Sabra Health Care REIT, Inc. (“Sabra,” the “Company” or “we”)
(Nasdaq: SBRA) today announced its results of operations for the
third quarter of 2023.
THIRD QUARTER 2023 RESULTS AND RECENT
EVENTS
- Results per diluted common share for the third quarter of 2023
were as follows:
- Net Loss: $(0.07)
- FFO: $0.33
- Normalized FFO: $0.33
- AFFO: $0.35
- Normalized AFFO: $0.34
- EBITDARM Coverage Summary:
- Skilled Nursing/Transitional Care: 1.68x (1.61x excluding
Provider Relief Funds)
- Senior Housing - Leased: 1.17x
- Behavioral Health: 1.92x
- Specialty Hospitals & Other: 6.72x
- During the third quarter of 2023, Sabra generated $80 million
of gross proceeds from the disposition of 13 skilled nursing and
two senior housing facilities. Net proceeds were used to reduce the
outstanding balance on the Company’s revolving credit
facility.
- As previously disclosed, Sabra successfully transitioned the 11
wholly-owned senior housing managed properties formerly operated by
Enlivant to Inspirit Senior Living on July 6, 2023. Performance has
so far exceeded expectations, highlighted by occupancy in September
2023 increasing more than 230 bps compared to June 2023.
- On November 6, 2023, Sabra’s Board of Directors declared a
quarterly cash dividend of $0.30 per share of common stock. The
dividend will be paid on November 30, 2023 to common stockholders
of record as of the close of business on November 17, 2023.
BUSINESS UPDATE
Same-Store - Senior Housing
Managed
Sabra’s same-store senior housing managed portfolio performed
well as it continues to recover from the pandemic, highlighted by a
170 bps sequential increase in quarterly occupancy, to 81.9%. On a
year-over-year basis, third quarter revenue grew by 6.5% driven
primarily by higher REVPOR. Healthy top-line growth combined with
roughly flat operating expenses resulted in a 28.2% year-over-year
increase in quarterly Cash NOI for this portfolio.
Commenting on the third quarter’s results, Rick Matros, CEO and
Chair, said, “We believe our business is moving further and further
away from the pandemic-induced bottom. While we expect labor issues
to persist, we do see continued improvement. Despite this
challenge, occupancy and rent coverage in our skilled and senior
housing NNN portfolios remain on an upward trajectory. During the
quarter, our senior housing managed portfolio showed strong
improvement in all critical metrics. Our balance sheet continues to
be exemplary and that, together with our strategy of focusing on
our internal growth, has led to improvements in our cost of
capital. With an improved cost of capital, the door to external
growth has started to open in some cases. To the extent we execute
on these opportunities, we are focused on conservatively
underwriting lower risk singles and doubles.”
LIQUIDITY
As of September 30, 2023, we had approximately $1.0 billion of
liquidity, consisting of unrestricted cash and cash equivalents of
$33.3 million and available borrowings of $967.4 million under our
revolving credit facility. As of September 30, 2023, we also had
$500.0 million available under the ATM program.
CONFERENCE CALL AND COMPANY INFORMATION
A conference call with a simultaneous webcast to discuss the
2023 third quarter results will be held on Tuesday, November 7,
2023 at 10:00 am Pacific Time. The webcast URL is
https://events.q4inc.com/attendee/646608122. The dial-in number for
U.S. participants is (888) 880-4448. For participants outside the
U.S., the dial-in number is (646) 960-0572. The conference ID
number is 1382596. A digital replay of the call will be available
on the Company’s website at www.sabrahealth.com. The Company’s
supplemental information package for the third quarter will also be
available on the Company’s website in the “Investors” section.
ABOUT SABRA
As of September 30, 2023, Sabra’s investment portfolio included
377 real estate properties held for investment (consisting of (i)
240 Skilled Nursing/Transitional Care facilities, (ii) 43 senior
housing communities (“Senior Housing - Leased”), (iii) 61 senior
housing communities operated by third-party property managers
pursuant to property management agreements (“Senior Housing -
Managed”), (iv) 18 Behavioral Health facilities and (v) 15
Specialty Hospitals and Other facilities), 12 investments in loans
receivable (consisting of two mortgage loans and 10 other loans),
five preferred equity investments and two investments in
unconsolidated joint ventures. As of September 30, 2023, Sabra’s
real estate properties held for investment included 37,606
beds/units, spread across the United States and Canada.
FORWARD-LOOKING STATEMENTS SAFE HARBOR
This release contains “forward-looking” statements as defined in
the Private Securities Litigation Reform Act of 1995. Any
statements that do not relate to historical or current facts or
matters are forward-looking statements. These statements may be
identified, without limitation, by the use of “expects,”
“believes,” “intends,” “should” or comparable terms or the negative
thereof. Examples of forward-looking statements include all
statements regarding our expectations regarding labor, occupancy
and rent coverage trends; our expectations regarding continued
recovery from the pandemic; and our other expectations regarding
our future financial position, results of operations, cash flows,
liquidity, business strategy, growth opportunities, potential
investments and dispositions, and plans and objectives for future
operations and capital raising activity.
Our actual results may differ materially from those projected or
contemplated by our forward-looking statements as a result of
various factors, including, among others, the following: pandemics
or epidemics, including COVID-19, and the related impact on our
tenants, borrowers and Senior Housing - Managed communities;
increased labor costs and historically low unemployment; increases
in market interest rates and inflation; operational risks with
respect to our Senior Housing - Managed communities; competitive
conditions in our industry; the loss of key management personnel;
uninsured or underinsured losses affecting our properties;
potential impairment charges and adjustments related to the
accounting of our assets; the potential variability of our reported
rental and related revenues as a result of Accounting Standards
Update (“ASU”) 2016-02, Leases, as amended by subsequent ASUs;
risks associated with our investment in our unconsolidated joint
ventures; catastrophic weather and other natural or man-made
disasters, the effects of climate change on our properties and a
failure to implement sustainable and energy-efficient measures;
increased operating costs and competition for our tenants,
borrowers and Senior Housing - Managed communities; increased
healthcare regulation and enforcement; our tenants’ dependency on
reimbursement from governmental and other third-party payor
programs; the effect of our tenants, operators or borrowers
declaring bankruptcy or becoming insolvent; our ability to find
replacement tenants and the impact of unforeseen costs in acquiring
new properties; the impact of litigation and rising insurance costs
on the business of our tenants; the impact of required regulatory
approvals of transfers of healthcare properties; environmental
compliance costs and liabilities associated with real estate
properties we own; our tenants’, borrowers’ or operators’ failure
to adhere to applicable privacy and data security laws, or a
material breach of our or our tenants’, borrowers’ or operators’
information technology; our concentration in the healthcare
property sector, particularly in skilled nursing/transitional care
facilities and senior housing communities, which makes our
profitability more vulnerable to a downturn in a specific sector
than if we were investing in multiple industries; the significant
amount of and our ability to service our indebtedness; covenants in
our debt agreements that may restrict our ability to pay dividends,
make investments, incur additional indebtedness and refinance
indebtedness on favorable terms; adverse changes in our credit
ratings; our ability to make dividend distributions at expected
levels; our ability to raise capital through equity and debt
financings; changes and uncertainty in macroeconomic conditions and
disruptions in the financial markets; risks associated with our
ownership of property outside the U.S., including currency
fluctuations; the relatively illiquid nature of real estate
investments; our ability to maintain our status as a real estate
investment trust (“REIT”) under the federal tax laws; compliance
with REIT requirements and certain tax and tax regulatory matters
related to our status as a REIT; changes in tax laws and
regulations affecting REITs; the ownership limits and takeover
defenses in our governing documents and under Maryland law, which
may restrict change of control or business combination
opportunities; and the exclusive forum provisions in our
bylaws.
Additional information concerning risks and uncertainties that
could affect our business can be found in our filings with the
Securities and Exchange Commission (the “SEC”), including in Part
I, Item 1A of our Annual Report on Form 10-K for the year ended
December 31, 2022. We do not intend, and we undertake no
obligation, to update any forward-looking information to reflect
events or circumstances after the date of this release or to
reflect the occurrence of unanticipated events, unless required by
law to do so.
TENANT AND BORROWER INFORMATION
This release includes information regarding certain of our
tenants that lease properties from us and our borrowers, most of
which are not subject to SEC reporting requirements. The
information related to our tenants and borrowers that is provided
in this release has been provided by, or derived from information
provided by, such tenants and borrowers. We have not independently
verified this information. We have no reason to believe that such
information is inaccurate in any material respect. We are providing
this data for informational purposes only.
NOTE REGARDING NON-GAAP FINANCIAL MEASURES
This release includes the following financial measures defined
as non-GAAP financial measures by the SEC: Cash NOI, funds from
operations (“FFO”), Normalized FFO, Adjusted FFO (“AFFO”),
Normalized AFFO, FFO per diluted common share, Normalized FFO per
diluted common share, AFFO per diluted common share and Normalized
AFFO per diluted common share. These measures may be different than
non-GAAP financial measures used by other companies, and the
presentation of these measures is not intended to be considered in
isolation or as a substitute for financial information prepared and
presented in accordance with U.S. generally accepted accounting
principles. An explanation of these non-GAAP financial measures is
included under “Reporting Definitions” in this release, and
reconciliations of these non-GAAP financial measures to the GAAP
financial measures we consider most comparable are included on the
Investors section of our website at
https://ir.sabrahealth.com/investors/financials/quarterly-results.
SABRA HEALTH CARE REIT,
INC.
CONSOLIDATED STATEMENTS OF
(LOSS) INCOME
(dollars in thousands, except per
share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenues:
Rental and related revenues (1)
$
93,085
$
84,214
$
283,229
$
297,268
Resident fees and services
59,748
47,610
174,897
133,973
Interest and other income
8,794
8,940
25,991
28,585
Total revenues
161,627
140,764
484,117
459,826
Expenses:
Depreciation and amortization
43,242
47,427
140,211
137,855
Interest
28,156
27,071
85,024
77,573
Triple-net portfolio operating
expenses
4,304
5,120
13,243
14,983
Senior housing - managed portfolio
operating expenses
44,523
36,705
132,124
103,835
General and administrative
10,759
9,676
30,793
28,721
Provision for (recovery of) loan losses
and other reserves
328
(217
)
549
(12
)
Impairment of real estate
—
60,857
7,064
72,602
Total expenses
131,312
186,639
409,008
435,557
Other (expense) income:
Loss on extinguishment of debt
—
(140
)
(1,541
)
(411
)
Other income (expense)
2,229
994
2,570
(1,101
)
Net loss on sales of real estate
(46,545
)
(80
)
(75,893
)
(4,581
)
Total other (expense) income
(44,316
)
774
(74,864
)
(6,093
)
(Loss) income before loss from
unconsolidated joint ventures and income tax expense
(14,001
)
(45,101
)
245
18,176
Loss from unconsolidated joint
ventures
(645
)
(4,384
)
(2,136
)
(9,715
)
Income tax expense
(455
)
(579
)
(1,509
)
(1,118
)
Net (loss) income
$
(15,101
)
$
(50,064
)
$
(3,400
)
$
7,343
Net (loss) income, per:
Basic common share
$
(0.07
)
$
(0.22
)
$
(0.01
)
$
0.03
Diluted common share
$
(0.07
)
$
(0.22
)
$
(0.01
)
$
0.03
Weighted average number of common shares
outstanding, basic
231,224,692
230,982,227
231,197,375
230,936,032
Weighted average number of common shares
outstanding, diluted
231,224,692
230,982,227
231,197,375
231,779,750
(1)
See page 5 for additional details
regarding Rental and related revenues.
SABRA HEALTH CARE REIT,
INC.
CONSOLIDATED STATEMENTS OF
(LOSS) INCOME - SUPPLEMENTAL INFORMATION
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Cash rental income
$
88,006
$
92,966
$
265,044
$
288,532
Straight-line rental income
849
2,006
3,699
7,042
Straight-line rental income receivable
write-offs
(992
)
(16,606
)
(1,510
)
(17,068
)
Above/below market lease amortization
1,456
1,569
4,592
4,730
Above/below market lease intangible
write-offs
—
—
—
326
Operating expense recoveries
3,766
4,279
11,404
13,706
Rental and related revenues
$
93,085
$
84,214
$
283,229
$
297,268
SABRA HEALTH CARE REIT,
INC.
CONSOLIDATED BALANCE
SHEETS
(dollars in thousands, except per
share data)
September 30, 2023
December 31, 2022
Assets
Real estate investments, net of
accumulated depreciation of $1,002,484 and $913,345 as of September
30, 2023 and December 31, 2022, respectively
$
4,603,014
$
4,959,343
Loans receivable and other investments,
net
417,947
411,396
Investment in unconsolidated joint
ventures
135,755
134,962
Cash and cash equivalents
33,256
49,308
Restricted cash
5,602
4,624
Lease intangible assets, net
32,749
40,131
Accounts receivable, prepaid expenses and
other assets, net
152,239
147,908
Total assets
$
5,380,562
$
5,747,672
Liabilities
Secured debt, net
$
47,789
$
49,232
Revolving credit facility
32,623
196,982
Term loans, net
534,011
526,129
Senior unsecured notes, net
1,735,055
1,734,431
Accounts payable and accrued
liabilities
128,039
142,259
Lease intangible liabilities, net
34,192
42,244
Total liabilities
2,511,709
2,691,277
Equity
Preferred stock, $0.01 par value;
10,000,000 shares authorized, zero shares issued and outstanding as
of September 30, 2023 and December 31, 2022
—
—
Common stock, $0.01 par value; 500,000,000
shares authorized, 231,219,523 and 231,009,295 shares issued and
outstanding as of September 30, 2023 and December 31, 2022,
respectively
2,312
2,310
Additional paid-in capital
4,491,917
4,486,967
Cumulative distributions in excess of net
income
(1,665,045
)
(1,451,945
)
Accumulated other comprehensive income
39,669
19,063
Total equity
2,868,853
3,056,395
Total liabilities and equity
$
5,380,562
$
5,747,672
SABRA HEALTH CARE REIT,
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
Nine Months Ended September
30,
2023
2022
Cash flows from operating activities:
Net (loss) income
$
(3,400
)
$
7,343
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
140,211
137,855
Non-cash rental and related revenues
(6,781
)
4,970
Non-cash interest income
(380
)
(1,683
)
Non-cash interest expense
9,179
8,300
Stock-based compensation expense
5,468
5,367
Loss on extinguishment of debt
1,541
411
Provision for (recovery of) loan losses
and other reserves
549
(12
)
Net loss on sales of real estate
75,893
4,581
Impairment of real estate
7,064
72,602
Loss from unconsolidated joint
ventures
2,136
9,715
Distributions of earnings from
unconsolidated joint ventures
1,705
—
Other non-cash items
(3,704
)
2,167
Changes in operating assets and
liabilities:
Accounts receivable, prepaid expenses and
other assets, net
(10,660
)
(5,631
)
Accounts payable and accrued
liabilities
3,013
2,161
Net cash provided by operating
activities
221,834
248,146
Cash flows from investing activities:
Acquisition of real estate
(39,630
)
(83,985
)
Origination and fundings of loans
receivable
(9,614
)
(4,500
)
Origination and fundings of preferred
equity investments
(11,015
)
(5,813
)
Additions to real estate
(63,794
)
(33,809
)
Escrow deposits for potential
investments
—
(836
)
Repayments of loans receivable
8,674
4,885
Repayments of preferred equity
investments
4,828
4,173
Investment in unconsolidated joint
ventures
(4,797
)
(128,019
)
Net proceeds from the sales of real
estate
248,222
62,816
Net proceeds from sales-type lease
25,490
—
Insurance proceeds
6,001
—
Distributions in excess of earnings from
unconsolidated joint ventures
544
—
Net cash provided by (used in) investing
activities
164,909
(185,088
)
Cash flows from financing activities:
Net (repayments of) borrowings from
revolving credit facility
(165,338
)
147,353
Proceeds from term loans
12,188
—
Principal payments on term loans
—
(63,750
)
Principal payments on secured debt
(1,479
)
(17,030
)
Payments of deferred financing costs
(18,135
)
(6
)
Payment of contingent consideration
(17,900
)
(2,500
)
Issuance of common stock, net
(2,194
)
(4,394
)
Dividends paid on common stock
(208,079
)
(207,861
)
Net cash used in financing activities
(400,937
)
(148,188
)
Net decrease in cash, cash equivalents and
restricted cash
(14,194
)
(85,130
)
Effect of foreign currency translation on
cash, cash equivalents and restricted cash
(880
)
392
Cash, cash equivalents and restricted
cash, beginning of period
53,932
115,886
Cash, cash equivalents and restricted
cash, end of period
$
38,858
$
31,148
Supplemental disclosure of cash flow
information:
Interest paid
$
72,911
$
68,778
Supplemental disclosure of non-cash
investing activities:
Decrease in loans receivable and other
investments due to acquisition of real estate
$
4,644
$
14,311
SABRA HEALTH CARE REIT,
INC.
FUNDS FROM OPERATIONS (FFO),
NORMALIZED FFO,
ADJUSTED FUNDS FROM OPERATIONS
(AFFO) AND NORMALIZED AFFO
(dollars in thousands, except per
share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net (loss) income
$
(15,101
)
$
(50,064
)
$
(3,400
)
$
7,343
Add:
Depreciation and amortization of real
estate assets
43,242
47,427
140,211
137,855
Depreciation, amortization and impairment
of real estate assets related to unconsolidated joint ventures
2,255
6,090
6,505
15,856
Net loss on sales of real estate
46,545
80
75,893
4,581
Net gain on sales of real estate related
to unconsolidated joint ventures
—
—
—
(220
)
Impairment of real estate
—
60,857
7,064
72,602
FFO
$
76,941
$
64,390
$
226,273
$
238,017
Write-offs of cash and straight-line
rental income receivable and lease intangibles
939
16,370
1,371
15,831
Lease termination income
—
—
—
(2,338
)
Loss on extinguishment of debt
—
140
1,541
411
Provision for (recovery of) loan losses
and other reserves
328
(217
)
549
(12
)
Support payments paid to joint venture
manager (1)
—
2,254
—
5,880
Other normalizing items (2)
(1,003
)
(65
)
1,066
2,586
Normalized FFO
$
77,205
$
82,872
$
230,800
$
260,375
FFO
$
76,941
$
64,390
$
226,273
$
238,017
Stock-based compensation expense
2,235
2,117
5,468
5,367
Non-cash rental and related revenues
(1,312
)
13,031
(6,781
)
4,970
Non-cash interest income
8
(589
)
(380
)
(1,683
)
Non-cash interest expense
3,088
2,798
9,179
8,300
Non-cash portion of loss on extinguishment
of debt
—
140
1,541
411
Provision for (recovery of) loan losses
and other reserves
328
(217
)
549
(12
)
Other adjustments related to
unconsolidated joint ventures
133
(2,378
)
371
(4,056
)
Other adjustments (3)
61
36
224
2,430
AFFO
$
81,482
$
79,328
$
236,444
$
253,744
Cash portion of lease termination
income
—
—
—
(2,338
)
Write-off of cash rental income
—
—
—
71
Support payments paid to joint venture
manager (1)
—
2,254
—
5,880
Other normalizing items (2)
(1,017
)
(80
)
1,021
250
Normalized AFFO
$
80,465
$
81,502
$
237,465
$
257,607
Amounts per diluted common share:
Net (loss) income
$
(0.07
)
$
(0.22
)
$
(0.01
)
$
0.03
FFO
$
0.33
$
0.28
$
0.97
$
1.03
Normalized FFO
$
0.33
$
0.36
$
0.99
$
1.12
AFFO
$
0.35
$
0.34
$
1.01
$
1.09
Normalized AFFO
$
0.34
$
0.35
$
1.02
$
1.11
Weighted average number of common shares
outstanding, diluted:
Net (loss) income
231,224,692
230,982,227
231,197,375
231,779,750
FFO and Normalized FFO
232,835,849
231,993,295
232,566,392
231,779,750
AFFO and Normalized AFFO
233,988,463
232,858,600
233,878,874
232,810,528
(1)
Funding for support payments did not
require capital contributions from Sabra but rather were funded
with proceeds received by our Enlivant unconsolidated joint venture
from TPG for the issuance of senior preferred interests.
(2)
Other normalizing items for FFO and AFFO
for the three and nine months ended September 30, 2023 include $3.7
million of gain on insurance proceeds in both periods and $1.3
million and $1.4 million of transition expenses related to the
transition of 14 Senior Housing - Managed communities to new
operators, respectively. Other normalizing items for FFO for the
nine months ended September 30, 2022 include $2.2 million of
foreign currency transaction loss related to our Canadian
borrowings. In addition, other normalizing items for FFO and AFFO
include triple-net operating expenses, net of recoveries and
certain adjustments for amounts recorded in the current period that
relate to a prior period.
(3)
Other adjustments for the nine months
ended September 30, 2022 includes $2.2 million of foreign currency
transaction loss related to our Canadian borrowings.
REPORTING DEFINITIONS
Behavioral Health
Includes behavioral hospitals that provide inpatient and
outpatient care for patients with mental health conditions,
chemical dependence or substance addictions and addiction treatment
centers that provide treatment services for chemical dependence and
substance addictions, which may include inpatient care, outpatient
care, medical detoxification, therapy and counseling.
Cash Net Operating Income (“Cash NOI”)*
The Company believes that net income as defined by GAAP is the
most appropriate earnings measure. The Company considers Cash NOI
an important supplemental measure because it allows investors,
analysts and its management to evaluate the operating performance
of its investments. The Company defines Cash NOI as total revenues
less operating expenses and non-cash revenues and expenses. Cash
NOI excludes all other financial statement amounts included in net
income.
EBITDARM
Earnings before interest, taxes, depreciation, amortization,
rent and management fees (“EBITDARM”) for a particular facility
accruing to the operator/tenant of the property (not the Company),
for the period presented. The Company uses EBITDARM in determining
EBITDARM Coverage. EBITDARM has limitations as an analytical tool.
EBITDARM does not reflect historical cash expenditures or future
cash requirements for facility capital expenditures or contractual
commitments. In addition, EBITDARM does not represent a property’s
net income or cash flows from operations and should not be
considered an alternative to those indicators. The Company utilizes
EBITDARM to evaluate the core operations of the properties by
eliminating management fees, which may vary by operator/tenant and
operating structure, and as a supplemental measure of the ability
of the Company’s operators/tenants and relevant guarantors to
generate sufficient liquidity to meet related obligations to the
Company.
EBITDARM Coverage
Represents the ratio of EBITDARM to cash rent for owned
facilities (excluding Senior Housing - Managed communities) for the
period presented. EBITDARM Coverage is a supplemental measure of a
property’s ability to generate cash flows for the operator/tenant
(not the Company) to meet the operator’s/tenant’s related cash rent
and other obligations to the Company. However, its usefulness is
limited by, among other things, the same factors that limit the
usefulness of EBITDARM. EBITDARM Coverage includes only Stabilized
Facilities and excludes facilities for which data is not available
or meaningful.
Funds From Operations (“FFO”) and Adjusted Funds from
Operations (“AFFO”)*
The Company believes that net income as defined by GAAP is the
most appropriate earnings measure. The Company also believes that
funds from operations, or FFO, as defined in accordance with the
definition used by the National Association of Real Estate
Investment Trusts (“Nareit”), and adjusted funds from operations,
or AFFO (and related per share amounts) are important non-GAAP
supplemental measures of the Company’s operating performance.
Because the historical cost accounting convention used for real
estate assets requires straight-line depreciation (except on land),
such accounting presentation implies that the value of real estate
assets diminishes predictably over time. However, since real estate
values have historically risen or fallen with market and other
conditions, presentations of operating results for a real estate
investment trust that uses historical cost accounting for
depreciation could be less informative. Thus, Nareit created FFO as
a supplemental measure of operating performance for real estate
investment trusts that excludes historical cost depreciation and
amortization, among other items, from net income, as defined by
GAAP. FFO is defined as net income, computed in accordance with
GAAP, excluding gains or losses from real estate dispositions and
the Company’s share of gains or losses from real estate
dispositions related to its unconsolidated joint ventures, plus
real estate depreciation and amortization, net of amounts related
to noncontrolling interests, plus the Company’s share of
depreciation and amortization related to its unconsolidated joint
ventures, and real estate impairment charges of both consolidated
and unconsolidated entities when the impairment is directly
attributable to decreases in the value of depreciable real estate
held by the entity. AFFO is defined as FFO excluding merger and
acquisition costs, stock-based compensation expense, non-cash
rental and related revenues, non-cash interest income, non-cash
interest expense, non-cash portion of loss on extinguishment of
debt, provision for loan losses and other reserves, non-cash lease
termination income and deferred income taxes, as well as other
non-cash revenue and expense items (including ineffectiveness
gain/loss on derivative instruments, and non-cash revenue and
expense amounts related to noncontrolling interests) and the
Company’s share of non-cash adjustments related to its
unconsolidated joint ventures. The Company believes that the use of
FFO and AFFO (and the related per share amounts), combined with the
required GAAP presentations, improves the understanding of the
Company’s operating results among investors and makes comparisons
of operating results among real estate investment trusts more
meaningful. The Company considers FFO and AFFO to be useful
measures for reviewing comparative operating and financial
performance because, by excluding the applicable items listed
above, FFO and AFFO can help investors compare the operating
performance of the Company between periods or as compared to other
companies. While FFO and AFFO are relevant and widely used measures
of operating performance of real estate investment trusts, they do
not represent cash flows from operations or net income as defined
by GAAP and should not be considered an alternative to those
measures in evaluating the Company’s liquidity or operating
performance. FFO and AFFO also do not consider the costs associated
with capital expenditures related to the Company’s real estate
assets nor do they purport to be indicative of cash available to
fund the Company’s future cash requirements. Further, the Company’s
computation of FFO and AFFO may not be comparable to FFO and AFFO
reported by other real estate investment trusts that do not define
FFO in accordance with the current Nareit definition or that
interpret the current Nareit definition or define AFFO differently
than the Company does.
Grant Income
Grant income consists of funds specifically paid to communities
in our Senior Housing - Managed portfolio from state or federal
governments related to the pandemic and were incremental to the
amounts that would have otherwise been received for providing care
to residents.
Normalized FFO and Normalized AFFO*
Normalized FFO and Normalized AFFO represent FFO and AFFO,
respectively, adjusted for certain income and expense items that
the Company does not believe are indicative of its ongoing
operating results. The Company considers Normalized FFO and
Normalized AFFO to be useful measures to evaluate the Company’s
operating results excluding these income and expense items to help
investors compare the operating performance of the Company between
periods or as compared to other companies. Normalized FFO and
Normalized AFFO do not represent cash flows from operations or net
income as defined by GAAP and should not be considered an
alternative to those measures in evaluating the Company’s liquidity
or operating performance. Normalized FFO and Normalized AFFO also
do not consider the costs associated with capital expenditures
related to the Company’s real estate assets nor do they purport to
be indicative of cash available to fund the Company’s future cash
requirements. Further, the Company’s computation of Normalized FFO
and Normalized AFFO may not be comparable to Normalized FFO and
Normalized AFFO reported by other real estate investment trusts
that do not define FFO in accordance with the current Nareit
definition or that interpret the current Nareit definition or
define FFO and AFFO or Normalized FFO and Normalized AFFO
differently than the Company does.
REVPOR
REVPOR represents the average revenues generated per occupied
unit per month at Senior Housing - Managed communities for the
period indicated. It is calculated as resident fees and services
revenues, excluding Grant Income, divided by average monthly
occupied unit days. REVPOR includes only Stabilized Facilities.
Senior Housing
Senior Housing communities include independent living, assisted
living, continuing care retirement and memory care communities.
Senior Housing - Managed
Senior Housing communities operated by third-party property
managers pursuant to property management agreements.
Skilled Nursing/Transitional Care
Skilled Nursing/Transitional Care facilities include skilled
nursing, transitional care, multi-license designation and mental
health facilities.
Specialty Hospitals and Other
Includes acute care, long-term acute care and rehabilitation
hospitals, facilities that provide residential services, which may
include assistance with activities of daily living, and other
facilities not classified as Skilled Nursing/Transitional Care,
Senior Housing or Behavioral Health.
Stabilized Facility
At the time of acquisition, the Company classifies each facility
as either stabilized or non-stabilized. In addition, the Company
may classify a facility as non-stabilized after acquisition.
Circumstances that could result in a facility being classified as
non-stabilized include newly completed developments, facilities
undergoing major renovations or additions, facilities being
repositioned or transitioned to new operators, and significant
transitions within the tenants’ business model. Such facilities are
typically reclassified to stabilized upon the earlier of
maintaining consistent occupancy (85% for Skilled
Nursing/Transitional Care facilities and 90% for Senior Housing
communities) or 24 months after the date of classification as
non-stabilized. Stabilized Facilities exclude (i) facilities held
for sale, (ii) strategic disposition candidates, (iii) facilities
being transitioned to a new operator, (iv) facilities being
transitioned from being leased by the Company to being operated by
the Company and (v) leased facilities acquired during the three
months preceding the period presented.
*Non-GAAP Financial Measures
Reconciliations, definitions and important discussions regarding
the usefulness and limitations of the Non-GAAP Financial Measures
used in this release can be found at
https://ir.sabrahealth.com/investors/financials/quarterly-results.
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