but that's been the case for a while now. So I think it just takes increased creativity. It takes relationship-based deals and you really have to rely on the off-market relationships to the SNF market today. And I think our track record shows that we've been doing that successfully.

Your next question comes from Austin Wurschmidt with KeyBanc Capital Markets.

Dave or Derek, I guess, with the dual investment-grade rating and just kind of continued improvement in your long-term cost of capital, I mean, how do you think of the benefit of achieving this goal? And then utilizing that for maybe some strategic opportunities or even the flexibility it gives for your ability to source even some of the larger portfolios from time to time.

Austin, it's Derek. I think you kind of hit it in your question there. We've been fortunate to have strong access and support from capital markets to really underwrite and pursue a lot of our investment activity. And we feel like with just the added benefit of the upgrade from Moody's recently that it only gives us more optionality and expands our access, I think, deeper if we do decide to do an inaugural issuance in the high-grade market, and that's certainly on our radar there, especially as we grow and we start to pad out the balance sheet a little bit. So we're excited about it. We're thrilled. We really like what we see in the pipeline and beyond just for the next several years. And so having that option, we're really excited about it.

And maybe, Dave or James, within SHOP, you've talked a lot about just -- and others for that matter, the competition of the investment landscape I mean, what's been your hit rate on deals that you've been on? And I'm just curious if off-market opportunities as you continue to develop even more relationships similar to what you referenced and skilled as being sort of the best way to grow that portfolio? What's kind of the current process and strategy to continue to build that out within just that segment within the overall portfolio.

Yes. I mean I think Austin, this is James, you make a really good point, which is that, look, if in SHOP right now, given the amount of competition, if we do get an off-market deal or some other in our unique relationship on a deal that comes through, we're going to prioritize that you're going to look at that works and make a more heavy run at it. So I think that's definitely the case given the amount of competition right now. And I mean as far as hit rate, I mean, it's a small percentage of deals that we see come across the desk that we decided to be on. It's a smaller percentage that we decide to really push and start to stretch a little bit of the deals that we really push and stretch I don't know what the exact hit rate is. I mean it's a competitive market right now. I think that given the cost of capital we have and the access to capital, if we really decide we want a deal that it fits for us and we're going to stretch. It's a pretty good chance we're going to be in the last 1 or 2 and hopefully get it. But overall, it's a pretty low hit rate just given the number of deals that are coming across right now. But much of that low hit rate is based on the fact that we don't elect to pursue most of what comes across the desk.

And then just lastly, how much would you say cap rates have compressed since you really started to evaluate transactions.

In SHOP if we're talking about great compression. I mean, it's hard to put an exact nose on it. There's a range in SHOP often as you know, between where our primary market, if you're a Class A or where you fit in range from the best building or two in a primary market to the best few buildings in a secondary or tertiary. I would say right now, it feels like Class A in the primary market is going to have a 5 handle on it, and you're going to go up the range from there. So I would say in the last -- it's hard to say in there, but I would say in the last months, cap probably compressed 50 bps or more.

Your next question comes from Juan Sanabria with BMO Capital Markets.

Just hoping you could talk a little bit about the loan book its grown as a preponderance of the transactions that you did in the first quarter when companies but including the financing receivables. So just curious on how big you're comfortable with that getting? And any sort of color you can give on some of the loans you did, any options for the operators to buy back the real estate we should be thinking about? Or just generally more color on those investments.

Well, I'll start with that, Juan, this is Dave. I think our strategy with respect to lending was really established a few years ago and has been a key determent for the explosive growth that we've had. And the key feature of that strategy is that we'll only do loans really if it includes real estate acquisitions, or we're confident that it will lead to real estate acquisitions. And the activity that you've seen recently fits -- checks those boxes. The real estate that we've acquired came with some loans that were necessary to get the deals done. And even on the financing and receivables side, it's a little bit misleading because it's more of an accounting rule that causes what we consider a sale leaseback to be accounted for as a financing receivable because of the purchase options. But because those purchase options are so far out 9, 10 years. We view that much more as a sale leaseback. But technically, it will look like the loan book has grown more than it really will feel like it for the next 10 years.

Great. And then -- just curious on seniors housing on the SHOP side. How are you thinking about what markets you're looking to target? You've kind of mentioned cap rates in the primary markets with the 5 handle and/or the type of assets, whether they're core or core plus value kind of where do you think there is the best opportunity for the company.

And I think that we would -- this is James, we're still pretty agnostic in the market. I mean, we want primary, secondary, some tertiary, but we're really going to look at it on a deal-by-deal basis. So we're going to pursue it opportunistically. We view that we want to underwrite to an IRR of low double digits, and we see a lot of paths to get there and every deal is going to get the same path to get there. So we don't have one box that has to fit. We're going to look at each deal, we're going to be opportunistic, and we're going to say, what's this deal's path to a low double-digit IRR. Do we have confidence in that path? And if we do, we're going to make a run at it. If we don't, we're going to pass. So that path is really different if you're in a primary market and if you're in secondary tertiary, I think typically, we want to be in one of the 1 or 2, maybe 3 best facilities in a market. We want an operator that is a regional sharpshooter with experience in that area that has reporting capabilities to help us on the SHOP side but has a proven track record in that market of success, and that's kind of the parameters around it will pursue deals in SHOP right now.

Your next question comes from Michael Carroll with RBC Capital Markets.

I kind of wanted to talk a little bit more about the valuations just across portfolio? I know historic the shock cap rates have kind of come in. What about like the skilled nursing facility in the U.K. care homes? I mean, have those markets been any more competitive over the past few quarters? I mean how are you thinking about the competitive landscape in those property types?

Yes. I mean skilled -- I still feel like it's really changed that much in the past year. You've had a lot of family office. You have a lot of fierce competition. There's just fewer buyers in the U.S. SNF side, but it's the same groups. We see really on every deal. So there's still a lot of competition, Mike, but it's the same players, if you will. So I haven't seen cap rates change much, maybe a little bit. We've had to get bigger deals. We're going to go below a 9% yield on the lease to get a deal if it's big enough and the right operator. In the U.K., can be a little bit of increased competition, but we're still seeing for the product we're looking at yields are still going to be in the mid-8s for us. So that's pretty typical. It's more like a senior selling asset over there. So that's pretty difficult for -- if you were to do seniors housing triple net deals here. So we like that kind of yield and basis. So it's maybe a little bit uptick in competition in the U.K., but nothing comparable to the uptick in SHOP competition you see here.

And then can you provide us some details on the recent SHOP deal? Is that with a relationship operator that you could grow with? I mean, was it in a primary, secondary market? I mean, how should we think about that specific transaction?

Yes. In -- Arizona was done with the relationship operator. We known for a long time. This is the first deal with them, but we've known them for a very long time, sought to do deals with them for a long time. They're the current operator in the billing. We had a great relationship with the seller. We've been buying buildings from them for the last few years and hope to continue to buy buildings from them in the future. It's about 110 units of assisted living. They're going in estimated year 1 yield is going to be in the 8. And we like the market. We like this operator. We'd like to grow with them and think that we will -- and we like the path to get us to that low double-digit IRR. It's a pretty stable asset. So it's not in lease-up or other turnaround situation. It's really just making some tweaks to optimize the performance a bit to get us to that low double-digit IRR.

Okay. Great. And then lastly, Derek, can you talk a little bit about, I guess, CareTrust's desire to enter the debt markets? And should we think about another bond being pound-denominated, just kind of naturally hedged some of your U.K. exposure? Is that tenor process? Or should we think about that as U.S. dollar-denominated debt?

Yes. Thanks, Mike. I think if we do something this year, and we're exploring that option pretty deeply, heavily you'll see it denominated in USD. We're conscious and aware of our exposure to the pound sterling and we really like our current program and is doing very well and paired with the pipeline, which has been growing very consistently and I think, exceeding our expectations a bit to the team there, where we feel like we're sort of naturally hedged a little bit in terms of buying pounds and being short dollars. I think given the pricing differential there, we'll continue to put things on our balance sheet here and keep it denominated in USD as we explore it.

Your next question comes from Michael Goldsmith with UBS.

This is [ Justin ] on for Michael Goldsmith. I noticed that occupancy in your skilled nursing portfolio was up in 4Q '25. Is that primarily due to recently acquired properties? And maybe can you talk about how you feel occupancy will trend this year if pre-COVID SNP occupancy was 80% roughly, does the demographic tailwind push that number up significantly over the coming years?

Yes. So skilled nursing has been kind of on a steady, modest in climb really since it bottomed out in '21. It's difficult to say one quarter versus the other, what exactly happened across the portfolio of our size. But the direction of travel, we believe, will continue to be what it has been. But we -- the difference being, I think, in the coming years, it's going to start ramping up significantly. The demographics are inevitable. And of course, that's what has been kind of the basis for the SHOP and the skilled nursing excitement and investment by institutional investors. So yes, I think while we're in the low 80s as an industry and around 80% in our portfolio, 5 to 7 years from now, I think it's going to be dramatically different.

Great. And then last one for me. Can you walk through the increase in the guidance for G&A, the changes in interest income and interest expense as well?

Yes. Thanks, Justin. The increase in G&A is almost entirely due to just hitting key KPIs for STI given our performance and kind of guide for FFO and investment spend to date. So we kind of started with a nice accrual there. We're just sort of catching up. We're also continuing to build out the team a little bit just to support overall growth, not just shop but just generally across the organization, really just sort of rounding out the team at the moment, coming off a couple of years of growth there. Interest income and expense is really just moving around in part because of a strong downward revolver this quarter to date to fund the acquisitions and not anticipating or not incorporating the pipeline or future acquisitions into guidance. We're just sort of taking a snapshot there and running out the interest income and interest expense.

Your next question comes from Rich Anderson with Cantor Fitzgerald.

So my first question is, are you finding that building and buying -- building out your SHOP platform is proving to be more challenging than perhaps you thought going into it. I recall back in Dallas [ NAREIT ], you've made your first SHOP deal and everyone is like, okay, it comes CareTrust, but it's been a little bit slow. And perhaps to your credit, you're not growing for the sake of growth. But do you find yourself a little bit surprised by how tough it is to move the needle on in building the SHOP platform while some of your peers in the REIT space are certainly pacing themselves at a faster clip than you at this point? Just curious your thoughts there.

Yes. On some level, it's been a little bit surprising, not so much that it's been competitive because we know and knew as we were entering in that it's a very competitive seen. I think one of the surprises has just been to see how aggressive some of our competitors' underwriting has been. Even for the deals that, like James talked about, that we really like, it'll be stretched for, we sometimes get beat by folks that don't nearly have the cost of capital that we do. And I think it may speak a little bit rich to us really being agnostic across three growth engines. And the reality is we haven't in essence, painted ourselves in a corner with respect to having to do SHOP or feeling compelled to put money to work there. So I think that really is our advantage because we have the freedom to maintain the discipline that we've built the CareTrust portfolio on. And so yes, I think we're pleased with what we've done so far. I think we'll continue to grow it. And over time, it will become meaningful. And I think our confidence in the deals that we do get is very high.

Okay. Great. Second, when you talk about larger portfolio deals not included in the $360 million pipeline, are there any larger SHOP deals in that portfolio of potential deals?

No, I don't think so. I think what we're -- the chunkier deals right now that we're evaluating our in U.K. and U.S. SNF.

Okay. And then quickly for me. OHI has talked about applying RIDEA to their U.K. business. Is that at all on the table for you guys at this point? Or are you too new there at this juncture?

Yes. I think there will be a time when that opportunity presents itself for us. So we should be ready to do that.

Your next question comes from Michael Stroyeck with Green Street.

Now that there's been some time since the original Care REIT acquisition, how has that portfolio performing relative to expectations? And where does EBITDA coverage on that initial deal sit today?

Well, it's an appropriate question for today because today marks the 1-year anniversary of us closing that deal. So thank you for that. I would say, in most cases, it is ahead of schedule. I'd say that importantly, the team that we inherited there. We're very pleased with the quality of that team and their openness and acceptance and adoption of us. And becoming truly a CareTrust trust arm in the U.K. And that's important because all the success that we have throughout the organization is really based on the culture and the people that we have in the company. And that's what's produced the results. I thought if we could do in 2026, a couple of hundred million dollars of new investments in the U.K. that would be great. Remember, when we acquired Care REIT, their pipeline was basically starting from a standing start because they had a real restriction to access to capital before we acquired them. And so to see the amount of acquisitions that we've done and the pipeline continue to build, as it is really good. With respect to lease coverage, continues to be phenomenally high, particularly when you think about what these assets are, these are really senior housing assets that in the United States, if you have a triple net business back when we started 10, 11 years ago when triple net work was still getting done, those lease coverages for senior housing would be about 1.1x or somewhere around there. And we're much higher than that. I don't have it actually right in front of me, but it's closer to 1.75, 1.8x north of 2x on an EBITDARM basis. So to have that type of security on senior housing properties is a really strong foundation from which to grow.

Understood. And then maybe going back to the debt discussion. With that investment grade rating for Moody's, what sort of rate do you think you could issue at today?

Yes. I mean thank you. I'd like to signal to all the investors exactly what it would be and give you real hope. But no, we're probably looking at if we're doing like a 10-year, probably looking at 130, 140 basis point spread there.

Your next question comes from Wes Golladay with Baird.

I want to go back to that comment about the better CMS outcomes. And I imagine that's driven partly by the background helps you work with the operators there's also probably a component of you know who a good operator is out the gate. And so how transferable is that skill set to the U.K. and to U.S. SHOP?

The skill, I think, of identifying, vetting and selecting quality operators is definitely transferable although I'm not sure that, that skill set needs to be transferred to the team there because they evidently already have that skill set as evidenced by the very strong lease coverage and the quality operators that we were able to inherit. We're really pleased, by and large, with the operators that they selected there before we got there. And we feel like we're definitely in sync as we evaluate new operators for the U.K.

Your next question comes from Vikram Malhotra with Mizuho.

This is Jody on behalf of Vikram. So the new operator you have, the sale leaseback transaction, is there an opportunity to grow that relationship by the Genesis assets? And the second question I had is, what's your view on sustained double-digit FAD growth here on.

I'll take the first part of that, Jody. The Genesis bankruptcy doesn't have much of any real estate in it really. So I don't know if it's probably yet to be determined if we grow with that operator at all based on those assets. I mean, there's certainly nothing in discussion with the current time. So I think we'll definitely look to grow with them in other asset bases and other deals that we bring them or they bring us. We really like them. So we look forward to growing with them moving forward. But could you repeat the second half of your question? You cut out a little.

Yes. Sorry about that. I was just wondering, what's your view on the sustained double-digit FAD growth here on.

I'll take that one, it's Derek. Look, I think we're really, really pleased and excited about both the progress we've made on investments in our integration as well as the outlook. And I think that as Dave mentioned in the press release and I think in his prepared remarks, we don't plan on slowing down. We're still extremely bullish about all three of our growth segments. And I think as we -- it's really just up to us to execute on that.

There are no further questions at this time. I will now turn the call back to Dave Sedgwick, CEO, for closing remarks.

Well, I just really appreciate everybody's time and questions and interest. Appreciate our Board, our shareholders and especially our team here and the operators who make it all happen. So I really appreciate it all. And if you have further questions, you know where to find us. Have a great weekend.

This concludes today's call. Thank you for attending. You may now disconnect.