Sabra Health Care Reit, Inc. · NASDAQ:SBRA
Sabra Health Care Reit — Q3 2023 Earnings Presentation
36 slides from Sabra Health Care Reit's earnings presentation, Nov 7, 2023
Slide 1: Committed Cost to Long-Term Value
Committed Cost to Long-Term Value Investor Presentation | November 6, 2023
Slide 2: Disclaimers: Forward-Looking Statements
Disclaimers Forward-Looking Statements This presentation contains “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. Any statements that do not relate to historical or current facts or matters are forward-looking statements. These statements may be ident
Slide 3: Disclaimers: Tenant and Borrower Information, Non-GAAP
Disclaimers Tenant and Borrower Information This presentation includes information (e.g., EBITDARM Coverage and Occupancy Percentage) regarding certain of our tenants that lease properties from us and our borrowers, most of which are not subject to SEC reporting requirements. The information related
Slide 4: Uniquely Positioned to Thrive
LOREM IPSUM Heading Uniquely Positioned to Thrive Our passion for quality care and deep industry experience uniquely position Sabra to succeed in the dynamic healthcare real estate market. We have the size, know-how and resilient balance sheet necessary to deliver long-term value to shareholders. No
Slide 5: CEO quote on aligning with operators
STRATEGY “We know what happens inside our buildings matters most. That’s why we align ourselves with operators who skillfully and compassionately care for the residents and patients in the buildings we own.” -Rick Matros (he/him), Chief Executive Officer November 6, 2023 Investor Presentation 5
Slide 6: Portfolio Strategy
STRATEGY Portfolio Strategy Growing Demand > 80 population is expected to grow 4% per year through 2040 Drug overdose deaths have increased > 6x since 2000 Skilled Nursing Mission-Driven Senior Housing Needs-Based Passionate workforce Positive societal impact Behavioral Lifestyle enhancement Post-ac
Slide 7: Execution — Passion Meets Know-how
STRATEGY Execution — Passion Meets Know-how Unique, Accretive Investments - Utilize our operational and asset management experience to identify and capitalize on new opportunities where off-market price dislocation exists. Support Operator Expansion - Be the capital partner of choice for the expansi
Slide 8: Illustrative NOI Upside
STRATEGY Illustrative NOI Upside We believe the Annualized Cash NOI upside opportunity for Sabra’s portfolio is attractive. The upside is a result of the Company’s internal growth initiatives over the past several years, as well as the benefits of the broader healthcare industry’s continued recovery
Slide 9: Recent Highlights
STRATEGY IN ACTION Recent Highlights Inspirit Transition ▪ As previously disclosed, Sabra successfully transitioned the 11 wholly-owned senior housing managed properties formerly operated by Enlivant to Inspirit Senior Living on July 6, 2023. Performance has so far exceeded expectations, highlighted
Slide 10: CIO quote on executing strategy
STRATEGY IN ACTION “By consistently and deliberately executing our strategy, we deliver long-term value to our shareholders and provide the capital our tenants need to invest in their business and deliver quality care.” -Talya Nevo-Hacohen (she/her), Chief Investment Officer November 6, 2023 Investo
Slide 11: Adaptive Reuse for Behavioral Health
STRATEGY IN ACTION Adaptive Reuse for Behavioral Health • Sabra’s growing behavioral health portfolio represents a total investment of approximately $800 million, which accounts for roughly 14% of the Company’s Annualized Cash NOI as of September 30, 2023. • Our portfolio of owned addiction treatmen
Slide 12: Good for the Planet. Good for Our Stakeholders.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE Good for the Planet. Good for Our Stakeholders. “The question for us is not how important our ESG principles are, but rather how we can effectively and efficiently integrate them into our business strategy in ways that are self-sustaining and accretive.” -Rick Ma
Slide 13: ESG Framework
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ESG Framework We understand that good governance underpins sustainability, strengthens the accountability of our Board and management team and supports the long-term interests of our stakeholders. Our ESG principles are intrinsically tied to our objective to driv
Slide 14: E-Initiative Roadmap
ENVIRONMENTAL, SOCIAL AND GOVERNANCE E-Initiative Roadmap Improving the environment starts with enabling our operators and is central to everything we do. We take a comprehensive, integrated and collaborative approach to environmental stewardship. November 6, 2023 Investor Presentation 14
Slide 15: Environmental Stewardship
ENVIRONMENTAL, SOCIAL AND GOVERNANCE Environmental Stewardship Our industry-leading Green Links program is applying our E-Initiative Roadmap directly to the benefit and support of our NNN tenants including, where appropriate, financing environmentally beneficial improvements after exchanging and ass
Slide 16: Delos WISE Forum - Finding Solutions to Accelerate Change
ENVIRONMENTAL, SOCIAL AND GOVERNANCE Delos WISE Forum - Finding Solutions to Accelerate Change As an extension of our WISE Initiative (Wellness in Senior Living Environment), Sabra helped organize and sponsor the inaugural WISE Forum bringing together like-minded REITs, along with industry leaders,
Slide 17: Committed to Diversity, Equity & Inclusion
ENVIRONMENTAL, SOCIAL AND GOVERNANCE Committed to Diversity, Equity & Inclusion We believe a diverse workforce is essential to our continued success and gives us a competitive advantage. We integrated DE&I into our hiring process, which has proven to be successful in our hiring of top talent from di
Slide 18: Our Success Is Predicated on a Healthy Portfolio
PORTFOLIO Our Success Is Predicated on a Healthy Portfolio As of September 30, 2023 76% 89% 83% 77% 410 Investments SNF/TC SH - Leased Average Occupancy Percentage BH Hosp./Oth. 1 65 Relationships 35% Skilled Mix 1 8 Years Wtd. Avg. 1.68x 1.17x 1.92x 6.72x SNF/TC SH - Leased BH Hosp./Oth. 1 Remainin
Slide 19: Diverse Portfolio, Positioned to Perform
PORTFOLIO Diverse Portfolio, Positioned to Perform As of September 30, 2023 1 1 Relationship Concentration Asset Class Concentration Signature Healthcare, 9.3% Senior Housing - Managed, 16.1% The Ensign Group, 8.3% Other, 45.4% Avamere Family of Companies, 7.8% Behavioral Health, 14.4% Signature Beh
Slide 20: Historical SNF Supply
PORTFOLIO Historical SNF Supply Since 2000, the 85-or-older population has grown by 60%, compared to a 10% decline in skilled nursing beds over the same time frame. SNF Supply and Demand SNF Beds (000s) Population 85 or older (000s) 8,000 6,923 6,701 7,000 6,380 6,539 6,166 5,753 5,905 6,000 5,444 5
Slide 21: Medicaid and Medicare Rates
PORTFOLIO Medicaid and Medicare Rates As of September 30, 2023 1,2 2 Medicaid Average Daily Rate Medicare Average Daily Rate $300 $800 $780 $281 $764 $275 $278 $750 $738 $266 $713 $250 $252 CAGR: 3.9% $239 $700 CAGR: 2.0% $673 $225 $221 $649 $650 $194 $207 $618 $627 $200 $187 $182 $605 $595 $597 $60
Slide 22: Quote on investing in operator relationships
PORTFOLIO “We invest in relationships with operators who are nimble and poised to deliver excellent care now and in the future.” -Peter Nyland, Executive Vice President, Asset Management November 6, 2023 Investor Presentation 22
Slide 23: Advancing the Quality of Care
OPERATORS Advancing the Quality of Care We Work with Operators Who Are: • Committed to their mission • Nimble • Regional experts • In markets with favorable demographics • Well-positioned for the future of healthcare delivery November 6, 2023 Investor Presentation 23
Slide 24: We Support Our Operators
OPERATORS We Support Our Operators We Invest in Our Tenants’ Success: • Redevelopment / Adaptive Reuse • Expansion • Strategic development • Flexible equity and debt capital solutions November 6, 2023 Investor Presentation 24
Slide 25: Operator testimonial: Leo Brown Group
OPERATORS “What started with a single sale/leaseback transaction for a senior living community in Indiana has grown into a multi-state, multi- community relationship. We truly value the collaboration, insight and support we receive from Sabra. Sabra is who we think about first when it comes to a cap
Slide 26: CFO quote on balance sheet and access to capital
PERFORMANCE “Our strong balance sheet and ready access to capital allows us to thoughtfully finance investment opportunities and drive value for our shareholders.” –Michael Costa, Chief Financial Officer November 6, 2023 Investor Presentation 26
Slide 27: Prudent Balance Sheet Management
PERFORMANCE Prudent Balance Sheet Management • Term loans hedged to an average rate of 4.0%, resulting in interest savings of over $16 Line of Credit 1% million annually. Common Equity Value 58% Fixed Rate Bonds • Ample liquidity of $1.0 billion 30% ensures we have ready access CONSOLIDATED to capit
Slide 28: Strong Investment-Grade Credit Metrics
PERFORMANCE Strong Investment-Grade Credit Metrics 1 Investment-Grade Sabra 3Q 23 2 peers median 3 Net Debt to Adjusted EBITDA 5.57x 5.07x 3 Interest Coverage Ratio 4.33x 3.98x Debt as a % of Asset Value 36% 37% Secured Debt as a % of Asset Value 1% 4% We continue to focus on strengthening our balan
Slide 29: Favorable Profile with Staggered Maturities
PERFORMANCE Favorable Profile with Staggered Maturities Debt maturity profile at September 30, 2023 (Dollars in millions) 6.6% 6.0% $1,200 5.1% 3.9% 3.2% 2.9% 3.1% $1,000 2.9% 2.9% 2.9% 2.9% $2 $800 $600 $967 $2 $2 $400 $2 800 500 540 $200 33 350 $0 $2 $2 100 $2 $2 $29 $0 — 2023 2024 2025 2026 2027
Slide 30: Fixed Charge Coverage and Leverage
PERFORMANCE Fixed Charge Coverage and Leverage As of September 30, 2023 Fixed Charge Coverage & Sabra’s Leverage Weighted Average Interest Rate 5.85x 5.08x 5.14x 5.03x 5.66x 5.49x 5.38x 5.57x 5.09x 5.22x 6.3% 4.52x 4.89x4.88x 4.98x 4.24x 4.71x 4.60x 4.07x 5.4% 3.70x 3.28x 3.21x 3.20x 2.92x 2.76x 4.5
Slide 31: Attractive Valuation Relative to Direct Peers
PERFORMANCE Attractive Valuation Relative to Direct Peers 1 2 Forward FFO multiples Dividend yield 8.4% 7.9% 14.7x 7.0% 7.1% 11.3x 11.6x 12.0x 10.3x 5.0% SBRA OHI NHI LTC CTRE SBRA CTRE NHI LTC OHI 3 Premium / discount to consensus NAV Portfolio composition (% Annualized Cash NOI) 29.3% 27.3% 1% 5%
Slide 32: Well-Positioned Portfolio
PERFORMANCE Well-Positioned Portfolio 1 SNF concentration Top five relationships SNF EBITDARM SH EBITDARM 1 1,3 1 concentration Coverage Coverage 90% 2.73x 1.26x 1.26x 1.20x 67% 67% 2.47x 1.17x 1.12x 71% 1.92x 56% 45% 1.68x 54% 41% 1.50x 39% 35% 2 SBRA2 NHI LTC OHI CTRE SBRA OHI LTC NHI CTRE SBRA 4
Slide 33: Appendix
Appendix Appendix November 6, 2023 Investor Presentation 33
Slide 34: 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 35: Definitions
APPENDIX Definitions Funds From Operations (“FFO”) and Adjusted FFO (“AFFO”).* The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company also believes that funds from operations, or FFO, as defined in accordance with the definition used by the Nati
Slide 36: Definitions
APPENDIX Definitions Skilled Nursing/Transitional Care. Skilled Nursing/Transitional Care facilities include skilled nursing, transitional care, multi-license designation and mental health facilities. Specialty Hospitals and Other. Includes acute care, long-term acute care and rehabilitation hospita
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