Sabra Health Care REIT (Nasdaq: SBRA) is divvying up a 24-property portfolio previously leased to North American Health Care Inc. to The Ensign Group and Avamere Family of Companies.
Both existing tenants, Ensign (Nasdaq: ENSG) will now become one of the real estate investment trust’s (REITs) largest tenants — representing about 8% of annualized cash net operating income. Avamere continues to be one of Sabra’s largest tenants and also accounts for roughly 8% of annualized cash NOI.
“This is an opportunity to expand our relationship with Ensign, substantially improving the credit profile of our portfolio. Importantly, adding the four properties to Avamere’s existing Washington facilities enhances that portfolio as well, even more so after consideration of the recent increase in Washington’s Medicaid rates of nearly 20%,” Sabra CEO and Chair Rick Matros said in a statement.
Ensign is expected to add 20 California properties to two master leases with company subsidiaries with initial 18 and 20 year terms.
Avamere will add four properties in Washington to its existing master lease of nine other properties in the state with an initial 13 year term.
Sabra expects to see a total of $14.7 million in revenue from these facilities during the fourth financial quarter through the end of the transition period, the REIT said in an announcement on Monday ahead of its 3Q earnings call. This amounts to what Sabra would have received under North American’s previous leases.
The transition is expected to be complete by Feb. 1, 2023, pending the completion of certain regulatory approvals and other closing conditions.
Ensign CEO Barry Port said the California facilities were a “perfect fit” for one of the operator’s strongest and most mature markets. Ensign now operates 269 health care facilities across 13 states.
Ensign, in its 3Q earnings call late last month, marked the quarter one of its busiest on the acquisition front in years.
Avamere provides senior care services in more than 300 locations across 20 states.
“The North American portfolio represents the right geographic and strategic fit for Avamere in our growing Pacific Northwest footprint that aligns with our relationships with local hospitals and Med Advantage partners,” Avamere CEO Rick Miller said in a statement.
Companies featured in this article:
Avamere, Avamere Family of Companies, Ensign, Sabra Healh Care REIT, The Ensign Group
