CareTrust REIT launches offering of 17 million common shares

what happened

CareTrust REIT has launched an underwritten public offering of 17 million common shares. BofA Securities, Morgan Stanley, J.P. Morgan and Wells Fargo Securities are the book-running managers. Underwriters received a 30-day option to buy up to 2.55 million additional shares, which would bring the total to 19.55 million if fully exercised.

The deal relies on forward sale agreements with Bank of America and Morgan Stanley. These banks or their affiliates will borrow the shares from third parties and sell them to the underwriters. The company will not receive proceeds initially, and it expects to physically settle the forwards within about one year of the prospectus supplement. Net proceeds are intended for the operating subsidiary CTR Partnership, L.P., to be used for general corporate purposes such as acquisitions, investments or debt repayment. TradingView reported the details based on the company's press release, and Reuters published a brief announcement of the same offering.

why it matters

For investors, the main consideration is dilution: the new shares increase the number of shares outstanding, and the forward settlements are spread out over roughly a year.

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