Sabra Health Care Reit, Inc. · NASDAQ:SBRA
Sabra Health Care Reit — Nareit REITweek: Virtual Investor Conference 2020
35 slides from Sabra Health Care Reit's conference presentation, Jun 1, 2020
Slide 1: Consistent Strategy. Deliberate Execution.
CONSISTENT STRATEGY. DELIBERATE EXECUTION. Nareit REITweek: Virtual Investor Conference June 2-4, 2020
Slide 2: Delivering Value
DELIVERING VALUE Our vast industry knowledge, experienced executive team and entrepreneurial spirit make Sabra uniquely positioned to succeed in our dynamic industry. We have the size, know-how, balance sheet and passion to deliver long-term value to shareholders. June 2-4, 2020 Nareit REITweek: Vir
Slide 3: Strategy
STRATEGY “WE’VE BUILT A STRONG AND RESILIENT FOUNDATION.” – Rick Matros, Chief Executive Officer June 2-4, 2020 Nareit REITweek: Virtual Investor Conference 3
Slide 4: Sabra Today
STRATEGY SABRA TODAY 36% 70 $5.7B1 DEBT/ASSET VALUE OPERATOR RELATIONSHIPS ENTERPRISE VALUE $950M+ 9% 22.4% LIQUIDITY MAX RELATIONSHIP NOI CAGR SINCE 2011 CONCENTRATION (1) Includes Sabra’s 49% pro rata share of the debt of its unconsolidated joint venture. Share price as of 5/27/2020. June 2-4, 202
Slide 5: Building a Resilient and Agile REIT
STRATEGY BUILDING A RESILIENT AND AGILE REIT Investment ▪ Invest in high-quality, strong-performing senior housing and SNF portfolios ▪ Relationship diversification ▪ Geographic diversification (investments in 43 states and Canada) ▪ Grow private-pay through investments in high-quality managed senio
Slide 6: Strategy in Action
STRATEGY IN ACTION “BY OPPORTUNISTICALLY EXECUTING OUR STRATEGY, WE CONTINUE TO DELIVER LONG-TERM VALUE FOR OUR SHAREHOLDERS.” – Talya Nevo-Hacohen, Chief Investment Officer June 2-4, 2020 Nareit REITweek: Virtual Investor Conference 6
Slide 7: Strengthened Balance Sheet by Reducing Leverage
STRATEGY IN ACTION STRENGTHENED BALANCE SHEET BY REDUCING LEVERAGE Lowered cost of PERMANENT DEBT by 61 basis points to 3.67% 34 vs 72 Reduced NET DEBT TO ADJUSTED EBITDA ratio (including our unconsolidated joint venture) from 6.12x to 5.47x (1) Includes Sabra’s 49% pro rata share of the debt of its
Slide 8: Significantly Improved Credit Metrics
STRATEGY IN ACTION SIGNIFICANTLY IMPROVED CREDIT METRICS INTEREST COVERAGE FIXED CHARGE COVERAGE TOTAL DEBT/ASSET VALUE + 1.14x to 5.28x + 1.37x to 5.07x IMPROVED 1300 bps DECEMBER 31, 2018 vs MARCH 31, 2020 June 2-4, 2020 Nareit REITweek: Virtual Investor Conference 8
Slide 9: Creating Operating Efficiencies
STRATEGY IN ACTION CREATING OPERATING EFFICIENCIES ▪ Since Sabra’s inception, we have structured our company to be nimble and mobile, and that strategy has paid off as our corporate office operations smoothly transitioned to working from home in mid-March. PROPRIETARY INFORMATION TECHNOLOGY SYSTEM ▪
Slide 10: Investment Thesis
INVESTMENT THESIS “WE CUSTOMIZE OUR FINANCIAL SOLUTIONS TO PROVIDE OPERATORS WITH CAPITAL TO INVEST IN THEIR BUSINESS AND SUPPORT THE DELIVERY OF QUALITY CARE.” – Talya Nevo-Hacohen, Chief Investment Officer June 2-4, 2020 Nareit REITweek: Virtual Investor Conference 10
Slide 11: Opportunistically Sourced, Creatively Structured and Prudently Financed
INVESTMENT THESIS OPPORTUNISTICALLY SOURCED, CREATIVELY STRUCTURED AND PRUDENTLY FINANCED Unique, Accretive Investments Utilize our operational and asset management expertise to identify and capitalize on new opportunities where off-market price dislocation exists. Support Operator Expansion Be the
Slide 12: Portfolio
PORTFOLIO “OUR PORTFOLIO AND TENANTS ARE POSITIONED TO DELIVER QUALITY CARE NOW AND IN THE FUTURE.” – Peter Nyland, Executive Vice President Asset Management June 2-4, 2020 Nareit REITweek: Virtual Investor Conference 12
Slide 13: COVID-19 Impact to Our Portfolio
PORTFOLIO COVID-19 IMPACT TO OUR PORTFOLIO Although we collected 100% of expected cash rents in April and May, the operations of our facilities, like many others around the country, have been impacted in several ways by the COVID-19 pandemic. The most notable impacts have been occupancy declines and
Slide 14: COVID-19: Mitigation
PORTFOLIO COVID-19: MITIGATION ▪ In response to the COVID-19 pandemic, the federal government has approved several relief packages that could benefit our operators, especially those who operate skilled nursing/transitional care facilities. The following summarizes the estimated aggregate amounts ava
Slide 15: COVID-19: Mitigation (Cont.)
PORTFOLIO COVID-19: MITIGATION (CONT.) ▪ In addition to the mitigation sources on slide 14, there have been other governmental actions taken that benefit skilled nursing/transitional care operators. These actions include the waiver of the requirement for skilled nursing/transitional care patients to
Slide 16: Superior Returns Start with a Strong Portfolio
PORTFOLIO SUPERIOR RETURNS START WITH A STRONG PORTFOLIO1 AS OF MARCH 31, 2020 621 82%SNF/TC 87%SH - Leased SH87% - Managed 3 71%Hosp/Oth. Investments2 Average Occupancy Percentage 70 39% Relationships2 Skilled Mix2 8 SNF/TC/1.91xHosp/Oth . 1.38xSH - Leased Years Wtd. Avg. Remaining Rent Coverage2,4
Slide 17: Proprietary Pipeline of Purpose-Built Assets
PORTFOLIO PROPRIETARY PIPELINE OF PURPOSE-BUILT ASSETS ENHANCES THE QUALITY OF OUR PORTFOLIO COMPLETED AND PLANNED PROJECTS PROJECTS CURRENT TOTAL INVESTMENT 25 $363M EXPECTED REAL EXPECTED INITIAL CASH ESTATE VALUE 1 YIELD ON RENTS $493M 7.4% (1) Represents the value of completed projects at Sabra’
Slide 18: Effective Asset Management and Strong Operator Relationships
PORTFOLIO EFFECTIVE ASSET MANAGEMENT AND STRONG OPERATOR RELATIONSHIPS Senior Housing - Managed 17% Asset Mix 1 Crafted portfolio of high- Senior Housing - quality and diverse Leased 10% facilities passionate about care. Specialty Hospitals Skilled Nursing / and Other Transitional Care 10% 62% Inter
Slide 19: High Quality of Care, Strong Performance
HIGH QUALITY OF CARE STRONG PERFORMANCE June 2-4, 2020 Nareit REITweek: Virtual Investor Conference 19
Slide 20: Our Operators Are Driven by an Unwavering Passion
OPERATORS OUR OPERATORS ARE DRIVEN BY AN UNWAVERING PASSION: ADVANCING THE QUALITY OF CARE We Work With Operators Who Are: ▪ Highly engaged ▪ Nimble ▪ Regional experts ▪ In markets with favorable demographics ▪ Well positioned for the future of health care delivery June 2-4, 2020 Nareit REITweek: Vi
Slide 21: We Support Our Operators
OPERATORS WE SUPPORT OUR OPERATORS We Invest in Our Tenants’ Success: ▪ Redevelopment ▪ Expansion ▪ Strategic development ▪ Flexible equity and debt capital solutions June 2-4, 2020 Nareit REITweek: Virtual Investor Conference 21
Slide 22: Operator and Management Testimonials
STRATEGY IN ACTION OPERATORS “WHEN IT COMES “WE’VE CONSISTENTLY “ONE OF THE MANY ADVANTAGES OFTO WORKING EXECUTING DELIVERED VALUE TO OUR STRATEGY, OURWITH SHAREHOLDERS SABRA IS THAT THEY GET WHATWE IT’S DO WHATLIKE TO WE WHILEBE AN MAINTAININGOPERATOR .” A SAY WE ARE STRONG BALANCE - Brent Weil, Pr
Slide 23: Driving Performance with Free Access to Business Intelligence Tools
OPERATORS DRIVING PERFORMANCE WITH FREE ACCESS TO INDUSTRY-LEADING BUSINESS INTELLIGENCE TOOLS June 2-4, 2020 Nareit REITweek: Virtual Investor Conference 23
Slide 24: PointRight Program for SNF Tenants
OPERATORS POINTRIGHT PROGRAM FOR SNF TENANTS Data Integrity Audit Real-time MDS verification analyzes the accuracy of the Minimum Data Set (MDS) assessment prior to CMS submission. Each MDS is checked for logical and clinical coding accuracy, with recommended actions when inaccurate, incomplete, or
Slide 25: Diverse Operator Base, Passionate About Care
OPERATORS DIVERSE OPERATOR BASE, PASSIONATE ABOUT CARE Avamere 8.1% 1 Relationship Concentration North American 7.2% By diversifying our tenant concentration, we’ve Signature Healthcare curated a portfolio 7.2% equipped to perform in today’s dynamic health Other Cadia 47.4% care market. 6.9% Signatu
Slide 26: Performance
PERFORMANCE “WE’VE DELIVERED ON OUR PROMISE TO STRENGTHEN OUR BALANCE SHEET AND ARE POISED TO CAPITALIZE ON FUTURE GROWTH OPPORTUNITIES.” – Harold Andrews, Jr., Chief Financial Officer June 2-4, 2020 Nareit REITweek: Virtual Investor Conference 26
Slide 27: Fortified Balance Sheet with Focus on Lowering Leverage
PERFORMANCE FORTIFIED BALANCE SHEET WITH FOCUS ON LOWERING LEVERAGE AND ENHANCING LIQUIDITY ▪ Investment-grade balance sheet 1: BBB- / BBB- / Ba1 ▪ Primarily fixed rate, unsecured borrowings (78.7%)2 ▪ Cost of permanent debt is 3.67% 3 ▪ Well-laddered maturity schedule ▪ More than $950 million of av
Slide 28: Balanced Capital Structure
PERFORMANCE BALANCED CAPITAL STRUCTURE Capital Structure 1 Our diverse menu of capital Common Equity Value options ensures that we 50% have ready access to low- cost capital to fund our growth. Unsecured Debt 41% ENTERPRISE VALUE Our Credit Facility, which includes a $1.0 billion Revolving Credit Fa
Slide 29: Strong Investment Grade Credit Metrics
PERFORMANCE STRONG INVESTMENT GRADE CREDIT METRICS 1 SABRA 1Q20 INVESTMENT GRADE PEERS MEDIAN 2 LTM Net Debt to Adjusted EBITDA 4.97x 3 5.24x LTM Net Debt to Adjusted EBITDA - Incl. Unconsolidated Joint 5.47x 3 5.75x Venture Interest Coverage Ratio 5.28x 4.93x Debt as a % of Asset Value 36% 43% Secu
Slide 30: Favorable Profile with Staggered Maturities
PERFORMANCE FAVORABLE PROFILE WITH STAGGERED MATURITIES DEBT MATURITY PROFILE AT MARCH 31, 2020 (dollars in millions) $1,600 $1,400 $461 $1,200 $1,000 $898 899 $800 $585 $600 588 81 $407 101 $400 57 $192 500 $174 $200 $114 350 350 300 70 $37 $5 105 100 $3 $0 2020 2021 2022 2023 2024 2025 2026 2027 2
Slide 31: Attractive Relative Valuation
PERFORMANCE ATTRACTIVE RELATIVE VALUATION 2020 FFO Multiples 1 Dividend Yield 20.0x 12.0% 10.0% 16.0x 14.6x 8.6% 8.7% 13.0x 13.8x 7.5% 8.0% 10.8x 6.3% 12.0x 10.0x 5.9% 6.0% 5.1% 7.7x 8.0x 4.0% 4.0x 2.0% 0.0x 0.0% SBRA OHI NHI LTC Big 3 CTRE SBRA CTRE LTC Big 3 NHI OHI 2 Average 2 Average 3 Premium /
Slide 32: Well-Positioned Portfolio
PERFORMANCE WELL-POSITIONED PORTFOLIO SNF CONCENTRATION 1 TOP FIVE RELATIONSHIP SNF RENT COVERAGE 1,3 CONCENTRATION 1 85% 83% 66% 64% 2.76x 53% 2.34x 62% 57% 1.79x 39% 38% 1.65x 1.64x 26% 2 2 4 SBRA NHI LTC OHI CTRE SBRA OHI LTC NHI CTRE SBRA OHI LTC CTRE NHI (1) Represents latest available concentr
Slide 33: Appendix
APPENDIX June 2-4, 2020 Nareit REITweek: Virtual Investor Conference 33
Slide 34: Definitions
APPENDIX 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.
Slide 35: Forward-Looking Statements
APPENDIX FORWARD-LOOKING STATEMENTS 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 presentation include, but a
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