Sabra Health Care REIT, Inc. Provides Update on Sale of Certain Senior Care Centers and Genesis Facilities; Provides Update o...
January 27 2019 - 8:00PM
Sabra Health Care REIT, Inc. (“Sabra”, the “Company” or “we”)
(Nasdaq: SBRA) provided updates today on the status of the 38
facilities owned by Sabra and operated by Senior Care Centers (the
“Senior Care Centers Facilities”) and three of the remaining
facilities leased by Sabra to Genesis Healthcare, Inc. (“Genesis”),
as well as the conversion of its Holiday operated 21-community
independent living portfolio from a triple net master lease to a
management agreement structure.
Senior Care Centers
As previously announced, we entered into an agreement to sell
the Senior Care Centers Facilities for an aggregate purchase price
of $385.0 million. This agreement has been amended to reduce
the number of Senior Care Centers Facilities being sold and the
associated purchase price therefor to 28 and $282.5 million,
respectively, and to allow Sabra to retain the remaining 10
facilities (the “Retained Facilities”) for lease to one or more new
operators. Once stabilized, we expect the value of the Retained
Facilities to be between $95 million and $105 million.
We expect the sale of the 28 Senior Care Facilities and
transition of the Retained Facilities to both occur on April 1,
2019, subject to customary closing conditions including bankruptcy
court approval of operations transfer and related agreements.
Genesis Sale Update
On December 21, 2018, we completed the previously announced sale
of nine facilities leased to Genesis for gross sales proceeds of
$37.1 million, leaving three facilities (the “HUD Facilities”)
leased to Genesis that we plan to sell. We have entered into
agreements for the sale of the HUD facilities, which are being sold
subject to HUD-insured debt. These sales are expected to close upon
approval by HUD, which has been delayed due to the government
shutdown. The sale of the HUD Facilities is expected to generate
gross sales proceeds of $33.2 million and result in the elimination
of $2.7 million of annual cash rents. Our agreement with Genesis
provides for residual rents to be paid to Sabra for 4.28 years
following the sale of each facility. Upon completion of the sale of
the HUD Facilities, we expect these residual rents to total $10.4
million per year. We expect to retain eight facilities leased to
Genesis, which currently generate annual cash rents of $10.4
million (which would be in addition to the residual rents of $10.4
million per year).
Holiday Transition Update
As previously announced, we expect to terminate our Holiday
master lease and concurrently enter into one or more management
agreements with Holiday. In exchange for terminating the lease
agreements, we would receive $57.2 million of total consideration,
including $15.1 million of retained security deposits and a $42.1
million termination fee, which we have elected to receive in
cash. We currently expect this transition to occur in the
first quarter of 2019, though there can be no assurances that this
transition will be completed on the foregoing terms or timing or at
all.
Commenting on these developments, Rick Matros, CEO and Chairman,
said, “The revised terms of the Senior Care Centers Facilities sale
represent a good outcome for Sabra. Upon completion, we will
have achieved each of our stated objectives in connection with this
transaction by wrapping up our association with a troubled operator
and reducing our geographic concentration in a challenging state,
with the ability now to reduce earnings dilution through
re-tenanting of the retained properties with desired operating
partners. The transition of the Holiday portfolio remains on
track and the delay in the sale of the HUD Facilities should have a
modest positive impact on our 2019 results as we expect to continue
collecting contractual rents until these sales are completed.”
About Sabra
Sabra Health Care REIT, Inc. (Nasdaq: SBRA), a Maryland
corporation, operates as a self-administered, self-managed real
estate investment trust (a "REIT") that, through its subsidiaries,
owns and invests in real estate serving the healthcare industry.
Sabra leases properties to tenants and operators throughout the
United States and Canada.
Special Note Regarding Forward-Looking
Statements
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. Forward-looking statements in this release
include: (i) our expectations regarding the timing and terms for
the 28 Senior Care Centers Facilities we expect to sell, (ii) our
expectations regarding the 10 Senior Care Centers Facilities we
expect to retain, including our expectation regarding the value of
those facilities once stabilized, (iii) our expectations regarding
the timing and terms for our planned termination of the master
lease with respect to the Holiday communities and planned entry
into the Holiday management agreements, and (iv) our expectations
with respect to the timing and terms of the sale of the HUD
Facilities, including the impact on our 2019 results from the delay
in these sales.
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; the anticipated benefits of our merger with Care Capital
Properties, Inc. (“CCP”) may not be realized; the anticipated and
unanticipated costs, fees, expenses and liabilities related to our
merger with CCP; our ability to implement the previously announced
rent repositioning program for certain of our tenants who were
legacy tenants of 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 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.
CONTACT:
Investor & Media Inquiries: 1-888-393-8248 or
investorinquiries@sabrahealth.com
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