Sabra Health Care REIT, Inc. (“Sabra,” the “Company” or “we”)
(Nasdaq:SBRA) today announced results of operations for the third
quarter of 2018.
RECENT HIGHLIGHTS
- For the third quarter of 2018, net income attributable to
common stockholders, FFO, Normalized FFO, AFFO and Normalized AFFO
per diluted common share were $0.20, $0.50, $0.60, $0.54 and $0.55,
respectively, compared to $0.11, $0.34, $0.63, $0.56 and $0.60,
respectively, for the third quarter of 2017.
- For the third quarter of 2018, our Skilled Nursing occupancy
percentage improved 30 basis points to 82.6%, and our Skilled Mix
improved 60 basis points to 39.1%, each over the second quarter of
2018. In addition, our Senior Housing - Managed portfolio
realized a 90 basis point improvement in occupancy over the second
quarter of 2018 to 84.7%.
- During and subsequent to the third quarter of 2018, we
completed the sale of three facilities leased to Genesis
Healthcare, Inc. (“Genesis”) for gross sales proceeds of $7.2
million, leaving 16 facilities leased to Genesis that we expect to
sell by the end of the first quarter of 2019 for estimated total
gross proceeds of $109.0 million.
- During the third quarter of 2018, we made investments
of $34.7 million with a weighted average initial cash
yield of 7.25%. These investments consisted of: (i) $25.0
million of real estate acquisitions; (ii) $4.4
million of real estate additions; (iii) $4.3 million of
preferred equity investments; and (iv) $1.0 million of
investments in loans receivable.
- On August 27, 2018, we entered into a non-binding letter of
intent to sell the 36 Skilled Nursing facilities and two Senior
Housing communities currently leased to Senior Care Centers for an
aggregate sales price of $405.0 million, inclusive of a potential
earnout opportunity of $27.5 million. The sale of the facilities is
subject to entry by the parties into a definitive purchase and sale
agreement, as well as the completion by the potential purchaser of
due diligence and other customary closing conditions to be included
in the definitive agreement. We expect to complete the sale in
early 2019. There can be no assurances that a definitive agreement
will be entered into or that the sale transaction will be
consummated, on the foregoing terms or timing or at all. During the
three months ended September 30, 2018, we issued to Senior Care
Centers notices of default and lease termination due to non-payment
of rent under the terms of the master leases. As a result, Senior
Care Centers is currently operating the facilities on a
month-to-month basis. Deposits were fully exhausted to pay
contractual rents and cash rents have been recorded through a
portion of September 2018, reflecting a shortfall of $1.9 million
in cash rents from Senior Care Centers through September 30,
2018. No straight-line rents have been recorded since May
2018. There can be no assurances that we will receive any
additional rent payments from Senior Care Centers during the
pendency of the sale process. Prior to termination of the master
leases, the annual lease rate was $58.5 million.
• We have updated our 2018 earnings guidance ranges as
follows (per diluted common share):
|
Net income attributable
to common stockholders |
$1.64 |
- |
$1.67 |
(from $1.98 -
$2.06) |
|
FFO
attributable to common stockholders |
$2.16 |
- |
$2.19 |
(from $2.48 -
$2.56) |
|
Normalized FFO attributable to common stockholders |
$2.27 |
- |
$2.30 |
(from $2.47 -
$2.55) |
|
AFFO
attributable to common stockholders |
$2.11 |
- |
$2.14 |
(from $2.28 -
$2.36) |
|
Normalized AFFO attributable to common stockholders |
$2.14 |
- |
$2.17 |
(from $2.27 -
$2.35) |
|
|
|
|
|
|
|
As a result of the above referenced Senior Care Centers lease
termination, our guidance assumes that we do not recognize rental
revenues from Senior Care Centers during the fourth quarter of
2018, resulting in a reduction of $0.13 per diluted common share of
net income attributable to common stockholders, FFO and Normalized
FFO and $0.09 per diluted common share of AFFO and Normalized AFFO.
In addition, our updated 2018 earnings guidance also reflects
updates to our Senior Housing - Managed portfolio based on actual
performance and expected fourth quarter 2018 performance, resulting
in a reduction of $0.05 per diluted common share of net income
attributable to common stockholders, FFO and Normalized FFO and
$0.04 per diluted common share of AFFO and Normalized AFFO.
See “2018 Outlook Update” below for additional information
regarding our 2018 earnings guidance. |
- On November 1, 2018, we exercised our option to acquire a 140
unit Senior Housing community in Ohio for $26.2 million (of which
$3.7 million was used to repay our preferred equity investment in
this property). This investment has an initial cash yield of 7.47%
and was sourced through our proprietary development pipeline.
- On November 5, 2018, we announced that our board of directors
declared a quarterly cash dividend of $0.45 per share of common
stock. The dividend will be paid on November 30, 2018 to common
stockholders of record as of the close of business on November 15,
2018.
Commenting on the third quarter results, Rick Matros, CEO and
Chairman, said, “Sabra had a solid operational quarter. Our Skilled
Nursing portfolio continues to perform better than national trends.
Occupancy and Skilled Mix each improved for the third sequential
quarter. Occupancy for our Senior Housing - Leased portfolio was
slightly down sequentially, and was up 90 basis points sequentially
for our Senior Housing - Managed portfolio. Rent coverage was
stable for our Skilled Nursing and Senior Housing portfolios.
“We adjusted guidance down, as expected, which is primarily
driven by the expected sale of the Senior Care Centers portfolio.
We expect the sale to close in early 2019. We remain focused on
resolving all portfolio-related issues by year end or early 2019
and on growing from there with the operating partners that we have
a long term commitment to.”
OPERATING STATISTICS TRIPLE-NET PORTFOLIO (1) |
|
|
Coverage |
|
|
|
|
|
|
|
|
|
|
EBITDAR |
|
EBITDARM |
|
Occupancy Percentage |
|
Skilled Mix |
Property
Type |
|
3Q 2018 |
|
2Q 2018 |
|
3Q 2018 |
|
2Q 2018 |
|
3Q 2018 |
|
2Q 2018 |
|
3Q 2018 |
|
2Q 2018 |
Skilled
Nursing/Transitional Care |
|
1.30x |
|
1.32x |
|
1.77x |
|
1.79x |
|
82.6 |
% |
|
82.3 |
% |
|
39.1 |
% |
|
38.5 |
% |
Senior Housing -
Leased |
|
1.07x |
|
1.06x |
|
1.24x |
|
1.24x |
|
85.7 |
% |
|
86.0 |
% |
|
NA |
|
|
NA |
|
Specialty Hospitals and
Other |
|
3.19x |
|
3.27x |
|
3.48x |
|
3.55x |
|
88.9 |
% |
|
86.3 |
% |
|
NA |
|
|
NA |
|
(1) EBITDAR Coverage, EBITDARM Coverage, Occupancy
Percentage and Skilled Mix (collectively, “Operating Statistics”)
for each period presented include only facilities owned by the
Company as of the end of the current period for the duration that
such facilities were classified as Stabilized Facilities. Operating
Statistics are only included in periods subsequent to our
acquisition except for (i) the legacy CCP tenants, which are
presented as if these real estate investments were owned by Sabra
during the entire period presented and reflect the previously
announced rent repositioning program for certain of our tenants who
were legacy tenants of CCP and (ii) EBITDAR Coverage and EBITDARM
Coverage for the North American Healthcare portfolio is presented
on a trailing twelve month basis and consists of the EBITDAR
Coverage and EBITDARM Coverage, respectively, for facilities owned
by Sabra in periods subsequent to our acquisition and underwritten
stabilized EBITDAR Coverage and EBITDARM Coverage, respectively,
for periods preceding our acquisition. In addition, Operating
Statistics are presented for the twelve months ended at the end of
the respective period and one quarter in arrears. As such,
Operating Statistics exclude assets acquired after June 30,
2018.
SENIOR HOUSING - MANAGED PORTFOLIO OPERATING RESULTS
(1) |
Dollars in thousands,
except REVPOR |
|
Revenues |
|
Cash NOI |
|
Cash NOI Margin % |
|
REVPOR |
|
Occupancy Percentage |
|
|
3Q 2018 |
|
2Q 2018 |
|
3Q 2018 |
|
2Q 2018 |
|
3Q 2018 |
|
2Q 2018 |
|
3Q 2018 |
|
2Q 2018 |
|
3Q 2018 |
|
2Q 2018 |
Wholly-Owned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AL |
|
$ |
12,441 |
|
|
$ |
12,597 |
|
|
$ |
3,019 |
|
|
$ |
3,310 |
|
|
24.3 |
% |
|
26.3 |
% |
|
$ |
4,668 |
|
|
$ |
4,737 |
|
|
92.5 |
% |
|
92.8 |
% |
IL |
|
4,962 |
|
|
4,848 |
|
|
1,773 |
|
|
1,891 |
|
|
35.7 |
% |
|
39.0 |
% |
|
2,195 |
|
|
2,174 |
|
|
90.3 |
% |
|
89.9 |
% |
|
|
17,403 |
|
|
17,445 |
|
|
4,792 |
|
|
5,201 |
|
|
27.5 |
% |
|
29.8 |
% |
|
3,478 |
|
|
3,514 |
|
|
91.5 |
% |
|
91.4 |
% |
Sabra’s Share of
Unconsolidated JV (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AL |
|
36,940 |
|
|
36,657 |
|
|
8,747 |
|
|
8,727 |
|
|
23.7 |
% |
|
23.8 |
% |
|
4,017 |
|
|
4,051 |
|
|
81.8 |
% |
|
80.5 |
% |
Total |
|
$ |
54,343 |
|
|
$ |
54,102 |
|
|
$ |
13,539 |
|
|
$ |
13,928 |
|
|
24.9 |
% |
|
25.7 |
% |
|
$ |
3,835 |
|
|
$ |
3,868 |
|
|
84.7 |
% |
|
83.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operator |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enlivant |
|
$ |
45,906 |
|
|
$ |
45,728 |
|
|
$ |
11,222 |
|
|
$ |
11,355 |
|
|
24.4 |
% |
|
24.8 |
% |
|
$ |
4,172 |
|
|
$ |
4,222 |
|
|
83.8 |
% |
|
82.4 |
% |
Sienna |
|
5,413 |
|
|
5,309 |
|
|
1,855 |
|
|
2,004 |
|
|
34.3 |
% |
|
37.7 |
% |
|
2,106 |
|
|
2,086 |
|
|
90.3 |
% |
|
90.3 |
% |
Other |
|
3,024 |
|
|
3,065 |
|
|
462 |
|
|
569 |
|
|
15.3 |
% |
|
18.6 |
% |
|
6,135 |
|
|
5,901 |
|
|
79.7 |
% |
|
86.3 |
% |
Total |
|
$ |
54,343 |
|
|
$ |
54,102 |
|
|
$ |
13,539 |
|
|
$ |
13,928 |
|
|
24.9 |
% |
|
25.7 |
% |
|
$ |
3,835 |
|
|
$ |
3,868 |
|
|
84.7 |
% |
|
83.8 |
% |
(1) REVPOR and Occupancy Percentage include only
facilities owned by the Company as of the end of the current period
for the duration that such facilities were classified as Stabilized
Facilities. In addition, revenues, Cash NOI and REVPOR have been
adjusted for changes in the foreign currency exchange rate where
applicable.(2) Reflects Sabra’s 49% pro rata share of
applicable amounts related to its unconsolidated joint venture with
Enlivant.
PRO FORMA TOP 10 RELATIONSHIPS (1)
|
|
|
|
Twelve Months Ended September
30, 2018 |
Tenant |
|
Primary Facility Type |
|
Number of Sabra Properties
(2) |
|
Lease Coverage (3) |
|
% of Pro Forma Annualized Cash
NOI (4) |
Senior Care Centers (5) |
|
Skilled Nursing |
|
38 |
|
|
0.98x |
|
10.2% |
|
Enlivant |
|
Assisted Living |
|
183 |
|
|
NA |
|
8.0% |
|
Avamere Family of Companies (5) |
|
Skilled Nursing |
|
29 |
|
|
1.24x |
|
7.2% |
|
Signature Healthcare |
|
Skilled Nursing |
|
45 |
|
|
1.47x |
|
6.2% |
|
Holiday AL Holdings LP (6) |
|
Independent Living |
|
21 |
|
|
1.15x |
|
5.9% |
|
North American Healthcare (7) |
|
Skilled Nursing |
|
23 |
|
|
1.22x |
|
5.9% |
|
Signature Behavioral |
|
Behavioral Hospitals |
|
6 |
|
|
1.55x |
|
5.5% |
|
Genesis Healthcare, Inc. (8) |
|
Skilled Nursing |
|
26 |
|
|
1.20x |
|
5.4% |
|
Cadia Healthcare |
|
Skilled Nursing |
|
9 |
|
|
1.33x |
|
5.1% |
|
Healthmark Group |
|
Skilled Nursing |
|
18 |
|
|
1.23x |
|
2.8% |
|
(1) Pro forma top 10 relationships assumes the previously
announced rent repositioning program for certain of our tenants who
were legacy tenants of CCP was completed at the beginning of the
period presented.(2) Consists of properties directly owned by us
and properties owned through our joint venture with
Enlivant.(3) Lease Coverage for tenants is defined as the
EBITDAR Coverage for Stabilized Facilities operated by the
applicable tenant, unless there is a corporate guarantee and the
guarantor level fixed charge coverage is a more meaningful
indicator of the tenant’s ability to make rent payments. Lease
Coverage is for the twelve months ended September 30, 2018 and
is presented one quarter in arrears. Lease Coverage for legacy CCP
tenants is presented as if these real estate investments were owned
by Sabra during the entire period presented and reflects the
previously announced rent repositioning program for certain of our
tenants who were legacy tenants of CCP.(4) Pro Forma Annualized
Cash NOI reflects the Senior Care Centers portfolio at the
historical annual lease rate of $58.5 million as the leases for
these assets were terminated during the three months ended
September 30, 2018 due to non-payment of rent. Senior Care Centers
is currently operating the facilities on a month-to-month
basis.(5) Lease Coverage reflects guarantor level fixed
charge coverage for these relationships.(6) Lease Coverage
reflects guarantor level fixed charge coverage, pro forma for
Holiday AL Holdings LP’s recently announced termination agreement
on facilities leased from New Senior Investment Group, Inc. The
Holiday AL Holdings LP portfolio consists of 21 independent living
communities that the Company underwrote at a 1.10x EBITDAR
Coverage.(7) The North American Healthcare portfolio coverage is
presented on a trailing twelve month basis and consists of the
EBITDAR Coverage for facilities owned by Sabra in periods
subsequent to our acquisition and underwritten stabilized EBITDAR
Coverage for periods preceding our acquisition.(8) Lease Coverage
reflects guarantor level fixed charge coverage, pro forma for rent
reductions from Sabra and other Genesis landlords and the impact of
recent refinancings.
LIQUIDITY
As of September 30, 2018, we had approximately $417.1
million of liquidity, consisting of unrestricted cash and cash
equivalents of $36.1 million (excluding joint venture cash and cash
equivalents) and available borrowings of $381.0 million under our
revolving credit facility. In addition, restricted cash as
of September 30, 2018 includes $90.1
million held by exchange accommodation titleholders, which may
be used to fund future real estate acquisitions.
CONFERENCE CALL AND COMPANY INFORMATION
A conference call with a simultaneous webcast to discuss the
2018 third quarter results will be held on Tuesday, November 6,
2018 at 10:00 am Pacific Time. The dial-in number for U.S.
participants is (844) 862-3710. For participants outside the U.S.,
the dial-in number is (612) 979-9902. The conference ID number is
7157077. The webcast URL
is https://edge.media-server.com/m6/p/drpx878c. A
digital replay of the call will be available on the Company’s
website at www.sabrahealth.com. The Company’s supplemental
information package for the third quarter will also be available on
the Company’s website in the “Investors” section.
ABOUT SABRA
As of September 30, 2018, Sabra’s investment portfolio
included 487 real estate properties held for investment (consisting
of (i) 350 Skilled Nursing/Transitional Care facilities,
(ii) 91 Senior Housing communities (“Senior Housing -
Leased”), (iii) 24 Senior Housing communities operated by
third-party property managers pursuant to property management
agreements (“Senior Housing - Managed”) and (iv) 22 Specialty
Hospitals and Other facilities), one investment in a direct
financing lease, 22 investments in loans receivable (consisting of
(i) one mortgage loan, (ii) two construction loans, (iii) one
mezzanine loan, (iv) one pre-development loan and (v) 17 other
loans), 11 preferred equity investments and one investment in an
unconsolidated joint venture that owns 172 Senior Housing - Managed
communities. As of September 30, 2018, Sabra’s real estate
properties held for investment included 49,954 beds/units and its
unconsolidated joint venture included 7,652 beds/units, spread
across the United States and Canada.
FORWARD-LOOKING STATEMENTS SAFE HARBOR
This release contains “forward-looking” statements as defined in
the Private Securities Litigation Reform Act of 1995. These
statements may be identified, without limitation, by the use of
“expects,” “believes,” “intends,” “should” or comparable terms or
the negative thereof. Examples of forward-looking statements
include all statements regarding our planned dispositions
(including the expected proceeds from, and timing of, sales), as
well as our expected future financial position, results of
operations (including our updated outlook for the full year 2018),
business strategy, and plans and objectives for future
operations.
Our actual results may differ materially from those projected or
contemplated by our forward-looking statements as a result of
various factors, including among others, the following: our
dependence on the operating success of our tenants; operational
risks with respect to our Senior Housing - Managed communities; the
effect of our tenants declaring bankruptcy or becoming insolvent;
our ability to find replacement tenants and the impact of
unforeseen costs in acquiring new properties; the impact of
litigation and rising insurance costs on the business of our
tenants; our ability to implement the previously announced rent
repositioning program for certain of our tenants who were legacy
tenants of Care Capital Properties, Inc. (“CCP”) on the timing or
terms we have previously disclosed; our ability to dispose of
facilities currently leased to Genesis Healthcare, Inc. and Senior
Care Centers on the timing or terms we have disclosed; the
possibility that Sabra may not acquire the remaining majority
interest in the Enlivant joint venture; risks associated with our
investments in joint ventures; changes in healthcare regulation and
political or economic conditions; the impact of required regulatory
approvals of transfers of healthcare properties; competitive
conditions in our industry; our concentration in the healthcare
property sector, particularly in skilled nursing/transitional care
facilities and senior housing communities, which makes our
profitability more vulnerable to a downturn in a specific sector
than if we were investing in multiple industries; the significant
amount of and our ability to service our indebtedness; covenants in
our debt agreements that may restrict our ability to pay dividends,
make investments, incur additional indebtedness and refinance
indebtedness on favorable terms; increases in market interest
rates; our ability to raise capital through equity and debt
financings; changes in foreign currency exchange rates; the
relatively illiquid nature of real estate investments; the loss of
key management personnel or other employees; uninsured or
underinsured losses affecting our properties and the possibility of
environmental compliance costs and liabilities; the impact of a
failure or security breach of information technology in our
operations; our ability to maintain our status as a real estate
investment trust (“REIT”); changes in tax laws and regulations
affecting REITs (including the potential effects of the Tax Cuts
and Jobs Act); compliance with REIT requirements and certain tax
and tax regulatory matters related to our status as a REIT; and the
ownership limits and anti-takeover defenses in our governing
documents and under Maryland law, which may restrict change of
control or business combination opportunities.
Additional information concerning risks and uncertainties that
could affect our business can be found in our filings with the
Securities and Exchange Commission (the “SEC”), including Item 1A
of our Annual Report on Form 10-K for the year ended December 31,
2017. We do not intend, and we undertake no obligation, to update
any forward-looking information to reflect events or circumstances
after the date of this release or to reflect the occurrence of
unanticipated events, unless required by law to do so.
TENANT AND BORROWER INFORMATION
This release includes information regarding certain of our
tenants that lease properties from us and our borrowers, most of
which are not subject to SEC reporting requirements. The
information related to our tenants and borrowers that is provided
in this release has been provided by, or derived from information
provided by, such tenants and borrowers. We have not independently
verified this information. We have no reason to believe that such
information is inaccurate in any material respect. We are providing
this data for informational purposes only.
NOTE REGARDING NON-GAAP FINANCIAL MEASURES
This release includes the following financial measures defined
as non-GAAP financial measures by the SEC: net operating income
(“NOI”), Cash NOI, funds from operations attributable to common
stockholders (“FFO”), Normalized FFO, Adjusted FFO (“AFFO”),
Normalized AFFO, FFO per diluted common share, Normalized FFO per
diluted common share, AFFO per diluted common share and Normalized
AFFO per diluted common share. These measures may be different than
non-GAAP financial measures used by other companies, and the
presentation of these measures is not intended to be considered in
isolation or as a substitute for financial information prepared and
presented in accordance with U.S. generally accepted accounting
principles. An explanation of these non-GAAP financial measures is
included under “Reporting Definitions” in this release, and
reconciliations of these non-GAAP financial measures to the GAAP
financial measures we consider most comparable are included on the
Investors section of our website at
http://www.sabrahealth.com/investors/financials/reports-presentations/non-gaap.
CONTACT
Investor & Media Inquiries: (888) 393-8248 or
investorinquiries@sabrahealth.com
SABRA HEALTH CARE REIT, INC.
OVERVIEW
Financial Metrics |
Three Months Ended September
30, |
|
Nine Months Ended September 30, |
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
Dollars in thousands, except per
share data |
Revenues |
$ |
151,802 |
|
|
$ |
111,789 |
|
|
$ |
484,200 |
|
|
$ |
239,175 |
|
Net income attributable to common stockholders |
35,218 |
|
|
12,534 |
|
|
288,708 |
|
|
46,756 |
|
Diluted per share data attributable to common stockholders: |
|
|
|
|
|
|
|
EPS |
$ |
0.20 |
|
|
$ |
0.11 |
|
|
$ |
1.62 |
|
|
$ |
0.57 |
|
FFO |
0.50 |
|
|
0.34 |
|
|
1.72 |
|
|
1.28 |
|
Normalized FFO |
0.60 |
|
|
0.63 |
|
|
1.81 |
|
|
1.75 |
|
AFFO |
0.54 |
|
|
0.56 |
|
|
1.68 |
|
|
1.66 |
|
Normalized AFFO |
0.55 |
|
|
0.60 |
|
|
1.69 |
|
|
1.69 |
|
Dividends per common share |
0.45 |
|
|
0.36 |
|
|
1.35 |
|
|
1.21 |
|
Capitalization
and Market Facts |
September 30, 2018 |
|
|
|
Key Credit
Metrics |
Pro
FormaSeptember 30, 2018 (2) |
Common shares outstanding |
178.3million |
|
|
|
Net Debt to Adjusted EBITDA
(3)(4) |
5.50x |
Common equity Market
Capitalization |
$4.1 billion |
|
|
|
Including
unconsolidated joint venture (3)(4) |
5.94x |
Total Debt (1) |
$3.7 billion |
|
|
|
Interest Coverage
(3) |
4.18x |
Total Enterprise Value
(1) |
$7.8 billion |
|
|
|
Fixed Charge Coverage
Ratio (3) |
3.88x |
|
|
|
|
|
Total Debt/Asset
Value |
50% |
Common stock closing
price |
$23.12 |
|
|
|
Secured Debt/Asset
Value |
8% |
Common stock 52-week
range |
$15.78 - $23.83 |
|
|
|
Unencumbered
Assets/Unsecured Debt |
214% |
|
|
|
|
|
|
|
Common stock ticker
symbol |
SBRA |
|
|
|
|
|
Portfolio |
|
|
|
|
|
|
Occupancy Percentage (5) |
Property Count |
|
Investment |
|
Beds/Units |
|
|
|
|
|
|
|
As of September 30,
2018 |
Dollars in thousands |
Investment in Real
Estate Properties, gross |
|
|
|
|
|
|
|
Triple-Net Portfolio: |
|
|
|
|
|
|
|
Skilled Nursing /
Transitional Care |
350 |
|
|
$ |
4,236,602 |
|
|
39,848 |
|
|
82.6 |
% |
Senior
Housing - Leased |
91 |
|
|
1,227,305 |
|
|
7,309 |
|
|
85.7 |
|
Specialty
Hospitals and Other |
22 |
|
|
618,493 |
|
|
1,085 |
|
|
88.9 |
|
Total
Triple-Net Portfolio |
463 |
|
|
6,082,400 |
|
|
48,242 |
|
|
|
Senior
Housing - Managed |
24 |
|
|
311,782 |
|
|
1,712 |
|
|
91.5 |
|
Consolidated Equity Investments |
487 |
|
|
6,394,182 |
|
|
49,954 |
|
|
|
Unconsolidated Joint Venture Senior Housing - Managed |
172 |
|
|
732,935 |
|
|
7,652 |
|
|
81.8 |
|
Total
Equity Investments |
659 |
|
|
7,127,117 |
|
|
57,606 |
|
|
|
Investment in Direct
Financing Lease, net |
1 |
|
|
23,313 |
|
|
|
|
|
Investments in Loans
Receivable, gross (6) |
22 |
|
|
62,424 |
|
|
|
|
|
Preferred Equity
Investments, gross (7) |
11 |
|
|
47,096 |
|
|
Includes 73 relationships in 44
U.S. states and Canada |
Total
Investments |
693 |
|
|
$ |
7,259,950 |
|
|
(1) Includes Sabra’s 49% pro rata share of the debt
of its unconsolidated joint venture.(2) Assumes that
the remaining CCP rent reductions and the full $19.0 million
Genesis rent reduction were completed as of the beginning of the
period presented.(3) Based on the trailing twelve month
period ended as of the date indicated.(4) Net Debt to
Adjusted EBITDA is calculated based on Annualized Adjusted EBITDA,
which is Adjusted EBITDA, as adjusted for annualizing adjustments
that give effect to the acquisitions and dispositions completed
during the respective period as though such acquisitions and
dispositions were completed as of the beginning of the period
presented. Net Debt to Adjusted EBITDA - Including Unconsolidated
Joint Venture is calculated based on Annualized Adjusted EBITDA, as
adjusted, which includes Annualized Adjusted EBITDA and is further
adjusted to include the Company’s share of the unconsolidated joint
venture interest expense. See “Reconciliations of Non-GAAP
Financial Measures” on our website at
http://www.sabrahealth.com/investors/financials/reports-presentations/non-gaap
for additional information.(5) Occupancy Percentage is
presented for the trailing twelve month period and one quarter in
arrears, except for Senior Housing - Managed, which is presented
for the trailing three month period.(6) Three of our
investments in loans receivable contain purchase options on three
Senior Housing developments with 126 beds/units.(7) Our
preferred equity investments include investments in entities owning
10 Senior Housing developments with 1,090 beds/units and one
Skilled Nursing/Transitional Care development with 120
beds/units.
SABRA HEALTH CARE REIT, INC.
2018 OUTLOOK UPDATE
The table below sets forth our updated 2018 full year guidance
(per diluted common share):
|
Low |
|
High |
Net income attributable to common stockholders |
$ |
1.64 |
|
|
$ |
1.67 |
|
Add: |
|
|
|
Depreciation and amortization of real estate
assets |
1.07 |
|
|
1.07 |
|
Depreciation and amortization of real estate assets
related to unconsolidated joint venture |
0.12 |
|
|
0.12 |
|
Net gain on sales of real estate |
(0.68 |
) |
|
(0.68 |
) |
Impairment of real estate |
0.01 |
|
|
0.01 |
|
FFO attributable to common stockholders |
$ |
2.16 |
|
|
$ |
2.19 |
|
|
|
|
|
CCP merger and transition costs |
0.01 |
|
|
0.01 |
|
Provision for doubtful accounts and loan losses,
net |
0.03 |
|
|
0.03 |
|
Other normalizing items (1) |
0.07 |
|
|
0.07 |
|
Normalized FFO attributable to common stockholders |
$ |
2.27 |
|
|
$ |
2.30 |
|
|
|
|
|
FFO attributable to common stockholders |
2.16 |
|
|
2.19 |
|
Stock-based compensation expense |
0.04 |
|
|
0.04 |
|
Straight-line rental income adjustments |
(0.24 |
) |
|
(0.24 |
) |
Amortization of above and below market lease
intangibles, net |
0.03 |
|
|
0.03 |
|
Non-cash interest income adjustments |
(0.01 |
) |
|
(0.01 |
) |
Non-cash interest expense |
0.06 |
|
|
0.06 |
|
Provision for doubtful straight-line rental income,
loan losses and other reserves |
0.06 |
|
|
0.06 |
|
Other non-cash adjustments related to unconsolidated
joint venture |
0.01 |
|
|
0.01 |
|
AFFO attributable to common stockholders |
$ |
2.11 |
|
|
$ |
2.14 |
|
|
|
|
|
CCP transition costs |
0.01 |
|
|
0.01 |
|
Recovery of doubtful cash income |
(0.01 |
) |
|
(0.01 |
) |
Other normalizing items (1) |
0.03 |
|
|
0.03 |
|
Normalized AFFO attributable to common stockholders |
$ |
2.14 |
|
|
$ |
2.17 |
|
|
|
|
|
The updated 2018 outlook reflects the followng:
- An assumption that no rental revenues are recognized from
Senior Care Centers during the fourth quarter of 2018;
- Updates to the Company's Senior Housing - Managed portfolio
based on actual performance through the third quarter and expected
fourth quarter 2018 performance; and
- Updates for the actual timing of the Company's investments and
dispositions and related impact to the balance of the Company's
revolving credit facility.
Except as otherwise noted above, the foregoing projections
reflect management’s view of current and future market conditions.
There can be no assurance that the Company’s actual results will
not differ materially from the estimates set forth above. Except as
otherwise required by law, the Company assumes no, and hereby
disclaims any, obligation to update any of the foregoing
projections as a result of new information or new or future
developments.
(1) Other normalizing items for FFO and AFFO include
(i) $0.03 per diluted common share of capitalized issuance costs
related to our preferred stock issuance that were written off as a
result of the June 1, 2018 preferred stock redemption and (ii)
$0.01 per diluted common share of legal fees related to the
recovery of previously reserved cash rental income and non-Senior
Housing - Managed operating expenses. These amounts are partially
offset by $0.01 per diluted common share of other income related to
legacy CCP investments. In addition, other normalizing items
for FFO includes $0.04 per diluted common share of acceleration of
above market lease intangible amortization related to the
restructuring of an operator’s lease agreement.
SABRA HEALTH CARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(dollars in thousands, except per share data)
|
Three Months Ended September
30, |
|
Nine Months Ended September 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues: |
|
|
|
|
|
|
|
Rental income |
$ |
130,467 |
|
|
$ |
100,145 |
|
|
$ |
418,951 |
|
|
$ |
213,273 |
|
Interest and other income |
3,932 |
|
|
4,090 |
|
|
12,823 |
|
|
8,062 |
|
Resident fees and services |
17,403 |
|
|
7,554 |
|
|
52,426 |
|
|
17,840 |
|
|
|
|
|
|
|
|
|
Total revenues |
151,802 |
|
|
111,789 |
|
|
484,200 |
|
|
239,175 |
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
Depreciation and amortization |
48,468 |
|
|
25,933 |
|
|
143,301 |
|
|
62,290 |
|
Interest |
37,305 |
|
|
24,568 |
|
|
109,880 |
|
|
56,218 |
|
Operating expenses |
12,611 |
|
|
5,102 |
|
|
37,034 |
|
|
11,929 |
|
General and administrative |
8,022 |
|
|
12,944 |
|
|
25,160 |
|
|
24,159 |
|
Merger and acquisition costs |
151 |
|
|
23,299 |
|
|
593 |
|
|
29,750 |
|
Provision for doubtful accounts and loan losses |
8,910 |
|
|
5,149 |
|
|
9,449 |
|
|
7,454 |
|
Impairment of real estate |
— |
|
|
— |
|
|
1,413 |
|
|
— |
|
|
|
|
|
|
|
|
|
Total expenses |
115,467 |
|
|
96,995 |
|
|
326,830 |
|
|
191,800 |
|
|
|
|
|
|
|
|
|
Other income: |
|
|
|
|
|
|
|
Loss on extinguishment of debt |
— |
|
|
(553 |
) |
|
— |
|
|
(553 |
) |
Other income |
1,336 |
|
|
51 |
|
|
4,156 |
|
|
3,121 |
|
Net gain on sales of real estate |
14 |
|
|
582 |
|
|
142,445 |
|
|
4,614 |
|
|
|
|
|
|
|
|
|
Total other income |
1,350 |
|
|
80 |
|
|
146,601 |
|
|
7,182 |
|
|
|
|
|
|
|
|
|
Income before loss from unconsolidated joint venture and income tax
(expense) benefit |
37,685 |
|
|
14,874 |
|
|
303,971 |
|
|
54,557 |
|
|
|
|
|
|
|
|
|
Loss from unconsolidated joint venture |
(1,725 |
) |
|
— |
|
|
(3,626 |
) |
|
— |
|
Income tax (expense) benefit |
(732 |
) |
|
195 |
|
|
(1,847 |
) |
|
(161 |
) |
|
|
|
|
|
|
|
|
Net income |
35,228 |
|
|
15,069 |
|
|
298,498 |
|
|
54,396 |
|
|
|
|
|
|
|
|
|
Net (income) loss attributable to noncontrolling
interests |
(10 |
) |
|
26 |
|
|
(22 |
) |
|
42 |
|
|
|
|
|
|
|
|
|
Net income attributable to Sabra Health Care REIT, Inc. |
35,218 |
|
|
15,095 |
|
|
298,476 |
|
|
54,438 |
|
|
|
|
|
|
|
|
|
Preferred stock dividends |
— |
|
|
(2,561 |
) |
|
(9,768 |
) |
|
(7,682 |
) |
|
|
|
|
|
|
|
|
Net income attributable to common stockholders |
$ |
35,218 |
|
|
$ |
12,534 |
|
|
$ |
288,708 |
|
|
$ |
46,756 |
|
|
|
|
|
|
|
|
|
Net income attributable to common stockholders, per: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic common share |
$ |
0.20 |
|
|
$ |
0.11 |
|
|
$ |
1.62 |
|
|
$ |
0.58 |
|
|
|
|
|
|
|
|
|
Diluted common share |
$ |
0.20 |
|
|
$ |
0.11 |
|
|
$ |
1.62 |
|
|
$ |
0.57 |
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding, basic |
178,317,769 |
|
|
112,149,638 |
|
|
178,309,127 |
|
|
81,150,846 |
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding, diluted |
178,941,213 |
|
|
112,418,100 |
|
|
178,729,853 |
|
|
81,429,044 |
|
SABRA HEALTH CARE REIT, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(dollars in thousands, except per share data)
|
September 30, 2018 |
|
December 31, 2017 |
|
(unaudited) |
|
|
Assets |
|
|
|
Real estate investments, net of accumulated
depreciation of $419,225 and $340,423 as of September 30, 2018 and
December 31, 2017, respectively |
$ |
5,975,590 |
|
|
$ |
5,994,432 |
|
Loans receivable and other investments, net |
110,351 |
|
|
114,390 |
|
Investment in unconsolidated joint venture |
344,341 |
|
|
— |
|
Cash and cash equivalents |
36,348 |
|
|
518,632 |
|
Restricted cash |
103,168 |
|
|
68,817 |
|
Lease intangible assets, net |
142,919 |
|
|
167,119 |
|
Accounts receivable, prepaid expenses and other
assets, net |
197,622 |
|
|
168,887 |
|
Total assets |
$ |
6,910,339 |
|
|
$ |
7,032,277 |
|
|
|
|
|
Liabilities |
|
|
|
Secured debt, net |
$ |
252,827 |
|
|
$ |
256,430 |
|
Revolving credit facility |
619,000 |
|
|
641,000 |
|
Term loans, net |
1,189,647 |
|
|
1,190,774 |
|
Senior unsecured notes, net |
1,307,120 |
|
|
1,306,286 |
|
Accounts payable and accrued liabilities |
86,885 |
|
|
102,523 |
|
Lease intangible liabilities, net |
87,602 |
|
|
98,015 |
|
Total liabilities |
3,543,081 |
|
|
3,595,028 |
|
|
|
|
|
Equity |
|
|
|
Preferred stock, $.01 par value; 10,000,000 shares
authorized, 5,750,000 shares issued and outstanding as of
December 31, 2017 |
— |
|
|
58 |
|
Common stock, $.01 par value; 250,000,000 shares
authorized, 178,284,975 and 178,255,843 shares issued and
outstanding as of September 30, 2018 and December 31, 2017,
respectively |
1,783 |
|
|
1,783 |
|
Additional paid-in capital |
3,505,877 |
|
|
3,636,913 |
|
Cumulative distributions in excess of net
income |
(171,116 |
) |
|
(217,236 |
) |
Accumulated other comprehensive income |
26,357 |
|
|
11,289 |
|
Total Sabra Health Care REIT, Inc. stockholders’ equity |
3,362,901 |
|
|
3,432,807 |
|
Noncontrolling interests |
4,357 |
|
|
4,442 |
|
Total equity |
3,367,258 |
|
|
3,437,249 |
|
Total liabilities and equity |
$ |
6,910,339 |
|
|
$ |
7,032,277 |
|
SABRA HEALTH CARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in thousands)
|
Nine Months Ended September 30, |
|
2018 |
|
2017 |
Cash flows from
operating activities: |
|
|
|
Net income |
$ |
298,498 |
|
|
$ |
54,396 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
143,301 |
|
|
62,290 |
|
Amortization of above and below market lease intangibles, net |
4,193 |
|
|
637 |
|
Non-cash
interest income adjustments |
(1,722 |
) |
|
(137 |
) |
Non-cash
interest expense |
7,548 |
|
|
5,288 |
|
Stock-based compensation expense |
6,275 |
|
|
8,329 |
|
Loss on
extinguishment of debt |
— |
|
|
553 |
|
Straight-line rental income adjustments |
(34,404 |
) |
|
(18,260 |
) |
Provision
for doubtful accounts and loan losses |
9,449 |
|
|
7,454 |
|
Change in
fair value of contingent consideration |
— |
|
|
(552 |
) |
Net gain
on sales of real estate |
(142,445 |
) |
|
(4,614 |
) |
Impairment of real estate |
1,413 |
|
|
— |
|
Loss from
unconsolidated joint venture |
3,626 |
|
|
— |
|
Distributions of earnings from unconsolidated joint venture |
6,494 |
|
|
— |
|
Changes
in operating assets and liabilities: |
|
|
|
Accounts
receivable, prepaid expenses and other assets, net |
(4,031 |
) |
|
(5,565 |
) |
Accounts
payable and accrued liabilities |
(15,171 |
) |
|
(56,561 |
) |
|
|
|
|
Net cash
provided by operating activities |
283,024 |
|
|
53,258 |
|
Cash flows from
investing activities: |
|
|
|
Acquisition of real estate |
(239,001 |
) |
|
(393,064 |
) |
Cash
received in CCP merger |
— |
|
|
77,858 |
|
Origination and fundings of loans receivable |
(41,448 |
) |
|
(5,642 |
) |
Origination and fundings of preferred equity investments |
(5,285 |
) |
|
(2,713 |
) |
Additions
to real estate |
(21,695 |
) |
|
(3,233 |
) |
Repayments of loans receivable |
48,282 |
|
|
8,710 |
|
Repayments of preferred equity investments |
6,491 |
|
|
3,239 |
|
Investment in unconsolidated joint venture |
(354,461 |
) |
|
— |
|
Net
proceeds from the sales of real estate |
290,864 |
|
|
11,723 |
|
|
|
|
|
Net cash
used in investing activities |
(316,253 |
) |
|
(303,122 |
) |
Cash flows from
financing activities: |
|
|
|
Net
repayments of revolving credit facility |
(22,000 |
) |
|
(137,000 |
) |
Proceeds
from term loans |
— |
|
|
181,000 |
|
Principal
payments on secured debt |
(3,202 |
) |
|
(3,094 |
) |
Payments
of deferred financing costs |
(12 |
) |
|
(15,316 |
) |
Distributions to noncontrolling interests |
(107 |
) |
|
— |
|
Preferred
stock redemption |
(143,750 |
) |
|
— |
|
Issuance
of common stock, net |
(499 |
) |
|
319,026 |
|
Dividends
paid on common and preferred stock |
(244,978 |
) |
|
(86,813 |
) |
|
|
|
|
Net cash
(used in) provided by financing activities |
(414,548 |
) |
|
257,803 |
|
|
|
|
|
Net (decrease) increase
in cash, cash equivalents and restricted cash |
(447,777 |
) |
|
7,939 |
|
Effect of foreign
currency translation on cash, cash equivalents and restricted
cash |
(156 |
) |
|
758 |
|
Cash, cash equivalents
and restricted cash, beginning of period |
587,449 |
|
|
34,665 |
|
|
|
|
|
Cash, cash equivalents
and restricted cash, end of period |
$ |
139,516 |
|
|
$ |
43,362 |
|
SABRA HEALTH CARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS CONTINUED
(in thousands)
|
Nine Months Ended September 30, |
|
2018 |
|
2017 |
Supplemental disclosure of cash flow information: |
|
|
|
Interest paid |
$ |
111,519 |
|
|
$ |
48,836 |
|
Supplemental disclosure of non-cash investing and financing
activities: |
|
|
|
Acquisition of business in CCP merger |
$ |
— |
|
|
$ |
3,726,093 |
|
Assumption of indebtedness in CCP merger |
$ |
— |
|
|
$ |
(1,751,373 |
) |
Stock exchanged in CCP merger |
$ |
— |
|
|
$ |
(2,052,578 |
) |
SABRA HEALTH CARE REIT, INC.
FUNDS FROM OPERATIONS (FFO), NORMALIZED
FFO,ADJUSTED FUNDS FROM OPERATIONS (AFFO) AND
NORMALIZED AFFO
(dollars in thousands, except per share data)
|
Three Months Ended September
30, |
|
Nine Months Ended September 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net income attributable to common stockholders |
$ |
35,218 |
|
|
$ |
12,534 |
|
|
$ |
288,708 |
|
|
$ |
46,756 |
|
Add: |
|
|
|
|
|
|
|
Depreciation and amortization of real estate
assets |
48,468 |
|
|
25,933 |
|
|
143,301 |
|
|
62,290 |
|
Depreciation and amortization of real estate assets
related to noncontrolling interests |
(39 |
) |
|
— |
|
|
(119 |
) |
|
— |
|
Depreciation and amortization of real estate assets
related to unconsolidated joint venture |
5,214 |
|
|
— |
|
|
15,929 |
|
|
— |
|
Net gain on sales of real estate |
(14 |
) |
|
(582 |
) |
|
(142,445 |
) |
|
(4,614 |
) |
Impairment of real estate |
— |
|
|
— |
|
|
1,413 |
|
|
— |
|
FFO attributable to common stockholders |
$ |
88,847 |
|
|
$ |
37,885 |
|
|
$ |
306,787 |
|
|
$ |
104,432 |
|
Lease termination fee |
— |
|
|
(351 |
) |
|
— |
|
|
(2,634 |
) |
CCP merger and transition costs |
380 |
|
|
27,576 |
|
|
1,720 |
|
|
33,983 |
|
Loss on extinguishment of debt |
— |
|
|
553 |
|
|
— |
|
|
553 |
|
Provision for doubtful accounts and loan losses,
net |
10,860 |
|
|
4,583 |
|
|
5,568 |
|
|
6,365 |
|
Other normalizing items (1) |
6,430 |
|
|
51 |
|
|
9,402 |
|
|
163 |
|
Normalized FFO attributable to common
stockholders |
$ |
106,517 |
|
|
$ |
70,297 |
|
|
$ |
323,477 |
|
|
$ |
142,862 |
|
FFO attributable to common stockholders |
$ |
88,847 |
|
|
$ |
37,885 |
|
|
$ |
306,787 |
|
|
$ |
104,432 |
|
Merger and acquisition costs (2) |
151 |
|
|
23,299 |
|
|
593 |
|
|
29,750 |
|
Stock-based compensation expense |
2,436 |
|
|
2,669 |
|
|
6,275 |
|
|
6,988 |
|
Straight-line rental income adjustments |
(10,652 |
) |
|
(8,682 |
) |
|
(34,404 |
) |
|
(18,260 |
) |
Amortization of above and below market lease
intangibles, net |
5,561 |
|
|
637 |
|
|
4,193 |
|
|
637 |
|
Non-cash interest income adjustments |
(548 |
) |
|
(188 |
) |
|
(1,722 |
) |
|
(137 |
) |
Non-cash interest expense |
2,551 |
|
|
2,044 |
|
|
7,548 |
|
|
5,288 |
|
Non-cash portion of loss on extinguishment of
debt |
— |
|
|
553 |
|
|
— |
|
|
553 |
|
Change in fair value of contingent
consideration |
— |
|
|
270 |
|
|
— |
|
|
(552 |
) |
Provision for doubtful straight-line rental income,
loan losses and other reserves |
8,801 |
|
|
4,886 |
|
|
11,293 |
|
|
6,810 |
|
Other non-cash adjustments related to unconsolidated
joint venture |
118 |
|
|
— |
|
|
1,132 |
|
|
— |
|
Other non-cash adjustments |
25 |
|
|
30 |
|
|
55 |
|
|
215 |
|
AFFO attributable to common stockholders |
$ |
97,290 |
|
|
$ |
63,403 |
|
|
$ |
301,750 |
|
|
$ |
135,724 |
|
CCP transition costs |
286 |
|
|
4,297 |
|
|
1,220 |
|
|
4,297 |
|
Lease termination fee |
— |
|
|
(351 |
) |
|
— |
|
|
(2,634 |
) |
Provision for (recovery of) doubtful cash
income |
108 |
|
|
263 |
|
|
(2,160 |
) |
|
443 |
|
Other normalizing items (1) |
180 |
|
|
21 |
|
|
3,152 |
|
|
59 |
|
Normalized AFFO attributable to common
stockholders |
$ |
97,864 |
|
|
$ |
67,633 |
|
|
$ |
303,962 |
|
|
$ |
137,889 |
|
Amounts per diluted common share attributable to common
stockholders: |
|
|
|
|
|
|
|
Net income |
$ |
0.20 |
|
|
$ |
0.11 |
|
|
$ |
1.62 |
|
|
$ |
0.57 |
|
FFO |
$ |
0.50 |
|
|
$ |
0.34 |
|
|
$ |
1.72 |
|
|
$ |
1.28 |
|
Normalized FFO |
$ |
0.60 |
|
|
$ |
0.63 |
|
|
$ |
1.81 |
|
|
$ |
1.75 |
|
AFFO |
$ |
0.54 |
|
|
$ |
0.56 |
|
|
$ |
1.68 |
|
|
$ |
1.66 |
|
Normalized AFFO |
$ |
0.55 |
|
|
$ |
0.60 |
|
|
$ |
1.69 |
|
|
$ |
1.69 |
|
Weighted average number of common shares outstanding, diluted: |
|
|
|
|
|
|
|
Net income, FFO and Normalized FFO |
178,941,213 |
|
|
112,418,100 |
|
|
178,729,853 |
|
|
81,429,044 |
|
AFFO and Normalized AFFO |
179,469,883 |
|
|
112,693,779 |
|
|
179,428,243 |
|
|
81,741,288 |
|
(1) Other normalizing items for FFO and AFFO for the
three and nine months ended September 30, 2018 include $6.3
million of acceleration of above market lease intangible
amortization. In addition, the nine months ended September 30,
2018 includes $5.5 million of capitalized issuance costs related to
our preferred stock issuance that were written off as a result of
the June 1, 2018 preferred stock redemption and $0.6 million of
expenses related to the previously anticipated refinancing of our
senior notes, as well as legal fees related to the recovery of
previously reserved cash rental income and non-Senior Housing -
Managed operating expenses, partially offset by a contingency fee
of $2.0 million earned during the period related to a legacy CCP
investment and $0.9 million of interest income from a legacy CCP
loan receivable that was fully repaid in June 2018, which
represents the difference between the outstanding principal balance
repaid and its discounted book value.(2) Merger and
acquisition costs primarily relate to the CCP merger.
Adjusted EBITDA*Adjusted EBITDA is calculated
as earnings before interest, taxes, depreciation and amortization
(“EBITDA”) excluding the impact of merger-related costs,
stock-based compensation expense under the Company’s long-term
equity award program, and loan loss reserves. Adjusted EBITDA is an
important non-GAAP supplemental measure of operating
performance.
Ancillary Supported TenantA tenant, or one of
its affiliates, that owns an ancillary business that depends on
providing services to the residents of the properties leased by the
affiliated operating company (Sabra’s tenant) for a meaningful part
of the ancillary business’s profitability and has below market
EBITDAR coverage.
Cash Net Operating Income (“Cash NOI”)*The
Company believes that net income attributable to common
stockholders as defined by GAAP is the most appropriate earnings
measure. The Company considers Cash NOI an important supplemental
measure because it allows investors, analysts and its management to
evaluate the operating performance of its investments. The Company
defines Cash NOI as total revenues less operating expenses and
non-cash revenues. Cash NOI excludes all other financial statement
amounts included in net income.
Consolidated DebtThe principal balances of the
Company’s revolving credit facility, term loans, senior unsecured
notes, and secured indebtedness as reported in the Company’s
condensed consolidated financial statements.
Consolidated Enterprise ValueThe Company
believes Consolidated Enterprise Value is an important measurement
as it is a measure of a company’s value. The Company calculates
Consolidated Enterprise Value as market equity capitalization plus
Consolidated Debt. Market equity capitalization is calculated as
(i) the number of shares of common stock multiplied by the closing
price of the Company’s common stock on the last day of the period
presented plus (ii) the number of shares of preferred stock
multiplied by the closing price of the Company’s preferred stock on
the last day of the period presented. Consolidated Enterprise Value
includes the Company’s market equity capitalization and
Consolidated Debt, less cash and cash equivalents.
EBITDAREarnings before interest, taxes,
depreciation, amortization and rent (“EBITDAR”) for a particular
facility accruing to the operator/tenant of the property (not the
Company) for the period presented. EBITDAR includes an imputed
management fee of 5.0% of revenues for Skilled Nursing/Transitional
Care facilities and Senior Housing - Leased communities and an
imputed management fee of 2.5% of revenues for Specialty Hospitals
and Other facilities. The Company uses EBITDAR in determining
EBITDAR Coverage. EBITDAR has limitations as an analytical tool.
EBITDAR does not reflect historical cash expenditures or future
cash requirements for facility capital expenditures or contractual
commitments. In addition, EBITDAR does not represent a property’s
net income or cash flow from operations and should not be
considered an alternative to those indicators. The Company utilizes
EBITDAR as a supplemental measure of the ability of the Company’s
operators/tenants and relevant guarantors to generate sufficient
liquidity to meet related obligations to the Company.
EBITDAR CoverageRepresents the ratio of EBITDAR
to cash rent for owned facilities (excluding Senior Housing -
Managed communities) for the period presented. EBITDAR Coverage is
a supplemental measure of a property’s ability to generate cash
flows for the operator/tenant (not the Company) to meet the
operator’s/tenant’s related cash rent and other obligations to the
Company. However, its usefulness is limited by, among other things,
the same factors that limit the usefulness of EBITDAR. EBITDAR
Coverage includes only Stabilized Facilities and excludes
significant tenants with meaningful credit enhancement through
guarantees (which include Genesis, Holiday and two legacy CCP
tenants), one Ancillary Supported Tenant and facilities for which
data is not available or meaningful.
EBITDARMEarnings before interest, taxes,
depreciation, amortization, rent and management fees (“EBITDARM”)
for a particular facility accruing to the operator/tenant of the
property (not the Company), for the period presented. The Company
uses EBITDARM in determining EBITDARM Coverage. The usefulness of
EBITDARM is limited by the same factors that limit the usefulness
of EBITDAR. Together with EBITDAR, the Company utilizes EBITDARM to
evaluate the core operations of the properties by eliminating
management fees, which vary based on operator/tenant and its
operating structure.
EBITDARM CoverageRepresents the ratio of
EBITDARM to cash rent for owned facilities (excluding Senior
Housing - Managed communities) for the period presented. EBITDARM
coverage is a supplemental measure of a property’s ability to
generate cash flows for the operator/tenant (not the Company) to
meet the operator’s/tenant’s related cash rent and other
obligations to the Company. However, its usefulness is limited by,
among other things, the same factors that limit the usefulness of
EBITDARM. EBITDARM Coverage includes only Stabilized Facilities and
excludes significant tenants with meaningful credit enhancement
through guarantees (which include Genesis, Holiday and two legacy
CCP tenants), one Ancillary Supported Tenant and facilities for
which data is not available or meaningful.
Fixed Charge Coverage RatioEBITDAR (including
adjustments for one-time and pro forma items) for the period
indicated (one quarter in arrears) for all operations of any
entities that guarantee the tenants’ lease obligations to the
Company divided by the same period cash rent expense, interest
expense and mandatory principal payments for operations of any
entity that guarantees the tenants’ lease obligation to the
Company. Fixed Charge Coverage is a supplemental measure of a
guarantor’s ability to meet the operator/tenant’s cash rent and
other obligations to the Company should the operator/tenant be
unable to do so itself. However, its usefulness is limited by,
among other things, the same factors that limit the usefulness of
EBITDAR. Fixed Charge Coverage is calculated by the Company as
described above based on information provided by guarantors without
independent verification by the Company and may differ from similar
metrics calculated by the guarantors.
Funds From Operations Attributable to Common
Stockholders (“FFO”) and Adjusted Funds from Operations
Attributable to Common Stockholders (“AFFO”)*The Company
believes that net income attributable to common stockholders as
defined by GAAP is the most appropriate earnings measure. The
Company also believes that funds from operations attributable to
common stockholders, or FFO, as defined in accordance with the
definition used by the National Association of Real Estate
Investment Trusts (“NAREIT”), and adjusted funds from operations
attributable to common stockholders, or AFFO (and related per share
amounts) are important non-GAAP supplemental measures of the
Company’s operating performance. Because the historical cost
accounting convention used for real estate assets requires
straight-line depreciation (except on land), such accounting
presentation implies that the value of real estate assets
diminishes predictably over time. However, since real estate values
have historically risen or fallen with market and other conditions,
presentations of operating results for a real estate investment
trust that uses historical cost accounting for depreciation could
be less informative. Thus, NAREIT created FFO as a supplemental
measure of operating performance for real estate investment trusts
that excludes historical cost depreciation and amortization, among
other items, from net income attributable to common stockholders,
as defined by GAAP. FFO is defined as net income attributable to
common stockholders, computed in accordance with GAAP, excluding
gains or losses from real estate dispositions, plus real estate
depreciation and amortization, net of amounts related to
noncontrolling interests, plus the Company’s share of depreciation
and amortization related to our unconsolidated joint venture, and
real estate impairment charges. AFFO is defined as FFO excluding
merger and acquisition costs, stock-based compensation expense,
straight-line rental income adjustments, amortization of above and
below market lease intangibles, non-cash interest income
adjustments, non-cash interest expense, change in fair value of
contingent consideration, non-cash portion of loss on
extinguishment of debt, provision for doubtful straight-line rental
income, loan losses and other reserves and deferred income taxes,
as well as other non-cash revenue and expense items (including
ineffectiveness gain/loss on derivative instruments, and non-cash
revenue and expense amounts related to noncontrolling interests)
and our share of non-cash adjustments related to our unconsolidated
joint venture. The Company believes that the use of FFO and AFFO
(and the related per share amounts), combined with the required
GAAP presentations, improves the understanding of the Company’s
operating results among investors and makes comparisons of
operating results among real estate investment trusts more
meaningful. The Company considers FFO and AFFO to be useful
measures for reviewing comparative operating and financial
performance because, by excluding the applicable items listed
above, FFO and AFFO can help investors compare the operating
performance of the Company between periods or as compared to other
companies. While FFO and AFFO are relevant and widely used measures
of operating performance of real estate investment trusts, they do
not represent cash flows from operations or net income attributable
to common stockholders as defined by GAAP and should not be
considered an alternative to those measures in evaluating the
Company’s liquidity or operating performance. FFO and AFFO also do
not consider the costs associated with capital expenditures related
to the Company’s real estate assets nor do they purport to be
indicative of cash available to fund the Company’s future cash
requirements. Further, the Company’s computation of FFO and AFFO
may not be comparable to FFO and AFFO reported by other real estate
investment trusts that do not define FFO in accordance with the
current NAREIT definition or that interpret the current NAREIT
definition or define AFFO differently than the Company does.
InvestmentRepresents the carrying amount of
real estate assets after adding back accumulated depreciation and
amortization and excludes net intangible assets and liabilities.
Investment also includes the Company’s pro rata share of the real
estate assets held in the Company’s unconsolidated joint
venture.
Market CapitalizationTotal common shares of
Sabra outstanding multiplied by the closing price per common share
as of a given period.
Net Operating Income (“NOI”)*The Company
believes that net income attributable to common stockholders as
defined by GAAP is the most appropriate earnings measure. The
Company considers NOI an important supplemental measure because it
allows investors, analysts and its management to evaluate the
operating performance of its investments. The Company defines NOI
as total revenues less operating expenses. NOI excludes all other
financial statement amounts included in net income.
Normalized FFO and Normalized AFFO*Normalized
FFO and Normalized AFFO represent FFO and AFFO, respectively,
adjusted for certain income and expense items that the Company does
not believe are indicative of its ongoing operating results. The
Company considers Normalized FFO and Normalized AFFO to be useful
measures to evaluate the Company’s operating results excluding
these income and expense items to help investors compare the
operating performance of the Company between periods or as compared
to other companies. Normalized FFO and Normalized AFFO do not
represent cash flows from operations or net income as defined by
GAAP and should not be considered an alternative to those measures
in evaluating the Company’s liquidity or operating performance.
Normalized FFO and Normalized AFFO also do not consider the costs
associated with capital expenditures related to the Company’s real
estate assets nor do they purport to be indicative of cash
available to fund the Company’s future cash requirements. Further,
the Company’s computation of Normalized FFO and Normalized AFFO may
not be comparable to Normalized FFO and Normalized AFFO reported by
other real estate investment trusts that do not define FFO in
accordance with the current NAREIT definition or that interpret the
current NAREIT definition or define FFO and AFFO or Normalized FFO
and Normalized AFFO differently than the Company does.
Occupancy PercentageOccupancy Percentage
represents the facilities’ average operating occupancy for the
period indicated. The percentages are calculated by dividing the
actual census from the period presented by the available beds/units
for the same period. Occupancy includes only Stabilized Facilities
and excludes facilities for which data is not available or
meaningful. Occupancy Percentage for the Company’s unconsolidated
joint venture is weighted to reflect the Company’s pro rata
share.
REVPORREVPOR represents the average revenues
generated per occupied room per month at Senior Housing - Managed
communities for the period indicated. It is calculated as resident
fees and services revenues divided by average monthly occupied room
days. REVPOR includes only Stabilized Facilities. REVPOR for the
Company’s unconsolidated joint venture is weighted to reflect the
Company’s pro rata share.
Senior HousingSenior Housing communities
include independent living, assisted living, continuing care
retirement and memory care communities.
Skilled MixSkilled Mix is defined as the total
Medicare and non-Medicaid managed care patient revenue at Skilled
Nursing/Transitional Care facilities divided by the total revenues
at Skilled Nursing/Transitional Care facilities for the period
indicated. Skilled Mix includes only Stabilized Facilities and
excludes facilities for which data is not available or
meaningful.
Skilled Nursing/Transitional CareSkilled
Nursing/Transitional Care facilities include skilled nursing,
transitional care, multi-license designation and mental health
facilities.
Specialty Hospitals and OtherIncludes acute
care, long-term acute care, rehabilitation and behavioral
hospitals, facilities that provide residential services, which may
include assistance with activities of daily living, and other
facilities not classified as Skilled Nursing/Transitional Care or
Senior Housing.
Stabilized FacilityAt the time of acquisition,
the Company classifies each facility as either stabilized or
pre-stabilized. In addition, the Company may classify a facility as
pre-stabilized after acquisition. Circumstances that could result
in a facility being classified as pre-stabilized include newly
completed developments, facilities undergoing major renovations or
additions, facilities being repositioned or transitioned to new
operators, and significant transitions within the tenants’ business
model. Such facilities will be reclassified to stabilized upon
maintaining consistent occupancy (85% for Skilled
Nursing/Transitional Care facilities and 90% for Senior Housing
communities) but in no event beyond 24 months after the date of
classification as pre-stabilized. Stabilized Facilities exclude (i)
Senior Housing - Managed communities, (ii) facilities held for
sale, (iii) facilities being sold pursuant to the Company’s CCP
portfolio repositioning, (iv) facilities being transitioned to a
new operator, (v) facilities being transitioned from leased by the
Company to being operated by the Company; and (vi) facilities
acquired during the three months preceding the period
presented.
Total DebtConsolidated Debt plus the Company’s
pro rata share of the principal balances of the debt of the
Company’s unconsolidated joint venture.
Total Enterprise ValueConsolidated Enterprise
Value plus the Company’s pro rata share of the principal balances
of the debt of the Company’s unconsolidated joint venture.
*Non-GAAP Financial MeasuresReconciliations,
definitions and important discussions regarding the usefulness and
limitations of the Non-GAAP Financial Measures used in this release
can be found at
http://www.sabrahealth.com/investors/financials/reports-presentations/non-gaap.
Sabra Healthcare Reit - 7.125% Preferred Series A (delisted) (NASDAQ:SBRAP)
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