Sabra Health Care Reit, Inc. · NASDAQ:SBRA
Sabra Health Care Reit — Bank of America Merrill Lynch 2016 Global Real Estate Conference
27 slides from Sabra Health Care Reit's conference presentation, Sep 12, 2016
Slide 1: Bank of America Merrill Lynch 2016 Global Real Estate Conference
Bank of America Merrill Lynch 2016 Global Real Estate Conference September 13, 2016 Relationship driven. Investor focused.
Slide 2: Strategic Overview
. 2 STRATEGIC OVERVIEW Multiple avenues to increase shareholder returns Create a diversified portfolio that is well positioned for the future of health care delivery Leverage Sabra’s operating expertise to develop strategic relationships with local & regional operators Improve Sabra’s cost of capita
Slide 3: Genesis Dispositions - Overview
. 3 • Jointly selling 35 facilities (out of a total of 78 facilities in our Genesis portfolio) as contemplated by three separate MOUs with Genesis • All net proceeds go to Sabra – estimated to be $230.0 million ($176.0 million net of debt assumptions and payoffs) • Annual cash rent reduction from Ge
Slide 4: Genesis Dispositions - Long Term Benefits to Sabra
. 4 • Accelerated reduction in concentrations • Negligible impact expected on future NAFFO per share growth • $176.0 million of future investment activity to be funded from net sales proceeds (instead of debt and equity capital) which mitigates slow down in growth of absolute NAFFO • Leverage goals
Slide 5: Genesis Dispositions - Long Term Benefits to Sabra
. 5 • Enhanced portfolio • Sale of less desirable facilities; Genesis exits less desirable markets • Rent reallocations and maturity extensions • Creates strong coverage levels for longer dated lease maturities • Including the estimated $16.6 million reduction in rents following the sales, rent asso
Slide 6: The Future of Health Care Delivery
. 6 THE FUTURE OF HEALTH CARE DELIVERY The times they are a changing Skilled Nursing/ Transitional Care Long term care Higher-acuity, short-stay rehab, “step down” units for hospitals Senior Housing Developed by multi-family developers for self-sufficient residents Needs-based model, residents with
Slide 7: The Future of Health Care Delivery
. 7 Skilled Nursing reimbursement • Medicare rate increase of 2.4% effective as of October 1, 2016 • Medicaid environment modestly favorable • Operating partners successfully engaging in BPCI model • Comprehensive Care for Joint Replacement (“CJR”) model began April 1, 2016, which holds hospitals ac
Slide 8: Thinking Outside the Box
. 8 Traditional REIT structures - Sale/leasebacks -Mortgage debt Deal structure flexibility drives competitive advantage Smaller investments with options to purchase RIDEA compliant structures Preferred equity & mezzanine debt Development agreements THINKING OUTSIDE THE BOX
Slide 9: Market Focus
. 9 MARKET FOCUS Bigger is not always better • Many opportunities exist outside of largest MSAs in U.S. • The percentage of the population over the age of 65 is greater in the markets where Sabra has invested than in the U.S. as a whole • Lower costs to build, coupled with favorable demographics and
Slide 10: Development Activity
. 10 DEVELOPMENT ACTIVITY Development relationships drive consistent deal flow for new, purpose-built facilities ($ in millions, except price per unit) 35 Total anticipated new investments $116.2 Total invested dollars through September 7, 2016 $240,000 Price per unit upon option exercise $625.0 Val
Slide 11: Target = Investment Grade
. 11 TARGET = INVESTMENT GRADE Main barriers to investment grade rating are size and diversification Sabra (1) “Big 3” (2) Net Debt to Adjusted EBITDA (3) 5.09x 5.49x 5.80x Debt as %of Enterprise Value 41% 30% 37% Interest Coverage Ratio 4.14x 3.91x 5.10x Fixed Charge Coverage Ratio 3.19x 3.36x 4.60
Slide 12: Portfolio Performance
Portfolio Performance
Slide 13: Strong Portfolio Performance
. 13 STRONG PORTFOLIO PERFORMANCE Portfolio occupancy and SNF/TC portfolio skilled mix 87.5% 86.6% 90.4% 90.1% 38.0% 40.8% 2015 2016 2015 2016 SNF/TC Senior Housing Skilled Mix Occupancy & Skilled Mix Solid skilled mix reflects focus on higher- acuity, short-stay skilled nursing/transitional care fa
Slide 14: Strong Portfolio Performance
. 14 1.18x 1.55x 1.43x 1.75x EBITDAR EBITDARM 2015 2016 (1) (1) STRONG PORTFOLIO PERFORMANCE Skilled Nursing/Transitional Care (1) EBITDAR and EBITDARM coverages include only Stabilized Facilities owned as of the periods presented and are only included in periods subsequent to our acquisition. All d
Slide 15: Strong Portfolio Performance: Fixed Charge Coverage
. 15 STRONG PORTFOLIO PERFORMANCE Fixed charge coverage (1) Fixed Charge Coverage is presented one quarter in arrears for tenants with significant corporate guarantees. See Definitions for definition of Fixed Charge Coverage. (for the twelve month periods ended June 30, 2015 and 2016) Tenant Facilit
Slide 16: Financial Overview
Financial Overview
Slide 17: Capitalization and Cost of Capital
. 17 $1,718 $700 $177 $154 $341 Common Equity Market Value Senior Notes Mortgage Debt Preferred Equity Market Value Term Loans (1) Capitalization and cost of capital (1) Common Equity Market Value and Preferred Equity Market Value are based on closing stock prices of $26.32 and $26.80, respectively,
Slide 18: Financial Results
. 18 FINANCIAL RESULTS Normalized AFFO/share, Normalized FFO/share and dividend/share $1.51 $1.59 $1.77 $2.12 $2.14 $0.53 $0.55 $0.53 $0.58 $1.31 $1.47 $1.84 $2.20 $2.33 $0.58 $0.64 $0.56 $0.61 $1.29 $1.33 $1.38 $1.54 $1.62 $0.41 $0.41 $0.42 $0.42 2011 2012 2013 2014 2015 Q3 2015 Q4 2015 Q1 2016 Q2
Slide 19: Financial Strength: Historical Net Debt to Adjusted EBITDA
. 19 FINANCIAL STRENGTH Historical net debt to adjusted EBITDA (1) 2.19x 2.65x 2.82x 4.48x 5.11x 4.35x 1.90x 2.11x 1.92x 0.61x 0.74x 0.74x 4.09x 4.76x 4.74x 5.09x 5.85x 5.09x 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 6/30/2016 Unsecured Leverage Secured Leverage Net Debt to Adjusted EBI
Slide 20: Financial Strength: Historical LTM Interest Coverage
. 20 FINANCIAL STRENGTH Historical LTM interest coverage 3.17x 3.22x 3.85x 4.29x 4.19x 4.14x 2011 2012 2013 2014 2015 Q2 2016 Weighted average interest rate (2) declined from: 7.24% at December 31, 2011 to 4.47% of as of June 30, 2016 (1) Interest Coverage is calculated in accordance with the indent
Slide 21: Financial Strength: Debt Maturities
. 21 $2.1 $4.3 $4.5 $4.6 $4.8 $20.2 $4.5 $4.7 $4.8 $5.0 $117.6 $341.5 $500.0 $500.0 $200.0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Thereafter Mortgage Notes Term Loans Credit Facility Available Senior Notes FINANCIAL STRENGTH Debt maturities Ample liquidity with no significant maturities u
Slide 22: Appendix
Appendix
Slide 23: Key Credit Statistics
. 23 KEY CREDIT STATISTICS(1) Option One Option Three Ma December 31, 2015 June 30, 2016 Net Debt to Adjusted EBITDA (2) 5.85x 5.09x Interest Coverage 4.19x 4.14x Fixed Charge Coverage Ratio 3.21x 3.19x Total Debt/Asset Value 47% 44% Secured Debt/Asset Value 6% 6% Unencumbered Assets/Unsecured Debt
Slide 24: Reconciliation of FFO, Normalized FFO, AFFO and Normalized AFFO
. 24 RECONCILIATION OF FFO, NORMALIZED FFO, AFFO and NORMALIZED AFFO Option One Option Three Ma (1) See Non-GAAP Financial Measures on slide 26 for further information. 2015 2016 2011 2012 2013 2014 2015 Q3 Q4 Q1 Q2 Net income attributable to common stockholders $ 12.8 $ 19.5 $ 25.7 $ 36.7 $ 69.2 $
Slide 25: Forward Looking Statements
. 25 FORWARD LOOKING STATEMENTS Option One Option Three Ma This presentation contains “forward-looking” statements that may be identified, without limitation, by the use of “expects,” “believes,” “intends,” “should” or comparable terms or the negative thereof. Forward-looking statements in this pres
Slide 26: Non-GAAP Financial Measures
. 26 NON-GAAP FINANCIAL MEASURES Option One Option Three Ma This presentation includes the following financial measures defined as non-GAAP financial measures by the SEC: funds from operations attributable to common stockholders (“FFO”), Normalized FFO, Adjusted FFO (“AFFO”), Normalized AFFO, FFO pe
Slide 27: Definitions
. 27 DEFINITIONS Option One Option Three Ma EBITDAR Coverage. Represents the ratio of EBITDAR to contractual rent for owned facilities. EBITDAR Coverage is a supplemental measure of an operator/tenant's ability to meet their cash rent and other obligations to the Company. However, its usefulness is
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