UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2020



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-34950

SABRA HEALTH CARE REIT, INC.

(Exact Name of Registrant as Specified in Its Charter)



~~Maryland~~

	~~27-2560479~~
Maryland		27-2560479
(State of Incorporation)		(I.R.S. Employer Identification No.)

18500 Von Karman Avenue, Suite 550

Irvine, CA 92612

(888) 393-8248

(Address, zip code and telephone number of Registrant)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, $.01 par value	SBRA	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

Large accelerated filer

x☒

Accelerated filer

o☐

Non-accelerated filer

o ~~(Do not check if a smaller reporting company)~~

☐

Smaller reporting company

o☐

Emerging growth company

o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x☒

As of October ~~30, 2017,~~29, 2020, there were ~~178,232,213~~206,928,325 shares of the registrant’s $0.01 par value Common Stock outstanding.

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SABRA HEALTH CARE REIT, INC. AND SUBSIDIARIES

Index

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References throughout this document to “Sabra,” “we,” “our,” “ours” and “us” refer to Sabra Health Care REIT, Inc. and its direct and indirect consolidated subsidiaries and not any other person.

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q (this “10-Q”) 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, financing plans, business strategy, tenants, the expected amounts and timing of dividends and other distributions, projected expenses and capital expenditures, competitive position, growth opportunities, potential investments, potential dispositions, plans and objectives for future operations, and compliance with and changes in governmental regulations. 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, among others, the following:

•the ongoing COVID-19 pandemic and measures intended to prevent its spread, including the impact on our tenants, operators and Senior Housing - Managed communities (as defined below);

•our dependence on the operating success of our tenants;

•the potential variability of our reported rental and related revenues following the adoption of Topic 842 (as defined below) on January 1, 2019;

•operational risks with respect to our Senior Housing - Managed communities;

•the effect of our tenants declaring bankruptcy or becoming insolvent;

•our ability to find replacement tenants and the impact of unforeseen costs in acquiring new properties;

•the impact of litigation and rising insurance costs on the business of our tenants;

•the possibility that Sabra may not acquire the remaining majority interest in the Enlivant Joint Venture (as defined below);

•risks associated with our investments in joint ventures;

•changes in healthcare regulation and political or economic conditions;

•the ~~anticipated benefits~~impact of required regulatory approvals of transfers of healthcare properties;

•competitive conditions in our ~~merger with Care Capital Properties, Inc. (“CCP”) may not be realized;~~industry;

•our concentration in the ~~anticipated~~healthcare property sector, particularly in skilled nursing/transitional care facilities and ~~unanticipated costs, fees, expenses and liabilities related~~senior housing communities, which makes our profitability more vulnerable to ~~our merger with CCP;~~a downturn in a specific sector than if we were investing in multiple industries;

~~our dependence on the operating success of our tenants;~~

~~our ability to implement the previously announced rent repositioning program for certain of our tenants who were legacy tenants of CCP on the timing or terms we have previously disclosed;~~

~~our ability to dispose of facilities currently leased to Genesis Healthcare, Inc. (“Genesis”) on the timing or terms we have previously disclosed;~~

• the significant amount of and our ability to service our indebtedness;

•covenants in our debt agreements that may restrict our ability to pay dividends, make investments, incur additional indebtedness and refinance indebtedness on favorable terms;

•increases in market interest rates;

~~changes in foreign currency exchange rates;~~•the potential phasing out of the London Interbank Offered Rate (“LIBOR”) benchmark after 2021;

•our ability to raise capital through equity and debt financings;

~~the impact of required regulatory approvals of transfers of healthcare properties;~~•changes in foreign currency exchange rates;

•the relatively illiquid nature of real estate investments;

~~competitive conditions in our industry;~~

•the loss of key management ~~personnel or other employees;~~personnel;

~~the impact of litigation and rising insurance costs on the business of our tenants;~~

~~the effect of our tenants declaring bankruptcy or becoming insolvent;~~

•uninsured or underinsured losses affecting our properties and the possibility of environmental compliance costs and liabilities;

•the impact of a failure or security breach of information technology in our operations;

~~our ability to find replacement tenants and the impact of unforeseen costs in acquiring new properties;~~

the possibility that the conditions to closing the acquisition of a 49% equity interest in the Enlivant Joint Ventures (as defined below) may not be satisfied, such that the transaction will not close or that the closing may be delayed;

~~the possibility that Sabra may not acquire the remaining majority interest in the Enlivant Joint Ventures;~~

•our ability to maintain our status as a real estate investment trust (“REIT”); under the federal tax laws;

•changes in tax laws and regulations affecting ~~REITs;~~REITs (including the potential effects of the Tax Cuts and Jobs Act);

•compliance with REIT requirements and certain tax and tax regulatory matters related to our status as a REIT; and

•the ownership limits and ~~anti-takeover~~takeover defenses in our governing documents and under Maryland law, which may restrict change of control or business combination opportunities.

We urge you to carefully consider these risks and review the additional disclosures we make concerning risks and other factors that may materially affect the outcome of our forward-looking statements and our future business and operating results, including those made in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 (our ~~“2016~~“2019 Annual Report on Form 10-K”) and in Part II, Item 1A, “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2017,~~2020, as such risk factors may be amended, supplemented or superseded from time to time

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by other reports we file with the Securities and Exchange Commission (the “SEC”), including subsequent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. We caution you that any forward-looking statements made in this 10-Q are not guarantees of future performance, events or results, and you should not place undue reliance on these forward-looking

statements, which speak only as of the date of this report. 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 10-Q or to reflect the occurrence of unanticipated events, unless required by law to do so.

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PART I. FINANCIAL INFORMATION



ITEM 1.			FINANCIAL STATEMENTS

SABRA HEALTH CARE REIT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)


	September 30, 2020		December 31, 2019
	(unaudited)
Assets
Real estate investments, net of accumulated depreciation of $640,214 and $539,213 as of September 30, 2020 and December 31, 2019, respectively	$	5,306,272	$	5,341,370
Loans receivable and other investments, net	103,820		107,374
Investment in unconsolidated joint venture	293,801		319,460
Cash and cash equivalents	35,034		39,097
Restricted cash	6,815		10,046

Lease intangible assets, net	85,943		101,509
Accounts receivable, prepaid expenses and other assets, net	159,933		150,443
Total assets	$	5,991,618	$	6,069,299

Liabilities
Secured debt, net	$	78,975	$	113,070
Revolving credit facility	56,000		0
Term loans, net	1,039,685		1,040,258
Senior unsecured notes, net	1,248,324		1,248,773

Accounts payable and accrued liabilities	143,742		108,792
Lease intangible liabilities, net	60,552		69,946

Total liabilities	2,627,278		2,580,839

Commitments and contingencies (Note 12)

Equity
Preferred stock, $0.01 par value; 10,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2020 and December 31, 2019	0		0
Common stock, $0.01 par value; 500,000,000 shares authorized, 206,928,325 and 205,208,018 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively	2,069		2,052
Additional paid-in capital	4,101,269		4,072,079
Cumulative distributions in excess of net income	(689,828)		(573,283)
Accumulated other comprehensive loss	(49,170)		(12,388)


Total equity	3,364,340		3,488,460
Total liabilities and equity	$	5,991,618	$	6,069,299

September 30, 2017 December 31, 2016
(unaudited)
Assets
Real estate investments, net of accumulated depreciation of $336,689 and $282,812 as of September 30, 2017 and December 31, 2016, respectively $ 5,972,785
$ 2,009,939
Loans receivable and other investments, net 149,766
96,036
Cash and cash equivalents 30,873
25,663
Restricted cash 12,489
9,002
Lease intangible assets, net 262,817
26,250
Accounts receivable, prepaid expenses and other assets, net 159,577
99,029
Total assets $ 6,588,307
$ 2,265,919

Liabilities
Secured debt, net $ 257,571
$ 160,752
Revolving credit facility 251,000
26,000
Term loans, net 1,190,887
335,673
Senior unsecured notes, net 1,305,996
688,246
Accounts payable and accrued liabilities 116,146
39,639
Lease intangible liabilities, net 94,878
—
Total liabilities 3,216,478
1,250,310

Commitments and contingencies (Note 14)

Equity
Preferred stock, $.01 par value; 10,000,000 shares authorized, 5,750,000 shares issued and outstanding as of September 30, 2017 and December 31, 2016 58
58
Common stock, $.01 par value; 250,000,000 shares authorized, 175,832,213 and 65,285,614 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 1,758
653
Additional paid-in capital 3,588,510
1,208,862
Cumulative distributions in excess of net income (225,459 ) (192,201 )
Accumulated other comprehensive income (loss) 4,236
(1,798 )
Total Sabra Health Care REIT, Inc. stockholders’ equity 3,369,103
1,015,574
Noncontrolling interests 2,726
35
Total equity 3,371,829
1,015,609
Total liabilities and equity $ 6,588,307
$ 2,265,919

See accompanying notes to condensed consolidated financial statements.

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SABRA HEALTH CARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues:
Rental and related revenues	$	100,612	$	110,104	$	319,851	$	339,291
Interest and other income	3,299		3,325		8,756		77,145
Resident fees and services	39,341		36,405		117,908		89,537

Total revenues	143,252		149,834		446,515		505,973

Expenses:
Depreciation and amortization	44,209		43,092		132,579		137,517
Interest	24,904		29,255		75,900		99,181
Triple-net portfolio operating expenses	5,249		5,611		15,481		17,140
Senior housing - managed portfolio operating expenses	27,745		23,979		82,976		60,258
General and administrative	7,216		8,709		24,650		24,952

(Recovery of) provision for loan losses and other reserves	(90)		57		706		1,457
Impairment of real estate	3,154		13,966		3,154		119,102

Total expenses	112,387		124,669		335,446		459,607

Other income (expense):
Loss on extinguishment of debt	(139)		(644)		(531)		(10,763)
Other income	115		215		2,308		385
Net gain (loss) on sales of real estate	2,715		(19)		2,828		1,216

Total other income (expense)	2,691		(448)		4,605		(9,162)

Income before income (loss) from unconsolidated joint venture and income tax benefit (expense)	33,556		24,717		115,674		37,204

Income (loss) from unconsolidated joint venture	2,766		(605)		(13,037)		(5,635)
Income tax benefit (expense)	138		(826)		(1,337)		(2,292)

Net income	36,460		23,286		101,300		29,277

Net income attributable to noncontrolling interest	0		(4)		0		(22)





Net income attributable to common stockholders	$	36,460	$	23,282	$	101,300	$	29,255

Net income attributable to common stockholders, per:

Basic common share	$	0.18	$	0.12	$	0.49	$	0.16

Diluted common share	$	0.18	$	0.12	$	0.49	$	0.16

Weighted-average number of common shares outstanding, basic	205,791,699		190,650,400		205,592,806		183,578,254

Weighted-average number of common shares outstanding, diluted	206,727,167		191,952,389		206,442,674		184,698,411

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenues:
Rental income $ 100,145
$ 56,833
$ 213,273
$ 167,442
Interest and other income 4,090
3,157
8,062
25,482
Resident fees and services 7,554
1,937
17,840
5,811

Total revenues 111,789
61,927
239,175
198,735

Expenses:
Depreciation and amortization 25,933
17,102
62,290
51,273
Interest 24,568
15,794
56,218
49,139
Operating expenses 5,102
1,404
11,929
4,256
General and administrative 12,944
4,966
24,159
13,513
Merger and acquisition costs 23,299
1,051
29,750
1,222
Provision for doubtful accounts and loan losses 5,149
540
7,454
3,286
Impairment of real estate —
—
—
29,811

Total expenses 96,995
40,857
191,800
152,500

Other income (expense):
Loss on extinguishment of debt (553 ) —
(553 ) (556 )
Other income 51
2,945
3,121
5,345
Net gain (loss) on sale of real estate 582
1,451
4,614
(3,203 )

Total other income (expense) 80
4,396
7,182
1,586

Income before income tax expense 14,874
25,466
54,557
47,821

Income tax benefit (expense) 195
(154 ) (161 ) (786 )

Net income 15,069
25,312
54,396
47,035

Net loss attributable to noncontrolling interests
26
25
42
66

Net income attributable to Sabra Health Care REIT, Inc. 15,095
25,337
54,438
47,101

Preferred stock dividends (2,561 ) (2,561 ) (7,682 ) (7,682 )

Net income attributable to common stockholders $ 12,534
$ 22,776
$ 46,756
$ 39,419

Net income attributable to common stockholders, per:

Basic common share $ 0.11
$ 0.35
$ 0.58
$ 0.60

Diluted common share $ 0.11
$ 0.35
$ 0.57
$ 0.60

Weighted-average number of common shares outstanding, basic 112,149,638
65,312,288
81,150,846
65,285,591

Weighted-average number of common shares outstanding, diluted 112,418,100
65,591,428
81,429,044
65,470,589

Dividends declared per common share $ 0.36
$ 0.42
$ 1.21
$ 1.25

See accompanying notes to condensed consolidated financial statements.

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SABRA HEALTH CARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019

Net income	$	36,460	$	23,286	$	101,300	$	29,277
Other comprehensive income (loss):
Unrealized (loss) gain, net of tax:
Foreign currency translation (loss) gain	(359)		917		814		924
Unrealized gain (loss) on cash flow hedges	6,830		(9,376)		(37,596)		(32,620)

Total other comprehensive income (loss)	6,471		(8,459)		(36,782)		(31,696)

Comprehensive income (loss)	42,931		14,827		64,518		(2,419)

Comprehensive income attributable to noncontrolling interest	0		(4)		0		(22)

Comprehensive income (loss) attributable to Sabra Health Care REIT, Inc.	$	42,931	$	14,823	$	64,518	$	(2,441)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016

Net income $ 15,069
$ 25,312
$ 54,396
$ 47,035
Other comprehensive income (loss):
Unrealized gain (loss), net of tax:
Foreign currency translation gain (loss) 412
(500 ) 552
(749 )
Unrealized gain (loss) on cash flow hedges ⁽¹⁾
4,657
398
5,482
(1,300 )

Total other comprehensive income (loss) 5,069
(102 ) 6,034
(2,049 )

Comprehensive income 20,138
25,210
60,430
44,986

Comprehensive loss attributable to noncontrolling interest 26
25
42
66

Comprehensive income attributable to Sabra Health Care REIT, Inc. $ 20,164
$ 25,235
$ 60,472
$ 45,052


⁽¹⁾	Amounts are net of provision for income taxes of $0.4 million and $0.6 million for the three and nine months ended September 30, 2017, respectively, and none for the three and nine months ended September 30, 2016.

See accompanying notes to condensed consolidated financial statements.

SABRA HEALTH CARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(dollars in thousands, except per share data)

(unaudited)


		Three Months Ended September 30, 2019
	Common Stock		Additional Paid-in Capital			Cumulative Distributions in Excess of Net Income		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interest		Total Equity
		Shares			Amounts
Balance, June 30, 2019		189,515,024	$	1,895		$	3,725,971	$	(460,832)	$	(10,936)	$	3,256,098	$	4,278	$	3,260,376

Net income		—	—			—		23,282		—		23,282		4		23,286
Other comprehensive loss		—	—			—		—		(8,459)		(8,459)		—		(8,459)
Buyout of noncontrolling interest		—	—			4,039		—		—		4,039		(4,239)		(200)
Distributions to noncontrolling interest		—	—			—		—		—		—		(43)		(43)
Amortization of stock-based compensation		—	—			3,930		—		—		3,930		—		3,930

Common stock issuance, net		4,181,877	42			89,644		—		—		89,686		—		89,686


Common dividends ($0.45 per share)		—	—			—		(86,159)		—		(86,159)		—		(86,159)
Balance, September 30, 2019		193,696,901	$	1,937		$	3,823,584	$	(523,709)	$	(19,395)	$	3,282,417	$	0	$	3,282,417


		Three Months Ended September 30, 2020
	Common Stock		Additional Paid-in Capital			Cumulative Distributions in Excess of Net Income		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Noncontrolling Interest		Total Equity
		Shares			Amounts
Balance, June 30, 2020		205,560,680	$	2,056		$	4,078,737	$	(663,901)	$	(55,641)	$	3,361,251	$	0	$	3,361,251

Net income		—	—			—		36,460		—		36,460		—		36,460
Other comprehensive income		—	—			—		—		6,471		6,471		—		6,471


Amortization of stock-based compensation		—	—			1,625		—		—		1,625		—		1,625

Common stock issuance, net		1,367,645	13			20,907		—		—		20,920		—		20,920

Common dividends ($0.30 per share)		—	—			—		(62,387)		—		(62,387)		—		(62,387)
Balance, September 30, 2020		206,928,325	$	2,069		$	4,101,269	$	(689,828)	$	(49,170)	$	3,364,340	$	0	$	3,364,340

Preferred Stock Common Stock Additional
Paid-in Capital Cumulative Distributions in Excess of Net Income Accumulated Other Comprehensive Loss Total
Stockholders’
Equity Noncontrolling Interests Total Equity
Shares Amount Shares Amounts
Balance, December 31, 2015 5,750,000
$ 58
65,182,335
$ 652
$ 1,202,541
$ (142,148 ) $ (7,333 ) $ 1,053,770
$ 106
$ 1,053,876
Net income (loss) —
—
—
—
—
47,101
—
47,101
(66 ) 47,035
Other comprehensive loss —
—
—
—
—
—
(2,049 ) (2,049 ) —
(2,049 )
Amortization of stock-based compensation —
—
—
—
6,775
—
—
6,775
—
6,775
Common stock issuance, net —
—
108,731
1
(1,104 ) —
—
(1,103 ) —
(1,103 )
Repurchase of common stock —
—
(31,230 ) —
(725 ) —
—
(725 ) —
(725 )
Preferred dividends —
—
—
—
—
(7,682 ) —
(7,682 ) —
(7,682 )
Common dividends ($1.25 per share) —
—
—
—
—
(82,240 ) —
(82,240 ) —
(82,240 )
Balance, September 30, 2016 5,750,000
$ 58
65,259,836
$ 653
$ 1,207,487
$ (184,969 ) $ (9,382 ) $ 1,013,847
$ 40
$ 1,013,887

Preferred Stock Common Stock Additional
Paid-in Capital Cumulative Distributions in Excess of Net Income Accumulated Other Comprehensive Income (Loss) Total
Stockholders’
Equity Noncontrolling Interests Total Equity
Shares Amount Shares Amounts
Balance, December 31, 2016 5,750,000
$ 58
65,285,614
$ 653
$ 1,208,862
$ (192,201 ) $ (1,798 ) $ 1,015,574
$ 35
$ 1,015,609
Net income (loss) —
—
—
—
—
54,438
—
54,438
(42 ) 54,396
Other comprehensive income —
—
—
—
—
—
6,034
6,034
—
6,034
Change in noncontrolling interests —
—
—
—
—
—
—
—
2,733
2,733
Amortization of stock-based compensation —
—
—
—
8,768
—
—
8,768
—
8,768
Common stock issuance, net —
—
110,546,599
1,105
2,370,880
—
—
2,371,985
—
2,371,985
Preferred dividends —
—
—
—
—
(7,682 ) —
(7,682 ) —
(7,682 )
Common dividends ($1.21 per share) —
—
—
—
—
(80,014 ) —
(80,014 ) —
(80,014 )
Balance, September 30, 2017 5,750,000
$ 58
175,832,213
$ 1,758
$ 3,588,510
$ (225,459 ) $ 4,236
$ 3,369,103
$ 2,726
$ 3,371,829

See accompanying notes to condensed consolidated financial statements.

SABRA HEALTH CARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)

(dollars in thousands, except per share data)

(unaudited)


		Nine Months Ended September 30, 2019
	Common Stock		Additional Paid-in Capital			Cumulative Distributions in Excess of Net Income		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Noncontrolling Interest		Total Equity
		Shares			Amounts
Balance, December 31, 2018		178,306,528	$	1,783		$	3,507,925	$	(271,595)	$	12,301	$	3,250,414	$	4,333	$	3,254,747
Cumulative effect of Topic 842 adoption		—	—			—		(32,502)		—		(32,502)		—		(32,502)
Net income		—	—			—		29,255		—		29,255		22		29,277
Other comprehensive loss		—	—			—		—		(31,696)		(31,696)		—		(31,696)
Buyout of noncontrolling interest		—	—			4,039		—		—		4,039		(4,239)		(200)
Distributions to noncontrolling interest		—	—			—		—		—		—		(116)		(116)
Amortization of stock-based compensation		—	—			10,474		—		—		10,474		—		10,474

Common stock issuance, net		15,390,373	154			301,146		—		—		301,300		—		301,300


Common dividends ($1.35 per share)		—	—			—		(248,867)		—		(248,867)		—		(248,867)
Balance, September 30, 2019		193,696,901	$	1,937		$	3,823,584	$	(523,709)	$	(19,395)	$	3,282,417	$	0	$	3,282,417


		Nine Months Ended September 30, 2020
	Common Stock		Additional Paid-in Capital			Cumulative Distributions in Excess of Net Income		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interest		Total Equity
		Shares			Amounts
Balance, December 31, 2019		205,208,018	$	2,052		$	4,072,079	$	(573,283)	$	(12,388)	$	3,488,460	$	0	$	3,488,460
Cumulative effect of Topic 326 adoption		—	—			—		(167)		—		(167)		—		(167)
Net income		—	—			—		101,300		—		101,300		—		101,300
Other comprehensive loss		—	—			—		—		(36,782)		(36,782)		—		(36,782)


Amortization of stock-based compensation		—	—			7,582		—		—		7,582		—		7,582

Common stock issuance, net		1,720,307	17			21,608		—		—		21,625		—		21,625

Common dividends ($1.05 per share)		—	—			—		(217,678)		—		(217,678)		—		(217,678)
Balance, September 30, 2020		206,928,325	$	2,069		$	4,101,269	$	(689,828)	$	(49,170)	$	3,364,340	$	0	$	3,364,340

See accompanying notes to condensed consolidated financial statements.

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SABRA HEALTH CARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Nine Months Ended September 30,

2017 2016
Cash flows from operating activities:

Net income $ 54,396
$ 47,035
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 62,290
51,273
Amortization of above and below market lease intangibles, net 637
—
Non-cash interest income adjustments
(137 ) 549
Amortization of deferred financing costs 4,132
3,767
Stock-based compensation expense 8,329
6,137
Amortization of debt premium/discount (99 ) 81
Loss on extinguishment of debt 553
556
Straight-line rental income adjustments (18,260 ) (16,710 )
Provision for doubtful accounts and loan losses 7,454
3,286
Change in fair value of contingent consideration (552 ) 50
Net (gain) loss on sales of real estate (4,614 ) 3,203
Impairment of real estate —
29,811
Changes in operating assets and liabilities:

Accounts receivable, prepaid expenses and other assets (5,752 ) 1,381
Accounts payable and accrued liabilities (53,570 ) 6,217
Restricted cash (5,036 ) (2,820 )

Net cash provided by operating activities 49,771
133,816
Cash flows from investing activities:

Acquisition of real estate (393,064 ) (109,619 )
Cash received in CCP Merger 77,858
—
Origination and fundings of loans receivable (5,642 ) (9,478 )
Origination and fundings of preferred equity investments (2,713 ) (6,845 )
Additions to real estate (3,233 ) (901 )
Repayment of loans receivable 8,710
214,947
Repayments of preferred equity investments 3,239
—
Net proceeds from the sales of real estate 11,723
85,449

Net cash (used in) provided by investing activities (303,122 ) 173,553
Cash flows from financing activities:

Net repayments of revolving credit facility (137,000 ) (255,000 )
Proceeds from term loans 181,000
69,360
Principal payments on secured debt (3,094 ) (13,756 )
Payments of deferred financing costs (15,316 ) (5,933 )
Issuance of common stock, net 319,026
(1,289 )
Dividends paid on common and preferred stock (86,813 ) (89,283 )

Net cash provided by (used in) financing activities 257,803
(295,901 )

Net increase in cash and cash equivalents 4,452
11,468
Effect of foreign currency translation on cash and cash equivalents 758
772
Cash and cash equivalents, beginning of period 25,663
7,434

Cash and cash equivalents, end of period $ 30,873
$ 19,674
Supplemental disclosure of cash flow information:

Interest paid $ 48,836
$ 49,009
Supplemental disclosure of non-cash investing and financing activities:

Acquisition of business in CCP Merger (see Note 3) $ 3,726,093
$ —
Assumption of indebtedness in CCP Merger $ (1,751,373 ) $ —
Stock exchanged in CCP Merger $ (2,052,578 ) $ —
Real estate acquired through loan receivable foreclosure
$ —

$ 10,100


	Nine Months Ended September 30,
	2020		2019
Cash flows from operating activities:
Net income	$	101,300	$	29,277
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	132,579		137,517
Non-cash rental and related revenues	1,340		(12,965)
Non-cash interest income	(1,743)		(1,680)
Non-cash interest expense	6,527		7,846
Stock-based compensation expense	5,651		8,829
Non-cash lease termination income	0		(9,725)

Loss on extinguishment of debt	531		10,763

Provision for loan losses and other reserves	706		1,457
Net gain on sales of real estate	(2,828)		(1,216)
Impairment of real estate	3,154		119,102
Loss from unconsolidated joint venture	13,037		5,635
Distributions of earnings from unconsolidated joint venture	11,318		10,162
Changes in operating assets and liabilities:
Accounts receivable, prepaid expenses and other assets, net	(3,523)		(7,252)
Accounts payable and accrued liabilities	(2,594)		(20,769)

Net cash provided by operating activities	265,455		276,981
Cash flows from investing activities:
Acquisition of real estate	(92,945)		(14,977)

Origination and fundings of loans receivable	(1,651)		(9,441)
Origination and fundings of preferred equity investments	(20,059)		0
Additions to real estate	(32,416)		(15,985)
Repayments of loans receivable	3,095		13,761
Repayments of preferred equity investments	3,399		3,672

Net proceeds from the sales of real estate	8,754		321,715
Distributions in excess of earnings from unconsolidated joint venture	1,305		0
Buyout of noncontrolling interests	0		(200)
Net cash (used in) provided by investing activities	(130,518)		298,545
Cash flows from financing activities:
Net borrowings from (repayments of) revolving credit facility	56,000		(424,000)
Proceeds from issuance of senior unsecured notes	0		297,039
Principal payments on senior unsecured notes	0		(500,000)
Principal payments on secured debt	(2,396)		(2,566)
Payments of deferred financing costs	(819)		(14,001)
Payments related to extinguishment of debt	0		(6,897)
Distributions to noncontrolling interest	0		(116)

Issuance of common stock, net	20,961		302,030
Dividends paid on common stock	(215,747)		(247,222)

Net cash used in financing activities	(142,001)		(595,733)

Net decrease in cash, cash equivalents and restricted cash	(7,064)		(20,207)
Effect of foreign currency translation on cash, cash equivalents and restricted cash	(230)		211
Cash, cash equivalents and restricted cash, beginning of period	49,143		59,658

Cash, cash equivalents and restricted cash, end of period	$	41,849	$	39,662
Supplemental disclosure of cash flow information:
Interest paid	$	67,995	$	100,230

Supplemental disclosure of non-cash investing activities:



Decrease in loans receivable and other investments due to acquisition of real estate	$	20,731	$	0
Secured debt assumed by buyers in connection with sales of real estate	$	31,830	$	0

See accompanying notes to condensed consolidated financial statements.

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SABRA HEALTH CARE REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. BUSINESS

Overview

Sabra Health Care REIT, Inc. (“Sabra” or the “Company”) was incorporated on May 10, 2010 as a wholly owned subsidiary of Sun Healthcare Group, Inc. (“Sun”) and commenced operations on November 15, 2010 following ~~Sabra's~~Sabra’s separation from ~~Sun (the “Separation Date”).~~Sun. Sabra elected to be treated as a real estate investment trust (“REIT”) with the filing of its United States (“U.S.”) federal income tax return for the taxable year beginning January 1, 2011. Sabra believes that it has been organized and operated, and it intends to continue to operate, in a manner to qualify as a REIT. Sabra’s primary business consists of acquiring, financing and owning real estate property to be leased to ~~third party~~third-party tenants in the healthcare sector. Sabra primarily generates revenues by leasing properties to tenants and operators throughout the ~~United States~~U.S. and Canada. Sabra owns substantially all of its assets and properties and conducts its operations through Sabra Health Care Limited Partnership, a Delaware limited partnership (the “Operating Partnership”), of which Sabra is the sole general partner and ~~Sabra's~~a wholly owned ~~subsidiaries are~~subsidiary of Sabra is currently the only limited ~~partners,~~partner, or by subsidiaries of the Operating Partnership. The Company’s investment portfolio is primarily comprised of skilled nursing/transitional care facilities, senior housing communities (“Senior Housing - Leased”) and specialty hospitals and other facilities, in each case leased to third-party operators; senior housing communities operated by third-party property managers pursuant to property management agreements (“Senior Housing - Managed”); investments in loans receivable; ~~and~~ preferred equity ~~investments.~~investments; and an investment in an unconsolidated joint venture.

~~On May 7, 2017,~~COVID-19

In March 2020, the World Health Organization declared COVID-19 a pandemic, and the United States declared a national emergency with respect to COVID-19. In the intervening months, COVID-19 has spread globally and led governments and other authorities around the world, including federal, state and local authorities in the United States, to impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, quarantines and shelter-in-place orders. Although some of these governmental restrictions have since been lifted or scaled back, a recent surge of COVID-19 infections has resulted in the re-imposition of certain restrictions and may lead to other restrictions being re-implemented in response to efforts to reduce the spread of COVID-19. These measures may remain in place for a significant amount of time. The COVID-19 pandemic and measures to prevent its spread have negatively impacted and are expected to continue to negatively impact the Company and its operations in a number of ways, including but not limited to:

•Decreased occupancy and increased operating costs for the ~~Operating Partnership, PR Sub, LLC, a Delaware limited liability company~~Company’s tenants and ~~wholly owned subsidiary~~borrowers, which has negatively impacted their operating results and may adversely impact their ability to make full and timely rental payments and debt service payments, respectively, to the Company. In some cases, the Company may have to restructure tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to the Company as those currently in place. Reduced or modified rental and debt service amounts could result in the determination that the full amounts of the ~~Company (“Merger Sub”~~Company’s investments are not recoverable, which could result in an impairment charge. To date, the impact of COVID-19 on the Company’s skilled nursing/transitional care facility operators has been partially mitigated by the assistance they have received or expect to receive from state and federal assistance programs, including through the CARES Act (as defined and further described below under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Skilled Nursing Facility Reimbursement Rates” in Part I, Item 2), although these benefits on an individual operator basis vary and may not provide enough relief to meet their rental obligations to the Company. Prior to September 1, 2020, few of these programs were available to the Company’s senior housing operators; as of September 1, 2020, eligible assisted living facility operators may apply for funding through the CARES Act, and the assistance received or expected to be received will partially mitigate the negative impact of COVID-19 on the Company’s eligible assisted living facility operators. As of September 30, 2020, the Company’s tenants and borrowers have continued to pay expected cash rents and debt service obligations consistent with past practice. However, the longer the duration of the COVID-19 pandemic, the more likely that the Company’s tenants and borrowers will begin to default on these obligations. Such defaults could materially and adversely affect the Company’s results of operations and liquidity, in addition to resulting in potential impairment charges.

•Decreased occupancy and increased operating costs within the Company’s Senior Housing - Managed portfolio and in the Company’s 49% equity interest in a joint venture with affiliates of Enlivant and TPG Real Estate, the real estate platform of TPG, that owns senior housing communities managed by Enlivant (the “Enlivant Joint Venture”), ~~Care Capital Properties, Inc., a Delaware corporation (“CCP”),~~which have negatively impacted and ~~Care Capital Properties, L.P. (“CCPLP”), a Delaware limited partnership~~are expected to continue to negatively impact the operating results of these

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investments. As noted above, as of September 1, 2020, eligible assisted living facility operators may apply for funding through the CARES Act, and ~~wholly-owned subsidiary~~the assistance received or expected to be received will partially mitigate the negative impact of ~~CCP, entered into an Agreement~~COVID-19 on the Company’s Senior Housing - Managed portfolio and ~~Plan~~the Enlivant Joint Venture. During each of ~~Merger (the “Merger Agreement”), pursuant to which, on August 17, 2017, CCP merged with~~the three and ~~into Merger Sub, with Merger Sub continuing as the surviving corporation (the “CCP Merger”), following which Merger Sub merged with and into~~nine months ended September 30, 2020, the Company ~~with~~recognized government grants under the ~~Company continuing as~~CARES Act of $4.2 million. In addition, on October 1, 2020, the ~~surviving entity (the “Subsequent Merger”),~~Department of Health and ~~simultaneous with~~Human Services announced $20 billion of new funding for assisted living facility operators that have already received funds and to those who were previously ineligible. Prolonged deterioration in the ~~Subsequent Merger, CCPLP merged with~~operating results for the Company’s investments in its Senior Housing - Managed portfolio and ~~into~~ the ~~Operating Partnership, with~~Enlivant Joint Venture could result in the ~~Operating Partnership continuing as~~determination that the ~~surviving entity.~~full amounts of the Company’s investments are not recoverable, which could result in an impairment charge.

~~Pursuant to the Merger Agreement,~~The Company’s financial results as of and for the ~~effective time~~three and nine months ended September 30, 2020 reflect the results of the ~~CCP Merger, each share of CCP common stock, par value $0.01 per share, issued and outstanding immediately prior to the effective time~~Company’s evaluation of the ~~CCP Merger (other than shares~~impact of ~~CCP common stock owned directly by CCP, the Company~~COVID-19 on its business including, but not limited to, its evaluation of potential impairments of long-lived or ~~their respective subsidiaries, in each case not held~~other assets, measurement of credit losses on ~~behalf of third parties) was converted into the right to receive 1.123 newly issued shares of Company common stock, par value $0.01 per share, plus cash in lieu~~financial instruments, evaluation of any ~~fractional shares. See Note 3, “CCP Merger~~lease modifications, evaluation of lease accounting impact, estimates of fair value and ~~Recent Real Estate Acquisitions” for additional information regarding~~ the ~~CCP Merger.~~Company’s ability to continue as a going concern.

~~The acquisition of CCP has been reflected in the Company's condensed consolidated financial statements since the effective date of the CCP Merger.~~

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Sabra and its wholly owned subsidiaries as of September 30, ~~2017~~2020 and December 31, ~~2016~~2019 and for the three and nine month periods ended September 30, ~~2017~~2020 and ~~2016.~~2019. All significant intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair statement of the results for such periods. Operating results for the three and nine months ended September 30, ~~2017~~2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017~~.2020. For further information, refer to the Company’s consolidated financial statements and notes thereto

for the year ended December 31, ~~2016~~2019 included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 filed with the SEC.

GAAP requires the Company to identify entities for which control is achieved through voting rights or other means and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the ~~entity's~~entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the ~~entity's~~entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the ~~entity's~~entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. If the Company were determined to be the primary beneficiary of the VIE, the Company would consolidate investments in the VIE. The Company may change its original assessment of a VIE due to events such as modifications of contractual arrangements that affect the characteristics or adequacy of the ~~entity's~~entity’s equity investments at risk and the disposal of all or a portion of an interest held by the primary beneficiary.

The Company identifies the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the ~~entity's~~entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. The Company performs this analysis on an ongoing basis.

As of September 30, ~~2017~~,2020, the Company determined that it was 0t the primary beneficiary of two variable interest entities—a senior housing community and an exchange accommodation titleholder variable interest entity—and has consolidated the operations of these entities in the accompanying condensed consolidated financial statements. As of September 30, 2017, the Company determined that operations of these entities were not material to the Company’s results of operations, financial condition or cash flows.any VIEs.

As it relates to investments in loans, in addition to the ~~Company's~~Company’s assessment of VIEs and whether the Company is the primary beneficiary of those VIEs, the Company evaluates the loan terms and other pertinent facts to determine ifwhether the loan investment should be accounted for as a loan or as a real estate joint venture. If an investment has the characteristics of a real estate joint venture, including if the Company participates in the majority of the ~~borrower's~~borrower’s expected residual profit, the

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Company would account for the investment as an investment in a real estate joint venture and not as a loan investment. Expected residual profit is defined as the amount of profit, whether called interest or another name, such as an equity kicker, above a reasonable amount of interest and fees expected to be earned by a lender. At September 30, ~~2017, none~~2020, NaN of the ~~Company's~~Company’s investments in loans ~~are~~were accounted for as real estate joint ventures.

As it relates to investments in joint ventures, the Company assesses any limited ~~partners'~~partners’ rights and their impact on the presumption of control of the limited partnership by any single partner. The Company also applies this guidance to managing member interests in limited liability ~~companies.The~~companies. The Company reassesses its determination of which entity controls the joint venture if: there is a change to the terms or in the exercisability of the rights of any partners or members, the sole general partner or managing member increases or decreases its ownership interests, or there is an increase or decrease in the number of outstanding ownership interests. As of September 30, ~~2017,~~2020, the ~~Company's~~Company’s determination of which entity controls its investments in joint ventures has not changed as a result of any reassessment.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

Reclassifications

Certain amounts in the ~~Company's~~Company’s condensed consolidated ~~financial~~ statements of cash flows for prior periods have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of ~~operations~~operations.

Out of ~~prior periods. As a result,~~Period Adjustments

During the three months ended September 30, 2020, the Company identified certain ~~reclassifications were made~~historical errors in the recording of depreciation and amortization expense related to the basis difference in the Enlivant Joint Venture and not correctly expensing the allocable portion of the basis difference upon the sale of assets in the Enlivant Joint Venture. These errors impacted the Company’s investment in unconsolidated joint venture and income (loss) from unconsolidated joint venture as well as its condensed consolidated ~~balance sheets~~statements of income, condensed consolidated statements of comprehensive income (loss) and condensed consolidated statements of ~~income.~~equity since 2018, which impacted the quarterly financial statements and annual periods previously issued. These errors resulted in understating (overstating) previously recorded income (loss) from unconsolidated joint venture and net income by $5.2 million for the six months ended June 30, 2020 and $0.1 million and ($1.7) million for the years ended December 31, 2019 and 2018, respectively. These out of period adjustments were recorded in the third quarter of 2020, resulting in an increase to income from unconsolidated joint venture and net income of $3.6 million. Management evaluated the impact of the errors to the current period and prior period financial statements and determined that the impact was not material to any of the impacted periods.

~~Net Investment~~Government Grants

Government assistance provided to the Company in ~~Direct Financing Lease~~

the form of an income grant, which is not related to long-lived assets and is not required to be repaid, is recognized as grant income when there is reasonable assurance that the grant will be received and the Company will comply with any conditions associated with the grant. Additionally, grants are recognized over the periods in which the Company recognizes the qualifying expenses and/or lost income for which the grants are intended to compensate. As of September 30, ~~2017,~~2020, the amount of qualifying expenditures exceeded amounts recognized under the CARES Act, and the Company had ~~a $22.9 million net investment in one skilled nursing/transitional care facility leased to an operator under a direct financing lease, as the tenant is obligated to purchase the property at the end~~complied with all grant conditions. Accordingly, during each of ~~the~~

lease term. The net investment in direct financing lease is recorded in accounts receivable, prepaid expenses and other assets, net on the condensed consolidated balance sheets and represents the total undiscounted rental payments (including the tenant's purchase obligation), plus the estimated unguaranteed residual value, less the unearned lease income. Unearned lease income represents the excess of the minimum lease payments and residual values over the cost of the investment. Unearned lease income is deferred and amortized to income over the lease term to provide a constant yield when collectability of the lease payments is reasonably assured. Income from the Company's net investment in direct financing lease was $0.3 million for the three and nine months ended September 30, ~~2017~~2020, the Company recognized $1.2 million of grants in resident fees and ~~is reflected~~services and $3.0 million of grants in ~~interest and other income on~~loss from unconsolidated joint venture in the condensed consolidated statements of income. Future minimum lease payments contractually due under the direct financing lease at September 30, 2017, were as follows: $0.5 million for the remainder of 2017; $2.2 million for 2018; $2.2 million for 2019; $2.3 million for 2020; and $2.1 million for 2021.

Recently Issued Accounting Standards Update

~~Between May 2014 and May~~Adopted

In June 2016, the FASB issued ~~three~~ Accounting Standards ~~Updates (each, an “ASU”~~Update (“ASU”) ~~changing the requirements for recognizing and reporting revenue (together, herein referred to as the “Revenue ASUs”)~~2016-13, Financial Instruments—Credit Losses (Topic 326): ~~(i) ASU No. 2014-09, Revenue from Contracts with Customers~~Measurement of Credit Losses on Financial Instruments (“ASU 2014-09”), (ii) ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”) and (iii) ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”2016-13”). ASU ~~2014-09 provides guidance for revenue recognition to depict~~2016-13 requires that a financial asset (or a group of financial assets) measured at amortized cost basis be presented at the ~~transfer of promised goods or services to customers in an~~net amount ~~that reflects the consideration to which the entity expects~~expected to be ~~entitled in exchange~~collected. The allowance for ~~those goods or services. ASU 2016-08~~credit losses is ~~intended to improve~~a valuation account that is deducted from the ~~operability and understandability~~amortized cost basis of the ~~implementation guidance on principal versus agent considerations. ASU 2016-12 provides practical expedients and improvements~~financial asset(s) to present the net carrying value at the amount expected to be collected on the ~~previously narrow~~financial asset. The amendments in ASU 2016-13 are an improvement because they eliminate the probable initial recognition threshold under current GAAP and, instead, reflect an entity’s current estimate of all expected credit losses. Previously, when credit losses were measured under GAAP, an entity generally only considered past events and current conditions in measuring the incurred loss. In November 2018, the FASB

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issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses (“ASU 2018-19”), which amends ASU 2016-13 to clarify that receivables arising from operating leases are not within the scope of Subtopic 326-20, and instead, impairment of such receivables should be accounted for in accordance with ASU ~~2014-09.~~2016-02, Leases, as amended by subsequent ASUs (“Topic 842”). In ~~August 2015,~~November 2019, the FASB issued ASU ~~No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date~~2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses (“ASU ~~2015-14”~~2019-11”)., which amends ASU ~~2015-14 defers the effective date~~2016-13 to clarify or address stakeholders’ specific issues about certain aspects of ASU ~~2014-09 by one year to fiscal years, and interim periods within, beginning after December 15, 2017. All subsequent ASUs related to~~2016-13. ASU ~~2014-09, including~~2016-13, ASU ~~2016-08~~2018-19 and ASU 2016-12, assumed the deferred effective date enforced by ASU 2015-14. Early adoption of the Revenue ASUs is permitted for annual periods, and interim periods within, beginning after December 15, 2016. A reporting entity may apply the amendments in the Revenue ASUs using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or full retrospective approach. As the primary source of revenue for the Company is generated through leasing and financing arrangements, which2019-11 are excluded from the Revenue ASUs, the Company expects that the impact of the Revenue ASUs to the Company will be limited to the recognition of non-lease revenue, such as certain resident fees in its Senior Housing - Managed properties structures (a portion of which are not generated through leasing arrangements) ), and its recognition of real estate sale transactions. Under ASU 2014-09, revenue recognition for real estate sales is primarily based on the transfer of control versus continuing involvement under current guidance. Accordingly, the Company anticipates that the new guidance will result in more transactions qualifying as sales of real estate and gains on sale being recognized at an earlier date than under current accounting guidance. Additionally, upon adoption of the Revenue ASUs in 2018, the Company anticipates that it will be required to separately disclose the components of its total revenue between lease revenue accounted for under existing lease guidance and service revenue accounted for under the new Revenue ASUs, but does not anticipate a material change in the timing of revenue recognition. The Company has not yet elected a transition method and is evaluating the complete impact of the adoption of the Revenue ASUs on January 1, 2018 to its consolidated financial position, results of operations and disclosures. The Company expects to complete its evaluation of the impacts of the Revenue ASUs during the fourth quarter of 2017.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 supersedes guidance related to accounting for leases. ASU 2016-02 updates guidance around the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The objective of ASU 2016-02 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. ASU 2016-02 does not fundamentally change lessor accounting; however, some changes have been made to lessor accounting to conform and align that guidance with the lessee guidance and other areas within GAAP. ASU 2016-02 is effective for fiscal years and interim periods within those years beginning after December 15, ~~2018,~~2019, with early adoption ~~permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements when adopted.~~

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the definition of a business (“ASU 2017-01”). ASU 2017-01 clarifies the definition of a business with the objective of providing guidance to assist entities with evaluating whether transactions should be accounted forpermitted as ~~acquisitions (or disposals) of businesses. When substantially all~~ of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. To be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create outputs. To be a business without outputs, there will now need to be an organized workforce. ASU 2017-01 is effective for fiscal ~~years and interim periods within those~~

years beginning after December 15, ~~2017, with early adoption permitted.~~2018. An entity will apply the amendments in these updates through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). The Company adopted ASU ~~2017-01~~2016-13, ASU 2018-19 and ASU 2019-11 (collectively, “Topic 326”) on ~~October~~January 1, ~~2016~~2020.

The financial assets within the scope of Topic 326 are the Company’s investments in a direct financing lease and loans receivable, including the portion of unfunded loan commitments expected to be funded. The allowance for credit losses is calculated using the related amortization schedules, payment histories and loan-to-value ratios. The following rates are applied to determine the aggregate expected losses, which is recorded as the allowance for credit losses: (i) a default rate, (ii) a liquidation cost rate and (iii) a distressed property reduction rate. If no loan-to-value ratio is available, a loss severity rate is applied in place of the liquidation cost rate and the distressed property reduction rate. The default rate is based on average charge-off and delinquency rates from the Federal Reserve, and the other rates are based on industry research and historical performance of a ~~prospective basis. The Company expects that the majority~~similar portfolio of ~~its future acquisitions~~financial assets. Related interest income receivable balances are evaluated separately for collectability, and reserves are established based on management’s estimate of ~~real estate will be accounted for as asset acquisitions under the new guidance. This~~losses.

Upon adoption ~~will impact how~~of these standards, the Company ~~accounts~~recognized the cumulative effect on the opening balance of the allowance for ~~merger~~credit losses in the condensed consolidated balance sheets, which resulted in an increase to cumulative distributions in excess of net income and ~~acquisition costs and contingent consideration, which may result in lower expensed merger and acquisition costs and eliminate fair value adjustments related~~a decrease to ~~future contingent consideration arrangements.~~total assets of $0.2 million.

Issued but Not Yet Adopted

In ~~May 2017,~~March 2020, the FASB issued ASU ~~2017-09, Compensation—Stock compensation~~2020-04, Reference Rate Reform (Topic ~~718)~~848): ~~Scope~~Facilitation of ~~modification accounting~~the Effects of Reference Rate Reform on Financial Reporting (“ASU ~~2017-09”~~2020-04”). ASU ~~2017-09 clarifies~~2020-04 provides temporary optional guidance that provides transition relief for reference rate reform, including optional expedients and ~~reduces both (1) diversity in practice~~exceptions for applying GAAP to contract modifications, hedging relationships and ~~(2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation,~~other transactions that reference LIBOR or a reference rate that is expected to be discontinued as a ~~change to the terms or conditions~~result of ~~a share-based payment award. The amendments in~~reference rate reform if certain criteria are met. ASU ~~2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09~~2020-04 is effective ~~for fiscal years~~upon issuance, and ~~interim periods within those years beginning after~~the provisions generally can be applied prospectively as of January 1, 2020 through December ~~15, 2017, with early adoption permitted. The~~31, 2022. During the first quarter of 2020, the Company ~~does not expect the adoption of ASU 2017-09~~elected to ~~have a material impact on its consolidated financial statements.~~

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). ASU 2017-12 is intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements and to simplify the application ofapply the hedge accounting ~~guidance in current GAAP. ASU 2017-12 is effective~~expedients related to probability and the assessments of effectiveness for ~~fiscal years and interim periods within those years beginning after December 15, 2018,~~future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with ~~early adoption permitted.~~past presentation. The Company ~~is currently evaluating~~continues to evaluate the impact ~~this~~of the guidance ~~will have on its consolidated financial statements when adopted.~~and may apply other elections as applicable as additional changes in the market occur.

3. ~~CCP MERGER AND~~ RECENT REAL ESTATE ACQUISITIONS

~~CCP Merger~~

On August 17, 2017, the Company completed the CCP Merger. Under the terms of the Merger Agreement, each share of CCP common stock issued and outstanding immediately prior to the effective time of the CCP Merger (other than any shares owned directly by CCP, the Company or their respective subsidiaries, in each case not held on behalf of third parties) was converted into the right to receive 1.123 newly issued shares of Company common stock, resulting in the issuance of approximately 94.0 million shares of Company common stock at the effective time of the CCP Merger. As a result of the CCP Merger, the Company acquired 330 properties (consisting of 296 skilled nursing/transitional care facilities, 13 senior housing communities and 21 specialty hospitals and other facilities), one skilled nursing/transitional care facility leased to an operator under a direct financing lease (see Note 2, “Summary of Significant Accounting Policies—Net Investment in Direct Financing Lease”), 18 investments in loans receivable (see Note 6, “Loans Receivable and Other Investments”) and one specialty valuation firm. Sabra also assumed certain outstanding equity awards and other debt and liabilities of CCP (see Note 7, “Debt”). Based on the closing price of Sabra’s common stock on August 16, 2017, the Company estimates the fair value of the consideration exchanged or assumed to be approximately $2.1 billion. The Company’s estimated fair values of CCP’s assets acquired and liabilities assumed on the closing date of the CCP Merger are determined based on certain valuations and analyses that have yet to be finalized, and accordingly, the assets acquired and liabilities assumed, as detailed below, are preliminary and are subject to adjustment once the analyses are completed.

The following table summarizes the preliminary purchase price allocation for the CCP Merger based on the Company's initial valuation, including estimates and assumptions of the acquisition date fair value of the tangible and intangible assets acquired and liabilities assumed on August 17, 2017 (in thousands):

Real estate investments $ 3,629,447
Loans receivable and other investments 57,064
Cash and cash equivalents 77,858
Restricted cash 779
Lease intangible assets, net 234,426
Accounts receivable, prepaid expenses and other assets, net 35,829
Secured debt, net (98,500 )
Revolving credit facility (362,000 )
Unsecured term loans (674,000 )
Senior unsecured notes, net (616,873 )
Accounts payable and accrued liabilities (132,860 )
Lease intangible liabilities, net (95,859 )
Noncontrolling interests (2,733 )
Total consideration $ 2,052,578

The lease intangible assets and lease intangible liabilities acquired in connection with the CCP Merger have weighted-average amortization periods as of the closing date of the CCP Merger of 11 years and 10 years, respectively.

For the three and nine months ended September 30, 2017, the Company recognized $45.1 million of total revenues and $30.6 million of net income attributable to common stockholders, excluding acquisition related costs, from the CCP Merger investments. Acquisition related costs associated with the CCP Merger were $23.3 million and $29.7 million, respectively, during the three and nine months ended September 30, 2017.

~~Recent Real Estate Acquisitions~~

During the nine months ended September 30, ~~2017, in addition to the properties acquired as a result of the CCP Merger,~~2020, the Company acquired ~~21 skilled nursing/transitional care facilities~~3 Senior Housing - Leased communities and ~~one senior housing~~1 Senior Housing - Managed community. These investments were part of the Company’s proprietary development pipeline, and $20.7 million was previously funded through its preferred equity investments in these developments. During the nine months ended September 30, ~~2016,~~2019, the Company acquired ~~one skilled nursing/transitional care facility and three senior housing communities.~~2 specialty hospitals/other facilities. The consideration was allocated as follows (in thousands):


	Nine Months Ended September 30,					Nine Months Ended September 30,
	2017		2016			2020		2019
Land	$	55,579	$	5,521	Land	$	5,800	$	2,040
Building and improvements	329,462		102,094		Building and improvements	104,952		12,652
Tenant origination and absorption costs	6,143		1,565
Tenant relationship	1,880		439

Tenant origination and absorption costs intangible assets					Tenant origination and absorption costs intangible assets	2,578		234
Tenant relationship intangible assets					Tenant relationship intangible assets	347		51
Total consideration	$	393,064	$	109,619	Total consideration	$	113,677	$	14,977

The tenant origination and absorption costs intangible assets and tenant relationship intangible assets ~~acquired in connection with these acquisitions have weighted-average~~had weighted-

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average amortization periods as of the respective dates of acquisition of 13seven years and 2325 years, ~~respectively.~~respectively, for acquisitions completed during the nine months ended September 30, 2020, and 15 years and 25 years, respectively, for acquisitions completed during the nine months ended September 30, 2019.

For the three and nine months ended September 30, ~~2017,~~2020, the Company recognized ~~$1.5~~$3.4 million and ~~$1.6~~$9.2 million of total revenues, respectively, and $1.4 million and $3.7 million of net income attributable to common stockholders, respectively, from the facilities acquired during the nine months ended September 30, 2020. For each of the three and nine months ended September 30, 2019, the Company recognized $0.2 million of total revenues and $0.2 million of net income attributable to common stockholders from the facilities acquired during the nine months ended September 30, 2017. For the three and nine months ended September 30, 2016, the Company recognized $1.7 million of total revenues and $0.1 million of net income attributable to common stockholders from the facilities acquired during the nine months ended September 30, 2016.2019.

4. INVESTMENT IN REAL ESTATE PROPERTIES ~~HELD FOR INVESTMENT~~

The Company’s real estate properties held for investment consisted of the following (dollars in thousands):

~~As of~~ ~~September 30, 2017~~

Property Type
Number of
Properties

Number of
Beds/Units

Total
Real Estate
at Cost

Accumulated
Depreciation

Total
Real Estate
Investments, Net
Skilled Nursing/Transitional Care 409
45,710
$ 4,386,543
$ (215,921 ) $ 4,170,622
Senior Housing - Leased⁽¹⁾
88
8,110
1,149,278
(96,790 ) 1,052,488
Senior Housing - Managed⁽¹⁾
11
999
170,866
(10,884 ) 159,982
Specialty Hospitals and Other 22
1,085
602,339
(12,820 ) 589,519
530
55,904
6,309,026
(336,415 ) 5,972,611
Corporate Level 448
(274 ) 174
$ 6,309,474
$ (336,689 ) $ 5,972,785

~~As of~~ ~~December 31, 2016~~

Property Type
Number of
Properties

Number of
Beds/Units

Total
Real Estate
at Cost

Accumulated
Depreciation

Total
Real Estate
Investments, Net
Skilled Nursing/Transitional Care 97
10,819
$ 1,042,754
$ (190,038 ) $ 852,716
Senior Housing - Leased⁽¹⁾
83
7,855
1,153,739
(80,449 ) 1,073,290
Senior Housing - Managed⁽¹⁾
2
134
34,212
(1,682 ) 32,530
Specialty Hospitals and Other 1
70
61,640
(10,387 ) 51,253
183
18,878
2,292,345
(282,556 ) 2,009,789
Corporate Level 406
(256 ) 150
$ 2,292,751
$ (282,812 ) $ 2,009,939

September 30, 2017 December 31, 2016
Building and improvements $ 5,410,572
$ 1,983,769
Furniture and equipment 234,901
85,196
Land improvements 3,563
3,744
Land 660,438
220,042
6,309,474
2,292,751
Accumulated depreciation (336,689 ) (282,812 )
$ 5,972,785
$ 2,009,939


⁽¹⁾	During the nine months ended September 30, 2017, the Company transitioned nine senior housing communities into a managed property structure whereby the Company owns the operations of the communities and the communities are operated by a third-party property manager.

~~Contingent Consideration Arrangements~~

In connection with three of its prior real estate acquisitions, the Company entered into contingent consideration arrangements pursuant to which it could be required to pay out additional amounts based on incremental value created through the improvement of operations of the applicable acquired facility (a contingent consideration liability). The estimated value of the contingent consideration liabilities at the time of purchase was $3.2 million. The contingent consideration amounts would be determined based on portfolio performance and the facility achieving certain performance hurdles during 2017. During the nine months ended September 30, 2017, one earn-out arrangement expired and resulted in a $0 payout and a second earn-out arrangement was terminated in connection with the transition of the eight senior housing communities to Senior Housing - Managed properties. To determine the value of the remaining contingent consideration arrangement, the Company used significant inputs not observable in the market to estimate the contingent consideration, made assumptions regarding the probability of the facility achieving the incremental value and then applied an appropriate discount rate. As of September 30, ~~2017, based on the performance~~2020


Property Type	Number of Properties	Number of Beds/Units	Total Real Estate at Cost		Accumulated Depreciation		Total Real Estate Investments, Net
Skilled Nursing/Transitional Care	287	32,019	$	3,642,653	$	(360,742)	$	3,281,911
Senior Housing - Leased	64	4,242	707,379		(83,105)		624,274
Senior Housing - Managed	47	4,924	931,655		(134,056)		797,599
Specialty Hospitals and Other	27	1,193	663,982		(61,909)		602,073
	425	42,378	5,945,669		(639,812)		5,305,857
Corporate Level			817		(402)		415
			$	5,946,486	$	(640,214)	$	5,306,272

As of this facility, the contingent consideration liability had an estimated value of $0.3 million, which is included in accounts payable and accrued liabilities on the accompanying condensed consolidated balance sheets.December 31, 2019


Property Type	Number of Properties	Number of Beds/Units	Total Real Estate at Cost		Accumulated Depreciation		Total Real Estate Investments, Net
Skilled Nursing/Transitional Care	296	33,290	$	3,701,666	$	(306,565)	$	3,395,101
Senior Housing - Leased	62	3,820	630,688		(72,278)		558,410
Senior Housing - Managed	46	4,809	907,771		(112,893)		794,878
Specialty Hospitals and Other	25	1,193	639,721		(47,124)		592,597
	429	43,112	5,879,846		(538,860)		5,340,986
Corporate Level			737		(353)		384
			$	5,880,583	$	(539,213)	$	5,341,370

During the three and nine months ended September 30, 2017, the Company recorded an increase of $0.3 million and a decrease of $0.6 million, respectively, to the contingent consideration liability. These amounts are included in other income on the accompanying condensed consolidated statements of income.


	September 30, 2020		December 31, 2019
Building and improvements	$	5,107,022	$	5,042,435
Furniture and equipment	243,265		239,229
Land improvements	1,917		1,534
Land	594,282		597,385
	5,946,486		5,880,583
Accumulated depreciation	(640,214)		(539,213)
	$	5,306,272	$	5,341,370

Operating Leases

As of September 30, ~~2017~~,2020, the substantial majority of the Company’s real estate properties (excluding 1147 Senior Housing - Managed ~~properties)~~communities) were leased under triple-net operating leases with expirations ranging from less than one year to 15 years. As of September 30, ~~2017~~,2020, the leases had a weighted-average remaining term of ~~nine~~eight years. The leases generally include

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provisions to extend the lease terms and other negotiated terms and conditions. The Company, through its subsidiaries, retains substantially all of the risks and benefits of ownership of the real estate assets leased to the tenants. ~~In addition, the~~The Company may receive additional security under these operating leases in the form of letters of credit and security deposits from the lessee or guarantees from the parent of the lessee. Security deposits received in cash related to tenant leases are included in accounts payable and accrued liabilities inon the accompanying condensed consolidated balance sheets and totaled ~~$35.6~~$11.7 million ~~as of~~ ~~September 30, 2017~~ and ~~$2.7~~$10.5 million as of December 31, 2016. As of September 30, 2017, the Company had a $3.5 million reserve for unpaid cash rents and a $2.8 million reserve associated with accumulated straight-line rental income. As of December 31, 2016, the Company had a $3.2 million reserve for unpaid cash rents and a $3.7 million reserve associated with accumulated straight-line rental income.

~~The following table provides information regarding significant tenant relationships representing 10% or more of the Company's total revenues~~ as of September 30, ~~2017 (dollars in thousands):~~

Three Months Ended Nine Months Ended
September 30, 2017
Number of Investments Rental Revenue % of Total Revenue Rental Revenue % of Total Revenue

Genesis Healthcare, Inc. 76
$ 20,257
18.1 % $ 60,470
25.3 %
Holiday AL Holdings, LP 21
9,813
8.8
29,438
12.3

~~The~~2020 and December 31, 2019, respectively, and letters of credit deposited with the Company ~~has entered into memoranda of understanding with Genesis to market for sale 35 skilled nursing facilities (the “MOU Disposition Facilities”). As~~totaled approximately $86 million and $83 million as of September 30, ~~2017,~~2020 and December 31, 2019, respectively. In addition, the Company’s tenants have deposited with the Company ~~completed the sale~~$15.4 million and $14.3 million as of ~~two of the MOU Disposition Facilities, and subsequent to~~ September 30, ~~2017,~~2020 and December 31, 2019, respectively, for future real estate taxes, insurance expenditures and tenant improvements related to the Company’s properties and their operations, and these amounts are included in accounts payable and accrued liabilities on the accompanying condensed consolidated balance sheets.

Lessor costs that are paid by the lessor and reimbursed by the lessee are included in the measurement of variable lease revenue and the associated expense. As a result, the Company ~~completed~~recognized variable lease revenue and the ~~sale~~associated expense of ~~two additional MOU Disposition Facilities. The Company has also entered into a definitive agreement to sell an additional 20 MOU Disposition Facilities, which is expected to be completed in~~$5.0 million and $15.7 million during the ~~fourth quarter of 2017. The Company expects~~three and nine months ended September 30, 2020, respectively, and $4.0 million and $13.0 million during the remaining MOU Disposition Facilities to be sold by the end of the first quarter of 2018, though there can be no assurance that the sales will be completed in that timeframe, if at all. The Company has also begun the process of marketing for sale up to all of the remaining 43 facilities leased to Genesis, with sales expected to occur in 2018.three and nine months ended September 30, 2019, respectively.

The Company monitors the creditworthiness of its tenants by reviewing credit ratings (if available) and evaluating the ability of the tenants to meet their lease obligations to the Company based on the tenants’ financial performance, including the evaluation of any parent guarantees (or the guarantees of other related parties) of tenant lease obligations. ~~Because~~As formal credit ratings may not be available for most of the Company’s tenants, the primary basis for the Company’s evaluation of the credit quality of its tenants (and more specifically the tenant’s ability to pay their rent obligations to the Company) is the tenant’s lease coverage ratio or the parent’s fixed charge coverage ratio for those entities with a parent guarantee. These coverage ratios include earnings before interest, taxes, depreciation, amortization and rent (“EBITDAR”) to rent and earnings before interest, taxes, depreciation, amortization, rent and management fees (“EBITDARM”) to rent at the lease level and consolidated EBITDAR to total fixed charges at the parent guarantor level when such a guarantee exists. The Company obtains various financial and operational information from its tenants each month and reviews this information in conjunction with the above-described coverage metrics to identify financial and operational trends, evaluate the impact of the industry’s operational and financial environment (including the impact of government reimbursement), and evaluate the management of the tenant’s operations. These metrics help the Company identify potential areas of concern relative to its tenants’ credit quality and ultimately the tenant’s ability to generate sufficient liquidity to meet its obligations, including its obligation to continue to pay the rent due to the Company.

During the three months ended September 30, 2020, the auditors for Genesis Healthcare, Inc. (“Genesis”) and subsidiaries of Signature Healthcare (“Signature”) that lease facilities from the Company each expressed substantial doubt over the respective abilities of Genesis and Signature to continue as a going concern. Accordingly, the Company concluded that its leases with Genesis and Signature should no longer be accounted for on an accrual basis and wrote off $14.3 million of non-cash rent receivable balances and lease intangibles related to these leases.

For the three and nine months ended September 30, 2020, no tenant relationship represented 10% or more of the Company’s total revenues.

As of September 30, ~~2017~~,2020, the future minimum rental payments from the Company’s properties held for investment under non-cancelable operating leases ~~was~~were as follows and may materially differ from actual future rental payments received (in thousands):


October 1 through December 31, 2020	$	106,516
2021	431,202
2022	412,395
2023	402,083
2024	402,936
Thereafter	1,923,827
	$	3,678,959

Senior Housing - Managed Communities

The Company’s Senior Housing - Managed communities offer residents certain ancillary services that are not contemplated in the lease with each resident (i.e., housekeeping, laundry, guest meals, etc.). These services are provided and paid for in addition to the standard services included in each resident lease (i.e., room and board, standard meals, etc.). The

October 1, 2017 through December 31, 2017 $ 146,223
2018 590,222
2019 599,100
2020 592,748
2021 582,633
Thereafter 3,508,262
$ 6,019,188

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Company bills residents for ancillary services one month in arrears and recognizes revenue as the services are provided, as the Company has no continuing performance obligation related to those services. Resident fees and services include ancillary service revenue of $0.3 million and $0.7 million for the three and nine months ended September 30, 2020, respectively, and $0.2 million and $0.5 million for the three and nine months ended September 30, 2019, respectively.

Investment in Unconsolidated Joint Venture

The Company has a 49% equity interest in the Enlivant Joint Venture with affiliates of Enlivant and TPG Real Estate, the real estate platform of TPG, that owns senior housing communities managed by Enlivant. During the nine months ended September 30, 2020, the Enlivant Joint Venture sold 12 senior housing communities for aggregate gross proceeds of $18.2 million, and the Company recorded an aggregate net loss on sale of real estate related to unconsolidated joint venture of $3.3 million. As of September 30, 2020, the Enlivant Joint Venture owned 158 senior housing communities, and the book value of the Company’s investment in the Enlivant Joint Venture was $293.8 million.

Net Investment in Direct Financing Lease

As of September 30, 2020, the Company had a $24.1 million net investment in 1 skilled nursing/transitional care facility leased to an operator under a direct financing lease, as the tenant is obligated to purchase the property at the end of the lease term. The net investment in direct financing lease is recorded in accounts receivable, prepaid expenses and other assets, net on the accompanying condensed consolidated balance sheets and represents the present value of total rental payments of $2.8 million, plus the estimated purchase price of $24.8 million, less the unearned lease income of $3.3 million and allowance for credit losses of $0.2 million as of September 30, 2020. Unearned lease income represents the excess of the minimum lease payments and residual value over the cost of the investment. Unearned lease income is deferred and amortized to income over the lease term to provide a constant yield when collectability of the lease payments is reasonably assured. Income from the Company’s net investment in direct financing lease was $0.7 million and $2.0 million for the three and nine months ended September 30, 2020, respectively, and $0.7 million and $2.0 million for the three and nine months ended September 30, 2019, respectively, and is reflected in interest and other income on the accompanying condensed consolidated statements of income. Upon adoption of Topic 326 on January 1, 2020 and as of the adoption date, the Company recorded a $0.2 million reduction in equity and increase to its allowance for credit losses due to the cumulative effect of the changes contemplated by Topic 326. During the three and nine months ended September 30, 2020, the Company reduced its allowance for credit losses by $1,000 and $38,000, respectively. Future minimum lease payments contractually due under the direct financing lease at September 30, 2020 were as follows: $0.6 million for the remainder of 2020, $2.3 million for 2021 and $0.1 million for 2022.

5. ~~ASSET HELD FOR SALE~~IMPAIRMENT OF REAL ESTATE AND DISPOSITIONS

2020

Asset Held for Sale

As of September 30, ~~2017~~,2020, the Company determined that ~~one~~1 skilled nursing/transitional care facility with a net book value of ~~$2.0~~$8.9 million met the criteria to be classified as an asset held for ~~sale. The net book value~~sale, and this balance is included in accounts receivable, prepaid expenses and other assets, net on the condensed consolidated balance sheets. Subsequent to September 30, 2020, the Company completed the sale of the facility for a gross sales price of $9.0 million.

~~2017~~ Impairment of Real Estate

During the nine months ended September 30, 2020, the Company recognized a $3.2 million real estate impairment related to 3 senior housing communities and 1 skilled nursing/transitional care facility.

Dispositions

During the nine months ended September 30, ~~2017,~~2020, the Company completed the sale of ~~four~~7 skilled nursing/transitional care facilities for aggregate consideration, net of ~~$11.7~~closing costs, of $41.1 million. The net carrying value of the assets and liabilities of these facilities was ~~$7.1~~$38.3 million, which resulted in an aggregate ~~$4.6~~$2.8 million net gain ~~on sale.~~

~~2016 Dispositions~~

During the nine months ended September 30, 2016, the Company completed the sale of two skilled nursing/transitional care facilities and one acute care hospital for aggregate consideration of $85.4 million after selling expenses of $2.3 million. The net carrying value of the assets and liabilities of these facilities, after the impairment loss of $29.8 million recognized in relation to the acute care hospital, was $88.6 million, resulting in an aggregate $3.2 million loss on sale.

During the nine months ended September 30, ~~2017,~~2020, the Company recognized ~~$0.3~~$3.9 million of net income, ~~excluding~~which includes the $2.8 million net gain on sale, ~~from the asset held for sale~~ and ~~the dispositions made~~ during the nine months ended September 30, ~~2017. During the nine months ended September 30, 2016, the Company~~2019, recognized ~~$38,000~~$11.0 million of net ~~income, excluding the net~~ loss, ~~on sale and~~which includes $12.8 million of real estate impairment, in each case from ~~the dispositions made during the nine months ended September 30, 2017 and 2016.~~these facilities. The sale of these facilities dodoes not represent a strategic shift that has or will have a major effect on the ~~Company's~~Company’s operations and financial results, and therefore the results of operations attributable to these facilities have remained in continuing operations.

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2019

Impairment of Real Estate

During the nine months ended September 30, 2019, the Company recognized a $119.1 million real estate impairment, of which $95.2 million related to the 30 Senior Care Centers facilities that the Company sold and 1 additional Senior Care Centers facility that the Company transitioned to another operator, and the remaining $23.9 million related to 5 additional skilled nursing/transitional care facilities that were subsequently sold and 4 senior housing communities.

Dispositions

During the nine months ended September 30, 2019, the Company completed the sale of 31 skilled nursing/transitional care facilities and 7 senior housing communities for aggregate consideration, net of closing costs, of $315.0 million. The net carrying value of the assets and liabilities of these facilities was $313.8 million, which resulted in an aggregate $1.2 million net gain on sale.

During the nine months ended September 30, 2019, the Company recognized $65.1 million of net loss, which includes the $1.2 million net gain on sale and $69.1 million of real estate impairment, from these facilities. The sale of these facilities does not represent a strategic shift that has or will have a major effect on the Company’s operations and financial results, and therefore the results of operations attributable to these facilities have remained in continuing operations.

6. LOANS RECEIVABLE AND OTHER INVESTMENTS

As of September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the Company’s loans receivable and other investments consisted of the following (dollars in thousands):


									September 30, 2020
Investment	Quantity as of September 30, 2020	Property Type	Principal Balance as of September 30, 2020 (1)		Book Value as of September 30, 2020		Book Value as of December 31, 2019		Weighted Average Contractual Interest Rate / Rate of Return		Weighted Average Annualized Effective Interest Rate / Rate of Return		Maturity Date as of September 30, 2020
Loans Receivable:
Mortgage	1	Specialty Hospital	$	19,000	$	19,000	$	19,000	10.0	%	10.0	%	01/31/27
Construction	1	Senior Housing	3,343		3,353		2,487		8.0	%	7.8	%	09/30/22



Other	17	Multiple	43,973		40,010		42,147		6.8	%	6.9	%	03/01/21- 08/31/28
	19		66,316		62,363		63,634		7.8	%	7.9	%
Allowance for loan losses			—		(1,287)		(564)
			$	66,316	$	61,076	$	63,070
Other Investments:
Preferred Equity	6	Skilled Nursing / Senior Housing	42,533		42,744		44,304		11.3	%	11.3	%	N/A
Total	25		$	108,849	$	103,820	$	107,374	9.2	%	9.3	%

Investment Quantity as of September 30, 2017 Property Type
Principal Balance as of September 30, 2017 ⁽¹⁾

Book Value as of
September 30, 2017
Book Value as of
December 31, 2016 Weighted Average Contractual Interest Rate / Rate of Return as of September 30, 2017 Maturity Date as of September 30, 2017
Loans Receivable:
Mortgage 5
Skilled Nursing / Senior Housing $ 45,064
$ 42,664
$ 38,262
9.2 % 11/07/16- 02/10/27
Construction 2
Senior Housing 2,354
2,418
842
8.0 % 03/31/21- 05/31/22
Mezzanine 2
Senior Housing 34,640
28,391
9,656
10.3 % 02/28/18- 05/25/20
Pre-development 1
Senior Housing 2,357
2,357
4,023
9.0 % 04/01/20
Other 14
Multiple 44,926
27,859
—
8.6 % 10/28/17- 04/30/27
Debtor-in-possession —
Acute Care Hospital —
—
813
N/A
N/A

24
129,341
103,689
53,596
9.3 %

Loan loss reserve —
(6,211 ) (2,750 )

$ 129,341
$ 97,478
$ 50,846

Other Investments:
Preferred Equity 13
Skilled Nursing / Senior Housing 51,833
52,288
45,190
12.8 % N/A

Total 37
$ 181,174
$ 149,766
$ 96,036
10.3 %


⁽¹⁾	~~Principal balance includes amounts funded and accrued but unpaid interest / preferred return and excludes capitalizable fees.~~

~~In connection with the CCP Merger, the Company acquired 18 loan receivable investments with a book value of $54.1 million as of September 30, 2017.~~(1) Principal balance includes amounts funded and accrued but unpaid interest / preferred return and excludes capitalizable fees.

As of September 30, ~~2017,~~2020 and December 31, 2019, the Company ~~considered six loan~~had 4 loans receivable investments, ~~to be impaired. The~~with an aggregate principal balance of ~~the impaired loans was $35.2~~$2.2 million asand $2.3 million, respectively, that were considered to have deteriorated credit quality. As of September 30, ~~2017~~2020 and December 31, ~~2016. The Company recorded a provision for loan losses~~2019, the book value of ~~$3.0~~the outstanding loans with deteriorated credit quality was $0.6 million and ~~$4.8~~$0.8 million, ~~related to four loan receivable investments during~~respectively.

The following table presents changes in the accretable yield for the three and nine months ended September 30, ~~2017, respectively, two~~2020 and 2019 (in thousands):

Table of ~~which were written-off~~Contents


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Accretable yield, beginning of period	$	24	$	112	$	39	$	449
Accretion recognized in earnings	(7)		(53)		(22)		(357)
Reduction due to payoff	0		0		0		(33)

Accretable yield, end of period	$	17	$	59	$	17	$	59

During the three months ended September 30, 2020, the Company decreased its allowance for loan losses by $0.1 million, and during the nine months ended September 30, ~~2017.~~ 2020, the Company increased its allowance for loan losses by $0.7 million.

As of September 30, ~~2017, six~~2020, the Company had a $1.3 million allowance for loan losses. As of September 30, 2020, 2 loans receivable investments ~~totaling $35.2 million~~with 0 book value were on nonaccrual status. As of September 30, 2020, the Company did not consider any preferred equity investments to be impaired, and no preferred equity investments were on nonaccrual status.

As of December 31, 2019, the Company had 0 asset-specific loan loss reserve and a $0.6 million portfolio-based loan loss reserve. As of December 31, 2019, the Company did 0t consider any loans receivable investments to be impaired. As of December 31, 2019, 2 loans receivable investments with 0 book value were on nonaccrual status. As of December 31, 2019, the Company did not consider any preferred equity investments to be impaired, and no preferred equity investments were on nonaccrual status.

During the three months ended September 30, 2019, the Company recorded 0 provision for specific loan losses, and during the nine months ended September 30, 2019, the Company recorded a $1.2 million provision for specific loan losses. During the three and nine months ended September 30, ~~2017,~~2019, the Company ~~reduced~~increased its portfolio-based ~~loan~~ loss reserve by ~~$32,000 and $0.3 million, respectively. The Company's specific loan loss reserve was $6.1~~$0.1 million and ~~the portfolio-based loan loss reserve was $0.1~~$0.2 million, ~~as of September 30, 2017. The Company's specific loan loss reserve and portfolio-based loan loss reserve were $2.3 million and $0.4 million, respectively, as of December 31, 2016.~~respectively.

7. DEBT

Secured Indebtedness

The Company’s secured debt consists of the following (dollars in thousands):


Interest Rate Type	Principal Balance as of September 30, 2020 (1)		Principal Balance as of December 31, 2019 (1)		Weighted Average Interest Rate at September 30, 2020 (2)		Maturity Date
Fixed Rate	$	80,124	$	114,777	3.68	%	December 2021 - August 2051

(1) Principal balance does not include deferred financing costs, net of $1.1 million and $1.7 million as of September 30, 2020 and December 31, 2019, respectively.

(2) Weighted average interest rate includes private mortgage insurance.

Interest Rate Type
Book Value as of
September 30, 2017 ⁽¹⁾

Book Value as of
December 31, 2016⁽¹⁾

Weighted Average
Effective Interest Rate at
September 30, 2017 ⁽²⁾

Maturity
Date
Fixed Rate $ 161,871
$ 163,638
3.87 % December 2021 -
August 2051
Variable Rate 98,500
—
3.02 % July 2019
$ 260,371
$ 163,638
3.55 %

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⁽¹⁾	~~Principal balance does not include deferred financing costs, net of $2.8 million and $2.9 million as of September 30, 2017 and December 31, 2016, respectively.~~


⁽²⁾	~~Weighted average effective interest rate includes private mortgage insurance.~~

On ~~August 17, 2017, in connection with the CCP Merger (see Note 3, “CCP Merger and Recent Real Estate Acquisitions”),~~April 1, 2020, the Company sold 2 facilities that secured an aggregate $14.2 million of debt, which was assumed ~~a $98.5~~by the buyer of the facilities. On August 1, 2020, the Company sold 1 facility that secured $17.6 million ~~variable rate secured term loan that bears interest at LIBOR plus 1.80% and matures in July 2019.~~of debt, which was assumed by the buyer of the facility.

Senior Unsecured Notes

The Company’s senior unsecured notes consist of the following (dollars in thousands):

Principal Balance as of
Title Maturity Date
September 30, 2017 ⁽¹⁾

December 31, 2016 ⁽¹⁾

5.5% senior unsecured notes due 2021 (“2021 Notes”)

February 1, 2021 $ 500,000
$ 500,000
5.375% senior unsecured notes due 2023 (“2023 Notes”)

June 1, 2023 200,000
200,000
5.125% senior unsecured notes due 2026 (“2026 Notes”) August 15, 2026 500,000
—
5.38% senior unsecured notes due 2027 (“2027 Notes”) May 17, 2027 100,000
—
$ 1,300,000
$ 700,000


		Principal Balance as of
Title	Maturity Date	September 30, 2020 (1)		December 31, 2019 (1)
4.80% senior unsecured notes due 2024 (“2024 Notes”)	June 1, 2024	$	300,000	$	300,000
5.125% senior unsecured notes due 2026 (“2026 Notes”)	August 15, 2026	500,000		500,000
5.88% senior unsecured notes due 2027 (“2027 Notes”)	May 17, 2027	100,000		100,000
3.90% senior unsecured notes due 2029 (“2029 Notes”)	October 15, 2029	350,000		350,000
		$	1,250,000	$	1,250,000


⁽¹⁾ (1) Principal balance does not include premium, net of $6.7 million and deferred financing costs, net of $8.4 million as of September 30, 2020 and does not include premium, net of $7.6 million and deferred financing costs, net of $8.8 million as of December 31, 2019.	Principal balance does not include premium, net of $16.3 million and deferred financing costs, net of $10.3 million as of September 30, 2017 and does not include discount, net of $0.5 million and deferred financing costs, net of $11.2 million as of December 31, 2016.

The ~~2021~~2024 Notes and the ~~2023~~2029 Notes were issued by the Operating Partnership and Sabra Capital Corporation, wholly owned subsidiaries of the Company, ~~(the “Issuers”). The 2021 Notes~~and accrue interest at a rate of ~~5.5%~~4.80% and 3.90%, respectively, per ~~annum payable semiannually on February 1 and August 1 of each year, and the 2023 Notes accrue interest at a rate of 5.375% per annum~~annum. Interest is payable semiannually on June 1 and December 1 of each ~~year.~~year for the 2024 Notes and on April 15 and October 15 of each year for the 2029 Notes.

The 2026 Notes and the 2027 Notes were assumed as a result of the ~~CCP Merger (see Note 3, “CCP Merger and Recent Real Estate Acquisitions”)~~Company’s merger with Care Capital Properties, Inc. in 2017 and accrue interest at a rate of 5.125% and ~~5.38%~~5.88%, respectively, per annum. Interest is payable semiannually on February 15 and August 15 of each year for the 2026 Notes and on May 17 and November 17 of each year for the 2027 Notes.

The obligations under the ~~2021 Notes, 2023~~2024 Notes and 2027 Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by Sabra and ~~certain~~one of its non-operating subsidiaries, ~~of Sabra; provided, however, that such guarantees are~~ subject to release under certain customary circumstances. The obligations under the 2026 Notes and 2029 Notes are fully and unconditionally guaranteed, on an unsecured basis, by Sabra; provided, however, that such guarantee is subject to release under certain customary circumstances. See Note 12, “Summarized Condensed Consolidating Information” for additional information concerning the circumstances pursuant to which the guarantors will be automatically and unconditionally released from their obligations under the guarantees.

The indentures and agreements (the “Senior Notes Indentures”) governing the ~~2021 Notes, 2023~~2024 Notes, 2026 Notes, 2027 Notes and ~~2027~~2029 Notes (collectively, the “Senior Notes”) include customary events of default and require the Company to comply with specified restrictive covenants. As of September 30, ~~2017,~~2020, the Company was in compliance with all applicable financial covenants under the Senior Notes Indentures.

~~Revolving~~ Credit ~~Facility and Term Loans~~Agreement

On ~~January 14, 2016,~~September 9, 2019, the Operating Partnership and Sabra Canadian Holdings, LLC (together, the “Borrowers”), Sabra and the other parties thereto entered into a ~~third~~fifth amended and restated unsecured credit ~~facility~~agreement (the ~~“Prior Credit Facility”~~“Credit Agreement”).

The ~~Prior~~ Credit ~~Facility included~~Agreement includes a $1.0 billion revolving credit facility (the ~~“Prior Revolving~~“Revolving Credit Facility”) ~~and~~, $955.0 million in U.S. dollar term loans and a CAD $125.0 million Canadian dollar term ~~loans~~loan (collectively, the ~~“Prior Term~~“Term Loans”). ~~The Prior~~Further, up to $175.0 million of the Revolving Credit Facility provided for a borrowing capacity of $500.0 million and, in addition, provided for U.S. dollar and Canadian dollar term loans of $245.0 million and CAD $125.0 million, respectively. Further, up to $125.0 million of the Prior Revolving Credit Facility couldmay be used for borrowings in certain foreign currencies. The ~~Prior~~ Credit ~~Facility~~Agreement also ~~contained~~contains an accordion feature that ~~allowed for an~~can increase in the total available borrowings to ~~$1.25~~$2.75 billion, subject to terms and conditions. ~~In addition, the Canadian dollar term loan was re-designated as a net investment hedge (see Note 8, “Derivative and Hedging Instruments” for further information).~~

The ~~Prior~~ Revolving Credit Facility ~~had~~has a maturity date of ~~January 14, 2020,~~September 9, 2023, and ~~included two~~includes 2 six-month extension options. ~~The Prior~~$105.0 million of the U.S. dollar Term Loans ~~had~~has a maturity date of ~~January 14, 2021.~~September 9, 2022, $350.0 million of the U.S. dollar Term Loans has a maturity date of September 9, 2023, and the other Term Loans have a maturity date of September 9, 2024.

As of September 30, 2020, there was $56.0 million outstanding under the Revolving Credit Facility and $944.0 million available for borrowing.

Borrowings under the ~~Prior~~ Revolving Credit Facility ~~bore~~bear interest on the outstanding principal amount at a rate equal to ana ratings-based applicable ~~percentage~~interest margin plus, at the Operating ~~Partnership's~~Partnership’s option, either (a) LIBOR or (b) a base rate determined as the

greater of (i) the federal funds rate plus 0.5%, (ii) the prime rate, and (iii) one-month LIBOR plus 1.0% (the “Base Rate”). The applicable percentage for borrowings varied based on the Consolidated Leverage Ratio, as defined in the credit agreement for the Prior Credit Facility, and ranged from 1.80% to 2.40% per annum for LIBOR based borrowings and 0.80% to 1.40% per annum for borrowings at the Base Rate. In addition, the Operating Partnership paid an unused facility fee to the lenders equal to 0.25% or 0.30% per annum, which was determined by usage under the Prior Revolving Credit Facility.

The Prior Term Loans bore interest as follows: the U.S. dollar term loan bore interest on the outstanding principal amount at a rate equal to an applicable percentage plus, at the Operating Partnership’s option, either (a) LIBOR or (b) the Base Rate (the applicable percentage varied based on the Consolidated Leverage Ratio, as defined in the credit agreement for the Prior Credit Facility, and ranged from 1.75% to 2.35% per annum for LIBOR based borrowings and 0.75% to 1.35% per annum for borrowings at the Base Rate); and the Canadian dollar term loan bore interest on the outstanding principal amount at a rate equal to the Canadian Dollar Offer Rate (“CDOR”) plus 1.75% to 2.35% depending on the Consolidated Leverage Ratio.

Effective on August 17, 2017, the Borrowers, Sabra and the other parties thereto entered into a fourth amended and restated unsecured credit facility (the “Credit Facility”). The Credit Facility amends and restates the Prior Credit Facility. The Company recognized a $0.6 million loss on extinguishment of debt related to write-offs of deferred financing costs in connection with amending and restating the Prior Credit Facility during the three and nine months ended September 30, 2017.

The Credit Facility includes a $1.0 billion revolving credit facility (the “Revolving Credit Facility”), $1.1 billion in U.S. dollar term loans and a CAD $125 million Canadian dollar term loan (collectively, the “Term Loans”). Further, up to $175 million of the Revolving Credit Facility may be used for borrowings in certain foreign currencies. The Credit Facility also contains an accordion feature that can increase the total available borrowings to $2.5 billion, subject to terms and conditions.

The Revolving Credit Facility has a maturity date of August 17, 2021, and includes two six-month extension options. $200 million of the U.S. dollar Term Loans has a maturity date of August 17, 2020, and the other Term Loans have a maturity date of August 17, 2022.

~~As of September 30, 2017, there was $251.0 million outstanding under the Revolving Credit Facility and $749.0 million available for borrowing.~~

Borrowings under the Revolving Credit Facility bear interest on the outstanding principal amount at a rate equal to an applicable interest margin plus, at the Operating Partnership’s option, either (a) LIBOR or (b) the Base Rate. On August 17, 2017, Sabra’s ratings met the Investment Grade Ratings Criteria (as defined in the credit agreement), and Sabra elected to use the ratings-based applicable interest margin for borrowings ~~which~~ will vary based on the Debt Ratings, ~~(as~~as defined in the ~~credit agreement)~~Credit Agreement, and will range from ~~0.875%~~0.775% to ~~1.65%~~1.45% per annum for LIBOR based borrowings and 0.00% to ~~0.65%~~0.45% per

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annum for borrowings at the Base Rate. As of September 30, ~~2017,~~2020, the interest rate on the Revolving Credit Facility was ~~2.47%~~1.25%. In addition, the Operating Partnership pays a facility fee ranging between 0.125% and 0.300% per annum based on the aggregate amount of commitments under the Revolving Credit Facility regardless of amounts outstanding thereunder.

The U.S. dollar Term Loans bear interest on the outstanding principal amount at a rate equal to ana ratings-based applicable interest margin plus, at the Operating ~~Partnership's~~Partnership’s option, either (a) LIBOR or (b) the Base Rate. The ratings-based applicable interest margin for borrowings will vary based on the Debt Ratings ~~as defined in the credit agreement,~~ and will range from ~~0.90%~~0.85% to ~~1.90%~~1.65% per annum for LIBOR based borrowings and 0.00% to ~~0.90%~~0.65% per annum for borrowings at the Base Rate. The Canadian dollar ~~term loan~~Term Loan bears interest on the outstanding principal amount at a rate equal to ~~CDOR~~the Canadian Dollar Offered Rate (“CDOR”) plus an interest margin that ~~will range~~ranges from ~~0.90%~~0.85% to ~~1.90%~~1.65% depending on the Debt Ratings.

~~On June 10, 2015, the~~The Company ~~entered into an~~has interest rate swap agreement to fix the CDOR portion of the interest rate for CAD $90.0 million of its Canadian term loan at 1.59%. In addition, CAD $90.0 million of the Canadian dollar term loan was designated as a net investment hedge. On August 10, 2016, the Company entered into two interest rate swap agreements to fix the LIBOR portion of the interest rate for $245.0 million of its U.S. dollar Term Loan at 0.90% and one interest rate swap agreement to fix the CDOR portion on CAD $35.0 million of its Canadian dollar term loan at 0.93%. See Note 8, “Derivative and Hedging Instruments” for further information.

~~As a result of the CCP Merger (see Note 3, “CCP Merger and Recent Real Estate Acquisitions”), the Company assumed eight interest rate swap agreements~~swaps that fix the LIBOR portion of the interest rate for ~~$600~~$845.0 million of ~~the Company’s~~LIBOR-based borrowings under its U.S. dollar Term Loans at a weighted average rate of ~~1.31%~~1.24% and an interest rate swap that fixes the CDOR portion of the interest rate for $125.0 million of CDOR-based borrowings under its Canadian dollar Term Loan at a rate of 0.93%. In addition, CAD $125.0 million of the Canadian dollar Term Loan is designated as a net investment hedge. See Note 8, “Derivative and Hedging ~~Instruments”~~Instruments,” for further information.

The obligations of the Borrowers under the Credit ~~Facility~~Agreement are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by Sabra and one of its non-operating subsidiaries, subject to release under certain ~~subsidiaries of Sabra.~~customary circumstances.

The Credit ~~Facility~~Agreement contains customary covenants that include restrictions or limitations on the ability to ~~make acquisitions and other investments,~~ pay dividends, incur additional indebtedness, engage in non-healthcare related business

activities, enter into transactions with affiliates and sell or otherwise transfer certain assets as well as customary events of default. The Credit ~~Facility~~Agreement also requires Sabra, through the Operating Partnership, to comply with specified financial covenants, which include a maximum total leverage ratio, a minimum secured debt leverage ratio, a minimum fixed charge coverage ratio, ~~and~~a maximum unsecured leverage ratio, a minimum tangible net worth ~~requirement.~~requirement and a minimum unsecured interest coverage ratio. As of September 30, ~~2017,~~2020, the Company was in compliance with all applicable financial covenants under the Credit ~~Facility.~~Agreement.

Interest Expense

~~During the~~ ~~three and nine~~ ~~months ended~~ ~~September 30, 2017, the~~The Company incurred interest expense of ~~$24.6 million~~ ~~and $56.2 million, respectively, and $15.8~~$24.9 million and ~~$49.1~~$75.9 million during the three and nine months ended September 30, ~~2016,~~2020, respectively, and $29.3 million and $99.2 million during the three and nine months ended September 30, 2019, respectively. Interest expense includes ~~financing costs amortization~~non-cash interest expense of ~~$1.6~~$2.1 million and ~~$4.1~~$6.5 million for the three and nine months ended September 30, ~~2017,~~2020, respectively, and ~~$1.3~~$2.5 million and ~~$3.8~~$7.8 million for the three and nine months ended September 30, ~~2016,~~2019, respectively. As of September 30, ~~2017~~2020 and December 31, ~~2016~~,2019, the Company had ~~$15.4~~$18.1 million and $~~13.8~~$16.7 million,, respectively, of accrued interest included in accounts payable and accrued liabilities on the accompanying condensed consolidated balance sheets.

Maturities

The following is a schedule of maturities for the Company’s outstanding debt as of September 30, ~~2017~~2020 (in thousands):


	Secured Indebtedness		Revolving Credit Facility (1)		Term Loans		Senior Notes		Total
October 1 through December 31, 2020	$	655	$	0	$	0	$	0	$	655
2021	17,689		0		0		0		17,689
2022	2,412		0		105,000		0		107,412
2023	2,478		56,000		350,000		0		408,478
2024	2,545		0		593,538		300,000		896,083
Thereafter	54,345		0		0		950,000		1,004,345
Total Debt	80,124		56,000		1,048,538		1,250,000		2,434,662
Premium, net	0		0		0		6,740		6,740
Deferred financing costs, net	(1,149)		0		(8,853)		(8,416)		(18,418)
Total Debt, Net	$	78,975	$	56,000	$	1,039,685	$	1,248,324	$	2,422,984

Secured
Indebtedness

Revolving Credit
Facility ⁽¹⁾
Term Loans Senior Notes Total
October 1, 2017 through December 31, 2017 $ 1,054
$ —
$ —
$ —
$ 1,054
2018 4,304
—
—
—
4,304
2019 102,948
—
—
—
102,948
2020 4,598
—
200,000
—
204,598
2021 20,587
251,000
—
500,000
771,587
Thereafter 126,880
—
1,000,225
800,000
1,927,105
Total Debt 260,371
251,000
1,200,225
1,300,000
3,011,596
Premium, net —
—
—
16,259
16,259
Deferred financing costs, net (2,800 ) —
(9,338 ) (10,263 ) (22,401 )
Total Debt, Net $ 257,571
$ 251,000
$ 1,190,887
$ 1,305,996
$ 3,005,454
(1) Revolving Credit Facility is subject to 2 six-month extension options.


⁽¹⁾	~~Revolving Credit Facility is subject to two six-month extension options.~~

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8. DERIVATIVE AND HEDGING INSTRUMENTS

The Company is exposed to various market risks, including the potential loss arising from adverse changes in interest rates and foreign exchange rates. The Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates and foreign exchange rates. The Company’s derivative financial instruments are used to manage differences in the amount of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

Certain of the Company’s foreign operations expose the Company to fluctuations of foreign interest rates and exchange rates. These fluctuations may impact the value in the Company’s functional currency, the U.S. dollar, of the Company’s investment in foreign operations, the cash receipts and payments related to these foreign operations and payments of interest and principal under Canadian dollar denominated debt. The Company enters into derivative financial instruments to protect the value of its foreign investments and fix a portion of the interest payments for certain debt obligations. The Company does not enter into derivatives for speculative purposes.

Cash Flow Hedges

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps and collars as part of its interest rate risk management strategy. ~~Approximately $3.5 million of losses, which are included in accumulated other comprehensive loss, as of September 30, 2017, are expected to be reclassified into earnings in~~In May 2019, the ~~next 12 months. In 2016 the~~

Company terminated ~~its~~3 forward starting interest rate ~~cap, generating cash proceeds of $0.3~~swaps, resulting in a payment to counterparties totaling $12.6 million. The balance of the loss in other comprehensive income will be reclassified to earnings through ~~2019.~~2029. As of September 30, 2020, approximately $12.5 million of losses, which are included in accumulated other comprehensive income, are expected to be reclassified into earnings in the next 12 months.

Net Investment Hedges

The Company is exposed to fluctuations in foreign exchange rates on investments it holds in Canada. The Company uses cross currency interest rate swaps to hedge its exposure to changes in foreign exchange rates on these foreign investments.

The following presents the notional amount of ~~derivatives~~derivative instruments as of the dates indicated (in thousands):


	September 30, 2020		December 31, 2019
Derivatives designated as cash flow hedges:
Denominated in U.S. Dollars (1)	$	1,340,000	$	1,490,000
Denominated in Canadian Dollars (2)	$	250,000	$	125,000
Derivatives designated as net investment hedges:
Denominated in Canadian Dollars	$	53,239	$	54,489
Financial instrument designated as net investment hedge:
Denominated in Canadian Dollars	$	125,000	$	125,000
Derivatives not designated as net investment hedges:
Denominated in Canadian Dollars	$	3,061	$	1,811

(1) Balance includes swaps with an aggregate notional value of $400.0 million, which accretes to $600.0 million in January 2023, and 2 forward starting interest rate swaps and 1 forward starting interest rate collar with an effective date of January 2021. The forward starting interest rate swaps and forward starting interest rate collar have an aggregate notional amount of $245.0 million. Balance as of September 30, 2020 also includes 6 forward starting interest rate swaps with an effective date of May 2024 and an aggregate notional amount of $250.0 million.

(2) Balance as of September 30, 2020 includes 2 forward starting interest rate swaps with an effective date of January 2021 and an aggregate notional amount of CAD $125.0 million.

September 30, 2017 December 31, 2016
Derivatives designated as cash flow hedges:

Denominated in U.S. Dollars $ 845,000
$ 245,000
Denominated in Canadian Dollars $ 125,000
$ 125,000

Derivatives designated as net investment hedges:
Denominated in Canadian Dollars $ 56,300
$ 56,300

Financial instrument designated as net investment hedge:
Denominated in Canadian Dollars $ 125,000
$ 125,000

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Derivative and Financial Instruments Designated as Hedging Instruments

The following is a summary of the derivative and financial instruments designated as hedging instruments held by the Company at September 30, ~~2017~~2020 and December 31, ~~2016~~2019 (dollars in thousands):


			Fair Value				Maturity Dates						Count as of September 30, 2020		Fair Value					Maturity Dates
Type	Designation	Count as of September 30, 2017	September 30, 2017		December 31, 2016			Balance Sheet Location	Type		Designation			September 30, 2020			December 31, 2019				Balance Sheet Location
Assets:										Assets:
Interest rate swap	Cash flow	12	$	18,957	$	8,083		2020 - 2023		Accounts receivable, prepaid expenses and other assets, net

Interest rate swaps										Interest rate swaps		Cash flow	0		$	0		$	4,239	N/A		Accounts receivable, prepaid expenses and other assets, net
Forward starting interest rate swaps										Forward starting interest rate swaps		Cash flow	6		3,840			0		2034		Accounts receivable, prepaid expenses and other assets, net
Cross currency interest rate swaps	Net investment	2	827		3,157		2025		Accounts receivable, prepaid expenses and other assets, net	Cross currency interest rate swaps		Net investment	2		4,633			3,238		2025		Accounts receivable, prepaid expenses and other assets, net
			$	19,784	$	11,240									$	8,473		$	7,477

Liabilities:										Liabilities:
Interest rate swap	Cash flow	—	$	—	$	716	2020		Accounts payable and accrued liabilities
Interest rate swaps										Interest rate swaps		Cash flow	11		$	28,494		$	0	2021- 2024		Accounts payable and accrued liabilities
Forward starting interest rate swaps										Forward starting interest rate swaps		Cash flow	4		10,742			494		2024		Accounts payable and accrued liabilities
Forward starting interest rate collars										Forward starting interest rate collars		Cash flow	1		902			132		2024		Accounts payable and accrued liabilities
CAD term loan	Net investment	1	100,225		93,000		2022		Term loans, net	CAD term loan		Net investment	1		93,538			96,025		2024		Term loans, net
			$	100,225	$	93,716									$	133,676		$	96,651

The following presents the effect of the Company’s derivative and financial instruments designated as hedging instruments on the condensed consolidated statements of income and the condensed consolidated statements of equity for the three and nine months ended September 30, ~~2017~~2020 and 2019 (in thousands):


	Gain (Loss) Recognized in Other Comprehensive Income (Loss)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019		Income Statement Location
Cash Flow Hedges:
Interest rate products	$	3,836	$	(8,196)	$	(42,826)	$	(27,933)	Interest expense
Net Investment Hedges:
Foreign currency products	(1,044)		1,273		1,544		(3)		N/A
CAD term loan	(1,913)		1,088		2,488		(2,700)		N/A
	$	879	$	(5,835)	$	(38,794)	$	(30,636)

Gain (Loss) Recognized in Other Comprehensive Income
(Effective Portion) Income Statement Location
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016

Cash Flow Hedges:
Interest rate products $ 4,372
$ (40 ) $ 4,462
$ (2,019 ) Interest expense
Net Investment Hedges:
Foreign currency products (1,080 ) 102
(2,239 ) (2,118 ) N/A
CAD term loan (3,938 ) 1,363
(7,225 ) (5,863 ) N/A

$ (646 ) $ 1,425
$ (5,002 ) $ (10,000 )

Loss Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion) Income Statement Location
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016

Cash Flow Hedges:
Interest rate products $ (535 ) $ (413 ) $ (1,404 ) $ (802 ) Interest expense
Net Investment Hedges:
Foreign currency products —
—
—
—
N/A
CAD term loan —
—
—
—
N/A

$ (535 ) $ (413 ) $ (1,404 ) $ (802 )

The Company determined that a portion of a cash flow hedge was ineffective and recognized $30,000 and $0.1 million of unrealized losses during the three and nine months ended September 30, 2017, respectively, related to its interest rate swaps to other income in the condensed consolidated statements of income. During the three and nine months ended September 30, 2016, the Company determined that a portion of a cash flow hedge was ineffective and recognized $0.4 million of unrealized gains related to its interest rate swaps to other income in the condensed consolidated statements of income.

~~Derivatives Not Designated as Hedging Instruments~~


	(Loss) Gain Reclassified from Accumulated Other Comprehensive Income (Loss) into Income
	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019		Income Statement Location
Cash Flow Hedges:
Interest rate products	$	(2,985)	$	1,173	$	(5,148)	$	4,781	Interest expense

During the three and nine months ended September 30, ~~2017,~~2020 and 2019, 0 cash flow hedges were determined to be ineffective.

Derivatives Not Designated as Hedging Instruments

As of September 30, 2020, the Company had 1 outstanding cross currency interest rate swap, of which a portion was not designated as a hedging instrument, in an asset position with a fair value of $0.3 million and included this amount in accounts receivable, prepaid expenses and other assets, net on the condensed consolidated balance sheets. During the three and nine months ended September 30, 2020, the Company recorded $0$0.1 million of other expense and ~~$8,000,~~$13,000 of other income, respectively, related to this portion of the derivative not designated as a hedging instrument. During the three and nine months

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ended September 30, 2019, the Company recorded $38,000 and $31,000, respectively, of other ~~expense~~income related to a portion of a cross currency interest rate swap not designated as a hedging instrument. ~~As of September 30, 2017 and December 31, 2016, the Company's derivatives were all designated as hedging instruments.~~

Offsetting Derivatives

The Company enters into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of September 30, ~~2017~~2020 and December 31, ~~2016~~2019 (in thousands):


	As of September 30, 2020
	Gross Amounts of Recognized Assets / Liabilities		Gross Amounts Offset in the Balance Sheet		Net Amounts of Assets / Liabilities presented in the Balance Sheet		Gross Amounts Not Offset in the Balance Sheet
							Financial Instruments		Cash Collateral Received		Net Amount
Offsetting Assets:
Derivatives	$	8,473	$	0	$	8,473	$	(7,405)	$	0	$	1,068
Offsetting Liabilities:
Derivatives	$	40,138	$	0	$	40,138	$	(7,405)	$	0	$	32,733


	As of September 30, 2017													As of December 31, 2019
							Gross Amounts Not Offset in the Balance Sheet							Gross Amounts of Recognized Assets / Liabilities		Gross Amounts Offset in the Balance Sheet			Net Amounts of Assets / Liabilities presented in the Balance Sheet		Gross Amounts Not Offset in the Balance Sheet
	Gross Amounts of Recognized Assets / Liabilities		Gross Amounts Offset in the Balance Sheet		Net Amounts of Assets / Liabilities presented in the Balance Sheet		Financial Instruments		Cash Collateral Received		Net Amount							Financial Instruments			Cash Collateral Received		Net Amount
Offsetting Assets:													Offsetting Assets:
Derivatives	$	20,273	$	—	$	20,273	$	—	$	—	$	20,273	Derivatives	$	7,477	$	0		$	7,477	$	(544)	$	0	$	6,933
Offsetting Liabilities:													Offsetting Liabilities:
Derivatives	$	—	$	—	$	—	$	—	$	—	$	—	Derivatives	$	626	$	0		$	626	$	(544)	$	0	$	82

As of December 31, 2016
Gross Amounts Not Offset in the Balance Sheet
Gross Amounts of Recognized Assets / Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Assets / Liabilities presented in the Balance Sheet Financial Instruments Cash Collateral Received Net Amount
Offsetting Assets:
Derivatives $ 11,240
$ —
$ 11,240
$ (716 ) $ —
$ 10,524
Offsetting Liabilities:
Derivatives $ 716
$ —
$ 716
$ (716 ) $ —
$ —

~~Credit-risk-related~~Credit Risk-related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a provision pursuant to which the Company could be declared in default on the derivative obligation if the Company defaults on any of its indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender.

As of September 30, ~~2017,~~2020, the ~~Company had no derivatives with a~~ fair value of derivatives in a net liability ~~position.~~position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $34.3 million. As of September 30, 2020, the Company has not posted any collateral related to these agreements. If the Company had breached any of these provisions at September 30, 2020, it could have been required to settle its obligations under the agreements at their termination value of $32.7 million.

9. FAIR VALUE DISCLOSURES

Financial Instruments

The fair value for certain financial instruments is derived using a combination of market quotes, pricing models and other valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments.

Financial instruments for which actively quoted prices or pricing parameters are available and whose markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments whose markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The carrying values of cash and cash equivalents, restricted cash, accounts payable, accrued liabilities and the Credit ~~Facility~~Agreement are reasonable estimates of fair value because of the short-term maturities of these instruments. Fair values for other financial instruments are derived as follows:

Loans receivable: These instruments are presented inon the accompanying condensed consolidated balance sheets at their amortized cost and not at fair value. The fair values of the loans receivable were estimated using an internal valuation model that considered the expected cash flows for the loans receivable, as well as the underlying collateral value and other credit

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enhancements as applicable. The Company utilized discount rates ranging from 6% to 16% with a weighted average rate of 12% in its fair value calculation. As such, the Company classifies these instruments as Level 3.

Preferred equity investments: These instruments are presented inon the accompanying condensed consolidated balance sheets at their cost and not at fair value. The fair values of the preferred equity investments were estimated using an internal valuation model that considered the expected future cash flows for the preferred equity ~~investment,~~investments, the underlying collateral value and other credit enhancements. The Company utilized discount rates ranging from 10% to 15% with a weighted average rate of 11% in its fair value calculation. As such, the Company classifies these instruments as Level 3.

Derivative instruments: The Company’s derivative instruments are presented at fair value on the accompanying condensed consolidated balance sheets. The Company estimates the fair value of derivative instruments, including its interest rate swaps and cross currency swaps, using the assistance of a third party using inputs that are observable in the market, which include forward yield curves and other relevant information. Although the Company has determined that the majority of the inputs used to value its derivative financial instruments fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivative financial instruments utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. The Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivative financial instruments. As a result, the Company has determined that its derivative financial instruments valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Senior Notes: These instruments are presented inon the accompanying condensed consolidated balance sheets at their outstanding principal balance, net of unamortized deferred financing costs and premiums/discounts and not at fair value. The fair values of the Senior Notes were determined using third-party market quotes derived from orderly trades. As such, the Company classifies these instruments as Level 2.

Secured indebtedness: These instruments are presented inon the accompanying condensed consolidated balance sheets at their outstanding principal balance, net of unamortized deferred financing costs and premiums/discounts and not at fair value. The fair values of the Company’s secured debt were estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. The Company utilized rates ranging from 2% to 3% with a weighted average rate of 3% in its fair value calculation. As such, the Company classifies these instruments as Level 3.

The following are the face values, carrying amounts and fair values of the Company’s financial instruments as of September 30, ~~2017~~2020 and December 31, ~~2016~~2019 whose carrying amounts do not approximate their fair value (in thousands):


	September 30, 2020						December 31, 2019
	Face Value (1)		Carrying Amount (2)		Fair Value		Face Value (1)		Carrying Amount (2)		Fair Value
Financial assets:
Loans receivable	$	66,316	$	61,076	$	56,956	$	67,527	$	63,070	$	59,832
Preferred equity investments	42,533		42,744		43,039		43,893		44,304		44,493
Financial liabilities:
Senior Notes	1,250,000		1,248,324		1,311,354		1,250,000		1,248,773		1,328,714
Secured indebtedness	80,124		78,975		79,249		114,777		113,070		105,510

(1) Face value represents amounts contractually due under the terms of the respective agreements.

(2) Carrying amount represents the book value of financial instruments, including unamortized premiums/discounts and deferred financing costs.

September 30, 2017 December 31, 2016

Face
Value ⁽¹⁾

Carrying
Amount ⁽²⁾

Fair
Value

Face
Value ⁽¹⁾

Carrying
Amount ⁽²⁾

Fair
Value
Financial assets:
Loans receivable $ 129,341
$ 97,478
$ 97,722
$ 53,484
$ 50,846
$ 51,914
Preferred equity investments 51,833
52,288
52,926
44,882
45,190
48,332
Financial liabilities:
Senior Notes 1,300,000
1,305,996
1,341,106
700,000
688,246
709,500
Secured indebtedness 260,371
257,571
248,041
163,638
160,752
150,091

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⁽¹⁾	~~Face value represents amounts contractually due under the terms of the respective agreements.~~


⁽²⁾	~~Carrying amount represents the book value of financial instruments, including unamortized premiums/discounts and deferred financing costs.~~

The Company determined the fair value of financial instruments as of September 30, ~~2017~~2020 whose carrying amounts do not approximate their fair value with valuation methods utilizing the following types of inputs (in thousands):


			Fair Value Measurements Using									Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs					Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	Total		(Level 1)		(Level 2)		(Level 3)			Total
Financial assets:									Financial assets:
Loans receivable	$	97,722	$	—	$	—	$	97,722	Loans receivable	$	56,956	$	0	$	0	$	56,956
Preferred equity investments	52,926		—		—		52,926		Preferred equity investments	43,039		0		0		43,039
Financial liabilities:									Financial liabilities:
Senior Notes	1,341,106		—		1,341,106		—		Senior Notes	1,311,354		0		1,311,354		0
Secured indebtedness	248,041		—		—		248,041		Secured indebtedness	79,249		0		0		79,249

Disclosure of the fair value of financial instruments is based on pertinent information available to the Company at the applicable dates and requires a significant amount of judgment. ~~Despite increased capital market and credit market activity, transaction~~Transaction volume for certain of the Company’s financial instruments remains relatively ~~low. This~~low, which has made the estimation of fair values ~~difficult and, therefore,~~difficult. Therefore, both the actual results and the Company’s estimate of fair value at a future date could be materially different.

Items Measured at Fair Value on a Recurring Basis

During the nine months ended September 30, ~~2017,~~2020, the Company recorded the following amounts measured at fair value (in thousands):


			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	Total
Recurring Basis:
Financial assets:

Forward starting interest rate swaps	$	3,840	$	0	$	3,840	$	0
Cross currency interest rate swaps	4,633		0		4,633		0

Financial liabilities:
Interest rate swaps	28,494		0		28,494		0
Forward starting interest rate swaps	10,742		0		10,742		0
Forward starting interest rate collars	902		0		902		0

10. EQUITY

Fair Value Measurements Using
Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs
Total (Level 1) (Level 2) (Level 3)
Recurring Basis:
Financial assets:
Interest rate swap $ 18,957
$ —
$ 18,957
$ —
Cross currency swap 827
—
827
—
Financial liabilities:
Contingent consideration liability 266
—
266
—
Common Stock

On December 11, 2019, the Company established an at-the-market equity offering program (the “ATM Program”) pursuant to which shares of its common stock having an aggregate gross sales price of up to $400.0 million may be sold from time to time (i) by the Company through a consortium of banks acting as sales agents or directly to the banks acting as principals or (ii) by a consortium of banks acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement. The use of a forward sale agreement would allow the Company to lock in a share price on the sale of shares at the time the agreement is effective, but defer receiving the proceeds from the sale of the shares until a later date. The Company ~~entered into contingent consideration arrangements as~~may also elect to cash settle or net share settle all or a ~~result~~portion of its obligations under any forward sale agreement.

During the three ~~acquisitions~~months ended September 30, 2020, the Company sold 1.4 million shares under the ATM Program at an average price of ~~real estate (see Note 4, “Real Estate Properties Held for Investment”).~~$15.70 per share, generating gross proceeds of $21.4 million, before $0.3 million of commissions. During the nine months ended September 30, 2017, one earn-out arrangement expired and resulted in a $0 payout and a second earn-out arrangement was terminated in connection with the transition of the eight senior housing communities to Senior Housing - Managed properties. In order to determine the fair value of the Company’s remaining contingent consideration arrangement,2020, the Company ~~used significant inputs not observable in~~sold 1.6 million shares under the ~~market~~ATM Program at an average price of

~~to estimate the contingent consideration. The Company used financial information provided by the facility to estimate the possible payout.~~$16.26 per share, generating gross proceeds of $25.3 million, before $0.4 million of commissions. As of September 30, ~~2017, the total contingent consideration liability had an estimated value of $0.3 million.~~

~~The following reconciliation provides the details of activity for contingent consideration liability recorded at fair value using Level 3 inputs (in thousands):~~

Balance as of December 31, 2016 $ 818
Decrease in contingent consideration liability (552 )
Balance as of September 30, 2017 $ 266

~~During the three and nine months ended September 30, 2017,~~2020, the Company ~~recorded an increase of $0.3 million and a decrease of $0.6 million, respectively, to~~has not utilized the ~~contingent consideration liability. These amounts are included in other income on the accompanying condensed consolidated statements of income.~~

~~10. EQUITY~~

~~Preferred Stock~~

~~On March 21, 2013, the Company completed an underwritten public offering of~~ ~~5.8 million~~ ~~shares of~~ ~~7.125%~~ ~~Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”) at a price of~~ ~~$25.00~~ ~~per share, pursuant to an effective registration statement. The Company received net proceeds of~~ ~~$138.3 million~~ from the offering, after deducting underwriting discounts and other offering expenses. The Company classified the par value as preferred equity on its condensed consolidated balance sheets with the balanceforward feature of the ~~liquidation preference, net of any issuance costs, recorded as an increase in paid-in capital.~~

~~The holders of the Company’s Series A Preferred Stock rank senior to the Company’s common stock with respect to dividend rights~~ATM Program and ~~rights upon the Company’s liquidation, dissolution or winding up of its affairs. At~~ ~~September 30, 2017, there were no dividends in arrears.~~

~~The Series A Preferred Stock does not have a stated maturity date, but the Company may redeem the Series A Preferred Stock on or after March 21, 2018, for~~ ~~$25.00~~ per share, plus any accrued and unpaid dividends. The Company may redeem the Series A Preferred Stock prior to March 21, 2018, in limited circumstances to preserve its status as a REIT or pursuant to a specified change of control. Upon the occurrence of a specified change of control (which did not include the CCP Merger), each holder of Series A Preferred Stock will have the right to convert some or all of the shares of Series A Preferred Stock held by such holder into a number of shares of the Company’s common stock equivalent to $25.00 plus accrued and unpaid dividends, but not to exceed a cap of ~~1.7864~~ ~~shares of common stock per share of Series A Preferred Stock (subject to certain adjustments).~~

~~Common Stock~~

~~As a result of the CCP Merger completed on August 17, 2017, the Company issued approximately 94.0~~had $314.7 million ~~shares of its common stock in exchange for shares of CCP common stock and shares underlying share-based awards assumed by the Company outstanding as of the effective time of the CCP Merger.~~

On September 28, 2017, the Company completed an underwritten public offering of 16.0 million newly issued shares of its common stock pursuant to an effective registration statement. The Company received net proceeds, before expenses, of $322.6 million from the offering, after giving effect to the issuance and sale of all 16.0 million shares of common stock, at a price of $21.00 per share. These proceeds were used to repay borrowings outstandingavailable under the ~~Revolving Credit Facility.~~ATM Program.

The underwriters exercised their option to purchase additional shares, and on October 2, 2017, the Company issued an additional 2.4 million newly issued shares of its common stock pursuant to an effective registration statement at a price of $21.00 per share, resulting in additional net proceeds, before expenses, of $48.4 million.

The following table lists the cash dividends on common stock declared and paid by the Company during the nine ~~months ended~~ ~~September 30, 2017~~:

Declaration Date Record Date Amount Per Share Dividend Payable Date
February 3, 2017 February 15, 2017 $ 0.42
February 28, 2017
May 8, 2017 May 18, 2017 $ 0.43
May 31, 2017
August 2, 2017 August 16, 2017 $ 0.3598913
⁽¹⁾
August 18, 2017

⁽¹⁾~~Represents the previous full quarter dividend of $0.43 per share, prorated based on the time from the prior dividend payable date of May 31, 2017 through August 16, 2017.~~

~~During the~~ ~~nine~~ months ended September 30, ~~2017,~~2020:

Declaration Date

Record Date

Amount Per Share

Dividend Payable Date

February 4, 2020

February 14, 2020

0.45

February 28, 2020

May 6, 2020

May 18, 2020

0.30

May 29, 2020

August 5, 2020

August 17, 2020

0.30

August 31, 2020

During the nine months ended September 30, 2020, the Company issued ~~0.1 million~~164,224 shares of common stock as a result of restricted stock unit ~~vestings and in connection with amounts payable under the Company's 2016 Bonus Plan pursuant to an election by certain participants to receive their bonus in the form of an equity award.~~vestings.

Upon any payment of shares to employees as a result of restricted stock unit vestings, the employees’ related tax withholding obligation will generally be satisfied by the Company, reducing the number of shares to be delivered by a number of shares necessary to satisfy the related applicable tax withholding obligation. During the nine months ended September 30, ~~2017,~~2020 and 2019, the Company incurred ~~$2.8~~$0.9 million and $1.3 million, respectively, in tax withholding obligations on behalf of its employees that were satisfied through a reduction in the number of shares delivered to those participants.

Accumulated Other Comprehensive ~~Income (Loss)~~Loss

The following is a summary of the Company’s accumulated other comprehensive loss (in thousands):

September 30, 2017 December 31, 2016
Foreign currency translation loss $ (2,515 ) $ (3,067 )
Unrealized gains on cash flow hedges 6,751
1,269

Total accumulated other comprehensive income (loss) $ 4,236
$ (1,798 )


	September 30, 2020		December 31, 2019
Foreign currency translation loss	$	(702)	$	(1,516)
Unrealized loss on cash flow hedges	(48,468)		(10,872)
Total accumulated other comprehensive loss	$	(49,170)	$	(12,388)

11. EARNINGS PER COMMON SHARE

The following table illustrates the computation of basic and diluted earnings per share for the three and nine months ended September 30, ~~2017~~2020 and ~~2016~~2019 (in thousands, except share and per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator
Net income attributable to common stockholders	$	36,460	$	23,282	$	101,300	$	29,255
Denominator
Basic weighted average common shares and common equivalents	205,791,699		190,650,400		205,592,806		183,578,254
Dilutive restricted stock units	935,468		1,301,989		849,868		1,120,157
Diluted weighted average common shares	206,727,167		191,952,389		206,442,674		184,698,411
Net income attributable to common stockholders, per:
Basic common share	$	0.18	$	0.12	$	0.49	$	0.16
Diluted common share	$	0.18	$	0.12	$	0.49	$	0.16

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Numerator
Net income attributable to common stockholders $ 12,534
$ 22,776
$ 46,756
$ 39,419

Denominator
Basic weighted average common shares and common equivalents 112,149,638
65,312,288
81,150,846
65,285,591
Dilutive restricted stock units 268,462
279,140
278,198
184,998

Diluted weighted average common shares 112,418,100
65,591,428
81,429,044
65,470,589

Net income attributable to common stockholders, per:

Basic common share $ 0.11
$ 0.35
$ 0.58
$ 0.60

Diluted common share $ 0.11
$ 0.35
$ 0.57
$ 0.60

During the three and nine months ended September 30, ~~2017~~,2020, approximately ~~6,800~~99,700 and ~~23,100~~113,300 restricted stock units, respectively, were not included in computing diluted earnings per share because they were considered anti-dilutive. During the three months ended September 30, 2019, 0 restricted stock units were considered anti-dilutive, and during the nine months ended September 30, ~~2016,~~2019, approximately ~~1,200 and 15,600~~430 restricted stock units ~~respectively,~~ were not included in computing diluted earnings per share because they were considered anti-dilutive. ~~No stock options were considered~~

~~anti-dilutive during the three and nine months ended September 30, 2017 and no stock options were outstanding during three and nine months ended September 30, 2016.~~

Table of Contents

12. ~~SUMMARIZED CONDENSED CONSOLIDATING INFORMATION~~

In connection with the offerings of the 2021 Notes and the 2023 Notes by the Issuers, the Company and certain 100% owned subsidiaries of the Company (the “Guarantors”) have, jointly and severally, fully and unconditionally guaranteed the 2021 Notes and the 2023 Notes, subject to release under certain customary circumstances as described below. In connection with the assumption of the 2026 Notes as a result of the CCP Merger (see Note 3, “CCP Merger and Recent Real Estate Acquisitions”), the Company has fully and unconditionally guaranteed the 2026 Notes, subject to release under certain circumstances as described below. These guarantees are subordinated to all existing and future senior debt and senior guarantees of the Guarantors and are unsecured. The Company conducts all of its business through and derives virtually all of its income from its subsidiaries. Therefore, the Company’s ability to make required payments with respect to its indebtedness (including the Senior Notes) and other obligations depends on the financial results and condition of its subsidiaries and its ability to receive funds from its subsidiaries.

~~A Guarantor will be automatically and unconditionally released from its obligations under the guarantees with respect to the 2021 Notes and the 2023 Notes in the event of:~~

~~Any sale of the subsidiary Guarantor or of all or substantially all of its assets;~~

~~A merger or consolidation of a subsidiary Guarantor with an issuer of the 2021 Notes or the 2023 Notes or another Guarantor, provided that the surviving entity remains a Guarantor;~~

~~A subsidiary Guarantor is declared “unrestricted” for covenant purposes under the indentures governing the 2021 Notes or the 2023 Notes;~~

~~The requirements for legal defeasance or covenant defeasance or to discharge the indentures governing the 2021 Notes or the 2023 Notes have been satisfied;~~

~~A liquidation or dissolution, to the extent permitted under the indentures governing the 2021 Notes or the 2023 Notes, of a subsidiary Guarantor; or~~

~~The release or discharge of the guaranty that resulted in the creation of the subsidiary guaranty, except a discharge or release by or as a result of payment under such guaranty.~~

~~The Company will be automatically and unconditionally released from its obligations under the guarantees with respect to the 2026 Notes in the event of:~~

~~A liquidation or dissolution, to the extent permitted under the indenture governing the 2026 Notes;~~

~~A merger or consolidation, provided that the surviving entity remains a Guarantor; or~~

~~The requirements for legal defeasance or covenant defeasance or to discharge the indenture governing the 2026 Notes have been satisfied.~~

Pursuant to Rule 3-10 of Regulation S-X, the following summarized condensed consolidating information is provided for the Company (the “Parent Company”), the Issuers, the Guarantors, and the Company’s non-Guarantor subsidiaries with respect to the 2021 Notes and the 2023 Notes. This summarized financial information has been prepared from the books and records maintained by the Company, the Issuers, the Guarantors and the non-Guarantor subsidiaries. The summarized financial information may not necessarily be indicative of the results of operations or financial position had the Issuers, the Guarantors or non-Guarantor subsidiaries operated as independent entities. Sabra’s investments in its consolidated subsidiaries are presented based upon Sabra's proportionate share of each subsidiary's net assets. The Guarantor subsidiaries’ investments in the non-Guarantor subsidiaries and non-Guarantor subsidiaries’ investments in Guarantor subsidiaries are presented under the equity method of accounting. Intercompany activities between subsidiaries and the Parent Company are presented within operating activities on the condensed consolidating statement of cash flows.

Condensed consolidating financial statements for the Company and its subsidiaries, including the Parent Company only, the Issuers, the combined Guarantor subsidiaries and the combined non-Guarantor subsidiaries, are as follows:

~~CONDENSED CONSOLIDATING BALANCE SHEET~~

~~September 30, 2017~~

~~(in thousands)~~

~~(unaudited)~~

Combined Non-Guarantor Subsidiaries of 2026 Notes⁽⁶⁾

Parent
Company⁽¹⁾

Operating Partnership⁽²⁾

Sabra Capital Corporation⁽³⁾

Combined
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁴⁾

Combined Non-
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁵⁾
Elimination Consolidated
Assets
Real estate investments, net of accumulated depreciation $ 174
$ —
$ —
$ 1,832,335
$ 4,140,276
$ —
$ 5,972,785
Loans receivable and other investments, net (140 ) —
—
89,911
59,995
—
149,766
Cash and cash equivalents 25,214
—
—
1,014
4,645
—
30,873
Restricted cash —
—
—
2,038
10,451
—
12,489
Lease intangible assets, net —
—
—
22,801
240,016
—
262,817
Accounts receivable, prepaid expenses and other assets, net 2,219
30,483
—
87,304
43,771
(4,200 ) 159,577
Intercompany 2,618,618
2,339,272
—
—
—
(4,957,890 ) —
Investment in subsidiaries 744,470
1,040,196
—
12,833
—
(1,797,499 ) —
Total assets $ 3,390,555
$ 3,409,951
$ —
$ 2,048,236
$ 4,499,154
$ (6,759,589 ) $ 6,588,307

Liabilities
Secured debt, net $ —
$ —
$ —
$ —
$ 257,571
$ —
$ 257,571
Revolving credit facility —
251,000
—
—
—
—
251,000
Term loans, net —
1,091,939
—
98,948
—
—
1,190,887
Senior unsecured notes, net —
1,305,996
—
—
—
—
1,305,996
Accounts payable and accrued liabilities 21,452
16,546
—
7,230
75,118
(4,200 ) 116,146
Lease intangible liabilities, net —
—
—
—
94,878
—
94,878
Intercompany —
—
—
941,667
4,016,223
(4,957,890 ) —
Total liabilities 21,452
2,665,481
—
1,047,845
4,443,790
(4,962,090 ) 3,216,478

Total Sabra Health Care REIT, Inc. stockholders' equity 3,369,103
744,470
—
1,000,391
52,638
(1,797,499 ) 3,369,103
Noncontrolling interests —
—
—
—
2,726
—
2,726
Total equity 3,369,103
744,470
—
1,000,391
55,364
(1,797,499 ) 3,371,829
Total liabilities and equity $ 3,390,555
$ 3,409,951
$ —
$ 2,048,236
$ 4,499,154
$ (6,759,589 ) $ 6,588,307


⁽¹⁾	~~The Parent Company guarantees the 2021 Notes, the 2023 Notes and the 2026 Notes.~~


⁽²⁾	~~The Operating Partnership is the co-issuer of the 2021 Notes and the 2023 Notes and the issuer of the 2026 Notes.~~


⁽³⁾	~~Sabra Capital Corporation is the co-issuer of the 2021 Notes and the 2023 Notes.~~


⁽⁴⁾	~~The Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁵⁾	~~The Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes consist of the subsidiaries that do not guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁶⁾	None of Sabra Capital Corporation, the Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes, nor the Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2026 Notes.

~~CONDENSED CONSOLIDATING BALANCE SHEET~~

~~December 31, 2016~~

~~(in thousands)~~

~~(unaudited)~~

Combined Non-Guarantor Subsidiaries of 2026 Notes⁽⁶⁾

Parent
Company⁽¹⁾

Operating Partnership⁽²⁾

Sabra Capital Corporation⁽³⁾

Combined
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁴⁾

Combined Non-
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁵⁾
Elimination Consolidated
Assets
Real estate investments, net of accumulated depreciation $ 150
$ —
$ —
$ 1,860,850
$ 148,939
$ —
$ 2,009,939
Loans receivable and other investments, net (410 ) —
—
96,446
—
—
96,036
Cash and cash equivalents 18,168
—
—
2,675
4,820
—
25,663
Restricted cash —
—
—
57
8,945
—
9,002
Lease intangible assets, net —
—
—
25,489
761
—
26,250
Accounts receivable, prepaid expenses and other assets, net 2,859
18,023
—
70,812
9,244
(1,909 ) 99,029
Intercompany 368,281
687,493
—
—
25,125
(1,080,899 ) —
Investment in subsidiaries 640,238
907,136
—
12,364
—
(1,559,738 ) —
Total assets $ 1,029,286
$ 1,612,652
$ —
$ 2,068,693
$ 197,834
$ (2,642,546 ) $ 2,265,919

Liabilities
Secured debt, net $ —
$ —
$ —
$ —
$ 160,752
$ —
$ 160,752
Revolving credit facility —
26,000
—
—
—
—
26,000
Term loans, net —
243,626
—
92,047
—
—
335,673
Senior unsecured notes, net —
688,246
—
—
—
—
688,246
Accounts payable and accrued liabilities 13,712
14,542
—
11,606
1,688
(1,909 ) 39,639
Intercompany —
—
—
1,080,899
—
(1,080,899 ) —
Total liabilities 13,712
972,414
—
1,184,552
162,440
(1,082,808 ) 1,250,310

Total Sabra Health Care REIT, Inc. stockholders' equity 1,015,574
640,238
—
884,141
35,359
(1,559,738 ) 1,015,574
Noncontrolling interests —
—
—
—
35
—
35
Total equity 1,015,574
640,238
—
884,141
35,394
(1,559,738 ) 1,015,609
Total liabilities and equity $ 1,029,286
$ 1,612,652
$ —
$ 2,068,693
$ 197,834
$ (2,642,546 ) $ 2,265,919


⁽¹⁾	~~The Parent Company guarantees the 2021 Notes, the 2023 Notes and the 2026 Notes.~~


⁽²⁾	~~The Operating Partnership is the co-issuer of the 2021 Notes and the 2023 Notes and the issuer of the 2026 Notes.~~


⁽³⁾	~~Sabra Capital Corporation is the co-issuer of the 2021 Notes and the 2023 Notes.~~


⁽⁴⁾	~~The Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁵⁾	~~The Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes consist of the subsidiaries that do not guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁶⁾	None of Sabra Capital Corporation, the Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes, nor the Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2026 Notes.

~~CONDENSED CONSOLIDATING STATEMENT OF INCOME~~

~~For the~~ ~~Three Months EndedSeptember 30, 2017~~

~~(dollars in thousands, except per share amounts)~~

~~(unaudited)~~

Combined Non-Guarantor Subsidiaries of 2026 Notes⁽⁶⁾

Parent
Company⁽¹⁾

Operating Partnership⁽²⁾

Sabra Capital Corporation⁽³⁾

Combined
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁴⁾

Combined Non-
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁵⁾
Elimination Consolidated
Revenues:
Rental income $ —
$ —
$ —
$ 54,640
$ 48,692
$ (3,187 ) $ 100,145
Interest and other income 8
47
—
1,991
2,091
(47 ) 4,090
Resident fees and services —
—
—
—
7,554
—
7,554
Total revenues 8
47
—
56,631
58,337
(3,234 ) 111,789
Expenses:
Depreciation and amortization 217
—
—
15,500
10,216
—
25,933
Interest —
21,765
—
792
2,011
—
24,568
Operating expenses —
—
—
—
8,289
(3,187 ) 5,102
General and administrative 10,058
16
—
1,671
1,199
—
12,944
Merger and acquisition costs 23,287
—
—
12
—
—
23,299
Provision for doubtful accounts and loan losses 533
—
—
4,616
—
—
5,149
Total expenses 34,095
21,781
—
22,591
21,715
(3,187 ) 96,995
Other income (expense):
Loss on extinguishment of debt —
(422 ) —
(131 ) —
—
(553 )
Other income (expense) 349
688
—
(986 ) —
—
51
Net gain (loss) on sales of real estate —
—
—
614
(32 ) —
582
Total other income (expense) 349
266
—
(503 ) (32 ) —
80

Income in subsidiary 49,145
70,613
—
1,808
—
(121,566 ) —
Income before income tax expense 15,407
49,145
—
35,345
36,590
(121,613 ) 14,874
Income tax benefit (expense) (265 ) —
—
482
(22 ) —
195
Net income 15,142
49,145
—
35,827
36,568
(121,613 ) 15,069
Net income attributable to noncontrolling interests —
—
—
—
26
—
26
Net income attributable to Sabra Health Care REIT, Inc. 15,142
49,145
—
35,827
36,594
(121,613 ) 15,095
Preferred stock dividends (2,561 ) —
—
—
—
—
(2,561 )
Net income attributable to common stockholders $ 12,581
$ 49,145
$ —
$ 35,827
$ 36,594
$ (121,613 ) $ 12,534

Net loss attributable to common stockholders, per:
Basic common share $ 0.11
Diluted common share $ 0.11
Weighted-average number of common shares outstanding, basic 112,149,638
Weighted-average number of common shares outstanding, diluted 112,418,100


⁽¹⁾	~~The Parent Company guarantees the 2021 Notes, the 2023 Notes and the 2026 Notes.~~


⁽²⁾	~~The Operating Partnership is the co-issuer of the 2021 Notes and the 2023 Notes and the issuer of the 2026 Notes.~~


⁽³⁾	~~Sabra Capital Corporation is the co-issuer of the 2021 Notes and the 2023 Notes.~~


⁽⁴⁾	~~The Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁵⁾	~~The Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes consist of the subsidiaries that do not guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁶⁾	None of Sabra Capital Corporation, the Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes, nor the Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2026 Notes.

~~CONDENSED CONSOLIDATING STATEMENT OF INCOME~~

~~For the~~ ~~Three Months EndedSeptember 30, 2016~~

~~(dollars in thousands, except per share amounts)~~

~~(unaudited)~~

Combined Non-Guarantor Subsidiaries of 2026 Notes⁽⁶⁾

Parent
Company⁽¹⁾

Operating Partnership⁽²⁾

Sabra Capital Corporation⁽³⁾

Combined
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁴⁾

Combined Non-
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁵⁾
Elimination Consolidated
Revenues:
Rental income $ —
$ —
$ —
$ 52,233
$ 5,187
$ (587 ) $ 56,833
Interest and other income 1
—
—
3,156
68
(68 ) 3,157
Resident fees and services —
—
—
—
1,937
—
1,937
Total revenues 1
—
—
55,389
7,192
(655 ) 61,927
Expenses:
Depreciation and amortization 211
—
—
15,320
1,571
—
17,102
Interest —
13,215
—
878
1,701
—
15,794
Operating expenses —
—
—
—
1,991
(587 ) 1,404
General and administrative 4,527
21
—
375
43
—
4,966
Merger and acquisition costs (105 ) —
—
1,156
—
—
1,051
Provision for doubtful accounts and loan losses
566
—
—
(26 ) —
—
540
Total expenses 5,199
13,236
—
17,703
5,306
(587 ) 40,857
Other income (expense):
Other income (expense) 2,636
400
—
(91 ) —
—
2,945
Net gain on sales of real estate —
—
—
1,451
—
—
1,451
Total other income (expense) 2,636
400
—
1,360
—
—
4,396

Income in subsidiary 28,073
40,909
1,711
—
(70,693 ) —
Income before income tax expense 25,511
28,073
—
40,757
1,886
(70,761 ) 25,466
Income tax expense (106 ) —
—
(27 ) (21 ) —
(154 )
Net income 25,405
28,073
—
40,730
1,865
(70,761 ) 25,312
Net loss attributable to noncontrolling interests —
—
—
—
25
—
25
Net income attributable to Sabra Health Care REIT, Inc. 25,405
28,073
—
40,730
1,890
(70,761 ) 25,337
Preferred stock dividends (2,561 ) —
—
—
—
—
(2,561 )
Net income attributable to common stockholders $ 22,844
$ 28,073
$ —
$ 40,730
$ 1,890
$ (70,761 ) $ 22,776

Net loss attributable to common stockholders, per:
Basic common share $ 0.35
Diluted common share $ 0.35
Weighted-average number of common shares outstanding, basic 65,312,288
Weighted-average number of common shares outstanding, diluted 65,591,428


⁽¹⁾	~~The Parent Company guarantees the 2021 Notes, the 2023 Notes and the 2026 Notes.~~


⁽²⁾	~~The Operating Partnership is the co-issuer of the 2021 Notes and the 2023 Notes and the issuer of the 2026 Notes.~~


⁽³⁾	~~Sabra Capital Corporation is the co-issuer of the 2021 Notes and the 2023 Notes.~~


⁽⁴⁾	~~The Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁵⁾	~~The Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes consist of the subsidiaries that do not guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁶⁾	None of Sabra Capital Corporation, the Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes, nor the Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2026 Notes.

~~CONDENSED CONSOLIDATING STATEMENT OF INCOME~~

~~For the Nine Months Ended September 30, 2017~~

~~(dollars in thousands, except per share amounts)~~

~~(unaudited)~~

Combined Non-Guarantor Subsidiaries of 2026 Notes⁽⁶⁾

Parent
Company⁽¹⁾

Operating Partnership⁽²⁾

Sabra Capital Corporation⁽³⁾

Combined
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁴⁾

Combined Non-
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁵⁾
Elimination Consolidated
Revenues:
Rental income $ —
$ —
$ —
$ 160,121
$ 58,316
$ (5,164 ) $ 213,273
Interest and other income 21
47
—
6,014
2,045
(65 ) 8,062
Resident fees and services —
—
—
—
17,840
—
17,840
Total revenues 21
47
—
166,135
78,201
(5,229 ) �� 239,175
Expenses:
Depreciation and amortization 649
—
—
47,882
13,759
—
62,290
Interest —
48,689
—
2,237
5,292
—
56,218
Operating expenses —
—
—
—
17,111
(5,182 ) 11,929
General and administrative 19,380
47
—
3,429
1,303
—
24,159
Merger and acquisition costs 29,703
—
—
47
—
—
29,750
Provision for doubtful accounts and loan losses 615
—
—
6,839
—
—
7,454
Total expenses 50,347
48,736
—
60,434
37,465
(5,182 ) 191,800
Other income (expense):
Loss on extinguishment of debt —
(422 ) —
(131 ) —
—
(553 )
Other income (expense) 2,634
707
—
(220 ) —
—
3,121
Net gain (loss) on sale of real estate —
—
—
4,640
(26 ) —
4,614
Total other income (expense) 2,634
285
—
4,289
(26 ) —
7,182

Income in subsidiary 102,474
150,879
—
5,372
—
(258,725 ) —
Income before income tax expense 54,782
102,475
—
115,362
40,710
(258,772 ) 54,557
Income tax expense (297 ) (1 ) —
255
(118 ) —
(161 )
Net income 54,485
102,474
—
115,617
40,592
(258,772 ) 54,396
Net loss attributable to noncontrolling interests —
—
—
—
42
—
42
Net income attributable to Sabra Health Care REIT, Inc. 54,485
102,474
—
115,617
40,634
(258,772 ) 54,438
Preferred stock dividends (7,682 ) —
—
—
—
—
(7,682 )
Net income attributable to common stockholders $ 46,803
$ 102,474
$ —
$ 115,617
—
$ 40,634
$ (258,772 ) $ 46,756

Net loss attributable to common stockholders, per:
Basic common share $ 0.58
Diluted common share $ 0.57
Weighted-average number of common shares outstanding, basic 81,150,846
Weighted-average number of common shares outstanding, diluted 81,429,044


⁽¹⁾	~~The Parent Company guarantees the 2021 Notes, the 2023 Notes and the 2026 Notes.~~


⁽²⁾	~~The Operating Partnership is the co-issuer of the 2021 Notes and the 2023 Notes and the issuer of the 2026 Notes.~~


⁽³⁾	~~Sabra Capital Corporation is the co-issuer of the 2021 Notes and the 2023 Notes.~~


⁽⁴⁾	~~The Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁵⁾	~~The Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes consist of the subsidiaries that do not guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁶⁾	None of Sabra Capital Corporation, the Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes, nor the Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2026 Notes.

~~CONDENSED CONSOLIDATING STATEMENT OF INCOME~~

~~For the Nine Months Ended September 30, 2016~~

~~(dollars in thousands, except per share amounts)~~

~~(unaudited)~~

Combined Non-Guarantor Subsidiaries of 2026 Notes⁽⁶⁾

Parent
Company⁽¹⁾

Operating Partnership⁽²⁾

Sabra Capital Corporation⁽³⁾

Combined
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁴⁾

Combined Non-
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁵⁾
Elimination Consolidated
Revenues:
Rental income $ —
$ —
$ —
$ 153,658
$ 15,533
$ (1,749 ) $ 167,442
Interest and other income 3
—
—
25,490
196
(207 ) 25,482
Resident fees and services —
—
—
—
5,811
—
5,811
Total revenues 3
—
—
179,148
21,540
(1,956 ) 198,735
Expenses:
Depreciation and amortization 595
—
—
45,955
4,723
—
51,273
Interest —
41,238
—
2,772
5,129
—
49,139
Operating expenses —
—
—
—
6,016
(1,760 ) 4,256
General and administrative 12,440
42
—
902
129
—
13,513
Merger and acquisition costs 50
—
—
1,171
1
—
1,222
Provision for doubtful accounts and loan losses
(89 ) —
—
3,375
—
—
3,286
Impairment of real estate —
—
—
29,811
—
—
29,811
Total expenses 12,996
41,280
—
83,986
15,998
(1,760 ) 152,500
Other income (expense):
Loss on extinguishment of debt —
(468 ) —
(88 ) —
—
(556 )
Other income (expense) 4,732
916
—
(230 ) (73 ) —
5,345
Net gain on sales of real estate —
—
—
(3,203 ) —
—
(3,203 )
Total other income (expense) 4,732
448
—
(3,521 ) (73 ) —
1,586

Income in subsidiary 55,783
96,616
—
5,081
—
(157,480 ) —
Income before income tax expense 47,522
55,784
—
96,722
5,469
(157,676 ) 47,821
Income tax expense (225 ) (1 ) —
(512 ) (48 ) —
(786 )
Net income 47,297
55,783
—
96,210
5,421
(157,676 ) 47,035
Net loss attributable to noncontrolling interests —
—
—
—
66
—
66
Net income attributable to Sabra Health Care REIT, Inc. 47,297
55,783
—
96,210
5,487
(157,676 ) 47,101
Preferred stock dividends (7,682 ) —
—
—
—
—
(7,682 )
Net income attributable to common stockholders $ 39,615
$ 55,783
$ —
$ 96,210
$ 5,487
$ (157,676 ) $ 39,419

Net loss attributable to common stockholders, per:
Basic common share $ 0.60
Diluted common share $ 0.60
Weighted-average number of common shares outstanding, basic 65,285,591
Weighted-average number of common shares outstanding, diluted 65,470,589


⁽¹⁾	~~The Parent Company guarantees the 2021 Notes, the 2023 Notes and the 2026 Notes.~~


⁽²⁾	~~The Operating Partnership is the co-issuer of the 2021 Notes and the 2023 Notes and the issuer of the 2026 Notes.~~


⁽³⁾	~~Sabra Capital Corporation is the co-issuer of the 2021 Notes and the 2023 Notes.~~


⁽⁴⁾	~~The Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁵⁾	~~The Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes consist of the subsidiaries that do not guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁶⁾	None of Sabra Capital Corporation, the Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes, nor the Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2026 Notes.

~~CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME~~

~~For the~~ ~~Three Months EndedSeptember 30, 2017~~

~~(dollars in thousands)~~

~~(unaudited)~~


⁽¹⁾	~~The Parent Company guarantees the 2021 Notes, the 2023 Notes and the 2026 Notes.~~


⁽²⁾	~~The Operating Partnership is the co-issuer of the 2021 Notes and the 2023 Notes and the issuer of the 2026 Notes.~~


⁽³⁾	~~Sabra Capital Corporation is the co-issuer of the 2021 Notes and the 2023 Notes.~~


⁽⁴⁾	~~The Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁵⁾	~~The Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes consist of the subsidiaries that do not guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁶⁾	None of Sabra Capital Corporation, the Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes, nor the Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2026 Notes.


⁽⁷⁾	~~Amounts are net of provision for income taxes of $0.4 million for the three months ended September 30, 2017.~~

~~CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME~~

~~For the~~ ~~Three Months Ended~~ ~~September 30, 2016~~

~~(dollars in thousands)~~

~~(unaudited)~~


⁽¹⁾	~~The Parent Company guarantees the 2021 Notes, the 2023 Notes and the 2026 Notes.~~


⁽²⁾	~~The Operating Partnership is the co-issuer of the 2021 Notes and the 2023 Notes and the issuer of the 2026 Notes.~~


⁽³⁾	~~Sabra Capital Corporation is the co-issuer of the 2021 Notes and the 2023 Notes.~~


⁽⁴⁾	~~The Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁵⁾	~~The Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes consist of the subsidiaries that do not guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁶⁾	None of Sabra Capital Corporation, the Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes, nor the Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2026 Notes.

~~CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME~~

~~For the Nine Months Ended September 30, 2017~~

~~(dollars in thousands)~~

~~(unaudited)~~


⁽¹⁾	~~The Parent Company guarantees the 2021 Notes, the 2023 Notes and the 2026 Notes.~~


⁽²⁾	~~The Operating Partnership is the co-issuer of the 2021 Notes and the 2023 Notes and the issuer of the 2026 Notes.~~


⁽³⁾	~~Sabra Capital Corporation is the co-issuer of the 2021 Notes and the 2023 Notes.~~


⁽⁴⁾	~~The Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁵⁾	~~The Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes consist of the subsidiaries that do not guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁶⁾	None of Sabra Capital Corporation, the Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes, nor the Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2026 Notes.


⁽⁷⁾	~~Amounts are net of provision for income taxes of $0.6 million for the nine months ended September 30, 2017.~~

~~CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME~~

~~For the Nine Months Ended September 30, 2016~~

~~(dollars in thousands)~~

~~(unaudited)~~


⁽¹⁾	~~The Parent Company guarantees the 2021 Notes, the 2023 Notes and the 2026 Notes.~~


⁽²⁾	~~The Operating Partnership is the co-issuer of the 2021 Notes and the 2023 Notes and the issuer of the 2026 Notes.~~


⁽³⁾	~~Sabra Capital Corporation is the co-issuer of the 2021 Notes and the 2023 Notes.~~


⁽⁴⁾	~~The Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁵⁾	~~The Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes consist of the subsidiaries that do not guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁶⁾	None of Sabra Capital Corporation, the Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes, nor the Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2026 Notes.

~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~

~~For the~~ ~~Nine Months Ended September 30, 2017~~

~~(in thousands)~~

~~(unaudited)~~

Combined Non-Guarantor Subsidiaries of 2026 Notes⁽⁶⁾

Parent
Company⁽¹⁾

Operating Partnership⁽²⁾

Sabra Capital Corporation⁽³⁾

Combined
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁴⁾

Combined Non-
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁵⁾
Elimination Consolidated
Net cash provided by operating activities $ 40,567
$ —
$ —
$ 4,122
$ 5,082
$ —
$ 49,771
Cash flows from investing activities:

Acquisition of real estate —
—
—
(393,064 ) —
—
(393,064 )
Cash received in CCP Merger 77,858
—
—
—
—
—
77,858
Origination and fundings of loans receivable —
—
—
(1,488 ) (4,154 ) —
(5,642 )
Origination and fundings of preferred equity investments —
—
—
(2,713 ) —
—
(2,713 )
Additions to real estate (22 ) —
—
(2,847 ) (364 ) —
(3,233 )
Repayment of loans receivable —
—
—
2,221
6,489
—
8,710
Repayments of preferred equity investments —
—
—
3,239
—
—
3,239
Net proceeds from the sales of real estate —
—
—
11,328
395
—
11,723
Distribution from subsidiaries 2,474
2,474
—
—
—
(4,948 ) —
Intercompany financing (346,044 ) (374,728 ) —
—
—
720,772
—
Net cash provided by (used in) investing activities (265,734 ) (372,254 ) —
(383,324 ) 2,366
715,824
(303,122 )
Cash flows from financing activities:

Net repayments of revolving credit facility —
(137,000 ) —
—
—
—
(137,000 )
Proceeds from term loans —
181,000
—
—
—
—
181,000
Principal payments on secured debt —
—
—
—
(3,094 ) —
(3,094 )
Payments of deferred financing costs —
(15,316 ) —
—
—
—
(15,316 )
Issuance of common stock, net 319,026
—
—
—
—
—
319,026
Dividends paid on common and preferred stock (86,813 ) —
—
—
—
—
(86,813 )
Distribution to parent —
(2,474 ) —
—
(2,474 ) 4,948
—
Intercompany financing —
346,044
—
377,458
(2,730 ) (720,772 ) —
Net cash provided by (used in) financing activities 232,213
372,254
—
377,458
(8,298 ) (715,824 ) 257,803
Net increase (decrease) in cash and cash equivalents 7,046
—
—
(1,744 ) (850 ) —
4,452
Effect of foreign currency translation on cash and cash equivalents —
—
—
83
675
—
758
Cash and cash equivalents, beginning of period 18,168
—
—
2,675
4,820
—
25,663
Cash and cash equivalents,
end of period
$ 25,214
$ —
$ —
$ 1,014
$ 4,645
$ —
$ 30,873


⁽¹⁾	~~The Parent Company guarantees the 2021 Notes, the 2023 Notes and the 2026 Notes.~~


⁽²⁾	~~The Operating Partnership is the co-issuer of the 2021 Notes and the 2023 Notes and the issuer of the 2026 Notes.~~


⁽³⁾	~~Sabra Capital Corporation is the co-issuer of the 2021 Notes and the 2023 Notes.~~


⁽⁴⁾	~~The Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁵⁾	~~The Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes consist of the subsidiaries that do not guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁶⁾	None of Sabra Capital Corporation, the Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes, nor the Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2026 Notes.

~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~

~~For the~~ ~~Nine Months Ended September 30, 2016~~

~~(in thousands)~~

~~(unaudited)~~

Combined Non-Guarantor Subsidiaries of 2026 Notes⁽⁶⁾

Parent
Company⁽¹⁾

Operating Partnership⁽²⁾

Sabra Capital Corporation⁽³⁾

Combined
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁴⁾

Combined Non-
Guarantor
Subsidiaries of 2021 Notes and 2023 Notes⁽⁵⁾
Elimination Consolidated
Net cash provided by (used in) operating activities $ 113,886
$ —
$ —
$ 10,683
$ 9,247
$ —
$ 133,816
Cash flows from investing activities:
Acquisitions of real estate —
—
—
(109,619 ) —
—
(109,619 )
Origination and fundings of loans receivable —
—
—
(9,478 ) —
—
(9,478 )
Origination and fundings of preferred equity investments —
—
—
(6,845 ) —
—
(6,845 )
Additions to real estate (124 ) —
—
(400 ) (377 ) —
(901 )
Repayment of loans receivable —
—
—
214,947
—
—
214,947
Investment in subsidiaries (200 ) (200 ) —
—
—
400
—
Net proceeds from the sale of real estate —
—
—
85,449
—
—
85,449
Distribution from subsidiaries 6,404
6,404
—
—
—
(12,808 ) —
Intercompany financing (17,684 ) 197,638
—
—
—
(179,954 ) —
Net cash provided by (used in) investing activities (11,604 ) 203,842
—
174,054
(377 ) (192,362 ) 173,553
Cash flows from financing activities:

Net repayments of revolving credit facility —
(255,000 ) —
—
—
—
(255,000 )
Proceeds from term loans —
45,000
—
24,360
—
—
69,360
Principal payments on secured debt —
—
—
(10,766 ) (2,990 ) —
(13,756 )
Payments of deferred financing costs —
(5,322 ) —
(611 ) —
—
(5,933 )
Issuance of common stock, net (1,289 ) —
—
—
—
—
(1,289 )
Dividends paid on common and preferred stock (89,283 ) —
—
—
—
—
(89,283 )
Contribution from parent —
200
—
—
200
(400 ) —
Distribution to parent —
(6,404 ) —
—
(6,404 ) 12,808
—
Intercompany financing —
17,684
—
(197,638 ) —
179,954
—
Net cash provided by (used in) financing activities (90,572 ) (203,842 ) —
(184,655 ) (9,194 ) 192,362
(295,901 )
Net increase (decrease) in cash and cash equivalents 11,710
—
—
82
(324 ) —
11,468
Effect of foreign currency translation on cash and cash equivalents —
—
—
756
16
—
772
Cash and cash equivalents, beginning of period 2,548
—
—
1,008
3,878
—
7,434
Cash and cash equivalents,
end of period
$ 14,258
$ —
$ —
$ 1,846
$ 3,570
$ —
$ 19,674


⁽¹⁾	~~The Parent Company guarantees the 2021 Notes, the 2023 Notes and the 2026 Notes.~~


⁽²⁾	~~The Operating Partnership is the co-issuer of the 2021 Notes and the 2023 Notes and the issuer of the 2026 Notes.~~


⁽³⁾	~~Sabra Capital Corporation is the co-issuer of the 2021 Notes and the 2023 Notes.~~


⁽⁴⁾	~~The Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁵⁾	~~The Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes consist of the subsidiaries that do not guarantee the 2021 Notes and the 2023 Notes.~~


⁽⁶⁾	None of Sabra Capital Corporation, the Combined Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes, nor the Combined Non-Guarantor Subsidiaries of the 2021 Notes and the 2023 Notes guarantee the 2026 Notes.

~~13. PRO FORMA FINANCIAL INFORMATION~~

The following table summarizes, on an unaudited pro forma basis, the consolidated results of operations of the Company for the three and nine months ended September 30, 2017 and 2016 to give effect to the CCP Merger completed during the nine months ended September 30, 2017 and the acquisition of one skilled nursing/transitional care facility and three senior housing communities during the nine months ended September 30, 2016. The following unaudited pro forma information has been prepared to give effect to the acquisitions completed during the three and nine months ended September 30, 2017 and 2016 as if these acquisitions occurred on January 1, 2016 and 2015, respectively. This pro forma information does not purport to represent what the actual results of operations of the Company would have been had these acquisitions occurred on January 1, 2016 and 2015, nor does it purport to predict the results of operations for future periods.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in thousands, except share and per share amounts)
Revenues $ 162,128
$ 158,245
$ 480,287
$ 491,049
Net income attributable to common stockholders 37,823
78,483
209,674
177,067

Net income attributable to common stockholders, per:
Basic common share $ 0.24
$ 0.49
$ 1.31
$ 1.11
Diluted common share $ 0.24
$ 0.49
$ 1.31
$ 1.11

Weighted-average number of common shares outstanding, basic 160,189,442
159,347,649
159,685,873
159,320,952
Weighted-average number of common shares outstanding, diluted 160,457,904
159,626,789
159,964,071
159,505,950

~~Merger and acquisition costs of $29.7 million related to the CCP Merger completed during the nine months ended September 30, 2017 are reflected above as if they were incurred on January 1, 2016.~~

~~14.~~ COMMITMENTS AND CONTINGENCIES

Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. The Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the properties could result in future environmental liabilities. As of September 30, ~~2017,~~2020, the Company does not expect that compliance with existing environmental laws will have a material adverse effect on the Company’s financial condition and results of operations.

Legal Matters

From time to time, the Company is party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings where the likelihood of a loss contingency is reasonably possible and the amount or range of reasonably possible losses is material to the ~~Company's~~Company’s results of operations, financial condition or cash flows.

In addition, subsequent to its entry into the Merger Agreement, the Company, the Operating Partnership and Merger Sub were named, in addition to CCP and each member of CCP’s board of directors (collectively, “CCP Defendants”), in two putative class action lawsuits (~~Loeb v. Care Capital Properties, Inc., et al., Case No. 1:17-cv-00866-UNA (D. Del. June 30, 2017), and~~ ~~Klein v.Care Capital Properties, Inc., et al.,~~ Case No 1:99-mc-09999 (D. Del. July 10, 2017)) filed in the United States District Court for the District of Delaware. Four other related actions have been filed against only the CCP Defendants, three in the U.S. District Court for the District of Delaware (~~Gordon v. Care Capital Properties, Inc., et al., Case No. 1:17-cv-00859-LPS;~~ ~~Vineyard v. Care Capital Properties, Inc., et al., Case No. 1:17-cv-00878-LPS; and~~ ~~Parrish v. Care Capital Properties, Inc., et al., Case No. 1:17-cv-00909-LPS) and one in the U.S. District Court for the Northern District of Illinois (Douglas v. Care Capital Properties, Inc., et al., Case No. 1:17-cv-04942). The lawsuits all sought to recover under federal securities laws on the basis that the joint proxy statement/prospectus included in the registration statement filed by the~~

Company with the SEC purportedly omitted to disclose information necessary to make the statements therein not materially false or misleading. The lawsuits sought, among other things, an injunction of the CCP Merger; dissemination of a revised registration statement; declarations that the registration statement violated federal securities laws; damages, including rescissory damages; and an award of costs and attorneys’ fees. On July 25, 2017, the five actions filed in the United States District Court for the District of Delaware were consolidated under the lead-case caption ~~In re Care Capital Properties, Inc. Shareholder Litigation~~, Civil Action No. 1:17-cv-00859-LPS. During the three months ended September 30, 2017, the lawsuits were dismissed without prejudice by the plaintiffs. The Company expects that any award of attorneys’ fees payable by the Company to the plaintiffs will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

~~15.~~13. SUBSEQUENT EVENTS

The Company evaluates subsequent events up until the date the condensed consolidated financial statements are issued.

Dividend Declaration

On November ~~1, 2017,~~5, 2020, the ~~Company announced that its~~Company’s board of directors declared a quarterly cash dividend of ~~$0.5201087~~$0.30 per share of common stock, which consists of (i) a full quarter dividend of $0.45 per share and (ii) $0.0701087 per share, which is the difference between the prorated dividend paid on August 18, 2017 and the Company's previous full quarter dividend of $0.43 per share.stock. The dividend will be paid on November 30, ~~2017~~2020 to common stockholders of record as of the close of business on November ~~15, 2017.~~16, 2020.

~~On November 1, 2017, the Company also announced that its board~~

Table of directors declared a quarterly cash dividend of $0.4453125 per share of Series A Preferred Stock. The dividend will be paid on November 30, 2017 to preferred stockholders of record as of the close of business on November 15, 2017.Contents

~~Common Stock Issuance~~

On October 2, 2017, in connection with the exercise by the underwriters of their option to purchase additional shares, the Company issued 2.4 million newly issued shares of its common stock pursuant to an effective registration statement, at a price

~~of $21.00 per share, resulting in net proceeds, before expenses, of $48.4 million. See Note 10, “Equity.”~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF ~~OPERATIONS.~~OPERATIONS

The discussion below contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those which are discussed in the “Risk Factors” section in Part I, Item 1A of our ~~2016~~2019 Annual Report on Form 10-K and Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2017.~~2020. Also see “Statement Regarding Forward-Looking Statements” preceding Part I.

The following discussion and analysis should be read in conjunction with our accompanying condensed consolidated financial statements and the notes thereto.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is organized as follows:

•Overview

•Critical Accounting Policies

•Recently Issued Accounting Standards Update

•Results of Operations

•Liquidity and Capital Resources

•Concentration of Credit Risk

•Skilled Nursing Facility Reimbursement Rates

•Obligations and Commitments

•Off-Balance Sheet Arrangements

Overview

We operate as a self-administered, self-managed REIT that, through our subsidiaries, owns and invests in real estate serving the healthcare industry.

Our primary business consists of acquiring, financing and owning real estate property to be leased to third party tenants in the healthcare ~~sector using triple-net operating leases.~~sector. We primarily generate revenues by leasing properties to tenants and ~~operators~~owning properties operated by third-party property managers throughout the United States (“U.S.”) and Canada.

Our investment portfolio is primarily comprised of skilled nursing/transitional care facilities, senior housing communities (“Senior Housing - Leased”) and specialty hospitals and other facilities, in each case leased to third-party operators; senior housing communities operated by third-party property managers pursuant to property management agreements (“Senior Housing - Managed”); investments in loans receivable; ~~and~~ preferred equity ~~investments.~~investments and an investment in an unconsolidated joint venture.

~~Following~~Recent disruptions in the ~~completion~~equity and debt markets have significantly increased our cost of ~~our merger with Care Capital Properties, Inc.,~~capital and have made it difficult to establish market values for potential real estate investments, and accordingly we do not expect to make any material real estate investments as long as these market conditions persist.

Should market conditions improve, we expect ~~to continue~~ to grow our investment portfolio while diversifying our portfolio by tenant, ~~asset class~~facility type and geography within the healthcare sector. We plan to achieve these objectives primarily through making investments directly or indirectly in healthcare real ~~estate.~~estate, including the development of purpose-built healthcare facilities with select developers. We ~~may~~ also intend to achieve our objective of diversifying our portfolio by tenant and ~~asset class~~facility type through select asset sales and other arrangements with ~~Genesis and other~~our tenants. We have entered into memoranda of understanding with Genesis to market for sale 35 skilled nursing facilities (the “MOU Disposition Facilities”). As of September 30, 2017, we completed the sale of two of the MOU Disposition Facilities, and subsequent to September 30, 2017, we completed the sale of two additional MOU Disposition Facilities. We have also entered into a definitive agreement to sell an additional 20 MOU Disposition Facilities, which we expect to be completed in the fourth quarter of 2017. We expect the remaining MOU Disposition Facilities to be sold by the end of the first quarter of 2018, though there can be no assurance that the sales will be completed in that timeframe, if at all. We have also begun the process of marketing for sale up to all of the remaining 43 facilities leased to Genesis, with sales expected to occur in 2018. We believe that a significant reduction in our facilities leased to Genesis will ultimately improve our portfolio by reducing our exposure from the remaining skilled nursing operator in our portfolio that does not fit our preferred profile to an immaterial level.

We expect ~~to continue~~ to grow our portfolio primarily through the acquisition of assisted living, independent living and memory care communities in the ~~United States~~U.S. and Canada and through the acquisition of skilled nursing/transitional care and behavioral health facilities in the ~~United States.~~U.S. We have and, should market conditions improve, expect to continue to opportunistically acquire other types of healthcare real estate, originate financing secured directly or indirectly by healthcare facilities and invest in the development of senior housing communities and skilled nursing/transitional care facilities. We also expect to expand our portfolio through the development of purpose-built healthcare facilities through pipeline agreements and other arrangements with select developers. We further expect to work with existing operators to identify strategic development opportunities. These opportunities may

involve replacing, renovating or expanding facilities in our portfolio that may have become less competitive and new development opportunities that present attractive risk-adjusted returns. In addition to pursuing acquisitions with triple-net leases, we expect to continue to pursue other forms of investment, including investments in Senior Housing - Managed ~~properties,~~communities, mezzanine and secured debt investments, and joint ventures for senior housing communities and skilled nursing/

Table of Contents

transitional care facilities. We also expect to continue to enhance the strength of our investment portfolio by selectively disposing of underperforming facilities or working with new or existing operators to transfer underperforming but promising properties to new operators.

With respect to our debt and preferred equity investments, in general, we originate loans and make preferred equity investments when an attractive investment opportunity is presented and ~~either~~ (a) the property is in or near the development phase, or (b) the development of the property is completed but the operations of the facility are not yet ~~stabilized.~~stabilized or (c) the loan investment will provide capital to existing relationships. A key component of our development strategy related to loan originations and preferred equity investments is ~~our~~ having the option to purchase the underlying real estate that is owned by our borrowers (and that directly or indirectly secures our loan investments) or by the entity in which we have an investment. These options become exercisable upon the occurrence of various criteria, such as the passage of time or the achievement of certain operating goals, and the method to determine the purchase price upon exercise of the option is set in advance based on the same valuation methods we use to value our investments in healthcare real estate. This proprietary development pipeline strategy allows us to diversify our revenue streams and build relationships with operators and developers, and provides us with the option to add new properties to our existing real estate portfolio if we determine that those properties enhance our investment portfolio and stockholder value at the time the options are exercisable.

We employ a disciplined, opportunistic approach in our 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.

We elected to be treated as a REIT with the filing of our U.S. federal income tax return for the taxable year beginning January 1, 2011. We believe that we have been organized and have operated, and we intend to continue to operate, in a manner to qualify as a REIT. We operate through an umbrella partnership, commonly referred to as an UPREIT structure, in which substantially all of our properties and assets are held by Sabra Health Care Limited Partnership, a Delaware limited partnership (the “Operating Partnership”), inof which we are the sole general partner and ~~our~~a wholly owned ~~subsidiaries are~~subsidiary of ours is currently the only limited ~~partners,~~partner, or by subsidiaries of the Operating Partnership.

~~Care Capital Properties, Inc. Merger~~COVID-19

~~On May 7, 2017, Sabra,~~In March 2020, the ~~Operating Partnership, PR Sub, LLC,~~World Health Organization declared COVID-19 a ~~Delaware~~pandemic, and the United States declared a national emergency with respect to COVID-19. In the intervening months, COVID-19 has spread globally and led governments and other authorities around the world, including federal, state and local authorities in the United States, to impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, quarantines and shelter-in-place orders. Although some of these governmental restrictions have since been lifted or scaled back, a recent surge of COVID-19 infections has resulted in the re-imposition of certain restrictions and may lead to other restrictions being re-implemented in response to efforts to reduce the spread of COVID-19. These measures may remain in place for a significant amount of time. The COVID-19 pandemic and measures to prevent its spread have negatively impacted and are expected to continue to negatively impact us and our operations in a number of ways, including but not limited ~~liability company~~to:

•Decreased occupancy and ~~wholly owned subsidiary~~increased operating costs for our tenants and borrowers, which has negatively impacted their operating results and may adversely impact their ability to make full and timely rental payments and debt service payments, respectively, to us. In some cases, we may have to restructure tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place. Reduced or modified rental and debt service amounts could result in the determination that the full amounts of our investments are not recoverable, which could result in an impairment charge. To date, the impact of COVID-19 on our skilled nursing/transitional care facility operators has been partially mitigated by the assistance they have received or expect to receive from state and federal assistance programs, including through the CARES Act (as defined and further described below under “—Skilled Nursing Facility Reimbursement Rates”), although these benefits on an individual operator basis vary and may not provide enough relief to meet their rental obligations to us. Prior to September 1, 2020, few of these programs were available to our senior housing operators; as of September 1, 2020, eligible assisted living facility operators may apply for funding through the CARES Act, and the assistance received or expected to be received will partially mitigate the negative impact of COVID-19 on our eligible assisted living facility operators. As of September 30, 2020, our tenants and borrowers have continued to pay expected cash rents and debt service obligations consistent with past practice. However, the longer the duration of the ~~Company (“Merger Sub”~~COVID-19 pandemic, the more likely that our tenants and borrowers will begin to default on these obligations. Such defaults could materially and adversely affect our results of operations and liquidity, in addition to resulting in potential impairment charges.

•Decreased occupancy and increased operating costs within our Senior Housing - Managed portfolio and in our 49% equity interest in a joint venture with affiliates of Enlivant and TPG Real Estate, the real estate platform of TPG, that

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owns senior housing communities managed by Enlivant (the “Enlivant Joint Venture”), ~~Care Capital Properties, Inc., a Delaware corporation (“CCP”),~~which have negatively impacted and ~~Care Capital Properties, L.P. (“CCPLP”), a Delaware limited partnership and wholly-owned subsidiary~~are expected to continue to negatively impact the operating results of CCP, entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, on August 17, 2017, CCP merged with and into Merger Sub, with Merger Sub continuing as the surviving corporation (the “CCP Merger”), following which Merger Sub merged with and into the Company, with the Company continuing as the surviving entity (the “Subsequent Merger”), and, simultaneous with the Subsequent Merger, CCPLP merged with and into the Operating Partnership, with the Operating Partnership continuing as the surviving entity.

~~Pursuant to the Merger Agreement,~~these investments. As noted above, as of September 1, 2020, eligible assisted living facility operators may apply for funding through the ~~effective time~~CARES Act, and the assistance received or expected to be received will partially mitigate the negative impact of COVID-19 on our Senior Housing - Managed portfolio and the Enlivant Joint Venture. During each of the ~~CCP Merger, each share~~three and nine months ended September 30, 2020, we recognized government grants under the CARES Act of ~~CCP common stock, par value $0.01 per share, issued~~$4.2 million. In addition, on October 1, 2020, the Department of Health and ~~outstanding immediately prior~~Human Services announced $20 billion of new funding for assisted living facility operators that have already received funds and to those who were previously ineligible. Prolonged deterioration in the ~~effective time~~operating results for our investments in our Senior Housing - Managed portfolio and the Enlivant Joint Venture could result in the determination that the full amounts of our investments are not recoverable, which could result in an impairment charge.

Our financial results as of and for the three and nine months ended September 30, 2020 reflect the results of our evaluation of the ~~CCP Merger (other than shares~~impact of ~~CCP common stock owned directly by CCP, the Company~~COVID-19 on our business including, but not limited to, our evaluation of potential impairments of long-lived or ~~their respective subsidiaries, in each case not held~~other assets, measurement of credit losses on ~~behalf of third parties) was converted into the right to receive 1.123 newly issued shares of Company common stock, par value $0.01 per share, plus cash in lieu~~financial instruments, evaluation of any ~~fractional shares.~~

~~The acquisition of CCP has been reflected in our consolidated financial statements since the effective date of the CCP~~

~~Merger.~~

~~On September 7, 2017, Sabra announced its strategy to reposition the CCP portfolio, which includes a combination~~lease modifications, evaluation of lease ~~modifications (including up~~accounting impact, estimates of fair value and our ability to ~~$33.5 million of reduction in rents), working capital advances, transitioning facilities to~~

~~other Sabra tenants and strategic sales or closures of underperforming facilities.~~

~~See Note 3, “CCP Merger and Recent Real Estate Acquisitions” in the Notes to Condensed Consolidated Financial Statements for additional information regarding the CCP Merger.~~

continue as a going concern.

Acquisitions

During the nine months ended September 30, ~~2017,~~2020, we ~~invested $393.1 million for the acquisition of 21 skilled nursing/transitional care facilities located in two states~~acquired three Senior Housing - Leased communities and one ~~senior housing~~Senior Housing - Managed community ~~located in Texas.~~for an aggregate $113.7 million. See Note 3, ~~“CCP Merger and Recent~~“Recent Real Estate ~~Acquisitions”~~Acquisitions,” in the Notes to Condensed Consolidated Financial Statements for additional information regarding these acquisitions.

In connection with the acquisition of the 21 skilled nursing/transitional care facilities, we entered into a definitive agreement to acquire two additional skilled nursing/transitional care facilities from the seller for a purchase price of $42.8 million; the acquisition is expected to occur by December 31, 2017 and is subject to customary conditions.

Dispositions

During the nine months ended September 30, ~~2017,~~2020, we completed the sale of ~~four~~seven skilled nursing/transitional care facilities for aggregate consideration, net of ~~$11.7~~closing costs, of $41.1 million. The net carrying value of the assets and liabilities of these facilities was ~~$7.1~~$38.3 million, which resulted in an aggregate ~~$4.6~~$2.8 million net gain on sale.

~~Senior Housing - Managed Properties~~

During the nine months ended September 30, 2017, we terminated the lease of nine senior housing real estate investments in Canada and concurrently entered into a management agreement with Sienna Senior Living (“Sienna”), whereby we own the operations, through a wholly-owned foreign taxable REIT subsidiary, of the communities and the communities are operated by Sienna.

~~Credit Facility~~

~~Effective on August 17, 2017, we and certain of our subsidiaries entered into the Credit Facility (as defined below). See “—Liquidity and Capital Resources—Loan Agreements—Credit Facility.”~~

~~Enlivant Joint Ventures~~

On September 15, 2017, we entered into a definitive agreement with affiliates of Enlivant and TPG Real Estate, the real estate platform of TPG, to acquire a 49% equity interest in entities that collectively own 183 senior housing communities managed by Enlivant (the “Enlivant Joint Ventures”). We will pay $371.0 million for the 49% minority interest, which implies an aggregate portfolio value for the Enlivant Joint Ventures of $1.62 billion, inclusive of the outstanding indebtedness of $863 million for the portfolio. The joint venture agreements include an option for us to acquire the remaining majority interest in the Enlivant Joint Ventures during the first three years after the closing date and a right of first offer if TPG desires to sell its 51% interest. In addition, Sabra will have the right to designate three directors on the seven member boards of directors of the Enlivant Joint Ventures and will have other customary minority rights. The acquisition of the 49% equity interest in the Enlivant Joint Ventures, which is subject to customary closing conditions including regulatory approvals and lender consents, is expected to close by December 31, 2017.

Critical Accounting Policies

Our condensed consolidated interim financial statements have been prepared in accordance with ~~GAAP~~U.S. generally accepted accounting principles (“GAAP”) and in conjunction with the rules and regulations of the SEC. The preparation of our financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. A discussion of the accounting policies that management considers critical in that they involve significant management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results is included in Part II, Item 7 of our ~~2016~~2019 Annual Report on Form 10-K filed with the SEC. There have been no significant changes to our critical accounting policies during the nine months ended September 30, ~~2017.~~2020.

Recently Issued Accounting Standards Update

See Note 2, “Summary of Significant Accounting Policies,” in the Notes to Condensed Consolidated Financial Statements for information concerning recently issued accounting standards updates.

Results of Operations

As of September 30, ~~2017,~~2020, our investment portfolio included ~~530~~425 real estate properties held for investment, one asset held for sale, one investment in a direct financing lease, 2419 investments in loans receivable, 13six preferred equity investments and one investment in ~~a specialty valuation firm.~~an unconsolidated joint venture. As of September 30, ~~2016,~~2019, our investment portfolio included ~~182~~434 real estate properties held for investment, 11one investment in a direct financing lease, 20 investments in loans receivable, ~~and 11~~nine preferred equity ~~investments. The increase~~investments and one investment in ~~our investment portfolio during the three and nine months ended September 30, 2017 is primarily due to the CCP Merger completed in August 2017.~~an unconsolidated joint venture. In general, we expect that ~~our~~ income and expenses related to our portfolio will ~~increase~~fluctuate in future periods in comparison to the corresponding prior periods as a result of ~~owning acquired investments for an entire period, the~~investment and disposition activity and anticipated future ~~acquisition of additional investments and completion of the CCP Merger.~~changes in our portfolio. The results of operations presented are not directly comparable due to ongoing acquisition and disposition activity.

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Comparison of results of operations for the three months ended September 30, ~~2017~~2020 versus the three months ended September 30, ~~2016~~2019 (dollars in thousands):


	Three Months Ended September 30,					Increase / (Decrease)			Percentage Difference			Variance due to the CCP Merger, Acquisitions, Originations and Dispositions ⁽¹⁾			Remaining Variance ⁽²⁾				Three Months Ended September 30,					Increase / (Decrease)			Percentage Difference				Variance due to Acquisitions, Originations and Dispositions (1)			Remaining Variance (2)
	2017			2016							2020							2019
Revenues:																					Revenues:
Rental income	$	100,145		$	56,833	$	43,312			76	%		$	45,928		$	(2,616	)
Rental and related revenues																		Rental and related revenues	$	100,612		$	110,104		$	(9,492)		(9)		%		$	1,717		$	(11,209)
Interest and other income	4,090			3,157		933			30	%		1,240			(307		)	Interest and other income	3,299			3,325		(26)			(1)		%		(283)			257
Resident fees and services	7,554			1,937		5,617			290	%		—			5,617			Resident fees and services	39,341			36,405		2,936			8		%		2,429			507
Expenses:																		Expenses:
Depreciation and amortization	25,933			17,102		8,831			52	%		9,114			(283		)	Depreciation and amortization	44,209			43,092		1,117			3		%		854			263
Interest	24,568			15,794		8,774			56	%		7,719			1,055			Interest	24,904			29,255		(4,351)			(15)		%		(220)			(4,131)
Operating expenses	5,102			1,404		3,698			263	%		—			3,698
Triple-net portfolio operating expenses																		Triple-net portfolio operating expenses	5,249			5,611		(362)			(6)		%		66			(428)
Senior housing - managed portfolio operating expenses																		Senior housing - managed portfolio operating expenses	27,745			23,979		3,766			16		%		1,764			2,002
General and administrative	12,944			4,966		7,978			161	%		5,171			2,807			General and administrative	7,216			8,709		(1,493)			(17)		%		—			(1,493)
Merger and acquisition costs	23,299			1,051		22,248			2,117	%		22,248			—
Provision for doubtful accounts and loan losses	5,149			540		4,609			854	%		—			4,609
Other income:

(Recovery of) provision for loan losses and other reserves																		(Recovery of) provision for loan losses and other reserves	(90)			57		(147)			(258)		%		—			(147)
Impairment of real estate																		Impairment of real estate	3,154			13,966		(10,812)			(77)		%		(3,131)			(7,681)
Other income (expense):																		Other income (expense):
Loss on extinguishment of debt	(553		)	—		(553		)	NM			—			(553		)	Loss on extinguishment of debt	(139)			(644)		505			(78)		%		(139)			644
Other income	51			2,945		(2,894		)	(98	)%		—			(2,894		)	Other income	115			215		(100)			(47)		%		—			(100)
Net gain on sales of real estate	582			1,451		(869		)	(60	)%		(869		)	—
Net gain (loss) on sales of real estate																		Net gain (loss) on sales of real estate	2,715			(19)		2,734			NM				2,734			—
Income (loss) from unconsolidated joint venture																		Income (loss) from unconsolidated joint venture	2,766			(605)		3,371			(557)		%		7,538			(4,167)
Income tax benefit (expense)																		Income tax benefit (expense)	138			(826)		964			(117)		%		—			964

⁽¹⁾

(1) Represents the dollar amount increase (decrease) for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 as a result of investments/dispositions made after July 1, 2019.

(2) Represents the dollar amount increase (decrease) for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 that is not a direct result of investments/dispositions made after July 1, 2019.

~~Represents the dollar amount increase (decrease) for the three months ended~~ ~~September 30, 2017~~ ~~compared to the three months ended~~ ~~September 30, 2016~~ ~~as a result of the CCP Merger and investments/dispositions made after~~ ~~July 1, 2016~~.


⁽²⁾	~~Represents the dollar amount increase (decrease) for the three months ended~~ ~~September 30, 2017~~ ~~compared to the three months ended~~ ~~September 30, 2016~~ ~~that is not a direct result of the CCP Merger and investments/dispositions made after~~ ~~July 1, 2016~~.

Rental ~~Income~~and Related Revenues

During the three months ended September 30, ~~2017,~~2020, we recognized ~~$100.1~~$100.6 million of rental income compared to ~~$56.8~~$110.1 million for the three months ended September 30, ~~2016.~~2019. The ~~$43.3~~$9.5 million ~~increase~~net decrease in rental income is primarily ~~due~~related to (i) a $12.1 million net decrease related to leases that we concluded should no longer be accounted for on an ~~increase of $43.1~~accrual basis and (ii) a $1.0 million ~~from properties acquired in the CCP Merger and an increase of $3.5 million from other properties acquired after July 1, 2016, partially offset by a~~ decrease ~~of $0.7 million~~ from properties disposed of after July 1, ~~2016~~2019. The $12.1 million net decrease consists of a $13.1 million decrease in non-cash rental revenues, which includes $14.3 million in write-offs related to Signature Healthcare and Genesis Healthcare, Inc., whose leases are no longer accounted for on an accrual basis as a ~~decrease~~result of ~~$2.3~~the going concern issues for these tenants, partially offset by a $1.0 million ~~due~~increase in earned cash rents. These decreases are partially offset by (i) a $2.7 million increase from properties acquired after July 1, 2019 and (ii) a $1.0 million increase related to property tax recoveries.

Our reported rental and related revenues may be subject to increased variability in the ~~nine senior housing communities that were transitioned to Senior Housing - Managed properties during~~future as a result of adopting Topic 842. However, there can be no assurances regarding the ~~nine months ended September 30, 2017.~~timing and amount of these collections. Amounts due under the terms of all of our lease agreements are subject to contractual increases, and contingent rental income may be derived from certain lease agreements. No material contingent rental income was derived during the three months ended September 30, ~~2017~~2020 and ~~2016.~~2019.

Interest and Other Income

Interest and other income primarily consists of income earned on our loans receivable investments, preferred returns earned on our preferred equity investments and income on the direct financing lease. During each of the three months ended September 30, ~~2017,~~2020 and 2019, we recognized ~~$4.1~~$3.3 million of interest and other income. During the three months ended September 30, 2020, we recognized $0.3 million of lease termination income related to the transition of a specialty hospital to a

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new operator. In addition, we recognized a $0.7 million decrease in income from investments that were repaid after July 1, 2019, partially offset by a $0.4 million increase in income from investments made after July 1, 2019.

Resident Fees and Services

During the three months ended September 30, 2020, we recognized $39.3 million of resident fees and services compared to ~~$3.2~~$36.4 million for the three months ended September 30, ~~2016.~~2019. The $2.9 million net increase ~~of $0.9 million~~ is ~~due to an increase of $2.0 million~~ primarily related to ~~interest~~

~~income~~(i) a $2.4 million increase from ~~loan receivable investments, income~~two Senior Housing - Managed communities acquired after July 1, 2019 and (ii) a $1.1 million increase from one Senior Housing - Leased community that was transitioned to a ~~direct finance lease and income from the specialty valuation firm acquired~~Senior Housing - Managed community in ~~the CCP Merger,~~November 2019, partially offset by a ~~$1.1~~$0.6 million decrease from ~~investments that were disposed after~~Senior Housing - Managed communities acquired before July 1, ~~2016.~~

~~Resident Fees~~2019 primarily due to decreases in occupancy. Included in resident fees and ~~Services~~

~~During~~services is $1.2 million of government grant income recognized under the CARES Act during the three months ended September 30, 2017, we recognized $7.6 million of resident fees and services compared to $1.9 million for the three months ended September 30, 2016. The increase of $5.6 million is primarily due to the nine senior housing communities that were transitioned to Senior Housing - Managed properties in March and May 2017.2020.

Depreciation and Amortization

During the three months ended September 30, ~~2017,~~2020, we incurred ~~$25.9~~$44.2 million of depreciation and amortization expense compared to ~~$17.1~~$43.1 million for the three months ended September 30, ~~2016.~~2019. The ~~$8.8~~$1.1 million net increase ~~in depreciation and amortization expense~~ is primarily due to ana $1.6 million increase ~~of $8.6 million related to the properties acquired in the CCP Merger and an increase of $0.7 million~~ from ~~other~~ properties acquired after July 1, ~~2016,~~2019, partially offset by a $0.7 million decrease ~~of $0.3 million~~ from properties disposed of after July 1, ~~2016 and a $0.2 million decrease from fully depreciated assets.~~2019.

Interest Expense

We incur interest expense comprised of costs of borrowings plus the amortization of deferred financing costs related to our indebtedness. During the three months ended September 30, ~~2017,~~2020, we incurred ~~$24.6~~$24.9 million of interest expense compared to ~~$15.8~~$29.3 million for the three months ended September 30, ~~2016.~~2019. The ~~$8.8~~$4.4 million net ~~increase~~decrease is primarily related to (i) a ~~$3.7~~$2.8 million ~~increase~~decrease in interest expense related to ~~two~~the redemption of the 5.375% senior unsecured notes ~~assumed~~due 2023 (the “2023 Notes”) in ~~the CCP Merger (see Note 7, “Debt” for additional information),~~October 2019, (ii) a ~~$3.1~~$2.1 million ~~increase~~decrease in interest expense related to ~~our~~the partial pay down of the U.S. dollar term loans ~~as a result of increasing U.S. term loan borrowings from $245.0 million to $1.1 billion~~and decrease in ~~connection with the CCP Merger,~~interest rates, (iii) a ~~$1.4~~$2.1 million ~~increase~~decrease in interest expense related to the borrowings outstanding on the Revolving Credit Facility (as defined below) and decrease in interest rates and (iv) a ~~$0.5~~$0.6 million ~~increase of~~decrease in non-cash interest expense related to our interest rate ~~hedges.~~hedges, which decreases were partially offset by a $3.6 million increase in interest expense related to the issuance of the 2029 Notes (as defined below).

Triple-Net Portfolio Operating Expenses

During the three months ended September 30, ~~2017,~~2020, we recognized ~~$5.1~~$5.2 million of triple-net portfolio operating expenses compared to ~~$1.4~~$5.6 million for the three months ended September 30, ~~2016.~~2019. The $0.4 million net decrease is primarily related to property taxes paid during the three months ended September 30, 2019 on facilities that were transitioned to new operators who are now paying the property taxes directly.

Senior Housing - Managed Portfolio Operating Expenses

During the three months ended September 30, 2020, we recognized $27.7 million of Senior Housing - Managed portfolio operating expenses compared to $24.0 million for the three months ended September 30, 2019. The $3.8 million net increase ~~of $3.7 million~~ is primarily due to ~~the nine senior housing~~(i) a $1.8 million increase from two Senior Housing - Managed communities acquired after July 1, 2019 and (ii) a $1.0 million increase from one Senior Housing - Leased community that ~~were~~was transitioned to Senior Housing - Managed ~~properties~~communities in ~~March~~November 2019. The remaining increase is primarily due to increased supplies and ~~May 2017.~~labor needs related to the COVID-19 pandemic.

General and ~~Administrative~~Administrative Expenses

General and administrative expenses include compensation-related expenses as well as professional services, office costs, ~~and~~ other costs associated with asset ~~management.~~management, and merger and acquisition costs. During the three months ended September 30, ~~2017~~,2020, general and administrative expenses were ~~$12.9~~$7.2 million compared to ~~$5.0~~$8.7 million during the three months ended September 30, ~~2016~~.2019. The ~~$8.0~~$1.5 million ~~increase~~net decrease is primarily related to ~~(i) $4.3~~a $2.3 million ~~of transition expenses for the CCP Merger primarily consisting of salaries and severance benefits, (ii)~~decrease in stock-based compensation expense, offset by a ~~$1.8~~$0.9 million increase in ~~legal~~employee compensation as a result of increased staffing and ~~professional fees~~employees electing to receive their annual bonus opportunity in cash. The decrease in stock-based compensation expense, from $3.3 million during the three months ended September 30, 2019 to $0.9 million during the three months ended September 30, 2020, is primarily due to ~~the management~~a change in performance-based vesting assumptions on management’s equity compensation and employees electing to receive their annual bonus opportunity in cash. We expect stock-based compensation expense to fluctuate from period to period depending upon changes in our stock price and estimates associated with performance-based compensation.

Table of ~~the increased number of investments, (iii) $0.9 million in expenses incurred by our specialty valuation firm~~Contents

(Recovery of) Provision for Loan Losses and ~~(iv) a $0.7 million increase in payroll expenses related to the increased number of employees.~~

~~Merger and Acquisition Costs~~Other Reserves

During the three months ended September 30, ~~2017,~~2020, we ~~incurred $23.3~~recognized a $0.1 million recovery of ~~merger~~loan losses and ~~acquisition costs compared to $1.1 million for~~other reserves, primarily associated with loan loss reserves. During the three months ended September 30, ~~2016. The increase~~2019, we recognized a $0.1 million provision for loan losses and other reserves, all of ~~$22.2 million is due to costs related to the CCP Merger.~~which was associated with loan loss reserves.

~~Provision for Doubtful Accounts and Loan Losses~~Impairment of Real Estate

During the three months ended September 30, ~~2017,~~2020, we recognized ~~$5.1~~$3.2 million ~~in provision for doubtful accounts~~of impairment of real estate related to three senior housing communities and loan losses. Of the $5.1 million provision, $2.9 million is due to an increase in loan loss reserves, $1.3 million is due to a reserve for other tenant-related receivables, $0.6 million is due to an increase in reserves on straight-line rental income and $0.3 million is due to an increase in reserves for cash rental income.one skilled nursing/transitional care facility. During the three months ended September 30, ~~2016,~~2019, we recognized ~~$0.5~~$14.0 million ~~in provision for doubtful accounts and loan losses, which is comprised~~ of ~~$0.5 million~~impairment of real estate related to ~~an increase in general reserves on straight-line rental income~~three skilled nursing/transitional care facilities that were subsequently sold and ~~$0.3 million related to an increase in loan loss reserves, partially offset by a $0.3 million recovery on previously reserved cash rents.~~

four senior housing communities.

Loss on Extinguishment of Debt

WeDuring the three months ended September 30, 2020, we recognized a ~~$0.6~~$0.1 million loss on extinguishment of debt ~~during the three months ended September 30, 2017~~ related to write-offs of deferred financing costs in connection with ~~amending~~ the ~~Prior Credit Facility. We did not recognize any loss on extinguishment~~assumption of ~~debt during~~a mortgage note by the buyer of the facility that secured the mortgage note. During the three months ended September 30, ~~2016.~~2019, we recognized a $0.6 million loss on extinguishment of debt related to the write-off of unamortized deferred financing costs in connection with entering into the Credit Agreement (as defined below).

Other Income

During the three months ended September 30, ~~2017,~~2020 and September 30, 2019, we recognized $0.1 million ~~of other income. The $0.1~~and $0.2 million, respectively, of other income ~~is comprised of $0.4 million~~primarily related to ~~the amortization of lease termination~~settlement payments received related to a memorandum of understanding entered into with Genesis regarding five Genesis facilities (of which one was owned as of September 30, 2017), partially offset by $0.3 million of other expense as a result of adjusting the fair value of our contingent consideration liability related to the acquisition of a real estate property. During the three months ended September 30, 2016, we recognized $2.9 million of other income, of which $2.6 million related to lease termination payments related to the same memorandum of understanding with Genesis and $0.4 million related to an ineffectiveness gain related to our LIBOR interest rate swaps. These amounts were partially offset by $0.1 million of other expense as a result of adjusting the fair value of our contingent consideration liability related to the acquisition of a portfolio of real estate properties.legacy Care Capital Properties, Inc. (“CCP”) investment.

Net Gain (Loss) on Sales of Real Estate

During the three months ended September 30, ~~2017,~~2020, we recognized an aggregate net gain on the ~~sale~~sales of real estate of ~~$0.6~~$2.7 million related to the disposition of ~~three~~a skilled nursing/transitional care ~~facilities.~~facility. During the three months ended September 30, ~~2016,~~2019, we recognized $19,000 of selling expenses related to previously completed sales.

Income (Loss) from Unconsolidated Joint Venture

During the three months ended September 30, 2020, we recognized $2.8 million of income from our unconsolidated joint venture compared to $0.6 million of loss for the three months ended September 30, 2019. The $3.4 million net increase is primarily related to (i) a ~~gain~~$3.1 million net adjustment to our basis difference in the joint venture as a result of the completion of the joint venture’s strategic program to dispose of 14 senior housing communities and depreciation adjustments, partially offset by a $0.5 million loss on the sale of ~~real estate~~the final senior housing community in the joint venture’s strategic disposition program during the three months ended September 30, 2020, (ii) $3.0 million of ~~$1.5~~government grant income recognized under the CARES Act and (iii) a $2.0 million decrease in interest expense primarily due to a decrease in interest rates, partially offset by (i) a $2.5 million increase in operating expenses from the facilities owned by the joint venture as of September 30, 2020 due to increased supplies and labor needs related to the ~~disposition~~COVID-19 pandemic and increased insurance expense and (ii) a $1.7 million decrease in revenuefrom the facilities owned by the joint venture as of ~~one skilled nursing/transitional care facility. See Note 5, “Dispositions”~~September 30, 2020 primarily due to decreased occupancy.

Income Tax Benefit (Expense)

During the three months ended September 30, 2020, we recognized $0.1 million of income tax benefit compared to $0.8 million of income tax expense for ~~additional information.~~the three months ended September 30, 2019. The decrease is primarily due to lower taxable income from Senior Housing - Managed communities.

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Comparison of results of operations for the nine months ended September 30, ~~2017~~2020 versus the nine months ended September 30, ~~2016~~2019 (dollars in thousands):


	Nine Months Ended September 30,						Increase / (Decrease)			Percentage Difference			Variance due to the CCP Merger, Acquisitions, Originations and Dispositions ⁽¹⁾			Remaining Variance⁽²⁾				Nine Months Ended September 30,					Increase / (Decrease)			Percentage Difference				Variance due to Acquisitions, Originations and Dispositions (1)			Remaining Variance (2)
	2017			2016								2020							2019
Revenues:																						Revenues:
Rental income	$	213,273		$	167,442		$	45,831			27	%		$	51,922		$	(6,091	)
Rental and related revenues																			Rental and related revenues	$	319,851		$	339,291		$	(19,440)		(6)		%		$	(7)		$	(19,433)
Interest and other income	8,062			25,482			(17,420		)	(68	)%		(16,934		)	(486		)	Interest and other income	8,756			77,145		(68,389)			(89)		%		(1,794)			(66,595)
Resident fees and services	17,840			5,811			12,029			207	%		—			12,029			Resident fees and services	117,908			89,537		28,371			32		%		7,095			21,276
Expenses:																			Expenses:
Depreciation and amortization	62,290			51,273			11,017			21	%		9,653			1,364			Depreciation and amortization	132,579			137,517		(4,938)			(4)		%		218			(5,156)
Interest	56,218			49,139			7,079			14	%		7,719			(640		)	Interest	75,900			99,181		(23,281)			(23)		%		(375)			(22,906)
Operating expenses	11,929			4,256			7,673			180	%		—			7,673
Triple-net portfolio operating expenses																			Triple-net portfolio operating expenses	15,481			17,140		(1,659)			(10)		%		(1,225)			(434)
Senior housing - managed portfolio operating expenses																			Senior housing - managed portfolio operating expenses	82,976			60,258		22,718			38		%		5,100			17,618
General and administrative	24,159			13,513			10,646			79	%		5,171			5,475			General and administrative	24,650			24,952		(302)			(1)		%		—			(302)
Merger and acquisition costs	29,750			1,222			28,528			2,335	%		28,528			—
Provision for doubtful accounts and loan losses	7,454			3,286			4,168			127	%		—			4,168
Provision for loan losses and other reserves																			Provision for loan losses and other reserves	706			1,457		(751)			(52)		%		—			(751)
Impairment of real estate	—			29,811			(29,811		)	NM			(29,811		)	—			Impairment of real estate	3,154			119,102		(115,948)			(97)		%		(102,238)			(13,710)
Other (expense) income:
Other income (expense):																			Other income (expense):
Loss on extinguishment of debt	(553		)	(556		)	(3		)	NM			—			(3		)	Loss on extinguishment of debt	(531)			(10,763)		10,232			(95)		%		(531)			10,763
Other income	3,121			5,345			(2,224		)	(42	)%		—			(2,224		)	Other income	2,308			385		1,923			499		%		—			1,923
Net gain (loss) on sale of real estate	4,614			(3,203		)	7,817			NM			7,817			—
Net gain on sales of real estate																			Net gain on sales of real estate	2,828			1,216		1,612			133		%		1,612			—
Loss from unconsolidated joint venture																			Loss from unconsolidated joint venture	(13,037)			(5,635)		(7,402)			131		%		(1,580)			(5,822)
Income tax expense																			Income tax expense	(1,337)			(2,292)		955			(42)		%		—			955


⁽¹⁾	Represents the dollar amount increase (decrease) for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 as a result of the CCP Merger and investments/dispositions made after January 1, 2016.


⁽²⁾	Represents the dollar amount increase (decrease) for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 that is not a direct result of the CCP Merger and investments/dispositions made after January 1, 2016.

(1) Represents the dollar amount increase (decrease) for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 as a result of investments/dispositions made after January 1, 2019.

(2) Represents the dollar amount increase (decrease) for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 that is not a direct result of investments/dispositions made after January 1, 2019.

Rental ~~Income~~and Related Revenues

During the nine months ended September 30, ~~2017,~~2020, we recognized ~~$213.3~~$319.9 million of rental income compared to ~~$167.4~~$339.3 million for the nine months ended September 30, ~~2016.~~2019. The ~~$45.8~~$19.4 million ~~increase~~net decrease in rental income is primarily ~~due~~related to (i) a $14.1 million decrease related to leases that we concluded should no longer be accounted for on an ~~increase of $43.1~~accrual basis, (ii) a $10.1 million decrease from ~~properties acquired in~~ the ~~CCP Merger~~21 Holiday communities and an increase of $10.9 million from other properties acquired after January 1, 2016, partially offset by a decrease of $2.1 million from properties disposed of after January 1, 2016 and a decrease of $5.4 million due to the nine senior housing communitiesone Senior Housing - Leased community that were transitioned to Senior Housing - Managed communities in April 2019 and November 2019, respectively, and (iii) a $7.4 million decrease from properties ~~during~~disposed of after January 1, 2019. The $14.1 million decrease consists of a $13.7 million decrease in non-cash rental revenues, which includes $14.3 million in write-offs related to Signature Healthcare and Genesis Healthcare, Inc., whose leases are no longer accounted for on an accrual basis as a result of the ~~nine months ended September 30, 2017.~~going concern issues for these tenants, and a $0.4 million decrease in earned cash rents. These amounts were partially offset by (i) a $7.4 million increase from properties acquired after January 1, 2019 and (ii) a $2.7 million increase related to property tax recoveries.

Our reported rental and related revenues may be subject to increased variability in the future as a result of adopting Topic 842. However, there can be no assurances regarding the timing and amount of these collections. Amounts due under the terms of all of our lease agreements are subject to contractual increases, and contingent rental income may be derived from certain lease agreements. No material contingent rental income was derived during the nine months ended September 30, ~~2017 or 2016.~~2020 and 2019.

Interest and Other Income

Interest and other income primarily consists of income earned on our loans receivable investments, preferred returns earned on our preferred equity investments and income ~~from our~~on the direct ~~finance~~financing lease. During the nine months ended

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September 30, ~~2017,~~2020, we recognized ~~$8.1~~$8.8 million of interest and other income compared to ~~$25.5~~$77.1 million for the nine months ended September 30, ~~2016.~~2019. The net decrease of ~~$17.4~~$68.4 million is primarily due to ~~a decrease~~(i) $66.9 million of ~~$19.3 million primarily~~income related to ~~interest income recognized at~~ the ~~default rate~~transition of the 21 Holiday communities to our Senior Housing - Managed portfolio in April 2019, consisting of a $57.2 million lease termination payment and ~~late fees~~a $9.7 million gain related to ~~our~~the assumption of fixed assets net of liabilities, and (ii) a $2.4 million decrease in income from investments ~~in the Forest Park - Fort Worth construction loan and the Forest Park - Dallas mortgage loan during the nine months ended September 30, 2016. Both loans~~that were repaid ~~during the nine months ended September 30, 2016. The decrease is~~after January 1, 2019, partially offset by ana $0.6 million increase ~~of $2.0 million related to interest~~in income from ~~loan receivable~~ investments ~~income from a direct finance lease and income from the specialty valuation firm acquired in the CCP Merger.~~made after January 1, 2019.

Resident Fees and Services

During the nine months ended September 30, ~~2017,~~2020, we recognized ~~$17.8~~$117.9 million of resident fees and services compared to ~~$5.8~~$89.5 million for the nine months ended September 30, ~~2016.~~2019. The $28.4 million net increase ~~of $12.0 million~~ is primarily ~~due~~related to (i) a $20.6 million increase from the ~~nine senior housing~~21 Holiday communities and one Senior Housing - Leased community that were transitioned to Senior Housing - Managed ~~properties~~communities in ~~March~~April 2019 and ~~May 2017.~~November 2019, respectively, and (ii) a $7.1 million increase from two Senior Housing - Managed communities acquired after January 1, 2019. Included in resident fees and services is $1.2 million of government grant income recognized under the CARES Act during the nine months ended September 30, 2020.

Depreciation and Amortization

During the nine months ended September 30, ~~2017,~~2020, we incurred ~~$62.3~~$132.6 million of depreciation and amortization expense compared to ~~$51.3~~$137.5 million for the nine months ended September 30, ~~2016.~~2019. The ~~$11.0~~$4.9 million net ~~increase in depreciation and amortization expense~~decrease is primarily due to ~~an increase of $8.6 from properties acquired in the CCP Merger, an increase of $3.1~~(i) a $5.7 million ~~from other properties acquired after January 1, 2016 as well as a $1.8 million increase~~decrease due to the acceleration of lease intangible amortization related to the ~~nine senior housing~~transition of the 21 Holiday communities ~~transitioned~~ to Senior Housing - Managed ~~properties, partially offset by~~communities in April 2019 and (ii) a $4.3 million decrease ~~of $2.1 million~~ from properties disposed of after January 1, ~~2016 and~~2019, partially offset by a ~~$0.4~~$4.6 million ~~decrease~~increase from ~~fully depreciated assets.~~properties acquired after January 1, 2019.

Interest Expense

We incur interest expense comprised of costs of borrowings plus the amortization of deferred financing costs related to our indebtedness. During the nine months ended September 30, ~~2017,~~2020, we incurred ~~$56.2~~$75.9 million of interest expense compared to ~~$49.1~~$99.2 million for the nine months ended September 30, ~~2016.~~2019. The ~~$7.1~~$23.3 million net ~~increase~~decrease is primarily related to (i) ~~a $3.7~~an aggregate $23.1 million ~~increase~~decrease in interest expense related to ~~two~~the redemptions of the 5.5% senior unsecured notes ~~assumed~~due 2021 (the “2021 Notes”) in June 2019 and the ~~CCP Merger (see Note 7, “Debt” for additional information),~~2023 Notes in October 2019, (ii) a $3.2 million increase in interest expense related to our U.S. term loans as a result of increasing U.S. term loan borrowings from $245.0 million to $1.1 billion in connection with the CCP Merger and (iii) a $0.9 million increase of non-cash interest expense related to our interest rate hedges. These increases are partially offset by a $0.3$9.1 million decrease in interest expense related to the borrowings outstanding on the Revolving Credit Facility and decrease in interest rates, (iii) a ~~$0.2~~$6.5 million decrease in interest expense related to ~~secured debt.~~the partial pay down of the U.S. dollar term loans and decrease in interest rates and (iv) a $1.3 million decrease in non-cash interest expense related to our interest rate hedges, which decreases were partially offset by an aggregate $17.2 million increase in interest expense related to the issuances of the 2024 Notes (as defined below) and 2029 Notes.

Triple-Net Portfolio Operating Expenses

During the nine months ended September 30, 2020, we recognized $15.5 million of triple-net portfolio operating expenses compared to $17.1 million for the nine months ended September 30, 2019. The $1.7 million net decrease is primarily related to a $1.2 million decrease related to properties disposed of after January 1, 2019 and the remaining decrease is primarily related to property taxes paid during the nine months ended September 30, 2020 on facilities that were transitioned to new operators who are now paying the property taxes directly.

Senior Housing - Managed Portfolio Operating Expenses

During the nine months ended September 30, ~~2017,~~2020, we recognized ~~$11.9~~$83.0 million of operating expenses compared to ~~$4.3~~$60.3 million for the nine months ended September 30, ~~2016.~~2019. The $22.7 million net increase ~~of $7.7 million~~ is primarily due to (i) a $14.8 million increase from the ~~nine senior housing~~21 Holiday communities and one Senior Housing - Leased community that were transitioned to Senior Housing - Managed ~~properties~~communities in ~~March~~April 2019 and ~~May 2017.~~November 2019, respectively, and (ii) a $5.1 million increase from two Senior Housing - Managed communities acquired after January 1, 2019. The remaining increase is primarily due to increased supplies and labor needs related to the COVID-19 pandemic.

General and Administrative Expenses

~~$10.6~~ $0.3 million ~~increase~~net decrease is primarily related to a ~~(i) $4.3~~$3.2 million of transition expenses for the CCP Merger primarily consisting of salaries and severance benefits, (ii) a $3.1 million increase in legal and professional fees primarily due to the management of the increased number of investments, (iii) a $1.0 million increase in payroll expense primarily due to the increased number of employees, (iv) $0.9 million in expenses incurred by our specialty valuation firm and (v) a $0.8 million increasedecrease in stock-based compensation expense, offset by a $2.7 million increase in employee compensation as a result of increased staffing and employees electing to receive their annual bonus opportunity in cash. The decrease in stock-based compensation expense, from $8.8 million during

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the nine months ended September 30, 2019 to $5.7 million during the nine months ended September 30, 2020, is primarily due to ~~the increased number of employees.~~a change in performance-based vesting assumptions on management’s equity compensation and employees electing to receive their annual bonus opportunity in cash. We expect stock-based compensation expense to fluctuate from period to period depending upon changes in our stock price and estimates associated with performance-based compensation.

~~Merger~~Provision for Loan Losses and ~~Acquisition Costs~~Other Reserves

During the nine months ended September 30, ~~2017,~~2020, we ~~incurred $29.8~~recognized a $0.7 million ~~of merger~~provision for loan losses and ~~acquisition costs compared to $1.2 million for the nine months ended September 30, 2016. The increase of $28.6 million is due to costs related to the CCP Merger.~~

~~Provision for Doubtful Accounts and Loan Losses~~

other reserves, primarily associated with loan loss reserves. During the nine months ended September 30, ~~2017,~~2019, we recognized ~~$7.5~~a $1.5 million in provision for ~~doubtful accounts~~loan losses and ~~loan losses. The $7.5 million provision is primarily due to a $4.9 million increase in~~other reserves, all of which was associated with loan loss reserves, a $0.9 million increase in general reserves on straight-line rental income, a $1.3 million reserve for other tenant-related receivables and a $0.4 million increase in reserves on cash rental income. reserves.

Impairment of Real Estate

During the nine months ended September 30, ~~2016,~~2020, we recognized $3.3 million in provision for doubtful accounts and loan losses, which is comprised of $2.3 million related to an increase in loan loss reserves and $1.3 million related to an increase in general reserves on straight-line rental income, partially offset by a $0.3 million recovery on previously reserved cash rents.

~~Impairment of Real Estate~~

~~No impairment of real estate was recognized during the nine months ended September 30, 2017. During the nine months ended September 30, 2016, we recognized $29.8~~$3.2 million of impairment of real estate related to three senior housing communities and one skilled nursing/transitional care facility. During the ~~sale~~nine months ended September 30, 2019, we recognized $119.1 million of impairment of real estate, consisting of (i) $95.2 million related to the ~~Forest Park - Frisco hospital.~~30 Senior Care Centers facilities that we sold and one additional Senior Care Centers facility that we transitioned to another operator, which amount included $10.2 million related to our estimated contractual indemnification obligations, and (ii) $23.9 million related to five skilled nursing/transitional care facilities that were subsequently sold and four senior housing communities.

Loss on Extinguishment of Debt

During the nine months ended September 30, ~~2017,~~2020, we recognized a ~~$0.6~~$0.5 million loss on extinguishment of debt related to write-offs of deferred financing costs in connection with ~~amending~~ the ~~Prior Revolving Credit Facility. We~~sale of three facilities that secured three mortgage notes. During the nine months ended September 30, 2019, we recognized a ~~$0.6~~$10.8 million loss on extinguishment of debt, ~~during~~consisting of (i) $10.1 million in connection with the ~~nine months ended September 30, 2016~~redemption of the 2021 Notes, including $6.9 million in payments made to noteholders and legal fees for early redemption and $3.2 million of write-offs associated with unamortized deferred financing and premium costs and (ii) $0.6 million related to ~~write-offs~~the write-off of unamortized deferred financing costs in connection with ~~amending~~entering into the ~~2014 revolving credit facility and 2015 Canadian term loan.~~Credit Agreement.

Other Income

During the nine months ended September 30, ~~2017,~~2020 and September 30, 2019, we recognized ~~$3.1~~$2.3 million and $0.4 million, respectively, of other ~~income. Of the $3.1 million in other~~ income $2.6 million is due to the amortization of lease termination payments related to a memorandum of understanding entered into with Genesis regarding five Genesis facilities (one of which was owned as of September 30, 2017) and $0.5 million relates to other income as a result of adjusting the fair value of our contingent consideration liability related to the acquisition of a real estate property, partially offset by $0.1 million of ineffectiveness loss related to our LIBOR interest rate swaps. During the nine months ended September 30, 2016, we recognized $5.3 million in other income, of which $5.0 million primarily related to ~~lease termination~~settlement payments received related to the same memoranda of understanding with Genesis and $0.4 million related to an ineffectiveness gain related to our LIBOR interest rate swaps. These amounts were partially offset by $0.1 million of other expense as a result of adjusting the fair value of our contingent consideration liability related to the acquisition of a portfolio of real estate properties.legacy CCP investments.

Net Gain ~~(Loss)~~ on Sales of Real Estate

During the nine months ended September 30, ~~2017,~~2020, we recognized an aggregate net gain on the ~~sale~~sales of real estate of ~~$4.6~~$2.8 million related to the disposition of ~~four~~seven skilled nursing/transitional care facilities. During the nine months ended September 30, ~~2016,~~2019, we recognized aan aggregate net ~~loss~~gain on the ~~sale~~sales of real estate of ~~$3.2 million. The $3.2~~$1.2 million ~~net loss is due to a $4.7 million loss~~ related to the disposition of ~~one~~31 skilled nursing/transitional care ~~facility~~facilities and ~~one acute care hospital,~~seven senior housing communities.

Loss from Unconsolidated Joint Venture

During the nine months ended September 30, 2020, we recognized $13.0 million of loss from our unconsolidated joint venture compared to $5.6 million of loss for the nine months ended September 30, 2019. The $7.4 million net increase is primarily related to (i) a $6.3 million increase in operating expenses from the facilities owned by the joint venture as of September 30, 2020 primarily due to increased supplies and labor needs related to the COVID-19 pandemic and increased insurance expense, (ii) a $4.9 million depreciation adjustment related to our basis difference in the joint venture, (iii) a $2.4 million decrease in revenues from the facilities owned by the joint venture as of September 30, 2020 primarily due to decreases in occupancy and (iv) a $1.6 million increase in loss on sale primarily related to the sale of 12 senior housing communities, partially offset by (i) a ~~$1.5~~$4.6 million ~~gain related~~decrease in interest expense primarily due to a decrease in interest rates and (ii) $3.0 million of government grant income recognized under the ~~disposition~~CARES Act.

Income Tax Expense

During the nine months ended September 30, 2020, we recognized $1.3 million of ~~one skilled nursing/transitional care facility. See Note 5, “Dispositions” in~~income tax expense compared to $2.3 million of income tax expense recognized during the ~~Notes~~nine months ended September 30, 2019. The decrease is primarily due to ~~Condensed Consolidated Financial Statements for additional information.~~lower taxable income from Senior Housing - Managed communities.

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Funds from Operations and Adjusted Funds from Operations

We believe that net income attributable to common stockholders as defined by GAAP is the most appropriate earnings measure. We also believe that funds from operations attributable to common stockholders (“FFO”), as defined in accordance with the definition used by the National Association of Real Estate Investment Trusts (“~~NAREIT”~~Nareit”), and adjusted funds from

operations attributable to common stockholders (“AFFO”) (and related per share amounts) are important non-GAAP supplemental measures of our 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 REIT that uses historical cost accounting for depreciation could be less informative. Thus, ~~NAREIT~~Nareit created FFO as a supplemental measure of operating performance for REITs 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 and our share of gains or losses from real estate dispositions related to our unconsolidated joint venture, plus real estate depreciation and amortization, net of amounts related to noncontrolling interests, plus our share of depreciation and amortization related to our unconsolidated joint venture, and real estate impairment charges. AFFO is defined as FFO excluding ~~straight-line~~merger and acquisition costs, stock-based compensation expense, non-cash rental ~~income adjustments, amortization of above~~ and ~~below market lease intangibles,~~related revenues, non-cash interest income, ~~adjustments, stock-based compensation~~non-cash interest expense, ~~amortization~~non-cash portion of loss on extinguishment of debt, provision for loan losses and other reserves, non-cash lease termination income and deferred ~~financing costs and merger and acquisition costs,~~income taxes, as well as other non-cash revenue and expense items (including ~~provisions~~ineffectiveness gain/loss on derivative instruments, and ~~write-offs~~non-cash revenue and expense amounts related to ~~straight-line rental income, provision for loan losses, changes in fair value~~noncontrolling interests) and our share of ~~contingent consideration and amortization of debt premiums/discounts).~~non-cash adjustments related to our unconsolidated joint venture. We believe that the use of FFO and AFFO (and the related per share amounts), combined with the required GAAP presentations, improves the understanding of our operating results among investors and makes comparisons of operating results among REITs more meaningful. We consider FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed above, FFO and AFFO can help investors compare our operating performance between periods or as compared to other companies. While FFO and AFFO are relevant and widely used measures of operating performance of REITs, 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 our liquidity or operating performance. FFO and AFFO also do not consider the costs associated with capital expenditures related to our real estate assets nor do they purport to be indicative of cash available to fund our future cash requirements. Further, our computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs that do not define FFO in accordance with the current ~~NAREIT~~Nareit definition or that interpret the current ~~NAREIT~~Nareit definition or define AFFO differently than we do.

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The following table reconciles our calculations of FFO and AFFO for the three and nine months ended September 30, ~~2017~~2020 and ~~2016~~,2019, to net income attributable to common stockholders, the most directly comparable GAAP financial measure, for the same periods (in thousands, except share and per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net income attributable to common stockholders	$	36,460	$	23,282	$	101,300	$	29,255
Depreciation and amortization of real estate assets	44,209		43,092		132,579		137,517
Depreciation and amortization of real estate assets related to noncontrolling interest	—		(14)		—		(93)
Depreciation and amortization of real estate assets related to unconsolidated joint venture	10,391		5,439		21,525		16,102
Net (gain) loss on sales of real estate	(2,715)		19		(2,828)		(1,216)
Net (gain) loss on sales of real estate related to unconsolidated joint venture	(7,537)		—		3,271		1,690
Impairment of real estate	3,154		13,966		3,154		119,102

FFO attributable to common stockholders	83,962		85,784		259,001		302,357

Merger and acquisition costs	5		130		433		192
Stock-based compensation expense	916		3,259		5,651		8,829
Non-cash rental and related revenues	7,907		(4,958)		1,340		(12,965)
Non-cash interest income	(608)		(555)		(1,743)		(1,680)
Non-cash interest expense	2,069		2,523		6,527		7,846

Non-cash portion of loss on extinguishment of debt	139		642		531		3,866
Provision for loan losses and other reserves	(90)		57		706		1,457
Non-cash lease termination income	—		—		—		(9,725)
Other non-cash adjustments related to unconsolidated joint venture	394		777		1,337		2,923
Other non-cash adjustments	110		(3)		137		95

AFFO attributable to common stockholders	$	94,804	$	87,656	$	273,920	$	303,195

FFO attributable to common stockholders per diluted common share	$	0.41	$	0.45	$	1.25	$	1.64

AFFO attributable to common stockholders per diluted common share	$	0.46	$	0.46	$	1.32	$	1.63

Weighted average number of common shares outstanding, diluted:
FFO attributable to common stockholders	206,727,167		191,952,389		206,442,674		184,698,411

AFFO attributable to common stockholders	207,523,386		192,590,320		207,288,178		185,480,674

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Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income attributable to common stockholders $ 12,534
$ 22,776
$ 46,756
$ 39,419
Depreciation and amortization of real estate assets 25,933
17,102
62,290
51,273
Net (gain) loss on sale of real estate (582 ) (1,451 ) (4,614 ) 3,203
Impairment of real estate —
—
—
29,811

FFO attributable to common stockholders 37,885
38,427
104,432
123,706

Merger and acquisition costs⁽¹⁾
23,299
1,051
29,750
1,222
Stock-based compensation expense ⁽¹⁾
2,669
2,485
6,988
6,137
Straight-line rental income adjustments (8,682 ) (5,593 ) (18,260 ) (16,710 )
Amortization of above and below market lease intangibles, net 637
—
637
—
Non-cash interest income adjustments (188 ) 106
(137 ) 549
Amortization of deferred financing costs 1,574
1,273
4,132
3,767
Non-cash portion of loss on extinguishment of debt 553
—
553
556
Change in fair value of contingent consideration 270
100
(552 ) 50
Provision for doubtful straight-line rental income, loan losses and other reserves 4,886
830
6,810
3,445
Other non-cash adjustments⁽²⁾
500
(230 ) 1,371
(25 )

AFFO attributable to common stockholders $ 63,403
$ 38,449
$ 135,724
$ 122,697

FFOattributable to common stockholders per diluted common share
$ 0.34
$ 0.59
$ 1.28
$ 1.89

AFFO attributable to common stockholders per diluted common share $ 0.56
$ 0.58
$ 1.66
$ 1.86

Weighted average number of common shares outstanding, diluted:
FFO attributable to common stockholders 112,418,100
65,591,428
81,429,044
65,470,589

AFFO attributable to common stockholders 112,693,779
65,872,688
81,741,288
65,854,782


⁽¹⁾	Merger and acquisition costs incurred during the three and nine months ended September 30, 2017 primarily relate to the CCP Merger. Merger and acquisition costs include $1.3 million of stock-based compensation expense related to former CCP employees.


⁽²⁾	~~Other non-cash adjustments include amortization of debt premiums/discounts and non cash interest expense related to our interest rate hedges.~~

~~Set~~The following table sets forth ~~below is~~ additional information related to certain other items included in net income attributable to common stockholders above, and the portions of each that are included in FFO and AFFO attributable to common stockholders, which may be helpful in assessing our operating results. Please ~~see the accompanying condensed consolidated statements~~refer to “—Results of ~~cash flows~~Operations” above for ~~details of our operating, investing, and financing cash activities.~~additional information regarding these items (in millions):

~~Significant Items Included in FFO and AFFO Attributable to Common Stockholders:~~

During the three and nine months ended September 30, 2017, we incurred $23.3 million and $29.8 million, respectively, of merger and acquisition costs in connection with the CCP Merger. These entire amounts are included in FFO for the three and nine months ended September 30, 2017 and $4.3 million is included in AFFO for the three and nine months ended September 30, 2017.

During the three and nine months ended September 30, 2017, we incurred $4.3 million of transition expenses in connection with the CCP Merger primarily consisting of salaries and severance benefits. This entire amount is included in FFO and AFFO for the three and nine months ended September 30, 2017.

During the three and nine months ended September 30, 2017, we recognized $0.1 million and $3.1 million of other income, respectively. Other income includes $0.4 million and $2.7 million, respectively, related to the amortization of lease termination payments related to a memorandum of understanding entered into with Genesis regarding five Genesis facilities (of which one was owned as of September 30, 2017). Other income also includes ($0.3) million and

$0.5 million, respectively, related to adjusting the value of our contingent consideration liability related to the acquisition of a senior housing community. These amounts in their entirety are included in FFO for the three and nine months ended September 30, 2017, and $0.4 million and $2.8 million is included in AFFO for the three and nine months ended September 30, 2017, respectively.

During the three and nine months ended September 30, 2017, we recognized $5.1 million and $7.5 million, respectively, in provision for doubtful accounts. Loan loss reserves increased by $2.9 million and $4.9 million, respectively, general reserves on straight-line rental income increased by $0.6 million and $0.9 million, respectively, and reserves for cash rental income increased by $0.3 million and $0.4 million, respectively, during the three and nine months ended September 30, 2017. These amounts in their entirety are included in FFO for the three and nine months ended September 30, 2017 and $0.3 million and $0.4 million is included in AFFO for the three and nine months ended September 30, 2017, respectively.

During the three and nine months ended September 30, 2017, we recognized $0.6 million of loss on extinguishment of debt related to write-offs of deferred financing costs in connection with amending the Prior Credit Facility. During the nine months ended September 30, 2016, we recognized $0.6 million of loss on extinguishment of debt related to write-offs of deferred financing costs in connection with amending the 2014 revolving credit facility and 2015 Canadian term loan. These amounts in their entirety are included in FFO for the three and nine months ended September 30, 2017 and the nine months ended September 30, 2016.

During the three and nine months ended September 30, 2016, we recognized $0.5 million and $3.3 million, respectively, in provision for doubtful accounts. Loan loss reserves increased by $0.3 million and $2.3 million, respectively, general reserves on straight-line rental income increased by $0.5 million and $1.3 million, respectively, and reserves for cash renal income decreased by $0.3 million during the three and nine months ended September 30, 2016. These amounts in their entirety are included in FFO for the three and nine months ended September 30, 2016 and ($0.3) million and ($0.2) million, respectively, are included in AFFO for the three and nine months ended September 30, 2016.

During the three and nine months ended September 30, 2016, we recognized $0.6 million and $4.4 million of default interest income related to various investments in loans receivable. These amounts in their entirety are included in FFO and AFFO for the three and nine months ended September 30, 2016.

During the three and nine months ended September 30, 2016, we recognized $2.9 million and $5.3 million of other income, respectively, primarily due to lease termination payments related to a memorandum of understanding entered into with Genesis regarding five Genesis facilities. These amounts in their entirety are included in FFO for the three and nine months ended September 30, 2016, and $2.6 million and $5.0 million, respectively, are included in AFFO for the three and nine months ended September 30, 2016.

During the three and nine months ended September 30, 2016, we recognized $0.6 million of merger and acquisition costs not typically incurred related to the acquisition of one skilled nursing/transitional care facility. This entire amount is included in FFO for the three and nine months ended ~~September 30, 2016~~.


	Three Months Ended September 30,												Nine Months Ended September 30,
	2020		2019		2020		2019		2020		2019		2020		2019		2020		2019		2020		2019
	Net Income				FFO				AFFO				Net Income				FFO				AFFO
Rental and related revenues:
Reduction of revenues related to non-cash receivable balances / lease intangible write-offs	$	14.3	$	1.5	$	14.3	$	1.5	$	—	$	—	$	20.8	$	7.4	$	20.8	$	7.4	$	—	$	—
Resident fess and services:
CARES Act grant income	1.2		—		1.2		—		1.2		—		1.2		—		1.2		—		1.2		—
Interest and other income:
Lease termination income	0.3		—		0.3		—		0.3		—		0.3		66.9		0.3		66.9		0.3		57.2
Incremental interest expense related to the redemption of the 2021 Notes	—		—		—		—		—		—		—		1.0		—		1.0		—		1.0
Senior housing - managed portfolio operating expenses:
COVID-19 pandemic related expenses	1.2		—		1.2		—		1.2		—		3.2		—		3.2		—		3.2		—
General and administrative expense:
CCP transition expenses	—		0.1		—		0.1		—		0.1		0.1		0.2		0.1		0.2		0.1		0.2
Merger and acquisition costs	—		0.1		—		0.1		—		—		0.4		0.2		0.4		0.2		—		—
(Recovery of) provision for doubtful accounts	(0.1)		0.1		(0.1)		0.1		—		—		0.7		1.5		0.7		1.5		—		—
Loss on extinguishment of debt	0.1		0.6		0.1		0.6		—		—		0.5		10.8		0.5		10.8		—		6.9
Other income	0.1		0.2		0.1		0.2		0.2		0.2		2.3		0.4		2.3		0.4		2.3		0.4
Loss from unconsolidated joint venture:
CARES Act grant income	3.0		—		3.0		—		3.0		—		3.0		—		3.0		—		3.0		—
Deferred income tax benefit (expense)	0.1		(0.6)		0.1		(0.6)		—		—		(0.3)		(1.7)		(0.3)		(1.7)		—		—
COVID-19 pandemic related expenses	1.3		—		1.3		—		1.3		—		4.1		—		4.1		—		4.1		—

Liquidity and Capital Resources

As of September 30, ~~2017,~~2020, we had approximately ~~$779.6~~$979.0 million in liquidity, consisting of unrestricted cash and cash equivalents of ~~$30.6~~$35.0 million ~~(excluding joint venture cash and cash equivalents),~~ and available borrowings under our Revolving Credit Facility of ~~$749.0~~$944.0 million. The Credit ~~Facility~~Agreement also contains an accordion feature that can increase the total available borrowings to ~~$2.5~~$2.75 billion (from U.S. ~~$2.1~~$2.0 billion plus CAD $125.0 million), subject to terms and conditions.

We have filed a shelf registration statement ~~on Form S-3~~ with the SEC that expires in ~~January 2020,~~December 2022, which ~~will allow~~allows us to offer and sell shares of common stock, preferred stock, warrants, rights, units, and certain of our subsidiaries to offer and sell debt securities, through underwriters, dealers or agents or directly to purchasers, on a continuous or delayed basis, in amounts, at prices and on terms we determine at the time of the offering, subject to market conditions.

On ~~September 28, 2017,~~December 11, 2019, we ~~completed~~established an ~~underwritten public~~at-the-market equity offering ~~of 16.0 million newly issued~~program (the “ATM Program”) pursuant to which shares of our common stock having an aggregate gross sales price of up to $400.0 million may be sold from time to time (i) by us through a consortium of banks acting as sales agents or directly to the banks acting as principals or (ii) by a consortium of banks acting as forward sellers on behalf of any forward purchasers pursuant to ~~an effective registration statement. The underwriters exercised their option to purchase additional shares, and on October 2, 2017,~~a forward sale agreement. During the three months ended September 30, 2020, we issued an additional 2.4 million newly issued shares of our common stock pursuant to an effective registration statement. We received net proceeds, before expenses, of $370.9 million from the offering, after giving effect to the issuance and sale of all 18.4sold 1.4 million shares ~~of common stock,~~under the ATM Program at aan average price of ~~$21.00~~$15.70 per ~~share. These~~share, generating gross proceeds ~~were used to repay borrowings outstanding~~of $21.4 million, before $0.3 million of commissions. During the nine months ended September 30, 2020, we sold 1.6 million shares under the ~~Revolving Credit Facility.~~ATM Program at an average price of $16.26 per share, generating gross proceeds of

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$25.3 million, before $0.4 million of commissions. As of September 30, 2020, we have not utilized the forward feature of the ATM Program and we had $314.7 million available under the ATM Program. Subject to market conditions, we expect to use proceeds from our ATM Program to reduce our outstanding indebtedness and to finance future investments in properties.

Based on our current assessment of the impact of the COVID-19 pandemic on our company, we believe that our available cash, operating cash flows and borrowings available to us under ~~the~~our Revolving Credit Facility provide sufficient funds for our operations, scheduled debt service payments ~~with respect to our Senior Notes, secured~~

~~indebtedness on our properties,~~ and dividend requirements for the next twelve months. In addition, we do not believe that the restrictions under our Senior Notes Indentures (as defined below) or Credit Agreement significantly limit our ability to use our available liquidity for these purposes.

WeGiven current market conditions, we expect to use our available liquidity for general corporate purposes and to fund operations as necessary. Recent disruptions in the equity and debt markets have significantly increased our cost of capital and have made it difficult to establish market values for potential real estate investments, and accordingly we do not expect to make any material real estate investments as long as these market conditions persist.

Should market conditions improve, we intend to once again invest in additional healthcare properties as suitable opportunities arise and adequate sources of financing are available. We expect that future investments in properties, including any improvements or renovations of current or newly-acquired properties, will depend on and will be financed, in whole or in part, by our existing cash, borrowings available to us under our Revolving Credit Facility, future borrowings or the proceeds from issuances of common stock (including through our ATM Program), preferred stock, debt or other securities. In addition, we may seek financing from U.S. government agencies, including through Fannie Mae, Freddie Mac and ~~HUD,~~the U.S. Department of Housing and Urban Development, in appropriate circumstances in connection with acquisitions. We also use derivative instruments in the normal course of business to mitigate interest rate and foreign currency risk.

Cash Flows from Operating Activities

Net cash provided by operating activities was ~~$49.8~~$265.5 million for the nine months ended September 30, ~~2017~~.2020. Operating cash inflows were derived primarily from the rental payments received under our lease agreements, resident fees and services net of the corresponding operating expenses and interest payments from borrowers under our loan investments. Operating cash outflows consisted primarily of interest payments on borrowings and payment of general and administrative expenses, including ~~merger~~corporate overhead. We expect our annualized cash flows provided by operating activities to fluctuate as a result of completed investment and ~~acquisition costs primarily related to the CCP Merger~~disposition activity and ~~corporate overhead.~~anticipated future changes in our portfolio.

Cash Flows from Investing Activities

During the nine months ended September 30, ~~2017~~,2020, net cash used in investing activities was ~~$303.1~~$130.5 million and ~~consisted of $393.1~~included $92.9 million used infor the acquisition of ~~21 skilled nursing/transitional care~~four facilities, $32.4 million used for additions to real estate, $20.1 million used to provide funding for a preferred equity investment and ~~one senior housing community, $5.6~~$1.7 million used to provide additional funding for existing loans receivable, ~~$2.7 million used to fund preferred equity investments and $3.2 million used for tenant improvements,~~ partially offset by ~~$77.9 million in cash acquired in the CCP Merger, $11.7~~$8.8 million in sales proceeds related to the disposition of ~~four skilled nursing/transitional care~~seven real estate facilities, ~~$8.7~~$3.4 million in repayments of preferred equity investments, $3.1 million in repayments of loans receivable and ~~$3.2~~$1.3 million in ~~repayments~~distributions in excess of ~~preferred equity investments.~~

~~We expect to continue using available liquidity in connection with anticipated future real estate investments, loan originations and preferred equity investments.~~earnings from unconsolidated joint venture.

Cash Flows from Financing Activities

During the nine months ended September 30, ~~2017,~~2020, net cash ~~provided by~~used in financing activities ~~consisted~~was $142.0 million and included $215.7 million of ~~$319.0~~dividends paid to stockholders, $2.4 million inof principal repayments on secured debt and $0.8 million of payments of deferred financing costs, partially offset by $21.0 million of net proceeds from ~~the September 2017 common stock offering less~~shares sold through our ATM Program, net of payroll tax payments related to the issuance of common stock pursuant to equity compensation arrangements and $181.0 million in proceeds from the U.S. term loans, partially offset by $86.8 million of dividends paid to stockholders, $3.1 million of principal repayments of secured debt and $15.3 million of payments for deferred financing costs primarily associated with the new Credit Facility.arrangements. In addition, during the nine months ended September 30, ~~2017~~,2020, we ~~repaid~~borrowed a net amount of ~~$137.0~~$56.0 million on our Revolving Credit Facility.

In March 2020, we announced a significant reduction to our quarterly dividend, which reduction was implemented by our board of directors on May 6, 2020 when it declared a quarterly cash dividend of $0.30 per share of common stock. We took this step to help focus our capital resources and liquidity on maintaining our balance sheet strength and enhancing our ability to assist our operators in their time of need. We expect that our board of directors will re-evaluate the quarterly dividend once the COVID-19 pandemic has passed.

Please see the accompanying condensed consolidated statements of cash flows for details of our operating, investing and financing cash activities.

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Loan Agreements

~~2021~~2024 Notes. On ~~January 23, 2014,~~May 29, 2019, the Operating Partnership and Sabra Capital Corporation, wholly owned subsidiaries of Sabra (together, the ~~Company (the~~ “Issuers”), issued ~~$350.0~~$300.0 million aggregate principal amount of ~~5.5%~~4.80% senior ~~unsecured~~ notes due ~~2021~~2024 (the ~~“Existing 2021~~“2024 Notes”), providing net proceeds of approximately ~~$340.8~~$295.3 million after deducting underwriting discounts and other offering expenses. On October 10, 2014, the Issuers issued an additional $150.0 million aggregate principal amount of 5.5% senior unsecured notes due 2021 (together with the Existing 2021 Notes, the “2021 Notes”), providing net proceeds of approximately $145.6 million (not including pre-issuance accrued interest), after deducting underwriting discounts and other offering expenses and a yield-to-maturity of 5.593%.

~~2023 Notes.~~ On May 23, 2013, the Issuers issued $200.0 million aggregate principal amount of 5.375% senior notes due 2023 (the “2023 Notes”), providing net proceeds of approximately $194.6 million after deducting underwriting discounts and other offering expenses.

~~2026 and 2027 Notes.~~In connection with the October 2019 redemption of other senior notes of the Issuers, Sabra Capital Corporation’s obligations as a co-issuer were automatically released and discharged.

2026 and 2027 Notes. In connection with our merger with CCP, ~~Merger,~~ on August 17, 2017, Sabra assumed $500 million aggregate principal amount of 5.125% senior notes due 2026 (the “2026 Notes”) and $100 million aggregate principal amount of ~~5.38%~~5.88% senior notes due 2027 (the “2027 Notes”).

2029 Notes. On October 7, 2019, the Issuers issued $350.0 million aggregate principal amount of 3.90% senior notes due 2029 (the “2029 Notes” and, together with the ~~2021~~2024 Notes, the ~~2023~~2026 Notes and the ~~2026~~2027 Notes, the “Senior Notes”)., providing net proceeds of $340.5 million after deducting underwriting discounts and other offering expenses. In connection with the October 2019 redemption of other senior notes of the Issuers, Sabra Capital Corporation’s obligations as a co-issuer were automatically released and discharged.

See Note 7, “Debt,” in the Notes to Condensed Consolidated Financial Statements for additional information concerning the Senior Notes, including information regarding the indentures and agreements governing the Senior Notes (the “Senior Notes Indentures”). As of September 30, ~~2017~~,2020, we were in compliance with all applicable covenants under the Senior Notes Indentures.

Guarantor Financial Information. The 2024 Notes are issued by the Operating Partnership and fully and unconditionally guaranteed, jointly and severally, by us and one of our non-operating subsidiaries, subject to release under certain customary circumstances as described below. In connection with the Operating Partnership’s assumption of the 2026 Notes, we have fully and unconditionally guaranteed the 2026 Notes, subject to release under certain circumstances as described below. The 2029 Notes are issued by the Operating Partnership and guaranteed, fully and unconditionally, by us.

These guarantees are subordinated to all existing and future senior debt and senior guarantees of the applicable guarantors and are unsecured. We conduct all of our business through and derive virtually all of our income from our subsidiaries. Therefore, our ability to make required payments with respect to our indebtedness (including the Senior Notes) and other obligations depends on the financial results and condition of our subsidiaries and our ability to receive funds from our subsidiaries.

A guarantor will be automatically and unconditionally released from its obligations under the guarantee with respect to the 2024 Notes in the event of:

•Any sale of the subsidiary guarantor or of all or substantially all of its assets;

•A merger or consolidation of the subsidiary guarantor with the Operating Partnership or Sabra, provided that the surviving entity remains a guarantor;

•The requirements for legal defeasance or covenant defeasance or to discharge the indentures governing the 2024 Notes have been satisfied;

•A liquidation or dissolution, to the extent permitted under the indenture governing the 2024 Notes, of the subsidiary guarantor;

•The release or discharge of the guaranty that resulted in the creation of the subsidiary guaranty, except a discharge or release by or as a result of payment under such guaranty; or

•If the subsidiary guarantor is not a guarantor or is not otherwise liable in respect of any obligations under any credit facility (as defined in the indenture governing the 2024 Notes) of us or any of our subsidiaries.

We will be automatically and unconditionally released from our obligations under the guarantee with respect to the 2026 Notes in the event of:

•A liquidation or dissolution, to the extent permitted under the indenture governing the 2026 Notes;

•A merger or consolidation, provided that the surviving entity remains a guarantor; or

•The requirements for legal defeasance or covenant defeasance or to discharge the indenture governing the 2026 Notes have been satisfied.

Pursuant to amendments to Regulation S-X, the following aggregate summarized financial information is provided for Sabra, the Operating Partnership and Sabra Health Care, L.L.C. (the guarantor subsidiary of the 2024 Notes). This aggregate summarized financial information has been prepared from the books and records maintained by us, the Operating Partnership

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and Sabra Health Care, L.L.C. The aggregate summarized financial information does not include the investments in non-guarantor subsidiaries nor the earnings from non-guarantor subsidiaries and therefore is not necessarily indicative of the results of operations or financial position had the Operating Partnership and Sabra Health Care, L.L.C. operated as independent entities. Intercompany transactions have been eliminated. The aggregate summarized balance sheet information as of September 30, 2020 and December 31, 2019 and aggregate summarized statement of loss information for the nine months ended September 30, 2020 is as follows (in thousands):


	September 30, 2020		December 31, 2019
Total assets	$	49,462	$	52,597
Total liabilities	2,336,531		2,241,501

	Nine Months Ended September 30, 2020
Total revenues	342
Total expenses	88,917
Net loss	(88,963)
Net loss attributable to common stockholders	(88,963)

Credit ~~Facility~~Agreement. Effective on ~~August 17, 2017,~~September 9, 2019, the Operating Partnership and Sabra Canadian Holdings, LLC (together, the “Borrowers”), Sabra and the other parties thereto entered into a ~~fourth~~fifth amended and restated unsecured credit ~~facility~~agreement (the “Credit ~~Facility”~~Agreement”).

The Credit ~~Facility~~Agreement includes a $1.0 billion ~~Revolving~~revolving credit facility (the “Revolving Credit ~~Facility, $1.1 billion~~Facility”), $955.0 million in U.S. dollar term loans and a CAD ~~$125~~$125.0 million Canadian dollar term loan (collectively, the “Term Loans”). Further, up to ~~$175~~$175.0 million of the Revolving Credit Facility may be used for borrowings in certain foreign currencies. The Credit ~~Facility~~Agreement also contains an accordion feature that can increase the total available borrowings to ~~$2.5~~$2.75 billion, subject to terms and conditions.

The Revolving Credit Facility has a maturity date of ~~August 17, 2021,~~September 9, 2023, and includes two six-month extension options. ~~$200~~$105.0 million of the U.S. dollar Term Loans has a maturity date of ~~August 17, 2020,~~September 9, 2022, $350.0 million of the U.S. dollar Term Loans has a maturity date of September 9, 2023, and the other Term Loans have a maturity date of ~~August 17, 2022.~~September 9, 2024.

The obligations of the Borrowers under the Credit ~~Facility~~Agreement are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by us and ~~certain~~one of our ~~subsidiaries.~~non-operating subsidiaries, subject to release under certain customary circumstances.

See Note 7, “Debt,” in the Notes to Condensed Consolidated Financial Statements for additional information concerning the Credit ~~Facility,~~Agreement, including information regarding covenants contained in the Credit ~~Facility.~~Agreement. As of September 30, ~~2017~~,2020, we were in compliance with all applicable covenants under the Credit ~~Facility.~~Agreement.

Secured Indebtedness

OfAs of September 30, 2020 and December 31, 2019, 13 and 16 of our~~530~~ properties held for investment ~~30 are~~were subject to secured indebtedness to third parties, ~~that, as~~respectively. As of September 30, ~~2017, totaled approximately~~ ~~$260.4 million. As of~~ ~~September 30, 2017~~2020 and December 31, ~~2016~~,2019, our secured debt consisted of the following (dollars in thousands):


Interest Rate Type	Principal Balance as of September 30, 2020 (1)		Principal Balance as of December 31, 2019 (1)		Weighted Average Interest Rate at September 30, 2020 (2)		Maturity Date
Fixed Rate	$	80,124	$	114,777	3.68	%	December 2021 - August 2051

(1) Principal balance does not include deferred financing costs, net of $1.1 million and $1.7 million as of September 30, 2020 and December 31, 2019, respectively.

(2) Weighted average interest rate includes private mortgage insurance.

Interest Rate Type
Principal Balance as of
September 30, 2017 ⁽¹⁾

Principal Balance as of
December 31, 2016 ⁽¹⁾

Weighted Average
Effective Interest Rate at
September 30, 2017 ⁽²⁾
Maturity
Date
Fixed Rate $ 161,871
$ 163,638
3.87 % December 2021 -
August 2051
Variable Rate 98,500
—
3.02 % July 2019
$ 260,371
$ 163,638
3.55 %

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⁽¹⁾	~~Principal balance does not include deferred financing costs, net of $2.8 million and $2.9 million as of September 30, 2017 and December 31, 2016, respectively.~~


⁽²⁾	~~Weighted average effective interest rate includes private mortgage insurance.~~

~~On August 17, 2017, in connection with the CCP Merger, we assumed a $98.5 million secured term loan that bears interest at LIBOR plus 1.80% and matures in July 2019.~~

Capital Expenditures

~~There were $3.2~~We had $32.4 million and ~~$0.9~~$16.0 million of capital expenditures for the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively. ~~The capital expenditures for the nine months ended September 30, 2017 and 2016 include $22,000 and $0.1 million, respectively, of capital expenditures for corporate office needs.~~ There are no present plans for the improvement or development of any unimproved or undeveloped property; however, from time to time we may agree to fund improvements our tenants make at our facilities. Accordingly, we anticipate that our aggregate capital expenditure requirements for the next 12 months will ~~not exceed $67.0 million, and that such expenditures will~~ principally be for improvements to our facilities and will not exceed $64 million, of which $31 million will directly result in incremental rental income.

Dividends

We paid dividends of ~~$86.8~~$215.7 million on our common ~~and preferred~~ stock during the nine months ended September 30, ~~2017.~~2020. On November ~~1, 2017,~~5, 2020, our board of directors declared a quarterly cash dividend of ~~$0.5201087~~$0.30 per share of common stock, which consists of (i) a full quarter dividend of $0.45 per share and (ii) $0.0701087 per share, which is the difference between the prorated dividend paid on August 18, 2017 and our previous full quarter dividend of $0.43 per share.stock. The dividend will be paid on November 30, ~~2017~~2020 to common stockholders of record as of November 15, 2017. Also on November 1, 2017, our board of directors declared a quarterly cash dividend of $0.4453125 per share of Series A Preferred Stock. The dividend will be paid on November 30, 2017 to preferred stockholders of record as of the close of business on November 15, 2017.

16, 2020.

Concentration of Credit Risk

Concentrations of credit risk arise when a number of operators, tenants or obligors related to our investments are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to us, to be similarly affected by changes in economic conditions. We regularly monitor our portfolio to assess potential concentrations of risks.

Management believes our current portfolio is reasonably diversified across healthcare related real estate and geographical location and does not contain any other significant concentration of credit risks. Our portfolio of ~~530~~425 real estate properties held for investment as of September 30, ~~2017~~2020 is diversified by location across the United States and Canada.

~~The following table provides information regarding significant~~For the three and nine months ended September 30, 2020, no tenant ~~relationships representing~~relationship represented 10% or more of our total ~~revenues as of September 30, 2017 (dollars in thousands):~~

Skilled Nursing Facility Reimbursement Rates

~~A portion~~For the nine months ended September 30, 2020 (excluding one-time lease termination income of $0.3 million), 53.1% of our ~~revenue is~~revenues was derived directly or indirectly from skilled nursing/transitional care facilities. Medicare reimburses skilled nursing facilities for Medicare Part A services under the Prospective Payment System (“PPS”), as implemented pursuant to the Balanced Budget Act of 1997 and modified pursuant to subsequent laws, most recently the Patient Protection and Affordable Care Act of 2010. PPS regulations predetermine a payment amount per patient, per day, based on a market basket index calculated for all covered costs. ~~The~~

Prior to October 1, 2019, the amount to be paid iswas determined by classifying each patient into one of 66 Resource Utilization Group (“RUG”) categories that ~~represent~~represented the level of services required to treat different conditions and levels of acuity.

The ~~current~~ system of 66 RUG categories, or Resource Utilization Group, version IV (“RUG IV”), became effective as of October 1, 2010. RUG IV resulted from research performed by the Centers for Medicare & Medicaid Services (“CMS”) and was part of ~~CMS's~~CMS’s continuing effort to increase the correlation of the cost of services to the condition of individual patients.

On July 31, ~~2017,~~2018, CMS issued a final rule, CMS-1696-F, which includes changes to the case-mix classification system used under the PPS and fiscal year 2019 Medicare payment updates.

CMS-1696-F includes a new case-mix classification system called the skilled nursing facility Patient-Driven Payment Model (“PDPM”) that became effective on October 1, 2019. PDPM reflects significant changes to the Resident Classification System, Version I (“RCS-I”) that was being considered to replace RUG IV as outlined in an Advanced Notice of Proposed Rulemaking released by CMS in May 2017.

PDPM focuses on clinically relevant factors, rather than volume-based service, for determining Medicare payment. PDPM adjusts Medicare payments based on each aspect of a resident’s care, most notably for non-therapy ancillaries, which are items and services not related to the provision of therapy such as drugs and medical supplies, thereby more accurately addressing costs associated with medically complex patients. It further adjusts the skilled nursing facility per diem payments to reflect varying costs throughout the stay and incorporates safeguards against potential financial incentives to ensure that beneficiaries receive care consistent with their unique needs and goals.

On July 30, 2019, CMS released final fiscal year ~~2018~~2020 Medicare rates for skilled nursing facilities providing an estimated net increase of 1.0% over fiscal year 2017 payments. The new payment rates became effective on October 1, 2017. In its final rule, CMS also revised and rebased the market basket index by updating the base year from fiscal year 2010 to fiscal year 2014.

~~On July 29, 2016, CMS released final fiscal year 2017 Medicare rates for skilled nursing facilities providing a net increase of~~ 2.4% over fiscal year ~~2016~~2019 payments (comprised of a market basket increase of ~~2.7%~~2.8% less the productivity adjustment of ~~0.3%~~0.4%). The new payment rates became effective on October 1, ~~2016.~~2019.

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On ~~November 16, 2015,~~July 31, 2020, CMS ~~finalized the Comprehensive Care~~released final fiscal year 2021 Medicare rates for Joint Replacement model, which began April 1, 2016 and holds hospitals accountable for the quality of care they deliver to Medicare fee-for-service beneficiaries for hip and knee replacements and/or other major leg procedures from surgery through recovery. Through this payment model, hospitals in 67 geographic areas receive additional payments if quality and spending performance are strong or, if not, potentially have to repay Medicare for a portion of the spending for care surrounding a lower extremity joint replacement (LEJR) procedure. As a result, Medicare revenues derived at skilled nursing facilities ~~related~~providing an estimated net increase of 2.2% over fiscal year 2020 payments (comprised of a market basket increase of 2.2% and no productivity adjustment). The new payment rates became effective on October 1, 2020.

In response to ~~lower extremity joint replacement~~the COVID-19 pandemic, several federal relief packages were approved that could benefit our tenants, especially our tenants that operate skilled nursing/transitional care facilities.

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (“Families First Act”). Under the Families First Act, a temporary 6.2% increase in Federal Medical Assistance Percentages (“FMAP”) was approved retroactive to January 1, 2020, and several states have directed FMAP funds to skilled nursing/transitional care facilities.

On March 27, 2020, President Trump signed into law The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act provides for a $175 billion fund for eligible health care providers, which includes skilled nursing/transitional care operators, and as of September 1, 2020 also includes assisted living facility operators. The CARES Act also includes a temporary suspension of 2% Medicare sequestration cut beginning May 1, 2020 through December 31, 2020, a deferral of the employer’s Social Security remittances through December 31, 2020, and the establishment of the Paycheck Protection Program, a Small Business Administration loan to businesses with fewer than 500 employees that may be partially forgivable.

In addition to the above, there have been other actions taken that benefit skilled nursing/transitional care operators, including the waiver of the requirement for skilled nursing/transitional care patients to have stayed in a hospital ~~discharges could be positively or negatively impacted~~for three days in ~~those geographic areas identified by CMS~~order for ~~mandatory participation~~services rendered in a skilled nursing/transitional care facility to qualify for Medicare Part A, the ~~bundled payment program.~~acceleration and advance of three months of Medicare billing, and relaxation of certification requirements for employees performing non-clinical services in these facilities.

The Department of Health and Human Services (“HHS”) extended the COVID-19 Public Health Emergency for another 90 days, effective October 23, 2020, which allows HHS to continue providing temporary regulatory waivers and new rules to equip skilled nursing facilities and some assisted living operators with flexibility to respond to the COVID-19 pandemic. The extension of the COVID-19 Public Health Emergency also extends the Federal Medical Assistance Percentages funding increase through March 31, 2021.

Obligations and Commitments

The following table summarizes our contractual obligations and commitments in future years, including our ~~Senior Notes, our Revolving Credit Facility, our Term Loans, our~~ secured indebtedness to third parties on certain of our properties, our Revolving Credit Facility, our Term Loans, our Senior Notes and our operating leases. The following table is presented as of September 30, ~~2017~~2020 (in thousands):


			October 1 through December 31, 2020				Year Ending December 31,
	Total				2021		2022		2023		2024		After 2024
Secured indebtedness (1)	$	105,872	$	1,280	$	20,062	$	4,161	$	4,161	$	4,161	$	72,047
Revolving Credit Facility (2)	65,543		818		3,243		3,243		58,239		—		—
Term Loans (3)	1,136,413		6,292		26,177		130,370		370,390		603,184		—
Senior Notes (4)	1,635,885		16,715		59,055		59,055		59,055		359,055		1,082,950

Operating leases	2,561		108		445		467		507		529		505
Total	$	2,946,274	$	25,213	$	108,982	$	197,296	$	492,352	$	966,929	$	1,155,502

October 1 Through Year Ending December 31,
Total December 31, 2017 2018 2019 2020 2021 After 2021
Secured indebtedness ⁽¹⁾
$ 344,361
$ 3,207
$ 12,804
$ 109,972
$ 9,784
$ 25,619
$ 182,975
Revolving Credit Facility ⁽²⁾
285,281
2,226
8,830
8,830
8,855
256,540
—
Term Loans ⁽³⁾
1,346,671
8,169
32,408
32,408
230,303
26,520
1,016,863
Senior Notes ⁽⁴⁾
1,745,175
8,065
69,255
69,255
69,255
555,505
973,840
Operating leases 4,108
139
651
440
426
445
2,007
Total $ 3,725,596
$ 21,806
$ 123,948
$ 220,905
$ 318,623
$ 864,629
$ 2,175,685
(1)Secured indebtedness includes principal payments and interest payments through the applicable maturity dates. Total interest on secured indebtedness, based on contractual rates, is $25.7 million, which is attributable to fixed rate debt.

(2)Revolving Credit Facility includes interest payments and payments related to the facility fee due to the lenders based on the amount of commitments under the Revolving Credit Facility through the maturity date (assuming no exercise of our two six-month extension options) totaling $9.5 million.


⁽¹⁾ (3)Term Loans includes interest payments through the applicable maturity dates totaling $87.9 million, which reflects the impact of interest rate swaps. (4)Senior Notes includes interest payments through the applicable maturity dates totaling $385.9 million.	Secured indebtedness includes principal payments and interest payments through the maturity dates. Total interest on secured indebtedness, based on contractual rates, is $84.0 million, of which $5.5 million is attributable to variable rate debt.


⁽²⁾	Revolving Credit Facility includes payments related to the facility fee due to the lenders based on the amount of commitments under the Revolving Credit Facility and also includes interest payments through the maturity date (assuming no exercise of its two six-month extension options). Total interest on the Revolving Credit Facility is $34.3 million.


⁽³⁾	~~Term Loans include interest payments through the applicable maturity dates totaling $146.4 million.~~


⁽⁴⁾	~~Senior Notes includes interest payments through the maturity dates. Total interest on the Senior Notes is $445.2 million~~.

In addition to the above, as of September 30, ~~2017,~~2020, we have committed to provide up to ~~$13.5~~$2.2 million of future funding related to ~~five loan receivable investments. The loan~~four loans receivable investments ~~have~~with maturity dates ranging from ~~January 2018~~March 2021 to ~~February 2027.~~December 2022.

Off-Balance Sheet Arrangements

~~None.~~We have a 49% interest in an unconsolidated joint venture. See Note 4, “Investment in Real Estate Properties—Investment in Unconsolidated Joint Venture,” in the Notes to Condensed Consolidated Financial Statements for additional

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information. We have no other off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, primarily related to adverse changes in interest rates and the exchange rate for Canadian dollars. We use derivative instruments in the normal course of business to mitigate interest rate and foreign currency risk. We do not use derivative financial instruments for speculative or trading purposes. See Note 8, “Derivative and Hedging Instruments,” in the Notes to ~~the~~ Condensed Consolidated Financial Statements for further discussion onof our derivative instruments.

Interest rate risk. As of September 30, ~~2017,~~2020, our indebtedness included $1.3 billion aggregate principal amount of Senior Notes outstanding, ~~$260.4~~$80.1 million of secured indebtedness to third parties on certain of the properties that our subsidiaries own, ~~$1.2~~$1.0 billion in Term Loans and ~~$251.0~~$56.0 million outstanding under the Revolving Credit Facility. As of September 30, ~~2017,~~2020, we had ~~$1.5~~$1.1 billion of outstanding variable rate ~~indebtedness. In addition, as of September 30, 2017, we had $749.0~~indebtedness and $944.0 million available for borrowing under our Revolving Credit Facility. Additionally, as of September 30, 2020, our share of unconsolidated joint venture debt was $376.0 million, all of which was variable rate indebtedness.

We expect to manage our exposure to interest rate risk by maintaining a mix of fixed and variable rates for our indebtedness. We also may manage, or hedge, interest rate risks related to our borrowings through interest rate swap agreements. As of September 30, ~~2017,~~2020, we had 10 interest rate swaps that fix the LIBOR portion of the interest rate for $845.0 million of LIBOR-based borrowings under the U.S. dollar Term Loans at a weighted average rate of ~~1.19%~~1.24% and ~~two~~an interest rate ~~swaps~~swap that ~~fix~~fixes the ~~CDOR~~Canadian Dollar Offered Rate (“CDOR”) portion of the interest rate for CAD ~~$90.0 million and CAD $35.0~~$125.0 million of CDOR-based borrowings under the Canadian dollar Term Loan at ~~1.59% and~~a rate of 0.93%~~, respectively.~~. As of September 30, 2020, our share of unconsolidated joint venture debt included $368.4 million of LIBOR-based borrowings subject to interest rate cap agreements that cap the LIBOR portion of the interest rate at a weighted average rate of 2.89%.

From time to time, we may borrow under the Revolving Credit Facility to finance future investments in properties, including any improvements or renovations of current or newly acquired properties, or for other purposes. Because borrowings under the Revolving Credit Facility bear interest on the outstanding principal amount at a rate equal to an applicable interest margin plus, at our option, either (a) LIBOR or (b) a base rate determined as the greater of (i) the federal funds rate plus 0.5%, (ii) the prime rate, and (iii) one-month LIBOR plus 1.0%, the interest rate we will be required to pay on any such borrowings will depend on then applicable rates and may vary. An increase in interest rates could make the financing of any investment by us more costly. Rising interest rates could also limit our ability to refinance our debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness.

As of September 30, 2020, the index underlying our variable rate debt and our share of unconsolidated joint venture debt was below 100 basis points. Assuming a 100 basis point ~~increase/decrease~~increase in the ~~interest rate related~~index or a reduction of this index to ~~our variable rate debt~~zero, and after giving effect to the impact of interest rate ~~swap~~ derivative instruments, ~~interest expense~~net income would ~~increase/~~decrease by ~~$6.0~~$5.4 million or increase by $0.8 million, respectively, for the twelve months following September 30, ~~2017.~~2020.

Foreign currency risk. We are exposed to changes in foreign exchange rates as a result of our investments in Canadian real estate. Our foreign currency exposure is partially mitigated through the use of Canadian dollar denominated debt totaling CAD ~~$147.8~~$145.7 million and cross currency swap instruments. Based on our operating results for the three months ended September 30, ~~2017,~~2020, if the value of the Canadian dollar relative to the U.S. dollar were to increase or decrease by 10% compared to the average exchange rate during the three months ended September 30, ~~2017,~~2020, our cash flows would have decreased or increased, as applicable, by ~~$0.2~~$0.1 million.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, management, including our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon, and as of the date of, the evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of September 30, ~~2017~~2020 to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, ~~2017~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~On August 17, 2017, we completed the CCP Merger. We are continuing to integrate the acquired CCP operations into our overall internal control over financial reporting and will evaluate as part~~

Table of ~~our first internal control assessment that includes an~~Contents

assessment of CCP whether the CCP Merger resulted in any changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~For~~None of the Company or any of its subsidiaries is a ~~description~~party to, and none of their respective property is the subject of, any material legal proceeding, although we are from time to time party to legal proceedings that arise in the ordinary course of our legal proceedings, see “Legal Matters” in Part I, Item 1, Note 14 of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, which is incorporated by reference in response to this item.business.

ITEM 1A. RISK FACTORS

There have been no material changes in our assessment of our risk factors from those set forth in Part I, Item 1A of our ~~2016~~2019 Annual Report on Form 10-K, as updated by the risk ~~factors~~factor set forth in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2017.~~2020.

ITEM 6. EXHIBITS



Ex.		Description

2.1		Purchase and Sale Agreement and Joint Escrow Instructions, dated June 22, 2015, between Van Buren Street LLC, Randolph Road, LLC and St. Thomas More, LLC and Sabra Health Care Northeast, LLC (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed by Sabra Health Care REIT, Inc. on June 24, 2015).†

~~2.2~~	Purchase and Sale Agreement and Joint Escrow Instructions, dated June 25, 2015, between Marsh Pike, LLC and Sabra Hagerstown, LLC (incorporated by reference to Exhibit 2.2 of the Current Report on Form 8-K/A filed by Sabra Health Care REIT, Inc. on February 26, 2016).†

~~2.3~~	Agreement and Plan of Merger, dated as of May 7, 2017, by and among Sabra Health Care REIT, Inc., PR Sub, LLC, Sabra Health Care Limited Partnership, Care Capital Properties, Inc. and Care Capital Properties, LP (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed by Sabra Health Care REIT, Inc. on May 8, 2017).†

3.1		Articles of Amendment and Restatement of Sabra Health Care REIT, Inc., dated October 20, 2010, filed with the State Department of Assessments and Taxation of the State of Maryland on October 21, 2010 (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed by Sabra Health Care REIT, Inc. on October 26, 2010).

3.1.1		Articles Supplementary designating Sabra Health Care REIT, Inc.'s 7.125% Series A Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed by Sabra Health Care REIT, Inc. on March 21, 2013).

~~3.1.2~~	Articles of Amendment to the Articles of Amendment and Restatement of Sabra Health Care REIT, Inc., dated as of July 31, 2017 (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed by Sabra Health Care REIT, Inc. on July 31, 2017).

~~3.2~~3.1.2		Articles of Amendment to the Articles of Amendment and Restatement of Sabra Health Care REIT, Inc., dated as of June 9, 2020 (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed by Sabra Health Care REIT, Inc. on June 12, 2020).

3.2		Amended and Restated Bylaws of Sabra Health Care REIT, Inc. (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed by Sabra Health Care REIT, Inc. on ~~May 7, 2017)~~March 14, 2019).

~~4.1~~22.1		~~Indenture, dated as~~List of ~~July 14, 2016, by~~Subsidiary Issuers and ~~among~~Guarantors of Sabra Health Care ~~Capital Properties, LP, Care Capital Properties, Inc., Care Capital Properties GP, LLC and Regions Bank, as trustee (incorporated~~REIT, Inc . (inco rporated by reference to Exhibit ~~4.1~~22.1 of the ~~Current~~Quarterly Report on Form ~~8-K~~10-Q filed by Sabra Health Care REIT, Inc. on August ~~23, 2017)~~5, 2020).

~~4.2~~	First Supplemental Indenture, dated as of August 17, 2017, by and among Care Capital Properties, LP, PR Sub, LLC, Care Capital Properties GP, LLC and Regions Bank, as trustee (incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed by Sabra Health Care REIT, Inc. on August 23, 2017).

~~4.3~~	Second Supplemental Indenture, dated as of August 17, 2017, by and among Sabra Health Care Limited Partnership as successor to Care Capital Properties, LP, Sabra Health Care REIT, Inc., Care Capital Properties GP, LLC and Regions Bank, as trustee (incorporated by reference to Exhibit 4.3 of the Current Report on Form 8-K filed by Sabra Health Care REIT, Inc. on August 23, 2017).

~~4.4~~	Third Supplemental Indenture, dated as of August 17, 2017, by and among Sabra Health Care Limited Partnership, Sabra Health Care REIT, Inc., Care Capital Properties GP, LLC and Regions Bank, as trustee (incorporated by reference to Exhibit 4.4 of the Current Report on Form 8-K filed by Sabra Health Care REIT, Inc. on August 23, 2017).

~~4.5~~	Fourth Supplemental Indenture, dated as of August 18, 2017, by and among Sabra Health Care Limited Partnership, Sabra Health Care REIT, Inc. and Regions Bank, as trustee (incorporated by reference to Exhibit 4.5 of the Current Report on Form 8-K filed by Sabra Health Care REIT, Inc. on August 23, 2017).



~~Ex.~~31.1*		~~Description~~

~~10.1~~	Fourth Amended and Restated Credit Agreement, dated as of August 17, 2017, among Sabra Health Care Limited Partnership and Sabra Canadian Holdings, LLC, as Borrowers; Sabra Health Care REIT, Inc., as REIT Guarantor; the other guarantors party thereto; the lenders party thereto; Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer; Citizens Bank, National Association, Credit Agricole Corporate and Investment Bank and Wells Fargo Bank, N.A, as Co-Syndication Agents, Swing Line Lenders and L/C Issuers; BMO Harris Bank N.A., The Bank of Tokyo-Mitsubishi UFJ, LTD., Barclays Bank PLC, Compass Bank, Citibank, N.A., J.P. Morgan Chase Bank, N.A., Sumitomo Mitsui Banking Corporation, Suntrust Bank and UBS Securities LLC, as Co-Documentation Agents; and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Joint Lead Arranger and Sole Bookrunner; and Citizens Bank, National Association, Credit Agricole Corporate and Investment Bank and Wells Fargo Securities, LLC, as Joint Lead Arrangers (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by Sabra Health Care REIT, Inc. on August 17, 2017).

~~10.2+~~	Sabra Health Care REIT, Inc. 2009 Performance Incentive Plan, effective April 21, 2017 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by Sabra Health Care REIT, Inc. on June 21, 2017).

10.3+*	~~Form of Notice and Terms and Conditions of Stock Unit Award (for Non-Employee Directors).~~

12.1*	~~Statement Re: Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends.~~

31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL Instance ~~Document.~~Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		XBRL Taxonomy Extension Schema Document.

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document.

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Ex.			Description

104		~~Filed herewith.~~
**	~~Furnished herewith.~~
+	~~Designates a management compensation plan, contract or arrangement.~~Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.



†*			Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrants hereby agree to furnish supplementally copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission.Filed herewith.
**			Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		SABRA HEALTH CARE REIT, INC.

		~~SABRA HEALTH CARE REIT, INC.~~

Date: November ~~1, 2017~~5, 2020	By:		/S/ RICHARD K. MATROS
				Richard K. Matros
				Chairman, President and
				Chief Executive Officer
				(Principal Executive Officer)

Date: November ~~1, 2017~~5, 2020		By:		/S/ HAROLD W. ANDREWS, JR.
				Harold W. Andrews, Jr.
				Executive Vice President,
				Chief Financial Officer and Secretary
				(Principal Financial and Accounting Officer)

6048


			Page Numbers
PART I. FINANCIAL INFORMATION

Item 1.		~~Page~~ ~~Numbers~~
~~PART I. FINANCIAL INFORMATION~~

~~Item 1.~~	Financial Statements:

		Condensed Consolidated Balance Sheets	4

		Condensed Consolidated Statements of Income	5

		Condensed Consolidated Statements of Comprehensive Income (Loss)	6

		Condensed Consolidated Statements of Equity	7

		Condensed Consolidated Statements of Cash Flows	89

		Notes to Condensed Consolidated Financial Statements	910

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	4128

Item 3.		Quantitative and Qualitative Disclosures About Market Risk	5645

Item 4.		Controls and Procedures	5646

PART II. OTHER INFORMATION

Item 1.		Legal Proceedings	5847

Item 1a.		Risk Factors	5847

Item 6.		Exhibits	5847

Signatures			6049



	Preferred Stock			Common Stock				Additional Paid-in Capital			Cumulative Distributions in Excess of Net Income			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
	Shares	Amount		Shares		Amounts		Additional Paid-in Capital			Cumulative Distributions in Excess of Net Income			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance, December 31, 2015	5,750,000	$	58	65,182,335		$	652	$	1,202,541		$	(142,148	)	$	(7,333	)	$	1,053,770		$	106		$	1,053,876
Net income (loss)	—	—		—		—		—			47,101			—			47,101			(66		)	47,035
Other comprehensive loss	—	—		—		—		—			—			(2,049		)	(2,049		)	—			(2,049		)
Amortization of stock-based compensation	—	—		—		—		6,775			—			—			6,775			—			6,775
Common stock issuance, net	—	—		108,731		1		(1,104		)	—			—			(1,103		)	—			(1,103		)
Repurchase of common stock	—	—		(31,230	)	—		(725		)	—			—			(725		)	—			(725		)
Preferred dividends	—	—		—		—		—			(7,682		)	—			(7,682		)	—			(7,682		)
Common dividends ($1.25 per share)	—	—		—		—		—			(82,240		)	—			(82,240		)	—			(82,240		)
Balance, September 30, 2016	5,750,000	$	58	65,259,836		$	653	$	1,207,487		$	(184,969	)	$	(9,382	)	$	1,013,847		$	40		$	1,013,887


	Preferred Stock			Common Stock				Additional Paid-in Capital			Cumulative Distributions in Excess of Net Income			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
	Shares	Amount		Shares		Amounts		Additional Paid-in Capital			Cumulative Distributions in Excess of Net Income			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance, December 31, 2016	5,750,000	$	58	65,285,614		$	653	$	1,208,862		$	(192,201	)	$	(1,798	)	$	1,015,574		$	35		$	1,015,609
Net income (loss)	—	—		—		—		—			54,438			—			54,438			(42		)	54,396
Other comprehensive income	—	—		—		—		—			—			6,034			6,034			—			6,034
Change in noncontrolling interests	—	—		—		—		—			—			—			—			2,733			2,733
Amortization of stock-based compensation	—	—		—		—		8,768			—			—			8,768			—			8,768
Common stock issuance, net	—	—		110,546,599		1,105		2,370,880			—			—			2,371,985			—			2,371,985
Preferred dividends	—	—		—		—		—			(7,682		)	—			(7,682		)	—			(7,682		)
Common dividends ($1.21 per share)	—	—		—		—		—			(80,014		)	—			(80,014		)	—			(80,014		)
Balance, September 30, 2017	5,750,000	$	58	175,832,213		$	1,758	$	3,588,510		$	(225,459	)	$	4,236		$	3,369,103		$	2,726		$	3,371,829



Real estate investments	$	3,629,447
Loans receivable and other investments	57,064
Cash and cash equivalents	77,858
Restricted cash	779
Lease intangible assets, net	234,426
Accounts receivable, prepaid expenses and other assets, net	35,829
Secured debt, net	(98,500		)
Revolving credit facility	(362,000		)
Unsecured term loans	(674,000		)
Senior unsecured notes, net	(616,873		)
Accounts payable and accrued liabilities	(132,860		)
Lease intangible liabilities, net	(95,859		)
Noncontrolling interests	(2,733		)
Total consideration	$	2,052,578



		Three Months Ended				Nine Months Ended
		September 30, 2017
	Number of Investments	Rental Revenue		% of Total Revenue		Rental Revenue		% of Total Revenue

Genesis Healthcare, Inc.	76	$	20,257	18.1	%	$	60,470	25.3	%
Holiday AL Holdings, LP	21	9,813		8.8		29,438		12.3



October 1, 2017 through December 31, 2017	$	146,223
2018	590,222
2019	599,100
2020	592,748
2021	582,633
Thereafter	3,508,262
	$	6,019,188



Investment	Quantity as of September 30, 2017	Property Type	Principal Balance as of September 30, 2017 ⁽¹⁾		Book Value as of September 30, 2017			Book Value as of December 31, 2016			Weighted Average Contractual Interest Rate / Rate of Return as of September 30, 2017		Maturity Date as of September 30, 2017
Loans Receivable:
Mortgage	5	Skilled Nursing / Senior Housing	$	45,064	$	42,664		$	38,262		9.2	%	11/07/16- 02/10/27
Construction	2	Senior Housing	2,354		2,418			842			8.0	%	03/31/21- 05/31/22
Mezzanine	2	Senior Housing	34,640		28,391			9,656			10.3	%	02/28/18- 05/25/20
Pre-development	1	Senior Housing	2,357		2,357			4,023			9.0	%	04/01/20
Other	14	Multiple	44,926		27,859			—			8.6	%	10/28/17- 04/30/27
Debtor-in-possession	—	Acute Care Hospital	—		—			813			N/A		N/A

	24		129,341		103,689			53,596			9.3	%

Loan loss reserve			—		(6,211		)	(2,750		)

			$	129,341	$	97,478		$	50,846
Other Investments:
Preferred Equity	13	Skilled Nursing / Senior Housing	51,833		52,288			45,190			12.8	%	N/A

Total	37		$	181,174	$	149,766		$	96,036		10.3	%



Interest Rate Type	Book Value as of September 30, 2017 ⁽¹⁾		Book Value as of December 31, 2016⁽¹⁾		Weighted Average Effective Interest Rate at September 30, 2017 ⁽²⁾		Maturity Date
Fixed Rate	$	161,871	$	163,638	3.87	%	December 2021 - August 2051
Variable Rate	98,500		—		3.02	%	July 2019
	$	260,371	$	163,638	3.55	%



	Secured Indebtedness			Revolving Credit Facility ⁽¹⁾		Term Loans			Senior Notes			Total
October 1, 2017 through December 31, 2017	$	1,054		$	—	$	—		$	—		$	1,054
2018	4,304			—		—			—			4,304
2019	102,948			—		—			—			102,948
2020	4,598			—		200,000			—			204,598
2021	20,587			251,000		—			500,000			771,587
Thereafter	126,880			—		1,000,225			800,000			1,927,105
Total Debt	260,371			251,000		1,200,225			1,300,000			3,011,596
Premium, net	—			—		—			16,259			16,259
Deferred financing costs, net	(2,800		)	—		(9,338		)	(10,263		)	(22,401		)
Total Debt, Net	$	257,571		$	251,000	$	1,190,887		$	1,305,996		$	3,005,454



	As of December 31, 2016
							Gross Amounts Not Offset in the Balance Sheet
	Gross Amounts of Recognized Assets / Liabilities		Gross Amounts Offset in the Balance Sheet		Net Amounts of Assets / Liabilities presented in the Balance Sheet		Financial Instruments			Cash Collateral Received		Net Amount
Offsetting Assets:
Derivatives	$	11,240	$	—	$	11,240	$	(716	)	$	—	$	10,524
Offsetting Liabilities:
Derivatives	$	716	$	—	$	716	$	(716	)	$	—	$	—



	September 30, 2017						December 31, 2016
	Face Value ⁽¹⁾		Carrying Amount ⁽²⁾		Fair Value		Face Value ⁽¹⁾		Carrying Amount ⁽²⁾		Fair Value
Financial assets:
Loans receivable	$	129,341	$	97,478	$	97,722	$	53,484	$	50,846	$	51,914
Preferred equity investments	51,833		52,288		52,926		44,882		45,190		48,332
Financial liabilities:
Senior Notes	1,300,000		1,305,996		1,341,106		700,000		688,246		709,500
Secured indebtedness	260,371		257,571		248,041		163,638		160,752		150,091



Balance as of December 31, 2016	$	818
Decrease in contingent consideration liability	(552		)
Balance as of September 30, 2017	$	266



						Combined Non-Guarantor Subsidiaries of 2026 Notes⁽⁶⁾
	Parent Company⁽¹⁾			Operating Partnership⁽²⁾		Sabra Capital Corporation⁽³⁾		Combined Guarantor Subsidiaries of 2021 Notes and 2023 Notes⁽⁴⁾		Combined Non- Guarantor Subsidiaries of 2021 Notes and 2023 Notes⁽⁵⁾		Elimination			Consolidated
Assets
Real estate investments, net of accumulated depreciation	$	174		$	—	$	—	$	1,832,335	$	4,140,276	$	—		$	5,972,785
Loans receivable and other investments, net	(140		)	—		—		89,911		59,995		—			149,766
Cash and cash equivalents	25,214			—		—		1,014		4,645		—			30,873
Restricted cash	—			—		—		2,038		10,451		—			12,489
Lease intangible assets, net	—			—		—		22,801		240,016		—			262,817
Accounts receivable, prepaid expenses and other assets, net	2,219			30,483		—		87,304		43,771		(4,200		)	159,577
Intercompany	2,618,618			2,339,272		—		—		—		(4,957,890		)	—
Investment in subsidiaries	744,470			1,040,196		—		12,833		—		(1,797,499		)	—
Total assets	$	3,390,555		$	3,409,951	$	—	$	2,048,236	$	4,499,154	$	(6,759,589	)	$	6,588,307

Liabilities
Secured debt, net	$	—		$	—	$	—	$	—	$	257,571	$	—		$	257,571
Revolving credit facility	—			251,000		—		—		—		—			251,000
Term loans, net	—			1,091,939		—		98,948		—		—			1,190,887
Senior unsecured notes, net	—			1,305,996		—		—		—		—			1,305,996
Accounts payable and accrued liabilities	21,452			16,546		—		7,230		75,118		(4,200		)	116,146
Lease intangible liabilities, net	—			—		—		—		94,878		—			94,878
Intercompany	—			—		—		941,667		4,016,223		(4,957,890		)	—
Total liabilities	21,452			2,665,481		—		1,047,845		4,443,790		(4,962,090		)	3,216,478

Total Sabra Health Care REIT, Inc. stockholders' equity	3,369,103			744,470		—		1,000,391		52,638		(1,797,499		)	3,369,103
Noncontrolling interests	—			—		—		—		2,726		—			2,726
Total equity	3,369,103			744,470		—		1,000,391		55,364		(1,797,499		)	3,371,829
Total liabilities and equity	$	3,390,555		$	3,409,951	$	—	$	2,048,236	$	4,499,154	$	(6,759,589	)	$	6,588,307



			October 1 Through				Year Ending December 31,
	Total		December 31, 2017		2018		2019		2020		2021		After 2021
Secured indebtedness ⁽¹⁾	$	344,361	$	3,207	$	12,804	$	109,972	$	9,784	$	25,619	$	182,975
Revolving Credit Facility ⁽²⁾	285,281		2,226		8,830		8,830		8,855		256,540		—
Term Loans ⁽³⁾	1,346,671		8,169		32,408		32,408		230,303		26,520		1,016,863
Senior Notes ⁽⁴⁾	1,745,175		8,065		69,255		69,255		69,255		555,505		973,840
Operating leases	4,108		139		651		440		426		445		2,007
Total	$	3,725,596	$	21,806	$	123,948	$	220,905	$	318,623	$	864,629	$	2,175,685