Sabra Health Care Reit, Inc. · NASDAQ:SBRA
Sabra Health Care Reit — Stifel Nicolaus Senior Housing & Healthcare Real Estate Conference (January 2012)
28 slides from Sabra Health Care Reit's conference presentation, Jan 17, 2012
Slide 1: Stifel Nicolaus Senior Housing & Healthcare Real Estate Conference Company Presentation
STIFEL NICOLAUS SENIOR HOUSING & HEALTHCARE REAL ESTATE CONFERENCE COMPANY PRESENTATION January 17, 2012
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, EBITDARM, funds from operations (“FFO”), adjusted FFO (“AFFO”) and normalized AFFO, FFO per diluted share, AFFO per diluted share and normaliz
Slide 4: Company and Investment Highlights
4 Company Update and Investment Highlights
Slide 5: Sabra Has Competitive Industry Presence
SABRA HAS COMPETITIVE INDUSTRY PRESENCE 5 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 97 health care investments(1) 76 skilled
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
Slide 7: Sabra Capitalizes on Opportunity
SABRA CAPITALIZES ON OPPORTUNITY 7 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 prope
Slide 8: Acquisitions Yield Diversification
ACQUISITIONS YIELD DIVERSIFICATION Strong acquisition activity since inception with approximately $213.2 million of capital invested through December 6, 2011 6 new operator relationships 11 new assets in 4 new states (9 SNFs, 1 AL and 1 Hospital) Steady pipeline across spectrum of health car
Slide 9: Recent Investment Highlights
Encore Portfolio (Closed November 1, 2011) - Texas 9 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 Annualized G
Slide 10: Impact of Acquisitions: Annualized Revenue by Asset Class
10 88.0% 4.1% 7.2% 0.7% As of December 31, 2010 As of September 30, 2011 Acquisitions are changing the revenue makeup of our portfolio (1) Pro forma assumes all real estate acquisitions closed through December 6, 2011 were completed as of January 1, 2011. Pro forma also excludes revenues related to
Slide 11: Impact of Acquisitions: Annualized Revenue by Tenant
11 Sun 76.7% Texas Regional Medical Center 7.2% Cadia Portfolio 11.6% Aurora Portfolio 2.4% Other 2.1% As of December 31, 2010 As of September 30, 2011 Acquisitions are changing the revenue makeup of our portfolio Sabra’s Annualized Revenue By Tenant IMPACT OF ACQUISITIONS (as of September 30, 2011)
Slide 12: Rent Coverage Analysis
RENT COVERAGE ANALYSIS 12 Estimated Facility EBITDAR(M) Coverage After Medicare Cut(2) Facility EBITDARM Coverage (x) 1.70x 1.58x 3.15x 1.74x 1.70x Facility EBITDAR Coverage (x) 1.24x 1.07x 3.08x 1.49x 1.32x Estimated Tenant EBITDAR Coverage After Medicare Cut and Mitigation(3) Tenant EBITDAR Covera
Slide 13: Sabra's Portfolio & Primary Tenant
13 Sabra’s Portfolio & Primary Tenant
Slide 14: Strong Portfolio Performance
14 90.1% 88.2% 89.2% 87.3% 20% 40% 60% 80% 100% 2009 2010 Q3 2010 Q3 2011 90.0% 88.2% 88.2% 87.2% 20% 40% 60% 80% 100% 2009 2010 Q3 2010 Q3 2011 89.0% 87.3% 87.5% 87.7% 20% 40% 60% 80% 100% 2009 2010 Q3 2010 Q3 2011 39.2% 39.3% 38.6% 41.8% 10% 20% 30% 40% 50% 2009 2010 Q3 2010 Q3 2011 Historical ski
Slide 15: Property Diversification
PROPERTY DIVERSIFICATION (as of December 6, 2011) 1 1 1 1 3 2 2 1 4 3 1 1 5 2 1 1 2 2 11 2 1 8 5 2 8 3 2 9 1 1 States with existing facilities (Equity investments – 97 total) CCRC (total: 1) Multi-Licensed Designation (total: 10) Mental Health (total: 2) Assisted Living (total: 6) Skilled Nursing (t
Slide 16: Geographically Diverse Portfolio
GEOGRAPHICALLY DIVERSE PORTFOLIO New Hampshire Connecticut Kentucky Ohio Florida Texas Montana Delaware Other States 97 equity investments in 23 states $92.9 mm annualized pro forma rental revenue(1) (1) Pro forma assumes all real estate acquisitions closed through December 6, 2011 were completed as
Slide 17: Lease Structure Summary
17 LEASE STRUCTURE SUMMARY Sun TRMC Oak Brook Cadia Portfolio Aurora Portfolio Encore Portfolio Creekside Triple-net Master lease cross defaulted N/A N/A N/A Maturities 2020-2025 2034 2026 2026 2026 2026 2021 Escalators Lesser of CPI or 2.5% annually 6.0% every 5 years 2.5% ann
Slide 18: Lease Structure Summary Continued
18 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/ be
Slide 19: Primary Tenant Overview
PRIMARY TENANT OVERVIEW (as of September 30, 2011) States with facilities Number of facilities per state Key Sun portfolio information Number of Centers: 199 Property Type: Skilled Nursing Multi-License Designation Assisted Living Mental Health Independent Living 165 (83%) 14 (7%) 10 (5%)
Slide 20: Financially Secure Primary Tenant
FINANCIALLY SECURE PRIMARY TENANT 20 $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,
Slide 21: Financial Overview
21 Financial Overview
Slide 22: Financial Policies
FINANCIAL POLICIES $0.32 per share paid Q2 2011, Q3 2011 and Q4 2011 Target of 80% AFFO (dividends for Q1, Q2 and Q3 higher due to acquisition timing and increase in shares from equity offering) 22 Dividend Acquisitions and Investments Continued focus on triple-net lease structure in near term
Slide 23: Financial Highlights: Income Statement and Other Data
FINANCIAL HIGHLIGHTS 23 Income statement and other data Revenues $ 21.5 $ 23.2 $ 57.9 $ 69.7 G&A costs 4.7 4.8 10.3 10.4 EBITDA 16.8 18.4 47.6 59.4 Net income 2.3 3.4 5.7 14.2 FFO 9.2 10.8 24.9 36.6 AFFO 12.5 14.2 31.9 41.5 Normalized AFFO 12.5 14.2 32.2 41.8 Per share data: Diluted EPS $ 0.07 $ 0.0
Slide 24: Financial Highlights: Balance Sheet and Other Data
FINANCIAL HIGHLIGHTS 24 Balance sheet and other data Cash $ 56.4 $ 46.3 Real Estate, Gross Book Value 757.1 774.0 Real Estate, Asset Value (2) 909.5 926.9 Mortgage Note Receivable 5.3 - Total Debt 384.2 384.2 Total Equity 329.9 331.4 Capitalization 714.1 715.6 Liquidity 156.4 146.3 Debt Covenants (4
Slide 25: FY 2012 Guidance
FY 2012 GUIDANCE 25 Low High Net income from continuing operations 0.64$ 0.68$ Add: Depreciation and amortization 0.89 0.90 FFO 1.53$ 1.58$ Straight line rent adjustment (0.13) (0.14) Stock based compensation 0.18 0.18 Amortization of deferred financing costs 0.09 0.09 Acquisition pursuit costs 0.04
Slide 26: Pro Forma Debt Maturity Schedule
26 $0.8 $3.2 $3.5 $3.7 $86.0 $1.7 $1.8 $1.9 $2.1 $2.2 $51.8 $225 $0 $50 $100 $150 $200 $250 Mortgage Notes Senior Unsecured Notes Minimal near-term debt maturities PRO FORMA DEBT MATURITY SCHEDULE Weighted Average Cost of Debt(1): 7.25% (1) 6.00% weighted average interest rate on mortgage debt and 8
Slide 27: Investment Highlights Summary
27 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 28: Reconciliation of Net Income to EBITDA, FFO, AFFO and Normalized AFFO
28 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 $ 3.4 $ 5.7 $ 14.2 Interest expense 7.6 7.6 22.7 22.7 Depreciation and amortization 6.9 7.4 19.2 22.5 EBITDA $ 16.8 $ 18.4 $ 47.6 $