CareTrust REIT has replaced its existing bank agreement with a new credit package totaling $3.2 billion in revolving commitments and term-loan facilities. The arrangement adds a $700 million term-loan facility and gives the company access to revolving borrowings for refinancing, investments and general corporate needs.
The package is debt capacity, not a statement that CareTrust has borrowed the full amount. Existing revolving borrowings and loans under its prior term facility will carry over, except to the extent the new term-loan proceeds are used to repay them.
Key details
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Facility size and components: The agreement includes a $2.0 billion unsecured revolving credit facility, a new $700 million unsecured term-loan facility and an existing $500 million unsecured term-loan facility.
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Revolver features: Up to $300 million of the revolving commitments can support borrowings in euros, British pounds or Canadian dollars. The revolver also includes letter-of-credit and swingline subfacilities, each sized at 10% of available revolving commitments.
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Maturities: The revolver matures on Feb. 9, 2031, with two six-month extension options. The new term loan matures on Feb. 9, 2032, while the existing term-loan facility matures on May 30, 2030.
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Potential additional capacity: CareTrust may seek to add up to $1 billion in revolving commitments or new term loans, subject to lender commitments and other conditions, including compliance with financial covenants. No lenders have committed to that additional capacity.
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Interest and fees: Borrowing costs vary with CareTrust’s senior unsecured debt ratings and, in some cases, its debt-to-asset ratio. Dollar-denominated revolver loans carry a spread of 0.675% to 1.35% over SOFR, or 0% to 0.35% over a base rate. Term-loan spreads range from 0.75% to 1.55% over SOFR, or 0% to 0.55% over a base rate. The company will also pay an annual fee of 0.125% to 0.30% on revolving commitments. Different benchmark rates apply to loans in alternative currencies.
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Repayment flexibility: The loans generally have no scheduled interim principal payments. CareTrust can repay them early without a prepayment premium, although lenders may be reimbursed for certain costs tied to breaking SOFR-based borrowings. Revolving borrowings must be brought within the available commitments if they exceed them.
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Covenants and guarantees: CareTrust and certain wholly owned subsidiaries guarantee the credit facility. The agreement includes restrictions on matters such as liens, additional debt, asset sales, acquisitions and certain dividend payments. It also requires quarterly compliance with financial tests covering leverage, fixed-charge and interest coverage, tangible net worth, secured debt and unencumbered assets.
Plain-English implications
The agreement establishes long-dated unsecured borrowing capacity and adds a new term-loan tranche, while retaining the existing term-loan facility. CareTrust says it expects to use borrowings to refinance existing debt, fund investments and meet general corporate needs. The new agreement also maintains financial tests and other limits on the company’s borrowing and distributions.