Sabra Health Care Reit, Inc. · NASDAQ:SBRA
Sabra Health Care Reit — JMP Securities Conference 2020
37 slides from Sabra Health Care Reit's conference presentation, Nov 10, 2020
Slide 1: Consistent Strategy. Deliberate Execution.
CONSISTENT STRATEGY. DELIBERATE EXECUTION. JMP Securities Conference November 12, 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. November 12, 2020 JMP Securities Co
Slide 3: Strategy
STRATEGY “WE’VE BUILT A STRONG AND RESILIENT FOUNDATION.” – Rick Matros, Chief Executive Officer November 12, 2020 JMP Securities Conference 3
Slide 4: Sabra Today
STRATEGY SABRA TODAY 35% 71 $6.1B1 DEBT/ASSET VALUE OPERATOR RELATIONSHIPS ENTERPRISE VALUE $975M+ 9% 20.4% 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 11/09/2020. November 12,
Slide 5: A Resilient and Agile REIT
STRATEGY 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 senior housing
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 November 12, 2020 JMP Securities 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 75 basis points to 3.53% 34 vs 72 Reduced NET DEBT TO ADJUSTED EBITDA1 ratio from 5.66x to 4.91x DECEMBER 31, 2018 vs SEPTEMBER 30, 2020 (1) Net Debt to Adjusted EBITDA excludes the unconsolidated jo
Slide 8: Significantly Improved Credit Metrics
STRATEGY IN ACTION SIGNIFICANTLY IMPROVED CREDIT METRICS INTEREST COVERAGE FIXED CHARGE COVERAGE TOTAL DEBT/ASSET VALUE + 1.27x to 5.41x + 1.52x to 5.22x IMPROVED 1400 bps DECEMBER 31, 2018 vs SEPTEMBER 30, 2020 November 12, 2020 JMP Securities Conference 8
Slide 9: 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 November 12, 2020 JMP Securities Conference 9
Slide 10: 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 11: Portfolio
PORTFOLIO “OUR PORTFOLIO AND TENANTS ARE POSITIONED TO DELIVER QUALITY CARE NOW AND IN THE FUTURE.” – Peter Nyland, Executive Vice President Asset Management November 12, 2020 JMP Securities Conference 11
Slide 12: COVID-19 Impact on Our Business
PORTFOLIO COVID-19 IMPACT ON OUR BUSINESS ▪ Through October, we collected all our forecasted rents and through the first few business days of November, collections are in line with what we normally receive through this point of the month. ▪ Our balance sheet remains strong, our liquidity increased $
Slide 13: COVID-19 Impact on Our Portfolio
PORTFOLIO COVID-19 IMPACT ON OUR PORTFOLIO The COVID-19 pandemic continues to have a significant impact on the operations of our facilities, although mitigated by government relief packages that continue to provide assistance to our Skilled Nursing/Transitional Care and Specialty Hospital and Other
Slide 14: COVID-19 Impact on Our Portfolio (cont.)
PORTFOLIO COVID-19 IMPACT ON OUR PORTFOLIO (CONT.) ▪ The combined impact of these factors noted on slide 13 has lowered EBITDARM for our leased portfolios and earnings recognized in our Senior Housing-Managed portfolio, though their impact has been partially mitigated thus far due to the provision o
Slide 15: COVID-19: Mitigation
PORTFOLIO COVID-19: MITIGATION ▪ In response to the COVID-19 pandemic, the federal government approved several relief packages that have benefited our Skilled Nursing/Transitional Care facility operators. Prior to September 1, 2020, few of these programs were available to our Senior Housing operator
Slide 16: COVID-19: Mitigation (cont.)
PORTFOLIO COVID-19: MITIGATION (CONT.) Estimated Mitigates Available (All Mitigation EBITDARM Sabra Source Reductions Description Relationships) The CARES Act has, to date, appropriated $175 billion to the Provider Relief Fund (“PRF” or the “Fund”) for hospitals and other providers nationwide to pre
Slide 17: COVID-19: Mitigation (cont.)
PORTFOLIO COVID-19: MITIGATION (CONT.) ▪ In addition to the mitigation sources on slide 16, 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 18: Superior Returns Start with a Strong Portfolio
PORTFOLIO SUPERIOR RETURNS START WITH A STRONG PORTFOLIO AS OF SEPTEMBER 30, 2020 609 80%SNF/TC 85%SH - Leased SH82% - Managed 2 73%Hosp/Oth. Investments1 Average Occupancy Percentage 71 39% Relationships Skilled Mix 8 SNF/TC/2.07xHosp/Oth . SH1.31x - Leased Years Wtd. Avg. Remaining Rent Coverage3
Slide 19: 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 $390M EXPECTED REAL EXPECTED INITIAL CASH ESTATE VALUE 1 YIELD ON RENTS $493M 7.6% (1) Represents the value of completed projects at Sabra’
Slide 20: Effective Asset Management and Strong Operator Relationships
PORTFOLIO EFFECTIVE ASSET MANAGEMENT AND STRONG OPERATOR RELATIONSHIPS Senior Housing - Managed 14.9% Asset Mix 1 Specialty Hospitals Crafted portfolio of high- and Other quality and diverse 10.4% facilities passionate about care. Senior Housing - Leased 9.8% Skilled Nursing / Transitional Care Inte
Slide 21: High Quality of Care, Strong Performance
HIGH QUALITY OF CARE STRONG PERFORMANCE November 12, 2020 JMP Securities Conference 21
Slide 22: Our Operators Are Driven by Advancing the Quality of Care
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 November 12, 2020 JMP Securities C
Slide 23: 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 November 12, 2020 JMP Securities Conference 23
Slide 24: Strategy in Action: Operators
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 25: Creating Operating Efficiencies
OPERATORS CREATING OPERATING EFFICIENCIES PROPRIETARY INFORMATION TECHNOLOGY SYSTEM ▪ Supports the efficient and accurate collection of tenant, financial, asset management and acquisitions information. ▪ Furthers our ability to drive value to shareholders by enabling our team to remain lean, yet eff
Slide 26: Free Access to Industry-Leading Business Intelligence Tools
OPERATORS DRIVING PERFORMANCE WITH FREE ACCESS TO INDUSTRY-LEADING BUSINESS INTELLIGENCE TOOLS November 12, 2020 JMP Securities Conference 26
Slide 27: 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 28: Diverse Operator Base, Passionate About Care
OPERATORS DIVERSE OPERATOR BASE, PASSIONATE ABOUT CARE Avamere 8.5% 1 Relationship Concentration North American By diversifying our tenant 7.4% concentration, we’ve Signature Healthcare curated a portfolio 7.3% equipped to perform in today’s dynamic health Other Cadia care market. 48.1% 7.2% Signatu
Slide 29: 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 November 12, 2020 JMP Securities Conference 29
Slide 30: Balanced Capital Structure
PERFORMANCE BALANCED CAPITAL STRUCTURE Capital Structure 1 Our diverse menu of capital options ensures that we Common Equity Value have ready access to low- 54% cost capital to fund our Unsecured Debt growth. 38% ENTERPRISE VALUE Our Credit Facility, which includes a $1.0 billion Revolving Credit Fa
Slide 31: Strong Investment Grade Credit Metrics
PERFORMANCE STRONG INVESTMENT GRADE CREDIT METRICS 1 SABRA 3Q20 INVESTMENT GRADE PEERS MEDIAN 2 LTM Net Debt to Adjusted EBITDA 4.91x 3 6.02x LTM Net Debt to Adjusted EBITDA - Incl. Unconsolidated Joint 5.48x 3 6.35x Venture Interest Coverage Ratio 5.41x 4.55x Debt as a % of Asset Value 35% 39% Secu
Slide 32: Favorable Profile with Staggered Maturities
PERFORMANCE FAVORABLE PROFILE WITH STAGGERED MATURITIES DEBT MATURITY PROFILE AT SEPTEMBER 30, 2020 (dollars in millions) 1 2 (1) Term loans are pre-payable at par. (2) Revolving Credit Facility is subject to two six-month extension options. November 12, 2020 JMP Securities Conference 32
Slide 33: Attractive Relative Valuation
PERFORMANCE ATTRACTIVE RELATIVE VALUATION Forward FFO Multiples 1 Dividend Yield 20.0x 12.0% 17.5x 10.0% 16.0x 13.7x 7.5% 7.8% 11.4x 12.3x 8.0% 7.0% 12.0x 10.7x 6.5% 9.4x 6.0% 5.3% 4.2% 8.0x 4.0% 4.0x 2.0% 0.0x 0.0% SBRA NHI LTC CTRE OHI Big 3 SBRA Big 3 CTRE LTC NHI OHI 2 Average 2 Average 3 Premiu
Slide 34: Well-Positioned Portfolio
PERFORMANCE WELL-POSITIONED PORTFOLIO SNF CONCENTRATION 1 TOP FIVE RELATIONSHIP SNF EBITDARM COVERAGE 1,3 SH EBITDARM COVERAGE 1 CONCENTRATION 1 85% 65% 62% 1.40x 2.89x 1.31x 1.27x 1.19x 65% 2.53x 63% 49% 1.13x 1.05x 57% 39% 38% 1.84x 1.84x 1.85x 27% 2 4 4 SBRA 2 NHI LTC OHI CTRE SBRA OHI LTC NHI CT
Slide 35: Appendix
APPENDIX November 12, 2020 JMP Securities Conference 35
Slide 36: 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 37: 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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