Sabra CEO: We Have IRS Green Light But No Immediate Plans to Self-Manage IL Units

Sabra Health Care REIT (Nasdaq: SBRA) has also received a favorable IRS private letter ruling to self-manage IL units three years ago — but CEO Rick Matros has no plans to wield that power.

Like some of its real estate investment trust (REIT) peers have done more recently, Sabra in 2020 originally sought more flexibility to self-manage certain independent living units. The company did so not long after converting its then-21-community Holiday Retirement portfolio from a triple-net master lease to a management agreement structure in the prior year.

“We had some internal discussions about whether we would do anything else relative to management … but after Atria wound up taking over the portfolio, we decided that we would just keep that as optionality for us going forward,” Sabra CEO Rick Matros said Wednesday during the company’s fourth-quarter 2022 earnings call with investors and analysts.


Fast-forward to 2023 and Matros said the company is pleased with Atria’s performance and has no current plans to use its flexibility to self-manage.

“We don’t anticipate doing anything with it at this time,” he added.

Sabra has 106 leased or managed senior living communities in its portfolio in addition to 264 skilled nursing facilities, 17 behavioral health facilities and 15 specialty hospitals or other property types.


Matros is among several industry executives that have explored or plan to execute self-management of certain independent living units. Last year, Welltower sought and won flexibility from the IRS to self-manage 45,000 independent living units when the government body ruled those communities are not “health care” facilities and thus are not required to be leased to a third-party operator or taxable subsidiary as required under the REIT Investment Diversification and Empowerment Act (RIDEA).

The company is now accelerating those plans in 2023 with several pilot programs with future margins in mind.

“Our PLR gives us significant ammunition to accelerate the pace for what Welltower 3.0 might look like,” Welltower CEO Shankh Mitra said during the company’s most recent earnings call.

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