IRVINE, CA—“We had an amazing quarter, with 26% revenue growthand 23% FFO growth—we're ahead of schedule.” So says RickMatros, CEO of Sabra Healthcare REIT, whotells GlobeSt.com that the firm's Q1 results “exceeded ourexpectations. 2013 was our best year yet from an investmentperspective, and 2014 is set up to be the best year we've had.”

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In a report, analyst firm RBC Capital MarketsLLC echoes that Sabra's earnings were superior in somecases, but points out some areas where it missed the mark.According to the firm, Sabra's reported FFO of $0.55 per share “metour expectation and surpassed consensus of $0.54 per share. Thecompany's property-level income and mortgage income exceeded ourexpectation, but was offset by higher than expected G&Aexpenses. Including $0.56 per share of debt charges andstraight-line rent write-offs, Q1 2014 NAREIT FFO was negative$0.01 per share, which missed our expectation of positive $0.01 pershare.”

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In addition, RBC reports that the company's trailing 12-monthSNF EBITDARM coverage ratio trended lower during the quarter to1.66x from 1.72x in the previous quarter, “likely related to theinclusion of another quarter of Genesis'implementing its operational synergies from the SunHealthcare merger. The trailing 12-month senior-housingEBITDARM coverage ratio improved modestly to 1.41x compared to1.40x. Additionally, Genesis' underlying fixed charge coverageratio was 1.25x.”

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Year-to-date, according to RBC, Sabra has deployed $165.9million of capital. Matros says, “We had planned to do $170 millionby June, and we're already there before the end of the first halfof the year.”

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Also year-to-date, the company acquired roughly $138 million ofassets, largely consisting of senior-housing andmemory-care facilities and invested anotherroughly $28 million in construction loans and preferred-equityinvestments, RBC reports. It expects to be able to deploy another$180 million to $230 million during the rest of the year.

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RBC estimates that the REIT has roughly $82 million of drypowder and reports management indicated at quarter-end that it had$129.8 million of liquidity including unrestricted cash andavailabilities on the line of credit. Subsequent to quarter-end,Sabra invested roughly $18 million of cash and repaid a $30 millionmortgage loan, making its liquidity position appear tightcurrently. “We had a successful equity offering and deleveraged ourbalance sheet last week,” Matros says.

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In addition, Sabra has refinanced roughly $270 million ofhigh-yielding debt year-to-date and issued $350 million ofunsecured notes during the quarter with an interest rate of 5.5%,according to RBC. The REIT also repaid $211 million ofhigh-yielding unsecured notes that had an interest rate of 8.1%.Also, the company refinanced $44.8 million of high-yieldingmortgage debt with HUD at an average of 4.25%, and subsequent toquarter-end, refinanced another $11.6 million at 4.1%.

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RBC's research analyst Michael Carroll, whoco-authored the analysis of the REIT, was unavailable forcomment prior to deadline.

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As GlobeSt.com reported in February, the REIT acquired for$90 million cash six senior-housing facilities in the Midwest thathave a total of 673 beds or units. The six sit within a 100-mileradius of Omaha and provide a variety of living arrangementsincluding 292 skilled nursing beds, 213 independent living unitsand 168 assisted living units.

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Carrie Rossenfeld

Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.