Fitch Ratings has affirmed the ratings of
The Rating Outlook is Stable.
The affirmation and Stable Outlook reflect Fitch's view that CTRE's operations continue to recover from coronavirus pandemic on skilled nursing facilities (SNFs) and senior housing (SH), with continued long-term demographic tailwinds. Positively, the company has very low leverage below its positive sensitivities, strong financial flexibility and liquidity, very strong contingent liquidity, and strong portfolio-level lease coverage.
Fitch believes that should CTRE maintain leverage below 4.0x, particularly if the company's leverage target were revised below 4.0x, its credit profile would be more consistent with a higher rating. This would be true despite relatively high tenant concentration and a relatively weaker access to unsecured debt markets compared to other investment-grade REITs.
Key Rating Drivers
Strong Leverage and Financial Flexibility: CTRE's leverage is extremely low at roughly 0.7x as of
The company delevered meaningfully in 2023 after raising equity through its ATM program, and given current cost of debt vs. equity capital for the company, additional equity issuances are likely and would keep leverage well below this long-term target. CTRE's credit profile further benefits from the limited near-term maturities (as described in the liquidity section) and fully unencumbered portfolio.
Tenant Concentration Balanced by Healthy Portfolio Lease Coverage: CTRE's top five tenants represent 68% of annualized base rent (ABR) as of
Mixed Operator Performance in
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