Attached files
| file | filename |
|---|---|
| EX-99.1 - Q2 2016 EARNINGS RELEASE - Sabra Health Care REIT, Inc. | sbraex9912016q2.htm |
| 8-K - 8-K - Sabra Health Care REIT, Inc. | sbra8-k2016q2.htm |
Disclaimer
Certain statements in this supplement contain “forward-looking” information as that term is defined by the Private Securities Litigation Reform Act of 1995. Any statements that do not relate to historical or current facts or matters are forward-looking statements. Examples of forward-looking statements include all statements regarding our expected future financial position, results of operations, cash flows, liquidity, business strategy, growth opportunities, potential investments, and plans and objectives for future operations. You can identify some of the forward-looking statements by the use of forward-looking words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “should,” “may” and other similar expressions, although not all forward-looking statements contain these identifying words.
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 Genesis Healthcare, Inc. (“Genesis”) and certain wholly owned subsidiaries of Holiday AL Holdings LP until we are able to further diversify our portfolio; our dependence on the operating success of our tenants; 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; changes in foreign currency exchange rates; our ability to raise capital through equity and debt financings; the impact of required regulatory approvals of transfers of healthcare properties; the effect of increasing healthcare regulation and enforcement on our tenants and the dependence of our tenants on reimbursement from governmental and other third-party payors; the relatively illiquid nature of real estate investments; competitive conditions in our industry; the loss of key management personnel or other employees; the impact of litigation and rising insurance costs on the business of our tenants; the effect of our tenants declaring bankruptcy or becoming insolvent; uninsured or underinsured losses affecting our properties and the possibility of environmental compliance costs and liabilities; the ownership limits and anti-takeover defenses in our governing documents and Maryland law, which may restrict change of control or business combination opportunities; the impact of a failure or security breach of information technology in our operations; our ability to find replacement tenants and the impact of unforeseen costs in acquiring new properties; our ability to maintain our status as a REIT; compliance with REIT requirements and certain tax and tax regulatory matters related to our status as a REIT; and other factors discussed from time to time in our news releases, public statements and/or filings with the Securities and Exchange Commission (the “SEC”), especially the “Risk Factors” sections of our Annual and Quarterly Reports on Forms 10-K and 10-Q. 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 supplement or to reflect the occurrence of unanticipated events, unless required by law to do so.
Note Regarding Non-GAAP Financial Measures
This supplement includes the following financial measures defined as non-GAAP financial measures by the SEC: 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 supplement and reconciliations of these non-GAAP financial measures to the GAAP financial measures we consider most comparable are included under “Reconciliations of FFO, Normalized FFO, AFFO and Normalized AFFO” in this supplement.
Tenant and Borrower Information
This supplement 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. Genesis is subject to the reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information. The information related to our tenants and borrowers that is provided in this supplement has been 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. Genesis's filings with the SEC can be found at www.sec.gov.
Table of Contents
Reconciliations of FFO, Normalized FFO, AFFO and Normalized AFFO | |
Real Estate Portfolio Geographic Concentrations | |
Company Information
Board of Directors
Richard K. Matros Chairman of the Board, President and Chief Executive Officer Sabra Health Care REIT, Inc. | Michael J. Foster Managing Director RFE Management Corp. | |
Milton J. Walters President Tri-River Capital | Robert A. Ettl Chief Operating Officer Harvard Management Company | |
Craig A. Barbarosh Partner Katten Muchin Rosenman LLP | ||
Senior Management
Richard K. Matros Chairman of the Board, President and Chief Executive Officer | Harold W. Andrews, Jr. Executive Vice President, Chief Financial Officer and Secretary | |
Talya Nevo-Hacohen Executive Vice President, Chief Investment Officer and Treasurer | ||
Other Information
Corporate Headquarters 18500 Von Karman Avenue, Suite 550 Irvine, CA 92612 | Transfer Agent American Stock Transfer and Trust Company 6201 15th Avenue Brooklyn, NY 11219 | |
www.sabrahealth.com
The information in this supplemental information package should be read in conjunction with the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other information filed with the SEC. The Reporting Definitions and Reconciliations of Non-GAAP Measures are an integral part of the information presented herein.
On Sabra's website, www.sabrahealth.com, you can access, free of charge, Sabra’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such material is filed with, or furnished to, the SEC. The information contained on Sabra’s website is not incorporated by reference into, and should not be considered a part of, this supplemental information package. All material filed with the SEC can also be accessed through their website, www.sec.gov.
For more information, contact Harold W. Andrews, Jr., Executive Vice President, Chief Financial Officer and Secretary at (949) 679-0243.
 | 1 | |
SABRA HEALTH CARE REIT, INC.
COMPANY FACT SHEET
Company Profile
Sabra Health Care REIT, Inc., a Maryland corporation (“Sabra,” the “Company” or “we”), operates as a self-administered, self-managed real estate investment trust (“REIT”) that, through its subsidiaries, owns and invests in real estate serving the healthcare industry. Sabra primarily generates revenues by leasing properties to tenants and operators throughout the United States and Canada.
As of June 30, 2016, Sabra’s investment portfolio included 178 real estate properties held for investment and leased to operators/tenants under triple-net lease agreements (consisting of (i) 102 Skilled Nursing/Transitional Care facilities, (ii) 75 Senior Housing facilities, and (iii) one Acute Care Hospital), 14 investments in loans receivable (consisting of (i) six mortgage loans, (ii) three construction loans, (iii) one mezzanine loan, (iv) three pre-development loans and (v) one debtor-in-possession loan ("DIP")), and 11 preferred equity investments. Included in the 178 real estate properties held for investment are two 100% owned Senior Housing facilities leased through RIDEA-compliant structures. As of June 30, 2016, Sabra’s real estate properties held for investment included 18,390 beds/units, spread across the United States and Canada.
Objectives and Strategies
Our objectives are to grow our investment portfolio while diversifying our portfolio by tenant, asset class and geography within the healthcare sector. We plan to achieve these objectives primarily through making investments directly or indirectly in healthcare real estate. We may also achieve our objective of diversifying our portfolio by tenant and asset class through select asset sales and other arrangements with Genesis.
We expect to continue to grow our portfolio primarily through the acquisition of assisted living, independent living and memory care facilities in the U.S and Canada and with a secondary focus on acquiring Skilled Nursing/Transitional Care facilities in the U.S. We have and will continue to opportunistically acquire other types of healthcare real estate, originate financing secured directly or indirectly by healthcare facilities and invest in the development of Senior Housing and Skilled Nursing/Transitional Care facilities. We also expect to expand our portfolio through the development of purpose-built healthcare facilities through pipeline agreements and other arrangements with select developers. We further expect to work with existing operators to identify strategic development opportunities. These opportunities may involve replacing or renovating facilities in our portfolio that may have become less competitive and new development opportunities that present attractive risk-adjusted returns. In addition to pursuing acquisitions with triple-net leases, we expect to continue to pursue other forms of investment, including investments in Senior Housing through RIDEA-compliant structures, mezzanine and secured debt investments, and joint ventures for Senior Housing and Skilled Nursing/Transitional Care facilities.
In general, we originate loans and make preferred equity investments when an attractive investment opportunity is presented and either (a) the property is in or near the development phase or (b) the development of the property is completed but the operations of the facility are not yet stabilized. A key component of our strategy related to loan originations and preferred equity investments is our having the option to purchase the underlying real estate that is owned by our borrowers (and that directly or indirectly secures our loan investment) or by the entity in which we have an investment. These options become exercisable upon the occurrence of various criteria, such as the passage of time or the achievement of certain operating goals, and the method to determine the purchase price upon exercise of the option is set in advance based on the same valuation methods we use to value our investments in healthcare real estate. This strategy allows us to diversify our revenue streams and build relationships with operators and developers, and provides us with the option to add new properties to our existing real estate portfolio if we determine that those properties enhance our investment portfolio and stockholder value at the time the options are exercisable.
SABRA HEALTH CARE REIT, INC.
COMPANY FACT SHEET (CONTINUED)
As of June 30, 2016
Market Facts | Credit Ratings | |||
Stock Information | ||||
Closing Price (common stock): | $20.64 | Moody's: | ||
52-Week range (common stock): | $14.92 - $27.66 | Corporate Rating | Ba3 | |
Common Equity Market Capitalization: | $1.3 billion | Unsecured Notes Rating | Ba3 | |
Enterprise Value: | $2.6 billion | Preferred Equity Rating | B2 | |
Outstanding Shares (common stock): | 65.3 million | S&P: | ||
Corporate Rating | BB- (stable) | |||
Ticker symbols: | Unsecured notes/unsecured credit facility | BB | ||
Common Stock | SBRA | Preferred Equity Rating | B- | |
Preferred Stock | SBRAP | Fitch: | ||
Stock Exchange: | NASDAQ | Corporate Rating | BB+ | |
Governance | Unsecured notes/unsecured credit facility | BB+ | ||
ISS Governance QuickScore | 2 | Preferred Equity Rating | BB- | |
Portfolio Information | ||||||
Investment in real estate properties | Real Estate Property Bed/Unit Count | |||||
Skilled Nursing/Transitional Care | 102 | Skilled Nursing/Transitional Care | 11,545 | |||
Senior Housing | 75 | Senior Housing | 6,775 | |||
Acute Care Hospital | 1 | Acute Care Hospital | 70 | |||
Total Equity Investments | 178 | Total Beds/Units | 18,390 | |||
Investments in loans receivable (1) | 14 | Countries | 2 | |||
Preferred Equity Investments (2) | 11 | U.S. States | 36 | |||
Total Investments | 203 | Relationships | 34 | |||
(1) Our investments in loans receivable include investments secured directly or indirectly by one Skilled Nursing/Transitional Care facility with 141 beds/units, 11 Senior Housing developments with 608 beds/units, and land for two future Senior Housing developments.
(2) Our Preferred Equity Investments include investments in entities owning 10 Senior Housing developments with 1,130 beds/units and one Skilled Nursing/Transitional Care development with 140 beds/units.
| See reporting definitions. | 2 |
SABRA HEALTH CARE REIT, INC.
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | $ | 74,249 | $ | 56,586 | $ | 136,808 | $ | 112,158 | |||||||
Net income attributable to common stockholders | 34,915 | 14,275 | 16,643 | 31,164 | |||||||||||
FFO attributable to common stockholders | 51,372 | 27,049 | 85,279 | 58,088 | |||||||||||
Normalized FFO attributable to common stockholders | 39,763 | 32,303 | 81,133 | 63,856 | |||||||||||
AFFO attributable to common stockholders | 49,327 | 30,683 | 84,097 | 61,214 | |||||||||||
Normalized AFFO attributable to common stockholders | 38,258 | 30,790 | 77,535 | 61,669 | |||||||||||
Per common share data attributable to common stockholders: | |||||||||||||||
Diluted EPS | $ | 0.53 | $ | 0.24 | $ | 0.25 | $ | 0.52 | |||||||
Diluted FFO | 0.78 | 0.45 | 1.30 | 0.98 | |||||||||||
Diluted Normalized FFO | 0.61 | 0.54 | 1.24 | 1.07 | |||||||||||
Diluted AFFO | 0.75 | 0.51 | 1.28 | 1.02 | |||||||||||
Diluted Normalized AFFO | 0.58 | 0.52 | 1.18 | 1.03 | |||||||||||
Net cash flow from operations | $ | 69,768 | $ | 26,606 | $ | 94,494 | $ | 51,307 | |||||||
Investment Portfolio | June 30, 2016 | December 31, 2015 | |||||||||||||
Real Estate Properties held for investment (1) | 178 | 180 | |||||||||||||
Real Estate Properties held for investment, gross ($) | $ | 2,166,542 | $ | 2,277,158 | |||||||||||
Total Beds/Units | 18,390 | 18,349 | |||||||||||||
Weighted Average Remaining Lease Term (in months) | 111 | 117 | |||||||||||||
Total Investments in Loans Receivable (#) | 14 | 17 | |||||||||||||
Total Investments in Loans Receivable, gross ($) (2) | $ | 80,042 | $ | 271,094 | |||||||||||
Total Preferred Equity Investments (#) | 11 | 10 | |||||||||||||
Total Preferred Equity Investments, gross ($) | $ | 40,957 | $ | 29,993 | |||||||||||
Debt | June 30, 2016 | December 31, 2015 | |||||||||||||
Principal Balance | |||||||||||||||
Fixed Rate Debt | $ | 876,996 | $ | 877,850 | |||||||||||
Variable Rate Debt (3) | 341,475 | 519,890 | |||||||||||||
Total Debt | 1,218,471 | 1,397,740 | |||||||||||||
Cash | (103,868 | ) | (7,434 | ) | |||||||||||
Net Debt (4) | $ | 1,114,603 | $ | 1,390,306 | |||||||||||
Weighted Average Effective Rate | |||||||||||||||
Fixed Rate Debt | 5.17 | % | 5.17 | % | |||||||||||
Variable Rate Debt (3) | 2.68 | % | 3.17 | % | |||||||||||
Total Debt | 4.47 | % | 4.43 | % | |||||||||||
% of Total | |||||||||||||||
Fixed Rate Debt | 71.9 | % | 62.8 | % | |||||||||||
Variable Rate Debt (3) | 28.1 | % | 37.2 | % | |||||||||||
Availability Under Revolving Credit Facility | $ | 500,000 | $ | 195,000 | |||||||||||
Available Liquidity (5) | $ | 603,764 | $ | 202,412 | |||||||||||
(1) Included in Real Estate Properties held for investment are two 100% owned Senior Housing facilities leased through RIDEA-compliant structures.
(2) Total Investments in Loans Receivable consists of principal plus capitalized origination fees net of loan loss reserves.
(3) Includes $200.0 million subject to a 2% LIBOR cap and $69.5 million (CAD $90.0 million) subject to a swap agreement that fixes the CDOR rate at 1.59%. Excluding these amounts from variable rate debt equates to 5.9% of total debt being variable rate debt as of June 30, 2016.
(4) Net Debt excludes deferred financing costs and discounts.
(5) Available liquidity represents unrestricted cash, excluding cash associated with a consolidated joint venture, and availability under the revolving credit facility.
| See reporting definitions. | 3 |
SABRA HEALTH CARE REIT, INC.
2016 OUTLOOK UPDATE
Net income attributable to common stockholders | $ | 0.90 | ||
Add: | ||||
Depreciation and amortization | 1.05 | |||
Loss on sale of real estate | 0.07 | |||
Impairment of real estate | 0.45 | |||
FFO attributable to common stockholders | $ | 2.47 | ||
Additional default interest income | (0.07 | ) | ||
Lease termination fee | (0.11 | ) | ||
Loss on extinguishment of debt | 0.01 | |||
Provision for doubtful accounts and loan losses | 0.03 | |||
Normalized FFO attributable to common stockholders | $ | 2.33 | ||
FFO attributable to common stockholders | $ | 2.47 | ||
Acquisition pursuit costs | 0.03 | |||
Stock-based compensation expense | 0.13 | |||
Straight-line rental income adjustments | (0.34 | ) | ||
Amortization of deferred financing costs | 0.08 | |||
Non-cash portion of loss on extinguishment of debt | 0.01 | |||
Provision for doubtful straight-line rental income and loan losses | 0.04 | |||
AFFO attributable to common stockholders | $ | 2.42 | ||
Additional default interest income | (0.07 | ) | ||
Lease termination fee | (0.11 | ) | ||
Normalized AFFO attributable to common stockholders | $ | 2.24 | ||
The above guidance assumes all investments completed and acquisitions awarded to Sabra through August 1, 2016 and excludes any impact of the sales of up to 29 facilities currently leased to Genesis contemplated by the memorandum of understanding entered into with Genesis on July 29, 2016. The above guidance also excludes the impact of three facilities to be sold under the sale memorandum of understanding with Genesis. Except as otherwise noted above, the foregoing projections reflect management's view of current and future market conditions. There can be no assurance that the Company's actual results will not differ materially from the estimates set forth above. Except as otherwise required by law, the Company assumes no, and hereby disclaims any, obligation to update any of the foregoing projections as a result of new information or new or future developments.
| See reporting definitions. | 4 |
SABRA HEALTH CARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues: | |||||||||||||||
Rental income | $ | 55,297 | $ | 49,896 | $ | 110,609 | $ | 99,401 | |||||||
Interest and other income | 16,993 | 5,999 | 22,325 | 11,383 | |||||||||||
Resident fees and services | 1,959 | 691 | 3,874 | 1,374 | |||||||||||
Total revenues | 74,249 | 56,586 | 136,808 | 112,158 | |||||||||||
Expenses: | |||||||||||||||
Depreciation and amortization | 16,405 | 14,497 | 34,171 | 28,647 | |||||||||||
Interest | 16,427 | 14,052 | 33,345 | 27,932 | |||||||||||
Operating expenses | 1,440 | 499 | 2,852 | 997 | |||||||||||
General and administrative | 4,636 | 9,363 | 9,350 | 15,724 | |||||||||||
Provision for doubtful accounts and loan losses | 223 | 2,972 | 2,746 | 4,116 | |||||||||||
Impairment of real estate | — | — | 29,811 | — | |||||||||||
Total expenses | 39,131 | 41,383 | 112,275 | 77,416 | |||||||||||
Other income (expense): | |||||||||||||||
Loss on extinguishment of debt | — | — | (556 | ) | — | ||||||||||
Other income (expense) | 2,400 | (100 | ) | 2,400 | (200 | ) | |||||||||
Net (loss) gain on sale of real estate | (52 | ) | 1,723 | (4,654 | ) | 1,723 | |||||||||
Total other income (expense) | 2,348 | 1,623 | (2,810 | ) | 1,523 | ||||||||||
Net income | 37,466 | 16,826 | 21,723 | 36,265 | |||||||||||
Net loss attributable to noncontrolling interests | 9 | 9 | 41 | 20 | |||||||||||
Net income attributable to Sabra Health Care REIT, Inc. | 37,475 | 16,835 | 21,764 | 36,285 | |||||||||||
Preferred stock dividends | (2,560 | ) | (2,560 | ) | (5,121 | ) | (5,121 | ) | |||||||
Net income attributable to common stockholders | $ | 34,915 | $ | 14,275 | $ | 16,643 | $ | 31,164 | |||||||
Net income attributable to common stockholders, per: | |||||||||||||||
Basic common share | $ | 0.53 | $ | 0.24 | $ | 0.25 | $ | 0.53 | |||||||
Diluted common share | $ | 0.53 | $ | 0.24 | $ | 0.25 | $ | 0.52 | |||||||
Weighted-average number of common shares outstanding, basic | 65,303,057 | 59,323,799 | 65,274,845 | 59,254,895 | |||||||||||
Weighted-average number of common shares outstanding, diluted | 65,503,383 | 59,543,781 | 65,454,337 | 59,510,164 | |||||||||||
| See reporting definitions. | 5 |
SABRA HEALTH CARE REIT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
June 30, 2016 | December 31, 2015 | ||||||
(unaudited) | |||||||
Assets | |||||||
Real estate investments, net of accumulated depreciation of $258,277 and $237,841 as of June 30, 2016 and December 31, 2015, respectively | $ | 1,908,667 | $ | 2,039,616 | |||
Loans receivable and other investments, net | 120,300 | 300,177 | |||||
Cash and cash equivalents | 103,868 | 7,434 | |||||
Restricted cash | 8,979 | 9,813 | |||||
Prepaid expenses, deferred financing costs and other assets, net | 111,532 | 111,797 | |||||
Total assets | $ | 2,253,346 | $ | 2,468,837 | |||
Liabilities | |||||||
Mortgage notes, net | $ | 174,053 | $ | 174,846 | |||
Revolving credit facility | — | 255,000 | |||||
Term loans, net | 338,860 | 264,229 | |||||
Senior unsecured notes, net | 686,968 | 685,704 | |||||
Accounts payable and accrued liabilities | 36,553 | 35,182 | |||||
Total liabilities | 1,236,434 | 1,414,961 | |||||
Equity | |||||||
Preferred stock, $.01 par value; 10,000,000 shares authorized, 5,750,000 shares issued and outstanding as of June 30, 2016 and December 31, 2015 | 58 | 58 | |||||
Common stock, $.01 par value; 125,000,000 shares authorized, 65,288,316 and 65,182,335 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively | 653 | 652 | |||||
Additional paid-in capital | 1,205,419 | 1,202,541 | |||||
Cumulative distributions in excess of net income | (180,003 | ) | (142,148 | ) | |||
Accumulated other comprehensive loss | (9,280 | ) | (7,333 | ) | |||
Total Sabra Health Care REIT, Inc. stockholders’ equity | 1,016,847 | 1,053,770 | |||||
Noncontrolling interests | 65 | 106 | |||||
Total equity | 1,016,912 | 1,053,876 | |||||
Total liabilities and equity | $ | 2,253,346 | $ | 2,468,837 | |||
| See reporting definitions. | 6 |
SABRA HEALTH CARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 21,723 | $ | 36,265 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 34,171 | 28,647 | |||||
Non-cash interest income adjustments | 443 | 212 | |||||
Amortization of deferred financing costs | 2,494 | 2,529 | |||||
Stock-based compensation expense | 3,652 | 4,672 | |||||
Amortization of debt discount | 54 | 51 | |||||
Loss on extinguishment of debt | 556 | — | |||||
Straight-line rental income adjustments | (11,117 | ) | (11,834 | ) | |||
Provision for doubtful accounts and loan losses | 2,746 | 4,116 | |||||
Change in fair value of contingent consideration | (50 | ) | 200 | ||||
Net loss (gain) on sales of real estate | 4,654 | (1,723 | ) | ||||
Impairment of real estate | 29,811 | — | |||||
Changes in operating assets and liabilities: | |||||||
Prepaid expenses and other assets | 3,265 | (11,292 | ) | ||||
Accounts payable and accrued liabilities | 4,324 | 1,014 | |||||
Restricted cash | (2,232 | ) | (1,550 | ) | |||
Net cash provided by operating activities | 94,494 | 51,307 | |||||
Cash flows from investing activities: | |||||||
Acquisitions of real estate | — | (301,851 | ) | ||||
Origination and fundings of loans receivable | (6,283 | ) | (21,737 | ) | |||
Origination and fundings of preferred equity investments | (6,172 | ) | (5,131 | ) | |||
Additions to real estate | (874 | ) | (1,033 | ) | |||
Repayment of loans receivable | 193,893 | 2,052 | |||||
Release of contingent consideration held in escrow | — | 5,240 | |||||
Net proceeds from the sale of real estate | 75,456 | 1,800 | |||||
Net cash provided by (used in) investing activities | 256,020 | (320,660 | ) | ||||
Cash flows from financing activities: | |||||||
Net (repayments of) proceeds from revolving credit facility | (255,000 | ) | 54,000 | ||||
Proceeds from term loans | 69,360 | 73,242 | |||||
Principal payments on mortgage notes | (2,060 | ) | (1,340 | ) | |||
Payments of deferred financing costs | (5,931 | ) | (834 | ) | |||
Issuance of common stock, net | (1,289 | ) | 140,062 | ||||
Dividends paid on common and preferred stock | (59,288 | ) | (51,343 | ) | |||
Net cash (used in) provided by financing activities | (254,208 | ) | 213,787 | ||||
Net increase (decrease) in cash and cash equivalents | 96,306 | (55,566 | ) | ||||
Effect of foreign currency translation on cash and cash equivalents | 128 | (185 | ) | ||||
Cash and cash equivalents, beginning of period | 7,434 | 61,793 | |||||
Cash and cash equivalents, end of period | $ | 103,868 | $ | 6,042 | |||
Supplemental disclosure of cash flow information: | |||||||
Interest paid | $ | 30,581 | $ | 25,441 | |||
Supplemental disclosure of non-cash investing and financing activities: | |||||||
Assumption of mortgage indebtedness | $ | — | $ | 19,677 | |||
| See reporting definitions. | 7 |
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF FFO, NORMALIZED FFO, AFFO AND NORMALIZED AFFO
(dollars in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income attributable to common stockholders | $ | 34,915 | $ | 14,275 | $ | 16,643 | $ | 31,164 | |||||||
Add: | |||||||||||||||
Depreciation of real estate assets | 16,405 | 14,497 | 34,171 | 28,647 | |||||||||||
Net loss (gain) on sales of real estate | 52 | (1,723 | ) | 4,654 | (1,723 | ) | |||||||||
Impairment of real estate | — | — | 29,811 | — | |||||||||||
FFO attributable to common stockholders | $ | 51,372 | $ | 27,049 | $ | 85,279 | $ | 58,088 | |||||||
Additional default interest income | (8,850 | ) | — | (4,212 | ) | — | |||||||||
Lease termination fee | (2,098 | ) | — | (2,098 | ) | — | |||||||||
Non-recurring or unusual acquisition pursuit costs | — | 4,293 | — | 4,293 | |||||||||||
Loss on extinguishment of debt | — | — | 556 | — | |||||||||||
Provision for doubtful accounts and loan losses (1) | (409 | ) | 854 | 1,860 | 1,020 | ||||||||||
Other normalizing items | (252 | ) | 107 | (252 | ) | 455 | |||||||||
Normalized FFO attributable to common stockholders | $ | 39,763 | $ | 32,303 | $ | 81,133 | $ | 63,856 | |||||||
FFO | $ | 51,372 | $ | 27,049 | $ | 85,279 | $ | 58,088 | |||||||
Acquisition pursuit costs | 82 | 5,131 | 171 | 5,441 | |||||||||||
Stock-based compensation expense | 1,834 | 1,754 | 3,652 | 4,672 | |||||||||||
Straight-line rental income adjustments | (5,524 | ) | (6,178 | ) | (11,117 | ) | (11,834 | ) | |||||||
Amortization of deferred financing costs | 1,273 | 1,268 | 2,494 | 2,529 | |||||||||||
Non-cash portion of loss on extinguishment of debt | — | — | 556 | — | |||||||||||
Change in fair value of contingent consideration | (50 | ) | 100 | (50 | ) | 200 | |||||||||
Provision for doubtful straight-line rental income and loan losses | 92 | 1,434 | $ | 2,615 | $ | 1,855 | |||||||||
Other non-cash adjustments | 248 | 125 | $ | 497 | $ | 263 | |||||||||
AFFO attributable to common stockholders | $ | 49,327 | $ | 30,683 | $ | 84,097 | $ | 61,214 | |||||||
Additional default interest income | (8,850 | ) | — | (4,212 | ) | — | |||||||||
Lease termination fee | (2,098 | ) | — | (2,098 | ) | — | |||||||||
Provision for doubtful cash income (1) | 131 | — | — | — | |||||||||||
Other normalizing items | (252 | ) | 107 | (252 | ) | 455 | |||||||||
Normalized AFFO attributable to common stockholders | $ | 38,258 | $ | 30,790 | $ | 77,535 | $ | 61,669 | |||||||
Amounts per diluted common share attributable to common stockholders: | |||||||||||||||
Net income | $ | 0.53 | $ | 0.24 | $ | 0.25 | $ | 0.52 | |||||||
FFO | $ | 0.78 | $ | 0.45 | $ | 1.30 | $ | 0.98 | |||||||
Normalized FFO | $ | 0.61 | $ | 0.54 | $ | 1.24 | $ | 1.07 | |||||||
AFFO | $ | 0.75 | $ | 0.51 | $ | 1.28 | $ | 1.02 | |||||||
Normalized AFFO | $ | 0.58 | $ | 0.52 | $ | 1.18 | $ | 1.03 | |||||||
Weighted average number of common shares outstanding, diluted: | |||||||||||||||
Net income, FFO and Normalized FFO | 65,503,383 | 59,543,781 | 65,454,337 | 59,510,164 | |||||||||||
AFFO and Normalized AFFO | 65,784,776 | 59,742,209 | 65,783,312 | 59,733,598 | |||||||||||
(1) See Reporting Definitions for definition of Normalized FFO and Normalized AFFO for further information.
| See reporting definitions. | 8 |
SABRA HEALTH CARE REIT, INC.
CAPITALIZATION
(dollars in thousands, except per share data)
Debt | June 30, 2016 | December 31, 2015 | |||||
Mortgage notes | $ | 176,996 | $ | 177,850 | |||
Revolving credit facility | — | 255,000 | |||||
Term loans | 341,475 | 264,890 | |||||
Senior unsecured notes | 700,000 | 700,000 | |||||
Total Principal Balance | 1,218,471 | 1,397,740 | |||||
Deferred financing costs and discounts | (18,590 | ) | (17,961 | ) | |||
Total Debt, net | $ | 1,199,881 | $ | 1,379,779 | |||
Revolving Credit Facility | June 30, 2016 | December 31, 2015 | |||||
Credit facility availability | $ | 500,000 | $ | 195,000 | |||
Credit facility capacity | 500,000 | 450,000 | |||||
Enterprise Value | ||||||||||
As of June 30, 2016 | Shares Outstanding | Price | Value | |||||||
Common stock | 65,288,316 | $ | 20.64 | $ | 1,347,551 | |||||
Preferred stock | 5,750,000 | 26.16 | 150,420 | |||||||
Total debt | 1,218,471 | |||||||||
Cash and cash equivalents | (103,868 | ) | ||||||||
Total Enterprise Value | $ | 2,612,574 | ||||||||
As of December 31, 2015 | Shares Outstanding | Price | Value | |||||||
Common stock | 65,182,335 | $ | 20.23 | $ | 1,318,639 | |||||
Preferred stock | 5,750,000 | 25.25 | 145,188 | |||||||
Total debt | 1,397,740 | |||||||||
Cash and cash equivalents | (7,434 | ) | ||||||||
Total Enterprise Value | $ | 2,854,133 | ||||||||
Common Stock and Equivalents | Weighted Average Common Shares | ||||||||||
Three Months Ended June 30, 2016 | Six Months Ended June 30, 2016 | ||||||||||
EPS, FFO and Normalized FFO | AFFO and Normalized AFFO | EPS, FFO and Normalized FFO | EPS, AFFO and Normalized AFFO | ||||||||
Common stock | 65,274,722 | 65,274,722 | 65,247,412 | 65,247,412 | |||||||
Common equivalents | 28,335 | 28,335 | 27,433 | 27,433 | |||||||
Basic common and common equivalents | 65,303,057 | 65,303,057 | 65,274,845 | 65,274,845 | |||||||
Dilutive securities: | |||||||||||
Restricted stock and units | 200,326 | 481,719 | 179,492 | 508,467 | |||||||
Diluted common and common equivalents | 65,503,383 | 65,784,776 | 65,454,337 | 65,783,312 | |||||||
| See reporting definitions. | 9 |
SABRA HEALTH CARE REIT, INC.
INDEBTEDNESS
June 30, 2016
(dollars in thousands)
Principal | Weighted Average Effective Rate (1) | % of Total | |||||||
Fixed Rate Debt | |||||||||
Secured mortgage debt | $ | 176,996 | 4.01 | % | 14.5 | % | |||
Unsecured senior notes | 700,000 | 5.46 | % | 57.4 | % | ||||
Total fixed rate debt | 876,996 | 5.17 | % | 71.9 | % | ||||
Variable Rate Debt | |||||||||
Term loans (2) | 341,475 | 2.68 | % | 28.1 | % | ||||
Total Debt | $ | 1,218,471 | 4.47 | % | 100.0 | % | |||
Secured Debt | |||||||||
Secured mortgage debt | $ | 176,996 | 4.01 | % | 14.5 | % | |||
Unsecured Debt | |||||||||
Unsecured senior notes | 700,000 | 5.46 | % | 57.4 | % | ||||
Term loans (2) | 341,475 | 2.68 | % | 28.1 | % | ||||
Total unsecured debt | 1,041,475 | 4.55 | % | 85.5 | % | ||||
Total Debt | $ | 1,218,471 | 4.47 | % | 100.0 | % | |||
(1) Weighted average effective interest rate includes private mortgage insurance and impact of interest rate swap and cap agreements.
(2) Includes $200.0 million subject to a 2% LIBOR cap and $69.5 million (CAD $90.0 million) subject to a swap agreement that fixes CDOR at 1.59%. Excluding these amounts from variable rate debt equates to 5.9% of total debt being variable rate debt as of June 30, 2016.
Maturities | Secured Mortgage Debt | Unsecured Senior Notes | Term Loans | Revolving Credit Facility (2) | Total | |||||||||||||||||||||||||||||
Principal | Rate (1) | Principal | Rate (1) | Principal | Rate (1) | Principal | Rate (1) | Principal | Rate (1) | |||||||||||||||||||||||||
7/1/16-12/31/16 | $ | 2,101 | 3.56 | % | $ | — | — | $ | — | — | $ | — | — | $ | 2,101 | 3.56 | % | |||||||||||||||||
2017 | 4,311 | 3.58 | % | — | — | — | — | — | — | 4,311 | 3.58 | % | ||||||||||||||||||||||
2018 | 4,459 | 3.58 | % | — | — | — | — | — | — | 4,459 | 3.58 | % | ||||||||||||||||||||||
2019 | 4,612 | 3.59 | % | — | — | — | — | — | — | 4,612 | 3.59 | % | ||||||||||||||||||||||
2020 | 4,771 | 3.59 | % | — | — | — | — | — | 2.47 | % | 4,771 | 3.59 | % | |||||||||||||||||||||
2021 | 20,178 | 3.60 | % | 500,000 | 5.50 | % | 341,475 | 2.68 | % | — | — | 861,653 | 4.34 | % | ||||||||||||||||||||
2022 | 4,503 | 3.59 | % | — | — | — | — | — | — | 4,503 | 3.59 | % | ||||||||||||||||||||||
2023 | 4,658 | 3.60 | % | 200,000 | 5.38 | % | — | — | — | — | 204,658 | 5.34 | % | |||||||||||||||||||||
2024 | 4,817 | 3.61 | % | — | — | — | — | — | — | 4,817 | 3.61 | % | ||||||||||||||||||||||
2025 | 4,983 | 3.62 | % | — | — | — | — | — | — | 4,983 | 3.62 | % | ||||||||||||||||||||||
Thereafter | 117,603 | 3.74 | % | — | — | — | — | — | — | 117,603 | 3.74 | % | ||||||||||||||||||||||
Total principal balance | 176,996 | 700,000 | 341,475 | — | 1,218,471 | |||||||||||||||||||||||||||||
Discount | — | (570 | ) | — | — | (570 | ) | |||||||||||||||||||||||||||
Deferred financing costs | (2,943 | ) | (12,462 | ) | (2,615 | ) | — | (18,020 | ) | |||||||||||||||||||||||||
Total debt, net | $ | 174,053 | $ | 686,968 | $ | 338,860 | $ | — | $ | 1,199,881 | ||||||||||||||||||||||||
Wtd. avg. maturity/years | 25.1 | 5.3 | 4.5 | 3.5 | 7.9 | |||||||||||||||||||||||||||||
Wtd. avg. effective interest rate(3) | 4.01 | % | 5.46 | % | 2.68 | % | 2.47 | % | 4.47 | % | ||||||||||||||||||||||||
(1) Represents actual contractual interest rates excluding private mortgage insurance.
(2) Revolving Credit Facility is subject to two six-month extension options.
(3) Weighted average effective interest rate includes private mortgage insurance and impact of interest rate swap and cap agreements.
| See reporting definitions. | 10 |
SABRA HEALTH CARE REIT, INC.
KEY CREDIT STATISTICS (1)
June 30, 2016 | December 31, 2015 | |||||
Net Debt to Adjusted EBITDA (2) | 5.09x | 5.85x | ||||
Interest Coverage | 4.14x | 4.19x | ||||
Fixed Charge Coverage Ratio | 3.19x | 3.21x | ||||
Total Debt/Asset Value | 44 | % | 47 | % | ||
Secured Debt/Asset Value | 6 | % | 6 | % | ||
Unencumbered Assets/Unsecured Debt | 239 | % | 220 | % | ||
Cost of Permanent Debt (3) | 4.47 | % | 4.68 | % | ||
Corporate Ratings (Moody's / S&P / Fitch) | Ba3 / BB- / BB+ | Ba3 / BB- / BB+ | ||||
(1) Key credit statistics are calculated in accordance with the credit agreement (excluding net debt to adjusted EBITDA) relating to the revolving credit facility and the indentures relating to our unsecured senior notes.
(2) Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization ("EBITDA") excluding the impact of stock-based compensation expense under the Company's long-term equity award program, asset-specific loan loss reserves, and out of period reserves and is further adjusted to give effect to acquisitions and dispositions completed as of and subsequent to the date reported as though such acquisitions and dispositions occurred at the beginning of the period. Net Debt excludes deferred financing costs and discounts.
(3) Excludes revolving credit facility balance which had an interest rate of 2.47% and 3.03% as of June 30, 2016 and December 31, 2015, respectively.
| See reporting definitions. | 11 |
SABRA HEALTH CARE REIT, INC.
PORTFOLIO SUMMARY
June 30, 2016
(dollars in thousands)
Total Property Portfolio
GAAP Rental Income (1) | Number of Beds/Units | |||||||||||||||||
Number of Properties | Three Months Ended June 30, | |||||||||||||||||
Facility Type | Investment | 2016 | 2015 | |||||||||||||||
Skilled Nursing/Transitional Care | 102 | $ | 1,043,771 | $ | 34,156 | $ | 28,905 | 11,545 | ||||||||||
Senior Housing | 75 | 1,061,131 | 19,768 | 16,585 | 6,775 | |||||||||||||
Acute Care Hospital | 1 | 61,640 | 1,373 | 4,406 | 70 | |||||||||||||
Total | 178 | $ | 2,166,542 | $ | 55,297 | $ | 49,896 | 18,390 | ||||||||||
Coverage | ||||||||||||||||||||
EBITDAR (2) | EBITDARM (2) | Occupancy Percentage (2) | Skilled Mix (2) | |||||||||||||||||
Twelve Months Ended June 30, | ||||||||||||||||||||
Facility Type | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Skilled Nursing/Transitional Care | 1.43x | 1.18x | 1.75x | 1.55x | 86.6 | % | 87.5 | % | 40.8 | % | 38.0 | % | ||||||||
Senior Housing | 1.17x | 1.26x | 1.34x | 1.46x | 90.1 | % | 90.4 | % | NA | NA | ||||||||||
Twelve Months Ended June 30, | ||||
Fixed Charge Coverage Ratio (3) | 2016 | 2015 | ||
Genesis Healthcare, Inc. (4) | 1.27x | 1.27x | ||
Tenet Health Care Corporation | 2.18x | 2.41x | ||
Holiday AL Holdings LP | 1.18x | 1.19x | ||
Same Store Property Portfolio (5)
Cash Rent | |||||||||||
Three Months Ended June 30, | |||||||||||
Facility Type | Number of Properties | 2016 | 2015 | ||||||||
Skilled Nursing/Transitional Care | 88 | $ | 25,381 | $ | 24,587 | ||||||
Senior Housing | 48 | 12,468 | 11,994 | ||||||||
Acute Care Hospital | 1 | 1,256 | 1,244 | ||||||||
Total | 137 | 39,105 | 37,825 | ||||||||
Coverage | ||||||||||||||||||||
EBITDAR (2) | EBITDARM (2) | Occupancy Percentage (2) | Skilled Mix (2) | |||||||||||||||||
Twelve Months Ended June 30, | ||||||||||||||||||||
Facility Type | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Skilled Nursing/Transitional Care | 1.26x | 1.18x | 1.60x | 1.56x | 86.2 | % | 87.5 | % | 39.2 | % | 38.0 | % | ||||||||
Senior Housing | 1.35x | 1.26x | 1.55x | 1.46x | 90.8 | % | 90.4 | % | NA | NA | ||||||||||
(1) Rental income includes $5.5 million and $6.2 million of straight-line rental income adjustments for the three months ended June 30, 2016 and 2015, respectively, and does not include rental income from RIDEA-compliant structures.
(2) Occupancy Percentage, Skilled Mix, EBITDARM, EBITDAR and related coverages (collectively, “Facility Statistics”), include only Stabilized Facilities acquired before the three months ended June 30, 2016 and only for periods when the property was operated subject to a lease with the Company. Facility statistics are only included in periods subsequent to our acquisition and stabilization. In addition, Facility Statistics exclude the impact of strategic disposition candidates and facilities leased through RIDEA-compliant structures. EBITDARM Coverage and EBITDAR Coverage exclude tenants with significant corporate guarantees. All Facility Statistics are presented one quarter in arrears.
(3) Fixed Charge Coverage Ratio is presented one quarter in arrears for tenants with significant corporate guarantees. See Reporting Definitions for definition of Fixed Charge Coverage Ratio.
(4) Fixed charge coverage ratio for Genesis Healthcare, Inc. for the twelve months ended June 30, 2015 includes the pro forma impact of the Skilled Healthcare acquisition which was completed February 2, 2015.
(5) Same store Facility Statistics consist of Stabilized Facilities held or acquired before April 1, 2015 and exclude disposed facilities.
SABRA HEALTH CARE REIT, INC.
PORTFOLIO SUMMARY (CONTINUED)
June 30, 2016
(dollars in thousands)
Loans Receivable and Other Investments
Loan Type | Number of Loans | Facility Type | Principal Balance as of June 30, 2016 | Book Value as of June 30, 2016 | Weighted Average Contractual Interest Rate | Weighted Average Annualized Effective Interest Rate | Interest Income Three Months Ended June 30, 2016 (1) | Maturity Date | |||||||||||||||||
Mortgage | 6 | Skilled Nursing / Senior Housing | $ | 54,211 | $ | 54,282 | 9.1 | % | 8.9 | % | $ | 573 | 8/12/16- 4/30/18 | ||||||||||||
Construction | 3 | Senior Housing | 15,339 | 15,444 | 9.9 | % | 9.8 | % | 381 | 10/31/18- 3/31/21 | |||||||||||||||
Mezzanine | 1 | Skilled Nursing / Senior Housing | 9,640 | 9,666 | 11.0 | % | 10.8 | % | 268 | 08/31/17 | |||||||||||||||
Pre-development | 3 | Senior Housing | 3,847 | 3,895 | 9.0 | % | 7.7 | % | 76 | 1/28/17 - 9/09/17 | |||||||||||||||
Debtor-in-possession | 1 | Acute Care Hospital | 2,216 | 2,216 | 5.0 | % | 5.0 | % | — | NA | |||||||||||||||
14 | $ | 85,253 | $ | 85,503 | 9.4 | % | 9.1 | % | $ | 1,298 | |||||||||||||||
Loan loss reserve | — | (6,160 | ) | ||||||||||||||||||||||
$ | 85,253 | $ | 79,343 | ||||||||||||||||||||||
Other Investment Type | Number of Investments | Facility Type | Total Funding Commitments | Amount Funded as of June 30, 2016 | Book Value as of June 30, 2016 | Rate of Return | Other Income Three Months Ended June 30, 2016 | ||||||||||||||||
Preferred Equity | 11 | Skilled Nursing / Senior Housing | $ | 35,683 | $ | 35,152 | $ | 40,957 | 12.9 | % | $ | 1,129 | |||||||||||
(1) Includes interest income related to loans receivable investments held as of June 30, 2016.
| See reporting definitions. | 12 |
SABRA HEALTH CARE REIT, INC.
PORTFOLIO CONCENTRATIONS (1)
Annualized Revenue Concentration
On a pro forma basis, assuming that the investments described on pages 19 to 21 were completed
as of June 30, 2016, Genesis annualized revenue concentration decreases to 32.4%.
Annualized Revenue by Asset Class
Annualized Tenant/Borrower Revenue Concentration (2)
(1) Annualized Revenue consists of annual straight-line 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.
(2) Tenant and borrower revenue presented one quarter in arrears.
| See reporting definitions. | 13 |
SABRA HEALTH CARE REIT, INC.
REAL ESTATE PORTFOLIO GEOGRAPHIC CONCENTRATIONS
June 30, 2016
Property Type
Location | Skilled Nursing/Transitional Care | Senior Housing | Acute Care Hospital | Total | % of Total | ||||||||||
Texas | 5 | 10 | 1 | 16 | 9.0 | % | |||||||||
New Hampshire | 14 | 2 | — | 16 | 9.0 | ||||||||||
Kentucky | 13 | 1 | — | 14 | 7.9 | ||||||||||
Connecticut | 9 | 2 | — | 11 | 6.2 | ||||||||||
Michigan | — | 10 | — | 10 | 5.6 | ||||||||||
Florida | 5 | 5 | — | 10 | 5.6 | ||||||||||
Canada | — | 10 | — | 10 | 5.6 | ||||||||||
Ohio | 8 | — | — | 8 | 4.5 | ||||||||||
Oklahoma | 6 | 1 | — | 7 | 3.9 | ||||||||||
Maryland | 5 | 1 | — | 6 | 3.4 | ||||||||||
Other (27 states) | 37 | 33 | — | 70 | 39.3 | ||||||||||
Total | 102 | 75 | 1 | 178 | 100.0 | % | |||||||||
% of Total properties | 57.3 | % | 42.1 | % | 0.6 | % | 100.0 | % | |||||||
Distribution of Beds/Units
Total Number of Properties | Bed/Unit Type | |||||||||||||||||
Location | Skilled Nursing/Transitional Care | Senior Housing | Acute Care Hospital | Total | % of Total | |||||||||||||
New Hampshire | 16 | 1,469 | 235 | — | 1,704 | 9.3 | % | |||||||||||
Texas | 16 | 605 | 830 | 70 | 1,505 | 8.2 | ||||||||||||
Connecticut | 11 | 1,350 | 140 | — | 1,490 | 8.1 | ||||||||||||
Florida | 10 | 660 | 620 | — | 1,280 | 7.0 | ||||||||||||
Kentucky | 14 | 1,044 | 68 | — | 1,112 | 6.0 | ||||||||||||
Canada | 10 | — | 939 | — | 939 | 5.1 | ||||||||||||
Ohio | 8 | 900 | — | — | 900 | 4.9 | ||||||||||||
Maryland | 6 | 823 | 64 | — | 887 | 4.8 | ||||||||||||
Nebraska | 6 | 400 | 297 | — | 697 | 3.8 | ||||||||||||
Colorado | 5 | 509 | 132 | — | 641 | 3.5 | ||||||||||||
Other (27 states) | 76 | 3,785 | 3,450 | — | 7,235 | 39.3 | ||||||||||||
Total | 178 | 11,545 | 6,775 | 70 | 18,390 | 100.0 | % | |||||||||||
% of Total beds/units | 62.8 | % | 36.8 | % | 0.4 | % | 100.0 | % | ||||||||||
| See reporting definitions. | 14 |
SABRA HEALTH CARE REIT, INC.
REAL ESTATE PORTFOLIO GEOGRAPHIC CONCENTRATIONS
June 30, 2016
(dollars in thousands)
Investment
Location | Total Number of Properties | Skilled Nursing/Transitional Care | Senior Housing | Acute Care Hospital | Total | % of Total | ||||||||||||||||
Texas | 16 | $ | 65,625 | $ | 174,556 | $ | 61,640 | $ | 301,821 | 13.9 | % | |||||||||||
Maryland | 6 | 239,285 | 6,566 | — | 245,851 | 11.3 | ||||||||||||||||
Canada (1) | 10 | — | 155,192 | — | 155,192 | 7.2 | ||||||||||||||||
Connecticut | 11 | 116,075 | 29,170 | — | 145,245 | 6.7 | ||||||||||||||||
Florida | 10 | 29,507 | 92,843 | — | 122,350 | 5.6 | ||||||||||||||||
Delaware | 4 | 95,780 | — | — | 95,780 | 4.4 | ||||||||||||||||
Nebraska | 6 | 63,088 | 28,297 | — | 91,385 | 4.2 | ||||||||||||||||
New Hampshire | 16 | 74,619 | 12,310 | — | 86,929 | 4.0 | ||||||||||||||||
North Carolina | 3 | 9,489 | 67,272 | — | 76,761 | 3.5 | ||||||||||||||||
Michigan | 10 | — | 74,413 | — | 74,413 | 3.4 | ||||||||||||||||
Other (27 states) | 86 | 350,303 | 420,512 | — | 770,815 | 35.8 | ||||||||||||||||
Total | 178 | $ | 1,043,771 | $ | 1,061,131 | $ | 61,640 | $ | 2,166,542 | 100.0 | % | |||||||||||
% of Total Properties | 48.2 | % | 49.0 | % | 2.8 | % | 100.0 | % | ||||||||||||||
(1) Investment balance in Canada is based on the exchange rate as of June 30, 2016 of $0.7718 per CAD $1.00.
| See reporting definitions. | 15 |
SABRA HEALTH CARE REIT, INC.
PORTFOLIO LEASE EXPIRATIONS (1)
June 30, 2016
(dollars in thousands)
2016-2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Thereafter | Total | |||||||||||||||||||||||||||
Skilled Nursing/Transitional Care | |||||||||||||||||||||||||||||||||||
Properties | 1 | 26 | 30 | 12 | — | 9 | 4 | 20 | 102 | ||||||||||||||||||||||||||
Beds/Units | 120 | 2,957 | 3,503 | 893 | — | 1,056 | 559 | 2,457 | 11,545 | ||||||||||||||||||||||||||
Annualized Revenues | $ | 850 | $ | 27,066 | $ | 30,350 | $ | 10,383 | — | $ | 13,533 | $ | 5,141 | $ | 49,302 | $ | 136,625 | ||||||||||||||||||
Senior Housing | |||||||||||||||||||||||||||||||||||
Properties | — | 2 | 3 | 12 | — | 10 | 20 | 26 | 73 | ||||||||||||||||||||||||||
Beds/Units | — | 266 | 212 | 694 | — | 752 | 1,460 | 3,257 | 6,641 | ||||||||||||||||||||||||||
Annualized Revenues | — | 1,996 | 1,402 | 8,935 | — | 7,087 | 17,413 | 43,619 | 80,452 | ||||||||||||||||||||||||||
Acute Care Hospital | |||||||||||||||||||||||||||||||||||
Properties | — | — | — | — | — | — | — | 1 | 1 | ||||||||||||||||||||||||||
Beds/Units | — | — | — | — | — | — | — | 70 | 70 | ||||||||||||||||||||||||||
Annualized Revenues | — | — | — | — | — | — | — | 5,493 | 5,493 | ||||||||||||||||||||||||||
Total Properties | 1 | 28 | 33 | 24 | — | 19 | 24 | 47 | 176 | ||||||||||||||||||||||||||
Total Beds/Units | 120 | 3,223 | 3,715 | 1,587 | — | 1,808 | 2,019 | 5,784 | 18,256 | ||||||||||||||||||||||||||
Total Annualized Revenues | $ | 850 | $ | 29,062 | $ | 31,752 | $ | 19,318 | $ | — | $ | 20,620 | $ | 22,554 | $ | 98,414 | $ | 222,570 | |||||||||||||||||
% of Revenue | 0.4 | % | 13.1 | % | 14.3 | % | 8.7 | % | — | 9.3 | % | 10.1 | % | 44.1 | % | 100.0 | % | ||||||||||||||||||
(1) Excludes two Senior Housing facilities that are part of the consolidated RIDEA-compliant structures.
| See reporting definitions. | 16 |
SABRA HEALTH CARE REIT, INC.
RECENT INVESTMENT ACTIVITY
Poet's Walk of Fredericksburg
•Investment Date: | July 14, 2016 | |
•Investment Amount: | $23.0 million | |
•Investment Type: | Real Estate | |
•Number of Properties: | 1 | |
•Location: | Fredericksburg, VA | |
•Available Beds/Units: | 68 | |
•Property Type: | Senior Housing | |
•Annualized GAAP Income: | $2.1 million | |
•Initial Cash Yield: | 7.50% | |
| See reporting definitions. | 17 |
SABRA HEALTH CARE REIT, INC.
RECENT INVESTMENT ACTIVITY
NMS - Springbrook
•Investment Date: | July 26, 2016 | |
•Investment Amount: | $50.0 million | |
•Investment Type: | Real Estate | |
•Number of Properties: | 1 | |
•Location: | Silver Spring, MD | |
•Available Beds/Units: | 93 | |
•Property Type: | Skilled Nursing Facility | |
•Annualized GAAP Income: | $5.2 million | |
•Initial Cash Yield: | 8.75% | |
| See reporting definitions. | 18 |
SABRA HEALTH CARE REIT, INC.
RECENT INVESTMENT ACTIVITY
Poet's Walk at Chandler Oaks
•Investment Date: | August 1, 2016 | |
•Investment Amount: | $14.6 million | |
•Investment Type: | Real Estate | |
•Number of Properties: | 1 | |
•Location: | Round Rock, TX | |
•Available Beds/Units: | 68 | |
•Property Type: | Senior Housing | |
•Annualized GAAP Income: | $1.4 million | |
•Initial Cash Yield: | 7.50% | |
| See reporting definitions. | 19 |
SABRA HEALTH CARE REIT, INC.
PRO FORMA INFORMATION
The following pro forma information assumes that (i) the sale of the Forest Park - Frisco hospital, (ii) the repayment of the Forest Park - Fort Worth construction loan and the Forest Park - Dallas mortgage loan, (iii) the repayment of our revolving credit facility with proceeds from the sale and repayments of the Forest Park investments, and (iv) the acquisition activity on pages 19 to 21 were completed as of March 31, 2016. The acquisition activity on pages 19 to 21 was funded with available cash, resulting in pro forma cash of $16.2 million and available liquidity of $516.2 million.
(dollars in thousands, except per share amounts)
Three Months Ended June 30, 2016 | Adjustments | Pro Forma Three Months Ended June 30, 2016 | |||||||||||||
Investments | Financing | ||||||||||||||
Total revenues | $ | 74,249 | $ | (12,203 | ) | $ | — | $ | 62,046 | ||||||
Total expenses | 39,131 | 1,697 | (628 | ) | 40,200 | ||||||||||
Total other income | 2,348 | 52 | — | 2,400 | |||||||||||
Net income | 37,466 | (13,848 | ) | 628 | 24,246 | ||||||||||
Net loss attributable to noncontrolling interests | 9 | — | — | 9 | |||||||||||
Net income attributable to Sabra Health Care REIT, Inc. | 37,475 | (13,848 | ) | 628 | 24,255 | ||||||||||
Preferred stock dividends | (2,560 | ) | — | — | (2,560 | ) | |||||||||
Net income attributable to common stockholders | $ | 34,915 | $ | (13,848 | ) | $ | 628 | $ | 21,695 | ||||||
Add: | |||||||||||||||
Depreciation of real estate assets | 16,405 | 697 | — | 17,102 | |||||||||||
Net loss on sales of real estate | 52 | (52 | ) | — | — | ||||||||||
FFO attributable to common stockholders | $ | 51,372 | $ | (13,203 | ) | $ | 628 | $ | 38,797 | ||||||
Normalizing Items | (11,609 | ) | 8,850 | — | (2,759 | ) | |||||||||
Normalized FFO attributable to common stockholders | $ | 39,763 | $ | (4,353 | ) | $ | 628 | $ | 36,038 | ||||||
FFO attributable to common stockholders | $ | 51,372 | $ | (13,203 | ) | $ | 628 | $ | 38,797 | ||||||
Acquisition pursuit costs | 82 | 1,000 | — | 1,082 | |||||||||||
Stock-based compensation expense | 1,834 | — | — | 1,834 | |||||||||||
Straight-line rental income adjustments | (5,524 | ) | (383 | ) | — | (5,907 | ) | ||||||||
Amortization of deferred financing costs | 1,273 | — | — | 1,273 | |||||||||||
Change in fair value of contingent consideration | (50 | ) | — | — | (50 | ) | |||||||||
Provision for doubtful straight-line rental income and loan losses | 92 | — | — | 92 | |||||||||||
Other non-cash adjustments | 248 | — | — | 248 | |||||||||||
AFFO attributable to common stockholders | $ | 49,327 | $ | (12,586 | ) | $ | 628 | $ | 37,369 | ||||||
Normalizing items | (11,069 | ) | 8,850 | — | (2,219 | ) | |||||||||
Normalized AFFO attributable to common stockholders | $ | 38,258 | $ | (3,736 | ) | $ | 628 | $ | 35,150 | ||||||
Amounts per diluted common share: | |||||||||||||||
Net income attributable to common stockholders | $ | 0.53 | $ | 0.33 | |||||||||||
FFO attributable to common stockholders | $ | 0.78 | $ | 0.59 | |||||||||||
Normalized FFO attributable to common stockholders | $ | 0.61 | $ | 0.55 | |||||||||||
AFFO attributable to common stockholders | $ | 0.75 | $ | 0.57 | |||||||||||
Normalized AFFO attributable to common stocholders | $ | 0.58 | $ | 0.53 | |||||||||||
Weighted average number of common shares outstanding, diluted: | |||||||||||||||
Net income, FFO and Normalized FFO | 65,503,383 | 65,503,383 | |||||||||||||
AFFO and Normalized AFFO | 65,784,776 | 65,784,776 | |||||||||||||
| See reporting definitions. | 20 |
SABRA HEALTH CARE REIT, INC.
REPORTING DEFINITIONS
Acute Care Hospital. A facility designed to provide extended medical and rehabilitation care for patients who are clinically complex and have multiple acute or chronic conditions.
Annualized Revenues. The annual straight-line 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. The Company uses Annualized Revenues for the purpose of determining revenue concentrations and lease expirations.
EBITDAR. Earnings 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. 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 receives EBITDAR and other information from its operators/tenants and relevant guarantors and utilizes EBITDAR as a supplemental measure of their ability to generate sufficient liquidity to meet related obligations to the Company. All facility and tenant financial performance data is derived solely from information provided by operators/tenants and relevant guarantors without independent verification by the Company and is presented one quarter in arrears. The Company excludes the impact of strategic disposition candidates and facilities leased through RIDEA-compliant structures. The Company only includes EBITDAR for Stabilized Facilities acquired before the beginning of the current quarter and only for periods when the property was operated subject to a lease with the Company. EBITDAR for facilities with new tenants/operators are only included in periods subsequent to the Company's acquisition of the facilities.
EBITDAR Coverage. EBITDAR for the trailing 12 month periods prior to and including the period presented divided by the same period cash rent. Cash rent used for recently acquired facilities and facilities subject to lease restructuring is the first year rental rate. EBITDAR Coverage is a supplemental measure of an operator/tenant's ability to meet their 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. All facility and tenant data are derived solely from information provided by operators/tenants and relevant guarantors without independent verification by the Company. All such data is presented one quarter in arrears. The Company excludes the impact of strategic disposition candidates and facilities leased through RIDEA-compliant structures. The Company only includes EBITDAR Coverage for Stabilized Facilities acquired before the beginning of the current quarter and only for periods when the property was operated subject to a lease with the Company. EBITDAR Coverage for facilities with new tenants/operators are only included in periods subsequent to the Company's acquisition of the facilities. EBITDAR Coverage is not presented for tenants with significant corporate guarantees.
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. 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. All facility financial performance data is derived solely from information provided by operators/tenants and relevant guarantors without independent verification by the Company. All such data is presented one quarter in arrears. The Company excludes the impact of strategic disposition candidates and facilities leased through RIDEA-compliant structures. The Company only includes EBITDARM for Stabilized Facilities acquired before the beginning of the current quarter and only for periods when the property was operated subject to a lease with the Company. EBITDARM for facilities with new tenants/operators are only included in periods subsequent to the Company's acquisition of the facilities.
EBITDARM Coverage. EBITDARM for the trailing 12 month periods prior to and including the period presented divided by the same period cash rent. Cash rent used for recently acquired facilities and facilities subject to lease restructurings is the first year rental rate. 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. All facility and tenant data are derived solely from information provided by operators/tenants and relevant guarantors without independent verification by the Company. All such data is presented one quarter in arrears. The Company excludes the impact of strategic disposition candidates and facilities leased through RIDEA-compliant structures. The Company only includes EBITDARM Coverage for Stabilized Facilities acquired before the beginning of the current quarter and only for periods when the property was operated subject to a lease with the Company. EBITDARM Coverage for facilities with new tenants/operators are only included in periods subsequent to the Company's acquisition of the facilities. EBITDARM Coverage is not presented for tenants with significant corporate guarantees.
Enterprise Value. The Company believes Enterprise Value is an important measurement as it is a measure of a company’s value. We calculate Enterprise Value as market equity capitalization plus debt. Market equity capitalization is calculated as the number of shares of common stock multiplied by the closing price of our common stock on the last day of the period presented. Total Enterprise Value includes our market equity capitalization and consolidated debt, less cash and cash equivalents.
Fixed Charge Coverage Ratio. EBITDAR (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
| 21 | |
SABRA HEALTH CARE REIT, INC.
REPORTING DEFINITIONS
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, 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 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 and real estate impairment charges. AFFO is defined as FFO excluding straight-line rental income adjustments, stock-based compensation expense, amortization of deferred financing costs, acquisition pursuit costs, as well as other non-cash revenue and expense items (including provisions and write-offs related to straight-line rental income, provision for loan losses, changes in fair value of contingent consideration, amortization of debt premiums/discounts and non-cash interest income adjustments). 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.
Investment. Represents the carrying amount of real estate assets after adding back accumulated depreciation and amortization.
Market Capitalization. Total common shares of Sabra outstanding multiplied by the closing price per common share as of a given period.
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 REITs 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. Prior to the third quarter of 2015, the Company normalized 100% of straight-line rental income write-offs. In the third quarter of 2015, Sabra established a policy for normalizing write-offs and provisions for doubtful accounts to the extent in excess of any rental or interest income recognized during the period presented. The amounts for prior periods have been revised to conform to the current presentation.
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 for independent living facilities can be greater than 100% for a given period as multiple residents could occupy a single unit. All facility financial performance data were derived solely from information provided by operators/tenants without independent verification by the Company. All facility financial performance data are presented one quarter in arrears. The Company excludes the impact of strategic disposition candidates and facilities leased through RIDEA-compliant structures. The Company includes Occupancy Percentage for Stabilized Facilities acquired beginning in the quarter subsequent to the acquisition date and only for periods when the property was operated subject to a lease with the Company. Occupancy Percentage for facilities with new tenants/operators are only included in periods subsequent to the Company's acquisition of the facilities.
| 22 | |
SABRA HEALTH CARE REIT, INC.
REPORTING DEFINITIONS
Senior Housing. Senior housing facilities include independent living, assisted living, continuing care retirement community and memory care facilities.
Skilled Mix. Skilled 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 any given period. All facility financial performance data were derived solely from information provided by the Company's tenants without independent verification by the Company. All facility financial performance data are presented one quarter in arrears. The Company excludes the impact of strategic disposition candidates and facilities leased through RIDEA-compliant structures. The Company includes Skilled Mix for Stabilized Facilities acquired beginning in the quarter subsequent to the acquisition date and only for periods when the property was operated subject to a lease with the Company. Skilled Mix for facilities with new tenants/operators are only included in periods subsequent to the Company's acquisition of the facilities.
Skilled Nursing/Transitional Care. Skilled nursing/transitional care facilities include skilled nursing, transitional care, multi-license designation and mental health facilities.
Stabilized Facility. At the time of acquisition, the Company classifies each facility as either stabilized or pre-stabilized. Circumstances that would result in an acquired 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 and 90% for Senior Housing Facilities) but in no event beyond 24 months after the date of classification as pre-stabilized. Stabilized Facilities exclude facilities leased through RIDEA-compliant structures.
Total Debt. The carrying amount of the Company’s revolving credit facility, term loan, senior unsecured notes, and mortgage indebtedness, as reported in the Company’s condensed consolidated financial statements.
| 23 | |