Irvine, California-based real estate investment trust (REIT),
Sabra Health Care REIT Inc. (
, recently acquired five senior care assets in Texas and
Minnesota in two separate transactions. The properties, acquired
for a total price of $50.2 million, were funded with existing
cash and proceeds from its secured revolving credit facility.
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The properties acquired in Texas comprise of three skilled
nursing and one assisted living facility. Sabra Health Care
exercised a purchase option on the Texas portfolio and completed
the acquisition from Meridian Senior Properties Fund I, L.P. The
portfolio, collectively known as the Meridian Portfolio, is
situated in Dallas-Fort Worth Metroplex and Rockport in Texas.
In early 2012, Sabra Health Care had provided Meridian fund with
a $10 million mezzanine loan secured by partnership interests
under which the company had the option to purchase the assets for
$43 million. By the time Sabra Health Care closed the
acquisition, the outstanding mortgage debt and mezzanine loan had
been repaid, resulting in a net payment of $33 million by the
company for the acquisition.
Concomitant with the acquisition, Sabra Health Care penned a
15-year triple-net lease with the associates of the seller for
the portfolio. The deal includes two five-year renewal options
with annual rent increase equal to 3% for the first two years and
the greater of the change in the Consumer Price Index (CPI) or
2.5% thereafter. The initial yield on cash rent is expected to be
9% with $4.7 million in annual lease revenues.
The fifth acquired property is an 87-bed skilled nursing facility
known as Camden Care Center. The property, positioned in
Minneapolis, was acquired for $7.2 million. Alongside, Sabra
Health Care also inked a 15-year triple-net lease with Trinity
Health Systems, LLC for the property. The terms of the agreement
are same as in case of Meridian Portfolio lease. The initial
yield on cash rent is expected to be 10% with $0.9 million
annual lease revenues.
The transactions are in line with Sabra Health Care's objective
to expand its portfolio through the acquisition of skilled
nursing and long-term care facilities. The company's strategy of
diversifying its portfolio is backed by a professional management
Sabra Health Care through its subsidiaries owns and invests in
real estate for the healthcare industry. The company leases
properties to tenants and operators throughout the U.S. As of
September 30, 2012, Sabra Health Care properties comprised of 105
assets located in 26 states and included 11,689 licensed beds.
We currently have a long-term Neutral recommendation on Sabra
Health Care. Also, it carriers a short-term Zacks #3 Rank (Hold).
One of its peers -
Ventas, Inc. (
- carries a short-term Zacks #2 Rank (Buy).