Sabra Talks SNFs, Not Fearing a Blue Wave, and SHOP

Sabra Healthcare REIT, Inc. (Nasdaq: SBRA) beat Wall Street estimates with a strong third quarter earnings report on Nov. 2, and today during a call with analysts, Rick Matros, Sabra CEO, president and chair, said the outlook looks bright for both its Senior Housing Operating Portfolio, or SHOP, properties and SNFs.

Sabra reported quarterly funds from operations (FFO) of $0.41 per share, beating the Zacks Consensus Estimate of $0.40 per share. Numbers are adjusted for non-recurring items. Quarterly revenues of $249.57 million also bested the consensus by 6.17 percent and is more than $100 million higher than third quarter 2025 revenues of $190.04 million.

During the earnings call, Matros said Sabra is working on a lease extension in its SNF portfolio, “and the operators involved are interested in negotiating an extension sooner rather than later. And that extension would carry with it an increase in rent, simply given where rent coverage is for that portfolio today and what we would normally put a new lease at for a skilled nursing operator, you know, somewhere around 1.5.”

The upside will continue with the company’s lease expiration schedule between 2027 and 2031 showing “we have a big chunk of leases coming up. So, you should expect us to take advantage of that in the same way that we’ve been taking advantage of to date. . .”

SHOP Is More of a Focus

As for where Sabra is looking to grow, he said “in terms of our SHOP exposure overall, our focus is on growing earnings and we’re going to follow where the opportunities are. So right now, the predominant opportunities are in SHOP and that’s why we’re anticipating 12 months out we’ll be closer to 50 percent SHOP and closer to 40 percent skilled nursing.”

Sabra is not turning its back on SNF acquisitions, but for the first time the REIT will be more SHOP than SNF by the end of 2027, he said.

“We’re happy to do more skilled nursing and we can do both. So, if the SHOP opportunities remain what they are and there are more skilled nursing opportunities, we’re just going to do both. We’re not putting any parameters on how much SHOP we want to have or how much skilled nursing we want to have,” Matros said.

“We want to have a very well-balanced portfolio. We like the idea of having more SHOP than skilled. But as we all know, for those of us that have been around for a pretty long time, the outlook is great for both SHOP and skilled. But life happens and stuff happens and we just don’t want to have everything—we don’t want to make a bet just on one asset class only, particularly with the contributions that we’re getting out of the skilled portfolio now.”

Blue Wave?

When asked about the potential for a Democratic takeover of Congress after the midterms, Matros said the party has already made public its priorities for the healthcare space. “If the Dems win both the Senate and the House, they’ve already put this paper together—it’s like 81 pages on healthcare overall. And there’s some stuff in there that we like with workforce investments. And it’s not just about long-term care, by the way, it’s about the entire healthcare space." He said Sabra would expect that with Democrats in charge there is the chance staffing mandates will come up again for the skilled sector and attempts to limit private equity investment in healthcare facilities.

“So that kind of stuff will bubble up again. When we beat those things down in the past, we did it with bipartisan support. Not everybody sees it that way on the Dem side. So, you know, we feel pretty comfortable with it. There’ll probably be a little bit more noise about it if the Dems win the Senate as well, I think that is probably the best way to put it,” Matros said.

“The other thing I’d point out is to remind everybody every state that we’re in has staffing mandates, currently. And the staffing mandate that was originally recommended at the federal level was one that Sabra Healthcare REIT in the aggregate already met. So, it’s just not a concern. I think it’s going to be more noise and headlines than actual impact on the day-to-day business.”

SNFs for Sale?

Another analyst asked about the potential for selling off SNFs with the lease expiration picture the way it is, Matros said much has already been done by Sabra in that area.

Forty-some-odd percent of Sabra’s skilled expirations are after 2035, an analyst said, “And I think Ensign’s been out there desiring to buy some assets out of their REIT partner portfolios. I don’t know if they’ve approached you or not, but how do you think about some of the long-dated SNF assets and maybe offloading some of those?”

Matros answered: “At this point we feel like we’ve pretty much cleansed the portfolio of anything that we didn’t want to retain on the skilled side. So, we’ll see what the environment looks like. But as we sit here today, I wouldn’t anticipate any material dispositions with our skilled operators. I mean, the space has such a nice runway ahead of it. But, you know, the environment may change over the next couple of years. We’ve got time, obviously, to make those judgments. We’re not having those conversations with anybody right now—kind of to answer your question about that with Ensign. So, we’ll see. We’ll be open-minded about it.”

Portfolio

As of Sept. 30, Sabra’s investment portfolio included 364 real estate properties held for investment consisting of ((207 skilled nursing/transitional care facilities, 32 senior housing communities, 24 specialty hospitals and other facilities, and 101 senior housing communities operated by third-party property managers pursuant to property management agreements (SHOP)), 11 investments in loans receivable (consisting of two mortgage loans and nine other loans), four preferred equity investments, and two investments in unconsolidated joint ventures.

Also, as of Sept. 30, Sabra’s real estate properties held for investment included 37,513 beds/units, spread across the U.S. and Canada.

Comments or questions? Contact Patrick Connole at pconnole@parkplacelive.com.