Welcome to CareTrust REIT's first quarter 2016 earnings call. Listeners are advised that any forward-looking statements made on today's call are based on management's current expectations, assumptions and beliefs about CareTrust's business and the environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financings and any other matters, all of which are subject to risks and uncertainties that could cause actual results to materially differ from those expressed or implied here. Listeners should not place undue reliance on forward-looking statements and are encouraged to review the company's SEC filings for a more complete discussion of factors that could impact results as well as any financial or other statistical information required by SEC Regulation G. In addition, CareTrust supplements its GAAP reporting with non-GAAP metrics, such as EBITDA, adjusted EBITDA, FFO, normalized FFO, FAD and normalized FAD. When viewed together with its GAAP results, the company believes that these measures can provide a more complete understanding of its business, but they should not be relied upon to the exclusion of GAAP reports. Except as required by federal securities laws, CareTrust and its affiliates do not undertake to publicly update or revise any forward-looking statements where changes arise as a result of new information, future events, change in circumstances or for any other reason. Listeners are also advised that the company filed its 10-Q and accompanying press release yesterday. Both can be accessed on the Investor Relation section of CareTrust's website at www.caretrustreit.com. A replay of this call will also be available on the website. At this time, I would like to turn the call over to Mr. Greg Stapley, CareTrust's Chairman and CEO. You may begin.

Thank you, Sabrina. Good morning, everyone. Thank you for joining us today. With me are Bill Wagner, our Chief Financial Officer; Dave Sedgwick, our Vice President of Operations, who is joining us by phone from our East Coast office; and Mark Lamb, our Director of Investments. Our objective today is to briefly give you some color on the quarter and what we see on the horizon. For the numbers and other details we, of course, encourage you to look at our Q and the press release that we filed yesterday. Q1 saw us achieve some significant milestones. We refinanced the last of our legacy Ensign debt, achieving an immediate seven-figure annual interest savings; we upsized our unsecured revolver to $400 million, giving us more dry powder than ever to pursue external growth; and we executed our first overnight of $111 million equity raise that was more than 2x over subscribers in a couple of hours, which closed on a 3.7% file-to-offer discount, which was a vast improvement over our first follow-on last August. In addition, we grew the portfolio with over $116 million worth of new investments in the quarter and since adding several new assets, markets and outstanding operators. The average going-in cash yield on these investments was 9.1%. This growth, along with all the other deals under contract we announced in conjunction with our March follow-on, will reduce the tenant concentration of Ensign, our formal partners in blue-chip principal tenant from virtually a 100% less than two years ago to less than 57% of revenues on a run rate basis. By the way, speaking of Ensign, they are not surprisingly doing extraordinarily well in the evolving skilled nursing environment. And we congratulate them on the way they are adapting and apparently capturing market share in many of the…

Thanks, Greg. So we've had a solid start to the year, as we've added new operators, properties and states to the portfolio. We congratulate our terrific operators, New Haven, Trillium, Priority Life, Better Senior Living, Premier, Cascadia and 20/Twenty, all of whom have stepped into new acquisitions with us this year, under smooth transitions of our recently acquired properties in Texas, Iowa, Maryland, Indiana, Wisconsin, North Carolina, Idaho and Florida. As one-time operators ourselves, we know what it takes to thrive in the dynamic skilled nursing and the competitive seniors housing spaces. These new operators we've brought into the portfolio have that requisite, sophistication, talent, vision and culture to succeed for years to come. We're actively working to further grow each of their individual portfolios with us this year. On our last call, I talked about our recent larger deals in Ohio and Iowa, with Pristine and Trillium. While it's still very early in their transitions, suffice it to say, they are both performing very well as expected. Now, a brief word on the evolving skilled nursing environment. Although, we are not exclusively pursuing skilled nursing, as you can tell from our recent acquisitions, we remain as bullish as ever on the skilled nursing space. As has been the case for the last 15 years, the skilled operators, who are nimble, talented, sophisticated and committed to quality care, will be able to capitalize on the increasing demand for transparency, quality, data and collaboration with the acute hospitals, managed care organizations, home health providers and other stakeholders in their local markets. So we view the recent headlines as variation on a 15-year theme that providers needing to deliver care better, faster and more efficiently. And we known for the record that Medicare and Medicaid reimbursements rates have actually trended positively over that time. On the seniors housing front, our approach has been a focus on the B2B plus quality assets in secondary markets, thereby avoiding the oversupply concerns felt by some of the A-plus assets and the primary MSAs. Anecdotal reports indicate that occupancy across our seniors housing assets remains strong. We're at a point now where we can start to consistently collect that data and plan to start supplementing our standard disclosures with other relevant information starting next quarter. So to conclude, as you saw in Q1, we continue to focus on execution, execution at the transactional level by our team and execution at the operational level by our tenant. Our plan is to continue taking advantage of our size by mostly doing smaller dollar deals with quality growing operators, which offer stronger yields and that cover well. That's what we did in Q1, and thus far Q2 appears to be following that same pattern. Mark will now give you some color on our pipeline.

Thanks, Dave, and hello, everyone. As most of you know, the senior housing side of the healthcare real estate market has been experiencing some long overdue price dislocation of late, which is good for us as a buyer. NIC MAP recently reported that senior housing deal volume for Q1 was anemic, declining by around 30% quarter-over-quarter both in dollar volume and deal volume. This is due at least in part to report an 80% drop in public repurchases of senior housing assets over the same quarter last year. By contrast, sales of skilled nursing assets hit their highest levels since early 2012, trading nearly 3x the dollar volume for senior housing assets in Q1. This is what some might refer to as an inverted market, but we're not surprised. We do suspect that deal flow on the senior housing side will pick back up with other healthcare REIT's cost of the equity, returning to more normal levels. But we view this recent trend as a validation of our favorable view of skilled nursing assets. While they may carry a little more regulatory litigation and headline risk, they not only pay us a nice premium for those risks, which by the way are mostly more controllable than most people realize, but their valuations are also much more stable and predictable overtime than A-quality senior housing. That's one reason, why, although we continue to seek and close on well positioned and well priced senior housing assets, we are not unhappy to be overweight in sniffs. As we sit here today, the pipeline is strong with new deals crossing our desks almost everyday. As you know, we've been very busy lately, closing the $97 million in deals under contract that we pre-announced right at the end of last quarter in connection with our follow-on equity our offering. Of that amount, more than half or approximately $51 million is closed already. Now, in addition to the remaining $46 million we have under contract to close in the next couple of months, the pipeline is rebuilding nicely and is well on its way back towards a roughly $100 million level that's normal for us. Remember, when we quote our pipe, we only quote deals that we are actively pursuing, which meet the superior yield and coverage underwriting standards that you are accustom to seeing from us. And then only if we have reasonable level of confidence, so we can lock them up and close them. Finally, for the record, as we speak to you today, CareTrust has 143 properties in 19 states and we are actively working with a variety of brokers, sellers and operators to source additional opportunities for growth. And with that, I'll hand it to Bill.

Thanks, Mark. For the quarter we are pleased to report that normalized FFO grew by 72% over the prior-year quarter to $13.1 million and normalized FAD grew by 65% to $14.1 million. Normalized FFO per share grew by 13% over the prior-year quarter to $0.27 and normalized FAD per share grew by 7% to $0.29. Given our most recent quarterly dividend as $0.17 per share, which we just increased by $0.01 or 6.3%, this equates to a payout ratio of 63% on FFO and 59% on FAD, which represents one of the safest, best covered dividends in the healthcare sector. With this performance we are increasing FFO guidance for the year. Details are in the schedules to yesterday's press release. But briefly, we are now projecting normalized FFO per share for 2016 of $1.06 to $1.08 and normalized FAD per share of $1.14 to $1.16. Included in this guidance are the following assumptions. No new investments are included in the numbers, except for those we pre-announced at our recent equity offering. Of the $97 million we announced in late March, approximately $46 million at a blended yield of 9.2% is left to close. We will use our $400 million revolving credit line to fund these investments, which would bring the outstanding balance in line to about $81 million. No new debt or stock issuances are contemplated. With inflation running nearly flat, there are no CPI bumps factored in for any of the leases, which means Ensign is included in our guidance at $56 million and total rental revenues for the year are projected at approximately $91.2 million based on closed and announced deals. We actually do anticipate a small bump in our Ensign rent on June 1 and in all other leases throughout the year with an emphasis on small.…

Thanks, Bill. We hope this discussion has been helpful. We're grateful for your continued interest and support. And with that, we'll be happy to answer questions. Sabrina?

[Operator Instructions] And our first question comes from the line of Jordan Sadler of KeyBanc Capital Markets.

This is Jeff Gaston on for Jordan. Few quick questions for you. Do you have your current EBITDA coverage ratio for your portfolio?

We do. It sits for the entire portfolio and we report this on a quarter lag. EBITDAR is about 1.94x for the entire coverage. Ensign sits at around 2.05x as of December 31.

And then, on this quarter's earnings calls, Kindred and Genesis both described following lengths of stay and census stays without seeing any benefits from greater shares yet. Now, I know that you mentioned Ensign, and Ensign also reported that they were capturing share in an uncertain environment, but what are you hearing and seeing from your tenants?

You described it well. When quoting Ensign, they talked in some detail about what they're experiencing and its quite contrast to what others are experiencing in this space. They're doing really well. In fact, they see, as their length of stay comes down a little bit, they are capturing more of that share and overall revenue is increasing. So like I've said, in my prepared remarks, we see what's happening now as an evolution of what's been going on for the last 15 years, Ensign was a really adopter of the -- I should say, they embraced really quickly, they move to managed care. And operating in a heavy managed care environment has prepared them, especially well for the changes that are now coming from the hospitals in terms of the Medicare patients. So they are used to taking care of patients better, faster, communicating, collaborating, showing the data, and that's why I think they were able to explain their superior performance on yesterday's call. The other SNF operators that we brought on have that same talent set that we have with Ensign, and so we're seeing the same type of performance by our other tenants as well.

Let me just add something to that, Jeff. If you think about our non-Ensign skilled nursing tenants, it's primarily Trillium and Pristine, and both of those portfolios are fairly new. The Pristine portfolio we acquired last October and the Trillium portfolio we just acquired in this last quarter. In both cases, those portfolios were basically running primarily Medicaid shops. And so for them to -- any comment that we could make about what's happening to them in terms of their skilled mix or skilled revenue, it has to start from acknowledge the fact that that whether they get their next patient from, as Medicare fee-for-service patients or Medicare Advantage Managed Care patient or just straight HMO patient or even the Medicaid skilled patient that's all an improvement in mix over where they before, and its kind of gravy. So they really have no place to go, but us, regardless of what is happening with all the other guys that are used to having a lot of Medicare skilled mix in their portfolios.

One last question, so there is some concern about smaller operators, the moms and pops as far as being able to compete with larger regional operators. What are your thoughts on that?

We are firm believers that size really does not determine success on the skilled nursing space. If there was ever a business that's a local business, it really is skilled nursing. If you take some of the great regional, divisional, executive type people from the bigger companies, and they want to start their own business, and they start off small, of course, the chances of success are very, very, high with them, because they have the sophistication and the knowledge of big company's systems that are required to the changing environment. But they also have the advantage of having that high-touch, local ownership feel that a small company brings to the table for both their employees and then their residents and patients, and the relationships with the hospitals, and health plans who are the local decision makers. So I would say we're size agnostic. Big boys can do great if they the proper talent in place on the local level, but also the smaller guys if they come with the talent, and knowledge and commitment to quality care, also we'll do exceptionally well.

You're not concerned about, I guess, the scale of their operation and being able to partner with health systems or hospitals?

That's a good question, and it really depends on the market. Hospitals are, as you're alluding to, are narrowing their preferred provider networks. What they look at are the criteria -- there is several points that they look at to determine what facility should be included in their network for a particular hospital. We haven't seen yet hospitals that are turning down local operators, because they're not affiliated with the large regional and national chain. If you have as a facility, the data that supports included in that preferred network, those quality outcomes are what's going to drive it, not some arbitrary metric of whether or not you're affiliated with the big chain. For example, if you're part of the big chain, but your readmission rate to the hospitals is 20% and you have the small local mom and pop, this readmission rate to the hospital is 5%. The hospital can't ignore that. And they are always going to now more than ever factor in that data more than other considerations before.

And our next question comes from the line of Chad Vanacore of Stifel.

This is Seth Canetto on for Chad. First question, I just wanted to ask on your commentary on the pipeline, it sounds like the mix of assets is going to be more skilled nursing than senior housing, is that fair to say?

Yes. It's about 60-40 SNF to else.

And then on the guidance, did the FAD guidance decrease by $0.01, could you explain that?

No. FAD guidance actually decreased by $0.01 and that's due to the add backs, typically amortization of deferred financing fees as well as amortization of deferred stock. Those numbers stayed the same, but we now have a bigger share count, so its decreasing that add back.

And then just looking at how you guys acquire new SNF assets and you bring in operators and you underwrite those assets. How do you take into consideration the shorter length of time towards implementation of CJR and BPCI in the sense that like the operator has less time to prepare those employees for those changes, is that a big impact when you're underwriting assets?

We certainly think about it, but these operators they're not new. They're out there, they're around, they're already doing things and for them to move into a new facility and property with -- the first thing you do when you move into new property, you install your own people, culture and systems. And addressing CJR -- if they're moving into a CJR market, and we have relatively few properties in the CJR markets right now, but we expect those programs to expand later, but if you're moving into CRJ market that's just one of the many things that you would be prepared to address. And remember, most of our assets are so Medicaid heavy that they weren't getting the hips and knees from, taken into consideration in our underwriting. So it's not as if we're looking at a Medicare average daily census that that we expect to shrink. In fact, there is very little Medicare market share there. So if they move into a CJR market, as Greg alluded to it's about getting the systems in place to be able to take those patients on a go forward basis.

And last question, I think you guys mentioned last quarter of the star-rating changes that should affect 2017, is that a concern for operators with less than three stars? And I guess, what's your mix of tenants as far as the star rating system goes?

So I'll let Mark talk about the mix of the star ratings, but just a little bit color of that how our operators view it. We're in the early innings of hospitals using the star ratings as a criteria for their preferred networks. There is obviously the three-star cut off for the CJR for the three night qualifying stay waiver. But what that does is it creates a little bit more time in some cases for the two-star below facilities to qualify to be part of those preferred networks. In some cases hospitals have a pretty clear cut off. If you're not three-star above, they're going to include you. And so it takes some time, it can take one, two to three years to move significantly from one star up to where you want to be. Having said that, I started by saying we're in the early innings, because that's such a blunt tool for hospitals to use, it's not effective, because it doesn't accurately reflect quality. That's why they added the readmission rates to the quality measures for the star rating, but the way they did that to us doesn't seem to -- they fold it under the quality measurement component. And so it's not going to be as potent of a swing measurement, if you will, at the end of the day. So we believe that hospitals will evolve and pay more attention to that readmission rate data than to the less sophisticated star rating, if you will. So as we underwrite deals, we look to see what the star rating is, and to see if that particular hospital market has a star rating ceiling or floor for their preferred networks and then just how long we think it will take them to get into that market.

I'd like to add. If you look at the changes that are taking place to the five-star rating, they're focused on short stay patients that are our operators are focused on readmissions, patients not bouncing back to the hospital shortly after getting to the SNFs. So our operators that we vetted out, they are already doing everything that they need to, and they're prepared to, as they take on these facilities to ensure that their patients aren't bouncing back. And so they're actually aligned with what changes have taken place with the five-star rating. Some people have asked us over the last couple of weeks with respect to our portfolio. And we have, of our 108 SNFs we have 35 facilities that fall in the one and two-star range. Of the 35 facilities, 12; six came with the Pristine acquisition; and six came with the Trillium acquisition. And then of the 23 remaining facilities that were not part of either of those acquisitions; 10 to 12, we kind of sell down to the two-star to the one-star level as a result of a complaint visit or a annual survey by the Department of Health. And so we view those 10 to 12 is having high probability of bouncing back up into the three-star range over the next, I would say, year or so just depending on how quickly the next survey comes. And then the balance would just, as we looked in and took a look at those facilities, specifically kind of where they fell, a lot of those facilities fell, they were in tertiary markets, where staffing has historically kind of been a little bit tighter. And then also in markets that are less focus on the star rating where facility maybe of two or three nursing facilities in the entire town. So we're pretty happy with the portfolio and where the star ratings are lining up and we would expect that, as some of the facilities that have experienced some inspection challenges as they have their next annual inspection, we should see them hop back up into the three and four-star ratings.

And our next question comes from the line of Paul Morgan of Canaccord.

Just a quick follow-up on that last comment there. So you mentioned that six -- I guess a dozen of the 35 one and two stars are with Pristine and Trillium. I mean, are those assets where you don't expect movement, because there is less focus on it or are those in the kind of other category where you can see them bouncing up to the three-star range?

So let me just give you some perspective on that. In order to move star rating, star ratings follow a facility for three years, and it doesn't matter if the facility has changed hands and has a new operator. If you walk into one, it can take you up to three years to rack up enough good survey results to get yourself back up into the four and fives. So part of Mark's point was that if you look at the 108 SNFs in our portfolio, right now, if I'm doing the math right, 73 of them are three-star above, so we're not worried too much about those at all. And those threes will probably continue to move up toward fours. And then about three dozen of them are in the one and two-star, but two-thirds of those or about a third of those are facilities that have recently came into the portfolio and are dragging behind them the prior operator survey history. One of the great things that we do is that we find assets, that while they are stable, we think that they are under-managed and can be significantly improve merely by insertion of a great operator who's sophisticated and committed and knows what they're doing, and that's exactly what we've done with those assets. But the Pristine assets have been with us for about six months now, and we're just starting to see that movement. And the Trillium assets have been with us for a couple of months now, and it will be a while before they move up. So that's why we can say that we're pretty happy with the overall distribution. I think as it sits the overall distribution of five star ratings in our portfolio is better than most and we know that these things are barely getting started.

I mean, are there any metrics you can provide or maybe color around now that you're six months into the Pristine deal and the transition there, and how that is progressing versus the pro forma as they took over?

Yes. So when we experience this at The Ensign Group for all the time that we were there, as you know our MO there was to take the stress assets and turn it around largely Medicaid shops and turn them into short-term rehab facilities. In this case, as you know the Pristine buildings were Medicaid shops with cash flow and really nicely. Nevertheless, the strategy that Pristine is pursuing is to convert those long-term care shops into more short-term rehab facilities. So our pro forma matches our experience at Ensign and Chris' experience before and that is that you're going to ramp up a little bit the cost structure and the outset to build the clinical capabilities on your nursing and rehab team and you're going to invest a little bit more in marketing in order for that to happen. While you're doing that you can still see some modest increases in your skilled mix just by paying attention to it. That's what our model predicted and that just in general terms is exactly what we're seeing so far with that transition.

And what did you see as sort of a stabilized coverage for that deal? Could you remind me of that?

It was about 140 to 150, we thought somewhere in the 12 to 18 month mark that he should be somewhere in that range, in the 1.4x to 1.5x. This is going to take -- we thought there would be some incremental expense that they would pick up early on. And then we thought, call it, months three through nine, we would expect to see kind of them start to hit their stride and fully kind of bake in all their transitional expenses and really start to hit their stride on the marketing side. I would say, towards the end of this year, we would expect to see kind of 1.4x, 1.5x on an EBITDAR basis.

And then just on the acquisition pace, you mention sort of building back up kind of the pipeline. Is there any, as you close the deals that you've already announced in the second quarter, is there any reason to think that the pace of acquisitions in back half of the year would look any different in terms of volumes? And then I guess in terms of mix, although, you gave us 60-40 I think number there, but just in terms of kind of the amount, do you think you can achieve in the second half of the year?

Well, we've said we're pretty optimistic about the pipeline and what we think we can do through the rest of the year and into future. But remember at our size, quarter-by-quarter looking at acquisitions, it's going to be a little lumpy, so it would be -- while I would love to be able to project that we will replicate Q1 in the other three quarters of the year or exceed it, I'm not sure that we can do that. But I do think we'll have a much better year than the $233 million in capital deployment year that we had last year. And we are optimistic as we look at the pipeline and the kind of deals that are passing our desk everyday that the opportunities are going to be out there for us.

And then just lastly, do currently expect to buy, to exercise the option to buy the asset that's underlying the pref?

It's a little early to tell on that. I think that we wouldn't have done the deal, if we didn't expect it in time, we would be exercising that. But they've just barely started taking deposits and doing lease up, open unit thing, they've schedule the grand opening, I think for July, right Bill?

End of July.

End of July, which will give them some time to get through sort of the start up stuff. And I think probably over the next couple of quarters we'll get a much clear picture of how that thing is going to lease up and how it's going to run. We sure like the tenant, we sure like the location, and we definitely like the facility, it's beautiful. Mark and I were up there not long ago and toured it and its going to be a great asset, and I do think we'll -- my expectation is the same it was. We will exercise that into course, but we'll see what due course is.

And our next question comes from the line of Jonathan Hughes of Raymond James.

Earlier, Mark, you'd mentioned tight staffing in some markets, but are your operators seeing any increase wage pressures. Just kind of wondering if there's any impact on labor costs from the nationwide push towards higher minimum wages that could impact the coverages for your tenants?

Our operators haven't expressed that concern to us yet. As we talk to them about the minimum wage initiatives and their stake, they have reassured us that they feel comfortable with their cost structures and being able to absorb that. In the skilled nursing space, there is not a lot of the labor that's in that minimum wage amount as it stands today any way. And there is some optimism in California, for example, that the very strong state association there would be able to help those providers to make up that difference as that rolls out over time.

Just looking at acquisitions, our sellers becoming more reasonable on pricing expectations? Have they adjusted to your higher underwriting requirements that you guys talked about last quarter or are they still expecting pricing from, say, nine months ago?

They have for the present, Jonathan. The deals that we have in the pipeline now reflect -- and then the deals that we did in Q1 were really deals that we made in Q3 and Q4, the deals we closed in Q1. The deals that we have in the pipeline now, that would be our Q3 and Q4 deals this year, do reflect the increased underwriting standards that we imposed at the end of 2015. Whether that holds or not is a question mark. I think we've seen -- we're going to see some of the buyers who have been absent from the market for the past three or four months start to return now. And we'll just have to see if most of them have been expressed the same thing we have that they think the cap rate should tick up a little bit, but we'll see if that discipline holds.

And have you seen any maybe multi-asset deals kind of circle back around, that might have fallen through at the end of last year.

Yes, but we're not pursuing them.

And then one more. Your underwriting expectations changed in terms of rent coverage in recent months on SNFs and senior housing assets and how do you see this maybe potentially changing in the future?

No, our expectations haven't changed. But remember that our view is seems to be slightly different from some of the others. Whereas, there tends to be a prevailing view amongst healthcare REITs that when you see an asset that's like new and beautiful and 98% occupied and has a 60% skilled mix and is hitting on all cylinders that that's the asset that you want to go out and pay top dollar, pay a premium for. In our view, that asset really -- and you may skin your coverage down for that, and we've seen a lot of folks do that historically. We don't like that. We think that that asset has no place to go, but down. So if it's already at 98% occupancy and 60% skilled mixed, we darn well better get one type coverage on that asset. And in that environment, we tend to be not competitive on price. The assets that we like are the ones that are 80% occupied, but stabilized and cash flowing that have some upside left in there, some meat on the bone there for a new operator coming in that we would be bringing. We can get those at a much better price. We said that we'd actually [ph] skinny the coverage on that one, before we'd skinny the coverage on the first one at the premium price. Because if we know the operator, we know their business plan, we with our background and perspective as operators can say, yes, that's very likely to work. That's one that we might stretch for and skinny our coverage down on a tad to keep our yield up, and let them grow into that coverage, which they would typically do in our underwriting within 12 to 24 months. So we might skinny that coverage down to 1.4 even a little below that on an asset that we view as stable with great upside.

And our next question comes from the line of Michael Carroll of RBC Capital Markets.

This is actually George Clark on with Mike. I was just wondering do you guys expect RAC audits to cause any disruption in your portfolio or are there any tenants there could be audited?

Every tenant can be audited, George, but we don't expect any disruption from RAC audits. RAC audits have been around for a long, long time. And the only reason they've been in the news lately is that the CMS sort of allured RAC auditors about some new things that they thought they had to look for. But those new things are really the kinds of things that our tenants are typically dealing with. So the short answer to your question is no. We don't see a big issue there.

And then in terms of your pipeline, do you guys expect to add any new tenants to your roster in there or is mostly just relationship deals?

We're just staring at for a minute. There's a couple of new tenants in there in the existing pipe. Out of eight or nine deals, six or seven of them are going to go to existing tenants and we'll close them in and the rest would be new folks coming in.

And then, could you give some color as to why guys filed the non-timely 10-Q? Is there any reason other than just trying to gather data?

Yes. I can give some color on that since it's my responsibility. In building out our reporting calendar for this quarter, incorrectly assumed that we were still a non-accelerated filer, we actually became an accelerated filer at yearend. Non-accelerated allows for 45 days, whereas accelerated filer is 40 days. And we reported on day 41, so technically we were non-timely, which required us to file the Form 12b-25.

And our next question comes from the line of Duncan Brown of Wells Fargo Securities.

Just two for me. You've obviously got leverage down pretty nicely here and sounds like you have a nice pipeline. Can you remind us how sort of high you're willing to take it over the sort of near-to-intermediate term to close on some of those deals?

That's a great question. So what we've said from the beginning was that we were going to not try and get our leverage metrics down to where we want them to be all-in one jump that we would ratchet those down, do deals, raise equity do deals, raise debt equity and trying to be smart about it, and we have. Exactly what we've done is ratchet it down. And so, our target range on a debt to EBITDA basis is about 4.5x to 5.5x. We might float a little bit above that and we have the debt capacity to do that on a revolver to make acquisitions. But we would then want to bring that back down again. And if we can keep the debt to enterprise in the 30% to 40% range, we believe that's optimal for us, and that that's where investors would like us to be as well. So we will not be willing to go too high above those ranges, and we will always seek deals that are accretive and whatever we're paying for them to make sure that we return value to shareholders when we do.

And then, congrats on the S&P upgrade. And I appreciate the commentary on sort of the ratings strategy, if you will. We would be curious if you could provide any color in your commentary your conversations with Moody's, and anything that they are particularly looking for before you get the next bump on their side?

So we met with them a couple of weeks ago, when we also met with S&P, and they're just looking -- they wanted to see the transition of Pristine into our portfolio, and see these first quarter numbers. So now that we've reported, I'll be circling back with them and getting a better feel for where they're at. But when we presented, when they originally came out with their rating, they had given us like five targets, what could change our rating up. And when we went in and presented the numbers, we felt we checked each one of those five criteria. So it is the hope that they will see that as well and see the progress that we've made like S&P did, and give us a notch upgrade as well this year.

Thank you. And I'm showing no further questions at this time. I'd now like to turn the call back to Greg Stapley for closing remarks. End of Q&A

Thanks, everybody. We appreciate you being with us and we welcome you to give us a ring anytime you have any other questions. Thanks, Sabrina, and everyone else.

Thank you. Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a great day.