SBRA — Sabra Health Care REIT, Inc.

Summary of Sabra Healthcare REIT (SBRA) Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Normalized FFO per Share: $0.38, up 3% year-over-year.
• Normalized AFFO per Share: $0.40, up 5% year-over-year.
• Total Cash NOI: $144.3 million, compared to $138.7 million in Q1 2026.
• Cash NOI from Managed Senior Housing Portfolio: $44.6 million, up from $39 million in the previous quarter.
• Cash Rental Income from Triple Net Portfolio: $94.1 million, up from $89.8 million in Q1 2026.
• Leverage: Net debt to adjusted EBITDA ratio improved to 4.61x from 5.04x in Q1 2026.
• Liquidity: Approximately $1.3 billion, including $231.6 million in cash and $682.5 million available under the credit facility.
• Dividend: Quarterly cash dividend declared at $0.30 per share, representing a 75% payout of normalized AFFO.

2. Strategic Updates and Business Highlights

• Investment Activity: Closed approximately $600 million in investments, including $100 million in skilled nursing and $100 million in senior housing.
• Managed Senior Housing Portfolio: Revenue growth of 9.6% and cash NOI growth of 14.4% year-over-year, with a total of 21 new assets added year-over-year.
• Occupancy Rates: Same-store managed senior housing occupancy rose 170 basis points to 88.2%, with domestic occupancy at 85.7% and Canadian occupancy at 93.2%.
• Pipeline: Robust pipeline with over $1 billion in potential investments, primarily in SHOP (senior housing), indicating strong future growth prospects.

3. Forward Guidance and Outlook

• Earnings Guidance for 2026: Reaffirmed with a midpoint representing approximately 7% growth in normalized FFO per share and 8% growth in normalized AFFO per share.
• Expectations on Medicaid Rates: Anticipated to stabilize around 2%, with Medicare market basket growth at 2.4%.
• Future Investments: Anticipated additional $100 million in SHOP investments and $330 million in managed senior housing investments actively pursued.

4. Bad News, Challenges, or Points of Concern

• Occupancy Decline: Notable drop in occupancy and coverage in the triple-net senior housing portfolio attributed to the transition of a high-performing asset to SHOP.
• Regulatory Environment: While no immediate regulatory hurdles are anticipated, potential future changes could impact operations.
• Interest and Other Income: Decreased to $5.8 million from $10 million in Q1 due to reduced interest income from a mortgage loan payoff.
• Value-Add Risks: While pursuing value-add opportunities, concerns remain about competition and market conditions, particularly in the skilled nursing segment.

5. Notable Q&A Insights

• SHOP Guidance: Management reaffirmed a low to mid-teens growth rate for same-store SHOP NOI, with potential for upside as the year progresses.
• Value-Add Opportunities: Management is cautious but sees potential in acquiring properties with around 80% occupancy, emphasizing partnerships with proven operators.
• Behavioral Segment Exit: Discussions ongoing regarding exiting the behavioral segment, with confidence in achieving a favorable return if a deal is reached.
• Competitive Landscape: Management noted that competition for SHOP assets remains intense, with private buyers often outbidding due to different valuation metrics.
• Future Growth Sustainability: Management expressed confidence in sustaining growth rates of 5-6% for the foreseeable future, driven by strategic investments and operational improvements.

This summary encapsulates the key takeaways from Sabra Healthcare REIT's Q2 2026 earnings call, highlighting financial performance, strategic initiatives, guidance, and potential challenges.