Sabra Health Care REIT Ratchets Down Portfolio Sale to 28 Properties

The company had reported the sale of the 38 properties was valued at an aggregate purchase price of $385.0 million. The amended portfolio sale of 28 properties is now valued at approximately $282.5 million.

Rick Matros, CEO and chairman of Sabra Health Care REIT, Inc.

IRVINE, CA—Sabra Health Care REIT, Inc. reports its previously announced portfolio sale of a total of 38 skilled nursing and two senior housing facilities operated by Senior Care Centers has now been reduced to 28.

Sabra Health Care, which filed for bankruptcy protection and announced its intent to sell the 38-owned facilities in December 2018, reported on Sunday evening that it now intends to retain 10 of the properties for lease to one or more new operators. The company had reported the sale of the 38 properties was valued at an aggregate purchase price of $385.0 million. The amended portfolio sale of 28 properties is now valued at approximately $282.5 million.

The company adds that, once stabilized, the value of the 10 retained facilities will be between $95 million to $105 million.

Sabra Health Care REIT did not identify the buyer. A report in trade publication Skilled Nursing News stated that a knowledgeable source identified the prospective buyer as New York City-based alternative asset management firm Blue Mountain. The company expects the sale of the 28 properties and the transition of the 10 retained facilities to both occur on April 1.

The company in its latest announcement also provided updates on its sale of Genesis Healthcare Inc.-leased properties and the proposed termination of its master lease with Holiday Healthcare Inc.

Rick Matros, Sabra Healthcare CEO and chairman, said, “The revised terms of the Senior Care Centers Facilities sale represent a good outcome for Sabra. Upon completion, we will have achieved each of our stated objectives in connection with this transaction by wrapping up our association with a troubled operator and reducing our geographic concentration in a challenging state, with the ability now to reduce earnings dilution through re-tenanting of the retained properties with desired operating partners.”

He adds that the transition of the Holiday portfolio “remains on track and the delay in the sale of the HUD facilities should have a modest positive impact on our 2019 results as we expect to continue collecting contractual rents until these sales are completed.”

In December Sabra Health Care completed the sale of nine facilities leased to Genesis for gross sales proceeds of $37.1 million. The company states that it has entered into sale agreements on the three remaining HUD facilities leased to Genesis that are being sold subject to HUD-insured debt.

These sales are expected to close upon approval by HUD, which had been delayed due to the government shutdown. The sale of the HUD facilities is expected to generate gross sales proceeds of $33.2 million and result in the elimination of $2.7 million of annual cash rents. The sale agreement with Genesis provide for residual rents to be paid to Sabra for 4.28 years following the sale of each facility. Upon completion of the sale of the HUD facilities, Sabra expects the residual rents to total $10.4 million per year.

Sabra adds in its announcement that it expects to retain ownership of eight facilities leased to Genesis, which currently generate annual cash rents of $10.4 million.

The company also previously reported its intent to terminate its Holiday master lease and concurrently enter into one or more management agreements with Holiday. The deal involves the conversion of its Holiday-operated 21-community independent living portfolio from a triple net master lease to a management agreement structure.

In exchange for terminating the lease agreements, Sabra would receive $57.2 million of total consideration, including $15.1 million of retained security deposits and a $42.1 million termination fee, which Sabra states it has elected to receive in cash.

The company expects the Holiday transition to be finalized in the first quarter of 2019.