Sabra Touts $1 Billion Pipeline, ‘Flawless’ CCP Integration

It’s been a busy past few months for Sabra Health Care REIT (Nasdaq: SBRA), to say the least.

In August, company shareholders approved its merger with Care Capital Properties (NYSE: CCP). Then, in early September, the Irvine, California-based real estate investment trust (REIT) announced it was purchasing the real estate associated with 24 skilled nursing facilities for a total of $430 million.

A few weeks later, Sabra revealed that it had entered into a definitive agreement to acquire a 49% equity interest in a joint venture that owns 183 senior housing communities managed by Chicago-based operator Enlivant.

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All the while, Sabra is in the process of selling off all of its properties operated by Pennsylvania-based skilled nursing provider Genesis HealthCare (NYSE: GEN).

Now, after months of heavy activity, Sabra actually plans to quiet down, CEO Rick Matros indicated during the REIT’s third-quarter 2017 earnings call with analysts on Thursday.

“I think people can expect that things will be relatively quiet from us for the next few months,” Matros said. “Right now it’s probably a good thing for us to be quiet.”

Integrations proceeding ‘flawlessly’

Sabra’s third-quarter 2017 revenue of $100.15 million missed analysts’ expectations by $13.99 million, while its third-quarter FFO of 63 cents missed analysts’ expectations by 3 cents.

Still, the REIT’s various integrations and deal closings remain on track, Matros indicated.

“Everything’s going really smoothly,” he said.

The Enlivant deal, for instance, “is proceeding as expected,” and is now scheduled to close after January 1, 2018, according to Matros. He also sung the praises of the CCP integration.

“The integration of CCP is going pretty flawlessly, actually,” Matros said. “And the integration of North American, as well, was uneventful.”

A lot has changed since all of these deals were announced—including the look and feel of Sabra’s overall portfolio.

“Our skilled nursing exposure dropped from 73.5% to 64%,” Matros noted. “We feel good about that as well.”

$1 billion pipeline

Despite the company’s plan to quiet down for a bit, it still has major plans for 2018.

Sabra’s acquisition pipeline currently stands at $1 billion, primarily made up of senior housing, Matros said. Still, that could potentially change.

“I think the makeup of our acquisition pipeline right now is circumstantial,” Matros explained. “Six weeks from now it could be 40% skilled nursing.”

Currently, though, the properties that the REIT has in its pipeline are mainly triple-net, Matros said. Sabra’s acquisition of CCP has changed the type and number of potential deals the REIT is able to access, he added.

“We’re being shown everything now,” Matros said. All the while, the REIT will continue to concentrate on smaller deals, as it always has, he concluded.

Written by Mary Kate Nelson

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