Sabra Health Care REIT, Inc. (Nasdaq:SBRA) recently acquired four skilled nursing facilities in two separate transactions for a total of $27.5 million.
The first three properties were acquired on June 1 in a sale-leaseback transaction with affiliates of Aurora Health Management, LLC for $21.8 million.
Two of the facilities are located in Connecticut, and the third is in New Hampshire. They collectively have 327 beds.
In connection with the acquisition, Sabra amended its existing master lease with Aurora to include these three facilities with two others the REIT currently leases to the operator, and to extend the term by six months. The Aurora master lease has an initial term of 15 years with two five-year renewal options, and contains fixed annual rent escalators of 2.5%.
With the addition of these facilities, the Aurora portfolio will provide an initial yield on cash rent of 10.18% and annual lease revenues determined in accordance with GAAP of $4.6 million.
The REIT acquired another skilled nursing facility on May 1 for $5.7 million. This 120-bed purchase is located in Virginia, and in connection with the acquisition, Sabra entered a triple-net lease agreement with affiliates of Trinity Health Systems LLC.
The lease for the Virginia facilities has an initial term of 15 years with two five-year renewal options and provides for annual rent escalators equal to the greater of the change in the Consumer Price Index or 3.0%, resulting in annual lease revenues determined in accordance with GAAP of $0.8 million and an initial yield on cash rent of 11.0%. Sabra provided the tenant with an “improvement allowance” of up to $500,000.
Sabra funded both the purchases with available cash and proceeds from its secured revolving line of credit. After the acquisitions, the REIT had outstanding borrowings of $37.5 million on its credit line.
“The Aurora management team has exceeded our expectations since our first transaction with them last year and we are pleased to continue growing our relationship with this latest acquisition,” said Rick Matros, CEO and chairman of Sabra. “Similarly, while our relationship with Trinity Health Systems is new, I have known the principals for quite some time and am pleased to have established a relationship with them on their latest venture. All four facilities are attractive assets with operational upside expanding our foot print and further diversifying Sabra from its largest tenant.”
Written by Alyssa Gerace