Sabra Health Care REIT, Inc. Q4 FY2024 earnings call

• Promotions: Announced promotions for Kara, Lukas, and Anna. - Segment Performance: Senior housing and skilled portfolios showed positive trends; managed senior housing portfolio had revenue and cash NOI growth. - Regulatory and Political Environment: Addressed Medicaid cuts, noting historical congressional protection of the elderly, bipartisan support, and robust lobbying efforts. - 2025 Expectations: Anticipate higher deal volume in 2025, building on 2024's strategy with 7% year-over-year normalized AFFO growth.

Senior housing: SHOP same-store occupancy up 80 basis points sequentially with margins up 20 basis points. SHOP cash NOI was 17.9% for the quarter. Senior housing triple-net coverage stayed steady at 1.36. Skilled: occupancy up 60 basis points sequentially with skilled mix up 30 basis points. EBITDARM coverage hit an all-time high of 2.09. Managed senior housing portfolio: sequential revenue growth of 3.5%, cash NOI growth of 5.4% with margin expansion of 50 basis points. Same-store managed senior housing portfolio: revenue grew 7.4% year-over-year, Canadian communities revenue up 10.6%, fourth quarter occupancy grew 2.3% year-over-year, RevPOR rose 4.5% year-over-year, exPOR rose near 0.6%, total expenses rose 3.4% year-over-year, cash NOI grew 17.9% year-over-year.

• Full year 2025 guidance: Net income $0.67 to $0.70, FFO $1.42 to $1.45, normalized FFO $1.43 to $1.46, AFFO $1.47 to $1.50, normalized AFFO $1.48 to $1.51. - Midpoint expects approximately 4% increase in normalized FFO per share and normalized AFFO per share over 2024. - Guidance assumes no 2025 investment disposition or capital markets activity, low-single-digit cash NOI growth in triple-net portfolio, low to mid-teens cash NOI growth in same-store managed senior housing portfolio, and general and administrative expenses of approximately $50 million.

• Medicaid cuts uncertainty: Threat of Medicaid cuts is an overhang, with actions unpredictable but natural guardrails like bipartisan support and state governor involvement. - Political Environment Impact: Potential impact on business due to political dynamics, including wide differences between House and Senate positions on Medicaid cuts. - Market Competition: Intense competition in the senior housing and skilled nursing transaction markets, with strategic buyers bidding up prices.

Q: Regarding the occupancy for SHOP portfolio and pacing in 2025, what are thoughts?

A: Talya Nevo-Hacohen said it's hard to handicap occupancy vs RevPOR, with Canadian portfolio stable and domestic still room; Rick Matros added it's not deceleration but how much acceleration.

Q: Comments on opportunity set in 2025, mix of SHOP and SNFs, and pricing impacts?

A: Talya Nevo-Hacohen said skilled nursing transaction market is robust but challenge is lenders/REITs participating accretively; Rick Matros said strategic buyers are chasing deals, valuing assets based on operating entities.

Q: Follow-up on SHOP guide, back half deceleration vs operating leverage?

A: Mike Costa said conservative assumptions due to past growth and occupancy stabilization; Rick Matros and Talya Nevo-Hacohen noted operating leverage kicking in.