Skilled Nursing and Triple-Net Senior Housing EBITDA and Rent Coverage: 2.19 and 1.41, respectively. Behavioral Rent Coverage: 3.77, highest level since year-end 2023. Skilled Occupancy: Up 80 basis points sequentially. Triple-Net Senior Housing Occupancy: Up 50 basis points sequentially. Same-Store Managed Senior Housing Revenue Growth: 6.3% year over year. Same-Store Portfolio Occupancy: 85.4% compared to 82.6% in Q1 2024. Domestic Portfolio Occupancy: 83%, up 340 basis points year over year. Canadian Portfolio Occupancy: 90.9%, up 140 basis points year over year. RevPOR Increase: 2.8% year over year. Canadian Portfolio RevPOR Growth: 4.9% year over year. Cash NOI Growth in Same-Store Portfolio: 16.9% year over year. US Communities Cash NOI Growth: 14.4% year over year. Canadian Communities Cash NOI Growth: 24.7% year over year. Normalized FFO per Share: $0.35, up from $0.34 in Q1 2024. Normalized AFFO per Share: $0.37, up from $0.35 in Q1 2024. Normalized FFO and AFFO: $85.2 million and $88.2 million, up 7% and 9% year over year, respectively. Cash Rental Income from Triple Net Portfolio: $90 million, up from $89 million in Q1 2024. Cash NOI from Managed Senior Housing Portfolio: $24.1 million, up from $19.1 million in Q1 2024. Interest and Other Income: $10.1 million, up from $8.9 million in Q1 2024. Cash Interest Expense: $25.4 million, in line with Q1 2024. Recurring Cash G&A: $10 million, matching 2025 guidance run rate. Net Debt to Adjusted EBITDA Ratio: 5.19 times as of March 31, 2025. Liquidity: Over $1 billion, including $22.7 million in cash and $917.3 million in available borrowings. Quarterly Cash Dividend: $0.30 per share, representing 81% payout of Q1 normalized AFFO per share.

Warning! GuruFocus has detected 9 Warning Signs with SBRA.

Release Date: May 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Sabra Health Care REIT Inc (NASDAQ:SBRA) reported strong EBITDA and rent coverage for skilled nursing and senior housing, with behavioral health reaching its highest level since 2023. The company's skilled nursing occupancy increased by 80 basis points sequentially, and senior housing occupancy rose by 50 basis points. Sabra Health Care REIT Inc (NASDAQ:SBRA) has a robust deal pipeline, with over $200 million in awarded deals expected to close this quarter. The managed senior housing portfolio showed strong performance, with a 6.3% year-over-year revenue growth and a 16.9% increase in cash NOI. The company maintained a solid financial position with a net debt to adjusted EBITDA ratio of 5.19 times and ample liquidity of over $1 billion.

Story Continues

Negative Points

Labor costs, although improving, remain a challenge and have not yet returned to pre-pandemic levels. The company is not seeing many attractive skilled nursing facility (SNF) acquisition opportunities due to financial challenges in the sector. There is uncertainty regarding Medicaid rate increases, which could impact future financial performance. The SHOP portfolio faces challenges in occupancy growth due to seasonal factors and potential pricing power limitations in the US market. The behavioral health segment experienced a decline in occupancy, although coverage remains strong.

Q & A Highlights

Q: Can you provide an update on the expected $50 million skilled nursing facility sale? A: Richard Matros, CEO, confirmed that the sale is still expected to close despite regulatory delays, with no change in expected proceeds. Beyond this, Sabra anticipates ordinary course dispositions of $50 million to $100 million annually.

Q: How do you foresee the trajectory of RevPOR and expense growth in the SHOP portfolio as occupancy approaches high 80% levels? A: Talya Nevo-Hacohen, CIO, expects occupancy and RevPOR to continue rising, driven by stable labor costs and increased pricing power as occupancy grows. Expenses are expected to remain steady barring unforeseen political changes.

Q: Are the recent acquisitions included in your current guidance? A: Michael Costa, CFO, stated that the acquisitions are not included in the current guidance. They will be incorporated once closed, likely by the second quarter call.

Q: What are you seeing in the transaction market, particularly regarding deal flow and competition? A: Talya Nevo-Hacohen noted a robust pipeline, primarily in senior housing, with private equity firms selling due to fund life cycles. While competition exists, Sabra remains selective, focusing on strategic relationships and newer assets.

Q: Can you provide details on the $200 million senior housing acquisitions? A: Talya Nevo-Hacohen mentioned these are domestic deals, primarily in the eastern U.S., with growth potential in occupancy and RevPOR. They are more weighted towards assisted living and memory care.

Q: What is the current status of your exposure to Genesis? A: Richard Matros explained that Sabra has reduced its exposure significantly, with only eight facilities remaining, subleased to a trusted operator. The impact on NOI is negligible, and operations have improved.

Q: Are there any changes to your operator watchlist given the improving coverage levels? A: Richard Matros confirmed there are no changes to the operator watchlist, indicating stable performance across their portfolio.

Q: What makes skilled nursing facility (SNF) acquisitions currently unattractive? A: Talya Nevo-Hacohen highlighted that many SNF opportunities involve facilities losing money, often from nonprofits divesting due to financial strain, making it challenging to structure leases around such assets.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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