Sabra Health Care Reit, Inc. · NASDAQ:SBRA
Sabra Health Care Reit — NAREIT 2016 REITWorld Annual Convention
29 slides from Sabra Health Care Reit's conference presentation, Nov 16, 2016
Slide 1: NAREIT 2016 REITWorld Annual Convention
NAREIT 2016 REITWorld Annual Convention November 15-17, 2016 Relationship driven. Investor focused.
Slide 2: Strategic Overview
. 2 STRATEGIC OVERVIEW Multiple avenues to increase shareholder value 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 capital
Slide 3: Genesis Dispositions - Overview
. 3 • Jointly selling 35 facilities (out of a total of 78 facilities in our Genesis portfolio) as contemplated by three separate MOUs with Genesis • All net proceeds go to Sabra – estimated $226.2 million remaining to be received ($191.5 million net of debt assumptions and payoffs) • Annual cash ren
Slide 4: Genesis Dispositions – Long Term Benefits to Sabra
. 4 • Accelerated reduction in concentrations (1) • Negligible impact expected on future NAFFO per share growth • $191.5 million of future investment activity to be funded from net sales proceeds (instead of debt and equity capital) which mitigates slow down in growth of absolute NAFFO • Leverage go
Slide 5: Genesis Dispositions – Long Term Benefits to Sabra
. 5 • Enhanced portfolio • Sale of less desirable facilities; Genesis exits less desirable markets • Rent reallocations and maturity extensions • Creates strong coverage levels for longer dated lease maturities • Including the estimated $16.6 million reduction in rents following the sales, rent asso
Slide 6: The Future of Health Care Delivery
. 6 THE FUTURE OF HEALTH CARE DELIVERY The times they are a changing Skilled Nursing/ Transitional Care Long term care Higher-acuity, short-stay rehab, “step down” units for hospitals Senior Housing Developed by multi-family developers for self-sufficient residents Needs-based model, residents with
Slide 7: The Future of Health Care Delivery
. 7 Skilled Nursing reimbursement • Medicare rate increase of 2.4% effective as of October 1, 2016 • Medicaid environment modestly favorable • Operating partners successfully engaging in BPCI model • Comprehensive Care for Joint Replacement (“CJR”) model began April 1, 2016, which holds hospitals ac
Slide 8: Thinking Outside the Box
. 8 Traditional REIT structures - Sale/leasebacks -Mortgage debt Deal structure flexibility drives competitive advantage Smaller investments with options to purchase RIDEA compliant structures Preferred equity & mezzanine debt Development agreements THINKING OUTSIDE THE BOX Forward purchase commitme
Slide 9: Market Focus
. 9 MARKET FOCUS Bigger is not always better • Many opportunities exist outside of largest MSAs in U.S. • The percentage of the population over the age of 65 is greater in the markets where Sabra has invested than in the U.S. as a whole • Lower costs to build, coupled with favorable demographics and
Slide 10: Proprietary Development Pipeline
. 10 PROPRIETARY DEVELOPMENT PIPELINE Proprietary pipeline drives consistent deal flow for new, purpose-built facilities ($ in millions; investment amounts through October 31, 2016) Completed Projects In Process Future Total Projects 6 23 10 39 Current Investment Amount $ 82.5 $ 93.9 $ - $ 176.4 Rea
Slide 11: Proprietary Development Pipeline
. 11 $32.6 $14.5 $70.0 $24.4 $116.8 $27.0 $18.4 $23.7 $59.1 $17.8 $74.6 $7.7 2 1 3 1 4 1 1 1 2 1 5 1 $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 Texas Wisconsin Colorado Florida Indiana Kentucky Minnesota Nevada Ohio Tennessee Texas Wisconsin Investment Amount Est. Real Estate Value Upon Complet
Slide 12: New Assets in Real Estate Portfolio
. 12 NEW ASSETS IN REAL ESTATE PORTFOLIO Includes facilities built since 2010 and owned by Sabra ($ in millions; investment amounts through October 31, 2016) $10.1 $10.7 $23.0 $10.1 $5.6 $26.6 $41.4 $26.6 $- $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 Arizona Colorado Illinois Indiana Texas
Slide 13: Target = Investment Grade
. 13 TARGET = INVESTMENT GRADE Main barriers to investment grade rating are size and diversification Sabra (1) “Big 3” (2) Net Debt to Adjusted EBITDA (3) 5.29x 5.67x 6.10x Debt as % of Enterprise Value 45% 33% 44% Interest Coverage Ratio 3.99x 3.89x 5.24x Fixed Charge Coverage Ratio 3.17x 3.60x 4.7
Slide 14: Portfolio Performance
Portfolio Performance
Slide 15: Strong Portfolio Performance
. 15 STRONG PORTFOLIO PERFORMANCE Portfolio occupancy and SNF/TC portfolio skilled mix 87.2% 87.3% 90.7% 89.5% 39.1% 43.7% 2015 2016 2015 2016 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 16: Strong Portfolio Performance
. 16 1.28x 1.62x 1.49x 1.79x EBITDAR EBITDARM 2015 2016 (1) (1) STRONG PORTFOLIO PERFORMANCE Skilled Nursing/Transitional Care (1) EBITDAR and EBITDARM coverage for each period presented include only Stabilized Facilities owned by Sabra as of the end of the respective period and are only included in
Slide 17: Strong Portfolio Performance
. 17 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 September 30, 2015 and 2016) Tenant Fa
Slide 18: Financial Overview
Financial Overview
Slide 19: Capitalization and Cost of Capital
. 19 $1,360 $700 $165 $151 $340 Common Equity Market Value Senior Notes Mortgage Debt Preferred Equity Market Value Term Loans (1) Capitalization and cost of capital (1) Common Equity Market Value and Preferred Equity Market Value are based on closing stock prices of $20.84 and $26.22, respectively,
Slide 20: Financial Results
. 20 FINANCIAL RESULTS Normalized AFFO/share, Normalized FFO/share and dividend/share $1.51 $1.59 $1.77 $2.12 $2.14 $0.55 $0.53 $0.58 $0.53 $1.31 $1.47 $1.84 $2.20 $2.33 $0.64 $0.56 $0.61 $0.54 $1.29 $1.33 $1.38 $1.54 $1.62 $0.41 $0.42 $0.42 $0.42 2011 2012 2013 2014 2015 Q4 2015 Q1 2016 Q2 2016 Q3
Slide 21: Financial Strength
. 21 FINANCIAL STRENGTH Historical net debt to adjusted EBITDA (1) 2.19x 2.65x 2.82x 4.48x 5.11x 4.57x 1.90x 2.11x 1.92x 0.61x 0.74x 0.72x 4.09x 4.76x 4.74x 5.09x 5.85x 5.29x 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 9/30/2016 Unsecured Leverage Secured Leverage Net Debt to Adjusted EBI
Slide 22: Financial Strength
. 22 FINANCIAL STRENGTH Historical LTM interest coverage 3.17x 3.22x 3.85x 4.29x 4.19x 3.99x 2011 2012 2013 2014 2015 Q3 2016 Cost of permanent debt (2) declined from: 7.24% at December 31, 2011 to 4.54% of as of September 30, 2016 (1) Interest Coverage is calculated in accordance with the indenture
Slide 23: Financial Strength: Debt Maturities
. 23 $1.0 $4.1 $4.3 $4.4 $4.6 $19.7 $4.3 $4.4 $4.6 $4.7 $108.9 $340.1 $500.0 $500.0 $200.0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Thereafter Mortgage Notes Term Loans Credit Facility Available Senior Notes FINANCIAL STRENGTH Debt maturities Ample liquidity with no significant maturities u
Slide 24: Appendix
Appendix
Slide 25: Key Credit Statistics
. 25 KEY CREDIT STATISTICS (1) Option One Option Three Ma December 31, 2015 September 30, 2016 Net Debt to Adjusted EBITDA (2) 5.85x 5.29x Interest Coverage 4.19x 3.99x Fixed Charge Coverage Ratio 3.21x 3.17x Total Debt/Asset Value 47% 44% Secured Debt/Asset Value 6% 6% Unencumbered Assets/Unsecured
Slide 26: Reconciliation of FFO, Normalized FFO, AFFO and Normalized AFFO
. 26 RECONCILIATION OF FFO, NORMALIZED FFO, AFFO and NORMALIZED AFFO Option One Option Three Ma (1) See Non-GAAP Financial Measures on slide 28 for further information. (2) Other normalizing items for FFO include, for the applicable period(s), non-RIDEA facility operating expenses, ineffectiveness g
Slide 27: Forward Looking Statements
. 27 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 28: Non-GAAP Financial Measures
. 28 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 29: Definitions
. 29 DEFINITIONS Option One Option Three Ma EBITDAR Coverage. Represents the ratio of EBITDAR to contractual rent for owned facilities. EBITDAR Coverage is a supplemental measure of an operator/tenant's ability to meet their cash rent and other obligations to the Company. However, its usefulness is
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