Hello, and welcome to the CareTrust REIT offer for Care REIT plc conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session, and if you would like to ask a question during this time, please press star one on your telephone keypad. I would now like to turn the conference over to James Callister, Chief Investment Officer. You may begin. Thank you, and welcome to CareTrust REIT's investor call. We will make forward-looking statements today based on management's current expectations, including statements regarding our announced acquisition of Care REIT plc, industry and demographic conditions, the care home investment and financing environment, Care REIT future growth prospects, and the benefits of the acquisition. 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 the press release issued today by CareTrust, as well as in CareTrust REIT's most recent Form 10-K and 10-Q filings 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 FFO, FAD, and net debt to EBITDA. A reconciliation of FFO and FAD to the most comparable GAAP financial measures is available in our Q4 2024 financial supplement available on the investor relations section of CareTrust's website at www.caretrustreit.com. We have not provided reconciliations for certain other forward-looking non-GAAP measures we may disclose today, as the timing and amount of adjustments to those measures is not available without unreasonable efforts. Today, we will refer to an investor presentation about the acquisition, which is also available on the investor section of CareTrust's website. 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; Bill Wagner, Chief Financial Officer; and myself, James Callister, Chief Investment Officer. I'll now turn the call over to Dave Sedgwick, CareTrust REIT's President and CEO. Dave? Thank you, James, and good morning, everyone, and thank you for joining us. We have been studying the U.K. care home market and believe we have found in Care REIT an excellent entry point. We share more than just a very similar name. To quote Care REIT's Chairman of the Board, Simon Laffin, he said, "CareTrust's core values of operating expertise, partnership with elite operators, and delivering growth provide a strong fit with ours." We couldn't agree more. Let's jump into the transaction overview. The boards of CareTrust REIT and Care REIT have reached an agreement on the terms of a recommended cash acquisition of Care REIT, which is a U.K.-listed REIT with 137 care homes across England, Scotland, and Northern Ireland. The transaction now will be subject to Care REIT shareholder approval. Our offer price of $1.39 or GBP 1.08 per Care REIT share paid in cash represents an equity value of $577 million or an enterprise value of approximately $817 million when combined with $240 million of net debt. It also produces what could be an estimated accretion in year one of 6%-3% on an FFO and normalized FAD basis, respectively. I'll go into a little bit more detail about the accretion scenarios in just a minute. The deal will happen after a vote by the Care REIT shareholders, and we expect to close in the second quarter of 2025. Let me give you a little bit of a high-profile look at Care REIT. We've got in this portfolio 137 homes, approximately 7,500 operating beds, 15 operators, 89% occupancy, and approximately $66 million of contracted rent, with 2.2x EBITDA coverage. I'll show you in just a minute the pro forma impact to our portfolio's operator geography and asset class diversification. Let me talk about a little bit the rationale and the key benefits of this transaction for us. There's an attractive underlying U.K. care home market that I said that we've been studying for quite some time. There are some very similar structural tailwinds in the U.K. that we have deep experience with here in the United States. In this platform, we find a very strong track record of growth and potential for future development through both deployment into the existing portfolio as well as future acquisitions with existing operators and new operators. Also, Care REIT provides a high-quality portfolio of triple-net leases featuring long remaining lease terms and inflation-based escalators. It has robust operational metrics, including outstanding rent coverage and strong occupancy, and an enhanced portfolio diversification of asset class, geography, and operators in itself. What that does for us also, I'll illustrate for you in just a minute. Lastly, of course, the deal will be accretive in year one. Let me just drill down on each of those points very briefly. First, we've studied the U.K. market and, like I said, see very similar favorable sector tailwinds for investment. We see here the expected growth in demand from the aging population in the U.K., coupled with an undersupply of beds. On this slide, it demonstrates how the U.K. care home market, like both the skilled nursing and seniors housing segments in the United States, is largely fragmented with a high number of small to mid-size operators. Here we just take a look at really the investable market. We see plenty of opportunities for future growth. The future growth for CareTrust could be meaningful for us in the U.K., providing us another growth engine apart from the U.S. skilled nursing and seniors housing engines that we've had so much success with. The platform itself has been very successful, and we're excited to combine not only the Care REIT portfolio but also their team with its local London office and deep experience and relationships. We intend to combine together to invest in the existing facilities and expand with existing operators, and also look to nurture new relationships for external growth as well. Here we give you, since 2017, a look at how this platform has grown through both acquisition and investment in an expansion of their existing properties. Here you see just the makeup of these leases. It's very, very similar to the CareTrust REIT model. They have all triple-net leases, and almost all of them have a floor of either 1%-2% and a cap of either 4%-5% and an average remaining lease term of approximately 20 years. We also really like, of course, the EBITDA coverage of 2.2x, especially when you consider the nature of these facilities, which are essentially a hybrid of seniors housing and skilled nursing, though in our view, they track more closely with the assisted living and memory care segment here in the United States. When looking at the EBITDA coverage from that view, there is a lot to like. Now, let me just show you and illustrate what this does for CareTrust in terms of diversification. Care REIT also provides meaningful diversification on several fronts. Here you can see the pro forma improvement to both our operator and geographic concentration with the addition of Care REIT. Here, the diversification story is maybe even more compelling and pronounced for us, as our pro forma concentration in U.S. skilled nursing facilities properties goes from 77%- 49%. On a rental income basis, U.S. skilled nursing facilities goes from 78% approximately to 63%. Finally, this combination presents a range of accretion outcomes depending on our ultimate mix of debt and/or equity to finance the deal. At the midpoint of the range of accretion, you have 6% to normalized FFO and 3% to normalized FAD. Lastly, we illustrate the strength and capacity of our balance sheet to accretively grow the business in a significant way, regardless of the volatility in the market, and still be set up for executing on our regular way pipeline in addition to this acquisition. As you can tell, we're very excited about this opportunity. It makes sense and checks just about every box that we could look for an entry point into the U.K. Be happy to take your questions now if you have any. Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Please ensure you are not on speakerphone and that your phone is not on mute when called upon. Thank you. Your first question comes from Wes Golladay with Baird. Your line is open. Hey, good morning, everyone. Can you talk about how long you've been looking at this deal exclusively, the CareTrust deal or the Care REIT deal? Are you describing any platform value, expansion opportunities? You did mention you could grow the portfolio meaningfully. Can you also talk about how much exposure you're willing to have in the U.K.? Okay. Wes, all great questions. I just wanted to note that the acquisition in the U.K. comes with some special regulations. There's the Takeover Code in the U.K. that governs how much we can talk about the deal. The announcement that we gave, it's called the 2.7 announcement. You'll find that posted all over. That really outlines the main points of the deal, what we've agreed to between the two companies so far. Our press release and the investor presentation here kind of govern everything that we can talk about. What I really can't do is share material new opinions or information. With that caveat, and I may have to kind of refer to that a couple of times here, it's a little bit unusual, candidly, from what we're used to in the United States with respect to what we can kind of talk to. We have to respect that Takeover Code that governs this transaction. We have been looking at this opportunity since last year and really made the offer, began trying to engage with the company toward the end of last year, late last year. Probably the offer kind of stands on its own, speaks for itself in terms of what we valued the deal at. With respect to plans for future growth, we intend to grow meaningfully in the U.K., just like the United States, depending on the deal flow, right? We never want to get too ahead of ourselves with respect to predicting growth in any particular segment or style. That is why when we give guidance, for example, we do not bake in any growth projections. Without getting too far ahead of myself there, I would just refer back to my main point, which is it could be meaningful growth for us going forward. Okay. I'll hop back in the queue. Thanks. Thanks, Wes. The next question comes from Juan Sanabria with BMO Capital Markets. Your line is open. Hi. Good morning. Congratulations. Hoping you could talk a little bit more around the parameters around the accretion. It looks like the low end assumes that FAD could actually go down a tiny bit. Just curious on kind of the cost of debt you guys are assuming or the range of the cost of debt and the range between the% that's equity funded on CareTrust to have to fund a deal versus debt. Yeah. I do not think that we have stated anywhere what kind of those cost of debt figures are. I do not think we can talk to that quite yet in terms of debt that we would be assuming versus new debt issuance. I think you know pretty well how we view our cost of debt today for anything that we would issue new, do any new issuance. Basically, the range here shows from 100% debt financing to 100% equity financing. That is sort of the low and high end of the range. Sorry, just for our benefit and others maybe just listening, where do you think you can raise 10-year debt at CareTrust today just to give us a sense of at least that variable? Bill, what's the latest and greatest on that? Around 6%. Great. If I could just sneak in one more, could we think of the EBITDA coverage as 30-40 basis points lower than EBITDARM? Is that a fair delta between those two metrics? It's probably too early for us to give much commentary on that. We would just have to refer you to their website and their disclosures on how they calculate. Great. I'll hop back in the queue. Thank you. Thanks, Juan. Once again, ladies and gentlemen, if you have a question, it is star one on your telephone keypad. Your next question comes from Jonathan Hughes with Raymond James. Your line is open. Hi. Good morning out there, and congrats on the acquisition. Thank you. I realize you are a bit limited in what you can say, but maybe will this entire Care REIT U.K. team be kept in place and operate effectively as a U.K.-based subsidiary? How is growth, future growth, going to be driven within the U.K.? Is it U.S.-based, or is the team over there going to be driving the growth? Yeah. Great question, Jonathan, and thank you. I think we have some high-level ideas of how we'll answer that question, but I presume it will evolve with time. As we sit here today, the plan is to keep essentially the team in place and really leverage their experience and relationships and local industry knowledge to benefit the company in terms of growing and fostering new relationships and knowing which opportunities for expansion and asset management exist. I think it'll be largely driven by the London team with collaboration from us, of course. On the timing, I think I saw expected close by the end of next quarter. That seems quick for a cross-border deal of this size. I guess my question is, do licenses transfer a little faster over in the U.K.? I think we heard one of your large operators on their last call said that license transfers were actually taking exceptionally long. Just trying to understand any risks or potential delays to timing. Thank you. Looks like James wants to answer that one. No, I'd just say, Jonathan, that there won't be license changes here, so that wouldn't be a delay in the timing of the transaction. Okay. That is because it is being structured as effectively an acquisition and not one-off. In the operators. The operators aren't changing. Right. Understood. All right. Thank you for the time. I appreciate it. Thank you. The next question comes from Omotayo Okusanya with Deutsche Bank. Your line is open. Hi, yes. Good morning and congratulations on the deal. I'm just trying to understand the pro forma FAD and FFO numbers that you put in the presentation. When I look at it, the high end of your range is kind of going up much more versus the low end of the range. I think the low end is up only about $0.05 and the high end is up about $0.10 or something like that. Trying to understand a little bit why both the high end and low end didn't go up by exactly the same amount. At this point in the process, we can really, we're a little bit limited in talking about all the assumptions that go into it. Really, what's driving it, like I said, is the mix, the difference of debt versus equity in terms of how we finance the deal. At this point, Tayo, we've laid out all the assumptions that we can because if it's not covered in the 2.7 announcement or here, it's not something we can, unfortunately, based on the Takeover Code, elaborate much on. Gotcha. That's fair enough. I apologize if I missed this, but the debt you're assuming, could you talk about the rate on debt and when the debt actually matches? Tayo, your connection's not great for me. Could you repeat that? The debt that you're assuming as part of the transaction, could you talk about the interest rate on the debt and when it matures? No, I think what we would have to do at this stage is point you to Care REIT's public filings and have you look at it there because I do not believe we have talked about that specifically in the 2.7 announcement or here. I would highlight the fact that they are going to have their earnings results call, I believe, this Thursday. We can all kind of listen in and find out more from them. Gotcha. Thank you. You bet. Thank you. Your next question is a follow-up from Wes Golladay with Baird. Your line is open. Oh, thanks, guys, for taking the follow-up question. Just a real quick maybe philosophical question on hedging maybe future deals. How would you think about managing the FX exposure? I think with respect to that, we'll share with you our hedging policy as we get closer to the close of the transaction. It's certainly something that we will develop and present to our investors on how we're going to take care of that. Okay. Fair enough. Thanks for the time, guys. Thanks, Wes. Your next question is a follow-up from Juan Sanabria with BMO Capital Markets. Your line is open. Hi. Thanks for the time. Just not sure if you'll be able to answer this, but for the accretion math, are you assuming U.S. debt or U.K. debt? Is there a meaningful difference between the two depending on where it's sourced to help finance CareTrust's acquisition? Bill, you want to take that one? I think you've kind of answered it throughout the multiple questions that you've kind of fielded on this. I would just say we're trying to lay out a range here to give an idea based on what we disclosed in the press release where we talked about an initial yield on the total investment and layered in some scenarios, which generates the range as to how we finance it. I just want to point out that we did just recently redo our revolver, and there's $1.2 billion of capacity on it. Just one other quick question. Is there any sort of land bank or development opportunity that's part of the existing portfolio, or how should we think about that? It's not something that we cover in the 2.7 or here. That would be an area to look to the company's disclosures and website and earnings results for more color there. I will tell you, we do have a slide in the deck that talks about here. It shows how they've invested over the years, and it has been a combination of acquisitions and expansion asset management- type work. I think there's going to be a mix of opportunities for both going forward. Just one last one, if you would not mind hearing me. What is the latest thought on SHOP as a broader strategic expansion opportunity? Is that still on the table, or just how are you thinking about that as of today? Yeah. I'd say our thoughts on SHOP have not changed since for the last, call it, 18-24 months of how we've been talking about that. Thank you, guys, and congrats again. Thanks a lot, Juan. Thanks a lot. Your next question is a follow-up from Omotayo Okusanya with Deutsche Bank. Your line is open. I'll tell you. Omotayo, perhaps your line is on mute. I think we're good now. Hello? Can you hear me? Yes, we can. Okay. Sorry, I'm kind of in a tight spot right here. In the deck, there's a really good slide that you kind of talk about the sources of revenues within the U.K. between public and private. And clearly, there's a larger private piece of it versus the U.S. Can you just talk a little bit about that kind of structure? Even on the public side, whether it's more of the overall U.K. government paying it, whether it is local councils paying it on behalf of the residents, and kind of any potential kind of government-related risk associated with the public piece of the revenue? Yeah. Thank you. Like I said earlier in my prepared remarks, the U.K. care home, as we've gone over there and walked facilities and gotten to know the market well, spoken with operators about it, it's sort of a hybrid between skilled nursing in the United States and seniors housing, assisted living, memory care type of a facility. In my view, it tracks more toward the assisted living, memory care, sort of the base case offering with some nursing home or skilled nursing type offerings as well. Each building will have a different mix with respect to that. Each building is going to be a little bit different in terms of its mix of payer sources based on its perceived quality. Is it a brand new private pay-only type place or not? You do have, like in the United States, a range of offerings, and that is going to be reflected by the private and public mix. The public funding is largely local councils that operators negotiate with each year to get that rate right for their residents. You see here on the slide that the private funds or the private funding is actually growing a little bit more than the public. At the same time, it is a long tradition of both private and public funding for this, in the U.S. investor view, sort of a hybrid model. Thank you. Thanks, Tayo. This concludes the question- and- answer session. I'll turn the call to Dave Sedgwick for closing remarks. Thank you. We really appreciate the interest, the support. As you can, I'm sure, imagine we have both sides, Care REIT and the CareTrust team, have been working very hard to get to this point. We really appreciate Simon Laffin, the Chairman of the Board. We appreciate the entire board, Andrew Cowley, Mahesh Patel, and the entire team over at Care REIT. They've done a fantastic job. We're honored that we have a chance, hopefully, to combine our companies to build on their amazing story so far. What we think it does for us as CareTrust, I've highlighted that here. Just to reiterate, the diversification that it brings us and the extra engine of growth could be very special for us. We really look forward to what we hope is a successful shareholder bid and closing of this sometime in the next quarter. Really appreciate all of your interest and support. If you have any other questions, of course, you know where to find us. Hope you have a great day. Thank you. This concludes today's conference call. Thank you for joining. You may now disconnect.