Sabra Health Care REIT Posts Strong Q3 2024 Earnings with Record-Breaking Occupancy Rates and Improved Leverage
On November 1st, Sabra Health Care REIT (Sabre) reported its third-quarter 2024 earnings, revealing a remarkable performance across its various asset classes. The company's Chief Executive Officer, Rick Matros, expressed satisfaction with the continued improvements in all primary asset categories, attributing the gains to the company's strategic efforts and distancing from the pandemic-induced challenges.
One of the key highlights from the quarter was the substantial increase in occupancy rates across Sabra's portfolio. The skilled nursing facility (SNF) segment saw a 130-basis-point sequential gain, while the same-store senior housing portfolio experienced a 90-basis-point jump. Notably, the triple-net senior housing portfolio maintained an occupancy rate of around 90% for four consecutive quarters.
As Rick Matros highlighted, the EBITDAR (Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent) rent coverage ratios for both skilled nursing and triple-net senior housing portfolios reached record-breaking levels at 1.94% and 1.37%, respectively. This impressive performance demonstrates Sabra's ability to adapt and grow amidst industry challenges.
The company's behavioral and other category exhibited relatively flat occupancy rates, a result of incorporating stabilized addiction treatment centers into the pool last year. However, this stabilization is expected to contribute positively to future earnings. As Rick Matros noted, "the fact that we've been getting percentage rents for a number of months now as anticipated and yet they still have rent coverage as high as it is, shows that this particular lease restructure worked out really exactly as anticipated."
Sabra's leverage has continued to decrease, with the company increasing its guidance at the midpoint. The REIT expects year-over-year growth exceeding 6% in 2024 and anticipates carrying this momentum into 2025. New investments for the quarter totaled just under $100 million, with a focus on high-quality assets, good yields, and trusted operators.
As Rick Matros emphasized, Sabra is committed to approaching its investments with caution and a focus on quality, rather than pursuing larger portfolio deals that might introduce unnecessary complexity. This strategic approach has contributed to the company's year-over-year growth and will continue to shape its investment decisions moving forward.
