Group 1 - The current prevailing trend in the market is robust growth in AI, which drives demand for power, data centers, software, and semiconductors [2] - There is a focus on income-producing asset classes that provide sustainable portfolio income, diversification, and inflation hedging [1] Group 2 - The investment strategy emphasizes defensive stocks with a medium- to long-term horizon [2]

Core Viewpoint - Sabra Health Care REIT, Inc. is actively engaging with investors through a scheduled event during Jefferies' So Cal Tour on September 30, 2025, showcasing its leadership team [1] Company Summary - The leadership team participating in the event includes Rick Matros (Chair and CEO), Michael Costa (CFO), Talya Nevo-Hacohen (CIO), Darrin Smith (Executive VP of Investments), and Lukas Hartwich (Executive VP of Finance) [1]

Core Viewpoint - The article discusses the performance of three high-yield healthcare stocks during the COVID-19 pandemic, highlighting the contrasting strategies and outcomes of Sabra Healthcare, Omega Healthcare, and Alexandria Real Estate [1][2]. Group 1: Sabra Healthcare (SBRA) - Sabra Healthcare made decisions during the pandemic that ensured its long-term survival, but it significantly cut its dividend from $0.45 to $0.30 per share, a 33% reduction, which has remained unchanged since then [4][5]. - The company generates approximately 70% of its rents from senior housing, a sector severely impacted by the pandemic, leading to challenges for income investors relying on dividends [5][6]. - Compared to other healthcare REITs that have started to raise their dividends again, Sabra is lagging behind, making it less attractive for dividend-focused investors [6]. Group 2: Omega Healthcare (OHI) - Omega Healthcare maintained its dividend at $0.67 per share since 2019, avoiding cuts during the pandemic, which is reassuring for passive income investors [8][10]. - The company reported an 8% year-over-year increase in adjusted funds from operations (FFO) in Q2 2025 and made over half a billion in investments, indicating a readiness for growth [9]. - With the recovery in the senior housing sector, Omega is positioned as a reliable high-yield option for investors, despite not expecting significant dividend increases [10]. Group 3: Alexandria Real Estate (ARE) - Alexandria Real Estate focuses on medical research office assets and has increased its dividend annually for 15 consecutive years, even during the pandemic [11]. - The REIT's occupancy rate fell from 94.6% to 90.8% in 2025, and its FFO has been weak, but the dividend remains well-covered with an FFO payout ratio of approximately 57% [12]. - Despite concerns about the office downturn and changes in the healthcare industry, Alexandria's business model is expected to endure, making it a potential high-yield investment for conservative income investors [13][14].

Core Insights - Sunshine Retirement Living is expanding its national presence through a new management agreement with Sabra Health Care REIT, Inc., adding five independent living communities and increasing its portfolio from 35 to 40 communities across 17 states [1][5] - This marks Sunshine Retirement Living's first third-party management agreement, transitioning the company from an owner-operator to a full-scale third-party management provider [2][5] - The demand for senior housing is growing, and the company aims to enhance the lives of seniors nationwide by extending its service model to third-party owners [3][5] Company Strategy - Sunshine Retirement Living focuses on affordability, compassionate care, community engagement, and culinary excellence, addressing the needs of the underserved mid-market segment in senior housing [2][4] - The company is committed to wellness-focused living, offering innovative programs that promote physical fitness, mindfulness, and lifelong learning, including the introduction of the Blue Zones program [4][5] - Sunshine Retirement Living is actively seeking partnerships with real estate investment trusts (REITs) and other senior housing owners to maximize occupancy and enhance resident satisfaction [6][5] Market Trends - The senior housing market is experiencing favorable long-term demographic trends, with the 85+ population expected to triple by 2050, driving demand for quality senior housing [4][5] - The mid-market segment remains one of the fastest-growing areas in senior housing, and Sunshine Retirement Living is positioned to pioneer innovative solutions to make high-quality senior living accessible [3][4]

Financial Data and Key Metrics Changes - The company reported normalized FFO per share of $0.37 and normalized AFFO per share of $0.38, representing a 6% improvement over the same period in 2024 [20][22] - Total normalized FFO and normalized AFFO for the quarter were $89.2 million and $91.6 million respectively, reflecting strong sequential growth from increased NOI [20][22] - The net debt to adjusted EBITDA ratio was five times as of June 30, 2025, a decrease of 0.19 times from March 31, 2025 [24][26] Business Line Data and Key Metrics Changes - The managed senior housing portfolio contributed nearly 21% of total annualized cash NOI, with cash NOI for the quarter growing 17.1% year over year in the same store portfolio [14][18] - Cash rental income from the triple net portfolio increased by $2.3 million from the first quarter, driven by a $1.4 million increase in percentage rents [20][21] - The occupancy rate in the same store portfolio was 86% compared to 84.6% in 2024, with cash NOI growth expected to be in the low to mid-teens for the same store managed senior housing portfolio [16][24] Market Data and Key Metrics Changes - The average Medicaid rate increase is expected to be around 3.5%, with the top five skilled nursing tenants averaging just above 5% [9][12] - The Medicare market saw an upward revision from 2.8% to 3.2%, which is considered unusual but positive for the company [9][12] - The Canadian portfolio's RevPAR increased by 6.8% year over year, with occupancy above 90% for over five quarters [17][18] Company Strategy and Development Direction - The company aims to increase its SHOP (Senior Housing Operating Portfolio) from 20% to 30% by 2026, requiring approximately $1 billion in investments [11][12] - The focus is on acquiring well-performing newer senior housing communities that cater to the baby boomer generation, as the supply-demand equation remains constrained [15][18] - The company is not interested in building a loan book or engaging in complex joint venture structures, preferring straightforward traditional deals [36][104] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the investment pipeline, targeting $4.5 billion in investments for the year, with a strong deal flow expected to continue [11][70] - The company noted that the operational recovery in skilled nursing and senior housing has allowed for robust pricing, despite some challenges in the market [46][92] - Management remains optimistic about future occupancy and NOI growth, anticipating improvements as the transition from the holiday portfolio stabilizes [65][66] Other Important Information - The company declared a quarterly cash dividend of $0.30 per share, representing a payout of 79% of the second quarter normalized AFFO per share [27][28] - The company has ample liquidity of approximately $1.2 billion, consisting of unrestricted cash and available borrowings [27][26] Q&A Session Summary Question: Investment guidance and pipeline - Management indicated confidence in reaching the $400 million to $500 million investment range for the year, depending on timing [30][31] Question: Same store SHOP NOI growth - Management noted that the same store SHOP NOI growth is running at the high end of expectations, with hopes for upside [38][40] Question: Skilled nursing opportunities - Management clarified that while pricing is not an issue, the focus is on finding quality assets in the right markets [32][34] Question: Holiday transition impact - Management explained that the transition of holiday assets has had an impact on occupancy and NOI, but they expect improvements moving forward [44][65] Question: Labor market conditions - Management reported wage increases of around 4% across both skilled nursing and senior housing portfolios, with no significant labor market issues identified [96][99] Question: Operator selection criteria - Management emphasized the importance of understanding operators' outcomes and their willingness to grow as key selection criteria for new operators [103][104]

Financial Data and Key Metrics Changes - The normalized FFO per share for Q2 2025 was $0.37, and normalized AFFO per share was $0.38, representing a 6% improvement over the same period in 2024 [21][24] - Total normalized FFO and normalized AFFO for the quarter were $89.2 million and $91.6 million respectively, reflecting strong sequential growth from increased NOI in both triple net and managed senior housing portfolios [21][22] - Cash rental income from the triple net portfolio increased by $2.3 million from the first quarter, driven by a $1.4 million increase in percentage rents [22] Business Line Data and Key Metrics Changes - The managed senior housing portfolio contributed nearly 21% to total annualized cash NOI, with cash NOI for the quarter growing 17.1% year over year in the same store portfolio [14][18] - Revenue for the same store managed senior housing portfolio grew 5.6% year over year, with occupancy increasing to 86% from 84.6% in 2024 [16] - Cash NOI from the managed senior housing portfolio totaled $25.3 million for the quarter, up from $24.1 million last quarter [22] Market Data and Key Metrics Changes - The average Medicaid rate increase is expected to be around 3.5%, with the top five skilled nursing tenants averaging just above 5% [8] - The Medicare market saw an upward revision from 2.8% to 3.2%, which is considered unusual but positive [8] - The Canadian portfolio's RevPAR increased by 6.8% year over year, with occupancy above 90% for over five quarters [17] Company Strategy and Development Direction - The company aims to increase its SHOP (Senior Housing Operating Portfolio) from 20% to 30% by 2026, requiring $1 billion in investments [11] - The focus remains on acquiring well-performing newer senior housing communities that cater to the baby boomer generation [15] - The company is not interested in building a loan book or complex joint venture structures, preferring straightforward traditional deals [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the investment activity and operational performance, noting that triple net rent coverage is at new highs across all asset classes [12] - The company anticipates continued growth momentum into 2026, with a strong pipeline of investment opportunities [12][71] - Management remains cautious about the potential impact of economic factors on Medicare and Medicaid but believes the industry is in a healthier position than before [92][96] Other Important Information - The company declared a quarterly cash dividend of $0.30 per share, representing a payout of 79% of the second quarter normalized AFFO per share [29][30] - The net debt to adjusted EBITDA ratio was five times as of June 30, 2025, a decrease from previous quarters, indicating improved leverage [25][26] Q&A Session Summary Question: Investment guidance and confidence in reaching $500 million for the year - Management indicated that the investment range would be between $400 million to $500 million, depending on timing [33] Question: Composition of future investments and skilled nursing deals - Management clarified that while pricing is not an issue, the focus is on finding quality assets in the right markets, with a majority of future investments likely still in SHOP [35] Question: Same store SHOP NOI performance and guidance - Management expressed hope for upside but opted for a moderate approach in guidance adjustments [42] Question: Impact of holiday transition on occupancy and NOI - Management noted that the transition had an initial negative impact but expected improvements in occupancy and NOI moving forward [66] Question: Labor market conditions and wage increases - Wage increases across operators are around 4%, with no significant issues in specific markets [100][103] Question: Selection criteria for new operators - The selection process involves understanding operators' quality outcomes and their desire for growth [107]

Financial Performance & Guidance - Sabra is updating its 2025 Net Income guidance to a range of $0.77 to $0.79 per diluted common share[18] - The company projects 2025 FFO (Funds From Operations) to be in the range of $1.52 to $1.54 per diluted common share[18] - Normalized FFO for 2025 is guided between $1.45 and $1.47 per diluted common share[18] - Sabra anticipates 2025 AFFO (Adjusted Funds From Operations) to range from $1.47 to $1.49 per diluted common share[18] - Normalized AFFO for 2025 is expected to be between $1.49 and $1.51 per diluted common share, implying a 4% year-over-year growth[18, 19] Portfolio Metrics - As of June 30, 2025, the weighted average remaining lease term for the portfolio is 7 years[43] - The company has 392 investments and 58 relationships[43] - Skilled Nursing facilities represent 38% of the portfolio mix[43] - The average occupancy percentage is 83% for SNF/TC (Skilled Nursing/Transitional Care) Leased, 90% for SH (Senior Housing) - Leased, and 78% for BH/Hosp/Oth (Behavioral Health/Hospital/Other)[43] - SNF/TC EBITDARM coverage is 2.27x, and SH EBITDARM coverage is 1.49x[43] Balance Sheet & Capitalization - As of June 30, 2025, the company's consolidated enterprise value is $6.7 billion[67] - Common equity represents 64% of the capital structure[67] - Secured debt accounts for 1% of the capital structure[67]

Core Insights - Sabra Healthcare reported revenue of $189.15 million for the quarter ended June 2025, reflecting a 7.4% increase year-over-year and a surprise of +1.98% over the Zacks Consensus Estimate of $185.47 million [1] - The company's EPS for the quarter was $0.38, significantly higher than $0.10 in the same quarter last year, with an EPS surprise of +2.7% compared to the consensus estimate of $0.37 [1] Financial Performance Metrics - Interest and other income reached $10.34 million, exceeding the estimated $10.03 million, marking a +13.6% change year-over-year [4] - Rental and related revenues were reported at $99.82 million, surpassing the estimated $95.9 million, with a +0.7% change compared to the previous year [4] - Resident fees and services generated $78.99 million, slightly above the $78.6 million estimate, representing a +16.3% year-over-year increase [4] - Net Earnings Per Share (Diluted) was $0.27, compared to the average estimate of $0.17, indicating a positive performance [4] Stock Performance - Over the past month, Sabra's shares have returned -1.8%, contrasting with the Zacks S&P 500 composite's +0.6% change [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [3]

Core Viewpoint - Sabra Health Care REIT significantly outperformed market expectations in Q2 2025, with strong growth in both normalized FFO and revenue, indicating robust operational momentum and balance sheet improvement [1][2]. Financial Performance - Normalized FFO per diluted share was $0.37, exceeding the analyst forecast of $0.17, and up 5.7% from $0.35 in Q2 2024 [2]. - Revenue (GAAP) reached $189.15 million, surpassing estimates of $180.97 million, and reflecting a 7.4% increase compared to Q2 2024 [1][2]. - Net income per diluted common share (GAAP) was $0.27, a significant increase of 170.0% from $0.10 in Q2 2024 [2]. Operational Highlights - Managed senior housing was a key driver of performance, with a 17.1% year-over-year increase in same-store managed senior housing Cash NOI in Q2 2025 [5]. - The company aims to increase the share of managed senior housing in its portfolio from 20% to 30% [4]. - Operational disruptions from transitioning 21 senior housing properties to new operators were minimal, indicating effective management [5]. Investment Activity - Sabra closed $122.3 million in new senior housing investments year-to-date as of Q2 2025, with an additional $220 million in awarded deals pending [5][7]. - Expected cash yields on new investments are projected to be in the high-7% range [7]. Financial Management - The company refinanced $500 million in unsecured notes with a five-year unsecured term loan at a lower fixed rate, expected to reduce future interest expenses [8]. - Net debt to adjusted EBITDA improved to 5.00x as of June 30, 2025, down from 5.19x as of March 31, 2025 [9]. Future Outlook - Management provided updated guidance for FY2025, projecting net income between $0.77 and $0.79, FFO between $1.52 and $1.54, and normalized FFO between $1.45 and $1.47 [12]. - The outlook anticipates low single-digit growth in triple-net cash net operating income and low- to mid-teens growth in managed senior housing cash NOI for 2025 [12]. - The company is focused on executing over $350 million in senior housing investments and monitoring EBITDARM coverage as new Medicare and Medicaid rates take effect [13].

Financial Performance - Sabra Healthcare reported quarterly funds from operations (FFO) of $0.38 per share, exceeding the Zacks Consensus Estimate of $0.37 per share, and up from $0.36 per share a year ago, representing an FFO surprise of +2.70% [1] - The company posted revenues of $189.15 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.98%, compared to year-ago revenues of $176.14 million [2] Market Performance - Sabra shares have increased approximately 5.6% since the beginning of the year, while the S&P 500 has gained 6.1% [3] - The current consensus FFO estimate for the upcoming quarter is $0.38 on revenues of $188.99 million, and for the current fiscal year, it is $1.49 on revenues of $749.82 million [7] Industry Outlook - The REIT and Equity Trust - Other industry, to which Sabra belongs, is currently ranked in the top 38% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in estimate revisions, which can impact Sabra's stock performance [5]