Sabra Health Care Reit, Inc. · NASDAQ:SBRA
Sabra Health Care Reit — Wells Fargo 19th Annual Real Estate Securities Conference 2016
28 slides from Sabra Health Care Reit's conference presentation, Feb 23, 2016
Slide 1: Wells Fargo 19th Annual Real Estate Securities Conference
Wells Fargo 19th Annual Real Estate Securities Conference February 24, 2016 Relationship driven. Investor focused.
Slide 2: Strategic Overview
. 2 STRATEGIC OVERVIEW Multiple avenues to increase shareholder returns Create a diversified portfolio that is well positioned for the future of health care delivery Leverage Sabra’s operating expertise to develop strategic relationships with local & regional operators Improve Sabra’s cost of capita
Slide 3: Forest Park – Status Update: Key Transaction Terms
. 3 Key Transaction Terms Frisco – Real Estate Fort Worth – Construction Loan Dallas – Mortgage Loan • Sale pending for $96.3 million combined • Expected net proceeds to Sabra of $89.1 million to $94.1 million (1) • Q1 2016 expected aggregate loss of $30 million to $35 million, before consideration
Slide 4: Forest Park – Status Update (continued)
. 4 FOREST PARK – STATUS UPDATE (continued) Per Share Contribution To Normalized AFFO: Q4 2015 Full Year Assumed Net Proceeds (2) Assumed Repayment/ Sale Date Estimated 2016 Rent/ Interest Income Actual Run Rate(1) Diff Actual 2015 Expected 2016 (1) Diff Frisco $0.03 $0.01 $(0.02) $0.07 $0.03 $(0.04
Slide 5: Sabra's Portfolio by the Numbers
. 5 SABRA’S PORTFOLIO BY THE NUMBERS Revenue diversification is the name of the game Skilled nursing/ transitional care Genesis 1) Includes revenues from all investment activity through May 27, 2014 Private pay sources (1) (1) Non-private pay revenues for tenants and borrowers consist of revenues fr
Slide 6: The Future of Health Care Delivery
. 6 THE FUTURE OF HEALTH CARE DELIVERY The times they are a changing Skilled Nursing/ Transitional Care Long term care Higher-acuity, short-stay rehab, “step down” units for hospitals Senior Housing Developed by multi-family developers for self-sufficient residents Needs-based model, residents with
Slide 7: Thinking Outside the Box
. 7 Traditional REIT structures - Sale/leasebacks -Mortgage debt THINKING OUTSIDE THE BOX Deal structure flexibility drives competitive advantage Smaller investments with options to purchase RIDEA compliant structures Preferred equity & mezzanine debt Development agreements
Slide 8: Market Focus
. 8 MARKET FOCUS Bigger is not always better • Many opportunities exist outside of largest MSAs in U.S. • The percentage of the population over the age of 65 is greater in the markets where Sabra has invested than in the U.S. as a whole • Lower costs to build, coupled with favorable demographics and
Slide 9: Development Activity
. 9 DEVELOPMENT ACTIVITY Development relationships drive consistent deal flow for new, purpose-built facilities ($ in millions, except price per unit) 29 Total anticipated new investments $74.8 Total invested dollars through February 19, 2016 $240,000 Price per unit upon option exercise $635.3 Value
Slide 10: Target = Investment Grade
. 10 TARGET = INVESTMENT GRADE Main barriers to investment grade rating are size and diversification Sabra (1) “Big 3” (2) Net Debt to Adjusted EBITDA (3) 5.85x 5.48x 6.11x Debt as % of Enterprise Value 52% 36% 46% Interest Coverage Ratio 4.19x 4.21x 5.20x Fixed Charge Coverage Ratio 3.21x 3.32x 4.5
Slide 11: Portfolio Performance
Portfolio Performance
Slide 12: Strong Portfolio Performance: Occupancy and Skilled Mix
. 12 STRONG PORTFOLIO PERFORMANCE Portfolio occupancy and SNF/TC portfolio skilled mix 88.4% 87.6% 88.9% 90.8% 38.3% 40.8% 2014 2015 2014 2015 SNF/TC Senior Housing Skilled Mix Occupancy & Skilled Mix Solid skilled mix reflects focus on higher- acuity, short-stay skilled nursing/transitional care fa
Slide 13: Strong Portfolio Performance: SNF/TC EBITDAR Coverage
. 13 STRONG PORTFOLIO PERFORMANCE Skilled nursing/transitional care EBITDAR and EBITDARM coverage 1.25x 1.60x 1.36x 1.69x EBITDAR EBITDARM 2014 2015 (1) (1) EBITDAR and EBITDARM coverages include only Stabilized Facilities acquired before the three months ended December 31, 2015 and are only include
Slide 14: Strong Portfolio Performance: Senior Housing Coverage
. 14 STRONG PORTFOLIO PERFORMANCE Senior Housing EBITDAR and EBITDARM coverage 1.25x 1.46x 1.26x 1.45x EBITDAR EBITDARM 2014 2015 (1) Secure rental payments from an increasing portion of our portfolio (1) EBITDAR and EBITDARM coverages include only Stabilized Facilities acquired before the three mon
Slide 15: Strong Portfolio Performance: Fixed Charge Coverage
. 15 STRONG PORTFOLIO PERFORMANCE Fixed charge coverage (1) Fixed Charge Coverage is presented one quarter in arrears for tenants with significant corporate guarantees. See Definitions for definition of Fixed Charge Coverage. (for the twelve month periods ended December 31, 2014 and 2015) Tenant Fac
Slide 16: Financial Overview
Financial Overview
Slide 17: Capitalization and Cost of Capital
. 17 Capitalization and cost of capital $1,128 $699 $178 $145 $335 $187 Common Equity Market Value Senior Notes Mortgage Debt Preferred Equity Market Value Term Loans Revolving Credit Facility Net of Cash (1) (1) Common Equity Market Value and Preferred Equity Market Value are based on closing stock
Slide 18: Financial Results
. 18 FINANCIAL RESULTS Normalized AFFO/share, Normalized FFO/share and dividend/share $1.51 $1.59 $1.77 $2.12 $2.14 $0.52 $0.52 $0.53 $0.55 $1.31 $1.47 $1.84 $2.20 $2.33 $0.53 $0.53 $0.58 $0.64 $0.96 $1.32 $1.36 $1.51 $1.62 $0.39 $0.41 $0.41 $0.41 2011 2012 2013 2014 2015 Q1 2015 Q2 2015 Q3 2015 Q4
Slide 19: Financial Strength: Historical Net Debt to Adjusted EBITDA
. 19 FINANCIAL STRENGTH Historical net debt to adjusted EBITDA (1) 2.19x 2.65x 2.82x 4.48x 5.11x 1.90x 2.11x 1.92x 0.61x 0.74x 4.09x 4.76x 4.74x 5.09x 5.85x 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 Unsecured Leverage Secured Leverage Net Debt to Adjusted EBITDA • Maintaining total leve
Slide 20: Financial Strength: Historical LTM Interest Coverage
. 20 FINANCIAL STRENGTH Historical LTM interest coverage 3.17x 3.22x 3.85x 4.29x 4.19x 2011 2012 2013 2014 2015 Weighted average interest rate (2) declined from: 7.24% at December 31, 2011 to 4.68% of as of December 31, 2015 (1) Interest Coverage is calculated in accordance with the indentures relat
Slide 21: Financial Strength: Pro Forma Debt Maturities
. 21 FINANCIAL STRENGTH Pro Forma debt maturities Ample pro forma liquidity with no significant maturities until 2020 (1) Information assumes that the amended credit facility was entered into as of December 31, 2015. (2) Maturity may be extended for two six-month periods. (Pro Forma as of December 3
Slide 22: Appendix
Appendix
Slide 23: Key Credit Statistics
. 23 KEY CREDIT STATISTICS (1) Option One Option Three Ma December 31, 2014 December 31, 2015 Net Debt to Adjusted EBITDA (2) 5.09x 5.85x Interest Coverage 4.29x 4.19x Fixed Charge Coverage Ratio 3.28x 3.21x Total Debt/Asset Value 43% 47% Secured Debt/Asset Value 5% 6% Unencumbered Assets/Unsecured
Slide 24: Reconciliation of FFO, Normalized FFO, AFFO and Normalized AFFO
. 24 RECONCILIATION OF FFO, NORMALIZED FFO, AFFO and NORMALIZED AFFO Option One Option Three Ma (1) See Non-GAAP Financial Measures on slide 26 for further information. 2011 2012 2013 2014 2015 Q1 Q2 Q3 Q4 Net income attributable to common stockholders $ 12.8 $ 19.5 $ 25.7 $ 36.7 $ 69.2 $ 16.9 $ 14.
Slide 25: Forward Looking Statements
. 25 FORWARD LOOKING STATEMENTS Option One Option Three Ma 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 pres
Slide 26: Non-GAAP Financial Measures
. 26 NON-GAAP FINANCIAL MEASURES Option One Option Three Ma This presentation includes the following financial measures defined as non-GAAP financial measures by the SEC: funds from operations attributable to common stockholders (“FFO”), Normalized FFO, Adjusted FFO (“AFFO”), Normalized AFFO, FFO pe
Slide 27: Definitions
. 27 DEFINITIONS Option One Option Three Ma 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 12 month periods prior to and inc
Slide 28: Definitions
. 28 DEFINITIONS Option One Ma Occupancy Percentage. Occupancy Percentage represents the facilities’ average operating occupancy for the period indicated. The percentages are calculated by dividing the actual census from the period presented by the available beds/units for the same period. Occupancy
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