8-K
Sabra Health Care REIT, Inc. (SBRA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 7, 2022
SABRA HEALTH CARE REIT, INC.
(Exact name of registrant as specified in its charter)
| Maryland | 001-34950 | 27-2560479 | ||
|---|---|---|---|---|
| (State of<br>Incorporation) | (Commission<br>File Number) | (I.R.S. Employer<br>Identification No.) | ||
| 18500 Von Karman Avenue | Suite 550 | Irvine | CA | 92612 |
| --- | --- | --- | --- | --- |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number including area code: (888) 393-8248
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, $0.01 par value | SBRA | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | ☐ |
|---|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On November 7, 2022, Sabra Health Care REIT, Inc. (“Sabra”) issued a press release reporting its results of operations for the three month period ended September 30, 2022. The press release refers to the Reconciliations of Non-GAAP Financial Measures that is available on the Investors section of Sabra’s website, free of charge, at www.sabrahealth.com. The text of the press release and the Reconciliations of Non-GAAP Financial Measures are furnished herewith as Exhibits 99.1 and 99.3, respectively, and are specifically incorporated by reference herein.
| Item 7.01 | Regulation FD Disclosure. |
|---|
The press release furnished herewith as Exhibit 99.1 refers to a supplemental information package that is available on the Investors section of Sabra’s website, free of charge, at www.sabrahealth.com. The text of the supplemental information package is furnished herewith as Exhibit 99.2 and is specifically incorporated by reference herein.
Sabra intends to present the materials attached to this report as Exhibit 99.4 in investor presentations. The furnishing of these materials is not intended to constitute a representation that such furnishing is required by Regulation FD or other securities laws, or that the presentation materials include material investor information that is not otherwise publicly available. In addition, Sabra does not assume any obligation to update such information in the future.
The information in Items 2.02 and 7.01 of this Form 8-K and the information in Exhibits 99.1, 99.2, 99.3 and 99.4 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section and shall not be incorporated by reference into any filing of Sabra under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in any such filing.
| Item 9.01 | Financial Statements and Exhibits. |
|---|---|
| (d) | Exhibits. |
| --- | --- |
| 99.1 | Press Release of Sabra Health Care REIT, Inc., dated November 7, 2022. |
| 99.2 | Sabra Health Care REIT, Inc. Supplemental Information Package, dated September 30, 2022. |
| 99.3 | Reconciliations of Non-GAAP Financial Measures, dated September 30, 2022. |
| 99.4 | Investor Presentation. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SABRA HEALTH CARE REIT, INC. | ||
|---|---|---|
| Date: November 7, 2022 | /S/ MICHAEL COSTA | |
| Name: | Michael Costa | |
| Title: | Chief Financial Officer, Secretary and Executive Vice President |
Document
Exhibit 99.1
FOR IMMEDIATE RELEASE
SABRA REPORTS THIRD QUARTER 2022 RESULTS; PROVIDES BUSINESS UPDATE
IRVINE, CA, November 7, 2022 — Sabra Health Care REIT, Inc. (“Sabra,” the “Company” or “we”) (Nasdaq: SBRA) today announced its results of operations for the third quarter of 2022. In addition, the Company provided a business update.
THIRD QUARTER 2022 RESULTS AND RECENT EVENTS
•Results per diluted common share for the third quarter of 2022 were as follows:
•Net Loss: $(0.22)
•FFO: $0.28
•Normalized FFO: $0.36
•AFFO: $0.34
•Normalized AFFO: $0.35
•EBITDARM Coverage Summary:
•Skilled Nursing/Transitional Care:
◦1.83x (pro forma for North American transition, Avamere lease amendment)
◦1.60x (pro forma for North American transition, Avamere lease amendment, and excluding Provider Relief Funds)
•Senior Housing - Leased: 1.13x
•Behavioral Health: 1.72x
•Specialty Hospitals & Other: 7.30x
•As detailed in a separate press release, Sabra announced that it will transition the 24-property portfolio previously leased to North American Health Care, Inc. (“North American”) to two of Sabra’s existing tenants, The Ensign Group (“Ensign”) and the Avamere Family of Companies (“Avamere”), for a combined initial annual rent of $34.5 million.
•During the third quarter of 2022, we acquired two senior housing managed communities, including one through our proprietary development pipeline, for $71.7 million with an estimated blended stabilized cash yield of 7.2%.
•During the third quarter of 2022, we generated $23.1 million of gross proceeds from the disposition of three facilities. As previously disclosed, we continue to make progress on additional dispositions that are expected to generate gross proceeds of over $200 million. The sales under contract are expected to close by December 31, 2022, subject to customary closing and diligence conditions.
•Our Net Debt to Adjusted EBITDA ratio was 5.50x as of September 30, 2022, and we expect to reduce leverage closer to our 5.0x long-term leverage target by the end of the year with proceeds from our disposition activity described above. We remain committed to maintaining a strong balance sheet and strengthening our portfolio without accessing the capital markets.
•On November 7, 2022, our Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock. The dividend will be paid on November 30, 2022 to common stockholders of record as of the close of business on November 17, 2022.
BUSINESS UPDATE
Expanding Relationship with Ensign and Avamere
As detailed in a separate press release, Sabra announced that it will transition the 24-property portfolio previously leased to North American to two of Sabra’s existing tenants, Ensign and Avamere, for a combined initial annual rent of $34.5 million. As a result, Ensign will become one of Sabra’s largest relationships, representing approximately 8% of Annualized Cash NOI, while Avamere will remain one of Sabra’s largest relationships, also accounting for roughly 8% of Annualized Cash NOI. Sabra believes this transaction represents a unique opportunity to improve the long-term value of this high-quality real estate portfolio, noting the enhanced credit profile that supports its rental income, highlighted by Ensign’s corporate guaranty and $5 billion of equity market capitalization. The transition of these facilities to Ensign operating companies and Avamere is expected to be completed by February 1, 2023 and remains subject to the completion of certain regulatory approvals and other closing conditions. Sabra expects to recognize a total of $14.7 million in revenue from these facilities during the fourth quarter through the end of the transition period, which approximates the rent Sabra would have received during this timeframe under the previous leases with North American.
Commenting on the third quarter’s results, Rick Matros, CEO and Chair, said, “The transition of the North American portfolio should enhance the durability of Sabra’s earnings stream going forward. We appreciate the extension of the Public Health Emergency as the health care industry continues to navigate the challenging operating environment. Although the recovery in both the skilled and senior housing asset classes has been slower than we all would have preferred, we are heartened by the continued, albeit slow, improvement in the labor market which has been a major barrier to a quicker recovery. The asset sales we previously disclosed are proceeding as expected and we continue to receive interest in acquiring additional skilled nursing assets. We plan on continuing this strategy which will further diversify our asset classes and fund our ongoing investment activity.”
LIQUIDITY
As of September 30, 2022, we had approximately $887.7 million of liquidity, consisting of unrestricted cash and cash equivalents of $26.3 million and available borrowings of $861.4 million under our revolving credit facility. As of September 30, 2022, we also had $475.0 million available under the ATM Program.
CONFERENCE CALL AND COMPANY INFORMATION
A conference call with a simultaneous webcast to discuss the 2022 third quarter results will be held on Tuesday, November 8, 2022 at 10:00 am Pacific Time. The webcast URL is https://edge.media-server.com/mmc/p/eyzpt5x9. To participate via telephone, please register in advance at https://register.vevent.com/register/BId527bdd7b5cd4bd685268d3255d6aed6 to receive a unique PIN needed to access the call. The dial-in number is (844) 543-0451. A digital replay of the call will be available on the Company’s website at www.sabrahealth.com. The Company’s supplemental information package for the third quarter will also be available on the Company’s website in the “Investors” section.
ABOUT SABRA
As of September 30, 2022, Sabra’s investment portfolio included 407 real estate properties held for investment (consisting of (i) 270 Skilled Nursing/Transitional Care facilities, (ii) 52 Senior Housing communities (“Senior Housing - Leased”), (iii) 54 Senior Housing communities operated by third-party property managers pursuant to property management agreements (“Senior Housing - Managed”), (iv) 16 Behavioral Health facilities and (v) 15 Specialty Hospitals and Other facilities), one asset held for sale, one investment in a sales-type lease, 15 investments in loans receivable (consisting of two mortgage loans and 13 other loans), seven preferred equity investments and two investments in unconsolidated joint ventures. As of September 30, 2022, Sabra’s real estate properties held for investment included 41,053 beds/units, spread across the United States and Canada.
FORWARD-LOOKING STATEMENTS SAFE HARBOR
This release contains “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. Any statements that do not relate to historical or current facts or matters are forward-looking statements. These statements may be identified, without limitation, by the use of “expects,” “believes,” “intends,” “should” or comparable terms or the negative thereof. Examples of forward-looking statements include all statements regarding our expectations regarding our recent and pending investments and dispositions; our pending transition of the North American portfolio and our expectations regarding the related impact on our earnings stream; our expectations regarding growth in our relationships with Ensign and Avamere and the resulting impact on the long-term value of the 24 properties to be transitioned to Ensign and Avamere; our expectations regarding our leverage ratio; and our other expectations regarding our future financial position, results of operations, cash
flows, liquidity, business strategy, growth opportunities, potential investments and dispositions, and plans and objectives for future operations and capital raising activity.
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: epidemic diseases, pandemics or other contagious diseases, including the ongoing impact of COVID-19, and measures intended to prevent their spread, and the related impact on our tenants, operators and Senior Housing - Managed communities; operational risks with respect to our Senior Housing - Managed communities; competitive conditions in our industry; the loss of key management personnel; uninsured or underinsured losses affecting our properties and the possibility of environmental compliance costs and liabilities; potential impairment charges and adjustments related to the accounting of our assets; the potential variability of our reported rental and related revenues as a result of Accounting Standards Update (“ASU”) 2016-02, Leases, as amended by subsequent ASUs; risks associated with our investment in our unconsolidated joint ventures; catastrophic weather and other natural or man-made disasters, the effects of climate change on our properties and a failure to implement sustainable and energy-efficient measures; increased operating costs for our tenants and operators, due to labor market challenges and macroeconomic factors such as inflation; increased healthcare regulation and enforcement; our tenants’ dependency on reimbursement from governmental and other third-party payor programs; the effect of our tenants declaring bankruptcy or becoming insolvent; our ability to find replacement tenants and the impact of unforeseen costs in acquiring new properties; the impact of litigation and rising insurance costs on the business of our tenants; the impact of required regulatory approvals of transfers of healthcare properties; environmental compliance costs and liabilities associated with real estate properties we own; our tenants’ or operators’ failure to adhere to applicable privacy and data security laws, or a material breach of our or our tenants’ or operators’ information technology; our concentration in the healthcare property sector, particularly in skilled nursing/transitional care facilities and senior housing communities, which makes our profitability more vulnerable to a downturn in a specific sector than if we were investing in multiple industries; the significant amount of and our ability to service our indebtedness; covenants in our debt agreements that may restrict our ability to pay dividends, make investments, incur additional indebtedness and refinance indebtedness on favorable terms; increases in market interest rates; adverse changes in our credit ratings; our ability to make dividend distributions at expected levels; our ability to raise capital through equity and debt financings; changes in foreign currency exchange rates and other risks associated with our ownership of property outside the U.S.; the relatively illiquid nature of real estate investments; our ability to maintain our status as a real estate investment trust (“REIT”) under the federal tax laws; compliance with REIT requirements and certain tax and tax regulatory matters related to our status as a REIT; changes in tax laws and regulations affecting REITs; the ownership limits and takeover defenses in our governing documents and under Maryland law, which may restrict change of control or business combination opportunities; and the exclusive forum provisions in our bylaws.
Additional information concerning risks and uncertainties that could affect our business can be found in our filings with the Securities and Exchange Commission (the “SEC”), including in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021. We do not intend, and we undertake no obligation, to update any forward-looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, unless required by law to do so.
TENANT, OPERATOR AND BORROWER INFORMATION
This release includes information regarding certain of our tenants that lease properties from us and our operators and borrowers, most of which are not subject to SEC reporting requirements. The information related to our tenants, operators and borrowers that is provided in this release has been provided by, or derived from information provided by, such tenants, operators and borrowers. We have not independently verified this information. We have no reason to believe that such information is inaccurate in any material respect. We are providing this data for informational purposes only.
NOTE REGARDING NON-GAAP FINANCIAL MEASURES
This release includes the following financial measures defined as non-GAAP financial measures by the SEC: Adjusted EBITDA, Net Debt to Adjusted EBITDA, net operating income (“NOI”), Cash NOI, Annualized Cash NOI, funds from operations (“FFO”), Normalized FFO, Adjusted FFO (“AFFO”), Normalized AFFO, FFO per diluted common share, Normalized FFO per diluted common share, AFFO per diluted common share and Normalized AFFO per diluted common share. These measures may be different than non-GAAP financial measures used by other companies, and the presentation of these measures is not intended to be considered in isolation or as a substitute for financial information prepared and presented in accordance with U.S. generally accepted accounting principles. An explanation of these non-GAAP financial measures is included under “Reporting Definitions” in this release, and reconciliations of these non-GAAP financial measures to the GAAP financial measures we consider most comparable are included on the Investors section of our website at https://ir.sabrahealth.com/investors/financials/quarterly-results.
CONTACT
Investor & Media Inquiries: (888) 393-8248 or investorinquiries@sabrahealth.com
SABRA HEALTH CARE REIT, INC.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(dollars in thousands, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Revenues: | ||||||||
| Rental and related revenues (1) | $ | 84,214 | $ | 85,367 | $ | 297,268 | $ | 309,533 |
| Interest and other income | 8,940 | 3,405 | 28,585 | 9,377 | ||||
| Resident fees and services | 47,610 | 39,819 | 133,973 | 114,978 | ||||
| Total revenues | 140,764 | 128,591 | 459,826 | 433,888 | ||||
| Expenses: | ||||||||
| Depreciation and amortization | 47,427 | 45,046 | 137,855 | 133,912 | ||||
| Interest | 27,071 | 24,243 | 77,573 | 72,956 | ||||
| Triple-net portfolio operating expenses | 5,120 | 5,075 | 14,983 | 15,210 | ||||
| Senior housing - managed portfolio operating expenses | 36,705 | 30,761 | 103,835 | 88,607 | ||||
| General and administrative | 9,676 | 8,683 | 28,721 | 26,432 | ||||
| (Recovery of) provision for loan losses and other reserves | (217) | (26) | (12) | 1,890 | ||||
| Impairment of real estate | 60,857 | 495 | 72,602 | 495 | ||||
| Total expenses | 186,639 | 114,277 | 435,557 | 339,502 | ||||
| Other income (expense): | ||||||||
| Loss on extinguishment of debt | (140) | (913) | (411) | (1,760) | ||||
| Other income (expense) | 994 | 277 | (1,101) | 386 | ||||
| Net (loss) gain on sales of real estate | (80) | 655 | (4,581) | (1,784) | ||||
| Total other income (expense) | 774 | 19 | (6,093) | (3,158) | ||||
| (Loss) income before loss from unconsolidated joint ventures and income tax expense | (45,101) | 14,333 | 18,176 | 91,228 | ||||
| Loss from unconsolidated joint ventures | (4,384) | (4,018) | (9,715) | (178,817) | ||||
| Income tax expense | (579) | (92) | (1,118) | (1,314) | ||||
| Net (loss) income | $ | (50,064) | $ | 10,223 | $ | 7,343 | $ | (88,903) |
| Net (loss) income, per: | ||||||||
| Basic common share | $ | (0.22) | $ | 0.05 | $ | 0.03 | $ | (0.41) |
| Diluted common share | $ | (0.22) | $ | 0.05 | $ | 0.03 | $ | (0.41) |
| Weighted-average number of common shares outstanding, basic | 230,982,227 | 220,865,518 | 230,936,032 | 216,227,221 | ||||
| Weighted-average number of common shares outstanding, diluted | 230,982,227 | 222,063,910 | 231,779,750 | 216,227,221 |
(1) See page 6 for additional details regarding Rental and related revenues.
SABRA HEALTH CARE REIT, INC.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME - SUPPLEMENTAL INFORMATION
(in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Cash rental income | $ | 92,966 | $ | 101,496 | $ | 288,532 | $ | 305,480 |
| Straight-line rental income | 2,006 | 3,391 | 7,042 | 11,114 | ||||
| Straight-line rental income receivable write-offs | (16,606) | (25,213) | (17,068) | (25,213) | ||||
| Above/below market lease amortization | 1,569 | 1,081 | 4,730 | 3,985 | ||||
| Above/below market lease intangible write-offs | — | — | 326 | — | ||||
| Operating expense recoveries | 4,279 | 4,612 | 13,706 | 14,167 | ||||
| Rental and related revenues | $ | 84,214 | $ | 85,367 | $ | 297,268 | $ | 309,533 |
SABRA HEALTH CARE REIT, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
| September 30, 2022 | December 31, 2021 | |||
|---|---|---|---|---|
| Assets | ||||
| Real estate investments, net of accumulated depreciation of $882,755 and $831,324 as of September 30, 2022 and December 31, 2021, respectively | $ | 5,018,903 | $ | 5,162,884 |
| Loans receivable and other investments, net | 390,275 | 399,086 | ||
| Investment in unconsolidated joint ventures | 207,616 | 96,680 | ||
| Cash and cash equivalents | 26,289 | 111,996 | ||
| Restricted cash | 4,859 | 3,890 | ||
| Lease intangible assets, net | 48,299 | 54,063 | ||
| Accounts receivable, prepaid expenses and other assets, net | 148,674 | 138,108 | ||
| Total assets | $ | 5,844,915 | $ | 5,966,707 |
| Liabilities | ||||
| Secured debt, net | $ | 49,706 | $ | 66,663 |
| Revolving credit facility | 138,551 | — | ||
| Term loans, net | 524,457 | 594,246 | ||
| Senior unsecured notes, net | 1,734,228 | 1,733,566 | ||
| Accounts payable and accrued liabilities | 145,217 | 142,989 | ||
| Lease intangible liabilities, net | 44,023 | 49,713 | ||
| Total liabilities | 2,636,182 | 2,587,177 | ||
| Equity | ||||
| Preferred stock, $0.01 par value; 10,000,000 shares authorized, zero shares issued and outstanding as of September 30, 2022 and December 31, 2021 | — | — | ||
| Common stock, $0.01 par value; 500,000,000 shares authorized, 230,976,606 and 230,398,655 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 2,310 | 2,304 | ||
| Additional paid-in capital | 4,484,769 | 4,482,451 | ||
| Cumulative distributions in excess of net income | (1,296,868) | (1,095,204) | ||
| Accumulated other comprehensive income (loss) | 18,522 | (10,021) | ||
| Total equity | 3,208,733 | 3,379,530 | ||
| Total liabilities and equity | $ | 5,844,915 | $ | 5,966,707 |
SABRA HEALTH CARE REIT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Nine Months Ended September 30, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Cash flows from operating activities: | ||||
| Net income (loss) | $ | 7,343 | $ | (88,903) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||
| Depreciation and amortization | 137,855 | 133,912 | ||
| Non-cash rental and related revenues | 4,970 | 10,113 | ||
| Non-cash interest income | (1,683) | (1,444) | ||
| Non-cash interest expense | 8,300 | 5,389 | ||
| Stock-based compensation expense | 5,367 | 6,987 | ||
| Loss on extinguishment of debt | 411 | 1,760 | ||
| (Recovery of) provision for loan losses and other reserves | (12) | 1,890 | ||
| Net loss on sales of real estate | 4,581 | 1,784 | ||
| Impairment of real estate | 72,602 | 495 | ||
| Other-than-temporary impairment of unconsolidated joint venture | — | 164,126 | ||
| Loss from unconsolidated joint ventures | 9,715 | 14,691 | ||
| Other non-cash items | 2,167 | — | ||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable, prepaid expenses and other assets, net | (5,631) | 13,062 | ||
| Accounts payable and accrued liabilities | 2,161 | (5,403) | ||
| Net cash provided by operating activities | 248,146 | 258,459 | ||
| Cash flows from investing activities: | ||||
| Acquisition of real estate | (83,985) | (62,116) | ||
| Origination and fundings of loans receivable | (4,500) | — | ||
| Origination and fundings of preferred equity investments | (5,813) | (4,153) | ||
| Additions to real estate | (33,809) | (29,278) | ||
| Escrow deposits for potential investments | (836) | — | ||
| Repayments of loans receivable | 4,885 | 2,432 | ||
| Repayments of preferred equity investments | 4,173 | 683 | ||
| Investment in unconsolidated joint venture | (128,019) | — | ||
| Net proceeds from the sales of real estate | 62,816 | 15,066 | ||
| Net cash used in investing activities | (185,088) | (77,366) | ||
| Cash flows from financing activities: | ||||
| Net borrowings from revolving credit facility | 147,353 | — | ||
| Proceeds from issuance of senior unsecured notes | — | 791,520 | ||
| Principal payments on term loans | (63,750) | (455,000) | ||
| Principal payments on secured debt | (17,030) | (2,185) | ||
| Payments of deferred financing costs | (6) | (7,444) | ||
| Payment of contingent consideration | (2,500) | — | ||
| Issuance of common stock, net | (4,394) | 172,188 | ||
| Dividends paid on common stock | (207,861) | (194,311) | ||
| Net cash (used in) provided by financing activities | (148,188) | 304,768 | ||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (85,130) | 485,861 | ||
| Effect of foreign currency translation on cash, cash equivalents and restricted cash | 392 | 34 | ||
| Cash, cash equivalents and restricted cash, beginning of period | 115,886 | 65,523 | ||
| Cash, cash equivalents and restricted cash, end of period | $ | 31,148 | $ | 551,418 |
| Supplemental disclosure of cash flow information: | ||||
| Interest paid | $ | 68,778 | $ | 66,051 |
| Supplemental disclosure of non-cash investing activities: | ||||
| Decrease in loans receivable and other investments due to acquisition of real estate | $ | 14,311 | $ | — |
SABRA HEALTH CARE REIT, INC.
FUNDS FROM OPERATIONS (FFO), NORMALIZED FFO,
ADJUSTED FUNDS FROM OPERATIONS (AFFO) AND NORMALIZED AFFO
(dollars in thousands, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Net (loss) income | $ | (50,064) | $ | 10,223 | $ | 7,343 | $ | (88,903) |
| Add: | ||||||||
| Depreciation and amortization of real estate assets | 47,427 | 45,046 | 137,855 | 133,912 | ||||
| Depreciation, amortization and impairment of real estate assets related to unconsolidated joint ventures | 6,090 | 4,806 | 15,856 | 16,529 | ||||
| Net loss (gain) on sales of real estate | 80 | (655) | 4,581 | 1,784 | ||||
| Net loss (gain) on sales of real estate related to unconsolidated joint ventures | — | 15 | (220) | 30 | ||||
| Impairment of real estate | 60,857 | 495 | 72,602 | 495 | ||||
| Other-than-temporary impairment of unconsolidated joint ventures | — | — | — | 164,126 | ||||
| FFO | $ | 64,390 | $ | 59,930 | $ | 238,017 | $ | 227,973 |
| Write-offs of cash and straight-line rental income receivable and lease intangibles | 16,370 | 24,326 | 15,831 | 22,054 | ||||
| Lease termination income | — | — | (2,338) | — | ||||
| Loss on extinguishment of debt | 140 | 913 | 411 | 1,760 | ||||
| (Recovery of) provision for credit and loan losses and other reserves | (217) | (26) | (12) | 1,890 | ||||
| Support payments paid to joint venture manager (1) | 2,254 | — | 5,880 | 2,450 | ||||
| Other normalizing items (2) | (65) | 148 | 2,586 | 852 | ||||
| Normalized FFO | $ | 82,872 | $ | 85,291 | $ | 260,375 | $ | 256,979 |
| FFO | $ | 64,390 | $ | 59,930 | $ | 238,017 | $ | 227,973 |
| Stock-based compensation expense | 2,117 | 2,428 | 5,367 | 6,987 | ||||
| Non-cash rental and related revenues | 13,031 | 20,740 | 4,970 | 10,113 | ||||
| Non-cash interest income | (589) | (530) | (1,683) | (1,444) | ||||
| Non-cash interest expense | 2,798 | 1,744 | 8,300 | 5,389 | ||||
| Non-cash portion of loss on extinguishment of debt | 140 | 913 | 411 | 1,760 | ||||
| (Recovery of) provision for loan losses and other reserves | (217) | (26) | (12) | 1,890 | ||||
| Other adjustments related to unconsolidated joint ventures | (2,378) | (150) | (4,056) | (1,364) | ||||
| Other adjustments | 36 | (213) | 2,430 | 320 | ||||
| AFFO | $ | 79,328 | $ | 84,836 | $ | 253,744 | $ | 251,624 |
| Cash portion of lease termination income | — | — | (2,338) | — | ||||
| Write-off of cash rental income | — | — | 71 | — | ||||
| Support payments paid to joint venture manager (1) | 2,254 | — | 5,880 | 2,450 | ||||
| Other normalizing items (2) | (80) | 405 | 250 | 963 | ||||
| Normalized AFFO | $ | 81,502 | $ | 85,241 | $ | 257,607 | $ | 255,037 |
| Amounts per diluted common share: | ||||||||
| Net income (loss) | $ | (0.22) | $ | 0.05 | $ | 0.03 | $ | (0.41) |
| FFO | $ | 0.28 | $ | 0.27 | $ | 1.03 | $ | 1.05 |
| Normalized FFO | $ | 0.36 | $ | 0.38 | $ | 1.12 | $ | 1.18 |
| AFFO | $ | 0.34 | $ | 0.38 | $ | 1.09 | $ | 1.15 |
| Normalized AFFO | $ | 0.35 | $ | 0.38 | $ | 1.11 | $ | 1.17 |
| Weighted average number of common shares outstanding, diluted: | ||||||||
| Net income (loss) | 230,982,227 | 222,063,910 | 231,779,750 | 216,227,221 | ||||
| FFO and Normalized FFO | 231,993,295 | 222,063,910 | 231,779,750 | 217,385,804 | ||||
| AFFO and Normalized AFFO | 232,858,600 | 222,542,049 | 232,810,528 | 217,906,904 |
(1) Funding for support payments did not require capital contributions from Sabra but rather were funded with proceeds received by our unconsolidated joint venture with Enlivant from TPG for the issuance of senior preferred interests for each of the three and nine months ended September 30, 2022 and with cash on hand at the joint venture for the nine months ended September 30, 2021.
(2) FFO and AFFO for each of the three and nine months ended September 30, 2022 and 2021 includes $1.0 and $1.2 million, respectively, earned during the period related to legacy Care Capital Properties, Inc. investments. FFO for the nine months ended September 30, 2022, includes $2.2 million of foreign currency transaction loss related to our Canadian borrowings. In addition, other normalizing items for FFO and AFFO include triple-net operating expenses, net of recoveries.
REPORTING 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 (i) 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, (ii) exclude residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis and (iii) reflect the reduction in Avamere’s annual base rent to $30.7 million effective February 1, 2022.
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.
Cash Net Operating Income (“Cash NOI”)*
The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers Cash NOI an important supplemental measure because it allows investors, analysts and its management to evaluate the operating performance of its investments. The Company defines Cash NOI as total revenues less operating expenses and non-cash revenues and expenses. Cash NOI excludes all other financial statement amounts included in net income.
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.
Funds From Operations (“FFO”) and Adjusted Funds from Operations (“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
REPORTING DEFINITIONS
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 the depreciable real estate held by the entity. AFFO is defined as FFO excluding merger and acquisition costs, 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 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 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.
Grant Income
Grant income consists of funds specifically paid to communities in our Senior Housing - Managed portfolio from state or federal governments related to the pandemic and were incremental to the amounts that would have otherwise been received for providing care to residents.
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.
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
REPORTING DEFINITIONS
GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. Normalized FFO and Normalized AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of Normalized FFO and Normalized AFFO may not be comparable to Normalized FFO and Normalized AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define FFO and AFFO or Normalized FFO and Normalized AFFO differently than the Company does.
Occupancy 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.
REVPOR
REVPOR represents the average revenues generated per occupied unit per month at Senior Housing - Managed communities for the period indicated. It is calculated as resident fees and services revenues, excluding Grant Income, divided by average monthly occupied unit days. REVPOR includes only Stabilized Facilities.
Senior Housing
Senior Housing communities include independent living, assisted living, continuing care retirement and memory care communities.
Senior Housing - Managed
Senior Housing communities operated by third-party property managers pursuant to property management agreements.
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 the period indicated. Skilled Mix includes only Stabilized Facilities and excludes facilities for which data is not available or meaningful.
Skilled Nursing/Transitional Care
Skilled Nursing/Transitional Care facilities include skilled nursing, transitional care, multi-license designation and mental health facilities.
Specialty Hospitals and Other
Includes acute care, long-term acute care and rehabilitation hospitals, facilities that provide residential services, which may include assistance with activities of daily living, and other facilities not classified as Skilled Nursing/Transitional Care, Senior Housing or Behavioral Health.
Stabilized Facility
At the time of acquisition, the Company classifies each facility as either stabilized or non-stabilized. In addition, the Company may classify a facility as non-stabilized after acquisition. Circumstances that could result in a facility being classified as non-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 are typically reclassified to stabilized upon the earlier of maintaining consistent occupancy (85% for Skilled Nursing/Transitional Care facilities and 90% for Senior Housing communities) or 24 months after the date of classification as non-stabilized. Stabilized Facilities exclude (i) facilities held for sale, (ii) strategic disposition candidates, (iii) facilities being transitioned to a new operator, (iv) facilities being transitioned from being leased by the Company to being operated by the Company and (v) leased facilities acquired during the three months preceding the period presented.
*Non-GAAP Financial Measures
Reconciliations, definitions and important discussions regarding the usefulness and limitations of the Non-GAAP Financial Measures used in this release can be found at https://ir.sabrahealth.com/investors/financials/quarterly-results.
12
sbraex9922022q3
Exhibit 99.2
2 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 03 COMPANY INFORMATION 04 OVERVIEW 05 PORTFOLIO Triple-Net Portfolio Same Store Triple-Net Portfolio Top 10 Relationships Senior Housing - Managed Consolidated Portfolio Senior Housing - Managed Unconsolidated Portfolio Loans and Other Investments NOI Concentrations Geographic Concentrations - Consolidated Portfolio Triple-Net Lease Expirations 15 INVESTMENT ACTIVITY Summary 16 CAPITALIZATION Overview Indebtedness Debt Maturity Credit Metrics and Ratings 20 FINANCIAL INFORMATION Consolidated Financial Statements - Statements of (Loss) Income Consolidated Financial Statements - Balance Sheets Consolidated Financial Statements - Statements of Cash Flows FFO, Normalized FFO, AFFO and Normalized AFFO Components of Net Asset Value (NAV) 26 APPENDIX Disclaimer Reporting Definitions Discussion and Reconciliation of Certain Non-GAAP Financial Measures: CONTENT https://ir.sabrahealth.com/investors/financials/quarterly-results
3 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 SENIOR MANAGEMENT Rick Matros Michael Costa Talya Nevo-Hacohen Chief Executive Officer, President Chief Financial Officer, Secretary Chief Investment Officer, Treasurer and Chair and Executive Vice President and Executive Vice President BOARD OF DIRECTORS Rick Matros Michael Foster Jeffrey Malehorn Chief Executive Officer, President Lead Independent Director Director and Chair Craig Barbarosh Lynne Katzmann Clifton Porter II Director Director Director Katie Cusack Ann Kono Director Director CONTACT INFORMATION Sabra Health Care REIT, Inc. Transfer Agent 18500 Von Karman Avenue American Stock Transfer Suite 550 and Trust Company Irvine, CA 92612 6201 15th Avenue 888.393.8248 Brooklyn, NY 11219 sabrahealth.com COMPANY INFORMATION
4 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 Financial Metrics Dollars in thousands, except per share data September 30, 2022 Three Months Ended Nine Months Ended Revenues $ 140,764 $ 459,826 Net operating income 103,099 353,766 Cash net operating income 115,563 357,121 Diluted per share data: EPS $ (0.22) $ 0.03 FFO 0.28 1.03 Normalized FFO 0.36 1.12 AFFO 0.34 1.09 Normalized AFFO 0.35 1.11 Dividends per common share 0.30 0.90 Capitalization and Market Facts Key Credit Metrics (1) September 30, 2022 September 30, 2022 Common shares outstanding 231.0 million Net Debt to Adjusted EBITDA 5.50x Common equity Market Capitalization $3.0 billion Interest Coverage 4.71x Consolidated Debt $2.5 billion Fixed Charge Coverage Ratio 4.61x Consolidated Enterprise Value $5.5 billion Total Debt/Asset Value 35 % Secured Debt/Asset Value 1 % Common stock closing price $13.12 Unencumbered Assets/Unsecured Debt 276 % Common stock 52-week range $11.44 - $16.60 Common stock ticker symbol SBRA Portfolio (2) Dollars in thousands As of September 30, 2022 Property Count Investment Beds/Units Occupancy Percentage (3) Investment in Real Estate Properties, gross Triple-Net Portfolio: Skilled Nursing / Transitional Care 270 $ 3,438,590 30,205 72.9 % Senior Housing - Leased 52 673,346 3,822 81.8 Behavioral Health 16 447,427 965 83.1 Specialty Hospitals and Other 15 225,443 392 79.7 Total Triple-Net Portfolio 353 4,784,806 35,384 Senior Housing - Managed 54 1,115,965 5,669 80.8 (6) Consolidated Real Estate Investments 407 5,900,771 41,053 Unconsolidated Joint Venture Senior Housing - Managed 12 131,577 1,234 85.5 Total Equity Investments 419 6,032,348 42,287 Investment in Sales-Type Lease, net 1 25,431 Investments in Loans Receivable, gross (4) 15 341,617 Preferred Equity Investments, gross (5) 7 48,742 Includes 72 relationships in 41 U.S. states and CanadaTotal Investments 442 $ 6,448,138 (1) See page 19 of this supplement for important information about these credit metrics. (2) Excludes (i) one real estate property held for sale as of the end of the current period and (ii) our unconsolidated joint venture with Enlivant which consists of 157 facilities and 6,996 units. (3) Occupancy Percentage is presented for the trailing twelve month period and one quarter in arrears, except for our Senior Housing - Managed portfolio, which is presented for the current period on a trailing three month basis. (4) Our loans receivable investments include one investment which has a right of first offer on six addiction treatment centers with 928 beds. (5) Our preferred equity investments include investments in entities owning five Senior Housing developments with 697 aggregate units and one Skilled Nursing/Transitional Care development with 120 beds. (6) Reflects Occupancy Percentage of 79.7% and 81.2% for assisted living and independent living communities in our Senior Housing - Managed portfolio, respectively. OVERVIEW
5 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 Operating Statistics (2) Dollars in thousands 3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q 2022 Skilled Nursing/Transitional Care Number of Properties 282 279 279 272 270 Number of Beds 31,245 30,920 30,920 30,251 30,205 Cash NOI $ 74,640 $ 71,726 $ 75,500 $ 70,399 $ 68,120 Occupancy 71.1 % 71.4 % 71.8 % 72.8 % 72.9 % Skilled Mix 40.1 % 39.8 % 38.2 % 37.8 % 33.9 % Senior Housing - Leased Number of Properties 61 60 59 55 52 Number of Units 4,079 4,099 4,072 3,965 3,822 Cash NOI $ 12,412 $ 12,097 $ 11,578 $ 10,673 $ 10,166 Occupancy 78.1 % 78.1 % 78.5 % 79.7 % 81.8 % Behavioral Health Number of Properties 13 13 13 14 16 Number of Beds (3) 795 795 795 795 965 Cash NOI $ 9,416 $ 9,522 $ 8,889 $ 9,229 $ 9,397 Occupancy 84.5 % 84.2 % 84.6 % 83.3 % 83.1 % Specialty Hospitals and Other Number of Properties 16 15 15 15 15 Number of Beds 433 392 392 392 392 Cash NOI $ 4,589 $ 4,560 $ 4,456 $ 4,452 $ 4,464 Occupancy 79.9 % 80.6 % 80.5 % 80.0 % 79.7 % PORTFOLIO Triple-Net Portfolio (1) Triple-Net Portfolio Dollars in thousands As of September 30, 2022 Skilled Nursing/ Transitional Care Senior Housing - Leased Behavioral Health Specialty Hospitals and Other Total Number of Properties 270 52 16 15 353 Number of Beds/Units 30,205 3,822 965 392 35,384 Investment $ 3,438,590 $ 673,346 $ 447,427 $ 225,443 $ 4,784,806 (1) All metrics, except Cash NOI, exclude properties held for sale as of the end of the respective period. (2) Occupancy Percentage and Skilled Mix (together, “Operating Statistics”) and EBITDARM Coverage for each period presented include only Stabilized Facilities owned by the Company as of the end of such period 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 June 30, 2022. 3Q 2022 Operating Statistics exclude our North American Health Care portfolio due to the pending transition to Ensign (20 real estate properties) and Avamere (four real estate properties). Including our North American Health Care portfolio, Skilled Nursing/Transitional Care Occupancy Percentage and Skilled Mix for 3Q 2022 would have been 73.5% and 37.6%, respectively. (3) 2Q 2022 includes one facility transitioned to Behavioral Health during the period with zero beds as it is currently under construction. The property is expected to have 60 beds upon completion of construction. EBITDARM Coverage (2) 3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q 2022 Skilled Nursing/Transitional Care 1.78x 1.77x 1.80x 1.80x 1.83x Senior Housing - Leased 1.09x 1.04x 1.02x 1.09x 1.13x Behavioral Health 2.11x 2.06x 1.98x 1.83x 1.72x Specialty Hospitals and Other 7.42x 7.52x 7.52x 7.07x 7.30x
6 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 PORTFOLIO Same Store Triple-Net Portfolio (1) (1) Excludes one real estate property held for sale as of the end of the current period. (2) Same store triple-net portfolio includes all facilities held for investment as the same property type for the full period in both comparison periods. (3) Same store EBITDARM Coverage and Operating Statistics are presented for the twelve months ended at the end of the respective period and one quarter in arrears for Stabilized Facilities owned as the same property type for the full period in both comparison periods. Same Store Triple-Net Portfolio (2) Dollars in thousands Number of Properties Number of Beds/Units Cash NOI 3Q 2022 2Q 2022 3Q 2022 2Q 2022 Skilled Nursing/Transitional Care 270 30,205 30,126 $ 67,429 $ 69,350 Senior Housing - Leased 52 3,822 3,822 $ 9,961 $ 9,850 Behavioral Health 13 965 795 $ 9,387 $ 9,226 Specialty Hospitals and Other 15 392 392 $ 4,456 $ 4,448 EBITDARM Coverage (3) 3Q 2022 2Q 2022 Skilled Nursing/Transitional Care 1.80x 1.90x Senior Housing - Leased 1.17x 1.18x Behavioral Health 1.65x 1.83x Specialty Hospitals and Other 7.30x 7.07x Operating Statistics (3) Occupancy Skilled Mix 3Q 2022 2Q 2022 3Q 2022 2Q 2022 Skilled Nursing/Transitional Care 73.9 % 73.6 % 34.7 % 35.3 % Senior Housing - Leased 84.2 % 83.3 % N/A N/A Behavioral Health 82.5 % 83.3 % N/A N/A Specialty Hospitals and Other 79.7 % 80.0 % N/A N/A
7 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 PORTFOLIO Top 10 Relationships (1) Top 10 Relationships Tenant/Borrower Credit Exposure Senior Housing - Managed Operator Exposure As of September 30, 2022 (2) EBITDARM Coverage Twelve Months Ended (3) As of September 30, 2022 Relationship Primary Property Type Number of Sabra Investments % of Annualized Cash NOI September 30, 2022 June 30, 2022 Number of Sabra Investments % of Annualized Cash NOI Signature Healthcare Skilled Nursing 45 8.7 % 1.55x 1.73x — — Avamere Family of Companies Skilled Nursing 31 8.0 % 1.43x 1.36x — — The Ensign Group Skilled Nursing 27 7.7 % N/A N/A — — Signature Behavioral Behavioral Hospitals 5 7.0 % 1.37x 1.53x — — Recovery Centers of America Addiction Treatment 3 5.3 % N/A N/A — — Holiday AL Holdings LP Independent Living — — N/A N/A 22 5.2 % Cadia Healthcare Skilled Nursing 10 4.6 % 1.73x 1.80x — — Leo Brown Group Assisted Living 6 2.8 % 1.32x 1.33x 3 1.2 % The McGuire Group Skilled Nursing 8 3.7 % 1.96x 2.22x — — CommuniCare Skilled Nursing 12 3.6 % 1.58x 1.68x — — Top 10 relationships 147 51.4 % 1.53x 1.62x 25 6.4 % Remaining 62 relationships 229 37.0 % 2.64x 2.65x 41 5.2 % Total 376 88.4 % 2.05x 2.10x 66 11.6 % (1) Excludes (i) one real estate property held for sale as of the end of the current period and (ii) our unconsolidated joint venture with Enlivant which consists of 157 facilities and 6,996 units. (2) Assumes the pending transition of our North American Health Care portfolio to Ensign (20 real estate properties) and Avamere (four real estate properties) was completed as of the end of the current period. (3) EBITDARM Coverage is presented for Stabilized Facilities operated by the applicable tenant and is presented one quarter in arrears. (4) Effective February 1, 2022, Avamere’s annual base rent on the current portfolio has been reduced to $30.7 million from $44.1 million. Pro forma EBITDARM Coverage is presented one quarter in arrears and illustrates the impact of (i) this rent reduction and (ii) the pending transition of our North American Health Care portfolio to Ensign (20 real estate properties) and Avamere (four real estate properties) on our historical trailing twelve-month EBITDARM Coverages. Pro Forma EBITDARM Coverage (4) Pro Forma EBITDARM Coverage Twelve Months Ended September 30, 2022 June 30, 2022 Avamere Family of Companies 1.65x 1.66x The Ensign Group 1.55x 1.51x Top 10 relationships 1.57x 1.67x Skilled Nursing/Transitional Care 1.83x 1.92x Total 2.03x 2.08x
8 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 PORTFOLIO Senior Housing - Managed Consolidated Portfolio (1) REVPOR and Occupancy Percentage are presented for the three months ended at the end of the respective period and include only Stabilized Facilities owned by the Company as of the end of such period and only for the duration such facilities were owned by the Company and classified as Stabilized Facilities. In addition, resident fees and services, Cash NOI and REVPOR have been adjusted for changes in the foreign currency exchange rate where applicable. (2) Balances related to properties in Canada are based on the exchange rate as of the end of the period presented. The exchange rate as of September 30, 2022 was $0.7278 per 1 CAD. (3) Revenues and Cash NOI include $0.1 million of Grant Income for 2Q 2022. (4) Same store Senior Housing - Managed portfolio includes all facilities owned as the same property type for the full period in all comparison periods. Same store REVPOR and Occupancy Percentage are presented for the three months ended at the end of the respective period for Stabilized Facilities owned as the same property type for the full period in all comparison periods. In addition, resident fees and services, Cash NOI and REVPOR have been adjusted for changes in the foreign currency exchange rate where applicable. Senior Housing - Managed Consolidated Portfolio (1) Dollars in thousands, except REVPOR As of September 30, 2022 Holiday Enlivant Sienna Other Total Property Type IL AL IL AL AL / IL Number of Properties 22 11 8 13 54 Number of Units 3,117 631 757 1,164 5,669 Investment (2) $ 600,484 $ 131,695 $ 126,212 $ 257,574 $ 1,115,965 Capital Expenditures: (2) Recurring $ 732 $ 202 $ 219 $ 154 $ 1,307 Non-recurring $ 2,136 $ 272 $ 212 $ 205 $ 2,825 Resident fees and services (3) $ 19,785 $ 8,930 $ 5,205 $ 13,690 $ 47,610 Cash NOI (3) $ 5,855 $ 497 $ 1,754 $ 2,799 $ 10,905 Cash NOI Margin % 29.6 % 5.6 % 33.7 % 20.4 % 22.9 % REVPOR $ 2,725 $ 6,325 $ 2,702 $ 6,083 $ 3,549 Occupancy 80.3 % 74.6 % 84.8 % 85.9 % 80.8 % Operating Performance (1) Dollars in thousands, except REVPOR 3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q 2022 Number of Properties 49 49 50 50 54 Number of Units 5,140 5,140 5,266 5,266 5,669 Capital Expenditures: (2) Recurring $ 1,477 $ 1,618 $ 499 $ 1,350 $ 1,307 Non-recurring $ 3,104 $ 2,863 $ 920 $ 1,643 $ 2,825 Resident fees and services (3) $ 39,604 $ 40,323 $ 42,040 $ 43,988 $ 47,610 Cash NOI (3) $ 9,000 $ 8,102 $ 9,069 $ 10,065 $ 10,905 Cash NOI Margin % 22.7 % 20.1 % 21.6 % 22.9 % 22.9 % REVPOR - AL $ 5,924 $ 6,090 $ 6,122 $ 6,188 $ 6,207 REVPOR - IL $ 2,513 $ 2,524 $ 2,574 $ 2,669 $ 2,720 Occupancy - AL 75.5 % 74.7 % 76.8 % 80.3 % 79.7 % Occupancy - IL 79.8 % 80.7 % 79.0 % 79.9 % 81.2 % Same Store Operating Performance (4) Dollars in thousands, except REVPOR 3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q 2022 Number of Properties 49 49 49 49 49 Resident fees and services (3) $ 39,604 $ 40,323 $ 41,129 $ 42,738 $ 43,352 Cash NOI (3) $ 9,000 $ 8,102 $ 8,885 $ 9,998 $ 9,879 Cash NOI Margin % 22.7 % 20.1 % 21.6 % 23.4 % 22.8 % REVPOR - AL $ 5,924 $ 6,090 $ 6,161 $ 6,276 $ 6,306 REVPOR - IL $ 2,564 $ 2,578 $ 2,618 $ 2,657 $ 2,705 Occupancy - AL 75.5 % 74.7 % 76.1 % 79.0 % 78.2 % Occupancy - IL 80.0 % 81.0 % 80.6 % 81.2 % 82.5 %
9 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 PORTFOLIO Senior Housing - Managed Unconsolidated Portfolio (1) (1) Excludes our unconsolidated joint venture with Enlivant which consists of 157 facilities and 6,996 units. (2) Balances related to properties in Canada are based on the exchange rate as of the end of the period presented. The exchange rate as of September 30, 2022 was $0.7278 per 1 CAD. (3) Book value is net of debt. Our share of the debt was $19.2 million as of September 30, 2022. (4) Operating performance reflects a partial quarter for 2Q 2022 as these facilities were acquired during May and June 2022. REVPOR and Occupancy Percentage are presented for the three months ended at the end of the respective period and include only Stabilized Facilities owned by the Company as of the end of such period and only for the duration such facilities were owned by the Company and classified as Stabilized Facilities. In addition, resident fees and services, Cash NOI and REVPOR have been adjusted for changes in the foreign currency exchange rate where applicable. Senior Housing - Managed Unconsolidated Portfolio Dollars in thousands, at Sabra’s pro rata share As of September 30, 2022 Ownership % Property Type Number of Properties Number of Units Investment (2) Book Value (3) Debt Principal (2) Rate Sienna Joint Venture 50.0 % IL 12 1,234 $ 131,577 $ 120,216 $ 19,216 2.24 % Operating Performance (4) Dollars in thousands, except REVPOR, at Sabra’s pro rata share 2Q 2022 3Q 2022 Capital Expenditures: (2) Recurring $ 10 $ 63 Non-recurring $ 17 $ 68 Resident Fees and Services $ 2,764 $ 5,592 Cash NOI $ 662 $ 1,377 Cash NOI Margin % 23.9 % 24.6 % REVPOR - IL $ 3,661 $ 3,732 Occupancy - IL 84.9 % 85.5 %
10 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 PORTFOLIO Loans and Other Investments Loans Receivable and Other Investments Dollars in thousands As of September 30, 2022 Loan Type Number of Loans Property Type Principal Balance Book Value Weighted Average Contractual Interest Rate Weighted Average Annualized Effective Interest Rate Interest Income Three Months Ended September 30, 2022 (1) Maturity Date Mortgage 2 Behavioral Health $ 309,000 $ 309,000 7.7 % 7.7 % $ 5,923 11/01/26 - 01/31/27 Other 13 Multiple 42,774 38,960 6.9 % 6.2 % 620 11/30/22 - 08/31/28 15 351,774 347,960 7.6 % 7.5 % $ 6,543 Allowance for loan losses — (6,427) $ 351,774 $ 341,533 Other Investment Type Number of Investments Property Type Total Funding Commitments Total Amount Funded Book Value Rate of Return Other Income Three Months Ended September 30, 2022 (1) Preferred Equity 7 Skilled Nursing / Senior Housing $ 80,291 $ 44,522 $ 48,742 10.8 % $ 1,287 (1) Includes income related to loans receivable and other investments held as of September 30, 2022.
11 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 Avamere Family of Companies: 8.0% The Ensign Group: 7.7% Signature Behavioral: 7.0% Recovery Centers of America: 5.3% Managed (No Operator Credit Exposure): 11.6% Other: 51.7% Signature Healthcare: 8.7% RELATIONSHIP CONCENTRATION PROPERTY TYPE CONCENTRATION PAYOR SOURCE CONCENTRATION (2) PORTFOLIO NOI Concentrations (1) As of September 30, 2022 (1) Concentrations exclude (i) one real estate property held for sale as of the end of the current period and (ii) our unconsolidated joint venture with Enlivant which consists of 157 facilities and 6,996 units and assumes the pending transition of our North American Health Care portfolio to Ensign and Avamere was completed as of the end of the current period. Relationship 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 sales-type lease, mortgage and construction loans receivable and preferred equity investments in the related asset class of the underlying real estate. Payor source concentration excludes Annualized Cash NOI from investments in loans receivable and other investments. (2) Tenant payor source allocation presented one quarter in arrears. Holiday 5.2%Sienna 2.8%Other 3.6% Senior Housing - Managed: 11.6% Senior Housing - Leased: 10.3% Specialty Hospital and Other: 4.0% Other: 0.6% Skilled Nursing/Transitional Care: 60.0% Behavioral Health: 13.5% Private Pay: 41.5% Non-Private: 58.5%
12 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 PORTFOLIO Geographic Concentrations - Consolidated Portfolio (1) Property Type As of September 30, 2022 Location Skilled Nursing/ Transitional Care Senior Housing - Leased Senior Housing - Managed Consolidated Behavioral Health Specialty Hospitals and Other Total % of Total Texas 36 5 6 — 13 60 14.7 % California 24 1 1 3 1 30 7.3 Kentucky 25 1 — 1 1 28 6.9 Indiana 12 4 1 2 — 19 4.7 Oregon 15 4 — — — 19 4.7 Washington 15 1 1 — — 17 4.2 Massachusetts 17 — — — — 17 4.2 North Carolina 13 — 2 — — 15 3.7 Missouri 12 — 1 — — 13 3.2 Michigan 1 6 4 — — 11 2.7 Other (31 states & Canada) 100 30 38 10 — 178 43.7 Total 270 52 54 16 15 407 100.0 % % of Total 66.3 % 12.8 % 13.3 % 3.9 % 3.7 % 100.0 % Distribution of Beds/Units As of September 30, 2022 Property Type Location Total Number of Properties Skilled Nursing/ Transitional Care Senior Housing - Leased Senior Housing - Managed Consolidated Behavioral Health Specialty Hospitals and Other Total % of Total Texas 60 4,408 470 856 — 325 6,059 14.8 % Kentucky 28 2,598 142 — 60 40 2,840 6.9 California 30 2,058 58 102 313 27 2,558 6.2 Indiana 19 1,411 545 169 138 — 2,263 5.5 Massachusetts 17 2,133 — — — — 2,133 5.2 Oregon 19 1,520 377 — — — 1,897 4.6 Washington 17 1,591 52 113 — — 1,756 4.3 North Carolina 15 1,454 — 237 — — 1,691 4.1 New York 10 1,566 — 107 — — 1,673 4.1 Missouri 13 1,075 — 184 — — 1,259 3.1 Other (31 states & Canada) 179 10,391 2,178 3,901 454 — 16,924 41.2 Total 407 30,205 3,822 5,669 965 392 41,053 100.0 % % of Total 73.6 % 9.3 % 13.8 % 2.3 % 1.0 % 100.0 % (1) Excludes one real estate property held for sale as of the end of the current period.
13 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 PORTFOLIO Geographic Concentrations - Consolidated Portfolio Continued (1) Investment Dollars in thousands As of September 30, 2022 Property Type Location Total Number of Properties Skilled Nursing/ Transitional Care Senior Housing - Leased Senior Housing - Managed Consolidated Behavioral Health Specialty Hospitals and Other Total % of Total Texas 60 $ 356,997 $ 55,949 $ 185,149 $ — $ 187,387 $ 785,482 13.3 % California 30 435,612 19,137 38,683 217,764 7,743 718,939 12.2 Oregon 19 261,316 86,860 — — — 348,176 5.9 Indiana 19 158,666 117,343 37,581 12,155 — 325,745 5.5 New York 10 297,637 — 20,390 — — 318,027 5.4 Kentucky 28 242,533 23,668 — 9,374 30,313 305,888 5.2 Washington 17 189,251 10,686 27,942 — — 227,879 3.9 Maryland 8 218,855 — — — — 218,855 3.7 North Carolina 15 124,448 — 70,053 — — 194,501 3.3 Arizona 5 — 10,348 38,970 121,757 — 171,075 2.9 Other (31 states & Canada) (2) 196 1,153,275 349,355 697,197 86,377 — 2,286,204 38.7 Total 407 $ 3,438,590 $ 673,346 $ 1,115,965 $ 447,427 $ 225,443 $ 5,900,771 100.0 % % of Total 58.3 % 11.4 % 18.9 % 7.6 % 3.8 % 100.0 % (1) Excludes one real estate property held for sale as of the end of the current period. (2) Investment balance in Canada is based on the exchange rate as of September 30, 2022 of $0.7278 per 1 CAD.
14 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 PORTFOLIO Triple-Net Lease Expirations Triple-Net Lease Expirations (1) Dollars in thousands Skilled Nursing/ Transitional Care Senior Housing - Leased Behavioral Health Specialty Hospitals and Other Total Annualized RevenuesAs of September 30, 2022 % of Total 10/01/22 - 12/31/22 $ 7,893 $ — $ — $ — $ 7,893 2.2 % 2023 2,260 — — — 2,260 0.6 % 2024 9,323 — — — 9,323 2.6 % 2025 7,222 3,268 — 1,374 11,864 3.2 % 2026 16,783 1,350 — — 18,133 5.0 % 2027 39,353 4,095 — — 43,448 11.9 % 2028 19,608 7,161 — 3,210 29,979 8.2 % 2029 45,085 5,014 — 5,842 55,941 15.3 % 2030 743 — — 3,095 3,838 1.0 % 2031 81,029 5,443 1,025 — 87,497 24.0 % Thereafter 39,107 15,593 35,679 4,368 94,747 26.0 % Total Annualized Revenues $ 268,406 $ 41,924 $ 36,704 $ 17,889 $ 364,923 100.0 % (1) Excludes one real estate property held for sale as of the end of the current period and assumes the pending transition of our North American Health Care portfolio to Ensign and Avamere was completed as of the end of the current period.
15 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 INVESTMENT ACTIVITY Summary Investment Activity Dollars in thousands Investment Initial Investment Date Property Type Number of Properties Beds/Units 2022 Amounts Invested (1) Expected Cash Yield Real Estate Traditions of Deerfield (2) 02/01/22 Senior Housing - Managed 1 126 $ 26,000 6.70 % Traditions at North Willow (3) 08/01/22 Senior Housing - Managed 1 169 39,220 6.90 % New Hope Valley 08/01/22 Senior Housing - Managed 1 139 32,500 7.50 % Additions to Real Estate (4) Various Multiple N/A N/A 27,743 8.23 % Total Real Estate Investments 125,463 7.31 % Unconsolidated Joint Venture Sienna Joint Venture (5) 05/16/22 & 06/01/22 Senior Housing - Managed 12 1,234 147,374 6.50 % Preferred Equity Discovery Senior Living (6) 06/30/22 Senior Housing 1 180 1,735 12.00 % Additional Preferred Equity Fundings Various Multiple N/A N/A 4,074 10.00 % Total Preferred Equity Investments 5,809 10.60 % Loans Receivable McGuire Working Capital Loan 07/13/22 Skilled Nursing/ Transitional Care N/A N/A 4,500 7.50 % All Investments through September 30, 2022 $ 283,146 6.96 % (1) Excludes capitalized acquisition costs and origination fees. (2) Amount invested reflects the gross investment, of which $5.6 million was used to repay our preferred equity investment. Transaction includes a potential earnout if certain performance metrics are achieved after 18 months. (3) Amount invested reflects the gross investment, of which $8.6 million was used to repay our preferred equity investment. Transaction includes a potential earnout if certain performance metrics are achieved after the earlier of 15 months or when specified milestones are met. (4) Excludes capital expenditures for the Senior Housing - Managed portfolio and recurring capital expenditures for the Triple-Net portfolio. (5) Amount invested reflects Sabra's 50% pro rata share of the gross investment of CAD $379.0 million and is based on the exchange rate as of the investment date. In addition, the Sienna Joint Venture assumed CAD $53.4 million of debt. (6) Unit count reflects expected capacity at the completion of development. Sabra has the option to purchase the development at fair market value upon achievement of specified milestones.
16 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 CAPITALIZATION Overview Consolidated Debt Dollars in thousands As of September 30, 2022 Secured debt $ 50,609 Revolving credit facility 138,551 Term loans 527,225 Senior unsecured notes 1,750,000 Total 2,466,385 Deferred financing costs and premiums/discounts, net (19,443) Total, net $ 2,446,942 Revolving Credit Facility Dollars in thousands As of September 30, 2022 Credit facility availability $ 861,449 Credit facility capacity 1,000,000 Enterprise Value Dollars in thousands, except per share amounts As of September 30, 2022 Shares Outstanding Price Value Common stock 230,976,606 $ 13.12 $ 3,030,413 Consolidated Debt 2,466,385 Cash and cash equivalents (26,289) Consolidated Enterprise Value $ 5,470,509 Common Stock and Equivalents Weighted Average Common Shares Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 EPS FFO and Normalized FFO AFFO and Normalized AFFO EPS, FFO and Normalized FFO AFFO and Normalized AFFO Common stock 230,972,219 230,972,219 230,972,219 230,926,024 230,926,024 Common equivalents 10,008 10,008 10,008 10,008 10,008 Basic common and common equivalents 230,982,227 230,982,227 230,982,227 230,936,032 230,936,032 Dilutive securities: Restricted stock units — 1,011,068 1,876,373 843,718 1,874,496 Diluted common and common equivalents 230,982,227 231,993,295 232,858,600 231,779,750 232,810,528 At-The-Market Common Stock Offering Program Dollars in thousands Availability as of September 30, 2022 $ 475,033
17 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 CAPITALIZATION Indebtedness Fixed | Variable Rate Debt Dollars in thousands Weighted Average Interest Rate (1)As of September 30, 2022 Principal % of Total Fixed Rate Debt Secured debt $ 50,609 3.33 % 2.0 % Senior unsecured notes 1,750,000 4.04 % 71.0 % Total fixed rate debt 1,800,609 4.02 % 73.0 % Variable Rate Debt Revolving credit facility 138,551 4.84 % 5.6 % Term loans (2) 527,225 3.06 % 21.4 % Total variable rate debt 665,776 3.43 % 27.0 % Consolidated Debt $ 2,466,385 3.86 % 100.0 % Secured | Unsecured Debt Dollars in thousands Weighted Average Interest Rate (1)As of September 30, 2022 Principal % of Total Secured Debt Secured debt $ 50,609 3.33 % 2.0 % Unsecured Debt Senior unsecured notes 1,750,000 4.04 % 71.0 % Revolving credit facility 138,551 4.84 % 5.6 % Term loans 527,225 3.06 % 21.4 % Total unsecured debt 2,415,776 3.87 % 98.0 % Consolidated Debt $ 2,466,385 3.86 % 100.0 % (1) Weighted average interest rate includes private mortgage insurance and impact of interest rate derivative agreements. (2) Term loans include $436.3 million subject to interest rate swaps and interest rate collars that fix and set a cap and floor, respectively, for LIBOR at a weighted average rate of 1.14%, and $91.0 million (CAD $125.0 million) subject to swap agreements that fix CDOR at 1.10%. Excluding these amounts, variable rate debt was 5.6% of Consolidated Debt as of September 30, 2022.
18 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 CAPITALIZATION Debt Maturity Debt Maturity Schedule Dollars in thousands Secured Debt Senior Unsecured Notes Term Loans Revolving Credit Facility (1) Consolidated Debt As of September 30, 2022 Principal Rate (2) Principal Rate (2) Principal Rate (2) Principal Rate (2) Principal Rate (2) 10/01/22 - 12/31/22 $ 486 2.84 % $ — — $ — — $ — — $ 486 2.84 % 2023 1,979 2.84 % — — — — 138,551 4.84 % 140,530 4.81 % 2024 2,034 2.85 % — — 527,225 4.50 % — — 529,259 4.49 % 2025 2,089 2.86 % — — — — — — 2,089 2.86 % 2026 2,147 2.86 % 500,000 5.13 % — — — — 502,147 5.12 % 2027 2,206 2.87 % 100,000 5.88 % — — — — 102,206 5.82 % 2028 2,266 2.88 % — — — — — — 2,266 2.88 % 2029 2,328 2.89 % 350,000 3.90 % — — — — 352,328 3.89 % 2030 2,392 2.90 % — — — — — — 2,392 2.90 % 2031 2,093 2.92 % 800,000 3.20 % — — — — 802,093 3.20 % Thereafter 30,589 3.08 % — — — — — — 30,589 3.08 % Total 50,609 1,750,000 527,225 138,551 2,466,385 Discount, net — (3,374) — — (3,374) Deferred financing costs, net (903) (12,398) (2,768) — (16,069) Total, net $ 49,706 $ 1,734,228 $ 524,457 $ 138,551 $ 2,446,942 Wtd. avg. maturity/years 22.1 7.0 1.9 0.9 5.9 Wtd. avg. interest rate (3) 3.33 % 4.04 % 3.06 % 4.84 % 3.86 % (1) Revolving Credit Facility is subject to two six-month extension options. (2) Represents actual contractual interest rates excluding private mortgage insurance and impact of interest rate derivative agreements. (3) Weighted average interest rate includes private mortgage insurance and impact of interest rate derivative agreements.
19 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 Key Credit Metrics (1) September 30, 2022 December 31, 2021 Net Debt to Adjusted EBITDA (2) 5.50x 4.98x Interest Coverage (2) 4.71x 5.19x Fixed Charge Coverage Ratio (2) 4.61x 5.03x Total Debt/Asset Value 35 % 34 % Secured Debt/Asset Value 1 % 1 % Unencumbered Assets/Unsecured Debt 276 % 291 % Cost of Permanent Consolidated Debt (3) 3.81 % 3.59 % Unsecured Notes Ratings S&P (Stable outlook) BBB- Fitch (Stable outlook) BBB- Moody's (Stable outlook) Ba1 CAPITALIZATION Credit Metrics and Ratings (1) Key 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. (2) Based on the trailing twelve month period ended as of the date indicated. (3) Excludes revolving credit facility balance that had an interest rate of 4.84% and 1.20% as of September 30, 2022 and December 31, 2021, respectively.
20 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 FINANCIAL INFORMATION Consolidated Financial Statements Consolidated Statements of (Loss) Income Dollars in thousands, except per share data Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenues: Rental and related revenues (1) $ 84,214 $ 85,367 $ 297,268 $ 309,533 Interest and other income 8,940 3,405 28,585 9,377 Resident fees and services 47,610 39,819 133,973 114,978 Total revenues 140,764 128,591 459,826 433,888 Expenses: Depreciation and amortization 47,427 45,046 137,855 133,912 Interest 27,071 24,243 77,573 72,956 Triple-net portfolio operating expenses 5,120 5,075 14,983 15,210 Senior housing - managed portfolio operating expenses 36,705 30,761 103,835 88,607 General and administrative 9,676 8,683 28,721 26,432 (Recovery of) provision for loan losses and other reserves (217) (26) (12) 1,890 Impairment of real estate 60,857 495 72,602 495 Total expenses 186,639 114,277 435,557 339,502 Other income (expense): Loss on extinguishment of debt (140) (913) (411) (1,760) Other income (expense) 994 277 (1,101) 386 Net (loss) gain on sales of real estate (80) 655 (4,581) (1,784) Total other income (expense) 774 19 (6,093) (3,158) (Loss) income before loss from unconsolidated joint ventures and income tax expense (45,101) 14,333 18,176 91,228 Loss from unconsolidated joint ventures (4,384) (4,018) (9,715) (178,817) Income tax expense (579) (92) (1,118) (1,314) Net (loss) income $ (50,064) $ 10,223 $ 7,343 $ (88,903) Net (loss) income, per: Basic common share $ (0.22) $ 0.05 $ 0.03 $ (0.41) Diluted common share $ (0.22) $ 0.05 $ 0.03 $ (0.41) Weighted-average number of common shares outstanding, basic 230,982,227 220,865,518 230,936,032 216,227,221 Weighted-average number of common shares outstanding, diluted 230,982,227 222,063,910 231,779,750 216,227,221 (1) See page 21 for additional details regarding Rental and related revenues.
21 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 FINANCIAL INFORMATION Consolidated Financial Statements Consolidated Statements of (Loss) Income - Supplemental Information Dollars in thousands Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cash rental income $ 92,966 $ 101,496 $ 288,532 $ 305,480 Straight-line rental income 2,006 3,391 7,042 11,114 Straight-line rental income receivable write-offs (16,606) (25,213) (17,068) (25,213) Above/below market lease amortization 1,569 1,081 4,730 3,985 Above/below market lease intangible write-offs — — 326 — Operating expense recoveries 4,279 4,612 13,706 14,167 Rental and related revenues $ 84,214 $ 85,367 $ 297,268 $ 309,533
22 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 FINANCIAL INFORMATION Consolidated Financial Statements Consolidated Balance Sheets Dollars in thousands, except per share data September 30, 2022 December 31, 2021 (unaudited) Assets Real estate investments, net of accumulated depreciation of $882,755 and $831,324 as of September 30, 2022 and December 31, 2021, respectively $ 5,018,903 $ 5,162,884 Loans receivable and other investments, net 390,275 399,086 Investment in unconsolidated joint ventures 207,616 96,680 Cash and cash equivalents 26,289 111,996 Restricted cash 4,859 3,890 Lease intangible assets, net 48,299 54,063 Accounts receivable, prepaid expenses and other assets, net 148,674 138,108 Total assets $ 5,844,915 $ 5,966,707 Liabilities Secured debt, net $ 49,706 $ 66,663 Revolving credit facility 138,551 — Term loans, net 524,457 594,246 Senior unsecured notes, net 1,734,228 1,733,566 Accounts payable and accrued liabilities 145,217 142,989 Lease intangible liabilities, net 44,023 49,713 Total liabilities 2,636,182 2,587,177 Equity Preferred stock, $0.01 par value; 10,000,000 shares authorized, zero shares issued and outstanding as of September 30, 2022 and December 31, 2021 — — Common stock, $0.01 par value; 500,000,000 shares authorized, 230,976,606 and 230,398,655 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively 2,310 2,304 Additional paid-in capital 4,484,769 4,482,451 Cumulative distributions in excess of net income (1,296,868) (1,095,204) Accumulated other comprehensive income (loss) 18,522 (10,021) Total equity 3,208,733 3,379,530 Total liabilities and equity $ 5,844,915 $ 5,966,707
23 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 FINANCIAL INFORMATION Consolidated Financial Statements Consolidated Statements of Cash Flows Dollars in thousands Nine Months Ended September 30, 2022 2021 Cash flows from operating activities: Net income (loss) $ 7,343 $ (88,903) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 137,855 133,912 Non-cash rental and related revenues 4,970 10,113 Non-cash interest income (1,683) (1,444) Non-cash interest expense 8,300 5,389 Stock-based compensation expense 5,367 6,987 Loss on extinguishment of debt 411 1,760 (Recovery of) provision for loan losses and other reserves (12) 1,890 Net loss on sales of real estate 4,581 1,784 Impairment of real estate 72,602 495 Other-than-temporary impairment of unconsolidated joint venture — 164,126 Loss from unconsolidated joint ventures 9,715 14,691 Other non-cash items 2,167 — Changes in operating assets and liabilities: Accounts receivable, prepaid expenses and other assets, net (5,631) 13,062 Accounts payable and accrued liabilities 2,161 (5,403) Net cash provided by operating activities 248,146 258,459 Cash flows from investing activities: Acquisition of real estate (83,985) (62,116) Origination and fundings of loans receivable (4,500) — Origination and fundings of preferred equity investments (5,813) (4,153) Additions to real estate (33,809) (29,278) Escrow deposits for potential investments (836) — Repayments of loans receivable 4,885 2,432 Repayments of preferred equity investments 4,173 683 Investment in unconsolidated joint venture (128,019) — Net proceeds from the sales of real estate 62,816 15,066 Net cash used in investing activities (185,088) (77,366) Cash flows from financing activities: Net borrowings from revolving credit facility 147,353 — Proceeds from issuance of senior unsecured notes — 791,520 Principal payments on term loans (63,750) (455,000) Principal payments on secured debt (17,030) (2,185) Payments of deferred financing costs (6) (7,444) Payment of contingent consideration (2,500) — Issuance of common stock, net (4,394) 172,188 Dividends paid on common stock (207,861) (194,311) Net cash (used in) provided by financing activities (148,188) 304,768 Net (decrease) increase in cash, cash equivalents and restricted cash (85,130) 485,861 Effect of foreign currency translation on cash, cash equivalents and restricted cash 392 34 Cash, cash equivalents and restricted cash, beginning of period 115,886 65,523 Cash, cash equivalents and restricted cash, end of period $ 31,148 $ 551,418 Supplemental disclosure of cash flow information: Interest paid $ 68,778 $ 66,051 Supplemental disclosure of non-cash investing activities: Decrease in loans receivable and other investments due to acquisition of real estate $ 14,311 $ —
24 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 FINANCIAL INFORMATION FFO, Normalized FFO, AFFO and Normalized AFFO (1) Funding for support payments did not require capital contributions from Sabra but rather were funded with proceeds received by our unconsolidated joint venture with Enlivant from TPG for the issuance of senior preferred interests for each of the three and nine months ended September 30, 2022 and with cash on hand at the joint venture for the nine months ended September 30, 2021. (2) FFO and AFFO for each of the three and nine months ended September 30, 2022 and 2021 includes $1.0 and $1.2 million, respectively, earned during the period related to legacy Care Capital Properties, Inc. investments. FFO for the nine months ended September 30, 2022, includes $2.2 million of foreign currency transaction loss related to our Canadian borrowings. In addition, other normalizing items for FFO and AFFO include triple- net operating expenses, net of recoveries. FFO, Normalized FFO, AFFO and Normalized AFFO Dollars in thousands, except per share data Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net (loss) income $ (50,064) $ 10,223 $ 7,343 $ (88,903) Add: Depreciation and amortization of real estate assets 47,427 45,046 137,855 133,912 Depreciation, amortization and impairment of real estate assets related to unconsolidated joint ventures 6,090 4,806 15,856 16,529 Net loss (gain) on sales of real estate 80 (655) 4,581 1,784 Net loss (gain) on sales of real estate related to unconsolidated joint ventures — 15 (220) 30 Impairment of real estate 60,857 495 72,602 495 Other-than-temporary impairment of unconsolidated joint ventures — — — 164,126 FFO $ 64,390 $ 59,930 $ 238,017 $ 227,973 Write-offs of cash and straight-line rental income receivable and lease intangibles 16,370 24,326 15,831 22,054 Lease termination income — — (2,338) — Loss on extinguishment of debt 140 913 411 1,760 (Recovery of) provision for credit and loan losses and other reserves (217) (26) (12) 1,890 Support payments paid to joint venture manager (1) 2,254 — 5,880 2,450 Other normalizing items (2) (65) 148 2,586 852 Normalized FFO $ 82,872 $ 85,291 $ 260,375 $ 256,979 FFO $ 64,390 $ 59,930 $ 238,017 $ 227,973 Stock-based compensation expense 2,117 2,428 5,367 6,987 Non-cash rental and related revenues 13,031 20,740 4,970 10,113 Non-cash interest income (589) (530) (1,683) (1,444) Non-cash interest expense 2,798 1,744 8,300 5,389 Non-cash portion of loss on extinguishment of debt 140 913 411 1,760 (Recovery of) provision for loan losses and other reserves (217) (26) (12) 1,890 Other adjustments related to unconsolidated joint ventures (2,378) (150) (4,056) (1,364) Other adjustments 36 (213) 2,430 320 AFFO $ 79,328 $ 84,836 $ 253,744 $ 251,624 Cash portion of lease termination income — — (2,338) — Write-off of cash rental income — — 71 — Support payments paid to joint venture manager (1) 2,254 — 5,880 2,450 Other normalizing items (2) (80) 405 250 963 Normalized AFFO $ 81,502 $ 85,241 $ 257,607 $ 255,037 Amounts per diluted common share: Net income (loss) $ (0.22) $ 0.05 $ 0.03 $ (0.41) FFO $ 0.28 $ 0.27 $ 1.03 $ 1.05 Normalized FFO $ 0.36 $ 0.38 $ 1.12 $ 1.18 AFFO $ 0.34 $ 0.38 $ 1.09 $ 1.15 Normalized AFFO $ 0.35 $ 0.38 $ 1.11 $ 1.17 Weighted average number of common shares outstanding, diluted: Net income (loss) 230,982,227 222,063,910 231,779,750 216,227,221 FFO and Normalized FFO 231,993,295 222,063,910 231,779,750 217,385,804 AFFO and Normalized AFFO 232,858,600 222,542,049 232,810,528 217,906,904
25 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 FINANCIAL INFORMATION Components of Net Asset Value (NAV) As of September 30, 2022 (1) Excludes one real estate property held for sale as of the end of the current period and assumes the pending transition of our North American Health Care portfolio to Ensign and Avamere was completed as of the end of the current period. (2) Excludes our unconsolidated joint venture with Enlivant which consists of 157 facilities and 6,996 units. (3) Amounts represent principal amounts due and exclude deferred financing costs, net and premiums/discounts, net. (4) Includes balances that impact cash or NOI and excludes non-cash items. (5) Book value is net of debt. Our share of the debt was $377.1 million as of September 30, 2022. (6) Includes $0.9 million related to one real estate property held for sale as of the end of the current period. Annualized Cash NOI (1) Dollars in thousands Skilled Nursing/Transitional Care $ 268,406 Senior Housing - Leased 41,924 Senior Housing - Managed Consolidated Portfolio 46,489 Senior Housing - Managed Unconsolidated Portfolio (2) 5,510 Behavioral Health 36,704 Specialty Hospitals and Other 17,889 Annualized Cash NOI (excluding loans receivable and other investments) $ 416,922 Obligations Dollars in thousands Secured debt (3) $ 50,609 Senior unsecured notes (3) 1,750,000 Revolving credit facility 138,551 Term loans (3) 527,225 Sabra’s share of the Sienna Joint Venture debt 19,216 Total Debt 2,485,601 Add (less): Cash and cash equivalents and restricted cash (31,148) Sabra’s share of the Sienna Joint Venture cash and cash equivalents and restricted cash (2,336) Accounts payable and accrued liabilities (4) 136,526 Net obligations $ 2,588,643 Other Assets Dollars in thousands Loans receivable and other investments, net $ 390,275 Investment in unconsolidated joint venture with Enlivant (5) 87,400 Accounts receivable, prepaid expenses and other assets, net (4)(6) 54,077 Total other assets $ 531,752 Common Shares Outstanding Total shares 230,976,606 We disclose components of our business relevant to calculate NAV. We consider NAV to be a useful supplemental measure that assists both management and investors to estimate the fair value of our Company. The calculation of NAV involves significant estimates and can be calculated using various methods. Each individual investor must determine the specific methodology, assumptions and estimates to use to arrive at an estimated NAV of the Company. The components of NAV do not consider potential changes in our investment portfolio. The components include non-GAAP financial measures, such as Cash NOI. Although these measures are not presented in accordance with GAAP, investors can use these non-GAAP financial measures as supplemental information to evaluate our business.
26 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 APPENDIX Disclaimer Disclaimer This supplement contains “forward-looking” information as that term is defined in 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: epidemic diseases, pandemics or other contagious diseases, including the ongoing impact of COVID-19, and measures intended to prevent their spread, and the related impact on our tenants, operators and Senior Housing - Managed communities; operational risks with respect to our Senior Housing - Managed communities; competitive conditions in our industry; the loss of key management personnel; uninsured or underinsured losses affecting our properties and the possibility of environmental compliance costs and liabilities; potential impairment charges and adjustments related to the accounting of our assets; the potential variability of our reported rental and related revenues as a result of Accounting Standards Update (“ASU”) 2016-02, Leases, as amended by subsequent ASUs; risks associated with our investment in our unconsolidated joint ventures; catastrophic weather and other natural or man-made disasters, the effects of climate change on our properties and a failure to implement sustainable and energy-efficient measures; increased operating costs for our tenants and operators, due to labor market challenges and macroeconomic factors such as inflation; increased healthcare regulation and enforcement; our tenants’ dependency on reimbursement from governmental and other third-party payor programs; the effect of our tenants declaring bankruptcy or becoming insolvent; our ability to find replacement tenants and the impact of unforeseen costs in acquiring new properties; the impact of litigation and rising insurance costs on the business of our tenants; the impact of required regulatory approvals of transfers of healthcare properties; environmental compliance costs and liabilities associated with real estate properties we own; our tenants’ or operators’ failure to adhere to applicable privacy and data security laws, or a material breach of our or our tenants’ or operators’ information technology; our concentration in the healthcare property sector, particularly in skilled nursing/transitional care facilities and senior housing communities, which makes our profitability more vulnerable to a downturn in a specific sector than if we were investing in multiple industries; the significant amount of and our ability to service our indebtedness; covenants in our debt agreements that may restrict our ability to pay dividends, make investments, incur additional indebtedness and refinance indebtedness on favorable terms; increases in market interest rates; adverse changes in our credit ratings; our ability to make dividend distributions at expected levels; our ability to raise capital through equity and debt financings; changes in foreign currency exchange rates and other risks associated with our ownership of property outside the U.S.; the relatively illiquid nature of real estate investments; our ability to maintain our status as a real estate investment trust (“REIT”) under the federal tax laws; compliance with REIT requirements and certain tax and tax regulatory matters related to our status as a REIT; changes in tax laws and regulations affecting REITs; the ownership limits and takeover defenses in our governing documents and under Maryland law, which may restrict change of control or business combination opportunities; and the exclusive forum provisions in our bylaws. Additional information concerning risks and uncertainties that could affect our business can be found in our filings with the Securities and Exchange Commission (the “SEC”), including in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021. 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: net operating income (“NOI”), Cash NOI, funds from operations (“FFO”), Normalized FFO, Adjusted FFO (“AFFO”), Normalized AFFO, FFO per diluted common share, Normalized FFO per diluted common share, AFFO per diluted common share, Normalized AFFO per diluted common share and Adjusted EBITDA (defined below). 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 on the Investors section of our website at https://ir.sabrahealth.com/investors/ financials/quarterly-results. Tenant, Operator and Borrower Information This supplement includes information regarding our tenants that lease properties from us and our operators and borrowers, most of which are not subject to SEC reporting requirements. The information related to our tenants, operators and borrowers that is provided in this supplement has been provided by, or derived from information provided by, such tenants, operators 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. Sabra Information 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 its website, www.sec.gov. For more information, contact Investor Relations at (888) 393-8248 or investorrelations@sabrahealth.com.
27 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 APPENDIX Reporting 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 (i) 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, (ii) exclude residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis and (iii) reflect the reduction in Avamere’s annual base rent to $30.7 million effective February 1, 2022. 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. Cash Net Operating Income (“Cash NOI”)* The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers Cash NOI an important supplemental measure because it allows investors, analysts and its management to evaluate the operating performance of its investments. The Company defines Cash NOI as total revenues less operating expenses and non-cash revenues and expenses. Cash NOI excludes all other financial statement amounts included in net income. Cash NOI Margin Cash NOI Margin is calculated as Cash NOI divided by resident fees and services. 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 Debt, Net The carrying amount 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.
28 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 APPENDIX Reporting Definitions Funds From Operations (“FFO”) and Adjusted Funds from Operations (“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 merger and acquisition costs, 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 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 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. Grant Income Grant income consists of funds specifically paid to communities in our Senior Housing - Managed portfolio from state or federal governments related to the pandemic and were incremental to the amounts that would have otherwise been received for providing care to residents. Investment Represents the carrying amount of real estate assets after adding back accumulated depreciation and amortization and excludes net intangible assets and liabilities. Market Capitalization Total common shares of Sabra outstanding multiplied by the closing price per common share as of a given period. 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.
29 SABRA 3Q 2022 SUPPLEMENTAL INFORMATION September 30, 2022 APPENDIX Reporting Definitions Normalized FFO and Normalized AFFO* Normalized FFO and Normalized AFFO represent FFO and AFFO, respectively, adjusted for certain income and expense items that the Company does not believe are indicative of its ongoing operating results. The Company considers Normalized FFO and Normalized AFFO to be useful measures to evaluate the Company’s operating results excluding these income and expense items to help investors compare the operating performance of the Company between periods or as compared to other companies. Normalized FFO and Normalized AFFO do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. Normalized FFO and Normalized AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of Normalized FFO and Normalized AFFO may not be comparable to Normalized FFO and Normalized AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define FFO and AFFO or Normalized FFO and Normalized AFFO differently than the Company does. Occupancy 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. REVPOR REVPOR represents the average revenues generated per occupied unit per month at Senior Housing - Managed communities for the period indicated. It is calculated as resident fees and services revenues, excluding Grant Income, divided by average monthly occupied unit days. REVPOR includes only Stabilized Facilities. Senior Housing Senior Housing communities include independent living, assisted living, continuing care retirement and memory care communities. Senior Housing - Managed Senior Housing communities operated by third-party property managers pursuant to property management agreements. 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 the period indicated. Skilled Mix includes only Stabilized Facilities and excludes facilities for which data is not available or meaningful. Skilled Nursing/Transitional Care Skilled Nursing/Transitional Care facilities include skilled nursing, transitional care, multi-license designation and mental health facilities. Specialty Hospitals and Other Includes acute care, long-term acute care and rehabilitation hospitals, facilities that provide residential services, which may include assistance with activities of daily living, and other facilities not classified as Skilled Nursing/Transitional Care, Senior Housing or Behavioral Health. Stabilized Facility At the time of acquisition, the Company classifies each facility as either stabilized or non-stabilized. In addition, the Company may classify a facility as non-stabilized after acquisition. Circumstances that could result in a facility being classified as non-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 are typically reclassified to stabilized upon the earlier of maintaining consistent occupancy (85% for Skilled Nursing/Transitional Care facilities and 90% for Senior Housing communities) or 24 months after the date of classification as non-stabilized. Stabilized Facilities exclude (i) facilities held for sale, (ii) strategic disposition candidates, (iii) facilities being transitioned to a new operator, (iv) facilities being transitioned from being leased by the Company to being operated by the Company and (v) leased facilities acquired during the three months preceding the period presented. *Non-GAAP Financial Measures Reconciliations, definitions and important discussions regarding the usefulness and limitations of the Non-GAAP Financial Measures used in this supplement can be found at https://ir.sabrahealth.com/investors/financials/quarterly-results.
Document
Reconciliations of Non-GAAP Financial Measures
September 30, 2022
(Unaudited)
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
FFO, Normalized FFO, AFFO and Normalized AFFO
(dollars in thousands, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Net (loss) income | $ | (50,064) | $ | 10,223 | $ | 7,343 | $ | (88,903) |
| Add: | ||||||||
| Depreciation and amortization of real estate assets | 47,427 | 45,046 | 137,855 | 133,912 | ||||
| Depreciation, amortization and impairment of real estate assets related to unconsolidated joint ventures | 6,090 | 4,806 | 15,856 | 16,529 | ||||
| Net loss (gain) on sales of real estate | 80 | (655) | 4,581 | 1,784 | ||||
| Net loss (gain) on sales of real estate related to unconsolidated joint ventures | — | 15 | (220) | 30 | ||||
| Impairment of real estate | 60,857 | 495 | 72,602 | 495 | ||||
| Other-than-temporary impairment of unconsolidated joint ventures | — | — | — | 164,126 | ||||
| FFO | $ | 64,390 | $ | 59,930 | $ | 238,017 | $ | 227,973 |
| Write-offs of cash and straight-line rental income receivable and lease intangibles | 16,370 | 24,326 | 15,831 | 22,054 | ||||
| Lease termination income | — | — | (2,338) | — | ||||
| Loss on extinguishment of debt | 140 | 913 | 411 | 1,760 | ||||
| (Recovery of) provision for credit and loan losses and other reserves | (217) | (26) | (12) | 1,890 | ||||
| Support payments paid to joint venture manager (1) | 2,254 | — | 5,880 | 2,450 | ||||
| Other normalizing items (2) | (65) | 148 | 2,586 | 852 | ||||
| Normalized FFO | $ | 82,872 | $ | 85,291 | $ | 260,375 | $ | 256,979 |
| FFO | $ | 64,390 | $ | 59,930 | $ | 238,017 | $ | 227,973 |
| Stock-based compensation expense | 2,117 | 2,428 | 5,367 | 6,987 | ||||
| Non-cash rental and related revenues | 13,031 | 20,740 | 4,970 | 10,113 | ||||
| Non-cash interest income | (589) | (530) | (1,683) | (1,444) | ||||
| Non-cash interest expense | 2,798 | 1,744 | 8,300 | 5,389 | ||||
| Non-cash portion of loss on extinguishment of debt | 140 | 913 | 411 | 1,760 | ||||
| (Recovery of) provision for loan losses and other reserves | (217) | (26) | (12) | 1,890 | ||||
| Other adjustments related to unconsolidated joint ventures | (2,378) | (150) | (4,056) | (1,364) | ||||
| Other adjustments | 36 | (213) | 2,430 | 320 | ||||
| AFFO | $ | 79,328 | $ | 84,836 | $ | 253,744 | $ | 251,624 |
| Cash portion of lease termination income | — | — | (2,338) | — | ||||
| Write-off of cash rental income | — | — | 71 | — | ||||
| Support payments paid to joint venture manager (1) | 2,254 | — | 5,880 | 2,450 | ||||
| Other normalizing items (2) | (80) | 405 | 250 | 963 | ||||
| Normalized AFFO | $ | 81,502 | $ | 85,241 | $ | 257,607 | $ | 255,037 |
| Amounts per diluted common share: | ||||||||
| Net income (loss) | $ | (0.22) | $ | 0.05 | $ | 0.03 | $ | (0.41) |
| FFO | $ | 0.28 | $ | 0.27 | $ | 1.03 | $ | 1.05 |
| Normalized FFO | $ | 0.36 | $ | 0.38 | $ | 1.12 | $ | 1.18 |
| AFFO | $ | 0.34 | $ | 0.38 | $ | 1.09 | $ | 1.15 |
| Normalized AFFO | $ | 0.35 | $ | 0.38 | $ | 1.11 | $ | 1.17 |
| Weighted average number of common shares outstanding, diluted: | ||||||||
| Net income (loss) | 230,982,227 | 222,063,910 | 231,779,750 | 216,227,221 | ||||
| FFO and Normalized FFO | 231,993,295 | 222,063,910 | 231,779,750 | 217,385,804 | ||||
| AFFO and Normalized AFFO | 232,858,600 | 222,542,049 | 232,810,528 | 217,906,904 |
(1) Funding for support payments did not require capital contributions from Sabra but rather were funded with proceeds received by our unconsolidated joint venture with Enlivant from TPG for the issuance of senior preferred interests for each of the three and nine months ended September 30, 2022 and with cash on hand at the joint venture for the nine months ended September 30, 2021.
(2) FFO and AFFO for each of the three and nine months ended September 30, 2022 and 2021 includes $1.0 and $1.2 million, respectively, earned during the period related to legacy Care Capital Properties, Inc. investments. FFO for the nine months ended September 30, 2022, includes $2.2 million of foreign currency transaction loss related to our Canadian borrowings. In addition, other normalizing items for FFO and AFFO include triple-net operating expenses, net of recoveries.
See reporting definitions. 2
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA
Net Debt and Net Debt to Adjusted EBITDA
(in thousands)
| Trailing Twelve Months Ended | Year Ended | |||
|---|---|---|---|---|
| September 30, 2022 | December 31, 2021 | |||
| Net loss | $ | (17,010) | $ | (113,256) |
| Interest | 103,249 | 98,632 | ||
| Income tax expense | 1,649 | 1,845 | ||
| Depreciation and amortization | 182,934 | 178,991 | ||
| EBITDA | $ | 270,822 | $ | 166,212 |
| Loss from unconsolidated joint ventures | 22,979 | 27,955 | ||
| Other-than-temporary impairment of unconsolidated joint ventures | — | 164,126 | ||
| Stock-based compensation expense | 6,294 | 7,914 | ||
| Merger and acquisition costs | 135 | 279 | ||
| Provision for loan losses and other reserves and non-cash revenue write-offs | 37,708 | 47,893 | ||
| Impairment of real estate | 81,606 | 9,499 | ||
| Loss on extinguishment of debt | 33,273 | 34,622 | ||
| Other expense | 3,533 | 1,813 | ||
| Lease termination income | (2,338) | — | ||
| Net gain on sales of real estate | (9,504) | (12,301) | ||
| Adjusted EBITDA (1) | $ | 444,508 | $ | 448,012 |
| Annualizing adjustments (2) | (880) | 14,695 | ||
| Annualized Adjusted EBITDA (3) | $ | 443,628 | $ | 462,707 |
| September 30, 2022 | December 31, 2021 | |||
| Secured debt | $ | 50,609 | $ | 67,602 |
| Revolving credit facility | 138,551 | — | ||
| Term loans | 527,225 | 598,438 | ||
| Senior unsecured notes | 1,750,000 | 1,750,000 | ||
| Consolidated Debt | 2,466,385 | 2,416,040 | ||
| Cash and cash equivalents | (26,289) | (111,996) | ||
| Net Debt | $ | 2,440,096 | $ | 2,304,044 |
| September 30, 2022 | December 31, 2021 | |||
| Net Debt | $ | 2,440,096 | $ | 2,304,044 |
| Annualized Adjusted EBITDA | $ | 443,628 | $ | 462,707 |
| Net Debt to Adjusted EBITDA | 5.50x | 4.98x |
(1) 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.
(2) Annualizing adjustments give effect to the acquisitions and dispositions completed during the twelve months ended for the respective period as though such acquisitions and dispositions were completed as of the beginning of the period.
(3) Annualized Adjusted EBITDA is calculated as Adjusted EBITDA as adjusted to give effect to the adjustments described in footnote 2 above.
See reporting definitions. 3
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Consolidated Statements of Income (Loss)
Supplemental Information
(in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Cash rental income | $ | 92,966 | $ | 101,496 | $ | 288,532 | $ | 305,480 |
| Straight-line rental income | 2,006 | 3,391 | 7,042 | 11,114 | ||||
| Straight-line rental income receivable write-offs | (16,606) | (25,213) | (17,068) | (25,213) | ||||
| Above/below market lease amortization | 1,569 | 1,081 | 4,730 | 3,985 | ||||
| Above/below market lease intangible write-offs | — | — | 326 | — | ||||
| Operating expense recoveries | 4,279 | 4,612 | 13,706 | 14,167 | ||||
| Rental and related revenues | $ | 84,214 | $ | 85,367 | $ | 297,268 | $ | 309,533 |
See reporting definitions. 4
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Senior Housing - Managed Revenues
(in thousands)
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2022 | June 30, 2022 | March 31, 2022 | December 31, 2021 | September 30, 2021 | ||||||
| Revenues: (1) | ||||||||||
| Resident fees and services | $ | 47,610 | $ | 43,988 | $ | 42,040 | $ | 40,323 | $ | 39,604 |
| Resident fees and services not included in same store | (4,258) | (1,250) | (911) | — | — | |||||
| Same store resident fees and services | $ | 43,352 | $ | 42,738 | $ | 41,129 | $ | 40,323 | $ | 39,604 |
(1) Revenues have been adjusted for changes in the foreign currency exchange rate where applicable.
See reporting definitions. 5
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Property Type
(in thousands)
| Three Months Ended September 30, 2022 | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Skilled Nursing/ Transitional Care | Senior Housing | Behavioral Health | Specialty Hospitals and Other | ||||||||||||||||||||||
| Senior Housing - Leased | Senior Housing - Managed Consolidated | Senior Housing - Managed Unconsolidated (1) | Total Senior Housing | Other | Corporate | Total | |||||||||||||||||||
| Net (loss) income | $ | (33,921) | $ | 4,602 | $ | 677 | $ | (4,384) | $ | 895 | $ | 6,639 | $ | 3,213 | $ | 8,940 | $ | (35,830) | $ | (50,064) | |||||
| Adjustments: | |||||||||||||||||||||||||
| Depreciation and amortization | 27,586 | 5,068 | 10,228 | — | 15,296 | 3,062 | 1,461 | — | 22 | 47,427 | |||||||||||||||
| Interest | 214 | 233 | — | — | 233 | — | — | — | 26,624 | 27,071 | |||||||||||||||
| General and administrative | — | — | — | — | — | — | — | — | 9,676 | 9,676 | |||||||||||||||
| Recovery of loan losses and other reserves | — | — | — | — | — | — | — | — | (217) | (217) | |||||||||||||||
| Impairment of real estate | 60,857 | — | — | — | — | — | — | — | — | 60,857 | |||||||||||||||
| Loss on extinguishment of debt | — | — | — | — | — | — | — | — | 140 | 140 | |||||||||||||||
| Other income | — | — | — | — | — | — | — | — | (994) | (994) | |||||||||||||||
| Net loss on sales of real estate | 80 | — | — | — | — | — | — | — | — | 80 | |||||||||||||||
| Loss from unconsolidated JV | — | — | — | 4,384 | 4,384 | — | — | — | — | 4,384 | |||||||||||||||
| Income tax expense | — | — | — | — | — | — | — | — | 579 | 579 | |||||||||||||||
| Sabra’s share of unconsolidated JV Net Operating Income | — | — | — | 4,160 | 4,160 | — | — | — | — | 4,160 | |||||||||||||||
| Net Operating Income | $ | 54,816 | $ | 9,903 | $ | 10,905 | $ | 4,160 | $ | 24,968 | $ | 9,701 | $ | 4,674 | $ | 8,940 | $ | — | $ | 103,099 | |||||
| Non-cash revenue and expense adjustments | 13,304 | 263 | — | — | 263 | (304) | (210) | (589) | — | 12,464 | |||||||||||||||
| Cash Net Operating Income | $ | 68,120 | $ | 10,166 | $ | 10,905 | $ | 4,160 | $ | 25,231 | $ | 9,397 | $ | 4,464 | $ | 8,351 | $ | — | $ | 115,563 | |||||
| Cash Net Operating Income not included in same store | (691) | (205) | (1,026) | (4,160) | (5,391) | (10) | (8) | ||||||||||||||||||
| Same store Cash Net Operating Income | $ | 67,429 | $ | 9,961 | $ | 9,879 | $ | — | $ | 19,840 | $ | 9,387 | $ | 4,456 |
(1) Net Operating Income and Cash Net Operating Income include $0.1 million of Grant Income.
See reporting definitions. 6
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Property Type
(in thousands)
| Three Months Ended June 30, 2022 | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Skilled Nursing/ Transitional Care | Senior Housing | Behavioral Health | Specialty Hospitals and Other | ||||||||||||||||||||||
| Senior Housing - Leased | Senior Housing - Managed Consolidated (1) | Senior Housing - Managed Unconsolidated (2) | Total Senior Housing | Other | Corporate | Total | |||||||||||||||||||
| Net income (loss) | $ | 32,201 | $ | 3,742 | $ | 820 | $ | (2,529) | $ | 2,033 | $ | 6,609 | $ | 3,207 | $ | 8,653 | $ | (35,898) | $ | 16,805 | |||||
| Adjustments: | |||||||||||||||||||||||||
| Depreciation and amortization | 26,214 | 5,246 | 9,290 | — | 14,536 | 2,939 | 1,461 | — | 22 | 45,172 | |||||||||||||||
| Interest | 216 | 235 | — | — | 235 | — | — | — | 25,079 | 25,530 | |||||||||||||||
| General and administrative | — | — | — | — | — | — | — | — | 8,649 | 8,649 | |||||||||||||||
| Recovery of loan losses and other reserves | — | — | — | — | — | — | — | — | (270) | (270) | |||||||||||||||
| Impairment of real estate | 11,745 | — | — | — | — | — | — | — | — | 11,745 | |||||||||||||||
| Other expense | — | — | — | — | — | — | — | — | 2,163 | 2,163 | |||||||||||||||
| Net loss on sales of real estate | 2,615 | 1,886 | — | — | 1,886 | — | — | — | — | 4,501 | |||||||||||||||
| Loss from unconsolidated JV | — | — | — | 2,529 | 2,529 | — | — | — | — | 2,529 | |||||||||||||||
| Income tax expense | — | — | — | — | — | — | — | — | 255 | 255 | |||||||||||||||
| Sabra’s share of unconsolidated JV Net Operating Income | — | — | — | 5,055 | 5,055 | — | — | — | — | 5,055 | |||||||||||||||
| Net Operating Income | $ | 72,991 | $ | 11,109 | $ | 10,110 | $ | 5,055 | $ | 26,274 | $ | 9,548 | $ | 4,668 | $ | 8,653 | $ | — | $ | 122,134 | |||||
| Non-cash revenue and expense adjustments | (2,592) | (436) | — | — | (436) | (319) | (216) | (547) | — | (4,110) | |||||||||||||||
| Foreign exchange rate adjustment | — | — | (45) | — | (45) | — | — | — | — | (45) | |||||||||||||||
| Cash Net Operating Income | $ | 70,399 | $ | 10,673 | $ | 10,065 | $ | 5,055 | $ | 25,793 | $ | 9,229 | $ | 4,452 | $ | 8,106 | $ | — | $ | 117,979 | |||||
| Cash Net Operating Income not included in same store | (1,049) | (823) | (67) | (5,055) | (5,945) | (3) | (4) | ||||||||||||||||||
| Same store Cash Net Operating Income | $ | 69,350 | $ | 9,850 | $ | 9,998 | $ | — | $ | 19,848 | $ | 9,226 | $ | 4,448 |
(1) Net Operating Income, Cash Net Operating Income and Same store Cash Net Operating Income include $0.1 million of Grant Income.
(2) Net Operating Income and Cash Net Operating Income include $3.4 million of Grant Income.
See reporting definitions. 7
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Property Type
(in thousands)
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Skilled Nursing/ Transitional Care | Senior Housing | Behavioral Health | Specialty Hospitals and Other | ||||||||||||||||||||||
| Senior Housing - Leased | Senior Housing - Managed Consolidated | Senior Housing - Managed Unconsolidated | Total Senior Housing | Other | Corporate | Total | |||||||||||||||||||
| Net income (loss) | $ | 51,927 | $ | 6,797 | $ | (93) | $ | (2,802) | $ | 3,902 | $ | 6,314 | $ | 3,224 | $ | 10,992 | $ | (35,757) | $ | 40,602 | |||||
| Adjustments: | |||||||||||||||||||||||||
| Depreciation and amortization | 26,303 | 5,340 | 9,216 | — | 14,556 | 2,917 | 1,460 | — | 20 | 45,256 | |||||||||||||||
| Interest | 217 | 376 | — | — | 376 | — | — | — | 24,379 | 24,972 | |||||||||||||||
| General and administrative | — | — | — | — | — | — | — | — | 10,396 | 10,396 | |||||||||||||||
| Provision for loan losses and other reserves | — | — | — | — | — | — | — | — | 475 | 475 | |||||||||||||||
| Loss on extinguishment of debt | — | — | — | — | — | — | — | — | 271 | 271 | |||||||||||||||
| Other expense | — | — | — | — | — | — | — | — | (68) | (68) | |||||||||||||||
| Loss from unconsolidated JV | — | — | — | 2,802 | 2,802 | — | — | — | — | 2,802 | |||||||||||||||
| Income tax expense | — | — | — | — | — | — | — | — | 284 | 284 | |||||||||||||||
| Sabra’s share of unconsolidated JV Net Operating Income | — | — | — | 3,543 | 3,543 | — | — | — | — | 3,543 | |||||||||||||||
| Net Operating Income | $ | 78,447 | $ | 12,513 | $ | 9,123 | $ | 3,543 | $ | 25,179 | $ | 9,231 | $ | 4,684 | $ | 10,992 | $ | — | $ | 128,533 | |||||
| Non-cash revenue and expense adjustments | (2,947) | (935) | — | — | (935) | (342) | (228) | (547) | — | (4,999) | |||||||||||||||
| Foreign exchange rate adjustment | — | — | (54) | — | (54) | — | — | — | — | (54) | |||||||||||||||
| Cash Net Operating Income | $ | 75,500 | $ | 11,578 | $ | 9,069 | $ | 3,543 | $ | 24,190 | $ | 8,889 | $ | 4,456 | $ | 10,445 | $ | — | $ | 123,480 | |||||
| Cash Net Operating Income not included in same store | (184) | ||||||||||||||||||||||||
| Same store Cash Net Operating Income | $ | 8,885 |
See reporting definitions. 8
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Property Type
(in thousands)
| Three Months Ended December 31, 2021 | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Skilled Nursing/ Transitional Care | Senior Housing | Behavioral Health | Specialty Hospitals and Other | ||||||||||||||||||||||
| Senior Housing - Leased | Senior Housing - Managed Consolidated | Senior Housing - Managed Unconsolidated | Total Senior Housing | Other | Corporate | Total | |||||||||||||||||||
| Net income (loss) | $ | 26,649 | $ | 9,213 | $ | (626) | $ | (13,264) | $ | (4,677) | $ | 7,354 | $ | 7,135 | $ | 7,940 | $ | (68,754) | $ | (24,353) | |||||
| Adjustments: | |||||||||||||||||||||||||
| Depreciation and amortization | 26,302 | 5,353 | 8,787 | — | 14,140 | 3,124 | 1,494 | — | 19 | 45,079 | |||||||||||||||
| Interest | 229 | 400 | — | — | 400 | — | — | — | 25,047 | 25,676 | |||||||||||||||
| General and administrative | — | — | — | — | — | — | — | — | 8,237 | 8,237 | |||||||||||||||
| Recovery of loan losses and other reserves | — | — | — | — | — | — | — | — | 2,045 | 2,045 | |||||||||||||||
| Impairment of real estate | 9,004 | — | — | — | — | — | — | — | 9,004 | ||||||||||||||||
| Loss on extinguishment of debt | — | — | — | — | — | — | — | — | 32,862 | 32,862 | |||||||||||||||
| Other income | — | — | — | — | — | — | — | — | 13 | 13 | |||||||||||||||
| Net gain on sales of real estate | (7,153) | (2,287) | — | — | (2,287) | (816) | (3,829) | — | — | (14,085) | |||||||||||||||
| Loss from unconsolidated JV | — | — | — | 13,264 | 13,264 | — | — | — | — | 13,264 | |||||||||||||||
| Income tax expense | — | — | — | — | — | — | — | — | 531 | 531 | |||||||||||||||
| Sabra’s share of unconsolidated JV Net Operating Income | — | — | — | (4,240) | (4,240) | — | — | — | — | (4,240) | |||||||||||||||
| Net Operating Income | $ | 55,031 | $ | 12,679 | $ | 8,161 | $ | (4,240) | $ | 16,600 | $ | 9,662 | $ | 4,800 | $ | 7,940 | $ | — | $ | 94,033 | |||||
| Non-cash revenue and expense adjustments | 16,695 | (582) | — | — | (582) | (140) | (240) | (544) | — | 15,189 | |||||||||||||||
| Foreign exchange rate adjustment | — | — | (59) | — | (59) | — | — | — | — | (59) | |||||||||||||||
| Cash Net Operating Income | $ | 71,726 | $ | 12,097 | $ | 8,102 | $ | (4,240) | $ | 15,959 | $ | 9,522 | $ | 4,560 | $ | 7,396 | $ | — | $ | 109,163 | |||||
| Cash Net Operating Income not included in same store | — | ||||||||||||||||||||||||
| Same store Cash Net Operating Income | $ | 8,102 |
See reporting definitions. 9
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Property Type
(in thousands)
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Skilled Nursing/ Transitional Care | Senior Housing | Behavioral Health | Specialty Hospitals and Other | ||||||||||||||||||||||
| Senior Housing - Leased | Senior Housing - Managed Consolidated | Senior Housing - Managed Unconsolidated | Total Senior Housing | Other | Corporate | Total | |||||||||||||||||||
| Net income (loss) | $ | 26,977 | $ | 6,512 | $ | 300 | $ | (4,018) | $ | 2,794 | $ | 6,636 | $ | 3,356 | $ | 3,405 | $ | (32,945) | $ | 10,223 | |||||
| Adjustments: | |||||||||||||||||||||||||
| Depreciation and amortization | 26,634 | 5,234 | 8,557 | — | 13,791 | 3,093 | 1,510 | — | 18 | 45,046 | |||||||||||||||
| Interest | 297 | 404 | — | — | 404 | — | — | — | 23,542 | 24,243 | |||||||||||||||
| General and administrative | — | — | — | — | — | — | — | — | 8,683 | 8,683 | |||||||||||||||
| Recovery of loan losses and other reserves | — | — | — | — | — | — | — | — | (26) | (26) | |||||||||||||||
| Impairment of real estate | 312 | 183 | — | — | 183 | — | — | — | 495 | ||||||||||||||||
| Loss on extinguishment of debt | — | — | — | — | — | — | — | — | 913 | 913 | |||||||||||||||
| Other expense | — | — | — | — | — | — | — | — | (277) | (277) | |||||||||||||||
| Net (gain) loss on sales of real estate | — | (856) | 201 | — | (655) | — | — | — | — | (655) | |||||||||||||||
| Loss from unconsolidated JV | — | — | — | 4,018 | 4,018 | — | — | — | — | 4,018 | |||||||||||||||
| Income tax expense | — | — | — | — | — | — | — | — | 92 | 92 | |||||||||||||||
| Sabra’s share of unconsolidated JV Net Operating Income | — | — | — | 3,521 | 3,521 | — | — | — | — | 3,521 | |||||||||||||||
| Net Operating Income | $ | 54,220 | $ | 11,477 | $ | 9,058 | $ | 3,521 | $ | 24,056 | $ | 9,729 | $ | 4,866 | $ | 3,405 | $ | — | $ | 96,276 | |||||
| Non-cash revenue and expense adjustments | 20,420 | 935 | — | — | 935 | (313) | (277) | (530) | — | 20,235 | |||||||||||||||
| Foreign exchange rate adjustment | — | — | (58) | — | (58) | — | — | — | — | (58) | |||||||||||||||
| Cash Net Operating Income | $ | 74,640 | $ | 12,412 | $ | 9,000 | $ | 3,521 | $ | 24,933 | $ | 9,416 | $ | 4,589 | $ | 2,875 | $ | — | $ | 116,453 | |||||
| Cash Net Operating Income not included in same store | — | ||||||||||||||||||||||||
| Same store Cash Net Operating Income | $ | 9,000 |
See reporting definitions. 10
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Property Type
(in thousands)
| Nine Months Ended September 30, 2022 | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Skilled Nursing/ Transitional Care | Senior Housing | Behavioral Health | Specialty Hospitals and Other | ||||||||||||||||||||||
| Senior Housing - Leased | Senior Housing - Managed Consolidated (1) | Senior Housing - Managed Unconsolidated (2) | Total Senior Housing | Other | Corporate | Total | |||||||||||||||||||
| Net income (loss) | $ | 50,207 | $ | 15,141 | $ | 1,404 | $ | (9,715) | $ | 6,830 | $ | 19,562 | $ | 9,644 | $ | 28,585 | $ | (107,485) | $ | 7,343 | |||||
| Adjustments: | |||||||||||||||||||||||||
| Depreciation and amortization | 80,103 | 15,654 | 28,734 | — | 44,388 | 8,918 | 4,382 | — | 64 | 137,855 | |||||||||||||||
| Interest | 647 | 844 | — | — | 844 | — | — | — | 76,082 | 77,573 | |||||||||||||||
| General and administrative | — | — | — | — | — | — | — | — | 28,721 | 28,721 | |||||||||||||||
| Recovery of loan losses and other reserves | — | — | — | — | — | — | — | — | (12) | (12) | |||||||||||||||
| Impairment of real estate | 72,602 | — | — | — | — | — | — | — | — | 72,602 | |||||||||||||||
| Loss on extinguishment of debt | — | — | — | — | — | — | — | — | 411 | 411 | |||||||||||||||
| Other expense | — | — | — | — | — | — | — | — | 1,101 | 1,101 | |||||||||||||||
| Net loss on sales of real estate | 2,695 | 1,886 | — | — | 1,886 | — | — | — | — | 4,581 | |||||||||||||||
| Loss from unconsolidated JV | — | — | — | 9,715 | 9,715 | — | — | — | — | 9,715 | |||||||||||||||
| Income tax expense | — | — | — | — | — | — | — | — | 1,118 | 1,118 | |||||||||||||||
| Sabra’s share of unconsolidated JV Net Operating Income | — | — | — | 12,758 | 12,758 | — | — | — | — | 12,758 | |||||||||||||||
| Net Operating Income | $ | 206,254 | $ | 33,525 | $ | 30,138 | $ | 12,758 | $ | 76,421 | $ | 28,480 | $ | 14,026 | $ | 28,585 | $ | — | $ | 353,766 | |||||
| Non-cash revenue and expense adjustments | 7,766 | (1,107) | — | — | (1,107) | (966) | (655) | (1,683) | — | 3,355 | |||||||||||||||
| Cash Net Operating Income | $ | 214,020 | $ | 32,418 | $ | 30,138 | $ | 12,758 | $ | 75,314 | $ | 27,514 | $ | 13,371 | $ | 26,902 | $ | — | $ | 357,121 | |||||
| Annualizing adjustments (3) | 54,386 | 9,506 | 16,351 | (7,248) | 18,609 | 9,190 | 4,518 | 4,542 | — | 91,245 | |||||||||||||||
| Annualized Cash Net Operating Income | $ | 268,406 | $ | 41,924 | $ | 46,489 | $ | 5,510 | $ | 93,923 | $ | 36,704 | $ | 17,889 | $ | 31,444 | $ | — | $ | 448,366 | |||||
| Reallocation adjustments (4) | 828 | 4,413 | — | — | 4,413 | 23,676 | — | (28,917) | — | — | |||||||||||||||
| Annualized Cash Net Operating Income, as adjusted | $ | 269,234 | $ | 46,337 | $ | 46,489 | $ | 5,510 | $ | 98,336 | $ | 60,380 | $ | 17,889 | $ | 2,527 | $ | — | $ | 448,366 |
(1) Net Operating Income and Cash Net Operating Income include $0.1 million of Grant Income.
(2) Net Operating Income and Cash Net Operating Income include $3.5 million of Grant Income.
(3) Represents the annual effect of acquisitions, dispositions, lease modifications and scheduled rent increases completed during the period and mathematical adjustments needed to make Cash Net Operating Income for the period representative of Cash Net Operating Income for a full year. Annualizing adjustments also include the removal of triple-net operating expenses (net of recoveries), the Enlivant Joint Venture Cash NOI and the residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis, as well as adjustments to reflect the reduction in Avamere's annual base rent to $30.7 million effective February 1, 2022 and the pending transition of our North American portfolio to Ensign and Avamere.
(4) Adjustments to reflect Annualized Cash Net Operating Income from sales-type lease, mortgage and construction loans receivable and preferred equity investments in the related asset class of the underlying real estate.
See reporting definitions. 11
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Payor Source
(in thousands)
| Nine Months Ended September 30, 2022 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Private Payors (1) | Non-Private Payors | Other | Senior Housing - Managed Unconsolidated (2) | Corporate | Total | |||||||
| Net income (loss) | $ | 45,851 | $ | 49,672 | $ | 28,585 | $ | (9,280) | $ | (107,485) | $ | 7,343 |
| Adjustments: | ||||||||||||
| Depreciation and amortization | 66,415 | 71,376 | — | — | 64 | 137,855 | ||||||
| Interest | 903 | 588 | — | — | 76,082 | 77,573 | ||||||
| General and administrative | — | — | — | — | 28,721 | 28,721 | ||||||
| Recovery of loan losses and other reserves | — | — | — | — | (12) | (12) | ||||||
| Impairment of real estate | 9,013 | 63,589 | — | — | — | 72,602 | ||||||
| Loss on extinguishment of debt | — | — | — | — | 411 | 411 | ||||||
| Other expense | — | — | — | — | 1,101 | 1,101 | ||||||
| Net loss on sales of real estate | 2,379 | 2,202 | — | — | — | 4,581 | ||||||
| Loss from unconsolidated JV | 435 | — | — | 9,280 | — | 9,715 | ||||||
| Income tax expense | — | — | — | — | 1,118 | 1,118 | ||||||
| Sabra’s share of unconsolidated JV Net Operating Income | 2,051 | — | — | 10,707 | — | 12,758 | ||||||
| Net Operating Income | $ | 127,047 | $ | 187,427 | $ | 28,585 | $ | 10,707 | $ | — | $ | 353,766 |
| Non-cash revenue and expense adjustments | (952) | 5,990 | (1,683) | — | — | 3,355 | ||||||
| Cash Net Operating Income | $ | 126,095 | $ | 193,417 | $ | 26,902 | $ | 10,707 | $ | — | $ | 357,121 |
| Annualizing adjustments (3) | 46,735 | 50,675 | 4,542 | (10,707) | — | 91,245 | ||||||
| Annualized Cash Net Operating Income | $ | 172,830 | $ | 244,092 | $ | 31,444 | $ | — | $ | — | $ | 448,366 |
(1) Net Operating Income and Cash Net Operating Income include $0.1 million of Grant Income.
(2) Reflects our unconsolidated joint venture with Enlivant which consists of 157 facilities and 6,996 units. Net Operating Income and Cash Net Operating Income include $3.5 million of Grant Income.
(3) Represents the annual effect of acquisitions, dispositions, lease modifications and scheduled rent increases completed during the period and mathematical adjustments needed to make Cash Net Operating Income for the period representative of Cash Net Operating Income for a full year. Annualizing adjustments also include the removal of triple-net operating expenses (net of recoveries), the Enlivant Joint Venture Cash NOI and the residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis, as well as an adjustment to reflect the reduction in Avamere's annual base rent to $30.7 million effective February 1, 2022 and the pending transition of our North American portfolio to Ensign and Avamere.
See reporting definitions. 12
SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Relationship
(in thousands)
| Nine Months Ended September 30, 2022 | ||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Signature Healthcare | Avamere Family of Companies | The Ensign Group | Signature Behavioral | Recovery Centers of America | Holiday AL Holdings LP | Cadia Healthcare | Leo Brown Group | The McGuire Group | CommuniCare | All Other Relationships (1) | Corporate | Total | ||||||||||||||
| Net income (loss) | $ | 15,523 | $ | 19,306 | $ | 6,321 | $ | 17,334 | $ | 17,179 | $ | 1,879 | $ | (49,887) | $ | 6,779 | $ | 10,432 | $ | 5,298 | $ | 64,664 | $ | (107,485) | $ | 7,343 |
| Adjustments: | ||||||||||||||||||||||||||
| Depreciation and amortization | 10,741 | 10,238 | 9,533 | 6,726 | 908 | 15,105 | 8,018 | 5,388 | 5,345 | 3,403 | 62,386 | 64 | 137,855 | |||||||||||||
| Interest | — | — | — | — | — | — | — | 370 | — | — | 1,121 | 76,082 | 77,573 | |||||||||||||
| General and administrative | — | — | — | — | — | — | — | — | — | — | — | 28,721 | 28,721 | |||||||||||||
| Recovery of loan losses and other reserves | — | — | — | — | — | — | — | — | — | — | — | (12) | (12) | |||||||||||||
| Impairment of real estate | — | — | — | — | — | — | 57,796 | — | — | 3,061 | 11,745 | — | 72,602 | |||||||||||||
| Loss on extinguishment of debt | — | — | — | — | — | — | — | — | — | — | — | 411 | 411 | |||||||||||||
| Other expense | — | — | — | — | — | — | — | — | — | — | — | 1,101 | 1,101 | |||||||||||||
| Net loss on sales of real estate | — | — | — | — | — | — | — | — | — | — | 4,581 | — | 4,581 | |||||||||||||
| Loss from unconsolidated JV | — | — | — | — | — | — | — | — | — | — | 9,715 | — | 9,715 | |||||||||||||
| Income tax expense | — | — | — | — | — | — | — | — | — | — | — | 1,118 | 1,118 | |||||||||||||
| Sabra’s share of unconsolidated JV Net Operating Income | — | — | — | — | — | — | — | — | — | — | 12,758 | — | 12,758 | |||||||||||||
| Net Operating Income | $ | 26,264 | $ | 29,544 | $ | 15,854 | $ | 24,060 | $ | 18,087 | $ | 16,984 | $ | 15,927 | $ | 12,537 | $ | 15,777 | $ | 11,762 | $ | 166,970 | $ | — | $ | 353,766 |
| Non-cash revenue and expense adjustments | 5 | 2,253 | 12,211 | (828) | (175) | — | (673) | (1,153) | (3,404) | 426 | (5,307) | — | 3,355 | |||||||||||||
| Cash Net Operating Income | $ | 26,269 | $ | 31,797 | $ | 28,065 | $ | 23,232 | $ | 17,912 | $ | 16,984 | $ | 15,254 | $ | 11,384 | $ | 12,373 | $ | 12,188 | $ | 161,663 | $ | — | $ | 357,121 |
| Annualizing adjustments (2) | 12,835 | 4,003 | 6,449 | 8,083 | 5,976 | 6,434 | 5,501 | 6,696 | 4,405 | 3,835 | 27,028 | — | 91,245 | |||||||||||||
| Annualized Cash Net Operating Income | $ | 39,104 | $ | 35,800 | $ | 34,514 | $ | 31,315 | $ | 23,888 | $ | 23,418 | $ | 20,755 | $ | 18,080 | $ | 16,778 | $ | 16,023 | $ | 188,691 | $ | — | $ | 448,366 |
(1) Net Operating Income and Cash Net Operating Income include $3.6 million of Grant Income.
(2) Represents the annual effect of acquisitions, dispositions, lease modifications and scheduled rent increases completed during the period and mathematical adjustments needed to make Cash Net Operating Income for the period representative of Cash Net Operating Income for a full year. Annualizing adjustments also include the removal of triple-net operating expenses (net of recoveries), the Enlivant Joint Venture Cash NOI and the residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis, as well as an adjustment to reflect the reduction in Avamere's annual base rent to $30.7 million effective February 1, 2022 and the pending transition of our North American portfolio to Ensign and Avamere.
See reporting definitions. 13
SABRA HEALTH CARE REIT, INC.
REPORTING 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 (i) 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, (ii) exclude residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis and (iii) reflect the reduction in Avamere’s annual base rent to $30.7 million effective February 1, 2022.
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.
Cash Net Operating Income (“Cash NOI”). The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers Cash NOI an important supplemental measure because it allows investors, analysts and its management to evaluate the operating performance of its investments. The Company defines Cash NOI as total revenues less operating expenses and non-cash revenues and expenses. Cash NOI excludes all other financial statement amounts included in net income.
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.
Funds From Operations (“FFO”) and Adjusted Funds from Operations (“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 merger and acquisition costs, 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 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 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.
Grant Income. Grant Income consists of funds specifically paid to communities in our Senior Housing - Managed portfolio from state or federal governments related to the pandemic and were incremental to the amounts that would have otherwise been received for providing care to residents.
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.
See reporting definitions. 14
SABRA HEALTH CARE REIT, INC.
REPORTING DEFINITIONS
Normalized FFO and Normalized AFFO. Normalized FFO and Normalized AFFO represent FFO and AFFO, respectively, adjusted for certain income and expense items that the Company does not believe are indicative of its ongoing operating results. The Company considers Normalized FFO and Normalized AFFO to be useful measures to evaluate the Company’s operating results excluding these income and expense items to help investors compare the operating performance of the Company between periods or as compared to other companies. Normalized FFO and Normalized AFFO do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. Normalized FFO and Normalized AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of Normalized FFO and Normalized AFFO may not be comparable to Normalized FFO and Normalized AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define FFO and AFFO or Normalized FFO and Normalized AFFO differently than the Company does.
Senior Housing. Senior Housing communities include independent living, assisted living, continuing care retirement and memory care communities.
Senior Housing - Managed. Senior Housing communities operated by third-party property managers pursuant to property management agreements.
Skilled Nursing/Transitional Care. Skilled Nursing/Transitional Care facilities include skilled nursing, transitional care, multi-license designation and mental health facilities.
Specialty Hospitals and Other. Includes acute care, long-term acute care and rehabilitation hospitals, facilities that provide residential services, which may include assistance with activities of daily living, and other facilities not classified as Skilled Nursing/Transitional Care, Senior Housing or Behavioral Health.
See reporting definitions. 15
sbraex9942022q3
Cost What Happens Inside Our Buildings Matters Most Investor Presentation | November 7, 2022
November 7, 2022 Investor Presentation Forward-Looking Statements This presentation contains “forward-looking” statements as defined in 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. These statements may be identified, without limitation, by the use of “expects,” “believes,” “intends,” “should” or comparable terms or the negative thereof. Examples of forward-looking statements include all statements regarding our expectations regarding our recent and pending investments, and our strategic and operational plans, as well as all statements regarding expected future financial position, results of operations, cash flows, liquidity, financing plans, business strategy, projected expenses and capital expenditures, competitive position, growth opportunities and potential investments, plans and objectives for future operations. Our actual results may differ materially from those projected or contemplated by our forward-looking statements as a result of various factors, including, among others, the following: epidemic diseases, pandemics or other contagious diseases, including the ongoing impact of COVID-19, and measures intended to prevent their spread, and the related impact on our tenants, operators and Senior Housing - Managed communities; operational risks with respect to our Senior Housing - Managed communities; competitive conditions in our industry; the loss of key management personnel; uninsured or underinsured losses affecting our properties and the possibility of environmental compliance costs and liabilities; potential impairment charges and adjustments related to the accounting of our assets; the potential variability of our reported rental and related revenues as a result of Accounting Standards Update (“ASU”) 2016-02, Leases, as amended by subsequent ASUs; risks associated with our investment in our unconsolidated joint ventures; catastrophic weather and other natural or man-made disasters, the effects of climate change on our properties and a failure to implement sustainable and energy-efficient measures; increased operating costs for our tenants and operators, due to labor market challenges and macroeconomic factors such as inflation; increased healthcare regulation and enforcement; our tenants’ dependency on reimbursement from governmental and other third-party payor programs; the effect of our tenants declaring bankruptcy or becoming insolvent; our ability to find replacement tenants and the impact of unforeseen costs in acquiring new properties; the impact of litigation and rising insurance costs on the business of our tenants; the impact of required regulatory approvals of transfers of healthcare properties; environmental compliance costs and liabilities associated with real estate properties we own; our tenants’ or operators’ failure to adhere to applicable privacy and data security laws, or a material breach of our or our tenants’ or operators’ information technology; our concentration in the healthcare property sector, particularly in skilled nursing/transitional care facilities and senior housing communities, which makes our profitability more vulnerable to a downturn in a specific sector than if we were investing in multiple industries; the significant amount of and our ability to service our indebtedness; covenants in our debt agreements that may restrict our ability to pay dividends, make investments, incur additional indebtedness and refinance indebtedness on favorable terms; increases in market interest rates; adverse changes in our credit ratings; our ability to make dividend distributions at expected levels; our ability to raise capital through equity and debt financings; changes in foreign currency exchange rates and other risks associated with our ownership of property outside the U.S.; the relatively illiquid nature of real estate investments; our ability to maintain our status as a real estate investment trust (“REIT”) under the federal tax laws; compliance with REIT requirements and certain tax and tax regulatory matters related to our status as a REIT; changes in tax laws and regulations affecting REITs; the ownership limits and takeover defenses in our governing documents and under Maryland law, which may restrict change of control or business combination opportunities; and the exclusive forum provisions in our bylaws. Additional information concerning risks and uncertainties that could affect our business can be found in our filings with the Securities and Exchange Commission (the “SEC”), including in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021. Forward-looking statements made in this presentation are not guarantees of future performance, events or results, and you should not place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements as a result of new information or new or future developments, except as otherwise required by law. Disclaimers 2
November 7, 2022 Investor Presentation Tenant, Operator 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 operators and borrowers, most of which are not subject to SEC reporting requirements. The information related to our tenants, operators and borrowers that is provided in this presentation has been provided by, or derived from information provided by, such tenants, operators 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 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. 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 Disclaimers 3
LOREM IPSUM Heading November 7, 2022 Investor Presentation 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. Uniquely Positioned to Thrive 4
November 7, 2022 Investor Presentation 5 “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.” -Rick Matros (he/him), Chief Executive Officer STRATEGY
November 7, 2022 Investor Presentation Our Strategy — 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 – Given our current cost of debt and equity, prioritize available liquidity and recycled capital over new debt and equity issuances to fund investing activity. 6 STRATEGY
November 7, 2022 Investor Presentation 7 STRATEGY IN ACTION • As detailed in a separate press release, Sabra announced that it will transition the 24-property portfolio previously leased to North American to two of Sabra’s existing tenants, Ensign and Avamere, for a combined initial annual rent of $34.5 million. • As a result, Ensign will become one of Sabra’s largest relationships, representing approximately 8% of Annualized Cash NOI, while Avamere will remain one of Sabra’s largest relationships, also accounting for roughly 8% of Annualized Cash NOI. • Sabra believes this transaction represents a unique opportunity to improve the long-term value of this high-quality real estate portfolio, noting the enhanced credit profile that supports its rental income, highlighted by Ensign’s corporate guaranty and $5 billion of equity market capitalization. • The transition of these facilities to Ensign operating companies and Avamere is expected to be completed by February 1, 2023 and remains subject to the completion of certain regulatory approvals and other closing conditions. Sabra expects to recognize a total of $14.7 million in revenue from these facilities during the fourth quarter through the end of the transition period, which approximates the rent Sabra would have received during this timeframe under the previous leases with North American. Expanding Relationship with Ensign and Avamere
November 7, 2022 Investor Presentation “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 8 STRATEGY IN ACTION
November 7, 2022 Investor Presentation • Sabra’s growing behavioral health portfolio represents a total investment of approximately $756 million, which accounts for roughly 14% of the Company’s Annualized Cash NOI. • In total, eleven properties have been converted or are in the process of being converted to addiction treatment centers, and we are negotiating several additional conversion opportunities for existing wholly-owned assets. Landmark Recovery | Aurora, CO • Converted a 48-unit memory care community for use as an addiction treatment facility • The building is net leased to Landmark Recovery • As of September 30, 2022, Sabra has spent $3.4 million of the $3.5 million capital commitment associated with the conversion • Began accepting patients in July 2022 Recovery Centers of America | Greenville, SC • Closed on a 132-bed hotel on December 16, 2021 for conversion to an addiction treatment facility • As in Monroeville, RCA pre-leased the building under a long-term triple- net lease • Sabra purchased the hotel for $10.9 million and has agreed to invest up to $22.1 million in renovations to convert it to an addiction treatment facility Adaptive Reuse for Behavioral Health 9 STRATEGY IN ACTION
November 7, 2022 Investor Presentation Good for the Planet. Good for Our Stakeholders. 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 sabrahealth.com. “We endeavor to operate efficiently, sustainably and always in the best interest of our stakeholders.” -Rick Matros (he/him), Chief Executive Officer 10 ENVIRONMENTAL, SOCIAL AND GOVERNANCE
November 7, 2022 Investor Presentation Sabra’s ESG Priorities 11 ENVIRONMENTAL, SOCIAL AND GOVERNANCE
November 7, 2022 Investor Presentation Committed to Diversity, Equity & Inclusion 56% As of September 30, 2022, women comprised 56% of our workforce and 65% of our management level/leadership roles. 33% As of September 30, 2022, 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 16% of our team members chose not to self-identify. 12 ENVIRONMENTAL, SOCIAL AND GOVERNANCE We believe a diverse workforce is essential to our continued success, and are integrating our DE&I efforts into our hiring process so that we can achieve our aspirations for a more diverse and culturally inclusive team.
November 7, 2022 Investor Presentation Addressing Critical Health And Wellness Issues In Senior Facilities Sabra is a proud Alliance Member of the Well Living Lab and active participant in WISE— Wellness Innovation in Senior Living—initiative. The initiative will leverage scientific research conducted in simulated real-world environments and the field, and will share practical findings that can be applied to improving indoor spaces in senior living communities. 13 ENVIRONMENTAL, SOCIAL AND GOVERNANCE
November 7, 2022 Investor Presentation WELL Health-Safety Ratings Enlivant, one of Sabra’s largest operators, recently became the first senior living organization to achieve the WELL Health-Safety Rating for its entire portfolio. We are encouraging all our operators to pursue the WELL Health-Safety Rating. 14 ENVIRONMENTAL, SOCIAL AND GOVERNANCE
November 7, 2022 Investor Presentation Dedicated to Effective Corporate Governance Our strong, independent and diverse board brings unique skill sets and relevant experience that enrich our decision making. Healthcare Real Estate Finance Leadership Portfolio Management ESG Regulatory Risk Management Policy 15 ENVIRONMENTAL, SOCIAL AND GOVERNANCE
November 7, 2022 Investor Presentation Our Success Is Predicated on a Healthy Portfolio 1 Excludes (i) one real estate property held for sale as of the end of the current period and (ii) our unconsolidated joint venture with Enlivant which consists of 157 facilities and 6,996 units. 2 Occupancy Percentage and Skilled Mix (together, “Operating Statistics”) and EBITDARM Coverage for each period presented include only Stabilized Facilities owned by the Company as of the end of such period 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 June 30, 2022. 3Q 2022 Operating Statistics exclude our North American Health Care portfolio due to the pending transition to Ensign (20 real estate properties) and Avamere (four real estate properties). Including our North American Health Care portfolio, Skilled Nursing/Transitional Care Occupancy Percentage and Skilled Mix for 3Q 2022 would have been 73.5% and 37.6%, respectively. 3 Effective February 1, 2022, Avamere’s annual base rent on the current portfolio has been reduced to $30.7 million from $44.1 million. Pro forma EBITDARM Coverage is presented one quarter in arrears and illustrates the impact of (i) this rent reduction and (ii) the pending transition of our North American Health Care portfolio to Ensign (20 real estate properties) and Avamere (four real estate properties) on our historical trailing twelve-month EBITDARM Coverages. 8 Years Wtd. Avg. Remaining Lease Term 442 Investments1 1.83x 1.13x 1.72x 7.30x 72 Relationships 34% Skilled Mix2 Average Occupancy Percentage2 73% 82% 81% 83% 80% SH - Leased SH - Managed Hosp./Oth.SNF/TC SNF/TC SH - Leased Pro Forma Rent Coverage2 As of September 30, 2022 BH BH Hosp./Oth. 16 PORTFOLIO 3
November 7, 2022 Investor Presentation 1 Concentrations exclude (i) one real estate property held for sale as of the end of the current period and (ii) our unconsolidated joint venture with Enlivant which consists of 157 facilities and 6,996 units and assumes the pending transition of our North American Health Care portfolio to Ensign and Avamere was completed as of the end of the current period. Relationship 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 sales-type lease, 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. Diverse Portfolio, Positioned to Perform Relationship Concentration1 Asset Class Concentration1 As of September 30, 2022 17 PORTFOLIO Signature Healthcare, 8.7% Avamere Family of Companies, 8.0% The Ensign Group, 7.7% Signature Behavioral, 7.0% Recovery Centers of America, 5.3% Holiday, 5.2% Sienna, 2.8%Other, 3.6% Other, 51.7% Behavioral Health, 13.5% Senior Housing - Leased, 11.6% Senior Housing - Managed, 10.3% Specialty Hospital and Other, 4.0% Other, 0.6% Skilled Nursing/ Transitional Care, 60.0% Managed (No Operator Credit Exposure), 11.6%
November 7, 2022 Investor Presentation “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 18 PORTFOLIO
November 7, 2022 Investor Presentation 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 OPERATORS 19
November 7, 2022 Investor Presentation We Support Our Operators We Invest in Our Tenants’ Success: • Redevelopment / Adaptive Reuse • Expansion • Strategic development • Flexible equity and debt capital solutions OPERATORS 20
November 7, 2022 Investor Presentation “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 21 OPERATORS
November 7, 2022 Investor Presentation “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 22 PERFORMANCE
November 7, 2022 Investor Presentation Balanced Capital Structure 1 As of 9/30/2022. Common equity value estimated using outstanding common stock of 231.0 million shares and Sabra’s closing price of $13.43 as of 11/3/2022. 23 PERFORMANCE Capital Structure 1 Our diverse menu of capital options and $0.9 billion of available liquidity ensures that we have ready access to low cost capital to fund our growth. Our credit facility contains an accordion feature that can increase the total available borrowings to $2.75 billion (up from $2.0 billion plus CAD $125.0 million today). We have reduced the level of unhedged variable rate debt from 27.2% of our Consolidated Debt at the end of 2018 to 5.6% today; excluding our revolver, we have no unhedged variable rate debt as of September 30, 2022. Because of our hedging activities, our annual interest expense is approximately $7.6 million lower than it otherwise would be at today’s market rates. Common Equity Value 56% Secured Debt 1% Unsecured Debt 43% CONSOLIDATED ENTERPRISE VALUE $5.5B
November 7, 2022 Investor Presentation Sabra 3Q 22 1 Investment grade peers median 2 Net Debt to Adjusted EBITDA 5.50x 3 6.00x Interest Coverage Ratio 4.71x 3 4.30x Debt as a % of Asset Value 35% 39% Secured Debt as a % of Asset Value 1% 5% Strong Investment-Grade Credit Metrics 1 Key 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. 2 Investment-Grade Peers consists of WELL, VTR, OHI and NHI. The metrics used to calculate Investment-Grade Peers Median are sourced from most recent public filings with the SEC and may not be calculated in a manner identical to Sabra’s metrics. 3 Based on the trailing twelve-month period ended as of the date indicated. 24 PERFORMANCE We expect to reduce leverage closer to our 5.0x long-term leverage target by the end of the year with proceeds from disposition activity. We continue to focus on strengthening our balance sheet and portfolio without accessing the capital markets.
November 7, 2022 Investor Presentation Favorable Profile with Staggered Maturities 1 Revolving Credit Facility is subject to two six-month extension options. 2 Represents actual contractual interest rates excluding private mortgage insurance and impact of interest rate derivative agreements. (Dollars in millions) Debt maturity profile at September 30, 2022 25 500 100 350 800 527 $0 $2 $2 $2 $2 $2 $2 $2 $2 $31$139 $861 2.8% 4.8% 4.5% 2.9% 5.1% 5.8% 2.9% 3.9% 2.9% 3.2% 3.1% Unsecured Bonds Term Loans Mortgage Debt / Secure Debt Line of Credit Available Line of Credit Wtd. Avg. Interest 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Thereafter $0 $200 $400 $600 $800 $1,000 $1,200 PERFORMANCE 1 2 We have no material debt maturities before Q3 2024.
November 7, 2022 Investor Presentation Attractive Valuation Relative to Direct Peers Forward FFO multiples 1 Dividend yield 2 Premium / discount to consensus NAV Portfolio composition (% Annualized Cash NOI) 3 Sources: SNL Financial as of 11/3/2022, unless otherwise noted. 1 Forward FFO multiple is calculated as stock price as of 11/3/2022 divided by the forward four quarter consensus FFO from SNL Financial. 2 Dividend yield is calculated as most recent quarterly dividends declared per share annualized divided by stock price as of 11/3/2022. 3 Represents latest available concentration for peers from company filings as of 11/3/2022. 4 Based on Annualized Cash NOI for the quarter ended 9/30/2022 for real estate investments, investments in loans receivable and other investments. See the appendix to this presentation for the definition of Annualized Cash NOI. Concentrations exclude (i) one real estate property held for sale as of the end of the current period and (ii) our unconsolidated joint venture with Enlivant which consists of 157 facilities and 6,996 units and assumes the pending transition of our North American Health Care portfolio to Ensign and Avamere was completed as of the end of the current period. 26 PERFORMANCE 9.0x 10.4x 12.3x 12.5x 13.8x SBRA OHI CTRE NHI LTC 8.9% 6.0% 6.0% 6.6% 8.5% SBRA LTC CTRE NHI OHI -5.3% -2.2% 3.3% 18.2% 20.4% SBRA CTRE NHI OHI LTC 22% 7% 22% 41% 61% 60% 93% 70% 58% 34% 18% 8% 1% 5% Senior Housing Skilled Nursing Other SBRA CTRE OHI LTC NHI4
November 7, 2022 Investor Presentation Well-Positioned Portfolio SNF concentration 1 1 Represents latest available concentration and coverage for peers as of 11/3/2022. 2 Based on Annualized Cash NOI as of 9/30/2022 for real estate investments, investments in loans receivable and other investments. See the appendix to this presentation for the definition of Annualized Cash NOI. Concentrations exclude (i) one real estate property held for sale as of the end of the current period and (ii) our unconsolidated joint venture with Enlivant which consists of 157 facilities and 6,996 units and assumes the pending transition of our North American Health Care portfolio to Ensign and Avamere was completed as of the end of the current period. 3 Represents SNF EBITDARM Coverage for LTC and NHI; total portfolio EBITDARM Coverage for OHI and CTRE. 4 See appendix to this presentation for the definition of EBITDARM Coverage. 5 Effective February 1, 2022, Avamere’s annual base rent on the current portfolio has been reduced to $30.7 million from $44.1 million. Pro forma EBITDARM Coverage is presented one quarter in arrears and illustrates the impact of (i) this rent reduction and (ii) the pending transition of our North American Health Care portfolio to Ensign (20 real estate properties) and Avamere (four real estate properties) on our historical trailing twelve-month EBITDARM Coverages. Top five relationships concentration 1 SNF EBITDARM Coverage 1,3 SH EBITDARM Coverage 1 27 PERFORMANCE 60% 34% 58% 70% 93% SBRA NHI LTC OHI CTRE 37% 41% 46% 67% 71% SBRA OHI LTC NHI CTRE 1.83x 1.39x 2.01x 2.57x 2.67x SBRA OHI LTC CTRE NHI 1.13x 0.95x 1.01x 1.10x 1.11x SBRA LTC WELL VTR NHI2 2 4,5 4
November 7, 2022 Investor Presentation Appendix 28 i
November 7, 2022 Investor Presentation 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 (i) 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, (ii) exclude residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis and (iii) reflect the reduction in Avamere’s annual base rent to $30.7 million effective February 1, 2022. 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. Cash Net Operating Income (“Cash NOI”).* The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers Cash NOI an important supplemental measure because it allows investors, analysts and its management to evaluate the operating performance of its investments. The Company defines Cash NOI as total revenues less operating expenses and non-cash revenues and expenses. Cash NOI excludes all other financial statement amounts included in net income. 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 29 APPENDIX
November 7, 2022 Investor Presentation 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 merger and acquisition costs, 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 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 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. Grant Income. Grant income consists of funds specifically paid to communities in our Senior Housing - Managed portfolio from state or federal governments related to the pandemic and were incremental to the amounts that would have otherwise been received for providing care to residents. 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. Definitions 30 APPENDIX
November 7, 2022 Investor 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 includes only Stabilized Facilities and excludes facilities for which data is not available or meaningful. Senior Housing. Senior Housing communities include independent living, assisted living, continuing care retirement and memory care communities. Senior Housing - Managed. Senior Housing communities operated by third-party property managers pursuant to property management agreements. 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 the period indicated. Skilled Mix includes only Stabilized Facilities and excludes facilities for which data is not available or meaningful. Skilled Nursing/Transitional Care. Skilled Nursing/Transitional Care facilities include skilled nursing, transitional care, multi-license designation and mental health facilities. Specialty Hospitals and Other. Includes acute care, long-term acute care and rehabilitation hospitals, facilities that provide residential services, which may include assistance with activities of daily living, and other facilities not classified as Skilled Nursing/Transitional Care, Senior Housing or Behavioral Health. Stabilized Facility. At the time of acquisition, the Company classifies each facility as either stabilized or non-stabilized. In addition, the Company may classify a facility as non-stabilized after acquisition. Circumstances that could result in a facility being classified as non-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 are typically reclassified to stabilized upon the earlier of maintaining consistent occupancy (85% for Skilled Nursing/Transitional Care facilities and 90% for Senior Housing communities) or 24 months after the date of classification as non-stabilized. Stabilized Facilities exclude (i) facilities held for sale, (ii) strategic disposition candidates, (iii) facilities being transitioned to a new operator, (iv) facilities being transitioned from being leased by the Company to being operated by the Company and (v) leased facilities acquired during the three months preceding the period presented. * Non-GAAP Financial Measures: Reconciliations, definitions and important discussions regarding the usefulness and limitations of the Non-GAAP Financial Measures used in this supplement can be found at https://ir.sabrahealth.com/investors/financials/quarterly-results. APPENDIX Definitions 31