Sabra(SBRA)2025-02-20 21:51Financial Data and Key Metrics Changes - For Q4 2024, normalized FFO per share was 0.36, with normalized AFFO totaling 1.39 and normalized AFFO per share at 24.1 million, driven by same-store growth and a new property acquisition [27] Market Data and Key Metrics Changes - The skilled occupancy rate increased by 60 basis points sequentially, with EBITDARM coverage reaching an all-time high of 2.09% [10] - The Canadian communities within the same-store portfolio saw revenue growth of 10.6% year-over-year, while domestic portfolio occupancy grew by 2.8% [20][21] - Total expenses for the same-store portfolio rose 3.4% year-over-year, with labor costs increasing by 2.1% [21][22] Company Strategy and Development Direction - The company plans to build upon its successful 2024 strategy, anticipating a higher volume of deals in 2025, particularly in the skilled nursing space [11][12] - The focus will be on acquiring newer, nearly stabilized senior housing communities that offer care to residents, with a strategic shift towards increasing SHOP exposure [24][74] - The company is optimistic about its ability to withstand potential Medicaid cuts due to strong portfolio performance and robust lobbying efforts [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the political environment's impact on business, noting historical protections for the elderly population regarding Medicaid [13][14] - The company expects revenue growth to continue outpacing expense growth, leading to ongoing cash NOI growth [23] - Management highlighted a robust acquisition pipeline, with many opportunities arising from private equity firms looking to exit investments [52][54] Other Important Information - A quarterly cash dividend of 980 million, consisting of cash and available borrowings under its revolving credit facility [33] Q&A Session Summary Question: What are your thoughts on the pacing of occupancy in the senior housing space for 2025? - Management noted that operators are balancing rate increases with occupancy growth, making it difficult to predict exact occupancy trends [36][40] Question: Are you seeing any impacts in pricing for skilled nursing facilities due to the current environment? - The transaction market for skilled nursing is robust, with significant competition from strategic buyers [41][43] Question: What has changed in the acquisition pipeline that gives you confidence for 2025? - The company is seeing higher deal volume and improved cost of capital, allowing for more favorable acquisition opportunities [48][50] Question: How do you expect cash NOI growth to trend in 2025? - Cash NOI growth for the same-store managed senior housing portfolio is expected to be in the low to mid-teens, with a conservative approach to growth assumptions [31][58] Question: Can you elaborate on the strategies operators are implementing to mitigate costs? - Operators have embraced digital marketing for recruitment and revamped onboarding processes to improve employee retention [66] Question: What is the current size of the cash basis tenant base? - The cash basis tenant pool is less than 5% of total NOI, with some sales in the quarter related to cash basis tenants [138][140]