- Earnings call transcript Q3 2022

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Operator

Good day, ladies and gentlemen and welcome to the Sabra Health Care REIT Third Quarter 2022 Earnings Call. I would like to turn the conference over to Lukas Hartwich, SVP, Finance. Please go ahead, Mr. Hartwich.

Lukas Hartwich

Thank you and good morning.

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

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

and Our the the turn call Form also Investors of can And XX-Q, in Health that, earnings Matros, Sabra let me over President release, be section CEO, website. accessed Chair and Care supplement Rick with of REIT. our to

Rick Matros

and the us change We reevaluation with with, They America portfolio in has the the going they American start happy to request And downsize North them joining didn't portfolio. of North option Lukas. Company reduction. portfolio. management there was with reduction a Thanks wanted approached view the necessary that with couple Thanks, what change to the of a One inbounds the their management a to Board, our options. to a was transition. forward. the for very appreciate concert and primary it. had undertook with accommodate to start ownership and XX we're do that on us. I'll everybody been gotten in, To was rent the of XX always a as downsize it. non-Sabra performance something facilities We other on given We've the of actually that buildings. they This good assessment is to at rent

that So would have in terrific of we we some options terms transitioning the knew portfolio.

their occurred, wish we They've that best why that's specific transition. signed North It's a transition been So, terrific with end have on agreement. cooperative us, that going with and American, a very forward. we the to them

the Ensign of and We it outcome terms Washington, of for was us reasons. robust. best couple to was going In felt the pretty possible a in Avamere process, for bidding

really makes to we you to received -- for them good in opportunities needs, Medicaid so their in really do a been portfolio, XX% increase addition been when four terrific perspective. just managed recently tenant they've of their them the these Avamere. contracting perspective, buildings, adding rate buildings from In Washington, to add four these doing addressed And with our stronger from their us market pretty for provides a really care they've since well, terms issues, Avamere, doing really fills some in transaction

As extremely Ensign, They're to knows everybody operator. strong Ensign.

from most REITs, being our upside. have equity from transparency real because guarantee, and cap, So, having with is market their corporate private credit which as most the The different that are see we private. of quality tenants the operator, investors a obviously public, quite don't the

has this as even we So, we think transaction, a result an earnings think certainty. our stream of forward that's greater durability The added of plus. going

upgrade, on in like more we'll so. during we with our And them. questions rent evaluation, felt in the for And sure it, reduction for relationship the we expand able to get exchange our this XX% I'm it feel worth that great So was Q&A. trade we've on been well off

is our XXX release, which Moving points, during as a improving net that labor flat as that better. June that same function the our skill similarly of AL as still on through would well basis and is the so while side, improved. in quarter, October, noted up the labor's occupancy was occupancy second XXX arrears. view October. to operating And I basis directly on everybody note environment, quarter occupancy tough, to remind through improve. we occupancy for getting continues points timeframe, June the now portfolio And increased in our labor It's triple in a was but as

Our rent coverage continues in a had lease bump also improve portfolio to there. we nice senior housing and

transact Moving high-level we but investments nothing of From on note. capital Skilled Canada. lens. to behavioral investment small continue on deals, continue opportunity senior secondarily relatively activity more hope we uptick, a shown see we in and nursing in recycling have to investment a housing activity, also to a to through opportunities deals. slight view that seeing We're

a funded to program capital to to efficiencies. So to move asset to Green to initiatives. will water our that access be as links, And -- commitment also and over the to net with continue I in be our ESG will sales. and we call and from second will with us called and initiatives operators fund our to report. small We've our Talya. into beneficial fund These started the And therefore energy ESG, XXXX. be initiatives a give And turn issued designed Sabra operators our triple which accretive to note other finally, investments we proceeds a we continue is then words, new on expect that

Talya Nevo-Hacohen

portfolio in will and wholly-owned Rick. housing independent of quarters in two points housing on trends living quarter excluding for activity early portfolio percentage compared trend rate quarter. XXXX continued prior tailwinds Comparing in staff, XXXX. non-stabilized to of quarter discuss percentage of for quarter X.X labor in basis same-store third our and increasingly increase living over increase Occupancy increase XXXX. are our follows. over continued and has driven operating a I numbers the the occupancy up agency basis-point the was increase headline assisted over X.X our variant quarter and you, investment in REVPOR XXXX, by prior increased point independent X.X% X.X managed costs managed wholly-owned third communities, of in a third non-stabilized third XX.X%, the portfolio positive increase both prior XXXX. as assets REVPOR will period The senior on The percentage to X.X% We've and third is our XXXX. and the independent in in stabilize XXXX senior expenses. $X,XXX communities seeing communities to the a now assets Omicron was start Thank the our our excluding over since communities. living the living $X,XXX our for with living for non-stabilized XX health third was estate. as quarter quarter behavioral Same-store saw surge a decline X.X assisted real a period the excluding quarter occupancy our lower and replaced a occupancy points performance are for seen the to which assets quarter results permanent quarter

slightly NOI for prior cash government the stimulus of was the funds, quarter. quarter Excluding and ahead

line. revenue cash most Our X.X% went independent of living the quarter-over-quarter bottom to portfolio increase NOI in in directly and saw the increase a

our living than in our and costs. portfolio following earlier Continued pressure In vaccine rate needs independent some an portfolio, we of at from increases the time. experienced resulting immediately offset rebound steeper rollout, higher which margin our described portfolio assisted the the quarters labor the based living

up playing and NOI and the cash faster been lower structure has staffing lighter While pace. independent to REVPOR, on has living catch a occupancy at cost allowed recover model

If elevated power rates that’s X% annual and portfolio inclusive rate U.S. operating we care care particularly acuity property. between We entire throughout assets -- with our have communities XXXX. Higher across to X% the assets, positive our increases same-store outperforming continued and Canadian at been have move-out and seen our our Canadian our compare to re-leasing trends. our of of assets U.S. drive results pricing higher

and some statistics. the of and to in compares portfolio. prior This basis, our Occupancy the communities same-store in points quarter percentage growth with here are increase basis the on points XXXX. our sequential basis was to points quarter quarter the On REVPOR compared a compared for portfolio XX points Canadian X.X quick increased percentage to XXXX. slightly percentage our third X.X X.X of compared our U.S. third Canadian higher communities U.S. quarter of quarter in only third the than

basis In quarter our basis the government XXXX. XX.X% and However, compared a and in of a U.S. third on dropped for to quarter NOI stimulus third was quarter excluding third comparison, sequential funds the the cash compared slightly on higher sequential grew cash our XX.X% X.X% communities NOI higher in with portfolio XXXX. Canadian of

scenario month a Canada four place grew lifting remained These basis. past comprises assets the that experienced the same-store seeing we're same in reflect NOI Canadian our in following in restrictions units X.X% rebound emerging is quarter cash U.S. portfolio. quarters, of the function in of vaccine. the domestically the in on COVID a XX% Over the rollout compounded the demand our in the which strong of Essentially Canada communities and of managed wholly-owned the after in We longer per that believe than only statistics our

have including the additional property capital At in identified XX complete third invest the of the quarter behavioral these as of these well completion total properties $XX total and X our to an to At mortgages intend of investment turn to will for health Sabra's We all now investment $XXX leased health million. five million. me of Let investment of conversion Sabra's conversions, behavioral as of of a operators was which health conversions. $XXX million over current in behavioral portfolio. another properties, the to been end

to other the And of as and we sector Costa, within recovery where meet well see opportunities. operators Chief investment business that, Financial with I We call health turn as over will the Sabra's continue behavioral explore with relationships addiction Michael new Officer. to areas

Michael Costa

Thanks, Talya.

basis. XXXX, of $X.X normalized on AFFO fourth quarter normalized FFO share Enlivant is the of of income share $X.XX issue grant and $X.XX, as end a normalized quarter, government share received decreased cash second of timing quarter normalize XXXX, and whose shortfall This quarter accounted a $X.XX. to Compared result lower and from subsequent primarily AFFO is to tenants from rent for lower joint a quarter. recognized share FFO recognize due per of we per as the receiving NOI the the of million last per NOI was third the to venture, in For per and

expected we the receivables, for quarter. had a million the NOI rents burn of years just and the Ensign back a in to sold, amounts FFO These and Cash for the memorandums is basis fourth the Avamere of entered tenants straight arriving noted properties quarter. income disposition the This period. quarter, the of These totaled is from we Cash compared over decrease excess wrote off from four normalized to just at primarily understanding $XXX.X of that period we to the burn care rents $XX.X genesis that rents are majority itself this line million $X.X reaching date exposure. for XXXX, rental are transition end and off related received announced. facilities health to of million, North of began lower genesis were of $XXX of pursuant added in During of roughly million I American second quarter our the AFFO. and off to a the NOI includes cash primarily when into by previously reverse quarter in result the paid

earnings and the XXXX in fourth and recognize genesis We rents decrease and year XXXX amount excess respectively. the the quarter be to $X.X we $XXX,XXX expect in for full of million $X.X XXXX, to million of

EBITDARM XX of than our times is of NOI XXXX, below As less September one X% coverage.

second our XX, annualized down XX represented a ago. increase NOI and the quarter million $XXX.X expense of is $X.X from basis second quarter quarter in As cost and million, basis the of due SNF compared of cash annualized million XXX NOI, XXXX. million our XX% the stock-based to second cash XXXX, points exposure of our the year $X.X points down G&A quarter was increase for XXXX. $X.X to totaled a September to in This from compared of compensation

estimates an based in pre-pandemic the resulted on which As quarter, to payout quarter. stock-based made we performance reduction a to compensation a were in that reminder, last set awards that expense adjustment

referenced I adjustments, $X.X $X.X the expense compensation stock-based was compared the G&A Excluding quarter. recurring in second to cash million earlier, million,

efforts. sell During as are of the recognized quarter, capital estate to million impairment six real part we related our $XX.X of recycling contract of SNFs under to that

to turning sheet. balance the Now,

of Our be second of revolving no maturities proceeds with of Sabra in-process XXXX area which rate year the balance balance line of sheet continues outside the to half be by the of strength credit repaid floating debt material and an from we will for with until of no the expect dispositions. end our

in proactive our of at today's And approximately under cash consisting in million seen to our market $XX.X borrowings XX, of expense variable of rates. $XXX.X revolving hedging September approach lower XXXX, valuable rate our a rate and compliance our be significantly cash our of totaled equivalent of $XXX short-term credit rates time. covenants. liquidity of all million We're this hedging would as increased is of million have with available million, highly annual debt and facility. our period current otherwise interest Our than has environment, proved we activities, Because nearly in $X exposure short unrestricted

September of X.X leverage was our XX, times. XXXX As

have level long-term is short-term target, a this As average this our quarters, above we so few as leverage tiny last view stated simply the mismatch.

we from million we million and credit to to are proceeds quarter, borrowings proceeds. receive the as end borrowings, long-term are under these in the of Once expect roughly leverage repaid our received, and average proceeds dispositions we a pending completed repay closer expected year, generate target. facility, $XX.X which be we our of the leverage expect revolver pay a During $XXX to down gross by to and revolver

of well the of on of share Directors XXXX. do will We represents of and on positioned dividend dividend per stockholders $X.XX. balance access quarterly markets $X.XX portfolio XX.X% sheet just be are November payout strengthening more the cost to a to share capital cash XXXX, November a dividend record of of the of per is AFFO common that. on The favorable common without declared stock. continue Board normalized November paid close of XXXX to our we X, On focus until XX, as and The our business to our of XX, having

have we quarter. did quarters, as this several guidance communicated we the issue past Lastly, earnings not

slow While and recovery, in albeit still mark. confidently lines macroeconomic barrier recovery as a backdrop up with markets, volatility key continues to the we a a for Q&A. uncertainty are the This encouraged occupancy by estimate And at against time. labor of make of meaningful timing continued velocity question we view the is to to that, the it earnings the difficult our this provide open we'll which

Operator

will question Wurschmidt first of KeyBanc Our from Instructions] Markets. [Operator Austin Capital come

Austin Wurschmidt

new coming far hoping first provide market could just sort assets you of bit you on in any there's was rent lease the that the the a as baked little there of I years? if detail Rick, find, duration, more terms leases as and are escalators of transition resets fair the in

Rick Matros

duration base for rent release, Yes. annual The are press Avamere, Those are actually X.X%. X.XX%, -- leases our of the in Austin. But the XX… annual the the the Ensign for escalator is Ensign in the for to CPI exceed, escalators, not

Talya Nevo-Hacohen

XX is years. master two yes, one one -- are leases, There years, There's XX. XX is

Austin Wurschmidt

it. appreciate I

an that those contribution And assets And change on in about worried process been last you overtime? quarter. there's expect $XX I were XQ. you XX those what do announced separately, sort And provide on the Sorry NOI versus the you when any was could cash transitions million update to contributing of XX of cash plus in then commence rent that. in if

Michael Costa

Yes.

transitions to changes what we is is And our So quarter, no I still investor timing there's process. quick unchanged. the the are answer into presentation, last think those in put

to and end 'XX. now of We stabilize expect those the between

Austin Wurschmidt

at quarterly to, already have And rate? then run the those the eight million with XX.X transitioned stabilized that are

Michael Costa

where progressing number we stabilization as to is, they I'd have They're expect. get what relative stand they're progressing the expected, as but exact of we're to we had

Talya Nevo-Hacohen

so But number expected take those of XXXX. into they to a months stabilize before we well possibly

similar So they're on track, the but timeframe to other XX.

Operator

And Juan will Sanabria come BMO next question from of our Markets. Capital

Juan Sanabria

was a was rent could was and talk the for about rent reduce you assets the why rent need from bit the coverage hoping, in Rick, a transition than looking to worse lower that that maybe the lot TX on place -- more healthy the a the necessitated little the the operators. outside a pretty if coverage new seemingly and

So there's just talk dilution in why coming the with through could hoping some transition. you

Rick Matros

just get transition. cash really you once the a historically. from increase a think, know that a in rent. cases, -- transition in pretty it's flow Well, portfolio I an steady. stream we've portfolios, done negotiation, you to Every while function can smaller have was of and But most that And with people

this we offers frankly, offset part it aspects And of significant thought maybe enough we strengthening important the negotiation. were so, and rent. Ensign Avamere in there incremental didn't some that were slightly a low. But North the to And lower of see And would positive of that to just still as than It have American higher. the XX% with becomes as Ensign. the just moving going than not on attributes been the reduction case, were more being difference

Juan Sanabria

I then And guess and highlighted were that in I we're process, you some still believe. you XX -- assets, transitions doing

And that so Is addition this was you else that… talked but in obviously this offset. about anything an there is upside, what to had

Rick Matros

There else, ongoing The a our nothing of that previously were discussions is function Juan. announced XX had with operators. we

with relative transparency had management. a a was those Board's summer. That's lot different. decision. team. in strategic change their And transactions. late reevaluation they and and to to us in a of There So, the of lot was did productivity prior a This a great came management relationship We the

it of nothing to unique circumstance extrapolated a rest the and was should relative it from the So, be portfolio.

Juan Sanabria

financing in capital of terms with market the And me, $XXX rents one from that? of dispositions, do with on it of any the -- some you all associated any issues given the the what or dislocations through? sense that, buyers any cap targeted, a rate perspective just one for And for then million have that living Okay. means we're modeling last

Talya Nevo-Hacohen

can to I talk that.

on looking we're type So, of still of at year-end a transactions. most closing those

The hit challenges largest has been have $XXX one million lengthy that of everybody underway are recent. -- the time. have the component portfolios that's of of pretty to to something a So And get the that -- been $XXX-ish financing million. fairly period been for

hikes. have So, recent most the organized recent they'd -- committed prior and rate to financing their to

Juan Sanabria

Any color implied on yield $XXX on kind million? of the the

Talya Nevo-Hacohen

-- single. digits? Mid It's single it's single low

Michael Costa

Yes, mid to single low digits.

Operator

Valiquette will Our question of from come Steven Barclays. next

Steven Valiquette

of your slide useful a Difficulty]. More of you an rate quarter, [Technical data states XX top guys question among Medicaid here. status last status industry But of pretty the on the had some

Just for key states some rate any -- certainly helpful? Thanks. the updates. updates, looking the state will any and probably of evolution And of be they

Rick Matros

Yes. Sure, Steve. Thanks.

So we updates. didn't that been include change because there's no no this chart and time,

the we anxious Medicaid getting is rate there. to and they'll think state operators optimistic rates a year, how you as are be industry I the one was next So ground been cautiously all out that we'll that really, our with FMAP, on see. been underfunded. has about historically find have successful increase which data handled Texas, the know, than Other Texas appreciated, low And are

for fact just the the optimism are I the that dialogue legislators, reason system but think having with there. some not So operators the the in real issues that is pandemic demonstrated the

it really no one So, chrt. we're That's other we didn't put updates, all Steve. but that's on that why the for, the waiting

Steven Valiquette

missed far wondering the notorious that's as to quick point within pretty dramatically. just for ones, kind where Avamere? of mix if the for plan improvement that that what's operations apologize if big a for that, their the part But of I'm starting in improve but the One being as and property But able is is to this. Ensign, skill over going I the I of

Rick Matros

from of mix of excess perspective highest is the two XX%. our one skill in it's a in revenue Theirs portfolio,

is so. on their facilities allowed mix or thing We'll expenses, already that high. can are make opportunities to when The not. to own side. high And do Ensign so it sort been has historically the huge expense see whether There skill of comes

And corporate as well. from course, expense And some synergies to there of are lot to believe the bring they have a perspective. table, an

But So two incremental. I skilled be the will think changes be probably pickups in bigger any in mix, areas. much there'll other

of deal result rent improved in we this as a noted that coverage the the So releases.

their not in into much improve in just that to have continue recovering in from the pandemic, Ensign -- because brought the place but will you're remainder been the to so success rest therefore, programs that because expect portfolio. of putting their there We be of that

Operator

And question of Merrill our Dennerlein of next Joshua come from Bank will America Lynch.

Joshua Dennerlein

XX%? the and I color in like I of feel North But I broke between my pay. like, the cover have on comes difference American. versus was discussion was supposed to apartment whoever I I I any maybe, what there kind to appreciate Like, takes would my normally, lease, of

covering North So XX% that or…? there any on reduction discussion American

Rick Matros

of No, kind place. of because it in that negotiation, or kind wasn't wasn't it that leverage

sincerely were down. interested they in So, sizing

that. just there wasn't leverage yes, negotiate so that of to kind And

data. rent Our current Xst through is the the at fully covered level contractual February transition

Joshua Dennerlein

lease -- understand is I tenant end coming February on versus the why X? they Or typically a there as of agreement? of leverage so the responsible was here. there Are term it But, don't through due full landlord wasn't the for the

Rick Matros

it's -- couple No. Well, a things. of

we confidentiality First, agreement. have a

to So, they to once a removed decision so that went we made But I levers. to reduction transition the those any as their that buildings that through. that's say XX opposed actual other negotiations there's specific for down and of lot, not request can can honoring we whole move to the

Joshua Dennerlein

any are there structured differently? of could like tenants away who walk kind is -- Is or there other lease this

Rick Matros

not And reevaluation was elsewhere unique seeing Board's No, involvement I with and management to as portfolio. changes very lot it this of the had this portfolio. do a in a We're said, the and the situation. in

the generally, about historically, the remain statements all So we've made portfolio, today.

that one you are shouldn't don't portfolio. extrapolate should anticipate, to no this but unique and you aspects any other -- of Sometimes extrapolate the happen things

Joshua Dennerlein

your American North One and team? me. did conversations start these final for question between When

Rick Matros

middle Somewhere around of August. the

Operator

will question come from Griffin Citi of Michael next Research. Our

Michael Griffin

we grow of pro this as pretty base? tenants, to you've positively now, and largest to see Avamere transaction percentage relationships? of spoken you Ensign forma Would both them. a about for guess your continue great your them how can I so tenant expect become these And

Rick Matros

everybody we pretty one since been and did any the not that so overexposed keep ever to merger, committed -- XX%, below tenant. to we've we've we're try think, I No,

Ensign additional So continue were that I better that of Avamere that. put execute We're to goal still this going think X good to it we we I do to to regardless us would on, not set operators way, going we're as is things portfolio they having were facilities our fantastic and grow to thought happily and off as to a percentage as much we're in how higher now. them the get than are, possible. are diversity just

Michael Griffin

then commentary an Canada opportunistic And Should seem we of you around you see saying the is were more in I Canada, guess tactical just relatively or maybe investment this more from in positive. kind approach? increase

Talya Nevo-Hacohen

prior So of acquired a this One this quarter. more past already couple Canada thoughts. to in is, we've year

ready. we numbers all everybody And environment has same-store that There's half because some interesting. sure in had over for active the portfolios sales good and And went numbers I a this in some then been assets. market. for are the only that's assets generational time. executing And Canada, cover on past transactions I that year. occurring. provided year in you selling shifts and So used The has And been those in groups have maybe very that some fortune

as there. active I continue think we to -- trying to be you'll see

and not our if focus accretive, -- that's the our acquisitions thereafter. to capital. one. place the bid-ask that is world place first biggest to two, are the about get where the now anybody in today trying actually recycling spoke And right earlier for think in surely a Mike year, then capital, talked is I on challenge And acquisitions A spread

Operator

Our Securities. Malhotra Mizuho question from will come next of Vikram

Vikram Malhotra

things, understanding went operators. get no can operators Ensign you versus, also had? I with that level strategy or the other Doesn't And having operators these outlook costs these better to wanted to out, to well wanted firm. say, say almost rent would away, change, this better sort that well that you a trying said you -- suggest Or when this saying regarded to operate renegotiate. just transition read to to these a was square due, of when you assets, just the even what And also operators, to I'm et we’ve regarded credit. road? the are environment? they Board there's leverage, these both of of I we level, required I'm in decided follow-up led that would there's there's negotiate circumstance guess just we it the or where, facilities? down I'm the just rent on unique But very like, squares lower the cetera? how take wondering lower not away as the that across, like We synergies leases are hey, say, said come these -- like though Would trying of

So not I'm lower and squares that with an does How with out sure take have rent? square -- they how costs. to that just ability

Rick Matros

case. question. First I of all, the that is appreciate all, the -- First of a lot of transitions,

And in strength. transition. a like You rent, are people a position feel you're because of a they do want lower negotiating making to

a it's more not conservative That's how recovery recovery going through And much to take. room expected. this that are leases. And -- is more within not a of been years taking longer long is breathing been. this never it's possible or happen. of, of everybody this. -- I'm any ever a three quality, forward. much gotten everybody And industry But the like more not the much we're So than projections sure just having is than earning the That's brutal the anything last taking going function have stream appreciated, conservative how has that any aware It's portfolio to much approach of does -- unusual. taking this us -- how

a margin a a have from put still little year more last three probably on the the be realism more over think recovery lot years needs perspective. weight away disaster there from occupancy an of perspective, from And So and a that I to we're the so been. bit right

breathing everybody's So give been room. themselves to more trying

that's understandable. think I really

Vikram Malhotra

now underwriting taking more So then, in say labor forward not labor, forward situation? your in just shortages Because safe of remaining to you've reductions. high rent given terms more is said, the looking like maybe adjustments, past, the and in to the it with are portfolio, going we're how any costs of making surprised you persistently in has rent

Rick Matros

where any No, in we not are rent portfolio, we're with are. our we baking reductions. more Because

look at levels currently we reflect As new are. putting acquisitions, they we're that in rent where place

that going gives more and as us room certainty and room grow And gives us forward well. us so, gives more to

not or that's be case. no, more into We'd reductions, that looking acquisitions. at the rent new So, factoring

Vikram Malhotra

X.X going we would times Okay. last again, just back, looked they're no tenants and was these Because, said, I like have over quarter, at covered, issue.

unique know but how XX like, a buffer understand just a this one from to unfolded? poor has thing. of or so, just one the to last But are wonder what described on, the here, -- naturally environment than make the was more -- what appropriate tenants, you I coverage And kind want you hey, sure coverages question. portfolio the just I it buffer It’s a does the do given fall. top have that comment but need makes in circumstance, behavioral one is here create I and enough it behavioral coverage just given did

in wondering, terms we there Is be just a where basis, about should on of I'm spot concerned restructuring? anything so And stand? does that

Rick Matros

heavy part to at I'll and the all, take is concern no kick say Talya, the we first over that. there

EBITDAR the basis. that refer EBITDAR of kind X.X basis. you we underwrite we on that;s to On underwrite Well,

So an basis. EBITDA we on to underwrite X.X X.X

a and differential between there's So something obviously point like basis EBITDAR. XX big a that's difference actually EBITDARM because

EBITDARM. was X.X So coverage

underwrite an to basis a continue on to will on X.X basis. EBITDAR X,X We

to we basis, go are coverage as basis comfortable for nursing. on a forward have we will historically EBITDAR an sufficient X.X skilled be that X.X from So

Talya Nevo-Hacohen

Talya. is This

on some you, being has have had that -- therefore and enough to limitation its on hasn't but that On a the occupancy -- able pressure for spot has not and actually coverage. to staff. And able drove had side, behavioral pressure health don't to missions that's NOI been slightly due I us operator to specific occupancy actually little get lower what

that they of the operators and in operate We are the covering have smaller other buildings other in country, X times. upwards parts of it sector

at new to acquisitions about X is So it on fundamentally the what et of underwrite times operations inside really a and the varies as these in buildings. typically space. cetera buildings going at We the X.X

Rick Matros

one housing. all The of and facilities, labor other make an of breakeven issues skilled is I’d much economic point another, senior occupancy facilities, perspective behavioral lower kind the model asset point than the it the to for is or affect those even is extent from nursing classes though

there's So in more as well. breathing there actually

Operator

And from Tayo our question will Suisse. next of Credit Okusanya come

Tayo Okusanya

still along even again, of tight rent you guys this on have that this the And And the Just may the pretty fundamentals, there's that Vikram’s portfolio is point. at in idea I kind any line of your questioning, watch eye are coverage on. of tenants senior context just of additional pretty with list the tight asked again, housing there recovery.

kind of kind that, housing… underlying both underlying how skilled thinking you're of in just at So kind fundamentals about in both given this of senior and point, curious of kind fundamentals skilled

Michael Costa

can part Tayo, repeat of Sorry. last you the that question?

Tayo Okusanya

that in And so just I housing coverage in Again, quarter, watch tight. again, -- and your this between skills there's are still is real and context tenants, pretty quarter portfolio change And senior fundamentals lift. senior of your of Sure. rent it's asked the on the think kind I housing challenging? this idea list last of pretty still and if any

Michael Costa

in prepared watch So I Like as caught. of a our is our it's been the couple overall is my than one same EBITDARM sub about, less NOI. coverage things, remarks, mentioned X% our list is

a I thing triple the coverage, portion piece of housing our senior small to is point it's net, the on I on other it's the your the for triple-net out understand small of our very a question piece but think portfolio. portfolio.

Rick Matros

tight, And needs the point to it's tie though other is least improving. that at it even only was

from XXX. to went XXX So,

want certainly showing not we it are that's where be. They improvement. to So

the So, but taking we'd Omicron issues that as weighing worst than the that the kind things. longer believe all of occupancy the and the we may through along, it all exacerbated we've we've been be and of worst like, kind all kind all of then was of all I of hit, recovery saying, really And and been labor it. think gains reverse

if as The the effective, worst it. the And of and the not seeing the itself highly had We're call, vacced to the impact past well staff and mentioned this is well. of we're of we're be not true. vaccinations COVID as last think been been business. I boosters, it have today, -- seeing I So, most see in continues COVID on

holding is up business really the current negligible. to So relative well, they're COVID pretty cases,

Tayo Okusanya

always -- front. to with point. of around for TPG, kind you thing that maybe anything thoughts of Enlivant know, you this was the we've wait I there last at on it do then before then And And kind recover. be could conversation

to an of again, looking time is, the be outcome? what Just today, where kind potential start is to is looks XX%, now high at industry could and which looking appropriate like JV the it occupancy at the relative pretty

Rick Matros

but But I that which PPGs it's point, XX with are and XX out the occupancy at perspective portfolio portfolio. to So this the order need to that yes, to marketed going at soon. in XX, is in From perspective, said, agree. mean, go walk the we isn't you and their bankers be numbers per XX, share. believable

happen. And so that's what will

their team we'll on management will off board, the So sign to budget it. be process that completing is presented the

And bankers. sometime by kicked before year-end, the marketing process the off be will

Michael Costa

our you're Yes. for looking Sienna joint Tayo, that at. That's venture. that XX.X%

Operator

next come Street Our of question will Green Pawlowski LLC. Advisors, John from

John Pawlowski

statistic Michael -- statistics times EBITDARM EBITDAR? to Could percentage this below with shared of on share the with you regards X same you coverage.

Michael Costa

Yes.

a of don't I you exact for we it we've recall, that EBITDAR X%. with and talk in number now. disclosed under is non-comparable -- just It's don't -- pulling just in coverage, EBITDAR, past. reported the it’s what our right that it And, terms as So, various because you. about it disclose get peers the consistent I'm becomes And number. we the ways could of up But

John Pawlowski

Sorry.

EBITDARM are one below percentage the same EBITDAR both and on So, roughly? tenants of

Michael Costa

X percentage EBITDAR. on below X% difference. like and on X% were EBITDARM, We just It's a below

John Pawlowski

Group, the I cash, cash. loan them, they they but a Okay. need EBITDARM so McGuire almost the need I is follow-up. their times, believe X working view, you but got capital coverage extended on outsider's to Question just from shouldn't

capital additional the just So, operators in loans what us loan? for you the coming quarters? sense do can give working And extend to to drove a expect you

Talya Nevo-Hacohen

transition That a of for tied to is on us. a portfolio that took they

So, with. that's associated what that's

expedite we We it in make loans general and working short-term a very capital transition need are to provided usually to and operators. in few faster. have happen really to, our they they're nature very If

Michael Costa

saying said, that tied will for that is been this because consistent taking tenants is come a need be out period to pretty as of help we may people, recovery a transitions. that as to and it not -- number -- that that we've whether forms can long some and we And help on in But believe of time.

time, form period or partial could for full, So relief of rent the be a working or be a that could as it of loan in capital well.

whole side we help they So, tenants open the get our this to the to door other leave as three-year and step up experience. of try to

Operator

Securities. next will from Daniel One Capital come Bernstein of Our question

Daniel Bernstein

Hi, any the were apologize -- taking to part Avamere, in Two that and the purchase assets? North thanks transition to I for quick the those barking that Ensign background. Are question and given hear just options call of American or dog here. of there

Rick Matros

No.

Daniel Bernstein

I mean, know information then flu here residents you and uptake? vaccine been if And at Okay. higher headlines. historical, trying has the a levels pre-COVID? get levels? sense. employees, in are than to another flu the pre-COVID any say has was, had question Just I obviously, on vaccine versus have What this, I don’t been getting flu the the

Rick Matros

that, data higher for was Dan. previously-COVID get effort if on pretty the than I would flu. levels. good usually to I concerted don't it a have There's be vaccinated surprised residents

I seeing been like I there them doing I don't past for be of COVID. think was But would concerted data a that. on their thing. it's For have kind always is don't much that good I there's we're little in know kids of not impacting with see an older sort employees employees, COVID hit effort there's the But ever and the seeing own to flu surprised We're But yet. not this business any and which concern between there's this mostly that that uptick. been point. impact of adults. triple at and RSV,

Daniel Bernstein

don't cash whether cultural of question, earlier you but from enough the or Who XQ? I change not in the I shortfall not, but just the XQ this in wondering tenants? went or NOI paid [indiscernible]. was guess then it not, I data. over was instead what And call if last was a there's those know

Rick Matros

call the in somewhere range, far was our call million And It looking $X.X because of million. it as I it goes, by roughly about at. neighborhood that's as number in the dropped Yes. NOI somewhere it $X we're cash that

Daniel Bernstein

in XQ? was all paid that And early

Rick Matros

Correct.

Operator

question will next be coming Group. of SMBC from Our Richard Anderson

Richard Anderson

Avamere. that on question just an rent, a of operator giving cutting have to a rent, where have of sort irony I and portion portfolio the So, of a cut you

with and how would -- you're about into at had reflection given wonder all, assets them And your those weighed Avamere, a assets place history is precise But there? restructuring. And if it better Avamere existing you in how, this with the these So, at the of how do four that does feeling marry of assume in terms perhaps in of what point, I coverage portfolio where rent? a terms already XX given thinking the I go. much

Rick Matros

let better think So, you answer question, order, word your since I irony. use the me to

history. of bit little a Just

got didn't to for Avamere we coverage was, care to through to sort of But do whatever we operators their chose we did, one the that pandemic them, some on, not other took it always they Avamere other we do all tight. with obviously, Once it. really was ancillary Avamere the the part So, anything given that revenue of as too of rent businesses. their much. tenant the merger. because manage anything was we But it assets became long hit, sold or pandemic how they went continue sources or had still of the where

back recap could time, mechanism and them we rent that like they for put point. because to a something But we felt over we So, that capture level. to higher thought get at we really do needed that

you And stronger portfolio overall. much the so thinking into add to giving by when that make State the facilities fits all Washington Medicaid where that XX%, them this four some particularly the of increase. is is going And additional rate

have anticipated. much there. buildings don't little a happen so recovery bit, off So, quickly up the just they might than that Washington, rent for think there even of them we be they in and the is a market will sense. a of And acceleration Washington key of but Ensign lot that made I a has presence more two

made well. to the sense a as And preferred they more it California to lot just So me. do portfolio

that So answer does your question?

Richard Anderson

with guess lower? is I on what Avamere? the Is coverage them, new reflection or it coverage the assets, a the higher existing four of Well, is it

Rick Matros

No, there. think I that's good a estimate

Richard Anderson

Okay.

question, at exploit? being Ensign, a was there way can opportunities for managed to quality because perhaps, expense that was also or just them, some under the Ensign but portfolio was upside I'm expense is what them that in of the the the of a situation of by of Second management there particular, function an Ensign you at that But curious, huge which was combination? Company, portfolio. function for said the degree opportunity national it existing just

Rick Matros

as result North of Yes. It autonomy American at lot a knows, more do how that. and purchasing, its of getting a advantage take and the of to operators. scale There's as when But a was does lot group of of where, level purchasing, have to authority. Ensign local Ensign it a independence function of discounts everybody facility comes their a lot relative operators

philosophy positive that. that's on read margin for So, results doing bear for this are right will Ensign philosophy. one's reasons companies bringing there or to one's I'm a the completely wrong, that portfolio. different But not different saying

Richard Anderson

Okay. or expense similar for the that Avamere foregoing status opportunity there is And sort of a just is quo?

Rick Matros

Because some side. want. if opportunity it's it whatever, communities. -- four want, getting occupancy of in geographic buildings, and and difficulty these Avamere more is rates, and but four in care four revenue at because their Washington, the it's to they managed it prior their markets they've they densifies sound the contracts the These only getting buildings, and buildings, actually No, on the distribution urban their had may

insurer. So that with and conversations already they've the -- had

to will the Seattle of from care believe going because this only market. to rates to be around not better they're volume perspective provide those that contracts, but them additional managed they the allow to get insurers get that a So service able opportunity

Operator

to in I'm And would for remarks. no you. Thank further conference now like seeing Rick Matros the queue. questions I closing turn to back the

Rick Matros

digest. was we've your I Hopefully questions. know answered everybody, to a your time. it for Thanks, lot

and care. If available always the additional follow-up, additional we have Thanks have discussions. are as team's take you to

Operator

This concludes today's for all participating. conference call. Thank you

pleasant You disconnect a now and have day. may

Sabra Health Care REIT (SBRA) 8 Nov 222022 Q3 Earnings call transcript