Sabra Reports $7.3 Million FFO in Q1 2011, Closes on Two Acquisitions and More

Sabra Health Care REIT (Nasdaq:SBRA) reported funds from operations of $7.3 million during the first quarter of 2011.

Net income came in at $1.2 million, while the company generated $12.5 million of cash flow from operations.  During the quarter, Sabra recognized revenue of $17.6 million, which on an annualized basis, resulted in a lease coverage ratio of 1.45 based on the EBITDAR achieved from leased properties by Sun Healthcare Group, Inc.

Sabra also said it closed on the acquisition of Texas Regional Medical Center at Sunnyvale, is a 70-bed acute care hospital for $62.7 million on May 3, 2011.  Located outside of Dallas, TX, the facility opened to the public in September 2009 and includes approximately 75 physicians who practice at the hospital. In connection with the deal, Sabra assumed the landlord position in the existing triple-net lease that expires in September 2034.

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In addition, Sabra closed on a mortgage note secured by Hillside Terrace, a combined assisted living, independent living and memory care facility with 82 available beds in Ann Arbor, Michigan, for $5.3 million. As of March 31, 2011, Hillside Terrace was 86.5% occupied.

“We have agreed in principle with the borrower to accept a deed-in-lieu of foreclosure and are in the process of documenting the transfer of the facility’s real estate and securing a new tenant for the operations,” said the company in a statement.

Earlier this week, Sabra also entered into an agreement to buy Oakbrook Healthcare Center, a 120-bed skilled nursing facility near Tyler, Texas, for $11.3 million. In connection with the acquisition, we expect to enter into a new 15-year triple-net lease agreement with the current operator, which is expected to provide an initial yield on cash rent of 9.5%.  The company expects to close on the transaction in the second quarter of 2011.

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“Our first quarter performance was in line with our expectations and we are pleased with the execution of our business strategy, as demonstrated by our recent acquisitions of Texas Regional Medical Center at Sunnyvale and the Hillside Terrace mortgage note, an investment we expect to result in our obtaining the underlying real estate and operations in the second quarter of 2011, said Rick Matros, CEO and Chairman.

As of March 31, 2011, Sabra had approximately $167.8 million in liquidity, consisting of unrestricted cash and cash equivalents of $80.2 million and available borrowings of $87.6 million from a secured revolving credit facility.