Sabra Health Care REIT, Inc. (NASDAQ:SBRA) Q2 2016 Earnings Conference Call - Final Transcript

Aug 02, 2016 • 10:00 am ET

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Sabra Health Care REIT, Inc. (NASDAQ:SBRA) Q2 2016 Earnings Conference Call - Final Transcript

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Operator
operator

Good day ladies and gentlemen and welcome to the Sabra Health Care REIT's Second Quarter 2016 Earnings Conference Call. This call is being recorded. I would now like to turn the call over to Talya Nevo-Hacohen, CIO. Please go ahead.

Executive
Talya Nevo-Hacohen

Thank you. Good morning. (Forward-Looking Cautionary Statements) In addition, references will be made during this call to non-GAAP financial results. Investors are encouraged to review those non-GAAP financial measures as well as the explanation and reconciliation of these measures to the comparable GAAP results included at the end of our earnings press release and the supplemental information materials included as Exhibits 99.1 and 99.2, respectively, to the Form 8-K we furnished to the SEC yesterday. These materials can also be accessed in the IR section of our website at www.sabrahealth.com.

And with that, let me turn the call over to Rick Matros, Chairman and CEO of Sabra Health Care REIT.

Executive
Rick Matros

Thanks, Talya. Thanks for joining us today everybody. So, we reported another strong quarter last night, we had solid operational results and lower leverage. We've updated our guidance, which Harold will provide specifics on. We also announced the planned disposition of a significant number of Genesis facilities.

These dispositions will reduce our exposure to our largest tenant and it will leave us with 43 Genesis facilities, which is half the number we started with at the time of the split, and leaving us with stronger assets that will see increased rent coverage over time as Genesis will be able to focus on their best-performing assets rather than have a disproportionate amount of management times spent on more challenging assets, which is a trap that operators always get caught in.

Our lease expirations will now occur ratably rather than be frontloaded. Harold will provide the specifics of that as well. I'd also note that this is just one piece of a number of larger strategic initiatives that I'm sure Genesis will be talking about on their call going forward, and I think those initiatives will give the market great comfort relative to what Genesis is doing on a go-forward basis and will strengthen them from a balance sheet perspective and operational perspective and an income statement perspective.

In terms of our investments, our investment activity has slowly been picking up. We've invested just under 95 million today and have agreed to terms on another 22 million in the senior housing campus. And, I want to point out also that, our investment activity and the timing of the fact that it's picking up has nothing to do with anything else that we've been addressing in the company whether it was the Forest Park stuff or this Genesis deal. It's really just simply a matter of the acquisition market and that after having the seller's market last year things are just starting to pick-up a little bit more.

Our pipeline currently stays at 300 million, almost exclusively assisted living and memory care. On complete sales of the business, we continue to see competition from