Sabra Acquires Two Senior Care Communities for $42.5 Million

Sabra Health Care REIT, Inc. (NASDAQ:SBRA) recently acquired two senior care communities in separate transactions for a combined $42.5 million.

The first is a 48-unit memory care community in Aurora, Colo., purchased for $16 million from an affiliate of New Dawn Holding Company. 

The REIT also entered into a triple-net lease agreement with the New Dawn Holding affiliate. The lease has an initial 10-year term with two five-year renewal options and provides for a fixed annual rent escalator of 3%, resulting in annual lease revenues that will be determined in accordance with GAAP of $1.5 million and an initial yield on cash rent of 8%.

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Sabra funded the acquisition with available cash and was granted the right of first refusal to acquire a memory care community currently being built by an affiliate of New Dawn in Sun City West, Ariz.

“We are very pleased to expand our position in the senior housing memory care space,” said Rick Matros, Sabra CEO and chairman. “We expect to announce a pipeline agreement with New Dawn in addition to the acquisition of this asset with New Dawn.”

The second purchase was a 249-unit independent living community in Frankenmuth, Mich., acquired for $26.5 million and funded with available cash.

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Concurrent with the purchase, the REIT entered into a triple-net lease agreement with affiliates of Unified Acquisitions & Development, LLC. The lease has an initial 10-year term with two five-year renewal options and has annual rent escalators equal to the greater of the change in the Consumer Price Index or 3%, resulting in annual lease revenues determined in accordance with GAAP of $2.4 million and an initial yield on cash rent of 8%.

“This facility is an independent living facility in name only,” said Rick Matros, CEO and chairman of Sabra. “In Michigan, there are restrictions for assisted living licensure that limit the number of beds. The larger facilities are designated as independent living but provide supportive services through home health and other health care providers. We have been working on doing a transaction with the UPG management team for some time and are pleased to have consummated this transaction. We look forward to building our relationship with this superb management team.”

Written by Alyssa Gerace

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