July 23, 2018
VIA EDGAR
Mr. Isaac Esquivel
Accountant, Office of Real Estate and Commodities
Division of Corporation Finance
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
| Re: | Sabra Health Care REIT, Inc. |
Form10-K for the Fiscal Year Ended December 31, 2017 |
Form10-Q for the Quarterly Period Ended March 31, 2018 |
Filed on February 21, 2018 and May 9, 2018, respectively |
File No. 001-34950 |
Dear Mr. Esquivel:
This letter sets forth the response of Sabra Health Care REIT, Inc. (“Sabra,” the “Company” “we” or “our”) to the comments of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) contained in your letter dated July 16, 2018 (the “Comment Letter”), regarding the above-referenced filings with the Commission. For the convenience of the Staff, the Staff’s comment is restated in italics prior to the response to such comment.
Form10-Q for the Quarterly Period Ended March 31, 2018
2. Summary of Significant Accounting Policies
Recently Issued Accounting Standards Update, page 11
| 1. | Please tell us how you considered the disclosure requirements outlined in ASC606-10-50-12 through50-15 and606-10-50-17 through50-20 as it relates to your resident fees and services revenues. |
Response: In the “Recently Issued Accounting Standards Update” section of Note 2, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements in Sabra’s annual report on Form10-K for the fiscal year ended December 31, 2017, the Company included a discussion of the expected impact of the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”)No. 2014-09, Revenue from Contracts with Customers (“ASU2014-09”), ASUNo. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU2016-08”) and ASUNo. 2016-12, Narrow-Scope Improvements and Practical Expedients (“ASU2016-12”) (together, herein referred to as the “Revenue ASUs”).
Mr. Isaac Esquivel, July 23, 2018
In the above referenced discussion, the Company noted that it expected the impact of the Revenue ASUs to its consolidated financial statements to include “[a] requirement to disclose ancillary resident service revenue that is not included in the monthly base fees charged under resident agreements through its Senior Housing—Managed communities structures. The Company will separately disclose the amount, nature and timing of these ancillary resident service revenues in its future quarterly and annual reports.”
The Revenue ASUs became effective for the Company on January 1, 2018, and the adoption thereof had no material impact to beginning retained earnings as of January 1, 2018.
In the Company’s quarterly report on Form10-Q for the quarterly period ended March 31, 2018, the Company reported Resident Fee and Service Revenues of $17.5 million, which consisted primarily of monthly base fees under resident agreements under its Senior Housing – Managed communities structures. Revenues generated through these resident agreements are excluded, as leases, from the Revenue ASUs. For the three months ended March 31, 2018, ancillary resident service revenue that is not included in the monthly base fees charged under resident agreements represented less than 1% of the Company’s Total Revenues for the period. Accordingly, the Company concluded that these amounts were quantitatively and qualitatively immaterial to its condensed consolidated financial statements as of and for the three months ended March 31, 2018, and therefore did not include the disclosures outlined in ASC606-10-50-12 through50-15 and606-10-50-17 through50-20.
In future periods, the Company will continue to evaluate the quantitative and qualitative materiality of these ancillary resident service revenues and, if these amounts are determined to be material, the Company will include the relevant required disclosures under ASC 606.
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We appreciate the Staff’s comment and request that the Staff contact the undersigned at (949)679-0243 or by email at handrews@sabrahealth.com with any questions or comments regarding this letter.
Very truly yours,
/s/ Harold W. Andrews, Jr.
Harold W. Andrews, Jr.
Executive Vice President, Chief Financial
Officer and Secretary
| cc: | Michael Costa, Executive Vice President – Finance |
Sabra Health Care REIT, Inc. |
Renee Sarria |
PricewaterhouseCoopers LLP |
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