SBRA - Earnings call transcript Q4 2017 | Sabra Health Care REIT, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Sabra HealthCare REIT Fourth Quarter 2017 Earnings Conference Call. This call is being recorded. I would now like to turn the call over to Michael Costa, EVP Finance. Please go ahead, Mr. Costa.

Michael Costa

you. Thank

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

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

of website. Chairman call to accessed let with and in And REIT. of XX-K earnings Matros, also me Form release turn the Investors CEO Rick HealthCare be section our Sabra Our the and over that, can

Rick Matros

to to us and go joining for that after everybody the Q&A. over we'll call comments I'll through thanks my I'll today. Andrews And Mike. our Harold and then go turn Thanks, CFO

as an now had concluded executed $XX.X integration case the joining following merger would. well to again, Enlivant all us initiatives a annual CCP, So analysis extremely ahead portfolio said we the million of new our transactions We've We productive for million restructuring thanks we American rent schedule, our we quarter. North the $XX.X case from with reduction of million. $XX.X best lowering worst of finalized our we've and

assets performance divest the year. X.XX and all of consistent skilled execute will XX% that articulating. and between very what to Genesis completed then Genesis started on and Our with would XX we've at EBITDAR intend rent nursing remind just I sale end the LOIs be we coverage We of everybody the of been facilities remaining the X.XX marketing we

how So, we've more the gotten are really getting anticipated with we we for prices that fantastic response and detail. stacked

be so about, did And process With out some this exposure the some never our the XX% XX%. reduced from want would we heard nursing we'd phase. other minute proforma push long-term and comments to asset look skilled exposure on in I and skilled knew increase these we in did to take reiterate that that sort of we of get when merger and back goals a our there CCP and we we did to here

and have investment more our active have nursing did spin increase potentially so to day during and goals incentive balance from the to diversify classes. senior skilled to long-stated been the our other Our and asset housing we get to base diversification grade we

months and it later higher we grade XX% was diversified pretty to we CCP merger the rating, With our increase North live that the we base investment CCP tenant to are at received XX% dramatically, will temporary the here nursing XX% the that prior only merger. skilled in from it's exposure and going be and our acquisitions we've were subsequent and American, confident X%

had about reiterate So, record we I are with think our about request with said and if revenue really do that that goals everybody those tough one were having where good to I've stood all be we've make XX% now. do going we and that the operator. be with of feel on everything in operator we exposure were would would where compromises to right we had to and we we spot a We'll pretty we with asked that

the ever we're been for a the JV the transaction, We those the of of our Enlivant of we're with the transaction and at that and a basis. Enilvant organizations partnership and XXX% and the from actually JV TPG inception strength forward a that of of forward we both of growing then we spot is three-two option pleased reflection partnership look to in have business we that on where stronger of to perspective growing company. a closed since we closing price a additionally be acquired with So, go both the as credit, XX facilities the the but to have discount

also two our a options the cash in closed executed yield X.X% yield. cash proprietary two were of at facilities transaction, purchase last and We pipeline facilities that we and American the part X.X% North a

well. we've more that now on mind. everybody's know we'll I I that's want on how the So, course in comment got this that of of over Signature, to in coming year foremost as comment

landlords guys, the So, negotiations we the remaining of agreement have other really nicely. primary negotiations is progressing have those been one The actually items net Signature. with the with an now

than pipeline. those acquisition we where conclusion. We go, we to that Again, [ph] can are this us net hoping opportunity to continue than we that a currently depended cautious, but at on later. really on put optimistic point now the been good get now to bring now still if right so we that little more the behind sooner on are of a way I'm So, in continue how guys progressing to but with based can there's we the it's upon move are negotiations that outside Signature our restructured time a are any we they have bit negotiations the

pipeline side, still is million $XXX are equity is exclusively always to acquisition selling for it's really of the what The a assets. almost that lever as they If selling well. highest lot competition equity we of the currently is someone where housing happened is private senior look approximately to money specific competition senior to deals been is and on continuing Our highest and the very our expansion it then to yet and any have of deals recycled that remains so competitive IR and PE's environment, to it how and pertains some deals on senior want very cab it's rates that hasn't added see someone we on and translated going got busted competitive end business to a any into model know housing bidder us of what's would to the the to are then bidder, us business. we've the be an their go issue housing

a and Sabra So wants private have with in situation more a tend or their the as even take I'll want reasonable the that opposed capital ideal to stay triple it's price to the do they in said, to to someone fund. where partners like order net from equity perspective deal a PE operator to never our

on a lot of see that. assuming we're things happens see, we'll what we'll So, and

skilled to the go In another opportunities. terms terms back one opportunities basis now Genesis for acquire that nursing on don't market more buyers very buyers very to happens we'll actually don't skilled continue and private for to fact remains quickly of that of get Despite asset. to our nursing see, skilled and to very offers many skilled skilled the portfolio in nursing opportunities We nursing prior the only unabated us one access nursing, the very see where skilled CCP and be of in that asset on unsolicited for we side, skilled the a the on basis, almost acquisition appetite we the our want direction we and acquisition see few exposure a equity little nursing see get we really was it competitive merger. we in weekly private opportunity to assets on so equity that's to

our calls transitional not than coverage Let we're EBITDAR to skilled and environment same-store operational sequentially on X.XX to rent in we're X.XX, go care coverage higher that me now from X.X as in. noted slight particular was this prior move results, down going our

hitting some would the around the and fluctuate fluctuate don't around at we skilled to this any so of they going the starts coverages facilities. turn the we year sort just those as see we are, hopefully starts of see think point new in to nursing to initial where it's margins remainder demographic of entry expect particular the So, trend some upside XXXX there,

feel good front about of was the mix, of XX.X% that. same-store from very skill to door The very XX.X% we activities. skill creates Our was down that tremendous sequentially. down that mix occupancy with strong level just XX.X% XX%, that's skilled At mix about XX.X%

can that sequentially occupancy coverage so at of rent at is so margins X.XX mix X.XX only challenge investment, and or that coverage on holiday business senior not from EBITDAR able remind where we we need to like So we to for really of to portfolio sort continuing you operators [ph]. the is one at independent was been level feel to I'm of I that EBITDAR And maintain feel and up, XX.X% to be that living holiday is about investment. flat. week your obviously really the this XX% skill continue always our I has tenants it's do somewhere for keep coverage housing margins, from at. The The our that everybody in the strong same-store IL and they've top XX referring around good unloaded admission the sequentially, down holiday an so XX.X% tenant so relatively exactly

cover, we them really done that they've XX brought pretty low their sniff of deep on we've particular the tenant check patient and hanging dive fruits, you're so in. because that got our top can a got really with a some just new that initiatives, they executives have lot we tenant So, week if great right business about one now

that how a while to and content So, do. wait sort one we're they out see of

once done Harold is it to So, with and that, turn go Harold we'll over I'll Q&A. to then

Harold Andrews

an outlook of make Thanks portfolio asset highlights spend for the recent I'll repositioning, the quarter the CCP XXXX quick minutes from call the Genesis providing couple everybody through joining the on Thanks Rick. a let's release. on Genesis update press our financial the today. then and comments couple sales, a of walk and

three On million or share. on million merger the which CCP and FFO basis exclusion to ended of AFFO FFO of excludes per million the or from $XXX.X $XX.X a $XX.X FFO the increased of $XX.X normalized costs the doubtful charge acquisition to a an was of expenses to normalized the was costs accounts same CCP after $XXX.X to $XXX.X fourth recorded respectively normalized and a attributed we fourth revenues increase NOI million XX.X%. of increases a $X.XX to This and million due basis, XXXX, $XX.X previously in income are for increase and revenues million and per million million and million XXXX and $X.XX certain was and predominately for the expense X.X%. the share in $X.X quarter compared $X.X cash million share million a $X.XX per provision and These and million compares December AFFO reserve fourth normalized per of $XXX.X merger. months million from acquired share of normalized revenues non-cash for increase FFO transition after per properties was NOI related generated $X.X of $XXX.X or XXXX, of in $XX to million of XXXX. the store and $X.XX quarter of For XX, loan of quarter from cash on exclusion $X.X This $XX.X related per NOI million the X.X%. losses transition share million basis, and recovery merger $XXX.X the of compares CCP quarter or for share. against costs

XXXX. attributable the we the recorded For compared to for quarter fourth income quarter, million of common stockholders million to net $XX.X of $XXX.X

of X.X% merger of CCP the of transition related cost $X.X $X.X totaled prior $X.X and cash G&A in firm for quarter. legal quarter fees. $X.X G&A with tax following excluding million and Our the operating the Recurring and the acquired the trust, million valuation quarter CCP of costs costs the million for were health million NOI line costs. CCP for in audit included transition

quarterly our run to $X.X rate We expect quarter. million to be approximately million $X.X cash per recurring G&A

rent million per no that's We primarily $X.X incurred new doubtful totaling to losses charges related incurred related we quarter, the quarter. During assets the provision accounts for loan the to reserves specific to associated transition of write-off leases. of straight-line loan payments with certain and under rent during

of included for $X.X the XXXX. $X.X fourth costs quarter XXXX million compared $XX.X in expense Our of million interest in fourth financing the million of quarter expense amortization the in $XX.X million interest totaled quarter to is to compared deferred

average debt XX, was the As including unsecured borrowings of the credit XXXX, December over X.XX% our interest net XX sale We total gross of excluding operated XX, gain a $XXX.X facility XX the with of proceeds of XXXX, These unsecured share third interest estate joint by our an venture million revolving weighted XXXX. fourth facility under X.XX%. December of credit rate the revolving of quarter basis of associated during of the facilities, points XX Enlivant at under sales on million. recognized were bear Borrowings increase which Genesis. quarter and sale provided $XX.X at the real

incremental facility our loan our of remaining funded proprietary initial assets million North XXXX, preferred pipeline cash X.X% one portfolio. of invested additional in estate on revolving two shield real cash of lease XX, close investments stabilized being equity healthcare assets. under investment held a lease care the were with facility. initial of year-end, in senior housing the being $XXX.X an and and borrowings we as we During credit nursing a as transitional part made American from of One asset million Enlivant X.X%. These to skilled to quarter, facility Subsequent transition December two and to with investments $XX.X our with cash yield and

We $XX.X X%, per rents, of million to available funds our revolving repositioning. comprised a X, of under total were million saying As gears on covenants metrics proforma the $XXX.X in business compliance on captured of stockholders million items of $XXX.X preferred credit equivalents earnings $XXX EBITDA tenants and XX, to XXXX. and the debt is cash million close February and $XX.X about stockholders of of dividend the and Genesis will of long-term the like close as reduction off liquidity dividend into aggregate with maintain sheet strong net-debt-to other times, asset of liquidity subsequent handful normalized quarter cash XXXX February XXXX, of million talk on stock. and reductions secured cash quarterly XXXX. X.X value after paid million February investments between now million consideration our be business X, on a the and rent February as unconsolidated XX, the estimate to December at to On $XX.X AFFO of among at stock, venture also share. fourth value $XX.X I'd XXXX, start cash XX, X.XX rent the Switching and available credit common of the preferred our referred year facility of value we $X.X will in this per taking XX%, dividend our just debt record of currently completed $XXX.X our after XXXX, board reduction. debt all of proforma of annualized Series a of XXXX anticipate of February $XX.X with we've declared year-end range of of of covered of which opposed CCP million. XX, of unsecured charge continue at on a quarter with common debt following well reflected totaled X.X to had a rent and XX% CCP quarterly incorporate estimate concluded only interest in December times, wanting our balance impact Already per total debt-to-adjusted XXXX, record directors made $X.XXX dividend asset a February to XX, times, fourth ratio unencumbered XX, a Net X.XX A by total XXXX, coverage of of in activity to share dividend coverage we investment fixed million times, EBITDA declared of to On approximately to initial impact including is reduced end. portfolio joint XXX%. million evaluation asset board $X.XX share debt paid to The directors be adjusted as XXXX,

make the some million remaining of to of rent $X a certain tenants regarding relief continue or We determination will the performance as we of portion all XXXX. utilize monitor throughout

In which largely will $X.X addition, we we operated approximately gross of for these XX identified proceeds current annual different the have offset once sale tenants of million by estimated generate properties million in XXXX, $XX.X properties wins redeployed. five for expect cash to

to This proceeds expectations at the asset with accurately cannot prior time, from and redeployment our replace of sales receiving our the and timeframe in rents. rent reduction we consistent discussions. the predict However, noted subsequent this lost is temporary between previous

under leased we $XX cash Genesis effective million annual rent have facilities, to rent have towards in asset Genesis. no great our annualized represents distinction proforma of January longer we terms. progress annual $XX.X of Genesis Moving Genesis eight to net we of identified and million annual continuing contributing currently for a exposure contributing yield, year XX on less in of to for the of and are XXXX. total the proceeds million. We trigger rent us now to X.X of times annual letters XX XX our facilities, cash Rather, Of in XX. to rents we portfolios following arrangements marketed years with sales, presentation. sales are provided X, of refer being generating being These million to aggregate This that between for to retain properties under with XX executed are million continue These in cash made NOI. these sales our the sale, residual agreement its various are sold facilities release to EBITDA proceeds discussion with portfolio the aggregated This the X% expected we've are rents to into contract sold as we XXXX multiple agreements $XX under in than three Genesis will a various sell Genesis. generate lease to sales facilities for per expected Genesis. sale million. six rents the rents XX purchase be cash coverage. agreements of disclosures not reducing Remaining these of XX approximately $X.X with our cash million have at the make facilities in entirety reduction intent any of $XX.X of $XX.X properties $XXX for currently press XX X.XX portfolio the expected provided million genesis that contract leases will and genesis and Of $XX.X simplify have we X% generate to

estimated announced announced marketed the facilities XX range final the previously $XXX for have group fall for $XXX sale, we of to last had excluded XX we we We which selling. evaluation to were million assets that million be for previously

million Now with rents residual facilities intended value These in is to our along such of facilities in to and the estimates. facilities of valued approximating excess $XXX midpoint group estimates. we their rent receiving million are XX XX of earlier million expected the as final originally we excess current keep our $XXX prior approximately sell intend those residual and between $XXX at

have of cash our or the by of that from quarter. NOI. we proforma expect to total contract XXXX Genesis related assets million from expect residual A of $XX.X continuing the cash be occur sales over generated to XXXX outlook. under will including remainder approximately rents X.X% currently comments few sold our third We was completed these to all updated Ultimately,

senior asset retiring pipeline million of having guidance. the match acquisitions notes million refinanced $XXX all due and an We'll The incremental estimated refinancing capital yield in of included to CCP opportunistic XXXX. in half $XXX investments. related are consisting additional such investment XXXX million our due includes unsecured weighted acquisitions. X.XXX% senior other portfolio expected cash X.X% funding an and the hospital an be notes also First $XXX to-date proprietary and sales average plus XXXX to And first second the previously With preferred in also our XXXX it investments unsecured of ATM repositioning portfolio described for behavior investments of be our Signature equity activity completed program finally, during reinstating committed in our the half following, approximately markets are Genesis additional initial in X.X%. and of

set don't have the We no it's to something until we healthcare compared currently over significant reinvest program We that in cost expect to recovery of we of not giving pursue our see for timetable the proceeds currently sale acquisition asset need receive course can and expect reinstating peers. we as that so many our opportunities equity arise. XXXX pursue of a we doing will to significant a in to REIT

normalized normalized X.XX remained Our share declined outlook X.XX per range $X.XX to X.X% share the with or $X.XX outlook share per $X.XX. of to per unchanged essentially to AFFO midpoint our FFO while the at

expected your of expected in of we XXXX pieces noted total moving $XXX is sales asset to predict. a for I have hard which million $XXX for including investments and As timing assumptions million the outlook, of lot

Genesis's Sabra the range the lease loan share. the expected $XX range amount stressed from $XX from slightly sales expanded and highlighting higher reductions finally, annual just normalized As capital to professional our step of increasing for per that such Genesis have structure. assumptions the assumptions and is in The Furthermore, costs very run release. of increased certain normalized which the FFO, AFFO. on $XX quick delaying the for reductions included in including estimated $X.XX these bond by labor our by a to made our comment to million year increasing of commitments million asset G&A reducing the for which savings approximately additional press liquidity a rate from about with non-Genesis changes excluded for changes offering accounting Offsetting our final some million announcement to recent and have interest account we we time $X.XX lowered million purchase from new our XXXX outlook positive are fees, recurring and cash And cost and CCP taxes. the from million $XX $X

note as our in our long-stated Rick of effect under exposure to Genesis and X.X% release. not a of proforma of developments under said of positive charge goal provide currently have with to of X.XX of includes us Genesis total level retain times, accomplished that it prudent that the coverage And remaining has genesis. reduce will will our decision quality a at the our disclosures proforma press with contract financing plans XX eight we'll open new and These discussed a strong coverage the covers this proforma up NOI. rationale high the You assets been leased restructuring commitments goal contract, fixed to with for sale that for to sale to It the excluding and Q&A. approximately Genesis with we assets in

Operator

Citi. of on Our Rose Smedes Instructions] of line the first question comes [Operator

Your line open. is

Rick Matros

Hi Smedes.

Smedes Rose

you. are How Hi.

Rick Matros

Very good.

Smedes Rose

wanted ask your outlook proforma. you just pieces of in But coverage page overview to EBITDAR where detail lots Lots couple questions. provide and the of of of your supplement XX On of a moving there. I by segment kind

So, corporate those coverage metrics, you percent is your or covered guess if them I portfolio company-wide is attached? EBITDAR guarantee know what the to a don't ask some by there of include I of

Michael Costa

There you if I way this to you look XX question XX% a at we the NOI about so Yes, will think that our handful XX. those of top covering those top top XX and our is the in answer over also in the number. portfolio about are about that's of But included your can and like exact numbers. in get the coverage XX,

NOI other specific XX% and non-stabilized we you what's X% NOI acquisitions get I is define of point to get transitioned that assets want that have. new of again, being we'll that it's or is so. is actually our our only stabilized this and question covers about new operators we much I non-stabilized are included probably And are out or the how but the to lot, of a So, number thing a

asset-by-asset that So, we we'll the second specific get number, a you on about basis. a Smedes in do XX% specific disclose but

Smedes Rose

Okay. side. million And pipeline then housing looking you at $XXX guys you are around the about think a I senior said, on

primarily, side be assets are only RIDEA, RIDEA that triple-net is Enlivant kind in will of So, looking your or you the more venture the of at business there?

Rick Matros

So, it's primarily triple-net.

RIDEA Our but think the we're to view it. really in has there's runway acquire on bars is RIDEA key stage if to pursue ahead everybody of as asset as looking strategy never where knows lot to at I early there of an operator RIDEA basis, got an a a on a be been it's

good. from for if were and sort peers that were XXXX, slowed through deals larger RIDEA you been shop occupancy of returns inception, was the senior the when most really of in actually So, think when they done housing period done, up of of it's relative XXXX, quite some time the you even ramping our if look at

performance of an case opportunity the are because Enlivant to close ride there they yet, to that it. So was

we portfolio to to basis. way have put not it. It's in, it acquiring another a at got on a stable would RIDEA So, look

Smedes Rose

Okay. Thank you.

Operator

Thank you.

line Bank the of of Our next question comes Sanabria from America. Juan of

Your open. line is

Rick Matros

Hi Juan.

Juan Sanabria

morning. good Hi,

went feel now this regards But to is in effectuated through comfortable is that the that you in commentary. your the question XX apologize with What if you which anything fourth XXXX if to when timing a was XX quarter guess detailed very in gets of the your I Harold cuts flowing Just with. I through rent guidance?

Harold Andrews

Yes.

million. a the up did quarter $XX annualized little basis, So, that an fourth would flow over tenants. in have a for On we be of couple some

million between to the million million rest $XX going bucks X. is $XX January $X remaining And be and so, the difference effectively about flowing through

be already. quarter million but in $XX.X baked fully $XX.X fourth full in, was the will So, million the baked

Juan Sanabria

the in however to XX with XX What to fourth those for a the describe quarter assets. the Genesis rate then quarter as a it clean want quarter assets? just through kind of And to in was those about the fourth the regards first that to flowed numbers the for on NOI that Okay. run sales happened you think get or the

Harold Andrews

revenue head. my got XX representing XXXX that, Want starting you best that's have the start that started way take full with million million where to are at a The is for $XX look those year. and residual into of going will then have rent I January it we've to $X.X assets that I continuing about assets of at don't the so of a plus million the top we point your shortly. for $XX.X be for look on to the sold

Juan Sanabria

of and Okay. any private about the to buyback [ph] building you type then assumed where of would guys had how an NAV notice there. thought about published the thoughts housing are market any relative see guys or you be kind are of a I feeling there? acquisitions kind And you blocks cap rates looking kind pursuing instead of I How values you at which seniors trading

Rick Matros

when distress right so I in where have no that we got worry we which stock be don't much close say is universe rational levels we in this should about look now, coming Yes, proceeds where we've to trading at but it's are. is

the the we're there. integrate to makes concerns questions hopefully Just demonstrating that sense, ability think about despite have no and no and or issues story amply execute unfold continues the all to so as I we

We have do that. here tremendous capacity you

of to with out done looked there it have the six is and buyback that over mindful the of and just we past amount the increase a everything and I staying we been really get being always pull to we've grade begin. they you outlook put specifically, comfortable buyback we of early at doing leverage our S&P as by a get the agencies, XXXX we to or investment pretty of at our saw affirming doing transform we're negligible discussed think and notes and that and it and now jeopardy has so company so to serve everybody XXXX board terms out in with ready got [ph] we Fitch weren't So months as be were that that we and previewed with their really anything and end in the that we

out relative going the that us where So, with but is to the obviously given of at perform and everybody the we support on side, knows cover discount go we of appreciate a we're market have guys better no getting. working should that trading one that that is that equity this least we and some working we're basis current appreciate the been but terms out, certainly in

Juan Sanabria

you. Thank

Operator

Thank of question the from line Street next of Knott Green our Michael comes Advisor.

is line Your open.

Unidentified Analyst

Michael filling this Andrew is Knott. for Hi, in

XX operating about a different the assumptions to can at growth. tough this year like be markets changes forecasting negative little being your seems bit and your are housing the on year Looking for to slight talk what's a the some your is in as peers for it of going with occupancy? Enlivant senior you But guiding

Harold Andrews

they are noted for as a different Well at I spot. Enlivant,

the others some we and growth with think that's growth out forecasting not to time really I in like negative they Enlivant. because ago slow or percentile case mid-XX maybe maxed the are and maybe

say put So, out to we see we But that we. don't we to continue expect suffices forecast haven't a any will specific Enlivant growth, nor for that. negative

We continue to up. expect to ramp that portfolio

Unidentified Analyst

pricing target changed the it an what's out been bond to your from about has And talk pushed Can what you for issuance, is? 'XX has 'XX.

Harold Andrews

trading do peer of Well, I no year. have a were do things. affected is this our is us. it changed we us have which so now, We to this there for they One, us think a for don't have wider even don't strong couple to a that and group what we comp and have, we in is rush

and notes the than we where a up do, notes was outstanding also there go the with opportunities. for that us believe tighten PAT and waiting bit new more spreads and off and out So risk better old rather we're to give out little involved, take

We comp longer is which to filled no will our as continue effective will continue it that our to be to accrue now exposures benefit. decrease execute and as nursing

Unidentified Analyst

Okay. Thank you.

Operator

you. Thank

Anderson Mizuho comes Securities. of Our Rich next from question

is Your line open.

Richard Anderson

there scenario out because any Are the morning changed there changes, more all reduction asset more you like that going Good to anything get basically know or but are sort worst-case be the any of I sales you or changes rent there. there about it Thanks. release? CCP rent are is there

Rick Matros

change the There is in no assumptions.

we've know to Bill's done operational us. our to our under really a do of on the of time, we've umbrella period some and dives. Bill managers that asset certainly some certainly operators assessment us as given it's Rich work so background Now intricate beneficial longer portfolios, and and of some joined our for pretty we've deep done Mathies has mine operational you had those

watching So, the understanding their just watching of plans, trends, us their function about. that how have of it to in they we've looking really to response feedback at are is they minded at a business where terms execute start we their which them given really been open

of just the to that the led really it's reduction So, kinds things assumption. those in

Harold Andrews

not that that. process. are had assets anticipate we you with some but as we speak consistent go from all my we to want where just that me XX originally you we basically sales and we're that staying everybody expected and add to will be about we part to previously. then commentary, what In I see replaced, selling, some we'll did of flat assets that away just remind heard Rich Yes, weight

Richard Anderson

you dots why are becoming that was basically with on to selling more on Yes, maybe but lifeline longer a than? the you HCN process strategy everything for all any not All more Rick, given thought doing Okay. that and continuing out this work their wouldn't speak rest you CCP right. still the own dint the assets getting them dovish ultimately you and XX. their the all could that is guys stuff. I that they're for little Have term. that connect more Genesis, given eight almost than potential that

Rick Matros

Yes.

to does so. current in that's great model them The else's So, All to that company, they've the company be I that a they've completely it's strategy would not position gotten. it's restructured. the better on has correct not without is say the done that business work. commenting do restructure release anybody gotten because put to hopefully

this environment. XXX a in You buildings or company can't run with buildings XXX

time. In a in you simpler could ever in that skill space size run nursing a much fact, the company even never

So, our know maybe And it's months of next operators and have compete possible. from look, portfolio perspective now. six were that the of in our I they simply sort the can't kinds step, from addressing so they with we

Then contract that we our keeping assets make currently several maybe about that under months fit under restructuring contract that have with. of are that would mentioned of operator we'll we want from aren't but some the more ourselves and think think now them out XX profile to effective announce some exposure and we align that only the Harold those X% will X.X%. As increase to yet, and operators additional if they come

again while, out and visible have, you all space. space. more So, the first think an really what the we this public they when that probably represents much When Obviously, [ph]. be Brookdale a they look still their good think of then operators. and prefer tough. we'll other I really some number are we at to so ground and smaller we When We I represent operators, be going we it's are I too guys, terms happens are drove for point think that's all Medicare are won't space and the in to make think operators numeral think their stock we and Genesis. want announcements are around I you the look and would tenants are at operator the pray we they is to important. that you reset stress, just are much good see But they they that more, the the be with of more I point, at going made that on

I on but really better take And XX got industry. to when that you it's sure you the so gotten a and you look don't and operators incumbent going we at really all deal. want we when to best I pretty and perspective any XX operators a are through us, upon that a relatively be look and some the a much for that's that sort the assets and longer you've flying operated and or the that, our to few close have responsibility responsibility quickly think with actually water make and high we it that represent broader percentage seriously drives settle so, aligned and about here to And statewide to that be at our sentiment place we've good of the that business take that mines CCP isn't maybe top

Richard Anderson

with running Okay. CCP process little of to country just quick do a the and as with reviewing as out you to wait address or care And it evaluating same going fashion senior did you the the to thought you that that bit in give the through them? often any why around long and are do

Rick Matros

doesn't initial It's that coverage. in strong a one quoted they have good my question are the have and remarks, I that operator out obviously stands

whether wages are job that good it portfolio had turnover just or of pretty is doing the and operators and headwinds it case analysis in some care much management there. markets are have senior sounds they whatever like unlike their certain because they Our in that that is that so other

not we were office They low fruit to a corporate So, easy it's everything Bill doing And went if a there should that even think in of going through to detail are and there we a they out brought wait are their ton the new or we and a can one we little two wait Mathies that COO him prepared are solutions take. year. relatively in Texas send wait have they out little progress. to see hanging into we sixes. and I And think they that years can going a and be at probably office that there with We're the everything this if while. point, way great. progress him. can know to other who ran to that board But they while we through so we

Richard Anderson

the that or out is your Last ground question, had nursing year skilled could you do you of think XX:XX? exposure two past to CCP fly prior in XX% where resting you or the break on happy next the you below

Rick Matros

get terms of to I only X% above Yes. getting right we that know, to XX:XX it closer but want in now. we're

I going that so don't end by going not So, it's to expect close we're in year. take this so down think XX% X% years two year would pretty months, and from us be I we're to to

Richard Anderson

much. Thanks Okay. very

Operator

Thank you.

from comes Chad question next with the of Stifel. Vanacore Our line

is open. line Your

Chad Vanacore

million million. one. this cut it I might Thanks. than looks you On expected missed rent your $X you better like have to previously by outlined, are that $X

having about prepared then, remarks expectations. were $X left said the So And something to million you what the factors in allocate? in improved

Rick Matros

really of ourselves I we spend we we've a some what with the operators in so cush those in into bit got questions; team now the longer us those time a and just basically, that previous to additional little said in we've case but operationally, there deep more Yes, time, period it's gave is, to dives management really had portfolio our we've operators. brought for expertise wanted

cush ever as we've didn't the before, another to we've and trends, on time plan their and certain executing to dropping don't shift and as lock ourselves and to so really them trying and anyone some components other better got of And we felt much spent that as of did more quite know comfortable about we we're why some the three. that's giving concerned with need to we be want do business

Harold Andrews

the it really remember quick; Signature million, analysis dive really add came $XX.X upto to of pretty was that high if time's when and X.X. to based you getting plus below Rick's up the deep going on Just back talking level a getting upto about did it from that was coverage one a before X.X we we tenancy

dive. And the we've done deeper Rick as says, so

end we're comfortable and and there where with are expiring, that the -- with shorter also of what there we're going year, cut no see wait And tenants at time below we'll is at X.X a is that term here that's rent deal that those Some tenant happens is to with that to there when reason comes. for expires give lease they of tenant, the so are them. couple a but a the threshold alternative

Chad Vanacore

are seeing year? quarter roll the cuts or in Harold, rent the we first And all in through use some those

Harold Andrews

amounts January will additional numbers Again, quarter can even at in we numbers all, that. about And any fourth million talked you our X. decision, then that already $X $XX.X about if use made in were expect we effective be an we full any on then -- the million a $XX.X to million haven't of reflected basis annualized and

Rick Matros

remember we of the basis I cash net Signature. quarter, a on in bookings certain tenants last saw like

Chad Vanacore

and On should we you're invest cash million flows through in to to it like these your investments in come XXXX; XXXX how looks $XXX expect XXXX? pipeline, for looking

Harold Andrews

slightly come And XXXX. it's our currently spread and assets for estate big or loan So that about is stabilizing chunk portfolio the the talking throughout this primarily are we're investment not evenly a it's I'd loaded say purchase the backend thereby treasuring pretty equity to probably in real into year, that option portfolio, portfolio. our but preferred

Operator

next question the Capital Our from Securities. One of line Bernstein of comes Daniel

is open. line Your

Daniel Bernstein

don't I but great here. good Normally execution I say think job you had guys

on limit you going also SNFs think potential to SNF but that growth? On out occupancy the a and Congress basket Devil's occupancy years; how When of your talks the we that bit of about there and Advocate with expense seen we've maybe kind thinking seniors talk housing? you next play how of versus market reconcile little the couple on for the about the about I'm [ph]. wage industry outlook to see agree do versus flipside, and I you everybody the demographics in are some I the growth increase of operators the And for SNF

Rick Matros

that are couple of think things. there I

skilled are pretty look next comfortable couple as years. out over actually of Our operators the they

in of really -- which infrastructure demographic of they place peers other and I are good vendors actually that we about earnings are I association third-party in think do basis the projections. modeling good that the they this have we modelling, trade infrastructure, some they one don't on from the good, is has detail data our around have really access on information an points that and call as job piece, talked think their --

at we big we straight going is that or relatively agree If buildings, are pretty here XX% XXX-bed occupancy the about cost way and in to to as but crowd, the your wave we'll it two see no relief, think got at quickly. provides to to it's there Go is XX% coming XXXX on you've so bottom-line, back sort occupancy know, start industry it. strong one some just then point in average all the patients and fixed. some in are in or increase trickling getting more start of starting plus And XX

wage issues shortage XX they to business shortage in the down, there been happen really very that for issue wage issue, time the therefore much, that, have think years. And the thing wage when the So issues because the about I've you change impact the about been nursing of been a entire nearly the there pressure coming becomes therapy is, wage and has a and down is of length occupancy the last coming disproportionate. stays with for

to impact cost pretty specific, significant some highlighted we're to percentage would seeing industry. markets same point you portfolio the you. knowing market secondary associated a markets those in leverage pressures to So increases of to that mitigate And about we couple -- think are there good you've sensitive wage also you than your are our or I the that's other are wage pressure wage where And this wages. and the that, the to very occupancy if of really others, tertiary that we of impact really relative got out are to to in nursing if dynamics points we no to don't have think I about add but that's way that two see there more kind there is, we want of it think

service, rooms bigger beds that and common million down and of have want a rooms, well. it's our acquire You're doors, acquire at so acquisitions, that existing some I pots renovations beds they I build of years. you've build they to supply the when X.X both see shutting bigger who there dining facilities, They They continue space; going [ph], take do when over when so look you going accommodate few decline all and their of think more they that operators have dramatically got we more decrease have pretty mean some beds of very customers. the comes to then semi-private they number about to out that's of or to today's come as much model private past modernizing they gym, will from reduces do to and

patients of is; be gets is the if supply. dynamic in occupancy that good critical I it then to going a And increase some CMS it's with really for design hoping greater I lower of system where after much right slight decrease there the incentive the than patients other So think complex length a nursing a patients; think piece combined of to operators obviously those will focused stay have and been is time has out and nursing they RCSX a states rehab come they have the historically go on even do complex short-term we we're patients in off rate of know on once it just currently that right in industry pay have and all the modelling we industry [indiscernible] settings Medicaid with Medicare the patients to on. business the operators an that that Medicaid. to really they L-Tax strong try through this and equivalent with to get hospitals this worked higher turned get [ph] We out or but to in try those how

so is in have and on stay longer stay patients shorter lot kind do so that And our issues the length of pulmonary of a in different portfolio nursing much patients. of complex out the then those operators talking rehab of and patients, those patients because it stay length length they no of mitigates

the the and not are to still that. don't which system realistic be very I is DRJ then every probably be something longer. that's the supply; all although minutes is are rehab a function going of it October XX out unnoticed look see demographic going ultra-high the destination, I is a -- talks everything when I'd starting gaming out assumption the somehow to go system based RCS gets away. all that and And happening and the once increases And it to according rolled be going the October it's [ph] a to occupancy So seems more just to this that that at going function to by to any about, of timeframe billing decrease other people think it's minutes CMS improvement, high, and on about point not and the RCSX you built that's if

negative. lot the though even a hit impact DOJ industry has the obviously pretty providers, been So the on headlines and the investigation of haven't

you to too; that in that's looking for. are more help regard that So maybe going than really

Daniel Bernstein

into I Actually that is, is added it -- your Box the and know sizing that; the real really No, portfolio gives seems there open question CapEx to any whenever of construction if a be any in lot where of I you you just have of development? you the on a one towards CapEx more industry or you come see more the opportunities needs put -- and are some it your into so I don't complex have mean there some to some real portfolio industry more you base. Pandora's to going floor. new you the buildings Do mean and up there construction operators well, into is care to put much be the to maybe opportunities working your do quick like it, SNF's really

Rick Matros

because regulations. actually Texas is but I skilled whatever do quite much and way the of that's less nursing not you you there of in want exaggeration an can much without Texas development. for But money bit don't in see In outside up unheard a yesterday years is opening it's through get had took but four expensive. a so it's actually regulatory skilled facility which process. I it California with to so is nursing the conversation someone off them regulated, in a almost Texas, who that new

-- extent work, just operators in and and to that's right. we of just to benefit of the going to to it get think I the accrue terms So,

done operators out them our development -- it's we may them like call the to think as not bring asset of you of and whatever so about it say us, nursing assets they do terms dialogues have and existing modernization it's they team, actually we make going about so to thinking soon tell, haven't they that little they that maybe it's to more on existing that management on more in ongoing -- time that opportunity up will know feel modernize to it portfolio, modernization but skilled that of So have through as to may they there new can we be that our on you've possible were CapEx wanted a that bit do and investments we'll as assets. brought with start

Operator

line Our of Jefferies. [ph] next Akusania question Mateo of the from comes

open. line Your is

Unidentified Analyst

my from first Signature. the one end; Questions is

same point; but give have parties is can tough all And their going you whether way going of restructuring? together bigger Genesis of making -- the through it trying a kind rent they get kind just times? at the through there to on are with with sort them the at a of So dealt what's mean I at this they the still broader restructuring curious concession

Rick Matros

Sure.

going now meet the so Signature, [ph] I if we're and they as Harbor us equity We to [ph] place, line are don't who those are to hold exactly, and from CAPX So lender think an on they X then the us, -- already this have potentially just the through a if on; that's [ph] cooperative agreement negotiations sponsor in DK. have negotiations go far ongoing. has so we'll already that because We been the then it's have called very continue for to done, is reasonable it's an well. and us I working see primarily Omega, agreement facilities place, to have think to we're waiting in it's in are with leases provided be about which group the guys Omega it's med-mail they getting

there actually is with constituents; us came pretty So no so major issues that easily. and together

Unidentified Analyst

should are about they bankruptcy? be how and Signature process; of the we impact change Signature have willing through the thinking not the DK to does is or restructuring negotiate that do anything overall about what But go you to

Harold Andrews

a the will It won't that cost add but crushed. bankruptcy except change get will guys anything those

want peer this to our other -- change anticipate that, case forward I feel don't I going saying won't might thing. peers; would in I of or that anything we any terms of been same our comfortable what saying that recording about we feel in have and any comments what make comfortable think So the

Unidentified Analyst

And you that then the again the $X.X just would how the remind years, second million works thing; X.XX the next again? residuals, for us

Harold Andrews

cover it pre-marketing analysis with was willing be in Sure, we tighter that set fee. cut, that no rent more all We them that buyers problem. X.X than gave the covers knew at were The to our million management deal are $XX probably struck properties we those to is, accept. Genesis going X%

their we landlord. rent agreed to to also cooperation we when give other those getting rent in to million from they pay $XX assets the to sales we So addition the reduction assets sell just have agreement cut, give on whatever Genesis are that a a put will the them based into -- going to new

the So are new rent what this going the to are and landlord, the cut landlords these case, Genesis next in are between less that X.XX be with leases they rent have years. and set these X.X demanding rents us paying for so new coverage; what dealt at they they paying pay that's that us and were on to

$X these are upon the As expect and said, it's additional selling the are the about under million to we once portfolio. million contract, I $X rest $X.X million of that

Unidentified Analyst

pipeline. in you year to the one was SNF world the on; credit made very up change talked your earlier there the deal a acquisition that of you again, of of bond trading housing back senior a from perspective. lot had kind And assets thought this the comment you had a Rick, wide you with you about because was pushing would comps the

wants years, exactly think then nursing skilled nursing and about heavy to forth some of and seems look Over not kind sometimes and like and what the gone and of skilled kind forth back it be to go confusion be you've Sabra or coming on it heavy; back basis. past a creates X-X and I long-term

like really is; I world? want the half more skilled are So a wants question and you the next of Do and halves over the yourself have guess, mainly NHIs you of LTCs -- What's look you years? the business? the become nursing still of Sabra X to consider to the like what I do vision to X

Rick Matros

you this, [ph] Maybe to and we more and we're balanced senior housing. in steady prior would back we year. look is spring but XXXX wasn't last gaining really do reduction an increase through state the forth, started a in a occasion we of reversing terms senior first of very I on It deal skilled and trajectory say deal the housing go really -- didn't CCT when the steady the the it much; if of at deal, it nursing was from good

And benefits CCT -- can were those has the opportunity to drove narrative we as of getting stated we down able to for the know that which -- that certainly and relatively also was the gave doing. having been to very exposure we're been worked it's our the which included that case not achieving two things tenant us to entire some exposure so be confident us going goals of had investment get have grades strategic down one different specific company. quickly because And long increase there which in you that put

been that size company, the the us that of the facility on of We improved, also new allow would improved company the the it deal senior noted, light be and as felt in of the more to company and with competitive credit we [ph] doing we had and we housing have gotten deal not the never would than happen. without done that GPG would

would given our have can but to have would of make, are instant to that bit merger. mean the in to off because able So -- we kinds got to that gearing right, that it. more the continue on tell tell we that for time And and again able you class, portfolio, that us that be path. our little where and sort always doing doubt we've from we we had we strategic benefit would one of are we that of confident look, and trajectory balanced that be asset a any diversify a about merger us, was prove that us, there that I you is the would decisions if those of I having a continue

Operator

SunTrust. Our of from Eric of comes Fleming next line question the

is line open. Your

Eric Fleming

with follow important. can I you not offline, it's that

Operator

Todd Our with question of next Fargo. line Wells [ph] the comes from

is line Your open.

Unidentified Analyst

color any there? over coverage in it's does know of don't move the missed if I now at on it upward sub call, way the your in Xx quarter, restructuring this last Signature, early get lease all? X.Xx; this I And The was

Harold Andrews

giving result It's are which that we're the restructuring, of pro adjustments rent actually coverage forma the them. those a represents

going still they been rents no It's projections that so the expect strongly to paying area. to they steady would look them, performance. there pretty to the their they historical done a are that's for it their once provided up in forward based had and X.Xx very are like So we adjusted were state we it's is and to pick On when show XXXX rent closer on X.XXx; are been you be previously, to covering. performance you performing to basis, deterioration

Operator

Raymond Hughes [Operator Our Jonathan of comes next the question Instructions] James. line of from

is line Your open.

Jonathan Hughes

the the deep the mentioned operators? for the fund remaining sales. I'm or out to private understand is you working to acquisition strategic just except their Genesis buyers you're fund is out REITs Rick, equity with trying Are other buyer there of the [indiscernible]. the how market there on looking of kind one for any expansions pool SNF for

Rick Matros

our been. hasn't necessarily formation And conversations it you really foreign a equity side, benefited buyer with formation in subset skill on equity can The that experience but [ph] pool outside if buyers private you you huge close doesn't always and it the happen. it really was but the influx on have is I never and deep side. interest get consider positive they've think you could is the mean the of

see been are that there we've is the are then the there willing the with make and a if seen on is estate particular buyer commitments. different out What's to are before business upside buying, we're operator I buyers, free been have there and operate in this are the running interesting they willing off Genesis happens to only if or So it it, pool then we buy outlined some asset totally and there ground, close finance we've like the bit operators strategic little really are to understand than seen -- the of that that [indiscernible] get who they to sources assets; that to normally really it. earlier and fail that and real that seeing buyers for would the around

a about to mean the sort over assets [ph]. if ago and it's literally -- little of have I think So -- that's I of been under month mean, LOI you interesting we a this, just XX% bit started watch we marketing but

of think that market. really at on having specific XX and other in given market not you over you a market when can't those to it the these the and it's basis out assets all states, all way about because So it's any there pretty market, sort is, it out about the robust think much there look on

is trying one one So the in to that skilled with CapEx always whatever us are of kind all count is have in into that that of I terms necessary their that factor, a every of trying deals that are of put to our to of results, that partners be on. they know sort know willing the all that get and it's peers there capital think invest advantages out and of and grow I aligned operators as to we that of we to the can they operators know

Jonathan Hughes

know outlook reform a side. legislative that those SNFs? on Medicaid to call Do I New the some setting but your to and benefit longer may see for back we've of Are that process, you it's the California they York early try managed and still term care heard states? in investments risk rate tax as in the

Rick Matros

if from it's in care even our we within it which how no -- don't Medicaid not skill don't happening operators our tune much the rounding managed any we We'll and SNF it's revenue see one, Medicaid think not care plays operators, it have SNF trends any may but I even out in managed is, the is there setting. not population. see

their and lobbying to [ph] really get in to have I'm the check. anytime over people go along lobbying cliff effort effort really try keep all be those that So pulled were with to do politicians happen. tends pushed concerned that pay out DMR with again. strong a as The ads being in to to associations I about will not really districts and over two graphics they states it But if something that think also strong those it in usually legislatively, trade

Operator

call this At to the time back any turn closing like you. Thank I'd over for Rick to remarks.

Rick Matros

another things but a time went execute, all I comfort level noted, that bit long moving of a your as least to lot everybody I Thanks a have much. day. very on for to call lot hope have going all today. and for a but pieces it's know Thanks and what the lot we look at us may you like -- you a just of

and available Thanks day. to at anyway, are we'll and you great season, so forward conference go-forward a to be the I always up. you of lot coming a it's much, seeing talking So basis, look Harold very on conferences a have

Operator

gentlemen, today's and your and Thank a you conference. day. Ladies wonderful concludes this participation for have

Sabra Health Care REIT (SBRA) 22 Feb 182017 Q4 Earnings call transcript