Sabra Health Care REIT, Inc. (NASDAQ: SBRA) announced Tuesday its breakthrough into the Nebraska senior housing market with the acquisition of six properties for $90 million.
The sale/leaseback transaction with Nebraska-based Nye Senior Services, LLC, comprises a total of 673 beds and units covering the continuum of care—292 skilled nursing beds, 213 independent living units and 168 assisted living units.
All six of the properties are located within approximately 100 miles of Omaha, the state’s largest city, and represents the Maryland-based REIT’s first foray into Nebraska.
“This acquisition marks our first entry into Nebraska and aligns us with a terrific operator who has had success in operating senior housing and skilled nursing facilities, a valuable skill set,” stated Sabra CEO and Chairman in a release. “The management team also has expansion plans on the docket for certain existing assets, which we anticipate financing.”
Coinciding with the purchase, Sabra also said it has entered into a triple-net master lease agreement with affiliates of Nye.
The lease has an initial term of 10 years with four renewal options of five years each and also provides for an annual rent escalator of 3% resulting in annual lease revenues of $8 million and an initial yield on cash rent of 7.78%.
In addition, Sabra will pay an “earn-out” based on incremental portfolio value created through expansion and conversion projects, the company stated. This amount will be determined based on portfolio performance following the third anniversary of the master lease.
Sabra’s announcement of the Nye acquisition brings the company’s investment portfolio to 127 real estate properties leased under triple-net lease agreements.
The portfolio consists of 96 skilled nursing/post-acute care facilities, 29 senior housing facilities and two post acute care hospitals.
As of February 18, 2014, Sabra’s real estate properties are located in 28 states and include 13,414 licensed beds.
Written by Jason Oliva