EX-99.2 3 sbraex9922014q2.htm Q2 2014 SUPPLEMENTAL INFORMATION SBRA EX 99.2 2014 Q2


Exhibit 99.2

Supplemental Information
June 30, 2014
(Unaudited)





    




Disclaimer
Certain statements in this supplement contain “forward-looking” information as that term is defined by the Private Securities Litigation Reform Act of 1995. Any statements that do not relate to historical or current facts or matters are forward-looking statements. Examples of forward-looking statements include all statements regarding our expected future financial position, results of operations, cash flows, liquidity, business strategy, growth opportunities, potential investments, and plans and objectives for future operations. You can identify some of the forward-looking statements by the use of forward-looking words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “should,” “may” and other similar expressions, although not all forward-looking statements contain these identifying words.
Our actual results may differ materially from those projected or contemplated by our forward-looking statements as a result of various factors, including the following: our dependence on Genesis HealthCare LLC (“Genesis”), the parent company of Sun Healthcare Group, Inc. ("Sun"), until we are able to further diversify our portfolio; our dependence on the operating success of our tenants; changes in general economic conditions and volatility in financial and credit markets; the dependence of our tenants on reimbursement from governmental and other third-party payors; the significant amount of and our ability to service our indebtedness; covenants in our debt agreements that may restrict our ability to make investments, incur additional indebtedness and refinance indebtedness on favorable terms; increases in market interest rates; our ability to raise capital through equity financings; the relatively illiquid nature of real estate investments; competitive conditions in our industry; the loss of key management personnel or other employees; the impact of litigation and rising insurance costs on the business of our tenants; uninsured or underinsured losses affecting our properties and the possibility of environmental compliance costs and liabilities; our ability to maintain our status as a REIT; compliance with REIT requirements and certain tax matters related to our status as a REIT; and other factors discussed from time to time in our news releases, public statements and/or filings with the Securities and Exchange Commission (the “SEC”), especially the “Risk Factors” sections of our Annual and Quarterly Reports on Forms 10-K and 10-Q. We do not intend, and we undertake no obligation, to update any forward-looking information to reflect events or circumstances after the date of this supplement or to reflect the occurrence of unanticipated events, unless required by law to do so.
Note Regarding Non-GAAP Financial Measures
This supplement includes the following financial measures defined as non-GAAP financial measures by the SEC: EBITDA, Adjusted EBITDA, funds from operations (“FFO”), Normalized FFO, Adjusted FFO (“AFFO”), Normalized AFFO, FFO per diluted common share, Normalized FFO per diluted common share, AFFO per diluted common share and Normalized AFFO per diluted common share. These measures may be different than non-GAAP financial measures used by other companies, and the presentation of these measures is not intended to be considered in isolation or as a substitute for financial information prepared and presented in accordance with U.S. generally accepted accounting principles. An explanation of these non-GAAP financial measures is included under “Reporting Definitions” in this supplement and reconciliations of these non-GAAP financial measures to the GAAP financial measures we consider most comparable are included under “Reconciliations of EBITDA, Adjusted EBITDA, Funds from Operations (FFO), Normalized FFO, Adjusted Funds from Operations (AFFO) and Normalized AFFO” in this supplement.
Tenant and Borrower Information
This supplement includes information regarding each of our tenants that lease properties from us and our borrowers. The information related to these tenants and borrowers that is provided in this supplement has been provided by the tenants and borrowers. We have not independently verified this information. We have no reason to believe that such information is inaccurate in any material respect. We are providing this data for informational purposes only.


 


Table of Contents

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate Portfolio Geographic Concentrations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recent Investment Activity
 
 
 
 
 
 
 
 
 
 




Company Information
Board of Directors
 
 
 
 
 
Richard K. Matros
Chairman of the Board, President and
Chief Executive Officer
Sabra Health Care REIT, Inc.
  
Michael J. Foster
Managing Director
RFE Management Corp.
 
 
Milton J. Walters
President
Tri-River Capital
  
Robert A. Ettl
Chief Operating Officer
Harvard Management Company
 
 
Craig A. Barbarosh
Partner
Katten Muchin Rosenman LLP
  
 
Senior Management
 
 
 
 
 
Richard K. Matros
Chairman of the Board, President and
Chief Executive Officer
  
Harold W. Andrews, Jr.
Executive Vice President,
Chief Financial Officer and Secretary
 
 
Talya Nevo-Hacohen
Executive Vice President,
Chief Investment Officer and Treasurer
  
 
Other Information
 
 
 
 
 
Corporate Headquarters
18500 Von Karman Avenue, Suite 550
Irvine, CA 92612
  
Transfer Agent
American Stock Transfer and Trust Company
6201 15th Avenue
Brooklyn, NY 11219
www.sabrahealth.com
The information in this supplemental information package should be read in conjunction with the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other information filed with the SEC. The Reporting Definitions and Reconciliations of Non-GAAP Measures are an integral part of the information presented herein.
On Sabra's website, www.sabrahealth.com, you can access, free of charge, Sabra’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such material is filed with, or furnished to, the SEC. The information contained on Sabra’s website is not incorporated by reference into, and should not be considered a part of, this supplemental information package. All material filed with the SEC can also be accessed through their website, www.sec.gov.
For more information, contact Harold W. Andrews, Jr., Executive Vice President, Chief Financial Officer and Secretary at
(949) 679-0243.

 

See reporting definitions.
1
    

SABRA HEALTH CARE REIT, INC.
COMPANY FACT SHEET
Company Profile
Sabra Health Care REIT, Inc., a Maryland corporation (“Sabra,” the “Company” or “we”), operates as a self-administered, self-managed real estate investment trust (“REIT”) that, through its subsidiaries, owns and invests in real estate serving the healthcare industry. Sabra primarily generates revenues by leasing properties to tenants and operators throughout the United States.
As of June 30, 2014, Sabra’s investment portfolio included 130 real estate properties held for investment and leased to operators/tenants under triple-net lease agreements (consisting of (i) 102 skilled nursing/post-acute facilities, (ii) 26 senior housing facilities, and (iii) two acute care hospitals), 12 debt investments (consisting of (i) four mortgage loans, (ii) three construction loans, (iii) one mezzanine loan, and (iv) four pre-development loans) and five preferred equity investments. Included in the 130 real estate properties held for investment is one 100% owned, senior housing facility leased to a 50%/50% RIDEA-compliant joint venture tenant. As of June 30, 2014, Sabra’s real estate properties were located in 28 states and included 13,550 licensed beds/units.
Objectives and Strategies
Sabra expects to continue to grow its portfolio primarily through the acquisition of senior housing and memory care facilities with a secondary focus on acquiring skilled nursing facilities. We have and will continue to opportunistically acquire other types of healthcare real estate (including acute care hospitals) and originate financing secured directly or indirectly by healthcare facilities. We also expect to grow our portfolio through the development of purpose-built healthcare facilities through pipeline agreements and other arrangements with select developers.
As Sabra acquires additional properties and expands its portfolio, Sabra expects to further diversify by tenant, asset class and geography within the healthcare sector. Sabra employs a disciplined, opportunistic approach in its healthcare real estate investment strategy by investing in assets that provide attractive opportunities for dividend growth and appreciation of asset values, while maintaining balance sheet strength and liquidity, thereby creating long-term stockholder value.


Market Facts
 
As of June 30, 2014
Stock Information (as of June 30, 2014)
 
Investments
 
Closing Price (common stock):
$28.71
Equity Investments
 
52-Week range (common stock):
$21.55 - $31.17
Skilled Nursing/Post-Acute
102

Market Capitalization:
$1.4 billion
Senior Housing
26

Enterprise Value:
$2.2 billion
Acute Care Hospitals
2

Outstanding Shares (common stock):
47.3 million
 
130

Ticker symbols:
 
Debt Investments (1)
12

Common Stock
SBRA
Preferred Equity Investments (2)
5

Preferred Stock
SBRAP
Total Investments
147
Stock Exchange:
NASDAQ
 
 
Credit Ratings
 
Bed/Unit Count
 
Moody's:
 
Skilled Nursing/Post-Acute
11,460

  Senior Notes Rating
Ba3 (stable)
Senior Housing
1,966

  Preferred Equity Rating
B2
Acute Care Hospitals
124

S&P:
 
Total Beds/Units
13,550

Corporate Rating
B+ (stable)
 
 
Senior Notes Rating
BB-
Total Number of States
28

Preferred Equity Rating
CCC+
 
 
 
 
 


(1) As of June 30, 2014, our Debt Investments related to investments secured directly or indirectly by 11 skilled nursing facilities with 1,560 beds/units, six memory care developments with 250 beds/units, one multi-license facility development with 85 beds/units, one acute care hospital with 84 beds, and one acute care hospital development with 54 beds.  
(2) As of June 30, 2014, our Preferred Equity Investments related to investments in entities owning a skilled nursing facility with 141 beds, one assisted living facility with 52 beds/units, one assisted living development with 130 beds/units and two memory care developments with 137 units.

See reporting definitions.
2
    


SABRA HEALTH CARE REIT, INC.
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Revenues
$
42,973

 
$
32,275

 
$
83,823

 
$
64,297

EBITDA
$
35,545

 
$
17,703

 
$
48,708

 
$
45,508

Adjusted EBITDA
$
35,047

 
$
28,853

 
$
70,044

 
$
56,158

Net income (loss) attributable to common stockholders
$
12,241

 
$
(3,185
)
 
$
2,377

 
$
6,068

FFO
$
21,996

 
$
5,037

 
$
21,482

 
$
22,536

Normalized FFO
$
25,053

 
$
15,557

 
$
46,772

 
$
33,056

AFFO
$
23,527

 
$
5,644

 
$
23,851

 
$
22,203

Normalized AFFO
$
23,609

 
$
15,656

 
$
44,729

 
$
32,215

Per common share data:
 
 
 
 
 
 
 
Diluted EPS
$
0.28

 
$
(0.09
)
 
$
0.06

 
$
0.16

Diluted FFO
$
0.50

 
$
0.13

 
$
0.51

 
$
0.60

Diluted Normalized FFO
$
0.57

 
$
0.41

 
$
1.12

 
$
0.87

Diluted AFFO
$
0.53

 
$
0.15

 
$
0.57

 
$
0.58

Diluted Normalized AFFO
$
0.53

 
$
0.41

 
$
1.06

 
$
0.84

 
 
 
 
 
 
 
 
Net cash flow from operations
$
27,714

 
$
1,383

 
$
28,921

 
$
22,986

 
 
 
 
 
 
 
 
 
June 30, 2014
 
December 31, 2013
 
 
 
 
Real Estate Portfolio
 
 
 
 
 
 
 
Total Equity Investments (1) (#)
130

 
121

 
 
 
 
Total Equity Investments, gross ($)
$
1,205,821

 
$
1,066,242

 
 
 
 
Total Licensed Beds/Units
13,550

 
12,468

 
 
 
 
Weighted Average Remaining Lease Term (in months)
123

 
131

 
 
 
 
Total Debt Investments (#)
12

 
10

 
 
 
 
Total Debt Investments, gross ($) (2)
$
211,089

 
$
177,592

 
 
 
 
Total Preferred Equity Investments (#)
5

 
2

 
 
 
 
Total Preferred Equity Investments, gross ($)
$
14,921

 
$
7,784

 
 
 
 
 
Twelve Months Ended June 30, 2014
 
Twelve Months Ended June 30, 2013
 
 
 
 
EBITDARM Coverage (3)
1.63x

 
1.77x

 
 
 
 
EBITDAR Coverage (3)
1.24x

 
1.34x

 
 
 
 
 
June 30, 2014
 
December 31, 2013
 
 
 
 
Debt
 
 
 
 
 
 
 
Book Value
 
 
 
 
 
 
 
Fixed Rate Debt
$
675,400

 
$
469,090

 
 
 
 
Variable Rate Debt
—

 
222,140

 
 
 
 
Total Debt
$
675,400

 
$
691,230

 
 
 
 
Weighted Average Effective Rate
 
 
 
 
 
 
 
Fixed Rate Debt
5.17
%
 
6.14
%
 
 
 
 
Variable Rate Debt
—
%
 
3.88
%
 
 
 
 
Total Debt
5.17
%
 
5.41
%
 
 
 
 
 
 
 
 
 
 
 
 
% of Total
 
 
 
 
 
 
 
Fixed Rate Debt
100.0
%
 
67.9
%
 
 
 
 
Variable Rate Debt
—
%
 
32.1
%
 
 
 
 
Total Debt
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
Availability Under Revolving Credit Facility:
$
289,455

 
$
135,126

 
 
 
 
Available Liquidity (Unrestricted Cash, excluding Cash Associated with a Consolidated Joint Venture, and Availability Under Revolving Credit Facility)
$
304,456

 
$
139,434

 
 
 
 
 

(1) Included in equity investments is one senior housing facility leased to a 50%/50% RIDEA-compliant joint venture tenant.
(2) Total Debt Investments, gross consists of principal of $210.0 million plus capitalized origination fees of $1.1 million.
(3) EBITDARM and EBITDAR and related coverages for facilities with new tenants/operators are only included in periods subsequent to our acquisition of the facilities and exclude the impact of strategic disposition candidates, non-stabilized properties and facilities leased to RIDEA-compliant joint venture tenants. All facility financial performance data are presented one quarter in arrears.

See reporting definitions.
3
    


SABRA HEALTH CARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(dollars in thousands, except per share data)
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
Rental income
$
37,485

 
$
31,518

 
$
73,578

 
$
62,993

Interest and other income
5,488

 
757

 
10,245

 
1,304

 
 
 
 
 
 
 
 
Total revenues
42,973

 
32,275

 
83,823

 
64,297

 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
Depreciation and amortization
9,755

 
8,222

 
19,105

 
16,468

Interest
10,994

 
10,143

 
22,128

 
20,145

General and administrative
7,926

 
3,422

 
13,779

 
8,139

 
 
 
 
 
 
 
 
Total expenses
28,675

 
21,787

 
55,012

 
44,752

 
 
 
 
 
 
 
 
Other (expense) income:
 
 
 
 
 
 
 
Loss on extinguishment of debt
(162
)
 
(9,750
)
 
(22,296
)
 
(9,750
)
Other income (expense)
660

 
(1,400
)
 
960

 
(900
)
 
 
 
 
 
 
 
 
Total other income (expense)
498

 
(11,150
)
 
(21,336
)
 
(10,650
)
 
 
 
 
 
 
 
 
Net income (loss)
14,796

 
(662
)
 
7,475

 
8,895

 
 
 
 
 
 
 
 
Net loss attributable to noncontrolling interests
5

 
—

 
23

 
—

 
 
 
 
 
 
 
 
Net income (loss) attributable to Sabra Health Care REIT, Inc.
14,801

 
(662
)
 
7,498

 
8,895

 
 
 
 
 
 
 
 
Preferred stock dividends
(2,560
)
 
(2,523
)
 
(5,121
)
 
(2,827
)
 
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders
$
12,241

 
$
(3,185
)
 
$
2,377

 
$
6,068

 
 
 
 
 
 
 
 
 
 

 
 

 
 

 
 
Net income (loss) attributable to common stockholders, per:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic common share
$
0.28

 
$
(0.09
)
 
$
0.06

 
$
0.16

 
 
 
 
 
 
 
 
Diluted common share
$
0.28

 
$
(0.09
)
 
$
0.06

 
$
0.16

 
 
 
 
 
 
 
 
Weighted-average number of common shares outstanding, basic
43,655,292

 
37,357,112

 
41,324,795

 
37,321,813

 
 
 
 
 
 
 
 
Weighted-average number of common shares outstanding, diluted
44,096,297

 
37,357,112

 
41,791,470

 
37,789,804

 
 
 
 
 
 
 
 


See reporting definitions.
4
    


SABRA HEALTH CARE REIT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
 

 
June 30,
2014
 
December 31,
2013
 
(unaudited)
 
 
Assets
 
 
 
Real estate investments, net of accumulated depreciation of $169,763 and $151,078 as of June 30, 2014 and December 31, 2013, respectively
$
1,036,312

 
$
915,418

Loans receivable and other investments, net
225,787

 
185,293

Cash and cash equivalents
15,085

 
4,308

Restricted cash
6,125

 
5,352

Deferred tax assets
24,212

 
24,212

Prepaid expenses, deferred financing costs and other assets
68,990

 
63,252

Total assets
$
1,376,511

 
$
1,197,835

 
 
 
 
Liabilities
 
 
 
Mortgage notes
$
125,400

 
$
141,328

Secured revolving credit facility
—

 
135,500

Senior unsecured notes
550,000

 
414,402

Accounts payable and accrued liabilities
21,084

 
22,229

Tax liability
24,212

 
24,212

Total liabilities
720,696

 
737,671

 
 
 
 
Equity
 
 
 
Preferred stock, $.01 par value; 10,000,000 shares authorized, 5,750,000 shares issued and outstanding as of June 30, 2014 and December 31, 2013
58

 
58

Common stock, $.01 par value; 125,000,000 shares authorized, 47,263,151 and 38,788,745 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively
473

 
388

Additional paid-in capital
760,258

 
534,639

Cumulative distributions in excess of net income
(104,951
)
 
(74,921
)
Total Sabra Health Care REIT, Inc. stockholders’ equity
655,838

 
460,164

Noncontrolling interests
(23
)
 
—

Total equity
655,815

 
460,164

Total liabilities and equity
$
1,376,511

 
$
1,197,835







 


See reporting definitions.
5
    


SABRA HEALTH CARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Six Months Ended June 30,
 
2014
 
2013
Cash flows from operating activities:

 
 
Net income
$
7,475

 
$
8,895

Adjustments to reconcile net income to net cash provided by operating activities:

 
 
Depreciation and amortization
19,105

 
16,468

Non-cash interest income adjustments
140

 
12

Amortization of deferred financing costs
1,872

 
1,589

Stock-based compensation expense
4,792

 
3,933

Amortization of premium
(33
)
 
(401
)
Loss on extinguishment of debt
1,418

 
508

Straight-line rental income adjustments
(8,433
)
 
(7,300
)
Write-off of straight-line rental income
2,994

 
—

Change in fair value of contingent consideration
(960
)
 
900

Changes in operating assets and liabilities:


 
 
Prepaid expenses and other assets
(1,171
)
 
(1,563
)
Accounts payable and accrued liabilities
3,312

 
1,877

Restricted cash
(1,590
)
 
(1,932
)

 
 
 
Net cash provided by operating activities
28,921

 
22,986


 
 
 
Cash flows from investing activities:

 
 
Acquisitions of real estate
(118,389
)
 
(6,175
)
Origination and fundings of loans receivable
(38,373
)
 
(25,244
)
Preferred equity investment
(6,458
)
 
(5,144
)
Additions to real estate
(783
)
 
(226
)
Net proceeds from the sale of real estate
—

 
2,208


 
 
 
Net cash used in investing activities
(164,003
)
 
(34,581
)

 
 
 
Cash flows from financing activities:

 
 
Proceeds from issuance of senior unsecured notes
350,000

 
200,000

Principal payments on senior unsecured notes
(211,250
)
 
(113,750
)
Proceeds from secured revolving credit facility
80,000

 
—

Payments on secured revolving credit facility
(215,500
)
 
(92,500
)
Proceeds from mortgage notes
57,703

 
—

Principal payments on mortgage notes
(87,733
)
 
(9,193
)
Payments of deferred financing costs
(10,135
)
 
(5,378
)
Issuance of preferred stock
—

 
138,345

Issuance of common stock
219,899

 
(2,851
)
Dividends paid on common and preferred stock
(37,125
)
 
(27,409
)

 
 
 
Net cash provided by financing activities
145,859

 
87,264


 
 
 
Net increase in cash and cash equivalents
10,777

 
75,669

Cash and cash equivalents, beginning of period
4,308

 
17,101


 
 
 
Cash and cash equivalents, end of period
$
15,085

 
$
92,770


 
 
 
Supplemental disclosure of cash flow information:

 
 
Interest paid
$
15,298

 
$
19,839


 
 
 
Supplemental disclosure of non-cash transaction:
 
 
 
Assumption of mortgage indebtedness
$
14,102

 
$
—


See reporting definitions.
6
    


SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF EBITDA, ADJUSTED EBITDA, FUNDS FROM OPERATIONS (FFO), NORMALIZED FFO, ADJUSTED FUNDS FROM OPERATIONS (AFFO) AND NORMALIZED AFFO
(dollars in thousands, except per share data) 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Net income (loss)
$
14,796

 
$
(662
)
 
$
7,475

 
$
8,895

Interest expense
10,994

 
10,143

 
22,128

 
20,145

Depreciation and amortization
9,755

 
8,222

 
19,105

 
16,468

EBITDA
$
35,545

 
$
17,703

 
$
48,708

 
$
45,508

 
 
 
 
 
 
 
 
Loss on extinguishment of debt
162

 
9,750

 
22,296

 
9,750

Change in fair value of contingent consideration
(660
)
 
1,400

 
(960
)
 
900

Adjusted EBITDA
$
35,047

 
$
28,853

 
$
70,044

 
$
56,158

 
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders
$
12,241

 
$
(3,185
)
 
$
2,377

 
$
6,068

Depreciation of real estate assets
9,755

 
8,222

 
19,105

 
16,468

Funds from Operations (FFO)
$
21,996

 
$
5,037

 
$
21,482

 
$
22,536

 
 
 
 
 
 
 
 
Loss on extinguishment of debt
162

 
9,750

 
22,296

 
9,750

Write-off of straight-line rental income
2,895

 
—

 
2,994

 
—

Additional interest on 2018 Notes
—

 
770

 
—

 
770

Normalized FFO
$
25,053

 
$
15,557

 
$
46,772

 
$
33,056

 
 
 
 
 
 
 
 
FFO
$
21,996

 
$
5,037

 
$
21,482

 
$
22,536

Acquisition pursuit costs
187

 
229

 
579

 
426

Stock-based compensation expense
2,279

 
1,459

 
4,792

 
3,933

Straight-line rental income adjustments
(4,247
)
 
(3,617
)
 
(8,433
)
 
(7,300
)
Amortization of deferred financing costs
927

 
823

 
1,872

 
1,589

Amortization of debt premiums
—

 
(202
)
 
(33
)
 
(401
)
Change in fair value of contingent consideration
(660
)
 
1,400

 
(960
)
 
900

Non-cash portion of loss on extinguishment of debt
80

 
508

 
1,418

 
508

Non-cash interest income adjustments
70

 
7

 
140

 
12

Write-off of straight-line rental income
2,895

 
—

 
2,994

 
—

Adjusted Funds from Operations (AFFO)
$
23,527

 
$
5,644

 
$
23,851

 
$
22,203

 
 
 
 
 
 
 
 
Cash portion of loss on extinguishment of debt
82

 
9,242

 
20,878

 
9,242

Additional interest on 2018 Notes
—

 
770

 
—

 
770

Normalized AFFO
$
23,609

 
$
15,656

 
$
44,729

 
$
32,215

Amounts per diluted common share:
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders
$
0.28

 
$
(0.09
)
 
$
0.06

 
$
0.16

 
 
 
 
 
 
 
 
FFO
$
0.50

 
$
0.13

 
$
0.51

 
$
0.60

 
 
 
 
 
 
 
 
Normalized FFO
$
0.57

 
$
0.41

 
$
1.12

 
$
0.87

 
 
 
 
 
 
 
 
AFFO
$
0.53

 
$
0.15

 
$
0.57

 
$
0.58

 
 
 
 
 
 
 
 
Normalized AFFO
$
0.53

 
$
0.41

 
$
1.06

 
$
0.84

 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding, diluted:
 
 
 
 
 
 
 
Net income (loss)
44,096,297

 
37,357,112

 
41,791,470

 
37,789,804

FFO and Normalized FFO
44,096,297

 
37,834,496

 
41,791,470

 
37,789,804

AFFO and Normalized AFFO
44,335,381

 
38,190,891

 
42,075,917

 
38,125,087

 

See reporting definitions.
7
    


SABRA HEALTH CARE REIT, INC.
CAPITALIZATION
(dollars in thousands, except per share data)
Debt
June 30, 2014
 
December 31, 2013
Mortgage notes
$
125,400

 
$
141,328

Senior unsecured notes
550,000

 
414,402

Revolving credit facility
—

 
135,500

 
 
 
 
Total debt
$
675,400

 
$
691,230

 

Revolving Credit Facility
June 30, 2014
 
December 31, 2013
Current credit facility availability
$
289,455

 
$
135,126

Credit facility capacity
375,000

 
375,000


Enterprise Value
 
 
 
 
 
As of June 30, 2014
Shares
Outstanding
 
Price
 
Value
Common stock
47,263,151

 
$
28.71

 
$
1,356,925

Preferred stock
5,750,000

 
25.10

 
144,325

Total debt
 
 
 
 
675,400

Cash and cash equivalents
 
 
 
 
(15,085
)
 
 
 
 
 
 
Total enterprise value
 
 
 
 
$
2,161,565

 
 
 
 
 
 
As of December 31, 2013
Shares
Outstanding
 
Price
 
Value
Common stock
38,788,745

 
$
26.14

 
$
1,013,938

Preferred stock
5,750,000

 
23.75

 
136,563

Total debt
 
 
 
 
691,230

Cash and cash equivalents
 
 
 
 
(4,308
)
 
 
 
 
 
 
Total enterprise value
 
 
 
 
$
1,837,423

 
 
 
 
 
 
 
At-the-Market Common Stock Offering Program
 
 
 
 
 
 
 
 
 
Program
 
Three Months Ended
June 30, 2014
 
Cumulative as of June 30, 2014
 
 
 
 
 
Shares issued
 
69,900

 
1,654,308

 
 
 
 
 
Net proceeds
 
$
1,902

 
$
44,011

 
 
 
 
 
Weighted average price per share
 
$
27.77

 
$
27.11

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Common Shares
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2014
 
Six Months Ended June 30, 2014
 
EPS, FFO and Normalized FFO
 
AFFO and Normalized AFFO
 
EPS, FFO and Normalized FFO
 
AFFO and Normalized AFFO
 
Common stock
 
43,635,016

 
43,635,016

 
41,301,917

 
41,301,917

 
Common equivalents
 
20,276

 
20,276

 
22,878

 
22,878

 
 
 
 
 
 
 
 
 
 
 
Basic common and common equivalents
 
43,655,292

 
43,655,292

 
41,324,795

 
41,324,795

 
Dilutive securities:
 
 
 
 
 
 
 
 
 
Restricted stock and units
 
441,005

 
680,089

 
457,188

 
741,037

 
Options
 
—

 
—

 
9,487

 
10,085

 
 
 
 
 
 
 
 
 
 
 
Diluted common and common equivalents
 
44,096,297

 
44,335,381

 
41,791,470

 
42,075,917

 
 
 
 
 
 
 
 
 
 
 

See reporting definitions.
8
    


SABRA HEALTH CARE REIT, INC.
INDEBTEDNESS
June 30, 2014
(dollars in thousands)
 
Principal
 
Weighted
Average
Effective Rate (1)
 
% of Total
Fixed rate debt
 
 
 
 
 
Secured mortgage debt 
$
125,400

  
3.96
%
 
18.6
%
Unsecured senior notes 
550,000

  
5.45
%
 
81.4
%
 
 
 
 
 
 
Total fixed rate debt
675,400

  
5.17
%
 
100.0
%
 
 
 
 
 
 
Variable rate debt
 
 
 
 
 
Revolving credit facility (2)
—

  
3.66
%
 
—
%
 
 
 
 
 
 
Total variable rate debt
—

  
—
%
 
—
%
 
 
 
 
 
 
Total debt
$
675,400

  
5.17
%
 
100.0
%
 
 
 
 
 
Secured debt
 
 
 
 
 
Secured mortgage debt
$
125,400

  
3.96
%
 
18.6
%
Revolving credit facility (2)
—

  
3.66
%
 
—
%
 
 
 
 
 
 
Total secured debt
125,400

  
3.96
%
 
18.6
%
 
 
 
 
 
 
Unsecured debt
 
 
 
 
 
Unsecured senior notes 
550,000

  
5.45
%
 
81.4
%
 
 
 
 
 
 
Total unsecured debt
550,000

  
5.45
%
 
81.4
%
 
 
 
 
 
 
Total debt
$
675,400

  
5.17
%
 
100.0
%
(1) Weighted average effective rate includes private mortgage insurance.
(2) Borrowings under the revolving credit facility bear interest on the outstanding principal amount at a rate equal to, at our option, LIBOR plus 2.50% - 3.50% or a Base Rate plus 1.50% - 2.50%. The actual interest rate within the applicable range was determined based on our then applicable Consolidated Leverage Ratio.
 
Maturities
 
Secured Mortgage Debt
 
Unsecured Senior Notes
 
Revolving Credit Facility
  
Total
 
Principal
 
Rate (1)
 
Principal
 
Rate (1)
 
Principal
 
Rate (1)
  
Principal
 
Rate (1)
July 1 through December 31, 2014
$
1,377

 
3.54
%
 
$
—

 
—

  
$
—

 
—

  
$
1,377

 
3.54
%
2015
2,823

 
3.54
%
 
—

 
—

  
—

 
—

  
2,823

 
3.54
%
2016
2,917

 
3.55
%
 
—

 
—

  
—

 
3.66
%
  
2,917

 
3.55
%
2017
3,013

 
3.56
%
 
—

 
—

  
—

 
—

  
3,013

 
3.56
%
2018
3,114

 
3.56
%
 
—

 
—

  
—

 
—

  
3,114

 
3.56
%
2019
3,218

 
3.57
%
 
—

 
—

  
—

 
—

  
3,218

 
3.57
%
2020
3,325

 
3.58
%
 
—

 
—

  
—

 
—

  
3,325

 
3.58
%
2021
3,437

 
3.59
%
 
350,000

 
5.50
%
 
—

 
—

  
353,437

 
5.48
%
2022
3,552

 
3.60
%
 
—

 
—

  
—

 
—

  
3,552

 
3.60
%
2023
3,672

 
3.61
%
 
200,000

 
5.38
%
  
—

 
—

  
203,672

 
5.35
%
Thereafter
94,952

 
3.85
%
 
—

 
—

  
—

 
—

  
94,952

 
3.85
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total debt
$
125,400

 
 
 
$
550,000

 
 
 
$
—

 
 
  
$
675,400

 
 
Weighted average maturity in years
28.7

 
 
 
7.4

 
 
 
2.1

 
 
  
11.4

 
 
Weighted average effective interest rate (2)
3.96
%
 
 
 
5.45
%
 
 
 
3.66
%
 
 
  
5.17
%
 
 
(1) Represents actual contractual interest rates excluding private mortgage insurance.
(2) Weighted average effective rate includes private mortgage insurance.

See reporting definitions.
9
    


SABRA HEALTH CARE REIT, INC.
DEBT COVENANTS (1) 
(dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
Minimum
 
Maximum
 
December 31, 2013
 
June 30, 2014
 
June 30, 2014 Pro forma (2)       
Revolving Credit Facility:
 
 
 
 
 
 
 
 
 
Consolidated Leverage Ratio
 
 
5.50x

 
4.60x

 
4.12x

 
4.11x

Consolidated Fixed Charge Coverage Ratio
1.75x

 
 
 
2.76x

 
3.23x

 
3.24x

Consolidated Tangible Net Worth(3)
 
$
616.6

 
 
 
$
595.6

 
$
806.3

 
$
806.3

Limitation on Secured Indebtedness (4)
 
 
30
%
 
9
%
 
7
%
 
7
%
 
 
 
 
 
 
 
 
 
 
Unsecured Senior Notes:
 
 
 
 
 
 
 
 
 
Total Debt/ Asset Value
 
 
60
%
 
52
%
 
39
%
 
39
%
Secured Debt/ Asset Value
 
 
40
%
 
17
%
 
7
%
 
7
%
Unencumbered Assets/ Unsecured Debt
150
%
 
 
 
163
%
 
206
%
 
206
%
Minimum Interest Coverage
2.00x

 
 
 
3.85x

 
4.17x

 
4.17x

(1) All covenants are based on terms defined in the related credit agreement (as amended) and unsecured senior notes indentures. Asset Value and Unencumbered Assets used for debt covenant calculation purposes include a value for the initial real estate portfolio obtained in the separation from Sun, which is calculated in accordance with the indentures and uses an assumed 9.75% capitalization rate. This results in an assumed total portfolio value for the initial real estate portfolio of $757 million.
(2) Assumes the Titan preferred equity investment was completed as of June 30, 2014.
(3) As of December 31, 2013 the consolidated tangible Net Worth minimum was $452.7 million and we were in compliance.
(4) Excludes borrowings under the revolving credit facility.
 





See reporting definitions.
10
    


SABRA HEALTH CARE REIT, INC.
PORTFOLIO SUMMARY - ALL INVESTMENTS
June 30, 2014
(dollars in thousands)
 
 
 
 
 
 
Rental Income (1)
 
Number of
Licensed
Beds/Units
 
Occupancy Percentage (2)
 
 
Number of
Properties
 
 
 
Three Months Ended June 30,
 
 
Twelve Months Ended June 30,
Facility Type
 
 
Investment
 
2014
 
2013
 
 
2014
 
2013
Skilled Nursing/Post-Acute
 
102

 
$
825,011

 
$
28,130

 
$
26,186

 
11,460

 
87.9
%
 
88.8
%
Senior Housing
 
26

 
205,003

 
4,533

 
3,684

 
1,966

 
90.4
%
 
88.5
%
Acute Care Hospitals
 
2

 
175,807

 
4,822

 
1,648

 
124

 
N/A

 
N/A

Total 
 
130

 
$
1,205,821

 
$
37,485

 
$
31,518

 
13,550

 
88.2
%
 
88.8
%

 
 
EBITDAR Coverage (2)
 
EBITDARM Coverage (2)
 
 
Twelve Months Ended June 30,
Facility Type
 
2014
 
2013
 
2014
 
2013
Skilled Nursing/Post-Acute
 
1.18x
 
1.28x
 
1.63x
 
1.76x
Senior Housing
 
1.18x
 
1.20x
 
1.40x
 
1.43x
Acute Care Hospitals
 
1.69x
 
2.71x
 
1.83x
 
2.82x
Total
 
1.24x
 
1.34x
 
1.63x
 
1.77x
 
 
 
 
 
 
 
 
 

Fixed Charge Coverage Ratio (3)
 
Twelve Months Ended June 30, 2014
Twelve Months Ended June 30, 2013
Genesis
 
1.24x
1.23x













  








(1) Rental income includes $4.2 million and $3.6 million of straight-line rental income adjustments for the three months ended June 30, 2014 and June 30, 2013, respectively and does not include income from RIDEA-compliant joint ventures.
(2) Occupancy percentage, EBITDARM, EBITDAR and related coverages are only included in periods subsequent to our acquisition of the facilities for facilities with new tenants/ operators and exclude the impact of strategic disposition candidates, non-stabilized properties and facilities leased to RIDEA-compliant joint venture tenants. All facility financial performance data are presented one quarter in arrears.
(3) As of June 30, 2014, 81 of the Company's 130 properties held for investment were operated by and leased to subsidiaries of Genesis pursuant to triple-net leases that are guaranteed by Genesis. Fixed Charge Coverage Ratio is presented one quarter in arrears. See Reporting Definitions for definition of Fixed Charge Coverage.
SABRA HEALTH CARE REIT, INC.
PORTFOLIO SUMMARY - ALL INVESTMENTS (CONTINUED)
June 30, 2014
(dollars in thousands)



Loan Type
 
Number of Loans
 
Facility Type
 
Principal Balance as of June 30, 2014
 
Book Value as of June 30, 2014
 
Weighted Average Contractual Interest Rate
 
Weighted Average Annualized Effective Interest Rate
 
Interest Income Three Months Ended June 30, 2014
Maturity Date
Mortgage
 
4

 
Skilled Nursing / Senior Housing / Acute Care Hospital
 
$
149,756

 
$
150,203

 
8.2
%
 
8.1
%
 
$
3,069

10/31/16 - 1/31/18
Construction
 
3

 
Acute Care Hospital / Memory Care
 
50,989

 
51,309

 
7.4
%
 
7.3
%
 
786

9/30/16 - 10/31/18
Mezzanine
 
1

 
Skilled Nursing
 
6,517

 
6,536

 
12.0
%
 
11.6
%
 
191

12/27/14
Pre-development
 
4

 
Senior Housing
 
2,709

 
2,818

 
9.0
%
 
8.0
%
 
48

8/16/15 - 5/8/17
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12

 
 
 
$
209,971

 
$
210,866

 
8.2
%
 
8.0
%
 
$
4,094

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Other Investment Type
 
Number of Investments
 
Facility Type
 
Total Funding Commitments
 
Amount Funded
 as of
June 30, 2014
 
Book Value
as of
June 30, 2014
 
Rate of Return
 
Other Income
Three Months Ended
June 30, 2014
Preferred Equity
 
5
 
Skilled Nursing / Senior Housing
 
$
14.384

 
$
13,315

 
$
14,921

 
14.2
%
 
$
371




                                          



See reporting definitions.
11
    


SABRA HEALTH CARE REIT, INC.
PORTFOLIO SUMMARY - SAME STORE (1) 
June 30, 2014
(dollars in thousands)
 
 
 
 
Rental Income (2)
 
Occupancy Percentage (3)
 
Skilled Mix (3)
 
 
 
 
Three Months Ended June 30,
 
Twelve Months Ended June 30,
Facility Type
 
Number of
Properties
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Skilled Nursing/Post-Acute
 
94

 
$
25,773

 
$
26,031

 
88.1
%
 
88.8
%
 
35.8
%
 
37.3
%
Senior Housing
 
20

 
3,475

 
3,468

 
89.4
%
 
88.1
%
 
N/A

 
N/A

Acute Care Hospitals
 
1

 
1,493

 
1,648

 
N/A

 
N/A

 
N/A

 
N/A

Total
 
115

 
$
30,741

 
$
31,147

 
88.3
%
 
88.7
%
 
35.8
%
 
37.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
EBITDAR Coverage (3)
 
EBITDARM Coverage (3)
 
 
Twelve Months Ended June 30,
Facility Type
 
2014
 
2013
 
2014
 
2013
Skilled Nursing/Post-Acute
 
1.17x
 
1.28x
 
1.63x
 
1.76x
Senior Housing
 
1.17x
 
1.20x
 
1.40x
 
1.43x
Acute Care Hospitals
 
2.02x
 
2.71x
 
2.12x
 
2.82x
Total
 
1.21x
 
1.34x
 
1.63x
 
1.77x
 
 
 
 
 
 
 
 
 


































(1) Same Store statistics consist of facilities held or acquired before April 1, 2013.
(2) Rental income includes $3.1 million and $3.6 million of straight-line rental income adjustments for the three months ended June 30, 2014 and June 30, 2013, respectively and does not include income from RIDEA-compliant joint ventures.
(3) Occupancy percentage, skilled mix, EBITDARM, EBITDAR and related coverages are only included in periods subsequent to our acquisition of the facilities for facilities with new tenants/operators and exclude the impact of strategic disposition candidates, non-stabilized properties and facilities leased to RIDEA-compliant joint venture tenants. All facility financial performance data are presented one quarter in arrears.

See reporting definitions.
12
    


SABRA HEALTH CARE REIT, INC.
INVESTMENT ACTIVITY
For the Six Months Ended June 30, 2014
(dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Date
 
Facility Type
 
Number of Properties
 
Beds/Units
 
Total Commitment
 
Investment as of June 30, 2014
 
Rate of Return
Real Estate Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
Nye Portfolio (1)
2/14/2014
 
Senior Housing / Skilled Nursing
 
6

 
673

 
$
90,000

 
$
90,000

 
7.8
%
Chai Portfolio
3/5/2014
 
Skilled Nursing
 
2

 
254

 
24,483

 
24,483

 
9.5
%
Park Place
4/30/2014
 
Senior Housing
 
1

 
140

 
23,840

 
23,840

 
7.4
%
Total Real Estate Investments
 
 
 
 
 
 
 
 
138,323

 
138,323

 
8.0
%
Preferred Equity Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
Colorado Springs - New Dawn
4/30/2014
 
Memory Care
 
1

 
48

 
1,762

 
1,724

 
12.0
%
Shavano Park - Meridian
5/14/2014
 
Memory Care
 
1

 
89

 
2,980

 
2,237

 
15.0
%
Traditions at Beaumont
6/25/2014
 
Senior Housing
 
1

 
130

 
2,400

 
2,400

 
12.0
%
Total Preferred Equity Investments
 
 
 
 
 
 
 
 
7,142

 
6,361

 
14.2
%
Debt Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
Weston II
1/28/2014
 
Memory Care
 
1

 
32

 
383

 
383

 
9.0
%
First Phoenix - Aurora
5/8/2014
 
Memory Care
 
1

 
50

 
777

 
777

 
9.0
%
Total Debt Investments
 
 
 
 
 
 
 
 
1,160

 
1,160

 
9.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
All Investments (Total: 8)
 
 
 
 


 


 
$
146,625

 
$
145,844

 
8.3
%

Annualized Revenue Concentration (2) 

Annualized Revenue by Asset Class (2)
                                    
(1) In connection with its acquisition of four skilled nursing facilities and two senior housing facilities, the Company may pay an earn-out based on incremental portfolio value created through the improvement of current operations as well as through expansion and conversion projects. The earn-out amount will be determined based on portfolio performance following the third anniversary of the master lease. The Company estimated a contingent consideration liability of $3.2 million at the time of purchase. This amount is excluded from the total commitment and investment amount as of June 30, 2014.
(2) Annualized revenue consists of annual straight-line rental revenues under leases and interest and other income generated by the Company's loans receivable and other investments based on amounts invested and applicable terms as of the end of the period presented.

See reporting definitions.
13
    



SABRA HEALTH CARE REIT, INC.
REAL ESTATE PORTFOLIO GEOGRAPHIC CONCENTRATIONS
June 30, 2014
 
Property Type   
State
 
Skilled Nursing/Post-Acute
 
Senior Housing
  
Acute Care Hospitals
  
Total
 
% of Total
New Hampshire
 
14

 
2

 
—

 
16

 
12.3
%
Kentucky
 
13

 
2

 
—

 
15

 
11.5

Connecticut
 
12

 
1

 
—

 
13

 
10.0

Michigan
 
—

 
10

 
—

 
10

 
7.7

Texas
 
6

 
1

 
2

 
9

 
6.9

Ohio
 
8

 
—

 
—

 
8

 
6.2

Florida
 
6

 
—

 
—

 
6

 
4.6

Nebraska
 
4

 
2

 
—

 
6

 
4.6

Oklahoma
 
3

 
1

 
—

 
4

 
3.1

Delaware
 
4

 
—

 
—

 
4

 
3.1

Other (18 states)
 
32

 
7

 
—

 
39

 
30.0

 
 
 
 
 
 
 
 
 
 
 
Total
 
102

 
26

 
2

 
130

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
% of Total properties
 
78.5
%
 
20.0
%
 
1.5
%
 
100.0
%
 
 
 
 
 
  
 
 
 
 
 
 
 
 
Distribution of Licensed Beds/Units
 
 
Total Number of
Properties
 
Bed/Unit Type
 
 
 
State
 
 
Skilled Nursing/Post-Acute
 
Senior Housing
  
Acute Care Hospitals
 
Total
 
% of Total
Connecticut
 
13

 
1,770

 
49

 
—

 
1,819

 
13.4
%
New Hampshire
 
16

 
1,470

 
203

 
—

 
1,673

 
12.3

Kentucky
 
15

 
1,020

 
128

 
—

 
1,148

 
8.5

Ohio
 
8

 
897

 
—

 
—

 
897

 
6.6

Texas
 
9

 
720

 
34

 
124

 
878

 
6.5

Florida
 
6

 
767

 
—

 
—

 
767

 
5.7

Nebraska
 
6

 
380

 
291

 
—

 
671

 
5.0

Michigan
 
10

 
—

 
571

 
—

 
571

 
4.2

Colorado
 
4

 
509

 
48

 
—

 
557

 
4.1

Montana
 
4

 
538

 
—

 
—

 
538

 
4.0

Other (18 states)
 
39

 
3,389

 
642

 
—

 
4,031

 
29.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
130

 
11,460

 
1,966

 
124

 
13,550

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
% of Total beds/units
 
 
 
84.6
%
 
14.5
%
 
0.9
%
 
100.0
%
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 










See reporting definitions.
14
    


SABRA HEALTH CARE REIT, INC.
REAL ESTATE PORTFOLIO GEOGRAPHIC CONCENTRATIONS
June 30, 2014
(dollars in thousands)

Investment
State
 
Total Number of Properties
 
Skilled Nursing/Post-Acute
 
Senior Housing
  
Acute Care Hospitals
  
Total
 
% of Total
Texas
 
9

 
$
65,795

 
$
1,396

 
$
175,807

 
$
242,998

 
20.2
%
Connecticut
 
13

 
140,810

 
7,965

 
—

 
148,775

 
12.3

Delaware
 
4

 
95,780

 
—

 
—

 
95,780

 
7.9

Nebraska
 
6

 
63,088

 
28,297

 
—

 
91,385

 
7.6

New Hampshire
 
16

 
76,437

 
12,645

 
—

 
89,082

 
7.4

Michigan
 
10

 
—

 
74,013

 
—

 
74,013

 
6.1

Kentucky
 
15

 
57,148

 
9,739

 
—

 
66,887

 
5.5

Colorado
 
4

 
42,727

 
15,702

 
—

 
58,429

 
4.8

Montana
 
4

 
42,629

 
—

 
—

 
42,629

 
3.5

Ohio
 
8

 
41,913

 
—

 
—

 
41,913

 
3.5

Other (18 states)
 
41

 
198,684

 
55,246

 
—

 
253,930

 
21.2

 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
130

 
$
825,011

 
$
205,003

 
$
175,807

 
$
1,205,821

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
% of Total Properties
 
 
 
68.4
%
 
17.0
%
 
14.6
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




























See reporting definitions.
15
    


SABRA HEALTH CARE REIT, INC.
REAL ESTATE PORTFOLIO GEOGRAPHIC CONCENTRATIONS
June 30, 2014
(dollars in thousands)

Rental Income - Three Months Ended June 30, 2014 (1) 
State
 
Total Number of Properties
 
Skilled Nursing/Post-Acute
  
Senior Housing
  
Acute Care Hospitals
  
Total
  
% of Total
Texas
 
9

 
$
1,877

 
$
25

 
$
4,822

 
$
6,724

 
17.9
%
New Hampshire
 
16

 
3,465

 
391

 
—

 
3,856

 
10.3

Connecticut
 
13

 
3,772

 
83

 
—

 
3,855

 
10.3

Kentucky
 
15

 
2,893

 
146

 
—

 
3,039

 
8.1

Delaware
 
4

 
2,645

 
—

 
—

 
2,645

 
7.1

Florida
 
6

 
2,496

 
—

 
—

 
2,496

 
6.7

Nebraska
 
6

 
1,494

 
511

 
—

 
2,005

 
5.3

Michigan
 
10

 
—

 
1,731

 
—

 
1,731

 
4.6

Colorado
 
4

 
1,166

 
367

 
—

 
1,533

 
4.1

Ohio
 
8

 
1,471

 
—

 
—

 
1,471

 
3.9

Other (18 states)
 
38

 
6,851

 
1,279

 
—

 
8,130

 
21.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
129

 
$
28,130

 
$
4,533

 
$
4,822

 
$
37,485

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
% of Total Properties
 
 
 
75.0
%
 
12.1
%
 
12.9
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Rental Income - Six Months Ended June 30, 2014 (1) 
State
 
Total Number of Properties
 
Skilled Nursing/Post-Acute
  
Senior Housing
  
Acute Care Hospital
  
Total
  
% of Total
Texas
 
9

 
$
3,754

 
$
49

 
$
9,800

 
$
13,603

 
18.5
%
New Hampshire
 
16

 
6,929

 
782

 
—

 
7,711

 
10.5

Connecticut
 
13

 
7,545

 
166

 
—

 
7,711

 
10.5

Kentucky
 
15

 
5,775

 
292

 
—

 
6,067

 
8.2

Delaware
 
4

 
5,289

 
—

 
—

 
5,289

 
7.2

Florida
 
6

 
4,788

 
—

 
—

 
4,788

 
6.5

Michigan
 
10

 
—

 
3,461

 
—

 
3,461

 
4.7

Nebraska
 
6

 
2,259

 
772

 
—

 
3,031

 
4.1

Montana
 
4

 
2,981

 
—

 
—

 
2,981

 
4.1

Ohio
 
8

 
2,941

 
—

 
—

 
2,941

 
4.0

Other (18 states)
 
38

 
13,076

 
2,919

 
—

 
15,995

 
21.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
129

 
$
55,337

 
$
8,441

 
$
9,800

 
$
73,578

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
% of Total Properties
 
 
 
75.2
%
 
11.5
%
 
13.3
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 








(1) Excludes income from one senior housing facility that is part of a RIDEA-compliant joint venture.

See reporting definitions.
16
    


SABRA HEALTH CARE REIT, INC.
SKILLED MIX, OCCUPANCY PERCENTAGE AND TENANT/BORROWER REVENUE MIX
 
 
 
 
 
 
Twelve Months Ended June 30,
 
Year Ended December 31,
 
 
2014
 
2013
 
2013
 
2012
 
2011
Skilled Mix (1) (Skilled Nursing Only)
 
35.6
%
 
36.9
%
 
36.0
%
 
37.9
%
 
41.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended June 30,
 
Year Ended December 31,
Occupancy Percentage (1)
 
2014
 
2013
 
2013
 
2012
 
2011
Skilled Nursing/Post-Acute
 
87.9
%
 
88.8
%
 
88.2
%
 
89.1
%
 
89.3
%
Senior Housing
 
90.4
%
 
88.5
%
 
88.3
%
 
88.0
%
 
85.4
%
 
 
 
 
 
 
 
 
 
 
 
Weighted Average
 
88.2
%
 
88.8
%
 
88.2
%
 
89.0
%
 
89.1
%

 
 
Twelve Months Ended June 30,
Private Pay Revenues Percentage (1)
 
2014
 
2013
Skilled Nursing
 
18.6
%
 
18.1
%
Senior Housing
 
94.3
%
 
93.9
%
Acute Care Hospitals
 
90.1
%
 
76.8
%
Weighted Average
 
41.6
%
 
30.5
%



Annualized Tenant/Borrower Revenue Concentration (2) 

                
                                   






 (1) Skilled mix, occupancy percentage and private pay revenues percentage for facilities with new tenants/operators are only included in periods subsequent to our acquisition of the facilities and exclude the impact of strategic disposition candidates, non-stabilized properties and facilities leased to RIDEA-compliant joint venture tenants. All facility financial performance data are presented one quarter in arrears.
(2) Non-private pay revenues for tenants and borrowers consist of revenues from federal, state and local reimbursement programs. Total revenues are weighted by the cash revenues Sabra receives from our tenants and borrowers. All facility financial performance data are presented one quarter in arrears.

See reporting definitions.
17
    


SABRA HEALTH CARE REIT, INC.
PORTFOLIO LEASE EXPIRATIONS(1)  
June 30, 2014
(dollars in thousands)
 

 
2014 - 2019
 
2020
 
2021
 
2022
 
2023
 
2024
 
2025
 
Thereafter
 
Total
Skilled Nursing/Post-Acute
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties
—
 
27

 
30

 
12

 
—
 
5

 
4

 
24

 
102

Licensed Beds/Units
—
 
3,025

 
3,508

 
869

 
—
 
740

 
575

 
2,743

 
11,460

Annualized Revenues
—
 
$
27,061

 
$
30,814

 
$
10,234

 
—
 
$
8,111

 
$
5,141

 
$
32,424

 
$
113,785

Senior Housing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties
—
 
2

 
3

 
13

 
—
 
2

 
1

 
4

 
25

Licensed Beds/Units
—
 
251

 
197

 
747

 
—
 
291

 
114

 
306

 
1,906

Annualized Revenues
—
 
$
1,974

 
$
1,501

 
$
8,975

 
—
 
$
2,044

 
$
837

 
$
3,533

 
$
18,864

Acute Care Hospitals
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties
—
 
—
 
—
 
—
 
—
 
—
 
—
 
2

 
2

Licensed Beds/Units
—
 
—
 
—
 
—
 
—
 
—
 
—
 
124

 
124

Annualized Revenues
—
 
—
 
—
 
—
 
—
 
—
 
—
 
$
18,260

 
$
18,260

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Properties
—
 
29

 
33

 
25

 
—
 
7

 
5

 
30

 
129

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Licensed Beds/Units
—
 
3,276

 
3,705

 
1,616

 
—
 
1,031

 
689

 
3,173

 
13,490

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Annualized Revenues
—
 
$
29,035

 
$
32,315

 
$
19,209

 
—
 
$
10,155

 
$
5,978

 
$
54,217

 
$
150,909

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% of Revenue
—
 
19.3
%
 
21.4
%
 
12.7
%
 
—
 
6.7
%
 
4.0
%
 
35.9
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 























(1) Excludes one senior housing facility that is part of a consolidated RIDEA-compliant joint venture.

See reporting definitions.
18
    


SABRA HEALTH CARE REIT, INC.
RECENT INVESTMENT ACTIVITY

First Phoenix - Aurora
• Investment Date:
 
May 8, 2014
 
 
 
• Investment Price:
 
$0.8 million
 
 
 
• Investment Type:
 
Pre-development loan
 
 
 
• Number of Properties:
 
One
 
 
 
• Location:
 
Aurora, Colorado
 
 
 
• Available Beds/Units:
 
50 Beds / 40 Units
 
 
 
• Property Type:
 
Memory care
 
 
 
• Annualized GAAP Interest Income:
 
$0.1 million
 
 
 
• Rate of Return:
 
9.0%






























See reporting definitions.
19
    


SABRA HEALTH CARE REIT, INC.
RECENT INVESTMENT ACTIVITY

Shavano Park - Meridian

• Investment Date:
 
May 14, 2014
 
 
 
• Investment Price:
 
$3.0 million (1) ($2.2 million funded as of June 30, 2014)
 
 
 
• Investment Type:
 
Preferred equity
 
 
 
• Number of Properties:
 
One
 
 
 
• Location:
 
Shavano Park, Texas
 
 
 
• Available Beds/Units:
 
89 beds
 
 
 
• Property Type:
 
Memory care
 
 
 
• Annualized GAAP Income:
 
$0.4 million
 
 
 
• Rate of Return:
 
15.0%


















(1) The preferred equity investment contains a purchase option.

See reporting definitions.
20
    



SABRA HEALTH CARE REIT, INC.
RECENT INVESTMENT ACTIVITY

Traditions at Beaumont

• Investment Date:
 
June 25, 2014
 
 
 
• Investment Price:
 
$2.4 million (1)
 
 
 
• Investment Type:
 
Preferred equity
 
 
 
• Number of Properties:
 
One
 
 
 
• Location:
 
Louisville, Kentucky
 
 
 
• Available Beds/Units:
 
130
 
 
 
• Property Type:
 
Independent living, assisted living and memory care

 
 
 
• Annualized GAAP Income:
 
$0.3 million
 
 
 
• Rate of Return:
 
12.0%















(1) The preferred equity investment contains a purchase option.

See reporting definitions.
21
    




SABRA HEALTH CARE REIT, INC.
RECENT INVESTMENT ACTIVITY

Titan Senior Living





• Investment Date:
 
July 7, 2014
 
 
 
• Investment Price:
 
$4.5 million (1)
 
 
 
• Investment Type:
 
Preferred equity
 
 
 
• Number of Properties:
 
One
 
 
 
• Location:
 
Outside of San Antonio, Texas
 
 
 
• Available Beds/Units:
 
113 units (75 assisted living and 38 memory care)
 
 
 
• Property Type:
 
Assisted living and memory care
 
 
 
• Annualized GAAP Income:
 
$0.5 million
 
 
 
• Rate of Return:
 
10.0%











(1) The preferred equity investment contains a purchase option.

See reporting definitions.
22
    


SABRA HEALTH CARE REIT, INC.
RECENT INVESTMENT ACTIVITY - PRO FORMA INFORMATION

The following Pro Forma Net Income Attributable to Common Stockholders, FFO, Normalized FFO, AFFO and Normalized AFFO information assumes that (i) the investment activity during the quarter ended June 30, 2014 or subsequent to June 30, 2014 as described on pages 14 and 20-23 of this Supplement, (ii) the financing activity during the quarter ended June 30, 2014 consisting of the repayment of $29.8 million of existing variable mortgage indebtedness with proceeds from our revolving credit facility and the underwritten public offering of 8.1 million newly issued shares of our common stock and use of proceeds thereof and (iii) the change in ownership of one of our tenants and the resulting modification of the lease terms were completed as of April 1, 2014.

(dollars in thousands, except per share data)
 
Three Months Ended June 30, 2014
 
Adjustments
 
Pro Forma Three Months Ended June 30, 2014
 
 
Investing
 
Financing
 
Net income attributable to common stockholders
$
12,241

 
$
2,917

 
$
806

 
$
15,964

Depreciation of real estate assets
9,755

 
46

 
—

 
9,801

 
 
 
 
 
 
 
 
Funds from Operations (FFO)
$
21,996

 
$
2,963

 
$
806

 
$
25,765

 
 
 
 
 
 
 
 
Loss on extinguishment of debt
162

 
—

 
(162
)
 
—

Write-off of straight-line rental income
2,895

 
(2,895
)
 
—

 
—

Normalized FFO
$
25,053

 
$
68

 
$
644

 
$
25,765

 
 
 
 
 
 
 
 
FFO
$
21,996

 
$
2,963

 
$
806

 
$
25,765

Acquisition pursuit costs
187

 
—

 
—

 
187

Stock-based compensation expense
2,279

 
—

 
—

 
2,279

Straight-line rental income adjustments
(4,247
)
 
(274
)
 
—

 
(4,521
)
Amortization of deferred financing costs
927

 
—

 
—

 
927

Change in fair value of contingent consideration
(660
)
 
—

 
—

 
(660
)
Non-cash portion of loss on extinguishment of debt
80

 
—

 
(80
)
 
—

Non-cash interest income adjustments
70

 
—

 
—

 
70

Write-off of straight-line rental income
2,895

 
(2,895
)
 
—

 
—

Adjusted Funds from Operations (AFFO)
$
23,527

 
$
(206
)
 
$
726

 
$
24,047

 
 
 
 
 
 
 
 
Cash portion of loss on extinguishment of debt
82

 
—

 
(82
)
 
—

Normalized AFFO
$
23,609

 
$
(206
)
 
$
644

 
$
24,047

Amounts per diluted common share:
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders
$
0.28

 
 
 
 
 
$
0.33

 
 
 
 
 
 
 
 
FFO
$
0.50

 
 
 
 
 
$
0.54

 
 
 
 
 
 
 
 
Normalized FFO
$
0.57

 
 
 
 
 
$
0.54

 
 
 
 
 
 
 
 
AFFO
$
0.53

 
 
 
 
 
$
0.50

 
 
 
 
 
 
 
 
Normalized AFFO
$
0.53

 
 
 
 
 
$
0.50

 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding, diluted:
 
 
 
 
 
 
 
Net Income, FFO and Normalized FFO
44,096,297

 
 
 
 
 
47,723,220

AFFO and Normalized AFFO
44,335,381

 
 
 
 
 
47,962,304

 
 
 
 
 
 
 
 






See reporting definitions.
23
    
SABRA HEALTH CARE REIT, INC.
REPORTING DEFINITIONS


Acute Care Hospital. A facility designed to provide extended medical and rehabilitation care for patients who are clinically complex and have multiple acute or chronic conditions.
Adjusted EBITDA. The Company uses EBITDA (defined below), adjusted to exclude losses on extinguishment of debt and changes in fair value of contingent consideration ("Adjusted EBITDA"), a non-GAAP financial measure, as a measure of operating performance. By excluding interest expense and losses on extinguishment of debt, Adjusted EBITDA allows investors to measure the Company’s operating performance independent of its capital structure and indebtedness and, therefore, allows for a more meaningful comparison of its operating performance between quarters as well as annual periods and to compare its operating performance to that of other companies, both in the real estate industry and in other industries. The Company believes investors should consider Adjusted EBITDA in conjunction with net income attributable to common stockholders (the primary measure of the Company’s performance) and the other required GAAP measures of its performance, to improve their understanding of the Company’s operating results, and to make more meaningful comparisons of its performance between periods and against other companies. Adjusted EBITDA has limitations as an analytical tool and should be used in conjunction with the Company’s required GAAP presentations. Adjusted EBITDA does not reflect the Company’s historical cash expenditures or future cash requirements for capital expenditures or contractual commitments. Adjusted EBITDA does not represent net income, net income attributable to common stockholders or cash flow from operations as defined by GAAP and it should not be considered as an alternative to those indicators in evaluating operating performance or liquidity. Further, the Company’s computation of Adjusted EBITDA may not be comparable to similar measures reported by other companies.
Annualized Revenues. The annual straight-line rental revenues under leases and interest and other income generated by the Company's loans receivable and other investments based on amounts invested and applicable terms as of the end of the period presented. Annualized Revenues do not include tenant recoveries or additional rents.  The Company uses Annualized Revenues for the purpose of determining revenue concentrations and lease expirations.
EBITDA. The real estate industry uses earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP financial measure, as a measure of both operating performance and liquidity. The Company uses EBITDA to measure both its operating performance and liquidity. By excluding interest expense, EBITDA allows investors to measure the Company’s operating performance independent of its capital structure and indebtedness and, therefore, allows for a more meaningful comparison of its operating performance between quarters as well as annual periods and to compare its operating performance to that of other companies, both in the real estate industry and in other industries. As a liquidity measure, the Company believes that EBITDA helps investors analyze the Company’s ability to meet its interest payments on outstanding debt. The Company believes investors should consider EBITDA in conjunction with net income attributable to common stockholders (the primary measure of the Company’s performance) and the other required GAAP measures of its performance and liquidity, to improve their understanding of the Company’s operating results and liquidity, and to make more meaningful comparisons of its performance between periods and against other companies. EBITDA has limitations as an analytical tool and should be used in conjunction with the Company’s required GAAP presentations. EBITDA does not reflect the Company’s historical cash expenditures or future cash requirements for capital expenditures or contractual commitments. While EBITDA is a relevant and widely used measure of operating performance and liquidity, it does not represent net income, net income attributable to common stockholders or cash flow from operations as defined by GAAP and it should not be considered as an alternative to those indicators in evaluating operating performance or liquidity. Further, the Company’s computation of EBITDA may not be comparable to similar measures reported by other companies.
EBITDAR. Earnings before interest, taxes, depreciation, amortization and rent (“EBITDAR”) for a particular facility accruing to the operator/tenant of the property (not the Company) for the period presented. The Company uses EBITDAR in determining EBITDAR Coverage. EBITDAR has limitations as an analytical tool. EBITDAR does not reflect historical cash expenditures or future cash requirements for facility capital expenditures or contractual commitments. In addition, EBITDAR does not represent a property's net income or cash flow from operations and should not be considered an alternative to those indicators. The Company receives EBITDAR and other information from its operators/tenants and relevant guarantors and utilizes EBITDAR as a supplemental measure of their ability to generate sufficient liquidity to meet related obligations to the Company. All facility and tenant financial performance data is derived solely from information provided by operators/tenants and relevant guarantors without independent verification by the Company and is presented one quarter in arrears. The Company includes EBITDAR with respect to a property if the property was operated at any time during the period presented subject to a lease with the Company. EBITDAR for facilities with new tenants/operators are only included in periods subsequent to the Company's acquisition of the facilities. EBITDAR excludes the impact of strategic disposition candidates, non-stabilized properties and facilities leased to RIDEA-compliant joint venture tenants.
EBITDAR Coverage. EBITDAR for the trailing 12 month periods prior to and including the period presented divided by the same period cash rent for all of our facilities. Cash rent used for recently acquired facilities and facilities subject to lease restructurings is the first year rental rate excluding any rent concessions or deferrals. EBITDAR Coverage is a supplemental measure of an operator/tenant's ability to meet their cash rent and other obligations to the Company. However, its usefulness is limited by, among other things, the same factors that limit the usefulness of EBITDAR. All facility and tenant data are derived solely from information provided by operators/tenants and relevant guarantors without independent verification by the Company and are only included for stabilized properties. All such data is presented one quarter in arrears and excludes the impact of strategic disposition candidates, non-stabilized properties and facilities leased to RIDEA-compliant joint venture tenants.

See reporting definitions.
24
    
SABRA HEALTH CARE REIT, INC.
REPORTING DEFINITIONS


EBITDARM. Earnings before interest, taxes, depreciation, amortization, rent and management fees (“EBITDARM”) for a particular facility accruing to the operator/tenant of the property (not the Company), for the period presented. The Company uses EBITDARM in determining EBITDARM Coverage. The usefulness of EBITDARM is limited by the same factors that limit the usefulness of EBITDAR. Together with EBITDAR, the Company utilizes EBITDARM to evaluate the core operations of the properties by eliminating management fees, which vary based on operator/tenant and its operating structure. All facility financial performance data is derived solely from information provided by operators/tenants and relevant guarantors without independent verification by the Company. All such data is presented one quarter in arrears. The Company includes EBITDARM for a property if it was operated at any time during the period presented subject to a lease with the Company. EBITDARM for facilities with new tenants/operators are only included in periods subsequent to our acquisition of the facilities. EBITDARM excludes the impact of strategic disposition candidates, non-stabilized properties and facilities leased to RIDEA-compliant joint venture tenants.
EBITDARM Coverage. EBITDARM for the trailing 12 month periods prior to and including the period presented divided by the same period cash rent. Cash rent used for recently acquired facilities and facilities subject to lease restructurings is the first year rental rate excluding any rent concessions or deferrals. EBITDARM coverage is a supplemental measure of a property's ability to generate cash flows for the operator/tenant (not the Company) to meet the operator's/tenant's related cash rent and other obligations to the Company. However, its usefulness is limited by, among other things, the same factors that limit the usefulness of EBITDARM. All facility and tenant data are derived solely from information provided by operators/tenants and relevant guarantors without independent verification by the Company and are only included for stabilized properties. All such data is presented one quarter in arrears and excludes the impact of strategic disposition candidates, non-stabilized properties and facilities leased to RIDEA-compliant joint venture tenants.
Enterprise Value. The Company believes Enterprise Value is an important measurement as it is a measure of a company’s value. We calculate Enterprise Value as market equity capitalization plus debt. Market equity capitalization is calculated as the number of shares of common stock multiplied by the closing price of our common stock on the last day of the period presented. Total Enterprise Value includes our market equity capitalization and consolidated debt, less cash and cash equivalents.
Fixed Charge Coverage. EBITDAR (including adjustments for one-time and pro forma items) for the period indicated (one quarter in arrears) for all operations of any entities that guarantee the tenants' lease obligations to the Company divided by the same period cash rent expense, interest expense and mandatory principal payments for operations of any entity that guarantees the tenants' lease obligation to the Company. Fixed Charge Coverage is a supplemental measure of a guarantor's ability to meet the operator/tenant's cash rent and other obligations to the Company should the operator/tenant be unable to do so itself. However, its usefulness is limited by, among other things, the same factors that limit the usefulness of EBITDAR. Fixed Charge Coverage is calculated by the Company as described above based on information provided by guarantors without independent verification by the Company and may differ from similar metrics calculated by the guarantors.
Funds From Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”). The Company believes that net income attributable to common stockholders as defined by GAAP is the most appropriate earnings measure. The Company also believes that Funds From Operations, or FFO, as defined in accordance with the definition used by the National Association of Real Estate Investment Trusts (“NAREIT”), and Adjusted Funds from Operations, or AFFO (and related per share amounts) are important non-GAAP supplemental measures of the Company's operating performance. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a real estate investment trust that uses historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for real estate investment trusts that excludes historical cost depreciation and amortization, among other items, from net income attributable to common stockholders, as defined by GAAP. FFO is defined as net income attributable to common stockholders, computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization and impairment charges. AFFO is defined as FFO excluding non-cash revenues (including, but not limited to, straight-line rental income adjustments and write-offs, non-cash interest income adjustments and amortization of debt premium), non-cash expenses (including, but not limited to, stock-based compensation expense, amortization of deferred financing costs and amortization of debt discounts) and acquisition pursuit costs. The Company believes that the use of FFO and AFFO (and the related per share amounts), combined with the required GAAP presentations, improves the understanding of the Company's operating results among investors and makes comparisons of operating results among real estate investment trusts more meaningful. The Company considers FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, by excluding gains or losses from real estate dispositions, impairment charges and real estate depreciation and amortization, and, for AFFO, by excluding non-cash revenues (including, but not limited to, straight-line rental income adjustments and write-offs, non-cash interest income adjustments and amortization of debt premium), non-cash expenses (including, but not limited to, stock-based compensation expense, amortization of deferred financing costs and amortization of debt discounts) and acquisition pursuit costs, FFO and AFFO can help investors compare the operating performance of the Company between periods or as compared to other companies. While FFO and AFFO are relevant and widely used measures of operating performance of real estate investment trusts, they do not represent cash flows from operations or net income attributable to common stockholders as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. FFO and AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other real estate investment trusts that do not define

See reporting definitions.
25
    
SABRA HEALTH CARE REIT, INC.
REPORTING DEFINITIONS


FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition or define AFFO differently than the Company.
Investment. Represents the carrying amount of real estate assets after adding back accumulated depreciation and amortization.
Licensed Beds/Units. Senior housing facilities are measured in units (e.g., studio, one or two bedroom units). Skilled nursing and mental health facilities are measured in licensed bed count. All facility financial performance data were derived solely from information provided by operators/tenants without independent verification by the Company.
Market Capitalization. Total common shares of Sabra outstanding multiplied by the closing price per common share as of a given period.
Normalized FFO and AFFO. Normalized FFO represents FFO adjusted for certain income and expense items that the Company does not believe are indicative of its ongoing operating results. Normalized AFFO represents AFFO adjusted for one-time start-up costs and certain income and expense items that the Company does not believe are indicative of its ongoing operating results. The Company considers normalized FFO and AFFO to be a useful measure to evaluate the Company’s operating results excluding start-up costs and non-recurring income and expenses. Normalized FFO and AFFO can help investors compare the operating performance of the Company between periods or as compared to other companies. Normalized FFO and AFFO do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. Normalized FFO and AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor does it purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of normalized FFO and AFFO may not be comparable to normalized FFO and AFFO reported by other REITs that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition or define FFO and AFFO or normalized FFO and normalized AFFO differently from the Company.
Occupancy Percentage. Occupancy Percentage represents the facilities’ average operating occupancy for the period indicated. The percentages are calculated by dividing the actual census from the period presented by the available beds/units for the same period. Occupancy for independent living facilities can be greater than 100% for a given period as multiple residents could occupy a single unit. All facility financial performance data were derived solely from information provided by operators/tenants without independent verification by the Company and are only included for stabilized properties. All facility financial performance data are presented one quarter in arrears. The Company includes the occupancy percentage for a property if it was owned by the Company at any time during the period presented and excludes the impact of strategic disposition candidates, non-stabilized properties and facilities leased to RIDEA-compliant joint venture tenants. Occupancy Percentage for facilities with new tenants/operators are only included in periods subsequent to our acquisition of the facilities.
Senior Housing. Senior housing facilities include independent living, assisted living, continuing care retirement community and memory care facilities.
Skilled Mix. Skilled Mix is defined as the total Medicare and non-Medicaid managed care patient revenue at skilled nursing facilities divided by the total revenues at skilled nursing facilities for any given period. All facility financial performance data were derived solely from information provided by the Company's tenants without independent verification by the Company and are only included for stabilized properties. All facility financial performance data are presented one quarter in arrears. The Company includes skilled mix for a property if it was owned by the Company at any time during the period presented and excludes the impact of strategic disposition candidates, non-stabilized properties and facilities leased to RIDEA-compliant joint venture tenants. Skilled Mix for facilities with new tenants/operators are only included in periods subsequent to our acquisition of the facilities.
Skilled Nursing/Post-Acute. Skilled nursing/post-acute facilities include skilled nursing facilities, multi-license designation, and mental health facilities.
Total Debt. The carrying amount of the Company’s secured revolving credit facility, senior unsecured notes, and mortgage indebtedness, as reported in the Company’s consolidated financial statements.
Total Secured Debt. Mortgage and other debt secured by real estate.







See reporting definitions.
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