Sabra Health Care REIT Inc. (SBRA), a real estate investment trust (:REIT), recently acquired a 249-unit independent living facility in Frankenmuth, Michigan for $26.5 million. The transaction was funded with available cash.
In addition to the deal, Sabra Health Care also entered into a triple-net lease agreement with the affiliates of Unified Acquisitions & Development, LLC under which the tenant will pay all taxes, insurance, and maintenance costs for the property, in addition to rent. The 10-year lease agreement includes annual rent escalation of 3.0%, or the rate of change in the Consumer Price Index — whichever is greater.
The strategic move aims to expand its presence in the living facilities sector. The acquired facility provides supportive services similar to an assisted living facility, although it is classified under independent living. The lease agreement further ensures value addition and is expected to be accretive to the company’s earnings.
The company’s strategy of diversifying its portfolio is further backed by a dedicated management team. During the six months ended June 30, 2012, Sabra Health Care acquired six skilled nursing facilities for $55.6 million.
Based in Irvine, California, Sabra Health Care owns and invests in real estate for the healthcare industry. The company leases properties to tenants and operators throughout the United States. As of September 21, 2012, Sabra Health Care's properties were located in 26 states and included 11,689 licensed beds.
Sabra Health Care currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We also have a long-term Neutral recommendation on the stock. One of its competitors, Health Care REIT, Inc. (HCN) also holds a Zacks #3 Rank.
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