IRVINE, CA—Calling the post-merger Sabra 2.0 “a Formula 1 pit stop” that was necessary to move toward completion of the mission, Sabra Health Care REIT chairman and CEO Rick Matros said Monday that 2018 will see the rollout of Sabra 3.0. With that goal in mind, the company has begun marketing its 43 remaining facilities leased to Genesis Healthcare Inc. and plans to sell them by the end of next year.
In all, Sabra expects to realize between $425 million and $475 million in sales proceeds from the remaining 43 Genesis properties. This divestiture plan comes on top of its previously announced plan to sell off 33 facilities leased to Genesis.
Along with the dispositions will be acquisitions: Sabra has closed on the first 21 of a 24-property skilled nursing portfolio in a $430-million sale leaseback with a major West Coast operator, which the company did not identify. “The operator is a standout provider in the skilled nursing space,” says Matros. “I have known the principals for over 20 years and the CEO was my COO at Regency Health Services in the early 1990s,” a period in which Matros himself served as Regency's chief executive. He adds that the portfolio represents “a perfect fit for Sabra's perspective on where the industry is going, and is an ideal replacement for the facilities we sell as we execute on the Genesis exodus plan.”
And last week the company announced that it would take a 49% stake in joint ventures that control a 183-property seniors housing portfolio managed by Enlivant and valued at $1.62 billion. The transaction values Sabra's minority interest investment at $371 million. Sabra expects to eventually own the entire 183-asset portfolio, and accordingly the JV agreements include an option for Sabra to acquire the remaining majority interest in the JVs over the next three years.
All of these developments occur a little over a month after Sabra completed its $7.4-billion merger with Care Capital Properties, first announced this past May. Post-merger, the company more than doubled its enterprise value to $6.5 billion, while halving its seniors housing concentration to 17% of its portfolio. The 3.0 model will have an enterprise value of $6.8 billion, the company said Monday.
“The increased scale” resulting from the CCP merger, along with an upsizing of its unsecured revolving credit facility and an upgrade in its credit ratings by Standard & Poor's, Moody's and Fitch, “positioned the company to become Sabra 3.0,” says Matros. “The combined announcements of the Enlivant joint ventures and the skilled nursing portfolio acquisition, along with the Genesis Exodus Plan, repositions the company well beyond the CCP merger.
“The CCP transaction was critical to this execution of our vision and has allowed us to bring in a premier skilled nursing operator as well as demonstrate our commitment and ability to expand our senior housing asset base with a true platform in a sector where there are few platforms left, much less one of Enlivant's quality and upside,” he continues. “We remain focused on creating long-term shareholder value.”
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
