Sabra Health Care Reit, Inc. · NASDAQ:SBRA
Sabra Health Care Reit — Bank of America Merrill Lynch 2011 Leveraged Finance Conference
27 slides from Sabra Health Care Reit's conference presentation, Dec 1, 2011
Slide 1: Bank of America Merrill Lynch 2011 Leveraged Finance Conference Company Presentation
BANK OF AMERICA MERRILL LYNCH 2011 LEVERAGED FINANCE CONFERENCE COMPANY PRESENTATION December 1, 2011
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS 2 Certain information contained in this presentation includes forward-looking statements. Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events or performance and underlying assump
Slide 3: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 3 This presentation includes the following financial measures defined as non-GAAP financial measures by the SEC: EBITDA, EBITDAR, EBITDAR(M), funds from operations (FFO), adjusted FFO (AFFO) and normalized AFFO, FFO per share, AFFO per diluted share and normalized AFFO pe
Slide 4: Company and Investment Highlights
Company Update and Investment Highlights
Slide 5: Sabra Has Competitive Industry Presence
SABRA HAS COMPETITIVE INDUSTRY PRESENCE 5 Formation Formed by Opco / Propco split of Sun Healthcare Group Independently traded as of November 2010 (NASDAQ: SBRA) Structured as an UPREIT B+/B2 rating (S&P / Moody's) - S&P upgrade from B on September 30, 2011 Portfolio 98 health care investments(1) 76
Slide 6: Opportunity to Be Capital Provider of Choice
OPPORTUNITY TO BE CAPITAL PROVIDER OF CHOICE Few capital providers serving the smaller operators Over 90% of senior housing facilities are owned in portfolios of less than 10 properties (1) Larger health care REITs have made transformational deals and grown significantly Limited debt sources for Sab
Slide 7: Sabra Capitalizes on Opportunity
SABRA CAPITALIZES ON OPPORTUNITY Focused Tactics Execution Diversification from original tenant Exposure to diverse property types within health care sector Increased AFFO Lower cost of capital Sale/ leaseback transactions Focus on deals < $100 mm Triple-net lease structure Broad spectrum of propert
Slide 8: Acquisitions Yield Diversification
ACQUISITIONS YIELD DIVERSIFICATION Strong acquisition activity since inception with approximately $213.2 million of capital invested through November 22, 2011 6 new operator relationships 12 new assets in 5 new states (9 SNFs, 1 AL, 1 Hospital and 1 Debt Investment) Steady pipeline across spectrum o
Slide 9: Recent Investment Highlights
RECENT INVESTMENT HIGHLIGHTS Encore Portfolio (Closed November 1, 2011) - Texas Purchase Price: $14.2mm Number of Properties: 2 Windcrest Alzheimer's Care Center Wesley Woods Alzheimer's Care Center Investment Type: Equity Property Type: SNF Available Beds: 240 combined Facility Ages: 7-12 years Ann
Slide 10: Impact of Acquisitions
IMPACT OF ACQUISITIONS As of December 31, 2010 As of September 30, 2011 Acquisitions are changing the revenue makeup of our portfolio (1) Pro Forma assumes all acquisitions closed through November 22, 2011 were completed as of January 1, 2011. (2) Skilled nursing and health care facilities include s
Slide 11: Impact of Acquisitions
IMPACT OF ACQUISITIONS Acquisitions are changing the revenue makeup of our portfolio Sabra's Annualized Revenue By Tenant (1)Pro Forma assumes all acquisitions closed through November 22, 2011 were completed as of January 1, 2011. Texas Regional Medical Center Cadia Portfolio Aurora Portfolio Other
Slide 12: Rent Coverage Analysis
RENT COVERAGE ANALYSIS Individual Tenants Combined Portfolio Sun TRMC Oak Brook Cadia Portfolio Actual Coverage Facility EBITDARM Coverage (x) 2.07x 1.98x 3.15x 2.02x 2.06x Facility EBITDAR Coverage (x) 1.59x 1.45x 3.08x 1.78x Tenant EBITDAR Coverage (x) 1.82x 1.74x 3.08x 1.78x 1.67x Estimated Facil
Slide 13: Sabra's Portfolio & Primary Tenant
Sabra's Portfolio & Primary Tenant
Slide 14: Strong Portfolio Performance
STRONG PORTFOLIO PERFORMANCE Strong occupancy and skilled mix trends in Sabra's portfolio 90.1% 88.2% 89.2% 87.3% 20% 40% 60% 80% 100% 2009 2010 Q3 2010 Q3 201190.0% 88.2% 88.2% 87.2% 89.0% 87.3% 87.5% 87.7% 39.2% 39.3% 38.6% 41.8% Historical skilled nursing/ health care facilities occupancy (1) His
Slide 15: Property Diversification
PROPERTY DIVERSIFICATION As of November 22, 2011 Key real estate portfolio information Equity Investments: Skilled Nursing 76 Multi-License Designation 10 Assisted Living 6 Mental Health 2 Independent Living 1 CCRC 1 Acute Care Hospital 1 TOTAL Equity Investments: 98 Debt Investments: 1 Hillside Ter
Slide 16: Geographically Diverse Portfolio
GEOGRAPHICALLY DIVERSE PORTFOLIO 97 equity investments in 23 states (1) $92.9 mm annualized pro forma (2) rental revenue (1)Properties/ facilities by state Annualized pro forma(2) rental revenue by state New Hampshire Connecticut Kentucky Ohio Florida Texas Montana Delware Oklahoma Other States Char
Slide 17: Lease Structure Summary
LEASE STRUCTURE SUMMARY Sun TRMC Oak Brook Cadia Portfolio Aurora Portfolio Encore Portfolio Creekside Triple Net Master Lease cross defaulted Maturities Escalators Renewal Options N/A 2020-2025 2033 2026 2021 Lesser of CPI or 2.5% annually 6.0% every 5 years 2.5% annually 2.79% annually commencing
Slide 18: Lease Structure Summary Continued
LEASE STRUCTURE SUMMARY CONTINUED Sun TRMC Oak Brook Cadia Portfolio Aurora Portfolio Encore Portfolio Creekside Annual Minimum cap ex $360/ bed No minimum – maintain good condition and repair $400/ bed $400/ bed (1-3 yrs.) $500/ bed (4-6 yrs.) $600/ bed (7-9 yrs.) $700/ bed (10-12 yrs.) $800/ bed (
Slide 19: Primary Tenant Overview
PRIMARY TENANT OVERVIEW Sun operates 199 inpatient centers in 25 states 1)Sun defines Adjusted EBITDAR as earnings before loss on discontinued operations, income taxes, interest, net, depreciation and amortization and center rent expense (EBITDAR) before loss on sale of assets, restructuring costs a
Slide 20: Financially Secure Primary Tenant
FINANCIALLY SECURE PRIMARY TENANT $150.8 million of liquidity as of September 30, 2011(5) 0.46x Net Debt-to-Adjusted EBITDA ratio(6) (1)For the quarter ended September 30, 2011. (2)Sun defines Adjusted EBITDAR as earnings before loss on discontinued operations, income taxes, interest, net, depreciat
Slide 21: Financial Overview
Financial Overview
Slide 22: Financial Policies
FINANCIAL POLICIES Dividend $0.32 per share paid Q2 2011, Q3 2011 and to be paid December 2, 2011 Target of 80% AFFO (dividends for Q1, Q2 and Q3 higher due to acquisition timing and increase in shares from equity offering) Acquisitions and Investments Continued focus on triple-net lease structure i
Slide 23: Financial Highlights
FINANCIAL HIGHLIGHTS Income statement and other data Revenues $21.5 $23.4 $57.9 $70.2 G&A costs 4.7 4.8 10.3 10.4 EBITDA16.8 18.6 47.6 59.8 Net income2.3 3.6 5.7 14.6 FFO9.2 11.0 24.9 37.1 AFFO 12.5 14.4 31.9 41.9 Normalized AFFO12.5 14.4 32.2 42.2 Per share data: Diluted EPS$0.07$0.10$0.20$0.39 Dil
Slide 24: Financial Highlights: Balance Sheet and Other Data
FINANCIAL HIGHLIGHTS 24 Balance sheet and other data Cash $56.4 $39.5Real Estate, Gross Book Value 757.1 773.9 Real Estate, Asset Value (2) 909.5 926.3 Mortgage Note Receivable5.35.3Total Debt384.2384.2Total Equity329.9329.9Capitalization714.1714.1Liquidity156.4139.5Debt Covenants (3)MAX Actual Incu
Slide 25: Pro Forma Debt Maturity Schedule
PRO FORMA DEBT MATURITY SCHEDULE Weighted Average Cost of Debt(1): 7.25% Mortgage Notes Senior Unsecured Notes Minimal near-term debt maturities (1) 6.00% weighted average interest rate on mortgage debt and 8.13% on Senior Notes. 25 $0.8 $3.2 $3.5 $3.7 $86.0 $1.7 $1.8 $1.9 $2.1 $2.2 $51.8 $225 $0 $5
Slide 26: Investment Highlights Summary
Geographically Diverse Portfolio Attractive Industry Fundamentals Favorable Long-Term Lease Structure Strong Lease Coverage Strong Asset Coverage Financially Secure Primary Tenant Growth Opportunities Experienced Management Team
Slide 27: Reconciliation of Net Income to EBITDA, FFO, AFFO and Normalized AFFO
Reconciliation of Net Income to EBITDA, Funds from Operations (FFO), Adjusted Funds from Operations (AFFO) and Normalized AFFO Actual Pro Forma (1)Net income$2.3$3.6 $5.7 $14.6 Interest expense7.67.6 22.7 22.7 Depreciation and amortization6.97.4 19.2 22.5 EBITDA$16.8$18.6 $47.6 $59.8 Net income$2.3$
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