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SBRA Sabra Healthcare REIT

Participants
Michael Costa EVP, Finance
Rick Matros Chairman & CEO
Talya Nevo-Hacohen EVP, CIO & Treasurer
Harold Andrews CFO
Nick Yulico Scotiabank
Nick Joseph Citi
Chad Vanacore Stifel
Rich Anderson SMBC
John Kim BMO Capital Markets
Steven Valiquette Barclays
Daniel Bernstein Capital One
Connor Siversky Berenberg
Lukas Hartwich Green Street Advisors
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Sabra Health Care REIT Fourth Quarter 2019 Earnings Conference Call. This call is being recorded. I would now like to turn the call over to your host, Mr. Michael Costa, EVP Finance. Please go ahead Mr. Costa.

Michael Costa

you. Thank

expectations obligation I statements you in tenants' risks Form including press in as your concerning begin, be earnings the was we we X-K response well XX, in financial to filed the ended disposition questions forward-looking acquisition, making our that the our our in performance, release want listed that our furnished we plans, that this for our included remind will to and expectations our valid. Before investment Form our our XXXX, morning, could regarding are comments future we as year and and circumstances forward-looking actual our as and based XX-K statements cause regarding with our still Exhibit to morning. on this update plans, to uncertainties SEC subsequent are results to later no materially, December and assume management's our the quarter XX.X not and undertake We position in events to financing expectations subject are reflect risks to of SEC that the regarding current comments you differ to or expectations statements financial forward-looking operations. today results and the These make should

references section GAAP the Investors of of page as be the to and on to are In explanation Investors non-GAAP measures call addition, measures included at results. will comparable well as our made of the www.sabrahealth.com. encouraged financial the these non-GAAP this during financial to review results reconciliation website financials these

section of be also supplement Investor earnings our the XX-K, Form Our and in can release website. accessed

Rick turn and the And Health of Chairman with Matros, Care CEO REIT. that call over Sabra me to let

Rick Matros

blessing. in morning may those Staples for life helicopter morning, a Thanks, all the for of memories that joining [indiscernible] crash. families lost we us their This at Center is this Mike, the and now And celebration other thanks the families and be afternoon. this everybody happening

things on about the of which year that pristine more -- will finished we I'm improve that our did that. portfolio is into going Sabra. the pretty sheet Now a to to XXXX the Harold was condition, we the pretty in talk repositioning all XXXX did and balance

our growth and getting balance ever sheet based very simple strong on for really best that we and in the story that's XXXX back Our place is had. and focus platform we have to now, that a

getting the first XXXX. Activity and starting in will average were $XX up. We just The $XX the of is a bit completed a be million pick quarter fourth We're rather yield million in investments the and accretive through be year. to deals far, the X.X%. little later in in over the quarter million so also initially will of that investment housing deal $XXX close investment earnings-neutral, to senior closing

be going Our specifically investments focus to investing, going on behavioral is skilled-nursing on high-yield forward and addiction.

this improvement our is the guidance expected commitment the the to Incorporated maintaining with in of part beginning year's in year. latter dividend coverage

better cap same the terms to levels. it's We're seeing historically nursing at rates. on housing senior We're volume to in stable tick Moving some starting as that's competition. skilled of up ticking the it's environment. see to deal and Essentially up opportunities been

with deals And under but billion, addiction senior relationships we more the to still acquisition seeing investment in some we're also $X and Our just two current opportunities primarily now behavioral skilled addiction starting well. space. operators have is pipeline housing, we're see and as

us. a the don't it's growth So start off getting for but nice we rapid, be expect to to

it's shortages that our possible. solution, a to for I know, add enough with talking noise looking the we're been to we've you repositioning. JV we're while. not new Moving as and complications it story, keep JV. a through at, to going best we about it's that We Enlivant, TPG pursuing to have a determine We that to some the with solutions to on with everything work real as went all uncomplicated We're had think our trying simpler

make December the give exercise it XX would see the strengthen. we our this that of investment any accretion a don't portfolio occupancy good when anticipate happy investment. any of to end a and spot that until as provide to to with to we're Enlivant year. gains option clear compelled in level in Until we're Our feel believe exercising incremental We current the from more We path the continues to doesn't changes. until time performance option occurs,

option will partial maintain be for penalty out the partnerships. the take an again the outcome working extended minimizing required, current Possible remainder, a equity with may TPG with

pretty less for Now snapshot be XXXX, we're bit seeing where much bit Sabra to rate results mid-single-digit. that moving on the quarter publish our on first that impacts the points, point could at Once early do little able more a how everybody But say not fourth have able I be to of Hopefully PDPM. with about is a May. around provide little know A to at coverage. a at through a Board. net will would we of basket mid-single-digit more, curious we quarter data some call in coming snapshot. we the we'll sort across We're the market PDPM, of of I growth,

on through are of the a our One working therapy. is reduction still big impact that that improved coverage have cost the will operators things the

cost PDPM So the sense of and of a will been the new operators transition of seeing they to stabilizing But coverage. we're really as as the our with cost system. those improving really pleased how that make on been any with the there's disruption much no reductions to improvements we've they combination go have relative to increase better and rate progress reductions more

Moving now to operations.

occupancy EBITDA Our triple skilled skilled were net business, same-store stable. coverage and mix

EBITDA For well. were coverage as stable occupancy senior and housing,

and out showed that's more improvement continuing but the the the strong. Our Top Avamere, sooner down nice trending operators bottomed in because quickly North fourth The they're kept little quarter, was anticipated. generally eye first than quarter, we they on they and into Signature we -- three Avamere in closest a XX quarter is third actually Health, American. sequentially, up a bit

North American also well trended quarter. as is Healthcare Signature up continuing first quarter early improving to in improve, Health in quarter. first improved and the the sequentially, fourth continues

our from about feel So perspective for a good we operators and coverage where matter. are really all else that

occupancy unconsolidated the same-store the will TPG showed details RevPAR across specific Our Talya provide with and shop, margin improvement with and in all a margin. Enlivant RevPAR, JV but solid showed occupancy up we and board the

it And with turn over to that, I'm I'll sorry, Talya. Harold.

Talya Nevo-Hacohen

cash of update to portfolio. In managed Thank portfolio. was our you. on XXXX, Sabra's quarter by fourth Housing our NOI XX% generated managed annualized the provide Approximately of Senior an approximately Canadian I'll to of XX.X% that living Enlivant communities and The relates communities. includes serve by our and that memory and XX% communities Holiday-managed assisted US. for balance portfolio in are relates managed our

the XXXX as RevPAR room managed holiday X.X%, in last The impact we non-stabilized when X.X%. year-over-year XXXX that recovering assets results occupied revenue from showed as third portfolio, aren't the was compared same-store fourth the comparing end X.X% excluding by were cash, per quarter assets of income which favorable a to of increased net quarter basis, flu. dramatic excludes quarter with quarter increased the fourth Revenues results operating by quarter and up the the On year-over-year were they was XXXX. results

our move was felt cash The improving outs. across even more portfolio makes the flu and continuing season in trend of the revenue The higher impact resulting this in of rate operating already income December, context context -- results managed solid current net portfolio. the

cities labor and housing impacted feel the pressure higher senior the for costs, residents our an importance the by these supply maintain in important of Canada dramatically of increased the continues in and industry employees, and in markets. because that secondary largely of capital is locations, targets to as market US to the our communities portfolio projects communities communities factors employer Although and not middle their the [ph] both ongoing as

details the is quarter's as results, I this business One quarter volatility. there into get will we the obvious. a trend, doesn't state every operating Before make in of

understanding direction in landscape And supplemental trends , time. look you include time, on you to sequential in our focus encourage results track can etc. portfolio seasonalites we changes I competitive begin information at where managed So source we over that results of of over in volatilities through the to quarterly while the the to our

Cash In X% for venture Average a X.X% NOI previous a in $X,XXX, same-store occupancy cash was the higher seen with improvement. to by back The line XXX a X.X% This is X.X% on details. was higher since we the expense growth for owns year-over-year basis. XXXX, higher made was flat was the basis X.X% and and year-over-year steady year's RevPAR venture's highest quarter , sequentially. stabilized Now on on operating was joint properties basis. we than Enlivant higher results. Enlivant portfolio, driven the XX.X%, that in the a X.X% X.X% net NOI XX.X%, of cash top XXXX, the higher have same-store was and joint prior stabilized quarter income showed control. line year-over-year RevPAR margin higher quarter which than XX% quarter-over-quarter investment. Same-store Sabra the -- and

on communities portfolio drive Continuing of results to Enlivant rates. continued to the XX portfolio. managed of wholly-owned Sabra's the wholly-owned

XX already but the to related was communities [ph] due in invented two group. the and in at November Both of two our and effects of the bounced flu properties is to occupancy hard move-outs of beginning portfolio January. early into start early markets the are hit flu a impacted communities of strong However, in occupancy back, Occupancy by communities therefore season margin. XX results particularly late and

a by higher depth X.X% that higher occupancy [ph] on result XX.X%, move than setting. acuity and spike Fourth quarter X.X% a basis quarter to as year-over-year and the was lower a prior in of

a RevPAR because flu, X.X% because prior January a optimistic occupancy rose over move-ins the and calendar about came year. Enlivant in occupancy in a result over was quarter to outcome the strong in was being rate cash at of offset year XXXX X.X% rate effect NOI momentum is $X,XXX, of basis increase on of NOI declining XX.X% This on by While gains. occupancy in seeing compared is cash prior and increase and fourth X.X% up XX.X% [ph] quarter X the the a with losses to increase sequential increases. up October Portfolio on is direct XXXX.

have we do same-store managed to communities to at [Technical yet Difficulty] year-over-year quarter so results transitioned second report. XXXX, of the we not start our from of holiday portfolio Holiday, the

transitioned the we addition, [indiscernible] to year. community fourth our In this in quarter Holiday of independent-living

X.X% quarter same-store the with excluding included the XX.X% assets. X.X% Franklin operating in a deferral because I sequentially, quarter, line the the quarter. RevPAR the in the was $X,XXX, with Portfolio prior prior will fell of So, occupancy associated on income third referral focus adjustment was results lower and than in quarter-over-quarter favorable Cash net quarter fees.

British and Excluding this increased for Sienna Senior NOI sequentially. Sabra. X.X% manages Ontario eight cash retirement in Columbia Living adjustment, homes

increased year quarter year X.X% In basis, down X.X% which of basis stabilized to by income with quarter controls band managed remaining Sienna in slightly narrow the in results a portfolio. on eight fourth the was full-year flat quarter same-store prior but compared in XX.X% in tight and resulting for basis. operating from and year-over-year Sienna the continues operating was calendar properties prior higher occupancy consistent same-store occupancy, in to quarter. XXXX expense compared which same XXXX. is a Last the to virtually maintain a X.X% delivered calendar XXXX down Fourth net XXXX cash by $X,XXX, with margins XXXX, the year-over-year on same-store XX.X% a on quarter was

Sabra's call the Chief And with turn that now over Financial Andrews, Officer. to I Harold will

Harold Andrews

Thanks call everybody the joining Talya, thanks today. for

leverage as This comfortably many times. our to achieved metric follows. in quarter This of throughout below our improvements our stated X.X XXXX of credit compared target resulted levels XXXX December XX lowering objective we effort

is charge from from up down XX% times X.XX Our times we're JV times, EBITDA X.XX to to from X.XX fixed excluding XX%. at X.XX times. down to Interest up debt-to-EBITDA, and to X.XX from times times adjusted now to and coverage, debt the X.XX value times debt asset X.XX coverage

generating of also our to of X.XX% the approximately annual XX which improvement, interest X.XX% excludes basis a million. XXXX the end We lowered cost at at end from savings of debt, XXXX, of the revolver permanent $XX point

to quarter, of common term of outstanding our XX.X shares credit and repay proceeds million program, all $XXX generating These maturing XXXX. our the loans During in of under $XXX.X facility used issued million under ATM net we fourth our balances primarily million. proceeds stock were

a program. and cash the In of revolving along our us us of metric, credit our of with available credit addition full of we advantage offering improvement we with investment to pay few ensure well And stock performance below financial available liquidity, that acquisitions maintain is ATM to cash target as provides users getting our our positioned billion on fund leverage times our Supplementing have for liquidity $X we facility, $XXX million us long-term potential to down the opportunities. unrestricted The take comments the for now allow that equivalents over will quarter. ATM a the X.X among and other about grow. match the

non-cash for $XX portfolio during the was housing termination which and December million million, quarter the also $X.XX third income costs ended for was increases housing exclude $XX.X debt, $XXX.X AFFO the million months respectively. and $X.X of line per and in the our of NOI or with of and to in and expectations was and respectively in million FFO line normalized share. at third to loss were or million acquisition our three are notes quarter at XXXX, managed to redemption merger certain that of FFO the community This senior compared quarters a our of it XXXX. million a lease X% the by normalized XXXX, or XX, the FFO our $XXX.X recorded $X.XX primarily with excludes For senior share on $XX.X the transition our of connection senior was XXXX. with quarter and million, million and X.X% we expectations part $XX.X due non-cash from the share. basis X.XXX% $XX.X $XXX.X and fourth related unsecured million basis to AFFO, in $XXX.X million recognized compares acquisitions on expenses, and $X.X $X.XX per driven normalized in per third quarter. was and to These normalized increases million one for revenues of fourth extinguishment of during revenues

AFFO of $XX.X normalized in in on the third cash $X.X a to recognized was AFFO note normalized or extinguishment of of redemption. loss compares portion debt with primarily of quarter $X.XX the senior to million This million share connection per exclude XXXX.

recorded NOI For quarter the of in of for $X.X income or for recurring a share. with we quarter, costs totaled million million G&A the common $X.X million X.X% stockholders stock-based expense, to and or the per million line $X.XX attributable of cash our $X of net expectations. $XX.X including compensation cost G&A quarter

ongoing quarterly expect average million. cash approximately cost We G&A to $X.X

$XX.X of Our million interest expense the for third compared quarter the in million quarter totaled to XXXX. $XX.X

our quarters and interest debt a reduction a the total driven borrowing cost combination and $X.X expense activities. was Interest million XXXX lower and quarter-over-quarter This refinancing by of lower for overall of $XXX.X included from respectively. third $X.X resulting of million million non-cash of fourth

from relates the during settlement AFFO. not we During quarter. This estate, to one nursing million any related asset fourth impairment We the normalized quarter, sold did to to a primarily prior a in from a expected the Other from of quarter is income be facility skilled operator. $X.X amount million excluded this $X.X FFO for and recognize normalized XXXX. revenues recognized of real

completed quarter senior acquisitions weighted and the of yield to subsequent $XXX.X $XXX.X of from fourth one a for and average three addiction real million. of Those X.X%. acquisitions cash including center five this During consisted development treatment communities, million our pipeline $X.X of estate million with XXXX, housing we

completed committed have treatment complete be center, $XX.X project to invest which We to million expected additional an XXXX. is for early addition the in the to construction

eight of $X.X skilled fourth portfolio the anticipated million. quarter facilities further nursing the completed of for and our XXXX, sale were repositioning portfolio. sales During in proceeds aggregates plans strengthened of care the sales we transitional These

totaling less these the quarter, revenues fourth from recorded than sold During we facilities $XXX,XXX.

compliance of with of XXst, as all our in were December We covenants debt XXXX.

value XXX% at and previously, year-over-year to remains debt increased debt value mentioned the from to addition asset asset to our metrics to secured XXX% unsecured In X%. unencumbered I

$X.XX; We getting Finally range issued share earnings income, to to to to $X.XX; our normalized FFO, our XXXX to guidance AFFO, FFO, and AFFO $X.XX per $X.XX; follows: net normalized $X.XX. $X.XX guidance. from $X.XX as $X.XX

owned, grow our XXXX NOI as to follows: X%; expect venture, wholly same-store joint We X%. unconsolidated housing portfolio's managed senior

repositioning we're in very about balance the returning sheet With of growth. the to to the portfolio be prospects de-levering accomplished XXXX, and of excited

[Technical investments X.X%. did has guidance. include $XXX our any been XXXX of expected included million in not initial yield investment speculative activities million a Difficulty] at weighted already in this in We average of have $XX our cash We guidance completed.

at to be X.X performance will investing debt and adjusted expectations is maintaining times a built EBITDA Furthermore, consideration below forward. our in our or going into critical activities

includes remaining and consist expected assets guidance in requiring a sales of yet Our of that to and XXXX repayments dispositions Genesis approval which close. loan the three identified few $XXX asset remaining million HUD are primarily

close the yield most by a expect of these second X.X%. We at end approximately quarter of the to of

and refinancing activities, related meaningful acquisitions. financing over we as the debt funding XXXX do activities that years, next significant any With maturities any several in may of the expect absence we be to accomplished the not except

to to Related we below guidance million of do leverage ATM and equity commitment million during acquisitions year. assumed include our included on the $XXX the in our maintain $XXX our the the to of X.X issuance times,

$X.XX noted having that Many we to should are be XXXX million. to XXXX several annualized the It rents these impact quarter fourth of $XX.X few guidance. in of of of maturing in and have expected be renewed aggregating a our limiting and maturities the in included has less these impact also share. mature no been leases reduction revenues on per to The total than XXXX

final One our on comment XXXX guidance.

collections AFFO XXXX driven from $X.XX tenants. first weighted the from with $X.XX quarter average and ranges costs quarter higher along our to quarter FFO in is in outstanding shares of respectively. XXXX be over and an QX $X.XX of This basis $X.XX We and to decline increase normalized by the cash normalized expect timing to primarily G&A

declared be share. dividend of paid stockholders of X, as record Finally, to XXth its February quarterly a common that $X.XX Company on The cash XXXX announced will the February dividend on Board XXth. Directors February of per

And with Matros. to turn I'll that, Rick it back

Rick Matros

up We'll now. for open Q&A it

Operator

Yulico [Operator Instructions] Our of Nick first question comes Scotiabank. from

is line open. Your

Nick Yulico

morning. Good Thanks.

to Rick, a net I it's when a little of but you of talking basket early, but rate bit mid-single said want think I First clarify, the just growth you're snapshot, give all, to was digit. PDPM, saying about the market

the increase? mean market of that that's basket inclusive does the So of benefit

Rick Matros

basket. No, the market it excludes

Nick Yulico

Okay.

Rick Matros

PDPA. rate So, pure from it's growth the

Nick Yulico

right. All Okay.

So you I any early, how to point from for viewing point, would out? granted may sense this have of still that in some guess little PDPM I but a some bit mean kind the feel notice of CMS at it's address that think benefit April clawback, be in happen that the of to going whether sort and you're terms any that at goes

Rick Matros

a the clawback. couple egregious I revenue we we're will -- and Yes, comments. but that -- here, all see One of wasn't be expect we're way RUG-IV that actually was neutral, not knew I don't going RUG-IV a operated and was. it on may basis. and not but that don't double-digit it's not seeing see not [Technical it certainly think Difficulty] a you to we

think growth in do going at CMS comments forward. despite is -- they my I guess point an expected some time will is forward go adjustment and positive do some what

Difficulty] So, a market October [Technical XX, getting for basket example, [Technical Difficulty].

So would my anything guess else. of is than fine which it's go-forward thing, a more be

writing data if there because happens out I'll rule and they been enough the process of have anything already simply the surprised be in been hasn't just there. year initial this

my of there just obviously or would best on 'XX, basis, is there guess, be but sort some fiscal to more But be would palatable. to going going adjustment a not technically you to be that October be I But -- anything tough isn't unreasonable. of clawback to So year XXXX never make that's because lot which wouldn't want growth it's go-forward think know. a be a effective do I statistically, to going

was wasn't extremely I it also revenue Great just place would growth The that took other note high, RUG-IV it but during the Recession. thing so the

at So issues that of compounded sort kind the of the time.

see. we'll So

Nick Yulico

Okay, Thanks. that's helpful.

Just you're second is new on question Enlivant JV. said you a I and pursuing know not

possible. is said you a take partial think out I there

some on their that for opened whether where was tell get us option just you're point you own interest. that if discussions to and mean at resolved think you do will of selling as I in or it this year, think just you're at not? the something January to with Enlivant TPG it I going more kind of can to

Rick Matros

of place to it Difficulty] -- path in TPG we'll and seems that's that see at discussion there. accretion only point, want to where take through And [Technical we just the here. from be this So, a sort

opening So, comfortable pretty the comments, are where said as in we're we now. I

-- pleased happen rush. in addition we really are with would something which to expect We of the not not I And [indiscernible]. are is a

Nick Yulico

a that the to just work. how venture, just remind you in -- are of stake you you, valuation how Is a of the paid? in increase joint or price us somehow terms your can if is can new it And would follow-up, going totally that it just the valuation dependent originally that it was on works happens

Rick Matros

It's was based on that price paid. originally the

nothing changed a, There it's was plus there. So [ph]. X% X% is

Nick Yulico

Okay, thanks. Very helpful.

Rick Matros

Yes.

Operator

Thank you .

from Joseph comes Citi . Our with next question Nick

is line Your open .

Nick Joseph

Thanks. out Maybe just accretively. your following of in that wanting it up this Enlivant, for I expectations obviously to you terms put year. on acquire understand And

current expectations, or NOI your think does that occupancy actually do So inflection occur you could where do you standpoint, accretively? it point from based of when

Rick Matros

to can't pick of the time, the in quarter. We year, closer latter sometime probably it's fourth the part a

Nick Joseph

gave then, back XXXX guidance. comments, Okay, helpful. opening just And to thanks, growth obviously just that's getting your Rick,

you expect issuance is the and per earnings that year? more deleveraging felt share a XXXX of comment So of the been would share now. growth impact next right Is currently

Rick Matros

takes yes, they deals close year, fact have on it everything Yes, to that to will the going anything, done 'XX I particularly have in on bigger a this time impact then [ph], think, are much 'XX. get we

I comment the XXXX it growth some we taking the when dividend of would the I during incremental. the And latter part we will that's that, also start impact on the So -- earlier of will hold. coverage be for move investments But clearly impact that help expect of us 'XX. mode why into year expect

Nick Joseph

you. Thank sense. Makes

Rick Matros

Yes.

Operator

you. Thank

next Our from Vanacore question comes Chad Stifel. of

Your line open. is

Chad Vanacore

morning. good Hi,

about thinking the So in I assets owned just shop. was

of half occupancy a significantly hundred couple Now, with points. half second about basis dropped first holiday from pretty

trend expect should how XXXX? we in So that

Talya Nevo-Hacohen

these fairly held assets. on usually have steady They

stabilized one was some there to different assets. transitioned [Technical Difficulty] portfolio I a in that of The So of volatility, but by we that's not that stabilized run asset I the Michigan. is one asset that being only is operator think them mentioned that

Chad Vanacore

does the Okay. And how affect that I'm overall? sorry, Talya,

Talya Nevo-Hacohen

asset, it's included [ph] Frankin numbers it's The think in because stabilized. I our don't not

Chad Vanacore

thinking $XXX you've dispositions in you got to cap there. that about then nursing XXX are and that should that M&A, million about what just we ratio about of What acquisitions. expect? the alluded Is Then Okay. kind skilled

Rick Matros

That's senior PSA. in housing and investment we're housing; a the in senior that's midst of with finalizing negotiations

we're the So prepared any to about not talk deal. relative specifics to

but said, initially will be, be I neutral, As it it in accretive will part it of earnings be the expect to latter year.

Chad Vanacore

you should shifting more be how of towards that? about then, nursing the skilled And had things, thinking side Rick, mentioned we about

Rick Matros

I in which interested assumption isn't there nursing Well, we been skilled case. an has that been haven't the think

the of of we just portfolio investments emphasize have merger are a job behavioral room REIT the to and rebalancing the high really other since in the CCP interested plenty hospitals. and I its without So between want nursing, housing done. nice skilled looking nursing portfolio that We skilled to skilled in and yield into grow that specialty we've in sort senior think hospitals and nursing arena becoming balance having still

Chad Vanacore

you end up year? at then that second half in million, said more, then, million part, should one in equity closing wouldn't of of what than JV if $XXX we point. in just the terms delevering issuance be what should we And live All And expect would, the just right. $XXX you this expect to

Rick Matros

part investments were combination that below it's some we of and is target and using that with delevering, fund, option leverage so at of there'll the in additional or not that it's And maintain year, combination to used leverage. and be about we do otherwise, maintaining debt just exercise if use leverage. target not, the we some debt our will equity this maintain live, target. to we It's our similarly that equity as or Everything so ATM match so our

any We So where we balance there standard investments, is. just mechanism to all And further. portfolio that it on to equity the might for way, do We do this ATM for not to the sheet us. to Enlivant the us anything need would expect use routine match sort any no to of by which just maintain using delever issue pretty fund just is the for same of year. -- the is

Chad Vanacore

All leave there. right, thanks. I'll

Rick Matros

Chad. Thanks, Yes,

Operator

Our comes Rich Anderson of from next question SMBC.

Your line is open.

Rich Anderson

morning out there. good thanks Hi,

about complicating not move what just you way and things that sit staying you you occupancy forever? I'm put So that need fundamental a or incremental it something you you feel get to simple, hit it investment thinking do just to that there ahead pause the curious, sort that JV, saw the you for caused more. gain observed or little simply that portfolio you was it a willing do on is if do in don't here back you the of and new bit sort like is JV, with thing to just to XX% of at incremental something some making

Rick Matros

buyer we -- so they feel comfortable a of price. hitting, where that they are are. take up, from for option kind But is that may want a We but to can where actions. additional obviously pay it had the differently [ph] Once that can are, we're TPG then about where we asset, comfortable that's them with find

platform, about In much of last what you've It's complicated mean talking and have We we hitting in, really you've to a issues it easier to you're and more got Sabra terms aligned now simplified pause partner pause, were all hitting operating JV wasn't But story. with new about, bring more structure digest. year. the want we much a got got everybody to incentives, for the owning got think going so Enlivant, you've in you've really the TPG if button. you

good really a We have partner, TPG.

our with And so their greatly is work part. willingness us appreciated on to

the years strategy, in other the specific some but changes result and which saw, the knew then, stronger was going were fourth ago, And into that from years made was quarter, more although in in of also perspective this call to looks relative season that had marketing we occupancy timing worst their two it we we that sort thing flu were ago. it's worse we what short-lived even in two everybody know the it

pull going want trigger, the sense, we it did an to occupancy that decline just have knowing you're any [indiscernible]. to just So make

longer So us not for managing said Yes, it. opening that's nice there a to as through in I job really is reason that did got until my wait through we flu they season. our other comments, operators. just no And the as

Rich Anderson

Yes, Okay. fine.

thanks for So, that.

have happy, we we from maybe everyone will when the a and and Moving maybe too expecting perhaps when and milk have -- actually curious, recalls the abstract going like opposed rationally behave become more to Is allowed story? conversation CMS. got you not in a got and something at part fast got not what this doesn't single but, us we I of every PDPM, maybe to too good have scenario RUGs for think type opening question reaction some little clawback behavior to -- that up maybe industry the as happened far they or of -- I'm or IV dumb try it so time that do legs something the fat to could that. dollar we possible

Rick Matros

Operators that's of state in thing at follow IV approach better well history was ever so really point, yes, happened that's it's of things much such in every has comments, designed. cut couple a I Difficulty] do happened design, of in [Technical just was money, they're every better much think this pretty slides Yes, every changes look mindful they a but their behavioral the definitely careers, so of a careers, easy Rich, and IV remember your other history their that. and time. the system the RUGs the and This simply, it -- an designed operators designed. not is RUGs way was to

So concurrent group we to to they took to example, a in as and the XX% give concurrent and PDPM, under group allowed average. by have run you you're specific industry revenues up way, therapy, was XX%, away therapy before

to XX well, the very hearing therapy -- Rockford going high. industry XX% flags, to very look we're mindful been where and the about operators, and is is that kind was. But of are our going flag zero and on talk always cap on the is when and everything basically group I'll therapy overnight CMS of very would So ultra-high to as you've billing red industry fact it -- what September forward from red the average elsewhere concurrent one be

we're So with seeing our that operators. not

about Our there. programs during on even We're just and made training coming presentations they operators all transitioning and go we're they fact, point to were of going to are working in us, the when the us, going in admirable talking a to not not given be that if headwinds more even industry had discipline, to , and that much. do much that. think has the to going about it's We're of even grab and not they're level the -- that me, saying, to prudent more you going look

And group we're go XX%. than we're and percentage to to a pretty and board. I have see might slower opportunity been much small of concurrent So therapy the gravitation given and seeing to that that anticipated, expect the much going across

I really, but operators memories. going operators pay for and Yes, has and operators there really been taken. to doing it, people and have really if pleased let say memories, yes, learned here with think approach some You're have investors I long and so there, they that's short those have egregious always lessons we've have think -- been the they're specific something

Rich Anderson

I the EBITDA leverage Or range but the side, of know X? for . sort mid-Xs you're something? there call debt on am a stay Okay below inclined this long-term forgetting I number in in , to to Harold, wasn't

Harold Andrews

achieve. a in being investment the a Below rating all, to No us our We as obviously good always long-term goal under Rich. us, , -- other not recognize you're was actually times with relative standing first and and secondarily forgetting, good peers, agencies. puts we like that X puts to spot in grade it of a characterize X.X would

kind our Job of manage is one. growth two job time. So really that's earnings to over

so be And down further. to or comfortable I then so, X.X times X earnings, below give term. we future at times further to closer then, sheet to And fit. get of cost see really delever the would X be also more us near will grow get ability as or our slightly mindful opportunistic that it we below we'll the we're very in we're But need and down obviously, to it for times. the future, of an of very improve to say, the capital as nice in balance see would It to that our

Rich Anderson

Okay. me. one from Last

that coverage what's You guys don't report and basis? on the why between report Just DARM be curiosity. coverage. of DAR a EBITDAR and difference What it you it would -- out on

Harold Andrews

Yes.

issues. So -- three so we have always

by that, First just of difference and into [ph], the we despite having And that fees everybody consideration foremost were is X%. that margin X% we're rating imputed management it. in some using fact and lower agencies, gained continually of us over should report for including it kind frankly on we without taking coverage DAR while be use fee, -- the others

the to the Secondly, got or everybody a on EBITDARM it's feedback not always apples, And all about negative having not apples guarantee. corporate the fixed basis by whether is we've there -- fixed charge coverage. now, presenting

only more we're So precedent. we'll thirdly, And and that be should understand. digestible make to ones, a it for a lot everybody not so setting simple the then

Rich Anderson

basis like The difference that, something points is like X XX -- points? or or XX basis

Harold Andrews

senior for basis XX think it's housing, I about points.

like it's probably bit more a little points. nursing, skilled XX For basis

Rich Anderson

Okay . got. That's all . I've Thanks

Operator

Thank you.

next of John Capital from BMO comes question Markets. Our Kim

open. is line Your

John Kim

just Thanks. Good opening statements time, quarter. coverage Avamere, your same sequentially, Can tie remarks, improvement together? you you the morning. those mentioned saw in fourth you Rick, at in the the two decline but an that

Rick Matros

Yes, sure.

previous in going Avamere So businesses. call, recall we about their you change might to back specific complete a systems, to going through ancillary earnings talked IT

as in as home reduction similar PDPM, for health got and a critical is that of a industry, business, well for some a it's PDGM, health why And it's negative because we really system new revenues. view health to a called because home which reimbursement they've has home them although the was

So, that's disruption. a just created real

a coverage of the ancillary of of most in So is most businesses their that. function downturn and their of impact the

and And contributes saw So trends their that, to we in PDPM, all systems. that through quarter. the upward implement saw what the earnings get and we the from combination fourth coverage improvement them that improvement of in the is plus

on we call In their fourth quarter seeing and trend with fact, him first operational the and detailed had we're well. improve in the Friday, quarter a that full on early results, as first quarter

I'll which make had is closed has Medicaid ongoing The other Avamere horrible just really about that issue I Three an aware because Avamere is more everybody basis -- facilities rates. State, been Washington on think with comment which recently. the

State there So in been the out are or there now Washington have of -- about XX think of the XXX facilities, closures. I total State,

So it the looks both a year, lot more positive existing that increase Washington and there rate rates this of re-basing rate will a be a State. for Medicaid increase

rate it's addition is. again, And Avamere or better everybody PDPM, wants improvement from seeing get to any improvement. than not remains seen, whether a that what be going they'll in to they're is So be it to but

So continue see we improvement without should to Avamere.

John Kim

Okay.

leases you to portfolio of So assets do restructuring Or as improve it's or you anticipate the at you just going think the mentioned? selling all? any out naturally

Rick Matros

leases. not we're restructuring No,

increase level [ph]. between estate. a think there from team any they will and there lease I be selling some But They then want PDPM if we'd a never into need But Medicaid in and about buy see company. is it State we been else rate whether anything to discussion didn't strong rush increase now the the good. no if of were real there's Washington that. to State, rate to in facility, want are might hopefully, Washington And see there you sit a Avamere was with do, back

John Kim

Okay.

is window on transaction, end your to from you anything the increase there option get to Enlivant the up that TPG? give On asked are

Rick Matros

No.

Rick Matros

a how acquisitions basis underwriting as net coverage as to Can and lease today talk you about annual in senior is difficult structure escalators? overall housing, are and or far transactions on what it triple-net leases triple your in

Talya Nevo-Hacohen

interest enter I future, time distant these Hi, -- be tell ever not somewhere the lease in the you I is wouldn't around would now, we I is anything see it's an theoretical reality. there days. say in want into to zero operator that, which I'd be there If if surprised interest because but will be not there entirely will can you would is Talya. we tell would for hardly But leases, leases. and greater on that underwrite flip entering in some almost switch why it

Rick Matros

CapEx me that's you Yes, XXXX? guidance be far as Last will you recurring as fine. one think in have a is, do what from

Harold Andrews

triple both managed $XX Yes, and look for but year. between release, at it's our here. million portfolio, portfolio actually and million, net press CapEx, and that's $XX little for the on Non-yielding the a own I'll up bit the

John Kim

thank , you . Great

Operator

. you Thank

Our next Steven Barclays. from question of Valiquette comes

line open. Your is

Steven Valiquette

the Thanks question. Hello, Great. everybody. for taking

So, any adjustments, your of comments a you touched PDPM were little definitely but CMS this topic helpful. just which given bit, around on and timing

for of and assets? SNP be by to of for seller or of months way you mindset net does want XX every SNP and case PDPM? just look other? whether next to a a urgency big buyer Just a picture, to regardless strategy much how property any one or the create PDPM your the Thanks. tied impact at still overall of XX net a Does as sense of this to you bigger picture case you sort strategy Do more

Rick Matros

reposition on in So disposition, of the things the of the be context will in a terms couple dispositions company. the of

program done, So may but there, here, is one I announced. one been than basically mean, other the that's what's there done. be

supply. So not PDPM, in yet, And seeing old, starting which housing they they modernize space, country to when in we're from combination continue Wisconsin, additional closes service. the and in it factors. Maine as ahead and just facilities, of isn't Washington seeing the see and of modernize currently that people it's improvements for data skilled, supply are PDPM, we it, in just of in it's we’re both they and we're comes have and really that most It's we're skilled that by it think housing, in skilled senior take a a facilities quite are senior its the in to it to in then, running, you're decline is in decline operated demographics Massachusetts, several for nice it and a where because seeing going the

don't got you're just building. a XX-year-old some to you it's data so bed three take going add more wards, can three [indiscernible] wards you space may work, and common service, building buy So bed that

make that still mom-and-pop. there. exist just don't sense. then, a already the And may struggling in be so to space They're them of some going some high got markets to thirdly, percentage really PDPM, with you've they're buying the But of also opportunities transition that’s

So well. see some closes may you as there,

over So you're start to country. few bit the out last years, beds a plus significant skilled actually in decline problems. kind years, you're the It past of a access number leveled little again, have to but that the seeing going you've XX the had decline of going over in pretty and

nice a base the and demographics going run projections better at combination of of there it we set system, that converge reimbursement all full is sort to supply up So XXXX. declining is improved showed the the skilled time, almost same really forward, think their skilled out by almost

liked the poised the our CCP now get and wanted merger, always a really skilled one. the after some We So, interest balance the for see that’s we scope one, in portfolio to nice back is stage. we've

Steven Valiquette

helpful Thanks. definitely color. that's Okay,

Operator

Thank you.

next Our question comes from [indiscernible].

is open. Your line

Unidentified Analyst

everyone. Yes. Good afternoon,

of accretion talk you expect some is net in the on, With about $XXX earnings, be? to about do And you that there further housing on? going any sharp a didn't were a million is it that year talking why to portfolio? include what although it's guidance? those year it earlier then two, done, Can to accretive investment reason a one And be when be you triple drivers neutral or of will

Rick Matros

to it’s of It's going put jinx not done until couple in and if it will know, fall we because in done not you it's done. it probably guidance, guidance, which nothing's just a yourself. apart, And things. So, you is,

in seeing So a opposite as we're It's we shop But there's towards that's growth of one. the that some end portfolio there inherent kind of we should perspective. revenue year, that's rate from expect -- And portfolio. that that the see well. the growth

Unidentified Analyst

CMS? had with then latest thoughts around and with you any about happened perspective, all, tell of will ultimately me I but we've what's just what that, lot of know from Okay. and that, with helpful. That's PDPM, a And Avamere the [ph] conversation second regulatory a

Rick Matros

Let's then talk the and in pieces, about tax UPL provider two it IPTP.

into guys provider should it but like, So and feeling tax than in a seeing weeds to classes Those waivers the some meaning provided may perspective, has no questions. played clean, caps XX from bit the within states more were all this environment. waivers whole you is to all provider like operating for There The there's a your about provider tax language. prior taxes answer and games language provide issue that XXXX place. little waiver waiver there were get certain that are

taxes. that significant So to most some waiver the [ph] those different up provider states are of to had out changes waiver, language waiver of has the the language, in insurmountable. make plain have that of carved think none clean language And XX us of problematic states, of CRC it, states being any a post-XXXX XX do will which XX lot to with

So provider think both IGT we taxes there going are compliance. be depending circumstances, to are with come fine. to and on into UPL, two And the taxes to provider three years

of think time there. there's So plenty we

the So It's going for going to underwriting story IGT. to a from that's defend to IDT the think from not Association, when think do with and little a look And We be today. itself provider Trade example, different a bit it an and UPL. on comes shape perspective, that differently in we legal good tax, to underwriting perspective, the of we're lobbyists at industry's fine. any than UPL

is to the Indiana, on of the going its and just what's Utah, XX% skilled particular American From a industry own it know Trade you on court. There there, that happen efforts political in Skilled relative it’s Association Association. in in that to Texas, have All states never the perspective, and industry, that, most are between joint vulnerability standing three Hospital the Indiana. And affects IGT. with CRC, hospital the said, industries

happen. to an heavy something if think we're at looking be which would But comes it take many seriously we don't in states skilled perspective, those to assets So hit it it to states. three that think I there, any when from do another underwriting those reason is pretty three expect into consideration I would

We in have Texas exposure in and Utah. no

shape. operator our struggle exposure of that that down a in It's housing, in big Texas, at the the good with side. one to may shape rest bit. little they're only in our with facilities. our five exposure, five really skilled We’re but we had you operators, bigger got when on senior whole We look facilities X.X% But it's

are our seven in we operator have of real folio. then Magnolia, And [indiscernible] estate a with corporate they guarantee got that's facilities But we've network most the Indiana. Indiana,

concerns storm them weathering in Indiana. So about no we had the

we're from states will So shape Sabra an perspective, look in we good at from three perspective. very portfolio, those current underwriting conservatively the with our definitely very, but

Unidentified Analyst

Thank you.

Rick Matros

to things got resolved to provider in with three also I've do with year window, say get to as UPL, you for two and IGT tax.

Unidentified Analyst

Okay.

Operator

next Capital Bernstein One. [Operator of comes Our Daniel you. Thank Instructions] question from

Your line is open.

Daniel Bernstein

of over owner the bit. it post-PDPM and to Or you the to trying somebody take Have buyers going pipeline else larger mom-and-pop pipeline or is is I'm in a sell jayvees a you? change portfolios? are you're you would that most the looking more sniff how or or operator? at, institutional seen say Hi, sellers little

Talya Nevo-Hacohen

fast, have disposing So, that problem will, relates as seen that you have [ph] sector of that institutional we portfolio in of on the an if change quintile or we since been a their haven't transactions. Most either to into a really PDPM the pipeline been transactions have our sellers it their sell, any of sniff scale put impact together are children. bottom to seen came

are portfolios. those So, two the baskets of

occasional We transactions. are seeing one-off

deal in the of seller been non-institutional I ones competitive. the they're Most they are-- and significant in have been quite of in often hasn't even still seen process, we've they're California. the that nature, flow. and terms think There

smaller not believe And fairly, non-institutional we businesses seen sort typically event, have that, selling. yet or a illness, aren't specific say, transactions They a we things death, window, are We to of because lot the and fairly really will or children family-owned a there's it. there's of A or expected PDPM generational within an do, transactions still either there's turnover. else I such activity. simply for will are those small see and interested and the companies that increased as are to and nothing trigger I the it. retirement

Daniel Bernstein

like really two the a It ago. sounds same or quarter is environment

Talya Nevo-Hacohen

those. seeing flood. a it's we haven't But I think seen more we're of

Daniel Bernstein

in say in just to perform the miss for other understand And operators year if this portfolio trying shop within XXXX seniors you then but shop it versus versus did I enliven commentary or on holiday and last know the down may year? housing I questions, guidance or don't portfolios other on different how based the break growth

Rick Matros

waywe is The and it then broke down JV. between our our Dan just wholly owned

even about is it our same our in owned numbers is in wholly that can not that you in So driven think and I this primarily holiday think enlivened, part because holiday by of don't the store.

So Canadian our of driven it's out the portfolios, vast majority And XXth fees the then by the really [ph]. holiday.

Daniel Bernstein

and thinking trying about versus right comments a Am then slowdown I And better? XX? it's to the so, it growth bit is to effectively how understand little read from a versus shop XX that you're XX on season? flu if that your Just

Rick Matros

consider would Yes. JV to more XX this, nice I I on side which X% I would line say rate. We normal you with we're the what probably growth some comparing below think a forecasting in XX. side, mean, had just that growth

over outside was we I And that’s it flu in good to had XXXX. think big a part very XXXX why relative in to in XXXX, of the compared comp season XXXX. XXXX a

occupancy stable So to when feel you're growth, and fact nice going see that normalized a as we and think will the other good the for but it some I expecting I are see is point being kind occupancy think occupancy, operators rate NOI some about of well. declining should the we take declining really growth year

Daniel Bernstein

quick you or Well, if the comfort use felt dividend? to the numbers, ratio, is policy in the point level would you know that last question comfortable? payout raising but What consider here. would imply slow don't one just And FFO I want terms of dividend where poor what's FAD okay. They you down. it's like be where

Rick Matros

Getting it back into the XXs.

Daniel Bernstein

FFO? on Okay,

Rick Matros

normalized It's on AFFO a basis.

Daniel Bernstein

I for the you all questions. have. That's right. All Thank taking

Operator

Thank you.

Connor Siversky next Our comes question of Berenberg. from

is open. line Your now

Connor Siversky

or on the state my the taking you Medicare for to that seeing do Thanks skilled in developing continued pertaining any one one everyone. like Advantage. Are future? Hi, question, nursing on see quick how pressures you

Rick Matros

into actually, to all the nursing healthy pretty small Yes, marketing not over plus the penetration Advantage, to no, the is skilled relative elderly. number we been has XX population we're Medicare Medicare and Advantage because a

and that hot, of flat for pretty skilled a really going single to It's and from a to digit seniors generation It's will pretty while quite it's the mid its for to of we're that because enter up census forward. nursing next the So projected Medicare they're high it's be signing perspective. employees going bigger of ones, advantage, sort been younger it. flat percentage a much see

took of PDPM, be So going pressure more term patients. system of under the length we totally because a on operators go there, system incentivize length you're to of short the there's terms potentially moving be stay to stable a in now for and lot rug always from expect rehab that however, state after to improved

So services more a put to industry with created stay. hip than make complex by headwinds of rehab patients. to definition, It's got while to coming that Under admitting harder a definition, the term stay. who's it [indiscernible] someone have longer patients is who's providing on after in someone medical put put by they on patients. medically pressure to And managers a conditions because generally, to complex, for lot the lot knee and needy system be pressure PDPM length surgery surgery. really it or you're services length on more you're shift case of still insurers The to only going easier short providing pressure

Connor Siversky

very more that’s Thanks helpful. little to a dividend. bit And then

remarks. what I of Could up think that Are calculus what more improve half you prepared to to little improvement coverage? towards to color makes are second see on the year? mentioned in provide going a going you maybe the the and factors some contribute you

Rick Matros

start the parts to bigger have deals XX a getting year, Primarily, as from will as start next noted this earlier, impact that it's the have lot of over on is to of a activities we months. going but us be investment going much impact number which we of closed in year to I the

and So us to us that's, everybody that's for knows everything back about it. about getting driver growth. the is Everything really is

Harold Andrews

see in contribution our portfolio And rate nice increases on also fourth rate recall, those that Enlivant you'll I you quarter, X. October a increase as you manage see the from every do portfolio will think the

toward a part dividend that's also going of help improve the so And year. to latter coverage the

Connor Siversky

final Thanks. And one then it. me. for Got one

is sensationalist seem not to for that come case? can becoming Somewhat any less why may I sniff system be provide the to attractive saying you or article as the color mean, sale that operators. last week across may leaseback

Rick Matros

anything operator do other something and nursing be don’t think skilled net will and that in that interested. triple like be interested any anything is seen would we not haven't We than I

So, piece. do skilled traded private remember is JV a whether interested, there are will very were anybody skilled takers. nursing only going not with nursing all a And than real that the NOI and announced Difficulty] on risk because that into risk skilled find [Technical that us [Technical the up had many to same The nursing really ownership the we're leads. To if public side, that take that situation Difficulty] a JV, more estate opened on I you that's deal. time are clear start between whole think liability they operations. getting operator Once any liability they're and of we delineation

it's can of much where greater are that. And really competent kinds things. I don't senior housing, up of level simply more of do skilled is filing. they like for the all unlike and The because these a the just the database time. liability they us the just And attorneys is think feel Because nursing that troll side whenever do any they you troll on doing database. file database All plaintiffs' federal

other that the So just Difficulty] [Technical in spaces. doesn't exist

Connor Siversky

all that's Thanks for me. Alright, much. very

Operator

Thank you.

Hartwich question next Green Our comes of Street from Advisors. Lukas

now line open. is Your

Lukas Hartwich

Thanks.

quick Just ones. a couple

to earlier, think on excludes year coverage just your said corporate I guarantees that clarify wanted I page but supplemental level of now? this tenant you the

Rick Matros

our the for new clarification portfolio, change under were past excluded coverage now were that that guarantee. in from the corporate we there published tenants that and that coverage made we were certain And tenants the had those No, the that everything reporting than for other when EBITDA numbers coverage, excluded numbers in all coverage in made assets on it are those and is from is there forward, published, it in encompassing. included simplified non-stabilized going the no portfolio tenants so coverage dramatically we've

Lukas Hartwich

Okay.

disclosure tenant coverage? the page so, flow in X, level on the the still corporate And includes cash

Rick Matros

coverage. It does the not. level property is It

Lukas Hartwich

it. Got

And I'm those curious just the Centers closed sell to yet proceeds year. curious just were a last if you I'm assets there? legacy and Senior what three Care follow-up on going Okay. ultimately then, quick that were the

Rick Matros

those, facility. Some other this of closed two one I think are the is those of closed year and

million I be to to are But yet minimal, million, bucks. very a less to X So has the it call close going are with closed proceeds three three be X million few one than of believe, the the around in proceeds.

Harold Andrews

We're estate the destroyed They the hurricane. got with were that the real telling has. just ones

Lukas Hartwich

it That's you. me. Thank for

Operator

to Thank time. showing call questions no turn like closing further any remarks. for this I'd back to over Matros Rick you. at I'm the

Rick Matros

next sure week, their so for we're everybody for coming you. of got we'll including seeing heading out Thanks, I'm more conferences today, these a time be tomorrow and up lot co. We've

a So, to these very as day. and follow-up conferences. at to and we're Thanks available everybody much have great seeing forward you look always,

Operator

gentlemen, this conclude Thank you. and conference. today's Ladies does

You great disconnect. a day. may Have all