Care REIT to be bought by US care home provider in £448m deal

11th Mar 2025 09:15

(Sharecast News) - Care REIT surged on Tuesday after agreeing to be bought by US care home provider CareTrust REIT in a £448m deal.

CareTrust is a self-administered US real estate investment trust engaged in the ownership, acquisition, development and leasing of seniors housing and healthcare-related properties. It is listed on the New York Stock Exchange and has a market capitalisation of about $4.9bn (£3.8bn).

Under the terms of the acquisition, CareTrust REIT will pay 108p per share in cash, which is a premium of 32.8% to the closing share price of Care REIT on Monday.

Care REIT chair Simon Laffin said: "Care REIT plc has, since its IPO in 2017, built an attractive portfolio of high-quality homes and tenants while delivering a total accounting return of 70.2%. However, UK investor sentiment has been negative on the UK listed REIT sector over the last few years, exacerbated by the weak macro-economic backdrop and high interest rates, leading to shares trading at significant discounts to net asset value."

Laffin noted that Care REIT has traded significantly below its net asset value over the last few years, with no sign of this improving in at least the short to medium term.

"This has made it almost impossible for Care REIT plc to raise new capital to grow the business," he said.

"Becoming part of the $5 billion CareTrust would enable the business to grow and to play a larger role in the UK's fragmented residential care sector. This would benefit both tenants and residents, as more investment will be available to both enhance our existing care homes and develop much needed new ones in the UK. Importantly, CareTrust's core values of operating expertise, partnership with elite operators and delivering growth provide a strong fit with ours."

Against this background, Laffin said the Care REIT board believes the offer from CareTrust provides shareholders the opportunity to receive cash at an attractive premium to the undisturbed share price, "whilst enabling the business access to capital to expand and enhance provision for both tenants and residents".

At 1140 GMT, the shares were up 33% at 108.30p.