Sabra Health Care REIT, Inc. (“Sabra,” the “Company” or “we”)
(Nasdaq: SBRA) today announced results of operations for the fourth
quarter of 2018.
RECENT HIGHLIGHTS
- For the fourth quarter of 2018, net loss attributable to common
stockholders, FFO, Normalized FFO, AFFO and Normalized AFFO per
diluted common share were $(0.11), $0.27, $0.50, $0.43 and $0.47,
respectively. These results were in-line with our expectations
except for the $28.9 million ($0.16 per diluted common share)
write-off of the straight-line rent receivable for Holiday, which
was previously expected to be taken in the first quarter of 2019,
and the acceleration of above market lease intangible amortization
of $5.2 million ($0.03 per diluted common share) primarily related
to facilities transitioned to new operators. These unexpected items
impacted net loss attributable to common stockholders and FFO
only.
- Fourth quarter of 2018 Senior Housing - Managed portfolio
results (dollars in millions):
|
|
|
Net Income (Loss) (1) |
|
Cash NOI |
|
Cash NOI Margin % |
|
|
|
4Q 2018 |
|
3Q 2018 |
|
% Change |
|
4Q 2018 |
|
3Q 2018 |
|
% Change |
|
4Q 2018 |
|
3Q 2018 |
|
Change |
|
Wholly-Owned |
|
$ |
2.8 |
|
|
$ |
2.1 |
|
|
33.3 |
% |
|
$ |
5.2 |
|
|
$ |
4.8 |
|
|
8.3 |
% |
|
29.4 |
% |
|
27.5 |
% |
|
1.9 |
% |
|
Sabra’s Share of
Enlivant JV |
|
(1.8 |
) |
|
(1.7 |
) |
|
(5.9 |
)% |
|
9.9 |
|
|
8.7 |
|
|
13.8 |
% |
|
25.5 |
% |
|
23.7 |
% |
|
1.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1.0 |
|
|
$ |
0.4 |
|
|
150.0 |
% |
|
$ |
15.1 |
|
|
$ |
13.5 |
|
|
11.9 |
% |
|
26.7 |
% |
|
24.9 |
% |
|
1.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes depreciation expense of $7.7 million and $7.9 million in
4Q 2018 and 3Q 2018, respectively. |
- During the fourth quarter of 2018, we completed the sale of 18
facilities for aggregate sales proceeds of $91.6 million, bringing
our total aggregate sale proceeds for the year ended December 31,
2018 to $382.6 million from the sale of 51 Skilled
Nursing/Transitional Care facilities, six Senior Housing
communities and one Senior Housing - Managed community. These sales
resulted in an aggregate $128.2 million net gain on sale for the
year ended December 31, 2018. Annualized Cash NOI attributed to
these facilities was approximately $34.7 million, or $0.19 per
diluted common share, and the 2018 Cash NOI lost from these sales
totaled $18.8 million, or $0.10 per diluted common share. After
giving effect to these sales, the portion of our annualized Cash
NOI attributable to Genesis Healthcare, Inc. (“Genesis”) as of
December 31, 2018 was 4.6%.
- During the fourth quarter of 2018, we made investments
of $39.2 million with a weighted average initial cash
yield of 7.40%. These investments consisted of: (i) $26.3
million of real estate acquisitions; (ii) $5.4
million of real estate additions; and (iii) $7.5
million of investments in loans receivable. This brings our
total investments made in 2018 to $673.7 million with a weighted
average cash yield of 6.70%.
- On February 5, 2019, our board of directors declared a
quarterly cash dividend of $0.45 per share of common stock. The
dividend will be paid on February 28, 2019 to common stockholders
of record as of the close of business on February 15, 2019.
- On February 15, 2019, we entered into a settlement agreement
with Senior Care Centers pursuant to which we agreed to discharge
our claims against Senior Care Centers in exchange for certain
settlement payments, a portion of which would be applied to pay
post-petition rent totaling $5.7 million. The effectiveness of this
agreement is subject to bankruptcy court approval, with settlement
payments expected to coincide with the sale of assets expected to
close on April 1, 2019.
- We have issued our 2019 earnings guidance ranges as follows,
which include the impact of de-levering the balance sheet as
described below (attributable to common stockholders, per diluted
common share):
|
Net income |
$0.24 |
- |
$0.32 |
|
FFO |
$2.02 |
- |
$2.10 |
|
Normalized FFO |
$1.86 |
- |
$1.94 |
|
AFFO |
$2.00 |
- |
$2.08 |
|
Normalized AFFO |
$1.81 |
- |
$1.89 |
The following are significant assumptions made in determining
our 2019 earnings guidance:
- Sale of 28 facilities currently operated by Senior Care Centers
for $282.5 million is completed April 1, 2019. Additionally, our
2019 earnings guidance assumes (i) that the settlement agreement
with Senior Care Centers described above is effective, such that we
recognize $5.7 million of post-petition rent from Senior Care
Centers during the first quarter of 2019, and (ii) total impairment
and transition costs of $69.3 million related to the sale and
transition of facilities (the substantial majority of which we
expect to be non-cash) which are excluded from Normalized FFO and
Normalized AFFO.
- Termination of our Holiday Retirement (“Holiday”) master lease
and concurrent entry into one or more management agreements with
Holiday effective April 1, 2019. Our 2019 earnings guidance assumes
the receipt of $57.2 million of cash consideration on April 1, 2019
in connection with the lease termination, which is excluded from
Normalized FFO and Normalized AFFO.
- Other dispositions and loan repayments during 2019 for
estimated aggregate proceeds of approximately $300 million, with
associated annualized Cash NOI of $18.6 million. These dispositions
are expected to result in a loss on sale of real estate of $84.9
million.
- Investments during 2019 (primarily during the fourth quarter)
of $142.4 million, primarily related to our proprietary development
pipeline and with a weighted average initial cash yield of 7.6%.
Our 2019 earnings guidance assumes no speculative investment
activity in 2019.Same store Cash NOI improvements in our
wholly-owned Senior Housing - Managed portfolio of 3.0% to 6.0% and
in our Enlivant joint venture of 6.0% to 12.0%, in each case as
compared to 2018.
- Reduction of Net Debt to Adjusted EBITDA (including our
unconsolidated joint venture) to below 5.50x (below 5.0x excluding
our unconsolidated joint venture) by December 31, 2019, reducing
our 2019 earnings by approximately $0.05 to $0.08 per diluted
common share.For additional detail and information regarding these
estimates, refer to the 2019 Outlook section of our corresponding
Supplemental Report and the Reconciliation of Non-GAAP Financial
Measures, both available in the Investor Relations section of our
website
at http://www.sabrahealth.com/investors/financials/reports-presentations/non-gaap.
Commenting on the fourth quarter results, Rick Matros, CEO and
Chairman, said, “We are pleased to report constructive results for
year-end earnings. Our Senior Housing - Managed portfolio performed
very well with Cash NOI margins from our wholly owned portfolio and
our JV with Enlivant improving 190 basis points and 180 basis
points, respectively, compared to the third quarter of 2018.
Sabra’s triple-net portfolio performance was uneventful with the
Senior Housing portfolio occupancy and EBITDAR rent coverage
essentially flat. On a sequential basis, our Skilled
Nursing/Transitional Care portfolio occupancy was also flat, with
Skilled Mix improving by 50 basis points. EBITDAR rent coverage was
down sequentially, but this decline was driven primarily by one
operator, North American Healthcare, which had experienced
unforeseen changes in senior management. Those issues have since
been addressed, and we remain confident in the performance of these
facilities.
“We expect, as previously announced, to close the sale of the 28
Senior Care Centers facilities as well as the re-tenanting of the
ten facilities we are retaining by April 1, 2019, subject to
satisfaction of the remaining closing conditions. We expect the
conversion of our Holiday portfolio from a triple-net lease
structure to a managed structure to be completed around the same
time. With the repositioning of our company close to completion, we
look forward to growing from a stronger foundation than existed
eighteen months ago. In addition to focusing on growth
opportunities in 2019, we are also committed to de-levering the
balance sheet as described in our 2019 guidance.”
OPERATING STATISTICS TRIPLE-NET PORTFOLIO (1) |
|
|
Coverage |
|
|
|
|
|
|
|
|
|
|
EBITDAR |
|
EBITDARM |
|
Occupancy Percentage |
|
Skilled Mix |
Property
Type |
|
4Q 2018 |
|
3Q 2018 |
|
4Q 2018 |
|
3Q 2018 |
|
4Q 2018 |
|
3Q 2018 |
|
4Q 2018 |
|
3Q 2018 |
Skilled
Nursing/Transitional Care |
|
1.28x |
|
1.32x |
|
1.76x |
|
1.80x |
|
82.8% |
|
82.8% |
|
39.4% |
|
38.9% |
Senior Housing -
Leased |
|
1.06x |
|
1.07x |
|
1.24x |
|
1.25x |
|
86.7% |
|
86.7% |
|
NA |
|
NA |
Specialty Hospitals and
Other |
|
2.94x |
|
3.05x |
|
3.22x |
|
3.34x |
|
89.6% |
|
88.9% |
|
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
September 30, 2018.
SENIOR HOUSING - MANAGED PORTFOLIO OPERATING RESULTS
(1) |
Dollars in thousands,
except REVPOR |
|
Revenues |
|
Cash NOI |
|
Cash NOI Margin % |
|
REVPOR |
|
Occupancy Percentage |
|
|
4Q 2018 |
|
|
3Q 2018 |
|
|
4Q 2018 |
|
|
3Q 2018 |
|
|
4Q 2018 |
|
3Q 2018 |
|
4Q 2018 |
|
|
3Q 2018 |
|
|
4Q 2018 |
|
3Q 2018 |
Wholly-Owned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AL |
|
$ |
12,659 |
|
|
$ |
12,422 |
|
|
$ |
3,242 |
|
|
$ |
3,016 |
|
|
25.6 |
% |
|
24.3 |
% |
|
$ |
5,534 |
|
|
$ |
5,126 |
|
|
90.7% |
|
92.9% |
IL |
|
5,052 |
|
|
4,907 |
|
|
1,957 |
|
|
1,753 |
|
|
38.7 |
% |
|
35.7 |
% |
|
2,193 |
|
|
2,171 |
|
|
92.4% |
|
90.3% |
|
|
17,711 |
|
|
17,329 |
|
|
5,199 |
|
|
4,769 |
|
|
29.4 |
% |
|
27.5 |
% |
|
3,776 |
|
|
3,605 |
|
|
91.5% |
|
91.6% |
Sabra’s Share of
Unconsolidated JV (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AL |
|
38,820 |
|
|
36,940 |
|
|
9,918 |
|
|
8,747 |
|
|
25.5 |
% |
|
23.7 |
% |
|
4,230 |
|
|
4,017 |
|
|
81.7% |
|
81.8% |
Total |
|
$ |
56,531 |
|
|
$ |
54,269 |
|
|
$ |
15,117 |
|
|
$ |
13,516 |
|
|
26.7 |
% |
|
24.9 |
% |
|
$ |
4,083 |
|
|
$ |
3,884 |
|
|
84.5% |
|
84.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Disposition
(AL) |
|
143 |
|
|
446 |
|
|
28 |
|
|
82 |
|
|
19.6 |
% |
|
18.4 |
% |
|
|
|
|
|
|
|
|
Total, net of
Disposition |
|
$ |
56,388 |
|
|
53,823 |
|
|
$ |
15,089 |
|
|
13,434 |
|
|
26.8 |
% |
|
25.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operator |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enlivant |
|
$ |
48,355 |
|
|
$ |
45,906 |
|
|
$ |
12,982 |
|
|
$ |
11,222 |
|
|
26.8 |
% |
|
24.4 |
% |
|
$ |
4,424 |
|
|
$ |
4,172 |
|
|
83.2% |
|
83.8% |
Sienna |
|
5,195 |
|
|
5,353 |
|
|
1,985 |
|
|
1,835 |
|
|
38.2 |
% |
|
34.3 |
% |
|
2,193 |
|
|
2,171 |
|
|
92.4% |
|
90.3% |
Other |
|
2,981 |
|
|
3,010 |
|
|
150 |
|
|
459 |
|
|
5.0 |
% |
|
15.2 |
% |
|
6,040 |
|
|
6,088 |
|
|
81.5% |
|
80.0% |
Total |
|
$ |
56,531 |
|
|
$ |
54,269 |
|
|
$ |
15,117 |
|
|
$ |
13,516 |
|
|
26.7 |
% |
|
24.9 |
% |
|
$ |
4,083 |
|
|
$ |
3,884 |
|
|
84.5% |
|
84.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Disposition
(Sienna) |
|
143 |
|
|
446 |
|
|
28 |
|
|
82 |
|
|
19.6 |
% |
|
18.4 |
% |
|
|
|
|
|
|
|
|
Total, net of
Disposition |
|
$ |
56,388 |
|
|
$ |
53,823 |
|
|
$ |
15,089 |
|
|
$ |
13,434 |
|
|
26.8 |
% |
|
25.0 |
% |
|
|
|
|
|
|
|
|
(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) |
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2018 |
|
Twelve Months Ended |
Tenant |
|
Primary Facility Type |
|
Number of Sabra Properties (2) |
|
% of Annualized Cash NOI (1) |
|
December 31, 2018 Lease Coverage (3) |
|
September 30, 2018 Lease Coverage (3) |
Enlivant |
|
Assisted Living |
|
183 |
|
9.4% |
|
NA |
|
NA |
Avamere Family of
Companies (4) |
|
Skilled Nursing |
|
29 |
|
7.9% |
|
1.26x |
|
1.24x |
Signature
Healthcare |
|
Skilled
Nursing |
|
45 |
|
7.0% |
|
1.43x |
|
1.45x |
North American
Healthcare (5) |
|
Skilled Nursing |
|
24 |
|
7.0% |
|
1.09x |
|
1.21x |
Holiday AL Holdings LP
(6) |
|
Independent Living |
|
21 |
|
6.7% |
|
1.14x |
|
1.15x |
Signature Behavioral
(7) |
|
Behavioral Hospitals |
|
6 |
|
6.1% |
|
1.49x |
|
1.55x |
Cadia Healthcare
(8) |
|
Skilled
Nursing |
|
9 |
|
5.6% |
|
1.41x |
|
1.44x |
Genesis Healthcare,
Inc. (4) |
|
Skilled
Nursing |
|
11 |
|
4.6% |
|
1.18x |
|
1.20x |
Healthmark Group
(9) |
|
Skilled
Nursing |
|
18 |
|
3.1% |
|
1.17x |
|
1.23x |
The McGuire Group |
|
Skilled
Nursing |
|
7 |
|
2.9% |
|
1.76x |
|
1.74x |
|
|
|
|
353 |
|
60.3% |
|
|
|
|
(1) Pro forma top 10 relationships and Annualized Cash NOI
assume that the sale of 26 Skilled Nursing/Transitional Care
facilities and two Senior Housing communities from the Senior Care
Centers portfolio that are currently under contract to sell and the
transition of the remaining 10 facilities currently operated by
Senior Care Centers were 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 presented one quarter in arrears. Lease Coverage for
legacy CCP tenants reflects the previously announced rent
repositioning program for certain of our tenants who were legacy
tenants of CCP.(4) Lease Coverage reflects guarantor level fixed
charge coverage for these relationships.(5) Lease Coverage for
the twelve months ended September 30, 2018 reflects the EBITDAR
Coverage for facilities owned by Sabra in periods subsequent to our
acquisition and underwritten stabilized EBITDAR Coverage for
periods preceding our acquisition.(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) Lease Coverage reflects EBITDAR Coverage for five
Stabilized Facilities and excludes one pre-stabilized facility
representing 0.8% of Annualized Cash NOI.(8) Lease Coverage
reflects EBITDAR Coverage for four Stabilized Facilities and
excludes five pre-stabilized facilities that were transitioned to
Cadia Healthcare representing 3.5% of Annualized Cash
NOI.(9) Lease Coverage reflects EBITDAR Coverage for 13
Stabilized Facilities and excludes five pre-stabilized facilities
that were transitioned to Healthmark Group representing 0.9% of
Annualized Cash NOI.
LIQUIDITY
As of December 31, 2018, we had approximately $426.0
million of liquidity, consisting of unrestricted cash and cash
equivalents of $50.0 million (excluding joint venture
cash and cash equivalents) and available borrowings of $376.0
million under our revolving credit facility.
CONFERENCE CALL AND COMPANY INFORMATION
A conference call with a simultaneous webcast to discuss the
2018 fourth quarter earnings will be held on Monday, February 25,
2019 at 10:00 a.m. 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 2758908. The webcast URL is
https://edge.media-server.com/m6/p/gfy3ywbv. A digital replay of
the call will be available on our website at www.sabrahealth.com.
The Company’s supplemental information package for the fourth
quarter will also be available on our website in the “Investors”
section.
ABOUT SABRA
As of December 31, 2018, Sabra’s investment portfolio
included 470 real estate properties held for investment (consisting
of (i) 335 Skilled Nursing/Transitional Care facilities,
(ii) 90 Senior Housing communities (“Senior Housing -
Leased”), (iii) 23 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 and (iv) 18 other loans), nine preferred equity
investments and one investment in an unconsolidated joint venture
that owns 172 Senior Housing - Managed communities. As of
December 31, 2018, Sabra’s real estate properties held for
investment included 47,648 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 (i) our pending transactions with
Senior Care Centers and Holiday, including the timing, terms and
receipt of necessary approvals (and satisfaction of the other
closing conditions) for those transactions, (ii) our expectations
with respect to the performance of our facilities leased to North
American Healthcare (and that the issues they had experienced have
been resolved), and (iii) our expected future financial position,
results of operations (including our 2019 earnings guidance, as
well as the assumptions set forth therein), 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. on the timing or terms we
have previously disclosed; our ability to dispose of or transition
facilities currently operated by Senior Care Centers on the timing
or terms we have previously disclosed; the possibility that Sabra
may not acquire the remaining majority interest in the Enlivant
joint venture; our ability to transition the facilities currently
leased to Holiday Retirement (“Holiday”) to Senior Housing -
Managed communities operated by Holiday on the timing or terms we
have previously disclosed; 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; 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 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,
2018. 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 December 31, |
|
Year Ended December 31, |
2018 |
|
2017 |
|
2018 |
|
2017 |
Dollars in thousands, except per share data |
Revenues |
$ |
139,209 |
|
|
$ |
166,472 |
|
|
$ |
623,409 |
|
|
$ |
405,647 |
|
Net (loss) income
attributable to common stockholders |
(19,394 |
) |
|
101,385 |
|
|
269,314 |
|
|
148,141 |
|
Diluted per share data
attributable to common stockholders: |
|
|
|
|
|
|
|
EPS |
$ |
(0.11 |
) |
|
$ |
0.57 |
|
|
$ |
1.51 |
|
|
$ |
1.40 |
|
FFO |
0.27 |
|
|
0.60 |
|
|
1.99 |
|
|
2.00 |
|
Normalized FFO |
0.50 |
|
|
0.66 |
|
|
2.29 |
|
|
2.43 |
|
AFFO |
0.43 |
|
|
0.60 |
|
|
2.11 |
|
|
2.28 |
|
Normalized AFFO |
0.47 |
|
|
0.60 |
|
|
2.16 |
|
|
2.31 |
|
Dividends per common
share |
0.45 |
|
|
0.52 |
|
|
1.80 |
|
|
1.73 |
|
Capitalization
and Market Facts |
December 31, 2018 |
|
|
|
Key Credit
Metrics |
December 31, 2018 |
Common shares
outstanding |
178.3million |
|
|
|
Net Debt to Adjusted
EBITDA (2)(3) |
5.66x |
Common equity Market
Capitalization |
$2.9 billion |
|
|
|
Including
unconsolidated joint venture (2)(3) |
6.12x |
Total Debt (1) |
$3.6 billion |
|
|
|
Interest Coverage
(2) |
4.14x |
Total Enterprise Value
(1) |
$6.5 billion |
|
|
|
Fixed Charge Coverage
Ratio (2) |
3.70x |
|
|
|
|
|
Total Debt/Asset
Value |
49% |
Common stock closing
price |
$16.48 |
|
|
|
Secured Debt/Asset
Value |
7% |
Common stock 52-week
range |
$15.70 - $23.83 |
|
|
|
Unencumbered
Assets/Unsecured Debt |
222% |
|
|
|
|
|
|
|
Common stock ticker
symbol |
SBRA |
|
|
|
|
|
Portfolio |
|
|
|
|
|
|
Occupancy Percentage (4) |
Property Count |
|
Investment |
|
Beds/Units |
|
As of December 31,
2018 |
Dollars in thousands |
Investment in Real
Estate Properties, gross |
|
|
|
|
|
|
|
Triple-Net Portfolio: |
|
|
|
|
|
|
|
Skilled Nursing /
Transitional Care |
335 |
|
$ |
4,094,484 |
|
|
37,628 |
|
82.8 |
% |
Senior
Housing - Leased |
90 |
|
1,237,790 |
|
|
7,332 |
|
86.7 |
|
Specialty
Hospitals and Other |
22 |
|
621,236 |
|
|
1,085 |
|
89.6 |
|
Total
Triple-Net Portfolio |
447 |
|
5,953,510 |
|
|
46,045 |
|
|
Senior
Housing - Managed |
23 |
|
301,739 |
|
|
1,603 |
|
91.5 |
|
Consolidated Equity Investments |
470 |
|
6,255,249 |
|
|
47,648 |
|
|
Unconsolidated Joint Venture Senior Housing - Managed |
172 |
|
734,813 |
|
|
7,652 |
|
81.7 |
|
Total
Equity Investments |
642 |
|
6,990,062 |
|
|
55,300 |
|
|
Investment in Direct
Financing Lease, net |
1 |
|
23,427 |
|
|
|
|
|
Investments in Loans
Receivable, gross (5) |
22 |
|
68,517 |
|
|
|
|
|
Preferred Equity
Investments, gross (6) |
9 |
|
44,262 |
|
|
Includes 70 relationships in 44
U.S. states and Canada |
Total
Investments |
674 |
|
$ |
7,126,268 |
|
|
(1) Includes Sabra’s 49% pro rata share of the debt of its
unconsolidated joint venture.(2) Based on the trailing twelve
month period ended as of the date indicated. Includes the impact of
lost Annualized Adjusted EBITDA from Senior Care Centers of $20.9
million due to non-payment of rent.(3) 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.(4) 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.(5) Two of our investments
in loans receivable contain purchase options on two Senior Housing
developments with 42 units.(6) Our preferred equity
investments include investments in entities owning eight Senior
Housing developments with 950 units and one Skilled
Nursing/Transitional Care development with 120 beds.
SABRA HEALTH CARE REIT, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(dollars in thousands, except per share data)
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues: |
|
|
|
|
|
|
|
Rental
income |
$ |
117,654 |
|
|
$ |
150,918 |
|
|
$ |
536,605 |
|
|
$ |
364,191 |
|
Interest and
other income |
3,844 |
|
|
6,964 |
|
|
16,667 |
|
|
15,026 |
|
Resident
fees and services |
17,711 |
|
|
8,590 |
|
|
70,137 |
|
|
26,430 |
|
|
|
|
|
|
|
|
|
Total revenues |
139,209 |
|
|
166,472 |
|
|
623,409 |
|
|
405,647 |
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
Depreciation
and amortization |
48,078 |
|
|
51,592 |
|
|
191,379 |
|
|
113,882 |
|
Interest |
37,226 |
|
|
32,222 |
|
|
147,106 |
|
|
88,440 |
|
Operating
expenses |
12,512 |
|
|
5,931 |
|
|
49,546 |
|
|
17,860 |
|
General and
administrative |
11,298 |
|
|
8,242 |
|
|
36,458 |
|
|
32,401 |
|
Merger and
acquisition costs |
43 |
|
|
505 |
|
|
636 |
|
|
30,255 |
|
Provision
for doubtful accounts, straight-line rental income and loan
losses |
29,626 |
|
|
9,659 |
|
|
39,075 |
|
|
17,113 |
|
Impairment
of real estate |
— |
|
|
1,326 |
|
|
1,413 |
|
|
1,326 |
|
|
|
|
|
|
|
|
|
Total expenses |
138,783 |
|
|
109,477 |
|
|
465,613 |
|
|
301,277 |
|
|
|
|
|
|
|
|
|
Other income: |
|
|
|
|
|
|
|
Loss on
extinguishment of debt |
(2,917 |
) |
|
— |
|
|
(2,917 |
) |
|
(553 |
) |
Other
income |
324 |
|
|
49 |
|
|
4,480 |
|
|
3,170 |
|
Net (loss)
gain on sales of real estate |
(14,247 |
) |
|
47,415 |
|
|
128,198 |
|
|
52,029 |
|
|
|
|
|
|
|
|
|
Total other (loss)
income |
(16,840 |
) |
|
47,464 |
|
|
129,761 |
|
|
54,646 |
|
|
|
|
|
|
|
|
|
(Loss) income before loss
from unconsolidated joint venture and income tax expense |
(16,414 |
) |
|
104,459 |
|
|
287,557 |
|
|
159,016 |
|
|
|
|
|
|
|
|
|
Loss from unconsolidated
joint venture |
(1,805 |
) |
|
— |
|
|
(5,431 |
) |
|
— |
|
Income tax expense |
(1,164 |
) |
|
(490 |
) |
|
(3,011 |
) |
|
(651 |
) |
|
|
|
|
|
|
|
|
Net (loss) income |
(19,383 |
) |
|
103,969 |
|
|
279,115 |
|
|
158,365 |
|
|
|
|
|
|
|
|
|
Net
(income) loss attributable to noncontrolling interests |
(11 |
) |
|
(24 |
) |
|
(33 |
) |
|
18 |
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to Sabra Health Care REIT, Inc. |
(19,394 |
) |
|
103,945 |
|
|
279,082 |
|
|
158,383 |
|
|
|
|
|
|
|
|
|
Preferred
stock dividends |
— |
|
|
(2,560 |
) |
|
(9,768 |
) |
|
(10,242 |
) |
|
|
|
|
|
|
|
|
Net (loss) income
attributable to common stockholders |
$ |
(19,394 |
) |
|
$ |
101,385 |
|
|
$ |
269,314 |
|
|
$ |
148,141 |
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to common stockholders, per: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
common share |
$ |
(0.11 |
) |
|
$ |
0.57 |
|
|
$ |
1.51 |
|
|
$ |
1.40 |
|
|
|
|
|
|
|
|
|
Diluted
common share |
$ |
(0.11 |
) |
|
$ |
0.57 |
|
|
$ |
1.51 |
|
|
$ |
1.40 |
|
|
|
|
|
|
|
|
|
Weighted-average number of
common shares outstanding, basic |
178,314,638 |
|
|
178,234,481 |
|
|
178,305,738 |
|
|
105,621,242 |
|
|
|
|
|
|
|
|
|
Weighted-average number of
common shares outstanding, diluted |
178,314,638 |
|
|
178,428,200 |
|
|
178,721,744 |
|
|
105,842,434 |
|
SABRA HEALTH CARE REIT, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
|
December 31, |
|
2018 |
|
2017 |
Assets |
|
|
|
Real
estate investments, net of accumulated depreciation of $402,338 and
$340,423 as of December 31, 2018 and 2017, respectively |
$ |
5,853,545 |
|
|
$ |
5,994,432 |
|
Loans
receivable and other investments, net |
113,722 |
|
|
114,390 |
|
Investment
in unconsolidated joint venture |
340,120 |
|
|
— |
|
Cash and
cash equivalents |
50,230 |
|
|
518,632 |
|
Restricted
cash |
9,428 |
|
|
68,817 |
|
Lease
intangible assets, net |
131,097 |
|
|
167,119 |
|
Accounts
receivable, prepaid expenses and other assets, net |
167,161 |
|
|
168,887 |
|
Total assets |
$ |
6,665,303 |
|
|
$ |
7,032,277 |
|
|
|
|
|
Liabilities |
|
|
|
Secured
debt, net |
$ |
115,679 |
|
|
$ |
256,430 |
|
Revolving
credit facility |
624,000 |
|
|
641,000 |
|
Term loans,
net |
1,184,930 |
|
|
1,190,774 |
|
Senior
unsecured notes, net |
1,307,394 |
|
|
1,306,286 |
|
Accounts
payable and accrued liabilities |
94,827 |
|
|
102,523 |
|
Lease
intangible liabilities, net |
83,726 |
|
|
98,015 |
|
Total liabilities |
3,410,556 |
|
|
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, 178,306,528
and 178,255,843 shares issued and outstanding as of December 31,
2018 and 2017, respectively |
1,783 |
|
|
1,783 |
|
Additional
paid-in capital |
3,507,925 |
|
|
3,636,913 |
|
Cumulative
distributions in excess of net income |
(271,595 |
) |
|
(217,236 |
) |
Accumulated
other comprehensive income |
12,301 |
|
|
11,289 |
|
Total Sabra Health Care
REIT, Inc. stockholders’ equity |
3,250,414 |
|
|
3,432,807 |
|
Noncontrolling
interests |
4,333 |
|
|
4,442 |
|
Total equity |
3,254,747 |
|
|
3,437,249 |
|
Total liabilities and
equity |
$ |
6,665,303 |
|
|
$ |
7,032,277 |
|
SABRA HEALTH CARE REIT, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in thousands)
|
Year Ended December 31, |
|
2018 |
|
2017 |
Cash flows from operating
activities: |
|
|
|
Net
income |
$ |
279,115 |
|
|
$ |
158,365 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
Depreciation
and amortization |
191,379 |
|
|
113,882 |
|
Amortization
of above and below market lease intangibles, net |
7,701 |
|
|
(912 |
) |
Non-cash
interest income adjustments |
(2,300 |
) |
|
(769 |
) |
Non-cash
interest expense |
10,137 |
|
|
7,776 |
|
Stock-based
compensation expense |
7,648 |
|
|
8,359 |
|
Loss on
extinguishment of debt |
874 |
|
|
553 |
|
Straight-line rental income adjustments |
(44,144 |
) |
|
(29,440 |
) |
Provision
for doubtful accounts, straight-line rental income and loan
losses |
39,075 |
|
|
17,113 |
|
Change in
fair value of contingent consideration |
— |
|
|
(426 |
) |
Net gain on
sales of real estate |
(128,198 |
) |
|
(52,029 |
) |
Impairment
of real estate |
1,413 |
|
|
1,326 |
|
Loss from
unconsolidated joint venture |
5,431 |
|
|
— |
|
Distributions of earnings from unconsolidated joint venture |
8,910 |
|
|
— |
|
Changes in
operating assets and liabilities: |
|
|
|
Accounts
receivable, prepaid expenses and other assets, net |
(6,753 |
) |
|
(16,811 |
) |
Accounts
payable and accrued liabilities |
(11,745 |
) |
|
(71,198 |
) |
Net cash
provided by operating activities |
358,543 |
|
|
135,789 |
|
Cash flows from investing
activities: |
|
|
|
Acquisition
of real estate |
(261,511 |
) |
|
(419,905 |
) |
Cash
received in CCP Merger |
— |
|
|
77,859 |
|
Origination
and fundings of loans receivable |
(50,731 |
) |
|
(17,239 |
) |
Origination
and fundings of preferred equity investments |
(5,313 |
) |
|
(2,749 |
) |
Additions to
real estate |
(27,697 |
) |
|
(6,954 |
) |
Repayments
of loans receivable |
51,789 |
|
|
32,430 |
|
Repayments
of preferred equity investments |
6,870 |
|
|
3,755 |
|
Investment
in unconsolidated joint venture |
(354,461 |
) |
|
— |
|
Net proceeds
from sales of real estate |
382,560 |
|
|
150,243 |
|
Net cash
used in investing activities |
(258,494 |
) |
|
(182,560 |
) |
Cash flows from financing
activities: |
|
|
|
Net
(repayments of) proceeds from revolving credit facility |
(17,000 |
) |
|
253,000 |
|
Proceeds
from term loans |
— |
|
|
181,000 |
|
Principal
payments on secured debt |
(140,338 |
) |
|
(4,145 |
) |
Payments of
deferred financing costs |
(352 |
) |
|
(15,337 |
) |
Payment of
contingent consideration |
— |
|
|
(382 |
) |
Distributions to noncontrolling interests |
(142 |
) |
|
(30 |
) |
Preferred
stock redemption |
(143,750 |
) |
|
— |
|
Issuance of
common stock, net |
(499 |
) |
|
366,800 |
|
Dividends
paid on common and preferred stock |
(325,220 |
) |
|
(182,089 |
) |
Net cash
(used in) provided by financing activities |
(627,301 |
) |
|
598,817 |
|
Net (decrease) increase in
cash, cash equivalents and restricted cash |
(527,252 |
) |
|
552,046 |
|
Effect of foreign currency
translation on cash, cash equivalents and restricted cash |
(539 |
) |
|
738 |
|
Cash, cash equivalents and
restricted cash, beginning of period |
587,449 |
|
|
34,665 |
|
Cash, cash equivalents and
restricted cash, end of period |
$ |
59,658 |
|
|
$ |
587,449 |
|
SABRA HEALTH CARE REIT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(in thousands)
|
Year Ended December 31, |
|
2018 |
|
2017 |
Supplemental disclosure of
cash flow information: |
|
|
|
Interest
paid |
$ |
137,668 |
|
|
$ |
69,686 |
|
Income taxes
paid |
$ |
1,800 |
|
|
$ |
714 |
|
Supplemental disclosure of
non-cash investing and financing activities: |
|
|
|
Acquisition
of business in CCP merger |
$ |
— |
|
|
$ |
3,726,092 |
|
Assumption
of indebtedness in CCP merger |
$ |
— |
|
|
$ |
(1,751,373 |
) |
Stock
exchanged in CCP merger |
$ |
— |
|
|
$ |
(2,052,578 |
) |
Real estate
acquired through loan receivable foreclosure |
$ |
— |
|
|
$ |
19,096 |
|
Decrease in
loans receivable and other investments due to acquisition of real
estate |
$ |
— |
|
|
$ |
(6,913 |
) |
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 December 31, |
|
Year Ended December 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net (loss) income
attributable to common stockholders |
$ |
(19,394 |
) |
|
$ |
101,385 |
|
|
$ |
269,314 |
|
|
$ |
148,141 |
|
Add: |
|
|
|
|
|
|
|
Depreciation and amortization of real estate assets |
48,078 |
|
|
51,592 |
|
|
191,379 |
|
|
113,882 |
|
Depreciation and amortization of real estate assets related to
noncontrolling interests |
(40 |
) |
|
(45 |
) |
|
(159 |
) |
|
(53 |
) |
Depreciation and amortization of real estate assets related to
unconsolidated joint venture |
5,324 |
|
|
— |
|
|
21,253 |
|
|
— |
|
Net loss
(gain) on sales of real estate |
14,247 |
|
|
(47,415 |
) |
|
(128,198 |
) |
|
(52,029 |
) |
Impairment of real estate |
— |
|
|
1,326 |
|
|
1,413 |
|
|
1,326 |
|
FFO
attributable to common stockholders |
$ |
48,215 |
|
|
$ |
106,843 |
|
|
$ |
355,002 |
|
|
$ |
211,267 |
|
Lease
termination fee |
— |
|
|
— |
|
|
— |
|
|
(2,634 |
) |
CCP
merger and transition costs |
274 |
|
|
1,633 |
|
|
1,994 |
|
|
35,617 |
|
Loss on
extinguishment of debt |
2,917 |
|
|
— |
|
|
2,917 |
|
|
553 |
|
Provision
for doubtful accounts and loan losses, net |
28,848 |
|
|
9,323 |
|
|
30,243 |
|
|
12,457 |
|
Other
normalizing items (1) |
9,989 |
|
|
116 |
|
|
19,391 |
|
|
279 |
|
Normalized FFO
attributable to common stockholders |
$ |
90,243 |
|
|
$ |
117,915 |
|
|
$ |
409,547 |
|
|
$ |
257,539 |
|
FFO
attributable to common stockholders |
$ |
48,215 |
|
|
$ |
106,843 |
|
|
$ |
355,002 |
|
|
$ |
211,267 |
|
Merger
and acquisition costs (2) |
43 |
|
|
505 |
|
|
636 |
|
|
30,255 |
|
Stock-based compensation expense |
1,373 |
|
|
29 |
|
|
7,648 |
|
|
7,017 |
|
Straight-line rental income adjustments |
(9,740 |
) |
|
(11,180 |
) |
|
(44,144 |
) |
|
(29,440 |
) |
Amortization of above and below market lease intangibles, net |
3,508 |
|
|
(1,549 |
) |
|
7,701 |
|
|
(912 |
) |
Non-cash
interest income adjustments |
(578 |
) |
|
(632 |
) |
|
(2,300 |
) |
|
(769 |
) |
Non-cash
interest expense |
2,589 |
|
|
2,488 |
|
|
10,137 |
|
|
7,776 |
|
Non-cash
portion of loss on extinguishment of debt |
874 |
|
|
— |
|
|
874 |
|
|
553 |
|
Change in
fair value of contingent consideration |
— |
|
|
126 |
|
|
— |
|
|
(426 |
) |
Provision
for doubtful straight-line rental income, loan losses and other
reserves |
29,513 |
|
|
10,044 |
|
|
40,806 |
|
|
16,854 |
|
Other
non-cash adjustments related to unconsolidated joint venture |
1,520 |
|
|
— |
|
|
2,652 |
|
|
— |
|
Other
non-cash adjustments |
(30 |
) |
|
(104 |
) |
|
25 |
|
|
103 |
|
AFFO
attributable to common stockholders |
$ |
77,287 |
|
|
$ |
106,570 |
|
|
$ |
379,037 |
|
|
$ |
242,278 |
|
CCP
transition costs |
241 |
|
|
708 |
|
|
1,461 |
|
|
5,005 |
|
Cash
portion of loss on extinguishment of debt |
2,043 |
|
|
— |
|
|
2,043 |
|
|
— |
|
Lease
termination fee |
— |
|
|
— |
|
|
— |
|
|
(2,634 |
) |
(Recovery
of) provision for doubtful cash income |
(508 |
) |
|
(385 |
) |
|
(2,668 |
) |
|
176 |
|
Other
normalizing items (1) |
4,761 |
|
|
236 |
|
|
7,913 |
|
|
294 |
|
Normalized AFFO
attributable to common stockholders |
$ |
83,824 |
|
|
$ |
107,129 |
|
|
$ |
387,786 |
|
|
$ |
245,119 |
|
Amounts per diluted
common share attributable to common stockholders: |
|
|
|
|
|
|
|
Net
(loss) income |
$ |
(0.11 |
) |
|
$ |
0.57 |
|
|
$ |
1.51 |
|
|
$ |
1.40 |
|
FFO |
$ |
0.27 |
|
|
$ |
0.60 |
|
|
$ |
1.99 |
|
|
$ |
2.00 |
|
Normalized FFO |
$ |
0.50 |
|
|
$ |
0.66 |
|
|
$ |
2.29 |
|
|
$ |
2.43 |
|
AFFO |
$ |
0.43 |
|
|
$ |
0.60 |
|
|
$ |
2.11 |
|
|
$ |
2.28 |
|
Normalized AFFO |
$ |
0.47 |
|
|
$ |
0.60 |
|
|
$ |
2.16 |
|
|
$ |
2.31 |
|
Weighted average number
of common shares outstanding, diluted: |
|
|
|
|
|
|
|
Net
(loss) income |
178,314,638 |
|
|
178,428,200 |
|
|
178,721,744 |
|
|
105,842,434 |
|
FFO and
Normalized FFO |
178,932,966 |
|
|
178,428,200 |
|
|
178,721,744 |
|
|
105,842,434 |
|
AFFO and
Normalized AFFO |
179,394,677 |
|
|
178,647,299 |
|
|
179,338,881 |
|
|
106,074,862 |
|
(1) Other normalizing items for FFO for the three months
and year ended December 31, 2018 include $5.2 million and
$11.5 million, respectively, of acceleration of above market lease
intangible amortization. Other normalizing items for FFO and AFFO
for the three months and year ended December 31, 2018 include $4.3
million and $4.7 million, respectively, of non-Senior Housing -
Managed operating expenses. In addition, the year ended December
31, 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, partially
offset by other income of $3.2 million earned during the period
related to legacy CCP investments 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
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)
facilities held for sale, (ii) facilities being sold pursuant to
the Company’s CCP portfolio repositioning, (iii) facilities being
transitioned to a new operator, (iv) facilities being transitioned
from leased by the Company to being operated by the Company; and
(v) 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.
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