IRVINE, CA—In its largest acquisition to date, Sabra Health Care REIT Inc. said Monday that it had bought a 21-property portfolio of independent living facilities from affiliates of Holiday Acquisition Holdings Corp. for $550 million in cash. Separately, the locally based REIT said it plans to offer six million shares of common stock to help repay the credit facility that funded the 15-state purchase.

SBRA CEO and chairman Rick Matros calls the deal “transformational for Sabra. Our profile moves significantly, in line with our stated goals including diversification of our asset base into private pay senior housing and continued reduction of our exposure to our largest tenant.”

The deal increases the REIT's revenue from private payors to 52.4% of the total, up from 41.6% prior to the acquisition, while decreasing its exposure to skilled nursing/transitional care facilities from 68.6% to 55.8%. Matros adds that the acquisition is expected to accelerate SBRA's progress toward achieving investment grade ratings from the ratings agencies.

Concurrently with the acquisition, which closed this past Thursday, SBRA entered into a triple-net master lease agreement with a Holiday affiliate, under which the affiliate of Holiday will continue to operate the facilities pursuant to a management agreement with Holiday Tenant. The master lease has an initial term of 15 years with two five-year renewal options.

Seven of the 21 assets in the portfolio were acquired by Holiday since 2011. As a result, Matros says, those seven are in “various stages of conversion to the Holiday model and, in our view, provide strong potential upside for the Holiday portfolio.”

All told, the acquisition expands SBRA's footprint from 28 states to 34. According to an SEC filing, the portfolio includes assets in: Auburn, AL; Phoenix and Yuma, AZ; Jonesboro, AR; San Luis Obispo, CA; Branford, CT; Eustis and Gainesville, FL; Kansas City, MO; Glenville, NY; Raleigh and Winston-Salem, NC; Nashville, TN; Allen, Longview, McAllen and McKinney, TX; Ogden, UT; Richmond, VA; Olympia, WA; and Menomonee Falls, WI. Prior to the Holiday acquisition, SBRA's single largest deal was $119.8 million for Forest Park Medical Center—Frisco, a 54-bed acute care hospital in Frisco, TX, which it bought last October.