Q2 2026 Sabra Health Care REIT Inc Earnings Call Transcript
Key Points
- Closed approximately $600 million in investments year-to-date, including $100 million in skilled nursing, with an additional $100 million in SHOP investments expected to close before year-end.
- Same-store Managed Senior Housing portfolio delivered strong performance with revenue growth of 8.6% year-over-year, cash NOI growth of 13.7%, and occupancy up 170 basis points to 88.2%.
- Net debt to adjusted EBITDA leverage improved significantly to 4.61 times from 5.04 times at the end of the first quarter, positioning the company comfortably below its previous target of 5 times.
- Increased 2026 earnings guidance, with normalized FFO per share growth of approximately 7% and normalized AFFO per share growth of approximately 8% at the midpoint.
- Proactive portfolio management yielded meaningful benefits, including a rent reset with Avamere that increased annualized fixed cash rent to $48 million and moving two tenants from cash basis to accrual basis accounting, reflecting their strengthened performance.
- Investment pipeline remains robust, with over $1 billion in deals under review, almost entirely in the managed senior housing (SHOP) segment, and the company remains competitive on new investments.
- Dividend is well covered, with a payout ratio of 75% of second quarter normalized AFFO per share.
- Recorded a $102.4 million provision for loan losses and other reserves, primarily related to the discounted payoff of the RCA mortgage loan, which was excluded from normalized results but represents a significant capital loss.
- Triple-net senior housing portfolio experienced a drop in occupancy and coverage due to the transition of a high-performing asset to the SHOP portfolio, which negatively impacted that segment's results.
- Interest and other income decreased to $5.8 million from $10 million in the first quarter, primarily due to reduced interest income from the discounted payoff of the RCA mortgage loan.
- Cash interest expense increased to $27.4 million from $26 million in the first quarter due to higher borrowings under the credit facility to fund completed investment activity.
- The company wrote off $1.3 million of straight-line rent receivable from a triple-net senior housing facility that was transitioned to the managed senior housing portfolio.
- Medicaid rate growth is expected to come in around 2%, reverting to pre-pandemic levels, which could moderate the pace of revenue growth for skilled nursing operators.
- The company is pursuing value-add SHOP investments with occupancy around 80%, which carry more risk than stabilized assets, though management notes these are with existing operators and have a clear path to stabilization.
Good day, everyone. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sabra Health Care REIT second quarter 2026 earnings call.
(Operator Instructions) I would now like to turn the call over to Lukas Hartwich, EVP Finance. Please go ahead, Mr. Hartwich.
Thank you. Good morning. Before we begin, I want to remind you that we will be making forward-looking statements in our comments and in response to your questions concerning our expectations regarding our future financial position and results of operations, including our earnings guidance for 2026, and our expectations regarding our tenants and operators, and our expectations regarding our acquisition, disposition, and investment plans.
These forward-looking statements are based on managementâs current expectations and are subject to risks and uncertainties that could cause actual results to differ materially, including the risks listed in our Form
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