Sabra Health Care REIT : First Quarter 2025 Presentation

Published: 2025-05-05 22:03:29 ET SBRA

Published on 05/05/2025 at 22:03

Strategic. Disciplined. Opportunistic.

Investor Presentation | May 5, 2025

Disclaimers

Tenant and Borrower Information

This presentation includes information (e.g., EBITDARM Coverage and Occupancy Percentage) 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 presentation 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.

Non-GAAP Financial Measures

May 5, 2025

Investor Presentation

This presentation contains certain non-GAAP financial measures related to Sabra Health Care REIT, Inc., including Annualized Cash NOI, Net Debt to Adjusted EBITDA and funds from operations (FFO). 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 (GAAP). An explanation of these non-GAAP financial measures is included under "Definitions" in the Appendix, 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 https://ir.sabrahealth.com/investors/financials/quarterly-results.

LOREM IPSUM

Heading

Uniquely Positioned to Thrive

Our passion for quality care and deep industry experience uniquely position Sabra to succeed in the dynamic healthcare real estate market. We have the size, know-how and resilient balance sheet necessary to deliver long-term value to shareholders.

May 5, 2025 Investor Presentation 4

"We know what happens inside our buildings matters most. That's why we align ourselves with operators who skillfully and compassionately care for the residents and patients in the buildings we own."

May 5, 2025

Investor Presentation

-Rick Matros (he/him), Chief Executive Officer

STRATEGY

Portfolio Strategy

Growing Demand

> 80 population is expected to grow 4% per year through 2040 Drug overdose deaths have increased 6x since 2000

Mission-Driven

Passionate workforce Positive societal impact

Community backbone

Skilled Nursing Senior Housing

Needs-Based

Lifestyle enhancement Post-acute care

Mental health treatment

Safety net infrastructure

Psychosocial support Addiction treatment

Dementia care

Execution - Passion Meets Know-how

Unique, Accretive Investments - Utilize our operational and asset management experience to identify and capitalize on new opportunities where off-market price dislocation exists.

Support Operator Expansion - Be the capital partner of choice for the expansion and growth of leading operators with regional expertise and concentrated in markets with favorable demographics. Structure deals opportunistically across the capital stack.

Creatively Financed Development - Pursue strategic development opportunities and long-term partnerships with leading developers.

Optimize Portfolio - Continue to curate our portfolio to optimize diversification and maintain a mix of assets well-positioned for the future of healthcare delivery.

Prudent Financing - Maintain balance sheet strength and lower leverage by match funding accretive investing activity with a combination of available liquidity, recycled capital and ATM proceeds.

"By consistently and deliberately executing our strategy, we deliver long-term value to our shareholders and provide the capital our tenants need to invest in their business and deliver quality care."

-Talya Nevo-Hacohen (she/her), Chief Investment Officer

STRATEGY IN ACTION

Good for the Planet. Good for Our Stakeholders.

"We're committed to true alignment between our business strategy and our sustainability initiatives. These efforts matter to our stakeholders not only because they are the right thing to do but also because they're an important part of how we create long-term value."

-Rick Matros (he/him),

Chief Executive Officer

Learn more about our commitment to strong corporate governance and our ongoing ESG efforts in our latest corporate sustainability report available on our website at https://sabrahealth.com/about/corporate-sustainability/.

ESG Framework

We understand that good governance underpins sustainability, strengthens the accountability of our Board and management team and supports the long-term interests of our stakeholders. Our ESG principles are intrinsically tied to our objective to drive shareholder value by operating efficiently, sustainably and with our stakeholders' best interests in mind.

"Sabra's unwavering commitment to supporting operators' success and prioritizing seniors' well-being extends seamlessly to our corporate sustainability projects, aimed at empowering operators' energy and water efficiency and enhancing the quality of residents' lives."

-Armand Markarian,

Manager, Asset Management

May 5, 2025 Investor Presentation 10

E-Initiative Roadmap

Our efforts to improve the environment start with enabling our operators. We take a comprehensive, integrated and collaborative approach to environmental stewardship, as demonstrated by our E-Initiative Roadmap.

Going the Extra Green Mile

At Gardens of Wakefield, Sabra and Holiday by Atria went the extra mile, bringing in Blue Sky E3 Partners, LLC and a team of Carrier engineers to help identify and design a custom, efficient solution for the community's heating/ cooling system. Replacing the existing gas water heaters with a modern tankless system, Carrier could fit a SEER 21 HVAC inverter system, significantly improving efficiency by a combined 44%. Not only did it reduce operating expenses, but, more importantly, it positively improved the overall environment, the residents' living environment, and the staff's work environment - a win-win-win-win investment.

Committed to Diversity, Equity & Inclusion

We believe a diverse workforce is essential to our continued success and gives us a competitive advantage. We believe we attract the best talent by embracing the diversity of our country.

As of March 31, 2025, women comprised 57% of our workforce and 61% of our management level/ leadership roles.

57%

As of March 31, 2025, 33% of our team members

self-identified as being members of one or more ethnic minorities.

We believe our ethnic diversity is higher than this reported percentage as another 14% of our team members chose not to self-identify.

33%

Our Success Is Predicated on a Healthy Portfolio

As of March 31, 2025

82% 90% 78%

399

SNF/TC

SH - Leased

BH/Hosp./Oth.

Investments

Relationships

Average Occupancy Percentage1

38%

Skilled Mix

2.19x 1.41x 3.77x

Years Wtd. Avg. Remaining Lease Term

SNF/TC SH - Leased

EBITDARM Coverage1

BH/Hosp./Oth.

1Occupancy Percentage and Skilled Mix (together, "Operating Statistics") and EBITDARM Coverage for the period presented include only Stabilized Facilities owned by the Company as of the end of the quarter following the period presented and only for the duration such facilities were owned by the Company and classified as Stabilized Facilities. In addition, EBITDARM Coverage and Operating Statistics are presented for the twelve months ended at the end of the respective period and one quarter in arrears, and therefore, EBITDARM Coverage and Operating Statistics exclude assets acquired after December 31, 2024.

Diverse Portfolio, Positioned to Perform

As of March 31, 2025

Relationship Concentration1

Asset Class Concentration1

The Ensign Group, 8.5%

Signature Healthcare, 8.2%

Senior Housing -Managed, 19.6%

Other 39.5%

Avamere Family of Companies, 8.2%

Signature Behavioral, 6.7%

Recovery Centers of America, 5.6%

The McGuire Group, 3.7%

Skilled Nursing/ Transitional Care, 51.6%

Specialty

Behavioral Health, 13.5%

Senior Housing -Leased, 10.6%

Managed (No Operator Credit Exposure), 19.6%

Other, 0.8%

Hospital and Other, 3.9%

1Relationship and asset class concentrations include real estate investments and investments in loans receivable and other investments. Relationship concentrations use Annualized Cash NOI, and asset class concentrations use Annualized Cash NOI, as adjusted to reflect Annualized Cash NOI from our mortgage and construction loans receivable and preferred equity investments in the related asset class of the underlying real estate. See the Appendix to this presentation for the definition of Annualized Cash NOI.

Favorable Supply and Demand Trends

Since 2000, the 85-or-older population has grown by 60%, compared to a 12% decline in skilled nursing beds over the same time frame.

8,000

7,000

6,000

5,000

4,000

3,000

SNF Supply and Demand

6,380

6,539

6,483

6,486

5,753

5,905

6,166

4,783

5,121

5,444

4,296

4,512

6,859

2,000

1,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

1,795 1,769 1,744 1,716 1,704 1,703 1,703 1,694 1,690 1,687 1,639 1,617 1,581

Source: Census.gov, AHCA, Care Compare

Skilled Nursing Medicaid and Medicare Rates

As of March 31, 2025

Medicaid Average Daily Rate

$350

$300

$309

$285

Medicare Average Daily Rate

$750

$700

$674

$720

$250

4.2% CAGR

$204

$193

$262

$246

$236

$217

$650

$600

2.1% CAGR

$657

$635

$582

$558

$200 $179 $184

$550$544

$544

$519 $522 $531 $531

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21

Jan-22

Jan-23

Jan-24

Jan-25

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21

Jan-22

Jan-23

Jan-24

Jan-25

$150 $500

Reimbursement trends remain positive. In April 2025, CMS proposed a net 2.8% increase in Medicare rates for fiscal year '26.

"We invest in relationships with operators who are nimble and poised to deliver excellent care now and in the future."

-Peter Nyland,

Executive Vice President, Asset Management

PORTFOLIO

Advancing the Quality of Care

We Work with Operators Who Are:

Committed to their mission

Nimble

Regional experts

In markets with favorable demographics

Well-positioned for the future of healthcare delivery

May 5, 2025 Investor Presentation 19

We Support Our Operators

We Invest in Our Tenants' Success:

Redevelopment / Adaptive Reuse

Expansion

Strategic development

Flexible equity and debt capital solutions

May 5, 2025 Investor Presentation 20

"What started with a single sale/leaseback transaction for a senior living community in Indiana has grown into a multi-state, multi-community relationship. We truly value the collaboration, insight and support we receive from Sabra. Sabra is who we think about first when it comes to a capital partner to support our company's growth."

- Tom Smith, Chief Executive Officer & Co-Founder Leo Brown Group

"Our strong balance sheet and ready access to capital

allows us to thoughtfully finance investment opportunities and drive value for our shareholders."

-Michael Costa,

Chief Financial Officer

Prudent Balance Sheet Management

As of March 31, 2025

Term loans are hedged at a fixed rate of 4.1% through early 2028, resulting in interest savings of

$10.6 million over the last 12 months.

Ample liquidity of approximately

$1 billion ensures we have ready access to capital.

$298 million of availability under at-the-market (ATM) equity offering program.

98% of borrowings are unsecured, providing additional balance sheet flexibility.

Fixed Rate Bonds 26%

Hedged Term Loans

Secured Debt 1%

Line of Credit 1%

CONSOLIDATED ENTERPRISE VALUE1

$6.6B

Common Equity Value

64%

1As of 3/31/2025. Common equity value estimated using outstanding common stock of 237.9 million shares and Sabra's closing price of $17.62 as of 5/1/2025.

Investment-Grade Credit Metrics

Investment-Grade peers range 2

Sabra 1Q 25 1

Net Debt to Adjusted EBITDA

5.19x 3

3.33x - 5.69x

Interest Coverage Ratio

4.52x

4.10x - 6.38x

Debt as a % of Asset Value

37%

25% - 39%

Secured Debt as a % of Asset Value

2% - 8%

We continue to focus on strengthening our balance sheet and portfolio.

1Key credit statistics (except Net Debt to Adjusted EBITDA) are calculated in accordance with the credit agreement relating to the revolving credit facility and the indentures relating to our senior unsecured notes. In addition, key credit statistics give effect to dispositions and acquisitions completed after the period presented as though such dispositions and acquisitions occurred at the beginning of the period.

2Investment-Grade Peers consists of WELL, VTR, OHI and NHI. The metrics used to calculate Investment-Grade peers range are sourced from the most recent public filings with the SEC and may not be calculated in a manner identical to Sabra's metrics.

3Based on the annualized trailing three-month period ended as of the date indicated.

Favorable Profile with Staggered Maturities

Debt maturity profile at March 31, 2025

1,200

,000

800

(Dollars in millions)

2.9%

3.1%

$917

500

350

100

$25

5.1%

5.5%

3.9%

800

2.9%

3.2%

535

600

400

200

2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Thereafter

1Revolving Credit Facility is subject to two six-month extension options.

2Represents actual contractual interest rates excluding private mortgage insurance and impact of interest rate hedges.

Attractive Valuation Relative to Direct Peers

Forward FFO multiples 1Dividend yield 2

19.6x

15.8x

16.0x

11.9x

12.9x

13.5x

6.8%

6.4%

7.0%

3.1%

4.8%

4.6%

SBRA OHI LTC CTRE NHI AHR SBRA AHR CTRE NHI LTC OHI

83%

14%

30%

42%

64%

52%

62%

31%

92%

57%

18%

Premium / discount to consensus NAV Portfolio composition (% Annualized Cash NOI) 3

43.0%

34.6%

37.9%

23.5%

9.3%

SBRA LTC AHR CTRE OHI NHI

Sources: S&P Capital IQ as of 5/1/2025, unless otherwise noted.

SBRA 4

CTRE OHI LTC NHI AHR5

1Forward FFO multiple is calculated as stock price as of 5/1/2025 divided by the forward four quarter consensus FFO from S&P Capital IQ.

2Dividend yield is calculated as most recent quarterly dividends declared per share annualized divided by stock price as of 5/1/2025.

3Represents latest available concentration for peers from company filings as of 5/1/2025.

4Based on Annualized Cash NOI for the quarter ended 3/31/2025 for real estate investments, investments in loans receivable and other investments. See the appendix to this presentation for the definition of Annualized Cash NOI.

5AHR SNF concentration includes only Triple-Net Leased NOI and does not include SNF NOI from Integrated Senior Health Campuses.

Well-Positioned Portfolio

SNF concentration 1

Top five relationships concentration 1

SNF EBITDARM

Coverage 1,4

SH EBITDARM

Coverage 1

62%

57%

52%

31%

2.90x

2.19x

1.85x 1.88x 1.95x

92%

3.05x

1.55x

65%

60%

46%

37%

1.41x

1.36x 1.37x 1.37x 1.40x

SBRA2

AHR3NHI LTC OHI CTRE

SBRA2

OHI LTC NHI CTRE

SBRA5

AHR OHI LTC CTRE NHI

SBRA5

WELL LTC AHR VTR NHI

1Represents latest available concentration and coverage for peers as of 5/1/2025.

2Based on Annualized Cash NOI as of 3/31/2025 for real estate investments, investments in loans receivable and other investments. See the appendix to this presentation for the definition of Annualized Cash NOI.

3AHR SNF concentration includes only Triple-Net Leased NOI and does not include SNF NOI from Integrated Senior Health Campuses.

4Represents SNF EBITDARM Coverage for LTC, AHR and NHI; total portfolio EBITDARM Coverage for OHI and CTRE.

5See appendix to this presentation for the definition of EBITDARM Coverage.

Appendix

May 5, 2025 Investor Presentation 28

Definitions

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.

Annualized Cash Net Operating Income ("Annualized Cash NOI").* The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers Annualized 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 Annualized Cash NOI as Annualized Revenues less operating expenses and non-cash revenues and expenses. Annualized Cash NOI excludes all other financial statement amounts included in net income.

Annualized Revenues. The annual contractual rental revenues under leases and interest and other income generated by the Company's loans receivable and other investments based on amounts invested and applicable terms as of the end of the period presented. Annualized Revenues do not include tenant recoveries or additional rents and are adjusted to reflect actual payments received related to the twelve months ended at the end of the respective period for leases no longer accounted for on an accrual basis.

Behavioral Health. Includes behavioral hospitals that provide inpatient and outpatient care for patients with mental health conditions, chemical dependence or substance addictions and addiction treatment centers that provide treatment services for chemical dependence and substance addictions, which may include inpatient care, outpatient care, medical detoxification, therapy and counseling.

Consolidated Debt. The 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 Value. The 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.

EBITDARM. Earnings 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. EBITDARM has limitations as an analytical tool. EBITDARM does not reflect historical cash expenditures or future cash requirements for facility capital expenditures or contractual commitments. In addition, EBITDARM does not represent a property's net income or cash flows from operations and should not be considered an alternative to those indicators. The Company utilizes EBITDARM to evaluate the core operations of the properties by eliminating management fees, which may vary by operator/tenant and operating structure, and 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.

EBITDARM Coverage. Represents 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 facilities for which data is not available or meaningful.

Definitions

Funds From Operations ("FFO") and Adjusted FFO ("AFFO").* The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company also believes that funds from operations, 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, 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, as defined by GAAP. FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from real estate dispositions and the Company's share of gains or losses from real estate dispositions related to its unconsolidated joint ventures, plus real estate depreciation and amortization, net of amounts related to noncontrolling interests, plus the Company's share of depreciation and amortization related to its unconsolidated joint ventures, and real estate impairment charges of both consolidated and unconsolidated entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. AFFO is defined as FFO excluding stock-based compensation expense, non-cash rental and related revenues, non-cash interest income, non-cash interest expense, non-cash portion of loss on extinguishment of debt, provision for (recovery of) loan losses and other reserves, non-cash lease termination income and deferred income taxes, as well as other non-cash revenue and expense items (including noncapitalizable acquisition costs, transaction costs related to operator transitions and organizational or other restructuring activities, ineffectiveness gain/loss on derivative instruments, and non-cash revenue and expense amounts related to noncontrolling interests) and the Company's share of non-cash adjustments related to its unconsolidated joint ventures. 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 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.

Net Debt.* The 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, net of cash and cash equivalents as reported in the Company's consolidated financial statements.

Net Debt to Adjusted EBITDA.* Net Debt to Adjusted EBITDA is calculated as Net Debt divided by 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 Operating Income ("NOI")* The Company believes that net income 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.

Occupancy Percentage. Occupancy 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.

Disclaimer

Sabra Health Care REIT Inc. published this content on May 05, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 06, 2025 at 01:53 UTC.