Sabra Health Care Reit, Inc. · NASDAQ:SBRA
Sabra Health Care Reit — Jefferies Global Healthcare and Life Science REIT Conference 2013
25 slides from Sabra Health Care Reit's conference presentation, Apr 2, 2013
Slide 1: Jefferies Global Healthcare and Life Science REIT Conference Presentation April 2013
Jefferies Global Healthcare and Life Science REIT Conference Presentation April 2013
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS 2 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 also include all stat
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: EBITDAR, EBITDARM, funds from operations (“FFO”), adjusted FFO (“AFFO”), and Normalized AFFO. These measures may be different than non-GAAP financial measures
Slide 4: Strategic Overview
Strategic Overview ASABRA
Slide 5: Market Thesis
5 MARKET THESIS • “Big Three” Health Care REITS: Elephant hunters • Smaller operators lack capital Market Conditions Opportunity Health care industry is extremely fragmented Limited capital flowing to local & regional operators Arbitrage between public and private markets Strategy Partner to smaller
Slide 6: Investment Thesis: Focus on needs-driven facilities
INVESTMENT THESIS 6 Focus on needs-driven facilities Observations • Quality of operator critical • SNFs remain low-cost option for ◦ ◦ care • Not all operators are “mom & pop” • Building age less important Investment Characteristics • Quality of care • Market location • Relationship with referral so
Slide 7: Opportunistic Investing
OPPORTUNISTIC INVESTING 7 SNF AL / MC IL Acute Care Hospital Equity Mezzanine Debt Mortgage Debt RIDEA Development Creative approaches to meet operators’ needs
Slide 8: Impact of Acquisitions: Annualized Revenue by Tenant
8 As of December 31, 2010 Pro forma as of December 31, 2012, 36.8% of total annualized revenue derived from acquisitions Sabra’s Annualized Revenue: By Tenant IMPACT OF ACQUISITIONS $70.2 million $94.6 million As of December 31, 2011 Pro Forma as of December 31, 2012(1) $128.9 million (1) Assumes th
Slide 9: Diversifying portfolio across spectrum of health care
9 Diversifying portfolio across spectrum of health care Sabra’s Annualized Revenue: By Asset Class IMPACT OF ACQUISITIONS As of December 31, 2011 Pro-forma as of December 31, 2012 (1) As of December 31, 2010 (1) Assumes the New Dawn Sun City West mortgage loan, Bee Cave preferred equity investments
Slide 10: Acquisition Case Study: Meridian
10 Crafting solutions: Building relationships * * * * * ACQUISITION CASE STUDY: MERIDIAN * * * * * Experienced SNF developers transforming from merchant builder to sustainable business model Dec. 2010: Introduced to Meridian as potential JV partner in SNF development program Mar. 2012: Sabra closes
Slide 11: Acquisition Case Study: Stoney River
11 * Sabra grows as partnerships flourish * * * * ACQUISITION CASE STUDY: STONEY RIVER * * * * * * Sep. 2011: Introduced to Stoney River principals through an equity partner Dec. 2011: Sabra tours Stoney River – Marshfield in Central Wisconsin Aug. 2012: Signed agreement to proceed with development
Slide 12: Acquisition Case Study: New Dawn
12 * Partnering to create next generation of memory care facilities * * * * ACQUISITION CASE STUDY: NEW DAWN * * * * * * Jul. 2012: Sabra introduced to New Dawn through its financial advisor Sep. 2012: Closed sale/leaseback on Aurora, Colorado facility Oct. 2012: Explored partial recapitilization of
Slide 13: Financial Overview
13 Financial Overview
Slide 14: Financial Strength: Capitalization
14 FINANCIAL STRENGTH (dollars in millions) $461 $225 $161 As of December 31, 2010 $806 $331 $152 $144 Pro Forma as of December 31, 2012 Common Equity Market Value Senior Notes Mortgage Debt Preferred Equity Capitalization $847 million (1) $1.4 billion Track record of access to capital markets (1) A
Slide 15: Financial Results: Normalized AFFO, FFO and dividend per share
FINANCIAL RESULTS 15 Normalized AFFO/share & FFO/share Normalized AFFO/share & dividend/share $0.36 $0.40 $0.38 $0.37 $0.38 $0.42 $0.39 $0.41 $0.41 $0.32 $0.32 $0.32 $0.33 $0.33 $0.33 $0.33 $0.33 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 PF Q
Slide 16: Strong Portfolio Performance
16 Historical overall occupancy(1) Historical SNF portfolio skilled mix(1) (2) STRONG PORTFOLIO PERFORMANCE (as of December 31, 2012) 41.8% 37.7% 39.9% 36.4% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% Trailing 12 Months, Q4 2011 Trailing 12 Months, Q4 2012 Q4 2011 Q4 2012 88.5% 88.3% 88.4% 88.2% 85.0
Slide 17: Rent Coverage Analysis: Skilled Nursing
17 EBITDAR Coverage (1) EBITDARM Coverage (1) RENT COVERAGE ANALYSIS (as of December 31, 2012) 1.59x 1.59x 1.74x 1.45x 1.30x 1.40x 1.50x 1.60x 1.70x 1.80x 1.90x 2.00x 2.10x 2.20x Trailing 3 months, Q4 2011 Trailing 3 months, Q4 2012 Trailing 12 months, Q4 2011 Trailing 12 months, Q4 2012 (1) EBITDAR
Slide 18: Rent Coverage Analysis: Senior Housing
18 EBITDAR coverage (1) (2) (3) EBITDARM coverage (1) (2) (3) RENT COVERAGE ANALYSIS (as of December 31, 2012) 1.55x 1.36x 1.73x 1.21x 1.00x 1.10x 1.20x 1.30x 1.40x 1.50x 1.60x 1.70x 1.80x 1.90x 2.00x 2.10x 2.20x Trailing 3 months, Q4 2011 Trailing 3 months, Q4 2012 Trailing 12 months, Q4 2011 Trail
Slide 19: Financial Strength: Leverage and Interest Coverage
2.49x 2.18x 1.85x 1.76x 1.67x 2.03x 1.53x 2.03x 1.24x 3.47x 3.07x 2.60x 2.50x 2.37x 2.26x 3.15x 2.69x 2.65x 0.00x 1.00x 2.00x 3.00x 4.00x 5.00x 6.00x 7.00x Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 PF Q4 2013 Secured Leverage Unsecured Leverage 4.04x FINANCIAL STRENGTH 19 LTM C
Slide 20: Financial Strength: Debt Maturities
FINANCIAL STRENGTH 20 Debt Maturities (dollars in millions) $194.0 $0 $50 $100 $150 $200 $250 $300 $350 2013 2014 2015 2016 2017 2018 2019 2020 2021 Thereafter Mortgage Notes Outstanding Revolver Unused Revolver Senior Notes $325.0 $4.1 $2.3 $3.9 $2.1 $2.2 $2.4 $2.5 $2.7 $43.4 $86.5 Pro forma liquid
Slide 21: Virtuous Cycle
21 Make accretive investments Diversify from Genesis Diversify payor sources Lower risk Lower cost of capital and enhance competitive position Higher AFFO VIRTUOUS CYCLE
Slide 22: Appendix
Appendix ASABRA
Slide 23: Debt Covenants
DEBT COVENANTS (1) 23 (1) Based on defined terms in the senior notes indenture and amended credit agreement. (2) Assumes the origination of the New Dawn Sun City West mortgage loan, Bee Cave preferred equity investments and the issuance of $143.8 million of preferred equity were completed as of Dece
Slide 24: Reconciliation of Net Income to FFO, AFFO and Normalized AFFO
24 Reconciliation of Net Income to Funds from Operations (FFO), Adjusted Funds from Operations (AFFO) and Normalized AFFO (1) Assumes that all 2012 investments, the refinance of six mortgage notes, pay off of one mortgage note, the amendment to the Sun lease agreements in connection with the acquisi
Slide 25: Definitions
DEFINITIONS 25 Acute Care Hospital. A facility designed to provide extended medical and rehabilitation care for patients who are clinically complex and have multiple acute or chronic conditions. EBITDAR Coverage. EBITDAR for the trailing 3 and 12 month periods prior to and including the period prese
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