Sabra Health Care REIT Exceeds Expectations in Q1 2025, With Strong Skilled Nursing and Triple-Net Senior Housing Performance
Sabra Health Care REIT (Sabre) has kicked off 2025 on a high note, with its first quarter earnings call revealing a robust performance across various metrics. The company's skilled nursing and triple-net senior housing EBITDA and rent coverage have reached new highs, setting the tone for a promising year ahead.
According to Rick Matros, CEO, President, and Chair of Sabra Health Care REIT, the company's skilled nursing and triple-net senior housing EBITDA and rent coverage continue to set new records at 2.19 and 1.41, respectively. The behavioral segment also hit its highest level since year-end 2023, reaching 3.77.
This impressive performance is a testament to Sabra's ability to navigate the complexities of the healthcare industry while delivering strong results. The company's focus on building long-term relationships with high-quality operators has paid off, as evidenced by the significant improvement in contract labor costs. While still higher than pre-pandemic levels, contract labor costs have decreased to 4.5 years, indicating a moderation in labor difficulties.
Sabra's skilled occupancy also saw an uptick of 80 basis points sequentially, with its skilled mix up 10 basis points. The triple-net senior housing occupancy rose by 50 basis points, further solidifying the company's position in the market.
Talya Nevo-Hacohen, Chief Investment Officer, discussed Sabra's managed senior housing portfolio, which held up well despite expectations of seasonality-driven declines in operating results. Revenue, cash NOI, and margin were flat on a sequential basis for the total managed portfolio, including non-stabilized communities and joint ventures at share.
The senior housing industry as a whole continues to show signs of resilience, with more units occupied than ever before. As Rick Matros noted, the pandemic has led to an absorption of significant inventory that came online during this period. With little new supply expected in the next few years, Sabra sees continued opportunities for internal and external growth in senior housing.
The company's pipeline remains busy, with a mix of deals involving existing operators and new relationships being cultivated with proven operators. While not providing details on awarded deals, Rick Matros mentioned that more than $200 million have been awarded to Sabra this quarter, exceeding the company's 2024 total. This is a positive indicator for future growth and development.
Overall, Sabra Health Care REIT's Q1 2025 performance is a testament to its strategic vision and operational expertise in navigating the complexities of the healthcare industry. With strong EBITDA and rent coverage, improved labor costs, and a busy deal pipeline, the company is well-positioned for continued success in 2025.
