Sabra Health Care Reit, Inc. · NASDAQ:SBRA
Sabra Health Care Reit — 2020 NIC Fall Conference
37 slides from Sabra Health Care Reit's conference presentation, Oct 5, 2020
Slide 1: Consistent Strategy. Deliberate Execution.
CONSISTENT STRATEGY. DELIBERATE EXECUTION. 2020 NIC Fall Conference Investing in Seniors Housing & Care Properties October 6-8 | 13-15, 2020 – The Essential Virtual Experience
Slide 2: Delivering Value
DELIVERING VALUE Our vast industry knowledge, experienced executive team and entrepreneurial spirit make Sabra uniquely positioned to succeed in our dynamic industry. We have the size, know-how, balance sheet and passion to deliver long-term value to shareholders. October 6-8 | 13-15, 2020 2020 NIC
Slide 3: Strategy
STRATEGY “WE’VE BUILT A STRONG AND RESILIENT FOUNDATION.” – Rick Matros, Chief Executive Officer October 6-8 | 13-15, 2020 2020 NIC Fall Conference 3
Slide 4: Sabra Today
STRATEGY SABRA TODAY 36% 69 $5.9B1 DEBT/ASSET VALUE OPERATOR RELATIONSHIPS ENTERPRISE VALUE $950M+ 9% 21.9% LIQUIDITY MAX RELATIONSHIP NOI CAGR SINCE 2011 CONCENTRATION (1) Includes Sabra’s 49% pro rata share of the debt of its unconsolidated joint venture. Share price as of 10/2/2020. October 6-8 |
Slide 5: A Resilient and Agile REIT
STRATEGY A RESILIENT AND AGILE REIT Investment ▪ Invest in high-quality, strong-performing senior housing and SNF portfolios ▪ Relationship diversification ▪ Geographic diversification (investments in 43 states and Canada) ▪ Grow private-pay through investments in high-quality managed senior housing
Slide 6: Strategy in Action
STRATEGY IN ACTION “BY OPPORTUNISTICALLY EXECUTING OUR STRATEGY, WE CONTINUE TO DELIVER LONG-TERM VALUE FOR OUR SHAREHOLDERS.” – Talya Nevo-Hacohen, Chief Investment Officer October 6-8 | 13-15, 2020 2020 NIC Fall Conference 6
Slide 7: Strengthened Balance Sheet by Reducing Leverage
STRATEGY IN ACTION STRENGTHENED BALANCE SHEET BY REDUCING LEVERAGE Lowered cost of PERMANENT DEBT by 77 basis points to 3.51% 34 vs 72 Reduced NET DEBT TO ADJUSTED EBITDA1 ratio from 5.66x to 5.00x DECEMBER 31, 2018 vs JUNE 30, 2020 (1) Net Debt to Adjusted EBITDA excludes the unconsolidated joint v
Slide 8: Significantly Improved Credit Metrics
STRATEGY IN ACTION SIGNIFICANTLY IMPROVED CREDIT METRICS INTEREST COVERAGE FIXED CHARGE COVERAGE TOTAL DEBT/ASSET VALUE + 1.22x to 5.36x + 1.47x to 5.17x IMPROVED 1300 bps DECEMBER 31, 2018 vs JUNE 30, 2020 October 6-8 | 13-15, 2020 2020 NIC Fall Conference 8
Slide 9: Investment Thesis
INVESTMENT THESIS “WE CUSTOMIZE OUR FINANCIAL SOLUTIONS TO PROVIDE OPERATORS WITH CAPITAL TO INVEST IN THEIR BUSINESS AND SUPPORT THE DELIVERY OF QUALITY CARE.” – Talya Nevo-Hacohen, Chief Investment Officer October 6-8 | 13-15, 2020 2020 NIC Fall Conference 9
Slide 10: Opportunistically Sourced, Creatively Structured and Prudently Financed
INVESTMENT THESIS OPPORTUNISTICALLY SOURCED, CREATIVELY STRUCTURED AND PRUDENTLY FINANCED Unique, Accretive Investments Utilize our operational and asset management expertise to identify and capitalize on new opportunities where off-market price dislocation exists. Support Operator Expansion Be the
Slide 11: Portfolio
PORTFOLIO “OUR PORTFOLIO AND TENANTS ARE POSITIONED TO DELIVER QUALITY CARE NOW AND IN THE FUTURE.” – Peter Nyland, Executive Vice President Asset Management October 6-8 | 13-15, 2020 2020 NIC Fall Conference 11
Slide 12: COVID-19 Impact on Our Business
PORTFOLIO COVID-19 IMPACT ON OUR BUSINESS ▪ Through September, we have collected all of our forecasted rents. ▪ Our balance sheet remains strong, with liquidity of $955.3 million as of June 30, 2020, no material debt maturities until 2024 and Net Debt to Adjusted EBITDA of 5.00x (5.54x including the
Slide 13: COVID-19 Impact on Our Portfolio
PORTFOLIO COVID-19 IMPACT ON OUR PORTFOLIO As a result of the COVID-19 pandemic, the operations of our facilities, like many other healthcare facilities around the country, have been impacted in several ways, most notably by occupancy declines and increased operating expenses. OCCUPANCY ▪ Occupancy
Slide 14: COVID-19 Impact on Our Portfolio (Cont.)
PORTFOLIO COVID-19 IMPACT ON OUR PORTFOLIO (CONT.) ▪ The combined impact of these factors noted on slide 13 has lowered earnings recognized in our Senior Housing - Managed portfolio and reduced EBITDARM coverages for our Senior Housing - Leased portfolio. Although our Skilled Nursing/Transitional Ca
Slide 15: COVID-19: Mitigation
PORTFOLIO COVID-19: MITIGATION ▪ In response to the COVID-19 pandemic, the federal government approved several relief packages that have benefited our skilled nursing facility operators. To date, few of these relief packages have been available to our senior housing operators. However, on September
Slide 16: COVID-19: Mitigation (Cont.)
PORTFOLIO COVID-19: MITIGATION (CONT.) Estimated Mitigates Available (All Mitigation EBITDARM Sabra Source Reductions Description Relationships) The CARES Act appropriated $100 billion to the Public Health and Social Services Emergency Fund (“PHSSEF” or the “Fund”) for hospitals and other providers
Slide 17: COVID-19: Mitigation (Cont.)
PORTFOLIO COVID-19: MITIGATION (CONT.) ▪ In addition to the mitigation sources on slide 16, there have been other governmental actions taken that benefit skilled nursing/transitional care operators. These actions include the waiver of the requirement for skilled nursing/transitional care patients to
Slide 18: Superior Returns Start with a Strong Portfolio
PORTFOLIO SUPERIOR RETURNS START WITH A STRONG PORTFOLIO AS OF JUNE 30, 2020 611 82%SNF/TC 86%SH - Leased SH84% - Managed 2 71%Hosp/Oth. Investments1 Average Occupancy Percentage 69 39% Relationships Skilled Mix 8 SNF/TC/1.91xHosp/Oth . 1.38xSH - Leased Years Wtd. Avg. Remaining Rent Coverage3 Lease
Slide 19: Proprietary Pipeline of Purpose-Built Assets
PORTFOLIO PROPRIETARY PIPELINE OF PURPOSE-BUILT ASSETS ENHANCES THE QUALITY OF OUR PORTFOLIO COMPLETED AND PLANNED PROJECTS PROJECTS CURRENT TOTAL INVESTMENT 25 $390M EXPECTED REAL EXPECTED INITIAL CASH ESTATE VALUE 1 YIELD ON RENTS $493M 7.6% (1) Represents the value of completed projects at Sabra’
Slide 20: Effective Asset Management and Strong Operator Relationships
PORTFOLIO EFFECTIVE ASSET MANAGEMENT AND STRONG OPERATOR RELATIONSHIPS Senior Housing - Managed 16.1% Asset Mix 1 Crafted portfolio of high- Senior Housing - Leased quality and diverse 10.0% facilities passionate about care. Specialty Hospitals and Other Skilled Nursing / 10.2% Transitional Care 62.
Slide 21: High Quality of Care, Strong Performance
HIGH QUALITY OF CARE STRONG PERFORMANCE October 6-8 | 13-15, 2020 2020 NIC Fall Conference 21
Slide 22: Our Operators Are Driven by an Unwavering Passion
OPERATORS OUR OPERATORS ARE DRIVEN BY AN UNWAVERING PASSION: ADVANCING THE QUALITY OF CARE We Work With Operators Who Are: ▪ Highly engaged ▪ Nimble ▪ Regional experts ▪ In markets with favorable demographics ▪ Well positioned for the future of health care delivery October 6-8 | 13-15, 2020 2020 NIC
Slide 23: We Support Our Operators
OPERATORS WE SUPPORT OUR OPERATORS We Invest in Our Tenants’ Success: ▪ Redevelopment ▪ Expansion ▪ Strategic development ▪ Flexible equity and debt capital solutions October 6-8 | 13-15, 2020 2020 NIC Fall Conference 23
Slide 24: Strategy in Action: Operators
STRATEGY IN ACTION OPERATORS “WHEN IT COMES “WE’VE CONSISTENTLY “ONE OF THE MANY ADVANTAGES OFTO WORKING EXECUTING DELIVERED VALUE TO OUR STRATEGY, OURWITH SHAREHOLDERS SABRA IS THAT THEY GET WHATWE IT’S DO WHATLIKE TO WE WHILEBE AN MAINTAININGOPERATOR .” A SAY WE ARE STRONG BALANCE - Brent Weil, Pr
Slide 25: Creating Operating Efficiencies
OPERATORS CREATING OPERATING EFFICIENCIES PROPRIETARY INFORMATION TECHNOLOGY SYSTEM ▪ Supports the efficient and accurate collection of tenant, financial, asset management and acquisitions information. ▪ Furthers our ability to drive value to shareholders by enabling our team to remain lean, yet eff
Slide 26: Driving Performance with Free Access to Business Intelligence Tools
OPERATORS DRIVING PERFORMANCE WITH FREE ACCESS TO INDUSTRY-LEADING BUSINESS INTELLIGENCE TOOLS October 6-8 | 13-15, 2020 2020 NIC Fall Conference 26
Slide 27: PointRight Program for SNF Tenants
OPERATORS POINTRIGHT PROGRAM FOR SNF TENANTS Data Integrity Audit Real-time MDS verification analyzes the accuracy of the Minimum Data Set (MDS) assessment prior to CMS submission. Each MDS is checked for logical and clinical coding accuracy, with recommended actions when inaccurate, incomplete, or
Slide 28: Diverse Operator Base, Passionate About Care
OPERATORS DIVERSE OPERATOR BASE, PASSIONATE ABOUT CARE Avamere 8.4% 1 Relationship Concentration North American By diversifying our tenant 7.3% concentration, we’ve Signature Healthcare curated a portfolio 7.2% equipped to perform in today’s dynamic health Other Cadia 47.5% care market. 7.0% Signatu
Slide 29: Performance
PERFORMANCE “WE’VE DELIVERED ON OUR PROMISE TO STRENGTHEN OUR BALANCE SHEET AND ARE POISED TO CAPITALIZE ON FUTURE GROWTH OPPORTUNITIES.” – Harold Andrews, Jr., Chief Financial Officer October 6-8 | 13-15, 2020 2020 NIC Fall Conference 29
Slide 30: Balanced Capital Structure
PERFORMANCE BALANCED CAPITAL STRUCTURE Capital Structure 1 Our diverse menu of capital Common Equity Value options ensures that we 52% have ready access to low- cost capital to fund our growth. Unsecured Debt 40% ENTERPRISE VALUE Our Credit Facility, which includes a $1.0 billion Revolving Credit Fa
Slide 31: Strong Investment Grade Credit Metrics
PERFORMANCE STRONG INVESTMENT GRADE CREDIT METRICS 1 SABRA 2Q20 INVESTMENT GRADE PEERS MEDIAN 2 LTM Net Debt to Adjusted EBITDA 5.00x 3 5.89x LTM Net Debt to Adjusted EBITDA - Incl. Unconsolidated Joint 5.54x 3 6.31x Venture Interest Coverage Ratio 5.36x 4.63x Debt as a % of Asset Value 36% 39% Secu
Slide 32: Favorable Profile with Staggered Maturities
PERFORMANCE FAVORABLE PROFILE WITH STAGGERED MATURITIES DEBT MATURITY PROFILE AT JUNE 30, 2020 (dollars in millions) $1,600 $433 $1,400 $1,200 $1,000 $901 927 $800 $585 $600 592 81 $407 $400 73 57 $114 $192 $174 500 $200 350 350 300 70 $3 $3 $38 189 105 100 $0 2020 2021 2022 2023 2024 2025 2026 2027
Slide 33: Attractive Relative Valuation
PERFORMANCE ATTRACTIVE RELATIVE VALUATION 2020 FFO Multiples 1 Dividend Yield 20.0x 12.0% 16.4x 10.0% 16.0x 13.9x 8.1% 8.5% 12.1x 8.0% 11.3x 6.9% 12.0x 10.1x 6.3% 6.0% 5.3% 8.2x 4.5% 8.0x 4.0% 4.0x 2.0% 0.0x 0.0% SBRA OHI NHI LTC CTRE Big 3 SBRA Big 3 CTRE LTC NHI OHI 2 Average 2 Average 3 Premium /
Slide 34: Well-Positioned Portfolio
PERFORMANCE WELL-POSITIONED PORTFOLIO SNF CONCENTRATION 1 TOP FIVE RELATIONSHIP SNF RENT COVERAGE 1,3 SH RENT COVERAGE 1 CONCENTRATION 1 85% 66% 2.81x 82% 63% 1.40x 1.38x 1.39x 2.39x 49% 1.18x 1.19x 1.20x 62% 56% 1.76x 39% 39% 1.66x 1.68x 26% 2 4 4 SBRA 2 NHI LTC OHI CTRE SBRA OHI LTC NHI CTRE SBRA
Slide 35: Appendix
APPENDIX October 6-8 | 13-15, 2020 2020 NIC Fall Conference 35
Slide 36: 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 37: Forward-Looking Statements
APPENDIX FORWARD-LOOKING STATEMENTS 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 include, but a